KBS REIT I CEASES DISTRIBUTIONS-VALUE DOWN 50%

KBS Real Estate Investment Trust Inc.( KBS REIT I) just  informed investors  it is ceasing the payment of distributions to investors. This no doubt is bad news for those who purchased KBS in anticipation of receiving monthly distributions to supplement retirement income.

Adding further insult to this financial injury, the company lowered the value of the REIT again. It has declined to $5.16 per share, from
$7.32, a drop of 29%. KBS has lost nearly 50% of its value from the  $10 per share offering price.

“The new pricing of KBS REIT I reflects the current status of the
portfolio, and the discontinuation of distributions was made with the
goal of managing the REIT’s debt obligations and cash flows, and
attempting to maximize the total return to investors over time,” according to a quote in the Investment News by
Keith Hall, executive vice president of KBS REIT I.

KBS I raised $1.7 billion, so this recent devaluation indicates investors have  losses of over $800 million. The future does not look too bright for a recovery since the company SEC filings report that occupancy rates declined last year to 85%, from 92% in 2010.

Our investigation indicates that many REITs were touted as being safe and secure investments that would maintain value and provide a steady income stream. Other REITS, including those from Behringer Harvard, Cornerstone Core Properties, Hines, Wells and Inland Western have seen values decline and the curtailment of distributions.

If you were sold KBS REIT or any other REIT on the basis that values and distributions were assured, you may be able to recover some or all of your losses. Rex Securities Law, located in Boca Raton, FL, represents aggrieved investors nationwide. Call us at 561 391 1900 or visit our website.

Initial consultation free.

Losses on Real Estate Investment Trusts? Recovery Options for Investors

Non-traded real estate investment trusts  (REITs) were sold to many with the promise of steady distributions of income and the understanding that the investment could be sold in the near future. Instead, many REITs have been funding distributions with capital or, worse yet, debt. Now many have ceased distributions completely. Here are six REITs whose value has dropped dramatically, as reported by the Investment News.

Name   Offering price, per share    Current estimated value   % decline per share  
Behringer Harvard Opportunity REIT I $10.00 $4.12 -58.80%
Behringer Harvard REIT I $10.00 $4.64 -53.60%
Behringer Harvard Short-Term Opportunity Fund $10.00 $0.40 -96%
Cornerstone Core Properties REIT $8.00 $2.25 -71.88%
Inland Western Retail Real Estate Trust Inc. $10.00 $6.95 -30.50%
KBS Real Estate Investment Trust Inc. $10.00 $5.16 -48.40%

If you have REIT losses or other stock market losses, you may be able to recover some or all of the losse through FINRA arbitration.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

TVIX Plummets 60%-Securities & Exchange Commission Investigating

March 29, 2012

According to the Wall Street Journal, the SEC is looking into VelocityShares 2x long VIX Short Term Exchange traded note ( TVIX ),  managed by Credit Suisse Group AG.

TVIX had about $700 million in assets before its recent decline in which it lost 60% of its value during the last week of March.

Share price for TVIX over the past year has ranged from a high of $109 to a low of $5.85. TVIX is a complex exchange-traded note (ETN) that is designed to track stock market volatility, however its dramatic decline last week, during a period when market volatility was little changed has regulators and investors concerned and curious as to the reason for the price drop.

While hedge funds are generally the most active traders of exchange traded notes (ETNs), they have become more popular with smaller investors due to the fact they are low cost and east to trade. A similar type of securities, exchange-traded funds (ETFs) have become popular for the same reasons.

An ETN doesn’t actually hold any underlying investment as does an ETF, but rather is a contractual agreement by the issuer to pay shareholders returns equal to the investments it is designed to track. Risk is amplified by the fact that TVIX is linked to the Chicago Board Options Exchange Volatility Index, the VIX, an index that can experience wild swings. Investors make….or lose….twice as muchas the daily move in the VIX.

ETNs, like TVIX, are complex investments that are not generally suitable for the average investor who may not be aware of the risks associated with this type of investment.

If you are an investor who has losses from investing in TVIX or other ETNs or ETFs that were suggested to you by your broker or financial adviser, you may be able to recover some or all of your losses. 

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Recovery Options for Investors with Losses in Cornerstone Core Properties REIT, Inc.

March 28, 2012

According to the Investment News, investors in Cornerstone Core Properties REIT were told in March 2012 that shares had plunged 72% in value, from $8 to $2.25. This reduction in estimated value is attributed to the recent global economic downturn which has negatively impacted the small business tenant base, according to the company, which says occupancy rates are down to 69% compared to 92% at the end of 2008.

FactRight, a due diligence firm that covers managers of alternative investmentsrecommended last year that broker dealers pull Cornerstone Core
Properties REIT from their sales platforms. Pacific Cornerstone Capital, Inc was the sponsoring broker-dealer. Pacific Cornerstone also sold another troubled product, CIP Leveraged Fund Advisors, see our prior blog post.

Cornerstone Core Properties REIT is following in the footsteps of other REITs who have seen their values plummet recently. Behringer Harvard Short-Term Opportunity Fund I, LP went from $6.48 to $.40. Behringer Harvard Opportunity REIT I, Inc fall to $4.12 from $7.66 a year earlier.

Other REITs like Cole Credit Property Trust II, Lerner Apple REITs,
Hines REIT, Inland American, KBS, Inland Western Retail Real Estate (now  Retail Properties of America) and the Wells and Wells Timberland REITs have faced similar issues resulting in reduced estimated values and/or termination of distributions.

Many REITs were sold with the promise of regular and dependable
distributions of income. In many cases these distributions were funded with debt or a return of capital and were not really distributions  of income. Investors who relied on these representations when making the decision to invest may have legal rights entitling them to the recovery of a portion or all of their losses.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Investors Beware! Do Not Sign Blank Forms Presented to You by Your Broker

The Financial Industry Regulatory Authority (FINRA) , filed a complaint in February 2012, against two UBS Financial Services brokers, Charles Kern, III and Thomas Haskins,  alleging that they made unsuitable recommendations and material misrepresentations or omissions regarding options
investments in the S&P 500 Euro Index.

The option strategy suggested involved selling uncovered calls with a strike price 10% above the market price of the S&P 500 Index and selling uncovered puts at a strike price 10% below the market price of the S&P 500 index. If the calls and puts expired unexercised, the customer retained the premiums collected on the option sales. If the calls or puts were exercised, the customer would have to purchase the securities to cover the exercise of the options.

Broker Kern told broker Haskins, who apparently did not have personal professional experience with this strategy, represented that it would be successful 90% of the time and did not explain that losses were potentially unlimited, but rather told the customer that losses would be limited to $2-3,000 per transaction.

Two clients, referred to as WH and CH in the complaint were instructed to sign a Client Qualification Form for option trading, but were told not to fill in the part of the form dealing with liquid net worth, annual income, risk tolerance and experience. WH had completed the 8th grade and CH had completed high school. They were 61 and 62 years old.

One was disabled and the other a sewing machine operator. Annual combined income was about $35,000. Clearly they should not have been advised to follow such a risky trading strategy.

Customers should never sign any forms that are not completed and it is a warning sign that something may be amiss. In this case the brokers filled the forms out using false information so that the firm’s compliance department would approve the trading. Had the correct information been submitted(net worth, experience, risk tolerance, etc.) the trading would have been prohibited by the compliance department.

These clients lost $25,000, a significant portion of their $75,000 nest egg.

Other clients who were similarly enticed to follow this option trading strategy had losses of nearly $800,000.

If you have lost money as a result of option trading or other trading strategies which you did not understand at the time of the recommendation, call to speak with an experienced securities attorney and learn how you may be able to recover damages.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Nationwide representation of victims of stockbroker fraud and the malpractice of investment professionals.

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