Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 02, 2020 | Jun. 30, 2019 | |
Cover page. | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 000-53649 | ||
Entity Registrant Name | KBS REAL ESTATE INVESTMENT TRUST II, INC. | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Tax Identification Number | 26-0658752 | ||
Entity Address, Address Line One | 800 Newport Center Drive | ||
Entity Address, Address Line Two | Suite 700 | ||
Entity Address, City or Town | Newport Beach | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92660 | ||
City Area Code | 949 | ||
Local Phone Number | 417-6500 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 185,168,769 | ||
Entity Central Index Key | 0001411059 | ||
Current Fiscal Year End Date | --12-19 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Public Float | $ 0 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Real estate: | ||
Land | $ 118,955 | $ 118,955 |
Buildings and improvements | 590,950 | 550,802 |
Tenant origination and absorption costs | 28,025 | 30,846 |
Total real estate held for investment, cost | 737,930 | 700,603 |
Less accumulated depreciation and amortization | (141,323) | (116,714) |
Total real estate held for investment, net | 596,607 | 583,889 |
Real estate held for sale, net | 270,124 | 370,318 |
Total real estate, net | 866,731 | 954,207 |
Cash and cash equivalents | 31,674 | 57,730 |
Restricted cash | 15,208 | 17,957 |
Rents and other receivables, net | 82,470 | 67,232 |
Above-market leases, net | 150 | 224 |
Assets related to real estate held for sale | 39,975 | 46,817 |
Prepaid expenses and other assets | 22,841 | 12,850 |
Total assets | 1,059,049 | 1,157,017 |
Notes payable: | ||
Notes payable, net | 300,780 | 266,296 |
Notes payable related to real estate held for sale, net | 115,827 | 148,912 |
Total notes payable, net | 416,607 | 415,208 |
Accounts payable and accrued liabilities | 68,539 | 48,903 |
Due to affiliate | 59 | 55 |
Distributions payable | 0 | 3,874 |
Below-market leases, net | 164 | 308 |
Liabilities related to real estate held for sale | 10,012 | 6 |
Other liabilities | 16,445 | 17,189 |
Total liabilities | 511,826 | 485,543 |
Commitments and contingencies (Note 10) | ||
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, 185,302,037 and 186,464,794 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively | 1,853 | 1,865 |
Additional paid-in capital | 1,662,555 | 1,667,897 |
Cumulative distributions in excess of net income | (1,127,185) | (1,008,288) |
Total stockholders’ equity | 537,223 | 661,474 |
Total liabilities and stockholders’ equity | $ 1,059,049 | $ 1,157,017 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
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) | 185,302,037 | 186,464,794 |
Common stock, shares outstanding (in shares) | 185,302,037 | 186,464,794 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | |||
Rental income | $ 105,287 | $ 132,452 | $ 139,048 |
Interest income from real estate loans receivable | 0 | 434 | 1,060 |
Other operating income | 6,825 | 9,329 | 9,351 |
Total revenues | 112,112 | 142,215 | 149,459 |
Expenses: | |||
Operating, maintenance, and management | 34,495 | 35,246 | 34,719 |
Real estate taxes and insurance | 18,128 | 19,268 | 19,816 |
Asset management fees to affiliate | 10,196 | 10,894 | 11,617 |
General and administrative expenses | 6,029 | 6,024 | 4,541 |
Depreciation and amortization | 40,889 | 50,202 | 54,047 |
Interest expense | 17,214 | 17,884 | 17,466 |
Impairment charges on real estate | 14,300 | 0 | 0 |
Total expenses | 141,251 | 139,518 | 142,206 |
Other income: | |||
Other interest income | 608 | 1,159 | 375 |
Loss from extinguishment of debt | (470) | (212) | 0 |
Gain on sales of real estate, net | 30,752 | 24,884 | 17,486 |
Total other income | 30,890 | 25,831 | 17,861 |
Net income | $ 1,751 | $ 28,528 | $ 25,114 |
Net income per common share, basic and diluted (in dollars per share) | $ 0.01 | $ 0.15 | $ 0.13 |
Weighted-average number of common shares outstanding, basic and diluted (in shares) | 185,912,776 | 187,133,703 | 188,235,450 |
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) |
Balance (in shares) at Dec. 31, 2016 | 188,719,952 | |||
Balance, value at Dec. 31, 2016 | $ 716,907 | $ 1,887 | $ 1,679,524 | $ (964,504) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 25,114 | 25,114 | ||
Redemptions of common stock (in shares) | (1,053,650) | |||
Redemptions of common stock | (5,767) | $ (10) | (5,757) | |
Distributions declared | (51,672) | (51,672) | ||
Balance (in shares) at Dec. 31, 2017 | 187,666,302 | |||
Balance, value at Dec. 31, 2017 | 684,582 | $ 1,877 | 1,673,767 | (991,062) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 28,528 | 28,528 | ||
Redemptions of common stock (in shares) | (1,201,508) | |||
Redemptions of common stock | (5,882) | $ (12) | (5,870) | |
Distributions declared | $ (45,754) | (45,754) | ||
Balance (in 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) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 1,751 | 1,751 | ||
Redemptions of common stock (in shares) | (1,162,757) | |||
Redemptions of common stock | (5,354) | $ (12) | (5,342) | |
Distributions declared | $ (120,648) | (120,648) | ||
Balance (in shares) at Dec. 31, 2019 | 185,302,037 | 185,302,037 | ||
Balance, value at Dec. 31, 2019 | $ 537,223 | $ 1,853 | $ 1,662,555 | $ (1,127,185) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Cash Flows from Operating Activities: | |||
Net income | $ 1,751 | $ 28,528 | $ 25,114 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 40,889 | 50,202 | 54,047 |
Impairment charges on real estate | 14,300 | 0 | 0 |
Noncash interest income on real estate-related investments | 0 | 3 | 4 |
Deferred rent | 1,003 | 3,717 | (864) |
Bad debt expense | 0 | 371 | 515 |
Amortization of above- and below-market leases, net | (72) | 1,037 | 762 |
Amortization of deferred financing costs | 1,513 | 1,272 | 1,106 |
Unrealized gain on derivative instruments | 0 | 0 | (101) |
Loss from extinguishment of debt | 470 | 212 | 0 |
Gain on sale of real estate, net | (30,752) | (24,884) | (17,486) |
Changes in operating assets and liabilities: | |||
Rents and other receivables | (16,709) | (38,367) | (2,610) |
Prepaid expenses and other assets | (13,942) | (8,186) | (2,635) |
Accounts payable and accrued liabilities | 18,861 | 34,657 | (4,203) |
Due to affiliate | 4 | (29) | 43 |
Other liabilities | (1,137) | 7,890 | (847) |
Net cash provided by operating activities | 16,179 | 56,423 | 52,845 |
Cash Flows from Investing Activities: | |||
Proceeds from sale of real estate | 130,283 | 94,015 | 83,410 |
Improvements to real estate | (44,807) | (34,601) | (17,639) |
Principal repayments on real estate loans receivable | 0 | 13,920 | 152 |
Net cash provided by investing activities | 85,476 | 73,334 | 65,923 |
Cash Flows from Financing Activities: | |||
Proceeds from notes payable | 134,350 | 375,000 | 0 |
Principal payments on notes payable | (134,010) | (460,765) | (21,663) |
Payments of deferred financing costs | (924) | (2,810) | (915) |
Payments to redeem common stock | (5,354) | (5,882) | (5,767) |
Distributions paid to common stockholders | (124,522) | (46,256) | (51,789) |
Net cash used in financing activities | (130,460) | (140,713) | (80,134) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (28,805) | (10,956) | 38,634 |
Cash, cash equivalents and restricted cash, beginning of period | 75,687 | 86,643 | 48,009 |
Cash, cash equivalents and restricted cash, end of period | 46,882 | 75,687 | 86,643 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 15,895 | 16,686 | 16,314 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||
Accrued improvements to real estate | 5,592 | 4,818 | 3,737 |
Distributions payable | $ 0 | $ 3,874 | $ 4,376 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019, the Company owned six office properties (of which two were held for sale) 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 June 6, 2019 (the “Advisory Agreement”). The Advisory Agreement is effective through May 21, 2020 and may be renewed for an unlimited number of one 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, 2019, the Company had redeemed 28,303,101 shares sold in the Offering for $257.1 million. Plan of Liquidation On January 27, 2016, the Company’s board of directors formed a special committee (the “Special Committee”) composed of all of the Company’s independent directors to explore the availability of strategic alternatives involving the Company. On November 13, 2019, in connection with a review of potential strategic alternatives available to the Company, the Special Committee and the board of directors unanimously approved the sale of all of the Company’s assets and the dissolution of the Company pursuant to the terms of the plan of complete liquidation and dissolution (the “Plan of Liquidation”). The principal purpose of the Plan of Liquidation is to provide liquidity to the Company’s stockholders by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to the Company’s stockholders. On March 5, 2020, the Company’s stockholders approved the Plan of Liquidation. For more information, see the Plan of Liquidation, which is included as an exhibit to this Annual Report on Form 10-K. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The consolidated financial statements and accompanying notes thereto have been 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”). The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements and 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. Upon adoption of the lease accounting standards of Topic 842 on January 1, 2019 (described below), the Company accounted for tenant reimbursements for property taxes, insurance and common area maintenance as variable lease payments and recorded these amounts as rental income on the statement of operations. For the years ended December 31, 2018 and 2017, the Company reclassified $10.6 million and $11.5 million, respectively, of tenant reimbursement revenue for property taxes, insurance, and common area maintenance to rental income for comparability purposes. In addition, during the year ended December 31, 2019, the Company sold two office properties and as of December 31, 2019, the Company had classified two office properties as held for sale. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. Revenue Recognition - Operating Leases Real Estate On January 1, 2019, the Company adopted the lease accounting standards under Topic 842 including the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) did not reassess the lease classification for any expired or existing lease, and (iii) 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 lease accounting standards of Topic 840 are or contain a lease under Topic 842. In addition, Topic 842 provides an optional transition method to allow entities to apply the new lease accounting standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted this transition method upon its adoption of the lease accounting standards of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019. The Company’s comparative periods presented in the financial statements will continue to be reported under the lease accounting standards of Topic 840. In accordance with Topic 842, tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s statement of operations beginning January 1, 2019. In addition, the Company adopted the practical expedient available under Topic 842 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, specifically related to 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 (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations beginning January 1, 2019. 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 probable 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 can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental 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 lessee or lessor supervises the construction and bears the risk of cost overruns; • 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. In accordance with Topic 842, the Company makes a determination of whether the collectibility of the lease payments in an operating lease is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any contractual lease payments, deferred rent receivable, and variable lease payments and would recognize rental income only if cash is received. Beginning January 1, 2019, these changes to the Company’s collectibility assessment are reflected as an adjustment to rental income. Prior to January 1, 2019, bad debt expense related to uncollectible accounts receivable and deferred rent receivable was included in operating, maintenance, and management expense in the statement of operations. Any subsequent changes to the collectibility of the allowance for doubtful accounts as of December 31, 2018, which was recorded prior to the adoption of Topic 842, are recorded in operating, maintenance, and management expense in the statement of operations. Beginning January 1, 2019, the Company, as a lessor, records costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease, as an expense and classifies such costs as operating, maintenance, and management expense 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. 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, Revenue from Contracts with Customers (Topic 606) . 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 or the expected hold period until the eventual disposition could result in incorrect conclusions on recoverability and 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, 2019, 2018 and 2017 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. 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, 2019. 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. 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 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 • 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 expect to have funds available for ordinary redemptions in the future. 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) (the “December EVPS) 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 was effective through the May 2019 redemption date, which was May 31, 2019. In connection with the declaration of the Special Distribution (defined below), on June 12, 2019, the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $4.50 (unaudited), effective June 17, 2019, which was the record date for the Special Distribution, based solely on subtracting the Special Distribution declared by the Company’s board of directors in the amount of $0.45 per share of common stock from the December EVPS of $4.95. This was the sole adjustment to the estimated value per share. The change in the redemption price became effective for the June 2019 redemption date, which was June 28, 2019, and was effective through the October 2019 redemption date, which was October 31, 2019. On November 13, 2019, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $3.79 (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, 2019, except that two properties that went under contract to sale subsequent to September 30, 2019 were valued at their contractual sales price less estimated closing credits. The change in the redemption price became effective for the November 2019 redemption date, which was November 29, 2019, and will be effective until the estimated value per share is updated. The Company may amend, suspend or terminate the share redemption program for any reason upon ten business days’ notice to stockholders. The Company may provide this 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 stockholders. 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, 2019, the Company redeemed 1,162,757 shares sold in the Offering for $5.4 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 2019 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”), Pacific Oak Strategic Opportunity REIT, Inc., formerly KBS Strategic Opportunity REIT, Inc., (“Pacific Oak Strategic Opportunity REIT”) (advisory agreement terminated as of October 31, 2019 and the dealer manager agreement terminated as of December 31, 2019), KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”) (which liquidated in December 2018), Pacific Oak Strategic Opportunity REIT II, Inc., formerly KBS Strategic Opportunity REIT II, Inc., (“Pacific Oak Strategic Opportunity REIT II”) (advisory agreement terminated as of October 31, 2019 and the dealer manager agreement terminated as of December 31, 2019) and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”). On November 1, 2019, Pacific Oak Strategic Opportunity REIT and Pacific Oak Strategic Opportunity REIT II each entered into advisory agreements with a new external advisor, Pacific Oak Capital Advisors, LLC. Pacific Oak Capital Advisors, LLC is part of a group of companies formed, owned and managed by Keith D. Hall and Peter McMillan III. Together, through GKP Holding LLC, Messrs. Hall and McMillan continue to indirectly own a 33 1/3% interest in the Advisor and the Dealer Manager. 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 |
REAL ESTATE HELD FOR INVESTMENT
REAL ESTATE HELD FOR INVESTMENT | 12 Months Ended |
Dec. 31, 2019 | |
Real Estate [Abstract] | |
REAL ESTATE HELD FOR INVESTMENT | REAL ESTATE HELD FOR INVESTMENT As of December 31, 2019, the Company’s portfolio of real estate held for investment was composed of four office properties and an office campus consisting of five office buildings, encompassing in the aggregate approximately 2.7 million rentable square feet. As of December 31, 2019, the Company’s real estate portfolio held for investment was 76% occupied. The following table summarizes the Company’s portfolio of real estate held for investment as of December 31, 2019 (in thousands): Property Date Acquired City State Property Type Total Real Estate Accumulated Depreciation and Amortization Total Real Estate, Net Willow Oaks Corporate Center 08/26/2009 Fairfax VA Office $ 120,226 $ (25,842) $ 94,384 Union Bank Plaza 09/15/2010 Los Angeles CA Office 201,685 (37,841) 163,844 Granite Tower 12/16/2010 Denver CO Office 147,329 (32,855) 114,474 Fountainhead Plaza 09/13/2011 Tempe AZ Office 119,383 (28,724) 90,659 Corporate Technology Centre 03/28/2013 San Jose CA Office 149,307 (16,061) 133,246 $ 737,930 $ (141,323) $ 596,607 As of December 31, 2019, the following properties represented more than 10% of the Company’s total assets: Property Location Rentable Total Real Estate, Net Percentage of Total Assets Annualized Base Rent (in thousands) (1) Average Annualized Base Rent per Sq. Ft. Occupancy Union Bank Plaza Los Angeles, CA 701,888 $ 163,844 15.5 % $ 25,336 $ 44.30 82 % Corporate Technology Centre San Jose, CA 415,492 133,246 12.6 % 5,774 33.39 42 % Granite Tower Denver, CO 591,070 114,474 10.8 % 19,399 34.99 94 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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. Annualized base rent excludes leases that have been executed but have not commenced as of December 31, 2019. Operating Leases The Company’s real estate properties held for investment are leased to tenants under operating leases for which the terms and expirations vary. As of December 31, 2019, the leases had remaining terms, excluding options to extend, of up to 15.4 years with a weighted-average remaining term of 6.4 years. Some of the leases have provisions to extend the term of the leases, options for early termination for all or part of the leased premises after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $3.7 million and $2.5 million as of December 31, 2019 and 2018, respectively. During the years ended December 31, 2019, 2018 and 2017, the Company recognized deferred rent from tenants, net of lease incentive amortization, of $(1.0) million, $(3.7) million and $0.9 million, respectively. As of December 31, 2019 and 2018, the cumulative deferred rent balance was $81.8 million and $61.7 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $54.4 million and $38.6 million of unamortized lease incentives as of December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, lease incentive payable was $52.8 million and $35.2 million, respectively, and is included in accounts payable and accrued liabilities on the accompanying balance sheets. As of December 31, 2019, the future minimum rental income from the Company’s properties held for investment under non-cancelable operating leases was as follows (in thousands): 2020 $ 49,751 2021 47,279 2022 51,902 2023 50,379 2024 39,445 Thereafter 282,544 $ 521,300 As of December 31, 2019, the Company had approximately 88 tenants over a diverse range of industries and geographic areas in its portfolio of real estate held for investment. 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 Finance 12 $ 20,818 29.1 % Mining, Oil & Gas Extraction 3 13,154 18.4 % Educational Services 1 11,728 16.4 % $ 45,700 63.9 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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, 2019. During the year ended December 31, 2019, the Company recorded an adjustment to rental income of $0.9 million for lease payments that were deemed not probable of collection and a net recovery of bad debt of $0.1 million, which was included in operating, maintenance, and management expense in the accompanying consolidated statements of operations. During the years ended December 31, 2018 and 2017, the Company recorded bad debt expense of $0.4 million and $0.5 million, respectively, which was included in operating, maintenance and management expense in the accompanying consolidated statement of operations. As of December 31, 2019, 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 Square % of Portfolio Annualized Base Rent (in thousands) (1) % of Annualized Lease Union Bank Union Bank Plaza Finance 295,563 10.8% $ 16,834 23.6% $ 56.95 05/31/2020/ 03/31/2021/ 05/31/2021/ 05/31/2022/ 05/31/2035 (2)(3) The University of Phoenix Fountainhead Plaza Educational Services 445,957 16.3% 11,728 16.4% 26.30 08/31/2023 (4) Anadarko Petroleum Corporation Granite Tower Mining, Oil & Gas Extraction 360,584 13.2% 12,256 17.1% 33.99 04/30/2021 / 04/30/2033 (5) _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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 dates of the lease as of December 31, 2019 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 $8.5 million was deferred as of December 31, 2018. During the year ended December 31, 2018, $1.9 million was recognized as rental income and $1.0 million was recognized as other operating income in the accompanying consolidated statement of operations. During the year ended December 31, 2019, $1.2 million was recognized as rental income and $0.8 million was recognized as other operating income in the accompanying consolidated statements of operations, and $6.5 million was deferred as of December 31, 2019 and included in other liabilities on the accompanying consolidated balance sheets. (3) On August 2, 2019, the Company entered into amended and restated lease agreements with Union Bank relating to Union Bank’s office, retail, and storage spaces, which amended the terms of the leases as follows: (i) remeasured the existing rentable square footage from 295,563 rentable square feet to 307,729 rentable square feet effective June 1, 2020, (ii) of the 307,729 rentable square feet, a total of 131,135 rentable square feet of office space and 11,985 rentable square feet of retail space will be surrendered at various dates between May 31, 2020 and May 31, 2022 and the remaining 164,609 rentable square feet will expire on May 31, 2035, and (iii) the addition of 3,152 rentable square feet of retail space for a 15-year lease term expiring on May 31, 2035. Each of Union Bank’s amended and restated office and retail lease agreements has two five (4) The University of Phoenix has two options to extend the term of this lease for five years per option term. (5) Per the lease agreement, 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, 2019, the Company’s net investments in real estate properties held for investment in California and Colorado represented 28.1% and 10.8% 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 Colorado 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 reduce the amount of liquidating distributions the Company’s stockholders receive and their overall return on investment. |
TENANT ORIGINATION AND ABSORPTI
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 and 2018, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands): Tenant Origination and Above-Market Below-Market 2019 2018 2019 2018 2019 2018 Cost $ 28,025 $ 30,846 $ 835 $ 835 $ (1,154) $ (2,635) Accumulated amortization (17,731) (16,869) (685) (611) 990 2,327 Net amount $ 10,294 $ 13,977 $ 150 $ 224 $ (164) $ (308) 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, 2019, 2018 and 2017 were as follows (in thousands): Tenant Origination and Above-Market Below-Market For the Years Ended December 31, For the Years Ended December 31, For the Years Ended December 31, 2019 2018 2017 2019 2018 2017 2019 2018 2017 Amortization $ (3,707) $ (6,928) $ (9,412) $ (74) $ (1,894) $ (2,348) $ 146 $ 857 $ 1,586 The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2019 will be amortized for the years ending December 31 as follows (in thousands): Tenant Origination and Above-Market Below-Market 2020 $ (3,519) $ (74) $ 82 2021 (3,256) (73) 79 2022 (2,150) (3) 3 2023 (1,369) — — $ (10,294) $ (150) $ 164 Weighted-Average Remaining Amortization Period 3.2 years 2.0 years 2.0 years |
REAL ESTATE HELD FOR SALE
REAL ESTATE HELD FOR SALE | 12 Months Ended |
Dec. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
REAL ESTATE HELD FOR SALE | REAL ESTATE HELD FOR SALE During the year ended December 31, 2019, the Company sold two office properties, and as of December 31, 2019, the Company had classified two office properties as held for sale. During the year ended December 31, 2018, the Company sold 3 office buildings that were part of an eight-building office campus. During the year ended December 31, 2017, the Company sold two office properties. The results of operations for the properties sold during the years ended December 31, 2019, 2018 and 2017 and the two office properties classified as held for sale as of December 31, 2019 are included in continuing operations on the Company’s consolidated statements of operations. The following table summarizes certain revenue and expenses related to the Company’s real estate properties that were sold during the years ended December 31, 2019, 2018 and 2017 and the two office properties classified as held for sale as of December 31, 2019, which were included in continuing operations (in thousands): Years Ended December 31, 2019 2018 2017 Revenues Rental income $ 39,174 $ 53,319 $ 61,889 Other operating income 1,475 2,804 3,089 Total revenues 40,649 56,123 64,978 Expenses Operating, maintenance, and management 12,529 16,191 17,320 Real estate taxes and insurance 4,469 6,697 8,574 Asset management fees to affiliate 3,492 4,641 5,398 General and administrative expenses 167 120 47 Depreciation and amortization 12,304 21,034 23,363 Interest expense 5,504 6,735 6,683 Impairment charges on real estate 14,300 — — Total expenses $ 52,765 $ 55,418 $ 61,385 The following summary presents the major components of assets and liabilities related to real estate held for sale as of December 31, 2019 and 2018. (in thousands): December 31, 2019 December 31, 2018 Assets related to real estate held for sale Total real estate, at cost $ 320,549 $ 427,335 Accumulated depreciation and amortization (50,425) (57,017) Real estate held for sale, net 270,124 370,318 Other assets 39,975 46,817 Total assets related to real estate held for sale $ 310,099 $ 417,135 Liabilities related to real estate held for sale Notes payable, net $ 115,827 $ 148,912 Other liabilities 10,012 6 Total liabilities related to real estate held for sale $ 125,839 $ 148,918 As of December 31, 2019, the following properties held for sale represented more than 10% of the Company’s total assets: Property Location Rentable Total Real Percentage of Annualized Base Rent (in thousands) (1) Average Occupancy Campus Drive Buildings (2) Florham Park, NJ 1,189,494 $ 270,124 25.5 % $ 32,181 $ 32.78 83 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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. Annualized base rent excludes leases that have been executed but have not commenced as of December 31, 2019. (2) Subsequent to December 31, 2019, the Company, through indirect wholly owned subsidiaries, sold the 100 & 200 Campus Driving Buildings and the 300-600 Campus Buildings (together, the “Campus Drive Buildings”) to a purchaser unaffiliated with the Company or the Advisor. See Note 11, “Subsequent Events - Disposition of the Campus Drive Buildings.” During the year ended December 31, 2019, the Company recorded non-cash impairment charges of $14.3 million to write down the carrying value of the Company’s investment in the Campus Drive Buildings to their contractual sales price less estimated costs to sell. The impairment was primarily due to estimated closing costs and disposition fees, which are reflected upon classification of the Campus Drive Buildings to held for sale. Subsequent to December 31, 2019, the Company sold the Campus Drive Buildings to a purchaser unaffiliated with the Company or the Advisor. See Note 11, “Subsequent Events - Disposition of Campus Drive Buildings.” |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of December 31, 2019 and 2018, the Company’s notes payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands): Book Value as of Book Value as of Contractual Interest Rate as of December 31, 2019 (1) Effective Interest Rate as of December 31, 2019 (1) Payment Maturity Date (2) Corporate Technology Centre Mortgage Loan (3) $ 40,564 $ 41,868 3.50% 3.5% Principal & Interest 04/01/2020 Portfolio Loan Facility (4) 281,293 375,000 One-month LIBOR + 1.45% 3.1% Interest Only 03/29/2020 Granite Tower Mortgage Loan (5) 95,350 — One-month LIBOR + 1.65% 3.4% (5) 09/01/2023 Total notes payable principal outstanding $ 417,207 $ 416,868 Deferred financing costs, net (600) (1,660) Total notes payable, net $ 416,607 $ 415,208 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2019. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2019, using interest rate indices as of December 31, 2019, where applicable. (2) Represents the initial maturity date or the maturity date as extended as of December 31, 2019; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) The loan documents require the Company 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. On January 23, 2020, the Company repaid the outstanding principal and accrued interest due under the Corporate Technology Centre Mortgage Loan. (4) On August 30, 2019, the Company repaid $62.0 million due under this loan and Granite Tower was released as security from the Portfolio Loan Facility. See below, “- Recent Financing Transactions - Granite Tower Mortgage Loan.” As of December 31, 2019, the Portfolio Loan Facility was secured by the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Willow Oaks Corporate Center, Union Bank Plaza and Fountainhead Plaza. As of December 31, 2019, $281.3 million of term debt of the Portfolio Loan Facility was outstanding and $62.4 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. As of December 31, 2019, there are two one (5) See below, “- Recent Financing Transaction - Granite Tower Mortgage Loan.” During the years ended December 31, 2019, 2018 and 2017, the Company incurred $17.2 million, $17.9 million and $17.5 million of interest expense, respectively. As of December 31, 2019 and 2018, $1.2 million and $1.3 million, respectively, of interest expense were payable. Included in interest expense for the years ended December 31, 2019, 2018 and 2017 were $1.5 million, $1.3 million and $1.1 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. The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of December 31, 2019 (in thousands): 2020 $ 321,857 2021 — 2022 — 2023 95,350 Thereafter — $ 417,207 Certain of the Company’s notes payable contain financial debt covenants. As of December 31, 2019, the Company was in compliance with these debt covenants. Recent Financing Transaction Granite Tower Mortgage Loan On August 30, 2019, in connection with the partial principal repayment of the Portfolio Loan Facility, the Company, through an indirect wholly owned subsidiary (the “Granite Tower Mortgage Loan Borrower”), entered into a four KBS REIT Properties II, LLC (“REIT Properties II”), the Company’s wholly owned subsidiary, is providing a guaranty of (i) payment of, and agrees to protect, defend, indemnify and hold harmless the Granite Tower Mortgage Loan Agent and each lender for, from and against, any liability, obligation, deficiency, loss, damage, costs and expenses (including reasonable attorney’s fees), and any litigation which may at any time be imposed upon, incurred or suffered by the Granite Tower Mortgage Loan Agent or any lender because of (a) certain intentional actions committed by the Granite Tower Mortgage Loan Borrower, (b) fraud or intentional misrepresentations by the Granite Tower Mortgage Loan Borrower or REIT Properties II in connection with the loan documents as described in the guaranty agreement, and (c) certain bankruptcy or insolvency proceedings involving the Granite Tower Mortgage Loan Borrower, as such acts are described in the guaranty, and (ii) upon and subject to the events and conditions described in the guaranty, payment of certain indemnity obligations of the Granite Tower Mortgage Loan Borrower related to environmental matters. REIT Properties II also provides a limited completion guaranty of all obligations of the Granite Tower Mortgage Loan Borrower under an amendment of a major tenant’s lease up to a maximum guaranteed amount of $45.7 million. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 12 Months Ended |
Dec. 31, 2019 | |
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 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. 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 notes payable as of December 31, 2019 and 2018, which carrying amounts do not generally approximate the fair values (in thousands): December 31, 2019 December 31, 2018 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial liabilities: Notes payable $ 417,207 $ 416,607 $ 417,874 $ 416,868 $ 415,208 $ 416,163 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. Assets Recorded at Fair Value During the year ended December 31, 2019, the Company measured the following assets at fair value on a nonrecurring basis (in thousands): Fair Value Measurements Using Total Quoted Prices in Active Significant Other Significant Nonrecurring Basis: Impaired real estate held for sale (1) $ 295,803 $ — $ — $ 295,803 _____________________ (1) Amount represents the fair value for the Campus Drive Buildings which were impacted by an impairment charge during the year, as of the date that the fair value measurement was made. The carrying value for the real estate asset may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. See Note 5, “Real Estate Held for Sale” for a further discussion on the impaired real estate property. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
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, Pacific Oak Strategic Opportunity REIT (advisory agreement terminated as of October 31, 2019 and the dealer manager agreement terminated as of December 31, 2019), KBS Legacy Partners Apartment REIT (which liquidated in December 2018), Pacific Oak Strategic Opportunity REIT II (advisory agreement terminated as of October 31, 2019 and the dealer manager agreement terminated as of December 31, 2019) and KBS Growth & Income REIT. On November 1, 2019, Pacific Oak Strategic Opportunity REIT and Pacific Oak Strategic Opportunity REIT II each entered into advisory agreements with a new external advisor, Pacific Oak Capital Advisors, LLC. Pacific Oak Capital Advisors, LLC is part of a group of companies formed, owned and managed by Keith D. Hall and Peter McMillan III. Together, through GKP Holding LLC, Messrs. Hall and McMillan continue to indirectly own a 33 1/3% interest in the Advisor and the Dealer Manager. As of January 1, 2017, the Company, together with KBS REIT I, KBS REIT III, KBS Growth & Income REIT, Pacific Oak Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, Pacific Oak Strategic Opportunity REIT II, the Dealer Manager, the Advisor and other KBS-affiliated entities, had entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage were 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. At the June 2017 renewal, KBS REIT I elected to cease participation in the program and obtained separate insurance coverage. At the June 2018 renewal, Pacific Oak Strategic Opportunity REIT, Pacific Oak Strategic Opportunity REIT II and KBS Legacy Partners Apartment REIT elected to cease participation in the program and obtained separate insurance coverage. In June 2019, the Company renewed its participation in the program. The program is effective through June 30, 2020. During the years ended December 31, 2019, 2018 and 2017, no other business transactions occurred between the Company and KBS REIT I, KBS REIT III, Pacific Oak Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, Pacific Oak 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, 2019, 2018 and 2017, respectively, and any related amounts payable as of December 31, 2019 and 2018 (in thousands): Incurred Payable as of 2019 2018 2017 2019 2018 Expensed Asset management fees $ 10,196 $ 10,894 $ 11,617 $ — $ — Reimbursement of operating expenses (1) 325 373 238 59 55 Disposition fees (2) 1,334 972 865 — — $ 11,855 $ 12,239 $ 12,720 $ 59 $ 55 _____________________ (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 $232,000, $244,000, and $213,000 for the years ended December 31, 2019, 2018 and 2017, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2019, 2018 and 2017. 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, 2019 | |
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, 2019 and 2018 (in thousands, except per share amounts): 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 29,882 $ 27,674 $ 26,423 $ 28,133 Net (loss) income (4,900) 26,778 (19,492) (635) Net (loss) income per common share, basic and diluted (0.03) 0.14 (0.10) — Distributions declared per common share 0.062 0.512 0.056 0.019 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 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019. Legal Matters |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Disposition of Campus Drive Buildings On September 9, 2008, the Company, through an indirect wholly owned subsidiary, KBSII 100-200 Campus Drive, LLC, purchased two four-story office buildings located at 100 & 200 Campus Drive in Florham Park, New Jersey containing 590,458 rentable square feet on an approximate 71.1-acre parcel of land (the “100 & 200 Campus Drive Buildings”). On October 10, 2008, the Company, through an indirect wholly owned subsidiary, KBSII 300-600 Campus Drive, LLC, purchased four four-story office buildings containing 578,388 rentable square feet (the “300-600 Campus Drive Buildings”). The 300-600 Campus Drive Buildings are located at 300, 400, 500 and 600 Campus Drive in Florham Park, New Jersey on an approximate 64.80-acre parcel of land. On October 22, 2019, the Company, through indirect wholly owned subsidiaries, entered into a membership interest purchase and sale agreement and escrow instructions for the sale of all of the membership interests of KBSII 300-600 Campus Drive, LLC (the owner of the 300-600 Campus Drive Buildings) and KBSII 100-200 Campus Drive, LLC (the owner of the 100 & 200 Campus Drive Buildings)(together, the “Property Owners”) to a buyer (the “Purchaser”), an affiliate of Opal Holdings. On January 22, 2020, the Company completed the sale of the membership interests in the Property Owners to the Purchaser for $311.0 million, before third-party closing costs of approximately $4.3 million and excluding disposition fees payable to the Advisor. In connection with the disposition of the Campus Drive Buildings, the Company repaid $136.1 million of the outstanding principal balance due under its Portfolio Loan Facility and the Campus Drive Buildings were released as collateral from the Portfolio Loan Facility. Additionally, on January 23, 2020, the Company used a portion of the proceeds generated by the sale of the Property Owners to repay the entire outstanding principal balance of $40.6 million due under the Corporate Centre Technology Mortgage Loan. Plan of Liquidation On March 5, 2020, the Company’s stockholders approved the Plan of Liquidation. The principal purpose of the Plan of Liquidation is to provide liquidity to the Company’s stockholders by selling the Company’s assets, paying its debts and distributing the net proceeds from liquidation to the Company’s stockholders. For more information, see the Plan of Liquidation, which is included as an exhibit to this Annual Report on Form 10-K. Initial Liquidating Distribution Authorized Pursuant to the Plan of Liquidation, on March 5, 2020, the Company’s board of directors authorized an initial liquidating distribution in the amount of $0.75 per share of common stock to the Company’s stockholders of record as of the close of business on March 5, 2020 (the “Initial Liquidating Distribution”). The Initial Liquidating Distribution will be funded from proceeds from the sale of the Campus Drive Buildings. The Company expects to pay the Initial Liquidating Distribution on or about March 10, 2020. Since the Initial Liquidating Distribution is a liquidating distribution pursuant to the Plan of Liquidation, it will reduce the Company’s stockholders’ remaining investment in the Company and reduce the estimated future liquidating distributions per share to be received by the Company’s stockholders by $0.75 per share. Updated Estimated Value Per Share As disclosed in the proxy statement and as of December 9, 2019, the date the Company filed the proxy statement with the SEC, the Company estimated that, if the Company is able to successfully implement the Plan of Liquidation, the amount of cash that its stockholders would receive for each share of the Company’s common stock that they then hold could range between approximately $3.40 and $3.83 per share. In connection with the authorization of the Initial Liquidating Distribution, on March 5, 2020, the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $2.87 (unaudited), effective March 5, 2020 (the “March 2020 Estimated Value Per Share”) to reflect the impact of the payment of the Initial Liquidating Distribution. The Company is providing the March 2020 Estimated Value Per Share to assist broker-dealers that participated in the Company’s now-terminated initial public offering in meeting their customer account statement reporting obligations under the Financial Industry Regulatory Authority Rule 2231. The March 2020 Estimated Value Per Share is equal to the midpoint of the estimated range of liquidating distributions of $3.40 and $3.83 per share of $3.615, reduced by the Initial Liquidating Distribution of $0.75 per share of common stock. Thus, the March 2020 Estimated Value Per Share reflects the resulting reduction of the stockholders’ remaining investment in the Company as a result of the Initial Liquidating Distribution. This valuation was performed in accordance with the provisions of and also to comply with Practice Guideline 2013-01, Valuations of Publicly Registered, Non-Listed REITs , issued by the Institute for Portfolio Alternatives (“IPA”) in April 2013 (the “IPA Valuation Guidelines”), reduced for the impact of expected disposition costs and fees related to future dispositions of real estate and estimated corporate and other liquidation and dissolution costs not covered by the Company’s cash flow from operations. Determination of the November 13, 2019 Estimated Value Per Share and Estimated Range in Liquidating Distributions As disclosed in the proxy statement, the Company’s range of estimated net proceeds from liquidation of approximately $3.40 and $3.83 is based on the range in estimated value per share of the Company’s common stock of $3.55 to $3.99 approved by the Company’s board of directors on November 13, 2019, and reduced for (i) expected disposition costs and fees related to future dispositions of real estate, and (ii) estimated corporate and other liquidation and dissolution costs not covered from the Company’s cash flow from operations. The Company’s board of directors approved the November 13, 2019 estimated value per share, in part, to assist the Company in calculating the range of estimated net proceeds from liquidation. The November 13, 2019 estimated value per share of $3.79 (unaudited) is based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, or net asset value, divided by the number of shares outstanding, all as of September 30, 2019, with the exception of certain adjustments described in this Annual Report under Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” for which estimated values were adjusted subsequent to September 30, 2019. The methodologies and assumptions used to determine the estimated value of the Company’s assets and the estimated value of the Company’s liabilities are described in this Annual Report under Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information.” Limitations of the March 2020 Estimated Value Per Share As mentioned above, the Company is providing the March 2020 Estimated Value Per Share to assist broker-dealers that participated in the Company’s now-terminated initial public offering in meeting their customer account statement reporting obligations. The March 2020 Estimated Value Per Share will first appear on the March 2020 customer account statements that will be mailed in April 2020. As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated value per share, and this difference could be significant. The March 2020 Estimated Value Per Share is not audited and does not represent the fair value of the Company’s assets less the fair value of the Company’s liabilities according to GAAP. Accordingly, with respect to the March 2020 Estimated Value Per Share, the Company can give no assurance: • of the amount or timing of liquidating distributions the Company will ultimately be able to pay its stockholders; • that a stockholder would be able to resell his or her shares at the March 2020 Estimated Value Per Share; • that an independent third-party appraiser or third-party valuation firm would agree with the March 2020 Estimated Value Per Share; or • that the methodology used to determine the March 2020 Estimated Value Per Share would be acceptable to FINRA or for compliance with ERISA reporting requirements. The March 2020 Estimated Value Per Share is based on the estimated range of liquidating distributions per share to be received by the Company’s stockholders pursuant to the Plan of Liquidation, reduced by the amount of the Initial Liquidating Distribution, as described above. The value of the Company’s shares will fluctuate over time in response to developments related to individual assets in the Company’s portfolio and the management of those assets, in response to the real estate and finance markets, based on the amount of net proceeds the Company receives from the disposition of its remaining assets and due to other factors. The March 2020 Estimated Value Per Share does not reflect a discount for the fact that the Company is externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. Amendment and Restatement of Share Redemption Program In connection with the approval of the Plan of Liquidation, on March 5, 2020, the board of directors approved the Company’s Tenth Amended and Restated Share Redemption Program (the “Amended Share Redemption Program”). The Amended Share Redemption Program changes the redemption price per share of the Company’s common stock eligible for redemption to take into account the estimated range of liquidating distributions as disclosed in the Proxy Statement and any liquidating distributions declared by the Company’s board of directors. The Amended Share Redemption Program sets the redemption price per share of the Company’s common stock eligible for redemption at (a) $3.615 (which represents the mid-point of the estimated range of liquidating distributions of $3.40 to $3.83 per share) less (b) the amount of any liquidating distributions on such share declared by the Company’s board of directors that have a record date prior to the applicable redemption date for such share. Thus, the redemption price per share of the Company’s common stock eligible for redemption on the March 31, 2020 redemption date will equal $2.87. The Company will report future redemption prices in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the SEC. There were no other changes in the Amended Share Redemption Program. The Amended Share Redemption Program will become effective on March 20, 2020. The Amended Share Redemption Program is filed as an exhibit to this Annual Report. The Amended Share Redemption Program continues to limit redemptions to redemptions sought in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the Amended Share Redemption Program). |
SCHEDULE III REAL ESTATE ASSETS
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | Description Location Ownership Encumbrances Initial Cost to Company Cost Capitalized Subsequent to Acquisition (2) Gross Amount at which Carried at Close of Period Accumulated Original Date Acquired Land Building and Improvements (1) Total Land Building and Improvements (1) Total (3) Properties Held for Investment Willow Oaks Corporate Center Fairfax, VA 100% (4) $ 25,300 $ 87,802 $ 113,102 $ 7,124 $ 25,300 $ 94,926 $ 120,226 $ (25,842) 1986/1989/2003 08/26/2009 Union Bank Plaza Los Angeles, CA 100% (4) 24,000 190,232 214,232 (12,547) 24,000 177,685 201,685 (37,841) 1967 09/15/2010 Granite Tower Denver, CO 100% $ 95,350 8,850 141,438 150,288 (2,959) 8,850 138,479 147,329 (32,855) 1983 12/16/2010 Fountainhead Plaza Tempe, AZ 100% (4) 12,300 123,700 136,000 (16,617) 12,300 107,083 119,383 (28,724) 2011 09/13/2011 Corporate Technology Centre San Jose, CA 100% 40,564 48,505 102,894 151,399 (2,092) 48,505 100,802 149,307 (16,061) 1999/2001 03/28/2013 Total Properties Held for Investment 118,955 646,066 765,021 (27,091) 118,955 618,975 737,930 (141,323) Properties Held for Sale 100 & 200 Campus Drive Buildings Florham Park, NJ 100% (4) 10,700 188,509 199,209 (47,049) 9,461 142,699 152,160 (22,341) 1988/1989 09/09/2008 300-600 Campus Drive Buildings Florham Park, NJ 100% (4) 9,717 185,445 195,162 (26,773) 9,121 159,268 168,389 (28,084) 1997/1999 10/10/2008 Total Properties Held for Sale 20,417 373,954 394,371 (73,822) 18,582 301,967 320,549 (50,425) TOTAL $ 139,372 $ 1,020,020 $ 1,159,392 $ (100,913) $ 137,537 $ 920,942 $ 1,058,479 $ (191,748) _____________________ (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 $1.3 billion (unaudited) as of December 31, 2019. (4) These properties are security for the Portfolio Loan Facility, which had an outstanding principal balance of $281.3 million as of December 31, 2019. 2019 2018 2017 Real Estate Balance at the beginning of the year $ 1,127,938 $ 1,207,445 $ 1,275,847 Improvements 59,768 35,681 16,616 Write-off of fully depreciated and fully amortized assets (2,821) (38,035) (13,095) Impairments (14,300) — — Sales (112,106) (77,153) (71,923) Balance at the end of the year $ 1,058,479 $ 1,127,938 $ 1,207,445 Accumulated depreciation and amortization Balance at the beginning of the year $ 173,731 $ 176,576 $ 150,111 Depreciation and amortization expense 41,145 46,043 50,079 Write-off of fully depreciated and fully amortized assets (2,821) (38,035) (13,095) Impairments — — — Sales (20,307) (10,853) (10,519) Balance at the end of the year $ 191,748 $ 173,731 $ 176,576 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | The consolidated financial statements and accompanying notes thereto have been 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”). The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | The preparation of the consolidated financial statements and 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. Upon adoption of the lease accounting standards of Topic 842 on January 1, 2019 (described below), the Company accounted for tenant reimbursements for property taxes, insurance and common area maintenance as variable lease payments and recorded these amounts as rental income on the statement of operations. For the years ended December 31, 2018 and 2017, the Company reclassified $10.6 million and $11.5 million, respectively, of tenant reimbursement revenue for property taxes, insurance, and common area maintenance to rental income for comparability purposes. In addition, during the year ended December 31, 2019, the Company sold two office properties and as of December 31, 2019, the Company had classified two office properties as held for sale. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. |
Real Estate | Real Estate On January 1, 2019, the Company adopted the lease accounting standards under Topic 842 including the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) did not reassess the lease classification for any expired or existing lease, and (iii) 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 lease accounting standards of Topic 840 are or contain a lease under Topic 842. In addition, Topic 842 provides an optional transition method to allow entities to apply the new lease accounting standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted this transition method upon its adoption of the lease accounting standards of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019. The Company’s comparative periods presented in the financial statements will continue to be reported under the lease accounting standards of Topic 840. In accordance with Topic 842, tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s statement of operations beginning January 1, 2019. In addition, the Company adopted the practical expedient available under Topic 842 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, specifically related to 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 (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations beginning January 1, 2019. 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 probable 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 can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental 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 lessee or lessor supervises the construction and bears the risk of cost overruns; • 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. In accordance with Topic 842, the Company makes a determination of whether the collectibility of the lease payments in an operating lease is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any contractual lease payments, deferred rent receivable, and variable lease payments and would recognize rental income only if cash is received. Beginning January 1, 2019, these changes to the Company’s collectibility assessment are reflected as an adjustment to rental income. Prior to January 1, 2019, bad debt expense related to uncollectible accounts receivable and deferred rent receivable was included in operating, maintenance, and management expense in the statement of operations. Any subsequent changes to the collectibility of the allowance for doubtful accounts as of December 31, 2018, which was recorded prior to the adoption of Topic 842, are recorded in operating, maintenance, and management expense in the statement of operations. Beginning January 1, 2019, the Company, as a lessor, records costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease, as an expense and classifies such costs as operating, maintenance, and management expense 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. |
Sale 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, Revenue from Contracts with Customers (Topic 606) . 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. 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, 2019. 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. |
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 |
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 or the expected hold period until the eventual disposition could result in incorrect conclusions on recoverability and 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, 2019, 2018 and 2017 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. |
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. |
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 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. |
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 • 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 expect to have funds available for ordinary redemptions in the future. 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) (the “December EVPS) 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 was effective through the May 2019 redemption date, which was May 31, 2019. In connection with the declaration of the Special Distribution (defined below), on June 12, 2019, the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $4.50 (unaudited), effective June 17, 2019, which was the record date for the Special Distribution, based solely on subtracting the Special Distribution declared by the Company’s board of directors in the amount of $0.45 per share of common stock from the December EVPS of $4.95. This was the sole adjustment to the estimated value per share. The change in the redemption price became effective for the June 2019 redemption date, which was June 28, 2019, and was effective through the October 2019 redemption date, which was October 31, 2019. On November 13, 2019, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $3.79 (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, 2019, except that two properties that went under contract to sale subsequent to September 30, 2019 were valued at their contractual sales price less estimated closing credits. The change in the redemption price became effective for the November 2019 redemption date, which was November 29, 2019, and will be effective until the estimated value per share is updated. The Company may amend, suspend or terminate the share redemption program for any reason upon ten business days’ notice to stockholders. The Company may provide this 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 stockholders. 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, 2019, the Company redeemed 1,162,757 shares sold in the Offering for $5.4 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 2019 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”), Pacific Oak Strategic Opportunity REIT, Inc., formerly KBS Strategic Opportunity REIT, Inc., (“Pacific Oak Strategic Opportunity REIT”) (advisory agreement terminated as of October 31, 2019 and the dealer manager agreement terminated as of December 31, 2019), KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”) (which liquidated in December 2018), Pacific Oak Strategic Opportunity REIT II, Inc., formerly KBS Strategic Opportunity REIT II, Inc., (“Pacific Oak Strategic Opportunity REIT II”) (advisory agreement terminated as of October 31, 2019 and the dealer manager agreement terminated as of December 31, 2019) and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”). On November 1, 2019, Pacific Oak Strategic Opportunity REIT and Pacific Oak Strategic Opportunity REIT II each entered into advisory agreements with a new external advisor, Pacific Oak Capital Advisors, LLC. Pacific Oak Capital Advisors, LLC is part of a group of companies formed, owned and managed by Keith D. Hall and Peter McMillan III. Together, through GKP Holding LLC, Messrs. Hall and McMillan continue to indirectly own a 33 1/3% interest in the Advisor and the Dealer Manager. |
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. |
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, 2019. As of December 31, 2019, returns for the calendar years 2015 through 2018 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, 2019, 2018 and 2017, respectively. On June 12, 2019, the Company’s board of directors declared a special distribution in the amount of $0.45 per share of common stock to stockholders of record as of the close of business on June 17, 2019 (the “Special Distribution”). Distributions declared per common share were $0.649, $0.245 and $0.274 in the aggregate for the years ended December 31, 2019, 2018 and 2017, respectively. Other than the Special Distribution, distributions per common share were based on a monthly record date for each month during the period commencing January 2017 through October 2019. 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. Accordingly, the Company aggregated its investments in real estate properties into one reportable business segment. |
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 investments included in these notes to the consolidated financial statements are presented on an unaudited basis and are outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. |
Recently Issued Accounting Standards Update | 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 assets 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. The Company does not expect the adoption of ASU No. 2016-13 will have a material impact on its financial statements. 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 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments | The following table summarizes the Company’s portfolio of real estate held for investment as of December 31, 2019 (in thousands): Property Date Acquired City State Property Type Total Real Estate Accumulated Depreciation and Amortization Total Real Estate, Net Willow Oaks Corporate Center 08/26/2009 Fairfax VA Office $ 120,226 $ (25,842) $ 94,384 Union Bank Plaza 09/15/2010 Los Angeles CA Office 201,685 (37,841) 163,844 Granite Tower 12/16/2010 Denver CO Office 147,329 (32,855) 114,474 Fountainhead Plaza 09/13/2011 Tempe AZ Office 119,383 (28,724) 90,659 Corporate Technology Centre 03/28/2013 San Jose CA Office 149,307 (16,061) 133,246 $ 737,930 $ (141,323) $ 596,607 |
Schedules of Concentration of Risk, by Risk Factor | As of December 31, 2019, the following properties represented more than 10% of the Company’s total assets: Property Location Rentable Total Real Estate, Net Percentage of Total Assets Annualized Base Rent (in thousands) (1) Average Annualized Base Rent per Sq. Ft. Occupancy Union Bank Plaza Los Angeles, CA 701,888 $ 163,844 15.5 % $ 25,336 $ 44.30 82 % Corporate Technology Centre San Jose, CA 415,492 133,246 12.6 % 5,774 33.39 42 % Granite Tower Denver, CO 591,070 114,474 10.8 % 19,399 34.99 94 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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. Annualized base rent excludes leases that have been executed but have not commenced as of December 31, 2019. As of December 31, 2019, the Company had approximately 88 tenants over a diverse range of industries and geographic areas in its portfolio of real estate held for investment. 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 Finance 12 $ 20,818 29.1 % Mining, Oil & Gas Extraction 3 13,154 18.4 % Educational Services 1 11,728 16.4 % $ 45,700 63.9 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. As of December 31, 2019, 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 Square % of Portfolio Annualized Base Rent (in thousands) (1) % of Annualized Lease Union Bank Union Bank Plaza Finance 295,563 10.8% $ 16,834 23.6% $ 56.95 05/31/2020/ 03/31/2021/ 05/31/2021/ 05/31/2022/ 05/31/2035 (2)(3) The University of Phoenix Fountainhead Plaza Educational Services 445,957 16.3% 11,728 16.4% 26.30 08/31/2023 (4) Anadarko Petroleum Corporation Granite Tower Mining, Oil & Gas Extraction 360,584 13.2% 12,256 17.1% 33.99 04/30/2021 / 04/30/2033 (5) _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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 dates of the lease as of December 31, 2019 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 $8.5 million was deferred as of December 31, 2018. During the year ended December 31, 2018, $1.9 million was recognized as rental income and $1.0 million was recognized as other operating income in the accompanying consolidated statement of operations. During the year ended December 31, 2019, $1.2 million was recognized as rental income and $0.8 million was recognized as other operating income in the accompanying consolidated statements of operations, and $6.5 million was deferred as of December 31, 2019 and included in other liabilities on the accompanying consolidated balance sheets. (3) On August 2, 2019, the Company entered into amended and restated lease agreements with Union Bank relating to Union Bank’s office, retail, and storage spaces, which amended the terms of the leases as follows: (i) remeasured the existing rentable square footage from 295,563 rentable square feet to 307,729 rentable square feet effective June 1, 2020, (ii) of the 307,729 rentable square feet, a total of 131,135 rentable square feet of office space and 11,985 rentable square feet of retail space will be surrendered at various dates between May 31, 2020 and May 31, 2022 and the remaining 164,609 rentable square feet will expire on May 31, 2035, and (iii) the addition of 3,152 rentable square feet of retail space for a 15-year lease term expiring on May 31, 2035. Each of Union Bank’s amended and restated office and retail lease agreements has two five (4) The University of Phoenix has two options to extend the term of this lease for five years per option term. (5) Per the lease agreement, 64,841 rentable square feet will expire on April 30, 2021 and the remainder will expire on April 30, 2033. |
Lessor, Operating Lease, Payments to be Received, Maturity | As of December 31, 2019, the future minimum rental income from the Company’s properties held for investment under non-cancelable operating leases was as follows (in thousands): 2020 $ 49,751 2021 47,279 2022 51,902 2023 50,379 2024 39,445 Thereafter 282,544 $ 521,300 |
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, 2019 | |
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, 2019 and 2018, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands): Tenant Origination and Above-Market Below-Market 2019 2018 2019 2018 2019 2018 Cost $ 28,025 $ 30,846 $ 835 $ 835 $ (1,154) $ (2,635) Accumulated amortization (17,731) (16,869) (685) (611) 990 2,327 Net amount $ 10,294 $ 13,977 $ 150 $ 224 $ (164) $ (308) |
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, 2019, 2018 and 2017 were as follows (in thousands): Tenant Origination and Above-Market Below-Market For the Years Ended December 31, For the Years Ended December 31, For the Years Ended December 31, 2019 2018 2017 2019 2018 2017 2019 2018 2017 Amortization $ (3,707) $ (6,928) $ (9,412) $ (74) $ (1,894) $ (2,348) $ 146 $ 857 $ 1,586 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2019 will be amortized for the years ending December 31 as follows (in thousands): Tenant Origination and Above-Market Below-Market 2020 $ (3,519) $ (74) $ 82 2021 (3,256) (73) 79 2022 (2,150) (3) 3 2023 (1,369) — — $ (10,294) $ (150) $ 164 Weighted-Average Remaining Amortization Period 3.2 years 2.0 years 2.0 years |
REAL ESTATE HELD FOR SALE (Tabl
REAL ESTATE HELD FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019, 2018 and 2017 and the two office properties classified as held for sale as of December 31, 2019, which were included in continuing operations (in thousands): Years Ended December 31, 2019 2018 2017 Revenues Rental income $ 39,174 $ 53,319 $ 61,889 Other operating income 1,475 2,804 3,089 Total revenues 40,649 56,123 64,978 Expenses Operating, maintenance, and management 12,529 16,191 17,320 Real estate taxes and insurance 4,469 6,697 8,574 Asset management fees to affiliate 3,492 4,641 5,398 General and administrative expenses 167 120 47 Depreciation and amortization 12,304 21,034 23,363 Interest expense 5,504 6,735 6,683 Impairment charges on real estate 14,300 — — Total expenses $ 52,765 $ 55,418 $ 61,385 |
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, 2019 and 2018. (in thousands): December 31, 2019 December 31, 2018 Assets related to real estate held for sale Total real estate, at cost $ 320,549 $ 427,335 Accumulated depreciation and amortization (50,425) (57,017) Real estate held for sale, net 270,124 370,318 Other assets 39,975 46,817 Total assets related to real estate held for sale $ 310,099 $ 417,135 Liabilities related to real estate held for sale Notes payable, net $ 115,827 $ 148,912 Other liabilities 10,012 6 Total liabilities related to real estate held for sale $ 125,839 $ 148,918 |
Schedule of Assets and Liabilities of Real Estate Held-for-Sale | As of December 31, 2019, the following properties held for sale represented more than 10% of the Company’s total assets: Property Location Rentable Total Real Percentage of Annualized Base Rent (in thousands) (1) Average Occupancy Campus Drive Buildings (2) Florham Park, NJ 1,189,494 $ 270,124 25.5 % $ 32,181 $ 32.78 83 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 2019, 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. Annualized base rent excludes leases that have been executed but have not commenced as of December 31, 2019. (2) Subsequent to December 31, 2019, the Company, through indirect wholly owned subsidiaries, sold the 100 & 200 Campus Driving Buildings and the 300-600 Campus Buildings (together, the “Campus Drive Buildings”) to a purchaser unaffiliated with the Company or the Advisor. See Note 11, “Subsequent Events - Disposition of the Campus Drive Buildings.” |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | As of December 31, 2019 and 2018, the Company’s notes payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands): Book Value as of Book Value as of Contractual Interest Rate as of December 31, 2019 (1) Effective Interest Rate as of December 31, 2019 (1) Payment Maturity Date (2) Corporate Technology Centre Mortgage Loan (3) $ 40,564 $ 41,868 3.50% 3.5% Principal & Interest 04/01/2020 Portfolio Loan Facility (4) 281,293 375,000 One-month LIBOR + 1.45% 3.1% Interest Only 03/29/2020 Granite Tower Mortgage Loan (5) 95,350 — One-month LIBOR + 1.65% 3.4% (5) 09/01/2023 Total notes payable principal outstanding $ 417,207 $ 416,868 Deferred financing costs, net (600) (1,660) Total notes payable, net $ 416,607 $ 415,208 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2019. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2019, using interest rate indices as of December 31, 2019, where applicable. (2) Represents the initial maturity date or the maturity date as extended as of December 31, 2019; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) The loan documents require the Company 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. On January 23, 2020, the Company repaid the outstanding principal and accrued interest due under the Corporate Technology Centre Mortgage Loan. (4) On August 30, 2019, the Company repaid $62.0 million due under this loan and Granite Tower was released as security from the Portfolio Loan Facility. See below, “- Recent Financing Transactions - Granite Tower Mortgage Loan.” As of December 31, 2019, the Portfolio Loan Facility was secured by the 100 & 200 Campus Drive Buildings, the 300-600 Campus Drive Buildings, Willow Oaks Corporate Center, Union Bank Plaza and Fountainhead Plaza. As of December 31, 2019, $281.3 million of term debt of the Portfolio Loan Facility was outstanding and $62.4 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. As of December 31, 2019, there are two one (5) See below, “- Recent Financing Transaction - Granite Tower Mortgage Loan.” |
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, 2019 (in thousands): 2020 $ 321,857 2021 — 2022 — 2023 95,350 Thereafter — $ 417,207 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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 notes payable as of December 31, 2019 and 2018, which carrying amounts do not generally approximate the fair values (in thousands): December 31, 2019 December 31, 2018 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial liabilities: Notes payable $ 417,207 $ 416,607 $ 417,874 $ 416,868 $ 415,208 $ 416,163 |
Fair Value Measurements, Nonrecurring | During the year ended December 31, 2019, the Company measured the following assets at fair value on a nonrecurring basis (in thousands): Fair Value Measurements Using Total Quoted Prices in Active Significant Other Significant Nonrecurring Basis: Impaired real estate held for sale (1) $ 295,803 $ — $ — $ 295,803 _____________________ (1) Amount represents the fair value for the Campus Drive Buildings which were impacted by an impairment charge during the year, as of the date that the fair value measurement was made. The carrying value for the real estate asset may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. See Note 5, “Real Estate Held for Sale” for a further discussion on the impaired real estate property. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019, 2018 and 2017, respectively, and any related amounts payable as of December 31, 2019 and 2018 (in thousands): Incurred Payable as of 2019 2018 2017 2019 2018 Expensed Asset management fees $ 10,196 $ 10,894 $ 11,617 $ — $ — Reimbursement of operating expenses (1) 325 373 238 59 55 Disposition fees (2) 1,334 972 865 — — $ 11,855 $ 12,239 $ 12,720 $ 59 $ 55 _____________________ (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 $232,000, $244,000, and $213,000 for the years ended December 31, 2019, 2018 and 2017, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2019, 2018 and 2017. 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. |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 and 2018 (in thousands, except per share amounts): 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 29,882 $ 27,674 $ 26,423 $ 28,133 Net (loss) income (4,900) 26,778 (19,492) (635) Net (loss) income per common share, basic and diluted (0.03) 0.14 (0.10) — Distributions declared per common share 0.062 0.512 0.056 0.019 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 |
ORGANIZATION (Details)
ORGANIZATION (Details) $ in Thousands | 12 Months Ended | 35 Months Ended | 140 Months Ended | ||
Dec. 31, 2019USD ($)propertyshares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | Mar. 22, 2011USD ($)shares | Dec. 31, 2019USD ($)propertyshares | |
Organizational Structure [Line Items] | |||||
Shares of common stock sold under dividend reinvestment plan, value | $ | $ 298,200 | ||||
Redemptions of common stock, value | $ | $ 5,354 | $ 5,882 | $ 5,767 | $ 257,100 | |
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 (in shares) | shares | 1,162,757 | 1,201,508 | 1,053,650 | 28,303,101 | |
Redemptions of common stock, value | $ | $ 12 | $ 12 | $ 10 | ||
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 | 6 | 6 | |||
Office Buildings, Campus | |||||
Organizational Structure [Line Items] | |||||
Number of real estate properties | property | 5 | 5 | |||
Assets Held-for-sale | Office Building | |||||
Organizational Structure [Line Items] | |||||
Number of real estate properties | property | 2 | 2 | |||
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) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2019property | |
Office Building | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | 6 | ||
Office Building | Assets Held-for-sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | 2 | ||
Accounting Standards Update 2016-02 | |||
Real Estate Properties [Line Items] | |||
Tenant reimbursement revenue | $ | $ 10.6 | $ 11.5 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Useful Life) (Details) | 12 Months Ended |
Dec. 31, 2019 | |
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_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Redeemable Common Stock) (Details) - USD ($) | Jun. 12, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 03, 2018 |
Accounting Policies [Abstract] | ||||||||||||||
Period of Increase or Decrease of Funding Available for Redemption | 10 days | |||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||||
Dollar limitation | $ 10,000,000 | |||||||||||||
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 | $ 4.50 | $ 4.95 | ||||||||||||
Special distributions declared per common share (in dollars per share) | 0.45 | |||||||||||||
Distributions declared per common share (in dollars per share) | $ 4.95 | $ 0.019 | $ 0.056 | $ 0.512 | $ 0.062 | $ 0.062 | $ 0.062 | $ 0.061 | $ 0.060 | $ 0.649 | $ 0.245 | $ 0.274 | ||
Common Stock | ||||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||||
Common stock redeemed (in shares) | 1,162,757 | |||||||||||||
Common stock redeemed | $ 5,400,000 | |||||||||||||
Forecast | ||||||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||||||
Dollar limitation | $ 10,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Fees) (Details) | Dec. 31, 2019 |
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% |
Advisor, Affiliates or Unaffiliated Third Parties | Maximum | |
Summary of Significant Accounting Policies [Line Items] | |
Disposition fee, percent | 6.00% |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Per Share Data) (Details) - $ / shares | Jun. 12, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||||||||||
Antidilutive securities (in shares) | 0 | 0 | 0 | |||||||||
Special distributions declared per common share (in dollars per share) | $ 0.45 | |||||||||||
Distributions declared per common share (in dollars per share) | $ 4.95 | $ 0.019 | $ 0.056 | $ 0.512 | $ 0.062 | $ 0.062 | $ 0.062 | $ 0.061 | $ 0.060 | $ 0.649 | $ 0.245 | $ 0.274 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Segments) (Details) | 12 Months Ended |
Dec. 31, 2019segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
REAL ESTATE HELD FOR INVESTME_3
REAL ESTATE HELD FOR INVESTMENT (Narrative) (Details) ft² in Millions | Dec. 31, 2019ft²property |
Real Estate Properties [Line Items] | |
Rentable square feet | ft² | 2.7 |
Occupancy | 76.00% |
Office Building | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 6 |
Office Building | Held for Investment | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 4 |
Office Campus | Held for Investment | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 1 |
Office Buildings, Campus | |
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, 2019 | Dec. 31, 2018 | |
Real Estate Properties [Line Items] | ||
Total Real Estate at Cost | $ 737,930 | $ 700,603 |
Accumulated Depreciation and Amortization | (141,323) | $ (116,714) |
Office Building | ||
Real Estate Properties [Line Items] | ||
Total Real Estate at Cost | 737,930 | |
Accumulated Depreciation and Amortization | (141,323) | |
Total real estate held for investment, net | $ 596,607 | |
Willow Oaks Corporate Center | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Aug. 26, 2009 | |
Total Real Estate at Cost | $ 120,226 | |
Accumulated Depreciation and Amortization | (25,842) | |
Total real estate held for investment, net | $ 94,384 | |
Union Bank Plaza | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Sep. 15, 2010 | |
Total Real Estate at Cost | $ 201,685 | |
Accumulated Depreciation and Amortization | (37,841) | |
Total real estate held for investment, net | $ 163,844 | |
Granite Tower | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Dec. 16, 2010 | |
Total Real Estate at Cost | $ 147,329 | |
Accumulated Depreciation and Amortization | (32,855) | |
Total real estate held for investment, net | $ 114,474 | |
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 | (28,724) | |
Total real estate held for investment, net | $ 90,659 | |
Corporate Technology Centre | Office Building | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Mar. 28, 2013 | |
Total Real Estate at Cost | $ 149,307 | |
Accumulated Depreciation and Amortization | (16,061) | |
Total real estate held for investment, net | $ 133,246 |
REAL ESTATE HELD FOR INVESTME_5
REAL ESTATE HELD FOR INVESTMENT (Corporate Technology Centre) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)ft²$ / ft² | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | ft² | 2,700,000 |
Percentage of Total Assets | 63.90% |
Annualized Base Rent | $ 45,700 |
Occupancy | 76.00% |
Union Bank Plaza | Assets, Total | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | ft² | 701,888 |
Total Real Estate, Net | $ 163,844 |
Percentage of Total Assets | 15.50% |
Annualized Base Rent | $ 25,336 |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 44.30 |
Occupancy | 82.00% |
Corporate Technology Centre | Assets, Total | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | ft² | 415,492 |
Total Real Estate, Net | $ 133,246 |
Percentage of Total Assets | 12.60% |
Annualized Base Rent | $ 5,774 |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 33.39 |
Occupancy | 42.00% |
Granite Tower | Assets, Total | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | ft² | 591,070 |
Total Real Estate, Net | $ 114,474 |
Percentage of Total Assets | 10.80% |
Annualized Base Rent | $ 19,399 |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 34.99 |
Occupancy | 94.00% |
REAL ESTATE HELD FOR INVESTME_6
REAL ESTATE HELD FOR INVESTMENT (Operating Leases) (Narrative) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)Tenants | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Operating Leased Assets [Line Items] | |||
Deferred rent recognized | $ (1,003) | $ (3,717) | $ 864 |
Deferred rent receivables | 81,800 | 61,700 | |
Unamortized lease incentives | $ 54,400 | 38,600 | |
Number of tenants | Tenants | 88 | ||
Bad debt expense | $ 0 | 371 | $ 515 |
Lease Revenue | |||
Operating Leased Assets [Line Items] | |||
Bad debt expense | 900 | ||
Cost of Real Estate Revenue | |||
Operating Leased Assets [Line Items] | |||
Bad debt expense | (100) | ||
Other Liabilities | |||
Operating Leased Assets [Line Items] | |||
Security deposit liability | 3,700 | 2,500 | |
Accounts Payable and Accrued Liabilities | |||
Operating Leased Assets [Line Items] | |||
Lease incentive payable | $ 52,800 | $ 35,200 | |
Maximum | |||
Operating Leased Assets [Line Items] | |||
Operating leases, term | 15 years 4 months 24 days | ||
Weighted Average | |||
Operating Leased Assets [Line Items] | |||
Operating leases, term | 6 years 4 months 24 days |
REAL ESTATE HELD FOR INVESTME_7
REAL ESTATE HELD FOR INVESTMENT (Future Minimum Rental Income) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Real Estate [Abstract] | |
2020 | $ 49,751 |
2021 | 47,279 |
2022 | 51,902 |
2023 | 50,379 |
2024 | 39,445 |
Thereafter | 282,544 |
Total | $ 521,300 |
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, 2019USD ($)tenantTenants | |
Concentration Risk [Line Items] | |
Number of Tenants | Tenants | 88 |
Annualized Base Rent | $ 45,700 |
Percentage of Annualized Base Rent | 63.90% |
Finance | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 12 |
Annualized Base Rent | $ 20,818 |
Percentage of Annualized Base Rent | 29.10% |
Mining, Oil & Gas Extraction | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 3 |
Annualized Base Rent | $ 13,154 |
Percentage of Annualized Base Rent | 18.40% |
Educational Services | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 1 |
Annualized Base Rent | $ 11,728 |
Percentage of Annualized Base Rent | 16.40% |
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 | Aug. 02, 2019ft²extensionnumberOfOptions | Dec. 31, 2019USD ($)ft²extension$ / ft² | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2018ft² | Mar. 31, 2018ft²numberOfParkingAreaPasses |
Concentration Risk [Line Items] | ||||||
Square Feet | 2,700,000 | |||||
Annualized Base Rent | $ | $ 45,700 | |||||
Rent income recognized | $ | 105,287 | $ 132,452 | $ 139,048 | |||
Other operating income | $ | $ 6,825 | 9,329 | $ 9,351 | |||
Tenant Lease - Union Bank Plaza | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 295,563 | 295,563 | ||||
% of Portfolio (Net Rentable Sq. Ft.) | 10.80% | |||||
Annualized Base Rent | $ | $ 16,834 | |||||
% of Portfolio Annualized Base Rent | 23.60% | |||||
Annualized Base Rent per Sq. Ft. (in dollars per sq, ft) | $ / ft² | 56.95 | |||||
Square feet surrender | 31,320 | 15,829 | ||||
Number of parking area passes | numberOfParkingAreaPasses | 321 | |||||
Termination of lease | $ | 11,400 | |||||
Rent income recognized | $ | $ 1,200 | 1,900 | ||||
Extension option | extension | 2 | |||||
Extension period | 5 years | |||||
Option to terminate | one | |||||
Period of termination notice | 18 months | |||||
Option to terminate and cancel a portion of lease | numberOfOptions | 2 | |||||
Tenant Lease - Union Bank Plaza | Real Estate, Other | ||||||
Concentration Risk [Line Items] | ||||||
Other operating income | $ | 800 | 1,000 | ||||
Tenant Lease - Union Bank Plaza | Will be Surrendered at Various Dates Between May 31, 2020 and May 31, 2022 | Retail Property | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 11,985 | |||||
Tenant Lease - Union Bank Plaza | Will be Surrendered at Various Dates Between May 31, 2020 and May 31, 2022 | Office Building | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 131,135 | |||||
Tenant Lease - Union Bank Plaza | Effective June 1, 2020 | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 307,729 | |||||
Tenant Lease - Union Bank Plaza | Expiring on May 31, 2035 | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 164,609 | |||||
Operating lease, term | 15 years | |||||
Tenant Lease - Union Bank Plaza | Expiring on May 31, 2035 | Retail Property | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 3,152 | |||||
Tenant Lease - Union Bank Plaza | Other Liabilities | ||||||
Concentration Risk [Line Items] | ||||||
Deferred revenue | $ | $ 6,500 | $ 8,500 | ||||
Tenant Lease - The University of Phoenix | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 445,957 | |||||
% of Portfolio (Net Rentable Sq. Ft.) | 16.30% | |||||
Annualized Base Rent | $ | $ 11,728 | |||||
% of Portfolio Annualized Base Rent | 16.40% | |||||
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 | 360,584 | |||||
% of Portfolio (Net Rentable Sq. Ft.) | 13.20% | |||||
Annualized Base Rent | $ | $ 12,256 | |||||
% of Portfolio Annualized Base Rent | 17.10% | |||||
Annualized Base Rent per Sq. Ft. (in dollars per sq, ft) | $ / ft² | 33.99 | |||||
Term Lease - Anadarko Petroleum Corporation | Will Expire on April 30, 2021 | ||||||
Concentration Risk [Line Items] | ||||||
Square Feet | 64,841 |
REAL ESTATE HELD FOR INVESTM_10
REAL ESTATE HELD FOR INVESTMENT (Geographic Concentration Risk) (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 63.90% |
California | Assets, Total | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 28.10% |
COLORADO | Assets, Total | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 10.80% |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |||
Tenant Origination and Absorption Costs, Cost | $ 28,025 | $ 30,846 | |
Tenant Origination and Absorption Costs, Accumulated amortization | (17,731) | (16,869) | |
Tenant Origination and Absorption Costs, Net amount | 10,294 | 13,977 | |
Above-Market Lease Assets, Costs | 835 | 835 | |
Above-Market Lease Assets, Accumulated amortization | (685) | (611) | |
Above-Market Lease Assets, Net amount | 150 | 224 | |
Below-Market Lease Liabilities, Costs | (1,154) | (2,635) | |
Below-Market Lease Liabilities, Accumulated amortization | 990 | 2,327 | |
Below-Market Lease Liabilities, Net amount | (164) | (308) | |
Tenant Origination and Absorption Costs, Amortization | (3,707) | (6,928) | $ (9,412) |
Above-Market Lease Assets, Amortization | (74) | (1,894) | (2,348) |
Below-Market Lease Liabilities, Amortization | $ 146 | $ 857 | $ 1,586 |
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, 2019USD ($) | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
2020 | $ 82 |
2021 | 79 |
2022 | 3 |
2023 | 0 |
Net Amount | 164 |
Tenant origination and absorption costs | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2020 | (3,519) |
2021 | (3,256) |
2022 | (2,150) |
2023 | (1,369) |
Net Amount | $ (10,294) |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
Weighted-Average Remaining Amortization Period | 3 years 2 months 12 days |
Above-Market Lease Assets | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2020 | $ (74) |
2021 | (73) |
2022 | (3) |
2023 | 0 |
Net Amount | $ (150) |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
Weighted-Average Remaining Amortization Period | 2 years |
Below-Market Lease Liabilities | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | |
Weighted-Average Remaining Amortization Period | 2 years |
REAL ESTATE HELD FOR SALE (Narr
REAL ESTATE HELD FOR SALE (Narrative) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)propertysegment | Dec. 31, 2018USD ($)property | Dec. 31, 2017USD ($)property | |
Real Estate Properties [Line Items] | |||
Impairment charges on real estate | $ | $ 14,300 | $ 0 | $ 0 |
Campus Drive Buildings | |||
Real Estate Properties [Line Items] | |||
Impairment charges on real estate | $ | 14,300 | ||
Disposed of by Sale | |||
Real Estate Properties [Line Items] | |||
Impairment charges on real estate | $ | $ 14,300 | $ 0 | $ 0 |
Office Building | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | property | 6 | ||
Office Building | Disposed of by Sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties sold | 2 | 3 | 2 |
Office Building | Assets Held-for-sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | property | 2 | ||
Building Office Campus | Assets Held-for-sale | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | property | 8 |
REAL ESTATE HELD FOR SALE (Reve
REAL ESTATE HELD FOR SALE (Revenue and Expenses of Real Estate Held-for-Sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||||||||||
Rental income | $ 105,287 | $ 132,452 | $ 139,048 | ||||||||
Total revenues | $ 28,133 | $ 26,423 | $ 27,674 | $ 29,882 | $ 39,235 | $ 32,682 | $ 34,622 | $ 35,676 | 112,112 | 142,215 | 149,459 |
Expenses | |||||||||||
Operating, maintenance, and management | 34,495 | 35,246 | 34,719 | ||||||||
Real estate taxes and insurance | 18,128 | 19,268 | 19,816 | ||||||||
Asset management fees to affiliate | 10,196 | 10,894 | 11,617 | ||||||||
General and administrative expenses | 6,029 | 6,024 | 4,541 | ||||||||
Depreciation and amortization | 40,889 | 50,202 | 54,047 | ||||||||
Interest expense | 17,214 | 17,884 | 17,466 | ||||||||
Impairment charges on real estate | 14,300 | 0 | 0 | ||||||||
Total expenses | 141,251 | 139,518 | 142,206 | ||||||||
Disposed of by Sale | |||||||||||
Revenues | |||||||||||
Rental income | 39,174 | 53,319 | 61,889 | ||||||||
Other operating income | 1,475 | 2,804 | 3,089 | ||||||||
Total revenues | 40,649 | 56,123 | 64,978 | ||||||||
Expenses | |||||||||||
Operating, maintenance, and management | 12,529 | 16,191 | 17,320 | ||||||||
Real estate taxes and insurance | 4,469 | 6,697 | 8,574 | ||||||||
Asset management fees to affiliate | 3,492 | 4,641 | 5,398 | ||||||||
General and administrative expenses | 167 | 120 | 47 | ||||||||
Depreciation and amortization | 12,304 | 21,034 | 23,363 | ||||||||
Interest expense | 5,504 | 6,735 | 6,683 | ||||||||
Impairment charges on real estate | 14,300 | 0 | 0 | ||||||||
Total expenses | $ 52,765 | $ 55,418 | $ 61,385 |
REAL ESTATE HELD FOR SALE (Sche
REAL ESTATE HELD FOR SALE (Schedule of Major Components of Real Estate Held for Sale and Liabilities Related to Real Estate Held for Sale) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Discontinued Operations and Disposal Groups [Abstract] | ||
Total real estate, at cost | $ 320,549 | $ 427,335 |
Accumulated depreciation and amortization | (50,425) | (57,017) |
Real estate held for sale, net | 270,124 | 370,318 |
Other assets | 39,975 | 46,817 |
Total assets related to real estate held for sale | 310,099 | 417,135 |
Notes payable, net | 115,827 | 148,912 |
Other liabilities | 10,012 | 6 |
Total liabilities related to real estate held for sale | $ 125,839 | $ 148,918 |
REAL ESTATE HELD FOR SALE (As P
REAL ESTATE HELD FOR SALE (As Percent of Total Assets) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)ft²$ / ft² | |
Real Estate [Line Items] | |
Rentable Square Feet | ft² | 2,700,000 |
Percentage of Total Assets | 63.90% |
Annualized Base Rent | $ 45,700 |
Occupancy | 76.00% |
Campus Drive Buildings | Assets, Total | |
Real Estate [Line Items] | |
Rentable Square Feet | ft² | 1,189,494 |
Total Real Estate, Net | $ 270,124 |
Percentage of Total Assets | 25.50% |
Annualized Base Rent | $ 32,181 |
Average Annualized Base Rent per Sq. Ft. | $ / ft² | 32.78 |
Occupancy | 83.00% |
NOTES PAYABLE (Schedule of Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) $ in Thousands | Jan. 22, 2020USD ($) | Aug. 30, 2019USD ($) | Dec. 31, 2019USD ($)extension | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 417,207 | $ 416,868 | ||
Deferred financing costs, net | (600) | (1,660) | ||
Total notes payable, net | 416,607 | 415,208 | ||
Portfolio Loan Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Payoff of principle balance | $ 136,100 | |||
Portfolio Loan Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 281,300 | |||
Remaining borrowing capacity | 62,400 | |||
Granite Tower Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 95,400 | |||
Remaining borrowing capacity | $ 49,600 | |||
Granite Tower Mortgage Loan | One-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate, Variable Rate | 1.65% | |||
Mortgages | Corporate Technology Centre Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 40,564 | 41,868 | ||
Contractual Interest Rate, Percentage | 3.50% | |||
Effective Interest Rate | 3.50% | |||
Maturity Date | Apr. 1, 2020 | |||
Mortgages | Portfolio Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 281,293 | 375,000 | ||
Effective Interest Rate | 3.10% | |||
Maturity Date | Mar. 29, 2020 | |||
Payoff of principle balance | $ 62,000 | |||
Number of extensions | extension | 2 | |||
Extension period | 1 year | |||
Mortgages | Portfolio Loan Facility | One-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate, Variable Rate | 1.45% | |||
Mortgages | Granite Tower Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 95,350 | $ 0 | ||
Effective Interest Rate | 3.40% | |||
Maturity Date | Sep. 1, 2023 | |||
Mortgages | Granite Tower Mortgage Loan | One-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Contractual Interest Rate, Variable Rate | 1.65% |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |||
Interest expense | $ 17,214 | $ 17,884 | $ 17,466 |
Interest payable, current | 1,200 | 1,300 | |
Amortization of financing cost, net of discontinued operations | $ 1,500 | 1,300 | $ 1,100 |
Debt refinancing costs | $ 300 |
NOTES PAYABLE (Schedule of Matu
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
2020 | $ 321,857 | |
2021 | 0 | |
2022 | 0 | |
2023 | 95,350 | |
2024 | 0 | |
Total notes payable, net | $ 417,207 | $ 416,868 |
NOTES PAYABLE (Recent Financing
NOTES PAYABLE (Recent Financing Transactions) (Details) - USD ($) | Aug. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||
Notes payable | $ 417,207,000 | $ 416,868,000 | |
Total notes payable principal outstanding | 417,207,000 | $ 416,868,000 | |
Granite Tower Mortgage Loan | |||
Debt Instrument [Line Items] | |||
Term | 4 years | ||
Notes payable | $ 145,000,000 | ||
Total notes payable principal outstanding | 95,400,000 | ||
Remaining borrowing capacity | $ 49,600,000 | ||
Amortization schedule | 30 years | ||
Limited completion guaranty of major tenant lease | $ 45,700,000 | ||
Granite Tower Mortgage Loan | One-month LIBOR | |||
Debt Instrument [Line Items] | |||
Variable rate | 1.65% |
FAIR VALUE DISCLOSURES (Schedul
FAIR VALUE DISCLOSURES (Schedule of Face Value, Carrying Amounts and Fair Value) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Face Value | $ 417,207,000 | $ 416,868,000 |
Book Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | 416,607,000 | 415,208,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | $ 417,874,000 | $ 416,163,000 |
FAIR VALUE DISCLOSURES (Sched_2
FAIR VALUE DISCLOSURES (Schedule of Assets and Liabilities at Fair Value) (Details) - Nonrecurring Basis $ in Thousands | Dec. 31, 2019USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate held for sale | $ 295,803 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate held for sale | 0 |
Significant Other Observable Inputs (Level 2) [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate held for sale | 0 |
Significant Unobservable Inputs (Level 3) [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate held for sale | $ 295,803 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 01, 2019 | |
Related Party Transaction [Line Items] | ||||
Payable as of | $ 59 | $ 55 | ||
Administrative fees, amount paid | 232 | 244 | $ 213 | |
Advisor and Dealer Manager | ||||
Related Party Transaction [Line Items] | ||||
Expenses | 11,855 | 12,239 | 12,720 | |
Payable as of | 59 | 55 | ||
Advisor and Dealer Manager | Asset Management Fees | ||||
Related Party Transaction [Line Items] | ||||
Expenses | 10,196 | 10,894 | 11,617 | |
Payable as of | 0 | 0 | ||
Advisor and Dealer Manager | Reimbursement of Operating Expenses | ||||
Related Party Transaction [Line Items] | ||||
Expenses | 325 | 373 | 238 | |
Payable as of | 59 | 55 | ||
Advisor and Dealer Manager | Disposition Fees | ||||
Related Party Transaction [Line Items] | ||||
Expenses | 1,334 | 972 | 865 | |
Payable as of | $ 0 | 0 | ||
Advisor (KBS Capital Advisors LLC) | Property Insurance Rebate | ||||
Related Party Transaction [Line Items] | ||||
Due from related parties | $ 100 | $ 100 | ||
GKP Holding LLC | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 33.33% |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 12, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Revenues | $ 28,133 | $ 26,423 | $ 27,674 | $ 29,882 | $ 39,235 | $ 32,682 | $ 34,622 | $ 35,676 | $ 112,112 | $ 142,215 | $ 149,459 | |
Net (loss) income | $ (635) | $ (19,492) | $ 26,778 | $ (4,900) | $ 3,587 | $ (454) | $ 26,374 | $ (979) | $ 1,751 | $ 28,528 | $ 25,114 | |
Net (loss) income per common share, basic and diluted (in dollars per share) | $ 0 | $ (0.10) | $ 0.14 | $ (0.03) | $ 0.02 | $ 0 | $ 0.14 | $ (0.01) | $ 0.01 | $ 0.15 | $ 0.13 | |
Distributions declared per common share (in dollars per share) | $ 4.95 | $ 0.019 | $ 0.056 | $ 0.512 | $ 0.062 | $ 0.062 | $ 0.062 | $ 0.061 | $ 0.060 | $ 0.649 | $ 0.245 | $ 0.274 |
SUBSEQUENT EVENTS (Disposition)
SUBSEQUENT EVENTS (Disposition) (Details) $ in Millions | Jan. 23, 2020USD ($) | Jan. 22, 2020USD ($) | Oct. 10, 2008ft²aproperty | Sep. 09, 2008ft²aproperty |
Subsequent Event | Portfolio Loan Facility | ||||
Subsequent Event [Line Items] | ||||
Payoff of principle balance | $ 136.1 | |||
Subsequent Event | Corporate Centre Technology Mortgage Loan | ||||
Subsequent Event [Line Items] | ||||
Payoff of principle balance | $ 40.6 | |||
Subsequent Event | Campus Drive Buildings | Disposed of by Sale | ||||
Subsequent Event [Line Items] | ||||
Consideration | 311 | |||
Closing cost | $ 4.3 | |||
100 & 200 Campus Drive Buildings | Office Building | ||||
Subsequent Event [Line Items] | ||||
Number of buildings acquired | property | 2 | |||
Net rentable area | ft² | 590,458 | |||
Area of land | a | 71.1 | |||
300-600 Campus Drive Buildings | Office Building | ||||
Subsequent Event [Line Items] | ||||
Number of buildings acquired | property | 4 | |||
Net rentable area | ft² | 578,388 | |||
Area of land | a | 64.80 |
SUBSEQUENT EVENTS (Plan of Liqu
SUBSEQUENT EVENTS (Plan of Liquidation) (Details) - Common Stock - $ / shares | Mar. 05, 2020 | Nov. 13, 2019 |
Subsequent Event [Line Items] | ||
Estimated value per share of initial liquidating distribution (in dollars per share) | $ 3.79 | |
Minimum | ||
Subsequent Event [Line Items] | ||
Estimated value per share of initial liquidating distribution (in dollars per share) | 3.55 | |
Maximum | ||
Subsequent Event [Line Items] | ||
Estimated value per share of initial liquidating distribution (in dollars per share) | $ 3.99 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Initial liquidating distribution (in dollars per share) | $ 0.75 | |
Reduction in future liquidating distributions (in dollars per share) | 0.75 | |
Estimated value per share of initial liquidating distribution (in dollars per share) | 2.87 | |
Subsequent Event | Minimum | ||
Subsequent Event [Line Items] | ||
Amount of cash per share hold by shareholders (in dollars per share) | 3.40 | |
Subsequent Event | Maximum | ||
Subsequent Event [Line Items] | ||
Amount of cash per share hold by shareholders (in dollars per share) | 3.83 | |
Subsequent Event | Weighted Average | ||
Subsequent Event [Line Items] | ||
Amount of cash per share hold by shareholders (in dollars per share) | $ 3.615 |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Real Estate and Accumulated Depreciation [Line Items] | ||||
Initial Cost to Company, Land | $ 139,372 | |||
Initial Cost to Company, Building and Improvements | 1,020,020 | |||
Initial Cost to Company, Total | 1,159,392 | |||
Cost Capitalized Subsequent to Acquisition | (100,913) | |||
Gross Amount at which Carried at Close of Period, Land | 137,537 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 920,942 | |||
Gross Amount at which Carried at Close of Period, Total | 1,058,479 | $ 1,127,938 | $ 1,207,445 | $ 1,275,847 |
Accumulated Depreciation and Amortization | (191,748) | (173,731) | $ (176,576) | $ (150,111) |
Aggregate cost of real estate for federal income tax purposes | 1,300,000 | |||
Total notes payable principal outstanding | 417,207 | 416,868 | ||
Portfolio Loan Facility | Mortgages | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Total notes payable principal outstanding | 281,293 | $ 375,000 | ||
Properties Held for Investment | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Initial Cost to Company, Land | 118,955 | |||
Initial Cost to Company, Building and Improvements | 646,066 | |||
Initial Cost to Company, Total | 765,021 | |||
Cost Capitalized Subsequent to Acquisition | (27,091) | |||
Gross Amount at which Carried at Close of Period, Land | 118,955 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 618,975 | |||
Gross Amount at which Carried at Close of Period, Total | 737,930 | |||
Accumulated Depreciation and Amortization | $ (141,323) | |||
Properties Held for Investment | 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 | 7,124 | |||
Gross Amount at which Carried at Close of Period, Land | 25,300 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 94,926 | |||
Gross Amount at which Carried at Close of Period, Total | 120,226 | |||
Accumulated Depreciation and Amortization | $ (25,842) | |||
Original Date of Construction | 1986/1989/2003 | |||
Date Acquired | Aug. 26, 2009 | |||
Properties Held for Investment | 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 | (12,547) | |||
Gross Amount at which Carried at Close of Period, Land | 24,000 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 177,685 | |||
Gross Amount at which Carried at Close of Period, Total | 201,685 | |||
Accumulated Depreciation and Amortization | $ (37,841) | |||
Original Date of Construction | 1967 | |||
Date Acquired | Sep. 15, 2010 | |||
Properties Held for Investment | Granite Tower | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Encumbrances | $ 95,350 | |||
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 | (2,959) | |||
Gross Amount at which Carried at Close of Period, Land | 8,850 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 138,479 | |||
Gross Amount at which Carried at Close of Period, Total | 147,329 | |||
Accumulated Depreciation and Amortization | $ (32,855) | |||
Original Date of Construction | 1983 | |||
Date Acquired | Dec. 16, 2010 | |||
Properties Held for Investment | 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 | $ (28,724) | |||
Original Date of Construction | 2011 | |||
Date Acquired | Sep. 13, 2011 | |||
Properties Held for Investment | Corporate Technology Centre | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100.00% | |||
Encumbrances | $ 40,564 | |||
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 | (2,092) | |||
Gross Amount at which Carried at Close of Period, Land | 48,505 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 100,802 | |||
Gross Amount at which Carried at Close of Period, Total | 149,307 | |||
Accumulated Depreciation and Amortization | $ (16,061) | |||
Original Date of Construction | 1999/2001 | |||
Date Acquired | Mar. 28, 2013 | |||
Properties Held for Sale | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Initial Cost to Company, Land | $ 20,417 | |||
Initial Cost to Company, Building and Improvements | 373,954 | |||
Initial Cost to Company, Total | 394,371 | |||
Cost Capitalized Subsequent to Acquisition | (73,822) | |||
Gross Amount at which Carried at Close of Period, Land | 18,582 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 301,967 | |||
Gross Amount at which Carried at Close of Period, Total | 320,549 | |||
Accumulated Depreciation and Amortization | $ (50,425) | |||
Properties Held for Sale | 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 | (47,049) | |||
Gross Amount at which Carried at Close of Period, Land | 9,461 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 142,699 | |||
Gross Amount at which Carried at Close of Period, Total | 152,160 | |||
Accumulated Depreciation and Amortization | $ (22,341) | |||
Original Date of Construction | 1988/1989 | |||
Date Acquired | Sep. 9, 2008 | |||
Properties Held for Sale | 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 | (26,773) | |||
Gross Amount at which Carried at Close of Period, Land | 9,121 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 159,268 | |||
Gross Amount at which Carried at Close of Period, Total | 168,389 | |||
Accumulated Depreciation and Amortization | $ (28,084) | |||
Original Date of Construction | 1997/1999 | |||
Date Acquired | Oct. 10, 2008 |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Real Estate | |||
Balance at the beginning of the year | $ 1,127,938 | $ 1,207,445 | $ 1,275,847 |
Improvements | 59,768 | 35,681 | 16,616 |
Write-off of fully depreciated and fully amortized assets | (2,821) | (38,035) | (13,095) |
Impairments | (14,300) | 0 | 0 |
Sales | (112,106) | (77,153) | (71,923) |
Balance at the end of the year | 1,058,479 | 1,127,938 | 1,207,445 |
Accumulated depreciation and amortization | |||
Balance at the beginning of the year | 173,731 | 176,576 | 150,111 |
Depreciation and amortization expense | 41,145 | 46,043 | 50,079 |
Write-off of fully depreciated and fully amortized assets | (2,821) | (38,035) | (13,095) |
Impairments | 0 | 0 | 0 |
Sales | (20,307) | (10,853) | (10,519) |
Balance at the end of the year | $ 191,748 | $ 173,731 | $ 176,576 |