Another KBS REIT Replaces External Advisor with Pacific Oak
KBS Strategic Opportunity REIT, a publicly registered non-traded real estate investment trust, will terminate its advisory agreement with KBS Capital Advisors LLC.
KBS Strategic Opportunity REIT, a publicly registered non-traded real estate investment trust, will terminate its advisory agreement with KBS Capital Advisors LLC, effective October 31st, and appoint Pacific Oak Capital Advisors LLC as its new external advisor.
Yesterday, KBS Strategic Opportunity REIT II also announced the termination of its advisory agreement with KBS Capital Advisors, and the intention to name Pacific Oak Capital Advisors as its replacement.
KBS Capital Advisors managed the REIT’s affairs on a day-to-day basis and is obligated to cooperate with the REIT to make an orderly transition of the advisory function, the filing stated.
In addition, the KBS Strategic Opportunity REIT advisory agreement was amended so that the performance fee due to the advisor upon termination will be payable in restricted stock units instead of a promissory note.
The restricted stock units will be paid once an orderly transition to the new advisor is completed, as measured by the filing of the company’s 2019 annual report, and will vest on November 1, 2021.
The KBS Strategic Opportunity REIT board intends to hire Pacific Oak Capital Advisors on November 1, 2019, and the new advisory agreement is expected to be on substantially the same terms as the previous agreement, the company said.
Pacific Oak is part of a group of companies formed, owned and managed by KBS Strategic Opportunity REIT’s chief executive officer and director, Keith D. Hall, and its chairman and president, Peter McMillan III.
Hall and McMillan formed Pacific Oak Companies in November 2018, which is comprised of Pacific Oak Capital Advisors LLC, Pacific Oak Capital Markets Group LLC, and Pacific Oak Holdings LLC.
Pacific Oak was created to create, advise, and distribute commercial real estate investment offerings to individual investors through the independent broker-dealer and registered investment advisor channels. Investment offerings may include a perpetual life real estate investment trust, private placements including Delaware statutory trusts, qualified opportunity zone funds, private equity, and other value-add alternative investment products.
In November 2018, KBS Capital Markets Group, the distribution affiliate of non-traded REIT sponsor KBS, laid off its sales force and other employees, aside from some investor services representatives. The move came one year after KBS launched KBS Direct, an online portal designed to attract investments in its offerings directly from retail investors.
Last month, KBS Strategic Opportunity REIT announced plans to purchase all of the outstanding shares of common stock of Housing REIT Inc. (NASDAQ: RVEN) for approximately $56.9 million.
Reven Housing REIT currently owns 993 single-family rental properties in Alabama, Florida, Georgia, Mississippi, Oklahoma, Tennessee and Texas. The transaction will be structured as a merger and was unanimously approved by the boards of both companies and will close at the end of October 2019, if approved by Reven stockholders.
KBS Strategic Opportunity REIT launched its initial public offering in November 2009 and has raised approximately $637 million in investor equity from the offering and distribution reimbursement plan, as of the second quarter 2019. The company owns seven office properties and one office portfolio consisting of four office buildings and 14 acres of undeveloped land valued at $731.9 million.
