KBS Real Estate Investment Trust III, Inc. has sold 11 of its Class A office properties, totaling 3.4 million rentable square feet of Class A office space, for $1.2 billion, according to the announcement by parent company KBS, one of the largest owners of commercial real estate in the US.
The 11 assets sold, include:
• Tower I at Emeryville in Emeryville, California
• 222 Main in Salt Lake City, Utah
• Village Center Station in Greenwood Village, Colorado
•Village Center Station II in Greenwood Village, Colorado
• 101 South Hanley in St. Louis, Missouri
• Tower on Lake Carolyn in Irving, Texas
• Promenade I & II at Eilan in San Antonio, Texas
• CrossPoint at Valley Forge in Wayne, Pennsylvania
• One Washingtonian Center in Gaithersburg, Maryland
• Reston Square in Reston, Virginia
• 171 17th Street in Atlanta, Georgia
In connection with the transaction, KBS REIT III repaid outstanding debt secured by the properties and retained a 33 percent ownership interest in the purchaser. Additionally, the company is planning to use a significant amount of the proceeds to provide enhanced liquidity to KBS REIT III stockholders (whether through the share redemption program or one or more self-tender offers), and to utilize a portion of the net proceeds to pay a special distribution.
SEE ALSO : KBS sells Class A office property in Florida
“A transaction of this magnitude has the potential to greatly benefit our stockholders in KBS REIT III,” said KBS CEO Charles J. Schreiber, Jr.
“We have executed on an important strategic disposition, while also keeping a portfolio of 20 well-located and high-performing properties valued in excess of $3 billion in KBS REIT III. This gives KBS and our board of directors the opportunity to evaluate new strategies to enhance portfolio value moving forward.”
“Our investment strategy centers on acquiring and managing exceptionally well-located assets in urban nodes where powerful value creation is possible,” Schreiber explained.
“From the asset location and construction quality we demand at acquisition, to the high-end upgrades and tenant-focused amenities we deliver within our properties, through the caliber of our tenant companies themselves, the high bar that we set and act upon ensures that our assets are uniquely valuable in each market.”
As an example, Schreiber points to the recently renamed Accenture Tower in Chicago, Illinois, at which KBS worked with its anchor tenant to increase its lease to a total of 226,486 square feet.
Accenture Tower, one of the 20 assets remaining in the KBS REIT III portfolio, was Chicago’s first and largest full-service office location. The property currently holds a record for the largest Class A, LEED Gold-certified building in Chicago for its environmental sustainability. KBS implemented a multi-million-dollar renovation of the property in 2015 to provide tenants best-in-class services and amenities. The property now features a two-level fitness center spanning 14,000 square feet, with a basketball court, group exercise classes, and a new tenant lounge with air hockey, shuffleboard and wine lockers. The property has been named Building of the Year on two separate occasions by the Building Owners and Managers Association (BOMA).