KBS Real Estate Investment Trust II, a publicly registered non-traded REIT, has sold another office property at District 237, a Class A 415,500-square-foot office/research and development formerly known as Corporate Technology Centre located in the North San Jose submarket of Silicon Valley. The company also authorized its third liquidating distribution following the sale.
The REIT sold 350 Holger, a 96,500-square-foot building to Thor Equities for $50.5 million, excluding closing costs and disposition fees. The three-story steel-frame building was renovated in 2019 and is 100 percent leased through 2027.
In September 2020, KBS REIT II sold 250 Holger Way for nearly $38.3 million. In July, the REIT sold two other office buildings in District 237, including 100 Headquarters Drive and 200 Holger Way, for $95.2 million. The sales were part of KBS REIT II’s liquidation plan that was approved by shareholders in March 2020.
KBS REIT II originally purchased Corporate Technology Centre (District 237) in March 2013 for $239 million. Built in 1999 and 2001, the campus consists of eight office buildings totaling 610,083 rentable square feet located on approximately 32.7 acres of land. In 2018, the REIT sold three office buildings at the campus in separate transactions totaling $97.4 million.
Following the sale, the REIT’s board authorized a $0.40 per share liquidating distribution to stockholders of record as of the close of business on December 24, 2020. The distribution, which is expected to be paid on December 30, 2020, was funded with sales proceeds of 250 Holger and 350 Holger.
The REIT’s updated net asset value per share will be $2.01 on December 30, 2020 to reflect the distribution.
The REIT expects the net proceeds of the liquidation plan to range between approximately $3.40 and $3.83 per share.
The $2.01 NAV per share is equal to the midpoint of the estimated range of liquidating distributions ($3.615), minus an initial liquidating distribution of $0.75 per share paid on March 10, 2020, a second liquidating distribution of $0.25 per share paid on August 7, 2020, and the third liquidating distribution of $0.40 per share. The REIT also reduced the net value of its properties by $0.21 per share due to the impact of the novel coronavirus disease pandemic on leasing projections, projected rental rates, hold periods, and the resulting ultimate estimated impact on sales prices of the real estate properties, the company said.
The REIT’s share redemption program only allows special redemptions in the case of a stockholder’s death, qualifying disability, or determination of incompetence. Shares eligible for redemption will be purchased for $2.01 on the December 31, 2020 redemption date. Special redemptions during 2020 and 2021 are capped at $10 million.
KBS REIT II closed its primary offering in December 2010 after raising approximately $1.8 billion in investor equity. As of September 30, 2020, the company’s real estate investments included four office properties and an office campus consisting of two office buildings.