Prime US REIT, KBS Secure $550M Refi of Office Portfolio

A Singapore-based real estate investment trust (REIT) has landed a $550 million refinancing package for an expansive U.S. office portfolio, and its partner in the deal is a familiar face. 

KBS, the Newport Beach, Calif.-based investment management firm, assisted Prime US REIT in securing the debt, which consists of a $400 million term loan and a $150 million revolving credit facility. A group of lenders provided the financing, with Bank of America (BAC) leading the deal and acting as the administrative agent, a source familiar with the deal told Commercial Observer. 

The REIT’s portfolio includes 13 Class A office properties spread across 12 states, including California, Maryland and Virginia, together totaling 4.2 million square feet with a combined carrying value of $1.3 billion. KBS serves as the portfolio’s asset manager.

“This refinancing marks another strategic move by Prime US REIT and demonstrates the ongoing appeal of premier office assets,” Marc DeLuca, CEO and eastern regional president of KBS, said in a statement. “While Class B and C office properties may be struggling due to shifting trends in office use, companies are continuing to gravitate toward well-located Class A office buildings with state-of-the-art amenities in key U.S. markets.”

The portfolio’s leasing volume in the first half of this year also more than doubled compared to the first half of 2023, jumping to nearly 269,000 square feet, with a weighted average lease term of 4.2 years. The portfolio is 83.9 percent occupied, excluding the roughly 314,000-square-foot One Washingtonian Center building in Gaithersburg, Md., which is undergoing building upgrades. The project is expected to wrap in the fourth quarter of this year.

“Prime US REIT is in a strong financial position, bolstered by this refinancing,” Cindy Teo, chief financial officer of Prime US REIT, said. “The additional liquidity allows us to invest in critical capital improvements across our properties, enhancing the quality and longevity of our assets.”

A spokesperson for Bank of America declined to comment. 

After a topsy-turvy few years, capital markets seem to have adapted to their new post-pandemic normal — at least where U.S.-based REITs are concerned. In the second quarter of this year alone, U.S.-based REITs collectively raised $12.5 billion of corporate debt and $4.1 billion of common and preferred equity, according to data from National Association of Real Estate Investment Trusts.

Nick Trombola can be reached at ntrombola@commercialobserver.com.