UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 11, 2016
KBS REAL ESTATE INVESTMENT TRUST, INC.
(Exact Name of Registrant as Specified in Its Charter)
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| Maryland | | 000-52606 | | 20-2985918 |
(State or Other Jurisdiction of Incorporation or Organization) | | (Commission File Number) | | I.R.S. Employer Identification No. |
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
(Address of principal executive offices)
Registrant’s telephone number, including area code: (949) 417-6500
620 Newport Center Drive, Suite 1300
Newport Beach, California 92660
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| £ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| £ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| £ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| £ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Disposition of the FSI 6000 Properties
On April 11, 2016, KBS Real Estate Investment Trust, Inc. (the “Company”), through indirect wholly owned subsidiaries, First States Investors 6000A, L.P., First States Investors 6000B, L.P., First States Investors 6000C, L.P., and First States Investors 6000D, L.P., sold 61 bank branch properties, containing 245,843 rentable square feet (the “FSI 6000 Properties”), to Pontus Net Lease Advisors, LLC, a buyer unaffiliated with the Company or its advisor (the “FSI 6000 Buyer”), for an aggregate sales price, net of closing credits, of $139.6 million (which includes a payment of $6.6 million by the FSI 6000 Buyer to the Company to compensate the Company for costs and expenses the Company incurred in connection with the defeasance of the FSI 6000 Mortgage Loans, as defined below), excluding closing costs. The carrying value of the FSI 6000 Properties was approximately $105.7 million, which is net of $27.1 million of accumulated depreciation and amortization. The Company recognized a gain on the disposition of the FSI 6000 Properties of approximately $30.0 million after fees and expenses.
In connection with the disposition of the FSI 6000 Properties, the Company entered into a defeasance agreement with each of the lenders under the FSI 6000A Mortgage Loan, FSI 6000B Mortgage Loan, FSI 6000C Mortgage Loan and FSI 6000D Mortgage Loan (collectively, the “FSI 6000 Mortgage Loans”) to defease the entire aggregate outstanding principal balance of $102.3 million under the FSI 6000 Mortgage Loans, releasing the FSI 6000 Properties, which had secured the FSI 6000 Mortgage Loans. The FSI 6000A Mortgage Loan and the FSI 6000C Mortgage Loan each bore interest at a rate of 6.80% and were due to mature on October 5, 2017. The FSI 6000B Mortgage Loan and the FSI 6000D Mortgage Loan each bore interest at a rate of 5.80% and were due to mature on June 5, 2017. The defeasance costs and write-off of an unamortized discount resulted in an aggregate loss on extinguishment of debt of approximately $6.6 million.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
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| (b) | Pro Forma Financial Information | |
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| | KBS Real Estate Investment Trust, Inc. | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | KBS REAL ESTATE INVESTMENT TRUST, INC. |
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| Dated: April 14, 2016 | | BY: | | /s/ Jeffrey K. Waldvogel |
| | | | | Jeffrey K. Waldvogel |
| | | | | Chief Financial Officer |
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KBS REAL ESTATE INVESTMENT TRUST, INC.
SUMMARY OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma information should be read in conjunction with the consolidated balance sheet of KBS Real Estate Investment Trust, Inc. (“KBS REIT”) as of December 31, 2015, the related consolidated statements of operations, comprehensive income (loss) stockholders’ equity, and cash flows for the year ended December 31, 2015, and the notes thereto. The consolidated financial statements of KBS REIT as of and for the year ended December 31, 2015 have been included in KBS REIT's prior filings with the SEC.
The following unaudited pro forma balance sheet as of December 31, 2015 has been prepared to give effect to the disposition of the FSI 6000 Properties as if the disposition occurred on December 31, 2015. The unaudited pro forma balance sheet does not purport to reflect the actual transaction or financial position of KBS REIT as it occurred on April 11, 2016, as certain amounts and balances have changed.
The following unaudited pro forma statement of operations for the year ended December 31, 2015 has been prepared to give effect to the April 11, 2016 disposition of the FSI 6000 Properties as if the disposition occurred on January 1, 2015.
These unaudited pro forma financial statements have been prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the disposition of the FSI 6000 Properties been consummated as of the dates indicated.
KBS REAL ESTATE INVESTMENT TRUST, INC.
UNAUDITED PRO FORMA BALANCE SHEET
As of December 31, 2015
(in thousands, except share and per share amounts)
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| | | | | | | | | | | |
| | KBS REIT Historical (a) | | Pro Forma Adjustments | | Pro Forma Total |
| | | FSI 6000 Properties (b) | |
| Assets | | | | | |
| Real estate held for investment: | | | | | |
| Land | $ | 236,034 |
| | $ | (31,269 | ) | | $ | 204,765 |
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| Buildings and improvements | 716,829 |
| | (68,978 | ) | | 647,851 |
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| Tenant origination and absorption costs | 61,708 |
| | (9,145 | ) | | 52,563 |
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| Total real estate held for investment, at cost and net of impairment charges | 1,014,571 |
| | (109,392 | ) | | 905,179 |
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| Less accumulated depreciation and amortization | (161,243 | ) | | 20,918 |
| | (140,325 | ) |
| Total real estate held for investment, net | 853,328 |
| | (88,474 | ) | | 764,854 |
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| Real estate held for sale, net | 7,552 |
| | — |
| | 7,552 |
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| Total real estate, net | 860,880 |
| | (88,474 | ) | | 772,406 |
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| Real estate loans receivable, net | 27,281 |
| | — |
| | 27,281 |
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| Total real estate and real estate-related investments, net | 888,161 |
| | (88,474 | ) | | 799,687 |
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| Cash and cash equivalents | 46,605 |
| | 26,817 |
| (c) | 73,422 |
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| Restricted cash | 39,874 |
| | — |
| | 39,874 |
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| Rents and other receivables, net | 37,388 |
| | (5,382 | ) | | 32,006 |
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| Above-market leases, net | 17,896 |
| | (12,088 | ) | | 5,808 |
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| Assets related to real estate held for sale | 110 |
| | — |
| | 110 |
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| Prepaid expenses and other assets, net | 24,831 |
| | (146 | ) | | 24,685 |
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| Total assets | $ | 1,054,865 |
| | $ | (79,273 | ) | | $ | 975,592 |
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| Liabilities and equity | | | | | |
| Notes payable, net | $ | 428,222 |
| | $ | (102,873 | ) | (d) | $ | 325,349 |
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| Accounts payable and accrued liabilities | 19,152 |
| | — |
| | 19,152 |
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| Due to affiliates | 68 |
| | — |
| | 68 |
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| Below-market leases, net | 25,863 |
| | (100 | ) | | 25,763 |
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| Liabilities related to real estate held for sale | 939 |
| | — |
| | 939 |
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| Other liabilities | 50,958 |
| | — |
| | 50,958 |
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| Total liabilities | 525,202 |
| | (102,973 | ) | | 422,229 |
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| Commitments and contingencies | | | | | |
| Redeemable common stock | 10,000 |
| | — |
| | 10,000 |
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| Stockholders’ Equity | | | | | |
| Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding | — |
| | — |
| | — |
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| Common stock, $.01 par value; 1,000,000,000 shares authorized, 186,414,147 shares issued and outstanding as of December 31, 2015 | 1,864 |
| | — |
| | 1,864 |
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| Additional paid-in capital | 1,656,137 |
| | — |
| | 1,656,137 |
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| Cumulative distributions and net losses | (1,138,338 | ) | | 23,700 |
| | (1,114,638 | ) |
| Total stockholders’ equity | 529,663 |
| | 23,700 |
| | 553,363 |
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| Total liabilities and equity | $ | 1,054,865 |
| | $ | (79,273 | ) | | $ | 975,592 |
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KBS REAL ESTATE INVESTMENT TRUST, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
As of December 31, 2015
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| (a) | Historical financial information derived from KBS REIT’s Annual Report on Form 10-K as of December 31, 2015. |
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| (b) | Represents adjustments to reflect the disposition of the FSI 6000 Properties. The sale price, net of closing credits, of the FSI 6000 Properties was $139.6 million (which includes a payment of $6.6 million by the FSI 6000 Buyer to KBS REIT to compensate KBS REIT for costs and expenses KBS REIT incurred in connection with the defeasance of the FSI 6000 Mortgage Loans), excluding closing costs. |
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| (c) | Represents the amount of proceeds from the disposition of the FSI 6000 Properties, which amount was reduced by the aggregate outstanding balance of the FSI 6000 Mortgage Loans as of December 31, 2015 and estimated costs to defease the FSI 6000 Mortgage Loans. |
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| (d) | Represents the aggregate outstanding principal balance of $102.9 million and $63,000 of unamortized discount, net, on the FSI 6000 Mortgage Loans as of December 31, 2015. |
KBS REAL ESTATE INVESTMENT TRUST, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2015
(in thousands, except share and per share amounts)
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| | KBS REIT Historical (a) | | Pro Forma Adjustment | | Pro Forma Total |
| | | FSI 6000 Properties (b) | |
| Revenues: | | | | | |
| Rental income | $ | 135,117 |
| | $ | (10,900 | ) | | $ | 124,217 |
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| Tenant reimbursements | 47,217 |
| | (366 | ) | | 46,851 |
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| Interest income from real estate loans receivable | 3,089 |
| | — |
| | 3,089 |
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| Parking revenues and other operating income | 2,797 |
| | (7 | ) | | 2,790 |
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| Total revenues | 188,220 |
| | (11,273 | ) | | 176,947 |
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| Expenses: | | | | | |
| Operating, maintenance, and management | 75,034 |
| | (268 | ) | | 74,766 |
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| Real estate taxes, property-related taxes, and insurance | 23,696 |
| | (234 | ) | | 23,462 |
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| Asset management fees to affiliate | 9,547 |
| | — |
| | 9,547 |
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| General and administrative expenses | 32,619 |
| | — |
| | 32,619 |
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| Depreciation and amortization | 59,145 |
| | (4,979 | ) | | 54,166 |
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| Interest expense | 29,517 |
| | (6,691 | ) | | 22,826 |
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| Impairment charge on real estate | 49,306 |
| | — |
| | 49,306 |
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| Provision for loan losses | 2,504 |
| | — |
| | 2,504 |
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| Total expenses | 281,368 |
| | (12,172 | ) | | 269,196 |
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| Other income: | | | | | |
| Gaines on sales of real estate, net | 99,988 |
| | — |
| | 99,988 |
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| Gain on sales of foreclosed real estate held for sale | 2,509 |
| | — |
| | 2,509 |
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| (Loss) gain from extinguishment of debt | (22,518 | ) | | — |
| | (22,518 | ) |
| Other interest income | 605 |
| | — |
| | 605 |
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| Other income | 789 |
| | (166 | ) | | 623 |
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| Total other income | 81,373 |
| | (166 | ) | | 81,207 |
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| Loss from continuing operations | (11,775 | ) | | 733 |
| | (11,042 | ) |
| Discontinued operations: | | | | | |
| Gain on sales of real estate, net | 124 |
| | — |
| | 124 |
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| Income from discontinued operations | 264 |
| | — |
| | 264 |
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| Total income from discontinued operations | 388 |
| | — |
| | 388 |
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| Net loss | $ | (11,387 | ) | | $ | 733 |
| | $ | (10,654 | ) |
| Basic and diluted income (loss) per common share: | | | | | |
| Continuing operations | $ | (0.06 | ) | | | | $ | (0.06 | ) |
| Discontinued operations | — |
| | | | — |
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| Net loss per common share | $ | (0.06 | ) | | | | $ | (0.06 | ) |
| Weighted-average number of common shares outstanding, basic and diluted | 187,219,590 |
| | | | 187,219,590 |
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KBS REAL ESTATE INVESTMENT TRUST, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2015
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| (a) | Historical financial information derived from KBS REIT’s Annual Report on Form 10-K for the year ended December 31, 2015. |
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| (b) | Amount represents the adjustment to remove the historical operations of the FSI 6000 Properties as reflected in the historical statement of operations of KBS REIT for the year ended December 31, 2015. |
