June 29, 2017 Comments (0) Current Investigations

KBS Growth & Income REIT Terminates Offering

KBS Growth & Income REIT

Investigating Potential Claims Involving KBS Growth & Income REIT

Are you concerned about your investment losses in KBS Growth & Income REIT? If so, The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

KBS Growth & Income REIT, a publicly registered non-traded real estate investment trust, was formed in January 2015 and has raised a combined $80 million in its private and public offerings.

The company often raises money for investments through Reg D private placement offerings like the company did for KBS Growth & Income REIT.  These Reg D private placements are then typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%, as well as additional “due diligence fees” that can range from 1-3%.

KBS Growth & Income REIT Inc. Closes Offering

KBS Growth & Income REIT Inc. is closing its primary offering at the end of the month, according to SEC filings. The REIT plans to continue offering shares under its distribution reinvestment plan.

The board of directors approved the offering termination effective June 30, 2017 to prepare for and market an online private offering to accredited investors. Subscriptions for the primary public offering must be received in good order no later than June 30th.

In connection with the preparation of an online private offering, the company said that it expects to establish and announce an estimated net asset value per share of its common stock. Following the NAV announcement, the REIT’s advisor, KBS Capital Advisors, has agreed to pay stockholders any difference between the “net price paid” by stockholders and the estimated NAV per share. “Net price paid” is the gross purchase price paid by stockholders less selling commissions and dealer manager fees.

The payment will be funded entirely by the advisor without any reimbursement from the REIT and is ineligible for reinvestment through the distribution reinvestment plan. The company noted that the tax treatment of the payment is not entirely clear, and stockholders should consult with their tax advisor to determine the associated tax consequences.

KBS Growth & Income REIT expects to declare an estimated NAV and the stockholder payment to be made before the end of the third quarter of 2017.

The Trouble with Alternative Investment Products

The trouble with alternative investment products, like KBS Growth & Income REIT, is that they involve a high degree of risk and are typically sold as unregistered securities which lack the same regulatory oversight as more traditional investment products like stocks or bonds.

The White Law Group is investigating the liability that brokerage firms may have for improperly selling private placements like KBS Growth & Income REIT and other KBS offerings.

Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations to ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.

However, another problem with Reg D private placements is that the high sales commissions and due diligence fees the brokers earn for selling such products.  Sometimes this provides brokers with an incentive to push the product to unsuspecting investors who do not fully understand the risks of these types of investments. They may even misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks.

Fortunately, FINRA does provide for an arbitration forum for investors to resolve such disputes. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment they may be found liable for investment losses in a FINRA arbitration claim.

Recovery of Investment Losses

To determine whether you may be able to recover investment losses incurred as a result of your purchase of KBS Growth & Income REIT or another KBS private placement investment, please contact The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. The firm represents investors throughout the country in claims against their brokerage firm.

For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.



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