DUKE REALTY INVESTMENTS INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required) for the
fiscal year ended December 31, 1997
----------------
or
/ / Transition report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934 (No Fee Required)
for the transition period from to
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Commission file number 1-9044
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DUKE REALTY INVESTMENTS, INC.
-----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Indiana 35-1740409
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

8888 Keystone Crossing, Suite 1200
Indianapolis, Indiana 46240
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(Address of principal executive offices) (Zip Code)
(317) 846-4700
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(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Title of each class: Name of each exchange on which registered:
------------------- -----------------------------------------

Common Stock ($.01 par value) New York Stock Exchange

Series A Cumulative Redeemable) New York Stock Exchange
Preferred Shares ($.01 par value)

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE.

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
------ -----

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )

The aggregate market value of the voting shares of the
Registrant's outstanding common shares held by non-affiliates of
the Registrant is $1,720,038,903 based on the last reported sale
price on March 11, 1998.

The number of Common Shares outstanding as of March 11, 1998 was
77,196,875 ($.01 par value).

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference the Registrant's Proxy
Statement related to the Annual Meeting of Shareholders to be
held April 23, 1998.

TABLE OF CONTENTS

Form 10-K

Item No. Page(s)
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PART I

1. Business 1 - 4
2. Properties 4 - 14
3. Legal Proceedings 14
4. Submission of Matters to a Vote of
Security Holders 14

PART II

5. Market for the Registrant's Common Stock
and Related Security Holder Matters. 15
6. Selected Financial Data 15
7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 15 - 24
8. Financial Statements and Supplementary
Data 24
9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 24

PART III

10. Directors and Executive Officers of
the Registrant 24 - 25
11. Executive Compensation 25
12. Security Ownership of Certain Beneficial
Owners and Management 25
13. Certain Relationships and Related
Transactions 25

PART IV

14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 26 - 52

Signatures 54 - 55
Exhibits 56 - 57

WHEN USED IN THIS FORM 10-K REPORT, THE WORDS "BELIEVES," "EXPECTS,"
"ESTIMATES" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-
LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY.
IN PARTICULAR, AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY ARE CONTINUED QUALIFICATION AS A REAL ESTATE
INVESTMENT TRUST, GENERAL BUSINESS AND ECONOMIC CONDITIONS,
COMPETITION, INCREASES IN REAL ESTATE CONSTRUCTION COSTS, INTEREST
RATES, ACCESSIBILITY OF DEBT AND EQUITY CAPITAL MARKETS AND OTHER
RISKS INHERENT IN THE REAL ESTATE BUSINESS INCLUDING TENANT DEFAULTS,
POTENTIAL LIABILITY RELATING TO ENVIRONMENTAL MATTERS AND ILLIQUIDITY
OF REAL ESTATE INVESTMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF
THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY
RELEASE THE RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING
STATEMENTS WHICH MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER
THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
READERS ARE ALSO ADVISED TO REFER TO THE COMPANY'S FORM 8-K REPORT AS
FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON
MARCH 26, 1996 FOR ADDITIONAL INFORMATION CONCERNING THESE
RISKS.

PART I

ITEM 1. BUSINESS

Duke Realty Investments, Inc. (the "Company") is a self-administered
and self-managed real estate investment trust ("REIT"). The Company
began operations upon completion of its initial public offering in
February 1986. In October 1993, the Company completed an additional
common stock offering and acquired the rental real estate and service
businesses of Duke Associates whose operations began in 1972. The
Company's primary business segment is the ownership and rental of
industrial, office and retail properties throughout the Midwest. As
of December 31, 1997, the Company owned interests in a diversified
portfolio of 380 rental properties comprising 45.9 million square
feet (including 25 properties and three expansions comprising 5.2
million square feet under development). Substantially all of these
properties are located in the Company's primary markets of
Indianapolis, Indiana; Cincinnati, Cleveland, and Columbus, Ohio; St.
Louis, Missouri; Minneapolis, Minnesota and Nashville, Tennessee. In
addition to its Rental Operations, the Company, through its Service
Operations provides, on a fee basis, leasing, management,
construction, development and other real estate services for
approximately 8.3 million square feet of properties owned by third
parties. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Item 8, "Financial
Statements and Supplementary Data" for financial information of these
industry segments. The Company's rental operations are conducted
through Duke Realty Limited Partnership (the "Operating
Partnership"). In addition, the Company conducts its service
operations through Duke Realty Services Limited Partnership and Duke
Construction Limited Partnership, in which the Company's wholly-owned
subsidiary, Duke Services, Inc., is the sole general partner. All
references to the "Company" in this Form 10-K Report include the
Company and those entities owned or controlled by the Company, unless
the context indicates otherwise. The Company has the largest
commercial real estate operations in Indianapolis and Cincinnati and
is one of the largest real estate companies in the Midwest.

The Company's headquarters and executive offices are located in
Indianapolis, Indiana. In addition, the Company has seven regional
offices located in Cincinnati, Ohio; Columbus, Ohio; Cleveland, Ohio;
Chicago, Illinois; Nashville, Tennessee; St. Louis, Missouri
and Minneapolis, Minnesota. The Company had 620 employees as of
December 31, 1997.

- 1 -

BUSINESS STRATEGY

The Company's business objective is to increase its Funds From
Operations ("FFO") by (i) maintaining and increasing property
occupancy and rental rates through the aggressive management of its
portfolio of existing properties; (ii) expanding existing properties;
(iii) developing and acquiring new properties; and (iv) providing a
full line of real estate services to the Company's tenants and to
third-parties. FFO is defined by the National Association of Real
Estate Investment Trusts as net income or loss excluding gains or
losses from debt restructuring and sales of property plus
depreciation and amortization, and after adjustments for minority
interest, unconsolidated partnerships and joint ventures (adjustments
for minority interests, unconsolidated partnerships and joint
ventures are calculated to reflect FFO on the same basis). While
management believes that FFO is a relevant measure of the Company's
operating performance because it is widely used by industry analysts
to measure the operating performance of equity REITs, such amount
does not represent cash flow from operations as defined by generally
accepted accounting principles, should not be considered as an
alternative to net income as an indicator of the Company's operating
performance, and is not indicative of cash available to fund all cash
flow needs. As a fully integrated commercial real estate firm, the
Company believes that its in-house leasing, management, development
and construction services and the Company's significant base of
commercially zoned and unencumbered land in existing business parks
should give the Company a competitive advantage in its future
development activities.

The Company believes that the analysis of real estate opportunities
and risks can be done most effectively at regional or local levels.
As a result, the Company intends to continue its emphasis on
increasing its market share and effective rents in its primary
markets within the Midwest. The Company also expects to utilize its
approximately 1,700 acres of unencumbered land and its many business
relationships with more than 3,300 commercial tenants to expand its
build-to-suit business (development projects substantially pre-leased
to a single tenant) and to pursue other development and acquisition
opportunities in its primary markets and elsewhere in the Midwest.
The Company believes that this regional focus will allow it to assess
market supply and demand for real estate more effectively as well as
to capitalize on its strong relationships with its tenant base.

The Company's policy is to seek to develop and acquire Class A
commercial properties located in markets with high growth potential
for Fortune 500 companies and other quality regional and local firms.
The Company's industrial and suburban office development focuses on
business parks and mixed-use developments suitable for development of
multiple projects on a single site where the Company can create and
control the business environment. These business parks and mixed-use
developments generally include restaurants and other amenities which
the Company believes will create an atmosphere that is particularly
efficient and desirable. The Company's retail development focuses on
community, power and neighborhood centers in its existing markets. As
a fully integrated real estate company, the Company is able to arrange
for or provide to its industrial, office and retail tenants not only
well located and well maintained facilities, but also additional
services such as build-to-suit construction, tenant finish
construction, expansion flexibility and advertising and marketing
services.

Consistent with its business strategy of expanding in attractive
Midwestern markets, the Company carefully analyzed the real estate
investment potential of several major Midwestern metropolitan areas.
Based on this analysis, management concluded that the Minneapolis
and Chicago markets offer attractive real estate investment
returns in the industrial and suburban office markets based on
the following factors: (i) fragmented competition; (ii)
strong real estate fundamentals; and (iii) favorable economic
conditions.

- 2 -

In October 1997, the Company acquired a 3.2 million gross square
foot industrial and suburban office portfolio and the operating
personnel of an independent real estate developer and operator in
Minneapolis. Also in 1997, the Company established a regional
office in Chicago and acquired 995,000 square feet of suburban
office properties and 160 acres of land for the future development
of office and industrial properties. In addition to these major
transactions, the Company significantly expanded its presence in St.
Louis through the acquisition of a 982,000 gross square foot
primarily suburban office portfolio and the operating personnel of an
independent real estate developer and operator.

All of the Company's properties are located in areas that include
competitive properties. Such properties are generally owned by
institutional investors, other REITs or local real estate operators;
however, no single competitor or small group of competitors is
dominant in the Company's markets. The supply and demand of similar
available rental properties may affect the rental rates the Company
will receive on its properties. Based upon the current occupancy
rates in Company and competitive properties, the Company believes
there will not be significant competitive pressure to lower rental
rates in the near future.

FINANCING STRATEGY

The Company seeks to maintain a well-balanced, conservative and
flexible capital structure by: (i) currently targeting a ratio of
long-term debt to total market capitalization in the range of 25% to
40%; (ii) extending and sequencing the maturity dates of its debt;
(iii) borrowing primarily at fixed rates; (iv) generally pursuing
current and future long-term debt financings and refinancings on an
unsecured basis; and (v) maintaining conservative debt service and
fixed charge coverage ratios. Management believes that these
strategies have enabled and should continue to enable the Company to
access the debt and equity capital markets for their long-term
requirements such as debt refinancings and financing development and
acquisitions of additional rental properties. The Company has raised
approximately $1.1 billion through public debt and equity offerings
during the three years ended December 31, 1997. Based on these
offerings, the Company has demonstrated its abilities to access the
public markets as a source of capital to fund future growth. In
addition, as discussed under Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the
Company has a $200 million unsecured line of credit available for
short-term fundings of development and acquisition of additional
rental properties. The Company's debt to total market capitalization
ratio (total market capitalization is defined as the total market
value of all outstanding Common and Preferred Shares and units of
limited partnership interest ("Units") in the Operating Partnership
plus outstanding indebtedness) at March 11, 1998 was 25.79%. The
Company's ratio of earnings to debt service and ratio of earnings to
fixed charges for the year ended December 31, 1997 were 2.62x and
2.12x, respectively. In computing the ratio of earnings to debt
service, earnings have been calculated by adding debt service to
income before gains or losses on property sales and minority interest
in earnings of the Operating Partnership. Debt service consists of
interest expense and recurring principal amortization (excluding
maturities) and excludes amortization of debt issuance costs. In
computing the ratio of earnings to fixed charges, earnings have been
calculated by adding fixed charges, excluding capitalized interest,
to income before gains or losses on property sales and minority
interest in earnings of the Operating Partnership. Fixed charges
consist of interest costs, whether expensed or capitalized, the
interest component of rental expense, amortization of debt issuance
costs and preferred stock dividend requirements. Management believes
these measures to be consistent with its financing strategy.

OTHER

The Company's operations are not dependent on a single or few
customers as no single customer accounts for more than 2% of the
Company's total revenue. The Company's operations are not subject to
any

- 3 -

significant seasonal fluctuations. The Company believes it is in
compliance with environmental regulations and does not anticipate
material effects of continued compliance.

For additional information regarding the Company's investments and
operations, see Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and Item 8,
"Financial Statements and Supplementary Data." For additional
information about the Company's business segments, see Item 8,
"Financial Statements and Supplementary Data."

ITEM 2. PROPERTIES

As of December 31, 1997, the Company owns an interest in a
diversified portfolio of 380 commercial properties encompassing
approximately 45.9 million net rentable square feet (including 25
properties and three expansions comprising 5.2 million square feet
under development) located primarily in five states and approximately
1,700 acres of land for future development. The properties are
described on the following pages.

- 4 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- --------- ------- -------- ------------
IN-SERVICE
----------
INDUSTRIAL
----------

Indianapolis,
Indiana
PARK 100 BUSINESS
PARK
Building 38 Fee 100% 1978 1.11 6,000 100%
Building 48 Fee 50%[1] 1984 8.63 127,410 100%
Building 49 Fee 50%[1] 1982 4.55 89,600 100%
Building 50 Fee 50%[1] 1982 4.09 51,200 100%
Building 52 Fee 50%[1] 1983 2.70 34,800 100%
Building 53 Fee 50%[1] 1984 4.23 76,800 100%
Building 54 Fee 50%[1] 1984 4.42 76,800 100%
Building 55 Fee 50%[1] 1984 3.83 43,200 85%
Building 56 Fee 50%[1] 1984 15.94 300,000 0%
Building 57 Fee 50%[1] 1984 7.70 128,800 100%
Building 58 Fee 50%[1] 1984 8.03 128,800 100%
Building 59 Fee 50%[1] 1985 5.14 83,200 100%
Building 60 Fee 50%[1] 1985 4.78 83,200 85%
Building 62 Fee 50%[1] 1986 7.70 128,800 100%
Building 67 Fee 50%[1] 1987 4.23 72,350 100%
Building 68 Fee 50%[1] 1987 4.23 72,360 100%
Building 71 Fee 50%[1] 1987 9.06 193,400 100%
Building 74 Fee 10%-50%[2] 1988 12.41 257,400 100%
Building 76 Fee 10%-50%[2] 1988 5.10 81,695 48%
Building 78 Fee 10%-50%[2] 1988 21.80 512,777 100%
Building 79 Fee 100% 1988 4.47 66,000 100%
Building 80 Fee 100% 1988 4.47 66,000 100%
Building 83 Fee 100% 1989 5.34 96,000 35%
Building 84 Fee 100% 1989 5.34 96,000 73%
Building 85 Fee 10%-50%[2] 1989 9.70 180,100 100%
Building 89 Fee 10%-50%[2] 1990 11.28 311,600 100%
Building 91 Fee 10%-50%[2] 1990/1996 7.53 196,800 85%
Building 92 Fee 10%-50%[2] 1991 4.38 45,917 100%
Building 95 Fee 100% 1993 15.23 336,000 100%
Building 96 Fee 100% 1994/1997 [3] 27.69 737,850 100%
Building 97 Fee 100% 1994 13.38 280,800 94%
Building 98 Fee 100% 1968/1995 37.34 508,306 100%
Building 99 Fee 50%[4] 1994 18.00 364,800 100%
Building 100 Fee 100% 1995 7.00 117,500 100%
Building 101 Fee 50%[1] 1983 4.37 45,000 100%
Building 105 Fee 50%[1] 1983 4.64 41,400 100%
Building 106 Fee 50%[1] 1978 4.64 41,400 100%
Building 107 Fee 100% 1984 3.56 58,783 45%
Building 108 Fee 50%[1] 1983 6.36 60,300 100%
Building 109 Fee 100% 1985 4.80 46,000 94%
Building 113 Fee 50%[1] 1987 6.20 72,000 82%
Building 114 Fee 50%[1] 1987 6.20 56,700 100%
Building 117 Fee 10%-50%[2] 1988 13.36 135,600 90%
Building 120 Fee 10%-50%[2] 1989 4.54 54,982 86%
Building 122 Fee 100% 1990 6.17 73,274 100%
Building 125 Fee 100% 1994/1996 13.81 195,080 100%
Building 126 Fee 100% 1984 4.04 60,100 100%
Building 127 Fee 100% 1995 6.50 93,600 100%
Building 128 Fee 100% 1996 14.40 322,000 100%
Building 129 Fee 100% 1996 16.00 320,000 100%
Building 130 Fee 100% 1996 9.70 152,000 92%
Building 131 Fee 100% 1997 21.00 415,680 100%
Building 133 Fee 100% 1997 1.30 20,530 100%
Georgetown
Centre Bldg. 1 Fee 100% 1987 5.85 111,883 56%
Georgetown
Centre Bldg. 2 Fee 100% 1987 5.81 72,120 95%
Georgetown
Centre Bldg. 3 Fee 100% 1987 5.10 45,536 57%

- 5 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- -------- ------- ------ ------------
PARK FLETCHER
Building 2 Fee 50%[1] 1970 1.31 20,160 100%
Building 4 Fee 50%[1] 1974 1.73 23,000 0%
Building 6 Fee 50%[1] 1971 3.13 36,180 100%
Building 7 Fee 50%[1] 1974 3.00 41,900 100%
Building 8 Fee 50%[1] 1974 2.11 18,000 100%
Building 14 Fee 100% 1978 1.39 19,480 100%
Building 15 Fee 50%[1] 1979 5.74 72,800 100%
Building 16 Fee 50%[1] 1979 3.17 35,200 100%
Building 18 Fee 50%[1] 1980 5.52 43,950 100%
Building 21 Fee 50%[1] 1983 2.95 37,224 79%
Building 22 Fee 50%[1] 1983 2.96 48,635 58%
Building 26 Fee 50%[1] 1983 2.91 28,340 100%
Building 27 Fee 25%[1] 1985 3.01 39,178 75%
Building 28 Fee 25%[1] 1985 7.22 93,880 100%
Building 29 Fee 50%[1] 1987 7.16 92,044 100%
Building 30 Fee 50%[1] 1989 5.93 78,568 100%
Building 31 Fee 50%[1] 1990 2.62 33,029 100%
Building 32 Fee 50%[1] 1990 5.43 67,297 100%
Building 33 Fee 50%[1] 1997 7.50 112,710 100%
Building 34 Fee 50%[1] 1997 13.00 230,400 100%

SHADELAND STATION
Buildings 204
& 205 Fee 100% 1984 4.09 48,600 100%

HUNTER CREEK
BUSINESS PARK
Building 1 Fee 10%-50%[2] 1989 5.97 86,500 100%
Building 2 Fee 10%-50%[2] 1989 8.86 202,560 83%

HILLSDALE TECHNECTR.
Building 1 Fee 50%[1] 1986 9.16 73,436 91%
Building 2 Fee 50%[1] 1986 5.50 83,600 100%
Building 3 Fee 50%[1] 1987 5.50 84,050 100%
Building 4 Fee 100% 1987 7.85 73,874 100%
Building 5 Fee 100% 1987 5.44 67,500 93%
Building 6 Fee 100% 1987 4.25 64,000 100%

Franklin Road 1962
Bus.Ctr. Fee 100% 1971,1974 [5] 18.65 338,925 82%

Palomar Bus.
Ctr. Fee 100% 1973 4.50 99,350 100%

Nampac Fee 100% 1974 6.20 83,200 100%

NORTH AIRPORT PARK
Thomson Consumer
Electronics Fee 50%[6] 1996 52.00 599,040 100%
Building 2 Fee 100% 1997 22.50 377,280 100%

6060 Guion Rd. Fee 100% 1968/1974/1977 14.05 179,203 0%

4750 Kentucky Ave.Fee 100% 1974 11.01 125,000 100%
4316 W. Minnesota Fee 100% 1970 10.40 121,465 100%

CARMEL, INDIANA
HAMILTON CROSSING
Building 1 Fee 100% 1989 4.70 51,825 91%

GREENWOOD, INDIANA
SOUTH PARK BUS.CTR.
Building 2 Fee 100% 1990 7.10 86,806 74%

LEBANON, INDIANA
LEBANON BUS.PARK
American Air
Filter Fee 100% 1996 10.40 153,600 100%
Little, Brown
& Co. Fee 50%[6] 1996 31.60 500,455 100%
Purity Wholesale Fee 100% 1997 32.60 556,248 100%
Pamida Fee 100% 1997 14.90 200,000 100%

- 6 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- -------- ------- ------- ------------

CINCINNATI, OHIO
PARK 50 TECHNECTR.
Building 20 Fee 100% 1987 8.37 96,000 100%
Building 25 Fee 100% 1989 12.20 78,328 81%

GOVERNOR'S POINTE
4700 Building Fee 100% 1987 5.51 76,400 100%
4800 Building Fee 100% 1989 7.07 80,000 71%
4900 Building Fee 100% 1987 9.41 77,652 100%

WORLD PARK
Building 5 Fee 100% 1987 5.00 59,700 100%
Building 6 Fee 100% 1987 7.26 92,400 100%
Building 7 Fee 100% 1987 8.63 96,000 100%
Building 8 Fee 100% 1989 14.60 192,000 97%
Building 9 Fee 100% 1989 4.47 58,800 100%
Building 11 Fee 100% 1989 8.98 96,000 100%
Building 14 Fee 100% 1989 8.91 166,400 100%
Building 15 Fee 100% 1990 6.50 93,600 100%
Building 16 Fee 100% 1989 7.00 93,600 100%
MicroAge Fee 50%[1] 1994 15.10 304,000 100%
Building 18 Fee 100% 1997 16.90 252,000 100%

ENTERPRISE
BUS.PARK
Building 1 Fee 100% 1990 7.52 87,400 91%
Building 2 Fee 100% 1990 7.52 84,940 100%
Building A Fee 100% 1987 2.65 20,888 100%
Building B Fee 100% 1988 2.65 34,940 94%
Building D Fee 100% 1989 5.40 60,322 93%

FAIRFIELD BUS.CTR.
Building D Fee 100% 1990 3.23 40,223 88%
Building E Fee 100% 1990 6.07 75,600 100%

KENTUCKY DRIVE
7910 Kentucky
Dr. Fee 100% 1980 3.78 38,329 100%
7920 Kentucky
Dr. Fee 100% 1974 9.33 93,945 100%

OTHER INDUST. -
CINCINNATI
U.S. Post
Office Bldg. Fee 40%[7] 1992 2.60 57,886 100%
University
Moving Fee 100% 1991 4.95 70,000 100%
Creek Road
Bldg.I Fee 100% 1971 2.05 38,715 100%
Creek Road
Bldg.II Fee 100% 1971 2.63 53,210 100%
Cornell Commerce
Ctr. Fee 100% 1989 9.91 167,695 94%
Mosteller Dist.
Ctr. Fee 100% 1957 [8] 25.80 357,796 100%
Mosteller Dist.
Ctr.II Fee 100% 1997 12.20 261,440 45%
Perimeter Park
Bldg.A Fee 100% 1991 2.92 28,100 100%
Perimeter Park
Bldg.B Fee 100% 1991 3.84 30,000 60%

COLUMBUS, OHIO
Pet Foods Bldg. Fee 100% 1993/1995 16.22 276,000 100%
MBM Bldg. Fee 100% 1978 3.98 83,000 100%
Sun TV Fee 100% 1995 33.42 793,807 100%

SOUTH POINTE
BUS. CTR.
South Pointe A Fee 50% 1995 14.06 293,824 100%
South Pointe B Fee 50% 1996 13.16 307,200 100%
South Pointe C Fee 50% 1996 12.57 322,000 78%
SouthPointe
Bldg.D Fee 100% 1997 6.55 116,520 35%
SouthPointe
Bldg.E Fee 100% 1997 6.55 82,520 0%

HEBRON, KENTUCKY
SOUTHPARK BUS.CTR.
Bldg. 1 Fee 100% 1990 7.90 96,000 100%
Bldg. 3 Fee 100% 1991 10.79 192,000 100%
CR Services Fee 100% 1994 22.50 214,840 100%
Redken Labs Fee 100% 1994 28.79 166,400 100%
Skyport Bldg.I Fee 100% 1997 15.10 316,800 100%
- 7 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- -------- ------- -------- ------------

LOUISVILLE,
KENTUCKY
Dayco Fee 50%[1] 1995 30.00 282,539 100%

FLORENCE,
KENTUCKY
Empire
Commerce Ctr. Fee 100% 1973/1980 11.62 148,445 100%

DECATUR,
ILLINOIS
PARK 101
BUS. CTR.
Building 3 Fee 100% 1979 5.76 75,600 82%
Building 8 Fee 100% 1980 3.16 50,400 77%

NASHVILLE,
TENNESSEE
HAYWOOD OAKS
TECHNECTR.
Building 2 Fee 100% 1988 2.94 50,400 100%
Building 3 Fee 100% 1988 2.94 52,800 100%
Building 4 Fee 100% 1988 5.23 46,800 100%
Building 5 Fee 100% 1988 5.23 61,171 100%
Building 6 Fee 100% 1989 10.53 113,400 100%
Building 7 Fee 100% 1995 8.24 66,873 100%
Building 8 Fee 100% 1997 15.44 71,615 100%

Greenbriar
Bus.Park Fee 100% 1986 10.73 134,759 98%
Keebler Bldg. Fee 100% 1985 4.39 36,150 100%

MILWAUKEE,
WISCONSIN
S.F. Music
Box Bldg. Fee 33.33%[9] 1993 8.90 153,600 100%

ST. LOUIS,
MISSOURI
I-70 Ctr. Fee 100% 1986 4.57 76,240 100%
1920 Beltway Fee 100% 1986 4.44 70,000 100%
Alfa Laval Fee 100% 1996 12.76 129,500 100%

EARTH CITY
Dukeport I Fee 100% 1996 21.24 403,200 100%
Dukeport II Fee 100% 1997 14.70 244,800 65%

RIVERPORT
Scripts Bldg. Fee 100% 1992 10.81 119,000 100%
Riverport Dist. Fee 100% 1990 5.96 100,000 100%
Shultz Bldg. Fee 100% 1989 3.36 45,200 100%
Southport I Fee 100% 1977 1.36 20,810 100%
Southport II Fee 100% 1978 1.53 22,400 100%
Southport Comm.
Ctr. Fee 100% 1978 2.65 34,873 99%

CLEVELAND, OHIO
Johnson Controls Fee 100% 1972 14.56 85,410 100%
Dyment Fee 100% 1988 12.00 246,140 100%
Mr. Coffee Fee 100% 1997 35.00 458,000 100%

SOLON INDUST.PARK
30600 Carter Fee 100% 1971 11.30 190,188 90%
6230 Cochran Fee 100% 1977 7.20 100,365 84%
31900 Solon-Front Fee 100% 1974 8.30 85,000 100%
5821 Solon Fee 100% 1970 5.80 66,638 100%
6161 Cochran Fee 100% 1978 6.10 62,400 85%
5901 Harper Fee 100% 1970 4.10 54,719 70%
29125 Solon Fee 100% 1980 5.90 47,329 100%
6661 Cochran Fee 100% 1979 4.70 39,000 100%
6521 Davis Fee 100% 1979 3.20 21,600 100%
31900 Solon-Rear Fee 100% 1982 5.30 7,193 100%

MINNEAPOLIS,
MINNESOTA
Enterprise
Indust.C Fee 100% 1979 10.88 165,755 76%
Apollo Dist.Ctr. Fee 100% 1997 11.05 168,480 0%
Sibley Indust.
Ctr. Fee 100% 1973 2.88 54,612 100%
Sibley Indust.
Ctr. Fee 100% 1972 2.58 37,800 100%
Sibley Indust.
Ctr. Fee 100% 1968 4.10 32,810 39%
Yankee Place Fee 100% 1986 19.03 221,075 90%
- 8 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- --------- ------- ------- -----------

Larc Indust.
Park I Fee 100% 1977 4.59 67,200 85%
Larc Indust.
Park II Fee 100% 1976 3.70 54,000 99%
Larc Indust.
Park III Fee 100% 1980 2.38 30,800 100%
Larc Indust.
Park IV Fee 100% 1980 1.06 13,800 41%
Larc Indust.
Park V Fee 100% 1980 1.54 22,880 100%
Larc Indust.
Park VI Fee 100% 1975 3.91 63,600 81%
Larc Indust.
Park VII Fee 100% 1973 2.65 41,088 100%
Hampshire Dist.
Ctr. Fee 100% 1979 9.26 159,200 100%
Hampshire Dist.
Ctr. Fee 100% 1979 9.40 157,000 100%
Penn Corporate
Bldg. Fee 100% 1977 2.08 40,844 100%
Bloomington
Indust. Fee 100% 1963 7.40 100,852 78%
Edina Inter-
change I Fee 100% 1995 4.73 73,809 95%
Edina Inter-
change II Fee 100% 1980 3.46 55,006 100%
Edina Inter-
change III Fee 100% 1981 6.39 62,784 100%
Edina Inter-
change IV Fee 100% 1974 1.99 22,440 75%
Edina Inter-
change V Fee 100% 1974 4.92 139,101 100%
Pakwa Bus.
Park I Fee 100% 1979 1.67 38,196 100%
Pakwa Bus.
Park II Fee 100% 1979 1.41 21,254 100%
Pakwa Bus.
Park III Fee 100% 1979 1.32 19,978 89%
7540 Bush
Lake Rd. Fee 100% 1967 4.74 72,300 100%
Cahill Bus.Ctr. Fee 100% 1980 3.90 60,082 100%
Encore Park Fee 100% 1977 14.50 126,858 100%
Johnson Bldg. Fee 100% 1974 2.09 62,718 97%
Cornerstone Bus. Fee 100% 1996 13.49 222,494 100%
Westside Bus.Park Fee 100% 1987 9.10 114,800 100%
Oxford Indust. Fee 100% 1971 1.23 16,736 0%
Cedar Lake
Bus.Ctr. Fee 100% 1976 3.05 50,400 100%
Medicine Lake
Indust. Fee 100% 1970 16.37 222,893 100%
801 Zane Ave.N. Fee 100% 1989 4.93 84,219 100%
Decatur Bus.Ctr. Fee 100% 1982 3.96 44,279 100%
Sandburg
Indust.Ctr. Fee 100% 1973 5.68 94,612 100%
Crystal
Indust.Ctr. Fee 100% 1974 3.23 72,000 96%
Bass Lake Bus.Ctr.Fee 100% 1981 5.33 47,368 100%

OFFICE
-------
INDIANAPOLIS,
INDIANA
PARK 100 BUS.
PARK
Building 34 Fee 100% 1979 2.00 22,272 97%
Building 116 Fee 100% 1988 5.28 35,700 84%
Building 118 Fee 100% 1988 6.50 35,700 100%
Building 119 Fee 100% 1989 6.50 53,300 100%
CopyRite Bldg. Fee 50%[4] 1992 3.88 48,000 100%
Building 132 Fee 100% 1997 4.40 27,600 43%

WOODFIELD AT
THE CROSSING
Two Woodfield
Crsg. Fee 100% 1987 7.50 117,818 84%
Three Woodfield
Crsg. Fee 100% 1989 13.30 259,777 98%

PARKWOOD CROSSING
One Parkwood Fee 100% 1989 5.93 108,281 100%
Two Parkwood Fee 100% 1996 5.96 93,950 100%
Three Parkwood Fee 100% 1997 6.24 121,246 89%

SHADELAND STATION
7240 Shadeland
Sta. Fee 66.67%[10] 1985 2.14 45,585 82%
7330 Shadeland
Sta. Fee 100% 1988 4.50 42,619 87%
7340 Shadeland
Sta. Fee 100% 1989 2.50 32,235 77%
7351 Shadeland
Sta. Fee 100% 1983 2.14 27,740 92%
7369 Shadeland
Sta. Fee 100% 1989 2.20 15,551 100%
7400 Shadeland
Sta. Fee 100% 1990 2.80 49,544 100%

KEYSTONE AT
THE CROSSING
F.C. Tucker Fee/Ground
Bldg. Lease [11] 100% 1978 N/A 4,840 100%
3520 Commerce Ground/Bldg.
Crsg. Lease [12] 100% 1976 2.69 30,000 0%
8465 Keystone Fee 100% 1983 1.31 28,298 99%
8555 Keystone Fee/Ground
Lease [11] 100% 1985 N/A 75,545 94%

Community MOB Fee 100% 1995 4.00 39,205 100%

- 9 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- --------- ------- ------- -----------

HAMILTON
CROSSING
Hamilton Crsg.
Bldg. 2 Fee 100% 1997 5.10 32,800 77%

GREENWOOD,
INDIANA
SOUTH PARK
BUS. CTR.
Building 1 Fee 100% 1989 5.40 39,715 96%
Building 3 Fee 100% 1990 3.25 35,900 100%

St. Francis Fee/Ground
Medical Bldg. Lease[13] 100% 1995 N/A 95,579 95%

CINCINNATI, OHIO
GOVERNOR'S HILL
8600 Governor's
Hill Fee 100% 1986 10.79 200,584 97%
8700 Governor's
Hill Fee 100% 1985 4.98 58,617 100%
8790 Governor's
Hill Fee 100% 1985 5.00 58,177 95%
8800 Governor's
Hill Fee 100% 1985 2.13 28,700 100%

GOVERNOR'S POINTE
4605 Governor's
Pte. Fee 100% 1990 8.00 178,306 100%
4705 Governor's
Pte. Fee 100% 1988 7.50 140,984 100%
4770 Governor's
Pte. Fee 100% 1986 4.50 76,037 72%
Anthem Prescrip.
Mgmt. Fee 100% 1997 5.00 78,240 100%
Gov. Pte.4660
Bldg. Fee 100% 1997 4.65 76,465 91%

PARK 50 TECHNECTR.
SDRC Building Fee 100% 1991 13.00 221,215 100%
Building 17 Fee 100% 1985 8.19 70,644 97%

DOWNTOWN CINCINNATI
311 Elm Street Grnd/Bldg.
Lse [14] 100% 1902/1986 [15] N/A 90,127 100%
312 Plum Street Fee 100% 1987 0.69 230,489 89%
312 Elm Street Fee 100% 1992 1.10 378,786 96%

KENWOOD
Kenwood Commons
Bldg.I Fee 50%[16] 1986 2.09 46,145 100%
Kenwood Commons
Bldg.II Fee 50%[16] 1986 2.09 46,434 96%
Ohio National Fee 100% 1996 9.00 212,125 100%
Kenwood Executive
Ctr. Fee 100% 1981 3.46 49,984 97%

TRI-COUNTY
Triangle Off.
Park Fee 100% 1965/1985[17] 15.64 172,650 92%
Tri-County Off. 1971, 1973
Park Fee 100% 1982 [18] 11.27 102,166 88%
Executive Plaza I Fee 100% 1980 5.83 87,912 97%
Executive
Plaza II Fee 100% 1981 5.02 88,885 100%

BLUE ASH
West Lake Ctr. Fee 100% 1981 11.76 179,850 98%
Lake Forest Pl. Fee 100% 1985 13.50 217,264 94%
Huntington Bank
Bldg. Fee 100% 1986 0.94 3,235 100%
Blue Ash Off.
Ctr. VI Fee 100% 1989 2.96 35,603 90%

OTHER OFFICE -
CINCINNATI
Fidelity Dr.
Bldg. Fee 100% 1972 8.34 38,000 100%
Franciscan Fee/Ground
Health Sys. Lease[19] 100% 1996 N/A 36,634 100%
One Ashview Pl. Fee 100% 1989 6.88 120,853 100%
Remington Park
Bldg.A Fee 100% 1982 3.20 38,236 100%
Remington Park
Bldg.B Fee 100% 1982 3.20 38,320 99%

COLUMBUS, OHIO
TUTTLE CROSSING
4600 Lakehurst
(Sterling 1) Fee 100% 1990 7.66 106,300 100%
4650 Lakehurst
(Litel) Fee 100% 1990 13.00 164,639 100%
5555 ParkCtr.
(Xerox) Fee 100% 1992 6.09 83,971 94%
4700 Lakehurst
(Indiana Ins.) Fee 100% 1994 3.86 49,600 100%
Sterling 2 Fee 100% 1995 3.33 57,660 100%
John Alden Fee 100% 1995 6.51 101,112 76%
Cardinal Health Fee 100% 1995 10.95 132,854 100%
Nationwide Fee 100% 1996 17.90 315,102 100%
Sterling 3 Fee 100% 1996 3.56 64,500 100%
- 10 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- --------- ------- ------- -----------

Parkwood Place Fee 100% 1997 9.08 156,000 100%
MetroCtr. III Fee 100% 1983 5.91 73,757 100%
Veterans Admin.
Clinic Fee 100% 1994 4.98 118,000 100%
Scioto Corp.Ctr. Fee 100% 1987 7.58 57,251 98%
CompManagement Fee 100% 1997 5.60 68,700 100%

CLEVELAND, OHIO
Rock Run - N. Fee 100% 1984 5.00 62,565 99%
Rock Run - Ctr. Fee 100% 1985 5.00 61,099 93%
Rock Run - S. Fee 100% 1986 5.00 62,989 84%
Freedom Square I Fee 100% 1980 2.59 40,208 96%
Freedom Square II Fee 100% 1987 7.41 116,665 92%
Corporate Plaza I Fee 100% 1989 6.10 114,028 99%
Corporate Plz. II Fee 100% 1991 4.90 103,834 90%
One Corp. Exch. Fee 100% 1989 5.30 88,376 91%
Corporate Ctr.I Fee 100% 1985 5.33 99,260 99%
Corporate Ctr.II Fee 100% 1987 5.32 104,402 82%
Corporate Place Fee 100% 1988 4.50 84,768 98%
Corporate Circle Fee 100% 1983 6.65 120,444 99%
Freedom Sq. III Fee 100% 1997 2.00 71,025 87%
6111 Oak Tree Fee 100% 1979-1995 5.00 70,906 83%
Landerbrook Fee 100% 1997 8.00 110,148 72%

ST. LOUIS,
MISSOURI
Laumeier I Fee 100% 1987 4.26 113,852 100%
Laumeier II Fee 100% 1988 4.64 112,477 100%
Westview Place Fee 100% 1988 2.69 114,722 97%
Westmark Fee 100% 1987 6.95 123,889 100%

EARTH CITY
3300 Pointe 70 Fee 100% 1989 6.61 103,549 99%
3322 NGIC Fee 100% 1987 6.61 112,000 100%

Riverport Tower Fee 100% 1991 317,891 100%

MARYVILLE CTR.
500 Maryville Ctr.Fee 100% 1984 9.27 165,544 100%
530 Maryville Ctr.Fee 100% 1990 5.31 107,957 98%
550 Maryville Ctr.Fee 100% 1988 4.55 97,109 96%
635 Maryville Ctr.Fee 100% 1987 8.78 148,307 97%
655 Maryville Ctr.Fee 100% 1994 6.26 90,499 100%
540 Maryville Ctr.Fee 100% 1990 5.23 107,973 98%

Twin Oaks Fee 100% 1980 5.91 85,066 98%
625 Maryville Ctr.Fee 50% 1994 6.26 101,576 100%

CHICAGO, ILLINOIS
Central Park
of Lisle Fee 50% [20] 1990 8.88 345,200 93%

Executive Towers
I Fee 100% 1983 6.33 203,302 96%
Executive Towers
II Fee 100% 1984 6.33 224,140 99%
Executive Towers
III Fee 100% 1987 6.33 222,400 100%

MINNEAPOLIS,
MINNESOTA
10801 Red Cr.Dr. Fee 100% 1977 4.00 60,078 100%
Medicine Lake
Prof. Bldg. Fee 100% 1970 1.54 8,100 100%

RETAIL
------

INDIANAPOLIS,
INDIANA
PARK 100
BUS. PARK
Building 32 Fee 100% 1978 0.82 14,504 58%
Building 121 Fee 100% 1989 2.27 19,716 76%

CASTLETON CORNER
Michael's Plaza Fee 100% 1984 4.50 46,374 100%
Cub Plaza Fee 100% 1986 6.83 60,136 100%

FORT WAYNE, INDIANA
Coldwater Crsg. Fee 100% 1990 35.38 246,365 89%
- 11 -

Net Percent
Year Land Rentable Occupied at
Name/ Ownership Company's Constd/ Area Area December 31,
Location Interest Ownership Expanded (Acres) (sq.ft.) 1997
------------ --------- --------- --------- ------- -------- ------------

GREENWOOD, INDIANA
GREENWOOD CORNER
First Indiana
Bank Branch Fee 100% 1988 1.00 2,400 100%
Greenwood Corner
Shoppes Fee 100% 1986 7.45 50,840 84%

DAYTON, OHIO
Sugarcreek Plaza Fee 100% 1988 17.46 77,940 97%

CINCINNATI, OHIO
Governor's Plaza Fee 100% 1990 35.00 181,493 99%
King's Mall
Shp.Ctr. I Fee 100% 1990 5.68 52,661 94%
King's Mall
Shp.Ctr. II Fee 100% 1988 8.90 67,725 92%
Steinberg's Fee 100% 1993 1.90 21,008 100%
Kohl's Fee 100% 1994 12.00 80,684 100%
Sports Unlimited Fee 100% 1994 7.00 67,148 100%
Eastgate Square Fee 100% 1990/1996 11.60 94,182 100%
Office Max Fee 100% 1995 2.25 23,484 100%
Sofa Express Fee 100% 1995 1.13 15,000 100%
Bigg's SuperCtr. Fee 100% 1996 14.00 170,791 100%
Fountain Place Fee 25%[21] 1997 1.98 207,170 95%

GOVERNOR'S POINTE
Lowe's Fee 100% 1997 15.00 128,747 100%

FLORENCE, KENTUCKY
Sofa Express Fee 100% 1997 1.78 20,250 100%

BLOOMINGTON, ILLINOIS
Lakewood Plaza Fee 100% 1987 11.23 87,010 94%

CHAMPAIGN, ILLINOIS
Market View Fee 100% 1985 8.50 86,553 88%

COLUMBUS, OHIO
Galyans Trading
Company Fee 100% 1984 4.90 74,636 100%
Tuttle Retail
Ctr. Fee 100% 1995/1996 13.44 144,340 100%
-------- ----------
IN-SERVICE TOTAL 2,684.36 40,668,043
-------- ----------

UNDER CONSTRUCTION
------------------

Net Percent
Expected Land Rentable Pre-leased at
Name/ Ownership Company's In-service Area Area December 31,
Location Interest Ownership Date (Acres) (sq.ft.) 1997
- ------------ ---------- ---------- --------- ------- --------- -------------
INDUSTRIAL
- ----------

INDIANAPOLIS,
INDIANA
Building 134 Fee 100% May-98 8.70 110,400 41%

Franklin Road
Exp. Fee 100% Mar-98 9.35 150,000 61%

PARK FLETCHER
BUS. PARK
Building 35 Fee 50%[1] Oct-97 8.10 96,000 67%
Building 36 Fee 50%[1] Feb-98 3.90 52,800 0%

LEBANON,
INDIANA
LEBANON BUS.
PARK
Prentice Hall Fee 100% Jan-98 38.90 577,340 100%
Lebanon
(General
Cable) Fee 100% May-98 23.30 395,472 50%

Thomson
Consumer Exp. Fee 50% Jun-98 12.02 740,155 100%

CINCINNATI, OHIO
WORLD PARK
World Park
Bldg 28 Fee 100% Jan-98 11.60 220,160 87%
World Park
Bldg 29 Fee 100% Apr-98 21.40 452,000 100%

COLUMBUS, OHIO
Sun TV Exp. Fee 100% Jun-98 12.00 231,936 100%

- 12 -

Net Percent
Expected Land Rentable Pre-leased at
Name/ Ownership Company's In-service Area Area December 31,
Location Interest Ownership Date (Acres) (sq.ft.) 1997
- ----------- ---------- --------- ---------- ------- -------- -------------
CLEVELAND,
OHIO
Fountain Pkwy
Bldg. B1 Fee 100% May-98 6.50 108,704 0%

Strongsville
Bldg. 1 Fee 100% May-98 4.50 72,000 0%

ST. LOUIS,
MISSOURI
EARTH CITY
Dukeport 3 Fee 100% Dec-97 9.50 214,400 0%
Dukeport 4 Fee 100% Apr-98 12.70 153,600 0%

West Port
Ctr. I Fee 100% May-98 11.90 177,600 0%

OFFICE

INDIANAPOLIS,
INDIANA
PARK 100
BUS. PARK
Building 135 Fee 100% Mar-98 6.00 77,125 74%

RIVER ROAD
Software
Artistry Fee 100% Jan-98 6.90 108,273 75%

PARKWOOD CROSSING
Four Parkwood Fee 100% Sep-98 5.90 132,836 0%

CINCINNATI, OHIO
Gov. Pointe
4680 Bldg. Fee 100% Aug-98 9.80 126,102 0%

COLUMBUS, OHIO
TUTTLE CROSSING
Rings Road
Office Bldg. Fee 100% Apr-98 11.01 145,000 29%
Sterling 4 Fee 100% Apr-98 3.10 94,219 100%

One Easton
Oval Fee 100% May-98 7.69 127,080 0%

ST. LOUIS,
MISSOURI
EARTH CITY
MCI Fee 100% May-98 11.90 97,356 100%

520 Maryville
Ctr. Fee 100% Dec-98 5.30 113,659 0%

NASHVILLE,
TENNESSEE
CREEKSIDE
CROSSING
Creekside
Crossing One Fee 100% Jul-98 5.35 112,800 0%

CLEVELAND,
OHIO
Park Ctr.
Bldg.1 Fee 100% Oct-98 6.68 133,550 0%

RETAIL
- ------

CINCINNATI, OHIO
Tri-County
Marketplace Fee 100% Oct-98 10.38 74,174 100%
Western Hills
Marketplace Fee 100% Sep-98 10.50 148,140 82%
-------- ----------
UNDER CONST. TOTAL 294.88 5,242,881
-------- ----------
2,979.24 45,910,924
======== ==========

[1] These buildings are owned by a limited liability company in which the
Company is a 50.1% member. The Company shares in the profit or loss from
such buildings in accordance with the Company's ownership interest. This
limited liability company owns a 50% general partnership interest in Park
Fletcher Buildings 27 and 28 and shares in the profit or loss from these
buildings in accordance with the limited liability company's interest.

[2] These buildings are owned by a partnership in which the Company is a
partner. The Company owns a 10% capital interest in the partnership and
receives a 50% interest in the residual cash flow after payment of a 9%
preferred return to the other partner on its capital interest.

- 13 -

[3] This building was constructed in 1994 and expanded in 1997.

[4] This building is owned in partnership with a tenant of the building. The
Company owns a 50% general partnership interest in the partnership. The
Company shares in the profit or loss from the building in accordance with
such ownership interest.

[5] This building was constructed in three phases; 1962, 1971 and 1974.

[6] This building was contributed to the limited liability company
referenced in footnote [1] in 1996.

[7] This building is owned by a limited partnership in which the Company has
a 1% general partnership interest and a 39% limited partnership interest.
The Company shares in the profit or loss from such building in accordance
with the Company's ownership interest.

[8] This building was renovated in 1996.

[9] This building is owned by a partnership in which the Company owns a
33.33% limited partnership interest. The Company shares in the profit or
loss from the building in accordance with such ownership interest.

[10] The Company owns a 66.67% general partnership interest in the
partnership owning this building. The Company shares in the profit or loss
of this building in accordance with the Company's ownership interest.

[11] The Company owns the building and has a leasehold interest in the land
underlying this building with a lease term expiring October 31, 2067.

[12] The Company has a leasehold interest in this building with a lease term
expiring May 9, 2006.

[13] The Company owns this building and has a leasehold interest
in the land underlying this building with a lease term expiring August
2045, with two 20-year options to renew.

[14] The Company has a leasehold interest in the building and the
underlying land with a lease term expiring June 30, 2020. The Company has
an option to purchase the fee interest in the property throughout the term
of the lease.

[15] This building was renovated in 1986.

[16] These buildings are owned by a partnership in which the
Company has a 50% general partnership interest. The Company shares in the
profit or loss from such buildings in accordance with such ownership
interest.

[17] This building was renovated in 1985.

[18] Tri-County Office Park consists of four buildings. One was
built in 1971, two were built in 1973, and one was built in 1982.

[19] The Company owns this building and has a leasehold interest
in the land underlying this building with a lease term expiring June 2095.

[20] This building is owned by a limited liability company in
which the Company is a 50% member. The Company shares in the profit or loss
of this building in accordance with the Company's ownership interest.

[21] This building is owned through a limited liability company in which
the partnership Company is a 25% member. The limited liability company
will own a 57.5% interest in the Fountain Place retail project.

ITEM 3. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company or any
subsidiary was a party or to which any of their property is subject
other than routine litigation incidental to the Company's business. In
the opinion of management, such litigation is not material to the
Company's business operations or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1997.
- 14 -

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company's Common Shares are listed for trading on the New York
Stock Exchange, symbol DRE. The following table sets forth the high
and low sales prices of the Common Stock for the periods indicated and
the dividend paid per share during each such period. Comparable cash
dividends are expected in the future. As of March 4, 1998, there
were 8,332 record holders of Common Shares.

1997 (1) 1996 (1)
------------------------------ -------------------------
QUARTER ENDED HIGH LOW DIVIDEND HIGH LOW DIVIDEND
---------------- ---- ----- -------- ---- ----- --------

December 31 $25.00 $21.38 $.300 $19.25 $16.38 $.255
September 30 23.63 19.81 .295 16.62 14.50 .255
June 30 20.88 17.13 .255 15.25 14.19 .245
March 31 21.44 19.00 .255 16.25 14.56 .245

(1) All stock prices and dividend amounts reflect the Company's two-for-one
stock split effected in August 1997.

On January 29, 1998, the Company declared a quarterly cash dividend of
$0.30 per share payable on February 27, 1998 to common shareholders of
record on February 13, 1998. Following is a summary of the taxable
nature of the Company's dividends for the three years ended December
31:

1997 1996 1995
---- ---- ----

Total dividends per share $1.10 $1.00 $.96
==== ==== ===
Percent taxable as
ordinary income 100.00% 99.10% 85.51%
Percent taxable as
long-term capital gains - - .82%
Percent non-taxable as
return of capital - .90% 13.67%
------- ------- -------
100.00% 100.00% 100.00%
======= ======= =======

Dividends per share of $.97 and $.89 were required for the Company to
maintain its REIT status in 1997 and 1996, respectively.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following sets forth selected consolidated financial and
operating information on a historical basis for the Company for each
of the years in the five-year period ended December 31, 1997. The
following information should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Item 8, "Financial Statements and
Supplementary Data" included in this Form 10-K (in thousands, except
per share amounts):

1997 1996 1995 1994 1993
---- ---- ---- ---- ----

RESULTS OF OPERATIONS:
Revenues:
Rental Operations $ 229,702 $ 162,160 $113,641 $ 89,299 $ 33,648
Service Operations 22,378 19,929 17,777 18,473 5,654
--------- --------- ------- ------- -------
TOTAL REVENUES $ 252,080 $ 182,089 $131,418 $107,772 $ 39,302
========= ========== ======= ======= =======
NET INCOME (LOSS)
AVAILABLE FOR
COMMON SHARES $ 65,999 $ 50,872 $ 35,019 $ 26,216 $ 5,013
========= ========= ======== ======= =======
PER SHARE DATA (1):
Net Income per
Common Share
Basic $ .99 $ .91 $ .77 $ .77 $ .46
Diluted .98 .90 .77 .77 .46
Dividends per
Common Share 1.10 1.00 .96 .92 .84
Weighted Average
Common Shares
Outstanding 66,427 56,134 45,358 34,278 10,918
Weighted Average
Common and Dilutive
potential Common
Shares 74,993 64,398 53,802 43,002 13,152
- 15 -

BALANCE SHEET DATA
(at December 31):
Total Assets $2,176,214 $1,361,142 $1,045,588 $774,901 $632,885
Total Debt 720,119 525,815 454,820 298,640 248,433
Total Preferred Equity 218,338 72,288 - - -
Total Shareholders'
Equity 1,234,681 754,932 534,789 445,384 347,038
Total Common Shares
Outstanding (1) 76,065 58,972 48,304 40,782 32,092
OTHER DATA:
Funds From Operations
(2) $ 107,256 $ 76,079 $ 54,746 $ 38,198 $ 11,064
Cash Flow Provided by
(Used by):
Operating activities $ 159,195 $ 95,135 $ 78,620 $ 51,873 $ 14,363
Investing activities (597,324) (276,748) (289,569) (116,238)(315,025)
Financing activities 443,148 181,220 176,243 94,733 310,717

(1)Information for 1993 has been adjusted for the 1 for 4.2 reverse
stock split effected in 1993. Information for all five years
reflects the two-for-one stock split effected in August 1997.

(2)Funds From Operations, is defined by the National Association of
Real Estate Investment Trusts as net income or loss excluding
gains or losses from debt restructuring and sales of property
plus depreciation and amortization, and after adjustments for
minority interest, unconsolidated partnerships and joint ventures
(adjustments for minority interests, unconsolidated partnerships
and joint ventures are calculated to reflect Funds From Operations
on the same basis). Funds From Operations does not represent cash
flow from operations as defined by generally accepted accounting
principles, should not be considered as an alternative to net
income as an indicator of the Company's operating performance,
and is not indicative of cash available to fund all cash flow needs.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW
--------
The Company's operating results depend primarily upon income from the
rental operations of its industrial, office and retail properties
located in its primary markets. This income from rental operations is
substantially influenced by the supply and demand for the Company's
rental space in its primary markets. In addition, the Company's
continued growth is dependent upon its ability to maintain occupancy
rates and increase rental rates on its in-service portfolio and to
continue development and acquisition of additional rental properties.

The Company's primary markets in the Midwest have continued to offer
strong and stable local economies and have provided attractive new
development opportunities because of their central location,
established manufacturing base, skilled work force and moderate labor
costs. Consequently, the Company's occupancy rate of its in-service
portfolio has averaged 94.5% the last two years and was 94.1% at
December 31, 1997. The Company expects to maintain its overall
occupancy at comparable levels and also expects to increase
rental rates as leases are renewed or new leases are executed. This
stable occupancy as well as increasing rental rates should improve
the Company's results of operations from its in-service properties.
The Company's strategy for continued growth also includes developing
and acquiring additional rental properties in its primary markets and
expanding into other attractive Midwestern markets.

A new statistic that the Company started tracking in 1996 is Same
Property Performance which compares those properties that were fully
in-service for all of a two-year period. Because of the rapid growth
of the Company, this population of properties only represented 45.3% and
42.2% of the in-service portfolio at December 31, 1997 and December 31,
1996, respectively. As a result of the loss of a 90,000 square foot
downtown Cincinnati office tenant in 1996, along with the effects of a
property tax reassessment in another downtown Cincinnati property, Same
Property FFO increased only 1.1% from 1995 to 1996. In 1997, Same Property
FFO improved significantly with a 4.7% increase over 1996.

- 16 -

The following table sets forth information regarding the Company's in-
service portfolio of rental properties as of December 31, 1997 and
1996 (square feet in thousands):

Total Percent of
Square Feet Total Square Feet Percent Occupied
------------------ ----------------- ----------------
Type 1997 1996 1997 1996 1997 1996
---- ------ ------ ------- ------ ------- -------

INDUSTRIAL
Service Centers 3,707 3,151 9.1% 11.5% 91.9% 94.0%
Bulk 24,173 15,173 59.4% 55.4% 93.5% 95.1%
OFFICE
Suburban 9,758 6,319 24.0% 23.1% 95.9% 96.6%
CBD 699 699 1.7% 2.5% 93.9% 87.1%
Medical 290 370 .8% 1.3% 98.4% 92.8%
RETAIL 2,041 1,690 5.0% 6.2% 95.8% 93.7%
------ ------ ------ ------
Total 40,668 27,402 100.0% 100.0% 94.1% 95.0%
====== ====== ====== ======

Management expects occupancy of the in-service property portfolio to
remain stable because (i) only 10.2% and 12.2% of the Company's
occupied square footage is subject to leases expiring in 1998 and
1999, respectively, and (ii) the Company's renewal percentage
averaged 81%, 80% and 65% in 1997, 1996 and 1995, respectively.

The following tables reflects the Company's in-service lease
expiration schedules as of December 31, 1997, by product type
indicating square footage and annualized net effective rents under
expiring leases (in thousands, except per square foot amounts):

Industrial Portfolio Office Portfolio Retail Portfolio Total Portfolio
-------------------- ---------------- ---------------- ---------------
Yr of Sq. Sq. Sq. Sq.
Exp Ft. Rent Ft. Rent Ft. Rent Ft. Rent
- ------ ----- ----- ----- ----- ----- ----- ----- -----

1998 2,951 $ 11,508 874 $ 9,738 81 $ 918 3,906 $ 22,164
1999 3,236 13,738 1,322 14,560 114 1,197 4,672 29,495
2000 2,739 11,696 1,052 13,675 126 1,525 3,917 26,896
2001 2,944 11,940 1,465 17,639 89 1,064 4,498 30,643
2002 3,821 15,234 1,443 16,597 157 1,747 5,421 33,578
2003 1,455 5,880 475 5,661 57 541 1,987 12,082
2004 775 3,465 298 3,659 17 178 1,090 7,302
2005 1,761 5,593 924 12,916 177 1,518 2,862 20,027
2006 2,052 7,212 625 9,606 5 67 2,682 16,885
2007 1,875 5,813 362 4,638 76 760 2,313 11,211
There-
after 2,394 8,995 1,461 20,190 1,055 8,513 4,910 37,698
------ ------- ------ ------- ----- ------ ------ ------
Total
Leased 26,003 $101,074 10,301 $128,879 1,954 $18,028 38,258 $247,981
====== ======= ====== ======= ===== ====== ====== =======

Total
Port-
folio 27,880 10,747 2,041 40,668
====== ====== ===== ======
Annualized
net effective
rent per sq.
foot leased $ 3.89 $ 12.51 $ 9.23 $ 6.48
======= ======= ====== =======

This stable occupancy, along with increasing rental rates in each of
the Company's markets, will allow the in-service portfolio to
continue to provide a comparable or increasing level of earnings
from rental operations. The Company also expects to realize growth
in earnings from rental operations through (i) the development and
acquisition of additional rental properties in its primary markets;
(ii) the expansion into
- 17 -

other attractive Midwestern markets; and (iii) the completion of the
5.2 million square feet of properties under development at December
31, 1997 over the next five quarters. The 5.2 million square feet of
properties under development should provide future earnings from
rental operations growth for the Company as they are placed in
service as follows (in thousands, except percentages):

Anticipated Estimated Anticipated
In-Service Square Percent Project Stabilized
Date Feet Pre-Leased Costs Return
----------- -------- ---------- ----------- ------------

1st Quarter 1998 1,496 71% $ 50,258 11.3%
2nd Quarter 1998 2,779 68% 96,427 11.1%
3rd Quarter 1998 387 31% 35,119 12.1%
4th Quarter 1998
and thereafter 581 13% 75,508 11.2%
----- -------
5,243 60% $257,312 11.3%
===== =======

RESULTS OF OPERATIONS
---------------------
A summary of the Company's operating results and property statistics
for each of the years in the three-year period ended December 31, 1997
is as follows (in thousands, except number of properties and per share
amounts):

1997 1996 1995
------- -------- -------

Rental Operations revenues $229,702 $162,160 $113,641
Service Operations revenues 22,378 19,929 17,777
Earnings from Rental Operations 83,740 54,332 37,275
Earnings from Service Operations 7,153 6,436 6,569
Operating income 84,363 56,049 40,308
Net income available for
common shares $ 65,999 $ 50,872 $ 35,019
Weighted average common
shares outstanding (1) 66,427 56,134 45,358
Weighted average common and
dilutive potential common
shares (1) 74,993 64,398 53,802
Basic income per common
share (1) $ .99 $ .91 $ .77
Diluted income per common
share (1) $ .98 $ .90 $ .77

Number of in-service properties
at end of year 355 249 201
In-service square footage at
end of year 40,668 27,402 20,073
Under development square footage
at end of year 5,243 3,801 3,448

(1) As adjusted for the two-for-one stock split effected in August 1997.

COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------
Rental Operations
-----------------
The Company increased its in-service portfolio of rental properties
from 249 properties comprising 27.4 million square feet at December
31, 1996 to 355 properties comprising 40.7 million square feet at
December 31, 1997 through the acquisition of 84 properties totaling
8.4 million square feet and the placement in service of 28 properties
and two building expansions totaling 5.4 million square feet
developed by the Company.

The Company also disposed of six properties totaling 443,000 square
feet. These 106 net additional rental properties primarily account
for the $67.5 million increase in revenues from Rental Operations
from 1996 to 1997. The increase from 1996 to 1997 in rental expenses,
real estate taxes and depreciation and amortization expense is also a
result of the additional 106 in-service rental properties.

- 18 -

Interest expense increased by approximately $7.7 million. This
increase was primarily because of interest expense on the $90 million
of unsecured debt which the Company issued in 1996 under its medium-
term note program. These notes bear interest at a weighted average
rate of 7.20% and were outstanding a full year in 1997 as compared to
less than six months in 1996. The Company also issued $100 million of
unsecured debt in 1997 which bears interest at an effective interest
rate of 7.35%. The proceeds from these debt issuances were used
to fund development and acquisition of additional rental properties.

As a result of the above mentioned items, earnings from Rental
Operations increased $29.4 million from $54.3 million for the year
ended December 31, 1996 to $83.7 million for the year ended December
31, 1997.

Service Operations
----------------
Service Operations revenues increased from $19.9 million to $22.4
million for the year ended December 31, 1997 as compared to the year
ended December 31, 1996 primarily as a result of increases in
construction management fee revenue because of an increase in third-
party construction volume. Service Operations expenses increased from
$13.5 million to $15.2 million for the year ended December 31, 1997
as compared to the year ended December 31, 1996 primarily as a result
of an increase in operating expenses resulting from the overall
growth of the Company and the additional regional offices opened in
1996 and 1997.

As a result of the above-mentioned items, earnings from Service
Operations increased from $6.4 million to $7.2 million for the years
ended December 31, 1996 and 1997, respectively.

General and Administrative Expense
---------------------------------
General and administrative expense increased from $4.7 million for
the year ended December 31, 1996 to $6.5 million for the year ended
December 31, 1997 primarily as a result of increased state and local
taxes due to the growth in revenues and net income of the Company.
Property advertising expense also increased as a result of the
expanding size of the Company.

Other Income (Expense)
---------------------
Interest income increased from $1.2 million for the year ended
December 31, 1996 to $2.2 million for the year ended December 31,
1997 as a result of the temporary short-term investment of a greater
amount of proceeds from the 1997 debt and equity offerings. Other
expense consists of costs incurred in pursuit of unsuccessful
development or acquisition opportunities.

During the year ended December 31, 1996, the Company sold a 251,000
square foot corporate headquarters facility pursuant to a purchase
option contained in the original agreement to lease the building. The
project was sold for approximately $32.9 million and the Company
recognized a gain of approximately $1.6 million on the sale. The
Company also realized gains totaling $2.9 million in 1996 related to
the sale of a retail center and several parcels of land.

Net Income Available for Common Shares
-------------------------------------
Net income available for common shares for the year ended December
31, 1997 was $66.0 million compared to $50.9 million for the year
ended December 31, 1996. This increase results primarily from the
increases in the operating results of rental and service operations
explained above.

- 19 -

COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
- -----------------------------------------------------------------------------
Rental Operations
----------------
The Company increased its in-service portfolio of rental properties
from 201 properties comprising 20.1 million square feet at December
31, 1995 to 249 properties comprising 27.4 million square feet at
December 31, 1996 through the acquisition of 34 properties totaling
3.4 million square feet and the placement in service of 16 properties
and four building expansions totaling 4.1 million square feet
developed by the Company.

The Company also disposed of two properties totaling 182,000 square
feet. These 48 net additional rental properties primarily account for
the $48.5 million increase in revenues from Rental Operations from
1995 to 1996. The increase from 1995 to 1996 in rental expenses, real
estate taxes and depreciation and amortization expense is also a
result of the additional 48 in-service rental properties.

Interest expense increased by approximately $9.9 million. This
increase was primarily because of interest expense on the $150.0
million of unsecured notes which the Company issued in September
1995. These notes bear interest at an effective rate of 7.46%
and were outstanding a full year in 1996 as compared to approximately
three months in 1995. The Company also issued $90.0 million of
unsecured debt under its medium-term note program in 1996 which bears
interest at a weighted average rate of 7.20%. The proceeds from these
debt issuances were used to fund development and acquisition of
additional rental properties during 1995 and 1996.

As a result of the above-mentioned items, earnings from Rental
Operations increased $17.0 million from $37.3 million for the
year ended December 31, 1995 to $54.3 million for the year ended
December 31, 1996.

Service Operations
------------------
Service Operations revenues increased from $17.8 million to
$19.9 million for the year ended December 31, 1996 as compared to the
year ended December 31, 1995 primarily as a result of increases in
construction management fee revenue because of an increase in
construction volume. Service Operations expenses increased from $11.2
million to $13.5 million for the year ended December 31, 1996 as
compared to the year ended December 31, 1995 primarily as a result of
an increase in operating expenses resulting from the overall growth
of the Company and the additional regional offices opened in 1995 and
1996.

As a result of the above-mentioned items, earnings from Service
Operations decreased from $6.6 million to $6.4 million for the years
ended December 31, 1995 and 1996, respectively.

General and Administrative Expense
----------------------------------
General and administrative expense increased from $3.5 million for
the year ended December 31, 1995 to $4.7 million for the year ended
December 31, 1996 primarily as a result of increased state and local
taxes due to the growth in revenues and net income of the Company.
Property advertising expense as well as certain public company
expenses also increased as a result of the expanding size of the
Company.

Other Income (Expense)
---------------------
Interest income decreased from $1.9 million for the year ended
December 31, 1995 to $1.2 million for the year ended December 31,
1996 as a result of the temporary short-term investment of a greater
amount of proceeds from the 1995 debt and equity offerings compared
to proceeds generated by the 1996 debt and equity offerings.
- 20 -

During the year ended December 31, 1996, the Company sold a 251,000
square foot corporate headquarters facility pursuant to a purchase
option contained in the original agreement to lease the building. The
project was sold for approximately $32.9 million and the Company
recognized a gain of approximately $1.6 million on the sale. The
company also realized gains totaling $2.9 million in 1996 related to
the sale of a retail center and several parcels of land.

Net Income Available for Common Shares
-------------------------------------
Net income available for common shares for the year ended December
31, 1996 was $50.9 million compared to $35.0 million for the year
ended December 31, 1995. This increase results primarily from the
changes in the operating result of rental and service operations
explained above.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaling $159.2 million,
$95.1 million and $78.6 million for the years ended December 31,
1997, 1996 and 1995, respectively, represents the primary source of
liquidity to fund distributions to shareholders and minority
interests and to fund recurring costs associated with the renovation
and re-letting of the Company's properties. The primary reason for
the increases in net cash provided by operating activities is, as
discussed above under "Results of Operations," the increase in net
income each year resulting from the expansion of the in-service
portfolio through development and acquisitions of additional rental
properties.

Net cash used by investing activities totaling $597.3 million, $276.7
million and $289.6 million for the years ended December 31, 1997,
1996 and 1995, respectively, represents the investment of funds by
the Company to expand its portfolio of rental properties through the
development and acquisition of additional rental properties. In 1997,
$620.5 million was invested in the development and acquisition of
additional rental properties and land held for development and $14.3
million was used for recurring building and tenant improvements and
leasing costs.

Included in the $620.5 million of development and acquisition of
rental properties and land held for development for the year ended
December 31, 1997 is $1.3 million related to the acquisition of 41
industrial and suburban office buildings totaling 3.2 million gross
square feet in Minneapolis, Minnesota. The purchase price of these 41
buildings was approximately $144.7 million which included the
assumption of $93.1 million of mortgage debt, the issuance of $48.5
million of units of partnership interest in the Company's operating
partnership, and the assumption of approximately $1.8 million of
accrued taxes and other liabilities.

Also included in $620.5 million of development and acquisition of
rental properties and land held for development for the year ended
December 31, 1997 is $27.9 million related to the acquisition of 8
suburban office buildings and 3 industrial buildings totaling 982,000
gross square feet and land held for development in St. Louis,
Missouri. The purchase price of these properties was approximately
$147.7 million which included the assumption of $77.8 million of
mortgage debt, the issuance of $40.8 million of units of partnership
interest in the Company's operating partnership and the assumption of
approximately $1.2 million of accrued taxes and other liabilities.

Also in 1997, the Company sold six properties and several parcels of
land and received $32.6 million of net sales proceeds. These proceeds
were used to fund a portion of the 1997 development and acquisition
activity.

- 21 -

In 1996, $328.4 million was invested in the development and
acquisition of additional rental properties and land held for
development and $9.9 million was used for recurring building and
tenant improvements and leasing costs. In 1995, $250.3 million was
invested in the development and acquisition of additional rental
properties and land held for development and $8.6 million was used
for recurring building and tenant improvements and leasing costs.

Net cash provided by financing activities totaling $443.1 million,
$181.2 million and $176.2 million for the years ended December 31,
1997, 1996 and 1995, respectively, is comprised of debt and equity
issuances, net of distributions to shareholders and minority
interests and repayments of outstanding indebtedness. In 1997, the
Company received $299.1 million of net proceeds from common stock
offerings which were used to pay down amounts outstanding on the
unsecured line of credit and to fund acquisition and development of
additional rental properties and land held for development. During
1997, the Company also received $18.4 million of net proceeds from
the issuance of common stock under its Direct Stock Purchase and
Dividend Reinvestment Plan. The Company used these net proceeds to
fund the development and acquisition of additional rental properties.
In July 1997, the Company received $146.1 million of net proceeds
from a preferred stock offering. In August 1997, the Company issued
$100.0 million of unsecured debt. This unsecured debt matures in July
2004 and bears interest at an effective interest rate of 7.35%.
The Company used the net proceeds from the preferred stock and the
unsecured debt offerings to reduce amounts outstanding under the
Company's lines of credit and to fund the development and acquisition
of additional rental properties.

In March 1996, the Company received $125.3 million of net proceeds
from a common stock offering which was used to pay down amounts
outstanding on the unsecured line of credit. During 1996, the Company
also received $5.5 million of net proceeds from the issuance of
common stock under its Direct Stock Purchase and Dividend
Reinvestment Plan. The Company used these net proceeds to fund the
development and acquisition of additional rental properties.

In August 1996, the Company received $72.3 million of net proceeds
from a preferred stock offering. In July 1996, the Company issued
$40.0 million of unsecured debt under its medium-term note program.
These notes mature in July 2000 and bear interest at 7.28%. In
November 1996, the Company issued $50.0 million of unsecured debt
under its medium-term note program. These notes mature in November
2004 and bear interest at 7.14%. The Company used the net proceeds
from the preferred stock offering and the two medium-term note
offerings to pay off approximately $82.5 million of existing secured
debt which was scheduled to mature in the fourth quarter of 1996 or
early in 1997 and the remainder to fund the development and
acquisition of additional rental properties.

In 1995, the Company received $96.3 million of net proceeds from a
common stock offering and used the proceeds to fund development and
acquisition of additional rental properties. In 1995, the Company
also received $150.0 million from an unsecured debt offering and used
the proceeds to retire outstanding mortgage indebtedness and to fund
acquisition and development of additional rental properties.

The recurring capital needs of the Company are funded primarily
through the undistributed net cash provided by operating activities.
An analysis of the Company's recurring capital expenditures is as
follows (in thousands):

1997 1996 1995
----- ---- ----

Tenant improvements $ 7,985 $6,048 $4,312
Leasing costs 5,057 3,032 3,519
Building improvements 1,211 780 757
------ ----- -----
Total $14,253 $9,860 $8,588
====== ===== =====

- 22 -

The Company has a $200.0 million unsecured line of credit available
to fund the development and acquisition of additional rental
properties and to provide working capital as needed. This line of
credit matures in April 2001 and bears interest at the 30-day London
Interbank Offered Rate ("LIBOR") plus .80%. Borrowings of $13.0
million under this line of credit as of December 31, 1997 bear
interest at an effective rate of 6.74%. The Company also has a demand
$7.0 million secured line of credit which is available to provide
working capital. This facility bears interest payable monthly at the
30-day LIBOR rate plus .65%. Borrowings of $7.0 million are
outstanding on this line of credit at December 31, 1997 and bear
interest at an effective rate of 6.59%. The current 30-day LIBOR rate
as of March 2, 1998 is 5.68%.

The Company currently has on file two Form S-3 Registration
Statements with the Securities and Exchange Commission (the "Shelf
Registrations") which have remaining availability as of December 31,
1997 of $504.1 million to issue additional common stock, preferred
stock and unsecured debt securities. The Company intends to issue
additional securities under such Shelf Registrations to fund the
development and acquisition of additional rental properties.

The total debt outstanding at December 31, 1997 consists of notes
totaling $720.1 million with a weighted average interest rate of
7.58% maturing at various dates through 2017. The Company has $353.0
million of unsecured debt and $367.1 million of secured debt
outstanding at December 31, 1997. Scheduled principal amortization of
such debt totaled $4.1 million for the year ended December 31, 1997.
A summary of the scheduled future amortization and maturities of the
Company's indebtedness is as follows (in thousands):

Repayments
------------------------------------- Weighted Average
Scheduled Interest Rate of
Year Amortization Maturities Total Future Repayments
---- ------------ ---------- ------- -----------------

1998 $ 6,795 $ 47,714 $ 54,509 7.07%
1999 5,880 30,450 36,330 6.71%
2000 6,262 64,850 71,112 7.14%
2001 5,926 87,560 93,486 7.65%
2002 6,433 50,000 56,433 7.40%
2003 4,415 68,216 72,631 8.46%
2004 3,398 177,035 180,433 7.41%
2005 3,681 100,000 103,681 7.49%
2006 3,989 - 3,989 7.68%
2007 3,516 14,939 18,455 7.77%
There-
after 29,060 - 29,060 7.69%
------ ------- -------
Total $79,355 $640,764 $720,119 7.58%
====== ======= =======

The Company intends to pay regular quarterly dividends from net cash
provided by operating activities. A quarterly dividend of $.30 per
common share was declared on January 29, 1998 which represents an
annualized dividend of $1.20 per share.

YEAR 2000

The Company has reviewed the impact of Year 2000 issues and has
determined that it is not expected to have a material impact on
its business, operations or its financial condition.

FUNDS FROM OPERATIONS

Management believes that Funds From Operations ("FFO"), which is
defined by the National Association of Real Estate Investment Trusts
as net income or loss excluding gains or losses from debt
restructuring and

- 23 -

sales of property plus depreciation and amortization, and after
adjustments for minority interest, unconsolidated partnerships and
joint ventures (adjustments for minority interest, unconsolidated
partnerships and joint ventures are calculated to reflect FFO on the
same basis), is the industry standard for reporting the operations of
real estate investment trusts.

The following reflects the calculation of the Company's FFO for the
years ended December 31 (in thousands):

1997 1996 1995
------- ------- -------

Net income available for common shares $ 65,999 $ 50,872 $ 35,019
Add back:
Depreciation and amortization 44,806 31,363 23,118
Share of joint venture
depreciation and amortization 3,017 1,890 411
Earnings from property sales (1,775) (4,532) (283)
Minority interest share of add-backs (4,791) (3,514) (3,519)
------- ------ -------
FUNDS FROM OPERATIONS $107,256 $ 76,079 $ 54,746
======= ====== =======

CASH FLOW PROVIDED BY (USED BY):
Operating activities $ 159,195 $ 95,135 $ 78,620
Investing activities (597,324) (276,748) (289,569)
Financing activities 443,148 181,220 176,243

The increase in FFO during the three-year period results primarily
from the increased in-service rental property portfolio as
discussed above under "Results of Operations."

While management believes that FFO is the most relevant and widely
used measure of the Company's operating performance, such amount
does not represent cash flow from operations as defined by
generally accepted accounting principles, should not be considered
as an alternative to net income as an indicator of the Company's
operating performance, and is not indicative of cash available to
fund all cash flow needs.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ON ACCOUNTING
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item for Directors and certain
Executive Officers will be contained in a definitive proxy statement
which the Registrant anticipates will be filed no later than March
23, 1998, which proxy statement is incorporated herein by reference,
and thus this part has been omitted in accordance with General
Instruction G(3) to Form 10-K.

The following information is provided regarding the executive
officers of the Company who do not serve as Directors of the Company:

- 24 -

GARY A. BURK
Age 46, President of Construction Services and Executive Vice
President of Duke Services, Inc. - Mr. Burk joined the Company in
1979, and has been responsible for the Company's construction
management operations since 1986.

JOHN R. GASKIN
Age 36, Vice President, General Counsel and Secretary - Mr. Gaskin
joined the Company in 1990. Prior to joining the Company, Mr. Gaskin
worked as an associate attorney in a mid-size Indianapolis, Indiana
law firm.

RICHARD W. HORN
Age 40, Executive Vice President - Office - Mr. Horn joined the
Company in 1984. Mr. Horn is responsible for all office activities
of the Company and also oversees the Nashville and Michigan operations
of the Company.

WILLIAM E. LINVILLE, III
Age 43, Executive Vice President - Industrial - Mr. Linville joined
the Company in 1987 and is responsible for all industrial activities
of the Company. Prior to that time, Mr. Linville was Vice President
and Regional Manager of the CB Commercial Brokerage Office in
Indianapolis.

DAVID R. MENNEL
Age 43, General Manager of Services Operations and President and
Treasurer of Duke Services, Inc.- Mr. Mennel was with the accounting
firm of Peat Marwick Mitchell & Co. and the property development
firm of Melvin Simon & Associates before joining the Company in
1978.

DENNIS D. OKLAK
Age 44, Executive Vice President and Chief Administrative Officer -
Mr. Oklak joined the Company in 1986 and has served as Treasurer,
Tax Manager and Controller of Development. Prior to joining the
Company, Mr. Oklak was a Senior Manager with the public accounting
firm of Deloitte Haskins Sells.

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are
required by Securities and Exchange Commission regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Information regarding Section 16(a) filings will be contained in a
definitive proxy statement which the Registrant anticipates will be
filed no later than March 23, 1998, which proxy statement is
incorporated herein by reference, and thus this part has been omitted
in accordance with General Instruction G(3) to Form 10-K.

ITEM 11, 12, 13 EXECUTIVE COMPENSATION, SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS.

The information required by Item 11, Item 12 and Item 13 will be
contained in a definitive proxy statement which the Registrant
anticipates will be filed no later than March 23, 1998, which proxy
statement is incorporated herein by reference, and thus this part has
been omitted in accordance with General Instruction G(3) to Form 10-
K.

- 25 -

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents Filed as Part of This Report.

1. Consolidated Financial Statements:

Index

Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1997 and 1996
Consolidated Statements of Operations, Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Cash Flows, Years Ended December 31, 1997,
1996 and 1995
Consolidated Statements of Shareholders' Equity, Years Ended December
31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements

2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

Index
-----
Schedule III - Real Estate and Accumulated Depreciation

EDGAR Financial Data Schedule
-----------------------------
Exhibit 27 - Financial Data Schedule for year ended December 31,
1997 (EDGAR filing only)

Other schedules are omitted for the reasons that they are not
required, are not applicable, or the required information is set
forth in the financial statements or notes thereto.
- 26 -

INDEPENDENT AUDITORS' REPORT

The Shareholders and Directors of
Duke Realty Investments, Inc.:

We have audited the consolidated financial statements of Duke
Realty Investments, Inc. and Subsidiaries as listed in the
accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index.
These consolidated financial statements and the financial
statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
consolidated financial statements and the financial statement
schedule based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Duke Realty Investments, Inc. and Subsidiaries as of
December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.

KPMG Peat Marwick LLP
Indianapolis, Indiana
January 28, 1998

- 27 -

DUKE REALTY INVESTMENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

December 31,
--------------------------
1997 1996
----------- ---------
ASSETS
------

Real estate investments:
Land and improvements $ 231,614 $ 140,391
Buildings and tenant improvements 1,591,604 1,041,040
Construction in progress 107,242 44,060
Investments in unconsolidated companies 106,450 79,362
Land held for development 139,817 65,185
--------- ---------
2,176,727 1,370,038
Accumulated depreciation (116,264) (82,207)
--------- ---------
Net real estate investments 2,060,463 1,287,831

Cash and cash equivalents 10,353 5,334
Accounts receivable, net of
allowance of $420 and $709 5,932 5,260
Straight-line rent receivable,
net of allowance of $841 14,746 10,956
Receivables on construction contracts 22,700 12,859
Deferred financing costs, net of
accumulated amortization
of $9,101 and $6,519 12,386 10,958
Deferred leasing and other costs,
net of accumulated amortization
of $9,251 and $5,249 34,369 21,573
Escrow deposits and other assets 15,265 6,371
--------- ---------
$2,176,214 $1,361,142
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY

Indebtedness:
Secured debt $ 367,119 $ 261,815
Unsecured notes 340,000 240,000
Unsecured line of credit 13,000 24,000
--------- ---------
720,119 525,815

Construction payables and amounts
due subcontractors 40,786 23,167
Accounts payable 1,342 1,585
Accrued Expenses:
Real estate taxes 25,203 14,888
Interest 6,883 4,437
Other 13,848 7,312
Other liabilities 11,720 8,312
Tenant security deposits and prepaid rents 14,268 7,611
--------- ---------
Total liabilities 834,169 593,127
--------- ---------
Minority interest 107,364 13,083
--------- ---------
Shareholders' equity:
Preferred shares and paid-in
capital ($.01 par value); 5,000 shares
authorized:
9.10% Series A, 300 shares issued
and outstanding (liquidation
preference of $75,000) 72,288 72,288
7.99% Series B, 300 shares issued
and outstanding (liquidation
preference of $150,000) 146,050 -
Common shares and paid-in capital
($.01 par value); 150,000 shares
authorized; 76,065 and 58,972 shares
issued and outstanding 1,071,990 731,107
Distributions in excess of net income (55,647) (48,463)
--------- ---------
Total shareholders' equity 1,234,681 754,932
--------- ---------
$2,176,214 $1,361,142
========= =========