KBS Strategic Opportunity REIT Plans to Convert to Perpetual Life NAV REIT
KBS Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, plans to convert to a non-traded perpetual-life NAV REIT, according to preliminary proxy materials filed with the Securities and Exchange Commission.
The company also disclosed that shareholders will soon vote on proposals that would remove a section of the company’s charter and accelerate an incentive compensation payment to the REIT’s external advisor, KBS Capital Advisors LLC.
Under the proposed NAV REIT structure, the company would sell new shares of common stock continuously through a number of distribution channels in ongoing public offerings, calculate the net asset value on a more frequent basis, and expand its current share redemption program and periodic self-tender offers.
“As an NAV REIT, we believe we will be able to raise additional equity capital to diversify and grow our portfolio for the benefit of our stockholders, while at the same time providing increased liquidity to our stockholders in excess of what is currently offered,” the company noted in the filing.
At the company’s yet-to-be scheduled 2017 annual meeting, shareholders will vote to amend the charter and remove a section that requires the company to seek shareholder approval to liquidate the company if it does not list its shares on a national securities exchange by July 31, 2019. However, if a majority of the conflicts committee determines that liquidation is not in the stockholders’ best interest at that time, the decision to liquidate the company will be postponed.
The company said that it is proposing to remove the section of the charter to eliminate confusion among investors regarding its long-term commitment to the perpetual-life strategy.
Shareholders will also vote to accelerate the payment of incentive compensation to the REIT’s advisor, in the form of restricted stock units, if certain performance thresholds were met for the year.
Neither proposal will take effect unless both are approved by stockholders. If stockholders vote against either proposal, the board will determine whether to continue with a perpetual-life NAV REIT strategy.
In other REIT news, The DI Wire reported yesterday that the company plans to sell 11 of its properties to subsidiaries of a newly formed Singapore real estate investment trust that is expected to be listed on the Singapore Stock Exchange.
KBS Strategic Opportunity REIT went effective in November 2009 and closed its primary offering three years later after raising $574 million in investor equity. As of the second quarter 2017, the company owned 20 properties with an investment cost of $1.2 billion, according to Summit Investment Research.
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