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BILLERICA, MA-KBS REIT has completed its purchase of Rivertech Park here, with the firm paying $45.2 million for the two-building complex at 129 Concord Rd. The asset was sold by New Boston Fund, which had acquired Rivertech in 2002 for $23 million.

“Physically, it is in very good condition,” KBS SVP Shannon Hill tells GlobeSt.com in reviewing the firm’s willingness to see the Rivertech acquisition through despite the rocky sales climate that has enveloped commercial real estate since mid-summer 2007. Original owner Nortel Networks had infused the property with an exceptional level of technology, he notes, and New Boston Fund ensured the expanded park was equally endowed. “That’s by and large what attracted the tenants,” says Hill.

Hill also lauds the $385 million expansion of Route 3, the roadway that Rivertech is located along. “It has made the area much more accessible,” he says of the initiative earlier this decade that widened Route 3 to six lanes. The project has been propitious for the Interstate 495 North submarket, says Hill, because rising rental rates in Cambridge and along Route 128 are spurring many firms to consider alternate markets such as Billerica and abutting Chelmsford.

The I-495 North vacancy rate remains above 20%, but the stable tenant roster makes KBS feel “very comfortable” about holding Rivertech over the near term, says Hill. Observers say the sale is a coup for New Boston Fund, which acquired the development after owner Nortel Networks downsized in the wake of the 2001 technology crash that crippled suburban Boston. Eastdil Secured broker James McCaffrey acknowledges that NBF fared well, but says the property was acquired below replacement cost for KBS. “I think everyone was happy about it,” says McCaffrey, who negotiated the sale with colleagues Peter Joseph and Chris Phaneuf from Eastdil’s Boston office.

Hill praised the brokerage team and NBF for guiding the deal through the lengthy negotiations, which extended back to the fourth quarter as indicated by a GlobeSt.com article on the sale in its Nov. 21st edition. “The process was very smooth,” Hill says, adding that the effort survived the national debt crunch partly because KBS is not a highly leveraged investor, typically aiming in the 50% to 60% range. While more challenging and expensive to obtain, such debt is available, he says.

As for the coming year, Hill says KBS is “not sitting on the sidelines,” and has value-added funds to place, but stresses the firm will avoid unnecessary risks. “The next 18 months are going to be very unpredictable, and we have to be cautious in how we invest our funds,” he says. Core assets are a big focus for KBS, but quality offerings have been limited in the early going of 2008, says Hill, whose firm is targeting deals in the $20 million to $50 million range.

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