**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 **March 31, 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     No   o

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

| Large  accelerated filer |   | Accelerated  filer o |   | Non-accelerated  filer 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 the number of shares outstanding of each ofthe issuer’s classes of common stock, as of the latest practicable date:
| **Class**                              | ** ** | **Outstanding  at May 1, 2007** |
|----------------------------------------|------------|---------------------------------|
| Common Units,  $.01 par value per unit |       | 146,704,499  units              |

 

 

----

**DUKEREALTY LIMITED PARTNERSHIP**

**INDEX**
| **Part I – Financial  Information**                                                                | ** **                                                                                             | ** **                                                   |   | **Page** |
|---------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------|----------|
| ** **                                                                                              |                                                                                                   |                                                         |   |     |
| **Item  1. Financial Statements**                                                                       |                                                                                                   |                                                         |   |     |
|                                                                                                    |                                                                                                   |                                                         |   |     |
|                                                                                                    | Consolidated  Balance Sheets as of  March 31, 2007 (Unaudited) and December 31, 2006                   |                                                         |   | 2        |
|                                                                                                    |                                                                                                   |                                                         |   |     |
|                                                                                                    | Consolidated  Statements of Operations (Unaudited) forthe three months ended March 31, 2007 and 2006   |                                                         |   | 3        |
|                                                                                                    |                                                                                                   |                                                         |   |     |
|                                                                                                    | Consolidated Statements of Cash Flows (Unaudited)  for the three months ended March 31, 2007 and 2006  |                                                         |   | 4        |
|                                                                                                    |                                                                                                   |                                                         |   |     |
|                                                                                                    | Consolidated Statement of Partners’ Equity  (Unaudited) for the three months ended March 31, 2007 |                                                         |   | 5        |
|                                                                                                    |                                                                                                   |                                                         |   |     |
|                                                                                                    | Notes to Consolidated Financial Statements (Unaudited)                                                 |                                                         |   | 6-13     |
| ** **                                                                                              |                                                                                                   |                                                         |   |     |
| **Item 2. Management’s Discussion and Analysis of Financial  Condition and Results of Operations** |                                                                                                   | 14-27                                                        |
| ** **                                                                                              |                                                                                                   |                                                         |
| **Item 3. Quantitative and Qualitative Disclosures About  Market Risk**                                 |                                                                                                   | 27                                                           |
| ** **                                                                                              |                                                                                                   |                                                         |   |     |
| **Item 4. Controls and Procedures**                                                                     |                                                                                                   |                                                         |   | 27       |
| ** **                                                                                              |                                                                                                   |                                                         |   |     |
| **Part  II – Other Information**                                                                   |                                                                                                   |                                                         |   |     |
|                                                                                                    |                                                                                                   |                                                         |   |     |
|                                                                                                    | Item  1.                                                                                               | Legal  Proceedings                                           |   | 28       |
|                                                                                                    | Item 1A.                                                                                               | Risk Factors                                                 |   | 28       |
|                                                                                                    | Item 2.                                                                                                | Unregistered Sales of Equity Securities and Use of  Proceeds |   | 28-29    |
|                                                                                                    | Item 3.                                                                                                | Defaults Upon Senior Securities                              |   | 29       |
|                                                                                                    | Item 4.                                                                                                | Submission of Matters to a Vote of Security Holders          |   | 29       |
|                                                                                                    | Item  5.                                                                                               | Other  Information                                           |   | 29       |
|                                                                                                    | Item 6.                                                                                                | Exhibits                                                     |   | 30-31    |
|                                                                                                         |                                                                                                        |                                                              |        |          |  |  |  |  |  |  |

 

----

**PART I -FINANCIAL INFORMATION**

**Item1.  Financial Statements**

**DUKEREALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedBalance Sheets**

**(inthousands)**
| ** **                                                                                  | ** ** | **March 31,  2007** | ** **    | **December 31,  2006** | ** ** |
|---------------------------------------------------------------------------------------------|------------|--------------------------|---------------|-----------------------------|------------|
| **ASSETS**                                                                                  | ** ** | **(Unaudited)**          |          |                        |       |
| Real estate  investments:                                                                   |       |                     |          |                        |       |
| Land and improvements                                                                       |       | **$**                    | **857,809**   |                        | $          | 844,091 |   |
| Buildings and tenant  improvements                                                          |       | **4,265,873**            |          | 4,211,602                   |       |
| Construction in  progress                                                                   |       | **451,707**              |          | 359,765                     |       |
| Investments in  unconsolidated companies                                                    |       | **514,631**              |          | 628,323                     |       |
| Land held for  development                                                                  |       | **748,392**              |          | 737,752                     |       |
| ** **                                                                                  |       | **6,838,412**            |          | 6,781,533                   |       |
| Accumulated  depreciation                                                                   |       | **(907,095**             | **)**         | (867,079                    | )          |
|                                                                                        |       | ** **               |          |                        |       |
| Net real estate  investments                                                                |       | **5,931,317**            |          | 5,914,454                   |       |
|                                                                                        | ** ** | ** **               |          |                        |       |
| Real estate investments  and other assets held for sale                                     | ** ** | **498,249**              |          | 512,925                     |       |
|                                                                                        | ** ** | ** **               |          |                        |       |
| Cash and cash  equivalents                                                                  | ** ** | **9,870**                |          | 68,154                      |       |
| Accounts receivable,  net of allowance of $1,128 and $1,088                                 | ** ** | **26,527**               |          | 24,118                      |       |
| Straight-line rent  receivable, net of allowance of $1,996 and $1,915                       | ** ** | **109,691**              |          | 105,319                     |       |
| Receivables on  construction contracts, including retentions                                | ** ** | **48,753**               |          | 64,768                      |       |
| Deferred financing  costs, net of accumulated amortization of $22,204 and $19,492           | ** ** | **60,898**               |          | 62,277                      |       |
| Deferred leasing and  other costs, net of accumulated amortization of $133,773 and $127,155 | ** ** | **374,052**              |          | 311,553                     |       |
| Escrow deposits and  other assets                                                           | ** ** | **213,506**              |          | 183,728                     |       |
| ** **                                                                                  |       | **$**                    | **7,272,863** |                        | $          | 7,247,296 |   |
| **LIABILITIES  AND PARTNERS’ EQUITY**                                                  |       | ** **               |          |                        |       |
|                                                                                        |       |                     |          |                        |       |
| Indebtedness:                                                                               |       |                     |          |                        |       |
| Secured debt                                                                                |       | **$**                    | **503,400**   |                        | $          | 515,192 |   |
| Unsecured notes                                                                             |       | **3,135,402**            |          | 3,129,653                   |       |
| Unsecured line of  credit                                                                   |       | **330,000**              |          | 317,000                     |       |
| ** **                                                                                  |       | **3,968,802**            |          | 3,961,845                   |       |
|                                                                                        | ** ** | ** **               |          |                        |       |
| Liabilities of  properties held for sale                                                    | ** ** | **152,518**              |          | 155,185                     |       |
|                                                                                        | ** ** | ** **               |          |                        |       |
| Construction payables  and amounts due subcontractors, including retentions                 | ** ** | **118,735**              |          | 136,508                     |       |
| Accrued expenses:                                                                           |       |                     |          |                        |       |
| Real estate  taxes                                                                          | ** ** | **63,878**               |          | 59,273                      |       |
| Interest                                                                                    | ** ** | **38,985**               |          | 52,106                      |       |
| Other                                                                                       | ** ** | **33,284**               |          | 62,078                      |       |
| Other liabilities                                                                           | ** ** | **117,135**              |          | 128,857                     |       |
| Tenant security  deposits and prepaid rents                                                 | ** ** | **34,163**               |          | 31,121                      |       |
| Total  liabilities                                                                          |       | **4,527,500**            |          | 4,586,973                   |       |
|                                                                                        | ** ** | ** **               |          |                        |       |
| Minority interest                                                                           | ** ** | **1,104**                |          | 1,080                       |       |
|                                                                                        |       |                     |          |                        |       |
| Partners’ equity:                                                                      |       |                     |          |                        |       |
| General Partner                                                                             |       |                     |          |                        |       |
| Common equity                                                                               | ** ** | **1,750,861**            |          | 1,625,958                   |       |
| Preferred equity  (liquidation preferences of $876,250)                                     | ** ** | **876,250**              |          | 876,250                     |       |
| ** **                                                                                  |       | **2,627,111**            |          | 2,502,208                   |       |
|                                                                                        | ** ** | ** **               |          |                        |       |
| Limited Partners’  common equity                                                       | ** ** | **111,445**              |          | 151,600                     |       |
| Accumulated  other comprehensive income                                                     |       | **5,703**                |          | 5,435                       |       |
| Total Partners’  equity                                                                | ** ** | **2,744,259**            |          | 2,659,243                   |       |
| ** **                                                                                  |       | **$**                    | **7,272,863** |                        | $          | 7,247,296 |   |

 

See accompanying Notes toConsolidated Financial Statements.

2

----

**DUKE REALTYLIMITED PARTNERSHIP AND SUBSIDIARIES**

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

**For theThree Months Ended March 31,**

**(in thousands, except per unitamounts)**
| ** **                                                                          | ** ** | **2007**    | ** **  | **2006**   | ** ** | ** ** |
|-------------------------------------------------------------------------------------|------------|-------------|-------------|------------|------------|------------|
| **RENTAL  OPERATIONS**                                                              |       |        |        |       |       |       |
| Revenues:                                                                           |       |        |        |       |       |       |
| Rental income from continuing operations                                            | ** ** | **$**       | **207,447** |       | $          | 184,077    |   |   |
| Equity in earnings of unconsolidated companies                                      | ** ** | **7,691**   |        | 8,259      |       |       |
| ** **                                                                          |       | **215,138** |        | 192,336    |       |       |
| Operating expenses:                                                                 |       |        |        |       |       |       |
| Rental expenses                                                                     | ** ** | **50,124**  |        | 43,907     |       |       |
| Real estate taxes                                                                   | ** ** | **25,746**  |        | 21,959     |       |       |
| Interest expense                                                                    | ** ** | **45,704**  |        | 37,013     |       |       |
| Depreciation and amortization                                                       | ** ** | **67,739**  |        | 57,630     |       |       |
| ** **                                                                          |       | **189,313** |        | 160,509    |       |       |
| Earnings from continuing rental operations                                          | ** ** | **25,825**  |        | 31,827     |       |       |
| ** **                                                                          |       |        |        |       |       |       |
| **SERVICE  OPERATIONS**                                                             |       |        |        |       |       |       |
| Revenues:                                                                           |       |        |        |       |       |       |
| General contractor gross revenue                                                    | ** ** | **54,157**  |        | 69,549     |       |       |
| General contractor costs                                                            | ** ** | **(48,688** | **)**       | (64,208    | )          |       |
| Net general contractor revenue                                                      | ** ** | **5,469**   |        | 5,341      |       |       |
| Service fee revenue                                                                 | ** ** | **6,397**   |        | 4,418      |       |       |
| Gain on sale of service operations properties                                       | ** ** | **2,864**   |        | 247        |       |       |
|                                                                                | ** ** | ** **  |        |       |       |       |
| Total revenue                                                                       | ** ** | **14,730**  |        | 10,006     |       |       |
|                                                                                | ** ** | ** **  |        |       |       |       |
| Operating expenses                                                                  | ** ** | **7,796**   |        | 5,556      |       |       |
|                                                                                | ** ** | ** **  |        |       |       |       |
| Earnings from service operations                                                    | ** ** | **6,934**   |        | 4,450      |       |       |
|                                                                                | ** ** | ** **  | ** **  |       |       |       |
| General and  administrative expense                                                 | ** ** | **(13,467** | **)**       | (13,938    | )          |       |
|                                                                                | ** ** | ** **  |        |       |       |       |
| Operating income                                                                    | ** ** | **19,292**  |        | 22,339     |       |       |
| ** **                                                                          |       |        |        |       |       |       |
| **OTHER  INCOME (EXPENSE)**                                                         |       |        |        |       |       |       |
| Interest and other income, net                                                      | ** ** | **2,418**   |        | 1,980      |       |       |
| Earnings from sale of land, net of impairment  adjustment                           | ** ** | **13,997**  |        | 1,890      |       |       |
| Other minority interest in earnings of subsidiaries                                 | ** ** | **(15**     | **)**       | (102       | )          |       |
| Income from continuing operations                                                   | ** ** | **35,692**  |        | 26,107     |       |       |
|                                                                                |       |        |        |       |       |       |
| Discontinued  operations:                                                           |       |        |        |       |       |       |
| Net income from discontinued operations                                             | ** ** | **1,287**   |        | 1,439      |       |       |
| Gain on sale of properties                                                          | ** ** | **51,720**  |        | 505        |       |       |
| Income from discontinued operations                                                 | ** ** | **53,007**  |        | 1,944      |       |       |
|                                                                                | ** ** | ** **  |        |       |       |       |
| Net income                                                                          | ** ** | **88,699**  |        | 28,051     |       |       |
| Dividends on  Preferred Units                                                       | ** ** | **(15,226** | **)**       | (12,712    | )          |       |
| Adjustments for  redemption of Preferred Units                                      | ** ** | **—**  |        | (2,633     | )          |       |
| Net income available for common unitholders                                         |       | **$**       | **73,473**  | ** ** | $          | 12,706     |   |   |
|                                                                                |       |        |        |       |       |       |
| Basic net income  per Common Unit:                                                  |       |        |        |       |       |       |
| Continuing operations                                                               | ** ** | **$**       | **.14**     |       | $          | .07        |   |   |
| Discontinued operations                                                             | ** ** | **.36**     |        | .02        |       |       |
| Total                                                                               | ** ** | **$**       | **.50**     |       | $          | .09        |   |   |
|                                                                                |       |        |        |       |       |       |
| Diluted net  income per common unit:                                                |       |        |        |       |       |       |
| Continuing operations                                                               | ** ** | **$**       | **.14**     |       | $          | .07        |   |   |
| Discontinued operations                                                             | ** ** | **.35**     |        | .02        |       |       |
| Total                                                                               | ** ** | **$**       | **.49**     |       | $          | .09        |   |   |
|                                                                                | ** ** | ** **  |        |       |       |       |
| Weighted average  number of Common Units outstanding                                | ** ** | **146,552** |        | 148,175    |       |       |
| Weighted average number  of Common Units and potential dilutive  common equivalents | ** ** | **149,465** |        | 149,265    |       |       |

 

See accompanying Notes toConsolidated Financial Statements.

3

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**DUKEREALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedStatements of Cash Flows**

**For thethree months ended March 31,**

**(inthousands)**

**(Unaudited)**
| ** **                                                                                                   | ** ** | **2007**    | ** ** | **2006**   | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|-------------|------------|------------|------------|------------|
| Cash flows from  operating activities:                                                                       |       |        |       |       |       |       |
| Net income                                                                                                   |       | **$**       | **88,699** | ** ** | $          | 28,051     |   |   |
| Adjustments to  reconcile net income to net cash provided by operating activities:                           |       |        |       |       |       |       |
| Depreciation of  buildings and tenant improvements                                                           | ** ** | **52,143**  |       | 51,271     |       |       |
| Amortization of  deferred leasing and other costs                                                            | ** ** | **15,596**  |       | 9,311      |       |       |
| Amortization of  deferred financing costs                                                                    | ** ** | **2,865**   |       | 1,707      |       |       |
| Minority  interest in earnings                                                                               | ** ** | **15**      |       | 102        |       |       |
| Straight-line  rent adjustment                                                                               | ** ** | **(5,773**  | **)**      | (5,417     | )          |       |
| Earnings from  land and depreciated property sales                                                           | ** ** | **(65,717** | **)**      | (2,395     | )          |       |
| Build-for-sale  operations, net                                                                              | ** ** | **(49,989** | **)**      | (36,042    | )          |       |
| Construction  contracts, net                                                                                 | ** ** | **6,764**   |       | (3,521     | )          |       |
| Other accrued  revenues and expenses, net                                                                    | ** ** | **(33,147** | **)**      | (11,069    | )          |       |
| Operating  distributions received in excess of (less than) equity in earnings from  unconsolidated companies | ** ** | **137**     |       | (3,323     | )          |       |
| **Net  cash provided by operating activities**                                                               | ** ** | **11,593**  |       | 28,675     |       |       |
|                                                                                                         |       |        |       |       |       |       |
| Cash flows from  investing activities:                                                                       |       |        |       |       |       |       |
| Development of  real estate investments                                                                      | ** ** | **(96,588** | **)**      | (84,479    | )          |       |
| Acquisition of  real estate investments and related intangible assets                                        | ** ** | **(33,628** | **)**      | (631,134   | )          |       |
| Acquisition of  land held for development                                                                    | ** ** | **(34,738** | **)**      | (203,159   | )          |       |
| Recurring tenant  improvements                                                                               | ** ** | **(10,333** | **)**      | (13,526    | )          |       |
| Recurring  leasing costs                                                                                     | ** ** | **(8,164**  | **)**      | (1,995     | )          |       |
| Recurring  building improvements                                                                             | ** ** | **(974**    | **)**      | (1,769     | )          |       |
| Other deferred  leasing costs                                                                                | ** ** | **(3,232**  | **)**      | (8,450     | )          |       |
| Other deferred  costs and other assets                                                                       | ** ** | **341**     |       | (15,538    | )          |       |
| Proceeds from  land and depreciated property sales, net                                                      | ** ** | **176,726** |       | 10,402     |       |       |
| Capital  distributions from unconsolidated companies                                                         | ** ** | **53,500**  |       | 17,740     |       |       |
| Advances to  unconsolidated companies, net                                                                   | ** ** | **(33,275** | **)**      | (6,313     | )          |       |
| **Net  cash provided by (used for) investing activities**                                                    | ** ** | **9,635**   |       | (938,221   | )          |       |
| Cash flows from  financing activities:                                                                       |       |        |       |       |       |       |
| Payments for  repurchases of Common Units                                                                    |       | —      |       | (11,883    | )          |       |
| Proceeds  (disbursements) from issuance of the General Partners’ stock options                          | ** ** | **(12**     | **)**      | 4,767      |       |       |
| Proceeds from  issuance of Preferred Units, net                                                              |       | —      |       | 177,734    |       |       |
| Payments for  redemption of Preferred Units                                                                  |       | —      |       | (75,000    | )          |       |
| Proceeds from  unsecured debt issuance                                                                       | ** ** | **5,812**   |       | 150,000    |       |       |
| Payments on  unsecured debt                                                                                  |       | —      |       | (100,000   | )          |       |
| Proceeds from  issuance of secured debt                                                                      |       | —      |       | 710,450    |       |       |
| Payments on  secured indebtedness including principal amortization                                           | ** ** | **(12,007** | **)**      | (1,808     | )          |       |
| Borrowings on  line of credit, net                                                                           | ** ** | **13,000**  |       | 125,000    |       |       |
| Distributions to  common unitholders                                                                         | ** ** | **(69,676** | **)**      | (69,989    | )          |       |
| Distributions to  preferred unitholders                                                                      | ** ** | **(15,226** | **)**      | (12,712    | )          |       |
| Distributions to  minority interest, net                                                                     |       | —      |       | (71        | )          |       |
| Cash overdrafts                                                                                              |       | —      |       | 4,979      |       |       |
| Deferred  financing costs                                                                                    | ** ** | **(1,403**  | **)**      | (18,779    | )          |       |
| **Net  cash provided by (used for) financing activities**                                                    | ** ** | **(79,512** | **)**      | 882,688    |       |       |
| **Net  decrease in cash and cash equivalents**                                                               | ** ** | **(58,284** | **)**      | (26,858    | )          | ** ** |
| Cash and cash  equivalents at beginning of period                                                            | ** ** | **68,154**  |       | 26,858     |       |       |
| Cash and cash  equivalents at end of period                                                                  | ** ** | **$**       | **9,870**  |       | $          | —     |   |   |
| Other non-cash items:                                                                                        |       |        |       |       |       |       |
| Assumption of secured  debt for real estate acquisitions                                                     | ** ** | **$**       | **—** |       | $          | 137,648    |   |   |
| Conversion of Limited  Partner Units to common shares of the General Partner                                 | ** ** | **$**       | **65,822** |       | $          | 225        |   |   |
| Issuance of Limited  Partner Units for acquisitions                                                          | ** ** | **$**       | **11,020** |       | $          | —     |   |   |
| Elimination upon consolidation of investments in and advances to  previously unconsolidated companies        | ** ** | **$**       | **94,724** |       | $          | —     |   |   |

 

See accompanyingNotes to Consolidated Financial Statements

4

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**DUKEREALTY LIMITED PARTNERSHIP AND SUBSIDIARIES**

**ConsolidatedStatement of Partners’ Equity**

**For thethree  months ended March 31, 2007**

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

**(Unaudited)**
| ** **                                                               | ** ** | ** **               | ** **    | ** **            | ** ** | **Limited**        | ** ** | **Accumulated**                       | ** **  | ** **  | ** ** | ** ** |
|--------------------------------------------------------------------------|------------|--------------------------|---------------|-----------------------|------------|--------------------|------------|---------------------------------------|-------------|-------------|------------|------------|
| ** **                                                               | ** ** | **General Partner** | ** **    | **Partners’**    | ** ** | **Other**          | ** ** | ** **                            |        |
| ** **                                                               | ** ** | **Common  Equity**       | ** **    | **Preferred  Equity** | ** ** | **Common  Equity** | ** ** | **Comprehensive  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                                                               |       | 68,563                   |          | 15,226                |       | 4,910              |       | —                                |        | 88,699      |       |       |
| Gains on derivative instruments                                          |       | —                   |          | —                |       | —             |       | 268                                   |        | 268         |       |       |
| Comprehensive income                                                     |       |                     |          |                  |       |               |       |                                  |        | 88,967      |       |       |
| Acquisition of Partnership interest for common stock  of General Partner |       | 117,245                  |          | —                |       | (51,423            | )          | —                                |        | 65,822      |       |       |
| Unit Issuance                                                            |       | —                   |          | —                |       | 11,020             |       | —                                |        | 11,020      |       |       |
| Stock based compensation plan activity                                   |       | 5,826                    |          | —                |       | —             |       | —                                |        | 5,826       |       |       |
| Distributions to Preferred Unitholders                                   |       | —                   |          | (15,226               | )          | —             |       | —                                |        | (15,226     | )          |       |
| Distributions to Partners ($.475 per Common Unit)                        |       | (65,014                  | )             | —                |       | (4,662             | )          | —                                |        | (69,676     | )          |       |
| ** **                                                               | ** ** | ** **               | ** **    | ** **            | ** ** | ** **         | ** ** | ** **                            | ** **  | ** **  |       |       |
| **Balance at March 31, 2007**                                            | ** ** | **$**                    | **1,750,861** | ** **            | **$**      | **876,250**        | ** ** | **$**                                 | **111,445** | ** **  | **$**      | **5,703**  | ** ** | **$** | **2,744,259** |   |   |
| ** **                                                               | ** ** | ** **               | ** **    | ** **            | ** ** | ** **         | ** ** | ** **                            | ** **  | ** **  |       |       |
| **Common  Units outstanding at March 31, 2007**                          | ** ** | **136,892**              | ** **    | ** **            | ** ** | **9,796**          | ** ** | ** **                            | ** **  | **146,688** |       |       |
|                                                                          |            |                          |               |                       |            |                    |            |                                       |             |             |            |            |  |  |  |  |  |  |

 

See accompanyingNotes to Consolidated Financial Statements

5

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**DUKEREALTY LIMITED PARTNERSHIP**

**NOTES TOCONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**1.**     **GeneralBasis of Presentation**

The interim consolidated financial statements includedherein have been prepared by Duke Realty Limited Partnership (the “Partnership”)without audit (except for the Balance Sheet as of December 31, 2006). Thefinancial statements have been prepared in accordance with U.S. generallyaccepted accounting principles (“GAAP”) for interim financial information andin accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Actof 1934, as amended. Accordingly, they do not include all of the informationand footnotes required by GAAP for complete financial statements. In theopinion of management, all adjustments (consisting of normal recurringadjustments) considered necessary for a fair presentation have been included.These financial statements should be read in conjunction with Management’sDiscussion and Analysis of Financial Condition and Results of Operationsincluded herein and the consolidated financial statements and notes theretoincluded in our Annual Report on Form 10-K for the year ended December 31,2006.

The Partnership was formed on October 4, 1993, whenDuke Realty Corporation (the “General Partner”) contributed all of itsproperties and related assets and liabilities, along with the net proceeds fromthe issuance of additional shares of the General Partner through an offering,to the Partnership. The General Partner qualifies as a real estate investmenttrust (“REIT”) under provisions of the Internal Revenue Code. The GeneralPartner is the sole general partner of the Partnership, owning 93.3% of thecommon partnership interests as of March 31, 2007 (“General Partner Units”).The remaining 6.7% of the Partnership’s common interest is owned by limitedpartners (“Limited Partner Units” and, together with the General Partner Units,the “Common Units”). The Limited Partner Units are exchangeable for shares ofthe General Partner’s common stock on a one-for-one basis subject generally toa one-year holding period or, under certain circumstances, the General Partnermay repurchase the Limited Partner Units for cash. The General Partner alsoowns preferred partnership interests in the Partnership (“Preferred Units”).

We own and operate a portfolio primarily consisting ofindustrial and office properties and provide real estate services tothird-party owners.  We conduct ourService Operations (as defined below) through Duke Realty Services, LLC, DukeRealty Services Limited Partnership and Duke Construction Limited Partnership.The condensed consolidated financial statements include our accounts and ourmajority-owned or controlled subsidiaries. In this Quarterly Report on Form10-Q (this “Report”), the terms “we,” “us” and “our” refer to the Partnershipand those entities owned or controlled by the Partnership.

**2.     Reclassifications**

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

**3.     Acquisition**

In February 2007, we closed on the acquisition of BremnerHealthcare Real Estate (“Bremner”), a national health care development andmanagement firm.  The primary reason forthe acquisition was to expand our development capabilities within the healthcare real estate market.

The initial consideration paid to the sellers totaled$47.1 million and the sellers will be eligible for further contingent paymentsover the next three years.

6

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Approximately $38.0 million of the total purchaseprice is allocated to goodwill, which is attributable to the value of Bremner’soverall development capabilities and their in-place workforce.  Our purchase accounting allocation ispreliminary as of March 31, 2007.

**4.     Indebtedness**

We had an unsecured line of credit available at March31, 2007, described as follows (dollars in thousands):
| ** **               | ** ** | **Borrowing** | ** ** | **Maturity** | ** ** | **Interest** | ** ** | **Outstanding Balance** | ** ** | ** ** |
|--------------------------|------------|---------------|------------|--------------|------------|--------------|------------|-------------------------|------------|------------|
| **Description**          | ** ** | **Capacity**  | ** ** | **Date**     | ** ** | **Rate**     | ** ** | **at March  31, 2007**  | ** ** | ** ** |
| Unsecured Line of Credit |       | $1,000,000    |       | January 2010 |       | LIBOR + .53  | %          | $330,000                |       |       |

 

We use this line of credit to fund development activities, acquireadditional rental properties and provide working capital.

The line of creditprovides us with an option to obtain borrowings from financial institutionsthat participate in the line, at rates lower than the stated interest rate,subject to certain restrictions. Interest rates on the amounts outstanding onthe unsecured line of credit as of March 31, 2007, range from LIBOR + .16% toLIBOR + .53% (equal to 5.48% and 5.85% as of March 31, 2007).

The 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 ofMarch 31, 2007, we were in compliance with all covenants under our line ofcredit.

**5.     Related Party Transactions**

We provide property management, leasing, constructionand other tenant related services to unconsolidated companies in which we haveequity interests. For the three months ended March 31, 2007 and 2006, wereceived management fees of $1.3 million and $1.1 million, leasing fees of$505,000 and $665,000 and construction and development fees of $3.6 million and$1.6 million, respectively, from these companies. These fees approximate marketrates for these types of services and we have eliminated our ownershippercentage of these fees in the consolidated financial statements.

**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.

7

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The following table reconciles the components of basic and diluted netincome per Common Unit for the three months ended March 31, 2007 and 2006,respectively (in thousands):

|                                                                                    | ** ** | **2007**    | ** ** | **2006** | ** ** | ** ** |
|------------------------------------------------------------------------------------|------------|-------------|------------|----------|------------|------------|
| Basic net income  available for common unitholders                                 | ** ** | **$**       | **73,473** |     | $          | 12,706     |   |   |
| Joint venture  partner convertible ownership net income (1)                        | ** ** | **452**     |       | —   |       |       |
|                                                                               | ** ** | ** **  |       |     |       |       |
| Diluted net  income available for common unitholders                               | ** ** | **$**       | **73,925** |     | $          | 12,706     |   |   |
|                                                                               | ** ** | ** **  |       |     |       |       |
| Weighted average  number of Common Units outstanding                               | ** ** | **146,552** |       | 148,175  |       |       |
| Joint venture  partner convertible ownership Common Unit equivalents (1)           |       | **1,138**   | ** ** | —   |       |       |
| Dilutive units  for stock-based compensation plans (2)                             | ** ** | **1,775**   |       | 1,090    |       |       |
| Weighted average number  of Common Units and potential dilutive common equivalents |       | **149,465** | ** ** | 149,265  |       |       |

 

(1)          One of our joint venture partners in one of ourunconsolidated companies has the option to convert a portion of its ownershipin the joint venture to the General Partner’s common shares.  The effect of this option on earnings perunit is dilutive for the first quarter 2007; therefore, conversion to CommonUnits is included in weighted average potential dilutive common equivalents forthe quarter.

(2)          Excludes (in thousands of units) 420 and 462 ofanti-dilutive units as of March 31, 2007 and 2006, respectively.  Additionally, we issued 3.75% ExchangeableSenior Notes (“Exchangeable Notes”) in November 2006, which were excluded fromearnings per unit due to having an anti-dilutive effect for the three-monthperiod ended March 31, 2007.

**7.     Segment Reporting**

We are engaged in threeoperating segments, the first two of which consist of the ownership and rentalof office and industrial real estate investments (collectively, “RentalOperations”). The third segment consists of our build-to-suit for saleoperations and providing various real estate services such as propertymanagement, maintenance, leasing, development and construction management tothird-party property owners and joint ventures (“Service Operations”). Ourreportable segments offer different products or services and are managedseparately because each segment requires different operating strategies andmanagement expertise.

The assets of the ServiceOperations 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, the resulting gain or loss is part of theincome of the Service Operations business segment.

Non-segmentrevenue consists mainly of equity in earnings of unconsolidated companies andother insignificant rental operations such as retail properties. Segment FFOinformation (FFO is defined below) is calculated by subtracting operatingexpenses attributable to the applicable segment from segment revenues.Non-segment assets consist of corporate assets including cash, deferredfinancing costs and investments in unconsolidated companies. Interest expenseand other non-property specific revenues and expenses are not allocated toindividual segments in determining our performance measure.

8

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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 REIT like our General Partner. FFOis calculated in accordance with the definition that was adopted by the Boardof Governors of the National Association of Real Estate Investment Trusts (“NAREIT”).NAREIT created FFO as a supplemental measure of REIT operating performance thatexcludes historical cost depreciation, among other items, from net incomedetermined in accordance with GAAP. FFO is a non-GAAP financial measuredeveloped by NAREIT to compare the operating performance of REITs. The mostcomparable GAAP measure is net income (loss). FFO should not be considered as a substitute for net income or any othermeasures derived in accordance with GAAP and may not be comparable to othersimilarly titled measure of other companies.

Historical cost accounting for real estate assets inaccordance with GAAP implicitly assumes that the value of real estate assetsdiminishes predictably over time.  Sincereal estate values instead have historically risen or fallen with marketconditions, many industry analysts and investors have considered presentationof operating results for real estate companies that use historical costaccounting to be insufficient by themselves. FFO, as defined by NAREIT, represents GAAP net income (loss), excludingextraordinary items as defined under GAAP and gains or losses from sales ofpreviously depreciated operating real estate assets, plus certain non-cashitems such as real estate asset depreciation and amortization, and aftersimilar adjustments for unconsolidated partnerships and joint ventures.

Management believes that the use of FFO, combined withthe required primary GAAP presentations, improves the understanding ofoperating results of REITs among the investing public and makes comparisons ofREIT operating results more meaningful. Management believes FFO is a useful measure for reviewing comparativeoperating and financial performance (although FFO should be reviewed inconjunction with net income which remains the primary measure of performance)because by excluding gains or losses related to sales of previously depreciatedoperating real estate assets and excluding real estate asset depreciation andamortization, FFO provides a useful comparison of the operating performance ofour real estate between periods or as compared to different companies.

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The following table shows (i) the revenues and FFO foreach of the reportable segments and (ii) a reconciliation of net incomeavailable for common unitholders to the calculation of FFO for the three monthsended March 31, 2007, and 2006, respectively (in thousands):
| ** **                                                              | ** ** | **Three Months Ended March 31,** | ** **  | ** ** |
|-------------------------------------------------------------------------|------------|------------------------------------------------------|-------------|------------|
| ** **                                                              | ** ** | **2007**                                             | ** **  | **2006**   | ** ** | ** ** |
| Revenues                                                                |       |                                                 |        |       |   |   |
| Rental Operations:                                                      |       |                                                 |        |       |   |   |
| Office                                                                  | ** ** | **$**                                                | **146,624** |       | $ | 131,437 |   |   |
| Industrial                                                              | ** ** | **56,758**                                           |        | 49,991     |   |   |
| Service Operations                                                      | ** ** | **14,730**                                           |        | 10,006     |   |   |
| Total Segment Revenues                                                  | ** ** | **218,112**                                          |        | 191,434    |   |   |
| Non-Segment Revenue                                                     | ** ** | **11,756**                                           |        | 10,908     |   |   |
|                                                                    |       |                                                 |        |       |   |   |
| Consolidated Revenue from continuing  operations                        |       | **229,868**                                          | ** **  | 202,342    |   |   |
| Discontinued Operations                                                 | ** ** | **5,745**                                            |        | 10,529     |   |   |
| Consolidated Revenue                                                    | ** ** | **$**                                                | **235,613** |       | $ | 212,871 |   |   |
| Funds From Operations                                                   |       |                                                 |        |       |   |   |
| Rental Operations:                                                      |       |                                                 |        |       |   |   |
| Office                                                                  | ** ** | **$**                                                | **87,848**  |       | $ | 80,464 |   |   |
| Industrial                                                              | ** ** | **42,483**                                           |        | 36,581     |   |   |
| Service Operations                                                      | ** ** | **6,934**                                            |        | 4,450      |   |   |
| Total Segment FFO                                                       | ** ** | **137,265**                                          |        | 121,495    |   |   |
|                                                                    |       |                                                 |        |       |   |   |
| Non-Segment FFO:                                                        |       |                                                 |        |       |   |   |
| Interest expense                                                        | ** ** | **(45,704**                                          | **)**       | (37,013    | ) |   |
| Interest and other income, net                                          | ** ** | **2,418**                                            |        | 1,980      |   |   |
| General and administrative expense                                      | ** ** | **(13,467**                                          | **)**       | (13,938    | ) |   |
| Gain on land sales, net of impairment                                   | ** ** | **13,997**                                           |        | 1,890      |   |   |
| Other non-segment income                                                | ** ** | **1,247**                                            |        | 1,167      |   |   |
| Minority interest                                                       | ** ** | **(15**                                              | **)**       | (102       | ) |   |
| Joint venture FFO                                                       | ** ** | **10,698**                                           |        | 9,998      |   |   |
| Dividends on Preferred Units                                            | ** ** | **(15,226**                                          | **)**       | (12,712    | ) |   |
| Adjustment for redemption of Preferred Units                            |       | —                                               |        | (2,633     | ) |   |
| Discontinued operations                                                 | ** ** | **1,287**                                            |        | 4,391      |   |   |
| Consolidated basic FFO                                                  | ** ** | **92,500**                                           |        | 74,523     |   |   |
| Depreciation and amortization on continuing  operations                 |       | **(67,739**                                          | **)**       | (57,630    | ) |   |
| Depreciation and amortization on discontinued  operations               |       | —                                               |        | (2,952     | ) |   |
| Partnership’s share of joint venture adjustments                   | ** ** | **(4,968**                                           | **)**       | (4,702     | ) |   |
| Earnings from depreciated  property sales on discontinued operations    | ** ** | **51,720**                                           |        | 505        |   |   |
| Earnings from depreciated property  sales — share of joint venture |       | **1,960**                                            | ** **  | 2,962      |   |   |
|                                                                    |       | ** **                                           | ** **  |       |   |   |
| Net income available for common unitholders                             |       | **$**                                                | **73,473**  | ** ** | $ | 12,706 |   |   |

 

The assets for each of the reportable segments as of March 31, 2007 andDecember 31, 2006, respectively, are as follows (in thousands):
| ** **           | ** ** | **March 31,** | ** **    | **December 31,** | ** ** |
|----------------------|------------|--------------------|---------------|-----------------------|------------|
| ** **           | ** ** | **2007**           | ** **    | **2006**              | ** ** |
| Assets               |       |               |          |                  |       |
| Rental Operations:   |       |               |          |                  |       |
| Office               | ** ** | **$**              | **4,162,363** |                  | $          | 4,052,882 |   |
| Industrial           | ** ** | **1,904,256**      |          | 1,951,916             |       |
| Service Operations   | ** ** | **425,694**        |          | 301,886               |       |
| Total Segment Assets | ** ** | **6,492,313**      |          | 6,306,684             |       |
| Non-Segment Assets   | ** ** | **780,550**        |          | 940,612               |       |
| Consolidated Assets  | ** ** | **$**              | **7,272,863** |                  | $          | 7,247,296 |   |

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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 aresummarized as follows for the three months ended March 31, 2007 and 2006,respectively  (in thousands):

|                                 | ** ** | **2007**  | ** ** | **2006** | ** ** |
|---------------------------------|------------|-----------|------------|----------|------------|
| Recurring  Capital Expenditures |       |      |       |     |       |
| Office                          | ** ** | **$**     | **15,722** |     | $          | 12,691 |   |
| Industrial                      | ** ** | **3,715** |       | 4,585    |       |
| Non-segment                     | ** ** | **34**    |       | 14       |       |
| Total                           | ** ** | **$**     | **19,471** |     | $          | 17,290 |   |

 

**8.     Discontinued Operations and Assets Held forSale**

We classified the operations of 33 buildings asdiscontinued operations as of March 31, 2007. These 33      buildings consist of 17 industrial and 16office properties. Of these properties, ten were sold during the first quarterof 2007, 21 were sold during 2006 and two operating properties are classifiedas held-for-sale at March 31, 2007.

The following table illustrates the operations of the buildingsreflected in discontinued operations for the three months ended March 31, 2007and 2006, respectively (in thousands):

 

|                                                            | ** ** | **2007**   | ** ** | **2006** | ** ** | ** ** |
|------------------------------------------------------------|------------|------------|------------|----------|------------|------------|
| Statement of  Operations:                                  |       |       |       |     |       |       |
| Revenues                                                   | ** ** | **$**      | **5,745**  |     | $          | 10,529     |   |   |
| Expenses:                                                  |       |       |       |     |       |       |
| Operating                                                  | ** ** | **2,940**  |       | 4,170    |       |       |
| Interest                                                   | ** ** | **1,514**  |       | 1,948    |       |       |
| Depreciation and Amortization                              |       | —     |       | 2,952    |       |       |
| General and Administrative                                 | ** ** | **4**      |       | 20       |       |       |
|                                                       |       |       |       |     |       |       |
| Income from  discontinued operations, before gain on sales |       | **1,287**  | ** ** | 1,439    |       |       |
| Gain on sale of property                                   | ** ** | **51,720** |       | 505      |       |       |
|                                                       | ** ** | ** ** |       |     |       |       |
| Income from  discontinued operations                       | ** ** | **$**      | **53,007** |     | $          | 1,944      |   |   |

 

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At March 31, 2007, we classified two propertiesas held-for-sale and included in discontinued operations.  Additionally, we have classified 21in-service properties as held-for-sale, but have included the results of theseproperties in continuing operations, either based on our present intention tosell the majority of our ownership interest in the properties to entities inwhich we will retain a minority equity ownership interest or because theresults of operations for the properties are immaterial.  The following table illustrates the aggregatebalance sheet of the aforementioned properties included in discontinuedoperations, as well as the 21 held-for-sale properties whose results areincluded in continuing operations, at March 31, 2007 (in thousands):

|                                  | ** ** | **Properties  Included in  Discontinued  Operations** | ** ** | **Properties  Included in  Continuing  Operations** | ** ** | **Total  Held-for-Sale  Properties** | ** ** |
|----------------------------------|------------|------------------------------------------------------------|------------|----------------------------------------------------------|------------|--------------------------------------|------------|
|                             |       |                                                       |       |                                                     |       |                                 |       |
| Balance Sheet:                   |       |                                                       |       |                                                     |       |                                 |       |
| Real estate  investments, net    |       | $                                                          | 29,252     |                                                     | $          | 456,966                              |       | $ | 486,218 |   |
| Other assets                     |       | 2,379                                                      |       | 9,652                                                    |       | 12,031                               |       |
| Total assets                     |       | $                                                          | 31,631     |                                                     | $          | 466,618                              |       | $ | 498,249 |   |
|                             |       |                                                       |       |                                                     |       |                                 |       |
| Accrued expenses                 |       | $                                                          | 754        |                                                     | $          | 1,966                                |       | $ | 2,720 |   |
| Other liabilities                |       | 442                                                        |       | 2,626                                                    |       | 3,068                                |       |
| Secured debt                     |       | —                                                     |       | 146,730                                                  |       | 146,730                              |       |
| Total liabilities  held-for-sale |       | $                                                          | 1,196      |                                                     | $          | 151,322                              |       | $ | 152,518 |   |

 

Weallocate interest expense to discontinued operations and have included suchinterest expense in computing net income from discontinued operations. Interestexpense allocable to discontinued operations includes interest on any debt onsecured properties included in discontinued operations and an allocable shareof our consolidated unsecured interest expense for unencumbered properties. Theallocation of unsecured interest expense to discontinued operations was basedupon the gross book value of the discontinued operations unencumberedpopulation as it related to our entire unencumbered population.

**9.****   Financial Instruments**

We are exposed to capital market risk, such as changesin interest rates. In order to manage the volatility relating to interest raterisk, we may enter into interest rate hedging arrangements from time to time.We do not utilize derivative financial instruments for trading or speculativepurposes.

In August 2005, we entered into $300.0 million of cashflow hedges through forward-starting interest rate swaps to hedge interestrates on $300.0 million of estimated debt offerings in 2007. The swaps qualifyfor hedge accounting, with any changes in fair value recorded in AccumulatedOther Comprehensive Income (“OCI”). At March 31, 2007, the fair value of theseswaps was approximately $10.0 million in an asset position as the effectiverates of the swaps were lower than current interest rates at March 31, 2007.

The effectiveness of our hedges will be evaluatedthroughout their lives using the hypothetical derivative method under which thechange in fair value of the actual swap designated as the hedging instrument iscompared to the change in fair value of a hypothetical swap.

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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 did nothave a material impact, with an additional tax exposure of approximately $1.7million recorded as an adjustment to the opening balance of Distributions inExcess of Net Income, on our financial position or results of operationsprimarily due to the General Partner’s tax status as a REIT. Our uncertain taxpositions are immaterial both individually and in the aggregate.

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 effectivefor fiscal years beginning after November 15, 2007.  Management is currently evaluating the impactthe adoption of this statement will have on the Partnership.

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 datefor SFAS 159 is the beginning of each reporting entity’s first fiscal year endthat begins after November 15, 2007. Management is currently evaluating the impact the adoption of this SFAS159 will have on the Partnership.

**11.****   Subsequent Events**

*Declarationof Distributions*

The GeneralPartner’s board of directors declared the following distributions at its April25, 2007, regularly scheduled Board meeting:

| Class                             | ** ** | **Quarterly  Amount/Unit** | ** ** | **Record Date** | ** **    | **Payment Date** | ** **    |
|-----------------------------------|------------|----------------------------|------------|----------------------|---------------|-----------------------|---------------|
| Common                            |       | $                          | 0.475      |                 | May 14, 2007  |                  | May 31, 2007  |   |
| Preferred (per  depositary unit): |       |                       |       |                 |          |                  |          |
| Series B                          |       | $                          | 0.998750   |                 | June 15, 2007 |                  | June 29, 2007 |   |
| Series J                          |       | $                          | 0.414063   |                 | May 17, 2007  |                  | May 31, 2007  |   |
| Series K                          |       | $                          | 0.406250   |                 | May 17, 2007  |                  | May 31, 2007  |   |
| Series L                          |       | $                          | 0.412500   |                 | May 17, 2007  |                  | May 31, 2007  |   |
| Series M                          |       | $                          | 0.434375   |                 | June 15, 2007 |                  | June 29, 2007 |   |
| Series N                          |       | $                          | 0.453125   |                 | June 15, 2007 |                  | June 29, 2007 |   |

 

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**Item 2.   Management’s Discussion and Analysisof Financial Condition and Results of Operations**

**Cautionary Statement Regarding Forward Looking Statements**

Certain statements contained in this Report, including those related toour future operations, constitute “forward-looking statements” within themeaning of Section 27A of the Securities Act of 1933, as amended, and Section21E of the Securities Exchange Act of 1934, as amended.  The words “believe,” “estimate,” “expect,”“anticipate,” “intend,” “plan,” “seek,” “may” and similar expressions orstatements regarding future periods are intended to identify forward-looking statements.  These forward-looking statements involveknown and unknown risks, uncertainties and other important factors that couldcause our actual results, performance or achievements, or industry results, todiffer materially from any predictionsof future results, performance or achievements that we express or imply in thisReport or in the information incorporated by reference into this Report. Someof the risks, uncertainties and other important factors that may affect futureresults include, among others:

·              Changes in general economic and businessconditions, including performance of financial markets;

·              The General Partner’s continued qualification asa real estate investment trust (“REIT”);

·              Heightened competition for tenants and potentialdecreases in property occupancy;

·              Potential increases in real estate constructioncosts;

·              Potential changes in the financial markets andinterest rates;

·              Our continuing ability to favorably raise fundsthrough the issuance of debt and equity in the capital markets;

·              Our ability to successfully identify, acquire,develop and/or manage properties on terms that are favorable to us;

·              Our ability to successfully dispose of propertieson terms that are favorable to us;

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

·              Other risks and uncertainties described orincorporated by reference herein, including, without limitation, those risksand uncertainties discussed from time to time in our other reports and otherpublic filings with the Securities 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 included inour Annual Report on Form 10-K for the fiscal year ended December 31, 2006,which we filed with the SEC on March 13, 2007, and is updated by us from timeto time in Quarterly Reports on Form 10-Q and 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 uncertain, and subject to change, asthey involve substantial risks and uncertainties beyond our control. Newfactors emerge from time to time, and it is not possible for us to predict thenature, 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 required by law.

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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, DukeRealty Services Limited Partnership and Duke Construction Limited Partnership.As of March 31, 2007, we:

·              Owned or jointly controlled 750 industrial,office and retail properties (including properties under development),consisting of approximately 120.7 million square feet; and

·              Owned or jointly controlled more than 7,700 acresof land with an estimated future development potential of approximately 112million square feet of industrial, office and retail properties.

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

·              Property leasing;

·              Property management;

·              Construction;

·              Development; and

·              Other tenant-related services.

**Acquisition**

In February 2007,we closed on the acquisition of Bremner Healthcare Real Estate (“Bremner”), anational health care development and management firm.  The primary reason for the acquisition was toexpand our development capabilities within the health care real estate market.

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

Approximately$38.0 million of the total purchase price is allocated to goodwill, which isattributable to the value of Bremner’s overall development capabilities andtheir in-place workforce.  Our purchaseaccounting allocation is preliminary as of March 31, 2007.

**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.

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***Occupancy Analysis:*** Our ability to maintain occupancy rates is aprincipal driver of our results of operations. The following table sets forthoccupancy information regarding our in-service portfolio of rental properties(excluding in-service properties developed or acquired with the intent to sell)as of March 31, 2007 and 2006 (in thousands, except percentage data):

|                | ** ** | **Total**           | ** ** | **Percent of**             | ** ** | ** **                | ** ** | ** ** | ** ** |
|----------------|------------|---------------------|------------|---------------------------------|------------|---------------------------|------------|------------|------------|
| ** **     | ** ** | **Square Fee** | ** ** | **Total Square Feet** | ** ** | **Percent Occupied** | ** ** |
| **Type**       | ** ** | **2007**            | ** ** | **2006**                        | ** ** | **2007**                  | ** ** | **2006**   | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Industrial** |       | 75,628              |       | 71,610                          |       | 69.7                      | %          | 69.0       | %          | 92.6 | % | 94.6 | % |
| **Office**     |       | 32,167              |       | 31,613                          |       | 29.7                      | %          | 30.4       | %          | 91.9 | % | 89.6 | % |
| **Other**      |       | 611                 |       | 611                             |       | 0.6                       | %          | 0.6        | %          | 96.7 | % | 99.1 | % |
| Total          |       | 108,406             |       | 103,834                         |       | 100.0                     | %          | 100.0      | %          | 92.4 | % | 93.1 | % |

 

***Lease Expiration and Renewal:*** Our ability to maintain and grow occupancy ratesprimarily depends upon our continuing ability to re-lease expiring space.******The following tablereflects our in-service lease expiration schedule by property type as of March31, 2007. The table indicates square footage and annualized net effective rents(based on March 2007 rental revenue) under expiring leases (in thousands,except percentage data):
| ** **                    | ** ** | **Total  Portfolio** | ** ** | **Industrial**     | ** ** | **Office**    | ** ** | **Other**  | ** ** |
|-------------------------------|------------|----------------------|------------|--------------------|------------|---------------|------------|------------|------------|
| **Year of**              | ** ** | **Square**           | ** ** | **Ann. Rent** | ** ** | **% of** | ** ** | **Square** | ** ** | **Ann. Rent** | ** ** | **Square** | ** ** | **Ann. Rent** | ** ** | **Square** | ** ** | **Ann. Rent** | ** ** |
| **Expiration**                | ** ** | **Feet**             | ** ** | **Revenue**        | ** ** | **Revenue**   | ** ** | **Feet**   | ** ** | **Revenue** | ** ** | **Feet** | ** ** | **Revenue** | ** ** | **Feet** | ** ** | **Revenue** | ** ** |
| 2007                          |       | 7,438                |       | $                  | 44,003     |          | 6          | %          | 5,666      |   | $ | 20,757 |   | 1,768 |   | $ | 23,186 |   | 4 |   | $ | 60 |   |
| 2008                          |       | 13,838               |       | 81,050             |       | 12            | %          | 10,572     |       | 40,860 |   | 3,247 |   | 39,855 |   | 19 |   | 335 |   |
| 2009                          |       | 11,644               |       | 75,237             |       | 11            | %          | 8,445      |       | 34,103 |   | 3,195 |   | 41,056 |   | 4 |   | 78 |   |
| 2010                          |       | 12,169               |       | 93,487             |       | 13            | %          | 8,029      |       | 35,154 |   | 4,129 |   | 58,166 |   | 11 |   | 168 |   |
| 2011                          |       | 13,517               |       | 85,233             |       | 12            | %          | 10,071     |       | 38,897 |   | 3,421 |   | 45,754 |   | 25 |   | 582 |   |
| 2012                          |       | 9,444                |       | 65,770             |       | 9             | %          | 6,375      |       | 24,623 |   | 3,062 |   | 40,814 |   | 7 |   | 333 |   |
| 2013                          |       | 7,511                |       | 67,785             |       | 10            | %          | 4,072      |       | 17,792 |   | 3,405 |   | 49,414 |   | 34 |   | 579 |   |
| 2014                          |       | 5,620                |       | 33,051             |       | 5             | %          | 4,259      |       | 15,168 |   | 1,361 |   | 17,883 |   | — |   | — |   |
| 2015                          |       | 6,883                |       | 52,944             |       | 8             | %          | 4,736      |       | 18,775 |   | 2,147 |   | 34,169 |   | — |   | — |   |
| 2016                          |       | 3,824                |       | 25,860             |       | 4             | %          | 2,690      |       | 9,577 |   | 960 |   | 14,611 |   | 174 |   | 1,672 |   |
| 2017 and Thereafter           |       | 8,267                |       | 68,078             |       | 10            | %          | 5,087      |       | 22,052 |   | 2,870 |   | 44,398 |   | 310 |   | 1,627 |   |
|                          |       | 100,155              |       | $                  | 692,498    |          | 100        | %          | 70,002     |   | $ | 277,758 |   | 29,565 |   | $ | 409,306 |   | 588 |   | $ | 5,434 |   |
|                          |       |                 |       |               |       |          |       |       |       |   |   |   |   |   |   |   |   |   |   |
| Total  Portfolio  Square Feet |       | 108,406              |       |               |       |          |       | 75,628     |       |   |   | 32,167 |   |   |   | 611 |   |   |   |
|                          |       |                 |       |               |       |          |       |       |       |   |   |   |   |   |   |   |   |   |   |
| Percent Occupied              |       | 92.4                 | %          |               |       |          |       | 92.6       | %          |   |   | 91.9 | % |   |   | 96.7 | % |   |   |

 

We renewed 81.6% and 76.4% of our leases up for renewal in the threemonths ended March 31, 2007 and 2006 totaling approximately 1.9 million and 1.9million square feet, respectively, on which we attained 5% and 3.8% growth innet effective rents.

The average term of renewals increased from 3.0 years in the threemonths ended March 31, 2006 to 3.6 years in the three months ended March 31,2007.

***Future Development:***Another source of growth in earnings is the developmentof additional properties. These properties should provide future earningsthrough income upon sale or from Rental Operations growth as they are placed inservice. We had 9.1 million square feet of property under development withtotal estimated costs of $1.0 billion at March 31, 2007, compared to 9.3million square feet with total costs of $718.0 million, at March 31, 2006.

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The following tablesummarizes our properties under development as of March 31, 2007 (in thousands,except percentage data):

|                                | ** ** | ** ** | ** ** | ** ** | ** **  | **Total**  | ** **    | ** ** | ** **      |
|--------------------------------|------------|------------|------------|------------|-------------|------------|---------------|------------|-----------------|
| **Anticipated**                | ** ** | ** ** | ** ** | ** ** | ** **  | ** ** | **Estimated** | ** ** | **Anticipated** | ** ** |
| **In-Service**                 | ** ** | ** ** | **Square** | ** ** | **Percent** | ** ** | **Project**   | ** ** | **Stabilized**  | ** ** |
| **Date**                       | ** ** | ** ** | **Feet**   | ** ** | **Leased**  | ** ** | **Costs**     | ** ** | **Return**      | ** ** |
| Held  for Rental Buildings:    |       |       |       |       |        |       |          |       |            |
| 2nd Quarter 2007               |       | 581        |       | 28         | %           | $          | 79,666        |       | 9.32            | % |
| 3rdQuarter 2007                |       | 2,626      |       | 7          | %           | 173,251    |          | 9.33       | %               |
| 4th Quarter 2007               |       | 1,035      |       | 14         | %           | 142,500    |          | 9.59       | %               |
| Thereafter                     |       | 240        |       | 46         | %           | 50,500     |          | 8.67       | %               |
|                           |       | 4,482      |       | 13         | %           | $          | 445,917       |       | 33              | % |
|                           |       |       |       |       |        |       |          |       |            |
| Service  Operations Buildings: |       |       |       |       |        |       |          |       |            |
| 2nd  Quarter 2007              |       | 2,648      |       | 34         | %           | 124,773    |          | 8.42       | %               |
| 3rdQuarter 2007                |       | 1,210      |       | 75         | %           | 234,349    |          | 8.67       | %               |
| 4th  Quarter 2007              |       | 647        |       | 79         | %           | 173,656    |          | 8.08       | %               |
| Thereafter                     |       | 111        |       | 100        | %           | 31,378     |          | 7.78       | %               |
|                           |       | 4,616      |       | 53         | %           | 564,156    |          | 8.36       | %               |
| Total                          |       | 9,098      |       | 33         | %           | $          | 1,010,073     |       | 8.81            | % |

 

***Acquisition and Disposition Activity:***We continued to selectively dispose of non-strategicproperties during the three months ended March 31, 2007.  Gross sales proceeds related to thedispositions of wholly owned held for rental properties were $144.9 million forthe three months ended March 31, 2007, which included the disposition of aportfolio of eight office properties in the Cleveland market.  Our share of proceeds from sales ofproperties within unconsolidated joint ventures, in which we have a less than100% interest, totaled $5.1 million for the three months ended March 31,2007.  For the three months ended March31, 2006, proceeds from the disposition of non-strategic properties totaled$7.4 million for wholly owned held for rental properties, and $50.1 million forour share of property sales from unconsolidated joint ventures.  Dispositions of wholly owned propertiesdeveloped for sale rather than rental resulted in $25.9 million in proceeds forthe three months ended March 31, 2007, and no dispositions of wholly ownedproperties developed for sale took place in the three months ended March 31,2006.

For the three months ended March 31, 2007, weacquired Bremner and also acquired $34.0 million of undeveloped land, comparedto acquisitions of $886.8 million of income producing properties and $202.8million of undeveloped land in the three months ended March 31, 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 supplemental measure of REIT operatingperformance that excludes historical cost depreciation, among other items, fromnet income determined in accordance with accounting principles generallyaccepted in the United States of America (“GAAP”). FFO is a non-GAAP financialmeasure developed by NAREIT to compare the operating performance of REITs.  The most comparable GAAP measure is netincome (loss).  FFO should not beconsidered as a substitute for net income or any other measures derived inaccordance with GAAP and may not be comparable to other similarly titledmeasure 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 operating resultsmore meaningful. Management believes FFO is a useful measure for reviewingcomparative operating and financial performance (although FFO should bereviewed in conjunction with net income which remains the primary measure ofperformance) because by excluding gains or losses related to sales ofpreviously depreciated operating real estate assets and excluding real estateasset depreciation and amortization, FFO 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 months endedMarch 31, 2007 and 2006, respectively (in thousands):

|                                                                          | ** ** | **2007**    | ** ** | **2006** | ** ** |
|--------------------------------------------------------------------------|------------|-------------|------------|----------|------------|
| Net income  available for common unitholders                             | ** ** | **$**       | **73,473** |     | $          | 12,706 |   |
| Adjustments:                                                             |       |        |       |     |       |
| Depreciation and amortization                                            | ** ** | **67,739**  |       | 60,582   |       |
| Partnership’s share of joint venture depreciation  and amortization | ** ** | **4,968**   |       | 4,702    |       |
| Earnings from depreciable property sales — wholly  owned            | ** ** | **(51,720** | **)**      | (505     | )          |
| Earnings from depreciable property sales — share of  joint venture  | ** ** | **(1,960**  | **)**      | (2,962   | )          |
|                                                                     |       |        |       |     |       |
| **Funds From Operations**                                                | ** ** | **$**       | **92,500** |     | $          | 74,523 |   |

 

**Results of Operations**

A summary of our operating results and property statistics for thethree months ended March 31, 2007 and 2006, respectively, is as follows (inthousands, except number of properties and per unit data):

|                                                              | ** ** | **2007**    | ** **  | **2006** | ** ** |
|--------------------------------------------------------------|------------|-------------|-------------|----------|------------|
| Rental Operations  revenues from Continuing Operations       | ** ** | **$**       | **215,138** |     | $          | 192,336 |   |
| Service Operations  revenues from Continuing Operations      | ** ** | **14,730**  |        | 10,006   |       |
| Earnings from  Continuing Rental Operations                  | ** ** | **25,825**  |        | 31,827   |       |
| Earnings from  Continuing Service Operations                 | ** ** | **6,934**   |        | 4,450    |       |
| Operating income                                             | ** ** | **19,292**  |        | 22,339   |       |
| Net income available  for common unitholders                 | ** ** | **$**       | **73,473**  |     | $          | 12,706 |   |
| Weighted average Common  Units outstanding                   | ** ** | **146,552** |        | 148,175  |       |
| Weighted average common  and dilutive potential Common Units | ** ** | **149,465** |        | 149,265  |       |
| Basic income per Common  Unit:                               |       |        |        |     |       |
| Continuing operations                                        | ** ** | **$**       | **.14**     |     | $          | .07 |   |
| Discontinued  operations                                     | ** ** | **$**       | **.36**     |     | $          | .02 |   |
| Diluted income per  Common Unit:                             |       |        |        |     |       |
| Continuing  operations                                       | ** ** | **$**       | **.14**     |     | $          | .07 |   |
| Discontinued  operations                                     | ** ** | **$**       | **.35**     |     | $          | .02 |   |
| Number of in-service  properties at end of period            | ** ** | **691**     |        | 704      |       |
| In-service square footage at end of period                   | ** ** | **108,406** |        | 103,834  |       |

 

 

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**Comparison of Three Months Ended March 31, 2007 to Three Months EndedMarch 31, 2006**

Rental Income From Continuing Operations

Overall, rental income from continuing operationsincreased from $184.1 million for the three months ended March 31, 2006,to $207.4 million for the same period in 2007. The following tablereconciles rental income from continuing operations by reportable segment toour total reported rental income from continuing operations for the threemonths ended March 31, 2007 and 2006, respectively (in thousands):

|               | ** ** | **2007**    | ** ** | **2006** | ** ** |
|---------------|------------|-------------|------------|----------|------------|
| Rental Income |       |        |       |     |       |
| Office        | ** ** | **146,624** |       | 131,437  |       |
| Industrial    | ** ** | **56,758**  |       | 49,991   |       |
| Non-segment   | ** ** | **4,065**   |       | 2,649    |       |
| Total         |       | **207,447** |       | 184,077  |       |

 

The following factorscontributed to these results:

·                  We acquired fourproperties and placed 26 developments in service from April 1, 2006 toMarch 31, 2007. These acquisitions and developments provided revenues of$11.7 million in the first quarter of 2007.

·                  Lease terminationfees decreased slightly from $4.1 million in the first quarter of 2006 to$3.4 million in the first quarter of 2007.

·                  Theremaining increase in rental revenues from the first quarter of 2006 isprimarily the result of an increase in reimbursable 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 three monthsended March 31, 2007 and 2006, respectively (in thousands):

|                    | ** ** | **2007**   | ** ** | **2006** | ** ** |
|--------------------|------------|------------|------------|----------|------------|
| Rental Expenses:   |       |       |       |     |       |
| Office             | ** ** | **41,221** |       | 35,541   |       |
| Industrial         | ** ** | **7,651**  |       | 7,650    |       |
| Non-segment        | ** ** | **1,252**  |       | 716      |       |
| Total              |       | **50,124** |       | 43,907   |       |
|               |       | ** ** |       |     |       |
| Real Estate Taxes: |       | ** ** |       |     |       |
| Office             |       | **17,554** |       | 14,872   |       |
| Industrial         |       | **6,625**  |       | 5,760    |       |
| Non-segment        |       | **1,567**  |       | 1,327    |       |
| Total              |       | **25,746** |       | 21,959   |       |

 

Of the overall$6.2 million increase in rental expenses, $1.6 million was attributable toproperties acquired and developments placed in service from April 1, 2006to March 31, 2007. Inclement weather conditions in the first quarter of2007 and normal inflationary factors triggered the remaining increase in rentalexpenses.

Of the overall$3.8 million increase in real estate taxes, $1.2 million wasattributable to properties acquired and developments placed in service from April 1,2006 to March 31, 2007. The remaining increase in real estate taxes wasdriven by increases in assessments by municipal authorities in our differentmarkets.

 

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Interest Expense

Interest expenseincreased from $37.0 million in the first quarter of 2006 to $45.7 millionin the first quarter of 2007 primarily due to borrowings that occurred in thelast half of 2006, including $700.0 million of senior unsecured notesissued in August 2006, $575.0 million of exchangeable senior notes issuedin November 2006 and $319.0 million of secured debt issued in November2006. These increased borrowings were used mainly to fund acquisitions anddevelopment.

Depreciation andAmortization

Depreciation andamortization expense increased from $57.6 million during the three months endedMarch 31, 2006 to $67.7 million for the same period in 2007 due toincreases in our held-for-rental asset base from acquisitions and developmentsduring 2006.

Service Operations

Our serviceoperations primarily consist of sales of properties developed or acquired withthe intent to sell within a short period of time and the leasing, management,construction and development services for joint venture properties andproperties owned by third parties (collectively, “Service Operations”). Theseoperations are heavily influenced by the current state of the economy, asleasing and management fees are dependent upon occupancy while construction anddevelopment services rely on the expansion of business operations. ServiceOperations earnings increased from $4.5 million for the three months endedMarch 31, 2006 to $6.9 million for the three months ended March 31,2007, primarily as a result of gains on the sale of two properties totaling$2.0 million in the three months ended March 31, 2007 compared to nosuch sales during the three months ended March 31, 2006.

General andAdministrative Expense

General andadministrative expenses decreased from $13.9 million for the three monthsended March 31, 2006 to $13.5 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. Those overheadcosts not allocated to these operations are charged to general andadministrative expenses.  The overalldecrease in general and administrative expenses is a result of more overheadallocated to other areas in 2007, primarily construction and leasing, due toincreases in wholly-owned activity in these areas.  This is offset to a large extent by anincrease in the overall pool of overhead costs, resulting in a minimal neteffect on total general and administrative expenses.

 

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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 fromsales of land, net of impairment adjustments, are comprised of the followingamounts for the three months ended March 31, 2007 and 2006, respectively(in thousands):

|                                 | ** ** | **2007** | ** ** | **2006** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|
| Gain on land sales              | ** ** | **$**    | **14,091** |     | $          | 1,890 |   |
| Impairment adjustment  for land | ** ** | **(94**  | )          | —   |       |
| Total                           |       | **$**    | **13,997** |     | $          | 1,890 |   |

 

We sold sixparcels of undeveloped land in the first quarter of 2007 with overall highermargins than the five land sales in the first quarter of 2006. In addition, werecognized a deferred gain of approximately $1.7 million in the firstquarter of 2007 on a property sold during 2006.

Discontinued Operations

The results of operations for properties sold during theyear or designated as held-for-sale to unrelated parties at the end of theperiod are required to be classified as discontinued operations. The propertyspecific components of net earnings that are classified as discontinuedoperations include rental revenues, rental expenses, real estate taxes,allocated interest expense and depreciation expense, as well as the net gain orloss on the disposition of properties.

We classified the operations of 33 buildings as discontinuedoperations as of March 31, 2007. These 33 buildings consist of 17industrial and 16 office properties. As a result, we classified net income fromoperations of $1.3 million and $1.4 million as net income fromdiscontinued operations for the three months ended March 31, 2007 and2006, respectively.

Of these properties, ten were sold during the firstquarter of 2007 and two  properties weresold during the first quarter of 2006. The gains on disposal of theseproperties of $51.7 million and $505,000 for the three months endedMarch 31, 2007 and 2006, respectively, are also reported in discontinuedoperations.

**Liquidity and Capital Resources**

Sources of Liquidity

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

·            working capital;

·            net cash provided byoperating activities; and

·            proceeds received fromreal estate dispositions.

 

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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 capital improvements,primarily through the following sources:

·            issuance of additionalGeneral Partner equity, including common and preferred stock;

·            issuance of additionaldebt securities including convertible debt instruments;

·            undistributed cashprovided by operating activities, if any; and

·            proceedsreceived from real estate dispositions.  

### *Rental Operations*

Webelieve our principal source of liquidity, cash flows from Rental Operations,provides a stable source of cash to fund operational expenses. We believe thatthis cash-based revenue stream is substantially aligned with revenuerecognition (except for periodic straight-line rental income accruals andamortization of above or below market rents) as cash receipts from the leasingof rental properties are generally received in advance of or a short timefollowing the actual revenue recognition.

Weare subject to risks of decreased occupancy through market conditions, as wellas tenant defaults and bankruptcies, and potential reduction in rental ratesupon renewal or re-letting of properties, each of which would result in reducedcash flow from operations. However, we believe that these risks may bemitigated by our relatively strong market presence in most of our locations andthe fact that we perform in-house credit review and analysis on major tenantsand all significant leases before they are executed.

*Credit Facility*

We have an unsecured lineof credit available at March 31, 2007, described as follows (dollars inthousands):

|                           | ** ** | **Borrowing** | ** ** | **Maturity** | ** **    | **Interest** | ** **    | **Outstanding Balance**         | ** ** |
|---------------------------|------------|---------------|------------|--------------|---------------|--------------|---------------|--------------------------------------|------------|
| **Description**           | ** ** | **Capacity**  | ** ** | **Date**     | ** **    | **Rate**     | ** **    | **at March 31, 2007** | ** ** |
| Unsecured Line  of Credit |       | $             | 1,000,000  |         | January  2010 |         | LIBOR  + .53% |                                 | $          | 330,000 |   |
|                           |            |               |            |              |               |              |               |                                      |            |  |  |

 

We use this line of credit to fund development activities, acquireadditional rental properties and provide working capital.

The line of creditprovides us with an option to obtain borrowings from financial institutionsthat participate in the line, at rates lower than the stated interest rate,subject to certain restrictions. Interest rates on the amounts outstanding onthe unsecured line of credit at March 31, 2007, range from LIBOR + .16% toLIBOR +  .53% (equal to 5.48% and 5.85%as of March 31, 2007).

The line of creditalso contains financial covenants that require us to meet financial ratios anddefined levels of performance, including those related to variable interestindebtedness, consolidated net worth and debt-to-market capitalization. As ofMarch 31, 2007, we were in compliance with all financial covenants underour line of credit.

 

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*Debtand Equity Securities*

At March 31, 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. From time to time, we and the GeneralPartner expect to issue additional securities under this new automatic shelfregistration statement to fund the development and acquisition of additionalrental properties and to fund the repayment of the credit facility and other long-termdebt upon maturity.

The indenturegoverning our unsecured notes requires us to comply with financial ratios andother covenants regarding our operations. We were in compliance with all suchcovenants as of March 31, 2007.

*Sale ofReal Estate Assets*

We utilize sales of real estate assets as anadditional source of liquidity. We pursue opportunities to sell real estateassets at favorable prices to capture value created by us, as well as toimprove the overall quality of our portfolio by recycling sales proceeds intonew properties with greater value creation opportunities.

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 threemonths ended March 31, 2007 and 2006, respectively (in thousands):

|                       | ** ** | **2007**    | ** ** | **2006** | ** ** |
|-----------------------|------------|-------------|------------|----------|------------|
| Tenant improvements   | ** ** | **$10,333** |       | $13,526  |       |
| Leasing costs         | ** ** | **8,164**   |       | 1,995    |       |
| Building improvements | ** ** | **974**     |       | 1,769    |       |
| Total                 |       | **$19,471** |       | $17,290  |       |

 

*DebtMaturities*

Debt outstandingat March 31, 2007, totaled $4.1 billion with a weighted average interest rateof 5.76%, maturing at various dates through 2028. We had $3.1 billion ofunsecured notes, $330.0 million outstanding on our unsecured line of credit andapproximately $650.1 million of secured debt outstanding at March 31, 2007.Scheduled principal amortization and maturities of such debt totaled $2.7 millionfor the three months ended March 31, 2007.

 

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The following is asummary of the scheduled future amortization and maturities of our indebtednessat March 31, 2007 (in thousands, except percentage data):

|            | ** ** | **Future Repayments** | ** ** | **Weighted Average** | ** ** |
|------------|------------|----------------------------|------------|---------------------------|------------|
| ** ** | ** ** | **Scheduled**              | ** ** | ** **                | ** ** | ** ** | ** ** | **Interest Rate of** | ** ** |
| **Year**   | ** ** | **Amortization**           | ** ** | **Maturities**            | ** ** | **Total** | ** ** | **Future Repayments** | ** ** |
| 2007       |       | $                | 9,904      |                      | $          | 205,323 |   | $ | 215,227 |   | 5.65% |   |
| 2008       |       | 12,478                     |       | 279,277                   |       | 291,755 |   | 5.09% |   |
| 2009       |       | 12,185                     |       | 275,000                   |       | 287,185 |   | 7.36% |   |
| 2010       |       | 11,952                     |       | 505,000                   |       | 516,952 |   | 5.63% |   |
| 2011       |       | 11,985                     |       | 1,012,139                 |       | 1,024,124 |   | 5.10% |   |
| 2012       |       | 9,914                      |       | 201,216                   |       | 211,130 |   | 5.90% |   |
| 2013       |       | 9,905                      |       | 150,000                   |       | 159,905 |   | 4.74% |   |
| 2014       |       | 9,826                      |       | 294,534                   |       | 304,360 |   | 6.44% |   |
| 2015       |       | 7,593                      |       | 5,807                     |       | 13,400 |   | 7.13% |   |
| 2016       |       | 6,671                      |       | 506,449                   |       | 513,120 |   | 6.17% |   |
| 2017       |       | 4,976                      |       | 450,000                   |       | 454,976 |   | 5.95% |   |
| Thereafter |       | 31,676                     |       | 91,722                    |       | 123,398 |   | 6.50% |   |
|       |       | $139,065                   |       | $3,976,467                |       | $4,115,532 |   | 5.76% |   |
|            |            |                            |            |                           |            |  |  |  |  |  |  |  |

 

Historical Cash Flows

Cash and cashequivalents were $9.9 million and zero at March 31, 2007 and 2006,respectively. The following highlights significant changes in net cashassociated with our operating, investing and financing activities (inmillions):

|                                                        | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                             | ** ** | **2007**                                             | ** ** | **2006** | ** ** |
| Net Cash Provided by   Operating Activities            |       | $                                                    | 11.6       |   | $ | 28.7 |   |
|                                                   |       |                                                 |       |   |   |
| Net Cash Provided by  (Used for)  Investing Activities |       | $                                                    | 9.6        |   | $(938.2 | ) |
|                                                   |       |                                                 |       |   |   |
| Net Cash Provided by (Used for)  Financing Activities  |       | $(79.5                                               | )          | $ 882.7 |   |
|                                                        |            |                                                      |            |  |  |  |  |

 

*OperatingActivities*

Cash flows fromoperating activities provide the cash necessary to meet normal operationalrequirements of our Rental Operations and Service Operations 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 the three-month period ended March 31,2007, we incurred Service Operations building development costs of $70.5million, compared to $36.3 million for the period ended March 31,2006. The difference is reflective of the increased activity in ourheld-for-sale pipeline. The pipeline of held-for-sale projects underconstruction as of March 31, 2007, has anticipated costs of $564.2 million.

·                  Wehad no Service Operations sales in the first quarter of 2006. We sold twoService Operations buildings in the first quarter of 2007, receiving netproceeds of $25.4 million, and recognized pre-tax gains of $2.9 million.

* *

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* *

*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 $96.6million for the three-month period ended March 31, 2007 from $84.5 millionfor the same period in 2006 as the result of an increase in developmentactivity in 2007.

·                  During the first quarter of 2007, wepaid cash of $36.1 million for the Bremner acquisition, of which$2.5 million is classified as a cash outflow from operating activities,(with the remaining $11.0 million paid through the issuance of CommonUnits) and $34.7 million for undeveloped land acquisitions compared to$631.1 million in real estate acquisitions and $203.2 million inacquisitions of undeveloped land in the same period in 2006. The mostsignificant activity in the first quarter of 2006 consisted of the purchase ofthe majority of a portfolio of suburban office and light industrial propertiesand undeveloped land in the Washington, D.C. area for $708.7 million($625.5 million paid in cash) and the purchase of the majority of aportfolio of industrial properties in Savannah, Georgia for $178.1 million($119.3 million paid in cash).

·                  Sales of land and depreciatedproperty provided $176.7 million in net cash proceeds for the three- monthperiod ended March 31, 2007, compared to $10.4 million for the sameperiod in 2006. We continue to dispose of non-strategic and older properties aspart of our capital recycling program to fund acquisitions and new developmentwhile improving the overall quality of our investment portfolio.

·                  Wereceived financing distributions (as the result of the sale of properties orrecapitalization) of $53.5 million from unconsolidated companies in thethree-month period ended March 31, 2007, compared to $17.7 millionfor 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 fluctuation in net cash flow related tofinancing activities in the first quarter of 2007 compared to the same periodin 2006:

·                  We had nosignificant new borrowings in the first three months of 2007, compared to a$700.0 million secured term loan obtained in the same period in 2006, which waspriced at LIBOR +.525% and was paid in full later in 2006.

·                  Similarly, whilein the first quarter of 2006 we received net proceeds of approximately $177.7million from the General Partner’s issuance of its Series M CumulativeRedeemable Preferred Shares, we had no new preferred equity issuances in thesame period in 2007.

·                  Weincreased net borrowings on our $1.0 billion line of credit by $13.0 millionand $125.0 million for the three months ended March 31, 2007 and 2006,respectively.

*Financial Instruments*

We are exposed to capital market risk, such as changesin interest rates. In order to manage the volatility relating to interest raterisk, we may enter into interest rate hedging arrangements from time to time.We do not utilize derivative financial instruments for trading or speculativepurposes.

 

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In August 2005, we entered into $300.0 million of cashflow hedges through forward-starting interest rate swaps to hedge interestrates on $300.0 million of estimated debt offerings in 2007. The swaps qualifyfor hedge accounting, with any changes in fair value recorded in AccumulatedOther Comprehensive Income (“OCI”). At March 31, 2007, the fair value of theseswaps was approximately $10.0 million in an asset position as the effectiverates of the swaps were lower than current interest rates at March 31, 2007.

The effectiveness of our hedges will be evaluatedthroughout their lives using the hypothetical derivative method under which thechange in fair value of the actual swap designated as the hedging instrument iscompared to the change in fair value of a hypothetical swap.

*Recent Accounting Pronouncements*

We adopted Financial Accounting Standards Board (“FASB”)Interpretation No. 48, *Accounting forUncertainty in Income Taxes, an Interpretation of FASB Statement No. 109*(“FIN 48”) on January 1, 2007.  Theadoption of FIN 48 did not have a material impact, with an additional taxexposure of approximately $1.7 million recorded as an adjustment to the openingbalance of Distributions in Excess of Net Income, on our financial position orresults of operations primarily due to the General Partner’s tax status as aREIT. Our uncertain tax positions are immaterial both individually and in theaggregate.

In September 2006, the FASB issued Statement ofFinancial 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 effectivefor fiscal years beginning after November 15, 2007.  Management is currently evaluating the impactthe adoption of this statement will have on the Partnership.

In January 2007, the FASB issued SFAS No. 159, *The Fair Value Options for Financial Assets andFinancial Liabilities*(“SFAS 159”). SFAS 159 provides a “Fair Value Option” under which a company mayirrevocably elect fair value as the initial and subsequent measurementattribute 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 datefor SFAS 159 is the beginning of each reporting entity’s first fiscal year endthat begins after November 15, 2007. Management is currently evaluating the impact the adoption of this SFAS159 will have on the Partnership.

**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 ifthe 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.

 

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We have equity interestsin unconsolidated partnerships and joint ventures that own and operate rentalproperties and hold land for development. The equity method of accounting isused for these investments in which we have the ability to exercise significantinfluence, but not control, over operating and financial policies. As a result,the assets and liabilities of these joint ventures are not included on ourbalance sheet. Our investment in unconsolidated companies representsapproximately 7% of our total assets as of March 31, 2007.

**Item3.   Quantitative and Qualitative Disclosure About Market Risk**

We are exposed to interest rate changes primarily as a result of ourline of credit, preferred stock and long-term debt used to maintain liquidityand fund capital expenditures and expansion of our real estate investment portfolioand operations. Our interest rate risk management objective is to limit theimpact of interest rate changes on earnings and cash flows and to lower ouroverall borrowing costs. To achieve our objectives, we borrow primarily atfixed rates and may enter into derivative financial instruments such asinterest rate swaps, caps and treasury locks in order to mitigate our interestrate risk on a related financial instrument. We do not enter into derivative orinterest rate transactions for speculative purposes. For a discussion of themarket risk with respect to our outstanding cash flow hedges, see “Management’sDiscussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources — Financial Instruments.”

**Item4.   Controls and Procedures**

(a)          Evaluation of Disclosure 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 Rule 13a-15 and 15d-15.Based upon the foregoing, the General Partner’s Chief Executive Officer andChief Financial Officer concluded that, as of the end of the period covered bythis Report, our disclosure controls and procedures are effective in allmaterial respects.

(b) Changesin Internal Control Over Financial Reporting

During the threemonths ended March 31, 2007, there have been no changes in our internal controlover financial reporting during the period covered by this report that havematerially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

** **

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** **

**Part II - Other Information**

**Item 1.   Legal Proceedings**

From time to time, we are parties to a variety oflegal proceedings and claims arising in the ordinary course of our businesses.While these matters generally are covered by insurance, there is no assurancethat our insurance will cover any particular proceeding or claim. We presentlybelieve that all of these proceedings to which we were subject as ofMarch 31, 2007, taken as a whole, will not have a material adverse effecton our liquidity, business financial condition or results of operations.

**Item 1A.   Risk Factors**

In addition to the otherinformation set forth in this Report, you should carefully review and considerthe information contained in our other reports and periodic filings that wemake with the SEC, including, without limitation the information containedunder the caption “Item 1A. Risk Factors” in our Annual Report onForm 10-K for the year ended December 31, 2006. Those risk factorscould materially affect our business, financial condition and results ofoperations.

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

**Item 2.   Unregistered Sales ofEquity Securities and Use of Proceeds**

**(a) UnregisteredSales of Equity Securities**

None

**(b) Useof Proceeds**

None

** **

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** **

**c) Issuer Purchases of EquitySecurities**

From time to time, the General Partner may repurchaseits common shares under a $750 million repurchase program that initiallywas approved by the General Partner’s board of directors and publicly announcedin October 2001 (the “Repurchase Program”). In July 2005, the General Partner’sboard of directors authorized management to purchase up to $750 million ofthe General Partner’s common shares pursuant to this plan. Under the RepurchaseProgram, the General Partner also executes share repurchases on an ongoingbasis associated with certain employee elections under the General Partner’scompensation and benefit programs.

Thefollowing table shows the General Partner’s share repurchase activity for eachof the three months in the quarter ended March 31, 2007:
| ** ** | ** ** | ** **                    | ** ** | ** **                   | ** ** | ** **                        | ** ** | **Maximum Number**               | ** ** |
|------------|------------|-------------------------------|------------|------------------------------|------------|-----------------------------------|------------|---------------------------------------|------------|
| ** ** | ** ** | ** **                    | ** ** | ** **                   | ** ** | ** **                        | ** ** | **(or Approximate**              | ** ** |
| ** ** | ** ** | ** **                    | ** ** | ** **                   | ** ** | **Total Number of**     | ** ** | **Dollar Value) of**        | ** ** |
| ** ** | ** ** | ** **                    | ** ** | ** **                   | ** ** | **Shares Purchased as** | ** ** | **Shares that May**         | ** ** |
| ** ** | ** ** | **Total Number of** | ** ** | ** **                   | ** ** | **Part of Publicly**    | ** ** | **Yet be Purchased**        | ** ** |
| ** ** | ** ** | **Shares**                    | ** ** | **Average Price**       | ** ** | **Announced Plans or**  | ** ** | **Under the Plans or** | ** ** |
| **Month**  | ** ** | **Purchased(1)**              | ** ** | **Paid per Share** | ** ** | **Programs**                      | ** ** | **Programs(2)**                       | ** ** |
| January    |       | 24,820                        |       | $43.42                       |       | 24,820                            |       |                                  |       |
| February   |       | 62,633                        |       | $45.91                       |       | 62,633                            |       |                                  |       |
| March      |       | 4,935                         |       | $43.99                       |       | 4,935                             |       |                                  |       |
|       |       |                          |       |                         |       |                              |       |                                  |       |
| Total      |       | 92,388                        |       | $45.14                       |       | 92,388                            |       |                                  |       |

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(1) Includes28,663 common shares of the General Partner repurchased under its EmployeeStock Purchase Plan and 63,725 shares of the General Partner swapped to pay theexercise price of stock options.

(2) Thenumber of common shares of the General Partner that may yet be repurchased inthe open market to fund shares purchased under its Employee Stock PurchasePlan, as amended, was 114,043 as of March 31, 2007. The approximate dollarvalue of common shares of the General Partner that may yet be repurchased underthe General Partner’s Repurchase Program was $361.0 million as of March 31,2007.

**Item 3.   Defaults upon SeniorSecurities**

During the period covered by this Report, we did notdefault under the terms of any of our material indebtedness, nor has there beenany material arrearage of dividends or other material uncured delinquency withrespect to any class of our preferred equity.

**Item 4.   Submission of Mattersto a Vote of Security Holders**

None

**Item 5.   Other Information**

During the period covered by this Report, there was noinformation required to be disclosed by us in a Current Report on Form 8-Kthat was not so reported, nor were there any material changes to the proceduresby which our security holders may recommend nominees to the General Partner’sboard of directors.

 

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**Item 6.   Exhibits**

**(a)             Exhibits**

3.1  Certificate of Limited Partnership of DukeRealty Limited Partnership, dated September 17, 1993 (filed as Exhibit 3.1 tothe Partnership’s Annual Report on Form 10-K for the fiscal year ended December31, 2006, as filed with the SEC on March 13, 2007, File No. 000-20625, andincorporated herein by this reference).

3.2(i)  Second Amended and Restated Agreement ofLimited Partnership of the Partnership (filed as Exhibit 4.1 to the Partnership’sCurrent 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 andRestated Agreement of Limited Partnership of the Partnership (filed as Exhibit10.3 to the General Partner’s Annual Report on Form 10-K for the fiscal yearended 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 RestatedAgreement of Limited Partnership of the Partnership (filed as Exhibit 10.4 tothe General Partner’s Annual Report on Form 10-K for the fiscal year endedDecember 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 andRestated Agreement of Limited Partnership of the Partnership (filed as Exhibit10.5 to the General Partner’s Annual Report on Form 10-K for the fiscal yearended 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 andRestated Agreement of Limited Partnership of the Partnership (filed as Exhibit10.6 to the General Partner’s Annual Report on Form 10-K for the fiscal yearended 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 RestatedAgreement of Limited Partnership of the Partnership (filed as Exhibit 10.7 tothe General Partner’s Annual Report on Form 10-K for the fiscal year endedDecember 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 andRestated Agreement of Limited Partnership of the Partnership (filed as Exhibit10.8 to the General Partner’s Annual Report on Form 10-K for the fiscal yearended 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 andRestated Agreement of Limited Partnership of the Partnership (filed as Exhibit3.1 to the Partnership’s Current Report on Form 8-K, as filed with the SEC onFebruary 6, 2006, File No. 000-20625, and incorporated herein by thisreference).

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3.2(ix)         Ninth Amendment to the Second Amendedand Restated Agreement of Limited Partnership of the Partnership (filed asExhibit 3.1 to the Partnership’s Current Report on Form 8-K, as filed with theSEC on July 5, 2006, and incorporated herein by this reference).

10.1  Form of Letter Agreement Regarding ExecutiveSeverance, 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, asfiled with the SEC on December 19, 2005, and incorporated herein by thisreference).

11.1                   StatementRegarding Computation of Earnings. **

12.1                   Ratio ofEarnings to Combined Fixed Charges and Preferred Stock Distributions.*

12.2                   Ratio ofEarnings to Debt Service.*

31.1                     Rule13a-14(a) Certification of the General Partner’s Chief Executive Officer.*

31.2                     Rule13a-14(a) Certification of the General Partner’s Chief Financial Officer.*

32.1                     Section 1350Certification of the General Partner’s Chief Executive Officer.*

32.2                     Section 1350Certification of the General Partner’s Chief Financial Officer.*

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* Filed herewith.

** Data required by Statement of Financial AccountingStandard No. 128, *Earnings per Share*,is provided in Note 6 to the consolidated financial statements included in thisreport.

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|                     |   | DUKE REALTY LIMITED PARTNERSHIP                                                                                                                                      |
|---------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                 |   |   |
|                |   |                                                                                                                                                                 |   |   |
| Date: May 11,  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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