RVEN Reven Housing REIT Inc

INFORMATION STATEMENT

To our Stockholders:

This information statement (this “Information Statement”) is being furnished to the stockholders of Reven Housing REIT, Inc., a Maryland corporation (the “Company,” “we”, “us” or “our”), to inform our stockholders (our “Stockholders”) that, on September 3, 2019, certain of our Stockholders holding, in the aggregate, a majority of the issued and outstanding shares of our common stock, par value $0.001 per share (each, a “Share” and, collectively, the “Shares”), executed and delivered to the Company an irrevocable written consent (the “Stockholders’ Written Consent”) approving the merger of SOR PORT, LLC, a Maryland limited liability company (“Merger Sub”) and wholly-owned subsidiary of SOR PORT Holdings, LLC, a Maryland limited liability company (“Parent”), with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”) pursuant to the Agreement and Plan of Merger, dated as of August 30, 2019, by and among the Company, Parent and Merger Sub (the “Merger Agreement”). Parent and Merger Sub are indirect, wholly-owned subsidiaries of KBS Strategic Opportunity REIT, Inc., a Maryland corporation (“KBS SOR”).

Upon completion of the Merger, each Share issued and outstanding immediately prior to the effective time of the Merger (other than any Shares owned by Parent, Merger Sub or any other wholly-owned subsidiary of Parent) will be cancelled and converted into the right to receive an amount in cash (without any interest thereon) equal to (i) the aggregate cash merger consideration of $56,849,495.55, to be increased or decreased, as the case may be, by the difference, if any, between the amount of the Company’s unrestricted cash that would be available to be distributed by the Company to Parent or the Paying Agent as of the date of the closing of the Merger in accordance with our organizational documents and applicable law (the “Available Cash”), and $6,500,000, divided by (ii) the total number of Shares outstanding immediately prior to the effective time of the Merger. We refer to this amount per Share as the “Merger Consideration.” Based on management’s current estimates of the Available Cash and on the total number of Shares outstanding as of the date of this Information Statement, we currently expect that the Merger Consideration would be approximately $[●] per Share. The Merger Agreement and the Merger are described in more detail herein.

At a meeting of our board of directors (the “Board”) held on August 30, 2019, the Board authorized the execution and delivery of the Merger Agreement, declared that the Merger and the other transactions contemplated by the Merger Agreement are advisable, in the best interests of the Company and our Stockholders, and in accordance with the MGCL, directed that the Merger be submitted for consideration by our Stockholders, and recommended that our Stockholders approve the Merger in accordance with the terms of the Merger Agreement.

Under Maryland law and our organizational documents, approval of the Merger by our Stockholders requires the affirmative vote or written consent of the holders of a majority of the outstanding Shares entitled to vote on such matter. As of the close of business on September 9, 2019 (the “Record Date”), there were 11,038,737 Shares issued and outstanding. Each Share is entitled to one vote in connection with the approval of the Merger.

As permitted by the Company’s organizational documents and by Section 2-505 of the Maryland General Corporation Law (as amended, the “MGCL”), on September 3, 2019, certain Stockholders holding, in the aggregate, approximately 70.7% of the total number of Shares issued and outstanding as of the Record Date executed and delivered to the Company the Stockholders’ Written Consent approving the Merger. The Stockholders’ Written Consent became effective at 11:59 p.m., New York City time, on September 9, 2019. As a result, further action or vote by our Stockholders will not be required to complete the Merger pursuant to the Merger Agreement.

ACCORDINGLY, WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THE MERGER HAS ALREADY BEEN APPROVED BY OUR STOCKHOLDERS.

We have asked brokers and other custodians, nominees and fiduciaries to forward this Information Statement to the beneficial owners of the Shares held of record by such persons and will reimburse such persons for out-of-pocket expenses incurred in forwarding such material.

We urge you to read the entire Information Statement carefully. Please do not send in any stock certificates or other evidences of ownership at this time. If the Merger is completed, you will receive instructions regarding the surrender of your stock certificates and payment for your Shares.

This Information Statement was first mailed on or about September [l], 2019 to our Stockholders of record on the Record Date. In accordance with Rule 14c-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Merger will not be completed until at least 20 calendar days after the date this Information Statement is mailed.

La Jolla, California

Neither the U.S. Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Merger, passed upon the fairness of the Merger or passed upon the adequacy or accuracy of the disclosures in this Information Statement. Any representation to the contrary is a criminal offense.

Important Notice Regarding the Availability of Information Statement
This Information Statement is also available at http://www.revenhousingreit.com

REVEN HOUSING REIT, INC.
875 Prospect Street, Suite 304
La Jolla, CA 92037

INFORMATION STATEMENT

TABLE OF CONTENTS

PRELIMINARY COPY – SUBJECT TO COMPLETION

SUMMARY

The following is a summary that highlights the information contained in this Information Statement. This summary may not contain all of the information that may be important to you. For a more complete description of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, we encourage you to read carefully this entire Information Statement, including the attached Annexes, and the documents referred to in this Information Statement. We have included page references in parentheses to direct you to the appropriate places in this Information Statement for a complete description of the topics presented in this summary.

All references in this Information Statement to:

All references to defined terms not defined herein shall have the meaning ascribed to them in the Merger Agreement, a copy of which is attached as Annex A to this Information Statement.

Information About the Parties (page [l])

Reven Housing REIT, Inc.

The Company is an internally managed Maryland corporation that engages in the acquisition and ownership of portfolios of occupied single-family rental properties in the United States. We currently own and operate 993 single family rental properties in Alabama, Florida, Georgia, Mississippi, Oklahoma, Tennessee and Texas. We were originally incorporated in 1995, but our current business was founded in July 2012. Since August 30, 2016, our common stock has been traded on NASDAQ under the symbol “RVEN”.

SOR PORT Holdings, LLC and SOR PORT, LLC

Parent is a Maryland limited liability company that was formed solely for the purposes of completing the transactions contemplated by the Merger Agreement. Parent has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, the Company will be a wholly-owned subsidiary of Parent.

Merger Sub is a Maryland limited liability company and a direct, wholly-owned subsidiary of Parent. Merger Sub was formed solely for the purpose of completing the transactions contemplated by the Merger Agreement. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Merger. Upon completion of the Merger, Merger Sub will be merged with and into the Company and will cease to exist.

Both Parent and Merger Sub are indirect, wholly-owned subsidiaries of KBS Strategic Opportunity REIT, Inc., a Maryland corporation. KBS SOR is a non-traded REIT designed to provide its stockholders attractive total returns through the purchase of commercial real estate and related investments that offer attractive risk-adjusted returns. KBS SOR invests across all real asset classes, including debt, equity, and corporate investments, targeting both developed and less liquid markets.

The Merger (page [l])

On August 30, 2019, the Company entered into the Merger Agreement with Parent and Merger Sub. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, and in accordance with the applicable provisions of the MGCL, Merger Sub will merge with and into the Company. The Company will be the surviving corporation (the “Surviving Corporation”) in the Merger and will continue as a wholly-owned subsidiary of Parent.

The Merger will become effective on the date and time at which the articles of merger with respect to the Merger (the “Articles of Merger”) have been filed with, and accepted for record by, the SDAT, or on such later date and time as may be mutually agreed to by the parties to the Merger Agreement and specified in the Articles of Merger (the “Effective Time”).

The Merger Agreement is attached as Annex A to this Information Statement. We encourage you to carefully read the Merger Agreement in its entirety.

Merger Consideration (page [l])

If the Merger is completed, at the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than any Shares owned by Parent, Merger Sub or any other wholly-owned subsidiary of Parent) will be converted into the right to receive an amount in cash (without any interest thereon) equal to (i) the aggregate merger consideration of $56,849,495.55 in cash (the “Aggregate Merger Consideration”), to be increased or decreased, as the case may be, by the difference, if any, between the amount of the Company’s unrestricted cash that would be available to be distributed by the Company to Parent or Paying Agent as of the date of the closing of the Merger in accordance with our organizational documents and applicable law (the “Available Cash”), and $6,500,000, divided by (ii) the total number of Shares outstanding immediately prior to the Effective Time. We refer to such amount of cash to be received for each Share as the “Merger Consideration” (as described in more detail below in the section titled “The Merger – Merger Consideration”).

The adjustment of the Aggregate Merger Consideration based on the Available Cash, as set forth in the Merger Agreement and described in more detail below in the section titled “The Merger – Merger Consideration”, may be referred to herein as the “Available Cash Adjustment”. Based on management’s current estimates of the Available Cash and on the total number of Shares outstanding as of the date of this Information Statement, we currently expect that the Merger Consideration will be approximately $[●] per Share.

The completion of the Merger is conditioned upon the final determination of the Available Cash and the Aggregate Merger Consideration. The Merger Agreement provides a mechanism for resolving disputes relating to the calculation of the Available Cash and the Aggregate Merger Consideration. See “The Merger Agreement – Company Estimate of Available Cash; Dispute Resolution” beginning on page [l]. The Merger Agreement also provides that if all disputes relating to the calculation of the Available Cash and the Aggregate Merger Consideration are not resolved prior to the anticipated closing date of the Merger (the “Closing Date”), the closing of the Merger (the “Closing”) will be postponed until all such disputes are resolved. For other conditions to the Closing, see the section below titled “The Merger Agreement – Conditions to Completion of the Merger” beginning on page [l].

Treatment of Common Stock and Unvested Restricted Stock Awards (page [l])

At the Effective Time, each Share (excluding any Shares granted in the form of Unvested Company Restricted Stock Awards (as defined below)) issued and outstanding immediately prior to the Effective Time (other than Shares held by Parent, Merger Sub or any other wholly-owned subsidiary of Parent) will be cancelled and automatically converted into the right to receive an amount in cash equal to the Merger Consideration, without interest.

At the Effective Time, each Share that is held by Parent, Merger Sub or any other wholly-owned subsidiary of Parent immediately prior to the Effective Time will cease to be outstanding, will be cancelled without payment of any consideration therefor and will cease to exist.

At the Effective Time, each award in respect of Shares that is subject to vesting, repurchase or other lapse restrictions granted under the Company Stock Plan (an “Unvested Company Restricted Stock Award”) that is outstanding immediately prior to the Effective Time will become immediately and fully vested, all restrictions thereon will lapse and such Unvested Company Restricted Stock Award will be automatically converted into the right to receive an amount in cash (without interest thereon) equal to the product of (x) the total number of Shares subject to such award and (y) the Merger Consideration, subject to applicable withholding of taxes.

Board Approval and Recommendation; Reasons for the Merger (page [l])

At a meeting held on August 30, 2019, after considering the factors more fully described in this Information Statement, the Board:

For the factors considered by the Board in reaching its decision to approve the Merger Agreement and approve the consummation of the transactions contemplated by the Merger Agreement, including the Merger, as well as the Board’s reasons for, and certain risks related to, the Merger, see “The Merger – Reasons for the Merger” beginning on page [l].

Required Stockholder Approval; Record Date (page [l])

Under Maryland law and our organizational documents, approval of the Merger by our Stockholders requires the affirmative vote or written consent of holders of a majority of the outstanding Shares entitled to vote on such matter.

As of September 9, 2019, the record date for purposes of determining our Stockholders entitled to vote on the approval of the Merger (the “Record Date”), there were 11,038,737 Shares issued and outstanding.

In connection with the Merger and the other transactions contemplated by the Merger Agreement, certain of our Stockholders holding, in the aggregate, approximately 70.7% of the total number of Shares issued and outstanding as of the Record Date (collectively, the “Majority Stockholders”) entered into the Support Agreement, pursuant to which each Majority Stockholder has agreed, among other things, upon the terms and subject to the conditions set forth therein, to vote or cause to be voted (including by taking action by written consent) all of its Shares in favor of the Merger in accordance with the terms and conditions of the Merger Agreement. The Support Agreement is further described in more detail below in the section titled “Support Agreement” beginning on page [l].

On September 3, 2019, the Majority Stockholders executed and delivered to the Company an irrevocable written consent approving the Merger (the “Stockholders’ Written Consent”). The Stockholders’ Written Consent became effective at 11:59 p.m., New York City time, on September 9, 2019. The execution and delivery of the Stockholders’ Written Consent satisfies the stockholder approval requirement for the Merger under the MGCL and our organizational documents.

As a result of the execution and delivery of the Stockholders’ Written Consent, no further action by our Stockholders is required to approve the Merger, and the Company is not soliciting your vote or consent to the approval of the Merger. The Company will not call a meeting of stockholders for purposes of voting on these matters.

Opinion of the Company’s Financial Advisor (page [l] and Annex B)

The Company engaged RBC Capital Markets, LLC (“RBC Capital Markets”) as the Company’s financial advisor in connection with the Merger. As part of this engagement, RBC Capital Markets delivered an opinion, dated August 30, 2019, to the Board as to the fairness, from a financial point of view and as of such date, of the Merger Consideration (assumed, for purposes of RBC Capital Markets’ opinion, as $5.15 per Share in cash based on the Aggregate Merger Consideration and estimates of the Company’s management) to be received pursuant to the Merger Agreement by holders of Shares (other than holders providing a written consent or support agreement in connection with the Merger or, as applicable, KBS SOR, Parent, Merger Sub, and their respective affiliates).

The full text of RBC Capital Markets’ written opinion, dated August 30, 2019, is attached as Annex B to this Information Statement and sets forth, among other things, the procedures followed, assumptions made, factors considered and qualifications and limitations on the review undertaken by RBC Capital Markets in connection with its opinion. RBC Capital Markets delivered its opinion to the Board for the benefit, information and assistance of the Board (in its capacity as such) in connection with its evaluation of the Merger. RBC Capital Markets’ opinion addressed only the fairness, from a financial point of view and as of the date of such opinion, of the Merger Consideration (to the extent expressly specified in such opinion) and did not address any other aspect of the Merger. RBC Capital Markets’ opinion also did not address the underlying business decision of the Company to engage in the Merger or the relative merits of the Merger compared to any alternative business strategy or transaction that might be available to the Company or which the Company might engage in or consider. RBC Capital Markets did not express any opinion and does not make any recommendation to any securityholder as to how such securityholder should vote or act with respect to the Merger or any proposal to be voted upon in connection with the Merger or otherwise.

No Appraisal Rights (page [l])

No dissenters’ or appraisal rights will be available to holders of Shares with respect to the Merger or the other transactions contemplated by the Merger Agreement, including any remedy under Section 3-201 et seq. of the MGCL.

Regulatory Approvals (page [l])

Each of Parent, Merger Sub and the Company have agreed to use their reasonable best efforts to promptly take all actions and to do all things necessary, proper or advisable under the Merger Agreement and applicable law to consummate the Merger and the other transactions contemplated by the Merger Agreement as promptly as reasonably practicable, including obtaining as reasonably promptly as practicable all governmental consents or approvals necessary or advisable to consummate the transactions contemplated by the Merger Agreement.

Parent, Merger Sub and the Company are not aware of any antitrust or other material governmental consents or approvals that are required for consummation of the Merger.

Financing of the Transactions (page [l])

Parent estimates that the total amount of funds required to complete the Merger and related transactions and pay related fees and expenses will be approximately $[l] million. Concurrently with the execution and delivery of the Merger Agreement, Parent has delivered to the Company the Equity Commitment Letter, pursuant to which KBS SOR has committed to purchase, directly or indirectly, equity securities of Parent for a maximum amount equal to the sum of (i) $56,849,495.55, plus (ii) if applicable, the excess amount by which the Available Cash amount exceeds $6,500,000, plus (iii) all costs and expenses required to be paid by Parent in connection with the Merger and the other transactions contemplated by the Merger Agreement (such sum, the “Commitment”).

We are an intended third-party beneficiary of Parent’s rights under the Equity Commitment Letter, solely for the purpose of seeking through an action of specific performance of KBS SOR’s obligation to fund the Commitment, in certain circumstances, subject to the terms and conditions of the Equity Commitment Letter.

The funding of the Commitment under the Equity Commitment Letter is not a condition to Parent’s obligation to consummate the Merger pursuant to the Merger Agreement.

Interests of Our Directors and Executive Officers in the Merger (page [l])

In considering our Board’s recommendations with respect to the Merger, you should be aware that the Company’s directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of our Stockholders generally. The Board was aware of these interests and considered them, among other matters, in negotiating, evaluating and approving the Merger Agreement and the transactions contemplated thereby, including the Merger, and in recommending that our Stockholders approve the Merger in accordance with the terms of the Merger Agreement. These interests are described in more detail below in the section titled “The Merger – Interests of Our Directors and Executive Officers in the Merger” beginning on page [l].

Delisting and Deregistration of the Shares (page [l])

If the Merger is completed, Shares of our common stock will no longer be listed on NASDAQ. In addition, the registration of the Shares under Section 12 of the Exchange Act will be terminated, and we will no longer file periodic reports with the SEC on account of our common stock.

Litigation Related to the Merger (page [l])

[As of September 20, 2019, we are not aware of any litigation relating to the Merger Agreement.]

Material United States Federal Income Tax Consequences of the Merger (page [l])

The exchange of Shares for cash pursuant to the Merger generally will be a taxable transaction for U.S. federal income tax purposes. Stockholders who are “U.S. Stockholders” (as such term is defined below under “The Merger – Material United States Federal Income Tax Consequences of the Merger”) will generally recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received with respect to their Shares pursuant to the Merger and their adjusted tax basis in such Shares. Gain recognized on the receipt of cash in exchange for our Shares pursuant to the Merger by Stockholders who are “non-U.S. Stockholders” (as such term is defined below under “The Merger – Material United States Federal Income Tax Consequences of the Merger”) may also be subject to U.S. federal income tax in certain circumstances, including pursuant to FIRPTA.

Stockholders should read “The Merger – Material United States Federal Income Tax Consequences of the Merger” beginning on page [l] for a more detailed discussion of certain U.S. federal income tax consequences of the receipt of the Merger Consideration in exchange for Shares pursuant to the Merger. Stockholders should consult their tax advisors to determine the tax consequences to them (including the application and effect of any state, local or foreign income or other tax laws) of the Merger.

Anticipated Closing Date of the Merger

We are working to complete the Merger as quickly as possible. Assuming timely satisfaction or (to the extent permitted by law) waiver of the closing conditions set forth in the Merger Agreement, we anticipate that the Merger will be completed by the end of October 2019. Completion of the Merger is, however, subject to various conditions set forth in the Merger Agreement, and it is possible that factors outside our control could result in the Merger being completed at a later time or not at all. See “The Merger Agreement – Conditions to Completion of the Merger” beginning on page [l].

Series A Preferred Stock Offering (page [l])

Pursuant to the Merger Agreement, the Company has agreed to conduct an offering of up to $20 million of shares of Series A Preferred Stock (as defined in the section below titled “The Merger Agreement – Series A Preferred Stock Offering”) that is exempt from the registration requirements of Section 5 of the Securities Act, pursuant to Rule 506(c) of Regulation D promulgated under the Securities Act (the “Preferred Stock Offering”). The Preferred Stock Offering is intended to be limited solely to our Stockholders as of the date of the Merger Agreement that are “accredited investors” (as defined in Rule 501 of Regulation D promulgated under the Securities Act).

It is currently expected that a total of $15 million of shares of Series A Preferred Stock will be offered in the Preferred Stock Offering. The Company intends to commence the Preferred Stock Offering as promptly as practicable following the filing with the SEC of this Information Statement in definitive form.

Compliance by the parties with their respective obligations under the Merger Agreement in respect of the Preferred Stock Offering or the consummation of the Preferred Stock Offering is not a condition to the Closing under the Merger Agreement.

THE INFORMATION CONTAINED IN THIS INFORMATION STATEMENT IS NOT INTENDED TO CONSTITUTE, AND SHALL NOT BE CONSTRUED AS, AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SHARES OF SERIES A PREFERRED STOCK OR ANY OTHER SECURITIES OF THE COMPANY. THE COMPANY INTENDS TO COMMENCE THE PREFERRED STOCK OFFERING AS PROMPTLY AS PRACTICABLE FOLLOWING THE FILING WITH THE SEC OF THIS INFORMATION STATEMENT IN DEFINITIVE FORM. THE SHARES OF SERIES A PREFERRED STOCK HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

Conditions to Completion of the Merger (page [l])

The respective obligations of each of the Company, Parent and Merger Sub to effect the Merger is subject to the satisfaction or (to the extent permitted by law) waiver of certain conditions, including:

The conditions to the Closing are described in more detail below in the section titled “The Merger Agreement – Conditions to the Merger” beginning on page [l].

Market Price of Our Stock

Shares of our common stock are listed on NASDAQ under the symbol “RVEN.” The closing price for our common stock on NASDAQ on August 30, 2019, the last trading day completed prior to the public announcement of the execution of the Merger Agreement, was $4.40 per Share. The closing price of our common stock on NASDAQ over the first five (5) business days following the first public announcement of the Merger on August 31, 2019 is set forth in the table below:

On [l], 2019, the most recent practicable date before this Information Statement was mailed to our Stockholders, the closing price for our common stock on NASDAQ was $[l] per Share. You are encouraged to obtain current market prices for our common stock.

QUESTIONS AND ANSWERS ABOUT
THE MERGER

The following questions and answers are intended to briefly address commonly asked questions as they pertain to the Merger Agreement and the transactions contemplated thereby, including the Merger. These questions and answers may not address all questions that may be important to you as our Stockholder. Please refer to the “Summary” beginning on page 1 and the more detailed information contained elsewhere in this Information Statement, the Annexes attached to this Information Statement and the documents referred to in this Information Statement, each of which you should read carefully.

Our common stock is currently registered under the Exchange Act and is listed on NASDAQ under the symbol “RVEN”. As a result of the Merger, we will cease to be a publicly traded company and will become a privately held subsidiary of Parent. Following the Merger, Shares of our common stock will no longer be listed on NASDAQ and our reporting obligations under the Exchange Act will be terminated and our common stock will no longer be listed or quoted on any stock exchange or quotation system, including NASDAQ. If completed, the transactions contemplated by the Merger Agreement, including the Merger, will result in the change of control of the Company.

Based on management’s current estimates of the Available Cash and on the total number of Shares outstanding as of the date of this Information Statement, we currently expect that the Merger Consideration would be approximately $[●] per Share.

Accordingly, no further action by our Stockholders is required to approve the Merger. Thus, your consent is not required and is not being solicited in connection with the approval of the Merger. We are not asking you for a proxy and you are requested not to send us a proxy.

We urge you to consult your tax advisor on the tax consequences of the Merger to you. Nothing in this Information Statement should be considered tax advice.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Information Statement contains or incorporates by reference “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements may include, but are not limited to, statements regarding the Company’s proposed Merger transaction with Parent and Merger Sub, the financing of the proposed Merger transaction, the anticipated timing and consummation of the proposed Merger, the benefits of the proposed Merger transaction respecting our Stockholders and the associated objectives, expectations and intentions, all statements regarding the Company’s expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, all discussions, expressed or implied, and statements containing words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “can,” “would,” “should,” “will,” “intend,” “may,” “might,” “potential,” “upside” and other similar expressions. All statements in this Information Statement that are not historical facts are forward-looking statements that reflect the best judgment of the Company based upon currently available information. Such forward-looking statements are inherently uncertain, and our Stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors, including, without limitation, those discussed below. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause its actual results, performance or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in the Company’s filings with the SEC. These risks, uncertainties and other factors include, among other things:

Additional risks, uncertainties and other factors include those discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this Information Statement and attributable to us or any other person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Information Statement or, in the case of the risk factors contained in the Annual Report, as of the date of such report. Except as required by applicable law or regulation, the Company assumes no obligation (and specifically disclaims any such obligation) to publicly update or revise any forward-looking statements contained in this Information Statement.

INFORMATION ABOUT THE PARTIES

Reven Housing REIT, Inc.

The Company is an internally managed Maryland corporation that engages in the acquisition and ownership of portfolios of occupied single-family rental properties in the United States. We currently own and operate 993 single family rental properties in Alabama, Florida, Georgia, Mississippi, Oklahoma, Tennessee and Texas. We were originally incorporated in 1995, but our current business was founded in July 2012. Since August 30, 2016, our common stock has been traded on NASDAQ under the symbol “RVEN.”

The Company’s principal executive offices are located at 875 Prospect Street, Suite 304, La Jolla, California 92037. Our telephone number is (858) 459-4000 and our company website is www.revenhousingreit.com. We do not intend for information contained on our website to be incorporated into this Information Statement.

As of the close of business on August 30, 2019, there were 11,038,737 Shares issued and outstanding.

Additional information about the Company is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2019 and June 30, 2019.

SOR PORT Holdings, LLC and SOR PORT, LLC

Parent is a newly formed Maryland limited liability company that was formed by KBS SOR solely for the purposes of completing the transactions contemplated by the Merger Agreement. Parent has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, the Company will be a wholly-owned subsidiary of Parent. Parent’s principal executive offices are located at 11150 Santa Monica Blvd, Suite 400, Los Angeles, California 90025 and its telephone number is (949) 417-6500. Parent does not maintain a company website.

Merger Sub is a newly formed Maryland limited liability company and a direct, wholly-owned subsidiary of Parent. Merger Sub was formed solely for the purpose of completing the transactions contemplated by the Merger Agreement. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will be merged with and into the Company and will cease to exist. Merger Sub’s principal executive offices are located at 11150 Santa Monica Blvd, Suite 400, Los Angeles, California 90025 and its telephone number is (949) 417-6500. Merger Sub does not maintain a company website.

Both Parent and Merger Sub are indirect, wholly-owned subsidiaries of KBS Strategic Opportunity REIT, Inc., a Maryland corporation. KBS SOR is a non-traded REIT designed to provide its stockholders attractive total returns through the purchase of commercial real estate and related investments that offer attractive risk-adjusted returns. KBS SOR invests across all real asset classes, including debt, equity, and corporate investments, targeting both developed and less liquid markets. KBS SOR’s principal executive offices are located at 11150 Santa Monica Blvd, Suite 400, Los Angeles, California 90025. KBS SOR’s telephone number is (949) 417-6500 and its company website is https://kbs.com/reits/kbs-strategic-opportunity-reit/.

THE MERGER

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. In this process, representatives of the Company and its advisors held multiple meetings and conversations with representatives of Parent and its affiliates, both in person and by telephone, relating to the potential transaction. This chronology covers only key events leading up to the signing of the Merger Agreement and does not purport to catalogue every related conversation among or between representatives of the Company, Parent or their respective affiliates or advisors.

The Board and the Company’s senior management regularly review the Company’s financial performance, results of operations and competitive position. During the first half of 2018, the Board and the Company’s senior management commenced a strategic review process in which a number of potentially interested parties were contacted; however, this process did not result in any transaction.

In March 2019, the Board determined to conduct a review of potential strategic alternatives available to the Company, focusing on maximizing stockholder value. The Board’s decision was based on the belief that although the Company has worked hard to actively manage, scale and add value to its single-family home platform, the Company’s efforts have not been fully acknowledged by the market. As a result, the Shares historically have traded at prices reflecting lower multiples of earnings and cash flows than those of many of the Company’s peer companies and a greater discount to the Company’s internal estimates of the net asset value (“NAV”) of the Company’s real estate assets than the Company’s perception of the comparable discounts for other publicly traded real estate companies. The Board also considered the Company’s continuing negative net operating income and cash flow trends, challenges in raising additional capital needed to fund the continued expansion of the Company’s real estate portfolio, and certain other adverse financial and business trends. Accordingly, the Board determined that it was necessary to begin exploring available alternatives for maximizing stockholder value, including a potential sale of the Company.

To assist with the Board’s review of potential strategic alternatives, the Company interviewed two financial advisory / investment banking candidates. At the conclusion of such process, upon the Board’s determination, the Company engaged RBC Capital Markets, LLC (“RBC Capital Markets”) as the Company’s financial advisor in connection with the Board’s review and evaluation of potential strategic alternatives, including a possible sale of the Company. RBC Capital Markets was selected based on, among other things, its experience and reputation as a leading investment banking firm regularly engaged in providing financial advisory services in connection with mergers and acquisitions, and RBC Capital Markets’ familiarity with the Company’s business and industry as a result of its prior engagement by the Company as the Company’s financial advisor in connection with certain proposed capital-raising transactions (which were not ultimately consummated).

On March 22, 2019, the Company issued a press release disclosing that the Board had determined to conduct a review of potential strategic alternatives available to the Company and that the Company had engaged RBC Capital Markets as the Company’s financial advisor to assist the Board in this strategic review.

During the period from late March 2019 through late May 2019, the Company, with the assistance of RBC Capital Markets, conducted a third-party solicitation process, during which a total of 58 potential strategic and financial bidders were contacted, 31 of which expressed initial interest in exploring a potential transaction involving the Company, and 19 of which entered into non-disclosure agreements with the Company and received marketing materials, including a confidential information presentation (“CIP”) containing information about the Company.

On April 9, 2019, in accordance with the directives of the Board, RBC Capital Markets sent to all potential bidders the Company’s first-round process letter, requesting, among other things, the submission of written initial indications of interest by May 10, 2019.

During the period from April 22, 2019 through May 10, 2019, due diligence questions from potential bidders were addressed and potential bidders were provided with additional marketing materials and other Company information, including information relating to the Company’s real estate assets.

On May 8, 2019, a representative of RBC Capital Markets was contacted by telephone by a representative of Battery Point who indicated that Battery Point would be interested in participating in the Company’s strategic alternatives process.

On May 10, 2019, seven bidders submitted preliminary indications of interest (consisting of five written proposals and two email/verbal proposals) with respect to a potential transaction involving the Company. These preliminary indications of interest (two of which were subsequently updated on May 13, 2019) contemplated a purchase price in a range from $3.15 to 5.00 per Share and included three mixed cash-and-stock bids, two cash bids that indicated an ability to include stock as consideration, and three all-cash bids. All of these preliminary indications of interest were subject to various conditions, including further business, financial and legal due diligence. The other parties that previously executed non-disclosure agreements with the Company declined to submit preliminary indications of interest, citing, among other factors, the condition of the Company’s real estate assets and the Company’s inability to sell down assets given its debt position, lack of scale in markets where these investors did not own assets or inability to envision a path to scale, and limited incremental debt capacity.

Also on May 10, 2019, Battery Point Financial, on behalf of Battery Point Trust, Inc. (“Battery Point”), an affiliate of KBS SOR, submitted a preliminary indication of interest in purchasing a controlling interest in the Company for a price of between $3.75 and $4.00 per Share (the “May 10 Proposal”). The May 10 Proposal was based solely on publicly available Company information and was subject to further due diligence. The May 10 Proposal indicated that Battery Point would be prepared to offer to the Company’s majority stockholders the option to roll some of their existing equity in the Company into the combined platform.

On May 16, 2019, the Board held a meeting, which also was attended by members of the Company’s senior management and representatives of RBC Capital Markets, to review and evaluate the preliminary indications of interest submitted in the first round of the strategic alternatives process. RBC Capital Markets updated the Board on the status of the Company’s strategic alternatives process and summarized certain financial and other terms of the eight first-round preliminary indications of interest received to date (including the May 10 Proposal submitted by Battery Point). The Board, with the assistance of the Company’s management and financial advisor, considered the potential opportunities and risks associated with each preliminary indication of interest and the relative merits of inviting the bidders that submitted preliminary indications of interest to participate in the second round of the Company’s strategic alternatives process and granting them due diligence access to additional non-public Company information.

Following discussion, the Board decided to invite four bidders (not including Battery Point) to the second round of the Company’s strategic alternatives process, in which they would conduct further due diligence and would be provided access to the Company’s virtual data room, management presentations and site visits. The Board decided not to invite the remaining bidders to the second round of the Company’s strategic alternatives process because the Board believed that such bidders’ proposals did not provide attractive value or such bidders did not have the financial wherewithal to complete a transaction. The Board determined not to invite Battery Point to the second round of the Company’s strategic alternatives process at that time because the May 10 Proposal submitted by Battery Point, which was based solely on publicly available information, did not contemplate an acquisition of the entire Company and did not provide attractive value, as compared to the preliminary indications of interest submitted by the four bidders invited to the second round of the Company’s strategic alternatives process. However, the Board decided to invite Battery Point to enter into a non-disclosure agreement with the Company, which would allow Battery Point to receive marketing materials, including the CIP, with a view towards submitting an updated indication of interest with respect to an acquisition of the entire Company at a higher purchase price.

On May 20, 2019, three bidders selected by the Board (not including Battery Point) were invited to the second round of the Company’s strategic alternatives process. These bidders are hereinafter referred to as Party A, Party B and Party C, respectively. The fourth bidder selected by the Board also was invited to the second round, but declined to participate.

On May 22, 2019, Battery Point entered into a non-disclosure agreement with the Company and received marketing materials, including the CIP, and the Company’s first-round process letter.

On May 23, 2019, each of Party A, Party B and Party C were granted access to the Company’s data room.

During the period between May 23, 2019 and June 26, 2019, members of the Company’s senior management and representatives of RBC Capital Markets held multiple conversations with the bidders participating in the second round of the Company’s strategic alternatives process and such bidders were provided with additional due diligence materials prepared by the Company.

On May 31, 2019, Battery Point, on behalf of KBS SOR, submitted an updated non-binding, preliminary indication of interest with respect to a potential transaction involving the Company (the “May 31 Proposal”). The May 31 Proposal contemplated that KBS SOR would acquire all of the Company’s outstanding Shares by means of a reverse merger (a taxable transaction), for an all-cash purchase price of $5.05 per Share, on a fully diluted basis, for an aggregate cash purchase price of approximately $55.7 million, subject to due diligence, and that the Company’s secured debt in the aggregate principal amount of approximately $61.9 million would remain in place after the completion of the proposed transaction. The May 31 Proposal indicated that the proposed purchase price of $5.05 per Share was based on the assumption that the Company would have at least $8.0 million of unrestricted cash on its balance sheet at closing, after payment of all severance costs that would become payable to the Company’s executives in connection with the transaction as well as all other transaction expenses. The May 31 Proposal also indicated that KBS SOR expected to offer to all of the Company’s existing stockholders the option to acquire convertible preferred interests in the post-transaction Company (the “Convertible Preferred Stock”), pro rata based on the number of Shares currently held by them, for a maximum aggregate investment of up to $15 million, with indicative material economic terms specified in the May 31 Proposal. The May 31 Proposal also indicated that KBS SOR expected that the Battery Point team would serve as KBS SOR’s primary due diligence team in connection with the proposed transaction.

Also on May 31, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of RBC Capital Markets, at which RBC Capital Markets summarized for the Board certain financial and other terms of the May 31 Proposal submitted by Battery Point on behalf of KBS SOR. After discussion, the Board determined to invite Battery Point, on behalf of KBS SOR, to the second round of the Company’s strategic alternatives process, in which it would conduct further due diligence and would be provided access to the Company’s virtual data room, management presentations and site visits.

On June 2, 2019, Battery Point, on behalf of KBS SOR, was invited to participate in the second round of the Company’s strategic alternatives process and granted access to the Company’s data room.

On June 5, 2019, representatives of Battery Point discussed KBS SOR’s May 31 Proposal further with representatives of RBC Capital Markets and relayed KBS SOR’s initial due diligence requests for the Company.

During the period from June 5, 2019 through June 12, 2019, Battery Point and the other three bidders invited to the second round of the Company’s strategic alternatives process attended management presentations and participated in site visits in Houston, Texas.

On June 7, 2019, in accordance with the directives of the Board, RBC Capital Markets sent the Company’s second-round process letter to each of Battery Point (on behalf of KBS SOR), Party A, Party B and Party C.

During the period from June 7, 2019 through June 21, 2019, each of the second-round bidders relayed a number of additional due diligence requests, and all second-round bidders were provided with additional due diligence materials prepared by the Company’s senior management in response to such requests. Members of the Company’s senior management, with representatives of RBC Capital Markets in attendance, also held due diligence calls with each of the second-round bidders.

On June 20, 2019, all second-round bidders were furnished with a proposed form of merger agreement with respect to the proposed transaction prepared by Greenberg Traurig, LLP (“Greenberg Traurig”), the Company’s outside legal counsel.

On June 27, 2019, Battery Point (on behalf of KBS SOR) and Party A submitted their respective second-round indications of interest. Party B submitted its second-round indication of interest on June 28, 2019. Party C declined to submit a second-round indication of interest.

In its second-round indication of interest (the “June 27 Proposal”), KBS SOR reiterated its prior proposal to acquire all of the Company’s outstanding Shares by means of a reverse merger (a taxable transaction), for an all-cash purchase price of $5.10 per Share, on a fully diluted basis, for aggregate all-cash merger consideration of approximately $56.3 million, subject to due diligence. The June 27 Proposal indicated that it was contingent on receipt of applicable lender consents required to continue the Company’s existing secured debt arrangements, which KBS SOR estimated to have an aggregate principal amount of approximately $61.9 million. The June 27 Proposal also indicated that the proposed purchase price of $5.10 per Share was based on the assumption that the Company would have at least $7.0 million of unrestricted cash on its balance sheet at closing (a $1.0 million reduction from the closing cash target of $8.0 million previously proposed by KBS SOR), that the aggregate merger consideration payable to the Company’s stockholders would be subject to adjustment, positive or negative, if the Company’s closing cash were to exceed or be less than the proposed target amount by up to $700,000, and that KBS SOR would not be required to complete the proposed transaction if the Company’s closing cash amount were less than the proposed target amount by more than $700,000. The June 27 Proposal indicated that KBS SOR expected to fund the proposed transaction with cash on hand and that the proposed transaction was not dependent on raising additional capital. The June 27 Proposal also indicated that KBS SOR expected to offer the option to acquire Convertible Preferred Stock in the post-transaction Company to all of the Company’s existing stockholders, pro rata based on the number of Shares currently held by them, for a maximum aggregate investment of up to $15 million, with indicative material economic terms specified in the June 27 Proposal. In the June 27 Proposal, KBS SOR requested a 30-day period of exclusivity to complete its due diligence and negotiate a definitive merger agreement. The June 27 Proposal also included a mark-up of the merger agreement proposed by the Company.

Party A, a financial bidder, submitted a proposal to acquire all of the Company’s outstanding Shares for an all-cash purchase price of $5.50 per Share. Party A’s proposal indicated that Party A was open to considering the possibility of an equity rollover by the Company’s majority stockholders. Party A’s second-round proposal indicated that Party A expected to fund the proposed transaction with proceeds of an equity and/or debt financing to be arranged by a capital advisory firm engaged by Party A. Party A requested a 45-day period of exclusivity to complete its due diligence and negotiate a definitive merger agreement. Party A’s proposal included a mark-up of the merger agreement proposed by the Company.

Party B, a strategic bidder, submitted a proposal to acquire all of the Company’s outstanding Shares for an all-cash purchase price of $3.25 per Share. Party B’s second-round proposal indicated that Party B expected to fund the proposed transaction with cash sourced from Party B’s own committed capital and from its institutional equity partners. Party B’s proposal contemplated a 60-day exclusivity period to complete its due diligence and negotiate a definitive merger agreement. Party B’s proposal included a mark-up of the form of merger agreement proposed by the Company.

On June 28, 2019 and July 1, 2019, in accordance with the directives of the Board, RBC Capital Markets had telephone conversations with Party A to discuss Party A’s second-round proposal and to inform Party A of the Board’s view that Party A’s proposed financing arrangements raised serious concerns regarding Party A’s ability to finance the proposed transaction, and that in order for Party A’s proposal to be competitive, it needed to articulate a clear path to raising the necessary capital to fund the proposed transaction, including its ability to deliver commitment letters from credible financing sources for the full amount of funding required.

On July 1, 2019, Party A submitted a revised second-round proposal, in which it attempted to address the financing concerns previously communicated on behalf of the Company. However, Party A’s revised second-round proposal did not contemplate meaningful improvements to the financing arrangements previously proposed by Party A.

Also on July 1, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig, Venable, LLP (“Venable”), Maryland counsel to the Company, and RBC Capital Markets. At the meeting, the Board discussed the status of the Company’s ongoing strategic alternatives process and reviewed and discussed the second-round bids received to date. Prior to the beginning of such discussion, Venable discussed with the Board the duties of directors under Maryland law, both generally and in connection with a potential sale of the Company.

RBC Capital Markets then updated the Board on the status of the Company’s strategic alternatives process and summarized for the Board certain financial and other terms of the three second-round bids then submitted to date by Battery Point (on behalf of KBS SOR), Party A and Party B. The Board noted that the price per share proposed by Party B was significantly below the price per share proposed by either of KBS SOR or Party A and that Party B’s proposal did not appear to provide attractive value, as compared to the proposals submitted by KBS SOR and Party A. Accordingly, the Board determined that further discussion should focus on the KBS SOR and Party A bids.

With respect to the June 27 Proposal submitted by Battery Point on behalf of KBS SOR, the Board noted that KBS SOR needed to improve its value proposition (including by proposing a more realistic closing cash target) and provide more detail regarding the option to purchase Convertible Preferred Stock in the post-transaction Company that KBS SOR was proposing to offer to the Company’s stockholders. With respect to the Party A bid, the Board expressed concern that while Party A’s bid contemplated a higher price per Share than the price per Share offered by KBS SOR, Party A’s proposal did not provide sufficient detail as to the size and structure of its financing arrangements and it was unclear if Party A had the ability to secure the necessary financing for the proposed transaction.

Following discussion, the Board determined that neither Battery Point (on behalf of KBS SOR) nor Party A had submitted a proposal based on which the Board would be prepared to grant exclusivity at that time, and that the Company should continue to engage in discussions with these bidders with a view to improving the value and other terms of their proposals. The Board directed RBC Capital Markets to contact each of Battery Point and Party A to provide the Board’s feedback on their respective proposals and update the Board on these discussions.

During the period from July 1, 2019 through July 3, 2019, in accordance with the Board’s directives, RBC Capital Markets had several telephone conversations with each of Battery Point and Party A to provide the Board’s feedback on their respective proposals.

On July 3, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig and RBC Capital Markets. At the meeting, the Board continued its discussion of the second-round bids previously submitted by Battery Point (on behalf of KBS SOR) and Party A. RBC Capital Markets informed the Board that KBS SOR had indicated that it would be willing to increase the purchase price of $5.10 per Share proposed in its second-round bid submission by $0.05 to $0.08 per Share if the Company agreed to offer to each of the Company’s stockholders an election to receive a portion of the merger consideration in the form of Convertible Preferred Stock in the post-transaction Company.

The Board discussed with Greenberg Traurig the legal requirements that would be applicable to the proposed merger consideration election structure, including whether a registration statement would need to be filed with the SEC with respect to the Convertible Preferred Stock to be offered to the Company’s stockholders. Following discussion, the Board expressed the view that the potential incremental price increase indicated by KBS SOR should be weighed against the additional complexity, extended transaction timeline and potential execution risks associated with the proposed Convertible Preferred Stock election structure.

RBC Capital Markets also updated the Board on its discussions with Party A, noting that, as directed by the Board, Party A was instructed to provide more information regarding its proposed financing structure, including its ability to deliver commitment letters from credible financing sources for the full amount of funding necessary to complete the proposed transaction, and that Party A indicated that it was engaged in discussions with several potential financing sources and expected to provide additional information regarding its proposed financing structure the following week. The Board concluded that these matters should be addressed before any decision could be made with respect to the KBS SOR or Party A proposals.

On July 5, 2019, Battery Point, on behalf of KBS SOR, provided additional detail regarding the terms of the June 27 Proposal previously submitted by Battery Point on behalf of KBS SOR, including the proposed Convertible Preferred Stock election structure. In submitting such additional information, Battery Point stated that the KBS SOR board of directors was highly focused on timing and had conditioned the updated June 27 Proposal on receiving a decision from the Company by no later than July 11, 2019.

On July 8, 2019, Greenberg Traurig held a telephone conference with Battery Point and DLA Piper LLP (“DLA Piper”), counsel to Battery Point, with RBC Capital Markets also in attendance, to discuss potential transaction structures for the proposed Convertible Preferred Stock election to be offered to the Company’s stockholders, as contemplated by the June 27 Proposal submitted by Battery Point on behalf of KBS SOR.

On July 9, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig and RBC Capital Markets. At the meeting, the Board discussed the June 27 Proposal submitted by Battery Point on behalf of KBS SOR, as updated by the materials delivered by Battery Point on behalf of KBS SOR on July 5, 2019. It was noted that while KBS SOR was not willing to increase its all-cash purchase price of $5.10 per Share, Battery Point had indicated that KBS SOR would be willing to increase its proposed purchase price to $5.20- $5.25 per Share, if the aggregate amount of merger consideration that the Company’s stockholders would be able to elect to receive in the form of Convertible Preferred Stock in the post-transaction Company was increased from $15 million, as originally proposed by KBS SOR, to $20 million- $25 million, respectively. The Board expressed the view that the proposed purchase price of $5.10 per Share was inadequate, especially because it was likely to be further reduced as a result of the purchase price adjustment based on the closing cash target of $7.0 million proposed by KBS SOR, and that the proposed purchase price would need to be significantly increased, and the proposed closing cash target of $7.0 million would need to be eliminated or at least significantly reduced, for the Board to consider granting exclusivity to KBS SOR. The Board also discussed certain improvements to the proposed economic terms of the Convertible Preferred Stock that would need to be negotiated with Battery Point to make the Convertible Preferred Stock offering more attractive to the Company’s stockholders, including the proposed minimum total investment amount, dividend rate and redemption price.

Greenberg Traurig reviewed with the Board the material issues raised by the mark-up of the Company’s auction draft of the merger agreement submitted by Battery Point on behalf of KBS SOR, including the deletion of materiality and “Material Adverse Effect” qualifiers in certain of the Company’s representations and warranties, changes that would allow Parent to declare a Material Adverse Effect based on the occurrence of stockholder litigation relating to the proposed transaction, and provisions that would allow Parent to seek money damages or specific performance in addition to collecting a termination payment from the Company in the event the merger agreement, in the form proposed by KBS SOR, was terminated in certain circumstances.

At the conclusion of the meeting, the Board discussed the appropriate negotiating strategy for maximizing KBS SOR’s proposed purchase price and directed RBC Capital Markets to inform Battery Point that, in order for the Board to consider granting exclusivity to KBS SOR, KBS SOR would need to further revise its proposal to address the following points:

Also on July 9, 2019, in accordance with the Board’s directives, RBC Capital Markets had a telephone conversation with Battery Point to communicate the Company’s response to the updated June 27 Proposal.

On July 10, 2019, Battery Point, on behalf of KBS SOR, delivered a further revised second-round proposal (the “July 10 Proposal”). In the July 10 Proposal, KBS SOR reiterated its prior proposal to acquire all of the Company’s outstanding Shares by means of a reverse merger (a taxable transaction), for an all-cash purchase price of $5.15 per Share, on a fully diluted basis, for an aggregate all-cash merger consideration of approximately $56.85 million, subject to due diligence. The July 10 Proposal indicated that it was contingent on receipt of applicable lender consents required to continue the Company’s existing secured debt arrangements, which KBS SOR estimated to have an aggregate principal amount of approximately $61.89 million. The July 10 Proposal indicated that the proposed purchase price of $5.15 per Share was based on the assumption that the Company would have at least $6.5 million of unrestricted cash on its balance sheet at closing (a $500,000 reduction from the closing cash target of $7.0 million previously proposed by KBS SOR), which amount would be increased by an amount equal to 2% of the total amount of Convertible Preferred Stock purchased by the Company’s current stockholders prior to the merger closing, and that the aggregate merger consideration would be subject to adjustment, positive or negative, if the Company’s closing cash position differed from the proposed target amount. The July 10 Proposal no longer contemplated that KBS SOR would not be required to complete the proposed transaction if the Company’s closing cash amount was less than the proposed target amount. The July 10 Proposal indicated that KBS SOR expected to fund the proposed transaction with available cash and that the proposed transaction was not dependent on raising additional capital. The July 10 Proposal also indicated that KBS SOR expected to offer to all of the Company’s existing stockholders meeting the eligibility requirements for Rule 506(c) offerings the option to purchase Convertible Preferred Stock in the post-transaction Company, pro rata based on the number of Shares currently held by them, for a maximum aggregate investment of up to $20 million, with material economic terms specified in the July 10 Proposal. The July 10 Proposal contemplated that the option to purchase Convertible Preferred Stock in the post-transaction Company would be offered to the eligible stockholders by means of an offering exempt from registration under the Securities Act, pursuant to Rule 506(c) of Regulation D and/or Regulation S under the Securities Act. The July 10 Proposal contemplated that the closing of the Convertible Preferred Stock offering would occur concurrently with the closing of the merger and that all proceeds of the offering would be held in escrow pending the closing of the merger and the offering. In the July 10 Proposal, KBS SOR indicated that such proposal was its “best and final offer” and reiterated its request for a 30-day period of exclusivity to complete its due diligence and negotiate a definitive merger agreement. The July 10 Proposal also included responses to the initial guidance provided by the Company to Battery Point on the material issues raised by the mark-up of the Company’s proposed form of the merger agreement previously delivered by Battery Point (on behalf of KBS SOR) to the Company in connection with the June 27 Proposal.

Later that same day, Battery Point provided additional detail relating to the Convertible Preferred Stock offering structure proposed by KBS SOR, including the relevant securities law considerations and the proposed increase of the Company’s unrestricted closing cash balance by an amount equal to 2% of the total amount of Convertible Preferred Stock purchased by the Company’s current stockholders in the offering.

Also on July 11, 2019, Party A submitted a further revised second-round proposal, in which Party A again attempted to address the financing concerns previously communicated to it on behalf of the Company. In particular, the July 11 proposal submitted by Party A contemplated that Party A, together with its equity co-investors, would commit to contribute up to $21 million of equity towards the funding of the proposed transaction, and indicated that Party A was negotiating with two reputable investment firms a structured equity investment to provide the balance of the necessary funding for the proposed transaction. The July 11 proposal indicated that Party A expected to have signed term sheets with both investment firms by the end of the following week.

Also on July 11, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig and RBC Capital Markets. At the meeting, the Board discussed the updated second-round bids submitted by Battery Point (on behalf of KBS SOR) and Party A. RBC Capital Markets summarized for the Board certain financial and other terms of the July 11 Proposal submitted by Battery Point (on behalf of KBS SOR), which Battery Point indicated reflected KBS SOR’s “best and final offer” and to which KBS SOR expected a response from the Company by the end of the week. The July 11 Proposal indicated the following:

Following discussion, the Board expressed the view that the terms of the July 10 Proposal submitted by KBS SOR, including the increased purchase price of $5.15 per Share, were more favorable in the aggregate to the Company’s stockholders than the terms of all other proposals received by the Company to date, taking into account the value that would be delivered to the Company’s stockholders and the likelihood of consummation of the proposed transaction (including the fact that KBS SOR’s proposal was fully financed). However, the Board expressed concern that the proposed purchase price adjustment based on the closing cash target of $6.5 million could potentially result in a material reduction to the proposed purchase price of $5.15 per Share, given the Company’s current “cash burn rate” and the anticipated amount of time required to complete the proposed transaction. Accordingly, the Board expressed the view that it was important to confirm that KBS SOR would bear all costs and expenses relating to obtaining any applicable lender consents necessary to continue the Company’s existing secured debt arrangements, as well as all incremental transaction costs relating to the proposed Convertible Preferred Stock offering.

RBC Capital Markets updated the Board regarding the second-round proposal submitted by Party A, which reflected a reduction in the proposed purchase price from $5.50 per Share, on a fully diluted basis, as proposed by Party A in its original second-round bid submission, to $5.30 per Share and provided certain additional information regarding its proposed financing arrangements. Following discussion, the Board expressed continued concerns regarding Party A’s ability to secure the necessary financing for the proposed transaction. The Board also noted that the timing specified by Party A for delivering to the Company signed terms sheets from the two investment firms with which Party A was negotiating a potential structured equity investment to provide the necessary funding for the proposed transaction was problematic because there was a serious risk that KBS SOR would withdraw its proposal and terminate further discussions with the Company if the Company did not respond to KBS SOR’s updated proposal by the end of the following week, as required by KBS SOR. Accordingly, the Board concluded that the Company and its advisors should focus on responding to KBS SOR’s proposal at that time and should revisit Party A’s proposal if the Company was unable to reach a deal with KBS SOR.

The Board then discussed the strategy for responding to KBS SOR’s updated proposal. Although the Board believed that the July 10 Proposal was superior overall to the other proposals received by the Company to date, the Board determined to seek additional improvements to KBS SOR’s proposed terms. Accordingly, the Board directed RBC Capital Markets to inform KBS SOR that the Board would be prepared to grant exclusivity to KBS SOR if it further revised its proposal to reflect: (i) a reduction in the proposed closing cash target from $6.5 million to $5.5 million; (ii) confirmation that KBS SOR would bear all costs and expenses associated with obtaining any applicable lender consents necessary to continue the Company’s existing secured debt arrangements and all incremental transaction costs relating to the proposed Convertible Preferred Stock offering; and (iii) further improvement of the economic terms of the Convertible Preferred Stock to be offered to the Company’s stockholders.

On July 12, 2019, in accordance with the Board’s directives, RBC Capital Markets had several telephone conversations with Battery Point to communicate the Company’s response to the July 10 Proposal submitted by Battery Point (on behalf of KBS SOR). In response, Battery Point (i) indicated that KBS SOR was unwilling to reduce the proposed closing cash target from $6.5 million to $5.5 million, as proposed by the Company, (ii) confirmed that KBS SOR would bear all costs and expenses associated with obtaining any applicable lender consents necessary to continue the Company’s existing secured debt arrangements and all incremental transaction costs relating to the proposed Convertible Preferred Stock offering, and (iii) indicated that KBS SOR would be willing to consider and discuss certain improvements to the economic terms of the Convertible Preferred Stock to be offered to the Company’s stockholders. Battery Point also indicated that it was no longer proposing to increase the amount of Available Cash by a percentage of the total amount of Convertible Preferred Stock purchased by the Company’s stockholders in the offering, due to the uncertainty regarding the amount that would be ultimately purchased. Battery Point also stated that the terms set forth in the July 10 Proposal, as supplemented by Battery Point on July 12, 2019, constituted KBS SOR’s “best and final offer”, reiterated KBS SOR’s request for a 30-day exclusivity period, and indicated that KBS SOR would withdraw its proposal and terminate discussions with the Company unless it received a response from the Company by the end of the day.

Later that same day, RBC Capital Markets reported to the Board on their telephone conversations with Battery Point, including the modifications to the terms of the July 10 Proposal proposed by Battery Point (on behalf of KBS SOR), its request for exclusivity and stated intention to withdraw its proposal and terminate discussions with the Company unless it received a response from the Company by the end of the day. Following extensive discussion, the Board directed RBC Capital Markets to inform Battery Point that the Board would move forward with KBS SOR’s final proposal, subject to Battery Point delivering to the Company an updated written indication of interest reflecting the final terms of KBS SOR’s offer.

On July 13, 2019, in accordance with the Board’s directives, RBC Capital Markets sent an email to Battery Point to communicate the Board’s decision.

On July 15, 2019, Battery Point, on behalf of KBS SOR, provided an updated, non-binding indication of interest reflecting the final transaction terms proposed by KBS SOR (the “Final KBS SOR Proposal”).

Also on July 15, 2019, the Board, acting by written consent without a meeting, unanimously approved a resolution authorizing the Company’s senior management to enter into a 30-day exclusivity agreement with KBS SOR and directing the Company’s senior management and advisors to seek to negotiate definitive documentation with Battery Point in connection with the proposed transaction, on terms and conditions substantially consistent with those set forth in the Final KBS SOR Proposal.

Later that same day, pursuant to the authorization of the Board, the Company and KBS SOR entered into an exclusivity agreement, pursuant to which the Company agreed to negotiate exclusively with KBS SOR and its representatives with respect to the proposed acquisition by KBS SOR (or an affiliate of KBS SOR) of all of the outstanding Shares on the preliminary terms and conditions set forth in the Final KBS SOR Proposal, until the earlier to occur of 5:00 p.m., Pacific time, on August 14, 2019 and the execution and delivery of a definitive agreement with respect to the proposed transaction.

During the period from July 16, 2019 through August 26, 2019, representatives of Battery Point participated in multiple business, financial, accounting, legal and other due diligence meetings and telephone conferences with the Company’s management and representatives.

Between July 22, 2019 and August 2, 2019, Greenberg Traurig and DLA Piper exchanged drafts of the merger agreement, and Greenberg Traurig delivered to DLA Piper an initial draft of the Company disclosure letter.

On August 5, 2019, DLA Piper and Greenberg Traurig held a conference call to discuss open points in the drafts of the merger agreement and the Company disclosure letter.

On August 7, 2019, Greenberg Traurig delivered to DLA Piper a revised draft of the merger agreement and initial drafts of the support agreement and the form of stockholders’ written consent. Greenberg Traurig also delivered to DLA Piper a sample calculation of Available Cash prepared by the Company’s senior management. On the same day, Battery Point, on behalf of KBS SOR, delivered an outline of the proposed economic terms of the Convertible Preferred Stock (the “Convertible Preferred Term Sheet”).

Also on August 7, 2019, the Board held its regularly scheduled quarterly meeting, which also was attended by members of the Company’s senior management. The Board discussed the Company’s financial performance and results of operations for the three- and six-month periods ended June 30, 2019, noting that the Company’s negative revenue and cash flow trends continued in the second quarter of 2019. The Board also reviewed and approved a draft of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Members of the Company’s senior management also updated the Board on the status of the Company’s ongoing merger negotiations with Battery Point.

During the period from August 12, 2019 through August 15, 2019, DLA Piper and Greenberg Traurig exchanged several revised drafts of the merger agreement, the Company disclosure letter and the form of stockholders’ written consent. DLA Piper also delivered to Greenberg Traurig an initial draft of the equity commitment letter. During the same period, DLA Piper and Greenberg Traurig held several conference calls to discuss the remaining open points in the drafts of the merger agreement and other transaction documents.

On August 15, 2019, members of the Company’s senior management and representatives of Battery Point, together with representatives of DLA Piper, Greenberg Traurig and RBC Capital Markets, held a conference call to discuss the outstanding business and legal points in the drafts of the merger agreement and other transaction documents. The status of Battery Point’s business, financial and legal due diligence was also discussed.

On the same day, DLA Piper delivered to Greenberg Traurig an updated draft of the Convertible Preferred Term Sheet.

On August 19, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig and RBC Capital Markets. At the meeting, the Board discussed the status of the Company’s ongoing merger agreement negotiations with KBS SOR and considered Battery Point’s request, on behalf of KBS SOR, for an extension of the exclusivity period, which expired on August 14, 2019. Noted for the Board were the remaining material business and due diligence matters relating to the proposed transaction, including Battery Point’s proposal to exclude certain cash items from the calculation of Available Cash, and remaining material legal points in the drafts of the merger agreement and other transaction documents, including the proposed materiality qualifiers in certain of the Company’s representations and warranties, the related “bring-down” closing condition, and the remedies that would be available to the Company in the event that KBS SOR failed to fund its equity commitment or otherwise to consummate the proposed transaction.

The Board also discussed the status of the Company’s discussions with KBS SOR regarding the economic terms of the Convertible Preferred Stock, including certain changes that the Board deemed necessary to make the economic terms of the Convertible Preferred Stock (including the redemption and conversion provisions) more attractive to the Company’s stockholders. Following discussion, the Board directed RBC Capital Markets to present the Board’s proposed changes to KBS SOR. The Board also reiterated its view that the Company should agree to pursue the Convertible Preferred Stock offering only if it would not cause significant delay or create additional execution risks with respect to the proposed Merger or result in incremental transaction costs to the Company that would reduce the Merger Consideration payable to the Company’s stockholders in the proposed Merger.

The Board also discussed Battery Point’s request, on behalf of KBS SOR, to extend the exclusivity period previously approved by the Board, which expired on August 14, 2019, for an additional two weeks. The Board considered that Battery Point remained interested in the proposed transaction and continued to diligently conduct its confirmatory due diligence and negotiate the drafts of the merger agreement and related transaction documents. However, the Board expressed concern that Battery Point’s proposal to exclude certain cash items from the calculation of Available Cash could result in a material reduction in the amount of Merger Consideration that would be payable to the Company’s stockholders in the proposed Merger. Following discussion, the Board approved a resolution authorizing the Company’s senior management to extend the exclusivity period for an additional two weeks, subject to a favorable resolution of the Available Cash issue. The Board and the Company’s advisors also discussed the strategy for providing feedback to Battery Point. Following discussion, the Board directed RBC Capital Markets to inform Battery Point that the Board’s decision as to whether to extend exclusivity would depend on the outcome of the Available Cash and other economic points.

On August 20, 2019, as directed by the Board, RBC Capital Markets delivered to Battery Point a revised draft of the Convertible Preferred Term Sheet reflecting the changes requested by the Board and relayed the Board’s decision regarding exclusivity.

During the period from August 20, 2019 through August 26, 2019, DLA Piper and Greenberg Traurig exchanged several revised drafts of the merger agreement, the Company disclosure letter, the form of stockholders’ written consent, the support agreement, the equity commitment letter, and certain other transaction documents. During the same period, DLA Piper and Greenberg Traurig held several conference calls to discuss the remaining open points in the drafts of the merger agreement and other transaction documents.

On August 26, 2019, members of the Company’s senior management and representatives of Battery Point, together with representatives of DLA Piper, Greenberg Traurig and RBC Capital Markets, held a conference call to discuss the outstanding business and legal points in the drafts of the merger agreement and certain other transaction documents. The status of Battery Point’s business, financial and legal due diligence was also discussed.

On August 27, 2019, Greenberg Traurig delivered to DLA Piper a further revised draft of the Convertible Preferred Term Sheet reflecting certain additional changes requested by the Board, including changes to the proposed dividend rate and conversion provisions.

On August 28, 2019, DLA Piper delivered to Greenberg Traurig a further revised draft of the Convertible Preferred Term Sheet, reflecting KBS SOR’s response to the changes requested by the Board, together with an initial draft of the form of articles supplementary setting forth the proposed terms and conditions of the Convertible Preferred Stock.

On August 29, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig and RBC Capital Markets. Greenberg Traurig discussed the status of the ongoing merger agreement negotiations with Battery Point. Greenberg Traurig reported that substantial progress had been made, with resolution of a number of outstanding points, over the last several days. Greenberg Traurig also discussed the remaining open points in the drafts of the merger agreement and certain other transaction documents, including the Convertible Preferred Term Sheet and the form of articles supplementary setting forth the proposed terms and conditions of the Convertible Preferred Stock, noting that Greenberg Traurig would continue to discuss such points with DLA Piper.

RBC Capital Markets then reviewed with the Board the process that the Company had undertaken since the Company publicly announced a process to explore strategic alternatives on March 22, 2019, noting the Company had conducted a five-month long public process to actively solicit indications of interest, offers and proposals from potential strategic and financial purchasers and investors. In the course of such process, 58 potential purchasers and investors were contacted, 31 of which expressed initial interest in the opportunity, 21 requested a non-disclosure agreement with the Company, 19 executed non-disclosure agreements with the Company and received marketing materials, eight submitted first-round indications of interest with respect to a potential acquisition of the Company, four were invited to the second round of the sale process, attended management presentations and site visits and were granted access to the data room maintained by the Company, and three (including Battery Point on behalf of KBS SOR) submitted final bids. The Board noted that the final bid submitted by Battery Point on behalf of KBS SOR was, in the Board’s view, the best final offer, taking into consideration price, financing certainty and execution risk, received by the Company during the strategic alternatives process. RBC Capital Markets also reviewed with the Board its preliminary financial analysis of the Merger Consideration (assumed, for purposes of such analysis, as $5.15 per Share in cash, based on the Aggregate Merger Consideration and estimates of the Company’s management).

Various questions were asked by the Board members regarding management’s estimate of the Available Cash amount as of the anticipated closing date of the Merger. In the course of that discussion, Mr. Chad Carpenter, the Company’s Chairman of the Board and Chief Executive Officer, and Mr. Thad Meyer, the Company’s Chief Financial Officer, indicated that, in order to increase the amount of Available Cash, they would be willing to agree to reduce their respective cash severance amounts that would be payable to each of them as a result of the anticipated termination of their employment with the Company in connection with the completion of the Merger and to execute and deliver to the Company binding agreements to that effect. After further discussion, it was decided that a Board meeting would be held at 10:00 a.m., Pacific time, on August 30, 2019, for the Board to receive an update from Greenberg Traurig on the status of the merger agreement and other transaction documents.

Later that same day, DLA Piper and Greenberg Traurig held several conference calls to resolve the remaining open points and finalize the merger agreement and the other transaction documents.

On August 30, 2019, the Board held a telephonic meeting, which also was attended by members of the Company’s senior management and representatives of Greenberg Traurig, Venable and RBC Capital Markets. Greenberg Traurig updated the Board regarding the most current status of negotiations with Battery Point and reported that all material open points in the merger agreement and other transaction documents had been resolved. Venable then discussed with the Board the duties of directors under Maryland law, both generally and in connection with a potential sale of the Company.

Greenberg Traurig then reviewed the material terms and conditions of the Merger Agreement, the Support Agreement and the Equity Commitment Letter, substantially final drafts of which had been distributed to the Board prior to the meeting, and summarized the outcome of the negotiation of all material business and legal issues relating to the proposed Merger. In particular, Greenberg Traurig reviewed with the Board the proposed transaction structure, the scope of the Company’s representations and warranties, including the related definitions of “Material Adverse Effect” and “Knowledge,” and the Company’s “interim conduct of business” covenants, including the relationship of such provisions with the closing conditions and termination provisions in the Merger Agreement. Greenberg Traurig also discussed the “deal protection package” contemplated by the Merger Agreement, including the Company’s obligation to deliver to Parent, within three business days after the date of the Merger Agreement, an executed copy of the form of stockholders’ written consent (the “Stockholders’ Written Consent”) effecting the requisite stockholder approval of the proposed Merger under Maryland law and the Company’s organizational documents, noting that the Stockholders’ Written Consent would become effective on the fifth business day after the date of the Merger Agreement, unless a superior proposal from a third party was received by the Company during such period. Greenberg Traurig also reviewed the Company’s no-solicitation covenants and the related “fiduciary outs” exception, noting that, once the Stockholders’ Written Consent became effective in accordance with its terms, the Board would no longer have the ability to respond to, consider and negotiate unsolicited acquisition proposals or to withdraw its recommendation of the Merger and terminate the Merger Agreement in order to enter into a definitive agreement with a party that submitted a superior proposal. Greenberg Traurig also discussed the termination payment that would be payable by the Company in the event of a termination of the Merger Agreement in certain circumstances. Greenberg Traurig also summarized the material provisions of the Equity Commitment Letter proposed to be delivered by KBS SOR, including KBS SOR’s commitments to fund the full amount of the Merger Consideration and Parent’s transaction expenses, as well as any money damages that may be payable by Parent to the Company (up to a cap of $2.0 million), noting that the Company is an express third-party beneficiary of KBS SOR’s obligation to fund such commitments under the Equity Commitment Letter.

RBC Capital Markets then reviewed its financial analysis of the Merger Consideration (assumed, for purposes of such analysis, as $5.15 per Share in cash based on the Aggregate Merger Consideration and estimates of the Company’s management) and rendered an oral opinion, confirmed by delivery of a written opinion dated August 30, 2019, to the Board to the effect that, as of that date and based on and subject to the procedures followed, assumptions made, factors considered and qualifications and limitations described in the opinion, such Merger Consideration to be received pursuant to the Merger Agreement by holders of Shares (other than holders providing a written consent or support agreement in connection with the Merger or, as applicable, KBS SOR, Parent, Merger Sub, and their respective affiliates) was fair, from a financial point of view, to such holders.

The Board then conducted its final deliberations and discussions regarding the terms and conditions of the Merger Agreement and the other transaction documents. The Board also considered a number of business, financial, legal, Company-specific, industry, macro-economic, structural, procedural and timing matters related to the proposed Merger.

Upon conclusion of such deliberations, upon motion duly made and seconded, the Board (by unanimous vote of all directors present at the meeting) (i) authorized the execution and delivery of the Merger Agreement, (ii) declared that the Merger and the other transactions contemplated by the Merger Agreement are advisable, in the best interests of the Company and its Stockholders, and in accordance with the MGCL, (iii) directed that the Merger be submitted for consideration by our Stockholders and (iv) recommended that the Stockholders approve the Merger in accordance with the terms of the Merger Agreement.

Later that same day, the Company, Parent and Merger Sub entered into the Merger Agreement. Concurrently with the execution and delivery of the Merger Agreement, Parent and the Majority Stockholders entered into the Support Agreement, and KBS SOR executed and delivered the Equity Commitment Letter. In addition, each of Messrs. Carpenter and Meyer executed and delivered to the Company a letter agreement, pursuant to which each of them agreed to reduce their respective cash severance payments by the respective amounts specified in such letter agreements.

On the morning of August 31, 2019, the Merger Agreement was publicly announced by the parties via joint press release.

On September 3, 2019, the Company filed with the SEC a Current Report on Form 8-K disclosing the Merger Agreement and the transactions contemplated thereby.

Also on September 3, 2019, each of the Majority Stockholders executed and delivered to the Company the Stockholders’ Written Consent, which was delivered by the Company to Parent promptly thereafter, in accordance with the Merger Agreement.

No inquiries, indications of interest, offers or proposals with respect to a potential transaction were received by the Company during the period from the date of the Merger Agreement through September 9, 2019. As a result, the Stockholders’ Written Consent became effective at 11:59 p.m., New York City time, on September 9, 2019.

During the period from August 31, 2019 through September 20, 2019, the parties continued to discuss potential changes to the Articles Supplementary to clarify the parties’ intent with respect to certain terms of the Convertible Preferred Stock, including the conversion price and certain rights of holders of the Convertible Preferred Stock with respect to future issuances of certain equity securities of the Company.

On September 20, 2019, the Company, Parent and Merger Sub entered into an amendment to the Merger Agreement, pursuant to which the parties agreed to amend certain terms of the Articles Supplementary.

Also on September 20, 2019, the Company filed with the SEC a Current Report on Form 8-K disclosing the Merger Agreement amendment.

Structure of the Merger

Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation (the “Surviving Corporation”) in the Merger. Following the consummation of the Merger, the Company will be a wholly-owned subsidiary of Parent.

The Merger will become effective on the date and time at which the Articles of Merger have been filed with, and accepted for record by, the SDAT, or on such later date and time as may be mutually agreed to by the parties to the Merger Agreement and specified in the Articles of Merger (the “Effective Time”).

Merger Consideration

If the Merger is completed, at the Effective Time, each Share (excluding any awards in respect of Shares that are subject to vesting, repurchase or other lapse restrictions granted under the Company Stock Plan (an “Unvested Company Restricted Stock Award”), the treatment of which is described in more detail below in the section titled “The Merger Agreement – Treatment of Common Stock and Unvested Restricted Stock Awards”) issued and outstanding immediately prior to the Effective Time (other than any Shares owned by Parent, Merger Sub or any other wholly-owned subsidiary of Parent) will be converted into the right to receive an amount in cash (without any interest thereon) equal to the Aggregate Merger Consideration divided by (ii) the total number of Shares outstanding immediately prior to the Effective Time. We refer to such amount of cash to be received for each Share as the “Merger Consideration”.

The “Aggregate Merger Consideration” equals $56,849,495.55 in cash, to be increased or decreased, as the case may be, by the difference, if any, between the Available Cash and $6,500,000. “Available Cash” refers to an estimate of the unrestricted cash of the Company and its subsidiaries as of last day of the calendar month in which the Closing is expected to occur, that (i) is calculated in a manner consistent with the manner in which cash is reflected on the consolidated balance sheets of the Company and its subsidiaries and (ii) the Company has determined in good faith, as supported by reasonable documentary detail, would be available to be distributed by the Company to Parent or the Paying Agent as of the Closing Date in accordance with our organizational documents and applicable law, including Section 2-311 and any other applicable provisions of the MGCL. Attached as Schedule I to the Merger Agreement is an illustrative sample calculation of Available Cash as of June 30, 2019.

Management currently estimates that the Available Cash will be approximately $[●] million. Based on this current estimate and the total number of Shares outstanding as of the date of this Information Statement, we currently expect that the Merger Consideration will be approximately $[●] per Share. However, several items included in the calculation of Available Cash are beyond the Company’s control and may result in a negative adjustment of the Merger Consideration. If, as a result of these or other variables beyond the Company’s control, the amount of Available Cash is significantly less than $6.5 million, the Merger Consideration may be reduced to be significantly lower than the current estimate of $[●] per Share (potentially to be as low as $4.56 per Share, if Available Cash is equal to zero, although we consider such outcome to be unlikely).

The Merger Agreement provides a mechanism for resolving disputes relating to the calculation of the Available Cash and the Aggregate Merger Consideration. See “The Merger Agreement – Company Estimate of Available Cash; Dispute Resolution” beginning on page [●].

Board Approval and Recommendation

Under Section 3-105 of the MGCL, the approval of the Board is required to approve the Merger in accordance with the terms and conditions set forth in the Merger Agreement. The Board carefully reviewed and considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Merger, which would require approval of the Board and our Stockholders under Maryland law. At a meeting held on August 30, 2019, the Board:

Reasons for the Merger

The Board, at a meeting held on August 30, 2019, authorized the execution and delivery of the Merger Agreement, declared that the Merger and the other transactions contemplated thereby are advisable, in the best interests of the Company and the Stockholders and in accordance with the MGCL, directed that the Merger be submitted for consideration by the Stockholders, and recommended that the Stockholders approve the Merger in accordance with the terms of the Merger Agreement. The Board evaluated the Merger in consultation with the Company’s senior management and its legal and financial advisors.

In reaching its determination and recommendation, the Board considered a number of potentially positive factors, including the following material factors and benefits of the Merger, each of which the Board believed supported its determination and recommendation (which factors are not intended to be exhaustive and are not listed in any intended relative order of importance):

In reaching its determination and recommendation, the Board also considered a number of uncertainties, risks and potentially negative factors concerning the Merger Agreement and the Merger, including the factors described below (which factors are not intended to be exhaustive and are not listed in any intended relative order of importance):

The above discussion of the information and factors considered by the Board is not intended to be exhaustive, but indicates the material matters considered. In reaching its determination and recommendation, the Board did not quantify, rank or assign any relative or specific weight to any of the foregoing factors, and individual members of the Board may have considered various factors differently. The Board did not undertake to make any specific determination as to whether any specific factor, or any particular aspect of any factor, supported or did not support its ultimate recommendation. Moreover, in considering the information and factors described above, individual members of the Board each applied his or her own personal business judgment to the process and may have given differing weights to differing factors. The Board based its determination and recommendation on the totality of the information presented. The explanation of the factors and reasoning set forth above contain forward looking statements that should be read in conjunction with the information set forth above in the section entitled “Cautionary Statements Concerning Forward- Looking Statements.”

Required Stockholder Approval; Record Date

Under Maryland law and the Company’s organizational documents, any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting if the action is advised, and submitted to our Stockholders for approval, by the Board and a written consent of stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders is delivered to the Company in accordance with the MGCL. Under Maryland law and the Company’s organizational documents, approval of the Merger requires the affirmative vote or consent of holders of a majority of the outstanding Shares entitled to vote on such matter.

In connection with the Merger and the other transactions contemplated by the Merger Agreement, the Majority Stockholders holding, in the aggregate, 7,801,404 Shares, or approximately 70.7% of the issued and outstanding Shares as of September 9, 2019, entered into the Support Agreement, pursuant to which each Majority Stockholder has agreed, among other things, upon the terms and subject to the conditions set forth therein, to vote or cause to be voted (including by taking action by written consent) all of its Shares in favor of the Merger in accordance with the terms and conditions of the Merger Agreement. The Support Agreement is further described in more detail below in the section titled “Support Agreement” beginning on page [●].

Pursuant to the Support Agreement, on September 3, 2019, the Majority Stockholders executed and delivered to the Company the Stockholders’ Written Consent approving the Merger. The Stockholders’ Written Consent became effective at 11:59 p.m., New York City time, on September 9, 2019.

As a result of the execution and delivery of the Stockholders’ Written Consent, no further action by our Stockholders is required under applicable law, including Section 3-105 of the MGCL, the Company’s organizational documents or the Merger Agreement to approve the Merger, and the Company will not be soliciting your vote for or consent to the approval of the Merger. The Company will not call a stockholders’ meeting for purposes of voting on these matters.

As of September 9, 2019, the Record Date, there were 11,038,737 Shares issued and outstanding. This Information Statement will be sent to record holders of Shares as of the Record Date. A complete list of our Stockholders as of the Record Date will be available for review at our executive offices during regular business hours.

Opinion of the Company’s Financial Advisor

The Company engaged RBC Capital Markets as the Company’s financial advisor in connection with the Merger. As part of this engagement, the Board requested that RBC Capital Markets evaluate the fairness, from a financial point of view, of the Merger Consideration (assumed, for purposes of RBC Capital Markets’ opinion, as $5.15 per Share in cash based on the Aggregate Merger Consideration and estimates of the Company’s management) to be received pursuant to the Merger Agreement by holders of Shares (other than holders providing a written consent or support agreement in connection with the Merger or, as applicable, KBS SOR, Parent, Merger Sub, and their respective affiliates). At an August 30, 2019 meeting of the Board held to evaluate the Merger, RBC Capital Markets rendered an oral opinion, confirmed by delivery of a written opinion dated August 30, 2019, to the Board to the effect that, as of that date and based on and subject to the procedures followed, assumptions made, factors considered and qualifications and limitations described in the opinion, such Merger Consideration to be received pursuant to the Merger Agreement by holders of Shares (other than holders providing a written consent or support agreement in connection with the Merger or, as applicable, KBS SOR, Parent, Merger Sub, and their respective affiliates) was fair, from a financial point of view, to such holders.

The full text of RBC Capital Markets’ written opinion, dated August 30, 2019, is attached as Annex B to this Information Statement and is incorporated herein by reference. The written opinion sets forth, among other things, the procedures followed, assumptions made, factors considered and qualifications and limitations on the review undertaken by RBC Capital Markets in connection with its opinion. The following summary of RBC Capital Markets’ opinion is qualified in its entirety by reference to the full text of the opinion. RBC Capital Markets delivered its opinion to the Board for the benefit, information and assistance of the Board (in its capacity as such) in connection with its evaluation of the Merger. RBC Capital Markets’ opinion addressed only the fairness, from a financial point of view and as of the date of such opinion, of the Merger Consideration (to the extent expressly specified in such opinion) and did not address any other aspect of the Merger. RBC Capital Markets’ opinion also did not address the underlying business decision of the Company to engage in the Merger or the relative merits of the Merger compared to any alternative business strategy or transaction that might be available to the Company or which the Company might engage in or consider. RBC Capital Markets did not express any opinion and does not make any recommendation to any securityholder as to how such securityholder should vote or act with respect to the Merger or any proposal to be voted upon in connection with the Merger or otherwise.

For purposes of rendering its opinion, RBC Capital Markets undertook such review, inquiries and analyses as it deemed necessary or appropriate under the circumstances and, among other things:

In rendering its opinion, RBC Capital Markets assumed and relied upon the accuracy and completeness of all information that was reviewed by RBC Capital Markets, including all financial, legal, tax, accounting, operating and other information provided to or discussed with RBC Capital Markets by or on behalf of the Company (including, without limitation, financial statements and related notes), and upon the assurances of the Company’s management and other representatives that they were not aware of any relevant information that was omitted or that remained undisclosed to RBC Capital Markets. RBC Capital Markets did not assume responsibility for independently verifying and it did not independently verify such information. RBC Capital Markets also assumed that the financial projections and other estimates and data (including, without limitation, as to the estimated available unrestricted cash of the Company and its subsidiaries) that RBC Capital Markets was directed to utilize in its analyses were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the Company’s management as to the future financial performance of, and were a reasonable basis upon which to evaluate, the Company and the other matters covered thereby. RBC Capital Markets expressed no opinion as to any such financial projections or other estimates and data, including the assumptions upon which they were based.

RBC Capital Markets relied upon the assessments of the Company’s management as to, among other things, (i) the potential impact on the Company of market, competitive, and other trends and developments in and prospects for, and governmental, regulatory and legislative matters relating to or affecting, the residential real estate industry, including the single-family rental sector thereof, related credit and financial markets, and the geographic regions in which the Company operates, and (ii) existing and future agreements and arrangements with, and the ability to attract, retain and/or replace, tenants, third-party vendors and service providers and other commercial relationships of the Company. RBC Capital Markets assumed that there would be no developments with respect to any of the foregoing that would be meaningful in any respect to its analyses or opinion. RBC Capital Markets also assumed that any adjustments to the Merger Consideration would not be meaningful in any respect to RBC Capital Markets’ analyses or opinion.

In connection with its opinion, RBC Capital Markets did not assume any responsibility to perform, and it did not perform, an independent valuation or appraisal of any of the assets or liabilities (contingent, off-balance sheet, accrued, derivative or otherwise) of or relating to the Company or any other entity and, except for certain third-party appraisals, RBC Capital Markets was not furnished with any such valuations or appraisals. RBC Capital Markets did not assume any obligation to conduct, and it did not conduct, any physical inspection of the property or facilities of the Company or any other entity. RBC Capital Markets did not evaluate the solvency or fair value of the Company or any other entity under any state, federal or other laws relating to bankruptcy, insolvency or similar matters.

RBC Capital Markets assumed that the Merger would be consummated in accordance with the terms of the Merger Agreement and in compliance with all applicable laws, documents and other requirements, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary governmental, regulatory or third party approvals, consents, releases, waivers and agreements for the Merger, no delay, limitation, restriction or condition would be imposed or occur, including any divestiture or other requirements, that would be meaningful in any respect to its analyses or opinion. RBC Capital Markets was advised by the Company, and RBC Capital Markets assumed, that the Company operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes since the Company’s taxable year beginning January 1, 2018 in expectation of its election to be taxed as a REIT upon the filing of its 2018 tax return. In addition, RBC Capital Markets assumed that the final executed Merger Agreement would not differ, in any respect meaningful to its analyses or opinion, from the draft that RBC Capital Markets reviewed.

RBC Capital Markets’ opinion speaks only as of the date of the opinion, was based on conditions as they existed and information supplied or reviewed as of the date of the opinion, without regard to any market, economic, financial, legal, regulatory or other circumstances or event of any kind or nature which may exist or occur after such date. RBC Capital Markets did not undertake and has no obligation to reaffirm, revise or update its opinion or otherwise comment upon events occurring after the date of its opinion with respect to its opinion. RBC Capital Markets did not express any opinion as to the price or range of prices at which Company common stock or any other securities of the Company or its affiliates may trade or otherwise be transferable at any time, including following announcement or consummation of the Merger. As the Board was aware, the credit, financial and stock markets, and the industry in which the Company operates, have experienced and may continue to experience volatility and RBC Capital Markets expressed no opinion or view as to any potential effects of such volatility on the Company or the Merger.

RBC Capital Markets’ opinion addressed the fairness, from a financial point of view and as of the date of the opinion, of the Merger Consideration (to the extent expressly specified in the opinion), without regard to any other securities of the Company or individual circumstances of specific holders (whether by virtue of control, voting, liquidity or otherwise) which may distinguish such holders or the securities of the Company held by such holders nor does our opinion address proportionate allocation or relative fairness. RBC Capital Markets’ opinion did not in any way address any other terms, conditions, implications or other aspects of the Merger or the Merger Agreement, including, without limitation, the form or structure of the Merger, any adjustments to the Merger Consideration, any preferred stock offering in connection with the Merger or otherwise, any written consent or support agreement or any other agreement, arrangement or understanding to be entered into in connection with or contemplated by the Merger or otherwise. RBC Capital Markets did not express any opinion or view with respect to, and RBC Capital Markets relied upon the assessments of the Company and the Company’s representatives regarding, legal, regulatory, tax, accounting and similar matters, including, without limitation, tax or other consequences resulting from the Merger or otherwise or changes in, or the impact of, accounting standards or tax or other laws, regulations and governmental and legislative policies affecting the Company or the Merger, as to which RBC Capital Markets understood that the Company obtained such advice as the Company deemed necessary from qualified professionals. Further, in rendering its opinion, RBC Capital Markets did not express any view on, and its opinion did not address, the fairness of the amount or nature of the compensation (if any) or other consideration to any officers, directors or employees of any party, or class of such persons, relative to the Merger Consideration or otherwise. The issuance of RBC Capital Markets’ opinion was approved by RBC Capital Markets’ fairness opinion committee.

In preparing its opinion to the Board, RBC Capital Markets performed various financial and comparative analyses, including those described below. The summary below of RBC Capital Markets’ material financial analyses provided to the Board in connection with RBC Capital Markets’ opinion is not a comprehensive description of all analyses undertaken or factors considered by RBC Capital Markets in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. RBC Capital Markets believes that the analyses and factors summarized below must be considered as a whole and in context.

In arriving at its opinion, RBC Capital Markets employed several analytical methodologies and no one method of analysis should be regarded as critical to the overall conclusion reached by RBC Capital Markets. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. The overall conclusion reached by RBC Capital Markets was based on all analyses and factors presented, taken as a whole, and also on application of RBC Capital Markets’ experience and judgment. Such conclusion may have involved significant elements of subjective judgment and qualitative analysis and no opinion was given as to the value or merit standing alone of any one or more portions of such analyses or factors.

In performing its analyses, RBC Capital Markets considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company. The estimates of the future performance of the Company in or underlying RBC Capital Markets’ analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those estimates or those suggested by RBC Capital Markets’ analyses. The analyses do not purport to be appraisals or to reflect the prices at which a company or business might actually be sold or acquired or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the implied reference ranges resulting from, any particular analysis described below are inherently subject to substantial uncertainty and should not be taken as RBC Capital Markets’ view of the actual value of the Company.

The Aggregate Merger Consideration was determined through negotiations between the Company and KBS SOR and the decision of the Company to enter into the Merger Agreement was solely that of the Board. RBC Capital Markets’ opinion and analyses were only one of many factors considered by the Board in its evaluation of the Merger and should not be viewed as determinative of the views of the Board, the Company’s management or any other party with respect to the Merger or the consideration payable in the Merger.

Financial Analyses

The summary of the financial analyses described below under this heading “—Financial Analyses” is a summary of the material financial analyses provided by RBC Capital Markets to the Board in connection with RBC Capital Markets’ opinion, dated August 30, 2019. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by RBC Capital Markets, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Selecting portions of RBC Capital Markets’ financial analyses or factors considered or focusing on the data set forth in the tables below without considering all analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of RBC Capital Markets’ financial analyses. Future results may differ from those described and such differences may be material. The order in which the financial analyses summarized below appear does not necessarily reflect the relative importance or weight given to such analyses. For purposes of the selected public companies analysis described below, the Company’s implied aggregate net asset value, referred to as NAV, refers to the Company’s estimated net operating income for the 12-month period ending December 31, 2020 based on financial projections and other estimates of the Company’s management and a nominal capitalization rate of 6.00%, and taking into account, based on the Company’s balance sheet data as of June 30, 2019, the Company’s (i) cash and cash equivalents, restricted cash, rent and other receivables, and other assets, and (ii) total estimated amount of indebtedness and other tangible liabilities. For purposes of the selected precedent transactions analysis described below, adjusted NAV refers to the Company’s NAV taking into account estimated transaction-related costs per the Company’s management.

Selected Public Companies Analyses. RBC Capital Markets performed a selected public companies analysis of the Company in which RBC Capital Markets reviewed certain financial and stock market information of the Company and the following eight selected publicly traded companies in the residential real estate industry that RBC Capital Markets considered generally relevant for purposes of analysis, consisting of three companies with operations primarily in the single-family rental sector, collectively referred to as the selected single-family rental companies, and five companies with operations primarily in the multifamily rental sector with equity market capitalizations of below $1.5 billion, collectively referred to as the selected small-cap multifamily companies and, together with the selected single-family rental companies, collectively referred to as the selected companies:

Selected Single-Family Rental Companies

Selected Small-Cap Multifamily Companies

RBC Capital Markets reviewed, among other things, the estimated net asset values per share of the selected companies as of August 29, 2019 as a premium or discount to the closing share prices of such companies on August 29, 2019, referred to as NAV premium/discount. Financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data of the Company was based on financial projections and other estimates of the Company’s management, public filings and other publicly available information.

The overall low to high NAV premiums/discounts observed for selected companies were approximately (36.0%) to 13.2%, with (i) overall low to high NAV premiums/discounts observed for the selected single-family rental companies of approximately (36.0%) to 8.3%, and (ii) overall low to high NAV premiums/discounts observed for the selected small-cap multifamily companies of approximately (15.3%) to 13.2%. RBC Capital Markets then applied a selected range of NAV premiums/discounts derived from the selected companies of (15.3%) to 12.0% to the Company’s estimated NAV per share. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the Merger Consideration as estimated by the Company’s management:

No company or business used in these analyses is identical to the Company. Accordingly, an evaluation of the results of these analyses is not entirely mathematical. Rather, these analyses involve complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies or businesses to which the Company was compared.

Selected Precedent Transactions Analysis. RBC Capital Markets performed a selected precedent transactions analysis of the Merger in which RBC Capital Markets reviewed, to the extent publicly available, certain financial information relating to the following 11 selected precedent transactions that RBC Capital Markets considered generally relevant for purposes of analysis as transactions involving companies with operations in the residential real estate industry, consisting of the following four selected precedent transactions involving companies with operations primarily in the single-family rental sector, collectively referred to as the selected single-family rental transactions, and the following seven selected precedent transactions involving companies with operations primarily in the multifamily rental sector, collectively referred to as the selected multifamily rental transactions and, together with the selected single-family rental transactions, collectively referred to as the selected transactions:

RBC Capital Markets reviewed, among other things, the estimated net asset values per share of the target companies as reported on or prior to the announcement of the applicable transactions as a premium or discount to the closing share prices of such target companies as of the date of announcement of the applicable transaction, referred to as transaction NAV premium/discount. Financial data for the selected transactions were based on publicly available research analysts’ estimates, public filings and other publicly available information. Financial data for the Company was based on financial projections and other estimates of the Company’s management and public filings.

The overall low to high transaction NAV premiums/discounts observed for the selected transactions were approximately (17.3%) to 8.5%, with (i) overall low to high transaction NAV premiums/discounts observed for the selected single-family rental transactions of approximately (17.3%) to (0.1)%, and (ii) overall low to high transaction NAV premiums/discounts observed for the selected multifamily rental transactions of approximately (6.0%) to 8.5%. RBC Capital Markets then applied a selected range of transaction NAV premiums/discounts derived from the selected transactions of (6.0%) to 4.1% to the Company’s estimated adjusted NAV per share.

This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the Merger Consideration as estimated by the Company’s management:

No company, business or transaction used in this analysis is identical to the Company or the Merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, businesses or transactions to which the Company and the Merger were compared.

Discounted Cash Flow Analyses. RBC Capital Markets performed a discounted cash flow analysis of the Company by calculating the estimated present value of the standalone unlevered free cash flows that the Company was forecasted to generate during the fiscal years ending December 31, 2019 through December 31, 2025 based on financial projections and other estimates of the Company’s management. RBC Capital Markets calculated terminal values for the Company by applying to the Company’s fiscal year 2025 projected net operating income a selected range of terminal year capitalization rates of 5.75% to 6.25%. The unlevered free cash flows and terminal values were then discounted to present value (as of September 30, 2019) using a selected range of discount rates of 8.0% to 10.0%. This analysis indicated the following approximate implied per share equity value reference range for the Company, as compared to the Merger Consideration as estimated by the Company’s management:

Certain Additional Information

RBC Capital Markets observed certain factors that were not considered part of RBC Capital Markets’ financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

Miscellaneous

The Company has agreed to pay RBC Capital Markets for its services as financial advisor to the Company an aggregate fee currently estimated to be approximately $2.35 million, of which a portion was payable upon delivery of RBC Capital Markets’ opinion and approximately $2.1 million is contingent upon consummation of the Merger. The Company also has agreed to reimburse RBC Capital Markets for expenses incurred in connection with RBC Capital Markets’ services and to indemnify RBC Capital Markets and related persons against certain liabilities, including liabilities under federal securities laws, arising out of RBC Capital Markets’ engagement.

Although during the two-year period prior to the date of RBC Capital Markets’ opinion, RBC Capital Markets and its affiliates did not provide investment banking, commercial banking or financial advisory services to the Company or KBS SOR for which services RBC Capital Markets and its affiliates received compensation, RBC Capital Markets and its affiliates in the future may provide services to such entities and their respective affiliates, for which services RBC Capital Markets and its affiliates would expect to receive customary compensation. The Company’s engagement of RBC Capital Markets during the two-year period prior to the date of RBC Capital Markets’ opinion with respect to certain proposed capital-raising transactions did not result in compensation to RBC Capital Markets as those transactions were not consummated.

RBC Capital Markets, as part of its investment banking services, is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, corporate restructurings, underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. In the ordinary course of business, RBC Capital Markets and/or certain of its affiliates may act as a market maker and broker in the publicly traded securities of the Company, KBS SOR and/or other entities involved in the Merger or their respective affiliates and receive customary compensation in connection therewith, and may also actively trade securities of such entities for RBC Capital Markets’ or its affiliates’ account or for the account of customers and, accordingly, RBC Capital Markets and its affiliates may hold a long or short position in such securities.

RBC Capital Markets is an internationally recognized investment banking firm which is regularly engaged in providing financial advisory services in connection with mergers and acquisitions. The Company selected RBC Capital Markets as the Company’s financial advisor in connection with the Merger on the basis of RBC Capital Markets’ experience in similar transactions, reputation in the investment community and familiarity with the Company’s business and industry.