KBS REIT Investigation

investment fraud lawyersKBS REIT Sales Practices by Certain Investment Professionals Investigated by Securities Lawyers

KBS Real Estate Investment Trust I (“KBS REIT I”) is a real estate investment trust (REIT) that was sold to investors until May 31, 2008. KBS REIT I acted as both and owner of real estate and a lender that made real estate-related loans.

The Peiffer Wolf securities lawyers are investigating the sales practices of certain licensed investment professionals who may have made unsuitable KBS REIT investment recommendations to their customers.  While there are no allegations of misconduct as to KBS REIT, the KBS REIT investments were not suitable to all investors. Rather, such investments may have been suitable only to investors who had a certain risk profile and the ability to bear substantial investment losses.

KBS Real Estate Investment Trust, Inc. Background

KBS Real Estate Investment Trust was created in 2005. In a filing with the Securities and Exchange Commission (“SEC”), the company declared that it would sell shares at a price of $10 per share. The company further stated that “the shares we are offering. . . are only suitable as a long-term investment for persons of adequate financial means and who have no need for liquidity in this investment,” and that there would be no public market for the shares, which would make them difficult to sell. According to the same filing, the offering was a “blind pool,” meaning that the company had not identified any properties to purchase at the time the offering commenced. The company sold shares until the offering closed on May 31, 2008.

According to other SEC filings, in December 2013, the Board of Directors of KBS REIT I estimated the value of each share to be $4.45—less than half of the price at which it was initially sold. In December 2014, the Board approved an estimated price per share of just $4.52. The Board cautioned that this was an estimate, and provided no assurance that a stockholder would be able to resell his or her shares for this amount. The same SEC filing also informed investors that the company was unable to conduct due diligence on certain properties in its portfolio and that some of the loans due to the company might not be paid in full or on time.

KBS REIT Sales Investigated by Securities Lawyer

REITs can be risky investments and may only be suitable for high net worth investors with high risk tolerance. Each investor’s portfolio is different, and some investors may be able to tolerate the higher level of risk that often goes with real estate investment trusts. However, REITs are often sold with stockbroker commissions that are much higher than commissions for readily-traded stocks. This may create a conflict of interest for some unscrupulous brokers who could be inclined to recommend REITs to their customers to garner high commissions, even when those REITs are unsuitable for such investors.

The securities lawyers at Peiffer Wolf Carr & Kane have been investigating sales practices of KBS Real Estate Investment Trust I and other similar types of REITs. Investors holding shares in this REIT may have different legal options depending on their situations.

Together, the firm’s attorneys have represented hundreds of investors who have purchased shares in REITs and other alternative investments in a wide variety of cases against brokers, companies, and other entities. Each investor’s situation is different. The lawyers at Peiffer Wolf have decades of experience in evaluating the portfolios of individual investors who have purchased REITs and other investments for suitability concerns.

Investors who believe they have lost money in a REIT may contact the securities lawyers Jason Kane or Joe Peiffer, for a free, no-obligation evaluation of their legal options, at 585-310-5140.

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