SCOTTSDALE, AZ-Beating out 14 other offers, KBS Realty Advisors LLC, on behalf of Pacific Life Insurance Co., has acquired the 175,191-sf Kierland I for $53.3 million. The building is 100% leased to Prudential Life Insurance Co.

Situated on 11 acres at 16430 N. Scottsdale Rd., Kierland I was brought to market by a pension fund managed by UBS Realty Investors LLC in San Francisco. While the property is fully leased, only 60% of it is occupied because Prudential is relocating its operations to a larger, adjacent building.

“Prudential’s still on the lease for another three years. They sublet a portion of the building out,” Robert Burnand, senior vice president in Phoenix with CB Richard Ellis, tells GlobeSt.com. Burnand, who represented the seller, says the upside will occur when the lease expires and the building can be offered at a higher market rate. The Fort Worth-based DR Horton Inc. has subleased part of the structure for its regional office.

Kierland I was completed in 1999 when market rates were $23 per sf to $24 per sf. Today market rate is $30 per sf to $33 per sf. “The lease to Prudential was triple net, as they wanted to keep the costs down. They did their own remodeling and put a lot of money into it,” Burnand says.

According to Burnand, KBS ended up with the building because of its reputation and familiarity with the submarket. “They already own property in that marketplace and their terms were favorable,” he adds.

Burnand teamed with Steve Lindley, Bob Buckley, and Tracy Cartledge, also formerly with Trammell Crow Co., but who are now affiliated with Grubb & Ellis/BRE Commercial LLC. KBS plans to manage Kierland I.

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