The question that some may ask is why do individual investors pay commissions and sales loads to invest in the same buildings and assets that institutional investors invest in? Because that is the way ‘it has been for decades. This answer typically comes from the sponsors and distributors that may say: “It is expensive to connect with investors who are investing in amounts of $10K, $25K, $50K. The processing of these ‘tickets’ is cumbersome and time consuming.”
But now technology, regulatory changes and transparency are changing the old model for individual investors paying commissions and loads to invest into a fund, REIT or related CRE product. Only a few Institutional sponsors, managing investments for institutional investors, are offering direct access, with no commissions or loads, to individual investors.
KBS is one of the leaders in the CRE industry and has created direct access for investors to invest into institutional quality commercial office buildings. One of the keys for investors is transparency into the REIT so that they can review the buildings and perform all the due diligence they want on the portfolio. This investment process was typically reserved for large institutional investors, but KBS has now opened the door to individual investors to participate in the same REIT/Fund evaluation and investment process as its institutional investors, without having to pay commissions and loads to invest.
So how does KBS offer direct investment access to individual investors?
The majority of REIT and Fund investments are offered through brokers and advisors. Individual investors may have relied on their advisors to suggest real estate investments and products for their portfolio. There has typically been a commission, fee, or load charged to the investor by the broker. Sometimes these fees can be high.
Some Institutional real estate sponsors are selling their REITs and investments through brokers and wire houses. The brokers may charge their investors a commission and/or load for these investments, which may reduce the potential yield and return to the end investor.
KBS is offering its REITs and funds directly to investors, and eliminating the commission and loads charged to investors. KBS can do this because it pays the commissions to complete the transaction and thus, 100% of an investor’s capital is put to work into the existing portfolio and buildings
Investors may benefit from this model
There are two types of investors who may benefit from this model:
- The individual DIY (Do it yourself) investor: The DIY investor can gather research on various products and perform all the investment due diligence themselves. There are platforms that provide market places for investors to review multiple buildings and investment options. There are also sponsors who have their own portal to make investments directly. KBS is one of the institutional real estate sponsors who offers its REITs online with direct access via KBSDirect.com, where investors can research the REITs and then invest without having to pay a commission or sales load.
- The investor using a ‘Fee Only’ advisor: Some investors use an advisor to recommend and perform due diligence on alternative investment products. REITs and other real estate investment products are part of this group. In the past, some ‘Fee Only’ Advisors and RIAs may not have considered a REIT product for their clients because the commissions and sales loads charged by the brokers selling the REIT product were high. Now advisors can buy the KBS REIT directly from KBS (the sponsor) and have the REIT shares settle at the custodian of the advisor and client, all with no commission or load charged to the investor.
The era of investors being able to invest into institutional quality real estate with an institutional quality sponsor like KBS, where individual investors do not pay commissions or sales loads to invest is here. You may invest like the institutional investors do with KBS: Direct Access into existing institutional quality office buildings, and at no cost to the investor to invest.
Investing in KBS Growth & Income REIT includes substantial risks. These risks include, but are not limited to: the possibility of losing your entire investment; no guarantees regarding performance; upon sale or distribution of assets you may receive less than your initial investment; fluctuation of the value of the assets owned by KBS Growth & Income REIT; lack of a public market for shares of KBS Growth & Income REIT; limited liquidity; limited transferability; reliance on KBS Capital Advisors LLC, the REIT’s advisor, to select, manage and dispose of assets; and various economic factors that may include changes in interest rates, laws, operating expenses, insurance costs and tenant turnover. Shares of KBS Growth & Income REIT are not suitable for all investors. Investors should read and consider the PPM carefully before investing.
KBS Direct makes no representations as to the appropriateness of an investment in KBS Growth & Income Real Estate Investment Trust for ERISA plan fiduciaries and IRA owners and no investment advice is being provided. ERISA plan fiduciaries and IRA owners should consult with their own advisors and counsel before making an investment in the REIT’s shares. This is not an offer to sell securities. Offers to sell, or the solicitations of offers to buy, any security can only be made through a private placement memorandum and other official offering documents that contain important information about risks, fees and expenses.
Securities offered through North Capital Private Securities (NCPS).