KBS GKK Debacle

KBS GKK Debacle

Postby Shareholder2 » Wed Sep 14, 2011 6:36 pm

Just copying from a thread that got started in the wrong topic about KBS's recent announcement that GKK was defaulting on the mezz loan. See below:

Was this posted the wrong forum? This sounds like a KBS problem. See my earlier post on this EXACT topic 4 MONTHS ago. No one (including, notably, REITWrecks itsself) said anything about it then. No one else even picked up the conversation over on the KBS forum of this website to make that known to KBS investors (not that there’s anything they could have done about it, since redemptions are closed) There’s still only one post in the KBS forum, even though they have now publicly hitched their wagon to a dying horse. They’re now the proud owner of 500 properties that are severely underwater and will pay $10M a year to Grammercy for the privilege of owning it.

And I’ll say it again, maybe someone will llisten a second time instead of rehashing the senseless Schorsch drivel that you've now put out twice: this terrible deal that went sour was crafted by KBS and Goldman Sachs a year and a half after AFRT underwent a management change. Don’t forget that the world was already starting to change at the time that AFRT’s board decided to make a deal with the devil and sell their
company and they saw the writing on the wall. KBS’s shareholders are left holding the bag. KBS delayed providing information to their investors and let the deal be extended time and again for an incredible 6 months from the original termination date before telling investors that they were taking over the properties. And they still have not recognized any sort of imparement relating to this investment, which is a sizeable portion of their entire portfolio of assets.

Did anyone read the 8K from KBS? http://www.sec.gov/Archives/edgar/data/1330622/000133062211000008/kbsi8k.htm. If you did you'd think that everything was going awesome with these properties. In truth, the underlying real estate is doing ok (nothing worse than any other pool of assets that was acquired before 2008). There are two massive problems. First, KBS hasn't informed investors that this large investment isn't going to continue to perform and their value should be diminished. The second problem is the massive amount of mezzanine debt that GKK used to complete the AFRT acquisition. The executives that are now at ARC had nothing to do with the mezz. In fact, even Schorsch's successor, the late Hal Pote, had nothing to do with it. It was two CEOs later.

I appreciate the commentary but lets put this conversation where it belongs and not drag unrelated companies into it. As you say, you've been "part of the industry" for 20 years. As someone who is so in touch with (and apparently quite opposed to) non-traded REIts I am still shocked you didn't post this on the KBS forum. I'll do you a favor and post this reply there so that interested folks can read it themselves.

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Re: KBS GKK Debacle

Postby frankscott39 » Mon Jan 16, 2012 9:03 pm

That's pretty decent information which you copied from somewhere else !

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