September 27, 2005
Mail Stop 4561
Charles J. Schreiber, Jr.
Chief Executive Officer
KBS Real Estate Investment Trust, Inc.
4343 Von Karman Avenue
Newport Beach, CA 92660
Re: KBS Real Estate Investment Trust, Inc.
Registration Statement on Form S-11/A-2
Filed September 16, 2005
Registration No. 333-126087
Dear Mr. Schreiber:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form S-11
General
1. For Plain English purposes, please avoid the use of cross-
references on the cover page in your response to previous comment
3.
Summary
Will you use leverage? Page 7
2. We note your added disclosure in response to previous comment 5
relating to your possible $190 million financing arrangement.
Please
revise the last bullet point of the risk factors shown on the
cover
page to disclose your intention to obtain the $190 million loan.
Please also quantify the extent to which the debt would exceed the
75% of cost of your assets limitation if you raise the minimum.
Provide similar disclosure in the risk factor sections where
appropriate.
If I buy shares, will I receive dividends and how often?, page 12
3. With respect to previous comment 7, we reissue that portion of
the
comment that asked you to clarify the circumstances under which a
distribution will be treated as a return of capital. We note that
you
have stated that your distribution policy is not to use proceeds
of
this offering to pay distributions. Please explain the possible
sources of cash for distributions in excess of current or
accumulated
earnings or profits, such as borrowings from related parties, bank
borrowings, proceeds from additional equity offerings, etc.
How does a "best efforts" offering work? What happens if you
don`t
raise at least $2,500,000 in gross proceeds? Page 15
4. With respect to your previous comment 8 of our September 2,
2005
letter and comment 66 of our July 22, 2005 letter, please clarify
how
the disclosure in the "Special Notice to Pennsylvania Investors"
section and on the cover page complies with Rule 10b-9 as it
applies
to Pennsylvania investors. In particular, please clarify that, as
required by Rule 10b-9, you will promptly return funds to
Pennsylvania investors (without the investors specifically
requesting
such return of funds) in the event that you do not reach the $66.7
million threshold by the expiration of the offering period, which
you
state in your response, is two years from the date of
effectiveness.
Prior Performance, page 89
5. We note your response to previous comment 10. However, based
on
your description of the single account programs on page F-19 it
appears that the institutional investors were not passive
investors
since, although the investors actually disapproved of only a few
properties that were identified for investment, their approval was
sought and required for each identified investment. We note from
your description of the single account programs on page F-19 that
dollars are raised only as assets are identified and that under
the
Investment Management Agreement, when KBS Advisors identifies
properties for investment, KBS Advisors notifies the institutional
investor. If the institutional investor agrees to purchase the
identified properties, KBS Advisors invests funds on behalf of the
investor, manages the assets in the investor`s portfolio and
ultimately sells the assets on behalf of the investor. With
respect
to the 7 funds referenced in your response, please tell us how
many
investors, other than the two pension fund investors, invested in
those funds and tell us whether any other investors in those 7
funds
had the ability to approve purchases of identified properties.
Please also tell us whether all of the identified properties were
presented to the pension funds for approval and tell us how many
properties were presented to the two pension fund investors for
their
approval overall. Further, as to these programs we note your
disclosure that you "did not close any offerings" during the
periods
presented. In this connection, please tell us how you are
defining
"closed" for purposes of these offerings?
6. Refer to your response to previous comment 11 and 19. We note
that Table III for Commingled Account 6/99 reveals that $28 per
$1000
invested was derived from a return of capital for the year 2000
but
that footnote 3 of that table indicates that deficiencies after
cash
distributions and special items for the years 2000 and 2001 were
derived from cash generated in prior periods. Please explain to
us
the inconsistency relating to the source of distributions for the
year 2000. We note similar discrepancies for Separate Account
1/98
in year 2004. Please advise or revise.
Federal Income Tax Considerations, 95
7. In response to previous comment 14, please provide us with the
language you intend to use in the registration statement to
address
our previous comment 14 so that we may have ample opportunity to
review your intended disclosure.
Performance Tables, beginning on page F-13
Table III, Separate Account 10/04
8. We note your disclosure in footnote 3 to the table; however it
is
unclear how you generated significant operating cash deficiencies
in
a period in which you generated income on a tax basis and GAAP
basis.
It is also unclear how changes in deposits would impact operating
cash flows. Please advise us and revise your disclosure
accordingly.
Exhibits 5 & 8
9. Refer to your response to previous comment 13. You may not
include language implying that investors in the offering are not
entitled to rely on the legal and tax opinions. Please revise the
opinions to remove the language in the fourth paragraph of the
legal
opinion and the last paragraph of the tax opinion that limit the
use
of the opinions solely to the company.
10. With respect to the tax opinion specifically, it is
inappropriate
to assume legal conclusions underlying the opinion relating to the
tax status of the company such as that KBS Limited Partnership is
a
duly organized and validly existing limited partnership as
mentioned
in section (iii) on the second page of the opinion. Please
revise.
Please also expand your disclosure in response to previous comment
15
to further describe the assumptions mentioned in your tax opinion
consistent with this comment.
* * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
? should the Commission or the staff, acting pursuant to
delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
? the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
? the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Howard Efron at 202-551-3439 or Steven
Jacobs,
Accounting Branch Chief, at 202-551-3403 if you have questions
regarding comments on the financial statements and related
matters.
Please contact Charito A. Mittelman at 202-551-3404 or me at 202-
551-
3495 with any other questions.
Sincerely,
Elaine Wolff
Legal Branch Chief
cc: Robert H. Bergdolt, Esq. (via facsimile)
DLA Piper Rudnick Gray Cary U.S. LLP
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Charles J. Schreiber, Jr.
KBS Real Estate Investment Trust, Inc.
September 27, 2005
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