SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 18, 2013
KBS REAL ESTATE INVESTMENT TRUST III, INC.
(Exact name of registrant specified in its charter)
620 Newport Center Drive, Suite 1300
Newport Beach, California 92660
(Address of principal executive offices)
Registrant's telephone number, including area code: (949) 417-6500
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Purchase and Sale Agreement for the RBC Plaza
KBS Real Estate Investment Trust III, Inc. (the “Company”), through an indirect wholly owned subsidiary (the “Buyer”), has entered into a purchase and sale agreement to acquire an office property containing 609,368 rentable square feet of office space and 68,677 rentable square feet of retail space located on approximately 1.3 acres of land in Minneapolis, Minnesota (the “RBC Plaza”). Upon acquisition, the Company intends to convert approximately 32,000 rentable square feet of retail space into office space. On December 20, 2012, the Company’s external advisor, KBS Capital Advisors LLC (the “Advisor”), entered into a purchase and sale agreement with Brookfield DB Inc. (the “Seller”) to purchase the RBC Plaza. The Seller is not affiliated with the Company or the Advisor.
On January 18, 2013, the Advisor assigned this purchase and sale agreement to the Buyer for $1.0 million, which is the amount of the first deposit under the purchase and sale agreement. Subsequent to the assignment, the Company made an additional deposit of $4.0 million under the purchase and sale agreement. Pursuant to the purchase and sale agreement, the Company would be obligated to purchase the property only after satisfactory completion of agreed upon closing conditions. There can be no assurance that the Company will complete the acquisition. In some circumstances, if the Company fails to complete the acquisition, it may forfeit up to $5.0 million of earnest money.
The contractual purchase price of the RBC Plaza is approximately $126.5 million plus closing costs. The Company intends to fund the purchase of the RBC Plaza with proceeds from its ongoing initial public offering, proceeds from an existing portfolio loan credit facility and proceeds from a mortgage loan from an unaffiliated lender. The Company is currently negotiating the terms of the mortgage loan.
The RBC Plaza was built in 1991. As of January 1, 2013, the RBC Plaza was 83% leased to 34 tenants. The current aggregate annual effective base rent, which is calculated as the annualized contractual base rental income (net of rental abatements), for the tenants of the RBC Plaza is approximately $8.6 million. The current weighted-average remaining lease term for the tenants is approximately 6.9 years. The current weighted-average rental rate over the remaining lease term is $16.08 per square foot.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.