DUKE REALTY CORP Management's Discussion and Analysis of Financial Condition and Resultsof Operations (form 10-Q)

Published: 2022-08-08 16:37:19 ET DRE

Cautionary Notice Regarding Forward-Looking Statements

The General Partner and Partnership collectively specialize in the ownership, management and development of industrial real estate.

Our overall strategy is to continue to increase our investment in quality industrial properties primarily through development, on both a speculative and build-to-suit basis, supplemented with acquisitions in Coastal Tier 1 markets.

Proposed Merger with Prologis

Key Performance Indicators

Our operating results depend primarily upon rental income from our Rental Operations. The following discussion highlights the metrics that drive the performance of our Rental Operations, which management uses to operate the business, and that we consider to be critical drivers of future revenues.

Occupancy Analysis

$4.37

* Represents the percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced. **Average annual net effective rent represents average annual base rental payments per leased square foot, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. This amount excludes additional amounts paid by tenants as reimbursement for operating expenses.

The higher leased percentage in our industrial portfolio at June 30, 2022, compared to June 30, 2021, was due to both leasing up speculative developments and leasing previously vacant space within our existing properties.

Vacancy Activity

* Early renewals represent renewals executed more than two years in advance of a lease's originally scheduled end date. ** Short-term leases represent leases with a term of less than twelve months.

Second Generation Leases

Leasing Concessions per Square Foot

Growth in average annual net effective rents for new second generation and renewal leases, on a combined basis, for our consolidated and unconsolidated industrial rental properties at our ownership share, is as follows:

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