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Duke Realty CEO Discusses Q1 2011 Results - Earnings Call Transcript

As I also noted on our fourth quarter call, that we were aware of a few potential significant terminations in our industrial portfolio or during the first part of 2011. I am pleased to report that we were able to execute a renewal for 800,000 square feet expirations we mentioned in Savannah. That was one of the key vacancies that we needed to address in 2011. We still have some challenges ahead but we're off to a good start nonetheless.

The office leasing environment remains slow but there are pockets of solid activity. We signed 125,000 square feet lease with Alcatel-Lucent over in Columbus Ohio. We also are pleased to report that our 3630 Peachtree project in Buckhead is now 44% leased with solid momentum and a backlog of prospects to push that occupancy even higher. On the medical office front leasing activity and development opportunities are picking up. In March we placed into service the Baylor Cancer Center in Dallas.

Our building is spectacular and is 95% leased to Baylor and US Oncology. The overall occupancy in our portfolio was 88.9% at March 31, down slightly from 89.1% at year-end 2010. This is a little better than we expected because of some key renewals and some continued short-term leases. We signed over 5.3 million sq ft of leases during the quarter which is a very solid number.

Our industrial portfolio maintained occupancy at 90.2% at the end of the quarter in addition to the two-year renewal we signed in Savannah, other key industrial transactions included a 646,000 square feet lease extension in our Hebron Building 1 in Cincinnati and three renewal extension deals totaling nearly 370,000 square feet in our Freeport buildings in Dallas.

Our office portfolio maintained occupancy at 85.6% as of the end of the first quarter which was basically flat with year-end. And as I mentioned there are pockets of activity but the leasing environment is still slow. One positive note is that we're beginning to see some of our customers looking to hire again which we believe is a good sign. Consistent with our expectations, same-property NOI for the three and 12 months ended March 31 was flat at a positive 0.9% respectively.

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