Duke Realty Completes $967 Million Transactions to Reposition Its Portfolio

Strategic Insights -

Duke Realty Corp. has successfully completed a series of transactions worth $967 million to reposition its portfolio, marking a significant shift in its long-term strategy. The company has sold its joint-venture interest in 20 suburban office buildings to CB Richard Ellis Group, Inc. and acquired 51 industrial properties and 5 office buildings in south Florida. This move is expected to improve Duke Realty's internal growth metrics and position it to emerge stronger once the real estate markets recover.

Key Takeaways:

  • Duke Realty has completed transactions worth $967 million to reposition its portfolio, which includes selling its joint-venture interest in 20 suburban office buildings to CB Richard Ellis Group, Inc. for $517 million.
  • The company acquired 51 industrial properties and 5 office buildings in south Florida for $450 million from Premier Commercial Realty, a full-service commercial real estate brokerage firm in Atlanta, Georgia.
  • The acquisition includes the assumption of $292 million of debt with a weighted average interest rate of 5.68%.
  • With the completion of both deals, Duke Realty's portfolio would comprise 49% office, 42% industrial, and 9% medical office and other assets.
  • Duke Realty aims to focus on areas where it already has a strong presence, and has exited certain markets including Austin, San Antonio, Seattle, and Newport Beach.
  • The company's internal growth metrics are expected to improve due to the portfolio reshuffle, positioning it to emerge stronger once the real estate markets recover.

Statistics:

  • The total value of the transactions completed by Duke Realty is $967 million.
  • The company expects to generate net proceeds of $414 million from the asset sale.
  • The acquisition of 51 industrial properties and 5 office buildings in south Florida spans a total of 4.9 million square feet of space.
  • The weighted average interest rate of the debt assumed as part of the acquisition is 5.68%.
  • Duke Realty's current portfolio composition is 49% office, 42% industrial, and 9% medical office and other assets.

Sources:

  • Zacks Equity Research (2010)
  • COMTEX (2010)
  • Comtex News Network, Inc. (2010)
  • Zacks Investment Research (2010)