KBS Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, is urging investors to reject an unsolicited tender offer made by Comrit Investments 1 for up to 691,563 shares of the company’s common stock, or approximately 1.0 percent of the outstanding shares.
In a letter to KBS Strategic Opportunity REIT stockholders, the company disclosed that Comrit launched a tender offer and offered to pay $7.23 per share of REIT common stock.
“We believe the offer price is substantially below the value of the shares and recommend against selling shares at that price,” the company stated.
In November 2018, the board approved a $9.91 estimated value per share of the REIT’s common stock, based on the estimated value of the REIT’s assets less the estimated value of its liabilities, divided by the number of shares outstanding as of September 30, 2018.
Also, in November 2018, the board authorized a special dividend of $2.95 per share. Excluding the special dividend, the company’s NAV per share would have been $12.86. Shares were originally priced at $10.00 each.
The company noted that the NAV per share does not take into account developments in the REIT’s portfolio since November 2018.
The REIT also disclosed that, due to share redemption program funding limitations, it had unfulfilled share redemption requests of nearly 3.3 million shares during the first quarter of 2019, or 94.2 percent of the shares submitted for redemption. In the second quarter of 2019, 3.8 million shares (94.9 percent) of the shares submitted for redemption were unfulfilled.
The company currently has $2.6 million available under the share redemption program for additional redemptions in 2019.
“As we did in prior instances when our board of directors authorized additional funds for the redemption of shares, we will continue to consider the liquidity available to stockholders going forward, balanced with other long-term interests of the stockholders and the REIT,” the company said.
KBS Strategic Opportunity REIT is continuing to evaluate possible strategic alternatives to provide additional liquidity to stockholders, including negotiating property sales, converting to an “NAV REIT” with increased capacity to repurchase shares through its SRP, and other strategies.
In other news, the KBS Strategic Opportunity REIT conflicts committee unanimously determined to postpone approval of the company’s liquidation while it continues to evaluate possible strategic alternatives. The committee is obligated to revisit the issue of liquidation at least annually.
The charter requires that the company seek stockholder approval of a liquidation if its shares of common stock are not listed on a national securities exchange by July 31, 2019, unless a majority of independent directors determines that liquidation is not then in the best interest of stockholders.
Pacific Oak Capital Advisors LLC, a sponsor of commercial real estate-focused alternative investments programs, will soon take over advisory duties for KBS Strategic Opportunity REIT and two other REITs previously managed by KBS Capital Advisors: KBS Strategic Opportunity REIT II, and Keppel Pacific Oak US REIT, which trades on the Singapore stock exchange.
Yesterday, The DI Wire published an article suggesting that KBS Strategic Opportunity REIT could be planning to launch a new offering under Pacific Oak.