KBS Strategic Opportunity REIT Urges Stockholders to Reject MacKenzie Tender Offer

KBS Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, sent a letter to shareholders recommending that they reject an unsolicited tender offer by MacKenzie Capital Management LP.

MacKenzie is offering to purchase up to 1 million shares of the REIT’s common stock for $11.01 per share, which is approximately 1.9 percent of the outstanding shares. KBS Strategic Opportunity REIT believes the offer price is “substantially below” the current value of the shares.

The REIT informed shareholders that it is in the process of receiving final appraisals of its real estate properties from independent third-party valuation firms to update its estimated value per share in mid-December 2017. The company’s most recent NAV per share is $14.81, as of December 2016.

Last month, KBS Strategic Opportunity REIT completed a self-tender offer at a price of $14.07 per share, and purchased 4.7 million shares, or approximately 83 percent of those properly tendered.

The company acknowledged that in the fourth quarter of 2016, first quarter of 2017, and second quarter of 2017, it rejected a number of share redemption requests due to insufficient funding.

Earlier this month, the company sold 11 properties to Singapore-based Keppel-KBS US REIT for $804 million which the company said generated additional capital that may be used for future share redemptions or tender offers.

The REIT also noted that it is considering converting to a “NAV REIT” which would increase its capacity to repurchase shares.

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 third quarter 2017, the company owned 20 properties with an investment cost of $1.3 billion, according to Summit Investment Research.

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