Duke Continues Retail Disposition Strategy, Selling Lifestyle Center for $188M

Duke Realty Corp. has sold a 391,120-square-foot lifestyle retail center in South Florida to an undisclosed buyer as it continues to reposition to mainly industrial holdings.

Duke Realty Corp. has sold the Shops at Pembroke Gardens, a 391,120-square-foot lifestyle retail center in South Florida for $188 million to an undisclosed buyer as it continues to reposition to mainly industrial holdings. The Indianapolis REIT noted that proceeds of the sale to an institutional joint venture would be used toward the purchase of an industrial portfolio.

“The sale of this retail asset is in alignment with our asset repositioning strategy, which includes divesting our retail holdings and targeting an asset allocation mix of 60 percent bulk industrial, 25 percent suburban office and 15 percent medical office by the end of 2013,” Denny Oklak, Duke Realty chair and CEO, said in a news release. “This disposition is a significant and strategic step in our repositioning strategy that has decreased our investment allocation in retail assets and resulted in significant gain. Proceeds from the sale will be accretively recycled into an eight-building industrial portfolio that we currently have under contract for purchase.”

Duke Realty built the retail center, located at the Interstate-75 and Pines Boulevard interchange southwest of Fort Lauderdale, in 2008 in conjunction with Jeffrey R. Anderson Real Estate, according to a company spokesperson. The center is 90 percent leased with stores like Bath & Body Works, Sephora, Banana Republic, Barnes & Noble, Old Navy, Ann Taylor and Cold Water Creek and numerous restaurants including The Cheesecake Factory.

“The Shops at Pembroke Gardens is a highly leased property and has quickly established a dominant presence in the South Florida landscape since it was built in 2008, making it attractive to investors,” Danny Finkle, senior managing director of HFF, which advised Duke Realty on the sale, noted in the release.

Finkle’s team at HFF included Jim Batjer, managing director; Luis Castillo, director; and Robert Saracco, a senior analyst. The team worked with Jeff Behm, vice president of dispositions for Duke Realty.

Duke Realty also owns seven acres slated for retail development outside but contiguous to the Shops at Pembroke Gardens and another 44 acres that has been master planned for approximately 700,000 square feet of Class A office space. A Duke Realty spokesperson told Commercial Property Executive that the firm is interested in either selling or leasing those properties.

Ed Mitchell, senior vice president of Duke Realty’s South Florida operations, noted in the news release that the properties have “outstanding accessibility and visibility.” He added that his team is “ready to work with interested parties on land sales and development opportunities.”

Duke Realty has been remaking its portfolio since the fall of 2009, when it consisted of 55 percent office, 36 percent industrial, 5 percent medical and 4 percent retail. Since that time, the firm has been disposing of non-core assets and acquiring more industrial properties, including selling a suburban office portfolio to an affiliate of the Blackstone Group in October 2011 for $1.1 billion. More recently, Duke Realty sold its interests in a joint venture to its partner Chambers Street Properties for $98.6 million. The portfolio consisted of 16 office properties and one industrial asset – Goodyear Crossing Industrial Park III, an 820,000-square-foot warehouse and distribution facility in Phoenix.

The REIT currently owns two other lifestyle retail properties – The Shops at West End in St. Louis Park, Minn., and The Shoppes at Montage in Moosic, Pa.

“Duke Realty’s long-term strategic plan calls for exiting the retail sector,” the REIT spokesperson told CPE. “We will market and sell our remaining retail properties when appropriate to maximize value.”