Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 07, 2015 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | KBS Real Estate Investment Trust II, Inc. | |
Entity Central Index Key | 1,411,059 | |
Entity Filer Category | Non-accelerated Filer | |
Current Fiscal Year end | --12-31 | |
Entity Common Stock, Shares Outstanding | 190,100,430 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | |
Real estate: | |||
Land | $ 207,501 | $ 207,501 | |
Buildings and improvements | 1,048,280 | 1,074,148 | |
Tenant origination and absorption costs | 91,913 | 109,378 | |
Total real estate held for investment, cost | 1,347,694 | 1,391,027 | |
Less accumulated depreciation and amortization | (144,250) | (168,041) | |
Total real estate held for investment, net | 1,203,444 | 1,222,986 | |
Real estate held for sale, net | 0 | 93,682 | |
Total Real Estate | 1,203,444 | 1,316,668 | |
Real estate loans receivable, net | [1] | 72,620 | 72,940 |
Total real estate and real estate-related investments, net | 1,276,064 | 1,389,608 | |
Cash and cash equivalents | 191,363 | 179,021 | |
Rents and other receivables, net | 45,106 | 41,231 | |
Above-market leases, net | 8,919 | 10,271 | |
Assets related to real estate held for sale | 0 | 4,289 | |
Deferred financing costs, prepaid expenses and other assets | 32,724 | 33,096 | |
Total assets | 1,554,176 | 1,657,516 | |
Notes payable: | |||
Notes payable | 700,911 | 726,959 | |
Notes payable related to real estate held for sale | 0 | 63,652 | |
Total notes payable | 700,911 | 790,611 | |
Accounts payable and accrued liabilities | 17,005 | 23,183 | |
Due to affiliate | 43 | 38 | |
Distributions payable | 4,582 | 6,456 | |
Below-market leases, net | 7,011 | 8,904 | |
Liabilities related to real estate held for sale | 0 | 3,024 | |
Other liabilities | 12,968 | 15,773 | |
Total liabilities | $ 742,520 | $ 847,989 | |
Commitments and contingencies (Note 12) | |||
Redeemable common stock | $ 7,477 | $ 10,000 | |
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, 190,131,064 and 190,561,603 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively | 1,901 | 1,905 | |
Additional paid-in capital | 1,690,014 | 1,690,010 | |
Cumulative distributions in excess of net income | (887,411) | (890,751) | |
Accumulated other comprehensive loss | (325) | (1,637) | |
Total stockholders’ equity | 804,179 | 799,527 | |
Total liabilities and stockholders’ equity | $ 1,554,176 | $ 1,657,516 | |
[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) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
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 | 190,131,064 | 190,561,603 |
Common stock, shares outstanding | 190,131,064 | 190,561,603 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues: | ||||
Rental income | $ 34,271 | $ 62,049 | $ 71,095 | $ 127,264 |
Tenant reimbursements | 3,711 | 15,893 | 7,603 | 32,562 |
Interest income from real estate loans receivable | 1,374 | 1,986 | 2,736 | 9,950 |
Interest income from marketable securities | 0 | 89 | 0 | 89 |
Other operating income | 1,847 | 2,699 | 3,699 | 5,306 |
Total revenues | 41,203 | 82,716 | 85,133 | 175,171 |
Expenses: | ||||
Operating, maintenance, and management | 8,114 | 16,784 | 18,264 | 34,980 |
Real estate taxes and insurance | 5,202 | 12,015 | 10,423 | 24,334 |
Asset management fees to affiliate | 3,022 | 5,631 | 6,108 | 11,335 |
General and administrative expenses | 1,045 | 1,513 | 2,168 | 2,802 |
Depreciation and amortization | 14,802 | 18,509 | 27,741 | 47,352 |
Interest expense | 5,605 | 15,213 | 12,452 | 29,848 |
Impairment charge on real estate | 0 | 0 | 4,486 | 1,075 |
Total expenses | 37,790 | 69,665 | 81,642 | 151,726 |
Other income: | ||||
Other interest income | 55 | 21 | 102 | 54 |
Gain on sales of real estate, net | 11 | 46,647 | 27,418 | 46,647 |
Total other income | 66 | 46,668 | 27,520 | 46,701 |
Net income | $ 3,479 | $ 59,719 | $ 31,011 | $ 70,146 |
Net income per common share, basic and diluted (in dollars per share) | $ 0.02 | $ 0.31 | $ 0.16 | $ 0.37 |
Weighted-average number of common shares outstanding, basic and diluted | 190,364,308 | 191,328,706 | 190,446,527 | 191,939,971 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,479 | $ 59,719 | $ 31,011 | $ 70,146 |
Other comprehensive income: | ||||
Unrealized losses on derivative instruments | 0 | (1,390) | 0 | (2,396) |
Unrealized losses on marketable securities | 0 | (67) | 0 | (67) |
Reclassification of realized losses recognized on interest rate swaps (effective portion) | 620 | 1,939 | 1,312 | 4,124 |
Reclassification of unrealized losses due to hedge ineffectiveness | 0 | 0 | 0 | 822 |
Reclassification of realized losses related to swap terminations | 0 | 364 | 0 | 521 |
Total other comprehensive income | 620 | 846 | 1,312 | 3,004 |
Total comprehensive income | $ 4,099 | $ 60,565 | $ 32,323 | $ 73,150 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Cumulative Distributions and Net Income (Loss) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] |
Balance, shares at Dec. 31, 2013 | 192,269,969 | ||||
Balance, value at Dec. 31, 2013 | $ 1,269,482 | $ 1,923 | $ 1,647,214 | $ (369,342) | $ (10,313) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 445,507 | 445,507 | |||
Other comprehensive income | 8,676 | 8,676 | |||
Issuance of common stock, shares | 2,749,008 | ||||
Issuance of common stock, value | 26,885 | $ 28 | 26,857 | ||
Redemptions of common stock, shares | (4,457,374) | ||||
Redemptions of common stock, value | (44,659) | $ (46) | (44,613) | ||
Transfers from/ (to) redeemable common stock | 60,552 | 60,552 | |||
Distributions declared | $ (966,916) | (966,916) | |||
Balance, shares at Dec. 31, 2014 | 190,561,603 | 190,561,603 | |||
Balance, value at Dec. 31, 2014 | $ 799,527 | $ 1,905 | 1,690,010 | (890,751) | (1,637) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 31,011 | 31,011 | |||
Other comprehensive income | 1,312 | 1,312 | |||
Redemptions of common stock, shares | (430,539) | ||||
Redemptions of common stock, value | (2,523) | $ (4) | (2,519) | ||
Transfers from/ (to) redeemable common stock | 2,523 | 2,523 | |||
Distributions declared | $ (27,671) | (27,671) | |||
Balance, shares at Jun. 30, 2015 | 190,131,064 | 190,131,064 | |||
Balance, value at Jun. 30, 2015 | $ 804,179 | $ 1,901 | $ 1,690,014 | $ (887,411) | $ (325) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash Flows from Operating Activities: | ||
Net income | $ 31,011 | $ 70,146 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 27,741 | 47,352 |
Impairment charge on real estate | 4,486 | 1,075 |
Noncash interest expense (income) on real estate-related investments | 6 | (112) |
Deferred rent | (2,552) | (3,717) |
Bad debt expense | 78 | 390 |
Amortization of above- and below-market leases, net | (562) | 1,532 |
Amortization of deferred financing costs | 1,100 | 2,759 |
Reclassification of realized losses on derivative instruments | 0 | 521 |
Unrealized losses due to hedge ineffectiveness | 0 | 822 |
Unrealized (gains) losses on derivative instruments | (638) | 40 |
Gain on sales of real estate, net | (27,418) | (46,647) |
Changes in operating assets and liabilities: | ||
Restricted cash for operational expenditures | 49 | 0 |
Rents and other receivables | (1,382) | (1,830) |
Prepaid expenses and other assets | (9,267) | (6,314) |
Accounts payable and accrued liabilities | (1,195) | 482 |
Due to affiliates | 5 | 0 |
Other liabilities | (733) | (8,152) |
Net cash provided by operating activities | 20,729 | 58,347 |
Cash Flows from Investing Activities: | ||
Proceeds from sale of real estate | 122,920 | 247,884 |
Improvements to real estate | (9,843) | (11,509) |
Investments in marketable securities | 0 | (173,002) |
Principal repayments on real estate loans receivable | 314 | 61 |
Proceeds from early payoff or sale of real estate loans receivable | 0 | 111,688 |
Net cash provided by investing activities | 113,391 | 175,122 |
Cash Flows from Financing Activities: | ||
Principal payments on notes payable | (89,700) | (162,952) |
Payments of deferred financing costs | (10) | (11) |
Payments to redeem common stock | (2,523) | (42,217) |
Distributions paid to common stockholders | (29,545) | (35,417) |
Net cash used in financing activities | (121,778) | (240,597) |
Net increase (decrease) in cash and cash equivalents | 12,342 | (7,128) |
Cash and cash equivalents, beginning of period | 179,021 | 175,042 |
Cash and cash equivalents, end of period | 191,363 | 167,914 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 12,128 | 26,315 |
Supplemental Disclosure of Noncash Transactions: | ||
Decrease in distributions payable | (1,874) | (448) |
Increase in accrued improvements to real estate | 1,243 | 2,484 |
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | $ 0 | $ 26,885 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2015 | |
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 invested in a diverse portfolio of real estate and real estate-related investments. As of June 30, 2015 , the Company owned 12 real estate properties (consisting of 10 office properties, one office/flex property and an office campus consisting of eight office buildings) and two real estate loans receivable. 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, 2015 (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 June 30, 2015 , the Company had redeemed 23,474,074 shares sold in the Offering for $232.1 million . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
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, 2014 . 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, 2014 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 six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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 six months ended June 30, 2015 , the Company sold one office property. 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 June 30, 2015 , the Company reclassified two properties that were previously classified as held for sale to held for investment. 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 six months ended June 30, 2015 and 2014 , respectively. Distributions declared per common share were $0.073 and $0.145 for the three and six months ended June 30, 2015 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions during the six months ended June 30, 2015 . These distributions declared consisted of the following: • On January 15, 2015, the Company’s board of directors declared January 2015 and February 2015 distributions in the amounts of $0.02488493 and $0.02247671 , respectively, per share of common stock to stockholders of record as of the close of business on January 29, 2015 and February 26, 2015, respectively. • On March 6, 2015, the Company’s board of directors declared March 2015 and April 2015 distributions in the amounts of $0.02488493 and $0.02408219 , respectively, per share of common stock to stockholders of record as of the close of business on March 20, 2015 and April 20, 2015, respectively. • On May 13, 2015, the Company’s board of directors declared May 2015 and June 2015 distributions in the amounts of $0.02488493 and $0.02408219 , respectively, per share of common stock to stockholders of record as of the close of business on May 20, 2015 and June 19, 2015, respectively. Distributions declared per common share were $0.162 and $0.322 for the three and six months ended June 30, 2014 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three and six months ended June 30, 2014 . For each day that was a record date for distributions during the three and six months ended June 30, 2014 , distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2014 through June 30, 2014 was a record date for distributions. 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 11, “Segment Information.” Recently Issued Accounting Standards Update 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. On July 9, 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company is still evaluating the impact of adopting ASU No. 2014-09 on its financial statements, but 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 No. 2014-15 to have a significant impact on its financial statements. In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU No. 2015-01”). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendments will eliminate the requirements in Subtopic 225-20 for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU No. 2015-01 to have a significant impact on its financial statements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs (“ASU No. 2015-03”). The amendments in ASU No. 2015-03 require debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. ASU No. 2015-03 is limited to the presentation of debt issuance costs and does not affect the recognition and measurement of debt issuance costs. ASU No. 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and is to be applied retrospectively. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU No. 2015-03 would change the presentation of debt issuance costs as the Company presents debt issuance costs as deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets. |
REAL ESTATE HELD FOR INVESTMENT
REAL ESTATE HELD FOR INVESTMENT | 6 Months Ended |
Jun. 30, 2015 | |
Real Estate [Abstract] | |
REAL ESTATE HELD FOR INVESTMENT | REAL ESTATE HELD FOR INVESTMENT As of June 30, 2015 , the Company’s portfolio of real estate held for investment was composed of ten office properties, one office/flex property and an office campus consisting of eight office buildings, encompassing in the aggregate approximately 5.2 million rentable square feet. As of June 30, 2015 , the Company’s real estate portfolio was 89% occupied. The following table summarizes the Company’s real estate portfolio held for investment as of June 30, 2015 (in thousands): Property Date Acquired City State Property Type Total Real Estate at Cost (1) Accumulated Depreciation and Amortization (1) Total Real Estate, Net (1) 100 & 200 Campus Drive Buildings 09/09/2008 Florham Park NJ Office $ 197,451 $ (44,589 ) $ 152,862 300-600 Campus Drive Buildings 10/10/2008 Florham Park NJ Office 146,700 (3,042 ) 143,658 350 E. Plumeria Building 12/18/2008 San Jose CA Office/Flex 36,413 (7,349 ) 29,064 Willow Oaks Corporate Center 08/26/2009 Fairfax VA Office 103,547 (20,237 ) 83,310 Pierre Laclede Center 02/04/2010 Clayton MO Office 68,489 (1,328 ) 67,161 Horizon Tech Center 06/17/2010 San Diego CA Office 28,200 (440 ) 27,760 Union Bank Plaza 09/15/2010 Los Angeles CA Office 185,992 (2,786 ) 183,206 Emerald View at Vista Center 12/09/2010 West Palm Beach FL Office 30,614 (4,911 ) 25,703 Granite Tower 12/16/2010 Denver CO Office 154,883 (28,313 ) 126,570 Gateway Corporate Center 01/26/2011 Sacramento CA Office 45,079 (8,157 ) 36,922 Fountainhead Plaza 09/13/2011 Tempe AZ Office 119,384 (4,104 ) 115,280 Corporate Technology Centre 03/28/2013 San Jose CA Office 230,942 (18,994 ) 211,948 $ 1,347,694 $ (144,250 ) $ 1,203,444 _____________________ (1) Amounts presented are net of impairment charges. As of June 30, 2015 , the following properties represented more than 10% of the Company’s total assets: Property Location Rentable Square Feet Total Real Estate, Net (in thousands) Percentage of Total Assets Annualized Base Rent (in thousands) (1) Average Annualized Base Rent per Sq. Ft. Occupancy Corporate Technology Centre San Jose, CA 610,083 $ 211,948 13.6 % $ 18,537 $ 30.38 100 % Union Bank Plaza Los Angeles, CA 627,334 183,206 11.8 % 23,217 38.75 96 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of June 30, 2015 , 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 June 30, 2015 , the leases had remaining terms, excluding options to extend, of up to 14.3 years with a weighted-average remaining term of 4.3 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 $2.5 million and $2.5 million as of June 30, 2015 and December 31, 2014 , respectively. During the six months ended June 30, 2015 and 2014 , the Company recognized deferred rent from tenants, net of lease incentive amortization, of $2.6 million and $3.7 million , respectively. As of June 30, 2015 and December 31, 2014 , the cumulative deferred rent balance was $42.4 million and $39.4 million , respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $4.1 million and $4.0 million of unamortized lease incentives as of June 30, 2015 and December 31, 2014 , respectively. As of June 30, 2015 , the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands): July 1, 2015 through December 31, 2015 $ 62,393 2016 125,634 2017 117,028 2018 101,102 2019 80,835 Thereafter 369,600 $ 856,592 As of June 30, 2015 , the Company had over 250 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 Base Rent (1) (in thousands) Percentage of Annualized Base Rent Finance 31 $ 30,170 22.1 % Computer System Design & Programming 10 25,792 18.9 % $ 55,962 41.0 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of June 30, 2015 , 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 June 30, 2015 . During the six months ended June 30, 2015 and 2014 , the Company recorded bad debt expense of $0.1 million and $0.4 million , respectively. As of June 30, 2015 , the Company had a bad debt expense reserve of approximately $0.2 million , which represented less than 1% of its annualized base rent. As of June 30, 2015 , 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 Feet % of Portfolio (Net Rentable Sq. Ft.) Annualized Base Rent (in thousands) (1) % of Portfolio Annualized Base Rent Annualized Base Rent per Sq. Ft. Lease Expiration (2) Union Bank Union Bank Plaza Finance 408,260 8.8% $ 16,742 12.3% $ 41.01 09/30/2016 / 01/31/2022 _____________________ (1) Annualized base rent represents annualized contractual base rental income as of June 30, 2015 , 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 June 30, 2015 and does not take into account any tenant renewal or termination options. Geographic Concentration Risk As of June 30, 2015 , the Company’s net investments in real estate in California and New Jersey represented 31.5% and 19.1% 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 six months ended June 30, 2015 , the Company recorded impairment charges of $4.5 million 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. |
TENANT ORIGINATION AND ABSORPTI
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 , 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 Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities June 30, December 31, June 30, December 31, June 30, December 31, Cost $ 91,913 $ 109,378 $ 15,815 $ 17,281 $ (23,237 ) $ (24,917 ) Accumulated Amortization (40,207 ) (49,302 ) (6,896 ) (7,010 ) 16,226 16,013 Net Amount $ 51,706 $ 60,076 $ 8,919 $ 10,271 $ (7,011 ) $ (8,904 ) 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 six months ended June 30, 2015 and 2014 were as follows (in thousands): Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities For the Three Months Ended June 30, For the Three Months Ended June 30, For the Three Months Ended June 30, 2015 2014 2015 2014 2015 2014 Amortization $ (3,732 ) $ (6,164 ) $ (651 ) $ (2,702 ) $ 822 $ 1,676 Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities For the Six Months Ended June 30, For the Six Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 2015 2014 Amortization $ (7,365 ) $ (15,230 ) $ (1,399 ) $ (5,077 ) $ 1,961 $ 3,545 |
REAL ESTATE LOANS RECEIVABLE
REAL ESTATE LOANS RECEIVABLE | 6 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
REAL ESTATE LOANS RECEIVABLE | REAL ESTATE LOANS RECEIVABLE As of June 30, 2015 and December 31, 2014 , the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands): Loan Name Location of Related Property or Collateral Date Acquired/ Originated Property Type Loan Type Outstanding Principal Balance as of June 30, 2015 (1) Book Value as of June 30, 2015 (2) Book Value as of December 31, 2014 (2) Contractual Interest Rate (3) Annualized Effective Interest Rate (3) Maturity Date (4) Sheraton Charlotte Airport Hotel First Mortgage Charlotte, North Carolina 07/11/2011 Hotel Mortgage $ 14,276 $ 14,286 $ 14,353 7.5% 7.6% 08/01/2018 Summit I & II First Mortgage (5) Reston, Virginia 01/17/2012 Office Mortgage 58,319 58,334 58,587 7.5% 7.6% 02/01/2017 $ 72,595 $ 72,620 $ 72,940 _____________________ (1) Outstanding principal balance as of June 30, 2015 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 2015, using the interest method, annualized and divided by the average amortized cost basis of the investment during 2015. The contractual interest rates and annualized effective interest rates presented are as of June 30, 2015 . (4) Maturity dates are as of June 30, 2015 ; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown. (5) Subsequent to June 30, 2015 , the borrower under the Summit I & II First Mortgage paid off the entire principal balance outstanding of $58.3 million plus accrued interest. See Note 13, “Subsequent Events — Payoff of Summit I & II First Mortgage.” The following summarizes the activity related to real estate loans receivable for the six months ended June 30, 2015 (in thousands): Real estate loans receivable - December 31, 2014 $ 72,940 Principal repayments received on real estate loans receivable (314 ) Amortization of closing costs and origination fees on real estate loans receivable (6 ) Real estate loans receivable - June 30, 2015 $ 72,620 For the three and six months ended June 30, 2015 and 2014 , interest income from real estate loans receivable consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Contractual interest income $ 1,377 $ 1,989 $ 2,742 $ 4,921 Prepayment fee received on real estate loan receivable — — — 4,917 Amortization of closing costs and origination fees (3 ) (3 ) (6 ) 112 Interest income from real estate loans receivable $ 1,374 $ 1,986 $ 2,736 $ 9,950 As of June 30, 2015 and December 31, 2014 , interest receivable from real estate loans receivable was $0.5 million and $0.5 million , respectively, and was included in rents and other receivables. |
REAL ESTATE SALES
REAL ESTATE SALES | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
REAL ESTATE SALES | REAL ESTATE SALES In accordance with 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”), results of operations from 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. Results of operations from properties that were classified as held for sale in financial statements issued prior to January 1, 2014 will remain in discontinued operations on the Company’s consolidated statements of operations. Prior to the adoption of ASU No. 2014-08, the results of operations of properties held for sale or to be disposed of and the aggregate net gains recognized upon their disposition were presented as discontinued operations in the accompanying consolidated statements of operations for all periods presented. During the six months ended June 30, 2015 , the Company disposed of one office property. During the year ended December 31, 2014 , the Company disposed of nine office properties, one industrial property, a portfolio of four industrial properties and a leasehold interest in one industrial property. The results of operations for the properties sold during the six months ended June 30, 2015 and the year ended December 31, 2014 are included in continuing operations on the Company’s consolidated statements of operations. The following table summarizes certain revenue and expenses related to the Company’s real estate properties that were sold during the year ended December 31, 2014 and six months ended June 30, 2015 , which were included in continuing operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenues Rental income $ — $ 28,036 $ 1,835 $ 58,889 Tenant reimbursements — 11,438 140 23,492 Other operating income — 914 126 1,884 Total revenues — 40,388 2,101 84,265 Expenses Operating, maintenance, and management — 8,467 536 17,913 Real estate taxes and insurance — 7,354 230 14,600 Asset management fees to affiliate — 2,597 108 5,240 General and administrative expenses — 343 — 384 Depreciation and amortization — 4,292 — 17,956 Interest expense — 8,359 411 15,531 Impairment charge on real estate — — — 1,075 Total expenses $ — $ 31,412 $ 1,285 $ 72,699 During the six months ended June 30, 2014 , the Company recorded an impairment charge of $1.1 million related to a real estate property held for sale as of that date. The impairment charge represents the difference between the carrying value of the real estate and the fair value of the real estate (based on a purchase and sale agreement which the Company had entered into) less costs to sell. The following summary presents the major components of assets and liabilities related to real estate held for sale as of June 30, 2015 and December 31, 2014 (in thousands). No real estate properties were held for sale as of June 30, 2015 . June 30, 2015 December 31, 2014 Assets related to real estate held for sale Total real estate, at cost and net of impairment charge $ — $ 116,264 Accumulated depreciation and amortization — (22,582 ) Real estate held for sale, net — 93,682 Other assets — 4,289 Total assets related to real estate held for sale $ — $ 97,971 Liabilities related to real estate held for sale Notes payable — 63,652 Other liabilities — 3,024 Total liabilities related to real estate held for sale $ — $ 66,676 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2015 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of June 30, 2015 and December 31, 2014 , 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 June 30, 2015 Principal as of December 31, 2014 Contractual Interest Rate as of June 30, 2015 (1) Effective Interest Rate as of June 30, 2015 (1) Payment Type Maturity Date (2) Amended and Restated Portfolio Revolving Loan Facility (3) $ 75,438 $ 75,438 One-month LIBOR + 1.80% (3) 3.1% Interest Only 06/21/2017 Union Bank Plaza Mortgage Loan (4) 105,000 105,000 One-month LIBOR + 1.75% 3.5% Interest Only 09/15/2015 Emerald View at Vista Center Mortgage Loan 19,800 19,800 One-month LIBOR + 2.25% 4.6% Interest Only 01/01/2016 Portfolio Mortgage Loan #1 (5) 95,033 184,733 One-month LIBOR + 2.15% 3.5% Interest Only 01/27/2016 Fountainhead Plaza Mortgage Loan 80,000 80,000 One-month LIBOR + 1.90% 2.9% Interest Only 12/01/2015 Portfolio Mortgage Loan #3 (6) 107,640 107,640 One-month LIBOR + 2.4% Interest Only 03/01/2016 Corporate Technology Centre Mortgage Loan (7) 140,000 140,000 3.50% 3.5% (7) 04/01/2020 300-600 Campus Drive Revolving Loan (8) 78,000 78,000 One-month LIBOR + 2.05% (8) 2.9% Interest Only 08/01/2016 $ 700,911 $ 790,611 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of June 30, 2015 . Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2015 (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 June 30, 2015 , where applicable. For further information regarding the Company’s derivative instruments, see Note 8, “Derivative Instruments.” (2) Represents the initial maturity date or the maturity date as extended as of June 30, 2015 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) As of June 30, 2015 , the Amended and Restated Portfolio Revolving Loan Facility was secured by 350 E. Plumeria Building and Pierre Laclede Center. (4) As of June 30, 2015 , $105.0 million of the Union Bank Plaza Mortgage Loan 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. (5) As of June 30, 2015 , Portfolio Mortgage Loan #1 was secured by Horizon Tech Center, Granite Tower and Gateway Corporate Center. On February 13, 2015, in connection with the disposition of National City Tower, the Company repaid $89.7 million of principal due under this loan and National City Tower was released as security from Portfolio Mortgage Loan #1. (6) As of June 30, 2015 , the principal balance of Portfolio Mortgage Loan #3 consisted of the $107.6 million non-revolving portion. The revolving portion of $41.6 million remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of June 30, 2015 , the Portfolio Mortgage Loan #3 was secured by the 100 & 200 Campus Drive Buildings and Willow Oaks Corporate Center. (7) Monthly payments are initially interest-only. Beginning on May 1, 2017 , monthly payments for Corporate Technology Centre Mortgage Loan 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. (8) As of June 30, 2015 , the principal balance of the 300-600 Campus Drive Revolving Loan 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 remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of June 30, 2015 and December 31, 2014 , the Company’s deferred financing costs were $2.1 million and $3.1 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 six months ended June 30, 2015 , the Company incurred $5.6 million and $12.5 million of interest expense, respectively. During the three and six months ended June 30, 2014 , the Company incurred $15.2 million and $29.8 million of interest expense, respectively. As of June 30, 2015 and December 31, 2014 , $1.9 million and $2.2 million , respectively, of interest expense were payable. Included in interest expense for the three and six months ended June 30, 2015 were $0.5 million and $1.1 million of amortization of deferred financing costs, respectively. Included in interest expense for the three and six months ended June 30, 2014 were $1.9 million and $2.8 million of amortization of deferred financing costs, respectively. Interest expense incurred as a result of the Company’s interest rate swap agreements were $1.0 million and $2.8 million for the three and six months ended June 30, 2015 , respectively. Interest expense incurred as a result of the Company’s interest rate swap agreements was $2.4 million and $5.5 million for the three and six months ended June 30, 2014 , respectively. The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of June 30, 2015 (in thousands): July 1, 2015 through December 31, 2015 $ 185,000 2016 300,473 2017 77,218 2018 2,750 2019 2,848 Thereafter 132,622 $ 700,911 Certain of the Company’s notes payable contain financial debt covenants. As of June 30, 2015 , the Company was in compliance with these debt covenants. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 . The notional amount 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 June 30, 2015 December 31, 2014 Reference Rate as of June 30, 2015 Weighted-Average Fix Pay Rate Weighted-Average Remaining Term in Years Number of Instruments Notional Amount Number of Instruments Notional Amount Interest Rate Swaps (1) 9 $519,175 11 $596,575 One-month LIBOR/ 1.27% 0.9 _____________________ (1) During the six months ended June 30, 2015 , the Company terminated one interest rate swap agreement and paid an aggregate breakage fee of $0.2 million . Also, one of the Company’s interest rate swaps expired during the six months ended June 30, 2015 . As of June 30, 2015 and December 31, 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 June 30, 2015 and December 31, 2014 (dollars in thousands): Derivative Instruments Balance Sheet Location June 30, 2015 December 31, 2014 Number of Instruments Fair Value Number of Instruments Fair Value Interest Rate Swaps Deferred financing costs, prepaid expenses and other assets, at fair value — $ — 2 $ 122 Interest Rate Swaps Other liabilities, at fair value 9 $ (2,678 ) 9 $ (4,749 ) 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 June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Derivatives designated as hedging instruments (1) Amount of loss recognized on interest rate swaps (effective portion) $ 620 $ 1,939 $ 1,312 $ 4,124 Unrealized losses due to hedge ineffectiveness — — — 822 Reclassification of realized losses related to swap terminations — 364 — 521 620 2,303 1,312 5,467 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps 951 — 1,940 — Unrealized (gains) losses on interest rate swaps (607 ) 55 (638 ) 40 Losses related to swap terminations — — 170 — 344 55 1,472 40 Increase in interest expense as a result of derivatives $ 964 $ 2,358 $ 2,784 $ 5,507 _____________________ (1) All of the Company’s interest rate swap agreements were initially designated as cash flow hedges. During 2014, the Company dedesignated all of its interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales, and therefore, certain hedged forecasted transactions were no longer probable beyond the projected asset sale date. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 , which carrying amounts do not generally approximate the fair values (in thousands): June 30, 2015 December 31, 2014 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial assets: Real estate loans receivable $ 72,595 $ 72,620 $ 73,906 $ 72,908 $ 72,940 $ 73,414 Financial liabilities: Notes payable $ 700,911 $ 700,911 $ 701,759 $ 790,611 $ 790,611 $ 794,439 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. As of June 30, 2015 , the Company measured the following liabilities at fair value (in thousands): Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recurring Basis: Liability derivatives $ 2,678 $ — $ 2,678 $ — |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company has entered into the Advisory Agreement with the Advisor. This agreement entitles the Advisor to specified fees upon the provision of certain services with regard to the management of the Company’s 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., KBS Strategic Opportunity REIT II, Inc. and KBS Growth & Income REIT, 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. In June 2015, KBS Growth & Income REIT, Inc. was added to the insurance program at terms similar to those described above. During the six months ended June 30, 2015 and 2014 , 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., KBS Strategic Opportunity REIT II, Inc. and KBS Growth & Income REIT, Inc. Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and six months ended June 30, 2015 and 2014 , respectively, and any related amounts payable as of June 30, 2015 and December 31, 2014 (in thousands): Incurred Payable as of Three Months Ended June 30, Six Months Ended June 30, June 30, December 31, 2015 2014 2015 2014 2015 2014 Expensed Asset management fees $ 3,022 $ 5,631 $ 6,108 $ 11,335 $ — $ — Reimbursement of operating expenses (1) 40 37 79 73 43 38 Disposition fees (2) — 2,563 1,239 2,563 — — $ 3,062 $ 8,231 $ 7,426 $ 13,971 $ 43 $ 38 _____________________ (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 $35,000 and $37,000 for the three months ended June 30, 2015 and 2014 , respectively, and $68,000 and $73,000 for the six months ended June 30, 2015 and 2014 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the six months ended June 30, 2015 and 2014 . 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 sale of real estate, net in the accompanying consolidated statements of operations. Disposition fees with respect to real estate loans receivable sold are included in the gain on payoff or sale of real estate loans receivable in the accompanying consolidated statements of operations. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2015 | |
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, asset management fees, 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 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 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, asset management fees 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. During the year ended December 31, 2014, the Company revised its definition of NOI to exclude asset management fees, which the Company does not consider to be controllable in connection with the management of each property or real estate-related asset and is viewed by the chief operating decision makers as a corporate-level administrative expense. NOI for all prior periods presented has been adjusted to conform to the current period definition. The following tables summarize total revenues and NOI for each reportable segment for the three and six months ended June 30, 2015 and 2014 and total assets and total liabilities for each reportable segment as of June 30, 2015 and December 31, 2014 (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Revenues: Real estate segment (1) $ 39,829 $ 80,641 $ 82,397 $ 165,132 Real estate-related segment 1,374 1,986 2,736 9,950 Total segment revenues 41,203 82,627 85,133 175,082 Corporate-level — 89 — 89 Total revenues $ 41,203 $ 82,716 $ 85,133 $ 175,171 Interest Expense: Real estate segment (1) $ 5,605 $ 14,626 $ 12,452 $ 28,855 Real estate-related segment — 587 — 993 Total interest expense $ 5,605 $ 15,213 $ 12,452 $ 29,848 NOI: Real estate segment (1) $ 20,912 $ 37,216 $ 41,270 $ 77,014 Real estate-related segment 1,370 1,399 2,724 8,906 Total segment NOI 22,282 38,615 43,994 85,920 Corporate-level — 89 — 89 Total NOI $ 22,282 $ 38,704 $ 43,994 $ 86,009 As of June 30, As of December 31, 2015 2014 Assets: Real estate segment $ 1,300,394 $ 1,317,990 Real estate-related segment 73,638 73,457 Total segment assets 1,374,032 1,391,447 Real estate held for sale — 97,971 Corporate-level (2) 180,144 168,098 Total assets $ 1,554,176 $ 1,657,516 Liabilities: Real estate segment $ 737,456 $ 774,173 Real estate-related segment — 2 Total segment liabilities 737,456 774,175 Real estate held for sale — 66,676 Corporate-level (3) 5,064 7,138 Total liabilities $ 742,520 $ 847,989 _____________________ (1) Amounts include properties sold. See Note 6, “Real Estate Sales” for more information. (2) Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $180.0 million and $167.8 million as of June 30, 2015 and December 31, 2014 , respectively. (3) As of June 30, 2015 and December 31, 2014 , corporate-level liabilities consisted primarily of distributions payable. The following table reconciles the Company’s net income to its NOI for the three and six months ended June 30, 2015 and 2014 (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net income $ 3,479 $ 59,719 $ 31,011 $ 70,146 Gain on sale of real estate, net (11 ) (46,647 ) (27,418 ) (46,647 ) Other interest income (55 ) (21 ) (102 ) (54 ) Asset management fees to affiliate 3,022 5,631 6,108 11,335 General and administrative expenses 1,045 1,513 2,168 2,802 Depreciation and amortization 14,802 18,509 27,741 47,352 Impairment charge on real estate — — 4,486 1,075 NOI $ 22,282 $ 38,704 $ 43,994 $ 86,009 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 . 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 | 6 Months Ended |
Jun. 30, 2015 | |
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 July 1, 2015, the Company paid distributions of $4.6 million , which related to distributions declared for June 2015 in the amount of $0.02408219 per share of common stock to stockholders of record as of the close of business on June 19, 2015. On August 3, 2015, the Company paid distributions of $4.7 million , which related to distributions declared for July 2015 in the amount of $0.02488493 per share of common stock to stockholders of record as of the close of business on July 20, 2015. Distributions Declared On August 11, 2015, the Company’s board of directors declared an August 2015 distribution in the amount of $0.02488493 per share of common stock to stockholders of record as of the close of business on August 20, 2015, which the Company expects to pay in September 2015, and a September 2015 distribution in the amount of $0.02408219 per share of common stock to stockholders of record as of the close of business on September 21, 2015, which the Company expects to pay in October 2015. Payoff of Summit I & II First Mortgage On January 17, 2012, the Company, through an indirect wholly owned subsidiary, originated a first mortgage loan in the amount of up to $58.8 million (the “Summit I & II First Mortgage”) to fund the acquisition of two six-story Class B+ office buildings located in Reston, Virginia. On August 4, 2015, the borrower of the Summit I & II First Mortgage exercised its prepayment option, pursuant to which the borrower paid off the entire principal balance outstanding and accrued interest in the amount of $58.7 million , and paid a yield maintenance premium of $0.9 million . The Summit I & II First Mortgage had an original maturity date of February 1, 2017 and bore interest at a fixed rate of 7.5% . |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
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 six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. |
Principles of Consolidation | 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 six months ended June 30, 2015 , the Company sold one office property. 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 June 30, 2015 , the Company reclassified two properties that were previously classified as held for sale to held for investment. |
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 six months ended June 30, 2015 and 2014 , respectively. Distributions declared per common share were $0.073 and $0.145 for the three and six months ended June 30, 2015 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions during the six months ended June 30, 2015 . These distributions declared consisted of the following: • On January 15, 2015, the Company’s board of directors declared January 2015 and February 2015 distributions in the amounts of $0.02488493 and $0.02247671 , respectively, per share of common stock to stockholders of record as of the close of business on January 29, 2015 and February 26, 2015, respectively. • On March 6, 2015, the Company’s board of directors declared March 2015 and April 2015 distributions in the amounts of $0.02488493 and $0.02408219 , respectively, per share of common stock to stockholders of record as of the close of business on March 20, 2015 and April 20, 2015, respectively. • On May 13, 2015, the Company’s board of directors declared May 2015 and June 2015 distributions in the amounts of $0.02488493 and $0.02408219 , respectively, per share of common stock to stockholders of record as of the close of business on May 20, 2015 and June 19, 2015, respectively. Distributions declared per common share were $0.162 and $0.322 for the three and six months ended June 30, 2014 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three and six months ended June 30, 2014 . For each day that was a record date for distributions during the three and six months ended June 30, 2014 , distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2014 through June 30, 2014 was a record date for distributions. |
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 11, “Segment Information.” |
Recently Issued Accounting Standards Update | 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. On July 9, 2015, the FASB voted to defer the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company is still evaluating the impact of adopting ASU No. 2014-09 on its financial statements, but 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 No. 2014-15 to have a significant impact on its financial statements. In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU No. 2015-01”). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendments will eliminate the requirements in Subtopic 225-20 for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU No. 2015-01 to have a significant impact on its financial statements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs (“ASU No. 2015-03”). The amendments in ASU No. 2015-03 require debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. ASU No. 2015-03 is limited to the presentation of debt issuance costs and does not affect the recognition and measurement of debt issuance costs. ASU No. 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and is to be applied retrospectively. Early adoption is permitted for financial statements that have not been previously issued. The adoption of ASU No. 2015-03 would change the presentation of debt issuance costs as the Company presents debt issuance costs as deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets. |
REAL ESTATE HELD FOR INVESTME22
REAL ESTATE HELD FOR INVESTMENT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments | The following table summarizes the Company’s real estate portfolio held for investment as of June 30, 2015 (in thousands): Property Date Acquired City State Property Type Total Real Estate at Cost (1) Accumulated Depreciation and Amortization (1) Total Real Estate, Net (1) 100 & 200 Campus Drive Buildings 09/09/2008 Florham Park NJ Office $ 197,451 $ (44,589 ) $ 152,862 300-600 Campus Drive Buildings 10/10/2008 Florham Park NJ Office 146,700 (3,042 ) 143,658 350 E. Plumeria Building 12/18/2008 San Jose CA Office/Flex 36,413 (7,349 ) 29,064 Willow Oaks Corporate Center 08/26/2009 Fairfax VA Office 103,547 (20,237 ) 83,310 Pierre Laclede Center 02/04/2010 Clayton MO Office 68,489 (1,328 ) 67,161 Horizon Tech Center 06/17/2010 San Diego CA Office 28,200 (440 ) 27,760 Union Bank Plaza 09/15/2010 Los Angeles CA Office 185,992 (2,786 ) 183,206 Emerald View at Vista Center 12/09/2010 West Palm Beach FL Office 30,614 (4,911 ) 25,703 Granite Tower 12/16/2010 Denver CO Office 154,883 (28,313 ) 126,570 Gateway Corporate Center 01/26/2011 Sacramento CA Office 45,079 (8,157 ) 36,922 Fountainhead Plaza 09/13/2011 Tempe AZ Office 119,384 (4,104 ) 115,280 Corporate Technology Centre 03/28/2013 San Jose CA Office 230,942 (18,994 ) 211,948 $ 1,347,694 $ (144,250 ) $ 1,203,444 _____________________ (1) Amounts presented are net of impairment charges. |
Schedules of Concentration of Risk, by Risk Factor | As of June 30, 2015 , 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 Feet % of Portfolio (Net Rentable Sq. Ft.) Annualized Base Rent (in thousands) (1) % of Portfolio Annualized Base Rent Annualized Base Rent per Sq. Ft. Lease Expiration (2) Union Bank Union Bank Plaza Finance 408,260 8.8% $ 16,742 12.3% $ 41.01 09/30/2016 / 01/31/2022 _____________________ (1) Annualized base rent represents annualized contractual base rental income as of June 30, 2015 , 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 June 30, 2015 and does not take into account any tenant renewal or termination options. As of June 30, 2015 , the Company had over 250 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 Base Rent (1) (in thousands) Percentage of Annualized Base Rent Finance 31 $ 30,170 22.1 % Computer System Design & Programming 10 25,792 18.9 % $ 55,962 41.0 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of June 30, 2015 , 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 June 30, 2015 , the following properties represented more than 10% of the Company’s total assets: Property Location Rentable Square Feet Total Real Estate, Net (in thousands) Percentage of Total Assets Annualized Base Rent (in thousands) (1) Average Annualized Base Rent per Sq. Ft. Occupancy Corporate Technology Centre San Jose, CA 610,083 $ 211,948 13.6 % $ 18,537 $ 30.38 100 % Union Bank Plaza Los Angeles, CA 627,334 183,206 11.8 % 23,217 38.75 96 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of June 30, 2015 , 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 June 30, 2015 , the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands): July 1, 2015 through December 31, 2015 $ 62,393 2016 125,634 2017 117,028 2018 101,102 2019 80,835 Thereafter 369,600 $ 856,592 |
TENANT ORIGINATION AND ABSORP23
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 , 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 Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities June 30, December 31, June 30, December 31, June 30, December 31, Cost $ 91,913 $ 109,378 $ 15,815 $ 17,281 $ (23,237 ) $ (24,917 ) Accumulated Amortization (40,207 ) (49,302 ) (6,896 ) (7,010 ) 16,226 16,013 Net Amount $ 51,706 $ 60,076 $ 8,919 $ 10,271 $ (7,011 ) $ (8,904 ) |
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 six months ended June 30, 2015 and 2014 were as follows (in thousands): Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities For the Three Months Ended June 30, For the Three Months Ended June 30, For the Three Months Ended June 30, 2015 2014 2015 2014 2015 2014 Amortization $ (3,732 ) $ (6,164 ) $ (651 ) $ (2,702 ) $ 822 $ 1,676 Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities For the Six Months Ended June 30, For the Six Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 2015 2014 Amortization $ (7,365 ) $ (15,230 ) $ (1,399 ) $ (5,077 ) $ 1,961 $ 3,545 |
REAL ESTATE LOANS RECEIVABLE (T
REAL ESTATE LOANS RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Receivables [Abstract] | |
Schedule of Real Estate Loans Receivable | As of June 30, 2015 and December 31, 2014 , the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands): Loan Name Location of Related Property or Collateral Date Acquired/ Originated Property Type Loan Type Outstanding Principal Balance as of June 30, 2015 (1) Book Value as of June 30, 2015 (2) Book Value as of December 31, 2014 (2) Contractual Interest Rate (3) Annualized Effective Interest Rate (3) Maturity Date (4) Sheraton Charlotte Airport Hotel First Mortgage Charlotte, North Carolina 07/11/2011 Hotel Mortgage $ 14,276 $ 14,286 $ 14,353 7.5% 7.6% 08/01/2018 Summit I & II First Mortgage (5) Reston, Virginia 01/17/2012 Office Mortgage 58,319 58,334 58,587 7.5% 7.6% 02/01/2017 $ 72,595 $ 72,620 $ 72,940 _____________________ (1) Outstanding principal balance as of June 30, 2015 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 2015, using the interest method, annualized and divided by the average amortized cost basis of the investment during 2015. The contractual interest rates and annualized effective interest rates presented are as of June 30, 2015 . (4) Maturity dates are as of June 30, 2015 ; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown. (5) Subsequent to June 30, 2015 , the borrower under the Summit I & II First Mortgage paid off the entire principal balance outstanding of $58.3 million plus accrued interest. See Note 13, “Subsequent Events — Payoff of Summit I & II First Mortgage.” |
Schedule of Activity Related to Real Estate Loans Receivable | The following summarizes the activity related to real estate loans receivable for the six months ended June 30, 2015 (in thousands): Real estate loans receivable - December 31, 2014 $ 72,940 Principal repayments received on real estate loans receivable (314 ) Amortization of closing costs and origination fees on real estate loans receivable (6 ) Real estate loans receivable - June 30, 2015 $ 72,620 |
Schedule of Interest Income from Real Estate Loans Receivable | For the three and six months ended June 30, 2015 and 2014 , interest income from real estate loans receivable consisted of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Contractual interest income $ 1,377 $ 1,989 $ 2,742 $ 4,921 Prepayment fee received on real estate loan receivable — — — 4,917 Amortization of closing costs and origination fees (3 ) (3 ) (6 ) 112 Interest income from real estate loans receivable $ 1,374 $ 1,986 $ 2,736 $ 9,950 |
REAL ESTATE SALES (Tables)
REAL ESTATE SALES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 related to the Company’s real estate properties that were sold during the year ended December 31, 2014 and six months ended June 30, 2015 , which were included in continuing operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenues Rental income $ — $ 28,036 $ 1,835 $ 58,889 Tenant reimbursements — 11,438 140 23,492 Other operating income — 914 126 1,884 Total revenues — 40,388 2,101 84,265 Expenses Operating, maintenance, and management — 8,467 536 17,913 Real estate taxes and insurance — 7,354 230 14,600 Asset management fees to affiliate — 2,597 108 5,240 General and administrative expenses — 343 — 384 Depreciation and amortization — 4,292 — 17,956 Interest expense — 8,359 411 15,531 Impairment charge on real estate — — — 1,075 Total expenses $ — $ 31,412 $ 1,285 $ 72,699 |
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 June 30, 2015 and December 31, 2014 (in thousands). No real estate properties were held for sale as of June 30, 2015 . June 30, 2015 December 31, 2014 Assets related to real estate held for sale Total real estate, at cost and net of impairment charge $ — $ 116,264 Accumulated depreciation and amortization — (22,582 ) Real estate held for sale, net — 93,682 Other assets — 4,289 Total assets related to real estate held for sale $ — $ 97,971 Liabilities related to real estate held for sale Notes payable — 63,652 Other liabilities — 3,024 Total liabilities related to real estate held for sale $ — $ 66,676 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Notes Payable [Abstract] | |
Schedule of Long-term Debt Instruments | As of June 30, 2015 and December 31, 2014 , 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 June 30, 2015 Principal as of December 31, 2014 Contractual Interest Rate as of June 30, 2015 (1) Effective Interest Rate as of June 30, 2015 (1) Payment Type Maturity Date (2) Amended and Restated Portfolio Revolving Loan Facility (3) $ 75,438 $ 75,438 One-month LIBOR + 1.80% (3) 3.1% Interest Only 06/21/2017 Union Bank Plaza Mortgage Loan (4) 105,000 105,000 One-month LIBOR + 1.75% 3.5% Interest Only 09/15/2015 Emerald View at Vista Center Mortgage Loan 19,800 19,800 One-month LIBOR + 2.25% 4.6% Interest Only 01/01/2016 Portfolio Mortgage Loan #1 (5) 95,033 184,733 One-month LIBOR + 2.15% 3.5% Interest Only 01/27/2016 Fountainhead Plaza Mortgage Loan 80,000 80,000 One-month LIBOR + 1.90% 2.9% Interest Only 12/01/2015 Portfolio Mortgage Loan #3 (6) 107,640 107,640 One-month LIBOR + 2.4% Interest Only 03/01/2016 Corporate Technology Centre Mortgage Loan (7) 140,000 140,000 3.50% 3.5% (7) 04/01/2020 300-600 Campus Drive Revolving Loan (8) 78,000 78,000 One-month LIBOR + 2.05% (8) 2.9% Interest Only 08/01/2016 $ 700,911 $ 790,611 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of June 30, 2015 . Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2015 (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 June 30, 2015 , where applicable. For further information regarding the Company’s derivative instruments, see Note 8, “Derivative Instruments.” (2) Represents the initial maturity date or the maturity date as extended as of June 30, 2015 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) As of June 30, 2015 , the Amended and Restated Portfolio Revolving Loan Facility was secured by 350 E. Plumeria Building and Pierre Laclede Center. (4) As of June 30, 2015 , $105.0 million of the Union Bank Plaza Mortgage Loan 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. (5) As of June 30, 2015 , Portfolio Mortgage Loan #1 was secured by Horizon Tech Center, Granite Tower and Gateway Corporate Center. On February 13, 2015, in connection with the disposition of National City Tower, the Company repaid $89.7 million of principal due under this loan and National City Tower was released as security from Portfolio Mortgage Loan #1. (6) As of June 30, 2015 , the principal balance of Portfolio Mortgage Loan #3 consisted of the $107.6 million non-revolving portion. The revolving portion of $41.6 million remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of June 30, 2015 , the Portfolio Mortgage Loan #3 was secured by the 100 & 200 Campus Drive Buildings and Willow Oaks Corporate Center. (7) Monthly payments are initially interest-only. Beginning on May 1, 2017 , monthly payments for Corporate Technology Centre Mortgage Loan 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. (8) As of June 30, 2015 , the principal balance of the 300-600 Campus Drive Revolving Loan 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 remained 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 June 30, 2015 (in thousands): July 1, 2015 through December 31, 2015 $ 185,000 2016 300,473 2017 77,218 2018 2,750 2019 2,848 Thereafter 132,622 $ 700,911 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 . The notional amount 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 June 30, 2015 December 31, 2014 Reference Rate as of June 30, 2015 Weighted-Average Fix Pay Rate Weighted-Average Remaining Term in Years Number of Instruments Notional Amount Number of Instruments Notional Amount Interest Rate Swaps (1) 9 $519,175 11 $596,575 One-month LIBOR/ 1.27% 0.9 _____________________ (1) During the six months ended June 30, 2015 , the Company terminated one interest rate swap agreement and paid an aggregate breakage fee of $0.2 million . Also, one of the Company’s interest rate swaps expired during the six months ended June 30, 2015 . As of June 30, 2015 and December 31, 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 June 30, 2015 and December 31, 2014 (dollars in thousands): Derivative Instruments Balance Sheet Location June 30, 2015 December 31, 2014 Number of Instruments Fair Value Number of Instruments Fair Value Interest Rate Swaps Deferred financing costs, prepaid expenses and other assets, at fair value — $ — 2 $ 122 Interest Rate Swaps Other liabilities, at fair value 9 $ (2,678 ) 9 $ (4,749 ) |
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 June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Derivatives designated as hedging instruments (1) Amount of loss recognized on interest rate swaps (effective portion) $ 620 $ 1,939 $ 1,312 $ 4,124 Unrealized losses due to hedge ineffectiveness — — — 822 Reclassification of realized losses related to swap terminations — 364 — 521 620 2,303 1,312 5,467 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps 951 — 1,940 — Unrealized (gains) losses on interest rate swaps (607 ) 55 (638 ) 40 Losses related to swap terminations — — 170 — 344 55 1,472 40 Increase in interest expense as a result of derivatives $ 964 $ 2,358 $ 2,784 $ 5,507 _____________________ (1) All of the Company’s interest rate swap agreements were initially designated as cash flow hedges. During 2014, the Company dedesignated all of its interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales, and therefore, certain hedged forecasted transactions were no longer probable beyond the projected asset sale date. |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and December 31, 2014 , which carrying amounts do not generally approximate the fair values (in thousands): June 30, 2015 December 31, 2014 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial assets: Real estate loans receivable $ 72,595 $ 72,620 $ 73,906 $ 72,908 $ 72,940 $ 73,414 Financial liabilities: Notes payable $ 700,911 $ 700,911 $ 701,759 $ 790,611 $ 790,611 $ 794,439 |
Schedule of Assets and Liabilities at Fair Value | As of June 30, 2015 , the Company measured the following liabilities at fair value (in thousands): Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recurring Basis: Liability derivatives $ 2,678 $ — $ 2,678 $ — |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 six months ended June 30, 2015 and 2014 , respectively, and any related amounts payable as of June 30, 2015 and December 31, 2014 (in thousands): Incurred Payable as of Three Months Ended June 30, Six Months Ended June 30, June 30, December 31, 2015 2014 2015 2014 2015 2014 Expensed Asset management fees $ 3,022 $ 5,631 $ 6,108 $ 11,335 $ — $ — Reimbursement of operating expenses (1) 40 37 79 73 43 38 Disposition fees (2) — 2,563 1,239 2,563 — — $ 3,062 $ 8,231 $ 7,426 $ 13,971 $ 43 $ 38 _____________________ (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 $35,000 and $37,000 for the three months ended June 30, 2015 and 2014 , respectively, and $68,000 and $73,000 for the six months ended June 30, 2015 and 2014 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the six months ended June 30, 2015 and 2014 . 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 sale of real estate, net in the accompanying consolidated statements of operations. Disposition fees with respect to real estate loans receivable sold are included in the gain on payoff or sale of real estate loans receivable in the accompanying consolidated statements of operations. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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 six months ended June 30, 2015 and 2014 and total assets and total liabilities for each reportable segment as of June 30, 2015 and December 31, 2014 (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Revenues: Real estate segment (1) $ 39,829 $ 80,641 $ 82,397 $ 165,132 Real estate-related segment 1,374 1,986 2,736 9,950 Total segment revenues 41,203 82,627 85,133 175,082 Corporate-level — 89 — 89 Total revenues $ 41,203 $ 82,716 $ 85,133 $ 175,171 Interest Expense: Real estate segment (1) $ 5,605 $ 14,626 $ 12,452 $ 28,855 Real estate-related segment — 587 — 993 Total interest expense $ 5,605 $ 15,213 $ 12,452 $ 29,848 NOI: Real estate segment (1) $ 20,912 $ 37,216 $ 41,270 $ 77,014 Real estate-related segment 1,370 1,399 2,724 8,906 Total segment NOI 22,282 38,615 43,994 85,920 Corporate-level — 89 — 89 Total NOI $ 22,282 $ 38,704 $ 43,994 $ 86,009 As of June 30, As of December 31, 2015 2014 Assets: Real estate segment $ 1,300,394 $ 1,317,990 Real estate-related segment 73,638 73,457 Total segment assets 1,374,032 1,391,447 Real estate held for sale — 97,971 Corporate-level (2) 180,144 168,098 Total assets $ 1,554,176 $ 1,657,516 Liabilities: Real estate segment $ 737,456 $ 774,173 Real estate-related segment — 2 Total segment liabilities 737,456 774,175 Real estate held for sale — 66,676 Corporate-level (3) 5,064 7,138 Total liabilities $ 742,520 $ 847,989 _____________________ (1) Amounts include properties sold. See Note 6, “Real Estate Sales” for more information. (2) Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $180.0 million and $167.8 million as of June 30, 2015 and December 31, 2014 , respectively. (3) As of June 30, 2015 and December 31, 2014 , 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 six months ended June 30, 2015 and 2014 (in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2015 2014 2015 2014 Net income $ 3,479 $ 59,719 $ 31,011 $ 70,146 Gain on sale of real estate, net (11 ) (46,647 ) (27,418 ) (46,647 ) Other interest income (55 ) (21 ) (102 ) (54 ) Asset management fees to affiliate 3,022 5,631 6,108 11,335 General and administrative expenses 1,045 1,513 2,168 2,802 Depreciation and amortization 14,802 18,509 27,741 47,352 Impairment charge on real estate — — 4,486 1,075 NOI $ 22,282 $ 38,704 $ 43,994 $ 86,009 |
ORGANIZATION (Details)
ORGANIZATION (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | 35 Months Ended | 86 Months Ended |
Jun. 30, 2015USD ($)LoansReceivablespropertyshares | Dec. 31, 2014USD ($)shares | Mar. 22, 2011USD ($)shares | Jun. 30, 2015USD ($)LoansReceivablespropertyshares | |
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 | property | 12 | 12 | ||
Number of real estate loans receivable | LoansReceivables | 2 | 2 | ||
Issuance of common stock, value | $ 26,885 | $ 1,800,000 | ||
Shares of common stock sold under dividend reinvestment plan, value | $ 298,200 | |||
Redemptions of common stock, value | $ 2,523 | $ 44,659 | $ 232,100 | |
Common Stock [Member] | ||||
Organizational Structure [Line Items] | ||||
Issuance of common stock, shares | shares | 2,749,008 | 182,681,633 | ||
Issuance of common stock, value | $ 28 | |||
Shares of common stock sold under dividend reinvestment plan, shares | shares | 30,903,504 | |||
Redemptions of common stock, shares | shares | 430,539 | 4,457,374 | 23,474,074 | |
Redemptions of common stock, value | $ 4 | $ 46 | ||
KBS Capital Advisors LLC [Member] | ||||
Organizational Structure [Line Items] | ||||
Period of Advisory Agreement renewal | 1 year | |||
Period of termination notice | 60 days | |||
KBS Capital Advisors LLC [Member] | Common Stock [Member] | ||||
Organizational Structure [Line Items] | ||||
Shares held by affiliate | shares | 20,000 | 20,000 | ||
Office Properties [Member] | ||||
Organizational Structure [Line Items] | ||||
Number of real estate properties | property | 10 | 10 | ||
Office/Flex Properties [Member] | ||||
Organizational Structure [Line Items] | ||||
Number of real estate properties | property | 1 | 1 | ||
Office Buildings, Campus [Member] | ||||
Organizational Structure [Line Items] | ||||
Number of real estate properties | property | 8 | 8 |
SUMMARY OF SIGNIFICANT ACCOUN32
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Subsequent Event Type [Domain] | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2015property$ / shares | May. 31, 2015$ / shares | Apr. 30, 2015$ / shares | Mar. 31, 2015$ / shares | Feb. 28, 2015$ / shares | Jan. 31, 2015$ / shares | Jun. 30, 2015property$ / shares | Jun. 30, 2014$ / shares | Jun. 30, 2015property$ / shares | Jun. 30, 2014$ / shares | Dec. 31, 2014property | |
Real Estate Properties [Line Items] | |||||||||||
Number of real estate properties classified from held-for-sale to held for investment | 2 | 2 | 2 | ||||||||
Distributions declared per common share (usd per share) | $ / shares | $ 0.073 | $ 0.162 | $ 0.145 | $ 0.322 | |||||||
Distribution rate per share per day, declared | $ / shares | $ 0.02408219 | $ 0.02488493 | $ 0.02408219 | $ 0.02488493 | $ 0.02247671 | $ 0.02488493 | $ 0.00178082 | $ 0.00178082 | |||
Industrial Properties [Member] | |||||||||||
Real Estate Properties [Line Items] | |||||||||||
Number of real estate properties sold | 1 | ||||||||||
Office Properties [Member] | |||||||||||
Real Estate Properties [Line Items] | |||||||||||
Number of real estate properties sold | 1 | 9 |
REAL ESTATE HELD FOR INVESTME33
REAL ESTATE HELD FOR INVESTMENT (Narrative) (Details) $ in Thousands, ft² in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015USD ($)ft²property | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)ft²property | Jun. 30, 2014USD ($) | |
Real Estate Properties [Line Items] | ||||
Number of real estate properties | 12 | 12 | ||
Occupancy | 89.00% | 89.00% | ||
Impairment charge on real estate | $ | $ 0 | $ 0 | $ 4,486 | $ 1,075 |
Number of real estate properties included in impairment calculation | 2 | |||
Real Estate Held-for-Investment [Member] | ||||
Real Estate Properties [Line Items] | ||||
Rentable Square Feet | ft² | 5.2 | 5.2 | ||
Impairment charge on real estate | $ | $ 4,500 | |||
Office Properties [Member] | ||||
Real Estate Properties [Line Items] | ||||
Number of real estate properties | 10 | 10 | ||
Office Properties [Member] | Real Estate Held-for-Investment [Member] | ||||
Real Estate Properties [Line Items] | ||||
Number of real estate properties | 10 | 10 | ||
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 |
REAL ESTATE HELD FOR INVESTME34
REAL ESTATE HELD FOR INVESTMENT (Schedule of Real Estate Investments) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2014 | ||
Real Estate Properties [Line Items] | |||
Total Real Estate at Cost (1) | $ 1,347,694 | $ 1,391,027 | |
Accumulated Depreciation and Amortization (1) | (144,250) | (168,041) | |
Total real estate held for investment, net | 1,203,444 | $ 1,222,986 | |
Office [Member] | |||
Real Estate Properties [Line Items] | |||
Total Real Estate at Cost (1) | 1,347,694 | ||
Accumulated Depreciation and Amortization (1) | [1] | (144,250) | |
Total real estate held for investment, net | [1] | $ 1,203,444 | |
100 & 200 Campus Drive Buildings [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Sep. 9, 2008 | ||
Total Real Estate at Cost (1) | $ 197,451 | ||
Accumulated Depreciation and Amortization (1) | [1] | (44,589) | |
Total real estate held for investment, net | [1] | $ 152,862 | |
300-600 Campus Drive Buildings [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Oct. 10, 2008 | ||
Total Real Estate at Cost (1) | $ 146,700 | ||
Accumulated Depreciation and Amortization (1) | [1] | (3,042) | |
Total real estate held for investment, net | [1] | $ 143,658 | |
350 E. Plumeria Building [Member] | Office/Flex Properties [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Dec. 18, 2008 | ||
Total Real Estate at Cost (1) | $ 36,413 | ||
Accumulated Depreciation and Amortization (1) | [1] | (7,349) | |
Total real estate held for investment, net | [1] | $ 29,064 | |
Willow Oaks Corporate Center [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Aug. 26, 2009 | ||
Total Real Estate at Cost (1) | $ 103,547 | ||
Accumulated Depreciation and Amortization (1) | [1] | (20,237) | |
Total real estate held for investment, net | [1] | $ 83,310 | |
Pierre Laclede Center [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Feb. 4, 2010 | ||
Total Real Estate at Cost (1) | $ 68,489 | ||
Accumulated Depreciation and Amortization (1) | [1] | (1,328) | |
Total real estate held for investment, net | [1] | $ 67,161 | |
Horizon Tech Center [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Jun. 17, 2010 | ||
Total Real Estate at Cost (1) | $ 28,200 | ||
Accumulated Depreciation and Amortization (1) | [1] | (440) | |
Total real estate held for investment, net | [1] | $ 27,760 | |
Union Bank Plaza [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Sep. 15, 2010 | ||
Total Real Estate at Cost (1) | $ 185,992 | ||
Accumulated Depreciation and Amortization (1) | [1] | (2,786) | |
Total real estate held for investment, net | [1] | $ 183,206 | |
Emerald View at Vista Center [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Dec. 9, 2010 | ||
Total Real Estate at Cost (1) | $ 30,614 | ||
Accumulated Depreciation and Amortization (1) | [1] | (4,911) | |
Total real estate held for investment, net | [1] | $ 25,703 | |
Granite Tower [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Dec. 16, 2010 | ||
Total Real Estate at Cost (1) | $ 154,883 | ||
Accumulated Depreciation and Amortization (1) | [1] | (28,313) | |
Total real estate held for investment, net | [1] | $ 126,570 | |
Gateway Corporate Center [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Jan. 26, 2011 | ||
Total Real Estate at Cost (1) | $ 45,079 | ||
Accumulated Depreciation and Amortization (1) | [1] | (8,157) | |
Total real estate held for investment, net | [1] | $ 36,922 | |
Fountainhead Plaza [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Sep. 13, 2011 | ||
Total Real Estate at Cost (1) | $ 119,384 | ||
Accumulated Depreciation and Amortization (1) | [1] | (4,104) | |
Total real estate held for investment, net | [1] | $ 115,280 | |
Corporate Technology Centre [Member] | Office [Member] | |||
Real Estate Properties [Line Items] | |||
Date Acquired | Mar. 28, 2013 | ||
Total Real Estate at Cost (1) | $ 230,942 | ||
Accumulated Depreciation and Amortization (1) | [1] | (18,994) | |
Total real estate held for investment, net | [1] | $ 211,948 | |
[1] | Amounts presented are net of impairment charges. |
REAL ESTATE HELD FOR INVESTME35
REAL ESTATE HELD FOR INVESTMENT (Properties Represented More than 10% of Company’s Total Assets) (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015USD ($)ft²$ / ft² | Dec. 31, 2014USD ($) | ||
Real Estate Properties [Line Items] | |||
Total Real Estate, Net | $ 1,203,444 | $ 1,222,986 | |
Percentage of Total Assets | 41.00% | ||
Annualized Base Rent | [1] | $ 55,962 | |
Occupancy | 89.00% | ||
Corporate Technology Centre [Member] | Assets, Total [Member] | |||
Real Estate Properties [Line Items] | |||
Rentable Square Feet | ft² | 610,083 | ||
Total Real Estate, Net | $ 211,948 | ||
Percentage of Total Assets | 13.60% | ||
Annualized Base Rent | [1] | $ 18,537 | |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 30.38 | ||
Occupancy | 100.00% | ||
Union Bank Plaza [Member] | |||
Real Estate Properties [Line Items] | |||
Rentable Square Feet | ft² | 408,260 | ||
Annualized Base Rent | [1] | $ 16,742 | |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 41.01 | ||
Union Bank Plaza [Member] | Assets, Total [Member] | |||
Real Estate Properties [Line Items] | |||
Rentable Square Feet | ft² | 627,334 | ||
Total Real Estate, Net | $ 183,206 | ||
Percentage of Total Assets | 11.80% | ||
Annualized Base Rent | [1] | $ 23,217 | |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 38.75 | ||
Occupancy | 96.00% | ||
[1] | Annualized base rent represents annualized contractual base rental income as of June 30, 2015, 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 INVESTME36
REAL ESTATE HELD FOR INVESTMENT (Operating Leases) (Narrative) (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015USD ($)Tenants | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Operating Leased Assets [Line Items] | |||
Deferred rent recognized | $ 2,552 | $ 3,717 | |
Deferred rent receivables | 42,400 | $ 39,400 | |
Unamortized lease incentives | $ 4,100 | 4,000 | |
Number of tenants | Tenants | 250 | ||
Recorded bad debt expense related to tenant | $ 78 | $ 390 | |
Bad debt reserve | 200 | ||
Other Liabilities, at Fair Value [Member] | |||
Operating Leased Assets [Line Items] | |||
Security deposit liability | $ 2,500 | $ 2,500 | |
Maximum [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease, term | 14 years 3 months 18 days | ||
Bad debt reserve of annualized base rent | 1.00% | ||
Weighted Average [Member] | |||
Operating Leased Assets [Line Items] | |||
Operating lease, term | 4 years 3 months 18 days |
REAL ESTATE HELD FOR INVESTME37
REAL ESTATE HELD FOR INVESTMENT (Future Minimum Rental Income) (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Real Estate [Abstract] | |
July 1, 2015 through December 31, 2015 | $ 62,393 |
2,016 | 125,634 |
2,017 | 117,028 |
2,018 | 101,102 |
2,019 | 80,835 |
Thereafter | 369,600 |
Future minimum rental income | $ 856,592 |
REAL ESTATE HELD FOR INVESTME38
REAL ESTATE HELD FOR INVESTMENT (Highest Tenant Industry Concentrations- Grater than 10% of Annual Base Rent) (Details) - Jun. 30, 2015 $ in Thousands | USD ($)Tenants | |
Concentration Risk [Line Items] | ||
Number of Tenants | Tenants | 250 | |
Annualized Base Rent | [1] | $ 55,962 |
Percentage of Annualized Base Rent | 41.00% | |
Industry - Finance [Member] | ||
Concentration Risk [Line Items] | ||
Number of Tenants | Tenants | 31 | |
Annualized Base Rent | [1] | $ 30,170 |
Percentage of Annualized Base Rent | 22.10% | |
Industry - Computer System Design & Programming [Member] | ||
Concentration Risk [Line Items] | ||
Number of Tenants | Tenants | 10 | |
Annualized Base Rent | [1] | $ 25,792 |
Percentage of Annualized Base Rent | 18.90% | |
[1] | Annualized base rent represents annualized contractual base rental income as of June 30, 2015, 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 INVESTME39
REAL ESTATE HELD FOR INVESTMENT (Concentration of Credit Risk for Tenant Leases) (Details) - Jun. 30, 2015 $ in Thousands | USD ($)ft²$ / ft² | |
Real Estate Properties [Line Items] | ||
Annualized Base Rent | [1] | $ 55,962 |
Union Bank Plaza [Member] | ||
Real Estate Properties [Line Items] | ||
Square Feet | ft² | 408,260 | |
% of Portfolio (Net Rentable Sq. Ft.) | 8.80% | |
Annualized Base Rent | [1] | $ 16,742 |
% of Portfolio Annualized Base Rent | 12.30% | |
Annualized Base Rent per Sq. Ft. | $ / ft² | 41.01 | |
Union Bank Plaza [Member] | Option One [Member] | ||
Real Estate Properties [Line Items] | ||
Lease Expiration | Sep. 30, 2016 | |
Union Bank Plaza [Member] | Option Two [Member] | ||
Real Estate Properties [Line Items] | ||
Lease Expiration | Jan. 31, 2022 | |
[1] | Annualized base rent represents annualized contractual base rental income as of June 30, 2015, 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 INVESTME40
REAL ESTATE HELD FOR INVESTMENT (Geographic Concentration Risk) (Details) - Real Estate Properties [Domain] | 6 Months Ended |
Jun. 30, 2015 | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 41.00% |
CALIFORNIA [Member] | Assets, Total [Member] | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 31.50% |
NEW JERSEY [Member] | Assets, Total [Member] | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 19.10% |
TENANT ORIGINATION AND ABSORP41
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |||||
Tenant Origination And Absorption Costs, Cost | $ 91,913 | $ 91,913 | $ 109,378 | ||
Tenant Origination and Absorption Costs, Accumulated Amortization | (40,207) | (40,207) | (49,302) | ||
Tenant Origination and Absorption Costs, Net Amount | 51,706 | 51,706 | 60,076 | ||
Tenant Origination and Absorption Costs, Amortization expense | (3,732) | $ (6,164) | (7,365) | $ (15,230) | |
Above-Market Lease Assets, Cost | 15,815 | 15,815 | 17,281 | ||
Above-Market Lease Assets, Accumulated Amortization | (6,896) | (6,896) | (7,010) | ||
Above-Market Lease Assets, Net Amount | 8,919 | 8,919 | 10,271 | ||
Above-Market Lease Assets, Amortization expense | (651) | (2,702) | (1,399) | (5,077) | |
Below-Market Lease Liabilities, Cost | (23,237) | (23,237) | (24,917) | ||
Below-Market Lease Liabilities, Accumulated Amortization | 16,226 | 16,226 | 16,013 | ||
Below-Market Lease Liabilities, Net Amount | (7,011) | (7,011) | $ (8,904) | ||
Below-Market Lease Liabilities, Amortization expense | $ 822 | $ 1,676 | $ 1,961 | $ 3,545 |
REAL ESTATE LOANS RECEIVABLE (S
REAL ESTATE LOANS RECEIVABLE (Schedule of Real Estate Loans Receivable) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2014 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Mortgage Loans on Real Estate, Outstanding Principal Balance | [1] | $ 72,595 | |
Book Value | [2] | $ 72,620 | $ 72,940 |
Mortgages [Member] | Sheraton Charlotte Airport Hotel First Mortgage [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Date Acquired | Jul. 11, 2011 | ||
Mortgage Loans on Real Estate, Outstanding Principal Balance | [1] | $ 14,276 | |
Book Value | [2] | $ 14,286 | 14,353 |
Contractual Interest Rate | [3] | 7.50% | |
Annualized Effective Interest Rate | [3] | 7.60% | |
Maturity Date | [4] | Aug. 1, 2018 | |
Mortgages [Member] | Origination of Summit I & II First Mortgage [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Date Acquired | Jan. 17, 2012 | ||
Mortgage Loans on Real Estate, Outstanding Principal Balance | [1],[5] | $ 58,319 | |
Book Value | [2],[5] | $ 58,334 | $ 58,587 |
Contractual Interest Rate | [3],[5] | 7.50% | |
Annualized Effective Interest Rate | [3],[5] | 7.60% | |
Maturity Date | [4],[5] | Feb. 1, 2017 | |
[1] | Outstanding principal balance as of June 30, 2015 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 2015, using the interest method, annualized and divided by the average amortized cost basis of the investment during 2015. The contractual interest rates and annualized effective interest rates presented are as of June 30, 2015. | ||
[4] | Maturity dates are as of June 30, 2015; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown. | ||
[5] | Subsequent to June 30, 2015, the borrower under the Summit I & II First Mortgage paid off the entire principal balance outstanding of $58.3 million plus accrued interest. See Note 13, “Subsequent Events — Payoff of Summit I & II First Mortgage.” |
REAL ESTATE LOANS RECEIVABLE 43
REAL ESTATE LOANS RECEIVABLE (Schedule of Activity Related to Real Estate Loans Receivable) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Real Estate Loans Receivable [Roll Forward] | |||||
Real estate loans receivable - December 31, 2014 | [1] | $ 72,940 | |||
Principal repayments received on real estate loans receivable | (314) | $ (61) | |||
Amortization of closing costs and origination fees on real estate loans receivable | $ (3) | $ (3) | (6) | $ 112 | |
Real estate loans receivable - June 30, 2015 | [1] | $ 72,620 | $ 72,620 | ||
[1] | Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. |
REAL ESTATE LOANS RECEIVABLE 44
REAL ESTATE LOANS RECEIVABLE (Schedule of Interest Income from Real Estate Loans Receivable) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Receivables [Abstract] | |||||
Contractual interest income | $ 1,377 | $ 1,989 | $ 2,742 | $ 4,921 | |
Prepayment fee received on real estate loan receivable | 0 | 0 | 0 | 4,917 | |
Amortization of closing costs and origination fees | (3) | (3) | (6) | 112 | |
Interest income from real estate loans receivable | 1,374 | $ 1,986 | 2,736 | $ 9,950 | |
Interest receivable | $ 500 | $ 500 | $ 500 |
REAL ESTATE SALES (Narrative) (
REAL ESTATE SALES (Narrative) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)property | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($)property | |
Real Estate Properties [Line Items] | |||||
Real estate held for sale, net | $ | $ 0 | $ 0 | $ 93,682 | ||
Impairment charge on real estate | $ | 0 | $ 0 | $ 4,486 | $ 1,075 | |
Office Properties [Member] | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties sold | 1 | 9 | |||
Industrial Properties [Member] | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties sold | 1 | ||||
Industrial Properties Portfolio- 1 [Member] | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties sold | 4 | ||||
Assets Held-for-sale [Member] | |||||
Real Estate Properties [Line Items] | |||||
Impairment charge on real estate | $ | $ 0 | $ 0 | $ 0 | $ 1,075 |
REAL ESTATE SALES (Revenue and
REAL ESTATE SALES (Revenue and Expenses of Real Estate Held-for-Sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||||
Rental income | $ 34,271 | $ 62,049 | $ 71,095 | $ 127,264 |
Tenant reimbursements | 3,711 | 15,893 | 7,603 | 32,562 |
Total revenues | 41,203 | 82,716 | 85,133 | 175,171 |
Expenses | ||||
Operating, maintenance, and management | 8,114 | 16,784 | 18,264 | 34,980 |
Real estate taxes and insurance | 5,202 | 12,015 | 10,423 | 24,334 |
Asset management fees to affiliate | 3,022 | 5,631 | 6,108 | 11,335 |
General and administrative expenses | 1,045 | 1,513 | 2,168 | 2,802 |
Depreciation and amortization | 14,802 | 18,509 | 27,741 | 47,352 |
Interest expense | 5,605 | 15,213 | 12,452 | 29,848 |
Impairment charge on real estate | 0 | 0 | 4,486 | 1,075 |
Total expenses | 37,790 | 69,665 | 81,642 | 151,726 |
Assets Held-for-sale [Member] | ||||
Revenues | ||||
Rental income | 0 | 28,036 | 1,835 | 58,889 |
Tenant reimbursements | 0 | 11,438 | 140 | 23,492 |
Other operating income | 0 | 914 | 126 | 1,884 |
Total revenues | 0 | 40,388 | 2,101 | 84,265 |
Expenses | ||||
Operating, maintenance, and management | 0 | 8,467 | 536 | 17,913 |
Real estate taxes and insurance | 0 | 7,354 | 230 | 14,600 |
Asset management fees to affiliate | 0 | 2,597 | 108 | 5,240 |
General and administrative expenses | 0 | 343 | 0 | 384 |
Depreciation and amortization | 0 | 4,292 | 0 | 17,956 |
Interest expense | 0 | 8,359 | 411 | 15,531 |
Impairment charge on real estate | 0 | 0 | 0 | 1,075 |
Total expenses | $ 0 | $ 31,412 | $ 1,285 | $ 72,699 |
REAL ESTATE SALES (Schedule of
REAL ESTATE SALES (Schedule of Major Components of Real Estate Held for Sale and Liabilities Related to Real Estate Held for Sale) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Discontinued Operations and Disposal Groups [Abstract] | ||
Total real estate, at cost and net of impairment charges | $ 0 | $ 116,264 |
Accumulated depreciation and amortization | 0 | (22,582) |
Real estate held for sale, net | 0 | 93,682 |
Other assets | 0 | 4,289 |
Total assets related to real estate held for sale | 0 | 97,971 |
Notes payable | 0 | 63,652 |
Other liabilities | 0 | 3,024 |
Total liabilities related to real estate held for sale | $ 0 | $ 66,676 |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||||
Interest expense | $ 5,605 | $ 15,213 | $ 12,452 | $ 29,848 | |
Interest payable, current | 1,900 | 1,900 | $ 2,200 | ||
Amortization of deferred financing costs | 500 | 1,900 | 1,100 | 2,759 | |
Additional interest expense related to the effective portion of cash flow hedges | 1,000 | $ 2,400 | 2,800 | $ 5,500 | |
Deferred Financing Costs, Prepaid Expenses and Other Assets, at Fair Value [Member] | |||||
Debt Instrument [Line Items] | |||||
Deferred financing costs | $ 2,100 | $ 2,100 | $ 3,100 |
NOTES PAYABLE (Schedule of Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) - USD ($) $ in Thousands | Feb. 13, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||||
Principal Balance | $ 700,911 | $ 790,611 | ||
Portfolio Mortgage Loan 3 [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowing capacity | 41,600 | |||
Portfolio Mortgage Loan 3 [Member] | Non-Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowing capacity | 107,600 | |||
300-600 Campus Drive Revolving Loan [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowing capacity | 25,000 | |||
300-600 Campus Drive Revolving Loan [Member] | Non-Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Amount outstanding | 78,000 | |||
Mortgage [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | 700,911 | 790,611 | ||
Mortgage [Member] | Portfolio Revolving Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | [1] | $ 75,438 | 75,438 | |
Effective Interest Rate | [1],[2] | 3.10% | ||
Maturity Date | [1],[3] | Jun. 21, 2017 | ||
Mortgage [Member] | Portfolio Revolving Loan [Member] | One-month LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [1],[2] | 1.80% | ||
Mortgage [Member] | Union Bank Plaza [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | [4] | $ 105,000 | 105,000 | |
Effective Interest Rate | [2],[4] | 3.50% | ||
Maturity Date | [3],[4] | Sep. 15, 2015 | ||
Amount outstanding | [5] | $ 105,000 | ||
Unused borrowing capacity, amount | [5] | $ 14,300 | ||
Mortgage [Member] | Union Bank Plaza [Member] | One-month LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2],[5] | 1.75% | ||
Mortgage [Member] | Emerald View at Vista Center [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | $ 19,800 | 19,800 | ||
Effective Interest Rate | [2] | 4.60% | ||
Maturity Date | [3] | Jan. 1, 2016 | ||
Mortgage [Member] | Emerald View at Vista Center [Member] | One-month LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2] | 2.25% | ||
Mortgage [Member] | Portfolio Mortgage Loan 1 [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | [5] | $ 95,033 | 184,733 | |
Effective Interest Rate | [2],[5] | 3.50% | ||
Maturity Date | [3],[5] | Jan. 27, 2016 | ||
Extinguishment of debt | $ 89,700 | |||
Mortgage [Member] | Portfolio Mortgage Loan 1 [Member] | One-month LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2],[6] | 2.15% | ||
Mortgage [Member] | Fountainhead Plaza [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | $ 80,000 | 80,000 | ||
Effective Interest Rate | [2] | 2.90% | ||
Maturity Date | [3] | Dec. 1, 2015 | ||
Mortgage [Member] | Fountainhead Plaza [Member] | One-month LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2] | 1.90% | ||
Mortgage [Member] | Portfolio Mortgage Loan 3 [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | [6] | $ 107,640 | 107,640 | |
Effective Interest Rate | [2],[6] | 2.40% | ||
Maturity Date | [3],[6] | Mar. 1, 2016 | ||
Mortgage [Member] | Portfolio Mortgage Loan 3 [Member] | One-month LIBOR [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2] | 1.75% | ||
Mortgage [Member] | Portfolio Mortgage Loan 3 [Member] | One-month LIBOR [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2] | 1.85% | ||
Mortgage [Member] | Corporate Technology Centre [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | [7] | $ 140,000 | 140,000 | |
Contractual Interest Rate, Percentage | [2],[7] | 3.50% | ||
Effective Interest Rate | [2],[7] | 3.50% | ||
Maturity Date | [3],[7] | Apr. 1, 2020 | ||
Amortization schedule | 30 years | |||
Mortgage [Member] | 300-600 Campus Drive Revolving Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Balance | [8] | $ 78,000 | $ 78,000 | |
Effective Interest Rate | [2],[8] | 2.90% | ||
Maturity Date | [3],[8] | Aug. 1, 2016 | ||
Mortgage [Member] | 300-600 Campus Drive Revolving Loan [Member] | Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 17,000 | |||
Mortgage [Member] | 300-600 Campus Drive Revolving Loan [Member] | One-month LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis Spread on Variable Rate | [2] | 2.05% | ||
[1] | As of June 30, 2015, the Amended and Restated Portfolio Revolving Loan Facility was secured by 350 E. Plumeria Building and Pierre Laclede Center | |||
[2] | Contractual interest rate represents the interest rate in effect under the loan as of June 30, 2015. Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2015 (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 June 30, 2015, where applicable. For further information regarding the Company’s derivative instruments, see Note 8, “Derivative Instruments.” | |||
[3] | Represents the initial maturity date or the maturity date as extended as of June 30, 2015; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. | |||
[4] | As of June 30, 2015, $105.0 million of the Union Bank Plaza Mortgage Loan 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. | |||
[5] | As of June 30, 2015, Portfolio Mortgage Loan #1 was secured by Horizon Tech Center, Granite Tower and Gateway Corporate Center. On February 13, 2015, in connection with the disposition of National City Tower, the Company repaid $89.7 million of principal due under this loan and National City Tower was released as security from Portfolio Mortgage Loan #1. | |||
[6] | s of June 30, 2015, the principal balance of Portfolio Mortgage Loan #3 consisted of the $107.6 million non-revolving portion. The revolving portion of $41.6 million remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of June 30, 2015, the Portfolio Mortgage Loan #3 was secured by the 100 & 200 Campus Drive Buildings and Willow Oaks Corporate Center. | |||
[7] | Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments for Corporate Technology Centre Mortgage Loan 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. | |||
[8] | As of June 30, 2015, the principal balance of the 300-600 Campus Drive Revolving Loan consisted of $78.0 million of the non-revolving portion. The remaining non-revolving portion of $17.0 million and the revolving portion of $25.0 million remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. |
NOTES PAYABLE (Schedule of Matu
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Notes Payable [Abstract] | ||
July 1, 2015 through December 31, 2015 | $ 185,000 | |
2,016 | 300,473 | |
2,017 | 77,218 | |
2,018 | 2,750 | |
2,019 | 2,848 | |
Thereafter | 132,622 | |
Total notes payable | $ 700,911 | $ 790,611 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2015USD ($)Investments | Dec. 31, 2014USD ($)Investments | ||
Derivative [Line Items] | |||
Interest rate swap agreements, termination, breakage fees | $ | $ 200 | ||
Interest Rate Swap [Member] | |||
Derivative [Line Items] | |||
Number of Instruments | [1] | 9 | 11 |
Notional Amount | $ | [1] | $ 519,175 | $ 596,575 |
Weighted-Average Fix Pay Rate | [1] | 1.27% | |
Weighted-Average Remaining Term in Years | [1] | 10 months 12 days | |
Number of instruments terminated | [1] | 1 | |
Interest Rate Swap [Member] | Deferred Financing Costs, Prepaid Expenses and Other Assets, at Fair Value [Member] | |||
Derivative [Line Items] | |||
Number of Instruments | 0 | 2 | |
Notional Amount | $ | $ 0 | $ 122 | |
Interest Rate Swap [Member] | Other Liabilities, at Fair Value [Member] | |||
Derivative [Line Items] | |||
Number of Instruments | 9 | 9 | |
Notional Amount | $ | $ 2,678 | $ 4,749 | |
Interest Rate Swap [Member] | One-month LIBOR [Member] | Minimum [Member] | |||
Derivative [Line Items] | |||
Reference Rate | [1] | 0.50% | |
Interest Rate Swap [Member] | One-month LIBOR [Member] | Maximum [Member] | |||
Derivative [Line Items] | |||
Reference Rate | [1] | 2.39% | |
[1] | During the six months ended June 30, 2015, the Company terminated one interest rate swap agreement and paid an aggregate breakage fee of $0.2 million. Also, one of the Company’s interest rate swaps expired during the six months ended June 30, 2015. As of June 30, 2015 and December 31, 2014, none of the Company’s interest rate swaps were designated as cash flow hedges. |
DERIVATIVE INSTRUMENTS (Stateme
DERIVATIVE INSTRUMENTS (Statement of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | ||
Derivative [Line Items] | |||||
Unrealized (gains) losses on interest rate swaps | $ 0 | $ 1,390 | $ 0 | $ 2,396 | |
Interest Rate Swap [Member] | |||||
Derivative [Line Items] | |||||
Increase in interest expense as a result of derivatives | 964 | 2,358 | 2,784 | 5,507 | |
Interest Rate Swap [Member] | Derivatives Designated as Hedging Instrument [Member] | |||||
Derivative [Line Items] | |||||
Amount of loss recognized on interest rate swaps (effective portion) | [1] | 620 | 1,939 | 1,312 | 4,124 |
Unrealized losses due to hedge ineffectiveness | [1] | 0 | 0 | 0 | 822 |
Reclassification of realized losses related to swap terminations | [1] | 0 | 364 | 0 | 521 |
Increase in interest expense as a result of derivatives | [1] | 620 | 2,303 | 1,312 | 5,467 |
Interest Rate Swap [Member] | Derivatives Not Designated as Hedging Instrument [Member] | |||||
Derivative [Line Items] | |||||
Realized loss recognized on interest rate swaps | 951 | 0 | 1,940 | 0 | |
Unrealized (gains) losses on interest rate swaps | (607) | 55 | (638) | 40 | |
Losses related to swap terminations | 0 | 0 | 170 | 0 | |
Increase in interest expense as a result of derivatives | $ 344 | $ 55 | $ 1,472 | $ 40 | |
[1] | All of the Company’s interest rate swap agreements were initially designated as cash flow hedges. During 2014, the Company dedesignated all of its interest rate swap instruments due to the anticipated early repayment of debt in connection with asset sales, and therefore, certain hedged forecasted transactions were no longer probable beyond the projected asset sale date. |
FAIR VALUE DISCLOSURES (Schedul
FAIR VALUE DISCLOSURES (Schedule of Face Value, Carrying Amounts and Fair Value) (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Real estate loan receivable, Face Value | $ 72,595 | $ 72,908 |
Notes payable, Face Value | 700,911 | 790,611 |
Carrying Amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Real estate loans receivable, Value | 72,620 | 72,940 |
Notes payable, Value | 700,911 | 790,611 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Real estate loans receivable, Value | 73,906 | 73,414 |
Notes payable, Value | $ 701,759 | $ 794,439 |
FAIR VALUE DISCLOSURES (Sched54
FAIR VALUE DISCLOSURES (Schedule of Assets and Liabilities at Fair Value) (Details) - Recurring Basis [Member] $ in Thousands | Jun. 30, 2015USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liability derivatives | $ 2,678 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liability derivatives | 0 |
Significant Other Observable Inputs (Level 2) [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liability derivatives | 2,678 |
Significant Unobservable Inputs (Level 3) [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liability derivatives | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | ||
Related Party Transaction [Line Items] | ||||||
Administrative fees | $ 35 | $ 37 | $ 68 | $ 73 | ||
Advisor and Dealer Manager [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 3,062 | 8,231 | 7,426 | 13,971 | ||
Payable as of | 43 | 43 | $ 38 | |||
Advisor and Dealer Manager [Member] | Expensed [Member] | Asset Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 3,022 | 5,631 | 6,108 | 11,335 | ||
Payable as of | 0 | 0 | 0 | |||
Advisor and Dealer Manager [Member] | Expensed [Member] | Reimbursement of Operating Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | [1] | 40 | 37 | 79 | 73 | |
Payable as of | [1] | 43 | 43 | 38 | ||
Advisor and Dealer Manager [Member] | Expensed [Member] | Dispositon Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | [2] | 0 | $ 2,563 | 1,239 | $ 2,563 | |
Payable as of | [2] | $ 0 | $ 0 | $ 0 | ||
[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 $35,000 and $37,000 for the three months ended June 30, 2015 and 2014, respectively, and $68,000 and $73,000 for the six months ended June 30, 2015 and 2014, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the six months ended June 30, 2015 and 2014. 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 sale of real estate, net in the accompanying consolidated statements of operations. Disposition fees with respect to real estate loans receivable sold are included in the gain on payoff or sale of real estate loans receivable in the accompanying consolidated statements of operations. |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of Segment Reporting Information, by Segment) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)segments | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | ||
Segment Reporting Information [Line Items] | |||||||
Number of reportable segments | segments | 2 | ||||||
Revenues | $ 41,203 | $ 82,716 | $ 85,133 | $ 175,171 | |||
Interest expense | 5,605 | 15,213 | 12,452 | 29,848 | |||
Total net operating income | 22,282 | 38,704 | 43,994 | 86,009 | |||
Assets | 1,554,176 | 1,554,176 | $ 1,657,516 | ||||
Liabilities | 742,520 | 742,520 | 847,989 | ||||
Cash and cash equivalents | 191,363 | 167,914 | 191,363 | 167,914 | 179,021 | $ 175,042 | |
Corporate-Level [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 0 | 89 | 0 | 89 | |||
Total net operating income | 0 | 89 | 0 | 89 | |||
Assets | [1] | 180,144 | 180,144 | 168,098 | |||
Liabilities | [2] | 5,064 | 5,064 | 7,138 | |||
Cash and cash equivalents | 180,000 | 180,000 | 167,800 | ||||
Real Estate Segment [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | [3] | 39,829 | 80,641 | 82,397 | 165,132 | ||
Interest expense | [3] | 5,605 | 14,626 | 12,452 | 28,855 | ||
Total net operating income | [3] | 20,912 | 37,216 | 41,270 | 77,014 | ||
Assets | 1,300,394 | 1,300,394 | 1,317,990 | ||||
Liabilities | 737,456 | 737,456 | 774,173 | ||||
Real Estate-Related Segment [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 1,374 | 1,986 | 2,736 | 9,950 | |||
Interest expense | 0 | 587 | 0 | 993 | |||
Total net operating income | 1,370 | 1,399 | 2,724 | 8,906 | |||
Assets | 73,638 | 73,638 | 73,457 | ||||
Liabilities | 0 | 0 | 2 | ||||
Operating Segments [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 41,203 | 82,627 | 85,133 | 175,082 | |||
Total net operating income | 22,282 | $ 38,615 | 43,994 | $ 85,920 | |||
Assets | 1,374,032 | 1,374,032 | 1,391,447 | ||||
Liabilities | 737,456 | 737,456 | 774,175 | ||||
Real Estate Held-for-Sale [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Assets | 0 | 0 | 97,971 | ||||
Liabilities | $ 0 | $ 0 | $ 66,676 | ||||
[1] | Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $180.0 million and $167.8 million as of June 30, 2015 and December 31, 2014, respectively. | ||||||
[2] | As of June 30, 2015 and December 31, 2014, corporate-level liabilities consisted primarily of distributions payable. | ||||||
[3] | Amounts include properties sold. See Note 6, “Real Estate Sales” for more information. |
SEGMENT INFORMATION (Reconcilia
SEGMENT INFORMATION (Reconciliation of Net Income (Loss) to Net Operating Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Segment Reporting [Abstract] | |||||
Net income | $ 3,479 | $ 59,719 | $ 31,011 | $ 70,146 | $ 445,507 |
Gain on sale of real estate, net | (11) | (46,647) | (27,418) | (46,647) | |
Other interest income | (55) | (21) | (102) | (54) | |
Asset management fees to affiliate | 3,022 | 5,631 | 6,108 | 11,335 | |
General and administrative expenses | 1,045 | 1,513 | 2,168 | 2,802 | |
Depreciation and amortization | 14,802 | 18,509 | 27,741 | 47,352 | |
Impairment charge on real estate | 0 | 0 | 4,486 | 1,075 | |
Total net operating income | $ 22,282 | $ 38,704 | $ 43,994 | $ 86,009 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Millions | Aug. 11, 2015 | Aug. 03, 2015 | Jul. 01, 2015 | Jul. 31, 2015 | Jun. 30, 2015 | May. 31, 2015 | Apr. 30, 2015 | Mar. 31, 2015 | Feb. 28, 2015 | Jan. 31, 2015 | Jun. 30, 2014 | Jun. 30, 2014 |
Subsequent Event [Line Items] | ||||||||||||
Distribution rate per share per day, declared | $ 0.02408219 | $ 0.02488493 | $ 0.02408219 | $ 0.02488493 | $ 0.02247671 | $ 0.02488493 | $ 0.00178082 | $ 0.00178082 | ||||
Dividend Paid [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Distribution rate per share per day, declared | $ 0.02408219 | |||||||||||
Subsequent Event [Member] | Dividend Paid [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Dividends declared | $ 4.7 | $ 4.6 | ||||||||||
Distribution rate per share per day, declared | $ 0.02488493 | |||||||||||
Subsequent Event [Member] | Dividend Declared [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Distribution rate per share per day, declared | $ 0.02488493 | |||||||||||
Subsequent Event [Member] | Dividend Declared [Member] | Scenario, Forecast [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Distribution rate per share per day, declared | $ 0.02408219 |
SUBSEQUENT EVENTS (Payoff of Su
SUBSEQUENT EVENTS (Payoff of Summit I & II First Mortgage) (Details) $ in Thousands | Aug. 04, 2015USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Jan. 17, 2012USD ($)property |
Subsequent Event [Line Items] | ||||
Face amount of mortgages | $ 72,595 | $ 72,908 | ||
Origination of Summit I & II First Mortgage [Member] | ||||
Subsequent Event [Line Items] | ||||
Face amount of mortgages | $ 58,800 | |||
Number of Real Estate Properties Funded in Acquisitions | property | 2 | |||
Origination of Summit I & II First Mortgage [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Extinguishment of debt | $ 58,700 | |||
Yield maintenance premium | $ 900 | |||
Contractual interest rate | 7.50% |