An affiliate of Newport Beach-based KBS Realty Advisors has bought a three-building office park in Atlanta, the latest in string of deals totaling nearly $200 million that the commercial real estate investor has made in the past two months.
KBS Realty ranks No. 122 on this week’s Business Journal list of fastest-growing private companies (see related stories throughout issue; list starting on page 36).
The company’s KBS Strategic Opportunity REIT Inc. last week announced it had closed on the purchase of Powers Ferry Landing East, a 393,502-square-foot, midrise office complex located near the Buckhead business district in Atlanta.
The Powers Ferry property counts three, six-story buildings on a 23-acre site. The buildings run from 122,392 square feet to 147,027 square feet.
KBS Realty and its affiliates now own about 1.26 million square feet of commercial space in the Greater Atlanta area, according to the company.
The Powers Ferry property traded hands for $17 million, or about $43 per square foot.
Offices in Atlanta have been trading at an average price of about $115 per square foot earlier this year, according to local brokerage reports.
The property is no stranger to Orange County investors. San Clemente-based Argus Realty Investors LP, a defunct tenant-in-common investor, paid a reported $65.3 million for the complex in 2005, which was foreclosed on last year.
The buildings are 32% leased, according to KBS Realty, which bought the property using a non-traded real estate investment trust that buys distressed, underleased or otherwise troubled real estate properties.
The Strategic Opportunity REIT—one of five non-traded REITs that the company oversees—has raised about $315 million from investors over the past two-and-a-half years.
Other properties acquired by the Strategic Opportunity REIT in recent months include an office campus outside Seattle it paid $78.7 million for in late July. The QBE Corporate Campus, a nine-building office campus in Bellevue, Wash., was 62% leased at the time of its sale.
The Bellevue acquisition is the largest buy to date by the strategic-opportunity REIT, which aims to buy real estate with more leasing risk than the other four non-traded real estate investment trusts KBS Realty manages.
Those funds have bought prominent skyscrapers in Chicago and Los Angeles, among other investments.
The company earned about $954 million in revenue for the 12-month period ending June 30, a 45% increase from its mid-2010 revenue figures.
KBS Realty is the fifth-largest company on the fastest-growing list in total revenue.
It saw the highest rate of revenue growth of the five largest companies, which includes Irvine-based food supplier Golden State Foods Corp. (No. 130) and Orange-based car dealership David Wilson Automotive Group (No. 152).
KBS Realty also is the largest real estate company, by revenue, on this week’s fastest-growing private companies list.
Top Executives
KBS Realty is headed up by Charles Schreiber, a former Koll Development Co. executive, and Peter Bren, brother of Irvine Company chairman Donald Bren.
The “K” in KBS is for late commercial real estate developer Donald Koll, who was involved with the company early on.
Increased rental, property management and loan payments have helped fueled the company’s fast growth, along with other income derived from numerous buildings and mortgages bought by KBS Realty and its affiliates during the past few years.
In addition to its five non-traded REITs, KBS Realty also has run 14 separate accounts, six commingled funds and five sovereign wealth funds since the company started 20 years ago. One of those funds paid a reported $54 million last month for a 10-story office building outside Denver.
Peakview Tower, a 264,149-square-foot building in Englewood, Colo., is about 10 miles south of downtown Denver. The sale works out to a price of about $204 per square foot for the building, which is 92% leased.
KBS also made a $35.8 million mortgage loan in September tied to a continuing-care retirement community near Sacramento.
The real estate investor’s burst of recent activity bodes well for the company’s inclusion on next year’s fastest-growing list. But not all of its revenue growth of the past year came from expected sources.
In 2008 the company’s non-traded KBS REIT Inc. bought a mezzanine loan with a face value of $500 million that helped New York-based Gramercy Capital Corp. finance the $3.3 billion purchase of a portfolio of bank buildings and small offices scattered across the U.S.
Gramercy defaulted on its loans last year, and KBS eventually took over the portfolio of more than 800 properties via foreclosure at the end of 2011.
The properties were responsible for $144.3 million in revenue for KBS REIT Inc. between January and June, according to Securities and Exchange Commission filings.
