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Pacific Oak Strategic Opportunity REIT II Responds to Third Party Tender Offer

February 10, 2020

Pacific Oak Strategic Opportunity REIT II Responds to Third Party Tender Offer

February 10, 2020

Comrit Investments 1, LP, filed a tender offer for the shares of Pacific Oak Strategic Opportunity REIT II, Inc. at a price of $7.20 per share. In a letter to shareholders on February 6, the REIT stated that it believes the offer price is substantially below the value of the REIT’s shares and recommended against shareholders selling their shares at that price.

According to the letter to shareholders:

“In arriving at our recommendation against selling your Shares to the Bidder, we considered the following:

• On December 17, 2019, our board of directors approved an estimated value per share (the “EVPS”) of the REIT’s common stock of $10.25 based on the estimated value of the REIT’s assets less the estimated value of the REIT’s liabilities, or net asset value, divided by the number of shares outstanding as of September 30, 2019, with the exception of the following adjustments: (i) the Company’s consolidated investments in real estate properties were valued as of October 31, 2019; (ii) an adjustment to reduce cash for the amount of capital expenditures incurred in October 2019; and (iii) an adjustment for disposition costs and fees incurred in connection with the disposition of 2200 Paseo Verde. For a full description of the methodologies and assumptions used to value the REIT’s assets and liabilities in connection with the calculation of the estimated value per share, see the REIT’s Current Report on Form 8-K filed on December 19, 2019, which can be found in the “Investor Information” section of the REIT’s website, http://www.pacificoakcmg.com/offering/reit-ii. The value of the REIT’s shares will fluctuate over time in response to developments related to individual assets in the REIT’s portfolio and the management of those assets and in response to the real estate and finance markets. As such, the most recent EVPS does not take into account developments in the REIT’s portfolio since December 17, 2019. Tendering stockholders whose shares are accepted for payment will lose the opportunity to participate in any potential future upside and future growth of the REIT with respect to such shares and will lose the right to receive any future distributions or dividends that we may declare and pay.

• In January 2019, we exhausted funds available for redemptions under our share redemption program (the “SRP”), other than those submitted in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” As a result, in 2019, we redeemed a total of 277,452 Shares in connection with ordinary redemption requests and 39,701 Shares in connection with requests submitted in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” In January 2020, we again exhausted funds available for redemptions under our SRP, other than other than those submitted in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” As of the January 2020 redemption date, we had outstanding and unfulfilled redemption requests representing 809,534 Shares. We have $0.5 million available to fund special redemptions during the remainder of 2020. We can provide no assurances as to whether our board of directors will make additional funds available for our share redemption program. However, we are evaluating possible strategic alternatives to provide additional liquidity to stockholders, including but not limited to negotiating or procuring the sale of certain properties in the REIT’s portfolio, the potential sale of the company, and other strategies. In particular, please see our Current Report on Form 8-K filed with the SEC on January 29, 2020 regarding a potential merger of our company with Pacific Oak Strategic Opportunity REIT, Inc., and available at our website http://www.pacificoakcmg.com/offering/reit-ii.

• We believe that the Bidder’s offer is meant to take advantage of the illiquidity of our Shares by buying your shares at a price significantly below their fair value in order to make a significant profit.”

Source:  SEC

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2016 Broker Dealer Educational Summit 2016
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