“This multi-asset class strategy has continued to create value for our stockholders,” said Keith Hall, Chief Executive Officer and Director of KBS Strategic Opportunity REIT II. “We look forward to continuing our value-add strategies for the benefit of stockholders.”
The Company’s conflicts committee, composed solely of its independent directors, engaged Duff & Phelps, LLC (“Duff & Phelps”), an independent third-party real estate valuation firm, to provide an appraisal of the REIT’s real estate properties in order to provide a calculation of the range in estimated value per share of the REIT’s common stock. KBS Capital Advisors LLC, the REIT’s external advisor, performed valuations of the REIT’s other assets and liabilities. Upon the committee’s receipt and review of Duff & Phelps’ valuation report and consideration of the material assumptions and valuation methodologies applied and described therein, the committee recommended to the board of directors that it adopt $9.65 as the estimated per share of the REIT’s common stock, which the board unanimously approved.
The valuation was performed in accordance with the methodology provided in the Institute for Portfolio Alternatives’ (f/k/a the Investment Program Association) practice guideline regarding valuations of publicly registered non-listed REITs. The estimated NAV does not reflect any “portfolio premium”, nor does it reflect an enterprise value for the Company.
For a full description of the limitations, methodologies and assumptions used to value the REIT’s assets and liabilities in connection with the calculation of the REIT’s estimated value per share, see the REIT’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (“SEC”) on December 6, 2018.
The foregoing includes forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The REIT intends that such forward-looking statements be subject to the safe harbors created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent, belief or current expectations of the REIT 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 REIT 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 REIT 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.
The appraisal methodology for the Appraised Properties assumes the properties realize the projected net operating income and expected exit cap rates and that investors would be willing to invest in such properties at yields equal to the expected discount rates. Though the appraisals of the Appraised Properties, with respect to Duff & Phelps, and the valuation estimates used in calculating the estimated NAV per share, with respect to the Advisor and the REIT, are the respective party’s best estimates as of September 30, 2018 or December 6, 2018, as applicable, the REIT can give no assurance in this regard. Even small changes to these assumptions could result in significant differences in the appraised values of the Appraised Properties and the estimated NAV per share. These statements also depend on factors such as: future economic, competitive and market conditions; the REIT’s ability to maintain occupancy levels and rental rates at its real estate properties; and other risks identified in Part I, Item IA of the REIT’s Annual Report on Form 10-K for the year ended December 31, 2017, and Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2018, each as filed with the SEC. Actual events may cause the value and returns on the REIT’s investments to be less than that used for purposes of the REIT’s estimated NAV per share.