KBS REIT III JV to Develop 466-Unit Multifamily Complex in Downtown Salt Lake City

KBS Real Estate Investment Trust III, a publicly registered non-traded REIT, entered into a joint venture agreement with an unaffiliated developer to build and operate a 466-unit multifamily complex in Salt Lake City on land it purchased in 2012 as part of a separate real estate deal. KBS REIT III owns a 99.2 percent equity interest in the joint venture.

According to a filing with the Securities and Exchange Commission, the joint venture plans to develop a two-building apartment complex totaling 423,000 rentable square feet for a projected $111.7 million. The property will sit on land originally purchased in May 2012 as part of the REIT’s Gateway Tech Center acquisition.

Gateway Tech, which was originally purchased for $30.3 million, is a historic 199,000-square-foot office building sitting on nine acres in the downtown area, with a portion of the acreage designated as multi-use with the potential for development.

The REIT funded its initial capital contribution to the joint venture with a portion of the developable land at Gateway Tech Center valued at $13.5 million and pre-closing development expenses in the amount of $4.6 million. Under the agreement, the company may be required to contribute an additional $20.7 million of cash to the joint venture. The term of the agreement will continue until December 31, 2066, or until the joint venture’s dissolution.

KBS Real Estate Investment Trust III, which focuses on investing in multi-tenant office buildings, went effective in October 2010 and closed in May 2015 after raising $1.9 billion in investor equity. The company oversees a portfolio of 29 properties with an investment cost of $3.3 billion.

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