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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 1-9044 (Duke Realty Corporation) 0-20625 (Duke Realty Limited Partnership)
DUKE REALTY CORPORATION
DUKE REALTY LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Indiana(Duke Realty Corporation) 35-1740409 (Duke Realty Corporation)
Indiana(Duke Realty Limited Partnership)35-1898425 (Duke Realty Limited Partnership)
(State or Other Jurisdiction
of Incorporation or Organization)
 (I.R.S. Employer
Identification Number)
8711 River Crossing Boulevard 
Indianapolis,Indiana46240
        (Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(317)808-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of ClassTrading Symbol(s)Name of Exchange on Which Registered
Duke Realty CorporationCommon Stock, $0.01 par valueDRENew York Stock Exchange
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.
Duke Realty Corporation
Yes
 No  
Duke Realty Limited Partnership
Yes 
 No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Duke Realty CorporationYes
 No  
Duke Realty Limited Partnership
Yes 
 No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Duke Realty Corporation:
Large accelerated filer
Accelerated filer  
Non-accelerated filer  
Smaller reporting company  
Emerging growth company
Duke Realty Limited Partnership:
Large accelerated filer
Accelerated filer  
Non-accelerated filer  
Smaller reporting company  
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Duke Realty CorporationYes
No  
Duke Realty Limited Partnership
Yes  
No  
The number of shares of Duke Realty Corporation's common stock outstanding at April 28, 2021 was 374,985,270.



EXPLANATORY NOTE
This report (the "Report") combines the quarterly reports on Form 10-Q for the period ended March 31, 2021 of both Duke Realty Corporation and Duke Realty Limited Partnership. Unless stated otherwise or the context otherwise requires, references to "Duke Realty Corporation" or the "General Partner" mean Duke Realty Corporation and its consolidated subsidiaries, and references to the "Partnership" mean Duke Realty Limited Partnership and its consolidated subsidiaries. The terms the "Company," "we," "us" and "our" refer to the General Partner and the Partnership, collectively, and those entities owned or controlled by the General Partner and/or the Partnership.
Duke Realty Corporation is a self-administered and self-managed real estate investment trust ("REIT") and is the sole general partner of the Partnership, owning approximately 99.0% of the common partnership interests of the Partnership ("General Partner Units") as of March 31, 2021. The remaining 1.0% of the common partnership interests ("Limited Partner Units" and, together with the General Partner Units, the "Common Units") are owned by limited partners. As the sole general partner of the Partnership, the General Partner has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Partnership.
The General Partner and the Partnership are operated as one enterprise. The management of the General Partner consists of the same members as the management of the Partnership. As the sole general partner with control of the Partnership, the General Partner consolidates the Partnership for financial reporting purposes, and the General Partner does not have any significant assets other than its investment in the Partnership. Therefore, the assets and liabilities of the General Partner and the Partnership are substantially the same.
We believe combining the quarterly reports on Form 10-Q of the General Partner and the Partnership into this single report results in the following benefits:
enhances investors' understanding of the General Partner and the Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation of information since a substantial portion of the Company's disclosure applies to both the General Partner and the Partnership; and
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
 
We believe it is important to understand the few differences between the General Partner and the Partnership in the context of how we operate as an interrelated consolidated company. The General Partner's only material asset is its ownership of partnership interests in the Partnership. As a result, the General Partner does not conduct business itself, other than acting as the sole general partner of the Partnership and issuing public equity from time to time. The General Partner does not issue any indebtedness, but does guarantee some of the unsecured debt of the Partnership. The Partnership holds substantially all the assets of the business, directly or indirectly, and holds the ownership interests related to certain of the Company's investments. The Partnership conducts the operations of the business and has no publicly traded equity. Except for net proceeds from equity issuances by the General Partner, which are contributed to the Partnership in exchange for General Partner Units or Preferred Units, the Partnership generates the capital required by the business through its operations, its incurrence of indebtedness and the issuance of Limited Partner Units to third parties.
Noncontrolling interests, shareholders' equity and partners' capital are the main areas of difference between the consolidated financial statements of the General Partner and those of the Partnership. The noncontrolling interests in the Partnership's financial statements include the interests in consolidated investees not wholly owned by the Partnership. The noncontrolling interests in the General Partner's financial statements include the same noncontrolling interests at the Partnership level, as well as the common limited partnership interests in the Partnership, which are accounted for as partners' capital by the Partnership.
In order to highlight the differences between the General Partner and the Partnership, there are separate sections in this report, as applicable, that separately discuss the General Partner and the Partnership, including separate financial statements and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure of the General Partner and the Partnership, this report refers to actions or holdings as being actions or holdings of the collective Company.




DUKE REALTY CORPORATION/DUKE REALTY LIMITED PARTNERSHIP
INDEX
  Page
Duke Realty Corporation:
Duke Realty Limited Partnership:
Duke Realty Corporation and Duke Realty Limited Partnership:
2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share amounts)
March 31,
2021
December 31,
2020
 (Unaudited) 
ASSETS
Real estate investments:
Real estate assets$8,855,987 $8,745,155 
Construction in progress856,496 695,219 
Investments in and advances to unconsolidated joint ventures128,010 131,898 
Undeveloped land294,855 291,614 
10,135,348 9,863,886 
Accumulated depreciation(1,705,011)(1,659,308)
Net real estate investments8,430,337 8,204,578 
Real estate investments and other assets held-for-sale 67,946 
Cash and cash equivalents9,009 6,309 
Accounts receivable16,925 15,204 
Straight-line rent receivable162,198 153,943 
Receivables on construction contracts, including retentions27,221 30,583 
Deferred leasing and other costs, net of accumulated amortization of $209,713 and $204,122340,539 329,765 
Restricted cash held in escrow for like-kind exchange 47,682 
Other escrow deposits and other assets309,218 255,384 
$9,295,447 $9,111,394 
LIABILITIES AND EQUITY
Indebtedness:
Secured debt, net of deferred financing costs of $333 and $343$63,007 $64,074 
Unsecured debt, net of deferred financing costs of $38,856 and $32,7633,469,884 3,025,977 
Unsecured line of credit 295,000 
3,532,891 3,385,051 
Liabilities related to real estate investments held-for-sale 7,740 
Construction payables and amounts due subcontractors, including retentions88,811 62,332 
Accrued real estate taxes80,909 76,501 
Accrued interest27,605 18,363 
Other liabilities245,940 269,806 
Tenant security deposits and prepaid rents60,150 57,153 
Total liabilities4,036,306 3,876,946 
Shareholders' equity:
Common shares ($0.01 par value); 600,000 shares authorized; 374,306 and 373,258 shares issued and outstanding, respectively3,743 3,733 
Additional paid-in capital5,756,738 5,723,326 
Accumulated other comprehensive loss(30,679)(31,568)
Distributions in excess of net income(548,843)(532,519)
Total shareholders' equity5,180,959 5,162,972 
Noncontrolling interests78,182 71,476 
Total equity5,259,141 5,234,448 
$9,295,447 $9,111,394 
See accompanying Notes to Consolidated Financial Statements
3


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
For the three months ended March 31,
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
 20212020
Revenues:
Rental and related revenue$258,179 $218,755 
General contractor and service fee revenue31,113 7,614 
289,292 226,369 
Expenses:
Rental expenses28,130 18,843 
Real estate taxes41,170 36,727 
General contractor and other services expenses29,463 6,568 
Depreciation and amortization93,573 85,359 
192,336 147,497 
Other operating activities:
Equity in earnings of unconsolidated joint ventures16,268 2,539 
Gain on sale of properties21,360 8,937 
Gain on land sales1,238 135 
Other operating expenses(1,145)(1,112)
Impairment charges (5,626)
Non-incremental costs related to successful leases(2,958)(2,525)
General and administrative expenses(24,217)(21,763)
10,546 (19,415)
Operating income107,502 59,457 
Other income (expenses):
Interest and other income, net463 1,395 
Interest expense(22,507)(23,494)
Loss on debt extinguishment(70)(17,806)
Income from continuing operations before income taxes85,388 19,552 
Income tax (expense) benefit(5,184)60 
Income from continuing operations80,204 19,612 
Discontinued operations:
Gain on sale of properties 48 
Income from discontinued operations 48 
Net income80,204 19,660 
Net income attributable to noncontrolling interests(842)(204)
Net income attributable to common shareholders$79,362 $19,456 
Basic net income per common share:
Continuing operations attributable to common shareholders$0.21 $0.05 
Diluted net income per common share:
Continuing operations attributable to common shareholders$0.21 $0.05 
Weighted average number of common shares outstanding373,667 368,190 
Weighted average number of common shares and potential dilutive securities377,744 371,870 
Comprehensive income:
Net income$80,204 $19,660 
Other comprehensive income:
Amortization of interest rate swap contracts889 801 
Comprehensive income$81,093 $20,461 
See accompanying Notes to Consolidated Financial Statements
4


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three months ended March 31,
(in thousands)
(Unaudited)
Three Months Ended
20212020
Cash flows from operating activities:
Net income$80,204 $19,660 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements79,062 71,582 
Amortization of deferred leasing and other costs14,511 13,777 
Amortization of deferred financing costs2,439 2,219 
Straight-line rental income and expense, net(8,021)(1,703)
Impairment charges 5,626 
Loss on debt extinguishment70 17,806 
Gain on land and property sales(22,598)(9,120)
Third-party construction contracts, net749 (780)
Other accrued revenues and expenses, net14,651 (6,738)
Equity in earnings (in excess of) less than operating distributions received from unconsolidated joint ventures(10,925)2,221 
Net cash provided by operating activities150,142 114,550 
Cash flows from investing activities:
Development of real estate investments(140,432)(170,900)
Acquisition of buildings and related intangible assets(34,738) 
Acquisition of land and other real estate assets(64,594)(87,023)
Second generation tenant improvements, leasing costs and building improvements(14,676)(8,105)
Other deferred leasing costs(8,007)(12,341)
Other assets(36,844)(15,040)
Proceeds from the repayments of notes receivable from property sales 110,000 
Proceeds from land and property sales, net85,479 27,081 
Capital distributions from unconsolidated joint ventures3,532  
Capital contributions and advances to unconsolidated joint ventures (2,353)
Net cash used for investing activities(210,280)(158,681)
Cash flows from financing activities:
Proceeds from issuance of common shares, net30,381 5,465 
Proceeds from unsecured debt446,634 316,371 
Payments on unsecured debt(40,226)(316,655)
Proceeds from secured debt financings 18,400 
Payments on secured indebtedness including principal amortization(1,007)(876)
(Repayments) borrowings on line of credit, net(295,000)200,000 
Distributions to common shareholders(95,310)(86,562)
Distributions to noncontrolling interests(1,092)(783)
Tax payments on stock-based compensation awards(4,754)(4,051)
Change in book cash overdrafts(14,430)(14,444)
Other financing activities(270)289 
Deferred financing costs(9,800)(3,971)
Net cash provided by financing activities15,126 113,183 
Net (decrease) increase in cash, cash equivalents and restricted cash(45,012)69,052 
Cash, cash equivalents and restricted cash at beginning of period67,223 121,431 
Cash, cash equivalents and restricted cash at end of period$22,211 $190,483 
Non-cash activities:
Lease liabilities arising from right-of-use assets$18,257 $1,132 
Assumption of indebtedness in real estate acquisitions$40,226 $ 
Non-cash distribution of assets from unconsolidated joint ventures, net$11,023 $ 
See accompanying Notes to Consolidated Financial Statements

5


DUKE REALTY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the three months ended March 31, 2021 and 2020
(in thousands, except per share data)
(Unaudited)
 
 Common Shareholders  
 Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Distributions
in Excess of
Net Income
Noncontrolling
Interests
Total
Balance at December 31, 2020$3,733 $5,723,326 $(31,568)$(532,519)$71,476 $5,234,448 
Net income— — — 79,362 842 80,204 
Other comprehensive income— — 889 — — 889 
Issuance of common shares7 30,374 — — — 30,381 
Stock-based compensation plan activity3 3,038 — (376)6,956 9,621 
Distributions to common shareholders ($0.255 per share)— — — (95,310)— (95,310)
Distributions to noncontrolling interests— — — — (1,092)(1,092)
Balance at March 31, 2021$3,743 $5,756,738 $(30,679)$(548,843)$78,182 $5,259,141 

 Common Shareholders  
 Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Distributions
in Excess of
Net Income
Noncontrolling
Interests
Total
Balance at December 31, 2019$3,680 $5,525,463 $(35,036)$(475,992)$62,145 $5,080,260 
Net income— — — 19,456 204 19,660 
Other comprehensive income— — 801 — — 801 
Issuance of common shares1 5,464 — — — 5,465 
Stock-based compensation plan activity3 2,879 — (314)5,653 8,221 
Distributions to common shareholders ($0.235 per share)— — — (86,562)— (86,562)
Distributions to noncontrolling interests— — — — (783)(783)
Balance at March 31, 2020$3,684 $5,533,806 $(34,235)$(543,412)$67,219 $5,027,062 




See accompanying Notes to Consolidated Financial Statements
6


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
March 31,
2021
December 31,
2020
(Unaudited)
ASSETS
Real estate investments:
Real estate assets$8,855,987 $8,745,155 
     Construction in progress856,496 695,219 
     Investments in and advances to unconsolidated joint ventures128,010 131,898 
     Undeveloped land294,855 291,614 
10,135,348 9,863,886 
Accumulated depreciation(1,705,011)(1,659,308)
              Net real estate investments8,430,337 8,204,578 
Real estate investments and other assets held-for-sale 67,946 
Cash and cash equivalents9,009 6,309 
Accounts receivable16,925 15,204 
Straight-line rent receivable162,198 153,943 
Receivables on construction contracts, including retentions27,221 30,583 
Deferred leasing and other costs, net of accumulated amortization of $209,713 and $204,122340,539 329,765 
Restricted cash held in escrow for like-kind exchange 47,682 
Other escrow deposits and other assets309,218 255,384 
$9,295,447 $9,111,394 
LIABILITIES AND EQUITY
Indebtedness:
Secured debt, net of deferred financing costs of $333 and $343$63,007 $64,074 
Unsecured debt, net of deferred financing costs of $38,856 and $32,7633,469,884 3,025,977 
Unsecured line of credit 295,000 
3,532,891 3,385,051 
Liabilities related to real estate investments held-for-sale 7,740 
Construction payables and amounts due subcontractors, including retentions88,811 62,332 
Accrued real estate taxes80,909 76,501 
Accrued interest27,605 18,363 
Other liabilities245,940 269,806 
Tenant security deposits and prepaid rents60,150 57,153 
     Total liabilities4,036,306 3,876,946 
Partners' equity:
Common equity (374,306 and 373,258 General Partner Units issued and outstanding, respectively)5,211,638 5,194,540 
Limited Partners' common equity (3,694 and 3,326 Limited Partner Units issued and outstanding, respectively)73,649 66,874 
Accumulated other comprehensive loss(30,679)(31,568)
            Total partners' equity5,254,608 5,229,846 
Noncontrolling interests4,533 4,602 
     Total equity5,259,141 5,234,448 
$9,295,447 $9,111,394 
See accompanying Notes to Consolidated Financial Statements
7


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
For the three months ended March 31,
(in thousands, except per unit amounts)
(Unaudited)
Three Months Ended
 20212020
Revenues:
Rental and related revenue$258,179 $218,755 
General contractor and service fee revenue31,113 7,614 
289,292 226,369 
Expenses:
Rental expenses28,130 18,843 
Real estate taxes41,170 36,727 
General contractor and other services expenses29,463 6,568 
Depreciation and amortization93,573 85,359 
192,336 147,497 
Other operating activities:
Equity in earnings of unconsolidated joint ventures16,268 2,539 
Gain on sale of properties21,360 8,937 
Gain on land sales1,238 135 
Other operating expenses(1,145)(1,112)
Impairment charges (5,626)
Non-incremental costs related to successful leases(2,958)(2,525)
General and administrative expenses(24,217)(21,763)
10,546 (19,415)
Operating income107,502 59,457 
Other income (expenses):
Interest and other income, net463 1,395 
Interest expense(22,507)(23,494)
Loss on debt extinguishment(70)(17,806)
Income from continuing operations before income taxes85,388 19,552 
Income tax (expense) benefit(5,184)60 
Income from continuing operations80,204 19,612 
Discontinued operations:
Gain on sale of properties 48 
           Income from discontinued operations 48 
Net income80,204 19,660 
Net income attributable to noncontrolling interests(81)(34)
Net income attributable to common unitholders$80,123 $19,626 
Basic net income per Common Unit:
Continuing operations attributable to common unitholders$0.21 $0.05 
Diluted net income per Common Unit:
Continuing operations attributable to common unitholders$0.21 $0.05 
Weighted average number of Common Units outstanding377,242 371,414 
Weighted average number of Common Units and potential dilutive securities377,744 371,870 
Comprehensive income:
Net income$80,204 $19,660 
Other comprehensive income:
Amortization of interest rate swap contracts889 801 
Comprehensive income$81,093 $20,461 

See accompanying Notes to Consolidated Financial Statements
8


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the three months ended March 31,
(in thousands)
(Unaudited)
Three Months Ended
20212020
Cash flows from operating activities:
Net income $80,204 $19,660 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements79,062 71,582 
Amortization of deferred leasing and other costs14,511 13,777 
Amortization of deferred financing costs2,439 2,219 
Straight-line rental income and expense, net(8,021)(1,703)
Impairment charges 5,626 
Loss on debt extinguishment70 17,806 
Gain on land and property sales(22,598)(9,120)
Third-party construction contracts, net749 (780)
Other accrued revenues and expenses, net14,651 (6,738)
Equity in earnings (in excess of) less than operating distributions received from unconsolidated joint ventures(10,925)2,221 
Net cash provided by operating activities150,142 114,550 
Cash flows from investing activities:
Development of real estate investments(140,432)(170,900)
Acquisition of buildings and related intangible assets(34,738) 
Acquisition of land and other real estate assets(64,594)(87,023)
Second generation tenant improvements, leasing costs and building improvements(14,676)(8,105)
Other deferred leasing costs(8,007)(12,341)
Other assets(36,844)(15,040)
Proceeds from the repayments of notes receivable from property sales 110,000 
Proceeds from land and property sales, net85,479 27,081 
Capital distributions from unconsolidated joint ventures3,532  
Capital contributions and advances to unconsolidated joint ventures (2,353)
Net cash used for investing activities(210,280)(158,681)
Cash flows from financing activities:
Proceeds from the General Partner30,381 5,465 
Proceeds from unsecured debt446,634 316,371 
Payments on unsecured debt(40,226)(316,655)
Proceeds from secured debt financings 18,400 
Payments on secured indebtedness including principal amortization(1,007)(876)
(Repayments) borrowings on line of credit, net(295,000)200,000 
Distributions to common unitholders(96,252)(87,345)
Distributions to noncontrolling interests(150) 
Tax payments on stock-based compensation awards(4,754)(4,051)
Change in book cash overdrafts(14,430)(14,444)
Other financing activities(270)289 
Deferred financing costs(9,800)(3,971)
Net cash provided by financing activities15,126 113,183 
Net (decrease) increase in cash, cash equivalents and restricted cash(45,012)69,052 
Cash, cash equivalents and restricted cash at beginning of period67,223 121,431 
Cash, cash equivalents and restricted cash at end of period$22,211 $190,483 
Non-cash activities:
Lease liabilities arising from right-of-use assets$18,257 $1,132 
Assumption of indebtedness in real estate acquisitions$40,226 $ 
Non-cash distribution of assets from unconsolidated joint ventures, net$11,023 $ 
See accompanying Notes to Consolidated Financial Statements
9


DUKE REALTY LIMITED PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the three months ended March 31, 2021 and 2020
(in thousands, except per unit data)
(Unaudited)
Common Unitholders
GeneralLimitedAccumulated
  Partner'sPartners'OtherTotal  
 Common EquityCommon EquityComprehensive
Loss
Partners' EquityNoncontrolling
Interests
Total Equity
Balance at December 31, 2020$5,194,540 $66,874 $(31,568)$5,229,846 $4,602 5,234,448 
Net income79,362 761 — 80,123 81 80,204 
Other comprehensive income— — 889 889 — 889 
Capital contribution from the General Partner30,381 — — 30,381 — 30,381 
Stock-based compensation plan activity2,665 6,956 — 9,621 — 9,621 
Distributions to common unitholders ($0.255 per Common Unit)(95,310)(942)— (96,252)— (96,252)
Distributions to noncontrolling interests— — — — (150)(150)
Balance at March 31, 2021$5,211,638 $73,649 $(30,679)$5,254,608 $4,533 $5,259,141 

Common Unitholders
GeneralLimitedAccumulated
  Partner'sPartners'OtherTotal  
 Common EquityCommon EquityComprehensive
Loss
Partners' EquityNoncontrolling
Interests
Total Equity
Balance at December 31, 2019$5,053,151 $57,575 $(35,036)$5,075,690 $4,570 $5,080,260 
Net income19,456 170 — 19,626 34 19,660 
Other comprehensive income— — 801 801 — 801 
Capital contribution from the General Partner5,465 — — 5,465 — 5,465 
Stock-based compensation plan activity2,568 5,653 — 8,221 — 8,221 
Distributions to common unitholders ($0.235 per Common Unit)(86,562)(783)— (87,345)— (87,345)
Balance at March 31, 2020$4,994,078 $62,615 $(34,235)$5,022,458 $4,604 $5,027,062 




See accompanying Notes to Consolidated Financial Statements
10


DUKE REALTY CORPORATION AND DUKE REALTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.    General Basis of Presentation
The interim consolidated financial statements included herein have been prepared by the General Partner and the Partnership. The 2020 year-end consolidated balance sheet data included in this Report was derived from the audited financial statements in the combined Annual Report on Form 10-K of the General Partner and the Partnership for the year ended December 31, 2020 (the "2020 Annual Report"), but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). The financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenue and expenses during the reporting period. Our actual results could differ from those estimates and assumptions. These financial statements should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included herein and the consolidated financial statements and notes thereto included in the 2020 Annual Report.
The General Partner was formed in 1985, and we believe that it qualifies as a REIT under the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The Partnership was formed on October 4, 1993, when the General Partner contributed all of its properties and related assets and liabilities, together with the net proceeds from an offering of additional shares of its common stock, to the Partnership. Simultaneously, the Partnership completed the acquisition of Duke Associates, a full-service commercial real estate firm operating in the Midwest whose operations began in 1972.
The General Partner is the sole general partner of the Partnership, owning approximately 99.0% of the Common Units at March 31, 2021. The remaining 1.0% of the Common Units are owned by limited partners. As the sole general partner of the Partnership, the General Partner has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Partnership. The General Partner and the Partnership are operated as one enterprise. The management of the General Partner consists of the same members as the management of the Partnership. As the sole general partner with control of the Partnership, the General Partner consolidates the Partnership for financial reporting purposes, and the General Partner does not have any significant assets other than its investment in the Partnership. Therefore, the assets and liabilities of the General Partner and the Partnership are substantially the same.
Limited partners have the right to redeem their Limited Partner Units, subject to certain restrictions. Pursuant to the Fifth Amended and Restated Agreement of Limited Partnership, as amended (the "Partnership Agreement"), the General Partner is obligated to redeem the Limited Partner Units in shares of its common stock, unless it determines in its reasonable discretion that the issuance of shares of its common stock could cause it to fail to qualify as a REIT. Each Limited Partner Unit shall be redeemed for one share of the General Partner's common stock, or, in the event that the issuance of shares could cause the General Partner to fail to qualify as a REIT, cash equal to the fair market value of one share of the General Partner's common stock at the time of redemption, in each case, subject to certain adjustments described in the Partnership Agreement. The Limited Partner Units are not required, per the terms of the Partnership Agreement, to be redeemed in registered shares of the General Partner.
As of March 31, 2021, we owned and operated a portfolio primarily consisting of industrial properties and provided real estate services to third-party owners, customers and joint ventures. Substantially all of our Rental Operations (see Note 10) are conducted through the Partnership. We conduct our Service Operations (see Note 10) through Duke Realty Services, LLC, Duke Realty Services Limited Partnership and Duke Construction Limited Partnership ("DCLP"), which are consolidated entities that are 100% owned by a combination of the General Partner and the Partnership. DCLP is owned through a taxable REIT subsidiary. The consolidated financial statements include our accounts and the accounts of our majority-owned or controlled subsidiaries.  
11


2.    Leases
Lease Income
Our leases generally include scheduled rent increases, but do not include variable payments based on indexes. Our rental revenue is primarily based on fixed, non-cancelable leases. Our variable rental revenue primarily consists of amounts recovered from lessees for property tax, insurance and common area maintenance ("CAM").
If we conclude that collection of lease payments are not probable, any difference between the revenue that would have been recognized under the straight-line method and the lease payments that have been collected is recognized as a current period adjustment to rental revenues. Any other changes in collectability reserves for leases not subject to the collectability constraint are also recorded as a current period adjustment to rental revenues.
All revenues related to lease and lease-related services are included in, and comprise substantially all of, the caption "Rental and Related Revenue" on the Consolidated Statements of Operations and Comprehensive Income. The components of Rental and Related Revenue are as follows (in thousands):
Three Months Ended March 31,
20212020
Rental revenue - fixed payments$187,387 $161,608 
Rental revenue - variable payments (1)70,792 57,147 
Rental and related revenue$258,179 $218,755 
(1) Primarily includes tenant recoveries for real estate taxes, insurance and CAM.
Lessee Accounting
As of March 31, 2021, our lease arrangements, where we are the lessee, primarily consisted of office and ground leases. For these lease arrangements, as required by Accounting Standards Codification Topic 842, Leases ("ASC 842"), we recognized right-of-use ("ROU") assets and the corresponding lease liabilities representing the discounted value of future lease payments. In determining these amounts, we elected an available practical expedient that allows us, as a lessee, to not separate lease and non-lease components.
All of our office leases are classified as operating leases under ASC 842. Ground leases that were classified as operating leases prior to adoption of ASC 842 continue to be accounted for as operating leases by electing the practical expedient under ASC 842. Two ground leases that were entered into subsequent to the adoption of ASC 842 are classified as finance leases. For the operating leases we recognized ROU assets and related lease liabilities as follows (in thousands):
March 31, 2021December 31, 2020
ROU assets$38,044 $38,867 
Lease liabilities 42,179 42,874 
For the finance leases, we recognized ROU assets and related lease liabilities as follows (in thousands):

March 31, 2021December 31, 2020
ROU assets$38,063 $19,239 
Lease liabilities 38,023 19,430 
ROU assets were included within Other Escrow Deposits and Other Assets and lease liabilities were included in Other Liabilities on our Consolidated Balance Sheets.



12


3.    Reclassifications
There have been no amounts in the accompanying consolidated financial statements for 2020 reclassified to conform to the 2021 consolidated financial statement presentation.

4.    Restricted Cash
Restricted cash primarily consists of cash proceeds from dispositions but restricted only for qualifying like-kind exchange transactions and cash held in escrow related to acquisition and disposition holdbacks.  The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in thousands):
March 31, 2021December 31, 2020
Cash and cash equivalents$9,009 $6,309 
Restricted cash held in escrow for like-kind exchange 47,682 
Restricted cash included in other escrow deposits and other assets13,202 13,232 
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows$22,211 $67,223 

5.