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 444 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

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage