Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ROSEMONT, IL-The Central States Southeast and Southwest Area Pension Fund is now Duke Realty Corp.’s fourth-largest tenant in its entire portfolio, paying nearly $7.8 million a year, nearly 1% of the REIT’s total revenue, for space in its newly acquired Riverway office property here. However, the pension fund has a lease for most of 9377 W. Higgins Rd. that expires in 2007.

The three-building, 877,082-sf Riverway complex, along with the 516,779-sf, two-building O’Hare International Center sold in a $257-million deal with another Indianapolis-based REIT, retail giant Simon Property Group. Occupancy in the five buildings, at Higgins and River roads as well as Higgins and Mannheim roads, was 79% when they were traded.

“I would say we feel reasonably good about being able to redo that tenant or backfill it with some other tenants that are already in place there,” says chairman and chief executive officer Dennis D. Oklak during his company’s recent earnings conference call. “We underwrote that accordingly.” That underwriting included a going-in yield of “about 7%,” with it rising to 8.3% once the properties are stabilized.

While Duke Realty had long coveted the Riverway and O’Hare International Center properties for years, having made one previous attempt to bolster its suburban office holdings, the same cannot be said about its interest in Prentiss Properties Trust’s 2.9 million sf of office and industrial assets on the market. Included in the package, which the Dallas-based seller expects to fetch more than $500 million based on multiple bids it has received, is 616,000 sf in two buildings in Rosemont in One O’Hare Centre at 6250 N. River Rd. and O’Hare Plaza II at 8755 W. Higgins Rd.

“We’re familiar with that portfolio. We’re not particularly interested in that,” Oklak says. “We really think [Riverway and O'Hare International Center] are some of the best properties in the best suburban submarket.”

Meanwhile, Duke Realty received $6.25 million for a vacant property at 105 E. Oakton St. to Philadelphia-based KTR Capital Partners, which has begun renovating the 180,020-sf building. The Indianapolis-based office and industrial REIT owned the building since 1999, when it was acquired for $4 million, according to property records.

The sale was part of Duke Realty’s $120.8 million in second-quarter sales, which were at a capitalization rate of 6.8%. Colliers Bennett & Kahnweiler senior vice president Matthew J. Stauber brokered the deal for represented Duke Realty and KTR Capital Partners, founded last year by former Keystone Property Trust chief executive officer Jeffrey E. Kelter. Stauber has been hired to lease the building.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


GlobeSt. NET LEASE Fall 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.