SAN ANTONIO-Kennedy-Wilson, in a partnership with Cargill Value Investment, has bought the KCI Tower and KCI Plaza in San Antonio, a 203,600-sf office and retail complex. The final selling price is hushed, but it brought well above $15 million for the seller, Kinetic Concepts, which will remain the lead tenant.
Kinetic Concepts has occupied the building since 1972 when it was bought for the corporate headquarters. The sale proceeds will be used to expand its medical healing systems business.
KCI occupies about 130,000 sf and now holds a 30,000-sf expansion option as part of its 10-year master lease. There are 12 other tenants in the 96%-occupied high-rise.
“In effect, it was a modified sale-leaseback deal,” says Phil Capron, senior managing director of Beverly Hill, CA-based Kennedy-Wilson. “Kinetic Concepts preferred to have the cash instead of a real estate asset.”
KCI Tower is a 163,600-sf, 15-story, class A building along the east frontage road of Interstate 10 West near Loop 410 in the city’s northwest submarket. KCI Plaza is an adjacent four-buildings complex totaling 40,000 sf of office and retail space.
Cargill Value Investment is the investment arm of Cargill, the privately held Minnetonka, MN-based commodities giant. The deal is part of the partnership’s strategic alliance, now in its third year, to build a major real estate portfolio in the United States and Japan.
The properties are situated in an office submarket that’s home to many of San Antonio’s largest corporations, including USAA, Ultramar Diamond Shamrock, South Texas Medical Center, Southwestern Bell Corporation, Alliance Capital, Allstate Insurance and Providian.
Greenwich Capital Financial Products of Greenwich, CT, provided mortgage debt financing of $14.8 million. Kennedy-Wilson’s investment team worked on the sourcing, due diligence, and debt/equity financing of the property, under the direction of Capron and Steve Pyhrr, also a senior managing director. Bob Benning, director of acquisitions, was the lead acquisition partner for the KCI office purchase. David Walker, senior managing director for real estate investment banking, and Randy Humphrey arranged debt financing for the property on behalf of the KW/Cargill partnership. Kennedy Wilson will be the asset manager for both properties.