A real estate investment trust controlled by office giant KBS Realty Partners has entered into a tentative agreement to sell an 11-property, 3.4M SF office portfolio to a newly created foreign REIT for $1.2B.
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KBS’ KBS Real Estate Investment Trust III will unload the office properties to Prime US REIT based in Singapore, according to KBS’ most recent filings with the Securities and Exchange Commission.
In the filings, KBS said it will have a $201M equity interest in Prime US REIT. The Singapore REIT is expected to be listed on the Singapore Stock Exchange, the filings reveal.
The deal is slated to close in July. However, KBS officials said it could not offer assurances that the transaction would close in July or at all, according to the filings.
A KBS spokesperson declined to comment.
The sale of the property comes about two months after the death of KBS co-founder and President Peter Bren. Bren’s widow, Linda, will manage a trust that will own a small portion of the foreign REIT, according to the SEC filing.
The Singaporean-based REIT will be managed by a joint venture, with majority ownership belonging to an entity called KBS Asia Partners indirectly owned by KBS CEO Charles Schreiber Jr. and the Linda Bren 2017 Trust.
The other companies in the JV include Keppel Capital and Experion Holdings — both not affiliated with KBS, according to the filings. Experion is an affiliate of AT Capital Group, controlled by Indian-born billionaire Arvind Tiku. Tiku is a longtime resident of Singapore and also has holdings in oil, gas and renewable energy.
Times Properties Private Limited, which is not affiliated with KBS, may also acquire an interest in KBS Asia Partners.
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The offices in the portfolio include:
Tower I Emeryville, a 12-story, 223K SF building at 1900 Powell St. in Emeryville, California.
222 Main, a 21-story, 423K SF office building at 222 South Main St. in Salt Lake City.
Village Center Station, a nine-story, 242K SF office building at 6380 South Fiddler's Green Circle in Greenwood Village, Colorado.
Village Center Station II, a two-building development under construction with a 12-story, 306K SF office building and two-story, 18K SF building at 6360 South Fiddler's Green Circle in Greenwood Village, Colorado.
101 South Hanley, a 19-story, 361K SF office tower at 101 South Hanley Road in St. Louis.
Tower 909, a 19-story 374K SF office building at 909 Lake Carolyn Parkway in Irving, Texas.
Promenade I and II at Eilan, two four-story office buildings totaling 205K SF at 17806 Interstate 10 in San Antonio.
CrossPoint at Valley Forge, a four-story 272K SF building at 550 East Swedesford Road in Wayne, Pennsylvania.
One Washingtonian Center, a 14-story 314K SF building at 9801 Washingtonian Blvd. in Gaithersburg, Maryland.
Reston Square, a seven-story, 139K SF building at 11790 Sunrise Valley Drive in Reston, Virginia.
171 17th St., a 21-story, 510K SF building in Midtown Atlanta's Atlantic Station development.
In the filings, KBS said it expects to net $475M in proceeds from this transaction.
Barbara Cambon has resigned as a member of the KBS board of directors to be the CEO and chief investment officer of Prime US REIT. Cambon has also served as an independent director on KBS' other public companies, KBS REIT I and II, according to her LinkedIn profile. KBS REIT III will get a 24.7% stake in the company that now owns 11 of its former properties.
Prime US REIT will list with a $612M initial public offering on the Singapore Exchange for 88 cents per share, The Business Times of Singapore reported last week. The company will have a market capitalization of more than $800M.
Keppel Capital and Singapore Print Holdings each plan to pay $55M for respective 6.8% stakes in Prime US REIT, the Business Times reports. Tiku's firm has agreed to pay $65M for 8%.
Another KBS entity, KBS US Prime Property Management, will serve as Prime US REIT's manager, of which KBS Asia Partners will control 40% — bringing KBS' ownership stake in the newly formed company to more than 60%. Keppel will own 30% of KBS US Prime Property Management, according to the Business Times.
CORRECTION, JULY 2, 9:45 A.M. ET: A previous version of this story misstated the ownership of Experion Holdings. This story has been updated.
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