MacKenzie Realty Capital, a publicly registered non-traded business development company, has launched an unsolicited tender offer to purchase 160,000 shares of Pacific Oak Strategic Opportunity REIT Inc., a non-traded real estate investment trust formerly known as KBS Strategic Opportunity REIT, for $2.50 per share. The tender offer expires on July 6, 2020.
In January 2020, the REIT’s board approved a $10.63 net asset value per share of the company’s common stock, as of September 30, 2019. Shares were originally sold for $10.00.
Earlier this year, Pacific Oak Strategic Opportunity REIT and affiliated REIT, Pacific Oak Strategic Opportunity REIT II, announced plans to merge in a stock-for-stock transaction, creating a combined company with approximately $2.6 billion in gross real estate and real estate-related assets. The REIT suspended ordinary redemptions until after the proposed merger closes, which is expected during the second half of 2020, with stockholder approval.
In its letter to Pacific Oak REIT shareholders, MacKenzie indicated that the REIT’s share redemption program is oversubscribed and, as of December 31, 2019, approximately 5.8 million shares totaling $58.7 million were submitted for repurchase and unredeemed. MacKenzie also said that the REIT has $800,000 available for redemptions during 2020.
MacKenzie and its affiliates currently own 175,434 shares of Pacific Oak REIT, or 0.27 percent of the outstanding shares.
MacKenzie’s board recently approved the suspension of the company’s share repurchase program in order to retain cash and “capitalize on opportunities to acquire assets at attractive prices” during the COVID-19 pandemic.
MacKenzie Capital Management LP and its affiliates have been in the business of purchasing illiquid real estate securities, both in open market transactions and by means of tender offers, since 1982. The firm claims to have acquired more than $170 million in such securities for affiliated portfolios over the last 10 years. MacKenzie Realty Capital is advised by MCM Advisers LP.