WHAT CAN I DO TO SELL MY KBS REAL ESTATE INVESTMENT TRUST?

Many investors in the KBS Real Estate Investment Trust have called our office and asked the same question: Is there any way I can sell my KBS REIT? This is due to the fact that KBS Real Estate Investment Trusts are non-traded, which means that they do not trade on any public exchange. Unless real estate investment trust (REIT) companies such as KBS decide to register with the Securities and Exchange Commission (SEC) and make a public offering of its shares, investors will most likely not be able to sell their shares and will remain at the mercy of the REITs' performance. But wagering on better performance by non-traded REITs in the near future does not seem to be a viable option for investors to hold their shares either since many non-traded REITs have ceased their buy-back programs and are no longer making promised monthly or quarterly distributions to investors - a universal sign of ruinous events to come for REIT investors.
Unfortunately, the only way to sell your REIT is privately or through an auction through one of several companies making a secondary market in your REIT. Investors looking to sell or liquidate their KBS REITs might want to investigate the following companies who are offering a secondary market for non-traded REITs:
•· REIT Secondary Exchange
•· SecondMarket
•· Pacific Partnership Group
•· Mackenzie Patterson Fuller LP
•· Central Trade and Transfer
•· Lapis Advisors LP
Please note that the Law Offices of Robert Wayne Pearce, P.A. does not recommend or endorse any of the aforementioned information exchanges. Investors are urged to do their own homework before initiating any business. If you cannot locate these companies, please call our office so that we can provide you with their contact information at no charge.
The primary cause of the increased number of telephone calls to our office over the last five years is many elderly and retired investors have been steered into non-traded REITs as yields on other income producing investments have steadily declined. According to many investors, the REITS were recommended as safe, secure, and steady income producing investments which sounded to be exactly what many seniors wanted and needed. When any KBS REIT investor calls our office, we will make a customer specific suitability determination after we learn the "essential facts" concerning that investor. We will ask, just as their stockbroker should have asked, about their age, investment experience, time horizon liquidity needs (length of time they could hold the investment without need for the principal), risk tolerance, other holdings, and financial situation in terms of liquid total net worth, tax status and investment objectives. All of these factors are relevant to suitability determination, and most weigh against the ownership of REIT investments by elderly retired investors. If we believe a brokerage firm or its representatives made an unsuitable recommendation that any person invest in a non-traded REIT, we recommend that they file a FINRA arbitration claim and attempt to recover their losses!
Have you suffered losses resulting from an investment in KBS Real Estate Investment Trust? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against stockbrokers who misrepresented and sold KBS Real Estate Investment Trusts to investors.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

WAS THE KBS REAL ESTATE INVESTMENT TRUST AN UNSUITABLE INVESTMENT?

Many investors have been calling my office and asking whether KBS Real Estate Investment Trust was an unsuitable investment for them. KBS Real Estate Investment Trust is a non-traded Real Estate Investment Trust (REIT). For most investors, liquidity, income and risk tolerance are a concern but if you are elderly and retired they are paramount! If you have limited resources and no ability to generate income from other sources to meet your liquidity and income needs then a non-traded REIT is an unsuitable investment. Likewise, if you cannot afford a total risk of loss, then speculative non-traded REITs are unsuitable investments. The suitability problem is compounded when any investors' portfolio is concentrated in non-traded REIT investments. A rule of thumb is that no more than 10% of anyone's investment portfolio should be concentrated in real estate investments, including REIT investments, and that percentage should be far less as a person reaches retirement and advances in age, perhaps zero!

Every brokerage firm has the responsibility of "knowing the customer" and making a customer specific "suitability" determination for every investment recommendation. The "Suitability Rule," Financial Industry Regulatory Authority (FINRA) Rule 2111, requires that a firm or associated person "have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer's investment profile." This is a new rule but it contains the core features of the previous National Association of Securities Dealers ("NASD") and New York Stock Exchange ("NYSE") suitability rules and codifies well-settled interpretations of those rules. Brokerage firms and their associated persons have always had the responsibility to make suitable recommendations in light of individuals in stating investment objectives and financial condition, tax status, and other relevant factors. According to FINRA, some non-traded Real Estate Investment Trust investments ("REITs") aren't suitable for anyone based on the offering terms, misrepresentations and unreasonable projections by the promoters (see FINRA News Release "FINRA Issues Investor Alert on Public Non-Traded REITs").

The primary cause of the increased number of telephone calls to our office over the last five years is many elderly and retired investors have been steered into non-traded REIT investments as the yields on other income producing investments have steadily declined. According to many investors, the REITS were recommended as safe, secure, and steady income producing investments which sounded to be exactly what many seniors wanted and needed. But these products offer little liquidity for investors who at this stage of their life are likely to need to dip into their investment savings to support their lifestyle or for medical and other emergencies. There is no public market, early redemption of shares in REITs is often very limited, and the fees associated with the sales of these products can be high and erode the total return, if they can be sold at all. Further, many of these investments do not truly generate income but make distributions with borrowed money, with newly raised capital, or by a return of principal rather than a return on investment which can stop at any time. Although non-traded REITs may offer some diversification benefits as part of a balanced portfolio, they all have underlying risk characteristics that make them unsuitable for certain investors, particularly the elderly retired investor with limited financial resources.

When any KBS Real Estate Investment Trust investor calls our office, we will make a customer specific suitability determination after we learn the "essential facts" concerning that investor. We will ask, just as their stockbroker should have asked, about their age, investment experience, time horizon liquidity needs (length of time they could hold the investment without need for the principal), risk tolerance, other holdings, and financial situation in terms of liquid total net worth, tax status and investment objectives. All of these factors are relevant to suitability and determination and most weigh against the ownership of REIT investments by elderly retired investors. If we believe a brokerage firm or its representatives made an unsuitable recommendation that any person invest in a non-traded REIT, we recommend that they file a FINRA arbitration claim and attempt to recover their losses!

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

NOW THAT KBS REAL ESTATE INVESTMENT TRUST INVESTORS LOST OVER 50%: WHAT SHOULD THEY DO?

It is now estimated by KBS Real Estate Trust Inc. (KBS REIT I) that investors' interests are worth $5.16. The new valuation represents a 29% drop from the last change to the valuation in late 2009 and a nearly 50% drop since shares of KBS REIT I were initially offered at $10.00. Many investors in the non-traded KBS I and II REITs have inquired about their ability to recover their losses after learning that their fund is no longer valued as much as they were previously led to believe. Additionally, KBS REIT investors were told that they would no longer be receiving any distributions. Our answer is: file a FINRA arbitration. Many claims are being filed by KBS REIT and other REIT investors for misrepresentation, unsuitable recommendations and/or overconcentrations of their investment funds in KBS REIT and other REIT investments to recover their REIT losses.

At first blush, one may think that the best claim is against the KBS REIT itself and its management but one needs to remember why they first invested. Undoubtedly, the KBS REIT and other REIT investments were recommended by your brokerage firm and financial advisor who have a fiduciary duty to not misrepresent or omit to state important facts, perform due diligence on any REIT and first make sure that the investment is suitable at all for any investor and then specifically ensure that the investment is appropriate in light of the investor's actual age, investment experience, investment objectives, tax and financial condition. If the brokerage firm and its advisor fail in fulfilling any one of these duties under common law and under the FINRA Code of Conduct, investors will have the right to recover their investment losses against them through a FINRA arbitration proceeding and/or court if no arbitration agreement has been executed.

The most common misrepresentation and misleading statement claims that the KBS REIT and other REIT investors have been making relate to the risk associated with the non-traded REITs. Many investors have complained that the KBS REIT and other REITs were not adequately represented before purchase and that they did not know the real truth about the valuations, performance, prospects, liquidity, or distribution and redemption practices of management relating to their investment. Many elderly investors seeking income were overconcentrated in the KBS REITs and other REITs because they needed income. Sadly they learned too late that there were no guarantees that distributions would be made. Some REIT investors have just learned that they would no longer be receiving distributions or that the distributions they actually received were derived from loans and not the true cash flow of the REIT. Brokerage firms and their financial advisors were eager to push REIT investments on their clients for the high commissions compared to other products. Unfortunately, many investors are locked in and unable to sell their REIT investments without suffering without selling into deeply discounted secondary market for some other REIT investments. If you are a KBS REIT investor with the same complaints, we believe we can help you recover your REIT losses!

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

NO MORE KBS REIT CLASS ACTION

On July 23^rd, KBS REIT investors' lead plaintiff George Stewart withdrew his class action suit against KBS REIT, alleging that KBS made misrepresentations about the REIT, including its investment objectives, the dividend payment policy and the value of the REIT's investments. No reason was given, but the Motion to Dismiss the Complaint pointed out the onerous pleading requirements of securities class actions. Perhaps Mr. Stewart will proceed to take his case to arbitration, the more traveled and less bumpy road to resolve investors' disputes. While the pending class action lawsuit against KBS has been withdrawn, investors in KBS can still file FINRA arbitration claims to attempt to recover their losses. In any event, KBS REIT investors will not benefit from his decision and need to take matters in their own hands!

Brokerage firms have a fiduciary duty to their clients to perform adequate due diligence on investments before recommending them to their clients. Based on what is now known about KBS REIT, it appears that the firms that sold the product will be unable to demonstrate that they performed adequate due diligence. Rather, it appears that the firms that sold KBS REIT were more interested in the high commissions selling the investment created (and not whether the investment was appropriate for investors).

KBS REIT I raised $1.7 billion in equity in its initial offering, according to an investor presentation the company filed with the Securities and Exchange Commission in March. It has $3.4 billion in property assets, and holds loans and other debt of $2.3 billion. Investors in KBS REIT I were notified in March that the REIT's value would be cut to $5.16 per share, from $7.32, a drop of 29%. The REIT's offering price was $10 per share. It also said it was stopping distributions to investors. Investors have good reason to be upset with KBS REIT, and more reason to complain about the brokers who recommended the investment.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website,www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

KBS REIT I LIKE OTHER NON-TRADED REITS IS A DISASTER FOR RETIREES THROUGHOUT THE UNITED STATES

The Law Office of Robert Wayne Pearce, P.A. has filed KBS REIT I claims to recover losses for investors in KBS Real Estate Investment Trust I ("KBS REIT I") after learning that shares which they purchased for $10 per share now have an "estimated" value of only $5.16. In his March 26, 2012 letter to shareholders, chief executive Charles Schreiber, Jr. also told Mr. Pearce's clients that they would no longer receive their monthly distribution payments, which had been reduced to less than $.53 per share.

Since the company halted its repurchase of shares in 2009, except in cases of death or disability, KBS REIT I investors are left holding illiquid, devalued shares that pay no distributions. Mr. Schreiber's statement to shareholders that the company is focusing its efforts "on attempting to maximize the amount of capital that we return to you over time" is little comfort to investors. His words are especially alarming to retirees, who are suffering from the loss of income they relied upon and have no hope of selling their shares for the price they paid in the foreseeable future. They see little light at the end of the tunnel.

As with most REITs, it appears that investors were routinely told that KBS REIT I was a safe investment whose share price was likely to remain stable. They were also told that it paid good dividends and was suitable for a retirement nest egg. They typically were not told that selling their shares could be problematic and that REITs were high commission products.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

SEC INVESTIGATES INLAND AMERICAN REAL ESTATE TRUST

Inland American Real Estate Trust Inc. is being investigated by the Securities and Exchange Commission according to that firm's quarterly report. The SEC's investigation is reportedly focusing on fees. Inland American is the industry's largest non-traded real estate investment trust, and has $11.2 billion in real estate assets. Inland American is one of five REITs sponsored by The Inland American Real Estate Group of Companies Inc.

REITs typically pay a high commission-often as much as 15% (which often explains the stockbroker's motivation in recommending the REIT investment to the investor). Due to the relatively high interest or dividend offered by non-traded REITs, elderly and retirees are often victimized by those misrepresented and unsuitable investment recommendations.

In addition to issues over fees, non-traded REITs have been cited for valuation problems. Over the past year, a number of non-traded REITs have been forced by regulators to stop valuing their REITs at the purchase price (which was false and misleading to investors) and disclose to investors an estimated true value. This has resulted in a wave of sharp decreases from previously reported values that have shocked investors. A related REIT, Retail Properties of America Inc., formerly known as Inland Western Retail Real Estate Trust Inc., recently had an initial public offering at $3.20 per share when just last June, that REIT's management said its estimated value was $6.95 per share.

InvestmentNews recently reported that the following non-traded REITs had suffered steep losses, as follows:

Behringer Harvard Short-Term Opportunity Fund - down 96%
Cornerstone Core Properties REIT - down 71.88%
Behringer Harvard Opportunity REIT I - down 58.80 %
Behringer Harvard REIT I - down 53.60%

KBS Real Estate Investment Trust Inc. - down 48.40%

Inland Western Retail Real Estate Trust Inc. - down 30.50%.

The Financial Industry Regulatory Authority (FINRA) is also investigating the non-traded REIT industry, and has commenced enforcement actions against some broker-dealer managers like Pacific Cornerstone Capital.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Mr. Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. Our law firm is devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.