KBS REIT III
SAMPLE Q2 2019 Performance Snapshot
As of June 30, 2019
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As of June 30, 2019
- Downtown undergoing huge redevelopment
- Google plans to build up to 8 million square feet of mixed use campus for employees and Adobe is adding 700,000 square feet of office
- 17,500 new residential units delivered, under construction, or approved in this cycle
- Light rail is being enhanced and expanded with new stations
- Technology tenants have leased 1 million sq. ft. in downtown in the last 30 months.
- Tenant demand has soared as a result of the pro-business climate, educated workforce, and influx of big tech companies seeking to add offices in the “Silicon Hills”.
- Austin has been the fastest growing city in the US with one-million+ residents for the past 8 years (source: U.S. Census).
- Global Medical Services signed a new lease for 5,532 SF, 5 years of term, and $20.0 NNN starting rent psf.
- Tamarack Business Partners signed a new lease for 977 SF, 3 years of term, and $21.0 NNN starting rent psf.
- Accenture signed an expansion lease in July 2019, increasing their space to 263,718 SF for 15 years of term. Accenture to make this its U.S. headquarters.
- Property is Chicago’s largest Class A, LEED Gold-Certified building, and has twice won “Building of the Year” from The Building Owners and Managers Association.
- High barriers to entry
- Measure M will severely limit future development.
- No new spec office buildings delivering until 2022
- Asking rents have reached new highs2.
- The Domain micro-market continues to be arguably the most sought after location in Austin, where tenant demand has soared as a result of the pro-business climate, educated workforce, and influx of big tech companies seeking to add offices in the “Silicon Hills”.
- Office cap rates in the North/Domain submarket are estimated at 5.4% and dropping, and over 1.4 Million SF of absorption has occurred in the submarket during 2019 alone2.
Tenant Allocation by IndustryThe ranking by National Real Estate Investor is based on volume of office space owned globally, as of December 31, 2017.
by Annualized Base Rent
by Annualized Base Rent
As of June 30, 2019
Performance for All Classes
Performance SummaryThe performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
Net Asset Value (NAV)
Annualized Distribution RateKBS REIT III has paid distributions monthly, since July 2011. For the periods from June 2011 through December 2018, distributions were calculated based on stockholders of record each day during the period at a daily rate of $0.00178082 per share per day and equaled a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on the initial primary offering purchase price of $10.00 per share in the REIT’s now-terminated primary initial public offering. For the periods from January 2019 through September 2019, distributions are calculated based on stock- holders of record on monthly record dates and equaled a monthly amount that, if paid each month for a 12-month period, would equal a 6.5% annualized rate based on the initial primary offering pur- chase price of $10.00 per share in the REIT’s now-terminated primary initial public offering or a 5.41% annualized rate based on the most recent estimated value per share of $12.02. There is no assurance that KBS REIT III will continue to declare and pay distributions at this rate and KBS REIT III may modify the rate at its discretion.
Distributions paid through June 30, 2019, consisting of 59% paid in cash and 51% reinvested through the dividend reinvestment plan, have been funded with 93% coming from cash flows from opera- tions and 7% from debt financing. For more information, please refer to KBS REIT III’s public filing. Because a portion of the distributions paid to date were paid with borrowings, distributions and the distribution rates referenced above may not be sustainable.
KBS REIT III’s charter permits it to pay distributions from any source, including offering proceeds or borrowings (which may constitute a return of capital), and does not limit the amount of funds it may use from any source to pay such distributions. If KBS REIT III pays distributions from sources other than cash flows from operating activities, it will have less funds available to make real estate invest- ments and the overall return to its stockholders may be reduced.
Growth of $10,000 InvestmentPast performance is historical and not a guarantee of future results. Performance returns reflect reinvested distributions and changes in the NAV per share. For Class S and T shares, the maximum amount of up-front fees paid for an investment of $10,000 is $350. For Class D shares, the maximum amount of up-front fees paid for an investment of $10,000 is $150. There are no up-front fees for purchases of Class I shares.
Renovation of NY Building
These upgrades have been accretive in improving the building to a best-in-class brick and timber building, but also in the retention of existing tenants and marking rents to market. In addition to the renovation.
101 South Hanley2
- Total leased percentage includes future leases that have been executed but have not yet commenced.
- On July 18, 2019, the Company sold this property.
- On July 18, 2019, the Company sold one of the three buildings at this property.
Sold Assets & Loan Payoff
Gross Sale Price
Las Cimas IV
Rocklin Corporate Center
Date Paid Off
Balance Paid Off
Dispositions & Investments
Subsequent to June 30, 2019On July 18, 2019, the Company sold 11 of its properties to various subsidiaries of a newly formed real estate investment trust (the “SREIT”). In addition, on July 19, 2019, a subsidiary of the Company acquired 307,953,999 units in the SREIT at an aggregate price of $271 million representing a 33.3% ownership interest in the SREIT. On August 21, 2019, the Company sold 18,392,100 of its units
in the SREIT for $16.2 million pursuant to an over-allotment option granted to the underwriters of the SREIT’s offering, reducing the Company’s ownership in the SREIT to 31.3% of the outstanding units of the SREIT.
Tower on Lake Carolyn
One Washingtonian Ctr.
Salt Lake City, UT
171 17th Street
Tower I at Emeryville
101 South Hanley
St. Louis, MO
Village Center Station
Greenwood Village, CO
Promenade I & II at Èilan
San Antonio, TX
CrossPoint at Valley Forge
Village Center Station II
Greenwood Village, CO
Subsequent to June 30, 2019
This is neither an offer to sell nor a solicitation of an offer to buy shares of KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”); KBS REIT III terminated its primary offering effective May 29, 2015. The REIT continues to offer shares of its common stock under its dividend reinvestment plan. Offering is only made by prospectus (www. kbsreits.com). This information must be preceded or accompanied by a prospectus in order to understand fully all of the implications and risks of the offering. Neither the Attorney General of the State of New York nor any other state regulators have passed on or endorsed the merits of this offering. Any representation to the contrary is unlawful.
Investing in KBS REIT III includes significant risks. These risks include, but are not limited to: the possibility of losing your entire investment; no guarantees regarding future performance; upon sale or distribution of assets you may receive less than your initial investment; fluctuation of the value of the assets owned by KBS REIT III; lack of a public market for shares of KBS REIT III; limited liquidity; limited transferability; reliance on KBS Capital Advisors LLC, KBS REIT III’s advisor, to select, manage and dispose of assets; payment of significant fees; and various economic factors that may include changes in interest rates, laws, operating expenses, insurance costs and tenant turnover. Shares of KBS REIT III are not suitable for all investors.
KBS REIT III’s advisor and its affiliates, KBS REIT III’s executive officers, some of KBS REIT III’s directors and other key professionals face conflicts of interest, including significant conflicts created by the advisor’s compensation arrangements with the REIT and other KBS-sponsored programs and KBS-advised investors.
KBS REIT III uses debt in connection with its investments, which increases the risk of loss associated with these investments and could hinder its ability to pay distributions to its stockholders or could decrease the value of its stockholders’ investments if income on, or the value of, the property securing the debt declines.
KBS REIT III may make adjustments to its target portfolio based on real estate market conditions and investment opportunities, and may change its targeted investments and investment guidelines at any time without the consent of its stockholders, which could result in the REIT making investments that are different from, and possibly riskier than, the investments described in the prospectus, as amended and supplemented. A change in the REIT’s targeted investments or investment guidelines may increase its exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the value of its common stock and its ability to make distributions to its stockholders.
KBS REIT III elected to be taxed as a REIT beginning with the taxable year that ended December 31, 2011. Should KBS REIT III not qualify as a REIT, it may be subject to adverse tax consequences. Please refer to the prospectus for more detailed information.