Nontraded REIT waives fee

By Bruce Kelly

Oct 21, 2012 @ 12:01 am (Updated 9:41 am) EST

Another large nontraded real estate investment trust plans to waive a heavily criticized fee tied to changes in its management.

KBS REIT II, which has $2.9 billion in total assets, said that it won't pay an internalization fee or compensation to its adviser, KBS Capital Advisors LLC, should the REIT decide to make a transaction such as acquiring its adviser.

REIT sponsors consistently have imposed the charge when the contract between the REIT and its outside adviser expires, with the REIT then acquiring the outside adviser.

That charge, which has drawn criticism because it typically isn't fully disclosed in offering documents, has cost investors in several big REITs hundreds of millions of dollars.

bkelly@investmentnews.com Twitter: @bdnewsguy