An affiliate of Newport Beach-based real estate investor KBS Realty Advisors is under contract to buy more than 1 million square feet of offices in Dallas and the suburbs of Washington, D.C., in a deal valued at close to $270 million.
The company’s KBS Real Estate Investment Trust III Inc. last week said it entered into three separate purchase and sale agreements to acquire a portfolio of office properties in Texas and Maryland from an affiliate of Los Angeles-based CBRE Global Investors.
The five buildings involved in the sale total nearly 1.1 million square feet and are expected to trade hands for $268.8 million, or about $253 per square foot.
CBRE Global Investors, an investment offshoot of L.A.-based brokerage CBRE Group Inc., paid about $220 million for the buildings in separate deals in 2010 and 2011, according to trade industry reports.
The three acquisitions combined appear to be one of the largest real estate purchases by an Orange County-based company this year.
The yet-to-close transaction will continue a string of pricey acquisitions by KBS, which oversees five nontraded real estate investment trusts, as well as programs for pension funds and other investors.
The company said its five nontraded REITs, including KBS REIT III, have acquired more than $9 billion in real estate and real estate-related assets since 2006.
Other acquisitions this year involving the company’s nontraded REITs include a $239 million purchase of an eight-building office campus in North San Jose, as well as a $76 million purchase of a three-building office portfolio in Austin. Both deals closed in April.
KBS Realty is headed by Charles Schreiber, a former Koll Development Co. executive, and Peter Bren, brother of Irvine Company Chairman Donald Bren.
Familiar Territories
Dallas properties expected to change hands in the latest deal include Preston Commons, a midrise office complex whose three buildings total 427,799 square feet, as well as Sterling Plaza, a 19-story office that runs 313,609 square feet.
KBS also is under contract to buy One Washingtonian Center, a 13-story, 321,007- square-foot office in Gaithersburg, Md., about 20 miles northwest of downtown Washington, D.C.
The five buildings it is buying are about 86% leased and have more than 120 tenants whose average lease runs about 5.7 years, according to regulatory filings.
The buildings combine to bring in close to $23.5 million in annual rent and average monthly rents close to $2.52 per square foot.
The company has plenty of familiarity in both markets involved in the deal.
KBS and its affiliates own a dozen other North Texas office buildings, which total more than 4 million square feet, according to The Dallas Morning News.
The company’s KBS Legacy Partners Apartment REIT Inc. in April paid about $44.9 million for an apartment complex in Frederick, Md., about 25 miles from One Washingtonian Center.
KBS hasn’t disclosed a time frame for finalization of the deal with CBRE Global Investors.
It said last week in regulatory filings that it made a $6.3 million deposit for the properties.
The company plans to fund the purchase with proceeds from a mortgage loan and from KBS REIT III’s ongoing initial public offering, which has raised more than $353 million from investors since 2010.
KBS said in the filings that it was negotiating the terms of the mortgage loan.
