UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrantx

Filed by a Party other than the Registrant¨

Check the appropriate box:

 

¨Preliminary Proxy Statement
¨Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2))
xDefinitive Proxy Statement
¨Definitive Additional Materials
¨Soliciting Material Pursuant to§ 240.14a-12

KBS STRATEGIC OPPORTUNITY REIT II, INC.

(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

 

xNo fee required.
¨Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 (1)Title of each class of securities to which transaction applies:
 (2)Aggregate number of securities to which transaction applies:
 (3)Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 (4)Proposed maximum aggregate value of transaction:
 (5)Total fee paid:

 

¨Fee paid previously with preliminary materials.

¨      Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 (1)Amount Previously Paid:
 (2)Form, Schedule or Registration Statement No.:
 (3)Filing Party:
 (4)Date Filed:


LOGO

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Proxy Statement and Notice of Annual Meeting of Stockholders

To Be Held July 6, 20152016

SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS

Dear Stockholder:

On Monday,Wednesday, July 6, 2015,2016, we will hold our 20152016 annual meeting of stockholders at the offices of KBS, 800 Newport Center Drive, First Floor, Suite 700,140 Conference Center, Newport Beach, California 92660. The annual meeting will begin at 10:00 a.m. Pacific daylight time. Directions to the annual meeting can be obtained by calling 949-417-6500.

We are holding thisthe 2016 annual meeting to:of stockholders for the following purposes:

 

 1.ElectTo elect five directors to hold office for one-year terms expiring in 2016.2017.

The Board of Directors recommends a vote FOR each nominee.

 

 2.RatifyTo ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.

The Board of Directors recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.

 

 3.AttendTo attend to such other business as may properly come before the annual meeting and any adjournment or postponement thereof.

The board of directors has selected April 8, 20157, 2016 as the record date for determining stockholders entitled to vote at the annual meeting.

TheWe expect to mail a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement proxy card and our 20142015 annual report to stockholders, are being mailedvia the Internet, how to youvote online, and how to request a paper copy of our proxy materials, to certain stockholders on or about April 23, 2015.22, 2016.

We expect to mail a paper copy of our proxy materials to our other stockholders on or about April 22, 2016.

Whether or not you plan to attend the annual meeting and vote in person, we urge you to have your vote recorded as early as possible. Stockholders have the following three options for submitting their votes by proxy: (1) via the Internet; (2) by telephone; or (3) if you receive a paper copy of our proxy materials, by mail, using the enclosedpaper proxy card.

YOUR VOTE IS VERY IMPORTANT! Your immediate response will help avoid potential delays and may save us significant additional expenses associated with soliciting stockholder votes.

 

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE  ANNUAL2016ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 6, 2015:2016:

Our proxy statement, form of proxy card and 20142015 annual report to stockholders are also available at http://

www.proxyvote.com, and can be accessed by using the 12-digit control number and following the instructions located

on the enclosed proxy card.

 

 By Order of the Board of Directors 
 LOGO 
 

Peter McMillan III

Chairman

 

Newport Beach, California

April 23, 201522, 2016


QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

 

 

Q:Why did you send me thisI receive a Notice of Internet Availability of Proxy Materials or a paper copy of the proxy statement?materials?

 

A:We sent you this proxy statement and the enclosed proxy card because theThe board of directors is soliciting your proxy to vote your shares at the 20152016 annual meeting of stockholders. ThisPursuant to the rules adopted by the Securities and Exchange Commission (“SEC”), we may furnish our proxy materials over the Internet to some or all of our stockholders. Accordingly, we mailed a Notice of Internet Availability of Proxy Materials on or about April 22, 2016 to certain stockholders. The Notice of Internet Availability of Proxy Materials summarizes the information you need to know to access our proxy materials via the Internet and vote your shares by proxy or in person at the annual meeting. For all other stockholders, we mailed a paper copy of our proxy materials on or about April 22, 2016. Our proxy statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (“SEC”)SEC and is designed to assist you in voting. You do not need to attend the annual meeting in person in order to vote.

 

 

 

Q:What is a proxy?

 

A:A proxy is a person who votes the shares of stock of another person who could not attend a meeting. The term “proxy” also refers to the proxy card or other method of appointing a proxy. When you submit your proxy, you are appointing Keith D. Hall., Peter McMillan III, David E. SnyderJeffrey K. Waldvogel and Stacie K. Yamane, each of whom is one of our officers, as your proxies, and you are giving them permission to vote your shares of common stock at the annual meeting. The appointed proxies will vote your shares of common stock as you instruct, unless you submit your proxy without instructions. If you submit your proxy without instructions, they will vote (i) FOR all of the director nominees and (ii) FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016. With respect to any other proposals to be voted upon, they will vote in accordance with the recommendation of the board of directors or, in the absence of such a recommendation, in their discretion. It is important for you to return the proxy card to us (or submit your proxy via the Internet or by telephone)telephone, or return your paper proxy card to us (if you are in receipt of one) as soon as possible, whether or not you plan on attending the annual meeting.

 

 

 

Q:When is the annual meeting and where will it be held?

 

A:The annual meeting will be held on Monday,Wednesday, July 6, 2015,2016, at 10:00 a.m. Pacific daylight time at the offices of KBS, 800 Newport Center Drive, First Floor, Suite 700,140 Conference Center, Newport Beach, California 92660.

 

 

 

Q:Who is entitled to vote at the annual meeting?

 

A:Anyone who is a stockholder of record at the close of business on April 8, 2015,7, 2016, the record date, or holds a valid proxy for the annual meeting, is entitled to vote at the annual meeting. In order to be admitted to the annual meeting, you must present proof of ownership of our stock on the record date. Such proof can consist of: a brokerage statement or letter from a broker indicating ownership on April 8, 2015;7, 2016; a proxy card; a voting instruction form; or a legal proxy provided by your broker or nominee. Any holder of a proxy from a stockholder must present the proxy card, properly executed, and a copy of the proof of ownership.

Note that our advisor, KBS Capital Advisors LLC, which owned 21,95724,086 shares of our Class A common stock as of the record date, has agreed to abstain from voting any shares it owns in any vote for the election of directors.

 

1


Q:Will my vote make a difference?

 

A:Yes. Your vote could affect the proposals described in this proxy statement. Moreover, your vote is needed to ensure that the proposals described herein can be acted upon. Because we are a widely held company,YOUR VOTE ISVERY IMPORTANT!Your immediate response will help avoid potential delays and may save us significant additional expenses associated withsoliciting stockholder votes.

 

1


Q:How many shares of common stock are outstanding?

 

A:As of April 8, 2015,7, 2016, there were 4,576,12311,545,934 shares of our common stock outstanding and entitled to be cast at the annual meeting. However, as stated above, KBS Capital Advisors LLC has agreed to abstain from voting any of its shares in any vote for the election of directors.

 

 

 

Q:What constitutes a quorum?

 

A:A quorum consists of the presence in person or by proxy of stockholders entitled to cast 50% of all the votes entitled to be cast at the annual meeting.meeting on any matter. There must be a quorum present in order for the annual meeting to be a duly held meeting at which business can be conducted. No business may be conducted at the meeting if a quorum is not present. If you submit your proxy, even if you abstain from voting, then you will still be considered part of the quorum.

If a quorum is not present at the July 6, 2016 annual meeting date, the chairman of the meeting may adjourn the annual meeting to another date, time or place, not later than 120 days after the original record date of April 7, 2016. Notice need not be given of the new date, time or place if announced at the annual meeting before an adjournment is taken.

 

 

 

Q:How many votes do I have?

 

A:You are entitled to one vote for each share of common stock you held as of the record date.

 

 

 

Q:What may I vote on?

 

A:You may vote on:

 

 (1)the election of the nominees to serve on the board of directors;
 (2)the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015;2016; and
 (3)such other business as may properly come before the annual meeting and any adjournment or postponement thereof.

 

 

 

Q:How does the board of directors recommend I vote on the proposals?

 

A:The board of directors recommends that you vote:

 

 (1)FOR each of the nominees for election as director who areis named in this proxy statement; and
 (2)FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.

 

2


Q:How can I vote?

 

A:Stockholders can vote in person at the annual meeting, as described above under “Who is entitled to vote at the annual meeting?”, or by proxy. Stockholders have the following three options for submitting their votes by proxy:

 

 (1)

via the Internet, by accessing the website and following the instructions indicated on the enclosedpaper proxy card;

card (if you are in receipt of one), or provided in the Notice of Internet Availability of Proxy Materials;
 (2)

by telephone, by calling the telephone number and following the instructions indicated on the enclosedpaper proxy card;card (if you are in receipt of one), or

provided in the Notice of Internet Availability of Proxy Materials; or
 (3)

by mail, by completing, signing, dating and returning the enclosedpaper proxy card.

card you should have received with the paper copy of our proxy materials.

For those stockholders with Internet access, we encourage you to vote by proxy via the Internet, since it is quick, convenient and provides a cost savings to us. When you vote by proxy via the Internet or by telephone prior to the annual meeting date, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and, therefore, not be counted. For further instructions on voting, see the enclosedNotice of Internet Availability of Proxy Materials or the paper proxy card.card (if you are in receipt of one).

2


If you elect to attend the annual meeting, you can submit your vote in person as described above under “Who is entitled to vote at the annual meeting?”, and any previous votes that you submitted, whether by Internet, telephone or mail, will be superseded.

 

 

 

Q:What if I submit my proxy and then change my mind?

 

A:You have the right to revoke your proxy at any time before the annual meeting by:

 

 (1)notifying David E. Snyder,Jeffrey K. Waldvogel, our Secretary;
 (2)attending the annual meeting and voting in person as described above under “Who is entitled to vote at the annual meeting?”;
 (3)if you received and returned a paper proxy card, returning another proxy card dated after your first proxy card, if we receive it before the annual meeting date; or
 (4)recasting your proxy vote via the Internet or by telephone.

Only the most recent proxy vote will be counted and all others will be discarded regardless of the method of voting.

 

3


Q:What are the voting requirements to elect the board of directors?

 

A:With regard to the election of directors, you may vote “FOR ALL” of the nominees, you may withhold your vote for all of the nominees by voting “WITHHOLD ALL,” or you may vote for all of the nominees except for certain nominees by voting “FOR ALL EXCEPT” and listing the corresponding number of the nominee(s) for whom you want your vote withheld in the space provided on the proxy card. Under our charter, a majority of the shares entitled to vote and present in person or by proxy at an annual meeting at which a quorum is present is required for the election of the directors. This means that, of the shares entitled to vote and present in person or by proxy at an annual meeting, a director nominee needs to receive affirmative votes from a majority of such shares in order to be elected to the board of directors. Because of this majority vote requirement,“withhold” votes will have the effect of a vote against each nominee for director. Broker non-votes (discussed below), since they are not entitled to vote, will have no effect on the determination of this proposal. If an incumbent director nominee fails to receive the required number of votes for re-election, then under Maryland law, he will continue to serve as a “holdover” director until his successor is duly elected and qualified. If you submit a proxy card with no further instructions, your shares will be voted in accordance with the recommendation of the board of directors.

 

 

 

Q:What are the voting requirements for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015?2016?

 

A:With regard to the proposal relating to the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015,2016, you may vote “FOR” or “AGAINST” the proposal, or you may “ABSTAIN” from voting on the proposal. Under our bylaws, a majority of the votes cast at an annual meeting at which a quorum is present is required for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016. Abstentions will not count as votes cast with respect to determining if a majority vote is obtained under our bylaws and will have no effect on the determination of this proposal. If you submit a proxy card with no further instructions, your shares will be voted in accordance with the recommendation of the board of directors.

 

3


Q:What is a “broker non-vote”?

 

A:A “broker non-vote” occurs when a broker holding stock on behalf of a beneficial owner submits a proxy but does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that particular proposal and has not received instructions from the beneficial owner. There is one proposal for our stockholders’ consideration at the annual meeting on which brokers do not have discretionary voting power, the election of directors. Thus, beneficial owners of shares held in broker accounts are advised that, if they do not timely provide instructions to their broker, their shares will not be voted in connection with the election of directors at the annual meeting.

 

 

 

Q:How will voting on any other business be conducted?

 

A:Although we do not know of any business to be considered at the annual meeting other than the election of directors and the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015,2016, if any other business is properly presented at the annual meeting, your submitted proxy gives authority to Keith D. Hall., Peter McMillan III, David E. SnyderJeffrey K. Waldvogel and Stacie K. Yamane, and each of them, to vote on such matters in accordance with the recommendation of the board of directors or, in the absence of such a recommendation, in their discretion.

 

4


Q:When are the director nominations and stockholder proposals for the next annual meeting of stockholders due?

 

A:Stockholders interested in nominating a person as a director or presenting any other business for consideration at the 20162017 annual meeting of stockholders may do so by following the procedures prescribed in Section 2.12 of our bylaws and in the SEC’s Rule 14a-8. To be eligible for presentation to and action by theour stockholders at the 20162017 annual meeting, director nominations and other stockholder proposals must be received by David E. Snyder,Jeffrey K. Waldvogel, our Secretary, no later than January 24, 2016.23, 2017. To also be eligible for inclusion in our proxy statement for the 20162017 annual meeting, director nominations and other stockholder proposals must be received by Mr. SnyderWaldvogel by December 25, 2015.24, 2016.

 

 

 

Q:How are proxies being solicited?

 

A:In addition to mailing proxy solicitation material, including a notice that our proxy materials are available on the Internet, our directors and employees of our advisor or its affiliates may also solicit proxies in person, via the Internet, by telephone or by any other electronic means of communication we deem appropriate. Additionally, we have retained Broadridge Financial Solutions, Inc. (“Broadridge”), a proxy solicitation firm, to assist us in the proxy solicitation process. If you need any assistance, or have any questions regarding the proposals or how to cast your vote, you may contact Broadridge at 1-855-723-7816.

We will pay all of the costs of soliciting these proxies, including the cost of Broadridge’s services. We anticipate that the cost for Broadridge’s solicitation services will not exceed $3,500. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders.

 

 

 

Q:Where can I find more information?

 

A:We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file with the SEC on the web sitewebsite maintained by the SEC at http://www.sec.gov.www.sec.gov. Our SEC filings are also available to the public at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information regarding the public reference facilities.

 

45


CERTAIN INFORMATION ABOUT MANAGEMENT

The Board of Directors

We operate under the direction of the board of directors. The board of directors oversees our operations and makes all major decisions concerning our business. During 2014,2015, the board of directors held twoseven meetings, participated in one joint meeting with the conflicts committee and acted by unanimous written consent on fivetwo occasions. For biographical information regarding our directors, see “ – Executive Officers and Directors.”Directors” below.

There are two committees of the board of directors: the audit committee and the conflicts committee, both of which were formed in June 2014 prior to commencement of our initial public offering. Information regarding each of these committees is set forth below.

Board Leadership Structure

The board of directors is composed of two of our sponsors, Keith D. Hall and Peter McMillan III, and three independent directors. The board composition and the corporate governance provisions in our charter ensure strong oversight by independent directors. The board of directors’ two committees, the audit committee and the conflicts committee, are composed entirely of independent directors. Since our inception in 2013, we have operated under a board leadership structure with separate roles for our Chairman of the Board and our Chief Executive Officer. OurThe board of directors is led by Mr. McMillan, who has served as Chairman of the Board since 2013. Mr. McMillan, as the Chairman of the Board, is responsible for presiding over the meetings of the board of directors and the annual meetings of stockholders, generally setting the agendas for board meetings (subject to the requests of other directors) and providing information to the other directors in advance of meetings and between meetings. Mr. Hall, as our Chief Executive Officer, is responsible for the general management of the business, financial affairs and day-to-day operations of our company. We believe it is beneficial to have a Chairman of the Board whose focus is to lead the board and facilitate communication among directors and management. We believe this structure, of not combining the roles of the Chairman of the Board and the Chief Executive Officer, is the best governance model for our company and our stockholders. We do not currently have a policy requiring the appointment of a lead independent director as all of our independent directors are actively involved in board meetings.

The Role of the Board of Directors in our Risk Oversight Process

Our executive officers and our advisor are responsible for the day-to-day management of risks faced by the company, while the board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. No less than quarterly, the entire board of directors reviews information regarding the company’s liquidity, credit, operations, regulatory compliance and compliance with covenants in our material agreements, as well as the risks associated with each. In addition, each year the board of directors reviews significant variances between our current portfolio business plan and our original underwriting analysis and each quarter the directors review significant variances between our current results and our projections from the prior quarter, review all significant changes to our projections for future periods and discuss risks related to our portfolio. The audit committee oversees risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements. The conflicts committee manages risks associated with the independence of the independent directors and potential conflicts of interest involving our advisor and its affiliates. Although each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire board of directors is regularly informed through committee reports about such risks as well as through regular reports directly from the executive officers responsible for oversight of particular risks within the company.

Director Independence

Although our shares are not listed for trading on any national securities exchange, a majority of our directors, and all of the members of the audit committee and the conflicts committee, are “independent” as defined by the New York Stock Exchange. The New York Stock Exchange standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, ourthe board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). OurThe board of directors has affirmatively determined that Michael L. Meyer,

 

56


Meyer, William M. Petak and Laurent Degryse each satisfies the New York Stock Exchange independence standards. Michael L. Meyer and William M. Petak also serve as independent directors of KBS Strategic Opportunity REIT, Inc. In addition, Michael L. Meyer serves as an independent director of KBS Legacy Partners Apartment REIT, Inc. None of these directors has ever served as (or is related to) an employee of ours or any of our predecessors or acquired companies or received or earned any compensation from us or any such entities except for compensation directly related to service as a director of us. Therefore, we believe that all of these directors are independent directors.

The Audit Committee

General

The audit committee’s function is to assist the board of directors in fulfilling its responsibilities by overseeing (i) our accounting and financial reporting processes, (ii) the integrity of our financial statements, (iii) our compliance with legal and regulatory requirements, (iv) our independent auditors’ qualifications, performance and independence, and (v) the performance of our internal audit function. The audit committee fulfills these responsibilities primarily by carrying out the activities enumerated in the audit committee charter. The audit committee approved the audit committee charter in June 2014. The audit committee charter is available on our web sitewebsite at www.kbssorii.com.www.kbssorii.com.

The members of the audit committee are Michael L. Meyer (Chairman), William M. Petak and Laurent Degryse. All of the members of the audit committee are “independent” as defined by the New York Stock Exchange. The board of directors has determined that all members of the audit committee have significant financial and/or accounting experience, and the board of directors has determined that Mr. Meyer satisfies the SEC’s requirements for an “audit committee financial expert.” Mr. Meyer serves on the audit committees of three other public companies, two of which are our affiliates, in addition to his service on our audit committee. The board of directors has affirmatively determined that such simultaneous service by Mr. Meyer on the audit committees of the three other public companies will not impair his ability to effectively serve on our audit committee. During 2014,2015, the audit committee held threesix meetings.

Independent Registered Public Accounting Firm

During the year ended December 31, 2014,2015, Ernst & Young LLP served as our independent registered public accounting firm and provided certain tax and other services. Ernst & Young has served as our independent registered public accounting firm since our formation. We expect that Ernst & Young representatives will be present at the annual meeting and they will have the opportunity to make a statement if they desire to do so. In addition, we expect that the Ernst & Young representatives will be available to respond to appropriate questions posed by stockholders. The audit committee has engaged Ernst & Young as our independent auditors to audit our financial statements for the year ending December 31, 2015.2016. The audit committee may, however, select new auditors at any time in the future in its discretion if it deems such decision to be in our best interests. Any such decision would be disclosed to our stockholders in accordance with applicable securities laws.

Pre-Approval Policies

In order to ensure that the provision of such services does not impair the auditors’ independence, the audit committee charter imposes a duty on the audit committee to pre-approve all auditing services performed for us by our independent auditors, as well as all permitted non-audit services. In determining whether or not to pre-approve services, the audit committee considers whether the service is a permissible service under the rules and regulations promulgated by the SEC. The audit committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by our independent auditors, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting.

For the yearyears ended December 31, 2015 and 2014, (the first year in which we were a public reporting company subject to Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) all services rendered by Ernst & Young were pre-approved in accordance with the policies and procedures described above.

 

67


Principal Independent Registered Public Accounting Firm Fees

The audit committee reviewed the audit and non-audit services performed by Ernst & Young, as well as the fees charged by Ernst & Young for such services. In its review of the non-audit service fees, the audit committee considered whether the provision of such services is compatible with maintaining the independence of Ernst & Young. The aggregate fees billed to us for professional accounting services, including the audit of our annual financial statements by Ernst & Young for the years ended December 31, 20142015 and 2013,2014, are set forth in the table below.

 

  2014   2013   2015   2014 

Audit fees

  $153,040    $125,081      $326,395    $182,540    

Audit-related fees

   166,300     –       0     166,300    

Tax fees

   56,182     5,000       219,211     56,182    

All other fees

   399     399       333     399    
  

 

 

   

 

 

 

Total

  $375,921    $130,480      $545,939    $405,421    
  

 

 

   

 

 

 

For purposes of the preceding table, Ernst & Young’s professional fees are classified as follows:

 

  

Audit fees – These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by Ernst & Young in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent auditors in connection with statutory and regulatory filings or engagements.

  

Audit-related fees – These are fees for assurance and related services that traditionally are performed by independent auditors that are reasonably related to the performance of the audit or review of our financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, internal control reviews and consultation concerning financial accounting and reporting standards.

  

Tax fees – These are fees for all professional services performed by professional staff in our independent auditor’s tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues. Services may also include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state and local tax issues related to due diligence.

  

All other fees – These are fees for any services not included in the above-described categories.

Report of the Audit Committee

The function of the audit committee is oversight of the financial reporting process on behalf of the board of directors. Management has responsibility for the financial reporting process, including the system of internal control over financial reporting, and for the preparation, presentation and integrity of our financial statements. In addition, the independent auditors devote more time and have access to more information than does the audit committee. Membership on the audit committee does not call for the professional training and technical skills generally associated with career professionals in the field of accounting and auditing. Accordingly, in fulfilling their responsibilities, it is recognized that members of the audit committee are not, and do not represent themselves to be, performing the functions of auditors or accountants.

In this context, the audit committee reviewed and discussed the 20142015 audited financial statements with management, including a discussion of the quality and acceptability of our financial reporting, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The audit committee discussed with Ernst & Young, which is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, the matters required to be discussed by Auditing StandardsStandard No. 16, “CommunicationCommunications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board. The audit committee received from Ernst & Young the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the audit committee concerning independence, and discussed with Ernst & Young their

8


independence from us. In addition, the audit committee considered whether Ernst & Young’s provision of non-audit services is compatible with Ernst & Young’s independence.

7


Based on these reviews and discussions, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20142015 for filing with the SEC.

 

April 7, 2015

5, 2016
  The Audit Committee of the Board of Directors:
  Michael L. Meyer (Chairman), William M. Petak, and Laurent Degryse

The Conflicts Committee

General

The members of the conflicts committee are William M. Petak (Chairman), Michael L. Meyer and Laurent Degryse all of whom are independent directors. Our charter empowers the conflicts committee to act on any matter permitted under Maryland law if the matter at issue is such that the exercise of independent judgment by directors who are affiliates of our advisor could reasonably be compromised. Among the duties of the conflicts committee are the following:

 

  

reviewing and reporting on our policies (see “ – Report of the Conflicts Committee – Review of Our Policies” below);

  

approving transactions with affiliates and reporting on their fairness to us (see “ – Report of the Conflicts Committee – Certain Transactions with Related Persons” below);

  

supervising and evaluating the performance and compensation of our advisor;

  

reviewing our expenses and determining that they are reasonable and within the limits prescribed by our charter;

  

approving borrowings in excess of the total liabilities limit set forth in our charter; and

  

discharging the board of directors’ responsibilities relating to compensation.

The primary responsibilities of the conflicts committee are enumerated in our charter. The conflicts committee does not have a separate committee charter. During 2014,2015, the conflicts committee held threesix meetings, and participated in one joint meeting with the board of directors.directors and acted by unanimous written consent on one occasion.

Oversight of Executive Compensation

As noted above, the conflicts committee discharges the board of directors’ responsibilities relating to the compensation of our executives. However, we currently do not have any paid employees and our executive officers do not receive any compensation directly from us. Our executive officers are officers and/or employees of, or hold an indirect ownership interest in, our advisor, and/or its affiliates, and our executive officers are compensated by these entities, in part, for their services to us or our subsidiaries. See “– Report of the Conflicts Committee – Certain Transactions with Related Persons” for a discussion of the fees paid to our advisor and its affiliates.

Report of the Conflicts Committee

Review of Our Policies

The conflicts committee has reviewed our policies and determined that they are in the best interest of our stockholders. Set forth below is a discussion of the basis for that determination.

Offering Policy. We are conducting aan initial public offering of up to 100,000,000$1,000,000,000 in shares of our common stock in our primary initial public offering, consisting of two classes of shares: Class A shares at $10a price of $10.00 per share and Class T shares at a price of $9.59 per share (with discounts available for certain categories of investors)purchasers for both classes of shares). We are also offering up to 80,000,000$76,366,066 in shares of our common stock underin our dividend reinvestment plan.plan offering: Class A shares at a price of $9.50 per share and Class T shares at a price of $9.12 per share. We are offering to sell any combination of Class A and Class T shares in our primary offering and

9


dividend reinvestment plan offering but in no event may we sell more than 180,000,000 of shares of our common stock pursuant to the offering. Immediately prior to commencement of our initial public offering, we offered up to $105 million of shares of our common stock for sale in a best efforts private placement offering to accredited investors only pursuant to a confidential private placement memorandum. We believe these offeringsour now-terminated private offering and our initial public offering are in the best interest of our stockholders because they increase the likelihood that we will be able to acquire a diverse portfolio of income-producing assets, thereby reducing risk in our portfolio.

8


As of For the year ended December 31, 2014, we had not broken escrowthe costs of raising capital in our initial public offering. As such, no dealer manager fees or selling commissions have been paid or incurred in connection with the sale of shares in the offering. As of December 31, 2014, organization andnow-terminated private offering costs of approximately $2.4 million have been incurred by our advisor on our behalf in connection with our initial public offering. We will be liable for such costs up to an amount that, when combined with selling commissions and dealer manager fees, does not exceed 15%represented 7% of the gross proceeds of the initial public offering. As of December 31, 2014, we hadcapital raised. We did not maderaise any salescapital in our initial public offering and accordingly, have no obligation to reimburse our advisor or its affiliates for such cost. On January 7,in the year ended December 31, 2014. For the year ended December 31, 2015, we broke escrowthe costs of raising capital in our primary initial public offering.offering and our dividend reinvestment plan offering represented 15% of the capital raised.

Acquisition and Investment Policies. We expectintend to use substantially all of the net proceeds from our now terminatednow-terminated private offering and our ongoing initial public offering to invest in and manage a diverse portfolio of real estate-related loans, opportunistic real estate, real estate-related debt securities and other real estate-related investments. We intend to acquireinvestments located in the United States and Europe. Such investments will include the acquisition of distressed debt, to originatethe origination and acquireacquisition of mortgage, mezzanine, bridge and other real estate-related loans, to investinvestment in various types of opportunistic real estate and to investinvestments in real estate-related debt securities such as residential and commercial mortgage-backed securities and collateralized debt obligations. In addition, weWe may acquire equity securities of companiesalso invest in entities that make similar investments. We may make our investments through loan origination and the acquisition of individual assets or by acquiring portfolios of assets, mortgage REITs or companies with investment objectives similar to ours. We expect to make our investments in respect of real estate and real estate-related assets located in the United States and Europe. Although this is our current target portfolio, we may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forego what we believe to be a good investment because it does not precisely fit our expected portfolio composition. As of April 7, 2015,January 31, 2016, we owned two hotel properties, one hoteloffice property and had originated a first mortgage loan.

Borrowing Policies. We will fund our investments with proceeds from our now terminated private offeringhave financed and our ongoing initial public offering and expect to continue to finance a portion of our investments with debt. We intendwill use debt financing in various forms in an effort to focusincrease the size of our investment activitiesportfolio and potential returns to our stockholders. Access to capital is crucial to our business, since we earn income based on obtaining a diverse portfoliothe spread between the yield on our investments and the cost of opportunisticour borrowings. We expect to use financing in the form of secured loans, revolving credit facilities, repurchase agreements, bridge financings and bank warehousing facilities. For funding, we may utilize securitization structures, if available, and we may place mortgage financing on any real estate real loans, debt securities and other real estate investments. Careful use of debt will help us to achieve our diversification goals becauseinvestments we will have more funds available for investment. make.

We expect that once we have fully invested the proceeds from our ongoing initial public offering, our debt financing and other liabilities will be 60% or less of the cost of our tangible assets (before deducting depreciation or other non-cash reserves), although it may exceed this level during our offering stage. This is our target leverage as established by ourthe board of directors. There is no limitation on the amount we may borrow for any single investment. Our charter limitsWe may incur debt until our total liabilities towould exceed 75% of the cost of our tangible assets (before deducting depreciation or other non-cash reserves); however, we may exceed that limit if a majority of the conflicts committee approves each borrowing in excess of our charterthat limitation and we disclose such borrowing to our common stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing.

We do not intend to exceed this leverage limit. Careful use of debt will help us to achieve our diversification goals because we will have more funds available for investment. However, high levels of debt could cause us to incur higher interest charges and higher debt service payments, which would decrease the amount of cash available for distribution to our investors, and could also be accompanied by restrictive covenants. High levels of debt could also increase the risk of being unable to refinance when loans become due, or of being unable to refinance on favorable terms, and the risk of loss with respect to assets pledged as collateral for loans.

Except with respect to the borrowing limits contained in our charter, we may reevaluate and change our debt policy in the future without a stockholder vote. Factors that we would consider when reevaluating or changing our debt policy include: economic conditions, the relative cost and availability of debt and equity capital, any investment opportunities, the ability of our investments to generate sufficient cash flow to cover debt service requirements and other similar factors. Further, we may increase or decrease our ratio of debt to book value in connection with any change of our borrowing policies.

10


As of JanuaryDecember 31, 2015, our borrowings and other liabilities were approximately 48%49% of the cost (before depreciation or other noncash reserves) and book value (before depreciation) of our tangible assets.

Disposition Policies. The period that we will hold our investments in real estate-related loans, opportunistic real estate, real estate-related debt securities and other real estate-related investments will vary depending on the type of asset, interest rates and other factors. Our advisor will develop a well-defined exit strategy for each investment we make and periodicallywill continually perform a hold-sell analysis on each asset. These periodic analyses will focus onasset in order to determine the remaining available value enhancement opportunities foroptimal time to hold the asset the demand for the asset in the marketplace, market conditions and our overall portfolio objectives to determine if the sale of the asset, whether via an individual sale or part of a portfolio sale or merger, would generate a favorablestrong return tofor our stockholders. Economic and market conditions may influence us to hold our investments for different periods of time. We may sell an asset before the end of the expected holding period if we believe that market conditions have maximized its value to us or the sale of the asset would otherwise be in the best interests of our stockholders.

We did not dispose of any real estate assets during the year ended December 31, 2015.

Policy Regarding Working Capital Reserves. We establish an annual budget for capital requirements and working capital reserves each year that we update periodically during the year. We may set aside proceeds from our primary initial public offering for working capital purposes. Depending on how much we raise in our primary public offering, we expect to use between 0.25% and 1.00% of the gross proceeds from our primary public offering for working capital reserves. We may also use proceeds from our dividend reinvestment plan offering, debt proceeds and our cash flow from operations to meet our needs for working capital and to build a moderate level of cash reserves. In addition, contractual obligations may require us to maintain a minimum working capital reserve related to our properties.

9


Policies Regarding Operating Expenses. For the four consecutive quarters ended December 31, 2014, based on the definitions of total operating expenses, net income and average invested assets in our charter, our total operating expenses were approximately $1.1 million, we had a net loss attributable to common stockholders of approximately $2.5 million and our average invested assets were approximately $3.5 million. For the four consecutive quarters ended December 31, 2014, our total operating expenses represented approximately 31% of average invested assets. Under our charter, commencing with the fiscal quarter ended December 31, 2015, we are required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. For the four consecutive quarters ended December 31, 2015, total operating expenses represented approximately 6% of average invested assets. Our net income for the four consecutive quarters ended December 31, 2015 was negative.

Our Policy Regarding Transactions with Related Persons

Our charter requires the conflicts committee to review and approve all transactions between us and our advisor, and any of our officers or directors or any of their affiliates. Prior to entering into a transaction with a related party, a majority of the conflicts committee must conclude that the transaction is fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties. In addition, our Code of Conduct and Ethics lists examples of types of transactions with related parties that would create prohibited conflicts of interest and requires our officers and directors to be conscientious of actual and potential conflicts of interest with respect to our interests and to seek to avoid such conflicts or handle such conflicts in an ethical manner at all times consistent with applicable law. Our executive officers and directors are required to report potential and actual conflicts to the Compliance Officer, currently our advisor’s Chief Financial Officer,Audit Executive, via the Ethics Hotline, to an internal audit representative or directly to the audit committee chair, as appropriate.

Certain Transactions with Related Persons

The conflicts committee has reviewed the material transactions between our affiliates and us since the beginning of 20132014 as well as any such currently proposed material transactions. Set forth below is a description of such transactions and the conflicts committee’s report on their fairness.

As described further below, we have entered into agreements with certain affiliates pursuant to which they provide services to us. Keith D. Hall and Peter McMillan III, two of our executive officers, directors and sponsors, control and indirectly own our advisor, KBS Capital Advisors LLC, and the dealer manager of our initial public offering, KBS Capital Markets Group LLC. Our two other sponsors, Peter M. Bren and Charles J. Schreiber, Jr., indirectly control and indirectly own our advisor and theour dealer manager of our public offering. We refer to these individuals as our sponsors.manager. All four of our sponsors actively participate in the management and operations of our advisor. Our advisor has three managers: an entity owned and controlled by Mr. Bren; an entity owned and controlled by Messrs. Hall and McMillan; and an entity owned and controlled by Mr. Schreiber.

11


Our Relationship with KBS Capital AdvisorsAdvisors.. Our advisor provides day-to-day management of our business. Among the services provided by our advisor under the terms of the advisory agreement are the following:

 

  

finding, presenting and recommending to us real estate investment opportunities consistent with our investment policies and objectives;

  

structuring the terms and conditions of our investments, sales and joint ventures;

  

acquiring properties and other investments on our behalf in compliance with our investment objectives and policies;

  

sourcing and structuring our loan originations and acquisitions;

  

arranging for financing and refinancing of our properties and our other investments;

  

entering into leases and service contracts for our properties;

  

supervising and evaluating each property manager’s performance;

10


  

reviewing and analyzing the properties’ operating and capital budgets;

  

assisting us in obtaining insurance;

  

generating an annual budget for us;

  

reviewing and analyzing financial information for each of our assets and our overall portfolio;

  

formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of our properties and other investments;

  

performing investor-relations services;

  

maintaining our accounting and other records and assisting us in filing all reports required to be filed with the SEC, the IRS and other regulatory agencies;

  

engaging in and supervising the performance of our agents, including our registrar and transfer agent; and

  

performing any other services reasonably requested by us.

Our advisor is subject to the supervision of ourthe board of directors and only has such authority as we may delegate to it as our agent. We initially entered our advisory agreement with our advisor on July 3, 2013 in connection with our now-terminated private offering. On August 12, 2014, we amended and restated our advisory agreement in connection with the launch of our initial public offering. The agreement was amended and restated again in August 2015 in connection with renewing the term of the agreement for an additional year and to effect certain changes to the agreement previously in effect. On February 17, 2016, we amended and restated our advisory agreement to reflect certain changes to fees and expense reimbursements in connection with the offer and sale of Class T shares of common stock in our initial public offering. Our current advisory agreement has a one-year term expiring August 12, 2015,2016, subject to an unlimited number of successive one-year renewals upon the mutual consent of the parties. For the year ended December 31, 20132014 and from January 1, 20142015 through the most recent date practicable, which was January 31, 2015,2016, we compensated our advisor as set forth below.

Our advisor or its affiliates have paid, and may pay in the future, some of our organization and other offering costs (other than selling commissions, and dealer manager fees)fees and the ongoing stockholder servicing fee with respect to Class T shares sold in our primary initial public offering) incurred in connection with our offerings, includingnow-terminated private offering and our legal, accounting, printing, mailing and filing fees.initial public offering. There was no limit on the organization and offering costs incurred in connection with our now-terminated private offering and we reimbursed our advisor for all such costs incurred on our behalf. For theour initial public offering we reimburse our advisor and dealer manager for such costscommercially reasonable organization and offering expenses they incur on our behalf in connection with our initial public offering up to an amount that, when combined with selling commissions, dealer manager fees, and the ongoing stockholder servicing fee paid with respect to Class T shares sold in our primary initial public offering, and all other amounts spent by us on organization and offering expenses, does not exceed 15% of the aggregate gross proceeds of our primary initial public offering and the offering under our dividend reinvestment plan offering as of the date of reimbursement. However,Effective February 17, 2016, at the termination of our primary initial public offering, and at the termination of the offering under our dividend reinvestment plan, our advisor has agreed toand its affiliates will reimburse us to the extent that selling commissions, dealer manager fees and otherthe organization and offering expenses incurredpaid directly or reimbursed by us (excluding selling commissions, the dealer manager fee and the ongoing stockholder servicing fee with respect to Class T shares sold in our primary initial public offering) in connection with our primary initial public offering, regardless of when incurred, exceed 15%1.0% of the gross offering proceeds of the respectivefrom our primary initial public offering. From January 1, 2013 through December 31, 2013, ourOur advisor incurred approximately $0.5 million ofand its affiliates will be responsible for any organization and other offering expenses related to our primary initial public offering to the privateextent they exceed 1.0% of gross proceeds from our primary initial public offering onas of the termination of our behalf and fromprimary initial public offering.

12


From January 1, 2014 through JanuaryDecember 31, 2015,2014, our advisor incurred approximately $0.2 million of organization and offering expenses related to theour now-terminated private offering on our behalf, all of which we had reimbursed as of JanuaryDecember 31, 2015.2014. From January 1, 20132015 through DecemberJanuary 31, 2013, our advisor incurred approximately $0.8 million of2016, no organization and offering expenses related to the publicour now-terminated private offering were incurred by our advisor on our behalf and frombehalf. From January 1, 2014 through JanuaryDecember 31, 2015,2014, our advisor incurred approximately $1.1 million of organization and offering expenses related to theour initial public offering on our behalf and from January 1, 2015 through January 31, 2016, our advisor incurred approximately $2.0 million of organization and offering expenses related to our initial public offering on our behalf, of which $1.9$2.6 million was outstanding as of January 31, 2015.2016.

We incur acquisition and origination fees payable to our advisor equal to 1.5%a percentage of the cost of investments acquired or originated by us, or the amount to be funded by us to acquire or originate loans, including acquisition and origination expenses and any debt attributable to such investments.investments plus significant capital expenditures related to the development, construction or improvement of the investment budgeted as of the date of acquisition. Acquisition and origination fees relate to services provided in connection with the selection and acquisition or origination of real estate investments. From January 1, 2013 through December 31, 2013 we did not incur any acquisitionFor investments acquired or originated with proceeds raised in our now-terminated private offering and origination fees payableinitial public offering on or prior to February 16, 2016, this percentage is 1.5%. For investments acquired or originated with proceeds raised in our advisor.initial public offering after February 16, 2016, this percentage is 2.6%. Acquisition and origination fees from January 1, 2014 through JanuaryDecember 31, 20152014 totaled approximately $0.6 million and acquisition and origination fees from January 1, 2015 through January 31, 2016 totaled approximately $1.0 million, of which $0.6$0.1 million was outstanding as of January 31, 2015.2016.

11


In addition to acquisition and origination fees, we reimburse our advisor for customary acquisition and origination expenses, whether or not we ultimately acquire the asset. From January 1, 20132014 through December 31, 20132014 and from January 1, 20142015 through January 31, 2015,2016, our advisor and its affiliates did not incur any such costs on our behalf.

For asset management services, we pay our advisor a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the cost of our investments and (ii) 2.0% of the sum of the cost of our investments, less any debt secured by or attributable to the investments. The cost of the real property investments is calculated as the amount paid or allocated to acquire the real property, including the cost of any subsequent development, construction or improvements to the property and including fees and expenses related thereto (but excluding acquisition fees paid or payable to our advisor). The cost of the loans and any investments other than real property is calculated as the lesser of (x) the amount actually paid or allocated to acquire or fund the loan or other investment, including fees and expenses related thereto (but excluding acquisition fees paid or payable to our advisor), and (y) the outstanding principal amount of such loan or other investment, including fees and expenses related to the acquisition or funding of such investment (but excluding acquisition fees paid or payable to our advisor), as of the time of calculation. In the case of investments made through joint ventures, the asset management fee is determined based on our proportionate share of the underlying investment. From January 1, 20132014 through December 31, 2013, we did not incur any asset management fees payable to our advisor. From January 1, 2014, through January 31, 2015, our asset management fees totaled $41,150,$13,000, and from January 1, 2015 through January 31, 2016, our asset management fees totaled $0.6 million, all of which $30,420 was outstandingpaid as of January 31, 2015.2016.

Under our advisory agreement our advisor and its affiliates have the right to seek reimbursement from us for all costs and expenses they incur in connection with their provision of services to us, including our allocable share of our advisor’s overhead, such as rent, employee costs, utilities and information technologycybersecurity costs. Our advisor may seek reimbursement for employee costs under the advisory agreement. At this time, our advisor only expects to seek reimbursement for our allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to us. In the future, if our advisor seeks reimbursement for additional employee costs, such costs may include our proportionate share of the salaries of persons involved in the preparation of documents to meet SEC reporting requirements. We do not reimburse our advisor or its affiliates for employee costs in connection with services for which our advisor earns acquisition or origination fees or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries and benefits our advisor or its affiliates may pay to our executive officers. From January 1, 20132014 through December 31, 2013,2014, we did not reimburse any operating expenses to our advisor. From January 1, 2014 through January 31, 2015, we had reimbursed our advisor for $446,592$0.4 million of operating expenses, including $10,623$11,000 of employee costs. From January 1, 2015 through January 31, 2016, we reimbursed our advisor for $0.4 million of operating expenses, including $0.2 million of employee cost and $0.2 million of dead deal costs. As of January 31, 2015,2016, we had $148,935$0.1 million of operating expenses outstanding, including $6,238$63,000 of employee costs.

13


On January 6, 2014, we, together with KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”), KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”), KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”), KBS Legacy Partners Apartment REIT, Inc., (“KBS Strategic Opportunity REIT, Inc.Legacy Partners Apartment REIT”), our dealer manager, our advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by our advisor and its insurance broker among each of the various entities covered by the plan,program, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. Our advisor’s and our dealer manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2015, KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”) was added to the insurance program at terms similar to those described above.

The conflicts committee considers our relationship with our advisor during 20132014 and 20142015 to be fair. The conflicts committee believes that the amounts paid or payable to our advisor under the advisory agreement are similar to those paid by other publicly offered, unlisted, externally advised REITs and that this compensation is necessary in order for our advisor to provide the desired level of services to us and our stockholders.

Our Relationship with KBS Capital Markets Group.Group. We have been party to a dealer manager agreement with our dealer manager since the launch of our now-terminated private offering on July 3, 2013. We ceased offering shares in our now-terminated private offering on August 11, 2014, at which point the dealer manager agreement with respect to theour now-terminated private offering terminated (other than with respect to certain provisions which survive termination of the agreement). On August 12, 2014 we launched our initial public offering and entered a new dealer manager agreement with our dealer manager with respect to theour initial public offering. Pursuant to the agreements, our dealer manager is or was entitled

12


to receive selling commissions and dealer manager fees of up to 9.5% of the gross proceeds of our primary initial public offering and our now-terminated primary private offering (no selling commissions or dealer manager fees are or were payable with respect to sales under theour dividend reinvestment plan)plan offering).

As of February 17, 2016, we entered an amended and restated dealer manager agreement in connection with our initial public offering in order to revise the terms of the dealer manager agreement to provide for the offer and sale of Class T shares of our common stock in our initial public offering. Pursuant to the terms of the amended and restated dealer manager agreement, our dealer manager is entitled to receive selling commissions of up to 6.5% of the purchase price for Class A shares of our common stock sold in our primary initial public offering and up to 3.0% of the purchase price of our Class T shares of common stock sold in our primary initial public offering, as well as a dealer manager fee of up to 2.0% of the purchase price of each class of shares of our common stock sold.

In addition, our dealer manager will receive an annual stockholder servicing fee of 1.0% of the purchase price per share (ignoring any discounts that may be available to certain categories of purchasers) of Class T common stock sold in our primary initial public offering solely to the extent there is a broker dealer of record with respect to such Class T share that has entered a currently effective selected dealer agreement or servicing agreement that provides for the payment to such broker dealer of the stockholder servicing fee with respect to such Class T share, and such broker dealer of record is in compliance with the applicable terms of such selected dealer agreement or servicing agreement related to such payment. To the extent payable, the stockholder servicing fee will accrue daily and be paid monthly in arrears, and our dealer manager will reallow 100% of the stockholder servicing fee to such broker dealer of record for services provided to Class T stockholders after the initial sale of the Class T share. In addition, no stockholder servicing fee will be paid with respect to Class T shares purchased through our dividend reinvestment plan offering or issued pursuant to a stock dividend. The stockholder servicing fee will cease accruing upon the occurrence of any of the following events: (i) the date at which aggregate underwriting compensation from all sources equals 10% of the gross proceeds from the primary offering in which the Class T share was sold, as calculated by us with our assistance of our dealer manager after the termination of the primary offering in which the Class T share was sold, (ii) with respect to a particular Class T share, on the fourth anniversary of the issuance of the share, (iii) a listing of our common stock on a national securities exchange, (iv) a merger or other extraordinary transaction, and (v) the date the Class T share associated with the stockholder servicing fee is no longer outstanding such as upon its redemption or our dissolution.

14


All or a portion of the selling commissions are or were not charged with regard to shares sold to certain categories of purchasers. A reduced dealer manager fee is or was payable with respect to certain volume discount sales. The dealer manager reallows or reallowed 100% of selling commissions to broker-dealers participating in our initial public offering. From its dealer manager fee, our dealer manager may reallow to any participating broker-dealer up to 1.0% of the gross offering proceeds attributable to that participating broker-dealer as a marketing fee (in specialselect cases, the dealer manager has the option to increase the amount of this reallowance). From January 1, 20132014 through December 31, 2013, we did not incur any selling commissions. From January 1, 2013 through December 31, 2013, we incurred dealer manager fees of $15,870, none of which was reallowed to participating broker-dealers. From January 1, 2014, through January 31, 2015, we incurred selling commissions of $1,231,787$1.2 million related to our now-terminated private offering and our initial public offering, of which 100% was reallowed to participating broker-dealers. From January 1, 20142015 through January 31, 2015,2016, we incurred selling commissions of $3.0 million related to our initial public offering of which 100% was reallowed to participating broker dealers. From January 1, 2014 through December 31, 2014, we incurred dealer manager fees of $816,875,$0.8 million related to our now-terminated private offering and our initial public offering, of which $116,877$0.1 million was reallowed by our dealer manager to participating broker-dealers. From January 1, 2015 through January 31, 2016, we incurred dealer manager fees of $1.6 million related to our initial public offering, of which $0.5 million was reallowed by our dealer manager to participating broker-dealers.

In addition to selling commissions and dealer manager fees, and subject to the limitations on organization and offering expenses described above, we are also obligated to reimburse our dealer manager and its affiliates for certain offering related expenses that they incur on our behalf. These expenses include, among others, the cost of bona fide training and education meetings held by us (primarily the travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and travel, and meal and lodging costs for registered persons associated with our dealer manager and officers and employees of our affiliates to attend retail seminars conducted by broker-dealers and, in special cases, reimbursement to participating broker-dealers for technology costs associated with our offerings, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of our shares by such broker-dealers and the ownership of our shares by such broker-dealers’ customers.broker-dealers. We reimburse our dealer manager for such underwriting compensation incurred in connection with our initial public offering as discussed in the prospectus for our initial public offering, provided that within 30 days after the end of the month in which our primary initial public offering terminates, our dealer manager must reimburse us to the extent that our reimbursements cause total underwriting compensation for our primary initial public offering to exceed 10% of the gross offering proceeds from the offering. We also directly pay or reimburse our dealer manager for bona fide invoiced due diligence expenses of broker-dealers. However, no reimbursements made by usFrom January 1, 2014 through December 31, 2014, our dealer manager sought reimbursement for $0.2 million in expenses related to our now-terminated private offering, all of which we have reimbursed to our dealer manager or our advisor may cause total organization and offering expenses incurred by us in connection with our public offering (including selling commissions, dealer manager fees and all other items of organization and offering expenses) to exceed 15% of the aggregate gross proceeds from our primary initial public offering and the offering under our dividend reinvestment plan as of the date of reimbursement. There was no limit on organization and offering expenses incurred by us in connection with our private offering and we reimbursedmanager. From January 1, 2014 through December 31, 2014, our dealer manager sought reimbursement for all offering related expenses they incurred on our behalf$0.5 million in connection with the private offering. From January 1, 2013 through December 31, 2013, we did not reimburse our dealer manager for expenses related to the privateour initial public offering, and from January 1, 20142015 through January 31, 2015, we had reimbursed our dealer manager for $234,551 in expenses related to the private offering, all of which had been paid as of January 31, 2015. As of January 31, 2015, our dealer manager had $626,779 ofsought reimbursement for $1.8 million in expenses outstanding related to theour initial public offering.offering, $0.5 million of which we had reimbursed as of January 31, 2016.

The conflicts committee believes that this arrangementthese arrangements with our dealer manager isare fair. The compensation payable to our dealer manager reflects our belief that such selling commissions, and dealer manager fees and stockholder servicing fees will maximize the likelihood that we will be able to achieve our goal of acquiring a large, diversified portfolio of real estate and real estate-related investments.

Other TransactionsTransactions.. Our advisor has entered a sub-advisory agreement with STAM Europe (“STAM”), a real estate operating company based in Paris, France, pursuant to which STAM will provide real estate acquisition and portfolio management services to our advisor in connection with investments in Europe. For investments in Europe we make directly and for which our ownership interest is 100%, our advisor will compensate STAM for its services in sourcing and managing these investments from the fees it earns from us under the advisory agreement with us and we will pay STAM no additional compensation. We, along with our advisor, expect to enter a letter agreement with STAM that sets forth general compensation terms with respect to investments we make through STAM, other than through our direct investment in value added real estate and distressed debt in Europe (which are governed by the sub-advisory agreement between STAM and our advisor).

13


Currently Proposed Transactions. There are no currently proposed material transactions with related persons other than those covered by the terms of the agreements described above.

The conflicts committee has determined that the policies set forth in this Report of the Conflicts Committee are in the best interests of our stockholders because they provide us with the highest likelihood of achieving our investment objectives.

 

April 7, 20155, 2016  The Conflicts Committee of the Board of Directors:
  William M. Petak (Chairman), Michael L. Meyer and Laurent Degryse

15


Nomination of Directors

General

We do not have a standing nominating committee. Unless otherwise provided by Maryland law, the board of directors is responsible for selecting its own nominees and recommending them for election by theour stockholders, provided that the conflicts committee is responsible for identifying and nominating replacements for vacancies among our independent director positions. Unless filled by a vote of the stockholders as permitted by the Maryland General Corporation Law, a vacancy that results from the removal of a director will be filled by a vote of a majority of the remaining directors. Any vacancy on the board of directors for any other cause will be filled by a vote of a majority of the remaining directors, even if such majority vote is less than a quorum. The board of directors believes that the primary reason for creating a standing nominating committee is to ensure that candidates for independent director positions can be identified and their qualifications assessed under a process free from conflicts of interest with us. Because nominations for vacancies in independent director positions are handled exclusively by a committee composed only of independent directors, the board of directors has determined that the creation of a standing nominating committee is not necessary. We do not have a charter that governs the director nomination process.

Board Membership Criteria

With respect to filling vacancies for independent director positions, the conflicts committee reviews the appropriate experience, skills and characteristics required of directors in the context of the then-current membership of the board of directors. The full board of directors annually conducts a similar review with respect to all director nominations. This assessment includes, in the context of the perceived needs of the board of directors at that time, issues of knowledge, experience, judgment and skills, such as an understanding of the real estate and real estate finance industries or accounting or financial management expertise. The board of directors seeks to nominate directors with diverse backgrounds, experiences and skill sets that complement each other so as to maximize the collective knowledge, experience, judgment and skills of the entire board of directors. The board of directors assesses its effectiveness in achieving this goal annually, in part, by reviewing the diversity of the skill sets of the directors and determining whether there are any deficiencies in the board of directors’ collective skill set that should be addressed in the nominating process. The board of directors made such an assessment in connection with director nominations for the 20152016 annual stockholders’ meeting of stockholders and determined that the composition of the current board of directors satisfies its diversity objectives.

Other considerations in director nominations include the candidate’s independence from conflict with us and the ability of the candidate to attend board meetings regularly and to devote an appropriate amount of time in preparation for those meetings. It also is expected that independent directors nominated by the conflicts committee will be individuals who possess a reputation and hold positions or affiliations befitting a director of a large publicly held company and who are actively engaged in their occupations or professions or are otherwise regularly involved in the business, professional or academic community. Moreover, as required by our charter, at least one of our independent directors must have at least three years of relevant real estate experience, and each director who is not an independent director must have at least three years of relevant experience demonstrating the knowledge and experience required to successfully acquire, manage and dispose of the types of assets we acquire and manage.

14


Selection of Directors

Unless otherwise provided by Maryland law, the board of directors is responsible for selecting its own nominees and recommending them for election by theour stockholders, provided that the conflicts committee must nominate replacements for any vacancies among the independent director positions. All director nominees stand for election by theour stockholders annually.

In nominating candidates for the board of directors, the board of directors (or the conflicts committee, as appropriate) solicits candidate recommendations from its own members and the management of KBS Capital Advisors. The board of directors and the conflicts committee may also engage the services of a search firm to assist in identifying potential director nominees.

16


The board of directors and the conflicts committee will consider recommendations made by stockholders for director nominees who meet the established director criteria set forth above. In order to be considered for nomination, recommendations made by stockholders must be submitted within the timeframe required to request a proposal to be included in the proxy materials. See “Stockholder Proposals” below. In evaluating the persons recommended as potential directors, the board of directors (or the conflicts committee, as appropriate) will consider each candidate without regard to the source of the recommendation and take into account those factors that they determine are relevant. Stockholders may directly nominate potential directors (without the recommendation of the board of directors or conflicts committee) by satisfying the procedural requirements for such nomination as provided in Article II, Section 2.12 of our bylaws. Any stockholder may request a copy of our bylaws free of charge by calling 1-866-584-1381 and selecting “Option 2”.

Stockholder Communications with the Board of Directors

We have established a procedure for stockholders to communicate comments and concerns to the board of directors. Stockholders may contact the board of directors at the following address:

Board of Directors of KBS Strategic Opportunity REIT II, Inc.

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Stockholders should report any complaints or concerns regarding (1) suspected violations or concerns as to compliance with laws, regulations, our Code of Conduct and Ethics or other suspected wrongdoings affecting us or our properties or assets, or (2) any complaints or concerns regarding our accounting, internal accounting controls, auditing matters, or any concerns regarding any questionable accounting or auditing matters affecting us. Stockholders should report any such suspected violations or other complaints or concerns by any of the following means:

 

  

Via the Internet at http://ethicspoint.com;kbssorii.ethicspoint.com;

  

By calling the toll free Ethics Hotline at 1-888-329-6414; or

  

By mailing a description of the suspected violation or concern to:

Audit Committee Chair

c/o KBS Strategic Opportunity REIT II, Inc.

800 Newport Center Drive, Suite 700

Newport Beach, CA 92660

Reports made via the Ethics Hotline will be sent to an internalour compliance officer and the audit representative and at least one of the company’s independent directors,committee chair, provided that no person named in the report will receive the report directly.

Stockholders can also communicate directly with the Chairman of the Board at the annual meeting. Although we do not have a policy regarding the attendance of directors at annual meetings of stockholders, we expect all of our directors to be present at all such meetings. All of our directors were present at the 2015 annual meeting of stockholders.

 

1517


Executive Officers and Directors

We have provided below certain information about our executive officers and directors. All of our directors have terms expiring on the date of the 2016 annual meeting and are being nominated for re-election to serve until the 20162017 annual meeting and until his successor is elected and qualified.

 

Name

  

Position(s)

    Age(1)    Year First
Became a
    Director    

Name and Address(1)

  

Position(s)

    Age(2)    Year First
Became a
    Director    

Keith D. Hall

  Chief Executive Officer and Director  56  2013  Chief Executive Officer and Director  57  2013

Peter McMillan III

  Chairman of the Board, President and Director  57  2013  Chairman of the Board, President and Director  58  2013

David E. Snyder

  Chief Financial Officer, Treasurer, and Secretary  44  N/A

Jeffrey K. Waldvogel

  Chief Financial Officer, Treasurer, and Secretary  38  N/A

Stacie K. Yamane

  Chief Accounting Officer  50  N/A  Chief Accounting Officer  51  N/A

Michael L. Meyer

  Independent Director  76  2014  Independent Director  77  2014

William M. Petak

  Independent Director  53  2014  Independent Director  54  2014

Laurent Degryse

  Independent Director  48  2014  Independent Director  49  2014

(1) The address of each named officer and director is 800 Newport Center Drive, Suite 700, Newport Beach, California 92660.

(2) As of April 1, 2015.2016.

Keith D. Hallis our Chief Executive Officer and one of our directors, positions he has held since our formation in February 2013. He is also Chief Executive Officer and a director of KBS Strategic Opportunity REIT, positions he has held since December 2008 and October 2008, respectively. He is also an Executive Vice President of KBS REIT I, KBS REIT II, KBS REIT III, and KBS Growth & Income REIT, Inc. (“KBS Growth and Income REIT”), positions he has held for these entities since June 2005, August 2007, January 2010 and January 2015, respectively. In addition, Mr. Hall is a sponsor of our company, KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS Growth & Income REIT, which were formed in 2013, 2005, 2007, 2009, 2008, 2009 and 2015, respectively. Mr. Hall owns and controls a 50% interest in GKP Holding LLC. GKP Holding owns a 33 1/3% interest in KBS Holdings LLC, which is the sole owner of our advisor and our dealer manager. All four of our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor. Mr. Hall is also a member of the investment committee formed by our advisor to evaluate and authorize new investment opportunities for us. Mr. Hall is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Mr. Hall is a co-founder of Willowbrook Capital Group, LLC, which, from August 2003 until December 2012, was an asset management company. Prior to forming Willowbrook in 2000, Mr. Hall was a Managing Director at CS First Boston, where he managed the distribution strategy and business development for the Principal Transaction Group’s $18.0 billion real estate securities portfolio. Mr. Hall’s two primary business unit responsibilities were Mezzanine Lending and Commercial Real Estate Development. Before joining CS First Boston in 1996, he served as a Director in the Real Estate Products Group at Nomura Securities, with responsibility for the company’s $6.0 billion annual pipeline of fixed-income, commercial mortgage-backed securities. During the 1980s, Mr. Hall was a Senior Vice President in the High Yield Department of Drexel Burnham Lambert’s Beverly Hills office, where he was responsible for distribution of the group’s high-yield real estate securities. Mr. Hall received a Bachelor of Arts Degree with honors in Finance from California State University, Sacramento.

OurThe board of directors has concluded that Mr. Hall is qualified to serve as one of our directors for reasons including his expertise in the real estate finance markets and his expertise with real estate-related investments. With over 30 years of experience investing in and managing real estate-related investments, Mr. Hall has the depth and breadth of experience to implement our business strategy. As an executive officer and principal of our advisor, Mr. Hall is able to direct ourthe board of directors to the critical issues facing our company.

Peter McMillan IIIis our President, the Chairman of the Board and one of our directors, positions he has held since our formation in February 2013. He is also President, Chairman of the Board and a director of KBS Strategic Opportunity REIT, positions he has held since December 2008. He is also an Executive Vice President, Treasurer, Secretary and a director of KBS REIT I, KBS REIT II, KBS REIT III and KBS Growth & Income REIT, and an Executive Vice President of KBS Legacy Partners Apartment REIT, positions he has held for these entities since June 2005, August 2007, January 2010, January 2015 and August 2009, respectively. In addition, Mr. McMillan is a sponsor of our company, KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS Growth & Income REIT, which were formed in 2013, 2005,

 

1618


2007, 2009, 2008, 2009 and 2014,2015, respectively. Mr. McMillan owns and controls a 50% interest in GKP Holding LLC. GKP Holding owns a 33 1/3% interest in KBS Holdings LLC, which is the sole owner of our advisor and our dealer manager. All four of our sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor. Mr. McMillan is also a member of the investment committee formed by our advisor to evaluate and authorize new investment opportunities for us. Mr. McMillan is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Mr. McMillan is a Partner and co-owner of Temescal Canyon Partners LP, an investment advisor formed in 2013 to manage a multi-strategy hedge fund on behalf of investors. Mr. McMillan is also a co-founder and the Managing Partner of Willowbrook Capital Group, LLC which, from August 2003 until December 2012, was an asset management company. Prior to forming Willowbrook in 2000, Mr. McMillan served as an Executive Vice President and Chief Investment Officer of SunAmerica Investments, Inc., which was later acquired by AIG. As Chief Investment Officer, he was responsible for over $75.0 billion in assets, including residential and commercial mortgage-backed securities, public and private investment grade and non-investment grade corporate bonds and commercial mortgage loans and real estate investments. Before joining SunAmerica in 1989, he served as Assistant Vice President for Aetna Life Insurance and Annuity Company with responsibility for the company’s $6.0 billion fixed income portfolios. Mr. McMillan received his Master of Business Administration in Finance from the Wharton Graduate School of Business at the University of Pennsylvania and his Bachelor of Arts Degree with honors in Economics from Clark University. Mr. McMillan is a member of the Board of Trustees of Metropolitan West Funds and TCW Mutual Funds and is a former director of Steinway Musical Instruments, Inc.

OurThe board of directors has concluded that Mr. McMillan is qualified to serve as one of our directors and the Chairman of the Board for reasons including his expertise in real estate finance and with real estate-related investments. With over 30 years of experience investing in and managing real estate-related debt investments, Mr. McMillan offers insights and perspective with respect to our real estate-related investment portfolio as well as our real estate portfolio. As one of our executive officers and a principal of our advisor, Mr. McMillan is also able to direct ourthe board of directors to the critical issues facing our company. Further, his experiences as a director of KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Growth and& Income REIT, TCW Mutual Funds and Metropolitan West Funds and as a former director of Steinway Musical Instruments, Inc. provide him with an understanding of the requirements of serving on a public company board and qualify him to serve as the chairman of ourthe board of directors.

David E. SnyderJeffrey K. Waldvogelis our Chief Financial Officer, Treasurer and Secretary, positions he has held since our formation in February 2013.June 2015. He is also the Chief Financial Officer of our advisor, KBS REIT I, KBS REIT II, KBS REIT III and KBS Growth & Income REIT, positions he has held for each of these entities since November 2008, December 2008, December 2008, January 2010 and January 2015, respectively.June 2015. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Strategic Opportunity REIT and KBS Legacy Partners Apartment REIT, positions he has held for each of these entities since December 2008 and August 2009, respectively.June 2015. Mr. SnyderWaldvogel is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

From January 1998Mr. Waldvogel has been employed by an affiliate of KBS Capital Advisors since November 2010. With respect to May 2008, Mr. Snyder worked for Nationwide Health Properties, Inc., a real estate investment trust specializing in healthcare related property. Hethe KBS-sponsored REITs advised by KBS Capital Advisors, he served as the Vice PresidentDirector of Finance and ControllerReporting from July 20052012 to February 2008June 2015 and as the VP Controller Technical Accounting from January 1998November 2010 to July 2005. At Nationwide Health Properties,2012. In these roles Mr. SnyderWaldvogel was responsible for overseeing internal and external financial reporting, Sarbanes-Oxleyvaluation analysis, financial analysis, REIT compliance, budgeting, debt compliance negotiation and documentationreporting, and technical accounting.

Prior to joining an affiliate of debt and equity financing andKBS Realty Advisors in 2010, Mr. Waldvogel was an audit senior manager at Ernst & Young LLP. During his eight years at Ernst & Young LLP, where he worked from October 2002 to October 2010, Mr. Waldvogel performed or supervised various auditing engagements, including the negotiationaudit of acquisition and leasing documentation. In addition, Mr. Snyder was partfinancial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), as well as financial statements prepared on a tax basis. These auditing engagements were for clients in a variety of the senior management team that approved investments, determined appropriate financing and developed strategic goals and plans. As part of his investment and financing responsibilities, Mr. Snyder participatedindustries, with a significant focus on clients in the origination, modification and refinancing of: mortgage loans made to customers, mortgages obtained on real estate and unsecured credit facilities.industry.

In April 2002, Mr. Snyder was an adjunct accounting professor at Biola University from 1998 to 2005, teaching courses in auditing and accounting. He was the director of financial reporting at Regency Health Services, Inc., a skilled nursing provider, from November 1996 to December 1997. From October 1993 to October 1996, Mr. Snyder worked for Arthur Andersen LLP. Mr. SnyderWaldvogel received a Master of Accountancy Degree and Bachelor of Science Degree in Business Administration with an emphasis in Accounting from BiolaBrigham Young University in La Mirada, California.Provo, Utah. Mr. SnyderWaldvogel is a Certified Public Accountant (California).

17


Stacie K. Yamaneis our Chief Accounting Officer, a position she has held since our formation in February 2013. Ms. Yamane is also the Chief Accounting Officer, Portfolio Accounting of our advisor and Chief Accounting

19


Officer of KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS Growth & Income REIT, positions she has held for these entities since October 2008, October 2008, October 2008, January 2010, August 2009, August 2009 and January 2015, respectively. From July 2007 until December 2008, Ms. Yamane served as the Chief Financial Officer of KBS REIT II and from July 2007 to October 2008, she served as Controller of KBS REIT II; from October 2004 to October 2008, she served as Fund Controller of our advisor; from June 2005 to December 2008, she served as Chief Financial Officer of KBS REIT I; and from June 2005 to October 2008 she served as Controller of KBS REIT I.

Ms. Yamane also serves as Senior Vice President/Controller, Portfolio Accounting for KBS Realty Advisors LLC, a position she has held since 2004. She served as a Vice President/Portfolio Accounting with KBS-affiliated investment advisors from 1995 to 2004. At KBS Realty Advisors, from 2004 through 2015, Ms. Yamane iswas responsible for client accounting/reporting for two real estate portfolios. These portfolios consistconsisted of industrial, office and retail properties as well as land parcels. Ms. Yamane worksworked closely with portfolio managers, asset managers, property managers and clients to ensure the completion of timely and accurate accounting, budgeting and financial reporting. In addition, she assistsassisted in the supervision and management of KBS Realty Advisors’ accounting department.

Prior to joining an affiliate of KBS Realty Advisors in 1995, Ms. Yamane was an audit manager at Kenneth Leventhal & Company, a CPA firm specializing in real estate. During her eight years at Kenneth Leventhal & Company, Ms. Yamane performed or supervised a variety of auditing, accounting and consulting engagements including the audit of financial statements presented in accordance with GAAP, as well as financial statements presented on a cash and tax basis, the valuation of asset portfolios and the review and analysis of internal control systems. Her experiences with various KBS-affiliated entities and Kenneth Leventhal & Company give her over 27 years of real estate experience.

Ms. Yamane received a Bachelor of Arts Degree in Business Administration with a dual concentration in Accounting and Management Information Systems from California State University, Fullerton. She is a Certified Public Accountant (inactive California).

Michael L. Meyeris one of our independent directors and is the chair of the audit committee, positions he has held since April 2014. He is also an independent director and the chairman of the audit committee of KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT, positions he has held for these entities since January 2010 and October 2009, respectively. Mr. Meyer is a private real estate investor and since 1999 has been the Chief Executive Officer of the Michael L. Meyer Company. The Michael L. Meyer Company is a principal and/or manager of real estate entities and provides those entities with property acquisition, financing and management services and advice. Since June 2006, Mr. Meyer also has been a principal of TwinRock Partners, LLC (formerly known as AMG Realty Investors, LLC), a commercial and residential real estate investment company. From 2000 to 2003, Mr. Meyer was a principal in Advantage 4 LLC, a provider of telecommunications systems for real estate projects. From 1999 to 2003, Mr. Meyer was also a principal of Pacific Capital Investors, which acquired non-performing loans secured by real estate in Japan. From 1974 to 1998, Mr. Meyer was Managing Partner-Orange County and Audit Partner of the E&Y Kenneth Leventhal Real Estate Group of Ernst & Young LLP and its predecessor. Mr. Meyer is a director and member of the audit committee of Opus Bank, positions he has held since September 2010. Additionally, Mr. Meyer previously served as a director and member of the audit committee of City National Bank and City National Corporation, positions he held for these entities from July 1999 to April 2010, as a director and member of the audit committee of William Lyon Homes, Inc. and as a director and chair of the audit committee of Paladin Realty Income Properties, Inc.

Mr. Meyer was inducted into the California Building Industry Foundation Hall of Fame in June of 1999 for outstanding achievements in the real estate industry and community. Mr. Meyer was also the recipient of the University of California Irvine Graduate School of Management Real Estate Program Lifetime Achievement Award. Mr. Meyer received a Bachelors of Business Administration from the University of Iowa. He is a Certified Public Accountant (inactive California).

18


OurThe board of directors has concluded that Mr. Meyer is qualified to serve as one of our independent directors and the chairman of our audit committee for reasons including his expertise with respect to residential and commercial real estate investments and accounting and financial reporting matters. With over 12 years of experience investing in residential and commercial real estate and providing residential and commercial real estate acquisition,

20


financing and management services and advice, Mr. Meyer is well-positioned to advise the board with respect to potential investment opportunities and investment management. In addition, with over 35 years of experience as an independent Certified Public Accountant or auditor for real estate companies, Mr. Meyer provides ourthe board of directors with substantial expertise regarding real estate accounting and financial reporting matters. Further, Mr. Meyer’s experience as a director and chairman of the audit committee of KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, and his prior experience as a director and member of the audit committee of City National Bank and City National Corporation, positions he held for these entities from July 1999 to April 2010, as a director and member of the audit committee of William Lyon Homes, Inc. and as a director and chair of the audit committee of Paladin Realty Income Properties, Inc. provide him with an understanding of the requirements of serving on a public company board.

William M. Petakis one of our independent directors a positionand is the chair of our conflicts committee, positions he has held since April 2014. He is also an independent director and member of the audit committee of KBS Strategic Opportunity REIT, a position he has held since October 2009. Since April 2009, Mr. Petak has served as the Managing Principal of CorAmerica Capital LLC, a commercial real estate loan investment manager. CorAmerica Capital was established to acquire discounted performing mortgage and real estate-related assets as well as originate new real estate investments. Mr. Petak has over 30 years of experience in the real estate industry and 20 years of experience investing in real estate-related debt investments. From January 2005 to April 2009, Mr. Petak served as Senior Vice President and Director for AIG Mortgage Capital, LLC, a subsidiary of American International Group, Inc. (AIG). Mr. Petak also served as National Head of Mortgage Lending and Real Estate for the retirement services company, SunAmerica, Inc., from January 1999 to August 2001, and served as Managing Director for AIG Investments, Inc. as well as National Head of Mortgage Lending and Real Estate for both SunAmerica and the life insurance company American General from August 2001 to April 2009. Both SunAmerica and American General were acquired by AIG in 1999 and 2001, respectively, and were managed on a mutually exclusive basis. Mr. Petak joined AIG with the merger of SunAmerica with AIG in 1999. Ultimately, Mr. Petak was responsible for AIG Mortgage Capital’s regulated insurance portfolios’ fixed income real estate investments nationwide. He served on both the Securitized Products Group Committee and Global Asset Allocation Committee for the regulated insurance companies of AIG.

Prior to joining AIG in 1999, Mr. Petak was SunAmerica Investments’ Senior Vice President. Mr. Petak was responsible for SunAmerica’s national mortgage lending and real estate investments as well as its leveraged lease real estate acquisitions. From 1996 to 2007, Mr. Petak served as a Loan Committee member and as a member of the board of directors for GreenPark Financial, one of the nation’s largest Fannie Mae DUS lenders. From 1983 to 1989, he worked with Pacific Financial Group, a privately held Beverly Hills real estate investment company, as Vice President of Acquisitions.

Mr. Petak is a graduate of the University of Southern California with a Bachelor of Science in Finance and Business Economics. He is a member of the Mortgage Bankers Association, the Commercial Mortgage Securities Association, the CRE Financial Council, Life Mortgage and Real Estate Officer Council and the President’s Council of the Real Estate Roundtable. Mr. Petak is a founding member of the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management. He currently is Chairman Emeritus of the Center and previously served as its Chairman.

OurThe board of directors has concluded that Mr. Petak is qualified to serve as one of our independent directors for reasons including his expertise in the real estate finance markets. With over 30 years of experience in the real estate industry and 20 years of experience investing in real estate-related debt, Mr. Petak offers insights and perspective with respect to our investment portfolio. Further, as a director and member of the audit committee of KBS Strategic Opportunity REIT and as a member of the Mortgage Bankers Association, the Commercial Mortgage Securities Association, the CRE Financial Council, Life Mortgage and Real Estate Officer Council, the President’s Council of the Real Estate Roundtable and a founding member, current Chairman Emeritus and past Chairman of the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management, Mr. Petak is regularly and actively engaged in both the professional and academic community.

19


Laurent Degryseis one of our independent directors, a position he has held since April 2014. Mr. Degryse has been involved in the real estate development industry for over 20 years with a focus on real estate activities in Belgium. For the past five years he has been self-employed and engaged in real estate development and venture capital activities. In 2002, Mr. Degryse founded Urbis Development, a real estate development company located in

21


Luxemburg, and served as its Managing Director until, in 2008, it created a joint venture with another real estate company, Herpain SA, and became Herpain Urbis.

Since December 2007 he has also served as the Managing Director of Hunza Ventures and Managing Partner of Hunza Management, affiliated venture capital companies based in Luxemburg that invest in technology and life science projects. In connection with his position at Hunza Ventures, he serves as a member of the supervisory board of Hunza Ventures II SCA SICAR, a fund raised by Hunza Ventures that is investing and raising capital for venture investments; and from December 2007 through June 2012 he served as a member of the supervisory board of Hunza Ventures SCA SPF, a fund that raised and fully invested €15 million in 14 venture investments. Mr. Degryse also manages his own portfolio of investments in Europe, Asia and the United States.

In addition, Mr. Degryse has served as the chairman of the board of SoftKinetic International SA since 2008. He is currently a director of Herpain Urbis Retail (since 2008) and previously served as a director of Herpain Urbis (from 2007 – 2013) and Herpain Enterprise (from 2008 – 2013). Herbain Urbis Retail, Herpain Urbis and Herpain Enterprise are related companies with expertise in real estate development and construction for office, residential and commercial real estate in Belgium. In addition, from March 2007 through March 2012 he served as a member of the supervisory board of Urbis SCA. Mr. Degryse is a member of the board of trustees and member of the finance and the audit committee of MOCA, the Museum of Contemporary Art in Los Angeles, California. Mr. Degryse is a graduate of the Solvay Business School at the University of Brussels, Belgium where he received a Master in Business Engineering.

OurThe board of directors has concluded that Mr. Degryse is qualified to serve as one of our independent directors for reasons including his expertise in the real estate development business. With over 20 years of experience in the real estate industry, with a particular focus on investments in Belgium, Mr. Degryse offers insights and perspective with respect to our investment portfolio and our focus on European investment opportunities.

Compensation of Executive Officers

Our executive officers do not receive compensation directly from us for services rendered to us. Our executive officers are officers and/or employees of, or hold an indirect ownership interest in, our advisor, and/or its affiliates, and our executive officers are compensated by these entities, in part, for their services to us. See “Report of the Conflicts Committee – Certain Transactions with Related Persons” for a discussion of the fees paid to our advisor and its affiliates.

 

2022


Compensation of Directors

If a director is also one of our executive officers, we do not pay any compensation to that person for services rendered as a director. The amount and form of compensation payable to our independent directors for their service to us is determined by the conflicts committee, based upon recommendations from our advisor. Two of our executive officers, Messrs. Hall and McMillan, manage and control our advisor, and through our advisor, they are involved in recommending and setting the compensation to be paid to our independent directors.

We have provided below certain information regarding compensation earned by or paid to our directors during fiscal year 2014.2015.

 

Name

    Fees Earned or  
  Paid in Cash in  
  2014(1)  
   All Other
  Compensation  
           Total             Fees Earned or  
  Paid in Cash in  
  2015 (1)  
   All Other
  Compensation  
           Total         

Michael L. Meyer

  $44,333    $    $44,333    $128,333    $    $128,333  

William M. Petak

   42,333          42,333     126,333          126,333  

Laurent Degryse

   41,333          41,333     117,333          117,333  

Keith D. Hall(2)

                              

Peter McMillan III(2)

                              

 

(1) 

No independent director fees were payable by us until we raised the minimum offering amount of $2,000,000Fees Earned or Paid in our initial public offering. As we did not break escrowCash in our initial public offering until January 2015 allinclude meeting fees earned for meetings attendedin: (i) 2014 but paid or reimbursed in 2014 were2015 as follows: Mr. Meyer $44,333, Mr. Petak $42,333, and Mr. Degryse $41,333; and (ii) 2015 but paid or to be paid in 2015.2016 as follows: Mr. Meyer $10,333, Mr. Petak $10,333, and Mr. Degryse $9,333.

 

(2) 

Directors who are also our executive officers do not receive compensation for services rendered as a director.

Cash Compensation

We compensate each of our independent directors with an annual retainer of $40,000. In addition, we pay our independent directors for attending board and audit andor conflicts committee meetings as follows:

 

  

$2,500 in cash for each board meeting attended;

  

$2,500 in cash for each committee meeting attended, except that the chairman of the committee is paid $3,000 for each meeting attended;

  

$2,000 in cash for each teleconference meeting of the board; and

  

$2,000 in cash for each teleconference meeting of any committee, except that the chairman of the committee is paid $3,000 for each teleconference meeting of the committee.

All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.

 

2123


STOCK OWNERSHIP

The following table shows, as of April 8, 20157, 2016, the amount of our Class A and Class T common stock beneficially owned (unless otherwise indicated) by (1) any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our Class A and Class T common stock, respectively, (2) our directors, (3) our executive officers, and (4) all of our directors and executive officers as a group.

 

Name and Address of Beneficial Owner

  Amount and Nature of  Beneficial
Ownership(3)
       Percent of all      
Shares

Robert E. Low(1)

  699,142 15.3%

Keith D. Hall, Chief Executive Officer and Director(2)

  264,571(3)(4) 5.8%

Peter McMillan III, Chairman of the Board, President and Director(2)

  264,571(3)(4) 5.8%

David E. Snyder, Chief Financial Officer, Treasurer and Secretary(2)

                  – 

Stacie K. Yamane, Chief Accounting Officer(2)

                  – 

Michael L. Meyer, Independent Director(2)

                  – 

William M. Petak, Independent Director(2)

                  – 

Laurent Degryse, Independent Director(2)

                  – 

All directors and executive officers as a group

  264,571(3)(4) 5.8%
                                                                                                                        

Name and Address of Beneficial Owner of

Class A and Class T Shares, as indicated

 Amount and
Nature of
Beneficial
Ownership of
Class A  Shares
 Percent of all
Class A  Shares
 Amount and
Nature of
Beneficial
Ownership of
Class T  Shares
 Percent of all
Class T  Shares

Kristin Goodin(1)

 –   –   2,620 16.9%

David M. Hunt(1)

 –   –   1,048 6.8%

Mary Ellen E. Blohowiak(1)

 –   –   1,048 6.8%

Robert K. Mueller(1)

 –   –   2,620 16.9%

Jamee N. Talbot(1)

 –   –   1,572 10.2%

Charlene Doi(1)

 –   –   5,240 33.9%

Lawrence L. Leppert(1)

 –   –   1,310 8.5%

Robert E. Low(1)

 766,934       6.7% –   –  
Keith D. Hall, Chief Executive Officer and Director(1) 293,595(2)(3) 2.5% –   –  
Peter McMillan III, Chairman of the Board, President and Director(1) 293,595(2)(3) 2.5% –   –  
Jeffrey K. Waldvogel, Chief Financial Officer, Treasurer and Secretary(1) –   –   –   –  
Stacie K. Yamane, Chief Accounting Officer (1) –   –   –   –  
Michael L. Meyer, Independent Director (1) –   –   –   –  

William M. Petak, Independent Director (1)

 –   –   –   –  

Laurent Degryse, Independent Director (1)

 –   –   –   –  

All directors and officers as a group

 293,595(2)(3) 2.5% –   –  

 

(1)

The address of this beneficial owner is 2740 N. Mayfair Avenue, Springfield, Missouri 65803.

(2) 

The address of this beneficial owner is 800 Newport Center Drive, Suite 700, Newport Beach, California 92660.

 

(3)(2) 

Includes 21,95724,086 Class A shares owned by KBS Capital Advisors, which is indirectly owned and controlled by Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr. None of the shares are pledged as security.

 

(4)(3) 

Includes 242,614269,509 Class A shares owned by Willowbrook Capital Group, an entity owned and controlled by Keith D. Hall and Peter McMillan III. None of the shares are pledged as security.

24


Section 16(a) Beneficial Ownership Reporting Compliance

Under U.S. securities laws, once our shares of common stock are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), directors, executive officers and any persons beneficially owning more than 10% (“ten percent beneficial owner”) of any class of equity securities registered pursuant to section 12 of the Exchange Act of 1934, as amended (the “Exchange Act”), in our case, our Class A common stock, are required to report their initial ownership in the class of the common stockregistered equity securities and most changes in that ownership to the SEC. During 2014,The SEC has designated specific due dates for these reports, and we are required to identify in this proxy statement those persons who did not file these reports when due. Based on the records of our sharestransfer agent and on our review of copies of the reports filed with the SEC and written representations of our directors and executive officers, we believe all persons subject to the Section 16 reporting requirements filed the reports on a timely basis in 2015 with the following exception: Robert E. Low beneficially owned more than 10% of our Class A common stock were notin April 2015 when we voluntarily registered our Class A common stock under the Exchange ActAct. At that time, he did not file a Form 3 to report his ownership interest in our Class A common stock. Since that time, his ownership interest has fallen below 10% and thushe is no reports were required to be filed by the persons described above in 2014.longer a ten percent beneficial owner of our Class A common stock.

 

2225


PROPOSAL 1. ELECTION OF DIRECTORS

At the annual meeting, you and the other stockholders will vote on the election of all five members of the board of directors. Those persons elected will serve as directors until the 20162017 annual meeting and until their successors are duly elected and qualified. The board of directors has nominated the following people for re-election as directors:

 

     Keith D. Hall

 

     Peter McMillan III

     Michael L. Meyer

 

     William M. Petak

     Laurent Degryse

 

Each of the nominees for director is a current director. Detailed information on each nominee is provided on pages 1618 through 20.22.

Vote Required

Under our charter, a majority of the shares entitled to vote and present in person or by proxy at an annual meeting at which a quorum is present is required for the election of the directors. This means that, of the shares entitled to vote and present in person or by proxy at an annual meeting, a director nominee needs to receive affirmative votes from a majority of such shares of common stock in order to be elected to the board of directors. Because of this majority vote requirement,“withhold” votes will have the effect of a vote against each nominee for director. Broker non-votes, since they are not entitled to vote, will have no effect on the determination of this proposal. If an incumbent director nominee fails to receive the required number of votes for reelection,re-election, then under Maryland law, he or she will continue to serve as a “holdover” director until his or her successor is duly elected and qualified.

The appointed proxies will vote your shares of common stock as you instruct. If you submit a proxy card with no further instructions, the appointed proxies will vote your shares FOR all of the director nominees listed above. If any nominee becomes unable or unwilling to stand for re-election, the board of directors may reduce its size or designate a substitute. If a substitute is designated, proxies voting on the original nominee will be cast for the substituted nominee.

Whether or not you plan to attend the annual meeting and vote in person, we urge you to have your vote recorded. Stockholders have the following three options for submitting their votes by proxy: (1) via the Internet, (2) by telephone or (3) if you receive a paper copy of our proxy materials, by mail, using the enclosedpaper proxy card.YOUR VOTE IS VERY IMPORTANT! Your immediate response will help avoid potential delays and may save us significant additional expenses associated with soliciting stockholder votes.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” ALL

NOMINEES LISTED FOR REELECTIONRE-ELECTION AS DIRECTORS.

 

2326


PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

At the annual meeting, you and the other stockholders will vote on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.

The audit committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.

The audit committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm. In making its determination regarding whether to appoint or retain a particular independent registered public accounting firm, the audit committee takes into account the opinions of management and our internal auditors in assessing the independent registered public accounting firm’s qualifications, performance and independence. Notwithstanding its appointment of Ernst & Young LLP, the audit committee may, however, select new auditors at any time in the future in its discretion if it deems such decision to be in our best interests. If the appointment of Ernst & Young LLP is not ratified by our stockholders, the audit committee may consider whether it should appoint another independent registered public accounting firm.

During the year ended December 31, 2014,2015, Ernst & Young LLP served as our independent registered public accounting firm and provided certain tax and other services. Ernst & Young LLP has served as our independent registered public accounting firm since our formation. We expect that Ernst & Young LLP representatives will be present at the annual meeting and they will have the opportunity to make a statement if they desire to do so. In addition, we expect that the Ernst & Young LLP representatives will be available to respond to appropriate questions posed by stockholders.

Vote Required

Under our bylaws, a majority of the votes cast at an annual meeting at which a quorum is present is required for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016. Abstentions will not count as votes actually cast with respect to determining if a majority vote is obtained under our bylaws and will have no effect on the determination of this proposal.

The appointed proxies will vote your shares of common stock as you instruct. If you submit a proxy card with no further instructions, the appointed proxies will vote your shares FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2015.2016.

Whether or not you plan to attend the annual meeting and vote in person, we urge you to have your vote recorded. Stockholders have the following three options for submitting their votes by proxy: (1) via the Internet, (2) by telephone or (3) if you receive a paper copy of our proxy materials, by mail, using the enclosedpaper proxy card.YOUR VOTE IS VERY IMPORTANT! Your immediate response will help avoid potential delays and may save us significant additional expenses associated with soliciting stockholder votes.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE

“FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG

LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

FOR THE YEAR ENDING DECEMBER 31, 2015.2016.

 

2427


STOCKHOLDER PROPOSALS

Any proposals by stockholders for inclusion in proxy solicitation material for the next2017 annual meeting of stockholders must be received by our secretary, David E. Snyder,Jeffrey K. Waldvogel, at our executive offices no later than December 25, 2015.24, 2016. However, if we hold the annual meeting before June 6, 20162017 or after August 5, 2016,2017, stockholders must submit proposals for inclusion in our 20162017 proxy statement within a reasonable time before we begin to print our proxy materials. The mailing address of our executive offices is 800 Newport Center Drive, Suite 700, Newport Beach, California 92660. If a stockholder wishes to present a proposal at the 20162017 annual meeting, whether or not the proposal is intended to be included in the 20162017 proxy materials, our bylaws require that the stockholder give advance written notice to our secretary by January 24, 2016.23, 2017.

OTHER MATTERS

As of the date of this proxy statement, we know of no business that will be presented for consideration at the annual meeting other than the items referred to above. If any other matter is properly brought before the annual meeting for action by stockholders, proxies in the enclosed form returned to us will be voted in accordance with the recommendation of the board of directors or, in the absence of such a recommendation, in accordance with the discretion of the proxy holder.

 

2528


LOGO

C/O DST SYSTEMS, INC.

P.O. BOX 219015

KANSAS CITY, MO 64121

 

 

    LOGO

VOTE BY INTERNET -www.proxyvote.com or scan the QR Barcode above.

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. If you vote by Internet you do not have to return your proxy card.

 

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

 

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. If you vote by phone you do not have to return your proxy card.

 

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717.

 
 

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

   M88317-P64932E03836-P77267 KEEP THIS PORTION FOR YOUR RECORDS

— — — — — — — — — — — — —  — — — — — — — — — — — — — — — — — — — —  — — — — — — — — — — — — — — 

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

 

KBS STRATEGIC OPPORTUNITY REIT II, INC.

 

For

All

 WithholdAll 

For All

Except

  

*ToWithhold authority to vote for any individual nominee(s), mark the “For All Except” box and write the number of the nominee(s) on the line below.

         
  

The Board of Directors recommends a vote
FORall nominees listed in Proposal 1.

 

 

¨

 

 

¨

 

 

¨

 

  

                                                                                                          

 

        
  

 

1.

 

 

Election of Directors

                
  
   01) Hall                
   02) McMillan                
   03) Meyer                
   04) Petak                
   05) Degryse                
  

 

The Board of Directors recommends a voteFORProposal 2 as described in the proxy statement.

       
            For   Against  Abstain   
  2. 

The ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm for the year ending December 31, 2015.2016.

   ¨   ¨  ¨   
  

 

Please sign exactly as your name appears on this proxy card. When shares of common stock are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by general partner or other authorized person.

              
                           
                         
                         
  Signature [PLEASE SIGN WITHIN BOX]  Date           Signature (Joint Owners)  Date         


LOGO

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS

KBS STRATEGIC OPPORTUNITY REIT II, INC.

Monday,Wednesday, July 6, 20152016

10:00 a.m. (PDT)

At

Offices of KBS

800 Newport Center Drive, SeventhFirst Floor, Suite 140 Conference Center

Newport Beach, California 92660

Your Vote is Important!

FOLD HERE BEFORE INSERTING INTO RETURN ENVELOPE

— — — — — — — — — — — — —  — — — — — — — — — — — — — — — — — — — —  — — — — — — — — — — — — — — 

M88318-P64932E03837-P77267

 

 

KBS Strategic Opportunity REIT II, Inc.

800 NEWPORT CENTER DRIVE FIRST FLOOR • SUITE 700140 CONFERENCE CENTER

NEWPORT BEACH CALIFORNIA 92660

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder hereby appoints Keith D. Hall, Peter McMillan III, David E. SnyderJeffrey K. Waldvogel and Stacie K. Yamane, and each of them, as proxy and attorney-in-fact, each with the power to appoint his or her substitute, on behalf and in the name of the undersigned, to represent the undersigned at the annual meeting of stockholders of KBS STRATEGIC OPPORTUNITY REIT II, INC. to be held on July 6, 2015,2016, and at any adjournments or postponements thereof, and to vote all shares of common stock that the undersigned would be entitled to vote if personally present, as indicated on the reverse side of this card. The undersigned acknowledges receipt of the notice of annual meeting of stockholders, the proxy statement and the annual report.

This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted “FOR”"FOR" all nominees listed in Proposal 1 and “FOR”"FOR" Proposal 2. The proxies are authorized to vote upon such other matters as may properly come before the annual meeting or any adjournments or postponements thereof in accordance with the recommendation of the board of directors or, in the absence of such a recommendation, in their discretion, including, but not limited to, the power and authority to adjourn the annual meeting to a date not more than 120 days after the record date in the event that a quorum is not obtained by the July 6, 20152016 meeting date.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders: The following materials are available at www.proxyvote.com:Notice and Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2015.


LOGO

Your vote is not cast automatically for you. We encourage you to cast your vote promptly, which will help minimize any additional cost associated with soliciting votes.

 

LOGO  Read Enclosed Materials
  Enclosed is the following information for the 20152016 Annual Meeting of Stockholders:
  

•  20142015 Annual Report

  

•  Proxy Statement that describes the proposals to be voted upon

  

•  Proxy card for each registration*

  * You may have more than one proxy card included in your packet because you have multiple registrations. Please be sure to vote all proxies in your packet.
LOGO  Complete the Proxy Card and Return by Mail
  On the proxy card, cast your vote on the proposals and sign and return it in the postage-paid envelope provided. Please note, all parties must sign.
LOGO  or Vote by Telephone*
  Call(800) 690-6903 using a touch-tone telephone and follow the simple, recorded instructions. Your control number is located on the proxy card.
LOGO  or Vote by Internet*
  Visitwww.proxyvote.com and follow the online instructions to cast your vote. Your control number is located on the proxy card.
  *If you voted by telephone or the Internet, you do not need to mail back the proxy card.
LOGO  For Assistance
  If you have any questions or need assistance with completing your proxy card, please call our proxy solicitor, Broadridge Financial Solutions, Inc., at (855) 723-7816. Representatives are available Monday through Friday 9:00 a.m. to 10:00 p.m. (EDT).

Thank you!

We appreciate your participation and support. Again, please be sure to vote!