KBS REAL ESTATE INVESTMENT TRUST, INC. (OTCMKTS:KBRS) Files An 8-K Other Events
ITEM 8.01 OTHER EVENTS
Estimated Value Per Share
On January 27, 2017, the stockholders of KBS Real Estate
Investment Trust, Inc. (the Company) approved a plan of complete
liquidation and dissolution of the Company (the Plan of
Liquidation). The principal purpose of the Plan of Liquidation is
to maximize stockholder value by selling the Companys assets,
paying its debts and distributing the net proceeds from
liquidation to the Companys stockholders. For a detailed
description of the Plan of Liquidation, see the Companys
Definitive Proxy Statement, filed with the SEC on November 10,
2016 (the Proxy Statement). As disclosed in the Proxy Statement
and as described further below, the Company estimated that, if
the Company is able to successfully implement the Plan of
Liquidation, the amount of cash that its stockholders would
receive for each share of the Companys common stock that they
then hold could range between approximately $3.27 and $3.68 per
share.
Investment Trust, Inc. (the Company) approved a plan of complete
liquidation and dissolution of the Company (the Plan of
Liquidation). The principal purpose of the Plan of Liquidation is
to maximize stockholder value by selling the Companys assets,
paying its debts and distributing the net proceeds from
liquidation to the Companys stockholders. For a detailed
description of the Plan of Liquidation, see the Companys
Definitive Proxy Statement, filed with the SEC on November 10,
2016 (the Proxy Statement). As disclosed in the Proxy Statement
and as described further below, the Company estimated that, if
the Company is able to successfully implement the Plan of
Liquidation, the amount of cash that its stockholders would
receive for each share of the Companys common stock that they
then hold could range between approximately $3.27 and $3.68 per
share.
to the Plan of Liquidation, on March 10, 2017, the Companys board
of directors authorized an initial liquidating distribution in
the amount of $1.00 per share of common stock to the Companys
stockholders of record as of the close of business on March 21,
2017. The initial liquidating distribution was paid on March 24,
2017 and was funded from proceeds from asset sales. Since it is a
liquidating distribution to the Plan of Liquidation, the initial
liquidating distribution reduced the Companys stockholders
remaining investment in the Company and reduced the estimated
range of future liquidating distributions per share to be
received by the Companys stockholders by $1.00 per share.
of directors authorized an initial liquidating distribution in
the amount of $1.00 per share of common stock to the Companys
stockholders of record as of the close of business on March 21,
2017. The initial liquidating distribution was paid on March 24,
2017 and was funded from proceeds from asset sales. Since it is a
liquidating distribution to the Plan of Liquidation, the initial
liquidating distribution reduced the Companys stockholders
remaining investment in the Company and reduced the estimated
range of future liquidating distributions per share to be
received by the Companys stockholders by $1.00 per share.
The Company is in the process of liquidating its remaining assets
and expects to make one or more additional liquidating
distributions to the Plan of Liquidation. There can be no
assurances as to the timing or amount of any additional
liquidating distributions.
and expects to make one or more additional liquidating
distributions to the Plan of Liquidation. There can be no
assurances as to the timing or amount of any additional
liquidating distributions.
On March 27, 2017, the Companys board of directors approved an
estimated value per share of the Companys common stock of $2.475
(the EVPS), effective March 21, 2017. The Company is providing
the EVPS to assist broker-dealers that participated in the
Companys initial public offering in meeting their customer
account statement reporting obligations under National
Association of Securities Dealers Conduct Rule 2340 as required
by the Financial Industry Regulatory Authority (FINRA). As
described further below, the EVPS is equal to the midpoint of the
estimated range of liquidating distributions of $3.27 and $3.68
per share (which midpoint is $3.475), reduced for the impact of
the payment of the initial liquidating distribution to the
Companys stockholders of $1.00 per share on March 24, 2017. Thus,
the EVPS reflects the resulting reduction of the stockholders
remaining investment in the Company. This valuation was performed
in accordance with the provisions of and also to comply with
Practice Guideline 2013-01, Valuations of Publicly Registered,
Non-Listed REITs, issued by the Investment Program Association
(IPA) in April 2013 (the IPA Valuation Guidelines), reduced for
the impact of liquidation fees and selling costs.
estimated value per share of the Companys common stock of $2.475
(the EVPS), effective March 21, 2017. The Company is providing
the EVPS to assist broker-dealers that participated in the
Companys initial public offering in meeting their customer
account statement reporting obligations under National
Association of Securities Dealers Conduct Rule 2340 as required
by the Financial Industry Regulatory Authority (FINRA). As
described further below, the EVPS is equal to the midpoint of the
estimated range of liquidating distributions of $3.27 and $3.68
per share (which midpoint is $3.475), reduced for the impact of
the payment of the initial liquidating distribution to the
Companys stockholders of $1.00 per share on March 24, 2017. Thus,
the EVPS reflects the resulting reduction of the stockholders
remaining investment in the Company. This valuation was performed
in accordance with the provisions of and also to comply with
Practice Guideline 2013-01, Valuations of Publicly Registered,
Non-Listed REITs, issued by the Investment Program Association
(IPA) in April 2013 (the IPA Valuation Guidelines), reduced for
the impact of liquidation fees and selling costs.
Methodology
Determination of the October 5, 2016 Estimated Value Per Share
and Estimated Range in Liquidating Distributions
and Estimated Range in Liquidating Distributions
As disclosed in the Proxy Statement, the Companys range of
estimated net proceeds from liquidation of approximately $3.27
and $3.68 per share is based on the range in estimated value per
share of the Companys common stock of $3.40 to $3.82 approved by
the Companys board of directors on October 5, 2016, and reduced
for (i) expected disposition costs and fees related to future
dispositions of real estate and real estate-related investments,
and (ii) estimated corporate and other liquidation and
dissolution costs not covered by the Companys cash flow from
operations. The Companys board of directors approved the October
5, 2016 estimated value per share, in part, to assist the Company
in calculating the range of estimated net proceeds from
liquidation to the Plan of Liquidation. The October 5, 2016
estimated value per share is based on the estimated value of the
Companys assets less the estimated value of the Companys
liabilities, or net asset value, divided by the number of shares
outstanding, all as of June 30, 2016, with the exception of
certain adjustments described in Item 8.01 of the Current Report
on Form 8-K, filed with the SEC on October 7, 2016 (the Valuation
8-K).
estimated net proceeds from liquidation of approximately $3.27
and $3.68 per share is based on the range in estimated value per
share of the Companys common stock of $3.40 to $3.82 approved by
the Companys board of directors on October 5, 2016, and reduced
for (i) expected disposition costs and fees related to future
dispositions of real estate and real estate-related investments,
and (ii) estimated corporate and other liquidation and
dissolution costs not covered by the Companys cash flow from
operations. The Companys board of directors approved the October
5, 2016 estimated value per share, in part, to assist the Company
in calculating the range of estimated net proceeds from
liquidation to the Plan of Liquidation. The October 5, 2016
estimated value per share is based on the estimated value of the
Companys assets less the estimated value of the Companys
liabilities, or net asset value, divided by the number of shares
outstanding, all as of June 30, 2016, with the exception of
certain adjustments described in Item 8.01 of the Current Report
on Form 8-K, filed with the SEC on October 7, 2016 (the Valuation
8-K).
In connection with the determination of the October 5, 2016
estimated value per share and with the approval of its conflicts
committee, the Company engaged Duff Phelps, LLC (Duff Phelps), an
independent third-party real estate valuation firm, to provide
appraisals for 11 of the Companys 12 historical real estate
properties that the Company owned as of June 30, 2016 and for all
but 50 of the 220 GKK Properties that the Company owned as of
June 30, 2016. The one historical real estate property and 50 GKK
Properties not valued by Duff Phelps either were under contract
to sell as of August 31, 2016 or were sold or disposed of
subsequent to June 30, 2016 and prior to October 5, 2016 and the
Company estimated their values based on the contractual sales
prices less actual or estimated disposition costs and fees in the
case of properties that were under contract to sell as of August
31, 2016 or properties sold or disposed of subsequent to June 30,
2016 and prior to October 5, 2016. For a full description of the
methodologies and assumptions used to value the Companys assets
and liabilities in connection with the calculation of the October
5, 2016 estimated value per share, see the Valuation 8-K.
estimated value per share and with the approval of its conflicts
committee, the Company engaged Duff Phelps, LLC (Duff Phelps), an
independent third-party real estate valuation firm, to provide
appraisals for 11 of the Companys 12 historical real estate
properties that the Company owned as of June 30, 2016 and for all
but 50 of the 220 GKK Properties that the Company owned as of
June 30, 2016. The one historical real estate property and 50 GKK
Properties not valued by Duff Phelps either were under contract
to sell as of August 31, 2016 or were sold or disposed of
subsequent to June 30, 2016 and prior to October 5, 2016 and the
Company estimated their values based on the contractual sales
prices less actual or estimated disposition costs and fees in the
case of properties that were under contract to sell as of August
31, 2016 or properties sold or disposed of subsequent to June 30,
2016 and prior to October 5, 2016. For a full description of the
methodologies and assumptions used to value the Companys assets
and liabilities in connection with the calculation of the October
5, 2016 estimated value per share, see the Valuation 8-K.
/div>
Based on the October 5, 2016 estimated value per share and the
estimated costs and expenses of liquidating and dissolving the
Company to the Plan of Liquidation and assuming the Company is
able to successfully implement the Plan of Liquidation, the
Company estimated that its net proceeds from liquidation and,
therefore, the amount of cash that its stockholders would
receive for each share of the Companys common stock that they
then hold, could range between approximately $3.27 and $3.68
per share.
estimated costs and expenses of liquidating and dissolving the
Company to the Plan of Liquidation and assuming the Company is
able to successfully implement the Plan of Liquidation, the
Company estimated that its net proceeds from liquidation and,
therefore, the amount of cash that its stockholders would
receive for each share of the Companys common stock that they
then hold, could range between approximately $3.27 and $3.68
per share.
Determination of the EVPS
Given that the Plan of Liquidation has been approved by the
Companys stockholders and is being implemented, in order to
determine the EVPS, the Companys board of directors (i)
determined that the midpoint of the estimated range of
liquidating distributions of $3.27 and $3.68 per share was
$3.475 and (ii) subtracted the initial liquidating distribution
of $1.00, resulting in the EVPS of $2.475.
Companys stockholders and is being implemented, in order to
determine the EVPS, the Companys board of directors (i)
determined that the midpoint of the estimated range of
liquidating distributions of $3.27 and $3.68 per share was
$3.475 and (ii) subtracted the initial liquidating distribution
of $1.00, resulting in the EVPS of $2.475.
Limitations of the EVPS
As mentioned above, the Company is providing the EVPS to assist
broker-dealers that participated in the Companys initial public
offering in meeting their customer account statement reporting
obligations. This valuation was performed in accordance with
the provisions of and also to comply with the IPA Valuation
Guidelines, reduced for the impact of liquidation fees and
selling costs. The EVPS will first appear on the March 31, 2017
customer account statements that will be mailed in April 2017.
As with any valuation methodology, the methodologies used are
based upon a number of estimates and assumptions that may not
be accurate or complete. Different parties with different
assumptions and estimates could derive a different estimated
value per share, and this difference could be significant. The
EVPS is not audited and does not represent the fair value of
the Companys assets less the fair value of the Companys
liabilities according to GAAP.
broker-dealers that participated in the Companys initial public
offering in meeting their customer account statement reporting
obligations. This valuation was performed in accordance with
the provisions of and also to comply with the IPA Valuation
Guidelines, reduced for the impact of liquidation fees and
selling costs. The EVPS will first appear on the March 31, 2017
customer account statements that will be mailed in April 2017.
As with any valuation methodology, the methodologies used are
based upon a number of estimates and assumptions that may not
be accurate or complete. Different parties with different
assumptions and estimates could derive a different estimated
value per share, and this difference could be significant. The
EVPS is not audited and does not represent the fair value of
the Companys assets less the fair value of the Companys
liabilities according to GAAP.
Accordingly, with respect to the EVPS, the Company can give no
assurance:
assurance:
|
of the amount or timing of liquidating distributions the
Company will ultimately be able to pay its stockholders; |
|
that a stockholder would be able to resell his or her
shares at the EVPS; |
|
that an independent third-party appraiser or third-party
valuation firm would agree with the EVPS; or |
|
that the methodology used to calculate the EVPS would be
acceptable to FINRA or for compliance with ERISA reporting requirements. |
The EVPS is based on the estimated range of liquidating
distributions per share to be received by the Companys
stockholders to the Plan of Liquidation, reduced by the amount
of the initial liquidating distribution, as described above.
The value of the Companys shares will fluctuate over time in
response to developments related to individual assets in the
Companys portfolio and the management of those assets, in
response to the real estate and finance markets, based on the
amount of net proceeds the Company receives from the
disposition of its remaining assets and due to other factors,
including those described below under Forward-Looking
Statements. The EVPS does not reflect a discount for the fact
that the Company is externally managed, nor does it reflect a
real estate portfolio premium/discount versus the sum of the
individual property values for the Companys remaining
properties.
distributions per share to be received by the Companys
stockholders to the Plan of Liquidation, reduced by the amount
of the initial liquidating distribution, as described above.
The value of the Companys shares will fluctuate over time in
response to developments related to individual assets in the
Companys portfolio and the management of those assets, in
response to the real estate and finance markets, based on the
amount of net proceeds the Company receives from the
disposition of its remaining assets and due to other factors,
including those described below under Forward-Looking
Statements. The EVPS does not reflect a discount for the fact
that the Company is externally managed, nor does it reflect a
real estate portfolio premium/discount versus the sum of the
individual property values for the Companys remaining
properties.
/div>
Forward-Looking Statements
The foregoing includes forward-looking statements within the
meaning of the Federal Private Securities Litigation Reform
Act of 1995. The Company intends that such forward-looking
statements be subject to the safe harbors created by Section
21E of the Securities Exchange Act of 1934, as amended. These
statements include statements regarding the intent, belief or
current expectations of the Company and members of its
management team, as well as the assumptions on which such
statements are based, and generally are identified by the use
of words such as may, will, seeks, anticipates, believes,
estimates, expects, plans, intends, should or similar
expressions. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak
only as of the date they are made. The Company undertakes no
obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time,
unless required by law. Such statements are subject to known
and unknown risks and uncertainties which could cause actual
results to differ materially from those contemplated by such
forward-looking statements. The Company makes no
representation or warranty (express or implied) about the
accuracy of any such forward-looking statements. These
statements are based on a number of assumptions involving the
judgment of management.
meaning of the Federal Private Securities Litigation Reform
Act of 1995. The Company intends that such forward-looking
statements be subject to the safe harbors created by Section
21E of the Securities Exchange Act of 1934, as amended. These
statements include statements regarding the intent, belief or
current expectations of the Company and members of its
management team, as well as the assumptions on which such
statements are based, and generally are identified by the use
of words such as may, will, seeks, anticipates, believes,
estimates, expects, plans, intends, should or similar
expressions. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak
only as of the date they are made. The Company undertakes no
obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time,
unless required by law. Such statements are subject to known
and unknown risks and uncertainties which could cause actual
results to differ materially from those contemplated by such
forward-looking statements. The Company makes no
representation or warranty (express or implied) about the
accuracy of any such forward-looking statements. These
statements are based on a number of assumptions involving the
judgment of management.
There are many factors that may affect the amount of
liquidating distributions the Company will ultimately pay to
its stockholders and, therefore, the EVPS, including, among
other factors, the ultimate sale price of each asset, changes
in market demand for office, industrial and bank branch
properties during the liquidation process, the amount of
taxes, transaction fees and expenses relating to the
liquidation and dissolution, and unanticipated or contingent
liabilities arising after the date of the Proxy Statement. No
assurance can be given as to the amount of liquidating
distributions the Company will ultimately pay to its
stockholders. If the Company underestimated its existing
obligations and liabilities or if unanticipated or contingent
liabilities arise, the amount of liquidating distributions
ultimately paid to the Companys stockholders could be less
than estimated, thus reducing the value of the Companys
shares of common stock.
liquidating distributions the Company will ultimately pay to
its stockholders and, therefore, the EVPS, including, among
other factors, the ultimate sale price of each asset, changes
in market demand for office, industrial and bank branch
properties during the liquidation process, the amount of
taxes, transaction fees and expenses relating to the
liquidation and dissolution, and unanticipated or contingent
liabilities arising after the date of the Proxy Statement. No
assurance can be given as to the amount of liquidating
distributions the Company will ultimately pay to its
stockholders. If the Company underestimated its existing
obligations and liabilities or if unanticipated or contingent
liabilities arise, the amount of liquidating distributions
ultimately paid to the Companys stockholders could be less
than estimated, thus reducing the value of the Companys
shares of common stock.
Forward-looking statements also depend on factors such as:
future economic, competitive and market conditions; the
Companys ability to maintain occupancy levels and lease rates
at its real estate properties; the Companys ability to sell
its real estate properties at the times and at the prices it
expects; the ability of the Company to make strategic asset
sales to fund its short and long-term liquidity needs; the
Companys ability to successfully operate and sell certain of
its properties given the concentration of these properties in
the financial services sector; the borrowers under the
Companys real estate loan investments continuing to make
required payments under the loan documents; the Companys
advisors limited experience operating and selling bank branch
properties; and other risks identified in the Proxy Statement
and in Part I, Item 1A of the Companys Annual Report on Form
10-K for the year ended December 31, 2015, each as filed with
the SEC. Actual events may cause the value and returns on the
Companys investments to be less than that used for purposes
of determining the Companys estimated range of liquidating
distributions, which would reduce the value of the Companys
shares of common stock.
future economic, competitive and market conditions; the
Companys ability to maintain occupancy levels and lease rates
at its real estate properties; the Companys ability to sell
its real estate properties at the times and at the prices it
expects; the ability of the Company to make strategic asset
sales to fund its short and long-term liquidity needs; the
Companys ability to successfully operate and sell certain of
its properties given the concentration of these properties in
the financial services sector; the borrowers under the
Companys real estate loan investments continuing to make
required payments under the loan documents; the Companys
advisors limited experience operating and selling bank branch
properties; and other risks identified in the Proxy Statement
and in Part I, Item 1A of the Companys Annual Report on Form
10-K for the year ended December 31, 2015, each as filed with
the SEC. Actual events may cause the value and returns on the
Companys investments to be less than that used for purposes
of determining the Companys estimated range of liquidating
distributions, which would reduce the value of the Companys
shares of common stock.
/div>
KBS REAL ESTATE INVESTMENT TRUST, INC. (OTCMKTS:KBRS) Recent Trading Information
KBS REAL ESTATE INVESTMENT TRUST, INC. (OTCMKTS:KBRS) closed its last trading session at with 2,188 shares trading hands.
