KBS Real Estate Investment Trust III Board Urges Rejection of Mini-Tender Offer

November 8, 2021 | James Sprow | Blue Vault

In a letter to stockholders dated November 5, 2021, the Board of KBS REIT III urged rejection of a mini-tender offer by Comrit. Following is the text of the letter to stockholders.

Dear Stockholder:

You may soon receive, or have already received, materials from Comrit related to an unsolicited tender offer to purchase your shares of KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”).

The KBS REIT III board of directors has reviewed the offer from Comrit and unanimously recommends that you REJECT their offer.

The following is a list of important considerations in arriving at this recommendation:

• As admitted by Comrit in its offering documents, it is making the offer exclusively for investment purposes with the intent of profiting off the shares it purchases from you and other stockholders. By buying stockholder shares at a substantial discount, Comrit intends to make a significant profit. The fact that Comrit is offering to purchase 556,328 shares and has previously purchased shares amounting to 1,043,829 as of August 9, 2021, through tender offers and secondary market purchases, indicates that it believes the shares are worth more than its offer price.

• It is important to consider that the estimated net asset value per share of KBS REIT III’s common stock, as approved by the board of directors on November 1, 2021, is $10.78.¹ Although this does not represent the price that a stockholder could obtain in the secondary market or through KBS REIT III’s current share redemption program, which is discussed below, the net asset value of KBS REIT III’s shares is approximately 33% more than the price Comrit is offering to purchase your shares at with their price of $7.19 per share. Please note that 33% is a significant discount to the estimated share price.

• KBS REIT III’s share redemption program is currently open for both ordinary and special redemptions. On July 14, 2021, the KBS REIT III board of directors approved an amended and restated the share redemption program. Under the current share redemption program, ordinary redemptions are made at a price per share equal to 96% of the most recent estimated value per share, whereas special redemptions, sought upon a stockholder’s death, “qualifying disability” or “determination of incompetence” (as defined in the share redemption program), are made at the most recent estimated value per share. It is also important to note that the board of directors may increase or decrease the funding for the redemption of shares or amend, suspend, or terminate the share redemption program for any reason upon ten business days’ notice to stockholders.²

• As Comrit disclosed in its own offering materials, in connection with their offer, Comrit did not retain an independent person to evaluate or render an opinion with respect to the offering price and has not made an independent appraisal of KBS REIT III shares or the properties owned by KBS REIT III. Also, as Comrit disclosed in its offering materials, Comrit is not qualified to appraise real estate.

• Finally, the Securities and Exchange Commission (the “SEC”) has cautioned investors about the heightened risk involved with offers of this nature. Additional information about mini-tender offers is available on the SEC’s website, which can be found at

www.sec.gov/investor/pubs/minitend.htm. We encourage you to read the information and exercise caution with respect to this and other mini-tender offers.

¹ On November 1, 2021, KBS REIT III’s board of directors approved an estimated value per share of KBS REIT III’s common stock of $10.78 based on the estimated value of KBS REIT III’s assets less the estimated value of KBS REIT III’s liabilities, or net asset value, divided by the number of shares outstanding, all as of September 30, 2021, with the exception of adjustments to KBS REIT III’s net asset value to give effect to (i) the change in the estimated value of KBS REIT III’s investment in units of Prime US REIT (SGX-ST Ticker: OXMU) as of October 22, 2021 and (ii) the contractual sales price less estimated disposition costs and fees of one property that was under contract to sell as of November 1, 2021. For a detailed description of the methodologies, limitations and assumptions used to value KBS REIT III’s assets and liabilities in connection with the calculation of the estimated value per share, please see KBS REIT III’s Current Report on Form 8-K filed with the SEC on November 4, 2021.

² For a detailed description of the current share redemption program, please see KBS REIT III’s Current Report on Form 8-K filed with the SEC on July 16, 2021.

Please note that Comrit is not affiliated with KBS REIT III, KBS Capital Advisors LLC or KBS Capital Markets Group LLC. Comrit does not have a copy of the KBS REIT III stockholder list, and their offering materials are mailed by a third party, which has signed agreements to keep the list confidential.

Again, the board of directors strongly believes the Comrit offer is NOT in the best interest of the stockholders and recommends stockholders ignore their offer.

This response, and any updates or changes, will be posted at www.kbs-cmg.com under the KBS Real Estate Investment Trust III, Inc. “Investor Information” section. Such updates or responses will also be filed with the SEC on a Current Report on Form 8-K.

If you have any questions related to Comrit’s tender offer, please consult with your financial representative or contact KBS Capital Markets Group LLC at (866) 527-4264.

Thank you for your investment in KBS REIT III.

Sincerely,

Charles J. Schreiber, Jr.
Chairman of the Board, Chief Executive Officer
President and Director

Source: SEC