KBS and Prime US REIT have partnered on yet another office purchase. KBS assisted Prime US REIT, which trades on the Singapore Exchange, in the purchase of Sorrento Towers in San Diego for $146 million. Shorenstein Properties sold the office building to Prime, and KBS sourced the deal and will serve as the US based asset manager on behalf of Prime.
Sorrento Towers is a 296,327 square-foot class-A office complex in the Sorrento Mesa, a technology and life science hub in San Diego. It has a LEED Gold certification, and at the time of the purchase, the property was 98.2% occupied. It is also near the University of San Diego and other major life science and technology hubs that are attracting companies like Google, Apple and Qualcomm. With increasing demand for life science properties, KBS expects the property to perform well for the foreseeable future.
In fact, KBS notes that San Diego has the highest percentage of patent growth in the country, up 84.4% in the last five years. The growth has made it a target for spin-off tech companies. Supply is also on the investor's side. San Diego recorded a 3.5% reduction in office vacancy from the end of 2020 through the first quarter of 2021 due to the conversion of direct office properties into life science.
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Shorenstein Properties had acquired Sorrento Towers in 2018 with a value-add strategy. The company invested $8.4 million in common area improvements and $16.7 million in tenant improvements. The targeted upgrades include upgraded common areas, a new open-air plaza, a fitness center and meeting spaces, the investor was able to drive occupancy above 98%.
Earlier this month, KBS assisted Prime in the acquisition of One Town Center in Boca Raton, Florida, for $99.5 million from a joint venture between CP Group and Siguler Guff & Co. One Town Center is a 10-story 191,294-square-foot office tower with 95% occupancy and strong in-place cash flow. It is a highly desirable asset in the market, as illustrated by the occupancy.
Newmark's Kevin Shannon, Brunson Howard, Ken White and Paul Jones represented Shorenstein Properties in the San Diego transaction. In addition, attorneys Bruce Fischer, Tatyana Litovsky, Christine Fan and Howard Chu, and paralegal Amanda Kennedy, of global law firm Greenberg Traurig, LLP's Orange County office represented Prime as legal counsel in the acquisition.
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Kelsi Maree Borland
