Chambers Acquires Interests in 17 JV Assets from Duke Realty

By Gail Kalinoski, Contributing Editor

22535 Colonial Pkwy, Houston

Chambers Street Properties has acquired the remaining interests in 17 properties it owned in a joint venture with Duke Realty Corp., for a reported $98.6 million as Duke continues to divest many of its office holdings to focus more on industrial assets.

The price paid was Duke’s 20 percent of the portfolio estimated at $493 million, according to the Triangle Business Journal in Raleigh, N.C. The portfolio consisted of 16 office properties and one industrial asset – Goodyear Crossing Industrial Park II, an 820,000-square-foot warehouse and distribution facility in Phoenix.

“This is a mutually agreeable transaction which has conveyed full ownership and control of 17 high quality commercial properties in markets where Chambers Street currently operates,” Philip L. Kianka, executive vice president and COO of Chambers Street, said in a company release.

The office properties are: The Landings I and II and McAuley Place, three buildings with a total of 542,000 square feet in Cincinnati; Atrium I and Easton III with a total of 451,000 square feet in Columbus; Point West I, a 183,000-square-foot property in Dallas; Miramar I and II, with a total of 223,000 square feet in Fort Lauderdale, Fla.; 22535 Colonial Parkway, a 90,000-square-foot building in Houston; Norman Pointe I and II, totaling 537,000 square feet in Minneapolis; Celebration Office Center and Northpoint III, totaling 209,000 square feet in Orlando, Fla.; and 1400 Perimeter Park Drive, 3900 N. Paramount Parkway and 3900 S. Paramount Parkway, totaling 265,000 square feet in Raleigh.

“The transaction is in keeping with our fundamental investment strategy while still allowing us to continue with our successful relationship with Duke Realty on the remaining assets held by the JV,” Kianka added.

Chambers Street, formerly known as CB Richards Ellis Realty Trust, is a Maryland-based REIT with its headquarters in Princeton, N.J. The REIT continues to have joint ventures with Duke in approximately 20 properties, most of them office but a few warehouse and distribution facilities including Buckeye Logistics Center in Phoenix and Fairfield Distribution Center IX in Tampa, Fla. The joint venture partnership between the two REITs began in 2008 and most of the JV properties were acquired between 2008 and 2011, according to a portfolio list on the Chambers Street website. Of the remaining JV properties, Chambers Street owns 80 percent and Duke owns 20 percent.

Duke, an Indianapolis-based REIT, has stated its long-term goal is to have 60 percent of its holdings in industrial, 25 percent in office and 15 percent in medical office holdings. As of Dec. 31, 2012, Duke’s portfolio, based on gross investment dollars, was 51 percent industrial, 29 percent office, 16 percent medical office and 4 percent retail, according to its 2012 fourth-quarter and full year filing with the U.S. Securities and Exchange Commission. The filing also noted that based on net operating income, Duke’s portfolio mix was 54 percent industrial, 30 percent office, 13 percent medical office and 3 percent retail at the end of last year. It currently owns and operates more than 145.6 million rentable square feet of industrial and office space in 18 U.S. cities and regions, including Atlanta, Baltimore, Chicago, Dallas, Houston, and southern Florida and southern California.

Chambers Street focuses on acquiring and managing high-quality corporate real estate with long-term leases in the United States, Europe and the United Kingdom. It currently has a portfolio of 129 properties in more than 40 markets. Most are in the U.S. with six in Germany and seven in the U.K. It also has an investment with institutional partners that includes interest in eight properties in China and Japan. The REIT’s most recent acquisitions have been in the U.S., including the purchase last month of two office buildings near Philadelphia that it had developed in 2012 with Trammel Crow. The two five-story, Class A buildings are located in Malvern, Pa., and have a total of 300,000 square feet.