A joint venture among three private investment partners led by Charlotte-based Trinity Capital Advisors has finalized its $1.1 billion acquisition of 62 suburban office properties owned by national real estate investment trust Duke Realty Corp. (NYSE: DRE) in four key real estate markets in South Florida, North Carolina, Tennessee, and Missouri.
The off-market acquisition deal includes 6.9 million square feet of office space that was 90 percent leased at the time of the deal, plus 57 acres of undeveloped land, says Walker Collier, a partner at Trinity Capital. Trinity’s partners in the deal are Starwood Capital Group and Vanderbilt Partners.
“This acquisition is in line with one of our core investment strategies of investing in high-quality real estate in growth markets at a discount to replacement cost,” Collier stated in a news release issued shortly after the final paperwork was signed Wednesday afternoon.
For Starwood, the Duke Realty portfolio acquisition will be partially funded by its Starwood Global Opportunity Fund X.
“We believe that we are at an attractive point in the cycle to enter suburban office markets that are well-positioned for growth, and we will continue to seek out investments in the sector on an opportunistic basis,” stated Christopher Graham, senior managing director and head of real estate acquisitions for the Americas at Starwood.
In the Triangle, Duke Realty will retain ownership of the 3 million square feet of industrial buildings and medical office buildings it manages. Denny Oklak, Duke Realty’s chairman and CEO, says proceeds from the sale will be used to repay debt and to fund ongoing property development activities.
“With this transaction, we were able to take advantage of the currently very active and competitive investment sale environment and continue our strategy to reduce our investment in suburban office assets… .”
Morgan Stanley advised Duke Realty Corp. in the deal negotiations.
Here’s a breakdown of the Duke Realty portfolio that was sold:
- In South Florida, nine buildings in four office parks with 940,800 square feet, plus 6.5 acres of land, with a tenant base of 51 companies. Avison Young has been hired to handle leasing duties for the South Florida market. The deal included Crossroads Business Park buildings 1, 2, 3 and 4 in Plantation, Sawgrass Pointe buildings 1 and 2 in Sunrise, Sawgrass Building A and B in Sunrise, and Park Central Business Park building 1 in Pompano Beach.
- In the Triangle, the partnership purchased 24 buildings in Morrisville, Cary and Raleigh, plus 50 acres of undeveloped land at Perimeter Park in Morrisville. The Triangle portfolio totals more than 3 million square feet with a tenant base that includes 90 tenant companies.
- In Nashville, Tennessee, the partnership 14 buildings with 1.03 million square feet and a tenant base that includes 104 tenant companies. Colliers has been hired to handle leasing duties for the Nashville market.
- In St. Louis, 15 buildings with 1.9 million square feet and a tenant based of 78 tenant companies. Vanderbilt has been hired to handle leasing duties for the St. Louis market.
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