KBS Capital Closes $2B Nontraded REIT

NEWPORT BEACH, CA-KBS Capital Advisors has closed its first nontraded REIT, called KBS REIT, after raising $1.67 billion from 42,000 investors and acquiring more than $2.1 billion in assets. As of June 18, KBS had used the proceeds of the offering to acquire $1.65 billion in commercial real estate–comprising 61 properties–totaling more than 20 million sf of office, industrial and retail space. More than 42,000 shareholders invested in the REIT.

Counting an additional $543 million of strategic debt real estate-related assets, the KBS REIT acquisitions total more than $2.1 billion, according to Charles Schreiber, chief executive officer of KBS Capital Advisors.

Examples of properties acquired by KBS REIT include the 487,775-sf Tysons Dulles Plaza office complex in the Washington, DC submarket of Tysons Corner. KBS bought the property from New York City-based Vornado Realty Trust for $152.8 million, according to a GlobeSt.com report at the time Vornado announced the sale.

Other acquisitions by the KBS REIT have included the 353,561-sf Millennium Tower in Dallas and an 11.4-million-sf, $516-million joint venture industrial portfolio–which is 80% owned by KBS REIT and 20% owned jointly by Hackman Capital Partners and Calare Properties.

KBS Capital Advisors is also the sponsor for a second nontraded REIT, called KBS REIT II, that recently commenced its initial public offering. The new REIT aims to raise up to $2 billion by offering up to 200 million shares at $10 per share.

KBS REIT II plans to buy a diverse portfolio of office, industrial and retail properties in major metropolitan areas of the US, according to its prospectus filed with the Securities and Exchange Commission. The prospectus says that KBS REIT II expects to allocate approximately 70% of its portfolio to investments in core properties with at least 80% occupancy and minimal near-term lease rollover. Approximately 30% of the portfolio will consist of other real estate-related investments such as mortgage, mezzanine, bridge and other loans, debt and derivative securities related to real estate assets, including mortgage-backed securities, and the equity securities of other REITs and real estate companies.

Both KBS REIT I and KBS REIT II are sponsored by KBS Capital Markets Group LLC. KBS REIT II is the latest in a growing list of nontraded real estate investment trusts that are being offered to the public through registered broker/dealers and investment advisers. The shares of a nontraded REIT are offered publicly to qualified investors, but the stock is not listed or traded on an exchange.