Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 07, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Registrant Name | 'KBS Real Estate Investment Trust II, Inc. | ' |
Entity Central Index Key | '0001411059 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Current Fiscal Year end | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 190,692,544 |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Real estate: | ' | ' | ||
Land | $221,997 | $221,997 | ||
Buildings and improvements | 1,236,482 | 1,238,516 | ||
Tenant origination and absorption costs | 147,027 | 167,904 | ||
Total real estate held for investment, cost | 1,605,506 | 1,628,417 | ||
Less accumulated depreciation and amortization | -233,122 | -223,889 | ||
Total real estate held for investment, net | 1,372,384 | 1,404,528 | ||
Real estate held for sale, net | 76,674 | 1,030,732 | ||
Total Real Estate | 1,449,058 | 2,435,260 | ||
Real estate loans receivable, net | 73,095 | [1] | 184,828 | [1] |
Total real estate and real estate-related investments, net | 1,522,153 | 2,620,088 | ||
Cash and cash equivalents | 88,304 | 175,042 | ||
Rents and other receivables, net | 46,569 | 42,059 | ||
Above-market leases, net | 12,358 | 16,164 | ||
Assets related to real estate held for sale | 4,835 | 77,481 | ||
Deferred financing costs, prepaid expenses and other assets | 29,532 | 23,466 | ||
Total assets | 1,703,751 | 2,954,300 | ||
Notes payable: | ' | ' | ||
Notes payable | 816,114 | 892,573 | ||
Notes payable related to real estate held for sale | 56,228 | 628,780 | ||
Total notes payable | 872,342 | 1,521,353 | ||
Accounts payable and accrued liabilities | 31,214 | 24,597 | ||
Distributions payable | 6,253 | 10,649 | ||
Below-market leases, net | 13,753 | 17,943 | ||
Liabilities related to real estate held for sale | 0 | 5,040 | ||
Other liabilities | 18,630 | 34,674 | ||
Total liabilities | 942,192 | 1,614,256 | ||
Commitments and contingencies (Note 14) | ' | ' | ||
Redeemable common stock | 8,181 | 70,562 | ||
Stockholders’ equity: | ' | ' | ||
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding | 0 | 0 | ||
Common stock, $.01 par value; 1,000,000,000 shares authorized, 190,753,163 and 192,269,969 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively | 1,908 | 1,923 | ||
Additional paid-in capital | 1,692,976 | 1,647,214 | ||
Cumulative distributions in excess of net income | -938,816 | -369,342 | ||
Accumulated other comprehensive loss | -2,690 | -10,313 | ||
Total stockholders’ equity | 753,378 | 1,269,482 | ||
Total liabilities and stockholders’ equity | $1,703,751 | $2,954,300 | ||
[1] | Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value (usd per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (usd per share) | $0.01 | $0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 190,753,163 | 192,269,969 |
Common stock, shares outstanding | 190,753,163 | 192,269,969 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues: | ' | ' | ' | ' |
Rental income | $44,602 | $65,446 | $171,865 | $192,989 |
Tenant reimbursements | 6,357 | 15,582 | 38,919 | 46,175 |
Interest income from real estate loans receivable | 1,396 | 8,586 | 11,346 | 25,258 |
Interest income from marketable securities | 864 | 0 | 953 | 0 |
Other operating income | 2,375 | 2,632 | 7,681 | 7,923 |
Total revenues | 55,594 | 92,246 | 230,764 | 272,345 |
Expenses: | ' | ' | ' | ' |
Operating, maintenance, and management | 12,720 | 16,967 | 47,700 | 49,616 |
Real estate taxes and insurance | 6,606 | 12,400 | 30,940 | 36,246 |
Asset management fees to affiliate | 3,829 | 6,079 | 15,164 | 17,563 |
Real estate acquisition fees to affiliates | 0 | 0 | 0 | 1,797 |
Real estate acquisition fees and expenses | 0 | 0 | 0 | 623 |
General and administrative expenses | 1,106 | 1,347 | 3,909 | 3,684 |
Depreciation and amortization | 16,835 | 30,746 | 64,187 | 90,769 |
Interest expense | 25,040 | 19,123 | 54,888 | 50,614 |
Impairment charge on real estate | 3,940 | 0 | 5,015 | 0 |
Total expenses | 70,076 | 86,662 | 221,803 | 250,912 |
Other income: | ' | ' | ' | ' |
Other interest income | 133 | 6 | 188 | 21 |
Loss on sale of marketable securities | -331 | 0 | -331 | 0 |
Gain on sales of real estate, net | 322,811 | 0 | 369,458 | 0 |
Total other income | 322,613 | 6 | 369,315 | 21 |
Net income | $308,131 | $5,590 | $378,276 | $21,454 |
Net income per common share, basic and diluted | $1.61 | $0.03 | $1.97 | $0.11 |
Weighted-average number of common shares outstanding, basic and diluted | 190,843,044 | 192,788,656 | 191,570,503 | 192,093,022 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $308,131 | $5,590 | $378,276 | $21,454 |
Other comprehensive income: | ' | ' | ' | ' |
Unrealized gains (losses) on derivative instruments | 473 | -3,067 | -1,923 | -3,029 |
Reclassification adjustment realized in net income (effective portion) | 1,694 | 2,484 | 5,818 | 6,985 |
Reclassification of unrealized losses due to hedge ineffectiveness | 2,385 | 0 | 3,207 | 0 |
Reclassification of realized losses related to swap terminations | 0 | 256 | 521 | 613 |
Unrealized loss on marketable securities | -246 | 0 | -313 | 0 |
Reclassification of loss on marketable securities to income | 313 | 0 | 313 | 0 |
Total other comprehensive income (loss) | 4,619 | -327 | 7,623 | 4,569 |
Total comprehensive income | $312,750 | $5,263 | $385,899 | $26,023 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Cumulative Distributions and Net Income (Loss) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
In Thousands, except Share data, unless otherwise specified | |||||
Balance, value at Apr. 21, 2008 | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Redemptions of common stock, shares | ' | -22,851,354 | ' | ' | ' |
Redemptions of common stock, value | ($228,400) | ' | ' | ' | ' |
Balance, value at Sep. 30, 2014 | 753,378 | 1,908 | ' | ' | ' |
Balance, shares at Sep. 30, 2014 | 190,753,163 | 190,753,163 | ' | ' | ' |
Balance, value at Dec. 31, 2012 | 1,329,031 | 1,903 | 1,633,994 | -289,737 | -17,129 |
Balance, shares at Dec. 31, 2012 | ' | 190,274,167 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Net income | 55,779 | ' | ' | 55,779 | ' |
Other comprehensive income | 6,816 | ' | ' | ' | 6,816 |
Issuance of common stock, shares | ' | 7,214,805 | ' | ' | ' |
Issuance of common stock, value | 70,562 | 72 | 70,490 | ' | ' |
Redemptions of common stock, shares | ' | -5,219,003 | ' | ' | ' |
Redemptions of common stock, value | -53,168 | -52 | -53,116 | ' | ' |
Transfers from/ (to) redeemable common stock | -4,135 | ' | -4,135 | ' | ' |
Distributions declared | -135,384 | ' | ' | -135,384 | ' |
Other offering costs | -19 | ' | -19 | ' | ' |
Balance, value at Dec. 31, 2013 | 1,269,482 | 1,923 | 1,647,214 | -369,342 | -10,313 |
Balance, shares at Dec. 31, 2013 | 192,269,969 | 192,269,969 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Net income | 378,276 | ' | ' | 378,276 | ' |
Other comprehensive income | 7,623 | ' | ' | ' | 7,623 |
Issuance of common stock, shares | ' | 2,749,008 | ' | ' | ' |
Issuance of common stock, value | 26,885 | 28 | 26,857 | ' | ' |
Redemptions of common stock, shares | ' | -4,265,814 | ' | ' | ' |
Redemptions of common stock, value | -43,509 | -43 | -43,466 | ' | ' |
Transfers from/ (to) redeemable common stock | 62,371 | ' | 62,371 | ' | ' |
Distributions declared | -947,750 | ' | ' | -947,750 | ' |
Balance, value at Sep. 30, 2014 | $753,378 | $1,908 | $1,692,976 | ($938,816) | ($2,690) |
Balance, shares at Sep. 30, 2014 | 190,753,163 | 190,753,163 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash Flows from Operating Activities: | ' | ' |
Net income | $378,276 | $21,454 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 64,187 | 90,769 |
Impairment charge on real estate | 5,015 | 0 |
Noncash interest income on real estate-related investments | -107 | -3,661 |
Deferred rent | -5,126 | -9,938 |
Bad debt expense | 489 | 470 |
Amortization of above- and below-market leases, net | 1,867 | 1,615 |
Amortization of deferred financing costs | 3,834 | 2,440 |
Reclassification of realized losses on derivative instruments | 521 | 613 |
Unrealized losses due to hedge ineffectiveness | 3,207 | 0 |
Change in fair value of contingent consideration | 0 | -31 |
Gain on sale of real estate, net | -369,458 | 0 |
Loss on sale of marketable securities | 331 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Restricted cash for operational expenditures | 2 | 0 |
Rents and other receivables | -2,841 | -2,807 |
Prepaid expenses and other assets | -6,737 | -11,838 |
Accounts payable and accrued liabilities | -1,336 | 6,321 |
Other liabilities | -12,147 | 2,685 |
Net cash provided by operating activities | 59,977 | 98,092 |
Cash Flows from Investing Activities: | ' | ' |
Proceeds from sale of real estate | 1,379,642 | 0 |
Acquisitions of real estate | 0 | -238,952 |
Improvements to real estate | -20,075 | -15,473 |
Investments in marketable securities | -529,997 | 0 |
Proceeds from sale of marketable securities | 529,666 | 0 |
Principal repayments on real estate loans receivable | 152 | 1,320 |
Proceeds from the early payoff of real estate loans receivable | 111,688 | 0 |
Investments in real estate loans receivable | 0 | -5,490 |
Net cash provided by (used in) investing activities | 1,471,076 | -258,595 |
Cash Flows from Financing Activities: | ' | ' |
Proceeds from notes payable | 0 | 456,000 |
Principal payments on notes payable | -649,011 | -207,590 |
Payments of deferred financing costs | -10 | -4,027 |
Return of contingent consideration related to acquisition of real estate | 0 | 308 |
Payments to redeem common stock | -43,509 | -31,757 |
Payments of other offering costs | 0 | -19 |
Distributions paid to common stockholders | -925,261 | -49,637 |
Net cash (used in) provided by financing activities | -1,617,791 | 163,278 |
Net (decrease) increase in cash and cash equivalents | -86,738 | 2,775 |
Cash and cash equivalents, beginning of period | 175,042 | 48,390 |
Cash and cash equivalents, end of period | 88,304 | 51,165 |
Supplemental Disclosure of Cash Flow Information: | ' | ' |
Interest paid | 35,144 | 44,245 |
Supplemental Disclosure of Noncash Transactions: | ' | ' |
(Decrease) in distributions payable | -4,396 | -211 |
Increase in redeemable common stock payable | 0 | 8,326 |
Increase in accrued improvements to real estate | 5,401 | 5,930 |
Increase in lease commissions payable | 3,723 | 710 |
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | $26,885 | $54,308 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
ORGANIZATION | ' |
ORGANIZATION | |
KBS Real Estate Investment Trust II, Inc. (the “Company”) was formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008. The Company conducts its business primarily through KBS Limited Partnership II, a Delaware limited partnership formed on August 23, 2007 (the “Operating Partnership”), and its subsidiaries. The Company is the sole general partner of and directly owns a 0.1% partnership interest in the Operating Partnership. The Company’s wholly-owned subsidiary, KBS REIT Holdings II LLC, a Delaware limited liability company formed on August 23, 2007 (“KBS REIT Holdings II”), owns the remaining 99.9% partnership interest in the Operating Partnership and is its sole limited partner. | |
The Company owns a diverse portfolio of real estate and real estate-related investments. As of September 30, 2014, the Company owned 19 real estate properties (consisting of 13 office properties, one office/flex property, a portfolio of four industrial properties and an office campus consisting of eight office buildings) and two real estate loans receivable. As of September 30, 2014, one office property and a portfolio of four industrial properties were classified as held for sale. | |
Subject to certain restrictions and limitations, the business of the Company is managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on May 21, 2014 (the “Advisory Agreement”). The Advisory Agreement may be renewed for an unlimited number of one-year periods upon the mutual consent of the Advisor and the Company. Either party may terminate the Advisory Agreement upon 60 days’ written notice. The Advisor owns 20,000 shares of the Company’s common stock. | |
Upon commencing its initial public offering (the “Offering”), the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Advisor, to serve as the dealer manager of the Offering pursuant to a dealer manager agreement, as amended and restated on April 30, 2010 (the “Dealer Manager Agreement”). The Company ceased offering shares of common stock in its primary offering on December 31, 2010 and terminated its primary offering on March 22, 2011. The Company terminated its dividend reinvestment plan effective May 29, 2014. | |
The Company sold 182,681,633 shares of common stock in its primary offering for gross offering proceeds of $1.8 billion. The Company sold 30,903,504 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $298.2 million. Also as of September 30, 2014, the Company had redeemed 22,851,354 shares sold in the Offering for $228.4 million. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |
Sep. 30, 2014 | ||
Accounting Policies [Abstract] | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2013, except for the addition of an accounting policy with respect to investments in marketable securities and the addition of an accounting policy related to the reclassification of a property from held for sale to held for investment. During the nine months ended September 30, 2014, the Company adopted ASU No. 2014-08 (defined below), which impacts the Company’s reporting of discontinued operations. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). | ||
Principles of Consolidation and Basis of Presentation | ||
The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. | ||
The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. | ||
Use of Estimates | ||
The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. | ||
Reclassifications | ||
Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the nine months ended September 30, 2014, the Company sold seven office properties, one industrial property and a leasehold interest in one industrial property and classified one office property and a portfolio of four industrial properties as held for sale. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. Additionally, as of September 30, 2014, the Company reclassified two properties that were previously classified as held for sale to held for investment. | ||
Change in a Plan to Sell | ||
When real estate is initially considered “held for sale” it is measured at the lower of its depreciated book value or estimated fair value less estimated costs to sell. Changes in the market may compel the Company to decide to reclassify a property that was designated as held for sale to held for investment. A property that is reclassified from held for sale to held for investment is measured and recorded at the lower of (i) its carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used, or (ii) its fair value at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of the property as a result of the reclassification is included in income from continuing operations as an impairment charge on real estate held for investment. | ||
Marketable Securities | ||
The Company classifies its investments in marketable securities as available-for-sale, since the Company may sell them prior to their maturity but does not hold them principally for the purpose of making frequent investments and sales with the objective of generating profits on short-term differences in price. These investments are carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss). Estimated fair values are generally based on quoted market prices, when available, or on estimates provided by independent pricing sources or dealers who make markets in such securities. In certain circumstances, such as when the market for the securities becomes inactive, the Company may determine it is appropriate to perform an internal valuation of the securities. Upon the sale of a security, the previously recognized unrealized gain (loss) is reversed out of accumulated other comprehensive income (loss) and the actual realized gain (loss) is recognized in earnings. | ||
On a quarterly basis, the Company evaluates its marketable securities for other-than-temporary impairment. The Company reviews the projected future cash flows from these securities for changes in assumptions due to prepayments, credit loss experience and other factors. If, based on the Company’s quarterly estimate of cash flows, there has been an adverse change in the estimated cash flows from the cash flows previously estimated, the present value of the revised cash flows is less than the present value previously estimated, and the fair value of the securities is less than their amortized cost basis, an other-than-temporary impairment is deemed to have occurred. | ||
The Company recognizes interest income on marketable securities that are beneficial interests in securitized financial assets and are rated “AA” and above on an accrual basis according to the contractual terms of the securities. Discounts or premiums are amortized to interest income over the life of the investment using the interest method. | ||
The Company recognizes interest income on marketable securities that are beneficial interests in securitized financial assets that are rated below “AA” using the effective yield method, which requires the Company to periodically project estimated cash flows related to these securities and recognize interest income at an interest rate equivalent to the estimated yield on the security, as calculated using the security’s estimated cash flows and amortized cost basis, or reference amount. Changes in the estimated cash flows are recognized through an adjustment to the yield on the security on a prospective basis. Projecting cash flows for these types of securities requires significant judgment, which may have a significant impact on the timing of revenue recognized on these investments. | ||
The Company is required to distinguish between other-than-temporary impairments related to credit and other-than-temporary impairments related to other factors (e.g., market fluctuations) on its debt securities that it does not intend to sell and where it is not likely that the Company will be required to sell the security prior to the anticipated recovery of its amortized cost basis. The Company calculates the credit component of the other-than-temporary impairment as the difference between the amortized cost basis of the security and the present value of its estimated cash flows discounted at the yield used to recognize interest income. The credit component will be charged to earnings and the component related to other factors is recorded to other comprehensive income (loss). | ||
Redeemable Common Stock | ||
On May 15, 2014, the Company’s board of directors approved the amendment and restatement of the Company’s share redemption program (the “Amended Share Redemption Program”) to provide only for redemptions sought upon a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the Amended Share Redemption Program, and, together with redemptions sought in connection with a stockholder’s death, “special redemptions”). During each calendar year, such special redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to the Company’s stockholders. The Company may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the Securities and Exchange Commission or (b) in a separate mailing to the stockholders. | ||
Commencing with the June 2014 redemption date, the dollar amount limitation for special redemptions for the remainder of calendar year 2014 is $10.0 million in the aggregate, as may be reviewed and adjusted from time to time by the board of directors. Based on historical redemption data, the board of directors believes that the $10.0 million redemption limitation for the remainder of calendar year 2014 will be sufficient for special redemptions. The Amended Share Redemption Program became effective on June 18, 2014. As of September 30, 2014, the Company had $8.1 million available for special redemptions for the remainder of 2014. There were no other changes to the terms of special redemptions, and special redemptions will continue to be made at a price per share equal to the most recent estimated value per share of the Company’s common stock as of the applicable redemption date. The Company currently does not expect to make ordinary redemptions in the future. | ||
Per Share Data | ||
Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the nine months ended September 30, 2014 and 2013, respectively. | ||
Distributions declared per common share were $4.644 and $4.966 for the three and nine months ended September 30, 2014, respectively. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions during the three and nine months ended September 30, 2014. These distributions declared consisted of the following: | ||
• | The Company’s board of directors declared distributions per common share based on daily record dates for each day during the period from January 1, 2014 through August 31, 2014. Each day during the period was a record date for distributions and distributions were calculated at a rate of $0.00178082 per share per day. | |
• | The Company’s board of directors declared special distributions in the amount of $3.75, $0.30 and $0.45 per share on the outstanding shares of the Company’s common stock on July 8, 2014, August 5, 2014 and August 29, 2014, respectively, for an aggregate amount of $4.50 per share of common stock, to stockholders of record as of the close of business on September 15, 2014. | |
• | On August 29, 2014, the Company’s board of directors declared a September 2014 distribution in the amount of $0.03277397 per share of common stock to stockholders of record as of the close of business on September 26, 2014. | |
Distributions declared per common share were $0.164 and $0.540 for the three and nine months ended September 30, 2013, respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three and nine months ended September 30, 2013. For each day that was a record date for distributions during the three and nine months ended September 30, 2013, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2013 through September 30, 2013 was a record date for distributions. Additionally, the Company’s board of directors declared a special distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on February 4, 2013. | ||
Segments | ||
The Company’s segments are based on the Company’s method of internal reporting, which classifies its operations by investment type: real estate and real estate-related. For financial data by segment, see Note 13, “Segment Information.” | ||
Recently Issued Accounting Standards Update | ||
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU No. 2014-08”). ASU No. 2014-08 limits discontinued operations reporting to disposals of components of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: a) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; b) the component of an entity or group of components of an entity is disposed of by sale; and c) the component of an entity or group of components of an entity is disposed of other than by sale. ASU No. 2014-08 also requires additional disclosures about discontinued operations. ASU No. 2014-08 is effective for reporting periods beginning after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company early adopted ASU No. 2014-08 for the reporting period beginning January 1, 2014. As a result of the adoption of ASU No. 2014-08, results of operations for properties that are classified as held for sale in the ordinary course of business on or subsequent to January 1, 2014 would generally be included in continuing operations on the Company’s consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above. Additionally, any gain or loss on sale of real estate that does not meet the criteria for classification as a discontinued operation would be included in income from continuing operations on the consolidated statements of operations. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company does not expect the adoption of ASU No. 2014-09 to have a material impact on its financial statements. | ||
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU No. 2014-15”). The amendments in ASU No. 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of ASU 2014-15 to have a significant impact on its financial statements. |
REAL_ESTATE_HELD_FOR_INVESTMEN
REAL ESTATE HELD FOR INVESTMENT | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Real Estate [Abstract] | ' | |||||||||||||||||||||||
REAL ESTATE HELD FOR INVESTMENT | ' | |||||||||||||||||||||||
REAL ESTATE HELD FOR INVESTMENT | ||||||||||||||||||||||||
As of September 30, 2014, the Company’s portfolio of real estate held for investment was composed of 12 office properties, one office/flex property and an office campus consisting of eight office buildings, encompassing in the aggregate approximately 6.3 million rentable square feet. For a discussion of the Company’s real estate properties held for sale, see Note 7, “Real Estate Held for Sale.” As of September 30, 2014, the Company’s real estate portfolio was 89% occupied. The following table summarizes the Company’s real estate portfolio held for investment as of September 30, 2014 (in thousands): | ||||||||||||||||||||||||
Property | Date Acquired | City | State | Property Type | Total | Accumulated Depreciation and Amortization | Total Real Estate, Net | |||||||||||||||||
Real Estate | ||||||||||||||||||||||||
at Cost | ||||||||||||||||||||||||
100 & 200 Campus Drive Buildings | 9/9/08 | Florham Park | NJ | Office | $ | 197,118 | $ | (39,103 | ) | $ | 158,015 | |||||||||||||
300-600 Campus Drive Buildings | 10/10/08 | Florham Park | NJ | Office | 196,349 | (41,970 | ) | 154,379 | ||||||||||||||||
350 E. Plumeria Building | 12/18/08 | San Jose | CA | Office/Flex | 36,116 | (6,500 | ) | 29,616 | ||||||||||||||||
Willow Oaks Corporate Center | 8/26/09 | Fairfax | VA | Office | 102,203 | (20,243 | ) | 81,960 | ||||||||||||||||
Pierre Laclede Center | 2/4/10 | Clayton | MO | Office | 82,318 | (15,558 | ) | 66,760 | ||||||||||||||||
One Main Place | 2/5/10 | Portland | OR | Office | 50,888 | (9,074 | ) | 41,814 | ||||||||||||||||
Horizon Tech Center | 6/17/10 | San Diego | CA | Office | 28,136 | — | 28,136 | |||||||||||||||||
Union Bank Plaza | 9/15/10 | Los Angeles | CA | Office | 216,343 | (30,307 | ) | 186,036 | ||||||||||||||||
Emerald View at Vista Center | 12/9/10 | West Palm Beach | FL | Office | 31,639 | (5,167 | ) | 26,472 | ||||||||||||||||
Granite Tower | 12/16/10 | Denver | CO | Office | 153,769 | (23,207 | ) | 130,562 | ||||||||||||||||
National City Tower | 12/17/10 | Louisville | KY | Office | 115,342 | (22,059 | ) | 93,283 | ||||||||||||||||
Gateway Corporate Center | 1/26/11 | Sacramento | CA | Office | 44,959 | (7,273 | ) | 37,686 | ||||||||||||||||
Fountainhead Plaza | 9/13/11 | Tempe | AZ | Office | 119,384 | — | 119,384 | |||||||||||||||||
Corporate Technology Centre | 3/28/13 | San Jose | CA | Office | 230,942 | (12,661 | ) | 218,281 | ||||||||||||||||
$ | 1,605,506 | $ | (233,122 | ) | $ | 1,372,384 | ||||||||||||||||||
As of September 30, 2014, the following properties represented more than 10% of the Company’s total assets: | ||||||||||||||||||||||||
Property | Location | Rentable | Total | Percentage | Annualized Base Rent | Average Annualized Base Rent per Sq. Ft. | Occupancy | |||||||||||||||||
Square | Real Estate, Net | of Total | (in thousands) (1) | |||||||||||||||||||||
Feet | (in thousands) | Assets | ||||||||||||||||||||||
Corporate Technology Centre | San Jose, CA | 610,083 | $ | 218,281 | 12.8 | % | $ | 18,537 | $ | 30.38 | 100 | % | ||||||||||||
Union Bank Plaza | Los Angeles, CA | 627,334 | 186,036 | 10.9 | % | 21,488 | 38.54 | 89 | % | |||||||||||||||
_____________________ | ||||||||||||||||||||||||
(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. | ||||||||||||||||||||||||
Operating Leases | ||||||||||||||||||||||||
The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of September 30, 2014, the leases had remaining terms, excluding options to extend, of up to 15.1 years with a weighted-average remaining term of 8.6 years. Some of the leases have provisions to extend the term of the leases, options for early termination for all or part of the leased premises after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $3.3 million and $4.6 million as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||
During the nine months ended September 30, 2014 and 2013, the Company recognized deferred rent from tenants, net of lease incentive amortization, of $5.1 million and $9.9 million, respectively. As of September 30, 2014 and December 31, 2013, the cumulative deferred rent balance was $42.7 million and $38.0 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $4.0 million and $3.3 million of unamortized lease incentives as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||
As of September 30, 2014, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands): | ||||||||||||||||||||||||
October 1, 2014 through December 31, 2014 | $ | 38,010 | ||||||||||||||||||||||
2015 | 148,671 | |||||||||||||||||||||||
2016 | 140,248 | |||||||||||||||||||||||
2017 | 126,135 | |||||||||||||||||||||||
2018 | 104,372 | |||||||||||||||||||||||
Thereafter | 333,676 | |||||||||||||||||||||||
$ | 891,112 | |||||||||||||||||||||||
As of September 30, 2014, the Company had over 300 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows: | ||||||||||||||||||||||||
Industry | Number of Tenants | Annualized | Percentage of Annualized Base Rent | |||||||||||||||||||||
Base Rent (1) | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Finance | 41 | $ | 33,380 | 21.2 | % | |||||||||||||||||||
Computer System Design & Programming | 13 | 27,897 | 17.7 | % | ||||||||||||||||||||
Legal Services | 51 | 19,205 | 12.2 | % | ||||||||||||||||||||
$ | 80,482 | 51.1 | % | |||||||||||||||||||||
_____________________ | ||||||||||||||||||||||||
(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. | ||||||||||||||||||||||||
No other tenant industries accounted for more than 10% of annualized base rent. The Company had not identified any material tenant credit issues as of September 30, 2014. During the nine months ended September 30, 2014 and 2013, the Company recorded bad debt expense of $0.5 million and $0.5 million, respectively. As of September 30, 2014, the Company had a bad debt expense reserve of approximately $0.7 million, which represents less than 1% of its annualized base rent. | ||||||||||||||||||||||||
As of September 30, 2014, the Company had a concentration of credit risk related to the following tenant lease that represented more than 10% of the Company’s annualized base rent: | ||||||||||||||||||||||||
Annualized Base Rent Statistics | ||||||||||||||||||||||||
Tenant | Property | Tenant Industry | Square | % of Portfolio (Net Rentable Sq. Ft.) | Annualized | % of Portfolio Annualized Base Rent | Annualized Base Rent per Sq. Ft. | Lease Expiration (2) | ||||||||||||||||
Feet | Base Rent | |||||||||||||||||||||||
(in thousands) (1) | ||||||||||||||||||||||||
Union Bank | Union Bank Plaza | Finance | 383,785 | 6.10% | $ | 15,857 | 10.00% | $ | 41.32 | 09/30/2016 / | ||||||||||||||
1/31/22 | ||||||||||||||||||||||||
_____________________ | ||||||||||||||||||||||||
(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. | ||||||||||||||||||||||||
(2) Represents the expiration date of the lease as of September 30, 2014 and does not take into account any tenant renewal or termination options. | ||||||||||||||||||||||||
Geographic Concentration Risk | ||||||||||||||||||||||||
As of September 30, 2014, the Company’s net investments in real estate in California and New Jersey represented 27.7% and 18.3% of the Company’s total assets, respectively. As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California and New Jersey real estate markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders. | ||||||||||||||||||||||||
Impairment of Real Estate | ||||||||||||||||||||||||
During the three and nine months ended September 30, 2014, the Company recorded impairment charges of $3.9 million and $5.0 million, respectively. The impairment charges during the three and nine months ended September 30, 2014 included $3.9 million of impairments with respect to two real estate properties that were reclassified from held for sale to held for investment. The impairment charge was recorded to adjust the carrying values of the properties for any depreciation and amortization expense that would have been recognized if the properties had always been classified as held for investment, which otherwise would have been recorded through depreciation and amortization expense and rental income (related to the amortization of above-market lease assets and below-market lease liabilities). See Note 7, “Real Estate Held for Sale and Discontinued Operations,” for information regarding impairments of assets related to real estate held for sale. |
TENANT_ORIGINATION_AND_ABSORPT
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | ' | ||||||||||||||||||||||||
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | ' | ||||||||||||||||||||||||
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | |||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands): | |||||||||||||||||||||||||
Tenant Origination and | Above-Market | Below-Market | |||||||||||||||||||||||
Absorption Costs | Lease Assets | Lease Liabilities | |||||||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Cost | $ | 147,027 | $ | 167,904 | $ | 20,543 | $ | 25,527 | $ | (37,367 | ) | $ | (39,487 | ) | |||||||||||
Accumulated Amortization | (70,681 | ) | (74,469 | ) | (8,185 | ) | (9,363 | ) | 23,614 | 21,544 | |||||||||||||||
Net Amount | $ | 76,346 | $ | 93,435 | $ | 12,358 | $ | 16,164 | $ | (13,753 | ) | $ | (17,943 | ) | |||||||||||
Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands): | |||||||||||||||||||||||||
Tenant Origination and | Above-Market | Below-Market | |||||||||||||||||||||||
Absorption Costs | Lease Assets | Lease Liabilities | |||||||||||||||||||||||
For the Three Months Ended September 30, | For the Three Months Ended September 30, | For the Three Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Amortization | $ | (5,080 | ) | $ | (10,343 | ) | $ | (1,684 | ) | $ | (2,451 | ) | $ | 1,349 | $ | 1,828 | |||||||||
Tenant Origination and | Above-Market | Below-Market | |||||||||||||||||||||||
Absorption Costs | Lease Assets | Lease Liabilities | |||||||||||||||||||||||
For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Amortization | $ | (20,310 | ) | $ | (31,216 | ) | $ | (6,761 | ) | $ | (7,201 | ) | $ | 4,894 | $ | 5,586 | |||||||||
REAL_ESTATE_LOANS_RECEIVABLE
REAL ESTATE LOANS RECEIVABLE | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Receivables [Abstract] | ' | ||||||||||||||||||||||||
REAL ESTATE LOANS RECEIVABLE | ' | ||||||||||||||||||||||||
REAL ESTATE LOANS RECEIVABLE | |||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands): | |||||||||||||||||||||||||
Loan Name | Date Acquired/ Originated | Property Type | Loan Type | Outstanding Principal Balance as of September 30, | Book Value | Book Value | Contractual Interest Rate (3) | Annualized Effective Interest Rate (3) | Maturity Date (4) | ||||||||||||||||
Location of Related Property or Collateral | 2014 (1) | as of | as of | ||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||
2014 (2) | 2013 (2) | ||||||||||||||||||||||||
Sheraton Charlotte Airport Hotel First Mortgage | |||||||||||||||||||||||||
Charlotte, North Carolina | 7/11/11 | Hotel | Mortgage | $ | 14,373 | $ | 14,386 | $ | 14,477 | 7.50% | 7.60% | 8/1/18 | |||||||||||||
Summit I & II First Mortgage | |||||||||||||||||||||||||
Reston, Virginia | 1/17/12 | Office | Mortgage | 58,687 | 58,709 | 58,781 | 7.50% | 7.60% | 2/1/17 | ||||||||||||||||
Tuscan Inn First Mortgage Origination (5) | |||||||||||||||||||||||||
San Francisco, California | 1/21/10 | Hotel | Mortgage | — | — | 20,077 | (5) | (5) | (5) | ||||||||||||||||
Chase Tower First Mortgage Origination (6) | |||||||||||||||||||||||||
Austin, Texas | 1/25/10 | Office | Mortgage | — | — | 58,820 | (6) | (6) | (6) | ||||||||||||||||
Pappas Commerce First Mortgage Origination (7) | |||||||||||||||||||||||||
Boston, Massachusetts | 4/5/10 | Industrial | Mortgage | — | — | 32,673 | (7) | (7) | (7) | ||||||||||||||||
$ | 73,060 | $ | 73,095 | $ | 184,828 | ||||||||||||||||||||
_____________________ | |||||||||||||||||||||||||
(1) Outstanding principal balance as of September 30, 2014 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns. | |||||||||||||||||||||||||
(2) Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. | |||||||||||||||||||||||||
(3) Contractual interest rate is the stated interest rate on the face of the loan. Annualized effective interest rate is calculated as the actual interest income recognized in 2014, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of September 30, 2014. | |||||||||||||||||||||||||
(4) Maturity dates are as of September 30, 2014; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown. | |||||||||||||||||||||||||
(5) On February 7, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Tuscan Inn First Mortgage Origination, pursuant to which the borrower of the Tuscan Inn First Mortgage Origination paid off the entire principal balance outstanding of $20.2 million and accrued interest. | |||||||||||||||||||||||||
(6) On February 14, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Chase Tower First Mortgage Origination, pursuant to which the borrower of the Chase Tower Mortgage Origination paid off the entire principal balance outstanding $58.9 million and accrued interest. Additionally, the borrower paid a yield maintenance premium of $4.9 million in accordance with the early payoff agreement, which was recorded in interest income from real estate loans receivable. | |||||||||||||||||||||||||
(7) On June 9, 2014, the borrower under the Pappas Commerce First Mortgage Origination paid off the entire principal balance outstanding of $32.7 million plus accrued interest. The Pappas Commerce First Mortgage had an original maturity date of July 1, 2014. | |||||||||||||||||||||||||
The following summarizes the activity related to real estate loans receivable for the nine months ended September 30, 2014 (in thousands): | |||||||||||||||||||||||||
Real estate loans receivable - December 31, 2013 | $ | 184,828 | |||||||||||||||||||||||
Principal repayments received on real estate loans receivable | (152 | ) | |||||||||||||||||||||||
Payoff of real estate loans receivable | (111,688 | ) | |||||||||||||||||||||||
Amortization of closing costs and origination fees on real estate loans receivable | 107 | ||||||||||||||||||||||||
Real estate loans receivable - September 30, 2014 | $ | 73,095 | |||||||||||||||||||||||
For the three and nine months ended September 30, 2014 and 2013, interest income from real estate loans receivable consisted of the following (in thousands): | |||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Contractual interest income | $ | 1,401 | $ | 7,313 | $ | 6,322 | $ | 21,597 | |||||||||||||||||
Prepayment fee received on real estate loan receivable | — | — | 4,917 | — | |||||||||||||||||||||
Accretion of purchase discounts | — | 1,416 | — | 4,075 | |||||||||||||||||||||
Amortization of closing costs and origination fees | (5 | ) | (143 | ) | 107 | (414 | ) | ||||||||||||||||||
Interest income from real estate loans receivable | $ | 1,396 | $ | 8,586 | $ | 11,346 | $ | 25,258 | |||||||||||||||||
As of September 30, 2014 and December 31, 2013, interest receivable from real estate loans receivable was $0.5 million and $1.3 million, respectively, and was included in rents and other receivables. |
MARKETABLE_SECURITIES
MARKETABLE SECURITIES | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Investments, Debt and Equity Securities [Abstract] | ' | |||
MARKETABLE SECURITIES | ' | |||
MARKETABLE SECURITIES | ||||
During the nine months ended September 30, 2014, the Company invested in marketable securities for cash management purposes, which it classified as available-for-sale. The following summarizes the activity related to the Company’s investments in marketable securities for the nine months ended September 30, 2014 (in thousands): | ||||
Marketable securities - December 31, 2013 | $ | — | ||
Investments in marketable securities | 529,997 | |||
Unrealized losses on marketable securities | (313 | ) | ||
Sale of marketable securities | (529,684 | ) | ||
Marketable securities - September 30, 2014 | $ | — | ||
During the three and nine months ended September 30, 2014, the Company recognized net income from marketable securities of $0.5 million and $0.6 million, respectively, which included a loss of $0.3 million and $0.3 million, respectively, in connection with the sale of marketable securities. During the three and nine months ended September 30, 2014, the Company recognized interest income from marketable securities of $0.9 million and $1.0 million, respectively. |
REAL_ESTATE_HELD_FOR_SALE
REAL ESTATE HELD FOR SALE | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||||||||||
REAL ESTATE HELD FOR SALE | ' | ||||||||||||||||
REAL ESTATE HELD FOR SALE | |||||||||||||||||
During the nine months ended September 30, 2014, the Company disposed of seven office properties, one industrial property and a leasehold interest in one industrial property. Additionally, as of September 30, 2014, the Company classified one office property and a portfolio of four industrial properties with an aggregate net book value of $81.4 million as held for sale. In accordance with the Company’s early adoption of ASU No. 2014-08, properties that are classified as held for sale in the ordinary course of business on or subsequent to January 1, 2014 would generally be included in continuing operations on the Company’s consolidated statements of operations. The results of operations for all properties that were sold during the nine months ended September 30, 2014 or classified as held for sale as of September 30, 2014 are included in continuing operations on the Company’s consolidated statements of operations. For more information, see Note 2, “Summary of Significant Accounting Policies — Recently Issued Accounting Standards Update.” | |||||||||||||||||
The following table summarizes certain revenue and expenses for the Company’s real estate properties that were sold or were held for sale during the three and nine months ended September 30, 2014 and 2013, which were included in continuing operations (in thousands): | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Rental income | $ | 4,690 | $ | 24,769 | $ | 52,405 | $ | 74,180 | |||||||||
Tenant reimbursements | 2,090 | 11,008 | 24,590 | 32,278 | |||||||||||||
Other operating income | 161 | 544 | 1,221 | 1,645 | |||||||||||||
Total revenues | 6,941 | 36,321 | 78,216 | 108,103 | |||||||||||||
Expenses | |||||||||||||||||
Operating, maintenance, and management | 1,446 | 6,884 | 15,626 | 19,973 | |||||||||||||
Real estate taxes and insurance | 1,322 | 6,738 | 14,636 | 19,946 | |||||||||||||
Asset management fees to affiliate | 468 | 2,351 | 5,037 | 6,952 | |||||||||||||
General and administrative expenses | (322 | ) | 12 | 61 | 10 | ||||||||||||
Depreciation and amortization | 477 | 11,836 | 13,134 | 35,476 | |||||||||||||
Interest expense | 15,965 | 6,582 | 29,961 | 19,903 | |||||||||||||
Impairment charge on real estate | — | — | 1,075 | — | |||||||||||||
Total expenses | $ | 19,356 | $ | 34,403 | $ | 79,530 | $ | 102,260 | |||||||||
During the nine months ended September 30, 2014, the Company recorded an impairment charge of $1.1 million related to a real estate property that was sold. The impairment charge represents the difference between the carrying value of the real estate and the fair value of the real estate (based on the sales price), less costs to sell. | |||||||||||||||||
The following summary presents the major components of assets and liabilities related to real estate held for sale as of September 30, 2014 and December 31, 2013 (in thousands): | |||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||
Assets related to real estate held for sale | |||||||||||||||||
Total real estate, at cost and net of impairment charge | $ | 94,052 | $ | 1,169,666 | |||||||||||||
Accumulated depreciation and amortization | (17,378 | ) | (138,934 | ) | |||||||||||||
Real estate held for sale, net | 76,674 | 1,030,732 | |||||||||||||||
Other assets | 4,835 | 77,481 | |||||||||||||||
Total assets related to real estate held for sale | $ | 81,509 | $ | 1,108,213 | |||||||||||||
Liabilities related to real estate held for sale | |||||||||||||||||
Notes payable | 56,228 | 628,780 | |||||||||||||||
Other liabilities | — | 5,040 | |||||||||||||||
Total liabilities related to real estate held for sale | $ | 56,228 | $ | 633,820 | |||||||||||||
NOTES_PAYABLE
NOTES PAYABLE | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes Payable [Abstract] | ' | ||||||||||||||||
NOTES PAYABLE | ' | ||||||||||||||||
NOTES PAYABLE | |||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s notes payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands): | |||||||||||||||||
Principal as of September 30, | Principal as of December 31, | Contractual Interest Rate as of | Effective Interest Rate as of | Payment Type | Maturity Date (2) | ||||||||||||
2014 | 2013 | September 30, 2014(1) | September 30, | ||||||||||||||
2014 (1) | |||||||||||||||||
Amended and Restated Portfolio Revolving Loan Facility (3) | $ | 92,376 | $ | 105,000 | One-month LIBOR + 1.80% (3) | 3.10% | Interest Only | 6/21/17 | |||||||||
300 N. LaSalle Building Mortgage Loan (4) | — | 348,061 | (4) | (4) | (4) | (4) | |||||||||||
Union Bank Plaza Mortgage Loan (5) | 105,000 | 105,000 | One-month LIBOR + 1.75% | 3.50% | Interest Only | 9/15/15 | |||||||||||
Emerald View at Vista Center Mortgage Loan | 19,800 | 19,800 | One-month LIBOR + 2.25% | 4.60% | Interest Only | 1/1/16 | |||||||||||
Portfolio Mortgage Loan #1 (6) | 249,526 | 341,544 | One-month LIBOR + 2.15% | 3.30% | Interest Only | 1/27/16 | |||||||||||
601 Tower Mortgage Loan (7) | — | 16,320 | (7) | (7) | (7) | (7) | |||||||||||
CityPlace Tower Mortgage Loan (8) | — | 71,000 | (8) | (8) | (8) | (8) | |||||||||||
Fountainhead Plaza Mortgage Loan | 80,000 | 80,000 | One-month LIBOR + 1.90% | 2.90% | Interest Only | 12/1/15 | |||||||||||
Portfolio Mortgage Loan #2 (9) | — | 75,628 | (9) | (9) | (9) | (9) | |||||||||||
Portfolio Mortgage Loan #3 (10) | 107,640 | 141,000 | One-month LIBOR + | 2.40% | Interest Only | 3/1/16 | |||||||||||
1.75% - 1.85% | |||||||||||||||||
Corporate Technology Centre Mortgage Loan (11) | 140,000 | 140,000 | 3.50% | 3.50% | (11) | 4/1/20 | |||||||||||
300-600 Campus Drive Revolving Loan (12) | 78,000 | 78,000 | One-month LIBOR + 2.05% (12) | 2.90% | Interest Only | 8/1/16 | |||||||||||
$ | 872,342 | $ | 1,521,353 | ||||||||||||||
_____________________ | |||||||||||||||||
(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2014. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2014 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates, if applicable), using interest rate indices as of September 30, 2014, where applicable. For further information regarding the Company’s derivative instruments, see Note 10, “Derivative Instruments.” | |||||||||||||||||
(2) Represents the initial maturity date or the maturity date as extended as of September 30, 2014; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. | |||||||||||||||||
(3) On June 4, 2014, in connection with the sale of Mountain View Corporate Center, the borrowing capacity under the Amended and Restated Portfolio Revolving Loan Facility was reduced from $145.0 million to $128.3 million. As of September 30, 2014, the Amended and Restated Portfolio Revolving Loan Facility was secured by 350 E. Plumeria Building, Pierre Laclede Center and One Main Place. As of September 30, 2014, the $92.4 million non-revolving portion had been funded, and the $35.9 million revolving portion remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. | |||||||||||||||||
(4) On July 7, 2014, in connection with the disposition of the 300 N. LaSalle Building, the Company repaid the entire $344.6 million principal balance and all other sums due under this loan, including a prepayment penalty of $13.7 million. | |||||||||||||||||
(5) On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of September 30, 2014, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement. | |||||||||||||||||
(6) As of September 30, 2014, the Portfolio Mortgage Loan #1 was secured by Horizon Tech Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center and I-81 Industrial Portfolio. On July 10, 2014, in connection with the disposition of Torrey Reserve West, the Company repaid $16.8 million of principal due under this loan and Torrey Reserve West was released as security from Portfolio Mortgage Loan #1. On July 25, 2014, in connection with the disposition of Two Westlake Park, the Company repaid $53.1 million of principal due under this loan and Two Westlake Park was released as security from Portfolio Mortgage Loan #1. | |||||||||||||||||
(7) On June 11, 2014 in connection with the disposition of 601 Tower at Carlson Center, the Company paid off the outstanding principal balance and all other sums due under this loan. | |||||||||||||||||
(8) On August 21, 2014 in connection with the disposition of CityPlace Tower, the Company paid off the outstanding principal balance and all other sums due under this loan. | |||||||||||||||||
(9) On June 9, 2014, in connection with the payoff of the Pappas Commerce First Mortgage Loan, the Company repaid the outstanding principal balance due and all other sums under Portfolio Mortgage Loan #2. | |||||||||||||||||
(10) On March 6, 2013, the Company entered into a three-year senior secured credit facility for borrowings of up to $235.0 million, of which $141.0 million was non-revolving debt and $94.0 million was revolving debt. On June 27, 2014, in connection with the sale of Metropolitan Center, the borrowing capacity under Portfolio Mortgage Loan #3 was reduced to $179.4 million, of which $107.6 million is non-revolving debt and $71.8 million is revolving debt. As of September 30, 2014, the principal balance consisted of the $107.6 million non-revolving portion. The revolving portion of $71.8 million remains available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of September 30, 2014, the Portfolio Mortgage Loan #3 was secured by the 100 & 200 Campus Drive Buildings and Willow Oaks Corporate Center. | |||||||||||||||||
(11) Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity. | |||||||||||||||||
(12) On July 10, 2013, the Company entered into a three-year senior secured credit facility for borrowings of up to $120.0 million, of which $95.0 million is non-revolving debt and $25.0 million is revolving debt. As of September 30, 2014, the principal balance consisted of $78.0 million of the non-revolving portion. The remaining non-revolving portion of $17.0 million and the revolving portion of $25.0 million remain available for future disbursements, subject to certain terms and conditions contained in the loan documents. | |||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s deferred financing costs were $3.8 million and $5.7 million, respectively, net of amortization, and are included in deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets. | |||||||||||||||||
During the three and nine months ended September 30, 2014, the Company incurred $25.0 million and $54.9 million of interest expense, respectively. During the three and nine months ended September 30, 2013, the Company incurred $19.1 million and $50.6 million of interest expense, respectively. As of September 30, 2014 and December 31, 2013, $2.3 million and $4.5 million, respectively, of interest expense were payable. Included in interest expense for the three and nine months ended September 30, 2014 were $1.1 million and $3.8 million of amortization of deferred financing costs, and $14.0 million and $14.6 million of prepayment penalties, respectively. Included in interest expense for the three and nine months ended September 30, 2013 were $0.9 million and $2.4 million of amortization of deferred financing costs, respectively. Interest expense incurred as a result of the Company’s interest rate swap agreements were $4.1 million and $9.6 million for the three and nine months ended September 30, 2014, respectively. Interest expense incurred as a result of the Company’s interest rate swap agreements were $2.7 million and $7.6 million for the three and nine months ended September 30, 2013, respectively. | |||||||||||||||||
The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of September 30, 2014 (in thousands): | |||||||||||||||||
October 1, 2014 through December 31, 2014 | $ | — | |||||||||||||||
2015 | 185,000 | ||||||||||||||||
2016 | 454,965 | ||||||||||||||||
2017 | 94,157 | ||||||||||||||||
2018 | 2,750 | ||||||||||||||||
Thereafter | 135,470 | ||||||||||||||||
$ | 872,342 | ||||||||||||||||
Certain of the Company’s notes payable contain financial debt covenants. As of September 30, 2014, the Company was in compliance with these debt covenants. |
OTHER_COMPREHENSIVE_INCOME_LOS
OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Equity [Abstract] | ' | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ' | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
The following summarizes the Company’s other comprehensive income (loss) for the nine months ended September 30, 2014 (in thousands): | ||||||||||||
Derivative Instruments | Marketable Securities | Total | ||||||||||
Accumulated other comprehensive loss - December 31, 2013 | $ | (10,313 | ) | $ | — | $ | (10,313 | ) | ||||
Unrealized gains (losses) | (1,923 | ) | (313 | ) | (2,236 | ) | ||||||
Reclassification adjustment realized in net income (effective portion) | 5,818 | — | 5,818 | |||||||||
Reclassification of unrealized losses due to hedge ineffectiveness | 3,207 | — | 3,207 | |||||||||
Reclassifications of realized losses related to swap terminations | 521 | — | 521 | |||||||||
Reclassifications of realized losses related to marketable securities | — | 313 | 313 | |||||||||
Accumulated other comprehensive loss - September 30, 2014 | $ | (2,690 | ) | $ | — | $ | (2,690 | ) | ||||
DERIVATIVE_INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | ||||||||||||||||
DERIVATIVE INSTRUMENTS | |||||||||||||||||
The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes. | |||||||||||||||||
The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero. | |||||||||||||||||
The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of September 30, 2014 and December 31, 2013. The notional value is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands): | |||||||||||||||||
Derivative Instruments | September 30, 2014 | December 31, 2013 | Reference Rate as of September 30, 2014 | Weighted-Average | Weighted-Average Remaining Term | ||||||||||||
Number of Instruments | Notional Amount | Number of Instruments | Notional Amount | Fix Pay Rate | in Years | ||||||||||||
Interest Rate Swaps (1) | 11 | $613,513 | 16 | $842,150 | One-month LIBOR/ | 1.35% | 1.6 | ||||||||||
Fixed at 0.50% - 2.39% | |||||||||||||||||
_____________________ | |||||||||||||||||
(1) During the nine months ended September 30, 2014, the Company terminated two interest rate swap agreements and paid an aggregate breakage fee of $0.2 million. In addition, the Company dedesignated 11 interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales. The Company dedesignated these hedged instruments due to certain hedged forecasted transactions no longer being probable beyond the projected asset sale date. As of September 30, 2014, none of the Company’s interest rate swaps were designated as cash flow hedges. | |||||||||||||||||
The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2014 and December 31, 2013 (dollars in thousands): | |||||||||||||||||
Derivative Instruments | Balance Sheet Location | September 30, 2014 | 31-Dec-13 | ||||||||||||||
Number of | Fair Value | Number of | Fair Value | ||||||||||||||
Instruments | Instruments | ||||||||||||||||
Interest Rate Swaps | Deferred financing costs, prepaid expenses and other assets, at fair value | 2 | $ | 223 | 2 | $ | 225 | ||||||||||
Interest Rate Swaps | Other liabilities, at fair value | 9 | $ | (5,973 | ) | 14 | $ | (10,260 | ) | ||||||||
The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income (loss) and as other comprehensive income in the accompanying consolidated statements of stockholders’ equity. Amounts in other comprehensive income (loss) will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow. The change in fair value of the ineffective portion is recognized directly in earnings. With respect to swap agreements that were terminated for which it remains probable that the original hedged forecasted transactions (i.e., LIBOR-based debt service payments) will occur, the loss related to the termination of these swap agreements is included in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction. The change in fair value of a derivative instrument that is not designated as a cash flow hedge is recorded as interest expense in the accompanying consolidated statements of operations. The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands): | |||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||
Amount of loss recognized on interest rate swaps (effective portion) | $ | 1,694 | $ | 2,484 | $ | 5,818 | $ | 6,985 | |||||||||
Unrealized losses due to hedge ineffectiveness | 2,385 | — | 3,207 | — | |||||||||||||
Reclassification of realized losses related to swap terminations | — | 256 | 521 | 613 | |||||||||||||
4,079 | 2,740 | 9,546 | 7,598 | ||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||
Unrealized (gain) loss on interest rate swaps | (5 | ) | — | 35 | — | ||||||||||||
(5 | ) | — | 35 | — | |||||||||||||
Increase in interest expense as a result of derivatives | $ | 4,074 | $ | 2,740 | $ | 9,581 | $ | 7,598 | |||||||||
FAIR_VALUE_DISCLOSURES
FAIR VALUE DISCLOSURES | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||
FAIR VALUE DISCLOSURES | ' | ||||||||||||||||||||||||
FAIR VALUE DISCLOSURES | |||||||||||||||||||||||||
Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: | |||||||||||||||||||||||||
• | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; | ||||||||||||||||||||||||
• | Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable in active markets; and | ||||||||||||||||||||||||
• | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. | ||||||||||||||||||||||||
The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value: | |||||||||||||||||||||||||
Cash and cash equivalents, rent and other receivables, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items. | |||||||||||||||||||||||||
Real estate loans receivable: The Company’s real estate loans receivable are presented in the accompanying consolidated balance sheets at their amortized cost net of recorded loan loss reserves and not at fair value. The fair values of real estate loans receivable were estimated using an internal valuation model that considered the expected cash flows for the loans, underlying collateral values (for collateral-dependent loans) and estimated yield requirements of institutional investors for loans with similar characteristics, including remaining loan term, loan-to-value, type of collateral and other credit enhancements. The Company classifies these inputs as Level 3 inputs. | |||||||||||||||||||||||||
Derivative instruments: The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk. | |||||||||||||||||||||||||
Notes payable: The fair value of the Company’s notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. | |||||||||||||||||||||||||
The following were the face values, carrying amounts and fair values of the Company’s real estate loans receivable and notes payable as of September 30, 2014 and December 31, 2013, which carrying amounts do not approximate the fair values (in thousands): | |||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Face Value | Carrying | Fair Value | Face Value | Carrying | Fair Value | ||||||||||||||||||||
Amount | Amount | ||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||
Real estate loans receivable | $ | 73,060 | $ | 73,095 | $ | 73,552 | $ | 184,900 | $ | 184,828 | $ | 190,485 | |||||||||||||
Financial liabilities: | |||||||||||||||||||||||||
Notes payable | $ | 872,342 | $ | 872,342 | $ | 873,250 | $ | 1,521,353 | $ | 1,521,353 | $ | 1,526,075 | |||||||||||||
Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Despite increased capital market and credit market activity, transaction volume for certain financial instruments remains relatively low. This has made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different. | |||||||||||||||||||||||||
During the nine months ended September 30, 2014, the Company measured the following assets and liabilities at fair value (in thousands): | |||||||||||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||||||||||
Total | Quoted Prices in | Significant Other | Significant | ||||||||||||||||||||||
Active Markets | Observable | Unobservable | |||||||||||||||||||||||
for Identical Assets | Inputs (Level 2) | Inputs (Level 3) | |||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||
Recurring Basis: | |||||||||||||||||||||||||
Asset derivatives | 223 | — | 223 | — | |||||||||||||||||||||
Liability derivatives | (5,973 | ) | — | (5,973 | ) | — | |||||||||||||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Related Party Transactions [Abstract] | ' | ||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | ' | ||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | |||||||||||||||||||||||||
The Company has entered into the Advisory Agreement with the Advisor and the Dealer Manager Agreement with the Dealer Manager. These agreements entitled the Advisor and/or the Dealer Manager to specified fees upon the provision of certain services with regard to the Offering and reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manger on behalf of the Company. These agreements also entitle the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate and real estate-related investments, the management of those investments, among other services, and the disposition of investments, as well as reimbursement of certain costs incurred by the Advisor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the Depository Trust & Clearing Corporation Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc. | |||||||||||||||||||||||||
On January 6, 2014, the Company, together with KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. | |||||||||||||||||||||||||
During the nine months ended September 30, 2014 and 2013, no other business transactions occurred between the Company and KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc. | |||||||||||||||||||||||||
Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2014 and 2013, respectively, and any related amounts payable as of September 30, 2014 and December 31, 2013 (in thousands): | |||||||||||||||||||||||||
Incurred | Incurred | Payable as of | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | September 30, | December 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Expensed | |||||||||||||||||||||||||
Asset management fees | $ | 3,829 | $ | 6,079 | $ | 15,164 | $ | 17,563 | $ | — | $ | — | |||||||||||||
Reimbursement of operating expenses (1) | 39 | 44 | 112 | 102 | — | — | |||||||||||||||||||
Acquisition fees | — | — | — | 1,797 | — | — | |||||||||||||||||||
Disposition fees (2) | 11,591 | — | 14,154 | — | — | — | |||||||||||||||||||
$ | 15,459 | $ | 6,123 | $ | 29,430 | $ | 19,462 | $ | — | $ | — | ||||||||||||||
_____________________ | |||||||||||||||||||||||||
(1) The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $39,000 and $44,000 for the three months ended September 30, 2014 and 2013, respectively, and $112,000 and $102,000 for the nine months ended September 30, 2014 and 2013, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the three and nine months ended September 30, 2014 and 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. | |||||||||||||||||||||||||
(2) Disposition fees with respect to real estate sold are included in the gain on sales of real estate in the accompanying consolidated statements of operations. | |||||||||||||||||||||||||
On July 29, 2010, the Company, through an indirect wholly owned subsidiary, KBSII 300 North LaSalle, LLC (the “Owner”), purchased the 300 N. LaSalle Building. On May 16, 2014, after a competitive bidding process overseen by HFF, Inc., an unaffiliated independent third party, the Owner entered into a purchase and sale agreement and escrow instructions for the sale of the 300 N. LaSalle Building to an affiliate of the Irvine Company, 300 North LaSalle LLC (the “Purchaser”). Donald Bren is the chairman and owner of the Purchaser and the Irvine Company and the brother of Peter Bren (one of the Company’s executive officers and sponsors). On July 7, 2014, the Company completed the sale of the 300 N. LaSalle Building to the Purchaser for $850.0 million. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
SEGMENT INFORMATION | ' | ||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||
The Company presently operates in two reportable business segments based on its investment types: real estate and real estate-related. Under the real estate segment, the Company has invested in office, office/flex and industrial properties. Under the real estate-related segment, the Company has invested in or originated mortgage loans and an A-Note. All revenues earned from the Company’s two reporting segments were from external customers and there were no intersegment sales or transfers. The Company does not allocate corporate-level accounts to its reporting segments. Corporate-level accounts include corporate general and administrative expenses, non-operating interest income, non-operating interest expense and other corporate-level expenses. The accounting policies of the segments are consistent with those described in Note 2, “Summary of Significant Accounting Policies.” | |||||||||||||||||
The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI for its real estate segment as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees and provision for bad debt) less interest expense. The Company defines NOI for its real estate-related segment as interest income less loan servicing costs, asset management fees and interest expense. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate and real estate-related investments and to make decisions about resource allocations. The Company believes that net income is the GAAP measure that is most directly comparable to NOI; however, NOI should not be considered as an alternative to net income as the primary indicator of operating performance, as it excludes the items described above. Additionally, NOI as defined above may not be comparable to other REITs or companies as their definitions of NOI may differ from the Company’s definition. | |||||||||||||||||
The following tables summarize total revenues and NOI for each reportable segment for the three and nine months ended September 30, 2014 and 2013 and total assets and total liabilities for each reportable segment as of September 30, 2014 and December 31, 2013 (in thousands): | |||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues: | |||||||||||||||||
Real estate segment (1) | $ | 53,334 | $ | 83,660 | $ | 218,465 | $ | 247,087 | |||||||||
Real estate-related segment | 1,396 | 8,586 | 11,346 | 25,258 | |||||||||||||
Total segment revenues | 54,730 | 92,246 | 229,811 | 272,345 | |||||||||||||
Corporate-level | 864 | — | 953 | — | |||||||||||||
Total revenues | $ | 55,594 | $ | 92,246 | $ | 230,764 | $ | 272,345 | |||||||||
Interest Expense: | |||||||||||||||||
Real estate segment (1) | $ | 25,040 | $ | 17,878 | $ | 53,895 | $ | 46,718 | |||||||||
Real estate-related segment | — | 1,152 | 993 | 3,424 | |||||||||||||
Total segment interest expense | 25,040 | 19,030 | 54,888 | 50,142 | |||||||||||||
Corporate-level | — | 93 | — | 472 | |||||||||||||
Total interest expense | $ | 25,040 | $ | 19,123 | $ | 54,888 | $ | 50,614 | |||||||||
NOI: | |||||||||||||||||
Real estate segment (1) | $ | 5,277 | $ | 30,900 | $ | 71,417 | $ | 98,608 | |||||||||
Real estate-related segment | 1,258 | 6,870 | 9,702 | 20,170 | |||||||||||||
Total segment NOI | 6,535 | 37,770 | 81,119 | 118,778 | |||||||||||||
Corporate-level | 864 | — | 953 | — | |||||||||||||
Total NOI | $ | 7,399 | $ | 37,770 | $ | 82,072 | $ | 118,778 | |||||||||
As of September 30, | As of December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Assets: | |||||||||||||||||
Real estate segment | $ | 1,473,070 | $ | 1,514,167 | |||||||||||||
Real estate-related segment | 73,599 | 229,457 | |||||||||||||||
Total segment assets | 1,546,669 | 1,743,624 | |||||||||||||||
Real estate held for sale | 81,509 | 1,108,213 | |||||||||||||||
Corporate-level (2) | 75,573 | 102,463 | |||||||||||||||
Total assets | $ | 1,703,751 | $ | 2,954,300 | |||||||||||||
Liabilities: | |||||||||||||||||
Real estate segment | $ | 879,008 | $ | 893,237 | |||||||||||||
Real estate-related segment | — | 75,820 | |||||||||||||||
Total segment liabilities | 879,008 | 969,057 | |||||||||||||||
Real estate held for sale | 56,228 | 633,820 | |||||||||||||||
Corporate-level (3) | 6,956 | 11,379 | |||||||||||||||
Total liabilities | $ | 942,192 | $ | 1,614,256 | |||||||||||||
_____________________ | |||||||||||||||||
(1) Amounts include properties sold and properties held for sale. See Note 7, “Real Estate Held for Sale” for more information. | |||||||||||||||||
(2) Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $75.1 million and $102.2 million as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||
(3) As of September 30, 2014 and December 31, 2013, corporate-level liabilities consisted primarily of distributions payable. | |||||||||||||||||
The following table reconciles the Company’s net income to its NOI for the three and nine months ended September 30, 2014 and 2013 (in thousands): | |||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income | $ | 308,131 | $ | 5,590 | $ | 378,276 | $ | 21,454 | |||||||||
Gain on sales of real estate, net | (322,811 | ) | — | (369,458 | ) | — | |||||||||||
Loss on sale of marketable securities | 331 | — | 331 | — | |||||||||||||
Other interest income | (133 | ) | (6 | ) | (188 | ) | (21 | ) | |||||||||
Real estate acquisition fees to affiliates | — | — | — | 1,797 | |||||||||||||
Real estate acquisition fees and expenses | — | — | — | 623 | |||||||||||||
General and administrative expenses | 1,106 | 1,347 | 3,909 | 3,684 | |||||||||||||
Depreciation and amortization | 16,835 | 30,746 | 64,187 | 90,769 | |||||||||||||
Impairment charge on real estate | 3,940 | — | 5,015 | — | |||||||||||||
Corporate-level interest expense | — | 93 | — | 472 | |||||||||||||
NOI | $ | 7,399 | $ | 37,770 | $ | 82,072 | $ | 118,778 | |||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | |
Economic Dependency | |
The Company is dependent on the Advisor for certain services that are essential to the Company, including: the disposition of real estate and real estate-related investments; management of the daily operations of the Company’s real estate and real estate-related investment portfolio; and other general and administrative responsibilities. In the event the Advisor is unable to provide any of these services, the Company will be required to obtain such services from other sources. | |
Environmental | |
As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Compliance with existing environmental laws is not expected to have a material adverse effect on the Company’s financial condition and results of operations as of September 30, 2014. | |
Legal Matters | |
From time to time, the Company is party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | |
The Company evaluates subsequent events up until the date the consolidated financial statements are issued. | |
Distributions Paid | |
On October 1, 2014, the Company paid distributions of $6.3 million, which related to distributions declared for September 2014 in the amount of $0.03277397 per share of common stock to stockholders of record as of the close of business on September 26, 2014. On November 3, 2014, the Company paid distributions of $6.5 million, which related to distributions declared for October 2014 in the amount of $0.03386644 per share of common stock to stockholders of record as of the close of business on October 29, 2014. | |
Distributions Declared | |
On November 10, 2014, the Company’s board of directors declared a November 2014 distribution in the amount of $0.03277397 per share of common stock to stockholders of record as of the close of business on November 26, 2014, which the Company expects to pay on or about December 1, 2014. | |
Purchase and Sale Agreements for Real Estate Properties Subsequent to September 30, 2014 | |
Crescent VIII | |
On May 26, 2010, the Company, through an indirect wholly owned subsidiary, purchased a four-story office building containing 82,265 rentable square feet located on approximately 4.2 acres of land in Greenwood Village, Colorado (“Crescent VIII”). On October 30, 2014, the Company entered into a purchase and sale agreement and escrow instructions for the sale of Crescent VIII to a purchaser unaffiliated with the Company or the Advisor. Pursuant to the purchase and sale agreement, the sale price for Crescent VIII is $17.25 million, subject to certain concessions and credits that will be finalized at closing. There can be no assurance that the Company will complete the sale of Crescent VIII. The purchaser would be obligated to purchase Crescent VIII only after satisfaction of agreed upon closing conditions. In some circumstances, if the purchaser fails to complete the acquisition, it may forfeit up to $0.5 million of earnest money. | |
I-81 Industrial Portfolio | |
On February 16, 2011, the Company, through an indirect wholly owned subsidiary, purchased a portfolio of four industrial properties containing an aggregate of 1,644,480 rentable square feet and encompassing an aggregate of 133.4 acres of land located in Pennsylvania (“I-81 Industrial Portfolio”). On November 3, 2014, the Company entered into a purchase and sale agreement and escrow instructions for the sale of I-81 Industrial Portfolio to a purchaser unaffiliated with the Company or the Advisor. Pursuant to the purchase and sale agreement, the aggregate sales price for I-81 Industrial Portfolio is $105.7 million, subject to certain concessions and credits that will be finalized at closing. There can be no assurance that the Company will complete the sale of I-81 Industrial Portfolio. The purchaser would be obligated to purchase I-81 Industrial Portfolio only after satisfaction of agreed upon closing conditions. In some circumstances, if the purchaser fails to complete the acquisition, it may forfeit up to $2.0 million of earnest money. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |
Sep. 30, 2014 | ||
Accounting Policies [Abstract] | ' | |
Principles of Consolidation and Basis of Presentation | ' | |
The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. | ||
The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. | ||
Use of Estimates | ' | |
The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. | ||
Reclassifications | ' | |
Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the nine months ended September 30, 2014, the Company sold seven office properties, one industrial property and a leasehold interest in one industrial property and classified one office property and a portfolio of four industrial properties as held for sale. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. Additionally, as of September 30, 2014, the Company reclassified two properties that were previously classified as held for sale to held for investment. | ||
Change in a Plan to Sell | ' | |
When real estate is initially considered “held for sale” it is measured at the lower of its depreciated book value or estimated fair value less estimated costs to sell. Changes in the market may compel the Company to decide to reclassify a property that was designated as held for sale to held for investment. A property that is reclassified from held for sale to held for investment is measured and recorded at the lower of (i) its carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used, or (ii) its fair value at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of the property as a result of the reclassification is included in income from continuing operations as an impairment charge on real estate held for investment. | ||
Marketable Securities | ' | |
The Company classifies its investments in marketable securities as available-for-sale, since the Company may sell them prior to their maturity but does not hold them principally for the purpose of making frequent investments and sales with the objective of generating profits on short-term differences in price. These investments are carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss). Estimated fair values are generally based on quoted market prices, when available, or on estimates provided by independent pricing sources or dealers who make markets in such securities. In certain circumstances, such as when the market for the securities becomes inactive, the Company may determine it is appropriate to perform an internal valuation of the securities. Upon the sale of a security, the previously recognized unrealized gain (loss) is reversed out of accumulated other comprehensive income (loss) and the actual realized gain (loss) is recognized in earnings. | ||
On a quarterly basis, the Company evaluates its marketable securities for other-than-temporary impairment. The Company reviews the projected future cash flows from these securities for changes in assumptions due to prepayments, credit loss experience and other factors. If, based on the Company’s quarterly estimate of cash flows, there has been an adverse change in the estimated cash flows from the cash flows previously estimated, the present value of the revised cash flows is less than the present value previously estimated, and the fair value of the securities is less than their amortized cost basis, an other-than-temporary impairment is deemed to have occurred. | ||
The Company recognizes interest income on marketable securities that are beneficial interests in securitized financial assets and are rated “AA” and above on an accrual basis according to the contractual terms of the securities. Discounts or premiums are amortized to interest income over the life of the investment using the interest method. | ||
The Company recognizes interest income on marketable securities that are beneficial interests in securitized financial assets that are rated below “AA” using the effective yield method, which requires the Company to periodically project estimated cash flows related to these securities and recognize interest income at an interest rate equivalent to the estimated yield on the security, as calculated using the security’s estimated cash flows and amortized cost basis, or reference amount. Changes in the estimated cash flows are recognized through an adjustment to the yield on the security on a prospective basis. Projecting cash flows for these types of securities requires significant judgment, which may have a significant impact on the timing of revenue recognized on these investments. | ||
The Company is required to distinguish between other-than-temporary impairments related to credit and other-than-temporary impairments related to other factors (e.g., market fluctuations) on its debt securities that it does not intend to sell and where it is not likely that the Company will be required to sell the security prior to the anticipated recovery of its amortized cost basis. The Company calculates the credit component of the other-than-temporary impairment as the difference between the amortized cost basis of the security and the present value of its estimated cash flows discounted at the yield used to recognize interest income. The credit component will be charged to earnings and the component related to other factors is recorded to other comprehensive income (loss). | ||
Redeemable Common Stock | ' | |
On May 15, 2014, the Company’s board of directors approved the amendment and restatement of the Company’s share redemption program (the “Amended Share Redemption Program”) to provide only for redemptions sought upon a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the Amended Share Redemption Program, and, together with redemptions sought in connection with a stockholder’s death, “special redemptions”). During each calendar year, such special redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to the Company’s stockholders. The Company may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the Securities and Exchange Commission or (b) in a separate mailing to the stockholders. | ||
Commencing with the June 2014 redemption date, the dollar amount limitation for special redemptions for the remainder of calendar year 2014 is $10.0 million in the aggregate, as may be reviewed and adjusted from time to time by the board of directors. Based on historical redemption data, the board of directors believes that the $10.0 million redemption limitation for the remainder of calendar year 2014 will be sufficient for special redemptions. The Amended Share Redemption Program became effective on June 18, 2014. As of September 30, 2014, the Company had $8.1 million available for special redemptions for the remainder of 2014. There were no other changes to the terms of special redemptions, and special redemptions will continue to be made at a price per share equal to the most recent estimated value per share of the Company’s common stock as of the applicable redemption date. The Company currently does not expect to make ordinary redemptions in the future. | ||
Per Share Data | ' | |
Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the nine months ended September 30, 2014 and 2013, respectively. | ||
Distributions declared per common share were $4.644 and $4.966 for the three and nine months ended September 30, 2014, respectively. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions during the three and nine months ended September 30, 2014. These distributions declared consisted of the following: | ||
• | The Company’s board of directors declared distributions per common share based on daily record dates for each day during the period from January 1, 2014 through August 31, 2014. Each day during the period was a record date for distributions and distributions were calculated at a rate of $0.00178082 per share per day. | |
• | The Company’s board of directors declared special distributions in the amount of $3.75, $0.30 and $0.45 per share on the outstanding shares of the Company’s common stock on July 8, 2014, August 5, 2014 and August 29, 2014, respectively, for an aggregate amount of $4.50 per share of common stock, to stockholders of record as of the close of business on September 15, 2014. | |
• | On August 29, 2014, the Company’s board of directors declared a September 2014 distribution in the amount of $0.03277397 per share of common stock to stockholders of record as of the close of business on September 26, 2014. | |
Distributions declared per common share were $0.164 and $0.540 for the three and nine months ended September 30, 2013, respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three and nine months ended September 30, 2013. For each day that was a record date for distributions during the three and nine months ended September 30, 2013, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2013 through September 30, 2013 was a record date for distributions. Additionally, the Company’s board of directors declared a special distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on February 4, 2013. | ||
Segments | ' | |
The Company’s segments are based on the Company’s method of internal reporting, which classifies its operations by investment type: real estate and real estate-related. For financial data by segment, see Note 13, “Segment Information.” | ||
Recently Issued Accounting Standards Update | ' | |
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU No. 2014-08”). ASU No. 2014-08 limits discontinued operations reporting to disposals of components of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: a) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; b) the component of an entity or group of components of an entity is disposed of by sale; and c) the component of an entity or group of components of an entity is disposed of other than by sale. ASU No. 2014-08 also requires additional disclosures about discontinued operations. ASU No. 2014-08 is effective for reporting periods beginning after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company early adopted ASU No. 2014-08 for the reporting period beginning January 1, 2014. As a result of the adoption of ASU No. 2014-08, results of operations for properties that are classified as held for sale in the ordinary course of business on or subsequent to January 1, 2014 would generally be included in continuing operations on the Company’s consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above. Additionally, any gain or loss on sale of real estate that does not meet the criteria for classification as a discontinued operation would be included in income from continuing operations on the consolidated statements of operations. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company does not expect the adoption of ASU No. 2014-09 to have a material impact on its financial statements. | ||
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU No. 2014-15”). The amendments in ASU No. 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of ASU 2014-15 to have a significant impact on its financial statements. |
REAL_ESTATE_HELD_FOR_INVESTMEN1
REAL ESTATE HELD FOR INVESTMENT (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Real Estate [Abstract] | ' | |||||||||||||||||||||||
Schedule of Real Estate Investments | ' | |||||||||||||||||||||||
The following table summarizes the Company’s real estate portfolio held for investment as of September 30, 2014 (in thousands): | ||||||||||||||||||||||||
Property | Date Acquired | City | State | Property Type | Total | Accumulated Depreciation and Amortization | Total Real Estate, Net | |||||||||||||||||
Real Estate | ||||||||||||||||||||||||
at Cost | ||||||||||||||||||||||||
100 & 200 Campus Drive Buildings | 9/9/08 | Florham Park | NJ | Office | $ | 197,118 | $ | (39,103 | ) | $ | 158,015 | |||||||||||||
300-600 Campus Drive Buildings | 10/10/08 | Florham Park | NJ | Office | 196,349 | (41,970 | ) | 154,379 | ||||||||||||||||
350 E. Plumeria Building | 12/18/08 | San Jose | CA | Office/Flex | 36,116 | (6,500 | ) | 29,616 | ||||||||||||||||
Willow Oaks Corporate Center | 8/26/09 | Fairfax | VA | Office | 102,203 | (20,243 | ) | 81,960 | ||||||||||||||||
Pierre Laclede Center | 2/4/10 | Clayton | MO | Office | 82,318 | (15,558 | ) | 66,760 | ||||||||||||||||
One Main Place | 2/5/10 | Portland | OR | Office | 50,888 | (9,074 | ) | 41,814 | ||||||||||||||||
Horizon Tech Center | 6/17/10 | San Diego | CA | Office | 28,136 | — | 28,136 | |||||||||||||||||
Union Bank Plaza | 9/15/10 | Los Angeles | CA | Office | 216,343 | (30,307 | ) | 186,036 | ||||||||||||||||
Emerald View at Vista Center | 12/9/10 | West Palm Beach | FL | Office | 31,639 | (5,167 | ) | 26,472 | ||||||||||||||||
Granite Tower | 12/16/10 | Denver | CO | Office | 153,769 | (23,207 | ) | 130,562 | ||||||||||||||||
National City Tower | 12/17/10 | Louisville | KY | Office | 115,342 | (22,059 | ) | 93,283 | ||||||||||||||||
Gateway Corporate Center | 1/26/11 | Sacramento | CA | Office | 44,959 | (7,273 | ) | 37,686 | ||||||||||||||||
Fountainhead Plaza | 9/13/11 | Tempe | AZ | Office | 119,384 | — | 119,384 | |||||||||||||||||
Corporate Technology Centre | 3/28/13 | San Jose | CA | Office | 230,942 | (12,661 | ) | 218,281 | ||||||||||||||||
$ | 1,605,506 | $ | (233,122 | ) | $ | 1,372,384 | ||||||||||||||||||
Schedules of Concentration of Risk, by Risk Factor | ' | |||||||||||||||||||||||
As of September 30, 2014, the Company had over 300 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows: | ||||||||||||||||||||||||
Industry | Number of Tenants | Annualized | Percentage of Annualized Base Rent | |||||||||||||||||||||
Base Rent (1) | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Finance | 41 | $ | 33,380 | 21.2 | % | |||||||||||||||||||
Computer System Design & Programming | 13 | 27,897 | 17.7 | % | ||||||||||||||||||||
Legal Services | 51 | 19,205 | 12.2 | % | ||||||||||||||||||||
$ | 80,482 | 51.1 | % | |||||||||||||||||||||
_____________________ | ||||||||||||||||||||||||
(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. | ||||||||||||||||||||||||
As of September 30, 2014, the Company had a concentration of credit risk related to the following tenant lease that represented more than 10% of the Company’s annualized base rent: | ||||||||||||||||||||||||
Annualized Base Rent Statistics | ||||||||||||||||||||||||
Tenant | Property | Tenant Industry | Square | % of Portfolio (Net Rentable Sq. Ft.) | Annualized | % of Portfolio Annualized Base Rent | Annualized Base Rent per Sq. Ft. | Lease Expiration (2) | ||||||||||||||||
Feet | Base Rent | |||||||||||||||||||||||
(in thousands) (1) | ||||||||||||||||||||||||
Union Bank | Union Bank Plaza | Finance | 383,785 | 6.10% | $ | 15,857 | 10.00% | $ | 41.32 | 09/30/2016 / | ||||||||||||||
1/31/22 | ||||||||||||||||||||||||
_____________________ | ||||||||||||||||||||||||
(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. | ||||||||||||||||||||||||
(2) Represents the expiration date of the lease as of September 30, 2014 and does not take into account any tenant renewal or termination options. | ||||||||||||||||||||||||
As of September 30, 2014, the following properties represented more than 10% of the Company’s total assets: | ||||||||||||||||||||||||
Property | Location | Rentable | Total | Percentage | Annualized Base Rent | Average Annualized Base Rent per Sq. Ft. | Occupancy | |||||||||||||||||
Square | Real Estate, Net | of Total | (in thousands) (1) | |||||||||||||||||||||
Feet | (in thousands) | Assets | ||||||||||||||||||||||
Corporate Technology Centre | San Jose, CA | 610,083 | $ | 218,281 | 12.8 | % | $ | 18,537 | $ | 30.38 | 100 | % | ||||||||||||
Union Bank Plaza | Los Angeles, CA | 627,334 | 186,036 | 10.9 | % | 21,488 | 38.54 | 89 | % | |||||||||||||||
_____________________ | ||||||||||||||||||||||||
(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. | ||||||||||||||||||||||||
Schedule of Future Minimum Rental Income for Company's Properties | ' | |||||||||||||||||||||||
As of September 30, 2014, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands): | ||||||||||||||||||||||||
October 1, 2014 through December 31, 2014 | $ | 38,010 | ||||||||||||||||||||||
2015 | 148,671 | |||||||||||||||||||||||
2016 | 140,248 | |||||||||||||||||||||||
2017 | 126,135 | |||||||||||||||||||||||
2018 | 104,372 | |||||||||||||||||||||||
Thereafter | 333,676 | |||||||||||||||||||||||
$ | 891,112 | |||||||||||||||||||||||
TENANT_ORIGINATION_AND_ABSORPT1
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | ' | ||||||||||||||||||||||||
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities | ' | ||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands): | |||||||||||||||||||||||||
Tenant Origination and | Above-Market | Below-Market | |||||||||||||||||||||||
Absorption Costs | Lease Assets | Lease Liabilities | |||||||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Cost | $ | 147,027 | $ | 167,904 | $ | 20,543 | $ | 25,527 | $ | (37,367 | ) | $ | (39,487 | ) | |||||||||||
Accumulated Amortization | (70,681 | ) | (74,469 | ) | (8,185 | ) | (9,363 | ) | 23,614 | 21,544 | |||||||||||||||
Net Amount | $ | 76,346 | $ | 93,435 | $ | 12,358 | $ | 16,164 | $ | (13,753 | ) | $ | (17,943 | ) | |||||||||||
Amortization of Tenant Origination and Absorption Costs, Above-Market Leases and Below-Market Lease Liabilities | ' | ||||||||||||||||||||||||
Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands): | |||||||||||||||||||||||||
Tenant Origination and | Above-Market | Below-Market | |||||||||||||||||||||||
Absorption Costs | Lease Assets | Lease Liabilities | |||||||||||||||||||||||
For the Three Months Ended September 30, | For the Three Months Ended September 30, | For the Three Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Amortization | $ | (5,080 | ) | $ | (10,343 | ) | $ | (1,684 | ) | $ | (2,451 | ) | $ | 1,349 | $ | 1,828 | |||||||||
Tenant Origination and | Above-Market | Below-Market | |||||||||||||||||||||||
Absorption Costs | Lease Assets | Lease Liabilities | |||||||||||||||||||||||
For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Amortization | $ | (20,310 | ) | $ | (31,216 | ) | $ | (6,761 | ) | $ | (7,201 | ) | $ | 4,894 | $ | 5,586 | |||||||||
REAL_ESTATE_LOANS_RECEIVABLE_T
REAL ESTATE LOANS RECEIVABLE (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Receivables [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Real Estate Loans Receivable | ' | ||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands): | |||||||||||||||||||||||||
Loan Name | Date Acquired/ Originated | Property Type | Loan Type | Outstanding Principal Balance as of September 30, | Book Value | Book Value | Contractual Interest Rate (3) | Annualized Effective Interest Rate (3) | Maturity Date (4) | ||||||||||||||||
Location of Related Property or Collateral | 2014 (1) | as of | as of | ||||||||||||||||||||||
September 30, | December 31, | ||||||||||||||||||||||||
2014 (2) | 2013 (2) | ||||||||||||||||||||||||
Sheraton Charlotte Airport Hotel First Mortgage | |||||||||||||||||||||||||
Charlotte, North Carolina | 7/11/11 | Hotel | Mortgage | $ | 14,373 | $ | 14,386 | $ | 14,477 | 7.50% | 7.60% | 8/1/18 | |||||||||||||
Summit I & II First Mortgage | |||||||||||||||||||||||||
Reston, Virginia | 1/17/12 | Office | Mortgage | 58,687 | 58,709 | 58,781 | 7.50% | 7.60% | 2/1/17 | ||||||||||||||||
Tuscan Inn First Mortgage Origination (5) | |||||||||||||||||||||||||
San Francisco, California | 1/21/10 | Hotel | Mortgage | — | — | 20,077 | (5) | (5) | (5) | ||||||||||||||||
Chase Tower First Mortgage Origination (6) | |||||||||||||||||||||||||
Austin, Texas | 1/25/10 | Office | Mortgage | — | — | 58,820 | (6) | (6) | (6) | ||||||||||||||||
Pappas Commerce First Mortgage Origination (7) | |||||||||||||||||||||||||
Boston, Massachusetts | 4/5/10 | Industrial | Mortgage | — | — | 32,673 | (7) | (7) | (7) | ||||||||||||||||
$ | 73,060 | $ | 73,095 | $ | 184,828 | ||||||||||||||||||||
_____________________ | |||||||||||||||||||||||||
(1) Outstanding principal balance as of September 30, 2014 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns. | |||||||||||||||||||||||||
(2) Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. | |||||||||||||||||||||||||
(3) Contractual interest rate is the stated interest rate on the face of the loan. Annualized effective interest rate is calculated as the actual interest income recognized in 2014, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of September 30, 2014. | |||||||||||||||||||||||||
(4) Maturity dates are as of September 30, 2014; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown. | |||||||||||||||||||||||||
(5) On February 7, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Tuscan Inn First Mortgage Origination, pursuant to which the borrower of the Tuscan Inn First Mortgage Origination paid off the entire principal balance outstanding of $20.2 million and accrued interest. | |||||||||||||||||||||||||
(6) On February 14, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Chase Tower First Mortgage Origination, pursuant to which the borrower of the Chase Tower Mortgage Origination paid off the entire principal balance outstanding $58.9 million and accrued interest. Additionally, the borrower paid a yield maintenance premium of $4.9 million in accordance with the early payoff agreement, which was recorded in interest income from real estate loans receivable. | |||||||||||||||||||||||||
(7) On June 9, 2014, the borrower under the Pappas Commerce First Mortgage Origination paid off the entire principal balance outstanding of $32.7 million plus accrued interest. The Pappas Commerce First Mortgage had an original maturity date of July 1, 2014. | |||||||||||||||||||||||||
Schedule of Activity Related to Real Estate Loans Receivable | ' | ||||||||||||||||||||||||
The following summarizes the activity related to real estate loans receivable for the nine months ended September 30, 2014 (in thousands): | |||||||||||||||||||||||||
Real estate loans receivable - December 31, 2013 | $ | 184,828 | |||||||||||||||||||||||
Principal repayments received on real estate loans receivable | (152 | ) | |||||||||||||||||||||||
Payoff of real estate loans receivable | (111,688 | ) | |||||||||||||||||||||||
Amortization of closing costs and origination fees on real estate loans receivable | 107 | ||||||||||||||||||||||||
Real estate loans receivable - September 30, 2014 | $ | 73,095 | |||||||||||||||||||||||
Schedule of Interest Income from Real Estate Loans Receivable | ' | ||||||||||||||||||||||||
For the three and nine months ended September 30, 2014 and 2013, interest income from real estate loans receivable consisted of the following (in thousands): | |||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||
Contractual interest income | $ | 1,401 | $ | 7,313 | $ | 6,322 | $ | 21,597 | |||||||||||||||||
Prepayment fee received on real estate loan receivable | — | — | 4,917 | — | |||||||||||||||||||||
Accretion of purchase discounts | — | 1,416 | — | 4,075 | |||||||||||||||||||||
Amortization of closing costs and origination fees | (5 | ) | (143 | ) | 107 | (414 | ) | ||||||||||||||||||
Interest income from real estate loans receivable | $ | 1,396 | $ | 8,586 | $ | 11,346 | $ | 25,258 | |||||||||||||||||
MARKETABLE_SECURITIES_Tables
MARKETABLE SECURITIES (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Investments, Debt and Equity Securities [Abstract] | ' | |||
Summary of Activities of Real Estate Securities | ' | |||
The following summarizes the activity related to the Company’s investments in marketable securities for the nine months ended September 30, 2014 (in thousands): | ||||
Marketable securities - December 31, 2013 | $ | — | ||
Investments in marketable securities | 529,997 | |||
Unrealized losses on marketable securities | (313 | ) | ||
Sale of marketable securities | (529,684 | ) | ||
Marketable securities - September 30, 2014 | $ | — | ||
REAL_ESTATE_HELD_FOR_SALE_Tabl
REAL ESTATE HELD FOR SALE (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||||||||||
Schedule of Revenue and Expenses of Real Estate Held-for-Sale | ' | ||||||||||||||||
The following table summarizes certain revenue and expenses for the Company’s real estate properties that were sold or were held for sale during the three and nine months ended September 30, 2014 and 2013, which were included in continuing operations (in thousands): | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Rental income | $ | 4,690 | $ | 24,769 | $ | 52,405 | $ | 74,180 | |||||||||
Tenant reimbursements | 2,090 | 11,008 | 24,590 | 32,278 | |||||||||||||
Other operating income | 161 | 544 | 1,221 | 1,645 | |||||||||||||
Total revenues | 6,941 | 36,321 | 78,216 | 108,103 | |||||||||||||
Expenses | |||||||||||||||||
Operating, maintenance, and management | 1,446 | 6,884 | 15,626 | 19,973 | |||||||||||||
Real estate taxes and insurance | 1,322 | 6,738 | 14,636 | 19,946 | |||||||||||||
Asset management fees to affiliate | 468 | 2,351 | 5,037 | 6,952 | |||||||||||||
General and administrative expenses | (322 | ) | 12 | 61 | 10 | ||||||||||||
Depreciation and amortization | 477 | 11,836 | 13,134 | 35,476 | |||||||||||||
Interest expense | 15,965 | 6,582 | 29,961 | 19,903 | |||||||||||||
Impairment charge on real estate | — | — | 1,075 | — | |||||||||||||
Total expenses | $ | 19,356 | $ | 34,403 | $ | 79,530 | $ | 102,260 | |||||||||
Schedule of Major Components of Real Estate Held for Sale and Liabilities Related to Real Estate Held for Sale | ' | ||||||||||||||||
The following summary presents the major components of assets and liabilities related to real estate held for sale as of September 30, 2014 and December 31, 2013 (in thousands): | |||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||
Assets related to real estate held for sale | |||||||||||||||||
Total real estate, at cost and net of impairment charge | $ | 94,052 | $ | 1,169,666 | |||||||||||||
Accumulated depreciation and amortization | (17,378 | ) | (138,934 | ) | |||||||||||||
Real estate held for sale, net | 76,674 | 1,030,732 | |||||||||||||||
Other assets | 4,835 | 77,481 | |||||||||||||||
Total assets related to real estate held for sale | $ | 81,509 | $ | 1,108,213 | |||||||||||||
Liabilities related to real estate held for sale | |||||||||||||||||
Notes payable | 56,228 | 628,780 | |||||||||||||||
Other liabilities | — | 5,040 | |||||||||||||||
Total liabilities related to real estate held for sale | $ | 56,228 | $ | 633,820 | |||||||||||||
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Notes Payable [Abstract] | ' | ||||||||||||||||
Schedule of Long-term Debt Instruments | ' | ||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company’s notes payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands): | |||||||||||||||||
Principal as of September 30, | Principal as of December 31, | Contractual Interest Rate as of | Effective Interest Rate as of | Payment Type | Maturity Date (2) | ||||||||||||
2014 | 2013 | September 30, 2014(1) | September 30, | ||||||||||||||
2014 (1) | |||||||||||||||||
Amended and Restated Portfolio Revolving Loan Facility (3) | $ | 92,376 | $ | 105,000 | One-month LIBOR + 1.80% (3) | 3.10% | Interest Only | 6/21/17 | |||||||||
300 N. LaSalle Building Mortgage Loan (4) | — | 348,061 | (4) | (4) | (4) | (4) | |||||||||||
Union Bank Plaza Mortgage Loan (5) | 105,000 | 105,000 | One-month LIBOR + 1.75% | 3.50% | Interest Only | 9/15/15 | |||||||||||
Emerald View at Vista Center Mortgage Loan | 19,800 | 19,800 | One-month LIBOR + 2.25% | 4.60% | Interest Only | 1/1/16 | |||||||||||
Portfolio Mortgage Loan #1 (6) | 249,526 | 341,544 | One-month LIBOR + 2.15% | 3.30% | Interest Only | 1/27/16 | |||||||||||
601 Tower Mortgage Loan (7) | — | 16,320 | (7) | (7) | (7) | (7) | |||||||||||
CityPlace Tower Mortgage Loan (8) | — | 71,000 | (8) | (8) | (8) | (8) | |||||||||||
Fountainhead Plaza Mortgage Loan | 80,000 | 80,000 | One-month LIBOR + 1.90% | 2.90% | Interest Only | 12/1/15 | |||||||||||
Portfolio Mortgage Loan #2 (9) | — | 75,628 | (9) | (9) | (9) | (9) | |||||||||||
Portfolio Mortgage Loan #3 (10) | 107,640 | 141,000 | One-month LIBOR + | 2.40% | Interest Only | 3/1/16 | |||||||||||
1.75% - 1.85% | |||||||||||||||||
Corporate Technology Centre Mortgage Loan (11) | 140,000 | 140,000 | 3.50% | 3.50% | (11) | 4/1/20 | |||||||||||
300-600 Campus Drive Revolving Loan (12) | 78,000 | 78,000 | One-month LIBOR + 2.05% (12) | 2.90% | Interest Only | 8/1/16 | |||||||||||
$ | 872,342 | $ | 1,521,353 | ||||||||||||||
_____________________ | |||||||||||||||||
(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2014. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2014 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates, if applicable), using interest rate indices as of September 30, 2014, where applicable. For further information regarding the Company’s derivative instruments, see Note 10, “Derivative Instruments.” | |||||||||||||||||
(2) Represents the initial maturity date or the maturity date as extended as of September 30, 2014; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. | |||||||||||||||||
(3) On June 4, 2014, in connection with the sale of Mountain View Corporate Center, the borrowing capacity under the Amended and Restated Portfolio Revolving Loan Facility was reduced from $145.0 million to $128.3 million. As of September 30, 2014, the Amended and Restated Portfolio Revolving Loan Facility was secured by 350 E. Plumeria Building, Pierre Laclede Center and One Main Place. As of September 30, 2014, the $92.4 million non-revolving portion had been funded, and the $35.9 million revolving portion remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. | |||||||||||||||||
(4) On July 7, 2014, in connection with the disposition of the 300 N. LaSalle Building, the Company repaid the entire $344.6 million principal balance and all other sums due under this loan, including a prepayment penalty of $13.7 million. | |||||||||||||||||
(5) On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of September 30, 2014, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement. | |||||||||||||||||
(6) As of September 30, 2014, the Portfolio Mortgage Loan #1 was secured by Horizon Tech Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center and I-81 Industrial Portfolio. On July 10, 2014, in connection with the disposition of Torrey Reserve West, the Company repaid $16.8 million of principal due under this loan and Torrey Reserve West was released as security from Portfolio Mortgage Loan #1. On July 25, 2014, in connection with the disposition of Two Westlake Park, the Company repaid $53.1 million of principal due under this loan and Two Westlake Park was released as security from Portfolio Mortgage Loan #1. | |||||||||||||||||
(7) On June 11, 2014 in connection with the disposition of 601 Tower at Carlson Center, the Company paid off the outstanding principal balance and all other sums due under this loan. | |||||||||||||||||
(8) On August 21, 2014 in connection with the disposition of CityPlace Tower, the Company paid off the outstanding principal balance and all other sums due under this loan. | |||||||||||||||||
(9) On June 9, 2014, in connection with the payoff of the Pappas Commerce First Mortgage Loan, the Company repaid the outstanding principal balance due and all other sums under Portfolio Mortgage Loan #2. | |||||||||||||||||
(10) On March 6, 2013, the Company entered into a three-year senior secured credit facility for borrowings of up to $235.0 million, of which $141.0 million was non-revolving debt and $94.0 million was revolving debt. On June 27, 2014, in connection with the sale of Metropolitan Center, the borrowing capacity under Portfolio Mortgage Loan #3 was reduced to $179.4 million, of which $107.6 million is non-revolving debt and $71.8 million is revolving debt. As of September 30, 2014, the principal balance consisted of the $107.6 million non-revolving portion. The revolving portion of $71.8 million remains available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of September 30, 2014, the Portfolio Mortgage Loan #3 was secured by the 100 & 200 Campus Drive Buildings and Willow Oaks Corporate Center. | |||||||||||||||||
(11) Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity. | |||||||||||||||||
(12) On July 10, 2013, the Company entered into a three-year senior secured credit facility for borrowings of up to $120.0 million, of which $95.0 million is non-revolving debt and $25.0 million is revolving debt. As of September 30, 2014, the principal balance consisted of $78.0 million of the non-revolving portion. The remaining non-revolving portion of $17.0 million and the revolving portion of $25.0 million remain available for future disbursements, subject to certain terms and conditions contained in the loan documents. | |||||||||||||||||
Schedule of Maturities of Long-term Debt | ' | ||||||||||||||||
The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of September 30, 2014 (in thousands): | |||||||||||||||||
October 1, 2014 through December 31, 2014 | $ | — | |||||||||||||||
2015 | 185,000 | ||||||||||||||||
2016 | 454,965 | ||||||||||||||||
2017 | 94,157 | ||||||||||||||||
2018 | 2,750 | ||||||||||||||||
Thereafter | 135,470 | ||||||||||||||||
$ | 872,342 | ||||||||||||||||
OTHER_COMPREHENSIVE_INCOME_LOS1
OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended | |||||||||||
Sep. 30, 2014 | ||||||||||||
Equity [Abstract] | ' | |||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||
The following summarizes the Company’s other comprehensive income (loss) for the nine months ended September 30, 2014 (in thousands): | ||||||||||||
Derivative Instruments | Marketable Securities | Total | ||||||||||
Accumulated other comprehensive loss - December 31, 2013 | $ | (10,313 | ) | $ | — | $ | (10,313 | ) | ||||
Unrealized gains (losses) | (1,923 | ) | (313 | ) | (2,236 | ) | ||||||
Reclassification adjustment realized in net income (effective portion) | 5,818 | — | 5,818 | |||||||||
Reclassification of unrealized losses due to hedge ineffectiveness | 3,207 | — | 3,207 | |||||||||
Reclassifications of realized losses related to swap terminations | 521 | — | 521 | |||||||||
Reclassifications of realized losses related to marketable securities | — | 313 | 313 | |||||||||
Accumulated other comprehensive loss - September 30, 2014 | $ | (2,690 | ) | $ | — | $ | (2,690 | ) | ||||
DERIVATIVE_INSTRUMENTS_Tables
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of Notional and Fair Value of Interest Rate Swaps Designated as Cash Flow Hedges | ' | ||||||||||||||||
The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of September 30, 2014 and December 31, 2013. The notional value is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands): | |||||||||||||||||
Derivative Instruments | September 30, 2014 | December 31, 2013 | Reference Rate as of September 30, 2014 | Weighted-Average | Weighted-Average Remaining Term | ||||||||||||
Number of Instruments | Notional Amount | Number of Instruments | Notional Amount | Fix Pay Rate | in Years | ||||||||||||
Interest Rate Swaps (1) | 11 | $613,513 | 16 | $842,150 | One-month LIBOR/ | 1.35% | 1.6 | ||||||||||
Fixed at 0.50% - 2.39% | |||||||||||||||||
_____________________ | |||||||||||||||||
(1) During the nine months ended September 30, 2014, the Company terminated two interest rate swap agreements and paid an aggregate breakage fee of $0.2 million. In addition, the Company dedesignated 11 interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales. The Company dedesignated these hedged instruments due to certain hedged forecasted transactions no longer being probable beyond the projected asset sale date. As of September 30, 2014, none of the Company’s interest rate swaps were designated as cash flow hedges. | |||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position | ' | ||||||||||||||||
The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2014 and December 31, 2013 (dollars in thousands): | |||||||||||||||||
Derivative Instruments | Balance Sheet Location | September 30, 2014 | 31-Dec-13 | ||||||||||||||
Number of | Fair Value | Number of | Fair Value | ||||||||||||||
Instruments | Instruments | ||||||||||||||||
Interest Rate Swaps | Deferred financing costs, prepaid expenses and other assets, at fair value | 2 | $ | 223 | 2 | $ | 225 | ||||||||||
Interest Rate Swaps | Other liabilities, at fair value | 9 | $ | (5,973 | ) | 14 | $ | (10,260 | ) | ||||||||
Schedule of Derivative Instruments in Statement of Operations | ' | ||||||||||||||||
The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands): | |||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||
Amount of loss recognized on interest rate swaps (effective portion) | $ | 1,694 | $ | 2,484 | $ | 5,818 | $ | 6,985 | |||||||||
Unrealized losses due to hedge ineffectiveness | 2,385 | — | 3,207 | — | |||||||||||||
Reclassification of realized losses related to swap terminations | — | 256 | 521 | 613 | |||||||||||||
4,079 | 2,740 | 9,546 | 7,598 | ||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||
Unrealized (gain) loss on interest rate swaps | (5 | ) | — | 35 | — | ||||||||||||
(5 | ) | — | 35 | — | |||||||||||||
Increase in interest expense as a result of derivatives | $ | 4,074 | $ | 2,740 | $ | 9,581 | $ | 7,598 | |||||||||
FAIR_VALUE_DISCLOSURES_Tables
FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Face Value, Carrying Amounts and Fair Value | ' | ||||||||||||||||||||||||
The following were the face values, carrying amounts and fair values of the Company’s real estate loans receivable and notes payable as of September 30, 2014 and December 31, 2013, which carrying amounts do not approximate the fair values (in thousands): | |||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Face Value | Carrying | Fair Value | Face Value | Carrying | Fair Value | ||||||||||||||||||||
Amount | Amount | ||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||
Real estate loans receivable | $ | 73,060 | $ | 73,095 | $ | 73,552 | $ | 184,900 | $ | 184,828 | $ | 190,485 | |||||||||||||
Financial liabilities: | |||||||||||||||||||||||||
Notes payable | $ | 872,342 | $ | 872,342 | $ | 873,250 | $ | 1,521,353 | $ | 1,521,353 | $ | 1,526,075 | |||||||||||||
Schedule of Assets and Liabilities at Fair Value | ' | ||||||||||||||||||||||||
During the nine months ended September 30, 2014, the Company measured the following assets and liabilities at fair value (in thousands): | |||||||||||||||||||||||||
Fair Value Measurements Using | |||||||||||||||||||||||||
Total | Quoted Prices in | Significant Other | Significant | ||||||||||||||||||||||
Active Markets | Observable | Unobservable | |||||||||||||||||||||||
for Identical Assets | Inputs (Level 2) | Inputs (Level 3) | |||||||||||||||||||||||
(Level 1) | |||||||||||||||||||||||||
Recurring Basis: | |||||||||||||||||||||||||
Asset derivatives | 223 | — | 223 | — | |||||||||||||||||||||
Liability derivatives | (5,973 | ) | — | (5,973 | ) | — | |||||||||||||||||||
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||
Related Party Transactions [Abstract] | ' | ||||||||||||||||||||||||
Schedule of Related Party Costs | ' | ||||||||||||||||||||||||
Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2014 and 2013, respectively, and any related amounts payable as of September 30, 2014 and December 31, 2013 (in thousands): | |||||||||||||||||||||||||
Incurred | Incurred | Payable as of | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | September 30, | December 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Expensed | |||||||||||||||||||||||||
Asset management fees | $ | 3,829 | $ | 6,079 | $ | 15,164 | $ | 17,563 | $ | — | $ | — | |||||||||||||
Reimbursement of operating expenses (1) | 39 | 44 | 112 | 102 | — | — | |||||||||||||||||||
Acquisition fees | — | — | — | 1,797 | — | — | |||||||||||||||||||
Disposition fees (2) | 11,591 | — | 14,154 | — | — | — | |||||||||||||||||||
$ | 15,459 | $ | 6,123 | $ | 29,430 | $ | 19,462 | $ | — | $ | — | ||||||||||||||
_____________________ | |||||||||||||||||||||||||
(1) The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $39,000 and $44,000 for the three months ended September 30, 2014 and 2013, respectively, and $112,000 and $102,000 for the nine months ended September 30, 2014 and 2013, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the three and nine months ended September 30, 2014 and 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. | |||||||||||||||||||||||||
(2) Disposition fees with respect to real estate sold are included in the gain on sales of real estate in the accompanying consolidated statements of operations. |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Schedule of Segment Reporting Information, by Segment | ' | ||||||||||||||||
The following tables summarize total revenues and NOI for each reportable segment for the three and nine months ended September 30, 2014 and 2013 and total assets and total liabilities for each reportable segment as of September 30, 2014 and December 31, 2013 (in thousands): | |||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues: | |||||||||||||||||
Real estate segment (1) | $ | 53,334 | $ | 83,660 | $ | 218,465 | $ | 247,087 | |||||||||
Real estate-related segment | 1,396 | 8,586 | 11,346 | 25,258 | |||||||||||||
Total segment revenues | 54,730 | 92,246 | 229,811 | 272,345 | |||||||||||||
Corporate-level | 864 | — | 953 | — | |||||||||||||
Total revenues | $ | 55,594 | $ | 92,246 | $ | 230,764 | $ | 272,345 | |||||||||
Interest Expense: | |||||||||||||||||
Real estate segment (1) | $ | 25,040 | $ | 17,878 | $ | 53,895 | $ | 46,718 | |||||||||
Real estate-related segment | — | 1,152 | 993 | 3,424 | |||||||||||||
Total segment interest expense | 25,040 | 19,030 | 54,888 | 50,142 | |||||||||||||
Corporate-level | — | 93 | — | 472 | |||||||||||||
Total interest expense | $ | 25,040 | $ | 19,123 | $ | 54,888 | $ | 50,614 | |||||||||
NOI: | |||||||||||||||||
Real estate segment (1) | $ | 5,277 | $ | 30,900 | $ | 71,417 | $ | 98,608 | |||||||||
Real estate-related segment | 1,258 | 6,870 | 9,702 | 20,170 | |||||||||||||
Total segment NOI | 6,535 | 37,770 | 81,119 | 118,778 | |||||||||||||
Corporate-level | 864 | — | 953 | — | |||||||||||||
Total NOI | $ | 7,399 | $ | 37,770 | $ | 82,072 | $ | 118,778 | |||||||||
As of September 30, | As of December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Assets: | |||||||||||||||||
Real estate segment | $ | 1,473,070 | $ | 1,514,167 | |||||||||||||
Real estate-related segment | 73,599 | 229,457 | |||||||||||||||
Total segment assets | 1,546,669 | 1,743,624 | |||||||||||||||
Real estate held for sale | 81,509 | 1,108,213 | |||||||||||||||
Corporate-level (2) | 75,573 | 102,463 | |||||||||||||||
Total assets | $ | 1,703,751 | $ | 2,954,300 | |||||||||||||
Liabilities: | |||||||||||||||||
Real estate segment | $ | 879,008 | $ | 893,237 | |||||||||||||
Real estate-related segment | — | 75,820 | |||||||||||||||
Total segment liabilities | 879,008 | 969,057 | |||||||||||||||
Real estate held for sale | 56,228 | 633,820 | |||||||||||||||
Corporate-level (3) | 6,956 | 11,379 | |||||||||||||||
Total liabilities | $ | 942,192 | $ | 1,614,256 | |||||||||||||
_____________________ | |||||||||||||||||
(1) Amounts include properties sold and properties held for sale. See Note 7, “Real Estate Held for Sale” for more information. | |||||||||||||||||
(2) Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $75.1 million and $102.2 million as of September 30, 2014 and December 31, 2013, respectively. | |||||||||||||||||
(3) As of September 30, 2014 and December 31, 2013, corporate-level liabilities consisted primarily of distributions payable. | |||||||||||||||||
Reconciliation of Net Income (Loss) to Net Operating Income (Loss) | ' | ||||||||||||||||
The following table reconciles the Company’s net income to its NOI for the three and nine months ended September 30, 2014 and 2013 (in thousands): | |||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income | $ | 308,131 | $ | 5,590 | $ | 378,276 | $ | 21,454 | |||||||||
Gain on sales of real estate, net | (322,811 | ) | — | (369,458 | ) | — | |||||||||||
Loss on sale of marketable securities | 331 | — | 331 | — | |||||||||||||
Other interest income | (133 | ) | (6 | ) | (188 | ) | (21 | ) | |||||||||
Real estate acquisition fees to affiliates | — | — | — | 1,797 | |||||||||||||
Real estate acquisition fees and expenses | — | — | — | 623 | |||||||||||||
General and administrative expenses | 1,106 | 1,347 | 3,909 | 3,684 | |||||||||||||
Depreciation and amortization | 16,835 | 30,746 | 64,187 | 90,769 | |||||||||||||
Impairment charge on real estate | 3,940 | — | 5,015 | — | |||||||||||||
Corporate-level interest expense | — | 93 | — | 472 | |||||||||||||
NOI | $ | 7,399 | $ | 37,770 | $ | 82,072 | $ | 118,778 | |||||||||
ORGANIZATION_Details
ORGANIZATION (Details) (USD $) | 9 Months Ended | 12 Months Ended | 35 Months Ended | 77 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | Mar. 22, 2011 | Sep. 30, 2014 | |
LoansReceivables | LoansReceivables | |||
property | property | |||
Organizational Structure [Line Items] | ' | ' | ' | ' |
Partnership interest in Operating Partnership | 0.10% | ' | ' | ' |
Partnership interest in the Operating Partnership and is its sole limited partner | 99.90% | ' | ' | ' |
Number of real estate properties | 19 | ' | ' | 19 |
Number of real estate loans receivable | 2 | ' | ' | 2 |
Issuance of common stock, value | $26,885,000 | $70,562,000 | $1,800,000,000 | ' |
Shares of common stock sold under dividend reinvestment plan, value | ' | ' | ' | 298,200,000 |
Redemptions of common stock, value | 43,509,000 | 53,168,000 | ' | 228,400,000 |
Common Stock [Member] | ' | ' | ' | ' |
Organizational Structure [Line Items] | ' | ' | ' | ' |
Issuance of common stock, shares | 2,749,008 | 7,214,805 | 182,681,633 | ' |
Issuance of common stock, value | 28,000 | 72,000 | ' | ' |
Shares of common stock sold under dividend reinvestment plan, shares | ' | ' | ' | 30,903,504 |
Redemptions of common stock, shares | 4,265,814 | 5,219,003 | ' | 22,851,354 |
Redemptions of common stock, value | $43,000 | $52,000 | ' | ' |
KBS Capital Advisors LLC [Member] | Common Stock [Member] | ' | ' | ' | ' |
Organizational Structure [Line Items] | ' | ' | ' | ' |
Shares held by affiliate | 20,000 | ' | ' | 20,000 |
Office Properties [Member] | ' | ' | ' | ' |
Organizational Structure [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 13 | ' | ' | 13 |
Number of real estate properties classified as held-for-sale | 1 | ' | ' | 1 |
Office/Flex Properties [Member] | ' | ' | ' | ' |
Organizational Structure [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 1 | ' | ' | 1 |
Industrial [Member] | ' | ' | ' | ' |
Organizational Structure [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 4 | ' | ' | 4 |
Number of real estate properties classified as held-for-sale | 4 | ' | ' | 4 |
Office Buildings, Campus [Member] | ' | ' | ' | ' |
Organizational Structure [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 8 | ' | ' | 8 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 0 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||||||
In Millions, except Per Share data, unless otherwise specified | Aug. 29, 2014 | Aug. 05, 2014 | Jul. 08, 2014 | Jun. 30, 2014 | Feb. 04, 2013 | Sep. 15, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2013 |
property | property | ||||||||||
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of real estate properties classified from held-for-sale to held for investment | ' | ' | ' | ' | ' | ' | 2 | ' | ' | 2 | ' |
Share redemption program, dollar limitation for fiscal 2014 | ' | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' |
Share redemption program, dollar limitation, available amount | ' | ' | ' | ' | ' | ' | $8.10 | ' | ' | $8.10 | ' |
Distributions declared per common share (usd per share) | $0.45 | $0.30 | $3.75 | ' | ' | $4.50 | $4.64 | $0.16 | ' | $4.97 | $0.54 |
Distribution rate per share per day, declared | $0.03 | ' | ' | ' | $0.05 | ' | ' | $0.00 | $0.00 | ' | $0.00 |
Industrial Properties [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of real estate properties sold | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' |
Number of real estate properties classified as held for sale during period | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' |
Office Properties [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of real estate properties sold | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 | ' |
Number of real estate properties classified as held for sale during period | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' |
REAL_ESTATE_HELD_FOR_INVESTMEN2
REAL ESTATE HELD FOR INVESTMENT (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
property | property | |||
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 19 | ' | 19 | ' |
Occupancy | 89.00% | ' | 89.00% | ' |
Impairment charge on real estate | $3,940 | $0 | $5,015 | $0 |
Real Estate Held-for-Investment [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Rentable Square Feet | 6,300,000 | ' | 6,300,000 | ' |
Impairment charge on real estate | $3,900 | ' | $3,900 | ' |
Office Properties [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 13 | ' | 13 | ' |
Office Properties [Member] | Real Estate Held-for-Investment [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 12 | ' | 12 | ' |
Office/Flex Properties [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 1 | ' | 1 | ' |
Office/Flex Properties [Member] | Real Estate Held-for-Investment [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 1 | ' | 1 | ' |
Office Campus [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 1 | ' | 1 | ' |
Office Buildings, Campus [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 8 | ' | 8 | ' |
Office Buildings, Campus [Member] | Real Estate Held-for-Investment [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 8 | ' | 8 | ' |
Industrial [Member] | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' |
Number of real estate properties | 4 | ' | 4 | ' |
REAL_ESTATE_HELD_FOR_INVESTMEN3
REAL ESTATE HELD FOR INVESTMENT (Schedule of Real Estate Investments) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
In Thousands, unless otherwise specified | Office [Member] | 100 & 200 Campus Drive Buildings [Member] | 300-600 Campus Drive Buildings [Member] | 350 E. Plumeria Building [Member] | Willow Oaks Corporate Center [Member] | Pierre Laclede Center [Member] | One Main Place [Member] | Horizon Tech Center [Member] | Union Bank Plaza [Member] | Emerald View at Vista Center [Member] | Granite Tower [Member] | National City Tower [Member] | Gateway Corporate Center [Member] | Fountainhead Plaza [Member] | Corporate Technology Centre [Member] | ||
Office [Member] | Office [Member] | Office/Flex Properties [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | Office [Member] | ||||
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Date Acquired | ' | ' | ' | 9-Sep-08 | 10-Oct-08 | 18-Dec-08 | 26-Aug-09 | 4-Feb-10 | 5-Feb-10 | 17-Jun-10 | 15-Sep-10 | 9-Dec-10 | 16-Dec-10 | 17-Dec-10 | 26-Jan-11 | 13-Sep-11 | 28-Mar-13 |
Total Real Estate at Cost | $1,605,506 | $1,628,417 | $1,605,506 | $197,118 | $196,349 | $36,116 | $102,203 | $82,318 | $50,888 | $28,136 | $216,343 | $31,639 | $153,769 | $115,342 | $44,959 | $119,384 | $230,942 |
Accumulated Depreciation and Amortization | -233,122 | -223,889 | -233,122 | -39,103 | -41,970 | -6,500 | -20,243 | -15,558 | -9,074 | 0 | -30,307 | -5,167 | -23,207 | -22,059 | -7,273 | 0 | -12,661 |
Total real estate held for investment, net | $1,372,384 | $1,404,528 | $1,372,384 | $158,015 | $154,379 | $29,616 | $81,960 | $66,760 | $41,814 | $28,136 | $186,036 | $26,472 | $130,562 | $93,283 | $37,686 | $119,384 | $218,281 |
REAL_ESTATE_HELD_FOR_INVESTMEN4
REAL ESTATE HELD FOR INVESTMENT (Properties Represented More than 10% of Company’s Total Assets) (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | ||
Real Estate Properties [Line Items] | ' | ' | |
Total Real Estate, Net | $1,372,384,000 | $1,404,528,000 | |
Percentage of Total Assets | 51.10% | ' | |
Annualized Base Rent | 80,482,000 | [1] | ' |
Occupancy | 89.00% | ' | |
Corporate Technology Centre [Member] | Assets, Total [Member] | ' | ' | |
Real Estate Properties [Line Items] | ' | ' | |
Rentable Square Feet | 610,083 | ' | |
Total Real Estate, Net | 218,281,000 | ' | |
Percentage of Total Assets | 12.80% | ' | |
Annualized Base Rent | 18,537,000 | [1] | ' |
Average Annualized Base Rent per Sq. Ft. | 30.38 | ' | |
Occupancy | 100.00% | ' | |
Union Bank Plaza [Member] | ' | ' | |
Real Estate Properties [Line Items] | ' | ' | |
Rentable Square Feet | 383,785 | ' | |
Annualized Base Rent | 15,857,000 | [1] | ' |
Average Annualized Base Rent per Sq. Ft. | 41.32 | ' | |
Union Bank Plaza [Member] | Assets, Total [Member] | ' | ' | |
Real Estate Properties [Line Items] | ' | ' | |
Rentable Square Feet | 627,334 | ' | |
Total Real Estate, Net | 186,036,000 | ' | |
Percentage of Total Assets | 10.90% | ' | |
Annualized Base Rent | 21,488,000 | [1] | ' |
Average Annualized Base Rent per Sq. Ft. | $38.54 | ' | |
Occupancy | 89.00% | ' | |
[1] | Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. |
REAL_ESTATE_HELD_FOR_INVESTMEN5
REAL ESTATE HELD FOR INVESTMENT (Operating Leases) (Narrative) (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Tenants | |||
Operating Leased Assets [Line Items] | ' | ' | ' |
Deferred rent recognized | $5,126,000 | $9,938,000 | ' |
Deferred rent receivables | 42,700,000 | ' | 38,000,000 |
Unamortized lease incentives | 4,000,000 | ' | 3,300,000 |
Number of tenants | 300 | ' | ' |
Recorded bad debt expense related to tenant | 489,000 | 470,000 | ' |
Bad debt reserve | 700,000 | ' | ' |
Other Liabilities [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Security deposit liability | $3,300,000 | ' | $4,600,000 |
Maximum [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating lease, term | '15 years 1 month 6 days | ' | ' |
Bad debt reserve of annualized base rent | 1.00% | ' | ' |
Weighted Average [Member] | ' | ' | ' |
Operating Leased Assets [Line Items] | ' | ' | ' |
Operating lease, term | '8 years 7 months 6 days | ' | ' |
REAL_ESTATE_HELD_FOR_INVESTMEN6
REAL ESTATE HELD FOR INVESTMENT (Future Minimum Rental Income) (Details) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Real Estate [Abstract] | ' |
October 1, 2014 through December 31, 2014 | $38,010 |
2015 | 148,671 |
2016 | 140,248 |
2017 | 126,135 |
2018 | 104,372 |
Thereafter | 333,676 |
Future minimum rental income | $891,112 |
REAL_ESTATE_HELD_FOR_INVESTMEN7
REAL ESTATE HELD FOR INVESTMENT (Highest Tenant Industry Concentrations- Grater than 10% of Annual Base Rent) (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | |
Tenants | ||
Concentration Risk [Line Items] | ' | |
Number of Tenants | 300 | |
Annualized Base Rent | $80,482 | [1] |
Percentage of Annualized Base Rent | 51.10% | |
Industry - Finance [Member] | ' | |
Concentration Risk [Line Items] | ' | |
Number of Tenants | 41 | |
Annualized Base Rent | 33,380 | [1] |
Percentage of Annualized Base Rent | 21.20% | |
Industry - Computer System Design & Programming [Member] | ' | |
Concentration Risk [Line Items] | ' | |
Number of Tenants | 13 | |
Annualized Base Rent | 27,897 | [1] |
Percentage of Annualized Base Rent | 17.70% | |
Industry - Legal Services [Member] | ' | |
Concentration Risk [Line Items] | ' | |
Number of Tenants | 51 | |
Annualized Base Rent | $19,205 | [1] |
Percentage of Annualized Base Rent | 12.20% | |
[1] | Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. |
REAL_ESTATE_HELD_FOR_INVESTMEN8
REAL ESTATE HELD FOR INVESTMENT (Concentration of Credit Risk for Tenant Leases) (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | ||
Real Estate Properties [Line Items] | ' | |
Annualized Base Rent | $80,482,000 | [1] |
Union Bank Plaza [Member] | ' | |
Real Estate Properties [Line Items] | ' | |
Square Feet | 383,785 | |
% of Portfolio (Net Rentable Sq. Ft.) | 6.10% | |
Annualized Base Rent | 15,857,000 | [1] |
% of Portfolio Annualized Base Rent | 10.00% | |
Annualized Base Rent per Sq. Ft. | $41.32 | |
Union Bank Plaza [Member] | Option One [Member] | ' | |
Real Estate Properties [Line Items] | ' | |
Lease Expiration | 30-Sep-16 | |
Union Bank Plaza [Member] | Option Two [Member] | ' | |
Real Estate Properties [Line Items] | ' | |
Lease Expiration | 31-Jan-22 | |
[1] | Annualized base rent represents annualized contractual base rental income as of September 30, 2014, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. |
REAL_ESTATE_HELD_FOR_INVESTMEN9
REAL ESTATE HELD FOR INVESTMENT REAL ESTATE HELD FOR INVESTMENT (Geographic Concentration Risk) (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Concentration Risk [Line Items] | ' |
Concentration risk, percentage | 51.10% |
CALIFORNIA [Member] | Assets, Total [Member] | ' |
Concentration Risk [Line Items] | ' |
Concentration risk, percentage | 27.70% |
NEW JERSEY [Member] | Assets, Total [Member] | ' |
Concentration Risk [Line Items] | ' |
Concentration risk, percentage | 18.30% |
TENANT_ORIGINATION_AND_ABSORPT2
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | ' | ' | ' | ' | ' |
Tenant Origination And Absorption Costs, Cost | $147,027 | ' | $147,027 | ' | $167,904 |
Tenant Origination and Absorption Costs, Accumulated Amortization | -70,681 | ' | -70,681 | ' | -74,469 |
Tenant Origination and Absorption Costs, Net Amount | 76,346 | ' | 76,346 | ' | 93,435 |
Tenant Origination and Absorption Costs, Amortization expense | -5,080 | -10,343 | -20,310 | -31,216 | ' |
Above-Market Lease Assets, Cost | 20,543 | ' | 20,543 | ' | 25,527 |
Above-Market Lease Assets, Accumulated Amortization | -8,185 | ' | -8,185 | ' | -9,363 |
Above-Market Lease Assets, Net Amount | 12,358 | ' | 12,358 | ' | 16,164 |
Above-Market Lease Assets, Amortization expense | -1,684 | -2,451 | -6,761 | -7,201 | ' |
Below-Market Lease Liabilities, Cost | -37,367 | ' | -37,367 | ' | -39,487 |
Below-Market Lease Liabilities, Accumulated Amortization | 23,614 | ' | 23,614 | ' | 21,544 |
Below-Market Lease Liabilities, Net Amount | -13,753 | ' | -13,753 | ' | -17,943 |
Below-Market Lease Liabilities, Amortization expense | $1,349 | $1,828 | $4,894 | $5,586 | ' |
REAL_ESTATE_LOANS_RECEIVABLE_S
REAL ESTATE LOANS RECEIVABLE (Schedule of Real Estate Loans Receivable) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 09, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Feb. 07, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Feb. 14, 2014 | Sep. 30, 2014 | Feb. 14, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | ||||||||||||
Pappas Commerce First Mortgage Origination [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | |||||||||||||||
Sheraton Charlotte Airport Hotel First Mortgage [Member] | Sheraton Charlotte Airport Hotel First Mortgage [Member] | Origination of Summit I & II First Mortgage [Member] | Origination of Summit I & II First Mortgage [Member] | Tuscan Inn First Mortgage Origination [Member] | Tuscan Inn First Mortgage Origination [Member] | Tuscan Inn First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Pappas Commerce First Mortgage Origination [Member] | Pappas Commerce First Mortgage Origination [Member] | |||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||
Date Acquired | ' | ' | ' | ' | 11-Jul-11 | ' | 17-Jan-12 | ' | ' | 21-Jan-10 | [1] | ' | ' | 25-Jan-10 | [2] | ' | ' | 5-Apr-10 | [3] | ' | |||||||||
Mortgage Loans on Real Estate, Outstanding Pricipal Balance | $73,060,000 | [4] | ' | ' | ' | $14,373,000 | [4] | ' | $58,687,000 | [4] | ' | ' | $0 | [1],[4] | ' | ' | $0 | [2],[4] | ' | ' | $0 | [3],[4] | ' | ||||||
Book Value | 73,095,000 | [5] | 184,828,000 | [5] | ' | ' | 14,386,000 | [5] | 14,477,000 | [5] | 58,709,000 | [5] | 58,781,000 | [5] | ' | 0 | [1],[5] | 20,077,000 | [1],[5] | ' | 0 | [2],[5] | ' | 58,820,000 | [2],[5] | 0 | [3],[5] | 32,673,000 | [3],[5] |
Contractual Interest Rate | ' | ' | ' | ' | 7.50% | [6] | ' | 7.50% | [6] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Annualized Effective Interest Rate | ' | ' | ' | ' | 7.60% | [6] | ' | 7.60% | [6] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Maturity Date | ' | ' | ' | ' | 1-Aug-18 | [7] | ' | 1-Feb-17 | [7] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Maintenance premium | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,900,000 | ' | ' | ' | ||||||||||||
Extinguishment of debt | ' | ' | $32,700,000 | $111,688,000 | ' | ' | ' | ' | $20,200,000 | ' | ' | $58,900,000 | ' | ' | ' | ' | ' | ||||||||||||
[1] | On February 7, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Tuscan Inn First Mortgage Origination, pursuant to which the borrower of the Tuscan Inn First Mortgage Origination paid off the entire principal balance outstanding of $20.2 million | ||||||||||||||||||||||||||||
[2] | On February 14, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Chase Tower First Mortgage Origination, pursuant to which the borrower of the Chase Tower Mortgage Origination paid off the entire principal balance outstanding $58.9 million and accrued interest. Additionally, the borrower paid a yield maintenance premium of $4.9 million in accordance with the early payoff agreement, which was recorded in interest income from real estate loans receivable. | ||||||||||||||||||||||||||||
[3] | On June 9, 2014, the borrower under the Pappas Commerce First Mortgage Origination paid off the entire principal balance outstanding of $32.7 million plus accrued interest. The Pappas Commerce First Mortgage had an original maturity date of July 1, 2014. | ||||||||||||||||||||||||||||
[4] | Outstanding principal balance as of September 30, 2014 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns. | ||||||||||||||||||||||||||||
[5] | Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. | ||||||||||||||||||||||||||||
[6] | Contractual interest rate is the stated interest rate on the face of the loan. Annualized effective interest rate is calculated as the actual interest income recognized in 2014, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of September 30, 2014. | ||||||||||||||||||||||||||||
[7] | Maturity dates are as of September 30, 2014; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown. |
REAL_ESTATE_LOANS_RECEIVABLE_S1
REAL ESTATE LOANS RECEIVABLE (Schedule of Activity Related to Real Estate Loans Receivable) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 09, 2014 | Sep. 30, 2014 | Feb. 07, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Feb. 14, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | ||||||||
Pappas Commerce First Mortgage Origination [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | Mortgages [Member] | |||||||||||||
Tuscan Inn First Mortgage Origination [Member] | Tuscan Inn First Mortgage Origination [Member] | Tuscan Inn First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Chase Tower First Mortgage Origination [Member] | Pappas Commerce First Mortgage Origination [Member] | Pappas Commerce First Mortgage Origination [Member] | |||||||||||||||
Real Estate Loans Receivable [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Real estate loans receivables, Beginning Balance | ' | ' | $184,828 | [1] | ' | ' | ' | ' | $0 | [1],[2] | $20,077 | [1],[2] | ' | $0 | [1],[3] | $58,820 | [1],[3] | $0 | [1],[4] | $32,673 | [1],[4] | |
Principal repayment received on real estate loan receivable | ' | ' | -152 | -1,320 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Early payoff | ' | ' | ' | ' | -32,700 | -111,688 | -20,200 | ' | ' | -58,900 | ' | ' | ' | ' | ||||||||
Amortization of closing costs and origination fees on real estate loans receivable | -5 | -143 | 107 | -414 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Real estate loans receivables, Ending Balance | $73,095 | [1] | ' | $73,095 | [1] | ' | ' | ' | ' | $0 | [1],[2] | $20,077 | [1],[2] | ' | $0 | [1],[3] | $58,820 | [1],[3] | $0 | [1],[4] | $32,673 | [1],[4] |
[1] | Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. | |||||||||||||||||||||
[2] | On February 7, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Tuscan Inn First Mortgage Origination, pursuant to which the borrower of the Tuscan Inn First Mortgage Origination paid off the entire principal balance outstanding of $20.2 million | |||||||||||||||||||||
[3] | On February 14, 2014, the Company, through an indirect wholly owned subsidiary, entered into an early payoff agreement with the borrower of the Chase Tower First Mortgage Origination, pursuant to which the borrower of the Chase Tower Mortgage Origination paid off the entire principal balance outstanding $58.9 million and accrued interest. Additionally, the borrower paid a yield maintenance premium of $4.9 million in accordance with the early payoff agreement, which was recorded in interest income from real estate loans receivable. | |||||||||||||||||||||
[4] | On June 9, 2014, the borrower under the Pappas Commerce First Mortgage Origination paid off the entire principal balance outstanding of $32.7 million plus accrued interest. The Pappas Commerce First Mortgage had an original maturity date of July 1, 2014. |
REAL_ESTATE_LOANS_RECEIVABLE_S2
REAL ESTATE LOANS RECEIVABLE (Schedule of Interest Income from Real Estate Loans Receivable) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Receivables [Abstract] | ' | ' | ' | ' | ' |
Contractual interest income | $1,401,000 | $7,313,000 | $6,322,000 | $21,597,000 | ' |
Prepayment fees received on loans receivable | 0 | 0 | 4,917,000 | 0 | ' |
Accretion of purchase discounts | 0 | 1,416,000 | 0 | 4,075,000 | ' |
Amortization of closing costs and origination fees | -5,000 | -143,000 | 107,000 | -414,000 | ' |
Interest income from real estate loans receivable | 1,396,000 | 8,586,000 | 11,346,000 | 25,258,000 | ' |
Interest receivable | $500,000 | ' | $500,000 | ' | $1,300,000 |
MARKETABLE_SECURITIES_Narrativ
MARKETABLE SECURITIES (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Investments, Debt and Equity Securities [Abstract] | ' | ' | ' | ' |
Net income from marketable securities | $500,000 | ' | $600,000 | ' |
Loss on sale of marketable securities | 331,000 | 0 | 331,000 | 0 |
Interest income from marketable securities | $864,000 | $0 | $953,000 | $0 |
MARKETABLE_SECURITIES_Activity
MARKETABLE SECURITIES (Activity of Real Estate Securities) (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 |
Investments, Debt and Equity Securities [Abstract] | ' |
Marketable securities - beginning balance | $0 |
Investments in marketable securities | 529,997 |
Unrealized losses on marketable securities | -313 |
Sale of marketable securities | -529,684 |
Marketable securities - ending balance | $0 |
REAL_ESTATE_HELD_FOR_SALE_Narr
REAL ESTATE HELD FOR SALE (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
property | property | ||||
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' |
Number of real estate properties classified as office properties | 1 | ' | 1 | ' | ' |
Real estate held for sale, net | $76,674 | ' | $76,674 | ' | $1,030,732 |
Impairment charge on real estate | 3,940 | 0 | 5,015 | 0 | ' |
Office Properties [Member] | ' | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' |
Number of real estate properties sold | ' | ' | 7 | ' | ' |
Number of real estate properties classified as held for sale during period | ' | ' | 1 | ' | ' |
Industrial Properties [Member] | ' | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' |
Number of real estate properties sold | ' | ' | 1 | ' | ' |
Number of real estate properties classified as held for sale during period | ' | ' | 4 | ' | ' |
Assets Held-for-sale [Member] | ' | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' |
Impairment charge on real estate | 0 | 0 | 1,075 | 0 | ' |
Real Estate Held-for-Sale [Member] | ' | ' | ' | ' | ' |
Real Estate Properties [Line Items] | ' | ' | ' | ' | ' |
Real estate held for sale, net | $81,400 | ' | $81,400 | ' | ' |
REAL_ESTATE_HELD_FOR_SALE_Reve
REAL ESTATE HELD FOR SALE (Revenue and Expenses of Real Estate Held-for-Sale) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues | ' | ' | ' | ' |
Rental income | $44,602 | $65,446 | $171,865 | $192,989 |
Tenant reimbursements | 6,357 | 15,582 | 38,919 | 46,175 |
Total revenues | 55,594 | 92,246 | 230,764 | 272,345 |
Expenses | ' | ' | ' | ' |
Operating, maintenance, and management | 12,720 | 16,967 | 47,700 | 49,616 |
Real estate taxes and insurance | 6,606 | 12,400 | 30,940 | 36,246 |
Asset management fees to affiliate | 3,829 | 6,079 | 15,164 | 17,563 |
General and administrative expenses | 1,106 | 1,347 | 3,909 | 3,684 |
Depreciation and amortization | 16,835 | 30,746 | 64,187 | 90,769 |
Interest expense | 25,040 | 19,123 | 54,888 | 50,614 |
Impairment charge on real estate | 3,940 | 0 | 5,015 | 0 |
Total expenses | 70,076 | 86,662 | 221,803 | 250,912 |
Assets Held-for-sale [Member] | ' | ' | ' | ' |
Revenues | ' | ' | ' | ' |
Rental income | 4,690 | 24,769 | 52,405 | 74,180 |
Tenant reimbursements | 2,090 | 11,008 | 24,590 | 32,278 |
Other operating income | 161 | 544 | 1,221 | 1,645 |
Total revenues | 6,941 | 36,321 | 78,216 | 108,103 |
Expenses | ' | ' | ' | ' |
Operating, maintenance, and management | 1,446 | 6,884 | 15,626 | 19,973 |
Real estate taxes and insurance | 1,322 | 6,738 | 14,636 | 19,946 |
Asset management fees to affiliate | 468 | 2,351 | 5,037 | 6,952 |
General and administrative expenses | -322 | 12 | 61 | 10 |
Depreciation and amortization | 477 | 11,836 | 13,134 | 35,476 |
Interest expense | 15,965 | 6,582 | 29,961 | 19,903 |
Impairment charge on real estate | 0 | 0 | 1,075 | 0 |
Total expenses | $19,356 | $34,403 | $79,530 | $102,260 |
REAL_ESTATE_HELD_FOR_SALE_Sche
REAL ESTATE HELD FOR SALE (Schedule of Major Components of Real Estate Held for Sale and Liabilities Related to Real Estate Held for Sale) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Discontinued Operations and Disposal Groups [Abstract] | ' | ' |
Total real estate, at cost and net of impairment charges | $94,052 | $1,169,666 |
Accumulated depreciation and amortization | -17,378 | -138,934 |
Real estate held for sale, net | 76,674 | 1,030,732 |
Other assets | 4,835 | 77,481 |
Total assets | 81,509 | 1,108,213 |
Notes payable | 56,228 | 628,780 |
Other liabilities | 0 | 5,040 |
Total liabilities | $56,228 | $633,820 |
NOTES_PAYABLE_Narrative_Detail
NOTES PAYABLE (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Interest expense | $25,040,000 | $19,123,000 | $54,888,000 | $50,614,000 | ' |
Interest payable, current | 2,300,000 | ' | 2,300,000 | ' | 4,500,000 |
Amortization of deferred financing costs | 1,100,000 | 900,000 | 3,834,000 | 2,440,000 | ' |
Prepayment fees related to pay-off of debt | 14,000,000 | ' | 14,600,000 | ' | ' |
Additional interest expense related to the effective portion of cash flow hedges | 4,100,000 | 2,700,000 | 9,600,000 | 7,600,000 | ' |
Deferred Financing Costs, Prepaid Expenses and Other Assets [Member] | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Deferred financing costs | $3,800,000 | ' | $3,800,000 | ' | $5,700,000 |
NOTES_PAYABLE_Schedule_of_Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Jun. 27, 2014 | Mar. 06, 2013 | Sep. 30, 2014 | Jun. 27, 2014 | Mar. 06, 2013 | Jun. 27, 2014 | Mar. 06, 2013 | Jul. 10, 2013 | Sep. 30, 2014 | Jul. 10, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Jul. 07, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Jul. 07, 2014 | Sep. 15, 2010 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Jul. 25, 2014 | Jul. 10, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Mar. 06, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Jul. 10, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jul. 10, 2013 | Sep. 30, 2014 | Jun. 04, 2014 | Jun. 21, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | 300-600 Campus Drive Revolving Loan [Member] | 300-600 Campus Drive Revolving Loan [Member] | 300-600 Campus Drive Revolving Loan [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | Mortgage [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Non-Revolving Credit Facility [Member] | Non-Revolving Credit Facility [Member] | Non-Revolving Credit Facility [Member] | Secured Debt [Member] | Secured Debt [Member] | Revolving Credit Facility [Member] | Non-Revolving Credit Facility [Member] | Non-Revolving Credit Facility [Member] | Portfolio Revolving Loan [Member] | Portfolio Revolving Loan [Member] | Portfolio Revolving Loan [Member] | 300 N. Lasalle [Member] | 300 N. Lasalle [Member] | 300 N. Lasalle [Member] | 300 N. Lasalle [Member] | Union Bank Plaza [Member] | Union Bank Plaza [Member] | Union Bank Plaza [Member] | Union Bank Plaza [Member] | Emerald View at Vista Center [Member] | Emerald View at Vista Center [Member] | Emerald View at Vista Center [Member] | Portfolio Mortgage Loan 1 [Member] | Portfolio Mortgage Loan 1 [Member] | Portfolio Mortgage Loan 1 [Member] | Portfolio Mortgage Loan 1 [Member] | Portfolio Mortgage Loan 1 [Member] | 601 Tower at Carlson Center [Member] | 601 Tower at Carlson Center [Member] | CityPlace Tower [Member] | CityPlace Tower [Member] | Fountainhead Plaza [Member] | Fountainhead Plaza [Member] | Fountainhead Plaza [Member] | Portfolio Mortgage Loan 2 [Member] | Portfolio Mortgage Loan 2 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Portfolio Mortgage Loan 3 [Member] | Corporate Technology Centre [Member] | Corporate Technology Centre [Member] | 300-600 Campus Drive Revolving Loan [Member] | 300-600 Campus Drive Revolving Loan [Member] | 300-600 Campus Drive Revolving Loan [Member] | 300-600 Campus Drive Revolving Loan [Member] | 300-600 Campus Drive Revolving Loan [Member] | Amended and Restated Portfolio Revolving Loan Facility [Member] | Amended and Restated Portfolio Revolving Loan Facility [Member] | Amended and Restated Portfolio Revolving Loan Facility [Member] | Amended and Restated Portfolio Revolving Loan Facility [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||
One-month LIBOR [Member] | Repayment Penalty [Member] | One-month LIBOR [Member] | One-month LIBOR [Member] | One-month LIBOR [Member] | One-month LIBOR [Member] | One-month LIBOR [Member] | One-month LIBOR [Member] | Secured Debt [Member] | One-month LIBOR [Member] | Revolving Credit Facility [Member] | Non-Revolving Credit Facility [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum [Member] | Maximum [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||
Principal Balance | $872,342,000 | $1,521,353,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $872,342,000 | $1,521,353,000 | $92,376,000 | [1] | $105,000,000 | [1] | ' | ' | $0 | [2] | $348,061,000 | [2] | ' | $119,300,000 | [3] | $105,000,000 | [3] | $105,000,000 | [3] | ' | $19,800,000 | $19,800,000 | ' | ' | ' | $249,526,000 | [4] | $341,544,000 | [4] | ' | $0 | [5] | $16,320,000 | [5] | $0 | [6] | $71,000,000 | [6] | $80,000,000 | $80,000,000 | ' | $0 | [7] | $75,628,000 | [7] | ' | $107,640,000 | [8] | $141,000,000 | [8] | ' | ' | $140,000,000 | [9] | $140,000,000 | [9] | ' | $78,000,000 | [10] | $78,000,000 | [10] | ' | ' | $128,300,000 | [1] | $145,000,000 | [1] | $35,900,000 | [1] | $92,400,000 | [1] | |||||||||||||||||||||
Basis Spread on Variable Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.80% | [1],[11] | ' | ' | ' | ' | ' | ' | ' | 1.75% | [11],[3] | ' | ' | 2.25% | [11] | ' | ' | ' | ' | 2.15% | [11],[4] | ' | ' | ' | ' | ' | ' | 1.90% | [11] | ' | ' | ' | ' | ' | 1.75% | [11],[8] | 1.85% | [11],[8] | ' | ' | ' | ' | ' | ' | 2.05% | [10],[11] | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||
Contractual Interest Rate, Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.50% | [11],[9] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||||||||||||||||||||||||||||||||||||
Effective Interest Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.10% | [1],[11] | ' | ' | ' | ' | ' | ' | ' | 3.50% | [11],[3] | ' | ' | 4.60% | [11] | ' | ' | ' | ' | 3.30% | [11],[4] | ' | ' | ' | ' | ' | ' | 2.90% | [11] | ' | ' | ' | ' | ' | 2.40% | [11],[8] | ' | ' | ' | 3.50% | [11],[9] | ' | ' | 2.90% | [10],[11] | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||
Payment Type | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Interest Only | [1] | ' | ' | ' | ' | ' | ' | ' | 'Interest Only | [3] | ' | ' | 'Interest Only | ' | ' | ' | ' | 'Interest Only | [4] | ' | ' | ' | ' | ' | ' | 'Interest Only | ' | ' | ' | ' | ' | 'Interest Only | [8] | ' | ' | ' | ' | ' | ' | 'Interest Only | [10] | ' | ' | ' | ' | ' | ' | ' | |||||||||||||||||||||||||||||||||||||||||
Maturity Date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21-Jun-17 | [1],[12] | ' | ' | ' | ' | ' | ' | ' | 15-Sep-15 | [12],[3] | ' | ' | 1-Jan-16 | [12] | ' | ' | ' | ' | 27-Jan-16 | [12],[4] | ' | ' | ' | ' | ' | ' | 1-Dec-15 | [12] | ' | ' | ' | ' | ' | 1-Mar-16 | [12],[8] | ' | ' | ' | 1-Apr-20 | [12],[9] | ' | ' | 1-Aug-16 | [10],[12] | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||
Term of credit facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||
Amortization schedule | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '30 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||
Amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 78,000,000 | [10] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 105,000,000 | [3] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||
Unused borrowing capacity, amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14,300,000 | [3] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||||||||||||||||||||||||||||||||||||
Borrowing capacity | ' | ' | 71,800,000 | [8] | 94,000,000 | [8] | 107,600,000 | [8] | 107,600,000 | [8] | 141,000,000 | [8] | 179,400,000 | [8] | 235,000,000 | [8] | 25,000,000 | [10] | ' | 95,000,000 | [10] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 120,000,000 | [10] | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||
Remaining borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 17,000,000 | [10] | ' | ' | ' | ' | ' | |||||||||||||||||||||||||||||||||||||||||||||
Extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $344,600,000 | ' | ' | $13,700,000 | ' | ' | ' | ' | ' | ' | ' | $53,100,000 | $16,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||
[1] | On June 4, 2014, in connection with the sale of Mountain View Corporate Center, the borrowing capacity under the Amended and Restated Portfolio Revolving Loan Facility was reduced from $145.0 million to $128.3 million. As of September 30, 2014, the Amended and Restated Portfolio Revolving Loan Facility was secured by 350 E. Plumeria Building, Pierre Laclede Center and One Main Place. As of September 30, 2014, the $92.4 million non-revolving portion had been funded, and the $35.9 million revolving portion remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[2] | On July 7, 2014, in connection with the disposition of the 300 N. LaSalle Building, the Company repaid the entire $344.6 million principal balance and all other sums due under this loan, including a prepayment penalty of $13.7 million. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[3] | On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of September 30, 2014, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[4] | As of September 30, 2014, the Portfolio Mortgage Loan #1 was secured by Horizon Tech Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center and I-81 Industrial Portfolio. On July 10, 2014, in connection with the disposition of Torrey Reserve West, the Company repaid $16.8 million of principal due under this loan and Torrey Reserve West was released as security from Portfolio Mortgage Loan #1. On July 25, 2014, in connection with the disposition of Two Westlake Park, the Company repaid $53.1 million of principal due under this loan and Two Westlake Park was released as security from Portfolio Mortgage Loan #1. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[5] | On June 11, 2014 in connection with the disposition of 601 Tower at Carlson Center, the Company paid off the outstanding principal balance and all other sums due under this loan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[6] | On August 21, 2014 in connection with the disposition of CityPlace Tower, the Company paid off the outstanding principal balance and all other sums due under this loan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[7] | On June 9, 2014, in connection with the payoff of the Pappas Commerce First Mortgage Loan, the Company repaid the outstanding principal balance due and all other sums under Portfolio Mortgage Loan #2. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[8] | On March 6, 2013, the Company entered into a three-year senior secured credit facility for borrowings of up to $235.0 million, of which $141.0 million was non-revolving debt and $94.0 million was revolving debt. On June 27, 2014, in connection with the sale of Metropolitan Center, the borrowing capacity under Portfolio Mortgage Loan #3 was reduced to $179.4 million, of which $107.6 million is non-revolving debt and $71.8 million is revolving debt. As of September 30, 2014, the principal balance consisted of the $107.6 million non-revolving portion. The revolving portion of $71.8 million remains available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of September 30, 2014, the Portfolio Mortgage Loan #3 was secured by the 100 & 200 Campus Drive Buildings and Willow Oaks Corporate Center. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[9] | Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[10] | On July 10, 2013, the Company entered into a three-year senior secured credit facility for borrowings of up to $120.0 million, of which $95.0 million is non-revolving debt and $25.0 million is revolving debt. As of September 30, 2014, the principal balance consisted of $78.0 million of the non-revolving portion. The remaining non-revolving portion of $17.0 million and the revolving portion of $25.0 million remain available for future disbursements, subject to certain terms and conditions contained in the loan documents. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[11] | Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2014. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2014 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates, if applicable), using interest rate indices as of September 30, 2014, where applicable. For further information regarding the Company’s derivative instruments, see Note 10, “Derivative Instruments.†| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[12] | Represents the initial maturity date or the maturity date as extended as of September 30, 2014; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. |
NOTES_PAYABLE_Schedule_of_Matu
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Notes Payable [Abstract] | ' | ' |
October 1, 2014 through December 31, 2014 | $0 | ' |
2015 | 185,000 | ' |
2016 | 454,965 | ' |
2017 | 94,157 | ' |
2018 | 2,750 | ' |
Thereafter | 135,470 | ' |
Total notes payable | $872,342 | $1,521,353 |
OTHER_COMPREHENSIVE_INCOME_LOS2
OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 |
Marketable Securities [Member] | Marketable Securities [Member] | Derivative [Member] | Derivative [Member] | |||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated other comprehensive income (loss) - Beginning balance | ' | ' | ($10,313) | ' | $0 | $0 | ($2,690) | ($10,313) |
Unrealized gains (losses), Derivative Instruments | 473 | -3,067 | -1,923 | -3,029 | ' | ' | ' | ' |
Unrealized gains (losses), Marketable Securities | -246 | 0 | -313 | 0 | ' | ' | ' | ' |
Unrealized gains (losses) | ' | ' | -2,236 | ' | ' | ' | ' | ' |
Reclassification adjustment realized in net income (effective portion) | 1,694 | 2,484 | 5,818 | 6,985 | ' | ' | ' | ' |
Reclassification of unrealized losses due to hedge ineffectiveness | 2,385 | 0 | 3,207 | 0 | ' | ' | ' | ' |
Reclassifications of realized losses related to swap terminations | 0 | 256 | 521 | 613 | ' | ' | ' | ' |
Reclassifications of realized losses related to marketable securities | 313 | 0 | 313 | 0 | ' | ' | ' | ' |
Accumulated other comprehensive income (loss) - Ending balance | ($2,690) | ' | ($2,690) | ' | $0 | $0 | ($2,690) | ($10,313) |
DERIVATIVE_INSTRUMENTS_Details
DERIVATIVE INSTRUMENTS (Details) (USD $) | 9 Months Ended | |||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Investments | Investments | |||
Derivative [Line Items] | ' | ' | ||
Interest rate swap agreements, termination, breakage fees | $200,000 | ' | ||
Interest Rate Swap [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Number of Instruments | 11 | [1] | 16 | [1] |
Notional Amount | 613,513,000 | [1] | 842,150,000 | [1] |
Weighted-Average Fix Pay Rate | 1.35% | [1] | ' | |
Weighted-Average Remaining Term in Years | '1 year 7 months 12 days | [1] | ' | |
Number of instruments terminated | 2 | [1] | ' | |
Number of instruments dedesignated | 11 | [1] | ' | |
Interest Rate Swap [Member] | Deferred Financing Costs, Prepaid Expenses and Other Assets [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Number of Instruments | 2 | 2 | ||
Notional Amount | 223,000 | 225,000 | ||
Interest Rate Swap [Member] | Other Liabilities [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Number of Instruments | 9 | 14 | ||
Notional Amount | $5,973,000 | $10,260,000 | ||
Interest Rate Swap [Member] | One-month LIBOR [Member] | Minimum [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Reference Rate | 0.50% | [1] | ' | |
Interest Rate Swap [Member] | One-month LIBOR [Member] | Maximum [Member] | ' | ' | ||
Derivative [Line Items] | ' | ' | ||
Reference Rate | 2.39% | [1] | ' | |
[1] | During the nine months ended September 30, 2014, the Company terminated two interest rate swap agreements and paid an aggregate breakage fee of $0.2 million. In addition, the Company dedesignated 11 interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales. The Company dedesignated these hedged instruments due to certain hedged forecasted transactions no longer being probable beyond the projected asset sale date. As of September 30, 2014, none of the Company’s interest rate swaps were designated as cash flow hedges. |
DERIVATIVE_INSTRUMENTS_Stateme
DERIVATIVE INSTRUMENTS (Statement of Operations) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Derivative [Line Items] | ' | ' | ' | ' |
Unrealized (gain) loss on interest rate swaps | ($473) | $3,067 | $1,923 | $3,029 |
Interest Rate Swap [Member] | ' | ' | ' | ' |
Derivative [Line Items] | ' | ' | ' | ' |
Increase in interest expense as a result of derivatives | 4,074 | 2,740 | 9,581 | 7,598 |
Interest Rate Swap [Member] | Derivatives Designated as Hedging Instrument [Member] | ' | ' | ' | ' |
Derivative [Line Items] | ' | ' | ' | ' |
Amount of loss recognized on interest rate swaps (effective portion) | 1,694 | 2,484 | 5,818 | 6,985 |
Unrealized losses due to hedge ineffectiveness | 2,385 | 0 | 3,207 | 0 |
Reclassification of realized losses related to swap terminations | 0 | 256 | 521 | 613 |
Increase in interest expense as a result of derivatives | 4,079 | 2,740 | 9,546 | 7,598 |
Interest Rate Swap [Member] | Derivatives Not Designated as Hedging Instrument [Member] | ' | ' | ' | ' |
Derivative [Line Items] | ' | ' | ' | ' |
Unrealized (gain) loss on interest rate swaps | -5 | 0 | 35 | 0 |
Increase in interest expense as a result of derivatives | ($5) | $0 | $35 | $0 |
FAIR_VALUE_DISCLOSURES_Schedul
FAIR VALUE DISCLOSURES (Schedule of Face Value, Carrying Amounts and Fair Value) (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Real estate loan receivable, Face Value | $73,060 | $184,900 |
Notes payable, Face Value | 872,342 | 1,521,353 |
Carrying Amount [Member] | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Real estate loans receivable, Value | 73,095 | 184,828 |
Notes payable, Value | 872,342 | 1,521,353 |
Fair Value [Member] | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Real estate loans receivable, Value | 73,552 | 190,485 |
Notes payable, Value | $873,250 | $1,526,075 |
FAIR_VALUE_DISCLOSURES_Schedul1
FAIR VALUE DISCLOSURES (Schedule of Assets and Liabilities at Fair Value) (Details) (Recurring Basis [Member], USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Assets derivatives | $223 |
Liability derivatives | -5,973 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Assets derivatives | 0 |
Liability derivatives | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Assets derivatives | 223 |
Liability derivatives | -5,973 |
Significant Unobservable Inputs (Level 3) [Member] | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' |
Assets derivatives | 0 |
Liability derivatives | $0 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (Advisor and Dealer Manager [Member], USD $) | 3 Months Ended | 9 Months Ended | ||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | |||||
Incurred | $15,459 | $6,123 | $29,430 | $19,462 | ' | |||||
Payable as of | 0 | ' | 0 | ' | 0 | |||||
Expensed [Member] | Asset Management Fees [Member] | ' | ' | ' | ' | ' | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | |||||
Expenses | 3,829 | 6,079 | 15,164 | 17,563 | ' | |||||
Payable as of | 0 | ' | 0 | ' | 0 | |||||
Expensed [Member] | Reimbursement of Operating Expenses [Member] | ' | ' | ' | ' | ' | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | |||||
Expenses | 39 | [1] | 44 | [1] | 112 | [1] | 102 | [1] | ' | |
Payable as of | 0 | [1] | ' | 0 | [1] | ' | 0 | [1] | ||
Expensed [Member] | Acquisition Fees [Member] | ' | ' | ' | ' | ' | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | |||||
Expenses | 0 | 0 | 0 | 1,797 | ' | |||||
Payable as of | 0 | ' | 0 | ' | 0 | |||||
Expensed [Member] | Dispositon Fees [Member] | ' | ' | ' | ' | ' | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | |||||
Expenses | 11,591 | [2] | 0 | [2] | 14,154 | [2] | 0 | [2] | ' | |
Payable as of | $0 | [2] | ' | $0 | [2] | ' | $0 | [2] | ||
[1] | The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $39,000 and $44,000 for the three months ended September 30, 2014 and 2013, respectively, and $112,000 and $102,000 for the nine months ended September 30, 2014 and 2013, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the three and nine months ended September 30, 2014 and 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. | |||||||||
[2] | Disposition fees with respect to real estate sold are included in the gain on sales of real estate in the accompanying consolidated statements of operations. |
RELATED_PARTY_TRANSACTIONS_Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jul. 07, 2014 | |
300 N. Lasalle [Member] | |||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' |
Administrative fees | $39,000 | $44,000 | $112,000 | $102,000 | ' |
Proceeds from divestiture of businesses | ' | ' | ' | ' | $850,000,000 |
SEGMENT_INFORMATION_Schedule_o
SEGMENT INFORMATION (Schedule of Segment Reporting Information, by Segment) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |||||
segments | |||||||||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | |||||
Number of reportable segments | ' | ' | 2 | ' | ' | ' | |||||
Revenues | $55,594 | $92,246 | $230,764 | $272,345 | ' | ' | |||||
Interest expense | 25,040 | 19,123 | 54,888 | 50,614 | ' | ' | |||||
Total net operating income | 7,399 | 37,770 | 82,072 | 118,778 | ' | ' | |||||
Assets | 1,703,751 | ' | 1,703,751 | ' | 2,954,300 | ' | |||||
Liabilities | 942,192 | ' | 942,192 | ' | 1,614,256 | ' | |||||
Cash and cash equivalents | 88,304 | 51,165 | 88,304 | 51,165 | 175,042 | 48,390 | |||||
Real Estate Segment [Member] | ' | ' | ' | ' | ' | ' | |||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | |||||
Revenues | 53,334 | [1] | 83,660 | [1] | 218,465 | [1] | 247,087 | [1] | ' | ' | |
Interest expense | 25,040 | [1] | 17,878 | [1] | 53,895 | [1] | 46,718 | [1] | ' | ' | |
Total net operating income | 5,277 | [1] | 30,900 | [1] | 71,417 | [1] | 98,608 | [1] | ' | ' | |
Assets | 1,473,070 | ' | 1,473,070 | ' | 1,514,167 | ' | |||||
Liabilities | 879,008 | ' | 879,008 | ' | 893,237 | ' | |||||
Real Estate-Related Segment [Member] | ' | ' | ' | ' | ' | ' | |||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | |||||
Revenues | 1,396 | 8,586 | 11,346 | 25,258 | ' | ' | |||||
Interest expense | 0 | 1,152 | 993 | 3,424 | ' | ' | |||||
Total net operating income | 1,258 | 6,870 | 9,702 | 20,170 | ' | ' | |||||
Assets | 73,599 | ' | 73,599 | ' | 229,457 | ' | |||||
Liabilities | 0 | ' | 0 | ' | 75,820 | ' | |||||
Operating Segments [Member] | ' | ' | ' | ' | ' | ' | |||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | |||||
Revenues | 54,730 | 92,246 | 229,811 | 272,345 | ' | ' | |||||
Interest expense | 25,040 | 19,030 | 54,888 | 50,142 | ' | ' | |||||
Total net operating income | 6,535 | 37,770 | 81,119 | 118,778 | ' | ' | |||||
Assets | 1,546,669 | ' | 1,546,669 | ' | 1,743,624 | ' | |||||
Liabilities | 879,008 | ' | 879,008 | ' | 969,057 | ' | |||||
Real Estate Held-for-Sale [Member] | ' | ' | ' | ' | ' | ' | |||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | |||||
Assets | 81,509 | ' | 81,509 | ' | 1,108,213 | ' | |||||
Liabilities | 56,228 | ' | 56,228 | ' | 633,820 | ' | |||||
Corporate-Level [Member] | ' | ' | ' | ' | ' | ' | |||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' | ' | |||||
Revenues | 864 | 0 | 953 | 0 | ' | ' | |||||
Interest expense | 0 | 93 | 0 | 472 | ' | ' | |||||
Total net operating income | 864 | 0 | 953 | 0 | ' | ' | |||||
Assets | 75,573 | [2] | ' | 75,573 | [2] | ' | 102,463 | [2] | ' | ||
Liabilities | 6,956 | [3] | ' | 6,956 | [3] | ' | 11,379 | [3] | ' | ||
Cash and cash equivalents | $75,100 | ' | $75,100 | ' | $102,200 | ' | |||||
[1] | Amounts include properties sold and properties held for sale. See Note 7, “Real Estate Held for Sale†for more information. | ||||||||||
[2] | Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $75.1 million and $102.2 million as of September 30, 2014 and December 31, 2013, respectively. | ||||||||||
[3] | As of September 30, 2014 and December 31, 2013, corporate-level liabilities consisted primarily of distributions payable. |
SEGMENT_INFORMATION_Reconcilia
SEGMENT INFORMATION (Reconciliation of Net Income (Loss) to Net Operating Income (Loss)) (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net income | $308,131 | $5,590 | $378,276 | $21,454 | $55,779 |
Gain on sales of real estate, net | -322,811 | 0 | -369,458 | 0 | ' |
Loss on sale of marketable securities | 331 | 0 | 331 | 0 | ' |
Other interest income | -133 | -6 | -188 | -21 | ' |
Real estate acquisition fees to affiliates | 0 | 0 | 0 | 1,797 | ' |
Real estate acquisition fees and expenses | 0 | 0 | 0 | 623 | ' |
General and administrative expenses | 1,106 | 1,347 | 3,909 | 3,684 | ' |
Depreciation and amortization | 16,835 | 30,746 | 64,187 | 90,769 | ' |
Impairment charge on real estate | 3,940 | 0 | 5,015 | 0 | ' |
Interest expense | 25,040 | 19,123 | 54,888 | 50,614 | ' |
Total net operating income | 7,399 | 37,770 | 82,072 | 118,778 | ' |
Corporate-Level [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Interest expense | 0 | 93 | 0 | 472 | ' |
Total net operating income | $864 | $0 | $953 | $0 | ' |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | 0 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | 0 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Aug. 29, 2014 | Feb. 04, 2013 | Sep. 30, 2013 | Aug. 31, 2014 | Sep. 30, 2013 | Nov. 03, 2014 | Oct. 01, 2014 | Nov. 10, 2014 |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||||||
Dividend Paid [Member] | Dividend Paid [Member] | Dividend Declared [Member] | ||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends declared | ' | ' | ' | ' | ' | $6.50 | $6.30 | ' |
Distribution rate per share per day, declared | $0.03 | $0.05 | $0.00 | $0.00 | $0.00 | $0.03 | $0.03 | $0.03 |
SUBSEQUENT_EVENTS_Purchase_and
SUBSEQUENT EVENTS (Purchase and Sale Agreements for Real Estate Properties Subsequent to September 30, 2014) (Details) (USD $) | 26-May-10 | Feb. 16, 2011 | Oct. 30, 2014 | Nov. 03, 2014 |
In Millions, unless otherwise specified | Crescent VIII [Member] | I-81 Industrial Portfolio [Member] | Subsequent Event [Member] | Subsequent Event [Member] |
Office Property [Member] | Industrial Property [Member] | Crescent VIII [Member] | I-81 Industrial Portfolio [Member] | |
acre | acre | |||
sqft | sqft | |||
Subsequent Event [Line Items] | ' | ' | ' | ' |
Net rentable area | 82,265 | 1,644,480 | ' | ' |
Area of land | 4.2 | 133.4 | ' | ' |
Sale price agreement, amount | ' | ' | $17.25 | $105.70 |
Amount that may be forfeited from purchaser | ' | ' | $0.50 | $2 |