KBS REIT III Investigation: NAV Declines 30%

KBS REIT III Investigation Update

The White Law Group continues to investigate potential securities claims involving the liability that brokerage firms may have for recommending KBS REIT III to investors.   

On December 26th, 2024, KBS Real Estate Investment Trust III, Inc., a publicly registered non-traded REIT, reportedly announced amendments to its loan agreement for the Accenture Tower property, extending the maturity date to November 2, 2026. This is the loan’s fourth modification.

In October 2024 the  REIT announced that it has amended its loan agreement with Bank of America, Wells Fargo, and other lenders to, among other items, extend the loan’s maturity date until Nov. 20, 2024. This marked the sixth extension agreement.

This announcement follows on what has been a challenging year for KBS REIT III. In February, the REIT sold an office building in Franklin, Tenn. to contribute to its loan obligations, and in January, the REIT reportedly had to return the keys to an office building in San Francisco. In December of 2023, the REIT reported “substantial doubt” regarding its “ability to continue.”

Net Asset Value Drops more than 30% 

KBS REIT III’s NAV has dropped significantly to $3.89 per share, a 30.5% decline from the previous year and a sharp fall from its peak of over $12.00 per share. This indicates substantial depreciation in the portfolio’s value, which could affect investor returns and confidence. The NAV decline may reflect broader real estate market challenges, including rising interest rates, reduced property valuations, and tighter credit conditions.

 KBS REIT III closed its initial public offering on May 29, 2015, and terminated the offering on July 28, 2015, according to its website. 

Secondary Sales Price – $1 per share

According to Lodas Markets, a secondary market for non-traded investments, KBS REIT III’s shares have recently sold for just $1.00 per share. The original offering price was $10 per share.

Suspended Redemptions 

According to filings with the SEC, the company’s board of directors has suspended “ordinary redemptions” under the company’s share redemption program. The suspension is reportedly a direct result of the ongoing challenges affecting commercial office buildings. The board has also lowered its distribution rate, according to the filing.

KBS REIT III Withdraws Registration for NAV REIT Conversion  

KBS REIT III has been evaluating possible liquidity options for its shareholders for some time now. One possibility was for the REIT to convert to a NAV REIT, where shares would be valued daily or quarterly. But according to SEC filings on July 29, 2022, the company withdrew its pre-effective registration statement for a $2 billion net asset value-based perpetual life offering, which was originally registered in January 2020. 

Potential Lawsuits to Recover Losses    

As a non-traded REIT, KBS REIT III’s shares are inherently illiquid, making it difficult for investors to exit their positions in a declining market. These products are complex and inherently risky products.  Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale.  

Broker dealers are required to inform clients of the risks associated with investment recommendations and to ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so, may be held responsible for any losses. 

Free Consultation

If you have suffered losses investing in KBS REIT III, please contact The White Law Group at 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 Seattle, Washington.