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Webcast: The Future of Commercial Real Estate Investing, How the Investment Ecosystem is Being Disrupted


Earlier this week, three members of KBS Direct’s leadership team, Chuck Schreiber, Peter Bren, and Lew Feldman, were all featured in a webcast with InvestmentNews. InvestmentNews Executive Editor, Evan Cooper, hosted, and together they discussed the future of real estate investment and the KBS Growth & Income Real Estate Investment Trust.

Visit https://kbsdirect.work/webcastIN/ to register and listen to the webcast.   

Do you have any questions? Speak with an Investor Relations Representative.

 

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Directdoes not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

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RIAs – Learning to Love No-Load Investments

Even though the implementation of the Fiduciary Rule has been pushed back to 2019, many of the country’s largest investment firms have already started making the changes necessary to comply.

It is inevitable that a larger portion of the financial industry will abide by a fiduciary standard. This standard can be a positive shift for the investor as well as the Registered Investment Advisor (RIA), especially if the adviser is continually working to acquire and retain clients by providing a high level of transparency in all information and investments.

Below are some ways RIAs can be more competitive1:

  • Really Listen:  Listen and understand each client’s needs so you provide the most relevant investment information for that investor’s needs.
  • Comprehensive Research:  Technology is such that most investors can find all the information they need on their own. That means you must prove that your advice is spot on and your solid experience in the field can help bring potentially steady returns
  • Show No Bias:  Always provide unbiased research.
  • Transparency:  With the arrival of the Fiduciary Rule, transparency is key since currently about two-thirds of investors do not trust the financial industry to act in their best interests. As an RIA, you can combat this by educating clients and helping them understand the decision-making process.
  • Relevance:  Show how your recommendations are relevant to your client’s desired outcome.

What about No-Load investments?

If investors show a preference for no-load investments, and they already are, current compensation structures in the industry can be impacted. No wonder there’s a sense of apprehension among financial professionals. But there’s no use in dragging your heels. RIAs who embrace the changes necessary to meet investors’ desire to avoid investments with upfront fees are likely to gain greater customer satisfaction and customer trust.

Be Clear

Despite the fact that most advisers are honest with clients, there is still a feeling that they are not. It could be that clients do not always understand the information being provided or the way it’s being presented. So be willing to take a more straightforward approach, and even if you’re not sure it’s necessary, take the extra time to make sure clients understand what you are advising .

Choose the Best Option

There are times when a no-load investment may be the best option for the investor, and sometimes it may not be. But if you present your client with clearly defined information, they feel empowered in the decision to invest their hard-earned money. Transparency is a sign of trust and there is no doubt that consumer trust is a key factor in the success of any business.

Start Now

The early adopters of increased transparency have a head start over those who are waiting until 2019. The financial industry is at a turning point, so be willing to change and learn new ways of doing business in order to survive the regulatory, technological and consumer transformations that are occurring.

Now is the time for RIAs to make the best use of their experience, intelligence, education, research, and interpersonal skills, to ensure each and every client is happy with and understands their investments.

 

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

 

1 Trainer, David (2017). How the Fiduciary Rule is Good for You. Retrieved from https://www.forbes.com/sites/greatspeculations/2017/12/14/how-the-fiduciary-rule-is-good-for-you/#557f7b6d60c5

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Portland’s Commonwealth Building owned by KBS Growth and Income REIT

Designed by renowned architect Pietro Belluschi and constructed between 1946 and 1948, Commonwealth is recognized as one of the first glass box, mid-century design towers ever built. Since its creative repositioning beginning in 2008, the building has become one of the dominant locations for Portland’s technology, advertising, media and information tenants.

Please check out our new video that showcases the Commonwealth building.

More than $13.6 million was invested in tenant improvements, shared amenities and capital expenditures in recent years, allowing Commonwealth to offer a best-in-class tenant experience. Amenities include a roof top deck, building conference room, tenant lounge, bicycle storage, a fitness center and locker rooms. The building fronts the Sixth Avenue transit mall providing tenants with convenient access to mass transit.

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Chicago’s 213 West Institute:
From Bike Factory to Dream Factory

Forget brick-and-mortar — how about brick-and-timber?

Chicago’s River North features a lot of millennials, startups and tech/creative firms. It also includes 213 West Institute, the newest property in KBS Direct’s Growth & Income Real Estate Investment Trust.

River North is one of Chicago’s oldest neighborhoods, and features mixed use buildings that have long served the youthful population from three neighboring universities: DePaul, Northwestern and Loyola.

“It’s catering to the millennials and the younger workforce,” says Dan Park, KBS senior VP and the asset manager for the property. “They’re demanding cool bars, restaurants, lounges, music venues — anything more experiential — cool and hip, if you will. This market has the older properties — the brick-and-timber buildings — that give it character. When you add in the walkability, it’s uniquely positioned.”

Because KBS looks for properties where there is strong population and job growth. The KBS acquisition team, was successful in acquiring this non-commodity asset property.  

The building can meet most millennials’ requirements for live/work/play. It is a Class A converted loft office building valued at $43.5 million. A brick-and-timber building that has housed creative and tech tenants, the property once served as a bicycle factory, with rentable space of 155,454 square feet.

“We believe this property fits seamlessly with the character and demand of today’s workforce with its great location, walkability to amenities and access to transportation and housing,” adds KBS SVP Dan Park.

As a 100-year-old, repurposed and renovated building — and having once been a bike factory — 213 W. Institute is unique building with an interesting history.

“We love Chicago, and like a lot of markets we love, it’s still all about understanding submarkets and micro-markets,” says Park. “We never bargain hunt at the expense of location, so making sure we are in a market we believe in and a submarket we love — that’s the bullseye for us.”

When it comes to choosing locations, the KBS strategy is surprisingly simple.

“Focus on places high-growth companies want to be in most,” says Park. “Company location is usually part of a broader team-building strategy and creating a culture that fuels their specific business. As far as specific location qualities, it’s all about lifestyle, which usually means a mixture of things that are important to today’s workforce. Outdoor activities, many food choices, public transportation, nearby housing, walkability, an authentic vibe, even a sense of history if you can find it — these things are usually very high on the wish list.”  

 

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. Investing in real estate involves substantial risks and an investment decision should be made only after a careful review of offering materials, including consideration of the risks related to the investment. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

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Preparing for Compliance with the Fiduciary Rule

By KBS Direct

As you may already know, the Department of Labor’s Fiduciary Rule rule has been postponed until July 1, 2019. But recently, Securities and Exchange Commission Chairman Jay Clayton publicly stated that the SEC has plans to enact its own fiduciary standard.

In other words, momentum for transparency between advisers and their clients continues to grow.

That’s why it’s not a bad idea to conduct an assessment of your firm sooner rather than later to determine what, if any, new processes you may need to implement.

Five Assessment Recommendations

So how can you approach an assessment of your firm?

The Harvard Law School Forum on Corporate Governance and Financial Regulation published several recommendations from two Mayer Brown attorneys to help companies prepare for the compliance process. These recommendations can benefit most financial professionals regardless of specialty.

  1. Conduct a thorough review of the roles and responsibilities of your employees, communications plans, and general operating procedures.
  2. Ensure your firm has enough fiduciary liability insurance to cover additional employees who will operate as fiduciaries.
  3. Confirm that all service providers know their new roles under the Rule and determine what they must know to comply with ERISA (Employee Retirement Income Security Act of 1974). The process may look a bit different for different vendors. It all depends on how much their roles will change. The largest affected group will be those employees who were not previously required to act as fiduciaries.
  4. Your current service agreements need to be reviewed and corrected if necessary with the new title of any advisor. This includes any changes that might take place in regards to covenants and standards of care, representations and warranties, even indemnity and exculpation.
  5. Develop a clear and easily understandable plan to address compensation structures. Advisors may feel uncomfortable discussing compensation with clients. By developing a communication plan that emphasizes the value of these services, advisors can better communicate with their clients.

A Reminder

This current period, prior to the Rule going live, is what the Department of Labor considers “transitional”. This means that certain provisions have taken effect, but most have not. One of those provisions in effect is that advisors must use the transitional version of the Best-Interest Contract Exemption (BICE), if they have a conflict of interest. The transitional BICE is in effect until July 1, 2019.

It requires advisors to conduct business by “Impartial Conduct Standards.” These include: putting investors’ best interests first, receiving “reasonable” compensation, and refraining from making deceptive statements. Moreover, advisors need to have policies in place—including ones that address compensation—to make sure their firms are aligned with the Impartial Conduct Standards.  

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

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How Investors May Benefit from the Fiduciary Rule

By: KBS Direct

The Fiduciary Rule has yet to take effect, having been pushed out to mid-2019; however, to invoke its name is to create a stir in the world of financial advisors. The rule has taken on a life of its own, and now it may not even matter if it ever becomes a law—it’s bringing change anyway.

The rule puts more responsibility on financial advisors to act in the best interest of their clients. This means disclosing whether investment opportunities include upfront commission or fees. In some cases, advisors have long relied on current fee-based models that did not require upfront disclosure.

Challenges Driving The Rule

In a Globest.com interview, Chuck Schreiber, CEO and co-founder of KBS Realty Advisors and KBS Capital Advisors, said the impetus for change within the industry first came from the Financial Industry Regulatory Authority (FINRA), a non-governmental agency that regulates the securities industry. FINRA began analyzing fees about 10 years ago, questioning what would be an appropriate commission for an investor to pay. Subsequently, the Department of Labor took up the charge, and issued the Fiduciary Rule in April of 2016.

Only a Matter of Time

Said Schreiber: “Whether this law and the rules are enacted as written today or even modified—and it may be modified—it already changed the discussion about commissioned products.”

Just as someone who hires an attorney will ask about fees, the same type of discussion will likely take place between advisors and their clients—if it isn’t happening already. Said Schreiber: “There are financial advisors who as far back as two years ago modified the structure of their organization, group, firm, or reps affiliated with that firm in their interaction in managing their relationship with their clients.”

Some firms are making changes to be in compliance with the rule, ahead of its enactment. Schreiber, and Peter Bren, Chairman, President and co-founder of KBS Realty Advisors and KBS Capital Advisors, are in that category.

They launched the Growth & Income Real Estate Investment Trust agreeing that as the sponsor, they would pay all upfront fees and expenses associated with an investment. Said Schreiber: “There is no commission or acquisition fee [paid with proceeds raised in the offering], with the intent to have 100% of the dollars an investor is committing into the fund go into the product. I don’t know of any other fund that has this.”

The Momentum for Transparency

The movement towards greater transparency has a lot to do with investors becoming savvier. “I think investors are much more knowledgeable about the opportunities” said Schreiber. “The more people know, the better off we all are.” Investors aren’t just looking at upfront costs, they’re also paying attention to sponsors’ track record of investments and the strategies they use.

With Securities and Exchange Commission Jay Clayton declaring in October that the commission was drafting its own fiduciary rule proposal, the momentum for transparency is expected to  continue to increase.

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

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A Quick FAQ on the Fiduciary Rule

The Department of Labor’s Fiduciary Rule—which has been delayed until July 1, 2019—is meant to ensure that transparency becomes general principle across the board. It also signals that educated consumers want a more transparent, data-driven process.

Level the Playing Field

The new rule aims to make all advisers play by the same rules, at least for retirement accounts. The new protections seem like common sense business practices:

  • Give practical advice when making investment recommendations
  • Put customers’ interests first when making recommendations
  • Avoid misleading or confusing language about fees, investments, and conflicts of interest
  • Adhere to the best interest standard and exclude financial incentives for advice that is not in the customer’s best interest
  • Charge reasonable compensation for services

A Few Questions Answered

Why did the Labor Department adopt the rule?

To protect people who are saving for retirement from unscrupulous investment advice.

How does the rule make change in the financial services industry?

The new Fiduciary Rule makes best interest advice the law. In many instances, financial advisers must give you a written statement that they are fiduciaries when they offer investment advice. They must disclose any information about conflicts of interest in any payments they get.

Will the rule better protect my retirement savings?

According to the DOL it will. Your adviser must provide impartial investment advice that is in your best interest and he/she cannot accept any payments that would cause conflicts of interest.

Which financial advisers are fiduciaries under the Rule?

Generally under the Rule, a fiduciary is someone, usually a financial adviser, who is paid for giving investment advice, a recommendation about your retirement accounts, your retirement account rollovers, based on your particular needs. To clarify, general investment or financial education is not considered fiduciary advice.

What loopholes are being closed by the Rule?

Prior to the Rule, many advisers received financial incentives for steering customers to products that weren’t necessarily in the customers’ best interest. Now they must be.

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBSDirect.com or relate to information contained herein, but KBSDirect.com does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBSDirect.com or NCPS of the linked or reproduced content.

KBS Direct makes no representations as to the appropriateness of an investment in KBS Growth & Income REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares.

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KBS: Twenty-Five Years of Undiluted Expertise

KBS is one of the country’s foremost commercial real estate owners and operators, with over $37 billion* in transactional volume since it was founded in 1992. KBS was ranked by National Real Estate Investor as one of the largest commercial real estate companies in the U.S in 2016. It also happens to be the sponsor of KBSDirect.com.

The culture at KBS is centered around real estate. It’s our passion, it’s what drives us, it’s what we’re focused on,” says Clint Copulos, KBS Senior Vice President and Asset Manager of Portland’s Commonwealth building.

“Where other companies have acquisition officers and asset managers that are working side by side to go out and buy real estate and execute business plans, KBS has market leaders. And those market leaders are focused on a specific market from the beginning of the process to the end. They acquire the asset, execute the business plan, and see it through; so there’s accountability, developing and building relationships, and there’s a real sense of ownership.”

Undiluted expertise in real estate

This undiluted strength in real estate began with the company’s inception. “Peter Bren and I wanted to have people who had extensive real estate expertise,” says Chuck Schreiber, KBS CEO. “We didn’t hire people who had degrees in economics or other areas thinking that we could teach them real estate. We wanted people who had hands-on real estate experience.”

Every one of KBS regional presidents and asset managers have one to three areas of real estate on which they focus: development, construction, retail properties, multi-family properties, industrial or office properties.

“When we gather together, we have some of the sharpest professionals in the country on our team helping us make decisions on assets within our portfolio,” says Schreiber.

Even the accounting and reporting teams have real estate expertise. “We’re all focused on the real estate we buy, operate, and ultimately, sell.”

The fundamentals of people at KBS are real estate experience, a very high level of integrity, and a passion for the investor.

Schreiber continues, “We do what we say we’re going to do and we don’t make commitments until we’re highly confident we can perform under those terms. We [build teams] that really have a passion for the investor. This isn’t high-risk, high-return objective money that somebody’s willing to lose. We’re dealing with people’s retirement money so this is of the utmost importance. We want to ensure that everyone within KBS has that passion and respect for our investors’ money because they are responsible for managing that money and investing it in real estate.”

Great buildings, great tenants

KBS started the shift to high quality office real estate in 2010-2011. “A large percentage of our portfolio and the majority of our efforts, is high-quality office space. We found that great tenants are attracted to great buildings.”

Even if the property is the most expensive in the marketplace, or perhaps even partly because of it, the building “attracts high-end tenants who want to be in beautiful buildings. They want employees to have an inspiring environment in which to work and also to be proud of their location,” says Schreiber.

This strategy combined with the breadth of KBS’ experience, is what creates their innovation. “We don’t stand still in anything, we’re always looking for a better way to perform a transaction, whether it’s an acquisition, disposition, or creative financing,” says Jim Chiboucas, KBS Vice Chairman and Chief Legal Officer. “We constantly look for ways to get better terms for our investors.”

Lewis Feldman, KBSDirect Chief Strategy Officer, has been and continues to be involved with online and direct investment companies as an advisor. “Scale, scope, and quality distinguish KBS Direct above all the other sites on the internet today where you can find and access direct investments. No one else has the professional management and this high level of expertise. With KBS Direct you have institutional quality, real estate professional management and scale like never before.”

Do you have any questions? Speak with an Investor Relations Representative.

Keep in mind there are risks to investing, including loss of capital.

*Presented by calendar year for the period 1993 through September 30, 2017. Includes equity investments in, and real estate-related debt investments secured by, real property assets, real property assets acquired through foreclosure, all consolidated joint venture investments and unconsolidated joint venture investments in which KBS owned or owns a majority interest, but excludes unconsolidated joint venture investments in which KBS did not or does not own a majority interest. Consolidated joint venture investments and unconsolidated joint venture investments in which KBS owned or owns a majority interest are shown at 100% of the respective purchase and/or sales price. Includes the following properties for which third-party asset managers unaffiliated with a KBS advisor provide asset management services, business and operation plans and other services: 867 bank branches, office buildings, operations centers and other properties; apartment and hotel properties; and an unconsolidated joint venture investment in which KBS owns a majority interest.

Articles or information from third-party sources outside of this domain may discuss KBSDirect.com or relate to information contained herein, but KBSDirect.com does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBSDirect.com or NCPS of the linked or reproduced content.

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At the Core of KBS Direct: Transparency

Institutional-quality commercial real estate investment is usually an exclusive club roped off to individual investors—until now. KBS, one of the largest, most trusted names in commercial real estate, with approximately $37 billion* in transactional volume since inception, has launched KBSDirect.com, a new online investment platform.

“As the regulations changed and the industry changed, there was a need for an even better product; one that allows investors to invest directly with complete transparency. With KBS’ institutional background, experience, track record and the technological infrastructures that were coming into place, we realized we could create a gold standard, different from everybody else. So, we developed KBSDirect.com,” said Jim Chiboucas, KBS Vice Chairman and Chief Legal Officer.

Informed investors

Lewis Feldman, KBSDirect.com’s Chief Strategy Officer, emphasized that the quality of the investment asset is first, and the online process is second—but it’s still important.

“The online experience has to reflect the transparency of management and I think that’s really the key in the user experience [and is] fundamentally important. At KBSDirect, [we crafted] a user experience that educates and makes sure that someone has learned what they need to learn about the area and the investment before they invest.”

“[We make] sure that we have informed investors and that registered investment advisors who are recommending these securities can feel that they are doing their fiduciary duty and are aligned with their investor and with KBS for everybody’s success.”

Foundation of transparency

“We are investor-centric,” said Mr. Chiboucas. “Before we make any decisions or do anything we typically ask two questions: how does this help the investor? How is this going to increase investor returns? Because if the decision doesn’t do that, what’s the point?”  

Mr. Schreiber, has expanded on that, attributing KBS transparency and method to examining the element of risk.

  • KBS assesses the risk at the time of acquisition.
  • KBS buys assets “in areas where we have appreciation, not only in cash flow but appreciation in value.”
  • KBS identifies the time when “we can sell that asset and develop realized returns for that investment.”

“The investment market has changed drastically over the last 20 years and for retail investors, over the last 15 years,” said Mr. Schreiber. “It’s promising to find that investors are well-educated thanks to the available materials online. As a result, we’re giving those educated investors the opportunity to invest in a high-quality portfolio in a structure that they’ve never been able to pursue previously. And we’re excited about this because I don’t think it has been done before.”

Do you have any questions? Speak with an Investor Relations Representative.

 

*Presented by calendar year for the period 1993 through September 30, 2017. Includes equity investments in, and real estate-related debt investments secured by, real property assets, real property assets acquired through foreclosure, all consolidated joint venture investments and unconsolidated joint venture investments in which KBS owned or owns a majority interest, but excludes unconsolidated joint venture investments in which KBS did not or does not own a majority interest. Consolidated joint venture investments and unconsolidated joint venture investments in which KBS owned or owns a majority interest are shown at 100% of the respective purchase and/or sales price. Includes the following properties for which third-party asset managers unaffiliated with a KBS advisor provide asset management services, business and operation plans and other services: 867 bank branches, office buildings, operations centers and other properties; apartment and hotel properties; and an unconsolidated joint venture investment in which KBS owns a majority interest.

Articles or information from third-party sources outside of this domain may discuss KBSDirect.com or relate to information contained herein, but KBSDirect.com does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBSDirect.com or NCPS of the linked or reproduced content.