Union Bank Plaza Sells For $104M, Half What KBS Paid For It
After nearly nine months of closing deadline extensions, the KBS Realty Advisors-created real estate vehicle KBS REIT II has sold Union Bank Plaza at a 50% loss.
The property sold to Waterbridge Capital for $104M, KBS Western Regional President Giovanni Cordoves confirmed to Bisnow. The buyer also assumed about $6M in capital obligations to existing tenants, Cordoves said. KBS bought the tower for $208M from Hines in 2010.
The property has weathered a challenging market for office space, especially Downtown, where office buildings have faced foreclosures and big-name landlords have defaulted on hundreds of millions of dollars in debt. KBS said in Securities and Exchange Commission filings that the slow return to the office in the neighborhood, coupled with the high-interest-rate environment, "impacted the projected cash flows of the property and the purchase price prospective buyers were willing to pay for the property."
The sale closed after a Colliers team secured a $75M acquisition loan for buyer Waterbridge Capital from BH Properties, a West LA-based private real estate investment firm. Colliers announced the acquisition Thursday but didn't disclose a sale price.
Colliers Vice Chair Sean Fulp, Executive Vice Presidents Mark Schuessler and Ryan Plummer, and Senior Vice President Jason Roth sourced the loan.
“Union Bank Plaza is just the most recent example of private capital filling the void where institutions have pulled back,” Fulp said in a statement. “We are thrilled to have been able to bridge the gap and get this deal across the finish line.”
It has been an extended trip to that finish line.
A $280M deal for the property fell through in 2019. Attempts to sell started up again in 2021, with hopes it would fetch $250M. Harbor Associates placed the deal under contract for $165M in May 2022, but that sale fell through months later. KBS REIT II entered into an agreement to sell the 40-story, 700K SF office building at 445 South Figueroa St. to Waterbridge for $155M in July 2022.
Filings with the SEC show that there were a dozen extensions to deadlines to close the deal. The most recent extension set the deadline to close as March 29, a deadline the transaction missed by a day. According to the terms of that extension, closing by that date would have meant a $155M sale price, "less a credit towards the purchase price of $13.0 million, and less other closing credits and adjustments."
The sale was days before the April 1 start date of the Measure ULA real estate transfer tax, a Colliers release says.
Union Bank, the building's anchor tenant, takes up 165K SF, having downsized since 2020. As of Sept. 30, Union Bank Plaza was 57% occupied, SEC filings show.
"The property represents an opportunity for the buyer to be part of an eventual post-pandemic recovery in downtown Los Angeles," Cordoves said via email. "Given our recent renovations at Union Bank Plaza, the building is well positioned to attract new tenants."
The REIT voted to liquidate its assets in February 2020. This was the last property it had to sell.
