KBS REIT III Investigation: NAV Declines 30%

KBS REIT III Investigation Update

Have you suffered investment losses in KBS Real Estate Investment Trust III? The White Law Group continues to investigate potential FINRA arbitration claims involving brokerage firms that improperly recommended KBS REIT III to investors.

Unsolicited Tender Offer from West 4

The board of directors of KBS Real Estate Investment Trust III, Inc. (KBS REIT III), a publicly registered non-traded REIT, has stated it will remain neutral and make no recommendation regarding an unsolicited tender offer from West 4 Capital Partners LLC.

West 4 has offered to purchase up to 2,295,000 shares of KBS REIT III common stock at $0.80 per share, representing approximately 1.55% of the REIT’s outstanding shares.

West 4 and its affiliates currently own about 430,026 shares and are not affiliated with KBS REIT III, KBS Capital Advisors LLC, or KBS Capital Markets Group LLC. Investors may have already received or will soon receive materials regarding this offer.

More Loan Modifications & Debt Concerns

As of March 2025, KBS REIT III faced substantial near-term debt obligations, including:

• $390 million in loan maturities
• $80 million in required loan paydowns over the next year

Recent developments include:

• Extended the Accenture Tower loan to November 2026 (fourth modification)
• October 2024: Amended loan agreements with Bank of America, Wells Fargo, and others to extend maturity to November 2024 (sixth extension)
• Earlier in 2024: Sold an office building in Franklin, Tennessee, and returned ownership of a San Francisco office tower

In December 2023, KBS REIT III acknowledged “substantial doubt” about its ability to continue as a going concern.

Net Asset Value Drops More Than 30%

KBS REIT III’s most recent net asset value (NAV) dropped to $3.89 per share, down from over $12.00 per share at its peak — a 30.5% year-over-year decline.

This dramatic drop may reflect ongoing headwinds in the commercial real estate sector, including:

• Rising interest rates
• Lower property valuations
• Tighter credit markets

Secondary Market Sales at $1 per Share

Shares of KBS REIT III have reportedly sold for as little as $1.00 per share on the secondary market, according to Lodas Markets. The original offering price was $10.00 per share.

Redemption Program Suspended

According to filings with the SEC, the REIT’s board has suspended “ordinary redemptions” under its share redemption program due to financial strain in the office property sector. The board has also reduced its distribution rate.

NAV REIT Conversion Withdrawn

Previously, KBS REIT III considered converting to a perpetual NAV REIT to offer greater liquidity and transparency. However, on July 29, 2022, the company withdrew its $2 billion registration for a NAV-based offering that was originally filed in January 2020.

Recovering Investment Losses

Non-traded REITs like KBS REIT III are illiquid and high-risk. Investors often struggle to find buyers and may incur substantial losses when trying to sell.

Broker-dealers are required to make suitable investment recommendations based on a client’s age, net worth, risk tolerance, and investment objectives. If a financial advisor failed to adequately disclose the risks of KBS REIT III or recommended an unsuitable investment, you may have grounds for a claim through FINRA arbitration.

Free Case Evaluation

If you are concerned about your investment in KBS REIT III, 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.