KBS Real Estate Investment Trust III Commences $350 Million Self-Tender Offer
June 7, 2021 | James Sprow | Blue Vault
KBS Real Estate Investment Trust III, Inc.’s (the “Company”) board of directors has approved a self-tender offer for shares of the Company’s common stock, par value $0.01 per share, to commence on or about June 4, 2021, for up to 33,849,130 shares at a purchase price of $10.34 per share (the “Purchase Price”), or approximately $350 million of shares (the “Offer”). Unless extended or withdrawn, the Offer will expire at midnight Eastern Time on or about Thursday, July 1, 2021.
The Offer is designed to provide limited liquidity to holders of shares for which there is no current public market. Historically, the Company offered limited liquidity to holders of shares under the Company’s share redemption program. However, the share redemption program limits the number of shares the Company may redeem during any calendar year, so the Company’s board of directors has decided to conduct the Offer to provide stockholders with additional liquidity that is in excess of that permitted under the Company’s share redemption program.
In December 2019, the Company’s board of directors determined to suspend Ordinary Redemptions (defined below) under the Company’s share redemption program and Ordinary Redemptions under the share redemption program have remained suspended as the Company navigates through the impact of the COVID-19 pandemic. Ordinary Redemptions are all redemptions other than those that qualify for the special provisions for redemptions sought in connection with a stockholder’s death, “Qualifying Disability” or “Determination of Incompetence” (each as defined in the share redemption program and, together, “Special Redemptions”). During the suspension of Ordinary Redemptions, no Ordinary Redemption requests have been or will be accepted under the share redemption program.
Further, in connection with the approval of the Offer, the Company’s board of directors approved a temporary suspension of all redemptions under the share redemption program, including Special Redemptions. As such, Special Redemptions under the share redemption program have been suspended for the June 30, 2021 redemption date, meaning no Special Redemptions will be made under the share redemption program in June 2021. During the suspension of Special Redemptions, no requests have been or will be accepted under the share redemption program.
The Company will not accept any redemption requests under the share redemption program until the completion of the Offer and all outstanding redemption requests under the share redemption program have been cancelled. Redemptions under the share redemption program are expected to resume on the last business day of July 2021. If stockholders would like to submit a redemption request under the share redemption program, they may do so after the Offer expires. After the completion of the Offer, the Company intends to remove the current funding limitation of the share redemption program such that, during any calendar year, the Company may redeem up to 5% of the weighted-average number of shares outstanding during the prior calendar year, consistent with Securities and Exchange Commission (“SEC”) guidance and interpretations. The Company also intends to amend the share redemption program such that Ordinary Redemptions are redeemed at 96% of the most recent estimated value per share of the Company’s common stock. The redemption price for Special Redemptions would remain at the most recent estimated value per share of the Company’s common stock, and the Company would continue to provide reserve funding for Special Redemptions. However, in its sole discretion, the Company’s board of directors could amend, further suspend, or terminate the share redemption program upon ten business days’ notice.
The Purchase Price is 96% of $10.77, which is the most recent estimated value per share of the Company’s common stock. This estimated value was approved by the Company’s board of directors on May 13, 2021, and was based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, or net asset value, divided by the number of shares outstanding, all as of March 31, 2021, with the exception of adjustments to the Company’s net asset value to give effect to the change in the estimated value of the Company’s investment in units of Prime US REIT (SGX-ST Ticker: OXMU) as of April 29, 2021. For a full description of the methodologies and assumptions used to value the Company’s assets and liabilities in connection with the calculation of the estimated value per share, see the Company’s Current Report on Form 8-K filed with the SEC on May 14, 2021.
Source: SEC
