CINCINNATI—A real estate fund managed by New York City-based Apollo Global Management recently acquired the fee-simple interest in an 85% leased, roughly one million square foot office portfolio located in the Cincinnati metro area, from Duke Realty Corp., industry sources say.

The buyer paid $103 million for the properties, mostly located in the town of Blue Ash about 20 minutes northeast of downtown Cincinnati along I-71. The purchase price implies a ~9.3% cap rate on in-place NOI with rents about 6% below market and Apollo's total projected basis after minor capital improvements is projected to be $110 per square foot, or roughly half of today's replacement cost.

In the twelve months preceding the sale, Duke signed leases with Microsoft, General Electric, Del Monte Foods and Cisco Systems, giving the portfolio a number of investment-grade tenants. Blue Ash is one of the top office markets in the metro region, with a class A vacancy rate of just 7%. The suburb is home to many corporate headquarters including the Belcan Corp.; the IT division of Citigroup; Sunny Delight Beverages; F+W Media and Procter & Gamble's Sharon Woods Innovation Center.