Companies headed by OC’s wealthiest residents are proving to be a profitable source of business for Newport Beach-based KBS Realty Advisors.
The commercial real estate investor has made a nearly $216 million profit from of a pair of out-of-town office tower sales over the past month, each of which involved locally based buyers with deep pockets.
The most recent deal: a $120 million sale of Two WestLake Park in Houston, a 17-story office tower in the city’s Energy Corridor.
The 455,476-square-foot office building sold for about $263 per square foot. An entity known as Bravo Strategies II LLC bought it from KBS, whose KBS REIT II affiliate acquired it in 2011 for $79.4 million.
Regulatory filings show Bravo Strategies to be an affiliate of Newport Beach-based Pacific Investment Management Co.
Bill Gross, Pimco’s cofounder and co-chief investment officer, is estimated to be Orange County’s fifth wealthiest person, with a fortune of $2.4 billion, according to the annual OC’s Wealthiest list in this week’s Business Journal Special Report (starts on page 15).
The bond investment giant, which has close to $2 trillion in assets under management and runs one of the world’s largest mutual funds, also has a growing real estate portfolio.
The company is reported to have raised close to $5.5 billion as of March for its Bank Recapitalization and Value Opportunities II fund, also known as Bravo II.
The fund expects to snap up a variety of commercial and residential real estate properties, among other assets.
A separate Bravo I fund is reported to have raised about $2.4 billion in 2011.
Some notable real estate investments made by Pimco since raising the first Bravo fund have been profitable.
In June, Pimco and Lincoln Property Co. in Dallas reached a deal to sell a 29-story office tower they jointly own in downtown Chicago.
Beacon Investment Properties LLC in Florida is paying $122 million, or $196 per square foot, for the nearly 624,000-square-foot office.
Pimco and Lincoln Property bought the tower in 2012 for a little more than $91 million.
Brotherly Deal
Chicago was also the location of KBS Realty’s other big sale involving an OC buyer.
On July 7, its KBS REIT II affiliate completed the $850 million sale of the 60-story 300 N. LaSalle skyscraper to Newport Beach-based Irvine Company.
The sale of the 1.3-million-square-foot tower—first announced in May—is believed to be the priciest office acquisition by any Orange County-based real estate company.
Irvine Co. Chairman Donald Bren is OC’s wealthiest person, with an estimated fortune of $15 billion (see entry in Special Report, starting on page 15). He’s also the brother of KBS President Peter Bren.
KBS REIT II bought 300 N. LaSalle in 2010 for about $655 million.
Factoring in capital expenditures, lease commissions and other costs, KBS said in regulatory filings that it made a profit of nearly $216 million on the sale of the Chicago and Houston towers.
KBS, Affiliates
KBS REIT II is one of five nontraded real estate investment trusts currently run by KBS that buys offices, apartments, and other types of properties on behalf of individual investors.
KBS Realty also runs a number of private real estate funds on behalf of pension funds and other institutional investors.
The company and its affiliates own nearly $8 billion in real estate across the country totaling about 44 million square feet. The company has investments in more than 40 markets in the U.S.
KBS is a venture of Peter Bren and Charles Schreiber, a former Koll Development Co. executive. The company started in 1992 and has made nearly $20 billion in deals since its founding.
The “K” in KBS stands for Donald Koll, the late commercial real estate executive who was involved with the company early on.
KBS and its affiliates remain active office buyers notwithstanding the two notable sales in Houston and Chicago.
In late July, the company’s KBS REIT III affiliate completed the $132.5 million purchase of 171 17th St. NW, a 509,237-square-foot office building in Atlanta. The 22-story building sold for about $260 per square foot. It last traded hands in 2005 for $170.5 million, according to local reports.
