KBS Real Estate Investment Trust II (KBS REIT II) – Liquidation Plans

KBS REIT II Shareholders may have Claims

The White Law Group continues to investigate potential claims involving KBS REIT II and the liability that brokerage firms may have for improperly recommending high-risk non-traded REITs to investors.

According to filings with the SEC, KBS Real Estate Investment Trust II (KBS REIT II), a publicly listed, non traded REIT, is in the process of liquidation after shareholders approval on March 5, 2020.

The REIT says it expects to distribute all of the net proceeds from liquidation to the REIT’s stockholders within 24 months from March 5, 2020. 

On December 28, in an 8-K filing, KBS REIT II announced that it sold another office property at District 237, a Class A 415,500-square-foot office/research and development formerly known as Corporate Technology Centre located in the North San Jose submarket of Silicon Valley. The company also authorized its third liquidating distribution following the sale.

The company’s board reportedly authorized a $0.40 per share liquidating distribution to stockholders of record as of the close of business on December 24, 2020. The REIT’s new NAV per share of $2.01 is equal to the midpoint of the estimated range of liquidating distributions ($3.615), minus an initial liquidating distribution of $0.75 per share paid on March 10, 2020, a second liquidating distribution of $0.25 per share paid on August 7, 2020, and the third liquidating distribution of $0.40 per share, according to the filings.

 The REIT notes that it also reduced the net value of its properties by $0.21 per share due to the impact of the coronavirus global pandemic on leasing projections, projected rental rates, hold periods, and the resulting ultimate estimated impact on sales prices of the real estate properties.

The REIT expects the net proceeds of the liquidation plan to range between approximately $3.40 and $3.83 per share. This may indicate losses for investors as the original offering price of the REIT was $10.00 per share.

The company also noted in the filings that its share redemption program provides only for redemptions sought upon a stockholder’s death, “qualifying disability” or “determination of incompetence.”

Recovery of Investment Losses

Non-traded REITS are considerably more complex than traditional investments and usually involve a high degree of risk. Unfortunately many investors were unaware of the risks and liquidity problems associated with non-traded REITs, when they were sold the investments. They also may come with high fees and commissions. 

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.

If a broker dealer fails to adequately disclose risks or make unsuitable investment recommendations, it can be held liable for investment losses.

If you are concerned about your investment in KBS REIT II, the securities attorneys at The White Law Group may be able to help you.  Please call The White Law Group at 1-888-637-5510 for a free consultation with an experienced securities attorney.

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.

For more information on The White Law Group and its representation of investors, please visit our website at www.whitesecuritieslaw.com