Investigating Potential Claims in KBS Real Estate Investment Trust
Did you lose money investing in KBS Real Estate Investment Trust at the recommendation of your broker? If so, the attorneys at The White Law Group may be able to help you recover your losses by filing a FINRA Arbitration Claim against the brokerage firm that sold you the investment.
According to their website, KBS Capital Markets Group (“KBS-CMG”) is a distributor whose team connects financial advisors and their clients to KBS-sponsored real estate investment trusts (REITs). KBS-CMG was formed in early 2006 to distribute a broad range of real estate and real estate-related investment products exclusively through investment professionals.
KBS-CMG’s affiliated company, KBS Capital Advisors, is a real estate operating company that serves as the advisor to the KBS REITs, which include KBS REIT I (closed after raising more than $1.7 billion), KBS REIT II (closed after raising more than $1.8 billion), KBS Strategic Opportunity REIT (closed after raising more than $561 million), KBS Legacy Partners Apartment REIT (closed after raising more than $191 million), KBS REIT III (closed after raising more than $1.7 billion), KBS Strategic Opportunity REIT II and KBS Growth & Income REIT.
KBS Real Estate Investment Trust Investor Update
According to recent SEC filings, on May 2, 2017, KBS Real Estate Investment Trust, Inc. approved recommending to its stockholders that they reject a mini-tender offer made by McKenzie Realty Capital, Inc., for up to 5,000,000 shares of the Company’s common stock, which is approximately 2.7% of the outstanding shares. The Company anticipates commencing distribution to its stockholders of the response containing this recommendation.
The White Law Group continues to investigate the liability that brokerage firms may have for improperly selling REITs such as KBS Real Estate Investment Trust.
The Problem with REITs
One of the major downfalls of REITs is the lack of liquidity. Non-traded REITs such as KBS Real Estate Investment Trust are not sold on the public market, therefore they lack liquidity. This prevents shares from being sold quickly and forces investors to search for a secondary market that is often very limited. The secondary market price is almost always significantly below the purchase price.
Many brokerage firms target investors that were retired or near retirement, often emphasizing the potential income the REIT may provide.
Unfortunately, some brokerage firms failed to disclose that it is not uncommon for REITs to borrow money in order to make distributions. In addition, distributions are often merely a return of principle. REITs are complex high risk products that are not suitable for most investors.
Brokerage firms have a fiduciary duty to its clients to perform adequate due diligence on an investment prior to recommending it for sale. They must ensure that any investment recommended is appropriate in light of the investor’s age, investment experience, net worth, and investment objectives. Given what is now known about non-traded REITs, it is clear that certain of the brokerage firms that sold this investment failed in its fiduciary duty to its clients.
If you suffered losses as a result of your purchase of KBS Real Estate Investment Trust or another KBS offering please call the securities attorneys of The White Law Group at 888-637-5510 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 Vero Beach, Florida.
For more information on the firm, please visit https://www.whitesecuritieslaw.com.