KBS REIT III Lawsuits Investigation Update – KBS REIT III Lowers Distribution Rate, Suspends Redemptions 

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.  

KBS REIT III, a non-traded Real Estate Investment Trust (REIT), closed its initial public offering on May 29, 2015, and terminated the offering on July 28, 2015, according to its website.

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. The January 2023 distribution will be in the amount of $0.03833333 per share on the outstanding shares of the company’s common stock to stockholders as of Jan. 20, 2023. Previously the company paid a distribution of $0.0498333 per share.

The company states that it is critical to preserve capital given the “current state of the markets.”

KBS REIT III Withdraws Registration for NAV REIT Conversion 

KBS REIT III has reportedly 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. KBS REIT III noted in previous filings that this conversion would result in further growth for the company. 

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.

Tender Offer may Indicate Losses for Shareholders 

On November 5, 2021, the board of KBS REIT III sent a letter to shareholders recommending that they ignore a recent unsolicited tender offer by CMG Partners LLC and affiliates.   

CMG Partners apparently offered to purchase shares of KBS REIT III for $7.19 per share. The REIT’s board notes that the offer was meant to take advantage of the current illiquidity of the Company’s shares by purchasing shares at a price significantly below their fair value. 

According to the letter, shares of KBS REIT III are currently valued at $10.78 per share as of November 20, 2021. The original offering price was $10.00 per share. 

Potential Lawsuits to Recover Financial Losses   

The trouble with non-traded REITs is that they are complex and inherently risky products. Lack of liquidity is often problematic for many investors.  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. 

To learn more about the risks of investing in non-traded REITs see: Did your Financial Advisor Recommend Investing in Non-Traded REITs? 

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. For more information on the firm, visit www.WhiteSecuritiesLaw.com.