KBS REIT Sells Off Houston Office Property For A Third Of Its Purchase Price
Capital Commercial Investments Inc. has picked up an office building in Houston’s Energy Corridor from KBS Growth & Income REIT at a major discount, according to filings showing the REIT will only get about 37% of its 2016 investment back.
The Austin-based firm bought the 203K SF Class-A Offices at Greenhouse at 19219 Katy Freeway for $17.6M, according to Securities and Exchange Commission filings. This comes out to about $87 per SF, an almost 63% discount from what the REIT paid when it bought the building for $47M in 2016 at $231 per SF.
The building was the final office property that KBS Growth & Income REIT was looking to offload as it liquidated amid financial troubles, The Real Deal reported.
The REIT linked to California-based KBS Realty Advisors was set to sell The Offices at Greenhouse to New Jersey-based firm Red River Asset Management for $18.3M in April, The Real Deal reported, citing an SEC filing. But that sale fell through when Red River Asset Management failed to pay the balance of the purchase price, TRD reported in June.
The REIT completed the sale to Capital Commercial Investments on July 23, according to an SEC filing.
Capital Commercial was attracted to the building’s location, visibility and walkable amenities, according to a news release. The building has a conference center, a tenant lounge, outdoor green space, an on-site car wash service and security.
“We are extremely excited about the prime location near Katy ISD,” Doug Agarwal, founder and president of Capital Commercial, said in the release. “Employers recognize that employees prefer to avoid a 45-minute commute to the Galleria area and the influx of tenants entering this market make it an exceptionally attractive opportunity.”
Capital Commercial plans to install electric vehicle charging stations and upgrade the outdoor patio area with shade structures and misters, the release says. Transwestern’s Doug Little, Kelli Gault and Jack Scharnberg will provide leasing services for the building.
KBS REIT paid lender JPMorgan Chase $14.3M upon the disposition of the building in June, the SEC filing shows. This satisfied the discounted payoff agreement between the two parties.
The REIT struggled to pay off the $72M loan it got from JPMorgan Chase at the time of purchase, and the maturity was extended four times, TRD reported.
A joint venture between Stream Realty and Wile Interests developed the property in 2014. The property was valued at $46.5M in 2017, according to Harris Central Appraisal District. That dropped to $38.2M this year.
