INDIANAPOLIS — Duke Realty Corp. (NYSE: DRE) has entered into a definitive agreement to sell an 82-building suburban office property portfolio to Blackstone Real Estate Partners VII for $1.08 billion. The properties total approximately 10.1 million square feet and are located in Atlanta; Chicago; Dallas; Minneapolis; Columbus, Ohio; Tampa and Orlando, Florida.
The portfolio is currently 84.6 percent leased and Blackstone will assume $30 million in debt. Closing is slated for Dec. 2011.
“The portfolio sale is simply a continuation of our strategic plan to reduce our investment in suburban office properties, primarily in Midwest markets,” said Danny Oklak, chairman and CEO of Duke Realty, in a statement. “The transaction generates over $1 billion of capital for the acquisition and development of industrial and medical office assets and to further de-lever the company’s balance sheet consistent with our strategic capital plans.”
Duke Realty’s long-term strategy is to achieve investment allocation of 60 percent industrial, 25 percent office and 15 percent medical office properties. The company owns and operates more than 141 million rentable square feet of industrial and office space in 18 cities.
According to the Wall Street Journal, the price per square foot averages out to around $107, compared to $750 per square foot or higher for similar properties in New York City and Washington, D.C.
Duke Realty’s share price closed at $10.68 on October 21, down from $12.19 a year ago.
— Savannah Duncan