KBS REIT III Lawsuit Investigation: NAV Declines 30%

KBS REIT III Sells Property at a Loss

The White Law Group continues to investigate potential securities claims involving KBS REIT III, an illiquid, non-traded investment.

KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”) – a publicly registered, non-traded real estate investment trust – has sold Park Place Village, a mixed-use office and retail property located in the Kansas City submarket of Leawood, Kansas. The deal closed on September 23, 2025, with an unaffiliated buyer purchasing the asset for $100 million, according to filings with the SEC.

The REIT originally purchased the property in June 2015 for $126.5 million, meaning it sold at a loss. After deductions – including tenant improvement credits, prorations, third-party closing costs, and a $0.8 million disposition fee to its adviser – KBS REIT III reported $95.5 million in net sales proceeds.

Debt Repayment and Liquidity Efforts

Despite selling the property below its purchase price, KBS REIT III used the proceeds to immediately reduce significant debt:

• Paid off the entire Park Place Village mortgage loan ($65.2 million principal and accrued interest).

• Applied $25.4 million to its main credit facility, reducing the balance to $37.5 million.

• Retained the remaining net proceeds for general liquidity management.

The Park Place Village sale follows other recent dispositions, including Sterling Plaza earlier this summer, as KBS REIT III continues to face headwinds in the commercial real estate market.

Ongoing Challenges for KBS REIT III

KBS REIT III has been under pressure in recent years:

• In 2023, the REIT issued a “going concern” warning.

• In 2024, it returned ownership of a San Francisco office property and extended maturity on several loans.

• Earlier in 2025, it took a neutral stance on an unsolicited $0.80 per share tender offer from West 4 Capital Partners.

As of June 30, 2025, KBS REIT III reported $1.78 billion in total assets, down more than 10% year-over-year from nearly $1.99 billion.

Net Asset Value Declines More Than 30%

The REIT’s net asset value (NAV) has continued to deteriorate, falling to $3.89 per share, compared to over $12.00 per share at its peak. Shares have also traded for as little as $1.00 per share on the secondary market, according to Lodas Markets.

Additionally, KBS REIT III has:

• Suspended “ordinary redemptions” under its share redemption program.

• Reduced distribution payments.

• Withdrawn its registration to convert into a perpetual NAV REIT.

KBS REIT III Lawsuit Investigation

The White Law Group continues to investigate potential FINRA arbitration claims on behalf of investors in KBS REIT III. Many investors were reportedly unaware of the risks and illiquidity associated with non-traded REITs when they were recommended by their financial advisors.

Broker-dealers have a duty to ensure investment recommendations are suitable, considering factors such as an investor’s age, risk tolerance, financial situation, and investment objectives. If your advisor failed to properly disclose these risks, you may be eligible to pursue recovery of your losses through FINRA arbitration.

Free Case Evaluation

If you invested in KBS REIT III and are concerned about your losses, contact The White Law Group at 888-637-5510 for a free consultation.

The White Law Group is a national securities fraud, FINRA arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.