KBS Real Estate Investment Trust III Inc., a publicly registered non-traded REIT, has disclosed its anticipated timeline for its conversion to a net asset value REIT. On April 7, 2020, shareholders will vote at the annual meeting on two proposals related to the conversion.
The REIT registered a $2 billion offering as a NAV-based perpetual life REIT in January and disclosed that the purchase price for each class will equal the prior month’s NAV per share.
In addition, the REIT disclosed in a shareholder presentation plans to “provide enhanced near-term shareholder liquidity” of up to $350 million stemming from a $1.2 billion 11-property sale to Prime US REIT (SREIT), a REIT traded on the Singapore stock exchange.
As part of the Prime US REIT property sale, which generated $413 million in proceeds, KBS REIT III acquired $254.8 million of SREIT’s units, representing a 31.3 percent ownership. Shareholders received an $0.80 per share special distribution in December 2019 totaling $48.5 million in cash.
Prime US REIT is managed by a joint venture between KBS Asia Partners, and unaffiliated companies Keppel Capital Two Pte. Ltd and Experion Holdings Pte. Ltd. KBS Asia Partners is an entity owned by KBS CEO Charles Schreiber Jr. and the Linda Bren 2017 Trust. Linda Bren is the widow of KBS co-founder and president Peter Bren, who passed away last year.
The potential conversion to a NAV REIT is expected to occur in the third or fourth quarter of 2020.
Other goals for the year include completing property renovations and major capital projects to attract quality tenants, completing the sale of its Hardware Village property, leasing-up and stabilizing all properties in the portfolio, distributing operating cash flows to stockholders, and monitoring the properties for beneficial sale opportunities.
KBS REIT III’s initial offering commenced in October 2010 and closed in July 2015 after raising approximately $1.7 billion. The REIT’s $2.2 billion property portfolio consists of 18 office properties, one mixed use office/retail property, and a multifamily property held for sale.