Duke Realty, the second-largest office landlord in the Triangle, announced late Wednesday that it is selling all of its local office properties as part of a $1.12 billion portfolio sale to a joint venture led by Starwood Capital Group.
Of the 62 buildings included in the deal, 23 are in the Triangle, including the office buildings and remaining land available for development at Duke’s Perimeter Park office park in Morrisville. That office park is home to Lenovo, SciQuest and a number of other prominent Triangle companies.
The office building Duke now has under construction at Perimeter Park, which is to be the headquarters for ChannelAdvisor, is expected to be sold to Starwood’s group later this year after it is completed.
The rest of the properties in the portfolio represent all of Duke’s office holdings in Nashville, Tenn.; St. Louis, Mo.; and South Florida.
The deal fits with Indianapolis-based Duke’s national strategy of increasing its industrial and medical office portfolio while reducing the number of office assets it owns. The company has unloaded several of its Triangle office properties in recent years, including a six-building portfolio that it sold for $43.95 million in 2012.
Earlier this week Duke sold its Regency Creek I office building in Cary for $20.55 million to Intercontinental Real Estate Corp., according to Wake County property records.
At the same time, Duke has been growing its industrial and medical office holdings. Duke is retaining its industrial and medical office properties here. The company now owns more than 2 million square feet of warehouse space in the Triangle.
Duke CEO Denny Oklak said in a statement that the transaction “allows us to focus on our primary strategy of growing the company through development of new bulk industrial and medical office properties throughout the country.”
Starwood is acquiring the portfolio along with Vanderbilt Partners and Trinity Capital Advisors. The group will take over the leasing and property management of the properties after the deal closes, which is expected to be in late 2015.
The portfolio sale will reduce the net operating income Duke gets from office properties from 22 percent to 12 percent. It includes a total of 6.9 square feet of office space, about 2.7 million of which is in the Triangle. The portfolio is now 91.6 leased and is being sold for $160 per square foot. The buildings are, on average, 15.5 years old.
Only Raleigh-based Highwoods Properties currently owns more office space in the Triangle than Duke.