A REIT, or Real Estate Investment Trust, is a focused real estate investment. A non-traded REIT is a security that is not listed or sold on the public stock exchanges. Since non-traded REIT’s are not listed on public exchanges, investors cannot reliably judge the share prices, receive protection from conflicts of interest, or, most importantly, readily liquidate their shares if need be.
The KBS Real Estate Investment Trust is a non-traded REIT, and, like other non-traded REITs, it has very high fees and selling commissions. There are acquisition fees, dealer manager feels, selling commissions, and more. Broker commissions for non-traded REITs can be as high as ten percent. These commissions compounded with other upfront fees can drain an investor’s principal of up to seventeen percent before any money is actually put toward the investment.
At the new issue phase, non-traded REITs, such as KBS, were sold at static prices that misrepresented the actual share value. This static share value caused many investors to think that the investment was actual performing well, when, in reality, the investment was losing money.
Non-traded REITs are typically sold by third tier independent brokerage firms rather than large reputable brokerage firms. A conflict of interest arises when securities brokers invest their client’s money with non-traded REITs because the trades are susceptible to being trades that only benefit the securities broker.
Oakes & Fosher wants to help those who have incurred losses the KBS Real Estate Investment Trust. If you, or someone you know, have lost money investing in this, or any other non-traded REIT, please contact Oakes & Fosher for a free and private consultation.