Blackstone Group to buy Duke Realty’s US suburban office portfolio for $1.08 bln

Private equity firm, Blackstone Group is buying Duke Realty Corp's US suburban office portfolio for $1.08 billion.

Blackstone, which is expecting its latest real estate fund to raise more than $10 billion, today entered into a definitive agreement to buy 10.1 million square foot portfolio of suburban office from Duke Realty, one of the largest commercial real estate companies in the US.

The assets comprise of 82 buildings in seven suburban markets, including in Atlanta, Chicago, Columbus, Dallas, Minneapolis, Orlando and Tampa.

"The portfolio sale is simply a continuation of our strategic plan to reduce our investment in suburban office properties, primarily in Midwest markets. 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," said Denny Oklak, Duke Realty's chairman and CEO.

The suburban office portfolio is 84.6-per cent leased and the buildings have an average age of 15 years. Assumed debt in the transaction is expected to be $30 million. Blackstone will assume leasing and property management responsibilities for the portfolio.

Duke Realty owns and operates more than 141 million rentable square feet of industrial and office, including medical office, space in 18 major US cities.

Blackstone, the world's largest private-equity firm, has invested more than $7 billion in real estate this year, and has raised $4 billion for its latest property fund. Blackstone acquired 36 US shopping centers in September, from Equity One for $473 million and purchased the US malls of Melbourne-based Centro Properties for $9 billion.