**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

WASHINGTON,D.C.  20549

 

**FORM 10-Q**

 

 
| (Mark One)                                             | ** ** | ** **                                                                                                                                                    |
|--------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                             | ** ** | ** **                                                                                                                                                    |
| **x**                                                  | ** ** | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                  |
| ** **                                             | ** ** | ** **                                                                                                                                                    |
| For the  quarterly period ended **September 30, 2007** |
|                                                   |       |                                                                                                                                                          |
| **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 FileNumber: **0-20625**

 

**DUKEREALTY LIMITED PARTNERSHIP**

(Exact Name ofRegistrant as Specified in Its Charter)

 

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

** **

**Registrant’s Telephone Number, Including Area Code: (317)808-6000**

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.    Yes  x    Noo

 

Indicate by check mark whether the registrant isa large accelerated filer, an accelerated filer, or a non-acceleratedfiler. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large acceleratedfiler o              Acceleratedfiler o               Non-acceleratedfiler x

 

Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act): YES  o    NO  x

 

Indicate thenumber of shares outstanding of each of the issuer’s classes of common stock,as of the latest practicable date:

 

| **Class**                              | ** ** | **Outstandingat  November 1, 2007** |
|----------------------------------------|------------|-------------------------------------|
| Common Units, $.01 par  value per unit |       | 153,857,016 units                   |

 

 

 

----

 

**DUKEREALTY LIMITED PARTNERSHIP**

 

**INDEX**

 

**Part I - Financial InformationPage**

 
| **Item 1. Financial Statements**                                                                                     | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                 |       |
| Consolidated  Balance Sheets as of   September 30, 2007 (Unaudited) and December 31, 2006                            | 2          |
|                                                                                                                 |       |
| Consolidated  Statements of Operations (Unaudited)   for the three and nine months ended September 30, 2007 and 2006 | 3          |
|                                                                                                                 |       |
| Consolidated Statements of Cash Flows (Unaudited)   for the nine months ended September 30, 2007 and 2006            | 4          |
|                                                                                                                 |       |
| Consolidated Statement of Partners’ Equity (Unaudited)    for the nine months ended September 30, 2007          | 5          |
|                                                                                                                 |       |
| Notes to Consolidated Financial Statements (Unaudited)                                                               | 6-13       |
|                                                                                                                 |       |
| **Item 2. Management’s Discussion and Analysis of  FinancialCondition and Results of  Operations**              | 14-29      |
|                                                                                                                 |       |
| **Item 3 Quantitative and Qualitative Disclosures About  Market Risk**                                               | 30         |
|                                                                                                                 |       |
| **Item 4. Controls and Procedures**                                                                                  | 30         |

 
| **Part  II - Other Information** |   |
|----------------------------------|--------|
|                             |   |   | 31 |
| Item 1.                          |   | Legal Proceedings |   |
| Item 1A.                         |   | Risk  Factors | 31 |
| Item 2.                          |   | Unregistered  Sales of Equity Securities and Use of Proceeds | 31-32 |
| Item 3.                          |   | Defaults Upon Senior  Securities | 32 |
| Item 4.                          |   | Submission of  Matters to a Vote of Security Holders | 32 |
| Item 5.                          |   | Other Information | 32 |
| Item 6.                          |   | Exhibits | 33-34 |
|                                  |        |  |  |  |

 

----

 

 

**PART I -FINANCIAL INFORMATION**

**Item 1. FinancialStatements**

**DUKEREALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedBalance Sheets**

**(inthousands)**
| ** **                                                                                                         | ** ** | **September 30,2007** | ** **    | **December 31,2006** | ** ** |
|--------------------------------------------------------------------------------------------------------------------|------------|-----------------------|---------------|----------------------|------------|
| **            ASSETS**                                 | ** ** | **(Unaudited)**       | ** **    | ** **           | ** ** |
| Real estate  investments:                                                                                          |       |                  |          |                 |       |
| Land and  improvements                                                                                             | ** ** | **$**                 | **822,436**   |                 | $          | 844,091 |   |
| Buildings and  tenant improvements                                                                                 | ** ** | **4,493,009**         |          | 4,211,602            |       |
| Construction in  progress                                                                                          | ** ** | **441,560**           |          | 359,765              |       |
| Investments in  and advances to unconsolidated companies                                                           | ** ** | **551,193**           |          | 628,323              |       |
| Land held for  development                                                                                         | ** ** | **800,737**           |          | 737,752              |       |
| ** **                                                                                                         | ** ** | **7****,108,935**     |          | 6,781,533            |       |
| Accumulated  depreciation                                                                                          | ** ** | **(928,024**          | )             | (867,079             | )          |
|                                                                                                               |       |                  |          |                 |       |
| Net real estate  investments                                                                                       | ** ** | **6,180,911**         |          | 5,914,454            |       |
|                                                                                                               |       |                  |          |                 |       |
| Real estate  investments and other assets held for sale                                                            | ** ** | **351,259**           |          | 512,925              |       |
|                                                                                                               |       |                  |          |                 |       |
| Cash and cash  equivalents                                                                                         | ** ** | **17,763**            |          | 68,154               |       |
| Accounts  receivable, net of allowance of $2,260 and $1,088                                                        | ** ** | **22,483**            |          | 24,118               |       |
| Straight-line  rent receivable, net of allowance of $1,800 and $1,915                                              | ** ** | **110,544**           |          | 105,319              |       |
| Receivables on  construction contracts, including retentions                                                       | ** ** | **60,190**            |          | 64,768               |       |
| Deferred  financing costs, net of accumulated amortization of $27,543 and $19,492                                  | ** ** | **57,578**            |          | 62,277               |       |
| Deferred leasing  and other costs, net of accumulated amortization of $146,472 and $127,155                        | ** ** | **367,729**           |          | 311,553              |       |
| Escrow deposits  and other assets                                                                                  | ** ** | **247,499**           |          | 174,636              |       |
| ** **                                                                                                         | ** ** | **$**                 | **7,415,956** |                 | $          | 7,238,204 |   |
|                                                                                                               |       |                  |          |                 |       |
| **            LIABILITIES  AND PARTNERS’ EQUITY** | ** ** | ** **            | ** **    | ** **           | ** ** |
| Indebtedness:                                                                                                      |       |                  |          |                 |       |
| Secured debt                                                                                                       | ** ** | **$**                 | **492,538**   |                 | $          | 515,192 |   |
| Unsecured notes                                                                                                    | ** ** | **3,368,920**         |          | 3,129,653            |       |
| Unsecured lines  of credit                                                                                         | ** ** | **304,224**           |          | 317,000              |       |
| ** **                                                                                                         | ** ** | **4,165,682**         |          | 3,961,845            |       |
|                                                                                                               |       |                  |          |                 |       |
| Liabilities of  properties held for sale                                                                           | ** ** | **37,926**            |          | 155,185              |       |
|                                                                                                               |       |                  |          |                 |       |
| Construction  payables and amounts due subcontractors, including retentions                                        | ** ** | **140,679**           |          | 136,508              |       |
| Accrued  expenses:                                                                                                 |       |                  |          |                 |       |
|  Real estate taxes                                                                                            | ** ** | **88,179**            |          | 59,273               |       |
|  Interest                                                                                                     | ** ** | **37,603**            |          | 52,106               |       |
|  Other                                                                                                        | ** ** | **44,605**            |          | 62,078               |       |
| Other liabilities                                                                                                  | ** ** | **135,589**           |          | 119,765              |       |
| Tenant security  deposits and prepaid rents                                                                        | ** ** | **28,251**            |          | 31,121               |       |
| Total  liabilities                                                                                                 | ** ** | **4,678,514**         |          | 4,577,881            |       |
|                                                                                                               |       |                  |          |                 |       |
| Minority  interest                                                                                                 | ** ** | **3,535**             |          | 1,080                |       |
|                                                                                                               |       |                  |          |                 |       |
| Partners’  equity:                                                                                            |       |                  |          |                 |       |
| General Partner                                                                                                    |       |                  |          |                 |       |
| Common equity                                                                                                      | ** ** | **1,768,788**         |          | 1,625,958            |       |
| Preferred equity  (liquidation preferences of $876,250)                                                            | ** ** | **876,250**           |          | 876,250              |       |
| ** **                                                                                                         | ** ** | **2,645,038**         |          | 2,502,208            |       |
|                                                                                                               |       |                  |          |                 |       |
| Limited  Partners’ common equity                                                                              | ** ** | **82,816**            |          | 151,600              |       |
| Accumulated  other comprehensive income                                                                            | ** ** | **6,053**             |          | 5,435                |       |
| Total Partners’  equity                                                                                       | ** ** | **2,733,907**         |          | 2,659,243            |       |
|                                                                                                               |       |                  |          |                 |       |
| ** **                                                                                                         | ** ** | **$**                 | **7,415,956** |                 | $          | 7,238,204 |   |

 

See accompanying Notes toConsolidated Financial Statements.

 

 

2

----

 

 

**DUKEREALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedStatements of Operations**

**For thethree and nine months ended September 30,**

**(inthousands, except per unit data)**

**(Unaudited)**

 
| ** **                                                                         | ** ** | **Three  Months Ended** | ** **  | **Nine  Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|-------------------------|-------------|------------------------|------------|
| ** **                                                                         | ** ** | **2007**                | ** **  | **2006**               | ** ** | **2007** | ** ** | **2006** | ** ** |
| **RENTAL  OPERATIONS:**                                                            | ** ** | ** **              | ** **  | ** **             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues:                                                                          |       |                    |        |                   |       |   |   |   |   |
| Rental income  from continuing operations                                          | ** ** | **$**                   | **201,376** |                   | $          | 192,563 | ** ** | **$** | **588,564** |   | $ | 553,001 |   |
| Equity in  earnings of unconsolidated companies                                    | ** ** | **1,838**               |        | 3,492                  | ** ** | **17,478** |   | 21,447 |   |
| ** **                                                                         | ** ** | **203,214**             |        | 196,055                | ** ** | **606,042** |   | 574,448 |   |
| Operating  expenses:                                                               |       |                    |        |                   |       |   |   |   |   |
| Rental expenses                                                                    | ** ** | **44,833**              |        | 41,993                 | ** ** | **133,417** |   | 124,256 |   |
| Real estate  taxes                                                                 | ** ** | **24,750**              |        | 21,321                 | ** ** | **73,223** |   | 64,128 |   |
| Interest expense                                                                   | ** ** | **42,390**              |        | 46,825                 | ** ** | **124,924** |   | 124,757 |   |
| Depreciation and  amortization                                                     | ** ** | **71,981**              |        | 59,432                 | ** ** | **202,854** |   | 173,623 |   |
| ** **                                                                         | ** ** | **183,954**             |        | 169,571                | ** ** | **534,418** |   | 486,764 |   |
| Earnings from  continuing rental operations                                        | ** ** | **19,260**              |        | 26,484                 | ** ** | **71,624** |   | 87,684 |   |
| **SERVICE  OPERATIONS**                                                            | ** ** | ** **              | ** **  | ** **             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues:                                                                          |       |                    |        |                   |       |   |   |   |   |
| General  contractor gross revenue                                                  | ** ** | **77,996**              |        | 100,314                | ** ** | **195,714** |   | 223,924 |   |
| General  contractor costs                                                          | ** ** | **(66,696**             | **)**       | (93,555                | )          | **(171,374** | **)** | (206,561 | ) |
| Net general  contractor revenue                                                    | ** ** | **11,300**              |        | 6,759                  | ** ** | **24,340** |   | 17,363 |   |
| Service fee  revenue                                                               | ** ** | **7,857**               |        | 7,866                  | ** ** | **21,909** |   | 16,714 |   |
| Gain on sale of  service operations properties                                     | ** ** | **1,116**               |        | 7,849                  | ** ** | **10,793** |   | 8,121 |   |
| Total revenue                                                                      | ** ** | **20,273**              |        | 22,474                 | ** ** | **57,042** |   | 42,198 |   |
| Operating  expenses                                                                | ** ** | **12,972**              |        | 11,923                 | ** ** | **30,789** |   | 23,721 |   |
| Earnings from  service operations                                                  | ** ** | **7,301**               |        | 10,551                 | ** ** | **26,253** |   | 18,477 |   |
| General and  administrative expense                                                | ** ** | **(3,847**              | **)**       | (6,760                 | )          | **(27,912** | **)** | (27,642 | ) |
| Operating income                                                                   | ** ** | **22,714**              |        | 30,275                 | ** ** | **69,965** |   | 78,519 |   |
| **OTHER  INCOME (EXPENSE)**                                                        | ** ** | ** **              | ** **  | ** **             | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest and  other income, net                                                    | ** ** | **6,292**               |        | 4,381                  | ** ** | **11,276** |   | 8,313 |   |
| Earnings from  sale of land, net of impairment adjustment                          | ** ** | **1,799**               |        | 2,982                  | ** ** | **18,207** |   | 5,427 |   |
| Other minority  interest in earnings of subsidiaries                               | ** ** | **(38**                 | **)**       | (126                   | )          | **(89** | **)** | (301 | ) |
| Income from  continuing operations                                                 | ** ** | **30,767**              |        | 37,512                 | ** ** | **99,359** |   | 91,958 |   |
| Discontinued  operations:                                                          |       |                    |        |                   |       |   |   |   |   |
| Net income from  discontinued operations                                           | ** ** | **1,851**               |        | 1,949                  | ** ** | **4,828** |   | 10,875 |   |
| Gain on sale of  properties                                                        | ** ** | **39,670**              |        | 43,735                 | ** ** | **111,751** |   | 45,739 |   |
| Income from  discontinued operations                                               | ** ** | **41,521**              |        | 45,684                 | ** ** | **116,579** |   | 56,614 |   |
| Net income                                                                         | ** ** | **72,288**              |        | 83,196                 | ** ** | **215,938** |   | 148,572 |   |
| Dividends on  Preferred Units                                                      | ** ** | **(15,227**             | **)**       | (15,226                | )          | **(45,679** | **)** | (41,193 | ) |
| Adjustments for  redemption of Preferred Units                                     | ** ** | **—**              |        | —                 | ** ** | **—** |   | (2,633 | ) |
| Net income  available for common unitholders                                       | ** ** | **$**                   | **57,061**  |                   | $          | 67,970 | ** ** | **$** | **170,259** |   | $ | 104,746 |   |
|                                                                               |       |                    |        |                   |       |   |   |   |   |
| Basic net income  per Common Unit:                                                 |       |                    |        |                   |       |   |   |   |   |
| Continuing  operations                                                             | ** ** | **$**                   | **.11**     |                   | $          | .15 | ** ** | **$** | **.36** |   | $ | .33 |   |
| Discontinued  operations                                                           | ** ** | **.28**                 |        | .31                    | ** ** | **.80** |   | .38 |   |
| Total                                                                              | ** ** | **$**                   | **.39**     |                   | $          | .46 | ** ** | **$** | **1.16** |   | $ | .71 |   |
| Diluted net  income per Common Unit:                                               |       |                    |        |                   |       |   |   |   |   |
| Continuing  operations                                                             | ** ** | **$**                   | **.11**     |                   | $          | .15 | ** ** | **$** | **.36** |   | $ | .32 |   |
| Discontinued  operations                                                           | ** ** | **.28**                 |        | .30                    | ** ** | **.79** |   | .38 |   |
| Total                                                                              | ** ** | **$**                   | **.39**     |                   | $          | .45 | ** ** | **$** | **1.15** |   | $ | .70 |   |
| Weighted average  number of Common Units outstanding                               | ** ** | **146,752**             |        | 148,328                | ** ** | **146,670** |   | 148,259 |   |
| Weighted average  number of Common Units and potential dilutive common equivalents | ** ** | **147,651**             |        | 150,947                | ** ** | **147,986** |   | 149,472 |   |

 

See accompanying Notes to Consolidated Financial Statements

 

 

3

----

 

 

**DUKEREALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedStatements of Cash Flows**

**For thenine months ended September 30,**

**(inthousands)**

**(Unaudited)**

 
| ** **                                                                                                   | ** ** | **2007**     | ** **  | **2006**   | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|--------------|-------------|------------|------------|
| Cash flows from  operating activities:                                                                       |       |         |        |       |       |
| Net income                                                                                                   |       | **$**        | **215,938** | ** ** | $          | 148,572 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities:                           |       |         |        |       |       |
| Depreciation of  buildings and tenant improvements                                                           | ** ** | **160,987**  |        | 155,156    |       |
| Amortization of  deferred leasing and other costs                                                            | ** ** | **47,235**   |        | 34,956     |       |
| Amortization of  deferred financing costs                                                                    | ** ** | **8,518**    |        | 6,093      |       |
| Minority  interest in earnings                                                                               | ** ** | **89**       |        | 301        |       |
| Straight-line  rent adjustment                                                                               | ** ** | **(13,643**  | )           | (15,263    | )          |
| Earnings from  land and depreciated property sales                                                           | ** ** | **(129,958** | )           | (46,734    | )          |
| Build-for-sale  operations, net                                                                              | ** ** | **(167,640** | )           | (163,106   | )          |
| Construction  contracts, net                                                                                 | ** ** | **720**      |        | (208       | )          |
| Other accrued  revenues and expenses, net                                                                    | ** ** | **8,456**    |        | (6,422     | )          |
| Operating  distributions received in excess of (less than) equity in earnings from  unconsolidated companies | ** ** | **4,166**    |        | (4,990     | )          |
| **Net  cash provided by operating activities**                                                               | ** ** | **134,868**  |        | 108,355    |       |
|                                                                                                         |       |         |        |       |       |
| Cash flows from  investing activities:                                                                       |       |         |        |       |       |
| Development of  real estate investments                                                                      | ** ** | **(324,317** | )           | (274,672   | )          |
| Acquisition of  real estate investments and related intangible assets                                        | ** ** | **(80,954**  | )           | (735,294   | )          |
| Acquisition of  land held for development                                                                    | ** ** | **(155,556** | )           | (367,517   | )          |
| Recurring tenant  improvements                                                                               | ** ** | **(32,987**  | )           | (36,300    | )          |
| Recurring  leasing costs                                                                                     | ** ** | **(22,771**  | )           | (12,338    | )          |
| Recurring  building improvements                                                                             | ** ** | **(4,894**   | )           | (5,490     | )          |
| Other deferred  leasing costs                                                                                | ** ** | **(20,562**  | )           | (30,918    | )          |
| Other deferred  costs and other assets                                                                       | ** ** | **(11,139**  | )           | 718        |       |
| Proceeds from  land and depreciated property sales, net                                                      | ** ** | **405,094**  |        | 140,273    |       |
| Capital  distributions from unconsolidated companies                                                         | ** ** | **207,545**  |        | 21,238     |       |
| Repayments from  (advances to) unconsolidated companies                                                      | ** ** | **(104,461** | )           | 4,865      |       |
| **Net  cash used for investing activities**                                                                  | ** ** | **(145,002** | )           | (1,295,435 | )          |
|                                                                                                         |       |         |        |       |       |
| Cash flows from  financing activities:                                                                       |       |         |        |       |       |
| Contribution  from General Partner                                                                           | ** ** | **2,186**    | ** **  | **—** |       |
| Payments for  repurchases of Common Units                                                                    |       | —       |        | (11,883    | )          |
| Proceeds from  issuance of the General Partner’s stock options                                          | ** ** | **703**      |        | 6,335      |       |
| Proceeds from  issuance of Preferred Units, net                                                              |       | —       |        | 283,994    |       |
| Payments for  redemption of Preferred Units                                                                  |       | —       |        | (75,000    | )          |
| Proceeds from  unsecured debt issuance                                                                       | ** ** | **339,424**  |        | 850,000    |       |
| Payments on  unsecured debt                                                                                  | ** ** | **(100,000** | )           | (100,000   | )          |
| Proceeds from  issuance of secured debt                                                                      |       | —       |        | 710,450    |       |
| Payments on  secured indebtedness including principal amortization                                           | ** ** | **(22,617**  | )           | (722,777   | )          |
| Borrowings  (repayments) on lines of credit, net                                                             | ** ** | **(12,776**  | )           | 521,000    |       |
| Distributions to  common unitholders                                                                         | ** ** | **(209,839** | )           | (210,142   | )          |
| Distributions to  preferred unitholders                                                                      | ** ** | **(45,679**  | )           | (41,193    | )          |
| Contributions from  minority interest                                                                        | ** ** | **2,355**    |        | 1,630      |       |
| Cash settlement  of interest rate swaps                                                                      | ** ** | **10,746**   |        | 732        |       |
| Deferred financing  costs                                                                                    | ** ** | **(4,760**   | )           | (27,930    | )          |
| **Net  cash provided by (used for) financing activities**                                                    | ** ** | **(40,257**  | )           | 1,185,216  |       |
| **Net  decrease in cash and cash equivalents**                                                               | ** ** | **(50,391**  | )           | (1,864     | )          |
| Cash and cash  equivalents at beginning of period                                                            | ** ** | **68,154**   |        | 26,858     |       |
| Cash and cash  equivalents at end of period                                                                  | ** ** | **$**        | **17,763**  |       | $          | 24,994 |   |
| Other non-cash  items:                                                                                       |       |         |        |       |       |
| Assumption of  secured debt for real estate acquisitions                                                     | ** ** | **$**        | **—**  |       | $          | 217,520 |   |
| Conversion of  Limited Partner Units to common shares of the General Partner                                 | ** ** | **$**        | **91,626**  |       | $          | 3,365 |   |
| Contribution of  real estate investments to, net of debt assumed by, unconsolidated companies                | ** ** | **$**        | **125,353** |       | $          | 77,412 |   |
| Issuance of  Limited Partner Units for acquisition                                                           | ** ** | **$**        | **11,020**  |       | $          | — |   |

 

See accompanyingNotes to Consolidated Financial Statements

 

4

----

 

 

**DUKEREALTY LIMITED PARTNERSHIPAND SUBSIDIARIES**

**ConsolidatedStatement of Partners’ Equity**

**For thenine months ended September 30, 2007**

**(inthousands, except per unit data)**

**(Unaudited)**

 
| ** **                                               | ** ** | ** **           | ** **    | ** **             | ** ** | **Limited** | ** **             | **Accumulated**    | ** **  | ** **             | ** ** |
|----------------------------------------------------------|------------|----------------------|---------------|------------------------|------------|-------------|------------------------|--------------------|-------------|------------------------|------------|
| ** **                                               | ** ** | **General  Partner** | ** **    | **Partners**           | ** ** | **Other**   | ** **             | ** **         | ** **  |
| ** **                                               | ** ** | **Common**           | ** **    | **Preferred**          | ** ** | **Common**  | ** **             | **Comprehensive**  | ** **  | ** **             | ** ** |
| ** **                                               | ** ** | **Equity**           | ** **    | **Equity**             | ** ** | **Equity**  | ** **             | **Income  (Loss)** | ** **  | **Total**              | ** ** |
| **Balance  at December 31, 2006**                        | ** ** | **$**                | **1,625,958** | **   ** | **$**      | **876,250** | **   ** | **$**              | **151,600** | **   ** | **$**      | **5,435** | **   ** | **$** | **2,659,243** |   |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Effect of  implementing new accounting principle         |       | (1,717               | )             | —                 |       | —      |                   | —             |        | (1,717                 | )          |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| **Balance  at January 1, 2007**                          | ** ** | **$**                | **1,624,241** | ** **             | **$**      | **876,250** | ** **             | **$**              | **151,600** | ** **             | **$**      | **5,435** | ** ** | **$** | **2,657,526** |   |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Comprehensive  income:                                   |       |                 |          |                   |       |        |                   |               |        |                   |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Net income                                               |       | 159,026              |          | 45,679                 |       | 11,233      |                   | —             |        | 215,938                |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Gains on  derivative instruments                         |       | —               |          | —                 |       | —      |                   | 618                |        | 618                    |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Comprehensive  income                                    |       |                 |          |                   |       |        |                   |               |        | $                      | 216,556    |   |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Acquisition of  Partnership interest for common stock of |       |                 |          |                   |       |        |                   |               |        |                   |       |
| General Partner                                          |       | 168,671              |          | —                 |       | (77,045     | )                      | —             |        | 91,626                 |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Unit Issuance                                            |       | —               |          | —                 |       | 11,020      |                   | —             |        | 11,020                 |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Capital  contribution from General Partner               |       | 2,186                |          | —                 |       | —      |                   | —             |        | 2,186                  |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Stock based  compensation plan activity                  |       | 10,511               |          | —                 |       | —      |                   | —             |        | 10,511                 |       |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Distributions to  Preferred Unitholders                  |       | —               |          | (45,679                | )          | —      |                   | —             |        | (45,679                | )          |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| Distributions to  Partners ($1.43 per Common Unit)       |       | (195,847             | )             | —                 |       | (13,992     | )                      | —             |        | (209,839               | )          |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| **Balance  at September 30, 2007**                       | ** ** | **$**                | **1,768,788** | ** **             | **$**      | **876,250** | ** **             | **$**              | **82,816**  | ** **             | **$**      | **6,053** | ** ** | **$** | **2,733,907** |   |
|                                                     |       |                 |          |                   |       |        |                   |               |        |                   |       |
| **Common  Units outstanding at September 30, 2007**      | ** ** | **138,570**          | ** **    | ** **             | ** ** | **8,259**   |                   |               |        | **146,829**            |       |

 

See accompanyingNotes to Consolidated Financial Statements

 

5

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**DUKEREALTY LIMITED PARTNERSHIP**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**1.**       **General Basis of Presentation**

 

The interimconsolidated financial statements included herein have been prepared by DukeRealty Limited Partnership (the “Partnership”) without audit (except for theBalance Sheet as of December 31, 2006). The financial statements have beenprepared in accordance with U.S. generally accepted accounting principles (“GAAP”)for interim financial information and in accordance with Rule 10-01 ofRegulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly,they do not include all of the information and footnotes required by GAAP forcomplete financial statements. In the opinion of management, all adjustments(consisting of normal recurring adjustments) considered necessary for a fairpresentation have been included. GAAP requires us to make estimates andassumptions that affect the reported amounts of assets and liabilities andrevenue and expenses during the reporting period. Our actual results coulddiffer from those estimates and assumptions. These financial statements shouldbe read in conjunction with Management’s Discussion and Analysis of FinancialCondition and Results of Operations included herein and the consolidatedfinancial statements and notes thereto included in our Annual Report on Form10-K for the year ended December 31, 2006.

 

The Partnershipwas formed on October 4, 1993, when Duke Realty Corporation (the “GeneralPartner”) contributed all of its properties and related assets and liabilities,along with the net proceeds from the issuance of additional shares of theGeneral Partner through an offering, to the Partnership. The General Partnerqualifies as a real estate investment trust (“REIT”) under provisions of theInternal Revenue Code. The General Partner is the sole general partner of thePartnership, owning 94.4% of the common partnership interests as of September30, 2007 (“General Partner Units”). The remaining 5.6% of the Partnership’scommon interest is owned by limited partners (“Limited Partner Units” and,together with the General Partner Units, the “Common Units”). The LimitedPartner Units are exchangeable for shares of the General Partner’s common stockon a one-for-one basis subject generally to a one-year holding period or, undercertain circumstances, the General Partner may repurchase the Limited PartnerUnits for cash. The General Partner also owns preferred partnership interestsin the Partnership (“Preferred Units”).

 

We own and operatea portfolio primarily consisting of industrial and office properties andprovide real estate services to third-party owners. We conduct our ServiceOperations (see Note 7) through Duke Realty Services LLC, Duke Realty ServicesLimited Partnership and Duke Construction Limited Partnership. The consolidatedfinancial statements include our accounts and our majority-owned or controlledsubsidiaries. In this Quarterly Report on Form 10-Q (this “Report”), unless thecontext indicates otherwise, the terms “we,” “us” and “our” refer to thePartnership and those entities owned or controlled by the Partnership.

 

**2.       Reclassifications**

 

Certain 2006balances have been reclassified to conform to the 2007 presentation.

 

**3.       Acquisitions**

 

In February 2007,we completed the acquisition of Bremner Healthcare Real Estate (“Bremner”), anational health care development and management firm. The primary reason forthe acquisition was to expand our development capabilities within the healthcare real estate market.

 

6

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The initialconsideration paid to the sellers totaled $47.1 million, and the sellers may beeligible for further contingent payments over the next three years.

 

Approximately$39.1 million of the total purchase price was allocated to goodwill, which isattributable to the value of Bremner’s overall development capabilities and itsin-place workforce. The results of operations for Bremner since the date ofacquisition have been included in continuing operations in our consolidatedfinancial statements.

 

**4.       Indebtedness**

 

We had oneunsecured line of credit available as of September 30, 2007.  Additionally, in July 2007, one of ourconsolidated majority owned subsidiaries entered into a lending agreement thatincluded an additional unsecured line of credit.  Our unsecured lines of credit as of September30, 2007 are described as follows (dollars in thousands):

 
| **Description**                                          | ** ** | **Borrowing****Capacity** | ** ** | **Maturity****Date** | ** **   | **Outstanding  Balance****at September 30, 2007** | ** ** |
|----------------------------------------------------------|------------|---------------------------|------------|----------------------|--------------|---------------------------------------------------|------------|
| Unsecured Line  of Credit                                |       | $                         | 1,000,000  |                 | January 2010 |                                              | $          | 302,000 |   |
| Unsecured Line  of Credit — Consolidated Subsidiary |       | $                         | 30,000     |                 | July 2011    |                                              | $          | 2,224 |   |

 

We useour line of credit to fund development activities, acquire additional rentalproperties and provide working capital. This line of credit provides us with an option to obtain borrowings fromfinancial institutions that participate in the line, at rates lower than thestated interest rate, subject to certain restrictions. Interest rates on theamounts outstanding on the unsecured line of credit as of September 30, 2007range from LIBOR +.16% to LIBOR +.525% (equal to 5.29% and 5.655% as ofSeptember 30, 2007).  Our line of creditalso contains financial covenants that require us to meet financial ratios anddefined levels of performance, including those related to variable rateindebtedness, consolidated net worth and debt-to-market capitalization. As ofSeptember 30, 2007, we were in compliance with all covenants under our line ofcredit.

 

Theconsolidated subsidiary’s unsecured line of credit allows for borrowings up to$30.0 million at a rate of LIBOR + .85%. (equal to 6.04% as of September 30, 2007).  The unsecured line of credit is used to funddevelopment activities within the consolidated subsidiary.  The consolidated subsidiary’s unsecured lineof credit matures on July 27, 2011 with a 12-month extension option.

 

InAugust 2007, we repaid $100.0 million of 7.375% senior unsecured notes on theirscheduled maturity date.

 

InSeptember 2007, we issued $300.0 million of 6.50% senior unsecured notes due inJanuary 2018.  This issuance was hedgedwith an interest rate swap (Note 9) that reduced the effective interest rate to6.16%.  The net proceeds from thatissuance were used to partially pay down the outstanding balance on our $1.0billion unsecured line of credit.

 

**5.       Related Party Transactions**

 

We provideproperty management, leasing, construction and other tenant related services tounconsolidated companies in which we have equity interests. For the nine monthsended September 30, 2007 and 2006, we received management fees of $5.1 millionand $3.3 million, leasing fees of $2.7 million and $2.2 million andconstruction and development fees of $9.0 million and $16.8 million,respectively, from these companies. These fees approximate market rates for these types of services, and wehave eliminated our ownership percentage of these fees in the consolidatedfinancial statements.

 

7

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**6.       Net Income Per Common Unit**

 

Basic net income per Common Unit is computed by dividing net incomeavailable for common unitholders by the weighted average number of Common Unitsoutstanding for the period. Diluted net income per Common Unit is computed bydividing net income available for common unitholders by the sum of the weightedaverage number of Common Units outstanding and any potential dilutive commonequivalents for the period.

 

The following table reconciles the components of basic and diluted netincome per Common Unit for the three and nine months ended September 30, 2007and 2006, respectively (in thousands):

 
| ** **                                                                         | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                         | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** |
| ** **                                                                         | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
| Basic net income  available for common unitholders                                 | ** ** | **$**                  | **57,061** |                  | $          | 67,970 | ** ** | **$** | **170,259** |   | $ | 104,746 |   |
| Joint venture  partner convertible ownership net income (2)                        |       | —                 |       | 378                   |       | — |   | — |   |
| Diluted net  income available for common unitholders                               | ** ** | **$**                  | **57,061** |                  | $          | 68,348 | ** ** | **$** | **170,259** |   | $ | 104,746 |   |
| Weighted average  number of Common Units outstanding                               | ** ** | **146,752**            |       | 148,328               | ** ** | **146,670** |   | 148,259 |   |
| Joint venture  partner convertible ownership common share equivalents (2)          |       | —                 |       | 1,357                 |       | — |   | — |   |
| Dilutive units  for stock-based compensation plans (1)                             | ** ** | **899**                |       | 1,262                 | ** ** | **1,316** |   | 1,213 |   |
| Weighted average  number of Common Units and potential dilutive common equivalents | ** ** | **147,651**            |       | 150,947               | ** ** | **147,986** |   | 149,472 |   |

----

(1)                                  Excludes the effectof outstanding stock options, as well as Exchangeable Senior Notes (“ExchangeableNotes”) issued in 2006, that have an anti-dilutive effect on earnings per unitfor the three and nine-month periods ended September 30, 2007 and 2006.

(2)                                  One of our jointventure partners in one of our unconsolidated companies has the option toconvert a portion of its ownership in the joint venture to the General Partner’scommon shares.  The effect of this optionon earnings per unit is dilutive for the third quarter 2006; therefore,conversion to Common Units is included in weighted average potential dilutivecommon equivalents for the quarter.

 

**7.       Segment Reporting**

 

We are engaged inthree reportable operating segments, the first two of which consist of theownership and rental of office and industrial real estate investments(collectively, “Rental Operations”). The third reportable segment consists ofour build-to-suit for sale operations and providing of various real estateservices such as property management, maintenance, leasing, development andconstruction management to third-party property owners and joint ventures (“ServiceOperations”). Our reportable segments offer different products or services andare managed separately because each segment requires different operatingstrategies and management expertise.

 

The assets of theService Operations business segment generally include properties underdevelopment.  During the period betweenthe completion of development, rehabilitation or repositioning of a ServiceOperations property and the date the property is contributed to a property fundor sold to a third party, the property and its associated rental income andrental expenses are included in the applicable Rental Operations segmentbecause the primary activity associated with the Service Operations propertyduring that period is rental activities. Upon contribution or sale, theresulting gain or loss is part of the income of the Service Operations businesssegment.

 

8

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Non-segmentrevenue consists mainly of equity in earnings of unconsolidated companies andother insignificant rental operations such as retail and medical officeproperties. Segment FFO information (FFO is defined below) is calculated bysubtracting operating expenses attributable to the applicable segment fromsegment revenues. Non-segment assets consist of corporate assets, includingcash, deferred financing costs and investments in unconsolidated companies.Interest expense and other non-property specific revenues and expenses are notallocated to individual segments in determining our performance measure.

 

We assess andmeasure segment operating results based upon an industry performance measurereferred to as Funds From Operations (“FFO”), which management believes is auseful indicator of our operating performance. FFO is used by industry analysts and investors as a supplementaloperating performance measure of an equity real estate investment trust (“REIT”)like our General Partner. FFO is calculated in accordance with the definitionthat was adopted by the Board of Governors of the National Association of RealEstate Investment Trusts (“NAREIT”). NAREIT created FFO as a supplemental measure of REIT operatingperformance that excludes historical cost depreciation, among other items, fromnet income determined in accordance with GAAP. FFO is a non-GAAP financialmeasure developed by NAREIT to compare the operating performance of REITs. Themost comparable GAAP measure is net income (loss).  FFO should not be considered as a substitutefor net income or any other measures derived in accordance with GAAP and maynot be comparable to other similarly titled measures of other companies.

 

Historical costaccounting for real estate assets in accordance with GAAP implicitly assumesthat the value of real estate assets diminishes predictably over time.  Since real estate values instead havehistorically risen or fallen with market conditions, many industry analysts andinvestors have considered presentation of operating results for real estatecompanies that use historical cost accounting to be insufficient bythemselves.  FFO, as defined by NAREIT,represents GAAP net income (loss), excluding extraordinary items as definedunder GAAP and gains or losses from sales of previously depreciated operatingreal estate assets, plus certain non-cash items such as real estate assetdepreciation and amortization, and after similar adjustments for unconsolidatedpartnerships and joint ventures.

 

Managementbelieves that the use of FFO, combined with the required primary GAAPpresentations, improves the understanding of operating results of REITs amongthe investing public and makes comparisons of REIT operating results moremeaningful.  Management believes FFO is auseful measure for reviewing comparative operating and financial performance(although FFO should be reviewed in conjunction with net income which remainsthe primary measure of performance) because by excluding gains or lossesrelated to sales of previously depreciated operating real estate assets and excludingreal estate asset depreciation and amortization, FFO provides a usefulcomparison of the operating performance of our real estate between periods oras compared to different companies.

 

9

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The followingtable shows (i) the revenues and FFO for each of the reportable segments and(ii) a reconciliation of net income available for common unitholders to thecalculation of FFO for the three and nine months ended September 30, 2007 and2006, respectively (in thousands):

 
| ** **                                                          | ** ** | **Three Months Ended** |        | **Nine Months Ended** | ** ** |
|---------------------------------------------------------------------|------------|------------------------|-------------|-----------------------|------------|
| ** **                                                          | ** ** | **September 30,**      |        | **September 30,**     | ** ** |
| ** **                                                          | ** ** | **2007**               | ** **  | **2006**              |       | **2007** | ** ** | **2006** | ** ** |
| Revenues                                                            |       |                   | ** **  |                  |       |   |   |   |   |
| Rental  Operations:                                                 |       |                   | ** **  |                  |       |   |   |   |   |
| Office                                                              | ** ** | **$**                  | **140,858** | ** **            | $          | 139,260 |   | **$** | **409,886** | ** ** | $ | 399,938 |   |
| Industrial                                                          | ** ** | **52,741**             | ** **  | 50,755                |       | **160,761** | ** ** | 144,113 |   |
| Service Operations                                                  | ** ** | **20,273**             | ** **  | 22,474                |       | **57,042** | ** ** | 42,198 |   |
| Total Segment Revenues                                              |       | **213,872**            | ** **  | 212,489               |       | **627,689** | ** ** | 586,249 |   |
| Non-Segment Revenue                                                 | ** ** | **9,615**              | ** **  | 6,040                 |       | **35,395** | ** ** | 30,397 |   |
| Consolidated Revenue from continuing operations                     |       | **$**                  | **223,487** | ** **            | $          | 218,529 |   | **$** | **663,084** | ** ** | $ | 616,646 |   |
| Discontinued Operations                                             | ** ** | **7,088**              | ** **  | 17,482                |       | **32,949** | ** ** | 59,964 |   |
| Consolidated Revenue                                                |       | **$**                  | **230,575** | ** **            | $          | 236,011 |   | **$** | **696,033** | ** ** | $ | 676,610 |   |
| Funds From Operations                                               |       |                   | ** **  |                  |       |   | ** ** |   |   |
| Rental  Operations:                                                 |       |                   | ** **  |                  |       |   | ** ** |   |   |
| Office                                                              |       | **$**                  | **87,742**  | ** **            | $          | 88,494 |   | **$** | **251,862** | ** ** | $ | 249,786 |   |
| Industrial                                                          |       | **40,645**             | ** **  | 40,357                |       | **123,528** | ** ** | 111,079 |   |
| Services Operations                                                 | ** ** | **7,301**              | ** **  | 10,551                |       | **26,253** | ** ** | 18,477 |   |
| Total Segment FFO                                                   |       | **135,688**            | ** **  | 139,402               |       | **401,643** | ** ** | 379,342 |   |
| Non-Segment FFO:                                                    |       |                   | ** **  |                  |       |   | ** ** |   |   |
| Interest expense                                                    | ** ** | **(42,390**            | **)**       | (46,825               | )          | **(124,924** | **)** | (124,757 | ) |
| Interest and other income, net                                      | ** ** | **6,292**              | ** **  | 4,381                 |       | **11,276** | ** ** | 8,313 |   |
| General and  administrative expense                                 | ** ** | **(3,847**             | **)**       | (6,760                | )          | **(27,912** | **)** | (27,642 | ) |
| Gain on land  sales, net of impairment                              | ** ** | **1,799**              | ** **  | 2,982                 |       | **18,207** | ** ** | 5,427 |   |
| Other  non-segment income                                           | ** ** | **3,407**              | ** **  | 164                   |       | **6,535** | ** ** | 3,487 |   |
| Minority  interest                                                  | ** ** | **(38**                | **)**       | (126                  | )          | **(89** | **)** | (301 | ) |
| Joint venture FFO                                                   | ** ** | **12,313**             | ** **  | 8,341                 |       | **36,669** | ** ** | 27,060 |   |
| Dividends on  Preferred Units                                       | ** ** | **(15,227**            | **)**       | (15,226               | )          | **(45,679** | **)** | (41,193 | ) |
| Adjustment for  redemption of Preferred Units                       |       | —                 | ** **  | —                |       | **—** | ** ** | (2,633 | ) |
| Discontinued  operations                                            | ** ** | **1,946**              | ** **  | 11,311                |       | **10,196** | ** ** | 31,795 |   |
| Consolidated basic FFO                                              | ** ** | **$**                  | **99,943**  | ** **            | $          | 97,644 |   | **$** | **285,922** | ** ** | $ | 258,898 |   |
| Depreciation and  amortization on continuing operations             | ** ** | **(71,981**            | **)**       | (59,432               | )          | **(202,854** | **)** | (173,623 | ) |
| Depreciation and  amortization on discontinued operations           | ** ** | **(95**                | **)**       | (4,931                | )          | **(5,368** | **)** | (16,489 | ) |
| Partnership’s  share of joint venture adjustments              | ** ** | **(10,473**            | **)**       | (4,568                | )          | **(21,020** | **)** | (13,695 | ) |
| Earnings from depreciated property sales on discontinued operations | ** ** | **39,670**             | ** **  | 39,537                |       | **111,751** | ** ** | 41,573 |   |
| Earnings from depreciated property sales-share of joint venture     | ** ** | **(3**                 | **)**       | (280                  | )          | **1,828** | ** ** | 8,082 |   |
| Net income available for common unitholders                         | ** ** | **$**                  | **57,061**  | ** **            | $          | 67,970 |   | **$** | **170,259** | ** ** | $ | 104,746 |   |

 

 

10

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The assets for each of the reportable segments as of September 30, 2007and December 31, 2006, respectively, are as follows (in thousands):

 

| ** **           | ** ** | **September 30,** | ** **    | **December 31,** | ** ** |
|----------------------|------------|-------------------|---------------|------------------|------------|
| ** **           | ** ** | **2007**          | ** **    | **2006**         | ** ** |
| Assets               |       |              |          |             |       |
| Rental  Operations:  |       |              |          |             |       |
| Office               | ** ** | **$**             | **3,890,873** |             | $          | 4,061,806 |   |
| Industrial           | ** ** | **2,099,009**     |          | 1,942,992        |       |
| Service Operations   | ** ** | **349,163**       |          | 301,886          |       |
| Total Segment Assets | ** ** | **6,339,045**     |          | 6,306,684        |       |
| Non-Segment Assets   | ** ** | **1,076,911**     |          | 931,520          |       |
| Consolidated Assets  | ** ** | **$**             | **7,415,956** |             | $          | 7,238,204 |   |

 

In addition to revenues and FFO, we also review our recurring capitalexpenditures in measuring the performance of our individual Rental Operationssegments. These recurring capital expenditures consist of tenant improvements,leasing commissions and building improvements. We review these expenditures todetermine the costs associated with re-leasing vacant space and maintaining thecondition of our properties. Our recurring capital expenditures by segment are summarizedas follows for the nine months ended September 30, 2007 and 2006,respectively  (in thousands):

 

| ** **                      | ** ** | **Nine Months Ended** | ** ** |
|---------------------------------|------------|-----------------------|------------|
| ** **                      | ** ** | **September 30,**     | ** ** |
| ** **                      | ** ** | **2007**              | ** ** | **2006** | ** ** |
| Recurring  Capital Expenditures |       |                  |       |   |   |
| Office                          | ** ** | **$**                 | **50,079** |   | $ | 42,035 |   |
| Industrial                      | ** ** | **10,383**            |       | 9,672 |   |
| Non-segment                     | ** ** | **190**               |       | 347 |   |
| Total                           | ** ** | **$**                 | **60,652** |   | $ | 52,054 |   |
|                            |       |                  |       |   |   |

**8.             Discontinued Operations**

 

We classified the operations of67 buildings as discontinued operations as of September 30, 2007. These 67buildings consist of 32 industrial and 35 office properties. Of theseproperties, 30 were sold during the first nine months of 2007, 21 were soldduring 2006 and 16 operating properties are classified as held-for-sale atSeptember 30, 2007.

 

The following table illustrates the operations ofthe buildings reflected in discontinued operations for the three and ninemonths ended September 30, 2007 and 2006, respectively (in thousands):

 
| ** **                                                 | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                 | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** |
| ** **                                                 | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
| Statement of Operations:                                   |       |                   |       |                  |       |   |   |   |   |
| Revenues                                                   | ** ** | **$**                  | **7,088**  |                  | $          | 17,482 | ** ** | **$** | **32,949** |   | $ | 59,964 |   |
| Expenses:                                                  |       |                   |       |                  |       |   |   |   |   |
| Operating                                                  | ** ** | **3,080**              |       | 6,780                 | ** ** | **14,022** |   | 21,645 |   |
| Interest                                                   | ** ** | **2,045**              |       | 3,776                 | ** ** | **8,690** |   | 10,858 |   |
| Depreciation and  Amortization                             | ** ** | **95**                 |       | 4,931                 | ** ** | **5,368** |   | 16,489 |   |
| General and  Administrative                                | ** ** | **17**                 |       | 46                    | ** ** | **41** |   | 97 |   |
|                                                       |       |                   |       |                  |       |   |   |   |   |
| Income from  discontinued operations, before gain on sales | ** ** | **1,851**              |       | 1,949                 | ** ** | **4,828** |   | 10,875 |   |
| Gain on sale of  property                                  | ** ** | **39,670**             |       | 43,735                | ** ** | **111,751** |   | 45,739 |   |
| Income from  discontinued operations                       | ** ** | **$**                  | **41,521** |                  | $          | 45,684 | ** ** | **$** | **116,579** |   | $ | 56,614 |   |

 

 

11

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At September 30, 2007, weclassified 16 properties as held-for-sale and included in discontinuedoperations. Additionally, we have classified 13 in-service properties asheld-for-sale, but have included the results of operations of these propertiesin continuing operations, either based on our present intention to sell themajority of our ownership interest in the properties to entities in which wewill retain a minority equity ownership interest or because the results ofoperations for the properties are immaterial. The following table illustratesthe aggregate balance sheet of the aforementioned properties included indiscontinued operations, as well as the 13 held-for-sale properties whoseresults are included in continuing operations, at September 30, 2007 (inthousands):

 
| ** **                       | ** ** | **Properties    Included in Discontinued Operations** | ** ** | **Properties    Included in Continuing Operations** | ** ** | **Total   Held-for-Sale Properties** | ** ** |
|----------------------------------|------------|-------------------------------------------------------|------------|-----------------------------------------------------|------------|--------------------------------------|------------|
| Balance Sheet:                   |       |                                                  |       |                                                |       |                                 |       |
| Real estate investments, net     |       | $                                                     | 133,895    |                                                | $          | 193,064                              |       | $ | 326,959 |   |
| Other assets                     |       | 9,810                                                 |       | 14,490                                              |       | 24,300                               |       |
| Total assets                     |       | $                                                     | 143,705    |                                                | $          | 207,554                              |       | $ | 351,259 |   |
|                             |       |                                                  |       |                                                |       |                                 |       |
| Accrued expenses                 |       | $                                                     | 2,762      |                                                | $          | 633                                  |       | $ | 3,395 |   |
| Other liabilities                |       | 1,021                                                 |       | 7,759                                               |       | 8,780                                |       |
| Secured debt                     |       | —                                                |       | 25,751                                              |       | 25,751                               |       |
| Total  liabilities held-for-sale |       | $                                                     | 3,783      |                                                | $          | 34,143                               |       | $ | 37,926 |   |

 

We allocate interest expense to discontinuedoperations and have included such interest expense in computing net income fromdiscontinued operations. Interest expense allocable to discontinued operationsincludes interest on any debt on secured properties included in discontinuedoperations and an allocable share of our consolidated unsecured interestexpense for unencumbered properties. The allocation of unsecured interestexpense to discontinued operations was based upon the gross book value of thediscontinued operations unencumbered population as it related to our entireunencumbered population.

 

**9.             Financial Instruments**

 

We are exposed tocapital market risk, such as changes in interest rates. In order to reduce thevolatility relating to interest rate risk, we may enter into interest ratehedging arrangements from time to time. We do not utilize derivative financialinstruments for trading or speculative purposes.

 

In August 2005, weentered into $300.0 million of cash flow hedges through forward-startinginterest rate swaps to hedge interest rates on $300.0 million of estimated debtofferings in 2007. The swaps qualified for hedge accounting, with any change infair value recorded in Accumulated Other Comprehensive Income (“OCI”). Inconjunction with the September 2007 issuance of $300.0 million of seniorunsecured notes (Note 4), we terminated these cash flow hedges asdesignated.  The settlement amountreceived of $10.7 million will be recognized to earnings through interestexpense over the term of the hedged cash flows. The ineffective portion of the hedge was insignificant.

 

In July 2007, weentered into a $21.0 million cash flow hedge through an interest rate swap tofix the rate on $21.0 million of floating rate term debt, issued by one of ourconsolidated majority owned subsidiaries, which matures in July 2011.  The swap qualifies for hedge accounting, withany changes in fair value recorded in OCI. At September 30, 2007 the fair value of this swap was approximately$585,000 in a liability position.

 

The effectivenessof our hedges will be evaluated throughout their lives using the hypotheticalderivative method under which the change in fair value of the actual swapdesignated as the hedging instrument is compared to the change in fair value ofa hypothetical swap.

 

12

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**10.          Recent Accounting Pronouncements**

 

We adoptedFinancial Accounting Standards Board (“FASB”) Interpretation No. 48, *Accounting for Uncertainty in Income Taxes, anInterpretation of FASB Statement No. 109* (“FIN 48”), on January 1,2007.  The adoption of FIN 48 resulted inan additional tax exposure of approximately $1.7 million recorded as anadjustment to the opening balance of Distributions in Excess of Net Income. Ouruncertain tax positions are immaterial both individually and in the aggregateprimarily due to the General Partner’s tax status as a REIT.

 

In September 2006,the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157, *Fair Value Measurements*(“SFAS 157”)*.* SFAS 157 defines fair value, establishes a framework for measuring fairvalue in accordance with GAAP and expands disclosure about fair valuemeasurements. SFAS No. 157 is effective for fiscal years beginning afterNovember 15, 2007. Management is currently evaluating the impact of adoptingthis statement.

 

In January 2007,the FASB issued SFAS No. 159, *The Fair ValueOptions for Financial Assets and Financial Liabilities*(“SFAS 159”).  SFAS 159 provides a “Fair Value Option” underwhich a company may irrevocably elect fair value as the initial and subsequentmeasurement attribute for certain financial assets and liabilities.  This Fair Value Option will be available on acontract-by-contract basis with changes in fair value recognized in earnings asthose changes occur. The effective date for SFAS 159 is the beginning of eachreporting entity’s first fiscal year end that begins after November 15,2007.  We do not expect to elect the FairValue Option for any of our financial assets or liabilities.

 

**11.          Subsequent Events**

 

*Declarationof Distributions*

 

The GeneralPartners’s board of directors declared the following dividends at its October31, 2007, regularly scheduled board meeting:

 
| **Class**                        | ** ** | **Quarterly  Amount/Unit** | ** ** | **Record  Date** | ** **        | **Payment  Date** | ** **        |
|----------------------------------|------------|----------------------------|------------|------------------|-------------------|-------------------|-------------------|
| Common                           |       | $                          | 0.48       |             | November 14, 2007 |              | November 30, 2007 |   |
| Preferred (per depositary unit:) |       |                       |       |             |              |              |              |
| Series J                         |       | $                          | 0.414063   |             | November 16, 2007 |              | November 30, 2007 |   |
| Series K                         |       | $                          | 0.406250   |             | November 16, 2007 |              | November 30, 2007 |   |
| Series L                         |       | $                          | 0.412500   |             | November 16, 2007 |              | November 30, 2007 |   |
| Series M                         |       | $                          | 0.434375   |             | December 17, 2007 |              | December 31, 2007 |   |
| Series N                         |       | $                          | 0.453125   |             | December 17, 2007 |              | December 31, 2007 |   |

 

 

*Issuance of the General Partner’s Common Stock*

 

In October 2007, the General Partner issued 7.0 million shares of itscommon stock for net proceeds of $232.7 million.  The net proceeds of the offering were used topartially pay down our $1.0 billion unsecured line of credit.

 

*Redemption of Series B Cumulative Redeemable PreferredShares*

 

In October 2007, the General Partner redeemed all of the outstandingshares of its 7.990% Series B Cumulative Redeemable Preferred Stock at aliquidation amount of $132.3 million.

 

 

13

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**Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations**

 

**Cautionary Statement Regarding Forward Looking Statements**

 

Certain statements contained in this Report, including, withoutlimitation, those related to our future operations, constitute “forward-lookingstatements” within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, asamended.  The words “believe,” “estimate,”“expect,” “anticipate,” “intend,” “plan,” “seek,” “may,” and similarexpressions or statements regarding future periods are intended to identifyforward-looking statements. These forward-looking statements involve known andunknown risks, uncertainties and other important factors that could cause ouractual results, performance or achievements, or industry results, to differmaterially from any predictions of future results, performance or achievementsthat we express or imply in this Report. Some of the risks, uncertainties andother important factors that may affect future results include, among others:

 

•                 Changes in generaleconomic and business conditions, including the performance of financialmarkets;

•                 The General Partner’scontinued qualification as a real estate investment trust, or “REIT”, for U.S.federal income tax purposes;

•                 Heightenedcompetition for tenants and potential decreases in property occupancy;

•                 Potential increasesin real estate construction costs;

•                 Potential changesin the financial markets and interest rates;

•                 Our continuingability to raise funds on favorable terms through the issuance of debt andequity in the capital markets;

•                 Our ability to successfullyidentify, acquire, develop and/or manage properties on terms that are favorableto us;

•                 Our ability tosuccessfully dispose of properties on terms that are favorable to us;

•                 Inherent risks inthe real estate business, including, but not limited to, tenant defaults,potential liability relating to environmental matters and liquidity of realestate investments; and

•                 Other risks anduncertainties described herein, as well as those risks and uncertaintiesdiscussed from time to time in our other reports and filings with theSecurities and Exchange Commission (“SEC”).

 

This list of risks and uncertainties, however, is only a summary ofsome of the most important factors and is not intended to be exhaustive.Additional information regarding risk factors that may affect us is includedunder the caption “Risk Factors” in our Annual Report on Form 10-K for thefiscal year ended December 31, 2006, which we filed with the SEC on March 13,2007, and is updated by us from time to time in Quarterly Reports on Form 10-Qand other public filings.

 

Although we presently believe that the plans, expectations and resultsexpressed in or suggested by the forward-looking statements are reasonable, allforward-looking statements are inherently subjective, uncertain and subject tochange, as they involve substantial risks and uncertainties beyond our control.New factors emerge from time to time, and it is not possible for us to predictthe nature, or assess the potential impact, of each new factor on our business.Given these uncertainties, we caution you not to place undue reliance on theseforward-looking statements. We undertake no obligation to update or revise anyof our forward-looking statements for events or circumstances that arise afterthe statement is made, except as otherwise may be required by law.

 

 

14

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**Business Overview**

 

We are a limited partnership formed under the laws of the State ofIndiana in 1993.  We own and operate aportfolio primarily consisting of industrial and office properties and providereal estate services to third-party owners. We conduct our Service Operations through Duke Realty Services, LLC,Duke Realty Services Limited Partnership and Duke Construction LimitedPartnership. As of September 30, 2007, we:

 

•                 Owned or jointlycontrolled 723 industrial, office and retail properties (including propertiesunder development), consisting of approximately 119.8 million square feet; and

•                 Owned or jointlycontrolled more than 7,600 acres of land with an estimated future developmentpotential of more than 112 million square feet of industrial, office and retailproperties.

 

We provide the following services for our properties and for certainproperties owned by third parties and joint ventures:

•                 Property leasing;

•                 Propertymanagement;

•                 Construction;

•                 Development; and

•                 Othertenant-related services.

 

**Acquisitions**

 

In February 2007,we completed the acquisition of Bremner Healthcare Real Estate (“Bremner”), anational health care development and management firm. The primary reason forthe acquisition was to expand our development capabilities within the healthcare real estate market.

 

The initialconsideration paid to the sellers totaled $47.1 million, and the sellers may beeligible for further contingent payments over the next three years.

 

Approximately $39.1million of the total purchase price is allocated to goodwill, which isattributable to the value of Bremner’s overall development capabilities and itsin-place workforce.

 

**Key Performance Indicators**

 

Our operating results depend primarily upon rental income from ouroffice and industrial properties (“Rental Operations”). The followinghighlights the areas of Rental Operations that we consider critical for futurerevenue growth. All square footage totals and occupancy percentages reflectboth wholly owned properties and properties in joint ventures.

 

***Occupancy Analysis:*** Our ability tomaintain favorable occupancy rates is a principal driver of our results ofoperations. The following table sets forth occupancy information regarding ourin-service portfolio of rental properties (excluding in-service propertiesdeveloped or acquired with the intent to sell — “Service Operations Buildings”)as of September 30, 2007 and 2006, respectively (in thousands, exceptpercentage data):

 
| ** **     | ** ** | **Total  Square Feet** | ** ** | **Percent of   Total Square Feet** | ** ** | **Percent Occupied** | ** ** |
|----------------|------------|------------------------|------------|------------------------------------|------------|----------------------|------------|
| **Type**       | ** ** | **2007**               | ** ** | **2006**                           | ** ** | **2007**             | ** ** | **2006** | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Industrial** | ** ** | **75,225**             |       | 73,248                             | ** ** | **69.5**             | **%**      | 69.0 | % | 94.6 | % | 93.2 | % |
| **Office**     | ** ** | **31,688**             |       | 32,170                             | ** ** | **29.2**             | **%**      | 30.3 | % | 91.0 | % | 91.0 | % |
| **Other**      | ** ** | **1,378**              |       | 745                                | ** ** | **1.3**              | **%**      | 0.7 | % | 90.7 | % | 96.9 | % |
| Total          | ** ** | **108,291**            |       | 106,163                            | ** ** | **100.0**            | **%**      | 100.0 | % | 93.5 | % | 92.5 | % |

 

 

15

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***Lease Expiration and Renewal:*** Our ability tomaintain and grow occupancy rates primarily depends upon our continuing abilityto re-lease expiring space.******The following table reflects our in-service lease expirationschedule by property type as of September 30, 2007. The table indicates squarefootage and annualized net effective rents (based on September 2007 rentalrevenue) under expiring leases (in thousands, except percentage data):

 
| ** **                   | ** ** | **Total  Portfolio** | ** ** | **Industrial**              | ** ** | **Office**        | ** ** | **Other**        | ** ** |
|------------------------------|------------|----------------------|------------|-----------------------------|------------|-------------------|------------|------------------|------------|
| **Year of  Expiration**      | ** ** | **Square  Feet**     | ** ** | **Ann. Rent  Revenue** | ** ** | **% of  Revenue** | ** ** | **Square  Feet** | ** ** | **Ann. Rent  Revenue** | ** ** | **Square  Feet** | ** ** | **Ann. Rent  Revenue** | ** ** | **Square  Feet** | ** ** | **Ann. Rent  Revenue** | ** ** |
| 2007                         |       | 2,580                |       | $                           | 13,597     |              | 2          | %                | 2,130      |   | $ | 8,075 |   | 405 |   | $ | 4,953 |   | 45 |   | $ | 569 |   |
| 2008                         |       | 12,358               |       | 69,195                      |       | 9                 | %          | 9,606            |       | 35,501 |   | 2,724 |   | 33,295 |   | 28 |   | 399 |   |
| 2009                         |       | 11,524               |       | 74,835                      |       | 11                | %          | 8,287            |       | 33,313 |   | 3,177 |   | 40,931 |   | 60 |   | 591 |   |
| 2010                         |       | 12,938               |       | 98,818                      |       | 14                | %          | 8,660            |       | 38,755 |   | 4,263 |   | 59,876 |   | 15 |   | 187 |   |
| 2011                         |       | 13,538               |       | 85,246                      |       | 12                | %          | 10,107           |       | 38,743 |   | 3,364 |   | 45,442 |   | 67 |   | 1,061 |   |
| 2012                         |       | 10,589               |       | 74,873                      |       | 11                | %          | 7,159            |       | 28,149 |   | 3,386 |   | 45,868 |   | 44 |   | 856 |   |
| 2013                         |       | 8,589                |       | 74,965                      |       | 11                | %          | 4,752            |       | 20,335 |   | 3,785 |   | 53,812 |   | 52 |   | 818 |   |
| 2014                         |       | 6,380                |       | 37,698                      |       | 5                 | %          | 4,914            |       | 18,089 |   | 1,431 |   | 19,071 |   | 35 |   | 538 |   |
| 2015                         |       | 7,353                |       | 55,841                      |       | 8                 | %          | 5,165            |       | 19,811 |   | 2,188 |   | 36,030 |   | — |   | — |   |
| 2016                         |       | 3,949                |       | 26,890                      |       | 4                 | %          | 2,847            |       | 10,427 |   | 887 |   | 13,964 |   | 215 |   | 2,499 |   |
| 2017 and  Thereafter         |       | 11,447               |       | 88,150                      |       | 13                | %          | 7,531            |       | 31,081 |   | 3,227 |   | 47,501 |   | 689 |   | 9,568 |   |
| Total Leased                 |       | 101,245              |       | $                           | 700,108    |              | 100        | %                | 71,158     |   | $ | 282,279 |   | 28,837 |   | $ | 400,743 |   | 1,250 |   | $ | 17,086 |   |
| Total Portfolio Square  Feet |       | 108,291              |       |                        |       |              |       | 75,225           |       |   |   | 31,688 |   |   |   | 1,378 |   |   |   |
|                         |       |                 |       |                        |       |              |       |             |       |   |   |   |   |   |   |   |   |   |   |
| Percent Occupied             |       | 93.5                 | %          |                        |       |              |       | 94.6             | %          |   |   | 91.0 | % |   |   | 90.7 | % |   |   |

 

Note:  Excludes Service OperationsBuildings.

 

We renewed 80.8% and 81.9% of our leases up for renewal in the threeand nine months ended September 30, 2007, totaling approximately 2.9 millionand 8.5 million square feet, respectively. This compares to renewals of 79.6%and 78.9% for the three and nine months ended September 30, 2006, totalingapproximately 1.9 million and 5.7 million square feet, respectively. Weattained 7.6% and 5.3% growth in net effective rents on these renewals in thethree and nine months ended September 30, 2007, respectively.

 

The average term of renewals for the three and nine months endedSeptember 30, 2007 was 3.0 and 3.9 years, respectively, compared to an averageterm of 4.7 and 3.9 years for the three and nine months ended September 30,2006, respectively.

 

***Future Development: ***Another source of growth in earnings isthe development of additional properties. These properties should providefuture earnings through income upon sale or from Rental Operations growth asthey are placed in service. We had 16.6 million square feet of property underdevelopment with total estimated costs of $1.3 billion at September 30, 2007,compared to 11.4 million square feet with total estimated costs of $1.1 billionat September 30, 2006.

 

 

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The followingtable summarizes our properties under development as of September 30, 2007 (inthousands, except percentage data):

 

| **Anticipated  In-Service Date** | ** ** | ** ** | **Square  Feet** | ** ** | **Percent  Leased** | ** ** | **Total  Estimated Project Costs** | ** ** | **Anticipated  Stabilized Return** | ** ** |
|----------------------------------|------------|------------|------------------|------------|---------------------|------------|------------------------------------|------------|------------------------------------|------------|
| Held-for-Rental Buildings:       |       |       |             |       |                |       |                               |       |                               |
| 4th Quarter 2007                 |       | 3,917      |             | 16%        |                | $          | 282,789                            |       | 9.38%                              |       |
| 1st Quarter 2008                 |       | 5,493      |             | 14%        |                | 282,511    |                               | 8.99%      |                               |
| 2nd Quarter 2008                 |       | 1,391      |             | 46%        |                | 97,798     |                               | 8.93%      |                               |
| Thereafter                       |       | 660        |             | 61%        |                | 109,714    |                               | 9.44%      |                               |
|                             |       | 11,461     |             | 21%        |                | $          | 772,812                            |       | 9.19%                              |       |
| Service Operations Buildings:    |       |       |             |       |                |       |                               |       |                               |
| 4th Quarter 2007                 |       | 1,469      |             | 49%        |                | $          | 223,352                            |       | 8.27%                              |       |
| 1st Quarter 2008                 |       | 585        |             | 31%        |                | 30,651     |                               | 8.77%      |                               |
| 2nd Quarter 2008                 |       | 1,044      |             | 88%        |                | 86,925     |                               | 8.08%      |                               |
| Thereafter                       |       | 2,047      |             | 79%        |                | 209,502    |                               | 8.51%      |                               |
|                             |       | 5,145      |             | 67%        |                | $          | 550,430                            |       | 8.36%                              |       |
| Total                            |       | 16,606     |             | 35%        |                | $          | 1,323,242                          |       | 8.85%                              |       |

 

***Acquisition and Disposition Activity:*******We continued to selectively dispose of non-strategic properties duringthe nine months ended September 30, 2007. Gross sales proceeds related to thedispositions of wholly owned held-for-rental properties were $317.4 million forthe nine months ended September 30, 2007, which included the disposition of aportfolio of eight office properties in the Cleveland market and a portfolio oftwelve industrial properties in the St. Louis market. Our share of proceedsfrom sales of properties within unconsolidated joint ventures, in which we havea less than 100% interest, totaled $13.4 million for the nine months endedSeptember 30, 2007. For the nine months ended September 30, 2006, proceedstotaled $126.5 million for the disposition of wholly owned held-for-rentalproperties and $72.6 million for our share of property sales fromunconsolidated joint ventures. Dispositions of wholly owned propertiesdeveloped for sale rather than rental resulted in $85.0 million in proceeds forthe nine months ended September 30, 2007, compared to $39.0 million for thesame period in 2006.

 

For the nine months ended September 30, 2007,in addition to the acquisition of Bremner, we acquired $47.4 million of incomeproducing properties and also acquired $156.8 million of undeveloped land,compared to acquisitions of $963.9 million of income producing properties and$366.2 million of undeveloped land in the nine months ended September 30, 2006.

 

**Funds From Operations**

 

Funds From Operations (“FFO”) is used by industry analysts andinvestors as a supplemental operating performance measure of an equity REITlike our General Partner. FFO is calculated in accordance with the definitionthat was adopted by the Board of Governors of the National Association of RealEstate Investment Trusts (“NAREIT”). NAREIT created FFO as a supplementalmeasure of REIT operating performance that excludes historical costdepreciation, among other items, from net income determined in accordance withU.S. generally accepted accounting principles (“GAAP”). FFO is a non-GAAPfinancial measure developed by NAREIT to compare the operating performance ofREITs. The most comparable GAAP measure is net income (loss).  FFO should not be considered as a substitutefor net income or any other measures derived in accordance with GAAP and maynot be comparable to other similarly titled measure of other companies.

 

 

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Historical cost accounting for real estate assets in accordance withGAAP implicitly assumes that the value of real estate assets diminishespredictably over time. Since real estate values instead have historically risenor fallen with market conditions, many industry analysts and investors haveconsidered presentation of operating results for real estate companies that usehistorical cost accounting to be insufficient by themselves. FFO, as defined byNAREIT, represents GAAP net income (loss), 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 estatedepreciation and amortization, and after similar adjustments for unconsolidatedpartnerships and joint ventures.

 

Management believes that the use of FFO, combined with the requiredprimary GAAP presentations, improves the understanding of operating results ofREITs among the investing public and makes comparisons of REIT operatingresults more meaningful. Management believes FFO is a useful measure forreviewing comparative operating and financial performance (although FFO shouldbe reviewed in conjunction with net income which remains the primary measure ofperformance) because by excluding gains or losses related to sales ofpreviously depreciated operating real estate assets and excluding real estateasset depreciation and amortization, FFO provides a useful comparison of theoperating performance of our real estate between periods or as compared todifferent companies.

 

The following table shows a reconciliation of net income available forcommon unitholders to the calculation of FFO for the three and nine monthsended September 30, 2007 and 2006, respectively (in thousands):

 
| ** **                                                               | ** ** | **Three Months Ended** | ** ** | **Nine Months Ended** | ** ** |
|--------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                               | ** ** | **September 30,**      | ** ** | **September 30,**     | ** ** |
| ** **                                                               | ** ** | **2007**               | ** ** | **2006**              | ** ** | **2007** | ** ** | **2006** | ** ** |
| Net income  available for common unitholders                             | ** ** | **$**                  | **57,061** | ** **            | $          | 67,970 |   | **$** | **170,259** | ** ** | $ | 104,746 |   |
| Adjustments:                                                             |       |                   | ** ** |                  |       |   | ** ** |   |   |
| Depreciation and  amortization                                           | ** ** | **72,076**             | ** ** | 64,363                |       | **208,222** | ** ** | 190,112 |   |
| Partnership’s  share of joint venture depreciation and amortization | ** ** | **10,473**             | ** ** | 4,568                 |       | **21,020** | ** ** | 13,695 |   |
| Earnings from  depreciable property sales -wholly owned                  | ** ** | **(39,670**            | **)**      | (39,537               | )          | **(111,751** | **)** | (41,573 | ) |
| Earnings from  depreciable property sales -share of joint venture        | ** ** | **3**                  | ** ** | 280                   |       | **(1,828** | **)** | (8,082 | ) |
|                                                                     | ** ** | ** **             | ** ** |                  |       | ** ** | ** ** |   |   |
| **Funds  From Operations**                                               | ** ** | **$**                  | **99,943** | ** **            | $          | 97,644 |   | **$** | **285,922** | ** ** | $ | 258,898 |   |

 

 

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**Results of Operations**

 

A summary of our operating results and property statistics for thethree and nine months ended September 30, 2007 and 2006, respectively, is asfollows (in thousands, except number of properties and per unit data):

 
| ** **                                                               | ** ** | **Three Months Ended  September 30,** | ** **  | **Nine Months Ended  September 30,** | ** ** |
|--------------------------------------------------------------------------|------------|---------------------------------------|-------------|--------------------------------------|------------|
| ** **                                                               | ** ** | **2007**                              | ** **  | **2006**                             | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                                                     | ** ** | ** **                            | ** **  | ** **                           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Rental Operations  revenue from Continuing Operations                    | ** ** | **$**                                 | **203,214** |                                 | $          | 196,055 | ** ** | **$** | **606,042** |   | $ | 574,448 |   |
| Service Operations  revenues from Continuing Operations                  | ** ** | **20,273**                            |        | 22,474                               | ** ** | **57,042** |   | 42,198 |   |
| Earnings from  Continuing Rental Operations                              | ** ** | **19,260**                            |        | 26,484                               | ** ** | **71,624** |   | 87,684 |   |
| Earnings from  Continuing Service Operations                             | ** ** | **7,301**                             |        | 10,551                               | ** ** | **26,253** |   | 18,477 |   |
| Operating income                                                         | ** ** | **22,714**                            |        | 30,275                               | ** ** | **69,965** |   | 78,519 |   |
| Net income available  for common unitholders                             | ** ** | **57,061**                            |        | 67,970                               | ** ** | **170,259** |   | 104,746 |   |
| Weighted average Common  Units outstanding                               | ** ** | **146,752**                           |        | 148,328                              | ** ** | **146,670** |   | 148,259 |   |
| Weighted average Common  Units and potential dilutive common equivalents | ** ** | **147,651**                           |        | 150,947                              | ** ** | **147,986** |   | 149,472 |   |
| Basic income per Common  Unit:                                           |       |                                  |        |                                 |       |   |   |   |   |
| Continuing  operations                                                   | ** ** | **$**                                 | **.11**     |                                 | $          | .15 | ** ** | **$** | **.36** |   | $ | .33 |   |
| Discontinued  operations                                                 | ** ** | **$**                                 | **.28**     |                                 | $          | . 31 | ** ** | **$** | **.80** |   | $ | .38 |   |
| Diluted income per  Common Unit:                                         |       |                                  |        |                                 |       |   |   |   |   |
| Continuing  operations                                                   | ** ** | **$**                                 | **.11**     |                                 | $          | .15 | ** ** | **$** | **.36** |   | $ | .32 |   |
| Discontinued  operations                                                 | ** ** | **$**                                 | **.28**     |                                 | $          | .30 | ** ** | **$** | **.79** |   | $ | .38 |   |
|                                                                     |       |                                  |        |                                 |       |   |   |   |   |
| Number of in-service  properties at end of period                        | ** ** | **682**                               |        | 705                                  | ** ** | **682** |   | 705 |   |
| In-service square  footage at end of period                              | ** ** | **108,291**                           |        | 106,163                              | ** ** | **108,291** |   | 106,163 |   |

 

 

**Comparison of Three Months Ended September 30, 2007 to Three MonthsEnded September 30, 2006**

 

Rental Income From Continuing Operations

 

Overall, rental income from continuing operationsincreased from $192.6 million for the quarter ended September 30, 2006 to$201.4 million for the same period in 2007. The following table reconcilesrental income from continuing operations by reportable segment to our totalreported rental income from continuing operations for the three months endedSeptember 30, 2007 and 2006, respectively (in thousands):

 

| ** **     | ** ** | **2007**   | ** **  | **2006** | ** ** |
|----------------|------------|------------|-------------|----------|------------|
| Rental  Income |       |       |        |     |       |
| Office         | ** ** | **$**      | **140,858** |     | $          | 139,260 |   |
| Industrial     | ** ** | **52,741** |        | 50,755   |       |
| Non-segment    | ** ** | **7,777**  |        | 2,548    |       |
| Total          | ** ** | **$**      | **201,376** |     | $          | 192,563 |   |

 

The following factors contributed to these results:

 

•                  Lease termination fees increased from $5.2 million in the third quarterof 2006 to $9.5 million in the third quarter of 2007.

•                  We acquired 34 properties and placed 56 developments in service fromJanuary 1, 2006 to September 30, 2007 that provided incremental revenues of$15.4 million in the third quarter of 2007, as compared to the same period in2006.

•                  We acquired an additional 30 properties during 2006 and latercontributed them to an unconsolidated joint venture, resulting in a $15.9million reduction in revenues in the third quarter of 2007, as compared to thesame period in 2006. Of these properties, 23 were contributed in the fourthquarter of 2006 and seven were contributed in the second quarter of 2007.

•                  The remaining net increase in rental revenues in the third quarter of2007 is primarily the result of an increase in average occupancy from the thirdquarter of 2006 as well as a $5.5 million increase in revenue from reimbursablerental expenses.

 

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Rental Expenses and Real Estate Taxes

 

The followingtable reconciles rental expenses and real estate taxes by reportable segment toour total reported amounts in the statement of operations for the three monthsended September 30, 2007 and 2006, respectively (in thousands):

 

| ** **          | ** ** | **2007**  | ** ** | **2006** | ** ** |
|---------------------|------------|-----------|------------|----------|------------|
| Rental Expenses:    |       |      |       |     |       |
| Office              | ** ** | **$**     | **36,797** |     | $          | 36,656 |   |
| Industrial          | ** ** | **5,385** |       | 4,461    |       |
| Non-segment         | ** ** | **2,651** |       | 876      |       |
| Total               | ** ** | **$**     | **44,833** |     | $          | 41,993 |   |
|                |       |      |       |     |       |
| Real Estate  Taxes: |       |      |       |     |       |
| Office              | ** ** | **$**     | **16,319** |     | $          | 14,108 |   |
| Industrial          | ** ** | **6,710** |       | 5,938    |       |
| Non-segment         | ** ** | **1,721** |       | 1,275    |       |
| Total               | ** ** | **$**     | **24,750** |     | $          | 21,321 |   |

 

The overall $2.8million increase in rental expenses was primarily driven by an increase inutilities across all of our markets due to unseasonably high temperatures. Inaddition, we had a $2.8 million increase in rental expenses in the thirdquarter of 2007, as compared to the same period in 2006, from propertiesacquired and developments placed in service from January 1, 2006 to September30, 2007, which was largely offset by a $3.2 million reduction in rentalexpenses resulting from the contribution of 30 properties to an unconsolidatedjoint venture since Spetember 30, 2006.

 

Of the overall$3.4 million increase in real estate taxes in the third quarter of 2007, ascompared to the same period in 2006, $1.6 million was attributable toproperties acquired and developments placed in service from January 1, 2006 toSeptember 30, 2007. The remaining increase in real estate taxes was driven byincreases in assessments by municipal authorities in some of our markets.

 

Interest Expense

 

Interest expensedecreased from $46.8 million in the third quarter of 2006 to $42.4 million inthe third quarter of 2007 largely as the result of increased developmentactivities, leading to the capitalization of more interest expense.  Also contributing to the decrease in interestexpense was the favorable rate on our $575.0 million of 3.75% ExchangeableSenior Notes that were issued in November 2006. The above decreases are both offset to some extent by increased interestexpense from an overall increase in the level of outstanding borrowings sinceSeptember 30, 2006.

 

Depreciation and Amortization

 

Depreciation and amortization expense increased from $59.4 millionduring the third quarter of 2006 to $72.0 million for the same period in 2007due to increases in our held-for-rental asset base from acquisitions anddevelopments during 2006 and 2007.

 

Service Operations

 

Service Operationsprimarily consist of sales of properties developed or acquired with the intentto sell within a short period of time and the leasing, management, constructionand development services for joint venture properties and properties owned bythird parties. These operations are heavily influenced by the current state ofthe economy, as leasing and management fees are dependent upon occupancy whileconstruction and development services rely on the expansion of businessoperations. Service Operations earnings decreased from $10.6 million for thethree months ended September 30, 2006 to $7.3 million for the three monthsended September 30, 2007, primarily due to the sale of only one propertyresulting in a pre-tax gain of $1.4 million in the three months ended September30, 2007, compared to one such building sale included in continuing operationswith a pre-tax gain of $6.6 million during the same period in 2006.

 

 

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General and Administrative Expense

 

General andadministrative expenses decreased from $6.8 million for the three months endedSeptember 30, 2006 to $3.8 million for the same period in 2007. General andadministrative expenses are comprised of two components. The first component isdirect expenses that are not attributable to specific assets such as legalfees, external audit fees, marketing costs, investor relations expenses andother corporate overhead. The second component is the unallocated overheadcosts associated with the operation of our owned properties and ServiceOperations, including construction, leasing and maintenance operations. Thoseoverhead costs not allocated to these operations are charged to general andadministrative expenses.  While there wasan increase in the overall pool of overhead costs necessitated by our overallgrowth, this was offset by a significant increase in the amount of overheadallocated to other areas in 2007, primarily construction and leasing due toincreases in wholly-owned and third-party activity in these areas.

 

Discontinued Operations

 

The results of operations forproperties sold during the year or designated as held-for-sale to unrelatedparties at the end of the period are required to be classified as discontinuedoperations. The property specific components of net earnings that areclassified as discontinued operations include rental revenues, rental expenses,real estate taxes, allocated interest expense and depreciation expense, as wellas the net gain or loss on the disposition of properties.

 

We classified the operations of67 buildings as discontinued operations as of September 30, 2007. These 67buildings consist of 32 industrial and 35 office properties. As a result, weclassified net income (loss) from operations of $1.9 million and $1.9 millionas net income from discontinued operations for each of the three months endedSeptember 30, 2007 and 2006, respectively.

 

Of these properties, 15 weresold during the third quarter of 2007 and 13 were sold during the third quarterof 2006. The gains on disposal of these properties of $39.7 million and $43.7million for the three months ended September 30, 2007 and 2006, respectively,are also reported in discontinued operations.

 

**Comparison of Nine Months Ended September 30, 2007 to Nine Months EndedSeptember 30, 2006**

 

Rental Income From Continuing Operations

 

Overall, rental income from continuing operationsincreased from $553.0 million for the nine months ended September 30, 2006 to$588.6 million for the same period in 2007. The following table reconcilesrental income from continuing operations by reportable segment to our totalreported rental income from continuing operations for the nine months endedSeptember 30, 2007 and 2006, respectively (in thousands):

| ** **    | ** ** | **2007**    | ** **  | **2006** | ** ** |
|---------------|------------|-------------|-------------|----------|------------|
| Rental Income |       |        |        |     |       |
| Office        | ** ** | **$**       | **409,886** |     | $          | 399,938 |   |
| Industrial    | ** ** | **160,761** |        | 144,113  |       |
| Non-segment   | ** ** | **17,917**  |        | 8,950    |       |
| Total         | ** ** | **$**       | **588,564** |     | $          | 553,001 |   |

 

The followingfactors contributed to these results:

 

•                  We acquired 34 properties and placed 56 developments in service fromJanuary 1, 2006 to September 30, 2007 that provided incremental revenues of $46.2million for the first nine months of 2007, as compared to the same period in2006.

 

 

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•                  We acquired an additional 30 properties in the first nine months of2006 and later contributed them to an unconsolidated joint venture, resultingin a $27.5 million reduction in revenues for the nine months ended September30, 2007, as compared to the same period in 2006. Of these properties, 23 werecontributed in the fourth quarter of 2006 and seven were contributed in thesecond quarter of 2007.

•                  The remaining increase in rental revenues from the first nine months of2006 is primarily the result of an increase in average occupancy from the firstnine months of 2006 as well as a $15.1 million increase in revenues fromreimbursable rental expenses.

 

Rental Expensesand Real Estate Taxes

 

The followingtable reconciles rental expenses and real estate taxes by reportable segment toour total reported amounts in the statement of operations for the nine monthsended September 30, 2007 and 2006, respectively (in thousands):

 

| ** **          | ** ** | **2007**   | ** **  | **2006** | ** ** |
|---------------------|------------|------------|-------------|----------|------------|
| Rental Expenses:    |       |       |        |     |       |
| Office              | ** ** | **$**      | **109,317** |     | $          | 106,932 |   |
| Industrial          | ** ** | **17,932** |        | 16,145   |       |
| Non-segment         | ** ** | **6,168**  |        | 1,179    |       |
| Total               | ** ** | **$**      | **133,417** |     | $          | 124,256 |   |
|                |       |       |        |     |       |
| Real Estate  Taxes: |       |       |        |     |       |
| Office              | ** ** | **$**      | **48,707**  |     | $          | 43,222 |   |
| Industrial          | ** ** | **19,301** |        | 16,888   |       |
| Non-segment         | ** ** | **5,215**  |        | 4,018    |       |
| Total               | ** ** | **$**      | **73,223**  |     | $          | 64,128 |   |

 

Of the overall $9.2 million increase in rental expenses in the first ninemonths of 2007, compared to the same period in 2006, $6.9 million wasattributable to properties acquired and developments placed in service fromJanuary 1, 2006 to September 30, 2007. This increase was largely offset by areduction in rental expenses of $4.9 million resulting from the contribution of30 properties to an unconsolidated joint venture since September 30, 2006.Inclement weather conditions in the first quarter of 2007, an increase inutilities in the third quarter of 2007 due to unseasonably high temperaturesand normal inflationary factors triggered the remaining increase in rentalexpenses.

 

Of the overall $9.1 million increase in real estate taxes in the firstnine months of 2007, compared to the same period in 2006, $4.5 million wasattributable to properties acquired and developments placed in service fromJanuary 1, 2006 to September 30, 2007. The remaining increase in real estatetaxes was driven by increases in assessments by municipal authorities in someof our markets.

 

Interest Expense

 

Interest expenseremained consistent at $124.9 million for the nine months ended September 30,2007, compared to $124.8 million for the same period in 2006, due to the offsettingeffects of increased development activities leading to the capitalization ofmore interest expense, the favorable rate on our $575.0 million of 3.75%Exchangeable Senior Notes that were issued in November 2006, and increasedinterest expense from an overall increase in the level of outstandingborrowings since September 30, 2006.

 

Depreciation andAmortization

 

Depreciation and amortization expense increased from $173.6 million forthe first nine months of 2006 to $202.9 million for the same period in 2007 dueto increases in the held-for-rental asset base from acquisitions anddevelopments during 2006 and 2007.

 

 

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Service Operations

 

Service Operationsprimarily consist of sales of properties developed or acquired with the intentto sell within a short period of time and the leasing, management, constructionand development services for joint venture properties and properties owned bythird parties. These operations are heavily influenced by the current state ofthe economy, as leasing and management fees are dependent upon occupancy whileconstruction and development services rely on the expansion of businessoperations. Service Operations earnings increased from $18.5 million for thenine months ended September 30, 2006 to $26.3 million for the nine months endedSeptember 30, 2007, primarily as a result of pre-tax gains on the sale of sixproperties totaling $10.8 million in the nine months ended September 30, 2007compared to one such building sale included in continuing operations with apre-tax gain of $6.6 million during the nine months ended September 30, 2006.

 

General andAdministrative Expense

 

General andadministrative expenses increased slightly from $27.6 million for the ninemonths ended September 30, 2006 to $27.9 million for the same period in 2007.General and administrative expenses are comprised of two components. The firstcomponent is direct expenses that are not attributable to specific assets suchas legal fees, external audit fees, marketing costs, investor relation expensesand other corporate overhead. The second component is the unallocated overheadcosts associated with the operation of our owned properties and ServiceOperations, including construction, leasing and maintenance operations. Thoseoverhead costs not allocated to these operations are charged to general andadministrative expenses. The overall increase in general and administrativeexpenses is a result of an increase in the overall pool of overhead costsnecessitated by our overall growth, largely offset by an increase in the amountof overhead allocated to other areas in 2007, primarily construction andleasing due to increases in wholly-owned and third-party activity in theseareas.

 

Other Income and Expenses

 

We pursueopportunities to dispose of land in markets with a high concentration ofundeveloped land and those markets where the land no longer meets our strategicdevelopment plans.

 

Earnings from sale of land, net of impairment adjustments, arecomprised of the following amounts for the nine months ended September 30, 2007and 2006, respectively (in thousands):

 

| ** **                      | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|
| Gain on land  sales             | ** ** | **$**    | **18,302** |     | $          | 5,737 |   |
| Impairment  adjustment for land | ** ** | **(95**  | )          | (310     | )          |
| Total                           | ** ** | **$**    | **18,207** |     | $          | 5,427 |   |

 

We sold 20 parcelsof undeveloped land in the first nine months of 2007 with overall highermargins than the 17 land sales in the first nine months of 2006.

 

Discontinued Operations

 

The results of operations forproperties sold during the year or designated as held-for-sale to unrelatedparties at the end of the period are required to be classified as discontinuedoperations. The property specific components of net earnings that areclassified as discontinued operations include rental revenues, rental expenses,real estate taxes, allocated interest expense and depreciation expense, as wellas the net gain or loss on the disposition of properties.

 

 

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We classified the operations of67 buildings as discontinued operations as of September 30, 2007. These 67buildings consist of 32 industrial and 35 office properties. As a result, weclassified net income from operations of $4.8 million and $10.9 million as netincome from discontinued operations for the nine months ended September 30,2007 and 2006, respectively.

 

Of these properties, 30 weresold during the first nine months of 2007 and 18 were sold during the firstnine months of 2006. The gains on disposal of these properties of $111.8million and $45.7 million for the nine months ended September 30, 2007 and2006, respectively, are also reported in discontinued operations.

 

**Liquidity and Capital Resources**

 

Sources of Liquidity

 

We expect tocontinue to meet our short-term liquidity requirements over the next 12 months,including payments of dividends anddistributions, as well as recurring capital expenditures relating tomaintaining our current real estate assets, primarily through the following:

 

•            workingcapital;

•            netcash provided by operating activities; and

•            proceedsreceived from real estate dispositions.

 

Although wehistorically have not used any other sources of funds to pay for recurringcapital expenditures on our current real estate investments, we may rely on thetemporary use of borrowings or property disposition proceeds to fund suchexpenditures during periods of high leasing volume.

 

We expect to meet long-term liquidity requirements,such as scheduled mortgage debt maturities, refinancing of long-term debt,Preferred Unit redemptions, the retirement of unsecured notes and amountsoutstanding under the unsecured credit facility, property acquisitions,financing of development activities and other non-recurring capitalimprovements, primarily through the following sources:

 

•            issuanceof additional General Partner equity, including common and preferred shares;

•            issuanceof additional debt securities;

•            undistributedcash provided by operating activities, if any; and

•            proceeds received from real estate dispositions.  

 

### ***RentalOperations***

We believe our principalsource of liquidity, cash flows from Rental Operations, provides a stablesource of cash to fund operational expenses. We believe that this cash-basedrevenue stream is substantially aligned with revenue recognition (except forperiodic straight-line rental income accruals and amortization of above orbelow market rents) as cash receipts from the leasing of rental properties aregenerally received in advance of or a short time following the actual revenuerecognition.

We are subject to risksof decreased occupancy through market conditions, as well as tenant defaultsand bankruptcies, and potential reduction in rental rates upon renewal or re-lettingof properties, each of which would result in reduced cash flow from operations.However, we believe that these risks may be mitigated by our relatively strongmarket presence in most of our locations and the fact that we perform in-housecredit review and analysis on major tenants and all significant leases beforethey are executed.

 

 

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*Debtand Equity Securities*

 

We had oneunsecured line of credit available as of September 30, 2007. Additionally, inJuly 2007, one of our consolidated majority owned subsidiaries entered into alending agreement that included an additional unsecured line of credit. Ourunsecured lines of credit as of September 30, 2007 are described as follows(dollars in thousands):

                                                                                                **                                                         **
| **Description**                                          | ** ** | **Borrowing****Capacity** | ** ** | **Maturity****Date** | ** **   | **Outstanding  Balance   a****t September 30, 2007** | ** ** |
|----------------------------------------------------------|------------|---------------------------|------------|----------------------|--------------|------------------------------------------------------|------------|
| Unsecured Line  of Credit                                |       | $                         | 1,000,000  |                 | January 2010 |                                                 | $          | 302,000 |   |
| Unsecured Line  of Credit — Consolidated Subsidiary |       | $                         | 30,000     |                 | July 2011    |                                                 | $          | 2,224 |   |

 

We useour line of credit to fund development activities, acquire additional rentalproperties and provide working capital. This line of credit provides us with an option to obtain borrowings fromfinancial institutions that participate in the line, at rates lower than thestated interest rate, subject to certain restrictions. Interest rates on theamounts outstanding on the unsecured line of credit as of September 30, 2007range from LIBOR +.16% to LIBOR +.525% (equal to 5.29% and 5.655% as ofSeptember 30, 2007).  Our line of creditalso contains financial covenants that require us to meet financial ratios anddefined levels of performance, including those related to variable rateindebtedness, consolidated net worth and debt-to-market capitalization. As ofSeptember 30, 2007, we were in compliance with all covenants under our line ofcredit.

 

Theconsolidated subsidiary’s unsecured line of credit allows for borrowings up to$30.0 million at a rate of LIBOR + .85%. (equal to 6.04% as of September 30, 2007).  The unsecured line of credit is used to funddevelopment activities within the consolidated subsidiary.  The consolidated subsidiary’s unsecured lineof credit matures on July 27, 2011 with a 12-month extension option.

 

InAugust 2007, we repaid $100.0 million of 7.375% senior unsecured notes on theirscheduled maturity date.

 

InSeptember 2007, we issued $300.0 million of 6.50% senior unsecured notes due inJanuary 2018.  This issuance was hedgedwith an interest rate swap that reduced the effective interest rate to6.16%.  The net proceeds from thatissuance were used to partially pay down the outstanding balance on our $1.0billion unsecured line of credit.

 

At September 30,2007, we had on file with the SEC an automatic shelf registration statement onForm S-3, relating to the offer and sale, from time to time, of anindeterminate amount of debt securities (including guarantees thereof). Fromtime to time, we and the General Partner expect to issue additional securitiesunder this new automatic shelf registration statement to fund development andacquisition of additional rental properties and to fund the repayment of thecredit facility and other long-term debt upon maturity.

 

The indentures(and related supplemental indentures) governing our outstanding series of notesalso require us to comply with financial ratios and other covenants regardingour operations. We were in compliance with all such covenants as of September30, 2007.

 

*Saleof Real Estate Assets*

 

We utilize salesof real estate assets as an additional source of liquidity. We pursueopportunities to sell real estate assets at favorable prices to capture valuecreated by us, as well as to improve the overall quality of our portfolio byrecycling sales proceeds into new properties with greater value creationopportunities.

 

 

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Uses of Liquidity

 

Our principal usesof liquidity include the following:

 

•                 property investments;

•                 recurring leasing/capital costs;

•                 distributions to unitholders;

•                 long-term debt maturities; and

•                 other contractual obligations.

 

*PropertyInvestment*

We evaluatedevelopment and acquisition opportunities based upon market outlook, supply andlong-term growth potential.

 

*RecurringExpenditures*

One of ourprincipal uses of our liquidity is to fund the development, acquisition andrecurring leasing/capital expenditures of our real estate investments. Thefollowing is a summary of our recurring capital expenditures for the ninemonths ended September 30, 2007 and 2006, respectively (in thousands):

 

| ** **             | ** ** | **2007**   | ** ** | **2006** | ** ** |
|------------------------|------------|------------|------------|----------|------------|
| Tenant  improvements   | ** ** | **$**      | **32,987** |     | $          | 34,226 |   |
| Leasing costs          | ** ** | **22,771** |       | 12,338   |       |
| Building  improvements | ** ** | **4,894**  |       | 5,490    |       |
| Totals                 | ** ** | **$**      | **60,652** |     | $          | 52,054 |   |

 

*DebtMaturities*

Debt outstandingat September 30, 2007 totaled $4.2 billion with a weighted average interestrate of 5.73% maturing at various dates through 2028. We had $3.4 billion ofunsecured debt, $304.2 million outstanding on our unsecured lines of credit andapproximately $518.3 million of secured debt outstanding at September 30, 2007.Scheduled principal amortization and maturities of such debt totaled $122.6million for the nine months ended September 30, 2007.

 

The following is asummary of the scheduled future amortization and maturities of our indebtednessat September 30, 2007 (in thousands, except percentage data):

 

| ** ** | ** ** | **Future  Repayments** | ** ** | **Weighted****Average** | ** ** |
|------------|------------|------------------------|------------|-------------------------|------------|
| ** ** | ** ** | **Scheduled**          | ** ** | ** **              | ** ** | ** ** | ** ** | **Interest  Rate of** | ** ** |
| **Year**   | ** ** | **Amortization**       | ** ** | **Maturities**          | ** ** | **Total** | ** ** | **Future Repayments** | ** ** |
| 2007       |       | $                      | 2,510      |                    | $          | 100,000 |   | $ | 102,510 |   | 3.70 | % |
| 2008       |       | 10,264                 |       | 291,888                 |       | 302,152 |   | 5.14 | % |
| 2009       |       | 9,833                  |       | 275,000                 |       | 284,833 |   | 7.37 | % |
| 2010       |       | 9,457                  |       | 477,000                 |       | 486,457 |   | 5.65 | % |
| 2011       |       | 9,339                  |       | 1,035,363               |       | 1,044,702 |   | 5.12 | % |
| 2012       |       | 7,111                  |       | 201,216                 |       | 208,327 |   | 5.89 | % |
| 2013       |       | 6,929                  |       | 150,000                 |       | 156,929 |   | 4.71 | % |
| 2014       |       | 6,669                  |       | 294,534                 |       | 301,203 |   | 6.44 | % |
| 2015       |       | 4,276                  |       | —                  |       | 4,276 |   | 6.16 | % |
| 2016       |       | 4,351                  |       | 468,976                 |       | 473,327 |   | 6.17 | % |
| 2017       |       | 3,666                  |       | 450,000                 |       | 453,666 |   | 5.95 | % |
| Thereafter |       | 23,051                 |       | 350,000                 |       | 373,051 |   | 6.80 | % |
|       |       | $                      | 97,456     |                    | $          | 4,093,977 |   | $ | 4,191,433 |   | 5.73 | % |

 

 

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Historical Cash Flows

Cash and cashequivalents were $17.8 million and $25.0 million at September 30, 2007 and2006, respectively. The following highlights significant changes in net cashassociated with our operating, investing and financing activities (inmillions):

 

| ** **                                            | ** ** | **Nine  Months Ended September 30,** | ** ** |
|-------------------------------------------------------|------------|--------------------------------------|------------|
| ** **                                            | ** ** | **2007**                             | ** ** | **2006** | ** ** |
|                                                  |       |                                 |       |   |   |
| Net Cash  Provided by Operating Activities            |       | $                                    | 134.9      |   | $ | 108.4 |   |
| Net Cash Used  for Investing Activities               |       | $                                    | (145.0     | ) | $ | (1,295.4 | ) |
| Net Cash  Provided by (used for) Financing Activities |       | $                                    | (40.3      | ) | $ | 1,185.2 |   |

 

*OperatingActivities*

Cash flows fromoperating activities provide the cash necessary to meet normal operationalrequirements of our Rental Operations and Service Operation activities. Thereceipt of rental income from Rental Operations continues to provide theprimary source of our revenues and operating cash flows. In addition, wedevelop buildings with the intent to sell them at or soon after completion,which provides another significant source of operating cash flow activity.  Highlights of such activity are as follows:

 

•                  During thenine-month period ended September 30, 2007, we incurred Service Operationsbuildings developmentcosts of $238.6 million, compared to $188.7 million for the same period endedSeptember 30, 2006. The difference is reflective of the increased activity inour held-for-sale pipeline. The pipeline of held-for-sale projects underconstruction as of September 30, 2007 has anticipated total costs uponcompletion of $550.4 million.

•                  We sold six Service Operationsbuildings in the first nine months of 2007, compared to sales of three ServiceOperations buildings for the same period in 2006, receiving net proceeds of$83.1 million and $38.2 million, respectively. We recognized pre-tax gains of$10.8 million and $12.6 million on these sales for the nine-month period endedSeptember 30, 2007 and 2006, respectively.

 

*InvestingActivities*

Investing activities areone of the primary uses of our liquidity. Development and acquisitionactivities typically generate additional rental revenues and provide cash flowsfor operational requirements. Highlights of significant cash sources and usesare as follows:

•                  Development costs increased to $324.3million for the nine-month period ended September 30, 2007 from $274.7 millionfor the same period in 2006 as a result of an increase in development activityin 2007.

•                  During the first nine months of 2007, wepaid cash of $82.4 million for real estate acquisitions, including $36.1 millionfor the Bremner acquisition (with the remaining $11.0 million paid through theissuance of Units of the Partnership) and $155.6 million for undeveloped landacquisitions, compared to $735.3 million in real estate acquisitions and $367.5million in acquisitions of undeveloped land in the same period in 2006. Themost significant activity in the first nine months of 2006 consisted of thepurchase of a portfolio of suburban office and light industrial properties andundeveloped land in the Washington, D.C. area for $865.2 million (of which$713.5 million was paid in cash) and the purchase of the majority of aportfolio of industrial properties in Savannah, Georgia for $196.2 million (ofwhich $125.9 million was paid in cash).

 

 

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•                  Sales of land and depreciated propertyprovided $405.1 million in net proceeds for the period ended September 30,2007, compared to $140.3 million for the same period in 2006. We continue todispose of non-strategic and older properties as part of our capital recyclingprogram to fund acquisitions and new development while improving the overallquality of our investment portfolio.

•                  We received financing distributions (as aresult of the sale of properties or recapitalization) of $207.5 million fromunconsolidated companies for the nine-month period ended September 30, 2007,compared to $21.2 million for the same period in 2006.

 

*FinancingActivities*

The overall decline incash provided by (used for) financing activities is a result of the short-termfinancing that was required for the significant acquisitions in the firstquarter of 2006.  Specifically, thefollowing items highlight major fluctuations in net cash flow related tofinancing activities in the first nine months of 2007 compared to the sameperiod in 2006:

•                  In September 2007, we issued $300.0 million of 6.50% senior unsecurednotes due in 2018. The proceeds were used to partially pay down our $1.0billion unsecured line of credit. Our primary borrowing activity in the firstnine months of 2006 consisted of a $700.0 million secured term loan obtained inFebruary 2006, which was priced at LIBOR +.525% and was paid in full in August2006 with proceeds from two unsecured debt issuances: $450.0 million of 5.95%senior unsecured notes due in 2017 and $250.0 million of 5.625% seniorunsecured notes due in 2011.

•                  In August 2007 we repaid $100.0 million of 7.375% senior unsecurednotes at their scheduled maturity date.

•                  While in the first nine months of 2006 we received net proceeds ofapproximately $177.7 million and $106.3 million, respectively, from the GeneralPartner’s issuances of its Series M and Series N Cumulative RedeemablePreferred Shares, we had no new preferred equity issuances in the same periodin 2007.

•                  We decreased net borrowings on our $1.0 billion line of credit by $15.0million for the nine months ended September 30, 2007 compared to an increase of$521.0 million for the same period in 2006.

 

Financial Instruments

We are exposed tocapital market risk, such as changes in interest rates. In order to reduce thevolatility relating to interest rate risk, we may enter into interest ratehedging arrangements from time to time. We do not utilize derivative financialinstruments for trading or speculative purposes.

 

In August 2005, weentered into $300.0 million of cash flow hedges through forward-startinginterest rate swaps to hedge interest rates on $300.0 million of estimated debtofferings in 2007. The swaps qualified for hedge accounting, with any changesin fair value recorded in Accumulated Other Comprehensive Income (“OCI”). Inconjunction with the September 2007 issuance of $300.0 million of seniorunsecured notes, we terminated these cash flow hedges as designated. Thesettlement amount received of $10.7 million will be recognized to earningsthrough interest expense over the term of the hedged cash flows. Theineffective portion of the hedge was insignificant.

 

In July 2007, weentered into a $21.0 million cash flow hedge through an interest rate swap tofix the rate on $21.0 million of floating rate term debt, issued by one of ourconsolidated majority owned subsidiaries, which matures in July 2011. The swapqualifies for hedge accounting, with any changes in fair value recorded in OCI.At September 30, 2007 the fair value of this swap was approximately $585,000 ina liability position.

 

 

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25600-1-bk.doc -Item1_LegalProceedings_084312

The effectivenessof our hedges will be evaluated throughout their lives using the hypotheticalderivative method under which the change in fair value of the actual swapdesignated as the hedging instrument is compared to the change in the fairvalue of a hypothetical swap.

 

Recent Accounting Pronouncements

 

We adoptedFinancial Accounting Standards Board (“FASB”) Interpretation No. 48, *Accounting for Uncertainty in Income Taxes, anInterpretation of FASB Statement No. 109* (“FIN 48”), on January 1,2007.  The adoption of FIN 48 resulted inan additional tax exposure of approximately $1.7 million recorded as anadjustment to the opening balance of Distributions in Excess of Net Income. Ouruncertain tax positions are immaterial both individually and in the aggregateprimarily due to the General Partner’s tax status as a REIT.

 

In September 2006,the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157, *Fair Value Measurements*(“SFAS 157”)*.* SFAS 157 defines fair value, establishes a framework for measuring fairvalue in accordance with GAAP and expands disclosure about fair valuemeasurements. SFAS No. 157 is effective for fiscal years beginning afterNovember 15, 2007. Management is currently evaluating the impact of adoptingthis statement.

 

In January 2007,the FASB issued SFAS No. 159, *The Fair ValueOptions for Financial Assets and Financial Liabilities*(“SFAS 159”).  SFAS 159 provides a “Fair Value Option” underwhich a company may irrevocably elect fair value as the initial and subsequentmeasurement attribute for certain financial assets and liabilities. This FairValue Option will be available on a contract-by-contract basis with changes infair value recognized in earnings as those changes occur.  The effective date for SFAS 159 is thebeginning of each reporting entity’s first fiscal year end that begins afterNovember 15, 2007.  We do not expect toelect the Fair Value Option for any of our financial assets or liabilities.

 

**Investments in Unconsolidated Companies**

 

We analyze ourinvestments in joint ventures under FASB Interpretation No. 46(R), *Consolidation of Variable Interest Entities*(“FIN 46(R)”)*,*to determine ifeach joint venture is a variable interest entity (a “VIE”, as defined by FIN46(R)) and would require consolidation. To the extent that our joint venturesdo not qualify as VIEs, we further assess under the guidelines of EmergingIssues Task Force (“EITF”) No. 04-5, *DeterminingWhether a General Partner, or the General Partners as a Group, Controls aLimited Partnership or Similar Entity when the Limited Partners Have CertainRights* (“EITF 04-5”); Statement of Position 78-9, *Accounting for Investments in Real Estate Ventures;*Accounting Research Bulletin No. 51*,**Consolidated Financial Statements*and FASB No. 94, *Consolidation of AllMajority-Owned Subsidiaries,* to determine if the venture should beconsolidated.

 

We have equityinterests in unconsolidated partnerships and joint ventures that own andoperate rental properties and hold land for development. The equity method ofaccounting is used for these investments in which we have the ability toexercise significant influence, but not control, over operating and financialpolicies. As a result, the assets and liabilities of these joint ventures arenot included on our balance sheet. Our investment in unconsolidated companiesrepresents approximately 7% of our total assets as of September 30, 2007.

 

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**Item3.  Quantitative and QualitativeDisclosures About Market Risk**

 

We are exposed to interest rate changes primarilyas a result of our line of credit, preferred shares and long-term debt used tomaintain liquidity and fund capital expenditures and expansion of our realestate investment portfolio and operations. Our interest rate risk managementobjective is to limit the impact of interest rate changes on earnings and cashflows and to lower our overall borrowing costs. To achieve our objectives, weborrow primarily at fixed rates and may enter into derivative financialinstruments such as interest rate swaps, caps and treasury locks in order tomitigate our interest rate risk on a related financial instrument. We do notenter into derivative or interest rate transactions for speculative purposes.For a discussion of the market risk with respect to our outstanding cash flowhedges, see “Management’s Discussion and Analysis of Financial Condition andResults of Operations — Liquidity and Capital Resources — FinancialInstruments.”

 

**Item4.  Controls and Procedures**

 

(a) Evaluation ofDisclosure Controls and Procedures

 

We maintaindisclosure controls and procedures that are designed to ensure that informationrequired to be disclosed by us in the reports that we file or submit under theSecurities and Exchange Act of 1934, as amended, is recorded, processed,summarized and reported within the time periods specified in the SEC’s rulesand forms. These disclosure controls and procedures are further designed toensure that such information is accumulated and communicated to management,including the General Partner’s Chief Executive Officer and Chief FinancialOfficer, to allow timely decisions regarding required disclosure.

 

We carried out anevaluation, under the supervision and with the participation of management,including the General Partner’s Chief Executive Officer and Chief FinancialOfficer, of the effectiveness of the design and operation of our disclosurecontrols and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Basedupon the foregoing, the General Partner’s Chief Executive Officer and ChiefFinancial Officer concluded that, as of the end of the period covered by thisReport, our disclosure controls and procedures are effective in all materialrespects.

 

(b) Changes inInternal Control over Financial Reporting

 

During the ninemonths ended September 30, 2007, there have been no changes in our internalcontrol over financial reporting during the period covered by this report thathave materially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

 

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**Part II -Other Information**

**Item1.  Legal Proceedings**

 

From time to time,we are parties to a variety of legal proceedings and claims arising in theordinary course of our businesses. While these matters generally are covered byinsurance, there is no assurance that our insurance will cover any particularproceeding or claim. We presently believe that all of these proceedings towhich we were subject as of September 30, 2007, taken as a whole, will not havea material adverse effect on our liquidity, business, financial condition orresults of operations.

 

**Item1A.  Risk Factors**

 

In addition to the information set forth in this Report, you also shouldcarefully review and consider the information contained in our other reportsand periodic filings that we make with the SEC, including, without limitation, theinformation contained under the caption “Item 1A. Risk Factors” in our AnnualReport on Form 10-K for the year ended December 31, 2006, and in our QuarterlyReports on Form 10-Q filed after the date of such Annual Report.  Those risk factors could materially affectour business, financial condition and results of operations.

 

The risks that we describe in our public filings are not the only risksthat we face.  Additional risks anduncertainties not currently known to us, or that we presently deem to beimmaterial, also may materially adversely affect our business, financialcondition and results of operations.

 

**Item2.  Unregistered Sales of EquitySecurities and Use of Proceeds**

 

**(a) Unregistered Sales of EquitySecurities**

None

 

**(b) Use of Proceeds**

None

 

**(c) Issuer Purchases of EquitySecurities**

 

From time to time,the General Partner may repurchase its common shares under a $750 millionrepurchase program that initially was approved by the General Partner’s boardof directors and publicly announced in October 2001 (the “Repurchase Program”).In July 2005, the General Partner’s board of directors authorized management topurchase up to $750 million of the General Partner’s common shares pursuant tothis plan. Under the Repurchase Program, the General Partner also executesshare repurchases on an ongoing basis associated with certain employeeelections under the General Partner’s compensation and benefit programs.

 

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The followingtable shows the General Partner’s share repurchase activity for each of thethree months in the quarter ended September 30, 2007:
| **Month**  |       | **Total  Number of Shares   Purchased (1)** |       | **Average  Price   Paid per Share** |       | **Total  Number of   Shares Purchased as   Part of Publicly   Announced Plans or   Programs** |       | **Maximum  Number   (or Approximate   Dollar Value) of   Shares that May   Yet be Purchased   Under the Plans or   Programs (2)** |       |
|------------|------------|---------------------------------------------|------------|-------------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------|------------|
| ** ** | ** ** | ** **                                  | ** ** | ** **                          | ** ** | ** **                                                                                    | ** ** | ** **                                                                                                                        | ** ** |
| July       |       | 5,503                                       |       | $                                   | 35.08      |                                                                                          | 5,503      |                                                                                                                              |       |   |
| August     |       | 19,124                                      |       | $                                   | 32.07      |                                                                                          | 19,124     |                                                                                                                              |       |   |
| September  |       | 58,682                                      |       | $                                   | 32.67      |                                                                                          | 58,682     |                                                                                                                              |       |   |
| Total      |       | 83,309                                      |       | $                                   | 32.69      |                                                                                          | 83,309     |                                                                                                                              |       |   |

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(1) Includes 12,197 common shares of the General Partner repurchasedunder its Employee Stock Purchase Plan, 64,894 common shares of the GeneralPartner swapped to pay the exercise price of stock options and 6,218 commonshares of the General Partner repurchased through a Rabbi Trust under theExecutives’ Deferred Compensation Plan.

 

(2) The number of common shares of the General Partnerthat may yet be repurchased in the open market to fund common shares purchasedunder its Employee Stock Purchase Plan, as amended, was 72,231 as of September30, 2007. The approximate dollar value of common shares of the General Partnerthat may yet be repurchased under the General Partner’s Repurchase Program was$361.0 million as of September 30, 2007.

 

**Item3.  Defaults upon Senior Securities**

 

During the periodcovered by this Report, we did not default under the terms of any of ourmaterial indebtedness, nor has there been any material arrearage of dividendsor other material uncured delinquency with respect to any class of ourpreferred equity.

 

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

 

None.

 

**Item5.  Other Information**

 

During the periodcovered by this Report, there was no information required to be disclosed by usin a Current Report on Form 8-K that was not so reported, nor were there anymaterial changes to the procedures by which our security holders may recommendnominees to the General Partner’s board of directors.

 

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**Item6.  Exhibits**

 
| **(a)** | **Exhibits** |                                                                                                                                                                                                                                                                                                                                               |
|---------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.1          | Certificate of  Limited Partnership of Duke Realty Limited Partnership, dated September 17,  1993 (filed as Exhibit 3.1 to the Partnership’s Annual Report on Form 10-K  for the fiscal year ended December 31, 2006, as filed with the SEC on March  13, 2007, File No. 000-20625, and incorporated herein by this reference).               |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(i)       | Second Amended  and Restated Agreement of Limited Partnership of the Partnership (filed as  Exhibit 4.1 to the Partnership’s Current Report on Form 8-K, as filed with  the SEC on July 16, 1999, File No. 000-20625, and incorporated herein by this  reference).                                                                            |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(ii)      | Second Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 10.3 to the General Partner’s Annual Report on  Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC  on March 15, 2002, File No. 001-09044, and incorporated herein by this  reference). |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(iii)     | Third Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 10.4 to the General Partner’s Annual Report on  Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC  on March 15, 2002, File No. 001-09044, and incorporated herein by this  reference).  |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(iv)      | Fourth Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 10.5 to the General Partner’s Annual Report on  Form 10-K for the fiscal year ended December 31, 2001, as filed with the SEC  on March 15, 2002, File No. 001-09044, and incorporated herein by this  reference). |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(v)       | Fifth Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 10.6 to the General Partner’s Annual Report on  Form 10-K for the fiscal year ended December 31, 2005, as filed with the SEC  on March 7, 2006, File No. 001-09044, and incorporated herein by this  reference).   |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(vi)      | Sixth Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 10.7 to the General Partner’s Annual Report on  Form 10-K for the fiscal year ended December 31, 2005, as filed with the SEC  on March 7, 2006, File No. 001-09044, and incorporated herein by this  reference).   |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(vii)     | Seventh  Amendment to the Second Amended and Restated Agreement of Limited Partnership  of the Partnership (filed as Exhibit 10.8 to the General Partner’s Annual  Report on Form 10-K for the fiscal year ended December 31, 2005, as filed  with the SEC on March 7, 2006, File No. 001-09044, and incorporated herein by  this reference). |
|    |         |                                                                                                                                                                                                                                                                                                                                               |
|    | 3.2(viii)    | Eighth Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 3.1 to the Partnership’s Current Report on Form  8-K, as filed with the SEC on February 6, 2006, File No. 000-20625, and  incorporated herein by this reference).                                                 |

 

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|   | 3.2(ix) | Ninth Amendment  to the Second Amended and Restated Agreement of Limited Partnership of the  Partnership (filed as Exhibit 3.1 to the Partnership’s Current Report on Form  8-K, as filed with the SEC on July 5, 2006, and incorporated herein by this  reference).                              |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 10.1    | Form of Letter Agreement Regarding Executive Severance, between the  General Partner and Samuel J. O’Briant and Kevin O. Rogus (filed as Exhibit 10.1 to the  Company’s Current Report on Form 8-K, as filed with the SEC on December 19,  2005, and incorporated herein by this reference). |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 11.1    | Statement Regarding Computation of Earnings.**                                                                                                                                                                                                                                                         |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 12.1    | Ratio of Earnings to Combined Fixed Charges and Preferred Stock  Distributions.*                                                                                                                                                                                                                       |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 12.2    | Ratio of Earnings to Debt Service.*                                                                                                                                                                                                                                                                    |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 31.1    | Rule 13a-14(a) Certification of the General Partner’s Chief Executive  Officer.*                                                                                                                                                                                                                  |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 31.2    | Rule 13a-14(a) Certification of the General Partner’s Chief Financial  Officer.*                                                                                                                                                                                                                  |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 32.1    | Section 1350 Certification of the General Partner’s Chief Executive  Officer.*                                                                                                                                                                                                                    |
|   |    |                                                                                                                                                                                                                                                                                                   |
|   | 32.2    | Section 1350 Certification  of the General Partner’s Chief Financial Officer.*                                                                                                                                                                                                                    |

----

* Filed herewith.

 

** Data required by Statement of Financial Accounting Standard No.128, *Earnings per Share*, is provided in Note 6 to theConsolidated Financial Statements included in this report.

 

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**SIGNATURES**

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.

 
|                   | DUKE REALTY LIMITED PARTNERSHIP |
|------------------------|---------------------------------|
|                   |                            |   |
|                   |                            |   |
|                   |                            |   |
| Date: November 5, 2007 |                            | /s/ Dennis D. Oklak |
|                   |                            | Dennis D. Oklak |
|                   |                            | Chairman and Chief Executive Officer of the General  Partner |
|                   |                            |   |
|                   |                            |   |
|                   |                            | /s/ Matthew A. Cohoat |
|                   |                            | Matthew A. Cohoat |
|                   |                            | Executive Vice President and Chief Financial Officer  of the General Partner |

 

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