Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 08, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | KBS Real Estate Investment Trust II, Inc. | ||
Entity Central Index Key | 0001411059 | ||
Current Fiscal Year end | --12-31 | ||
Entity Filer category | Non-accelerated Filer | ||
Document type | 10-K | ||
Document period end date | Dec. 31, 2018 | ||
Document fiscal year focus | 2018 | ||
Document fiscal period focus | FY | ||
Amendment flag | false | ||
Entity Common Stock, Shares Outstanding | 186,291,847 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Real estate: | ||
Land | $ 158,036 | $ 158,036 |
Buildings and improvements | 938,607 | 918,587 |
Tenant origination and absorption costs | 31,295 | 53,901 |
Total real estate held for investment, cost | 1,127,938 | 1,130,524 |
Less accumulated depreciation and amortization | (173,731) | (166,372) |
Total real estate held for investment, net | 954,207 | 964,152 |
Real estate held for sale, net | 0 | 66,717 |
Total real estate, net | 954,207 | 1,030,869 |
Real estate loan receivable, net | 0 | 13,923 |
Total real estate and real estate-related investments, net | 954,207 | 1,044,792 |
Cash and cash equivalents | 57,730 | 81,017 |
Restricted cash | 17,957 | 5,626 |
Rents and other receivables, net | 94,044 | 59,872 |
Above-market leases, net | 224 | 2,118 |
Assets related to real estate held for sale | 0 | 2,927 |
Prepaid expenses and other assets | 32,855 | 28,758 |
Total assets | 1,157,017 | 1,225,110 |
Notes payable: | ||
Notes payable, net | 415,208 | 407,719 |
Notes payable related to real estate held for sale, net | 0 | 94,580 |
Total notes payable, net | 415,208 | 502,299 |
Accounts payable and accrued liabilities | 48,903 | 13,166 |
Due to affiliate | 55 | 84 |
Distributions payable | 3,874 | 4,376 |
Below-market leases, net | 314 | 984 |
Liabilities related to real estate held for sale | 0 | 320 |
Other liabilities | 17,189 | 9,299 |
Total liabilities | 485,543 | 530,528 |
Commitments and contingencies (Note 12) | ||
Redeemable common stock | 10,000 | 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, 186,464,794 and 187,666,302 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively | 1,865 | 1,877 |
Additional paid-in capital | 1,667,897 | 1,673,767 |
Cumulative distributions in excess of net income | (1,008,288) | (991,062) |
Total stockholders’ equity | 661,474 | 684,582 |
Total liabilities and stockholders’ equity | $ 1,157,017 | $ 1,225,110 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 186,464,794 | 187,666,302 |
Common stock, shares outstanding (in shares) | 186,464,794 | 187,666,302 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||
Rental income | $ 121,813 | $ 127,521 | $ 133,408 |
Tenant reimbursements | 12,636 | 13,641 | 14,108 |
Interest income from real estate loans receivable | 434 | 1,060 | 1,075 |
Other operating income | 7,332 | 7,237 | 6,865 |
Total revenues | 142,215 | 149,459 | 155,456 |
Expenses: | |||
Operating, maintenance, and management | 35,246 | 34,719 | 34,603 |
Real estate taxes and insurance | 19,268 | 19,816 | 20,128 |
Asset management fees to affiliate | 10,894 | 11,617 | 11,811 |
General and administrative expenses | 6,024 | 4,541 | 6,370 |
Depreciation and amortization | 50,202 | 54,047 | 58,768 |
Interest expense | 17,884 | 17,466 | 16,651 |
Total expenses | 139,518 | 142,206 | 148,331 |
Other income: | |||
Other interest income | 1,159 | 375 | 529 |
Loss from extinguishment of debt | (212) | 0 | 0 |
Gain on sales of real estate | 24,884 | 17,486 | 9,093 |
Total other income | 25,831 | 17,861 | 9,622 |
Net income | $ 28,528 | $ 25,114 | $ 16,747 |
Net income per common share (in dollars per share) | $ 0.15 | $ 0.13 | $ 0.09 |
Weighted-average number of common shares outstanding, basic and diluted (in shares) | 187,133,703 | 188,235,450 | 189,111,086 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 28,528 | $ 25,114 | $ 16,747 |
Other comprehensive income: | |||
Reclassification of realized losses recognized on interest rate swaps (effective portion) | 0 | 0 | 60 |
Total other comprehensive income | 0 | 0 | 60 |
Total comprehensive income | $ 28,528 | $ 25,114 | $ 16,807 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Net Income (Loss) | Accumulated Other Comprehensive Income (Loss) |
Balance, shares at Dec. 31, 2015 | 189,556,185 | ||||
Balance, value at Dec. 31, 2015 | $ 757,930 | $ 1,895 | $ 1,684,206 | $ (928,111) | $ (60) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 16,747 | 16,747 | |||
Other comprehensive income | 60 | 60 | |||
Redemptions of common stock, shares | (836,233) | ||||
Redemptions of common stock | (4,690) | $ (8) | (4,682) | ||
Distributions declared | (53,140) | (53,140) | |||
Balance, shares at Dec. 31, 2016 | 188,719,952 | ||||
Balance, value at Dec. 31, 2016 | 716,907 | $ 1,887 | 1,679,524 | (964,504) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 25,114 | 25,114 | |||
Other comprehensive income | 0 | ||||
Redemptions of common stock, shares | (1,053,650) | ||||
Redemptions of common stock | (5,767) | $ (10) | (5,757) | ||
Distributions declared | $ (51,672) | (51,672) | |||
Balance, shares at Dec. 31, 2017 | 187,666,302 | 187,666,302 | |||
Balance, value at Dec. 31, 2017 | $ 684,582 | $ 1,877 | 1,673,767 | (991,062) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 28,528 | 28,528 | |||
Other comprehensive income | 0 | ||||
Redemptions of common stock, shares | (1,201,508) | ||||
Redemptions of common stock | (5,882) | $ (12) | (5,870) | ||
Distributions declared | $ (45,754) | (45,754) | |||
Balance, shares at Dec. 31, 2018 | 186,464,794 | 186,464,794 | |||
Balance, value at Dec. 31, 2018 | $ 661,474 | $ 1,865 | $ 1,667,897 | $ (1,008,288) | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating Activities: | |||
Net income | $ 28,528 | $ 25,114 | $ 16,747 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 50,202 | 54,047 | 58,768 |
Noncash interest income on real estate-related investments | 3 | 4 | 3 |
Deferred rent | 3,717 | (864) | (6,528) |
Bad debt expense | 371 | 515 | 258 |
Amortization of above- and below-market leases, net | 1,037 | 762 | 453 |
Amortization of deferred financing costs | 1,272 | 1,106 | 1,748 |
Unrealized gain on derivative instruments | 0 | (101) | (478) |
Loss from extinguishment of debt | 212 | 0 | 0 |
Gain on sale of real estate, net | (24,884) | (17,486) | (9,093) |
Changes in operating assets and liabilities: | |||
Rents and other receivables | (38,367) | (2,610) | (2,441) |
Prepaid expenses and other assets | (8,186) | (2,635) | (5,837) |
Accounts payable and accrued liabilities | 34,657 | (4,203) | (154) |
Due to affiliate | (29) | 43 | (8) |
Other liabilities | 7,890 | (847) | 954 |
Net cash provided by operating activities | 56,423 | 52,845 | 54,392 |
Cash Flows from Investing Activities: | |||
Proceeds from sale of real estate | 94,015 | 83,410 | 41,210 |
Improvements to real estate | (34,601) | (17,639) | (38,398) |
Principal repayments on real estate loans receivable | 13,920 | 152 | 128 |
Net cash provided by investing activities | 73,334 | 65,923 | 2,940 |
Cash Flows from Financing Activities: | |||
Proceeds from notes payable | 375,000 | 0 | 17,000 |
Principal payments on notes payable | (460,765) | (21,663) | (40,175) |
Payments of deferred financing costs | (2,810) | (915) | (879) |
Payments to redeem common stock | (5,882) | (5,767) | (4,690) |
Distributions paid to common stockholders | (46,256) | (51,789) | (53,372) |
Net cash used in financing activities | (140,713) | (80,134) | (82,116) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (10,956) | 38,634 | (24,784) |
Cash, cash equivalents and restricted cash, beginning of period | 86,643 | 48,009 | 72,793 |
Cash, cash equivalents and restricted cash, end of period | 75,687 | 86,643 | 48,009 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 16,686 | 16,314 | 15,411 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||
Increase in accrued improvements to real estate | $ 1,080 | $ 0 | $ 0 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2018 | |
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 December 31, 2018 , the Company owned eight office properties and an office campus consisting of five office buildings. 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, 2018 (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. 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 December 31, 2018 , the Company had redeemed 27,140,343 shares sold in the Offering for $251.7 million . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation 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. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Use of Estimates The preparation of the consolidated financial statements and the accompanying 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 year ended December 31, 2018 , the Company sold three office buildings that were part of an eight -building office campus. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. Revenue Recognition Real Estate The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is reasonably assured and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that a tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general-purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred. The Company makes estimates of the collectibility of its tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. Management specifically analyzes accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments. The Company recognizes a gain on sales of real estate upon the closing of a transaction with the purchaser. Gains on real estate sold are recognized using the full accrual method when collectibility of the sales price is reasonably assured, the Company is not obligated to perform additional activities that may be considered significant, the initial investment from the buyer is sufficient and other profit recognition criteria have been satisfied. Gain on sales of real estate may be deferred in whole or in part until the requirements for gain recognition have been met. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that is impacted by ASU No. 2014-09 includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. The recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. For the year ended December 31, 2018 , tenant reimbursements for substantial services accounted for under ASU No. 2014-09 were $1.9 million and were included in tenant reimbursements on the accompanying statements of operations. Sales of Real Estate Prior to January 1, 2018, gains on real estate sold were recognized using the full accrual method at closing when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. Gain on sales of real estate may have been deferred in whole or in part until the requirements for gain recognition had been met. Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09. Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. Real Estate Loan Receivable Interest income on the Company’s real estate loan receivable was recognized on an accrual basis over the life of the investment using the interest method. Direct loan origination fees and origination or acquisition costs, as well as acquisition premiums or discounts, were amortized over the term of the loan as an adjustment to interest income. Cash and Cash Equivalents The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income. Real Estate Depreciation and Amortization Real estate costs related to the acquisition and improvement of properties are capitalized and amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Expenditures for tenant improvements are capitalized and amortized over the shorter of the tenant’s lease term or expected useful life. The Company anticipates the estimated useful lives of its assets by class to be generally as follows: Buildings 25-40 years Building improvements 10-25 years Tenant improvements Shorter of lease term or expected useful life Tenant origination and absorption costs Remaining term of related leases, including below-market renewal periods Impairment of Real Estate and Related Intangible Assets and Liabilities The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities. Projecting future cash flows involves estimating expected future operating income and expenses related to the real estate and its related intangible assets and liabilities as well as market and other trends. Using inappropriate assumptions to estimate cash flows could result in incorrect fair values of the real estate and its related intangible assets and liabilities and could result in the overstatement of the carrying values of the Company’s real estate and related intangible assets and liabilities and an overstatement of the Company’s net income. Real Estate Held for Sale The Company generally considers real estate to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate held for sale” and “assets related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Notes payable and other liabilities related to real estate held for sale are classified as “notes payable related to real estate held for sale” and “liabilities related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Real estate classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties and related gains on sales of properties that were disposed of or classified as held for sale in the ordinary course of business during the years ended December 31, 2018, 2017 and 2016 are included in continuing operations on the Company’s consolidated statements of operations. Change in a Plan to Sell When real estate is initially considered “held for sale” it is measured at the lower of its depreciated book value or estimated fair value less estimated costs to sell. Changes in the market may compel the Company to decide to reclassify a property that was designated as held for sale to held for investment. A property that is reclassified from held for sale to held for investment is measured and recorded at the lower of (i) its carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used, or (ii) its fair value at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of the property as a result of the reclassification is included in income from continuing operations as an impairment charge on real estate held for investment. Real Estate Loan Receivable The Company’s real estate loan receivable was recorded at amortized cost, net of loan loss reserves (if any), and evaluated for impairment at each balance sheet date. The amortized cost of a real estate loan receivable is the outstanding unpaid principal balance, net of unamortized acquisition premiums or discounts and unamortized costs and fees directly associated with the origination or acquisition of the loan. As of December 31, 2018 , the Company did not own any real estate loans receivable. The Company’s real estate loan receivable was paid off in full on June 1, 2018. The Company did not record any impairment losses related to the real estate loan receivable during the years ended December 31, 2018 , 2017 and 2016 . Cash and Cash Equivalents The Company considers all short-term (with an original maturity of three months or less), highly-liquid investments utilized as part of the Company’s cash-management activities to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2018 . The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. Restricted Cash Restricted cash is comprised of lender impound reserve accounts on the Company’s borrowings for capital improvements and replacements. Rents and Other Receivables The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. In addition, the Company maintains an allowance for deferred rent receivable that arises from the straight-lining of rents. The Company exercises judgment in establishing these allowances and considers payment history and current credit status of its tenants in developing these estimates. Derivative Instruments The Company may enter into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate notes payable. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. 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 consolidated statements of stockholders’ equity. The changes in fair value for derivative instruments that are not designated as a hedge or that do not meet the hedge accounting criteria are recorded as a component of interest expense in the accompanying consolidated statements of operations. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded in accumulated other comprehensive income (loss) to earnings. Deferred Financing Costs Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Fair Value Measurements 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 non-financial and financial assets 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. When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. 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. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. Redeemable Common Stock The Company has a share redemption program pursuant to which stockholders may sell their shares to the Company only in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program and, together with redemptions sought in connection with a stockholder’s death, “Special Redemptions”). Such redemptions are subject to the limitations described in the share redemption program document, including: • During each calendar year, Special Redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to the Company’s stockholders. The Company may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to its stockholders. The dollar limitation for calendar year 2018 was $10.0 million . On December 3, 2018, the Company’s board of directors approved the same annual dollar amount limitation for Special Redemptions for calendar year 2019 of $10.0 million in the aggregate, as may be reviewed and adjusted from time to time by the board of directors. • During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year. • The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland General Corporation Law, as amended from time to time, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. If the Company cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the Company’s share redemption program, then it will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currently effective, or its most recently effective, registration statement as such registration statement has been amended or supplemented, then the Company would redeem all of such stockholder’s shares. Pursuant to the share redemption program, redemptions made in connection with Special Redemptions are made at a price per share equal to the most recent estimated value per share of the Company’s common stock as of the applicable redemption date. The Company does not currently expect to have funds available for ordinary redemptions in the future. On December 8, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $4.89 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and was effective through the November 2018 redemption date. On December 3, 2018, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $4.95 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2018. The change in the redemption price became effective for the December 2018 redemption date, which was December 31, 2018, and will be effective until the estimated value per share is updated. On December 3, 2018, the Company’s board of directors amended and restated the share redemption program to provide that the Company may amend, suspend or terminate the share redemption program for any reason upon ten business days’ notice to its stockholders. The Company may provide this notice by including such information in a (a) Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC or (b) separate mailing to its stockholders. There were no other material changes made to the share redemption program. The amended and restated share redemption program was effective on January 6, 2019. The Company records amounts that are redeemable under the share redemption program as redeemable common stock in the accompanying consolidated balance sheets because the shares are mandatorily redeemable at the option of the holder and therefore their redemption is outside the control of the Company. Pursuant to the share redemption program, effective for redemptions on or after June 18, 2014, the maximum amount redeemable under the Company’s share redemption program is limited to an annual dollar amount determined by Company’s board of directors, as described above. However, because the amounts that can be redeemed in future periods are determinable and only contingent on an event that is likely to occur (e.g., the passage of time), the Company presents the amounts available for future redemptions in future periods as redeemable common stock in the accompanying consolidated balance sheets. The Company classifies financial instruments that represent a mandatory obligation of the Company to redeem shares as liabilities. The Company’s redeemable common shares are contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to redeem shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values. For the year ended December 31, 2018 , the Company redeemed 1,201,508 shares sold in the Offering for $5.9 million , which represented all redemption requests received in good order and eligible for redemption as Special Redemptions under the share redemption program through the December 2018 redemption date. 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 entered into a fee reimbursement agreement (the “AIP 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 DTCC Alternative Investment Product Platform (“AIP Platform”) with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), which liquidated in December 2018; KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”); KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”); KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”), which liquidated in December 2018; KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”); and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”). The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement. Operating Expenses Under the Advisory Agreement, the Advisor has the right to seek reimbursement from the Company for all costs and expenses it incurs in connection with the provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, accounting software and cybersecurity costs. Commencing July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. In the future, the Advisor may seek reimbursement for additional employee costs. The Company will not reimburse the Advisor 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 and benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition, the Company reimburses the Advisor for certain of the Company’s direct costs |
REAL ESTATE HELD FOR INVESTMENT
REAL ESTATE HELD FOR INVESTMENT | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
REAL ESTATE HELD FOR INVESTMENT | REAL ESTATE HELD FOR INVESTMENT As of December 31, 2018 , the Company’s portfolio of real estate held for investment was composed of eight office properties and an office campus consisting of five office buildings, encompassing in the aggregate approximately 4.6 million rentable square feet. As of December 31, 2018 , the Company’s real estate portfolio was 76% occupied. The following table summarizes the Company’s real estate portfolio as of December 31, 2018 (in thousands): Property Date Acquired City State Property Type Total Real Estate at Cost Accumulated Depreciation and Amortization Total Real Estate, Net 100 & 200 Campus Drive Buildings 09/09/2008 Florham Park NJ Office $ 154,098 $ (16,452 ) $ 137,646 300-600 Campus Drive Buildings 10/10/2008 Florham Park NJ Office 161,668 (21,659 ) 140,009 Willow Oaks Corporate Center 08/26/2009 Fairfax VA Office 110,160 (22,111 ) 88,049 Pierre Laclede Center 02/04/2010 Clayton MO Office 82,490 (13,729 ) 68,761 Union Bank Plaza 09/15/2010 Los Angeles CA Office 185,864 (28,274 ) 157,590 Emerald View at Vista Center 12/09/2010 West Palm Beach FL Office 29,080 (5,177 ) 23,903 Granite Tower 12/16/2010 Denver CO Office 137,932 (30,172 ) 107,760 Fountainhead Plaza 09/13/2011 Tempe AZ Office 119,383 (23,253 ) 96,130 Corporate Technology Centre 03/28/2013 San Jose CA Office 147,263 (12,904 ) 134,359 $ 1,127,938 $ (173,731 ) $ 954,207 As of December 31, 2018 , 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 Union Bank Plaza Los Angeles, CA 627,334 $ 157,590 13.6 % $ 20,115 $ 43.42 74 % 300-600 Campus Drive Buildings Florham Park, NJ 578,424 140,009 12.1 % 17,865 33.63 92 % 100 & 200 Campus Drive Buildings Florham Park, NJ 590,458 137,646 11.9 % 14,002 30.68 77 % Corporate Technology Centre (2) San Jose, CA 415,700 134,359 11.6 % — — — % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , 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) The lease for the single tenant who occupied Corporate Technology Centre expired on October 31, 2018. Operating Leases The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of December 31, 2018 , the leases had remaining terms, excluding options to extend, of up to 14.3 years with a weighted-average remaining term of 6.0 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 $2.6 million as of December 31, 2018 and 2017 , respectively. During the years ended December 31, 2018 , 2017 and 2016 , the Company recognized deferred rent from tenants, net of lease incentive amortization, of $(3.7) million , $0.9 million and $6.5 million , respectively. As of December 31, 2018 and 2017 , the cumulative deferred rent balance was $88.5 million and $57.6 million , respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $42.3 million and $9.5 million of unamortized lease incentives as of December 31, 2018 and 2017 , respectively. As of December 31, 2018 and 2017 , lease incentive payable was $35.2 million and $1.8 million , respectively, and is included in accounts payable and accrued liabilities on the accompanying balance sheets. As of December 31, 2018 , the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands): 2019 $ 105,587 2020 102,432 2021 99,375 2022 81,295 2023 68,880 Thereafter 296,863 $ 754,432 As of December 31, 2018 , the Company had approximately 180 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 32 $ 26,807 25.3 % Legal Services 32 14,711 13.9 % Mining, Oil & Gas Extraction 3 13,711 12.9 % Educational Services 1 11,728 11.1 % $ 66,957 63.2 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , 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 December 31, 2018 . During the years ended December 31, 2018 , 2017 and 2016 , the Company recorded bad debt expense of $0.4 million , $0.5 million and $0.3 million , respectively. As of December 31, 2018 , the Company had a bad debt expense reserve of approximately $0.1 million , which represented less than 1% of its annualized base rent. As of December 31, 2018 , the Company had a concentration of credit risk related to the following tenant leases 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 Union Bank Union Bank Plaza Finance 295,563 8.6% $ 13,687 12.9% $ 46.31 01/31/2022 (2)(3) The University of Phoenix Fountainhead Plaza Educational Services 445,957 13.0% 11,728 11.1% 26.30 08/31/2023 (4) Anadarko Petroleum Corporation Granite Tower Mining, Oil & Gas Extraction 360,584 10.5% 11,174 10.5% 30.99 04/30/2021 / 04/30/2033 (5) _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , 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 December 31, 2018 and does not take into account any tenant renewal options. Pursuant to a lease amendment that the Company entered into with Union Bank on December 31, 2017, Union Bank surrendered 15,829 rentable square feet of its total rentable square footage on March 31, 2018 and 31,320 rentable square feet of its total rentable square footage on June 30, 2018. In addition, Union Bank also surrendered 321 parking area passes on March 31, 2018. During the year ended December 31, 2018 , the Company received $11.4 million of lease termination fees from Union Bank, of which $1.9 million was recognized as rental income and $1.0 million was recognized as other operating income in the accompanying consolidated statements of operations for the year ended December 31, 2018 , respectively, and $8.5 million was deferred as of December 31, 2018 and included in other liabilities on the accompanying consolidated balance sheets. (3) Union Bank has two options to extend the term of this lease for three, four, five, six or seven years per option term, provided that the combined renewal option terms do not exceed 10 years. If Union Bank elects to exercise its extension options, it must extend the lease on (i) the entire office premises or (ii) no less than 200,000 rentable square feet consisting of full floors only plus either all or none of both the retail and vault space. (4) The University of Phoenix has two options to extend the term of this lease for five years per option term. (5) Of the 360,584 rentable square feet occupied by the tenant, a total of 64,841 rentable square feet will expire on April 30, 2021 and the remainder will expire on April 30, 2033. Anadarko Petroleum Corporation has an option to terminate all or a portion of its leased space effective April 30, 2028 or April 30, 2030. No other tenant accounted for more than 10% of annualized base rent. Geographic Concentration Risk As of December 31, 2018 , the Company’s net investments in real estate in California and New Jersey represented 25.2% and 24.0% 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. |
TENANT ORIGINATION AND ABSORPTI
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
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 December 31, 2018 and 2017 , 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 2018 2017 2018 2017 2018 2017 Cost $ 31,295 $ 53,901 $ 835 $ 13,650 $ (2,696 ) $ (6,703 ) Accumulated amortization (17,215 ) (33,042 ) (611 ) (11,532 ) 2,382 5,719 Net amount $ 14,080 $ 20,859 $ 224 $ 2,118 $ (314 ) $ (984 ) 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 years ended December 31, 2018 , 2017 and 2016 were as follows (in thousands): Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities For the Years Ended December 31, For the Years Ended December 31, For the Years Ended December 31, 2018 2017 2016 2018 2017 2016 2018 2017 2016 Amortization $ (6,928 ) $ (9,412 ) $ (12,499 ) $ (1,894 ) $ (2,348 ) $ (3,129 ) $ 857 $ 1,586 $ 2,676 The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2018 will be amortized for the years ending December 31 as follows (in thousands): Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities 2019 $ (3,641 ) $ (74 ) $ 150 2020 (3,447 ) (74 ) 82 2021 (3,443 ) (74 ) 78 2022 (2,171 ) (2 ) 4 2023 (1,370 ) — — Thereafter (8 ) — — $ (14,080 ) $ (224 ) $ 314 Weighted-Average Remaining Amortization Period 4.1 years 3.0 years 2.5 years |
REAL ESTATE LOAN RECEIVABLE
REAL ESTATE LOAN RECEIVABLE | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
REAL ESTATE LOAN RECEIVABLE | REAL ESTATE LOAN RECEIVABLE As of December 31, 2017 , the Company, through an indirect wholly owned subsidiary, had originated the following real estate loan receivable, which was paid off in full on June 1, 2018 (dollars in thousands): Loan Name Location of Related Property or Collateral Date Acquired/ Originated Property Type Loan Type Outstanding Principal Balance as of December 31, 2018 Book Value as of December 31, 2018 (1) Book Value as of December 31, 2017 (1) Contractual Interest Rate Annualized Effective Interest Rate Maturity Date Sheraton Charlotte Airport Hotel First Mortgage Charlotte, North Carolina 07/11/2011 Hotel Mortgage $ — $ — $ 13,923 (2) (2) (2) _____________________ (1) Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. (2) On June 1, 2018, the borrower under the Sheraton Charlotte Airport Hotel First Mortgage paid off the entire principal balance due to the Company. The Sheraton Charlotte Airport Hotel First Mortgage had a maturity date of August 1, 2018. The Sheraton Charlotte Airport Hotel First Mortgage bore interest at a fixed rate of 7.5% . The following summarizes the activity related to the real estate loan receivable for the year ended December 31, 2018 (in thousands): Real estate loan receivable - December 31, 2017 $ 13,923 Principal repayments received on the real estate loan receivable (13,920 ) Amortization of closing costs and origination fees on the real estate loan receivable (3 ) Real estate loan receivable - December 31, 2018 $ — For the years ended December 31, 2018 , 2017 and 2016 , interest income from the real estate loan receivable consisted of the following (in thousands): For the Years Ended December 31, 2018 2017 2016 Contractual interest income $ 437 $ 1,064 $ 1,078 Amortization of closing costs and origination fees (3 ) (4 ) (3 ) Interest income from real estate loan receivable $ 434 $ 1,060 $ 1,075 |
REAL ESTATE SALES
REAL ESTATE SALES | 12 Months Ended |
Dec. 31, 2018 | |
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. During the year ended December 31, 2018 , the Company sold three office buildings that were part of an eight -building office campus. During the year ended December 31, 2017 , the Company sold two office properties. During the year ended December 31, 2016 , the Company disposed of one office/flex property. The results of operations for the properties sold during the year s ended December 31, 2018 , 2017 and 2016 are included in continuing operations on the Company’s consolidated statements of operations. As of December 31, 2018 , the Company did not have any real estate properties held for sale. The following table summarizes certain revenue and expenses related to the Company’s real estate properties that were sold during the years ended December 31, 2018 , 2017 and 2016 , which were included in continuing operations (in thousands): Years Ended December 31, 2018 2017 2016 Revenues Rental income $ 2,254 $ 10,373 $ 14,343 Tenant reimbursements 377 2,362 2,999 Other operating income — 18 15 Total revenues 2,631 12,753 17,357 Expenses Operating, maintenance, and management 130 1,825 2,529 Real estate taxes and insurance 261 2,005 2,704 Asset management fees to affiliate 222 1,088 806 General and administrative expenses 28 30 104 Depreciation and amortization 720 3,336 3,962 Interest expense 588 2,266 3,057 Total expenses $ 1,949 $ 10,550 $ 13,162 The following summary presents the major components of assets and liabilities related to real estate held for sale as of December 31, 2017 (in thousands). No real estate properties were held for sale as of December 31, 2018 . December 31, 2018 December 31, 2017 Assets related to real estate held for sale Total real estate, at cost $ — $ 76,921 Accumulated depreciation and amortization — (10,204 ) Real estate held for sale, net — 66,717 Other assets — 2,927 Total assets related to real estate held for sale $ — $ 69,644 Liabilities related to real estate held for sale Total notes payable, net — 94,580 Other liabilities — 320 Total liabilities related to real estate held for sale $ — $ 94,900 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of December 31, 2018 and 2017 , the Company’s notes payable, including notes payable related to real estate held for sale as of December 31, 2017 , consisted of the following (dollars in thousands): Book Value as of December 31, 2018 Book Value as of December 31, 2017 Contractual Interest Rate as of December 31, 2018 (1) Effective Interest Rate as of December 31, 2018 (1) Payment Type Maturity Date (2) Amended and Restated Portfolio Revolving Loan Facility (3) $ — $ 52,638 (3) (3) (3) (3) Union Bank Plaza Mortgage Loan (3) — 105,000 (3) (3) (3) (3) Portfolio Mortgage Loan #1 (3) — 59,651 (3) (3) (3) (3) Portfolio Mortgage Loan #3 (3) — 54,000 (3) (3) (3) (3) Corporate Technology Centre Mortgage Loan (4) 41,868 138,219 3.50% 3.5% Principal & Interest 04/01/2020 300-600 Campus Drive Revolving Loan (3) — 93,125 (3) (3) (3) (3) Portfolio Loan Facility (5) 375,000 — One-month LIBOR + 1.45% 3.8% Interest Only 03/29/2020 Total notes payable principal outstanding $ 416,868 $ 502,633 Deferred financing costs, net (1,660 ) (334 ) Total notes payable, net $ 415,208 $ 502,299 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2018 . Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2018 , using interest rate indices as of December 31, 2018 , where applicable. (2) Represents the initial maturity date or the maturity date as extended as of December 31, 2018 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) On of March 29, 2018, the Company paid off the outstanding balances under these loans with proceeds from the Portfolio Loan Facility. See footnote (5) below. (4) In connection with the sales of three of the eight buildings at Corporate Technology Centre during the year ended December 31, 2018 , the Company made a partial paydown on the Corporate Technology Centre Mortgage Loan. The Company is required to reserve for the annual charges for real estate taxes by making monthly deposits to an account held by the lender, subject to certain terms and conditions contained in the loan documents. (5) On March 29, 2018, the Company, through indirect wholly owned subsidiaries, entered into a loan facility (the “Portfolio Loan Facility”) for an amount of up to $500.0 million , of which $375.0 million is term debt and $125.0 million is revolving debt. The Portfolio Loan Facility was used to pay off the Amended and Restated Portfolio Revolving Loan Facility, the Union Bank Plaza Mortgage Loan, Portfolio Mortgage Loan #1, Portfolio Mortgage Loan #3 and the 300-600 Campus Drive Revolving Loan. The Portfolio Loan Facility is secured by the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Willow Oaks Corporate Center, Pierre Laclede Center, Union Bank Plaza, Emerald View at Vista Center, Granite Tower and Fountainhead Plaza. As of December 31, 2018 , $375.0 million of term debt of the Portfolio Loan Facility was outstanding and $125.0 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. During the years ended December 31, 2018 , 2017 and 2016 , the Company incurred $17.9 million , $17.5 million and $16.7 million of interest expense, respectively. As of December 31, 2018 and 2017 , $1.3 million and $1.4 million , respectively, of interest expense were payable. Included in interest expense for the years ended December 31, 2018 , 2017 and 2016 were $1.3 million , $1.1 million and $1.8 million of amortization of deferred financing costs, respectively. Also included in interest expense for the year ended December 31, 2018 was $0.3 million of debt refinancing costs. During the year ended December 31, 2017 , the Company recorded a reduction to interest expense of $10,000 as a result of the Company’s interest rate swap agreements. Interest expense incurred as a result of the Company’s interest rate swap agreements was $0.5 million for the year ended December 31, 2016 . The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of December 31, 2018 (in thousands): 2019 $ 1,304 2020 415,564 $ 416,868 Certain of the Company’s notes payable contain financial debt covenants. As of December 31, 2018 , the Company was in compliance with these debt covenants. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company may enter 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. As of June 1, 2017, all of the Company’s interest rate swaps had expired. 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 Years Ended December 31, 2018 2017 2016 Derivatives designated as hedging instruments (1) Amount of loss recognized on interest rate swaps (effective portion) $ — $ — $ 60 — — 60 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps — 91 791 Unrealized gain on interest rate swaps — (101 ) (478 ) Losses related to swap terminations — — 156 — (10 ) 469 Increase (decrease) in interest expense as a result of derivatives $ — $ (10 ) $ 529 _____________________ (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 | 12 Months Ended |
Dec. 31, 2018 | |
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 non-financial and financial assets 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, restricted cash, 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 loan receivable: The Company’s real estate loan receivable is presented in the accompanying consolidated balance sheets at its amortized cost net of recorded loan loss reserves (if applicable) and not at fair value. The fair value of the real estate loan receivable was estimated using an internal valuation model that considered the expected cash flows for the loan, underlying collateral value (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. 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 loan receivable and notes payable as of December 31, 2018 and 2017 , which carrying amounts do not generally approximate the fair values (in thousands): December 31, 2018 December 31, 2017 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial assets: Real estate loan receivable $ — $ — $ — $ 13,921 $ 13,923 $ 13,960 Financial liabilities: Notes payable $ 416,868 $ 415,208 $ 416,163 $ 502,633 $ 502,299 $ 500,683 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. Low levels of transaction volume for certain financial instruments have 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. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
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 or served as the advisor and dealer manager, respectively, for KBS REIT I (which liquidated in December 2018), KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT (which liquidated in December 2018), KBS Strategic Opportunity REIT II and KBS Growth & Income REIT. On January 6, 2014, the Company, together with KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, 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. In June 2015, KBS Growth & Income REIT was added to the insurance program at terms similar to those described above. In June 2018, the Company renewed its participation in the program. The program is effective through June 30, 2019. At renewal, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Legacy Partners Apartment REIT elected to cease participation in the program and obtained separate insurance coverage. KBS REIT I elected to cease participation in the program at the June 2017 renewal and obtained separate insurance coverage. During the years ended December 31, 2018 , 2017 and 2016 , no other business transactions occurred between the Company and KBS REIT I, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT, the Advisor, the Dealer Manager or other KBS-affiliated entities. Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2018 , 2017 and 2016 , respectively, and any related amounts payable as of December 31, 2018 and 2017 (in thousands): Incurred Years Ended December 31, Payable as of December 31, 2018 2017 2016 2018 2017 Expensed Asset management fees $ 10,894 $ 11,617 $ 11,811 $ — $ — Reimbursement of operating expenses (1) 373 238 288 55 84 Disposition fees (2) 972 865 423 — — $ 12,239 $ 12,720 $ 12,522 $ 55 $ 84 _____________________ (1) Reimbursable operating expenses primarily consists of internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed 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 $244,000 , $213,000 and $204,000 for the years ended December 31, 2018 , 2017 and 2016 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2018 , 2017 and 2016 . 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. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company. (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. During each of the years ended December 31, 2018 and 2017 , the Advisor reimbursed the Company $0.1 million for property insurance rebates. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2018 and 2017 (in thousands, except per share amounts): 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 35,676 $ 34,622 $ 32,682 $ 39,235 Net (loss) income (979 ) 26,374 (454 ) 3,587 Net (loss) income per common share, basic and diluted (0.01 ) 0.14 — 0.02 Distributions declared per common share 0.060 0.061 0.062 0.062 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 38,351 $ 37,968 $ 36,144 $ 36,996 Net income 2,778 10,354 899 11,083 Net income per common share, basic and diluted 0.01 0.05 — 0.07 Distributions declared per common share 0.068 0.068 0.069 0.069 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
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 investments; management of the daily operations of the Company’s real estate 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 December 31, 2018 . 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 | 12 Months Ended |
Dec. 31, 2018 | |
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 January 2, 2019, the Company paid distributions of $3.9 million , which related to distributions declared for December 2018 in the amount of $0.02076575 per share of common stock to stockholders of record as of the close of business on December 19, 2018. On February 4, 2019, the Company paid distributions of $3.8 million , which related to distributions declared for January 2019 in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on January 18, 2019. On March 1, 2019, the Company paid distributions of $3.8 million , which related to distributions declared for February 2019 in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on February 18, 2019. Distributions Authorized On March 12, 2019, the Company’s board of directors authorized a March 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on March 18, 2019, which the Company expects to pay in April 2019, and an April 2019 distribution in the amount of $0.02062500 per share of common stock to stockholders of record as of the close of business on April 18, 2019, which the Company expects to pay in May 2019. |
SCHEDULE III REAL ESTATE ASSETS
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | 12 Months Ended |
Dec. 31, 2018 | |
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | Initial Cost to Company Gross Amount at which Carried at Close of Period Description Location Ownership Percent Encumbrances Land Building and Improvements (1) Total Cost Capitalized Subsequent to Acquisition (2) Land Building and Improvements (1) Total (3) Accumulated Depreciation and Amortization Original Date of Construction Date Acquired 100 & 200 Campus Drive Buildings Florham Park, NJ 100% (4) $ 10,700 $ 188,509 $ 199,209 $ (45,111 ) $ 9,461 $ 144,637 $ 154,098 $ (16,452 ) 1988/1989 09/09/2008 300-600 Campus Drive Buildings Florham Park, NJ 100% (4) 9,717 185,445 195,162 (33,494 ) 9,121 152,547 161,668 (21,659 ) 1997/1999 10/10/2008 Willow Oaks Corporate Center Fairfax, VA 100% (4) 25,300 87,802 113,102 (2,942 ) 25,300 84,860 110,160 (22,111 ) 1986/1989/2003 08/26/2009 Pierre Laclede Center Clayton, MO 100% (4) 15,200 61,507 76,707 5,783 15,200 67,290 82,490 (13,729 ) 1964/1970 02/04/2010 Union Bank Plaza Los Angeles, CA 100% (4) 24,000 190,232 214,232 (28,368 ) 24,000 161,864 185,864 (28,274 ) 1967 09/15/2010 Emerald View at Vista Center West Palm Beach, FL 100% (4) 5,300 28,455 33,755 (4,675 ) 5,300 23,780 29,080 (5,177 ) 2007 12/09/2010 Granite Tower Denver, CO 100% (4) 8,850 141,438 150,288 (12,356 ) 8,850 129,082 137,932 (30,172 ) 1983 12/16/2010 Fountainhead Plaza Tempe, AZ 100% (4) 12,300 123,700 136,000 (16,617 ) 12,300 107,083 119,383 (23,253 ) 2011 09/13/2011 Corporate Technology Centre San Jose, CA 100% $ 41,868 48,505 102,894 151,399 (4,136 ) 48,504 98,759 147,263 (12,904 ) 1999/2001 03/28/2013 TOTAL $ 159,872 $ 1,109,982 $ 1,269,854 $ (141,916 ) $ 158,036 $ 969,902 $ 1,127,938 $ (173,731 ) ____________________ (1) Building and improvements includes tenant origination and absorption costs. (2) Costs capitalized subsequent to acquisition is net of impairments and write-offs of fully depreciated/amortized assets. (3) The aggregate cost of real estate for federal income tax purposes was $1.4 billion (unaudited) as of December 31, 2018 . (4) These properties are security for the Portfolio Loan Facility, which had an outstanding principal balance of $375.0 million as of December 31, 2018 . 2018 2017 2016 Real Estate Balance at the beginning of the year $ 1,207,445 $ 1,275,847 $ 1,291,762 Improvements 35,681 16,616 30,664 Write-off of fully depreciated and fully amortized assets (38,035 ) (13,095 ) (9,862 ) Impairments — — — Sales (77,153 ) (71,923 ) (36,717 ) Balance at the end of the year $ 1,127,938 $ 1,207,445 $ 1,275,847 Accumulated depreciation and amortization Balance at the beginning of the year $ 176,576 $ 150,111 $ 113,460 Depreciation and amortization expense 46,043 50,079 54,831 Write-off of fully depreciated and fully amortized assets (38,035 ) (13,095 ) (9,862 ) Impairments — — — Sales (10,853 ) (10,519 ) (8,318 ) Balance at the end of the year $ 173,731 $ 176,576 $ 150,111 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | 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. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). |
Use of Estimates | The preparation of the consolidated financial statements and the accompanying 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 year ended December 31, 2018 , the Company sold three office buildings that were part of an eight -building office campus. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. |
Revenue Recognition, Real Estate | The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is reasonably assured and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that a tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general-purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred. The Company makes estimates of the collectibility of its tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. Management specifically analyzes accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments. The Company recognizes a gain on sales of real estate upon the closing of a transaction with the purchaser. Gains on real estate sold are recognized using the full accrual method when collectibility of the sales price is reasonably assured, the Company is not obligated to perform additional activities that may be considered significant, the initial investment from the buyer is sufficient and other profit recognition criteria have been satisfied. Gain on sales of real estate may be deferred in whole or in part until the requirements for gain recognition have been met. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that is impacted by ASU No. 2014-09 includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. The recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. For the year ended December 31, 2018 , tenant reimbursements for substantial services accounted for under ASU No. 2014-09 were $1.9 million and were included in tenant reimbursements on the accompanying statements of operations. Sales of Real Estate Prior to January 1, 2018, gains on real estate sold were recognized using the full accrual method at closing when collectibility of the sales price was reasonably assured, the Company was not obligated to perform additional activities that may be considered significant, the initial investment from the buyer was sufficient and other profit recognition criteria had been satisfied. Gain on sales of real estate may have been deferred in whole or in part until the requirements for gain recognition had been met. Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09. Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. |
Revenue Recognition, Real Estate Loan Receivable | Interest income on the Company’s real estate loan receivable was recognized on an accrual basis over the life of the investment using the interest method. Direct loan origination fees and origination or acquisition costs, as well as acquisition premiums or discounts, were amortized over the term of the loan as an adjustment to interest income |
Revenue Recognition, Cash and Cash Equivalents | The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income. |
Real Estate, Depreciation and Amortization | Real estate costs related to the acquisition and improvement of properties are capitalized and amortized over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Expenditures for tenant improvements are capitalized and amortized over the shorter of the tenant’s lease term or expected useful life. |
Real Estate, Impairments of Real Estate and Related Intangible Assets and Liabilities | The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities. Projecting future cash flows involves estimating expected future operating income and expenses related to the real estate and its related intangible assets and liabilities as well as market and other trends. Using inappropriate assumptions to estimate cash flows could result in incorrect fair values of the real estate and its related intangible assets and liabilities and could result in the overstatement of the carrying values of the Company’s real estate and related intangible assets and liabilities and an overstatement of the Company’s net income. |
Real Estate, Real Estate Held for Sale | The Company generally considers real estate to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate held for sale” and “assets related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Notes payable and other liabilities related to real estate held for sale are classified as “notes payable related to real estate held for sale” and “liabilities related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Real estate classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties and related gains on sales of properties that were disposed of or classified as held for sale in the ordinary course of business during the years ended December 31, 2018, 2017 and 2016 are included in continuing operations on the Company’s consolidated statements of operations |
Change in a Plan to Sell | When real estate is initially considered “held for sale” it is measured at the lower of its depreciated book value or estimated fair value less estimated costs to sell. Changes in the market may compel the Company to decide to reclassify a property that was designated as held for sale to held for investment. A property that is reclassified from held for sale to held for investment is measured and recorded at the lower of (i) its carrying amount before the property was classified as held for sale, adjusted for any depreciation and amortization expense that would have been recognized had the property been continuously classified as held and used, or (ii) its fair value at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of the property as a result of the reclassification is included in income from continuing operations as an impairment charge on real estate held for investment. |
Real Estate Loan Receivable | The Company’s real estate loan receivable was recorded at amortized cost, net of loan loss reserves (if any), and evaluated for impairment at each balance sheet date. The amortized cost of a real estate loan receivable is the outstanding unpaid principal balance, net of unamortized acquisition premiums or discounts and unamortized costs and fees directly associated with the origination or acquisition of the loan. As of December 31, 2018 , the Company did not own any real estate loans receivable. The Company’s real estate loan receivable was paid off in full on June 1, 2018. The Company did not record any impairment losses related to the real estate loan receivable during the years ended December 31, 2018 , 2017 and 2016 . |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents The Company considers all short-term (with an original maturity of three months or less), highly-liquid investments utilized as part of the Company’s cash-management activities to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2018 . The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. Restricted Cash Restricted cash is comprised of lender impound reserve accounts on the Company’s borrowings for capital improvements and replacements. |
Rents and Other Receivables | The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. In addition, the Company maintains an allowance for deferred rent receivable that arises from the straight-lining of rents. The Company exercises judgment in establishing these allowances and considers payment history and current credit status of its tenants in developing these estimates. |
Derivative Instruments | The Company may enter into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate notes payable. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. 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 consolidated statements of stockholders’ equity. The changes in fair value for derivative instruments that are not designated as a hedge or that do not meet the hedge accounting criteria are recorded as a component of interest expense in the accompanying consolidated statements of operations. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded in accumulated other comprehensive income (loss) to earnings. |
Deferred Financing Costs | Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. |
Fair Value Measurements | 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 non-financial and financial assets 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. When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. 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. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. |
Redeemable Common Stock | The Company has a share redemption program pursuant to which stockholders may sell their shares to the Company only in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program and, together with redemptions sought in connection with a stockholder’s death, “Special Redemptions”). Such redemptions are subject to the limitations described in the share redemption program document, including: • During each calendar year, Special Redemptions are limited to an annual dollar amount determined by the board of directors, which may be reviewed during the year and increased or decreased upon ten business days’ notice to the Company’s stockholders. The Company may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to its stockholders. The dollar limitation for calendar year 2018 was $10.0 million . On December 3, 2018, the Company’s board of directors approved the same annual dollar amount limitation for Special Redemptions for calendar year 2019 of $10.0 million in the aggregate, as may be reviewed and adjusted from time to time by the board of directors. • During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year. • The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland General Corporation Law, as amended from time to time, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. If the Company cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the Company’s share redemption program, then it will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currently effective, or its most recently effective, registration statement as such registration statement has been amended or supplemented, then the Company would redeem all of such stockholder’s shares. Pursuant to the share redemption program, redemptions made in connection with Special Redemptions are made at a price per share equal to the most recent estimated value per share of the Company’s common stock as of the applicable redemption date. The Company does not currently expect to have funds available for ordinary redemptions in the future. On December 8, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $4.89 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and was effective through the November 2018 redemption date. On December 3, 2018, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $4.95 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2018. The change in the redemption price became effective for the December 2018 redemption date, which was December 31, 2018, and will be effective until the estimated value per share is updated. On December 3, 2018, the Company’s board of directors amended and restated the share redemption program to provide that the Company may amend, suspend or terminate the share redemption program for any reason upon ten business days’ notice to its stockholders. The Company may provide this notice by including such information in a (a) Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC or (b) separate mailing to its stockholders. There were no other material changes made to the share redemption program. The amended and restated share redemption program was effective on January 6, 2019. The Company records amounts that are redeemable under the share redemption program as redeemable common stock in the accompanying consolidated balance sheets because the shares are mandatorily redeemable at the option of the holder and therefore their redemption is outside the control of the Company. Pursuant to the share redemption program, effective for redemptions on or after June 18, 2014, the maximum amount redeemable under the Company’s share redemption program is limited to an annual dollar amount determined by Company’s board of directors, as described above. However, because the amounts that can be redeemed in future periods are determinable and only contingent on an event that is likely to occur (e.g., the passage of time), the Company presents the amounts available for future redemptions in future periods as redeemable common stock in the accompanying consolidated balance sheets. The Company classifies financial instruments that represent a mandatory obligation of the Company to redeem shares as liabilities. The Company’s redeemable common shares are contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to redeem shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values. For the year ended December 31, 2018 , the Company redeemed 1,201,508 shares sold in the Offering for $5.9 million , which represented all redemption requests received in good order and eligible for redemption as Special Redemptions under the share redemption program through the December 2018 redemption date. |
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 entered into a fee reimbursement agreement (the “AIP 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 DTCC Alternative Investment Product Platform (“AIP Platform”) with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), which liquidated in December 2018; KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”); KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”); KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”), which liquidated in December 2018; KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”); and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”). The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement. |
Related Party Transactions, Operating Expenses | Under the Advisory Agreement, the Advisor has the right to seek reimbursement from the Company for all costs and expenses it incurs in connection with the provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, accounting software and cybersecurity costs. Commencing July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. In the future, the Advisor may seek reimbursement for additional employee costs. The Company will not reimburse the Advisor 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 and benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on the Company’s behalf. |
Related Party Transactions, Asset Management Fee | With respect to investments in real estate, the Company pays the Advisor a monthly asset management fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property. This amount includes any portion of the investment that was debt financed and is inclusive of acquisition fees and expenses related thereto. In the case of investments made through joint ventures, the asset management fee will be determined based on the Company’s proportionate share of the underlying investment. With respect to investments in loans and any investments other than real estate, the Company paid the Advisor a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount paid or allocated to acquire or fund the loan or other investment (which amount included any portion of the investment that was debt financed and was inclusive of acquisition or origination fees and expenses related thereto) and (ii) the outstanding principal amount of such loan or other investment, plus the acquisition or origination fees and expenses related to the acquisition or funding of such investment, as of the time of calculation. With respect to an investment that has suffered an impairment in value, reduction in cash flow or other negative circumstances, such investment may either be excluded from the calculation of the asset management fee described above or included in such calculation at a reduced value that is recommended by the Advisor and the Company’s management and then approved by a majority of the Company’s independent directors, and this change in the fee will be applicable to an investment upon the earlier to occur of the date on which (i) such investment is sold, (ii) such investment is surrendered to a person other than the Company, its direct or indirect wholly owned subsidiary or a joint venture or partnership in which the Company has an interest, (iii) the Advisor determines that it will no longer pursue collection or other remedies related to such investment, or (iv) the Advisor recommends a revised fee arrangement with respect to such investment. As of December 31, 2018 , the Company has not determined to calculate the asset management fee at an adjusted value for any investments or to exclude any investments from the calculation of the asset management fee. |
Related Party Transactions, Disposition Fee | For substantial assistance in connection with the sale of properties or other investments, the Company pays the Advisor or its affiliates 1.0% of the contract sales price of each property or other investment sold; provided, however, in no event may the disposition fees paid to Advisor, its affiliates and unaffiliated third parties exceed 6.0% of the contract sales price |
Income Taxes | The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To continue to qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT. The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for all open tax years through December 31, 2018 . As of December 31, 2018 , returns for the calendar years 2014 through 2017 remain subject to examination by major tax jurisdictions. |
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 years ended December 31, 2018 , 2017 and 2016 , respectively. Distributions declared per common share were $0.245 , $0.274 and $0.281 in the aggregate for the years ended December 31, 2018, 2017 and 2016, respectively. Distributions per common share were based on a monthly record date for each month during the period commencing January 2016 through December 2018. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions during this period. |
Segments | The Company invested in core real estate properties and real estate-related investments with the goal of acquiring a portfolio of income-producing investments. The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. Beginning with the reporting period commencing on January 1, 2016, the Company aggregated its investments into one reportable business segment. The Company considered both quantitative and qualitative thresholds and determined that its investment in a real estate loan receivable did not constitute a reportable segment. Prior to the reporting period commencing on January 1, 2016, the Company had identified two reportable business segments based on its investment types: real estate and real estate-related. The Company’s investment in a real estate-related investment was paid off in full on June 1, 2018. |
Square Footage, Occupancy and Other Measures | Square footage, occupancy, number of tenants and other similar measures, including annualized base rent and annualized base rent per square foot, used to describe real estate and real estate-related investments included in these Notes to the Consolidated Financial Statements are presented on an unaudited basis. |
Recently Issued Accounting Standards Update | In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. ASU No. 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Upon its adoption of ASU No. 2016-02 on January 1, 2019, the Company adopted the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company 1) did not reassess whether any expired or existing contracts are or contain leases, 2) did not reassess the lease classification for any expired or existing lease, and 3) did not reassess initial direct costs for any existing leases. The Company did not elect the practical expedient related to using hindsight to reevaluate the lease term. In addition, the Company adopted the practical expedient for land easements and did not assess whether existing or expired land easements that were not previously accounted for as leases under the current lease accounting standards of Topic 840 are or contain a lease under Topic 842. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU No. 2018-11”), which provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met. Upon its adoption of the lease accounting standard under Topic 842, the Company adopted this practical expedient, specifically related to its tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements for common area maintenance as 1) the timing and pattern of transfer of the nonlease components and associated lease components are the same and 2) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance will be accounted for as rental income on the Company’s statement of operations beginning January 1, 2019. In addition, ASU No. 2018-11, provides an additional optional transition method to allow entities to apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease accounting standard will continue to be reported under the current lease accounting standards of Topic 840. The Company adopted this transition method upon its adoption of the lease accounting standard of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019. In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU No. 2018-20”), which permits lessors, as an accounting policy election, to not evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs and instead to account for these costs as if they were lessee costs. In addition, ASU No. 2018-20 requires lessors to 1) exclude lessor costs paid directly by lessees to third parties on the lessor’s behalf from variable payments and 2) include lessor costs that are reimbursed by the lessee in the measurement of variable lease revenue and the associated expense. The amendments also clarify that lessors are required to allocate the variable payments to the lease and non-lease components and follow the recognition guidance in Topic 842 for the lease component and other applicable guidance, such as ASC 606, for the non-lease component. The Company made the accounting policy election related to sales taxes upon adoption of the lease accounting standard of Topic 842 on January 1, 2019. The Company created an inventory of its leases where the Company may be a lessee to assess the potential impact to the Company’s financial statements. The adoption of the new lease accounting standard did not have a material impact to the Company’s financial statements on January 1, 2019. Beginning January 1, 2019, the Company, as a lessor, will record legal costs incurred to negotiate an operating lease as an expense, classified as operating, maintenance, and management on the Company’s consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842. In addition, the Company will account for new leases, including modifications of existing leases, entered into on and after January 1, 2019 under the new lease accounting standard under Topic 842 and follow the related presentation and disclosure requirements for reporting periods subsequent to January 1, 2019. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”). ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. ASU No. 2016-13 also amends the impairment model for available-for-sale securities. An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. ASU No. 2016-13 also requires new disclosures. For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available-for-sale securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due. ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”). The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurements. In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU No. 2018-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its financial statements, but does not expect the adoption of ASU No. 2018-13 to have a material impact on its financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Life | The Company anticipates the estimated useful lives of its assets by class to be generally as follows: Buildings 25-40 years Building improvements 10-25 years Tenant improvements Shorter of lease term or expected useful life Tenant origination and absorption costs Remaining term of related leases, including below-market renewal periods |
REAL ESTATE HELD FOR INVESTME_2
REAL ESTATE HELD FOR INVESTMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments | The following table summarizes the Company’s real estate portfolio as of December 31, 2018 (in thousands): Property Date Acquired City State Property Type Total Real Estate at Cost Accumulated Depreciation and Amortization Total Real Estate, Net 100 & 200 Campus Drive Buildings 09/09/2008 Florham Park NJ Office $ 154,098 $ (16,452 ) $ 137,646 300-600 Campus Drive Buildings 10/10/2008 Florham Park NJ Office 161,668 (21,659 ) 140,009 Willow Oaks Corporate Center 08/26/2009 Fairfax VA Office 110,160 (22,111 ) 88,049 Pierre Laclede Center 02/04/2010 Clayton MO Office 82,490 (13,729 ) 68,761 Union Bank Plaza 09/15/2010 Los Angeles CA Office 185,864 (28,274 ) 157,590 Emerald View at Vista Center 12/09/2010 West Palm Beach FL Office 29,080 (5,177 ) 23,903 Granite Tower 12/16/2010 Denver CO Office 137,932 (30,172 ) 107,760 Fountainhead Plaza 09/13/2011 Tempe AZ Office 119,383 (23,253 ) 96,130 Corporate Technology Centre 03/28/2013 San Jose CA Office 147,263 (12,904 ) 134,359 $ 1,127,938 $ (173,731 ) $ 954,207 |
Schedules of Concentration of Risk, by Risk Factor | As of December 31, 2018 , 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 Union Bank Plaza Los Angeles, CA 627,334 $ 157,590 13.6 % $ 20,115 $ 43.42 74 % 300-600 Campus Drive Buildings Florham Park, NJ 578,424 140,009 12.1 % 17,865 33.63 92 % 100 & 200 Campus Drive Buildings Florham Park, NJ 590,458 137,646 11.9 % 14,002 30.68 77 % Corporate Technology Centre (2) San Jose, CA 415,700 134,359 11.6 % — — — % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , 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) The lease for the single tenant who occupied Corporate Technology Centre expired on October 31, 2018. As of December 31, 2018 , the Company had a concentration of credit risk related to the following tenant leases 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 Union Bank Union Bank Plaza Finance 295,563 8.6% $ 13,687 12.9% $ 46.31 01/31/2022 (2)(3) The University of Phoenix Fountainhead Plaza Educational Services 445,957 13.0% 11,728 11.1% 26.30 08/31/2023 (4) Anadarko Petroleum Corporation Granite Tower Mining, Oil & Gas Extraction 360,584 10.5% 11,174 10.5% 30.99 04/30/2021 / 04/30/2033 (5) _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , 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 December 31, 2018 and does not take into account any tenant renewal options. Pursuant to a lease amendment that the Company entered into with Union Bank on December 31, 2017, Union Bank surrendered 15,829 rentable square feet of its total rentable square footage on March 31, 2018 and 31,320 rentable square feet of its total rentable square footage on June 30, 2018. In addition, Union Bank also surrendered 321 parking area passes on March 31, 2018. During the year ended December 31, 2018 , the Company received $11.4 million of lease termination fees from Union Bank, of which $1.9 million was recognized as rental income and $1.0 million was recognized as other operating income in the accompanying consolidated statements of operations for the year ended December 31, 2018 , respectively, and $8.5 million was deferred as of December 31, 2018 and included in other liabilities on the accompanying consolidated balance sheets. (3) Union Bank has two options to extend the term of this lease for three, four, five, six or seven years per option term, provided that the combined renewal option terms do not exceed 10 years. If Union Bank elects to exercise its extension options, it must extend the lease on (i) the entire office premises or (ii) no less than 200,000 rentable square feet consisting of full floors only plus either all or none of both the retail and vault space. (4) The University of Phoenix has two options to extend the term of this lease for five years per option term. (5) Of the 360,584 rentable square feet occupied by the tenant, a total of 64,841 rentable square feet will expire on April 30, 2021 and the remainder will expire on April 30, 2033. Anadarko Petroleum Corporation has an option to terminate all or a portion of its leased space effective April 30, 2028 or April 30, 2030. As of December 31, 2018 , the Company had approximately 180 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 32 $ 26,807 25.3 % Legal Services 32 14,711 13.9 % Mining, Oil & Gas Extraction 3 13,711 12.9 % Educational Services 1 11,728 11.1 % $ 66,957 63.2 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2018 , 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 December 31, 2018 , the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands): 2019 $ 105,587 2020 102,432 2021 99,375 2022 81,295 2023 68,880 Thereafter 296,863 $ 754,432 |
TENANT ORIGINATION AND ABSORP_2
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 December 31, 2018 and 2017 , 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 2018 2017 2018 2017 2018 2017 Cost $ 31,295 $ 53,901 $ 835 $ 13,650 $ (2,696 ) $ (6,703 ) Accumulated amortization (17,215 ) (33,042 ) (611 ) (11,532 ) 2,382 5,719 Net amount $ 14,080 $ 20,859 $ 224 $ 2,118 $ (314 ) $ (984 ) |
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 years ended December 31, 2018 , 2017 and 2016 were as follows (in thousands): Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities For the Years Ended December 31, For the Years Ended December 31, For the Years Ended December 31, 2018 2017 2016 2018 2017 2016 2018 2017 2016 Amortization $ (6,928 ) $ (9,412 ) $ (12,499 ) $ (1,894 ) $ (2,348 ) $ (3,129 ) $ 857 $ 1,586 $ 2,676 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2018 will be amortized for the years ending December 31 as follows (in thousands): Tenant Origination and Absorption Costs Above-Market Lease Assets Below-Market Lease Liabilities 2019 $ (3,641 ) $ (74 ) $ 150 2020 (3,447 ) (74 ) 82 2021 (3,443 ) (74 ) 78 2022 (2,171 ) (2 ) 4 2023 (1,370 ) — — Thereafter (8 ) — — $ (14,080 ) $ (224 ) $ 314 Weighted-Average Remaining Amortization Period 4.1 years 3.0 years 2.5 years |
REAL ESTATE LOAN RECEIVABLE (Ta
REAL ESTATE LOAN RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Schedule of Real Estate Loans Receivable | As of December 31, 2017 , the Company, through an indirect wholly owned subsidiary, had originated the following real estate loan receivable, which was paid off in full on June 1, 2018 (dollars in thousands): Loan Name Location of Related Property or Collateral Date Acquired/ Originated Property Type Loan Type Outstanding Principal Balance as of December 31, 2018 Book Value as of December 31, 2018 (1) Book Value as of December 31, 2017 (1) Contractual Interest Rate Annualized Effective Interest Rate Maturity Date Sheraton Charlotte Airport Hotel First Mortgage Charlotte, North Carolina 07/11/2011 Hotel Mortgage $ — $ — $ 13,923 (2) (2) (2) _____________________ (1) Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs. (2) |
Schedule of Activity Related to Real Estate Loans Receivable | The following summarizes the activity related to the real estate loan receivable for the year ended December 31, 2018 (in thousands): Real estate loan receivable - December 31, 2017 $ 13,923 Principal repayments received on the real estate loan receivable (13,920 ) Amortization of closing costs and origination fees on the real estate loan receivable (3 ) Real estate loan receivable - December 31, 2018 $ — |
Schedule of Interest Income from Real Estate Loans Receivable | For the years ended December 31, 2018 , 2017 and 2016 , interest income from the real estate loan receivable consisted of the following (in thousands): For the Years Ended December 31, 2018 2017 2016 Contractual interest income $ 437 $ 1,064 $ 1,078 Amortization of closing costs and origination fees (3 ) (4 ) (3 ) Interest income from real estate loan receivable $ 434 $ 1,060 $ 1,075 |
REAL ESTATE SALES (Tables)
REAL ESTATE SALES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 years ended December 31, 2018 , 2017 and 2016 , which were included in continuing operations (in thousands): Years Ended December 31, 2018 2017 2016 Revenues Rental income $ 2,254 $ 10,373 $ 14,343 Tenant reimbursements 377 2,362 2,999 Other operating income — 18 15 Total revenues 2,631 12,753 17,357 Expenses Operating, maintenance, and management 130 1,825 2,529 Real estate taxes and insurance 261 2,005 2,704 Asset management fees to affiliate 222 1,088 806 General and administrative expenses 28 30 104 Depreciation and amortization 720 3,336 3,962 Interest expense 588 2,266 3,057 Total expenses $ 1,949 $ 10,550 $ 13,162 |
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 December 31, 2017 (in thousands). No real estate properties were held for sale as of December 31, 2018 . December 31, 2018 December 31, 2017 Assets related to real estate held for sale Total real estate, at cost $ — $ 76,921 Accumulated depreciation and amortization — (10,204 ) Real estate held for sale, net — 66,717 Other assets — 2,927 Total assets related to real estate held for sale $ — $ 69,644 Liabilities related to real estate held for sale Total notes payable, net — 94,580 Other liabilities — 320 Total liabilities related to real estate held for sale $ — $ 94,900 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | As of December 31, 2018 and 2017 , the Company’s notes payable, including notes payable related to real estate held for sale as of December 31, 2017 , consisted of the following (dollars in thousands): Book Value as of December 31, 2018 Book Value as of December 31, 2017 Contractual Interest Rate as of December 31, 2018 (1) Effective Interest Rate as of December 31, 2018 (1) Payment Type Maturity Date (2) Amended and Restated Portfolio Revolving Loan Facility (3) $ — $ 52,638 (3) (3) (3) (3) Union Bank Plaza Mortgage Loan (3) — 105,000 (3) (3) (3) (3) Portfolio Mortgage Loan #1 (3) — 59,651 (3) (3) (3) (3) Portfolio Mortgage Loan #3 (3) — 54,000 (3) (3) (3) (3) Corporate Technology Centre Mortgage Loan (4) 41,868 138,219 3.50% 3.5% Principal & Interest 04/01/2020 300-600 Campus Drive Revolving Loan (3) — 93,125 (3) (3) (3) (3) Portfolio Loan Facility (5) 375,000 — One-month LIBOR + 1.45% 3.8% Interest Only 03/29/2020 Total notes payable principal outstanding $ 416,868 $ 502,633 Deferred financing costs, net (1,660 ) (334 ) Total notes payable, net $ 415,208 $ 502,299 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2018 . Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2018 , using interest rate indices as of December 31, 2018 , where applicable. (2) Represents the initial maturity date or the maturity date as extended as of December 31, 2018 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) On of March 29, 2018, the Company paid off the outstanding balances under these loans with proceeds from the Portfolio Loan Facility. See footnote (5) below. (4) In connection with the sales of three of the eight buildings at Corporate Technology Centre during the year ended December 31, 2018 , the Company made a partial paydown on the Corporate Technology Centre Mortgage Loan. The Company is required to reserve for the annual charges for real estate taxes by making monthly deposits to an account held by the lender, subject to certain terms and conditions contained in the loan documents. (5) On March 29, 2018, the Company, through indirect wholly owned subsidiaries, entered into a loan facility (the “Portfolio Loan Facility”) for an amount of up to $500.0 million , of which $375.0 million is term debt and $125.0 million is revolving debt. The Portfolio Loan Facility was used to pay off the Amended and Restated Portfolio Revolving Loan Facility, the Union Bank Plaza Mortgage Loan, Portfolio Mortgage Loan #1, Portfolio Mortgage Loan #3 and the 300-600 Campus Drive Revolving Loan. The Portfolio Loan Facility is secured by the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Willow Oaks Corporate Center, Pierre Laclede Center, Union Bank Plaza, Emerald View at Vista Center, Granite Tower and Fountainhead Plaza. As of December 31, 2018 , $375.0 million of term debt of the Portfolio Loan Facility was outstanding and $125.0 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth 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 December 31, 2018 (in thousands): 2019 $ 1,304 2020 415,564 $ 416,868 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
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 Years Ended December 31, 2018 2017 2016 Derivatives designated as hedging instruments (1) Amount of loss recognized on interest rate swaps (effective portion) $ — $ — $ 60 — — 60 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps — 91 791 Unrealized gain on interest rate swaps — (101 ) (478 ) Losses related to swap terminations — — 156 — (10 ) 469 Increase (decrease) in interest expense as a result of derivatives $ — $ (10 ) $ 529 _____________________ (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) | 12 Months Ended |
Dec. 31, 2018 | |
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 loan receivable and notes payable as of December 31, 2018 and 2017 , which carrying amounts do not generally approximate the fair values (in thousands): December 31, 2018 December 31, 2017 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial assets: Real estate loan receivable $ — $ — $ — $ 13,921 $ 13,923 $ 13,960 Financial liabilities: Notes payable $ 416,868 $ 415,208 $ 416,163 $ 502,633 $ 502,299 $ 500,683 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 years ended December 31, 2018 , 2017 and 2016 , respectively, and any related amounts payable as of December 31, 2018 and 2017 (in thousands): Incurred Years Ended December 31, Payable as of December 31, 2018 2017 2016 2018 2017 Expensed Asset management fees $ 10,894 $ 11,617 $ 11,811 $ — $ — Reimbursement of operating expenses (1) 373 238 288 55 84 Disposition fees (2) 972 865 423 — — $ 12,239 $ 12,720 $ 12,522 $ 55 $ 84 _____________________ (1) Reimbursable operating expenses primarily consists of internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed 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 $244,000 , $213,000 and $204,000 for the years ended December 31, 2018 , 2017 and 2016 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2018 , 2017 and 2016 . 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. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company. (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. |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2018 and 2017 (in thousands, except per share amounts): 2018 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 35,676 $ 34,622 $ 32,682 $ 39,235 Net (loss) income (979 ) 26,374 (454 ) 3,587 Net (loss) income per common share, basic and diluted (0.01 ) 0.14 — 0.02 Distributions declared per common share 0.060 0.061 0.062 0.062 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 38,351 $ 37,968 $ 36,144 $ 36,996 Net income 2,778 10,354 899 11,083 Net income per common share, basic and diluted 0.01 0.05 — 0.07 Distributions declared per common share 0.068 0.068 0.069 0.069 |
ORGANIZATION (Details)
ORGANIZATION (Details) $ in Thousands | 12 Months Ended | 35 Months Ended | 128 Months Ended | ||
Dec. 31, 2018USD ($)propertyshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares | Mar. 22, 2011USD ($)shares | Dec. 31, 2018USD ($)propertyshares | |
Organizational Structure [Line Items] | |||||
Shares of common stock sold under dividend reinvestment plan, value | $ | $ 298,200 | ||||
Redemptions of common stock, value | $ | $ 5,882 | $ 5,767 | $ 4,690 | $ 251,700 | |
Common Stock | |||||
Organizational Structure [Line Items] | |||||
Issuance of common stock, shares | shares | 182,681,633 | ||||
Issuance of common stock | $ | $ 1,800,000 | ||||
Shares of common stock sold under dividend reinvestment plan, shares | shares | 30,903,504 | ||||
Redemptions of common stock, shares | shares | 1,201,508 | 1,053,650 | 836,233 | 27,140,343 | |
Redemptions of common stock, value | $ | $ 12 | $ 10 | $ 8 | ||
Advisor (KBS Capital Advisors LLC) | |||||
Organizational Structure [Line Items] | |||||
Period of advisory agreement renewal | 1 year | ||||
Period of termination notice | 60 days | ||||
Advisor (KBS Capital Advisors LLC) | Common Stock | |||||
Organizational Structure [Line Items] | |||||
Shares held by affiliate | shares | 20,000 | 20,000 | |||
Office Building | |||||
Organizational Structure [Line Items] | |||||
Number of real estate properties | property | 8 | 8 | |||
Held for Investment | Office Building | |||||
Organizational Structure [Line Items] | |||||
Number of real estate properties | property | 8 | 8 | |||
Held for Investment | Office Campus | |||||
Organizational Structure [Line Items] | |||||
Number of real estate properties | property | 1 | 1 | |||
Held for Investment | Office Buildings, Campus | |||||
Organizational Structure [Line Items] | |||||
Number of real estate properties | property | 5 | 5 | |||
Operating Partnership | |||||
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% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Reclassifications and Cash) (Details) - Office Building - property | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate Properties [Line Items] | ||
Number of real estate properties | 8 | |
Disposed of by Sale | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties sold | 3 | 2 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revenue Recognition) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Tenant reimbursements | $ 12,636 | $ 13,641 | $ 14,108 |
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Tenant reimbursements | $ 1,900 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Useful Life) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Buildings | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 25 years |
Buildings | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 40 years |
Building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 25 years |
Tenant improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | Shorter of lease term or expected useful life |
Tenant origination and absorption costs | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | Remaining term of related leases, including below-market renewal periods |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Real Estate Loans Receivable) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Loan loss reserve | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Redeemable Common Stock) (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 03, 2018 | Dec. 31, 2018 | Dec. 08, 2017 |
Accounting Policies [Abstract] | |||
Period of Increase or Decrease of Funding Available for Redemption | 10 days | ||
Summary of Significant Accounting Policies [Line Items] | |||
Dollar limitation | $ 10 | ||
Dollar limitation for special redemptions | $ 10 | ||
Maximum percentage of weighted-average shares outstanding available for redemption during any calendar year | 5.00% | ||
Estimated value per share of company's common stock | $ 4.95 | $ 4.89 | |
Share redemption program, termination period | 10 days | ||
Common Stock | |||
Summary of Significant Accounting Policies [Line Items] | |||
Common stock redeemed, shares | 1,201,508 | ||
Common stock redeemed | $ 5.9 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Fees) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies [Line Items] | |
Asset management fee, percent fee | 0.75% |
Advisor (KBS Capital Advisors LLC) | |
Summary of Significant Accounting Policies [Line Items] | |
Monthly asset management fee, percent of acquisition expense, excluding acquisition fees related to thereto | 0.0625% |
Advisor or Affiliates | |
Summary of Significant Accounting Policies [Line Items] | |
Disposition fee, percent | 1.00% |
Maximum | Advisor, Affiliates or Unaffiliated Third Parties | |
Summary of Significant Accounting Policies [Line Items] | |
Disposition fee, percent | 6.00% |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Per Share Data) (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||||||||||
Antidilutive securities | 0 | 0 | 0 | ||||||||
Distributions declared per common share (in dollars per share) | $ 0.062 | $ 0.062 | $ 0.061 | $ 0.060 | $ 0.069 | $ 0.069 | $ 0.068 | $ 0.068 | $ 0.245 | $ 0.274 | $ 0.281 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Segments) (Details) - segment | Jan. 01, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Number of reportable segments | 2 | 1 | 1 |
REAL ESTATE HELD FOR INVESTME_3
REAL ESTATE HELD FOR INVESTMENT (Narrative) (Details) ft² in Millions | Dec. 31, 2018ft²property |
Real Estate Properties [Line Items] | |
Rentable square feet | ft² | 4.6 |
Percentage of portfolio occupied | 76.00% |
Office Building | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 8 |
Office Building | Held for Investment | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 8 |
Office Campus | Held for Investment | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 1 |
Office Buildings, Campus | Held for Investment | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 5 |
REAL ESTATE HELD FOR INVESTME_4
REAL ESTATE HELD FOR INVESTMENT (Schedule of Real Estate Investments) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate Properties [Line Items] | ||
Total Real Estate at Cost | $ 1,127,938 | $ 1,130,524 |
Accumulated Depreciation and Amortization | (173,731) | (166,372) |
Total real estate held for investment, net | 954,207 | $ 964,152 |
Office Building | ||
Real Estate Properties [Line Items] | ||
Total Real Estate at Cost | 1,127,938 | |
Accumulated Depreciation and Amortization | (173,731) | |
Total real estate held for investment, net | $ 954,207 | |
100 & 200 Campus Drive Buildings | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Sep. 9, 2008 | |
Total Real Estate at Cost | $ 154,098 | |
Accumulated Depreciation and Amortization | (16,452) | |
Total real estate held for investment, net | $ 137,646 | |
300-600 Campus Drive Buildings | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Oct. 10, 2008 | |
Total Real Estate at Cost | $ 161,668 | |
Accumulated Depreciation and Amortization | (21,659) | |
Total real estate held for investment, net | $ 140,009 | |
Willow Oaks Corporate Center | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Aug. 26, 2009 | |
Total Real Estate at Cost | $ 110,160 | |
Accumulated Depreciation and Amortization | (22,111) | |
Total real estate held for investment, net | $ 88,049 | |
Pierre Laclede Center | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Feb. 4, 2010 | |
Total Real Estate at Cost | $ 82,490 | |
Accumulated Depreciation and Amortization | (13,729) | |
Total real estate held for investment, net | $ 68,761 | |
Union Bank Plaza | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Sep. 15, 2010 | |
Total Real Estate at Cost | $ 185,864 | |
Accumulated Depreciation and Amortization | (28,274) | |
Total real estate held for investment, net | $ 157,590 | |
Emerald View at Vista Center | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Dec. 9, 2010 | |
Total Real Estate at Cost | $ 29,080 | |
Accumulated Depreciation and Amortization | (5,177) | |
Total real estate held for investment, net | $ 23,903 | |
Granite Tower | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Dec. 16, 2010 | |
Total Real Estate at Cost | $ 137,932 | |
Accumulated Depreciation and Amortization | (30,172) | |
Total real estate held for investment, net | $ 107,760 | |
Fountainhead Plaza | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Sep. 13, 2011 | |
Total Real Estate at Cost | $ 119,383 | |
Accumulated Depreciation and Amortization | (23,253) | |
Total real estate held for investment, net | $ 96,130 | |
Corporate Technology Centre | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Mar. 28, 2013 | |
Total Real Estate at Cost | $ 147,263 | |
Accumulated Depreciation and Amortization | (12,904) | |
Total real estate held for investment, net | $ 134,359 |
REAL ESTATE HELD FOR INVESTME_5
REAL ESTATE HELD FOR INVESTMENT (Corporate Technology Centre) (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)ft²$ / ft² | Dec. 31, 2017USD ($) | |
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 4,600,000 | |
Total Real Estate, Net | $ 954,207 | $ 964,152 |
Percentage of Total Assets | 63.20% | |
Annualized Base Rent | $ 66,957 | |
Occupancy | 76.00% | |
Union Bank Plaza | Assets, Total | ||
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 627,334 | |
Total Real Estate, Net | $ 157,590 | |
Percentage of Total Assets | 13.60% | |
Annualized Base Rent | $ 20,115 | |
Average Annualized Base Rent per sq. ft. (in dollars per sq, ft) | $ / ft² | 43.42 | |
Occupancy | 74.00% | |
300-600 Campus Drive Buildings | Assets, Total | ||
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 578,424 | |
Total Real Estate, Net | $ 140,009 | |
Percentage of Total Assets | 12.10% | |
Annualized Base Rent | $ 17,865 | |
Average Annualized Base Rent per sq. ft. (in dollars per sq, ft) | $ / ft² | 33.63 | |
Occupancy | 92.00% | |
100 & 200 Campus Drive Buildings | Assets, Total | ||
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 590,458 | |
Total Real Estate, Net | $ 137,646 | |
Percentage of Total Assets | 11.90% | |
Annualized Base Rent | $ 14,002 | |
Average Annualized Base Rent per sq. ft. (in dollars per sq, ft) | $ / ft² | 30.68 | |
Occupancy | 77.00% | |
Corporate Technology Centre | Assets, Total | ||
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 415,700 | |
Total Real Estate, Net | $ 134,359 | |
Percentage of Total Assets | 11.60% | |
Annualized Base Rent | $ 0 | |
Average Annualized Base Rent per sq. ft. (in dollars per sq, ft) | $ / ft² | 0 | |
Occupancy | 0.00% |
REAL ESTATE HELD FOR INVESTME_6
REAL ESTATE HELD FOR INVESTMENT (Operating Leases) (Narrative) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)Tenants | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Operating Leased Assets [Line Items] | |||
Deferred rent recognized | $ (3,717) | $ 864 | $ 6,528 |
Deferred rent receivables | 88,500 | 57,600 | |
Unamortized lease incentives | $ 42,300 | 9,500 | |
Number of tenants | Tenants | 180 | ||
Recorded bad debt expense related to tenant | $ 371 | 515 | $ 258 |
Bad debt reserve | 100 | ||
Other Liabilities | |||
Operating Leased Assets [Line Items] | |||
Security deposit liability | 2,500 | 2,600 | |
Accounts Payable and Accrued Liabilities | |||
Operating Leased Assets [Line Items] | |||
Lease incentive payable | $ 35,200 | $ 1,800 | |
Weighted Average | |||
Operating Leased Assets [Line Items] | |||
Operating leases, term | 6 years | ||
Maximum | |||
Operating Leased Assets [Line Items] | |||
Operating leases, term | 14 years 3 months 18 days | ||
Bad debt reserve of annualized base rent | 1.00% |
REAL ESTATE HELD FOR INVESTME_7
REAL ESTATE HELD FOR INVESTMENT (Future Minimum Rental Income) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Real Estate [Abstract] | |
2019 | $ 105,587 |
2020 | 102,432 |
2021 | 99,375 |
2022 | 81,295 |
2023 | 68,880 |
Thereafter | 296,863 |
Future minimum rental income | $ 754,432 |
REAL ESTATE HELD FOR INVESTME_8
REAL ESTATE HELD FOR INVESTMENT (Highest Tenant Industry Concentrations- Greater than 10% of Annual Base Rent) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)Tenantstenant | |
Concentration Risk [Line Items] | |
Number of Tenants | Tenants | 180 |
Annualized Base Rent | $ 66,957 |
Percentage of Annualized Base Rent | 63.20% |
Finance | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 32 |
Annualized Base Rent | $ 26,807 |
Percentage of Annualized Base Rent | 25.30% |
Legal Services | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 32 |
Annualized Base Rent | $ 14,711 |
Percentage of Annualized Base Rent | 13.90% |
Mining, Oil & Gas Extraction | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 3 |
Annualized Base Rent | $ 13,711 |
Percentage of Annualized Base Rent | 12.90% |
Educational Services | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 1 |
Annualized Base Rent | $ 11,728 |
Percentage of Annualized Base Rent | 11.10% |
REAL ESTATE HELD FOR INVESTME_9
REAL ESTATE HELD FOR INVESTMENT (Concentration of Credit Risk, Tenant Lease that Represents More than 10% of Annualized Base Rent) (Details) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018USD ($)ft²extension$ / ft² | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2018ft² | Mar. 31, 2018ft² | |
Concentration Risk [Line Items] | |||||
Square Feet | ft² | 4,600,000 | ||||
Annualized Base Rent | $ 66,957 | ||||
Rental income | 121,813 | $ 127,521 | $ 133,408 | ||
Other operating income | $ 7,332 | $ 7,237 | $ 6,865 | ||
Tenant Lease - Union Bank Plaza | |||||
Concentration Risk [Line Items] | |||||
Square Feet | ft² | 295,563 | ||||
% of Portfolio (Net Rentable Sq. Ft.) | 8.60% | ||||
Annualized Base Rent | $ 13,687 | ||||
% of Portfolio Annualized Base Rent | 12.90% | ||||
Annualized Base Rent per Sq. Ft. (in dollars per sq, ft) | $ / ft² | 46.31 | ||||
Square feet surrender | ft² | 31,320 | 15,829 | |||
Termination of lease | $ 11,400 | ||||
Rental income | 1,900 | ||||
Other operating income | $ 1,000 | ||||
Extension option | extension | 2 | ||||
Tenant Lease - Union Bank Plaza | Maximum | |||||
Concentration Risk [Line Items] | |||||
Extension period | 10 years | ||||
Tenant Lease - Union Bank Plaza | Minimum | |||||
Concentration Risk [Line Items] | |||||
Rentable area required for extension option | ft² | 200,000 | ||||
Tenant Lease - Union Bank Plaza | Other Liabilities | |||||
Concentration Risk [Line Items] | |||||
Deferred revenue | $ 8,500 | ||||
Tenant Lease - The University of Phoenix | |||||
Concentration Risk [Line Items] | |||||
Square Feet | ft² | 445,957 | ||||
% of Portfolio (Net Rentable Sq. Ft.) | 13.00% | ||||
Annualized Base Rent | $ 11,728 | ||||
% of Portfolio Annualized Base Rent | 11.10% | ||||
Annualized Base Rent per Sq. Ft. (in dollars per sq, ft) | $ / ft² | 26.30 | ||||
Extension option | extension | 2 | ||||
Extension period | 5 years | ||||
Term Lease - Anadarko Petroleum Corporation | |||||
Concentration Risk [Line Items] | |||||
Square Feet | ft² | 360,584 | ||||
% of Portfolio (Net Rentable Sq. Ft.) | 10.50% | ||||
Annualized Base Rent | $ 11,174 | ||||
% of Portfolio Annualized Base Rent | 10.50% | ||||
Annualized Base Rent per Sq. Ft. (in dollars per sq, ft) | $ / ft² | 30.99 | ||||
Term Lease - Anadarko Petroleum Corporation | Will Expire on April 30, 2021 | |||||
Concentration Risk [Line Items] | |||||
Square Feet | ft² | 64,841 |
REAL ESTATE HELD FOR INVESTM_10
REAL ESTATE HELD FOR INVESTMENT (Geographic Concentration Risk) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 63.20% |
California | Assets, Total | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 25.20% |
New Jersey | Assets, Total | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 24.00% |
TENANT ORIGINATION AND ABSORP_3
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Schedule of Net Amounts and Amortization) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |||
Tenant Origination and Absorption Costs, Cost | $ 31,295 | $ 53,901 | |
Tenant Origination and Absorption Costs, Accumulated amortization | (17,215) | (33,042) | |
Tenant Origination and Absorption Costs, Net amount | 14,080 | 20,859 | |
Above-Market Lease Assets, Costs | 835 | 13,650 | |
Above-Market Lease Assets, Accumulated amortization | (611) | (11,532) | |
Above-Market Lease Assets, Net amount | 224 | 2,118 | |
Below-Market Lease Liabilities, Costs | (2,696) | (6,703) | |
Below-Market Lease Liabilities, Accumulated amortization | 2,382 | 5,719 | |
Below-Market Lease Liabilities, Net amount | (314) | (984) | |
Tenant Origination and Absorption Costs, Amortization | (6,928) | (9,412) | $ (12,499) |
Above-Market Lease Assets, Amortization | (1,894) | (2,348) | (3,129) |
Below-Market Lease Liabilities, Amortization | $ 857 | $ 1,586 | $ 2,676 |
TENANT ORIGINATION AND ABSORP_4
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Remaining Unamortized Balance) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
2019 | $ 150 |
2020 | 82 |
2021 | 78 |
2022 | 4 |
2023 | 0 |
Thereafter | 0 |
Net Amount | 314 |
Tenant origination and absorption costs | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2019 | (3,641) |
2020 | (3,447) |
2021 | (3,443) |
2022 | (2,171) |
2023 | (1,370) |
Thereafter | (8) |
Net Amount | $ (14,080) |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
Weighted-Average Remaining Amortization Period | 4 years 1 month 6 days |
Above-Market Lease Assets | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2019 | $ (74) |
2020 | (74) |
2021 | (74) |
2022 | (2) |
2023 | 0 |
Thereafter | 0 |
Net Amount | $ (224) |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
Weighted-Average Remaining Amortization Period | 3 years |
Below-Market Lease Liabilities | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
Weighted-Average Remaining Amortization Period | 2 years 6 months |
REAL ESTATE LOAN RECEIVABLE (Sc
REAL ESTATE LOAN RECEIVABLE (Schedule of Real Estate Loans Receivable) (Details) - USD ($) $ in Thousands | Jun. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Book Value | $ 0 | $ 13,923 | |
Sheraton Charlotte Airport Hotel First Mortgage | Mortgages | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Date Acquired/ Originated | Jul. 11, 2011 | ||
Outstanding Principal Balance | $ 0 | ||
Book Value | $ 0 | $ 13,923 | |
Interest rate | 7.50% |
REAL ESTATE LOAN RECEIVABLE (_2
REAL ESTATE LOAN RECEIVABLE (Schedule of Activity Related to Real Estate Loans Receivable) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Real Estate Loans Receivable [Roll Forward] | |||
Real estate loan receivable - December 31, 2017 | $ 13,923 | ||
Principal repayments received on the real estate loan receivable | (13,920) | $ (152) | $ (128) |
Amortization of closing costs and origination fees on the real estate loan receivable | (3) | (4) | $ (3) |
Real estate loan receivable - December 31, 2018 | $ 0 | $ 13,923 |
REAL ESTATE LOAN RECEIVABLE (_3
REAL ESTATE LOAN RECEIVABLE (Schedule of Interest Income from Real Estate Loans Receivable) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Receivables [Abstract] | |||
Contractual interest income | $ 437 | $ 1,064 | $ 1,078 |
Amortization of closing costs and origination fees | (3) | (4) | (3) |
Interest income from real estate loans receivable | $ 434 | $ 1,060 | $ 1,075 |
REAL ESTATE SALES (Narrative) (
REAL ESTATE SALES (Narrative) (Details) - property | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Assets Held-for-sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | 0 | ||
Office Building | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | 8 | ||
Office Building | Disposed of by Sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties sold | 3 | 2 | |
Office-Flex Properties | Disposed of by Sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties sold | 1 |
REAL ESTATE SALES (Revenue and
REAL ESTATE SALES (Revenue and Expenses of Real Estate Held-for-Sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | |||||||||||
Rental income | $ 121,813 | $ 127,521 | $ 133,408 | ||||||||
Tenant reimbursements | 12,636 | 13,641 | 14,108 | ||||||||
Total revenues | $ 39,235 | $ 32,682 | $ 34,622 | $ 35,676 | $ 36,996 | $ 36,144 | $ 37,968 | $ 38,351 | 142,215 | 149,459 | 155,456 |
Expenses | |||||||||||
Operating, maintenance, and management | 35,246 | 34,719 | 34,603 | ||||||||
Real estate taxes and insurance | 19,268 | 19,816 | 20,128 | ||||||||
Asset management fees to affiliate | 10,894 | 11,617 | 11,811 | ||||||||
General and administrative expenses | 6,024 | 4,541 | 6,370 | ||||||||
Depreciation and amortization | 50,202 | 54,047 | 58,768 | ||||||||
Interest expense | 17,884 | 17,466 | 16,651 | ||||||||
Total expenses | 139,518 | 142,206 | 148,331 | ||||||||
Disposed of by Sale | |||||||||||
Revenues | |||||||||||
Rental income | 2,254 | 10,373 | 14,343 | ||||||||
Tenant reimbursements | 377 | 2,362 | 2,999 | ||||||||
Other operating income | 0 | 18 | 15 | ||||||||
Total revenues | 2,631 | 12,753 | 17,357 | ||||||||
Expenses | |||||||||||
Operating, maintenance, and management | 130 | 1,825 | 2,529 | ||||||||
Real estate taxes and insurance | 261 | 2,005 | 2,704 | ||||||||
Asset management fees to affiliate | 222 | 1,088 | 806 | ||||||||
General and administrative expenses | 28 | 30 | 104 | ||||||||
Depreciation and amortization | 720 | 3,336 | 3,962 | ||||||||
Interest expense | 588 | 2,266 | 3,057 | ||||||||
Total expenses | $ 1,949 | $ 10,550 | $ 13,162 |
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 | Dec. 31, 2018 | Dec. 31, 2017 |
Discontinued Operations and Disposal Groups [Abstract] | ||
Total real estate, at cost | $ 0 | $ 76,921 |
Accumulated depreciation and amortization | 0 | (10,204) |
Real estate held for sale, net | 0 | 66,717 |
Other assets | 0 | 2,927 |
Total assets related to real estate held for sale | 0 | 69,644 |
Total notes payable, net | 0 | 94,580 |
Other liabilities | 0 | 320 |
Total liabilities related to real estate held for sale | $ 0 | $ 94,900 |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |||
Interest expense | $ 17,884 | $ 17,466 | $ 16,651 |
Interest payable, current | 1,300 | 1,400 | |
Amortization of financing cost, net of discontinued operations | 1,300 | 1,100 | 1,800 |
Debt refinancing costs | $ 300 | ||
Gain (loss) on derivative, net | $ (10) | $ 500 |
NOTES PAYABLE (Schedule of Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)property | Dec. 31, 2017USD ($)property | Mar. 29, 2018USD ($) | |
Debt Instrument [Line Items] | |||
Principal outstanding | $ 416,868,000 | $ 502,633,000 | |
Deferred financing costs, net | (1,660,000) | (334,000) | |
Total notes payable, net | 415,208,000 | 502,299,000 | |
Notes payable | $ 416,868,000 | $ 502,633,000 | |
Office Building | |||
Debt Instrument [Line Items] | |||
Number of real estate properties | property | 8 | ||
Office Building | Disposed of by Sale | |||
Debt Instrument [Line Items] | |||
Number of real estate properties sold | property | 3 | 2 | |
Portfolio Loan Facility | Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal outstanding | $ 375,000,000 | ||
Remaining borrowing capacity | 125,000,000 | ||
Mortgages | Amended and Restated Portfolio Revolving Loan Facility | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 0 | $ 52,638,000 | |
Mortgages | Union Bank Plaza Mortgage Loan | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 0 | 105,000,000 | |
Mortgages | Portfolio Mortgage Loan | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 0 | 59,651,000 | |
Mortgages | Portfolio Mortgage Loan 3 | |||
Debt Instrument [Line Items] | |||
Principal outstanding | 0 | 54,000,000 | |
Mortgages | Corporate Technology Centre Mortgage Loan | |||
Debt Instrument [Line Items] | |||
Principal outstanding | $ 41,868,000 | 138,219,000 | |
Contractual Interest Rate, Percentage | 3.50% | ||
Effective Interest Rate | 3.50% | ||
Maturity Date | Apr. 1, 2020 | ||
Mortgages | 300-600 Campus Drive Revolving Loan | |||
Debt Instrument [Line Items] | |||
Principal outstanding | $ 0 | 93,125,000 | |
Mortgages | Portfolio Loan Facility | |||
Debt Instrument [Line Items] | |||
Principal outstanding | $ 375,000,000 | $ 0 | |
Effective Interest Rate | 3.80% | ||
Maturity Date | Mar. 29, 2020 | ||
Notes payable | $ 500,000,000 | ||
Mortgages | Portfolio Loan Facility | One-month LIBOR | |||
Debt Instrument [Line Items] | |||
Variable rate | 1.45% | ||
Secured Debt | Portfolio Loan Facility | |||
Debt Instrument [Line Items] | |||
Total notes payable, net | 375,000,000 | ||
Secured Debt | Portfolio Loan Facility | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 125,000,000 |
NOTES PAYABLE (Schedule of Matu
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
2020 | $ 1,304 | |
2021 | 415,564 | |
Total notes payable, net | $ 416,868 | $ 502,633 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative [Line Items] | |||
Increase (decrease) in interest expense as a result of derivatives | $ (10) | $ 500 | |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Increase (decrease) in interest expense as a result of derivatives | $ 0 | (10) | 529 |
Interest Rate Swap | Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Amount of loss recognized on interest rate swaps (effective portion) | 0 | 0 | 60 |
Increase (decrease) in interest expense as a result of derivatives | 0 | 0 | 60 |
Interest Rate Swap | Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Realized loss recognized on interest rate swaps | 0 | 91 | 791 |
Unrealized gain on interest rate swaps | 0 | (101) | (478) |
Losses related to swap terminations | 0 | 0 | 156 |
Increase (decrease) in interest expense as a result of derivatives | $ 0 | $ (10) | $ 469 |
FAIR VALUE DISCLOSURES (Schedul
FAIR VALUE DISCLOSURES (Schedule of Face Value, Carrying Amounts and Fair Value) (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Real estate loan receivable, Face Value | $ 0 | $ 13,921,000 |
Notes payable, Face Value | 416,868,000 | 502,633,000 |
Book Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Real estate loans receivable, Value | 0 | 13,923,000 |
Notes payable, Value | 415,208,000 | 502,299,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Real estate loans receivable, Value | 0 | 13,960,000 |
Notes payable, Value | $ 416,163,000 | $ 500,683,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||
Payable as of | $ 55 | $ 84 | |
Administrative fees, amount paid | 244 | 213 | $ 204 |
Advisor and Dealer Manager | |||
Related Party Transaction [Line Items] | |||
Expenses | 12,239 | 12,720 | 12,522 |
Payable as of | 55 | 84 | |
Advisor and Dealer Manager | Asset Management Fees | |||
Related Party Transaction [Line Items] | |||
Expenses | 10,894 | 11,617 | 11,811 |
Payable as of | 0 | 0 | |
Advisor and Dealer Manager | Reimbursement of Operating Expenses | |||
Related Party Transaction [Line Items] | |||
Expenses | 373 | 238 | 288 |
Payable as of | 55 | 84 | |
Advisor and Dealer Manager | Disposition Fees | |||
Related Party Transaction [Line Items] | |||
Expenses | 972 | 865 | $ 423 |
Payable as of | 0 | $ 0 | |
Advisor (KBS Capital Advisors LLC) | Property Insurance Rebate | |||
Related Party Transaction [Line Items] | |||
Due from related parties | $ 100 |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 39,235 | $ 32,682 | $ 34,622 | $ 35,676 | $ 36,996 | $ 36,144 | $ 37,968 | $ 38,351 | $ 142,215 | $ 149,459 | $ 155,456 |
Net (loss) income | $ 3,587 | $ (454) | $ 26,374 | $ (979) | $ 11,083 | $ 899 | $ 10,354 | $ 2,778 | $ 28,528 | $ 25,114 | $ 16,747 |
Net (loss) income per common share, basic and diluted (in dollars per share) | $ 0.02 | $ 0 | $ 0.14 | $ (0.01) | $ 0.07 | $ 0 | $ 0.05 | $ 0.01 | $ 0.15 | $ 0.13 | $ 0.09 |
Distributions declared per common share (in dollars per share) | $ 0.062 | $ 0.062 | $ 0.061 | $ 0.060 | $ 0.069 | $ 0.069 | $ 0.068 | $ 0.068 | $ 0.245 | $ 0.274 | $ 0.281 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | ||||||||
Apr. 30, 2019 | Mar. 31, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Dec. 31, 2017 | Mar. 01, 2019 | Feb. 04, 2019 | Jan. 02, 2019 | Dec. 31, 2018 | |
Subsequent Event [Line Items] | |||||||||
Distributions paid to common stockholders | $ 4,376 | $ 3,874 | |||||||
Dividend Paid | |||||||||
Subsequent Event [Line Items] | |||||||||
Distribution rate per share per day, declared | $ 0.02076575 | ||||||||
Forecast | Dividend Declared | |||||||||
Subsequent Event [Line Items] | |||||||||
Distribution rate per share per day, declared | $ 0.02062500 | $ 0.02062500 | |||||||
Subsequent Event | Dividend Paid | |||||||||
Subsequent Event [Line Items] | |||||||||
Distributions paid to common stockholders | $ 3,800 | $ 3,800 | $ 3,900 | ||||||
Distribution rate per share per day, declared | $ 0.02062500 | $ 0.02062500 |
SCHEDULE III REAL ESTATE ASSE_2
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (Assets and Accumulated Depreciation and Amortization) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Real Estate and Accumulated Depreciation [Line Items] | ||||
Initial Cost to Company, Land | $ 159,872 | |||
Initial Cost to Company, Building and Improvements | 1,109,982 | |||
Initial Cost to Company, Total | 1,269,854 | |||
Cost Capitalized Subsequent to Acquisition | (141,916) | |||
Gross Amount at which Carried at Close of Period, Land | 158,036 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 969,902 | |||
Gross Amount at which Carried at Close of Period, Total | 1,127,938 | $ 1,207,445 | $ 1,275,847 | $ 1,291,762 |
Accumulated Depreciation and Amortization | (173,731) | (176,576) | $ (150,111) | $ (113,460) |
Aggregate cost of real estate for federal income tax purposes | 1,400,000 | |||
Principal outstanding | $ 416,868 | 502,633 | ||
100 & 200 Campus Drive Buildings | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 10,700 | |||
Initial Cost to Company, Building and Improvements | 188,509 | |||
Initial Cost to Company, Total | 199,209 | |||
Cost Capitalized Subsequent to Acquisition | (45,111) | |||
Gross Amount at which Carried at Close of Period, Land | 9,461 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 144,637 | |||
Gross Amount at which Carried at Close of Period, Total | 154,098 | |||
Accumulated Depreciation and Amortization | $ (16,452) | |||
Original Date of Construction | 1988/1989 | |||
Date Acquired | Sep. 9, 2008 | |||
300-600 Campus Drive Buildings | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 9,717 | |||
Initial Cost to Company, Building and Improvements | 185,445 | |||
Initial Cost to Company, Total | 195,162 | |||
Cost Capitalized Subsequent to Acquisition | (33,494) | |||
Gross Amount at which Carried at Close of Period, Land | 9,121 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 152,547 | |||
Gross Amount at which Carried at Close of Period, Total | 161,668 | |||
Accumulated Depreciation and Amortization | $ (21,659) | |||
Original Date of Construction | 1997/1999 | |||
Date Acquired | Oct. 10, 2008 | |||
Willow Oaks Corporate Center | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 25,300 | |||
Initial Cost to Company, Building and Improvements | 87,802 | |||
Initial Cost to Company, Total | 113,102 | |||
Cost Capitalized Subsequent to Acquisition | (2,942) | |||
Gross Amount at which Carried at Close of Period, Land | 25,300 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 84,860 | |||
Gross Amount at which Carried at Close of Period, Total | 110,160 | |||
Accumulated Depreciation and Amortization | $ (22,111) | |||
Original Date of Construction | 1986/1989/2003 | |||
Date Acquired | Aug. 26, 2009 | |||
Pierre Laclede Center | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 15,200 | |||
Initial Cost to Company, Building and Improvements | 61,507 | |||
Initial Cost to Company, Total | 76,707 | |||
Cost Capitalized Subsequent to Acquisition | 5,783 | |||
Gross Amount at which Carried at Close of Period, Land | 15,200 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 67,290 | |||
Gross Amount at which Carried at Close of Period, Total | 82,490 | |||
Accumulated Depreciation and Amortization | $ (13,729) | |||
Original Date of Construction | 1964/1970 | |||
Date Acquired | Feb. 4, 2010 | |||
Union Bank Plaza | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 24,000 | |||
Initial Cost to Company, Building and Improvements | 190,232 | |||
Initial Cost to Company, Total | 214,232 | |||
Cost Capitalized Subsequent to Acquisition | (28,368) | |||
Gross Amount at which Carried at Close of Period, Land | 24,000 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 161,864 | |||
Gross Amount at which Carried at Close of Period, Total | 185,864 | |||
Accumulated Depreciation and Amortization | $ (28,274) | |||
Original Date of Construction | 1967 | |||
Date Acquired | Sep. 15, 2010 | |||
Emerald View at Vista Center | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 5,300 | |||
Initial Cost to Company, Building and Improvements | 28,455 | |||
Initial Cost to Company, Total | 33,755 | |||
Cost Capitalized Subsequent to Acquisition | (4,675) | |||
Gross Amount at which Carried at Close of Period, Land | 5,300 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 23,780 | |||
Gross Amount at which Carried at Close of Period, Total | 29,080 | |||
Accumulated Depreciation and Amortization | $ (5,177) | |||
Original Date of Construction | 2007 | |||
Date Acquired | Dec. 9, 2010 | |||
Granite Tower | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 8,850 | |||
Initial Cost to Company, Building and Improvements | 141,438 | |||
Initial Cost to Company, Total | 150,288 | |||
Cost Capitalized Subsequent to Acquisition | (12,356) | |||
Gross Amount at which Carried at Close of Period, Land | 8,850 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 129,082 | |||
Gross Amount at which Carried at Close of Period, Total | 137,932 | |||
Accumulated Depreciation and Amortization | $ (30,172) | |||
Original Date of Construction | 1983 | |||
Date Acquired | Dec. 16, 2010 | |||
Fountainhead Plaza | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Initial Cost to Company, Land | $ 12,300 | |||
Initial Cost to Company, Building and Improvements | 123,700 | |||
Initial Cost to Company, Total | 136,000 | |||
Cost Capitalized Subsequent to Acquisition | (16,617) | |||
Gross Amount at which Carried at Close of Period, Land | 12,300 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 107,083 | |||
Gross Amount at which Carried at Close of Period, Total | 119,383 | |||
Accumulated Depreciation and Amortization | $ (23,253) | |||
Original Date of Construction | 2011 | |||
Date Acquired | Sep. 13, 2011 | |||
Corporate Technology Centre | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Encumbrances | $ 41,868 | |||
Initial Cost to Company, Land | 48,505 | |||
Initial Cost to Company, Building and Improvements | 102,894 | |||
Initial Cost to Company, Total | 151,399 | |||
Cost Capitalized Subsequent to Acquisition | (4,136) | |||
Gross Amount at which Carried at Close of Period, Land | 48,504 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 98,759 | |||
Gross Amount at which Carried at Close of Period, Total | 147,263 | |||
Accumulated Depreciation and Amortization | $ (12,904) | |||
Original Date of Construction | 1999/2001 | |||
Date Acquired | Mar. 28, 2013 | |||
Mortgages | Portfolio Loan Facility | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Principal outstanding | $ 375,000 | $ 0 |
SCHEDULE III REAL ESTATE ASSE_3
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (Reconciliation) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Real Estate | |||
Balance at the beginning of the year | $ 1,207,445 | $ 1,275,847 | $ 1,291,762 |
Improvements | 35,681 | 16,616 | 30,664 |
Write-off of fully depreciated and fully amortized assets | (38,035) | (13,095) | (9,862) |
Impairments | 0 | 0 | 0 |
Sales | (77,153) | (71,923) | (36,717) |
Balance at the end of the year | 1,127,938 | 1,207,445 | 1,275,847 |
Accumulated depreciation and amortization | |||
Balance at the beginning of the year | 176,576 | 150,111 | 113,460 |
Depreciation and amortization expense | 46,043 | 50,079 | 54,831 |
Write-off of fully depreciated and fully amortized assets | (38,035) | (13,095) | (9,862) |
Impairments | 0 | 0 | 0 |
Sales | (10,853) | (10,519) | (8,318) |
Balance at the end of the year | $ 173,731 | $ 176,576 | $ 150,111 |