KBS Legacy Partners Apartment Reit eliminates internalisation compensation
The board of directors of KBS Legacy Partners Apartment Reit, a California-based public non-traded Reit sponsored by KBS Capital Advisors and Legacy Partners Residential Realty, will not pay any internalisation fees or compensation to its adviser or to its sub-adviser, KBS Legacy Apartment Community Reit Venture, or any of their respective affiliates, should the Reit enter into an internalisation transaction.
The decision was made at the recommendation of KBS Capital Advisors and approved by the board of directors of KBS Legacy Partners Apartment Reit as being in the best interest of the Reit and its shareholders.
Traditionally, in the event a non-traded Reit lists it shares on a public stock exchange, all management, acquisition and other functions previously performed by the Reit's external advisor are absorbed by the Reit, making it "self-managed." Such internalisation potentially could result in compensation, typically fees or shares of the Reit's stock, paid to the advisor in exchange for the advisor's personnel, infrastructure and other assets.
The elimination of this compensation can be a substantial cost savings for the Reit, and can potentially enhance investment returns to the Reit and its shareholders.
"By eliminating the internalisation fee for KBS Legacy Partners Apartment Reit, the board of directors and our adviser can strategically select the most attractive liquidation option when we reach that point in the Reit’s lifecycle, whether it is through individual asset sales, the sale of entire portfolios or listing on a public stock exchange," says W. Dean Henry, chief executive officer of KBS Legacy Partners Apartment Reit. "This flexibility allows us to focus on the option that would optimise shareholder returns at liquidation."