KBS Plans Sale of District 237 Asset in San Jose, Pricing Could Reach $95MM

District 237 San Jose KBS Real Estate Investment Trust II EXAN Group Silicon Valley

By Jon Peterson

Newport Beach, Calif.-based KBS Realty has placed on the market for sale two office buildings totaling 142,710 square feet that are part of the District 237 asset in San Jose. The pricing on this transaction could be in the range of $95 million, as stated by sources that are aware of the planned sale.

A company representative of KBS did not respond to an email seeking comment for the story. The real estate investor has hired CBRE to be the listing agent on the sale. The team working on the sale includes Joe Moriarty and Scott Prosser, both executive vice presidents, and Russell Ingrum, vice chairman. CBRE declined to comment when contacted for this story.

If the anticipated price point is reached, the sale would produce an initial cap rate of 5.5 percent, according to sources that are aware of the planned sale. This return would be based on the property’s current net operating income.

The two office buildings in the portfolio are located at 100 Headquarters Drive and 200 Holger Way. Both assets are fully leased to Raytheon Company with a lease that lasts through March 2032. The lease was signed by the tenant last month, and Raytheon is planning to move into the new space at the beginning of 2022.

KBS has been the owner of these two buildings since 2013. These two assets and six other buildings were acquired by the real estate firm for $239 million. The total square footage of the properties is 615,233 square feet, and tenants in the buildings at that time included Ericsson, AT&T and Dell.

As of July 2018, KBS had completed the sale of three of the buildings. This included 400 Holger for $49.15 million, which sold in June of that year to an entity of Tampa, Fla.-based Cater Validus. The two other buildings are 450 Holger, which sold for $40.8 million to tenant Microchip Technology, and 475 Holger, which went for $7.45 million to MSK Ventures and Sierra Vista Apartments.

The two buildings that KBS is now selling are located across the street from the @First Marketplace, which is a 222,000 square foot Target-anchored shopping center. The center also includes such tenants as Chipotle, CVS and Panera Bread.

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