KBS Real Estate Investment Trust III, a real estate investment trust (REIT) based in Newport Beach, California, warned shareholders of "substantial doubt as to KBS REIT III's ability to continue" due to commercial real estate lending woes. KBS wrote that its property values have already fallen by $350 million, which is ominous for a company that has $1.7 million in loan maturities in 2024. In turn, KBS issued its warning of potential defaults throughout 2024.
If KBS REIT III were to fail, investors could stand to lose some or all of their investment in the REIT.
Investors in KBS REIT III may have viable claims against the stockbrokers and/or investment advisors who recommended investing in the REIT.
The KBS REIT relies on commercial real estate, which is a market in peril. Citing "continued disruptions in the financial markets and economic uncertainty," KBS has taken multi-million losses (for example, a $51 million write-down on a building in San Francisco) and has looked at offloading more assets, as opposed to eyeing growth.
The National Bureau of Economic Research reported that more than 40% of current United States office property loans are under water, which poses another risk for the KBS REIT and its investors who may begin experiencing losses as a result of "challenges [that] have, in turn, had a discernible impact on the REIT's ongoing cash flow."
REITs and other complex and structured products carry with them significant risk. KBS REIT III's risk is further amplified by its concentration of properties held in Dallas, Texas and subject to the region's economic swings.
FINRA has previously enforced industry rules such as Regulation Best Interest to discipline brokers who act irresponsibly with investor funds when trading REITs and other risky products. For instance, in filing a complaint against Newbridge Securities broker Austin Richard Dutton Jr, FINRA alleged supervision failures and excessive commissions earned through unsuitable recommendations, all this despite prior six-figure fines for unsuitable recommendations in American Realty Capital (ARC) REITs.
If you invested with a broker or investment adviser in KBS REIT III or another complex and risky product, resulting in losses or other damages such as excessive sales charges, commissions, or fees, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.