Duke Energy tower under construction in uptown acquired in record deal
Maryland-based CGA Capital has partnered with Childress Klein to buy Duke Energy's Charlotte Metro Tower, currently under construction in uptown Charlotte. Once the project is complete, the two firms will pay as much as $675 million in the planned sale-and-leaseback deal for the 40-story tower.
Duke Energy Corp. (NYSE: DUK) spokesman Neil Nissan says the final construction cost has not yet been determined and the sales price can’t be identified. But he says Duke’s all-in costs for the new building are expected to be in the range of $675 million.
Regardless of the final price, the Duke tower marks the largest single real estate transaction ever made in Charlotte. The previous record of $445.5 million is set to occur next spring when Truist completes its purchase of the Heart Tower — a deal that was announced two weeks ago. That just edged the $441.6 million that paid for the Bank of America Tower at Legacy Union in late November.
Batson-Cook Construction in Atlanta has already started construction on the project at 525 S. Tryon St. in uptown. Childress Klein is the developer.
Site construction under way at Duke's proposed 40-story Tower on South Tryon Street.
“Metro Tower is a best-in-class project in an area with the highest net absorption of any submarket in the Southeast,” says Childress Klein partner Tom Coyle. “We have a great team in place and are delighted to be partnering with CGA and expanding our relationship with Duke Energy on this exciting project that will deliver significant economic benefits to the area.
Kyle Gore, CGA managing director and principal, calls the project “an outstanding opportunity from every standpoint.”
“We look forward to working with Childress Klein and their team as we have funded the creation of a dynamic office tower and a terrific new addition to the city skyline,” he says.
The sale-leaseback deal works as a funding mechanism for construction of the project. Duke draws down on the financing to pay for construction of the building. As a result, the final sale price will not be known until construction is finished.
Duke bought the 2.1-acre property, across from its South Tryon Street headquarters, for $27.5 million in 2017.
Duke Energy will occupy the LEED Gold-certified office tower when it's completed in 2022. Charlotte Metro Tower will have about 1 million square feet of office and retail space and a 1,100-space parking garage. The retail portion will take up about 25,000 square feet on the ground floor.
CGA Capital provides capital for large-scale corporate, government and nonprofit real estate projects. The deal has a debt investor group led by Nuveen, a TIAA company. Childress Klein is leading the design and preliminary site work. It also serves as the development manager.
CGA Capital was represented in the transaction by Ballard Spahr, and Childress Klein was represented by Parker Poe. Duke Energy was represented by Hunton Andrews Kurth LLP and advised by Eastdil Secured. The debt investor group was represented by Greenberg Traurig. The project’s architect is TVS Design.
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