KBS Real Estate Investment Trust III Inc., a publicly registered non-traded REIT, has registered a $2 billion offering as a net asset value-based perpetual life REIT. The offering is comprised of $1.7 billion in shares in the primary offering and up to $300 million dividend reinvestment plan shares.
KBS REIT III previously disclosed its evaluation of possible strategic alternatives to provide additional liquidity to stockholders, one being the potential conversion to an NAV REIT, where shares are valued as often as daily, but at least quarterly, on a net asset value basis.
In addition to providing increased liquidity to stockholders, the company previously stated that a conversion could result in further growth of the company. In connection with the potential conversion, the board of directors temporarily suspend ordinary redemptions under the share redemption program in December 2019.
The company is offering to sell four classes of shares of common stock, Class T, Class S, Class D and Class I shares. The purchase price per share for each class will vary and will generally equal the prior month’s NAV per share, plus upfront selling commissions and dealer manager fees.
The board of KBS REIT III recently approved an $11.65 NAV per share of the company’s common stock as of September 30, 2019. Excluding an $0.80 special dividend declared in October 2019, the company’s NAV per share would have been $12.45. Shares originally sold for $10.00 each.
Class T shares will have upfront selling commissions of up to 3 percent of the transaction price, upfront dealer manager fees of 0.5 percent, and a 0.85 percent annual distribution fee comprised of a 0.65 percent advisor distribution fee and a 0.20 percent dealer distribution fee. The distribution fee amounts may vary as long as the sum equals 0.85 percent per year.
Class S shares include selling commissions of up to 3.5 percent and a distribution fee of 0.85 percent per year.
Class D shares have selling commissions of up to 1.5 percent and a distribution fee of 0.25 percent per year.
Class I shares have no upfront selling commissions, dealer manager fees, or distribution fees.
The distribution fees will cease when total upfront selling commissions, dealer manager fees and distribution fees reach 8.75 percent.
The minimum purchase for all share classes is $2,500, except for Class I shares, which have a $1 million minimum. KBS Capital Markets Group LLC serves as the dealer manager for the offering.
The REIT’s property portfolio consists of 18 office properties, one mixed use office/retail property and a multifamily development project held through a consolidated joint venture, which were purchased for combined $2.4 billion.
In addition to its property portfolio, the REIT also own an investment in the equity securities of Prime US REIT, a Singapore real estate investment trust listed on the Singapore stock exchange.
The company previously sold 11 properties to Prime US REIT for $1.2 billion, and holds approximately $269.3 million of units in Prime US REIT, representing an approximate 31.3 percent interest.
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.
KBS REIT III’s initial offering commenced in October 2010 and closed in July 2015 after raising approximately $1.7 billion.