Kbs Real Estate Invt Tr Iii Inc. · OTC:KBSR
Kbs Real Estate Invt Tr Iii — KBS Real Estate Investment Trust III — Corporate Update (May 2020)
34 slides from Kbs Real Estate Invt Tr Iii's corporate update, May 28, 2020
Slide 1: Portfolio & Strategic Plan Update
Exhibit 99.1 Portfolio & Strategic Plan Update May 28, 2020
Slide 2: Important Disclosures
The information contained herein should be read in conjunction with, and is qualified by, the information in KBS Real Estate Investment Trust III’s (the “Company” or “KBS REIT III”) Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”), and in the Company’s Quarterly
Slide 3: Forward-Looking Statements Important Disclosures (cont.)
Forward-Looking Statements Important The Company may fund distributions from any source including, without limitation, from offering proceeds or borrowings. Distributions paid through March 31, 2020 have been funded with cash flow from operating activities, debt financing and proceeds from asset sal
Slide 4: About KBS
Transactional volume in excess of $42.3 billion1, AUM About KBS of $8.0 billion1 and 23.8 million square feet under management1. Formed by Peter Bren and Buyer and seller of well-located, yield-generating office Chuck Schreiber in 1992. and industrial properties. Over 27 years of investment and Advi
Slide 5: Regional Focus Map
Regional Focus Map Gateway Target First-tier Target Strong Employment / Growth KBS Offices WWW. KBS.COM 5
Slide 6: The Impact of COVID-19 on Capital Markets and US Real Estate Investments
The Impact of COVID-19 on Capital Markets and US Real Estate Investments WWW. KBS.COM 6
Slide 7: COVID-19 Impact Introduction
COVID-19 Impact Introduction Since initially being reported in December 2019, COVID-19 has spread around the world, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a nation
Slide 8: COVID-19 Impact (cont.)
As one would expect, leasing activity has come to a near halt for property tours and inquiries for new prospects. In COVID-19 addition, many of the leasing transactions that were in various stages of negotiation have slowed but continue to Impact (cont.) move forward slowly. The Federal Government h
Slide 9: COVID-19 Impact (cont.)
With the ongoing spread of the Coronavirus, the stock market has experienced a significant decline COVID-19 followed by marked volatility. As a result, treasury rates have continued to decline (and are now at historic lows) as investors continue to move funds into US treasuries. Additionally, the re
Slide 10: COVID-19 Impact (cont.)
COVID-19 Impact (cont.) It is premature to draw strong inferences about the virus’s impact on property markets. • The commercial real estate sector is not the stock market. It’s slower moving and the leasing fundamentals don’t change significantly from day to day. If the virus has a sustained and ma
Slide 11: COVID-19 Impact (cont.)
COVID-19 Impact (cont.) 19 Class A Over 650 Tenants Properties Located 4.8 Years Weighted with Staggered in 12 Different Average Lease Term We believe the KBS REIT III portfolio is positioned Lease Expirations to manage any short-term economic impact from Markets COVID-19 based on our liquidity, div
Slide 12: COVID-19 Impact (cont.)
COVID-19 Impact (cont.) The map shown here reflects a COVIID- 19 heat map based on number of confirmed cases as well as locations where the Company’s properties are located. WWW. KBS.COM 12
Slide 13: COVID-19 Impact (cont.)
COVID-19 Impact (cont.) All eyes are on the financial markets. • The virus is significantly impacting China’s economy. The precise impact to the global economy remains unknown, but it is evidently disrupting certain sectors of the economy. • Stock volatility continues as the virus spreads globally a
Slide 14: COVID-19 Capital Management Impact (cont.)
COVID-19 Capital Management Impact (cont.) The impact of COVID 19 has placed significant constraints on corporate liquidity in the financial markets. As a result, we are slightly delaying the timing of refinancings and certain asset sales. We believe the Company’s low leverage and liquidity position
Slide 15: Process for Tenants Requesting Rent Modification
COVID-19 A number of tenants have reached out to us in light of the impact of COVID-19 on their businesses. Our process when we receive such requests is generally as follows: Impact (cont.) • Process for Tenants We encourage the tenants to first look to government relief through the CARES act. In ad
Slide 16: Rent Collections Update
COVID-19 Depending upon the duration of quarantines and the corresponding economic slowdown, some of the Company’s tenants have or will seek rent deferrals or become unable to pay their rent. Through the 21th day of the respective Impact (cont.) months, rent collections compared to the previous 6 mo
Slide 17: Co-Working, Accommodations & Food and Retail Tenant Exposure
Co-Working, Accommodations & Food and Retail Tenant Exposure COVID-19 Impact (cont.) Industry Comparison1 Certain industries are experiencing greater economic Remaining Sectors 91% disruption due to COVID-19 compared to others. These industries include the Co-working Space, Accommodations & Food and
Slide 18: Park Place Village, Leawood, KS
COVID-19 Park Place Village located in Leawood, KS Park Place Village is a multi-tenant mixed-use office and retail Impact (cont.) property containing 483,984 rentable SF with retail space accounting for 23% of the total rentable SF. Due to COVID-19, many retail Impact on Real Estate tenants request
Slide 19: Distribution History
COVID-19 Distribution History: Impact (cont.) Special Dividend Distributions December 2019 $0.80/share While there is some near term impact to Distributions revenues, our exposure to the industries January 1, 2019 – $0.65/share* that are currently most impacted by COVID- December 31, 2019 19 is limi
Slide 20: Fund and Portfolio Overview
Fund and Portfolio Overview 20
Slide 21: Fund and Portfolio Overview
Fund and Portfolio Overview1 December 2019 Estimated Value of Current Portfolio of Properties1,2 $3.2 billion As of March 31, 2020, unless otherwise April 30, 2020 Value of Investment in units of PRIME US REIT 3 noted. $214.3 million Rentable Square Feet1 7.8 million Total Leased Occupancy1,4 91.5%
Slide 22: The Current Portfolio of Properties
The Current Portfolio of Properties Building Classification Mass Transit Leased Occupancy Leased Occupancy Property Metro City Class Sq. Ft. (CBD, Urban, Availability at Acquisition at March 31, 20201 ( A,B or C) Suburban) WEST Anchor Centre Phoenix A 333,014 Suburban Metro 78% 94% Salt Lake Hardwar
Slide 23: The Current Portfolio of Properties (map)
The Current Portfolio of Properties This map shows the markets where the current portfolio of properties is located. The Company’s Properties are: • In prime locations within the markets, via proximity to urban centers, an educated workforce, attractive live/work/play amenities, and/or mass transit.
Slide 24: Statistics for the Current Portfolio
Statistics for the Current Portfolio Market Diversification 1 Asset Diversification 1 Invested in Target Markets: Asset Diversification: 50% of value2 in CBRE’s Top 10 Tech Markets Largest asset accounts for just 16% 90% of value2 in CBRE’s Top 25 Tech Markets Park Place Village 3% Nashville 2% Doma
Slide 25: Statistics for the Current Portfolio: Tenants and Lease Expirations
Statistics for the Current Portfolio Over 650 Tenants with Staggered Lease Expirations and Industry Diversification Tenant Industries 1 Lease Expirations 1 Communications Equipment Manufacturing 1% $40000 15.6% Scientific Research & Development STEM/TAMI2 1% 14.4% Healthcare & Social Assistance 5% 2
Slide 26: Top Tenants Statistics for the Current Portfolio
Top 10 Tenants 1 Statistics for the WEIGHTED % OF NLA TOP 10 TENANTS INDUSTRY SECTOR PROPERTY AVERAGE LEASE ANNUALIZED (SQ. FT) Current Portfolio TERM (YRS) BASE RENT 2 CNA Corporation Management Consulting 3003 Washington 152,414 9.2 4.0% Real Estate and Rental and 201 Spear Street, WeWork3 132,645
Slide 27: Capital Management
1 Capital Management As of March 31, 2020, unless otherwise noted Initial Debt Maturities 1 $800,000 $737,117 3 Total Debt1 $1.5 billion $600,000 $379,245 $400,000 $294,623 $200,000 Loan-to-Value2 42.3% $93,000 $0 $0 $0 Average cost of debt 3.50% per annum Interest Rate Exposure (in millions) Fixed
Slide 28: KBS Real Estate Investment Trust III Property Updates
Real Estate Investment Trust Ill KBS Property Updates
Slide 29: Hardware Village Sale
Hardware Village Sale A two building multi-family apartment complex SALE PRICE $178.0 million Hardware Village was sold on May 7, 2020 for a gross sale price of $178.0 million. The cost basis at disposition was $128.3 million. In connection with the sale, KBS REIT III provided short-term seller fina
Slide 30: Strategic Plan Update NAV Conversion
Strategic Plan Update NAV Conversion 30
Slide 31: NAV Conversion
NAV Conversion Conversion to an NAV REIT fulfills certain key The Company’s Board of Directors finalized objectives of the Company including the current a review of strategic alternatives in an portfolio size and performance, shareholder desire for effort to further enhance shareholder liquidity as
Slide 32: NAV Conversion Update on Timing
NAV Conversion The impact of COVID-19 has altered the landscape of the real estate market in its entirety. The disruption has Update on Timing reduced cashflows and halted leasing activity resulting in reductions of real estate values. Specific to the REIT III portfolio, the COVID-19 crisis has caus
Slide 33: REIT III Goals & Objectives
REIT III Goals & Objectives Distribute operating cash flows to stockholders Efficiently manage the real estate portfolio throughout the COVID 19 crisis in order to maximize the long-term portfolio value to stockholders Carefully evaluate all tenant rent deferral requests to make sure we are providin
Slide 34: Q&A
Q&A For additional questions, contact KBS Capital Markets Group Investor Relations (866) 527-4264 34
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