Monday, July 1, 2019

KBS to Unload 11 US Office Buildings Into New Singapore REIT

KBS Realty Advisors has priced the initial public offering of a new Singapore real estate investment trust, Prime US REIT, that will acquire 11 U.S. office buildings from KBS' U.S. nontraded REIT, KBS Real Estate Investment Trust III.

Priced at 88 cents per unit, Prime US REIT is set to raise more than $612 million. It’s poised to become the largest REIT controlled by a U.S. company to trade on the Singapore stock exchange and the third since April.

KBS Realty Advisors plans to purchase an equity interest of about $200 million. The transaction is scheduled to close this month.

Prime US REIT has agreed to pay $1.2 billion for the 11 office properties in nine states. The portfolio totals 3.41 million square feet:

  • 101 S. Hanley Road, St. Louis
  • 171 17th St. NW, Atlanta
  • 222 S. Main St., Salt Lake City
  • CrossPoint at Valley Forge, Wayne, Pennsylvania
  • One Washingtonian Center, Gaithersburg, Maryland
  • Promenade I and Promenade II at Eilan, San Antonio
  • Reston Square, Reston, Virginia
  • Tower I at Emeryville, Emeryville, California
  • Tower on Lake Carolyn, Irving, Texas
  • Village Center Station I, Greenwood Village, Colorado
  • Village Center Station II, Greenwood Village, Colorado

In a filing with the U.S. Securities and Exchange Commission, KBS III said, "The company believes that the Singapore transaction presents an excellent opportunity to monetize the 11 stabilized properties that comprise the portfolio at attractive pricing."

Additionally, it said it would avoid significant third-party closing costs by selling the portfolio to a single buyer compared to potentially selling the assets in multiple sales transactions to various buyers.

KBS III expects to distribute a substantial portion of the net proceeds to its stockholders and to pay down debt.

The sale will leave KBS III with a portfolio of about 17 office properties.

Going forward, KBS Realty Advisors said that potential asset acquisition opportunities would go first to Prime US REIT if they meet the following criteria: a Class A office building with a purchase price of at least $125 million and occupancy of at least 90% for the first two years based on contractual in-place leases.

Prime US REIT will be the third U.S. property REIT to launch in Singapore. Last month, Eagle Hospitality REIT Management completed the IPO of Eagle Hospitality Trust, an offering that raised about $566 million. The REIT used the proceeds from the offering to complete the $1.11 billion acquisition of the portfolio.

In April, ARA US Hospitality Trust priced the IPO of its 38 Hyatt select-service U.S. hotels, raising about $498 million.

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