June 7, 2012 / 6:26 PM / 5 years ago

TEXT-S&P rates Duke Realty LP notes

June 7 - Standard & Poor's Ratings Services today assigned its 'BBB-' rating
to the $300 million 4.375% senior unsecured notes due June 15, 2022, issued by
Duke Realty L.P., a subsidiary of Duke Realty Corp. (together Duke; see list).	
	
Duke will use the proceeds from the note sale to repay revolver borrowings and 	
for general corporate purposes, which may include prefunding $200 million of 	
aggregate senior notes that mature in August ($150 million) and October ($50 	
million). 	
	
Our ratings on Duke Realty Corp. (Duke) reflect a "satisfactory" business risk 	
profile supported by a large, diversified, and competitively positioned 	
portfolio of high-quality industrial and medical office properties, and office 	
properties with weaker, but stabilizing performance. We believe the company's 	
advancing portfolio repositioning initiatives will enhance the portfolio over 	
the long run. We view the REIT's financial risk profile as "significant" due 	
to high, but moderating leverage (including preferred stock), and low, but 	
stable debt coverage measures.	
	
The stable outlook reflects our expectations for continued low but relatively 	
firm FCC measures, given the company's minimal exposure to variable interest 	
rates, relatively manageable lease expirations, and reduced development 	
pipeline. We could lower the ratings if the company's cash flow deteriorates, 	
perhaps due to very dilutive asset recycling. We would also consider a 	
downgrade if core operations deteriorate due to weaker than expected economic 	
growth, such that coverage measures fall from current levels. Although 	
unlikely in the near term, we could consider an upgrade if Duke gradually 	
reduces overall leverage levels, occupancy growth continues, and coverage 	
metrics steadily improve (FCC of more than 2.0x).	
 	
For our most recent credit analysis on Duke Realty Corp., see "Summary: Duke 	
Realty Corp.," published March 21, 2012, on RatingsDirect on the Global Credit 	
Portal at www.globalcreditportal.com.	
	
	
RELATED CRITERIA AND RESEARCH	
 	
     -- Industry Report Card: Improvements In Operating Fundamentals Bode Well 	
For North American REITs, published May 4, 2012.	
     -- Issuer Ranking: North American REITs And Real Estate Operating 	
Companies, Strongest To Weakest, published April 30, 2012.	
     -- Credit FAQ: How Standard & Poor's Applies Its Liquidity Descriptors 	
For Global Corporate Issuers To North American Real Estate Companies, 	
published Oct. 12, 2011.	
     -- Methodology And Assumptions: Liquidity Descriptors For Global 	
Corporate Issuers, published Sept. 28, 2011.	
     -- Key Credit Factors: Global Criteria For Rating Real Estate Companies, 	
published June 21, 2011.	
 	
RATINGS LIST	
 	
Duke Realty Corp./Duke Realty L.P.	
  Corporate credit               BBB-/Stable/--	
  Senior unsecured               BBB-	
 	
RATING ASSIGNED	
 	
Duke Realty L.P.	
  $300 million 4.375% senior	
  Unsecd notes due 2022          BBB-

Our Standards:The Thomson Reuters Trust Principles.
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