Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Tuesday, 25 October 2011

KBS REIT Seen Postponing Liquidity Event

Written by 
Rate this item
(0 votes)

Commercial Real Estate Direct Staff Report

Continued market volatility is likely to prompt KBS REIT Inc. to postpone a decision to list its shares or sell its assets.

The REIT, whose shares do not trade on any exchange, has raised nearly $1.9 billion of capital from investors and has leveraged that to make $3.1 billion of investments in 63 office, industrial and research buildings that are 82 percent leased as well as interests in a variety of debt instruments, including mezzanine loans.

The company was launched in 2005 by KBS Realty Advisors. And it made the bulk of its investments before 2008.

Its goal was to have a liquidity event - a sale of assets, merger or listing of its shares - in 2012. Such a plan is common in the non-traded REIT world, where investors give up a substantial amount of liquidity, but receive relatively healthy dividends.

But in a recent regulatory filing, the REIT said, "the continuing impact of the disruptions in the financial markets" on the value of investments it has made would make it "increasingly likely" that the REIT would put off its liquidity event "in order to improve the prospects for investors to have their capital returned and to realize a profit on their investment, likely through sales of individual or pooled assets."

As of the end of last year, KBS' shares were valued by the company at $7.32 each. That compares to the $10 that shareholders paid for them during the company's stock offering.

Among its investments was a $500 million mezzanine loan provided to Gramercy Capital Corp. It bought the loan for $496 million from Goldman Sachs and Citigroup, which financed the sale through repurchase agreements that remain in place. Those agreements require KBS to pay down the debt, restricting its cash flow and operations through April 2013.

The loan to Gramercy defaulted earlier this year when Gramercy couldn't refinance it when it came due. KBS last month started taking over some 815 properties, including 524 bank branches and 291 office buildings that Gramercy had assumed through its 2007 acquisition of American Financial Realty Trust in a $3.4 billion deal. As part of that transaction, KBS is assuming $1.4 billion of debt on the properties.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.



weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Additional Info

  • Syndicate to Realpoint: No
  • Subject: Mergers & Acquisitions (M&A), REITS -general (REITS), Stock/Equity Offerings (IPO)
Read 339 times

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

Top Bookrunners
Private-Label CMBS - FY2014
Inv Bank #Deals Bal $mln MktShr%
Deutsche Bank 27.1  23,479.37 26.3
JPMorgan 18.6  13,752.01 15.4
Wells Fargo 17.2  13,085.05 14.6
Goldman Sachs 9.0  7,896.25 8.8
Citigroup 9.1  7,526.97 8.4

 

 

MOODY'S/RCA CPPI

 

cppichart FP

 

 

cmbs2spreads

 

Top Loan Contributors
Private-Label CMBS FY2014
Lender Vol $mln MktShr%
Deutsche Bank 14,005.13 16.0
JPMorgan 11,440.63 13.0
Wells Fargo 5,849.16 6.7
CCRE 5,750.69 6.6
Citigroup 5,604.13 6.4

 

 

 

REITCafe

  • West Coast Port Slowdown and Industrial REITs
    After nine months of labor negotiations and worsening cargo congestion at West Coast Ports, U.S. Labor Secretary Thomas Perez stepped in this week to help broker a deal between the union and shippers. The work slowdown is affecting the nation’s supply chain. Honda has reported a production slowdown because of parts....
     
  • New REITs Increase Investor Choices in 2015
    Three REIT IPOs in as many weeks could indicate a strong year ahead for new REIT formation. Robust REIT returns during 2014 created momentum for IPO activity. In addition, the market’s favorable reception of the widely-watched Paramount REIT (PGRE) and STORE Capital (STOR) IPOs in late 2014 has encouraged companies to....

  • REITs Start 2015 Strong
    One month in to 2015, REITs continue to outperform the broader markets. During January, the FTSE NAREIT All REIT Index total return measured 5.59 percent, compared to -3.00 percent for the S&P 500, -3.69 percent for the DJIA, and -2.13 percent for the NASDAQ. REITs are attractive to investors for a...
warehouse-backstage