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Duke Realty selling 82 office buildings for $1.1B

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Duke Realty Corp. said on Friday that it is selling its suburban office holdings in seven major markets to New York-based Blackstone Group LP, the world’s largest private equity firm, for $1.08 billion.

The sale includes 82 buildings with a combined 10.1 million square feet of space in Atlanta, Chicago, Columbus, Dallas, Minneapolis, Orlando and Tampa.

The sale does not include any properties in Indiana, a company spokeswoman said.

“The portfolio sale is simply a continuation of our strategic plan to reduce our investment in suburban office properties,” Denny Oklak, CEO of Indianapolis-based Duke, said in a prepared statement.

The company said its long-term goal is have 60 percent of its holdings in industrial, 25 percent in office and 15 percent in medical office.

“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,” Oklak said.

Almost 85 percent of the office space Duke is selling is leased and the buildings have an average age of 15 years. Blackstone will take over the leasing and property management responsibility for the buildings.

Blackstone is on a real estate buying spree this year, investing more than $7 billion. The firm is aiming to capitalize on the sharp decline in property values in the wake of the financial crisis.

Shares of Duke rose almost 5 percent on the news Friday, as the broader market also rallied. In late-morning trading, the shares went for $11.20 apiece.

 
 

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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