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AUSTIN-Koger Equity Inc. has agreed to sell office properties in Austin, San Antonio and several other cities to ARIEF Realty Trust Inc., an affiliate of New York-based Apollo Real Estate Advisors LP.

The overall sale consists of 10 properties with 75 suburban office buildings and one retail center, a total of 3.9 million sf, in the Texas cities and in Greensboro and Charlotte, NC, Greenville, SC and Birmingham, AL. The properties, which Koger termed as “non-core assets,” accounted for 43% of Koger’s net rentable area. Koger has held onto its newer buildings with stronger core markets and higher occupancy rates, the company says.

Todd Chessher, general manager of the Austin properties, tells GlobeSt.com that Koger would continue to manage and lease the buildings. “I don’t see any local changes at all,” he says.

The deal is valued at more than $300 million. Executives of Boca Raton, FL-based Koger said it would use the money to invest in higher-growth markets, repay debt and pay for a one-time special-gain distribution to Koger shareholders.

Apollo partner John Jacobsson notes that the deal enables his company “to acquire a portfolio of assets and achieve target equity returns by utilizing substantially higher leverage than a REIT would typically employ.” Apollo holds an equity stake in Koger.

Under the terms of the agreement, Koger says it will consider offers on the properties from other bidders. If Koger doesn’t accept another bid, the deal with ARIEF will close late in the fourth quarter. The agreement also stipulates that ARIEF cannot revise its offer.

The Koger Center in Austin’s north central submarket has 12 buildings with 441,170 sf and is 94% leased. The center was developed between 1973 and 1985 and accounts for 4% of Koger’s portfolio. In San Antonio, Koger is selling two office centers. San Antonio West has 27 buildings with one million sf with an 83% occupancy rate. It was developed over a 30-year period, beginning in 1969. The San Antonio Airport project’s two buildings total 231,764 sf and are 97% leased. It was developed between 1982 and 1986.

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