Duke Realty to Sell Medical Office Business to Healthcare Trust of America for $2.8 Billion

INDIANAPOLIS, IN--(Marketwired - May 01, 2017) - Duke Realty Corporation (NYSE: DRE) (the "Company") entered into an agreement with a subsidiary of Healthcare Trust of America, Inc., to sell its medical office business, including its remaining portfolio (the "HTA Portfolio and Business") in a transaction expected to close in stages through the second and third quarters of 2017 for a purchase price of $2.8 billion. The sale of the HTA Portfolio and Business, when combined with the previously disclosed and completed ten-building portfolio sale to the parent entity of TriHealth, Inc. (the "TriHealth Portfolio"), would encompass all of the Company's 7.0 million square foot medical office portfolio and platform for total gross proceeds of $2.955 billion.

Sale of HTA Portfolio and Business

The HTA Portfolio is 6.6 million square feet comprised of 71 in-service buildings, five buildings that will be under construction at the time of sale, the Company's ownership interests in two buildings owned by unconsolidated joint ventures and 16.5 acres of land. The Company will fund the cost to complete the five properties that are under construction, which is expected to total approximately $50 million.

The transaction includes the Company's entire medical office operations and development platform.

The final composition of the HTA portfolio could be impacted by rights of first refusal, which could allow various hospital systems to purchase up to 30 properties, as well as various provisions related to the two buildings owned by unconsolidated joint ventures.

As part of the transaction, the Company will provide seller financing of $330 million, in the form of a note secured by a first mortgage, which will bear interest at 4.0 percent. This note will require three annual principal payments of $110 million beginning in 2018 and will be collateralized by a portion of the underlying properties with an approximate 75 percent loan to value ratio.

Jim Connor, Chairman and CEO stated, "We are very pleased to announce an agreement to monetize our medical office business. While the business has generated substantial value for our stakeholders since we acquired the business in 2007, we took advantage of strong investor appetite in the market for high quality and substantially on-campus medical office real estate. As many are aware, our medical office business evolved into a highly unique opportunity for a buyer to gain scale, quality assets and a talented operations and development team. Monetizing our medical office business at a price significantly higher than what the market previously ascribed is accretive to our net asset value per share and creates a more simplified business model with improved transparency for the long term benefit of our stakeholders while positioning our Company as the leading pure play domestic industrial REIT."