KBS REIT Sells $804M Portfolio to New Singaporean REIT

The 3.2 million-square-foot buy is part of the newly formed REIT's plan to focus on office real estate in key U.S. growth markets.

Peter McMillan III of KBS
Peter McMillan III of KBS

KBS Strategic Opportunity REIT Inc., a non-traded REIT based in Newport Beach, Calif., sold 11 properties totaling a net leasable area of about 3.2 million square feet to subsidiaries of Keppel-KBS US REIT for $804 million, the seller announced Tuesday. The buyer is a newly formed Singaporean REIT that recently listed on the Singapore Stock Exchange.

The new REIT and its underlying properties will be externally managed by a joint venture between Keppel Capital Holdings Pte. Ltd. and an entity in which KBS Capital Advisors Co-Founders Keith D. Hall and Peter McMillan III have an indirect ownership interest.

Keith Hall, co-founder of KBS
Keith Hall, co-founder of KBS

This transaction was “an excellent opportunity to monetize these assets at attractive pricing and to utilize a substantial portion of the net proceeds to invest in new opportunistic investments, as well as current capital projects,” Hall, the CEO and Director of KBS Strategic Opportunity REIT, said in a prepared statement.

Portfolio spans both coasts and the South

The portfolio consists of the following properties in the Seattle, Sacramento, Denver, Austin, Houston, Atlanta and Orlando metro areas.

  • 1800 West Loop, a 400,101-square-foot office tower in Houston.
  •  West Loop I and II, a 313,873-square-foot office complex in the Bellaire submarket of Houston.
  • Westech 360, a 175,529-square-foot, four-building office park in Austin.
  • Great Hills Plaza, a 139,252-square-foot, three-story office building in Austin.
  • Westmoor Center, a 612,890-square-foot, six-building office campus in Westminster, Colo.
  • Iron Point Business Park, a five-building, 211,887-square-foot office park in Folsom, Calif.
  • The Plaza Buildings, two office properties totaling 490,994 square feet in Bellevue, Wash.
  • Bellevue Technology Center, a 330,508-square-foot, nine-building office campus in Bellevue, Wash.
  • Northridge Center I and II, two office buildings totaling 188,509 square feet in Atlanta.
  • Powers Ferry Landing East, a collection of three six-story office buildings in Atlanta.
  • Maitland Promenade II, a 230,366-square-foot office building in Maitland, Fla.

The tenant base is diversified and “led by those in growth and defensive sectors such as technology, finance and insurance, professional services, as well as medical and healthcare” and features “stable and well-spread lease expiries,” according to an earlier announcement by Keppel-KBS US REIT.

David Snyder
David Snyder of Keppel-KBS US REIT Management

The Singaporean REIT currently owns just these 11 assets, but, David Snyder, CEO of Keppel-KBS US REIT Management Pte. Ltd., told Commercial Property Executive, “The REIT has a healthy balance sheet, with current gearing level at 36 percent, which will provide … financial flexibility for potential acquisitions.”

Earlier this month, the IPO for Keppel-KBS US REIT reportedly resulted in both the offering to Singaporeans and the international offering being oversubscribed.