KBS Growth & Income REIT Defaults on Commonwealth Building Loan

As the company encourages stockholders to liquidate, KBS Growth & Income REIT Inc., a publicly registered non-traded real estate investment trust, revealed in a filing with the Securities and Exchange Commission yesterday that the company defaulted on the Commonwealth Building mortgage loan after it failed to pay the amount of the debt outstanding and due on Feb. 1, 2023.

As The DI Wire previously reported, KBS purchased the 219,742-square-foot Commonwealth office tower in Portland, Oregon for $69 million.

On Jan. 18, 2018, through an indirect wholly owned subsidiary, KBS Growth & Income REIT entered into a loan agreement secured by the Commonwealth Building in Portland, Oregon with the Metropolitan Life Insurance Company, an unaffiliated lender, for borrowings of up to $51.4 million.

The company cited reduced rent and occupancy by the building’s tenants, as well as the negative market conditions prevailing in Portland for its inability to meet its mortgage obligations. The company also estimated that the current value of the Commonwealth Building is less than the outstanding debt of $47.4 million.

KBS says that in consideration of “depressed office rental rates and the continued social unrest and increased crime” in downtown Portland where the property is located, they do not anticipate any near-term recovery in value.

According to the filing, the company may relinquish ownership of the property to the lender in a foreclosure transaction or other alternative to foreclosure in satisfaction of the mortgage. The loan is non-recourse to the company.

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