KBS Spends Nearly $35M for 196,217-SF Office

In an SEC filing outlining the 2200 W. Loop South deal, the acquisition from CCD Acquisitions LLC was funded through an on-going public offering and a seven-year, $17.4-million loan carrying a 5.89% fixed-rate interest. Tenants' aggregate base rent is $3.9 million per year, with 6.2 years as the weighted average time left on leases. The new owner plans to make cosmetic upgrades to the building, which is situated on 4.27 acres.

Rodney Richerson, senior vice president with KBS Capital Advisors of Newport Beach, CA, says the building's occupancy, tenants and location were the primary driving factors behind the buy. Tenaris Global Services USA Corp. and Morgan Stanley DW Inc. occupy 64% of the building. Furthermore, he says "we really like just about every submarket between Downtown and the Energy Corridor."

The 35-year-old asset's acquisition follows on the heels of KBS' $27-million buy of a 234,231-sf office building at 3355 W. Alabama in the Greenway Plaza submarket, which is located about 2.5 miles northwest of its newest purchase.

Richerson says Houston continues to be one of the company's targets for investment. "As a company overall, we're investing a lot more money in assets than we did in the past. So far this year, we've spent about $1.6 billion," he tells GlobeSt.com. "With the Houston real estate market so strong right now thanks to unprecedented growth in the energy business, we're hoping to do more."

Richerson points out that KBS typically holds onto properties for five years, which is the plan for 2200 W. Loop South. However, he says "we'll hold an asset longer, if appropriate, particularly if a value-add opportunity fits well into our business plan."

KBS was represented in-house by Bill Rogalla, senior vice president. Houston-based Holliday Fenoglio Fowler LP's senior director H. Dan Miller and associate director Martin Hogan represented CCD Acquisitions. Doug Little, executive vice president of Houston-based PM Realty Group, and Mike Hackett, a vice president, will lease and manage 2200 W. Loop South for the new owner.