KBS Strategic Opportunity REIT JV Refinances NYC Property
KBS Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, and its joint venture partner, SREF III 110 William JV LLC, refinanced the existing loans relating to an New York City office property purchased by the joint venture in May 2014.
The 928,000-square-foot property is located at 110 William Street, and KBS SOR owns a 60 percent equity interest in the joint venture. The property was originally financed with a $141.5 million mortgage loan and a $20 million mezzanine loan.
The partners repaid $156 million of principal related to the 110 William Street loans. The refinancing was comprised of a mortgage loan up to $232.3 million from Morgan Stanley Bank N.A., a senior mezzanine loan up to $33.8 million, and a junior mezzanine loan up to $33.8 million – both from Morgan Stanley Mortgage Capital Holdings LLC.
The loans mature on March 7, 2019, with three one-year extension options. The mortgage loan bears interest at a floating rate of 2.2472 percent over one-month LIBOR. The senior and junior mezzanine loans bear interest at a floating rate of 6.25 percent over one-month LIBOR. The loans have monthly payments that are interest-only with the entire unpaid principal balance and all outstanding interest and fees due at maturity.
At closing, $205 million was disbursed from the mortgage loan to the joint venture, while $29.85 million was disbursed from the junior and senior mezzanine loans. The remaining funds can be disbursed for tenant improvements, leasing commissions and capital improvements.
KBS Strategic Opportunity REIT went effective in November 2009 and closed its primary offering three years later after raising $561.7 million in investor equity. As of September 30, 2016, the company owned 25 properties with an investment cost of $1.4 billion, according to Summit Investment Research.