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NEWPORT BEACH, CA-KBS Real Estate Investment Trust II, a nontraded REIT, has commenced its initial public offering of up to 200 million shares at $10 per share. The new REIT plans to buy a diverse portfolio of office, industrial and retail properties in major metropolitan areas of the US, according to its prospectus filed with the Securities and Exchange Commission.

The prospectus says that KBS REIT II, which follows KBS REIT I, expects to allocate approximately 70% of its portfolio to investments in core properties with at least 80% occupancy and minimal near-term lease rollover. Approximately 30% of the portfolio will consist of other real estate-related investments such as mortgage, mezzanine, bridge and other loans, debt and derivative securities related to real estate assets, including mortgage-backed securities, and the equity securities of other REITs and real estate companies.

Both KBS REIT I and KBS REIT II are sponsored by KBS Capital Markets Group LLC, whichwas formed by Peter Bren, Charles Schreiber, Peter McMillan and Keith Hall. KBS REIT I already has a track record of acquiring numerous assets throughout the US, including one recently reported on GlobeSt.com, its $17.8 million purchase of a 205,645-sf industrial building on 16 acres at Suwanee Point Business Park, near Atlanta.

KBS REIT II is the latest in a growing list of nontraded real estate investment trusts that are being offered to the public through registered broker/dealers and investment advisers. The shares of a nontraded REIT are offered publicly to qualified investors, but the stock is not listed or traded on an exchange.

Investors in nontraded REITs typically expect to hold their shares for a number of years until the REIT either disposes of the properties, elects to become listed on a public exchange or merges with a publicly traded company. In the case of KBS REIT II, the company’s prospectus says that if it does not list its shares of common stock on a national securities exchange by March 31, 2018, its charter requires that the REIT seek stockholder approval of the liquidation of the company or pursue other courses outlined in the prospectus, depending upon stockholder approval.

KBS REIT II plans to hold its properties for an extended period, typically five to seven years, but the actual period will depend on market conditions, interest rates and other factors.

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