KBS REIT Adds Capital City Asset

SACRAMENTO-KBS REIT last week closed on an 80,000-sf office building here that is 100% leased to the State of California’s Employment Development Department. The Newport Beach-based trust paid $15.75 million (exclusive of closing costs) for the asset.

Completed in 1992, the two-story building sits on five acres at 9815 Goethe Rd. The California EDD lease runs through mid-2014 but may be cancelled by the state with 60 days notice beginning in early 2011. The current aggregate annual base rent payable under the lease is approximately $1.7 million.

The acquisition was funded with proceeds from KBS REIT’s ongoing public offering. KBS REIT says it may place mortgage debt on the property at a later date. The seller was listed as Evergreen/Bradville II. “We do not intend to make significant renovations or improvements to the [building],” the company says in an SEC filing.