KBS Real Estate Investment Trust II, a publicly registered non-traded REIT, is urging shareholders to reject an unsolicited tender offer from MacKenzie Realty Capital, according to a letter filed with the Securities and Exchange Commission.
MacKenzie is offering to purchase up to 2.5 million shares of the REIT’s common stock for $3.87 per share, or approximately 1.33 percent of the outstanding shares.
KBS REIT II told shareholders that the offer price is “substantially below” the value of the shares, which have an estimated value of $5.49 per share, as of September 30, 2016.
The REIT noted that its valuation does not take into account estimated disposition costs and other fees related to property sales which could reduce its per share value by $0.14 to $0.28 per share. Additionally, based on market feedback during its recent efforts to sell certain properties, the board believes that the value of the real estate portfolio may have decreased by roughly 5 to 7 percent, or $0.40 to $0.56 per share.
A KBS REIT II special committee is currently exploring strategic alternatives with the help of its financial advisor, Evercore Group LLC. The committee determined that it would be in the best interest of stockholders to market certain properties for sale, and based on that effort, could possibly adopt a plan of liquidation in the future, subject to stockholder approval.
The REIT noted that its focus in 2017 is to continue to strategically sell assets and consider special distributions to its stockholders; negotiate lease renewals or new leases; complete capital projects, such as renovations or amenity enhancements, to attract quality buyers; and finalize the strategic alternatives assessment and decide on a course of action.
KBS REIT II went effective in April 2008 and closed its primary offering in March 2011 after raising $1.8 billion in investor equity. The company’s portfolio consists of 10 properties (9 office properties and an office campus consisting of eight office buildings) and one real estate loan receivable.