KBS REIT II Sells Union Bank Plaza for Big Loss

KBS Real Estate Investment Trust II Inc., a publicly registered non-traded real estate investment trust, announced the company completed the sale last week of Union Bank Plaza, an iconic Los Angeles office tower and its last remaining real estate property.

On July 20, 2022, KBS REIT agreed to sell Union Bank Plaza to a Waterbridge affiliate for $155 million, more than $50 million less than the $208 million paid to acquire the property from Hines’ US Office Value Added Fund in 2010. However, KBS extended the closing date 11 times. Ultimately, the REIT sold Union Bank Plaza for just $104 million plus $6 million in capital obligations to current tenants. KBS REIT II originally acquired the office tower from Hines for $208 million in 2010.

Union Bank Plaza is a 40‑story office building located in downtown Los Angeles, comprised of 701,888 rentable square feet on approximately 3.7 acres of land.

The sale was in connection with the company’s plan of liquidation which was announced in March 2020.

KBS REIT II also reported in a filing that it was unable to file its annual report on Form 10-K for 2022, “due to the uncertainty of the closing throughout the sale process and the impact of the timing of the closing on the company’s ultimate liquidation timing.”

Prior to the purchase and sale agreement with Waterbridge, The DI Wire reported that Harbor Associates terminated its agreement to purchase the property for $165 million. In late 2017, RC Acquisition, an affiliate of Pacific Reach Properties, agreed to purchase Union Bank Plaza for $280 million, but terminated the agreement.

KBS REIT II closed its primary offering in December 2010 after raising approximately $1.8 billion in investor equity.

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