NEWPORT BEACH, CA--(Marketwire - Nov 27, 2012) - Each of the five KBS-sponsored non-traded real estate investment trusts (REITs) has agreed to waive internalization compensation to its advisor, KBS Capital Advisors LLC, should it enter into an internalization transaction. The decisions were made at the recommendation of KBS Capital Advisors and approved by the boards of directors of each REIT at various times since Sept. 21, 2012 as being in the best interest of the REITs and their shareholders.
Traditionally, when a non-traded REIT lists its shares on a public stock exchange, certain functions previously performed by the REIT's external advisor are absorbed by the REIT, making it "self-managed." Such internalizations can potentially result in significant compensation paid to the advisor, typically in the form of fees or shares of the REIT's stock, in exchange for the advisor's personnel, infrastructure and other assets. The elimination of this compensation can potentially enhance returns to shareholders.
This change applies to KBS Real Estate Investment Trust, KBS Real Estate Investment Trust II, KBS Real Estate Investment Trust III, KBS Strategic Opportunity REIT Inc. and KBS Legacy Partners Apartment REIT Inc., each of which may use listing on a public exchange as one of its potential exit strategies.
"The board of each of our non-traded REITs has the flexibility to choose the best liquidity event for its REIT, and eliminating internalization compensation is an important step toward maximizing shareholder value in the event that the REIT lists its shares on a public stock exchange," said Charles Schreiber, Jr., chief executive officer of KBS Capital Advisors. "This decision is consistent with our goal to be a low-cost leader in the industry and will provide enhanced transparency in our REITs' fee structures."
KBS Capital Advisors is an affiliate of KBS Realty Advisors LLC, which is a private equity real estate company and SEC-registered investment advisor founded by Peter Bren and Charles Schreiber, Jr. Since 1992, KBS Realty Advisors and its affiliated companies have completed transactional activity of approximately $25 billion via 14 separate accounts, six commingled funds, five sovereign wealth funds and five non-traded REITs. For information, visit www.kbscapital.com.
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including the selection and potential success of any of KBS REITs' liquidity events and potential returns to their respective shareholders. These statements are subject to known and unknown risks, uncertainties and other factors which may cause each of the KBS REITs' actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.