KBS Strategic Opportunity REIT Inc., a U.S. public, non-traded real estate investment trust based in Newport Beach, California, filed a public draft prospectus with the Israel Securities Authority for a proposed offering of Series A debentures for a newly formed subsidiary KBS SOR (BVI) Holdings Ltd., which will own all of its properties.
The new REIT is looking to raise between $100 million and $150 million. The debentures will be denominated in Israeli new shekels.
The money would be used to fund ongoing operations, the acquisition of new assets and upgrading of existing assets, and added that it may use the proceeds of the offering to acquire holdings of assets to be transferred into partners.
As of Sept. 30, KBS SOR held 20 properties with 47 buildings totaling 4.74 million rentable square feet valued at $1.5 billion. The holdings include mainly offices, residences and investment properties.
Its largest holding is 110 William St. in Manhattan, a 928,000-square-foot Class A office building. KBS acquired the property in April 2014 for $261 million and lists its current value in the Israeli filing at $405.7 million.
As part of the filing KBS Strategic Opportunity REIT noted that it intended to sell off several assets in 2016, including its multifamily holdings. The money from the sales would be used to distribute a dividend in the amount of up to $180 million.
KBS Strategic owns apartments at 1180 Raymond Blvd. in Newark, New Jersey (317 units); and 424 Bedford Ave. in Brooklyn, New York (66 units).
The offering is subject to review by the Israel Securities Authority and the Tel Aviv Stock Exchange and their final approval.
KBS SOR is the second American real estate company expected to raise debt on the TASE since the beginning of 2016, after Dlsh Capital (Delsha Capital). Dlsh owns 13 residential real estate properties (1,100 apartments) and earlier this year raised $400 million in a bond offering.