KBS REIT II Shareholders to Vote on Liquidation and Dissolution

December 10, 2019

KBS REIT II Shareholders to Vote on Liquidation and Dissolution

December 10, 2019

The stockholders of KBS Real Estate Investment Trust II, Inc. will vote at the annual meeting to be held on Thursday, March 5, 2020, to approve the complete liquidation and dissolution of the Company. 

As more thoroughly described in the Company’s December 9, 2019, proxy statement, the recommendation to approve the Company’s liquidation follows a lengthy process of evaluating strategic alternatives, which process was overseen by a committee composed of independent directors (the “Special Committee”). In particular, because of developments over the past six months with respect to the execution of several key leases and completion of capital projects that enhance property stability and better position the REIT’s remaining assets for sale, the board of directors and the Special Committee believe that selling the REIT’s properties now, repaying its debts and distributing the net proceeds to stockholders is in the Company’s best interest and the best interest of stockholders.

The Company currently estimates that if the Plan of Liquidation is approved by stockholders and it is able to successfully implement the plan, the net proceeds from liquidation and, therefore, the amount of cash that a shareholder would receive for each share of common stock, would range between approximately $3.40 and $3.83 per share.

The REIT previously paid (i) a special distribution in the amount of $4.50 per share to stockholders of record as of the close of business on September 15, 2014, and (ii) a special distribution of $0.45 per share to stockholders of record as of the close of business on June 17, 2019, all in connection with asset sales.

The range of estimated net proceeds from liquidation is based upon market, economic, financial and other circumstances and conditions existing as of the date of the proxy statement, and any changes in such circumstances and conditions during the liquidation process could have a material effect on the ultimate amount of liquidating distributions received by stockholders.

Blue Vault reported that as of September 30, 2019, KBS REIT II owned six office properties and an office campus consisting of five office buildings, comprising 3.9 million square feet.  As of September 30, 2019, the Company’s real estate portfolio was 74% occupied.  The REIT’s estimated NAV per share was $4.50.  The REIT’s book value of debt was $416.6 million compared to total assets of $1,056.6 million, with 90.2% of the debt at unhedged variable rates, with a weighted average interest rate on the debt as of September 30, 2019, of 3.59%.  Approximately 77.1% of the debt principal is due to be repaid in 2020.  Since inception, the REIT has paid out 64% of MFFO in cash distributions, excluding DRIP, and this rate was 118% for the last four quarters, with both ratios excluding special distributions.  The REIT paid distributions in the third quarter of 2019 at the annualized rate of 5.00% based upon the $4.50 adjusted NAV per share. 

KBS REIT II, Inc. began its public offering in April 2008 and raised approximately $1.89 billion during the offering, including DRIP proceeds.  The offering closed December 31, 2010.  During the third quarter of 2019, the weighted average number of common shares outstanding was 185,770,646. 

Source:  SEC, Blue Vault


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Matthew C. Strife
Blue Vault Services
April 11, 2016

Blue Vault's services are without question great resources for the review of the nontraded products offered.