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UPDATED: KBS Looking To Cash Out Some Post-Recession Purchases

KBS Cuts Deal to Sell Five of 10 Properties in one REIT; Fold 11 Offices into a New REIT
September 14, 2017
Crystal Park at Waterford in Frederick, MD, is one of four properties being sold to Elite Capital.
Crystal Park at Waterford in Frederick, MD, is one of four properties being sold to Elite Capital.
KBS Legacy Partners Apartment REIT has decided it’s time to cash out and sell the remaining multifamily properties it purchased through early 2014. The California-based non-traded REIT has already cut separate agreements to sell five of them and is seeking approval of the sale from stockholders.

Funds affiliated with Houston-based Elite Street Capital agreed to pay $218.9 million for the properties containing 1,273 units, representing a price of $171,956/unit. The sale of the portfolio is also contingent on stockholder approval of the KBS REIT's plan of liquidation.

[Editor's Note:This story was updated Friday Sept. 15 at 9:30 am with additonal information on an apartment sale, and additional details on new office REIT.]

The properties to be sold as part of the Elite trade are Legacy at Valley Ranch, 504 units in Irving for $68.5 million purchase price; The Residence at Waterstone, a 255-unit complex in Pikesville, MD, for $60.1 million; Crystal Park at Waterford, a 314-unit complex in Frederick, MD selling for $45.9 million; and Lofts at the Highlands, a 200-unit complex in St. Louis selling for $44.4 million.

KBS Legacy Partners Apartment REIT noted that there are no restrictions on it to negotiate with other potential buyers and attempt to sell the properties for a higher price.

Then this week, the REIT sold its 228-unit Watertower Apartments in Eden Prairie, MN, to an as of yet unidentified buyer for $41.8 million or about $183,333/unit.

The REIT also owns other apartment properties in the Charlotte, Chicago, and Greenville, SC, markets.

Restructuring an Office REIT

The REIT’s sponsor, KBS Capital Advisors, is not done looking to reshape its post-recession era purchases. The firm is in talks with the asset-management arm of Singapore-based Keppel Corp. to form a joint venture for listing as a REIT later this year on the Singapore stock exchange. Keppel confirmed the ongoing efforts.

The initial portfolio will consist of 11 office assets to be injected into the REIT by a fund managed by KBS Capital, including office buildings in Seattle, Houston, and Denver.

Keppel has applied for a listing with the Monetary Authority of Singapore, which has it under review.

The details of the terms of the IPO are still being finalized and the proposed establishment and listing of the REIT will be subject to, among other things, market conditions, the relevant regulatory and other approvals being obtained and the execution of definitive agreements by the relevant parties, Keppel Corp. noted.

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