KBS Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, is considering converting the company into a NAV REIT. According to a filing with the Securities and Exchange Commission, the company’s board of directors approved management’s recommendation to explore the possible conversion.
NAV REITs differ from typical non-traded REITs since their shares are valued on at least a quarterly basis, and as often as daily. The company noted that this increases its capacity to repurchase shares at the most recent NAV per share through its share redemption program, which could enhance liquidity to stockholders by increasing the number of shares it can repurchase without having to conduct an issuer self-tender.
However, even if the board concludes that a conversion is in the best interest of stockholders, there may be significant restraints on its ability to do so. The REIT anticipates that the completion of a conversion would not occur for at least nine months, and may ultimately require stockholder approval.
The company’s advisor also engaged NGKF Capital Markets to identify, negotiate or procure the sale of all or a portion of the equity interest in certain properties in the REIT’s portfolio. In addition to the engagement of NGKF, the REIT’s management and board of directors continues to evaluate possible strategic alternatives that may provide additional liquidity for stockholders.
KBS Strategic Opportunity REIT, which went effective in November 2009 and closed in November 2012, raised $561.7 million in its primary offering and has sold $49.4 million in DRIP shares, according to the most recent quarterly filing with the Securities and Exchange Commission.
The REIT owns 26 office properties, one retail property, two multifamily properties, two investments in undeveloped land totaling 1,670 acres, one first mortgage loan and two investments in unconsolidated joint ventures.
KBS Capital Advisors is the external advisor to KBS real estate investment trusts, and is an affiliate of KBS Realty Advisors, a private equity real estate company and SEC-registered investment adviser founded in 1992. Since its inception, KBS-affiliated companies have completed transactional activity in excess of $31.5 billion via 14 separate accounts, six commingled funds, five sovereign wealth funds and six non-traded REITs.