EMERYVILLE, CA—Newport Beach, CA-based KBS Real Estate Investment Trust III recently revealed the acquisition of The Towers in Emeryville. The Towers is a three-building, 815,018-square-foot class A office property located directly across the bay from San Francisco on a waterfront location.
According to the firm's western regional president, Rodney Richerson, “The Towers presents KBS with a great opportunity to purchase an institutional quality asset located just across the Bay from San Francisco in the dynamic East Bay/Emeryville market.”
Due to SEC disclosure rules, KBS couldn't comment further, however, according to an 8-K SEC filing, LBA Realty LLC and Starwood Capital Group LLC were listed as the sellers of the property. The purchase price of the Towers at Emeryville was $248 million plus closing costs, the filing says.
The Towers were originally built between 1972 and 1985 and renovated in 1998 and 2012 and offer a best-in-class urban campus environment offering a combination of onsite amenities, easy access to transit and nearby hotels, restaurants, retail and residential living. Twenty-five restaurants and bars and four hotels are located within walking distance of the property.
Richerson adds that KBS considers the asset “one of the best” in a market that is “seeing increasing interest from financial service and technology-oriented users who do not want to pay the high rents associated with downtown San Francisco. As San Francisco goes, Emeryville has historically followed.”
Major tenants currently occupying the property include AAA of Northern California, Gracenote Inc., Sutter Health and Berkeley Research. In addition to the Towers, KBS and its affiliated companies currently own 10 properties in the greater Bay Area totaling more than 2.0 million square feet. As GlobeSt.com previously reported, the firm is also buying south of San Francisco. In San Jose, for example, the firm just purchased Ten Almaden, a 309,255-square-foot, transit-oriented, class A office building from Equity Office Properties.
“We have a very active asset management philosophy that will involve immediate improvements to this property,” notes KBS SVP and asset manager, Brent Carroll. “We plan to convert the property's conference center into a permanent tenant lounge and conference center that will hold up to 150 people and will allow the space to be used for meetings and entertainment and will tie into an attractive outdoor common area with great views.”
According to the filing, KBS entered into a mortgage loan with Bank of America, N.A., an unaffiliated lender, for borrowings of up to $175 million secured by the Towers at Emeryville (the “Towers at Emeryville Mortgage Loan”). At closing, $142.5 million of the loan was funded and the remaining $32.5 million was available for future disbursements to be used for tenant improvements, lease commissions and capital improvements, subject to certain terms and conditions contained in the loan documents. The Towers at Emeryville Mortgage Loan matures on January 15, 2018, with one two-year extension option, subject to certain terms and conditions contained in the loan documents. The Towers at Emeryville Mortgage Loan bears interest at a floating rate of 175 basis points over one-month LIBOR. Monthly payments are initially interest-only, with monthly payments during the extension period to include principal and interest with principal payments calculated using an amortization schedule of 30 years at an interest rate of 6%.
GlobeSt.com will update this story if we learn more.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
