MacKenzie Capital Management has launched an unsolicited tender offer for up to 120,000 shares of KBS Strategic Opportunity REIT, a publicly registered non-traded real estate investment trust, for $5.15 per share. The offer which constitutes 0.18 percent of the outstanding shares expires on June 7, 2019.
KBS Strategic Opportunity REIT’s most recent net asset value is $9.91 per share, as of September 30, 2018, and the board authorized two special dividends in recent years totaling $6.56 per share. Share were originally priced at $10.00 each.
MacKenzie noted that the REIT had oversubscribed its share repurchase program, and as of December 31, 2018, approximately 2.2 million shares totaling $20.7 million submitted for repurchase were unredeemed.
In a letter to stockholders, the REIT recommended that investors reject the offer and not sell their shares to MacKenzie.
KBS also said that during the first quarter of 2019, it had unfulfilled requests to redeem 3.3 million shares, or 94.2 percent of the shares submitted for redemption, due to SRP funding limitations.
“We had an aggregate $7.3 million available under the SRP for additional redemptions in 2019 with $6 million available for ordinary redemption requests subject to the $2 million quarterly limitation in addition to $1.3 million available for the monthly redemption of shares requested in connection with a stockholder’s death, qualifying disability or determination of incompetence, all of which is specified in the current SRP,” the company said.
The REIT said that it is continuing to evaluate possible strategic alternatives to provide additional liquidity to stockholders, including property sales, converting to a NAV REIT with increased capacity to repurchase shares through its SRP, and other strategies.
KBS Strategic Opportunity REIT launched its initial public offering in November 2009 and raised approximately $574 million in investor equity before closing the offering three years later. As of the third quarter 2018, the company owned 12 properties with an investment cost of more than $696.2 million.
Based in Moraga, California, MacKenzie has specialized in the area of discounted real estate securities and asset management since its formation in 1982.