MacKenzie Capital Management is launching an unsolicited tender offer for Class A shares of KBS Strategic Opportunity REIT II, a publicly registered non-traded real estate investment trust, according to a letter the REIT sent to its shareholders.
MacKenzie is offering to pay $2.75 per share, although the number of shares sought was not disclosed. In December 2018, the REIT’s board approved an estimated net asset value of $9.65 per share, as of September 30, 2018. Shares originally sold for $10.00 each.
“We believe that [MacKenzie’s] offer is meant to take advantage of the illiquidity of the REIT’s shares by buying your shares at a price significantly below their fair value in order to make a significant profit and deprive you of the opportunity to realize the full current and potential long-term value of your investment in the REIT,” the letter said.
In any calendar year, the REIT may redeem only the number of shares that it could purchase with the amount of net proceeds from the sale of shares under the its dividend reinvestment plan during the prior year, provided that $0.5 million is reserved exclusively for special redemptions, such as the death or disability of a shareholder.
KBS noted that based on the net proceeds raised from the sale of DRP shares during 2018, it has $3 million available to redeem shares under the plan during 2019, with $0.5 million of that amount being reserved for special redemptions.
The REIT redeems shares on the last business day of each month and following the January 2019 redemption date, the REIT has exhausted all funds available for ordinary redemptions in 2019, but said that it will continue to process special redemptions at the $9.65 NAV per share.
KBS Strategic Opportunity REIT II launched in August 2014, and through a private placement offering and a subsequent initial public offering, raised a total of $228.6 million in investor equity as of the third quarter of 2018. The company oversees a $520 million portfolio comprised of seven investments, according to Summit Investment Research. The REIT closed its primary offering in September 2018.