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KBS Strategic Opportunity REIT II Replaces External Advisor

KBS Strategic Opportunity REIT II, a publicly registered non-traded real estate investment trust, has terminated its advisory agreement with KBS Capital Advisors LLC.

KBS Strategic Opportunity REIT II, a publicly registered non-traded real estate investment trust, has terminated its advisory agreement with KBS Capital Advisors LLC, effective October 31st, and intends to appoint Pacific Oak Capital Advisors LLC as its new external advisor.

According to a filing with the Securities and Exchange Commission, the independent directors of the board notified KBS Capital Advisors of the termination on October 1, 2019.

KBS Capital Advisors managed the REIT’s affairs on a day-to-day basis, and upon termination, will no longer serve as the advisor or have any advisory responsibility to KBS Strategic Opportunity REIT II.

After termination, KBS Capital Advisors will be obligated to cooperate with the REIT to make an orderly transition of the advisory function, the filing stated.

The 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 II’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, essentially shut its doors and 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. According to sources at the time, the launch of the portal led to the cancellation of numerous selling agreements by the company’s network of broker-dealer partners.

KBS Strategic Opportunity REIT II launched in August 2014 to invest in opportunistic real estate, real estate-related loans, real estate equity securities and other real estate-related investments located in the United States and Europe.

Through a private placement offering and a subsequent initial public offering, the REIT raised a total of $269.9 million in investor equity as of the second quarter of 2019, including distribution reinvestment shares. The REIT closed its primary offering in September 2018.

KBS Strategic Opportunity REIT II oversees a $509 million portfolio comprised of seven investments, including two hotel properties, four office properties and one apartment building. In addition, as of June 30, 2019, the total book value of the company’s real estate equity securities was $8.6 million.

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