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KBS Realty Eyes Possible Liquidity Events for 2 Non-Traded REITs

March 22, 2016

KBS Realty Eyes Possible Liquidity Events for 2 Non-Traded REITs

Monday, March 21,  2016 | Commercial Real Estate Direct

equity investment

KBS Realty Advisors has started an effort to provide shareholders in two of its non-traded REITs with a liquidity event.

It has hired investment bank Evercore Group as financial adviser to help the special committees each of the two REITs have formed to evaluate potential strategic alternatives.

The two REITs, KBS REIT Inc. and KBS REIT II Inc., were the first launched by the Newport Beach, Calif., investment manager, which turned to the non-traded REIT business as an alternative to its comingled fund management business.

KBS REIT was launched in 2005 with a $2.8 billion equity target. It had raised just less than $2 billion by the time it ceased selling shares in 2008. So it was investing just as the market was heating up. As a result, the value of many of its investments turned south during the market downturn. It initially was to have undergone a liquidity event in 2012, but postponed that because of market volatility. Investors evidently weren’t too willing to pay up for its assets.

Late last year, it had set a net asset value of $3.94 on its common shares. While those shares were initially sold for $10 apiece, investors have received special distributions as cash was generated from the sale of assets.

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Gil Armour, CFP
February 3, 2016

I have been using Blue Vault Partners for the past five years.  I have found them to be a valuable, unbiased resource when it comes to evaluating and comparing non-traded REITs.  The reports help me analyze which sponsors are doing a responsible job of managing their offerings.  This allows me to limit my REIT recommendations to only the most competitive products, and then track those REITs throughout their life cycle.