Investors Face Substantial Losses on Potential Liquidation of KBS Growth & Income REIT
Investors in KBS Growth & Income REIT (KBS or the Company) may face substantial losses if a recently announced plan for the Company’s liquidation and dissolution is approved. KBS investors may have arbitration claims to be pursued before the Financial Industry Regulatory Authority (FINRA), in the event the investment was recommended by a financial advisor without a reasonable basis, or the investor was otherwise misled into investing in KBS without being adequately informed of the investment’s many risk components.
In a recent letter to investors, KBS announced that at the Company’s upcoming annual meeting, the board will seek approval for the complete liquidation and dissolution of KBS. It is estimated that the net proceeds from liquidation and the amount of cash that investors would receive for each share of their common stock would range between $0.59 and $1.16 per share. KBS was initially offered to investors at a price of $10.39 or $10 per share, for Class A and Class T shares, respectively.
Formed as a Maryland corporation in 2015, KBS is structured as a real estate investment trust (REIT) focused on acquiring and managing “a diverse portfolio of core real estate properties and real estate-related assets.” The Company’s initial offering raised $76.8 million before closing in 2016, followed by a second offering in 2017 which was suspended in 2019 and formally terminated in 2020. As we have previously reported, KBS has faced headwinds related to, among other things, the Covid-19 pandemic. In mid-2020, the Company announced an adjustment to its distribution policy based on uncertainties caused by the pandemic. In August 2020, KBS terminated its distribution reinvestment plan. In December 2020, the Company notified investors it would delay its liquidation strategy, following a “significant decrease” in the net asset value (NAV) per share. In November 2022, the Company noted in a quarterly report that its portfolio was under significant pressure, including facing near-term loan maturities which it may not be able to refinance under current terms.
As a non-traded REIT, investors cannot easily exit their investment position in KBS, as they might with a publicly traded stock or ETF by simply selling shares on a liquid national securities exchange. Rather, investors in non-traded REITs such as KBS typically must hold their investment for a lengthy period of time, in some instances for a long as 7 to 10 years, until such time as a liquidity event transpires.
The attorneys at Giarrusso Law Group LLC have extensive experience in handling claims on behalf of investors in non-traded REITs, as well as similar complex and illiquid financial products. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim may contact us at (201) 771-1115 or info@gialawgroup.com for a no-cost, confidential consultation.