Posts tagged ‘KBS REIT dividend cut’
KBS was quick to file an Amended Free Writing Prospectus (FWP) with the SEC after Keith D. Hall, KBS Capital Advisor co-founder and managing partner, appeared on Fox Business. The document filed on February 20th, 2013 is intended to correct and clarify approximately 15 statements Hall made in the 5 min TV segment titled “Non-Traded REITS Investing 101.”
KBS headquarters are located in Newport Beach, Calif. According to their website KBS began as a real estate investment company to provided real estate investments on behalf of large institutional clients. In 2005 KBS Capital Advisors was created to manage the assets of KBS non-traded REITs.
For prospective Real Estate investors, Hall’s interview was very persuasive in promoting non-traded REITs like those offered by KBS. However, the FWP document not only clarifies, it sheds light on some of the risks involved in non-traded REITs.
For example, Hall commented “…there is no volatility in the stock.” However, the FWP points out that even though non-traded REIT shares are not subject to broader market volatility, that the value of the REIT may be volatile. Investors in KBS Real Estate Investment Trust, Inc., know this to be true. Shares purchased between 2006 and 2008 initially for $10.00 per share are currently valued at $5.18 as of December 18, 2012.
To learn more about the Amended Free Writing Prospectus, and to read a transcript of the interview visit http://www.sec.gov/Archives/edgar/data/1482430/000119312513073587/d490785dfwp.htm
There is an inherent risk with non-trade REITs, as with any investment, and it is the responsibility of the brokerage firm selling the non-traded REIT to adequately disclose all risks. Non-trade REITs are not suitable for investors who need liquidity in their investment. Other suitability factors that should be considered by a brokerage firm prior to recommending a non-traded REIT are age, financial needs, and risk tolerance to name a few.
However, many brokerage firms overlook suitability regulations set forth by the SEC to earn the high commission that non-trade REITs, like KBS, offer. KBS Real Estate Investment Trust REITs offer a 6.5% sales commission, in addition to a 3.0% dealer manager fee.
Brokerage firms that do not perform adequate due diligences on an investment or demonstrate a breach of fiduciary duty can be held accountable for losses incurred through FINRA arbitration.
The White Law Group continues to investigate FINRA arbitration claims involving KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, KBS Real Estate Investment Trust III, KBS Strategic Opportunity REIT, and KBS Legacy Partners Apartment REIT.
If you invested in a KBS non-traded REIT and would like to discuss you litigation options, please call the securities attorneys of The White Law Group at 312-238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://whitesecuritieslaw.com
According to reports, a class action against KBS REIT has been withdrawn.
In May, investors lead by plaintiff George Stewart sued KBS REIT, alleging that KBS made misrepresentations about the REIT, including its investment objectives, the dividend payment policy and the value of the REIT’s investments.
Apparently, on Friday, the plaintiffs filed a notice of voluntary dismissal in U.S. District Court in Fort Meyers, Fla.
Investors in KBS REIT I were notified in March that the REIT’s value would be cut to $5.16 per share, from $7.32, a drop of 29%. The REIT’s offering price was $10 per share. It also said it was stopping distributions to investors.
KBS REIT I is substantial, having raised $1.7 billion in equity in its initial offering, according to an investor presentation the company filed with the Securities and Exchange Commission in March. It has $3.4 billion in property assets, and holds loans and other debt of $2.3 billion.
While the pending class action lawsuit against KBS has been withdrawn, investors in KBS can still file FINRA arbitration claims to attempt to recover their losses.
The White Law Group continues to investigate the liability that brokerage firms have for recommending KBS REIT to their customers. Brokerage firms have a fiduciary duty to their clients to perform adequate due diligence on investments before recommending them to their clients. Based on what is now known about KBS REIT, it appears that the firms that sold the product will be unable to demonstrate that they performed adequate due diligence.
Rather, it appears that the firms that sold KBS REIT were more interested in the high commissions selling the investment created (and not whether the investment was appropriate for investors).
If you suffered losses in KBS REIT and would like to discuss your litigation options, please call The White Law Group at 312/238-9650 for a free consultation. The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.