KBS REIT II to offer dividend upon sale of Chicago office building

Firm to offer another way besides public listing for REIT sponsors to provide liquidity to investors

May 23, 2014 @ 12:01 am

By Bruce Kelly

nontraded reit, kbs, chicago, stanger
+ Zoom

More liquidity is coming to nontraded real estate investment trust investors, this time in the form of a one-time dividend to shareholders.

KBS Real Estate Investment Trust II Inc. has agreed to sell a large office building in Chicago for $850 million. The property is a big chunk of the REIT, accounting for 19.5% of the company's total revenues for the first quarter of the year.

Known as KBS REIT II, the REIT has $2.86 billion in assets and was launched in 2008.

Advisers and their clients should keep a watch for the distribution, according to the company. If it completes the sale of the Chicago property, KBS REIT II “expects to make a special distribution to stockholders of a significant portion of the net proceeds from the sale,” after various payments, the company said in a filing with the Securities and Exchange Commission.

(See also: REIT firm KBS battling Schorsch's American Realty Capital over claim of trade secret theft)

KBS REIT II spokesman Mike Besack said the company had no comment beyond the SEC filing. The company gave no indication when it would deliver the special distribution to investors.

The REIT's move to sell off assets and offer a special dividend or limited liquidity is more in line with how nontraded REITs worked before the credit crisis, industry observers said. Since then, the emphasis has shifted to listing such a REIT on an exchange or merging it with a publicly traded REIT because of the success of various nontraded REITs sponsored by American Realty Capital and others that have listed or merged.

“They're looking to monetize individual assets or groups of assets in a good real estate market,” said Kevin Gannon, president, managing director of Robert A. Stanger & Co. Inc. “They decided they would do better with this type” of exit, he said.

“Office assets haven't priced as well” as other real estate sectors, including net lease properties, he said. Selling off parts of the REIT's portfolio may make sense over listing the company. “There's not a perception of a premium in the public market for a listed company with a lot of office assets,” he said.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

AXA's Christine Nigro: How to handle being the only woman in the room

Women face unique challenges as they move into the C-suite, and they need to remember to always be themselves and let their professional strengths shine, according to Christine Nigro, vice chairman at AXA Advisors.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

10 funds with largest 3-year outflows

Even well-managed funds that have beaten the S&P 500’s 10.1% average annual gain have watched investors flee.

Wirehouse training programs are back

At one time, major brokerage houses ran large, expensive training programs for thousands of young brokers, and now it looks as if they are about to return to that model.

New military pension rules need financial advisers to step up and serve

Matching defined contribution plan expected to see more money, more need for sound advice.

Brian Block's $4 million bonus was tied to a key metric at ARCP

Prosecution rests case in fraud trial against CFO of American Realty Capital Properties.

Edward Jones is winning the Google search war

Brokerage firm's digital marketing investment helps land it at the top of local and overall search engine results, report finds.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print