KBS Transacts $1 Billion Loan For REIT III


An interview with Rob Durand

KBS’ largest financing transaction in its history — for its REIT III — is signed, sealed, and delivered.

Rob Durand, EVP of finance, attributes the financing team’s success to the building of great relationships with the largest lenders in the country.

“It’s been a pretty exciting process,” he says. “We’ve been putting this together since April.”

That process was executed as a result of KBS’ strong reputation and its use of conservative leverage, which benefits the company’s ability to acquire and enhance real estate.

“It’s not often that you get to work on a deal with this kind of size and magnitude,” Rob says.

The  $1.01 billion facility is two-tiered:  a term loan of $757.5 million that was funded at closing, along with a revolving loan of $252.5 million of which $30 million was funded at closing. Bank of America will act as the administrative agent and joint lead arranger on the transaction, with Wells Fargo and U.S. Bank on board as joint lead arrangers. Each bank holds a piece of the overall debt.

“It’s a big transaction for us,” Rob says. “We’re humbled and honored that three of the largest banks in the country are trusting us with that kind of capital commitment.”

KBS Capital Advisors is the external advisor to KBS Real Estate Investment Trusts, and is an affiliate of KBS Realty Advisors, a private equity real estate company and SEC-registered investment adviser founded in 1992 by Peter Bren and Charles Schreiber. Since its inception, KBS-affiliated companies have completed transactional activity totaling more than $35 billion and financing activity in excess of $14 billion on behalf of 15 separate accounts, six institutional commingled funds, five sovereign wealth funds and seven non-traded REITs. KBS-affiliated investment advisers invest in real estate markets across the United States on behalf of their clients.

The three-year $1,010,000,000 loan facility is secured by eight office properties owned by KBS Real Estate Investment Trust III, Inc. and funds from the facility were used to replace existing debt agreements as well as pay origination fees and accrued interest.  These eight properties are located throughout the country.

Rob adds that the REIT III transaction — and the ability to seamlessly facilitate it —  is a testament to the asset management and operational prowess of KBS.

“We arranged it directly with relationship lenders,” Rob says, “and we did not engage an intermediary in that process. It was something we were able to put together with lending relationships developed over the years by our dedicated internal finance team.”

This is the next step in growing and flourishing the REIT, as well as evolving vital lender relationships.

“This transaction will provide a lot of flexibility for KBS REIT III going forward,” Rob says. “It means more liquidity for capital that needs to be reinvested in properties. It will also bring flexibility to whatever the future might hold for REIT III –what it does long term. We’re really excited about it, and our other REITs continue to move forward. We’re working on some flexible financing facilities for several of those REITs as well.”

This milestone continues to solidify KBS’ institutional reputation as a high-quality borrower with solid direction, capability and growth.

 

A special thank you to blog writer Ron Sklar for conducting this interview.

KBS Transacts $1 Billion Loan For REIT III Rob Durand website A 240x300
Mr. Durand is Executive Vice President of Financing.

 

The foregoing includes forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. KBS REIT III intends that such forward-looking statements be subject to the safe harbors created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent, belief or current expectations of KBS REIT III and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. KBS REIT III undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. Such statements are subject to known and unknown risks and uncertainties which could cause actual results to differ materially from those contemplated by such forward-looking statements. KBS REIT III makes no representation or warranty (express or implied) about the accuracy of any such forward-looking statements. These statements are based on a number of assumptions involving the judgment of management.  Forward-looking statements also depend on factors such as: future economic, competitive and market conditions; KBS REIT III’s ability to maintain occupancy levels and rental rates at its real estate properties; and other risks identified in Part I, Item 1A of the REIT’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC. Actual events may cause the value and returns on KBS REIT III’s investments to be less.