Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 08, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Current Fiscal Year End Date | --12-31 | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 184,111,590 | ||
Entity Central Index Key | 0001411059 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Public Float | $ 0 |
CONSOLIDATED STATEMENT OF NET A
CONSOLIDATED STATEMENT OF NET ASSETS $ in Thousands | Dec. 31, 2020USD ($) |
Assets | |
Real estate | $ 698,491 |
Cash and cash equivalents | 21,796 |
Rents and other receivables, net | 489 |
Other assets | 461 |
Total assets | 721,237 |
Liabilities | |
Liabilities for estimated costs in excess of estimated receipts during liquidation | 72,528 |
Notes payable | 240,520 |
Accounts payable and accrued liabilities | 7,308 |
Due to affiliate | 49 |
Liabilities for estimated closing costs and disposition fees | 16,458 |
Other liabilities | 2,879 |
Total liabilities | 339,742 |
Commitments and contingencies (Note 10) | |
Net assets in liquidation | $ 381,495 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET $ in Thousands | Dec. 31, 2019USD ($) |
Real estate: | |
Land | $ 118,955 |
Buildings and improvements | 590,950 |
Tenant origination and absorption costs | 28,025 |
Total real estate held for investment, cost | 737,930 |
Less accumulated depreciation and amortization | (141,323) |
Total real estate held for investment, net | 596,607 |
Real estate held for sale, net | 270,124 |
Total real estate, net | 866,731 |
Cash and cash equivalents | 31,674 |
Restricted cash | 15,208 |
Rents and other receivables, net | 82,470 |
Above-market leases, net | 150 |
Assets related to real estate held for sale | 39,975 |
Prepaid expenses and other assets | 22,841 |
Total assets | 1,059,049 |
Notes payable: | |
Notes payable, net | 300,780 |
Notes payable related to real estate held for sale, net | 115,827 |
Total notes payable, net | 416,607 |
Accounts payable and accrued liabilities | 68,539 |
Due to affiliate | 59 |
Below-market leases, net | 164 |
Liabilities related to real estate held for sale | 10,012 |
Other liabilities | 16,445 |
Total liabilities | 511,826 |
Commitments and contingencies (Note 10) | |
Redeemable common stock | 10,000 |
Stockholders’ equity: | |
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding | 0 |
Common stock, $.01 par value; 1,000,000,000 shares authorized, 185,302,037 shares issued and outstanding as of December 31, 2019 | 1,853 |
Additional paid-in capital | 1,662,555 |
Cumulative distributions in excess of net income | (1,127,185) |
Total stockholders’ equity | 537,223 |
Total liabilities and stockholders’ equity | $ 1,059,049 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) | Dec. 31, 2019$ / sharesshares |
Statement of Financial Position [Abstract] | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 |
Preferred stock, shares outstanding (in shares) | 0 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 |
Common stock, shares issued (in shares) | 185,302,037 |
Common stock, shares outstanding (in shares) | 185,302,037 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS $ in Thousands | 11 Months Ended |
Dec. 31, 2020USD ($) | |
Changes in Net Assets in Liquidation [Roll Forward] | |
Net assets in liquidation, beginning of period | $ 704,404 |
Changes in net assets in liquidation | |
Change in liquidation value of real estate properties after closing costs/disposition fees | (90,180) |
Change in estimated cash flow during liquidation | 4,027 |
Change in estimated capital expenditures | 24,711 |
Other changes, net | (201) |
Net decrease in liquidation value | (64,113) |
Liquidating distribution to stockholders | (258,796) |
Changes in net assets in liquidation | (322,909) |
Net assets in liquidation, end of period | $ 381,495 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||
Rental income | $ 8,107 | $ 105,287 | $ 132,452 |
Interest income from real estate loans receivable | 0 | 0 | 434 |
Other operating income | 483 | 6,825 | 9,329 |
Total revenues | 8,590 | 112,112 | 142,215 |
Expenses: | |||
Operating, maintenance, and management | 2,233 | 34,495 | 35,246 |
Real estate taxes and insurance | 1,336 | 18,128 | 19,268 |
Asset management fees to affiliate | 751 | 10,196 | 10,894 |
General and administrative expenses | 422 | 6,029 | 6,024 |
Depreciation and amortization | 2,586 | 40,889 | 50,202 |
Interest expense | 1,159 | 17,214 | 17,884 |
Impairment charges on real estate | 0 | 14,300 | 0 |
Total expenses | 8,487 | 141,251 | 139,518 |
Other income: | |||
Other interest income | 93 | 608 | 1,159 |
Loss from extinguishment of debt | (87) | (470) | (212) |
Gain on sales of real estate, net | 1,935 | 30,752 | 24,884 |
Total other income | 1,941 | 30,890 | 25,831 |
Net income | $ 2,044 | $ 1,751 | $ 28,528 |
Net income per common share, basic and diluted (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.15 |
Weighted-average number of common shares outstanding, basic and diluted (in shares) | 185,299,655 | 185,912,776 | 187,133,703 |
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, 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 | |||
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) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 2,044 | 2,044 | ||
Redemptions of common stock (in shares) | (73,817) | |||
Redemptions of common stock | (280) | $ (1) | (279) | |
Transfers from redeemable common stock | 280 | 280 | ||
Balance (in shares) at Jan. 31, 2020 | 185,228,220 | |||
Balance, value at Jan. 31, 2020 | $ 539,267 | $ 1,852 | $ 1,662,556 | $ (1,125,141) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities: | |||
Net income | $ 2,044 | $ 1,751 | $ 28,528 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 2,586 | 40,889 | 50,202 |
Impairment charges on real estate | 0 | 14,300 | 0 |
Noncash interest income on real estate-related investments | 0 | 0 | 3 |
Deferred rent | (638) | 1,003 | 3,717 |
Bad debt expense | 0 | 0 | 371 |
Amortization of above- and below-market leases, net | (3) | (72) | 1,037 |
Amortization of deferred financing costs | 115 | 1,513 | 1,272 |
Loss from extinguishment of debt | 87 | 470 | 212 |
Gain on sale of real estate, net | (1,935) | (30,752) | (24,884) |
Changes in operating assets and liabilities: | |||
Rents and other receivables | (515) | (16,709) | (38,367) |
Prepaid expenses and other assets | (1,995) | (13,942) | (8,186) |
Accounts payable and accrued liabilities | (894) | 18,861 | 34,657 |
Due to affiliate | 32 | 4 | (29) |
Other liabilities | (6,264) | (1,137) | 7,890 |
Net cash (used in) provided by operating activities | (7,380) | 16,179 | 56,423 |
Cash Flows from Investing Activities: | |||
Proceeds from sale of real estate | 302,028 | 130,283 | 94,015 |
Improvements to real estate | (2,684) | (44,807) | (34,601) |
Principal repayments on real estate loans receivable | 0 | 0 | 13,920 |
Net cash provided by investing activities | 299,344 | 85,476 | 73,334 |
Cash Flows from Financing Activities: | |||
Proceeds from notes payable | 0 | 134,350 | 375,000 |
Principal payments on notes payable | (176,687) | (134,010) | (460,765) |
Payments of deferred financing costs | 0 | (924) | (2,810) |
Payments to redeem common stock | (280) | (5,354) | (5,882) |
Distributions paid to common stockholders | 0 | (124,522) | (46,256) |
Net cash used in financing activities | (176,967) | (130,460) | (140,713) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 114,997 | (28,805) | (10,956) |
Cash, cash equivalents and restricted cash, beginning of period | 46,882 | 75,687 | 86,643 |
Cash, cash equivalents and restricted cash, end of period | 161,879 | 46,882 | 75,687 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 1,246 | 15,895 | 16,686 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||
Accrued improvements to real estate | 6,610 | 5,592 | 4,818 |
Distributions payable | $ 0 | $ 0 | $ 3,874 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2020 | |
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. As of December 31, 2020, the Company owned four office properties and an office building that is part of an office campus. 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 entered into with the Advisor (the “Advisory Agreement”). The Advisory Agreement is effective through May 21, 2021 and may be renewed for an unlimited number of one As of December 31, 2020, the Company had 184,299,500 shares of common stock issued and outstanding. On November 13, 2019, in connection with a review of potential strategic alternatives available to the Company, a special committee composed of all of the Company’s independent directors (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. The Plan of Liquidation is included as an exhibit to this Annual Report on Form 10-K. COVID-19 Pandemic One of the most significant risks and uncertainties facing the Company and the real estate industry generally continues to be the effect of the ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic. The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business and its liquidation, including how the pandemic is affecting its tenants and the Company’s ability to sell its remaining real estate properties at the times and prices it expects. During the year ended December 31, 2020, the Company did not experience significant disruptions in its operations from the COVID-19 pandemic. The Company reduced the estimated liquidation value of its real estate portfolio by $90.2 million due to changes in leasing projections across its portfolio resulting in lower projected cash flow and projected sales prices caused by the impact of the COVID-19 pandemic. Many of the Company’s tenants have experienced disruptions in their business, some more severely than others. As of December 31, 2020, the Company had granted rent relief to eight tenants as a result of the pandemic, but as the impact of the pandemic continues to be felt, these tenants or additional tenants may request rent relief in future periods or become unable to pay rent and therefore, the Company is unable to predict the ultimate impact the pandemic will have on its business and implementation of the Plan of Liquidation due to numerous uncertainties. The Company is evaluating each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor is the Company forgoing its contractual rights under its lease agreements. Further, significant reductions in rental revenue in the future related to the impact of the COVID-19 pandemic may limit the Company’s ability to draw on its portfolio loan facility due to covenants described in the Company’s loan agreements. |
PLAN OF LIQUIDATION
PLAN OF LIQUIDATION | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
PLAN OF LIQUIDATION | PLAN OF LIQUIDATION The Plan of Liquidation authorizes the Company to undertake an orderly liquidation. In an orderly liquidation, the Company will sell all of its remaining properties, pay all of its known liabilities, provide for the payment of its unknown or contingent liabilities, distribute its remaining cash to its stockholders, wind up its operations and dissolve. The Company is authorized to provide for the payment of any unascertained or contingent liabilities and may do so by purchasing insurance, by establishing a reserve fund or in other ways. The Plan of Liquidation enables the Company to sell any and all of its assets without further approval of its stockholders and provides that the amounts and timing of liquidating distributions will be determined by the Company’s board of directors or, if a liquidating trust is formed, by the trustees of the liquidating trust, in their discretion. Pursuant to applicable REIT rules, liquidating distributions the Company pays pursuant to the Plan of Liquidation will qualify for the dividends paid deduction, provided that they are paid within 24 months of the March 5, 2020 approval of the plan by the Company’s stockholders. However, if the Company cannot sell its properties and pay its debts within such time period, or if the board of directors and the Special Committee determine that it is otherwise advisable to do so, the Company may transfer and assign its remaining assets to a liquidating trust. Upon such transfer and assignment, the Company’s stockholders would receive beneficial interests in the liquidating trust. The liquidating trust would pay or provide for all of the Company’s liabilities and distribute any remaining net proceeds from liquidation to the holders of beneficial interests in the liquidating trust. If the Company is not able to sell its properties and pay its debt within the 24-month period and the remaining assets are not transferred to a liquidating trust, the distributions made during the 24 months may not qualify for the dividends paid deduction and may increase the Company’s tax liability. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
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”), including Subtopic 205-30, “Liquidation Basis of Accounting,” as indicated, and the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to the Company’s stockholders’ approval of the Plan of Liquidation, the Company adopted the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020 (as the approval of the Plan of Liquidation by the Company’s stockholders became imminent within the first week of February 2020 based on the results of the Company’s solicitation of proxies from its stockholders for their approval of the Plan of Liquidation). Accordingly, on February 1, 2020, assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash that the Company will collect through the disposal of assets as it carries out the Plan of Liquidation. The liquidation values of the Company’s remaining real estate properties are presented on an undiscounted basis. Estimated costs to dispose of assets and estimated capital expenditures through the anticipated disposition date of the properties have been presented separately from the related assets. Liabilities are carried at their contractual amounts due or estimated settlement amounts. The Company accrues costs and income that it expects to incur and earn through the completion of its liquidation, including the estimated amount of cash the Company expects to collect through the disposal of its assets and the estimated costs to dispose of its assets, to the extent it has a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Actual costs and income may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. See Note 2, “Plan of Liquidation” and Note 4, “Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation” for further discussion. Actual costs incurred but unpaid as of December 31, 2020 are included in accounts payable and accrued liabilities, due to affiliates and other liabilities on the Consolidated Statement of Net Assets. Net assets in liquidation represents the remaining estimated liquidation value available to stockholders upon liquidation. Due to the uncertainty in the timing of the sale of the Company's remaining real estate properties and the estimated cash flows from operations, actual liquidation costs and sale proceeds may differ materially from the amounts estimated. All financial results and disclosures through January 31, 2020, prior to the adoption of the liquidation basis of accounting, are presented on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business. As a result, the balance sheet as of December 31, 2019, the statements of operations, the statements of stockholders’ equity and the statements of cash flows for the month ended January 31, 2020 and the years ended December 31, 2019 and 2018 are presented using the going concern basis of accounting. Under the going concern basis of accounting, the Company’s consolidated financial statements included its accounts and the accounts of KBS REIT Holdings II, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions were 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 year ended December 31, 2018, the Company reclassified $10.6 million of tenant reimbursement revenue for property taxes, insurance, and common area maintenance to rental income for comparability purposes. Revenue Recognition - Operating Leases Liquidation Basis of Accounting Under the liquidation basis of accounting, the Company has accrued all income that it expects to earn through the completion of its liquidation to the extent it has a reasonable basis for estimation. Revenue from tenants is estimated based on the contractual in-place leases and projected leases through the anticipated disposition date of the property. These amounts are classified in liabilities for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Going Concern Basis 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 were reported under the lease accounting standards of Topic 840 until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020. In accordance with Topic 842, tenant reimbursements for property taxes and insurance were included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore were accounted for as variable lease payments and were recorded as rental income on the Company’s statement of operations beginning January 1, 2019 until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020. 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 were also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations beginning January 1, 2019 until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020. Until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020, the Company recognized 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 was probable and recorded amounts expected to be received in later years as deferred rent receivable. If the lease provided for tenant improvements, the Company determined whether the tenant improvements, for accounting purposes, were owned by the tenant or the Company. When the Company was the owner of the tenant improvements, the tenant was not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements were substantially completed. When the tenant was 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 was funded was 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 made a determination of whether the collectibility of the lease payments in an operating lease was probable. If the Company determined the lease payments were not probable of collection, the Company fully reserved for any contractual lease payments, deferred rent receivable, and variable lease payments and recognized rental income only if cash was received. Beginning January 1, 2019, these changes to the Company’s collectibility assessment were 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, were recorded in operating, maintenance, and management expense in the statement of operations. Beginning January 1, 2019, the Company, as a lessor, recorded 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 classified such costs as operating, maintenance, and management expense on the Company’s consolidated statement of operations, as these costs were no longer capitalizable under the definition of initial direct costs under Topic 842. Sales of Real Estate 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 determined it did not have a controlling financial interest in the entity that held the asset and the arrangement met the criteria to be accounted for as a contract, the Company derecognized the asset and recognized a gain or loss on the sale of the real estate when control of the underlying asset transferred 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 recognized interest income on its cash and cash equivalents as it was earned and classified such amounts as other interest income. Real Estate Liquidation Basis of Accounting As of February 1, 2020, the Company’s investments in real estate were adjusted to their estimated net realizable value, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash that the Company will collect through the disposal of its assets, including any residual value attributable to lease intangibles, as it carries out the Plan of Liquidation. As of December 31, 2020, the Company estimated the liquidation value of its investments in real estate based on internal valuation methodologies using a combination of the direct capitalization approach, sales comparison approach and discounted cash flow analyses and relied primarily on discounted cash flow analyses for the estimated liquidation value for each of the four office properties and relied on a sales comparison approach for the office building that is part of an office campus, which was vacant. The liquidation values of the Company’s investments in real estate are presented on an undiscounted basis and investments in real estate are no longer depreciated. Estimated costs to dispose of these investments are carried at their contractual amounts due or estimated settlement amounts and are presented separately from the related assets. Subsequent to February 1, 2020, all changes in the estimated liquidation value of the investments in real estate are reflected as a change to the Company’s net assets in liquidation. Going Concern Basis 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 considered 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 estimated useful lives of its assets by class to be generally as follows: Land N/A 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 monitored 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 suggested that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assessed the recoverability by estimating whether the Company would 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 did not believe that it would be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company recorded an impairment loss to the extent that the carrying value exceeded the estimated fair value of the real estate and related intangible assets and liabilities. Cash and Cash Equivalents The Company considered 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 were stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2020. 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 was comprised of lender impound reserve accounts on the Company’s borrowings for capital improvements and replacements. Rents and Other Receivables Liquidation Basis of Accounting In accordance with the liquidation basis of accounting, as of February 1, 2020, rents and other receivables were adjusted to their net realizable value. The Company periodically evaluates the collectibility of amounts due from tenants. Any changes in the collectibility of the receivables are reflected as a change to the Company’s net assets in liquidation. Going Concern Basis The Company made a determination of whether the collectibility of the lease payments in its operating leases was probable. If the Company determined the lease payments were not probable of collection, the Company fully reserved for any outstanding rent receivables related to contractual lease payments and variable leases payments, wrote-off any deferred rent receivable and recognized rental income only if cash was received. The Company exercised judgment in assessing collectibility and considered payment history, current credit status, the tenant’s financial condition, security deposits, letters of credit, lease guarantees and current market conditions that may impact the tenant’s ability to make payments in accordance with its lease agreements in making the determination. Accrued Liquidation Costs In accordance with the liquidation basis of accounting, the Company accrues for certain estimated liquidation costs to the extent it has a reasonable basis for estimation. These consist of legal fees, dissolution costs, final audit/tax costs, insurance, and distribution processing costs. Deferred Financing Costs Prior to the adoption of the liquidation basis of accounting, deferred financing costs represented commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and were presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs were amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs were generally expensed when the associated debt was refinanced or repaid before maturity unless specific rules were met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability was recognized were included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that did not close were expensed in the period in which it was determined that the financing would not close. 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. The Company does not expect to have funds available for ordinary redemptions in the future. In connection with the approval by the Company’s stockholders of the Plan of Liquidation, on March 5, 2020, the Company’s board of directors approved the Tenth Amended and Restated Share Redemption Program (the “Amended Share Redemption Program”). The Amended Share Redemption Program became effective on March 20, 2020. Prior to effectiveness of the Amended Share Redemption Program, the redemption price for redemptions made in connection with a Special Redemption was equal to the most recent estimated value per share of the Company’s common stock as of the redemption date. 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 for certain items for which estimated values were adjusted subsequent to September 30, 2019. The change in redemption price became effective for the November 2019 redemption date, which was November 29, 2019, and was effective through the February 2020 redemption date, which was February 28, 2020. The Amended Share Redemption Program changed the redemption price per share of the Company’s common stock eligible for Special Redemptions to take into account the estimated range of liquidating distributions as disclosed in the Company’s Definitive Proxy Statement, filed with the SEC on December 9, 2019, and any liquidating distributions declared by the Company’s board of directors. The Amended Share Redemption Program set 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. Pursuant to the Plan of Liquidation, on March 5, 2020, the Company’s board of directors authorized an initial liquidating distribution on the outstanding shares of the Company’s common stock to the Company’s stockholders of record as of the close of business on March 5, 2020 (the “Initial Liquidating Distribution”) with the amount per share of the Initial Liquidating Distribution equal to $0.75. The Initial Liquidating Distribution was paid on March 10, 2020. Therefore, effective commencing with the March 31, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.87, which was effective through the May 29, 2020 redemption date. On June 15, 2020, the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $2.66, effective June 9, 2020 (the “June 2020 Estimated Value Per Share”). In connection with the approval of the June 2020 Estimated Value Per Share, on June 15, 2020, the Company’s board of directors approved the Eleventh Amended and Restated Share Redemption Program (the “11th Amended Share Redemption Program”), which became effective on June 30, 2020. The 11th Amended Share Redemption Program sets the redemption price per share of the Company’s common stock eligible for redemption at the Company’s most recent estimated value per share as of the applicable redemption date, provided that if the Company’s board of directors has declared liquidating distributions on such share with a record date prior to the applicable redemption date for such share and the most recent estimated value per share has not been updated to reflect the reduction for such liquidating distributions, then the redemption price per share will be reduced to reflect the amount of such liquidating distributions. Thus, effective commencing with the June 30, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.66, which was effective through the July 31, 2020 redemption date. On July 31, 2020, in connection with the authorization of a second liquidating distribution in the amount of $0.25 per share of common stock to the Company’s stockholders of record as of the close of business on August 3, 2020 (the “Second Liquidating Distribution”), the Company’s board of directors approved an updated estimated value per share of Company’s common stock of $2.41, effective August 7, 2020. Therefore, effective commencing with the August 31, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.41, which was effective through the November 30, 2020 redemption date. On December 24, 2020, in connection with the authorization of a third liquidating distribution in the amount of $0.40 per share of common stock to the Company’s stockholders of record as of the close of business on December 24, 2020 (the “Third Liquidating Distribution”), the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $2.01, effective December 30, 2020. Therefore, effective commencing with the December 31, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.01 and was effective until the redemption price was updated on March 11, 2021. See Note 11, “Subsequent Events.” 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. For the year ended December 31, 2020, the Company redeemed 1,002,536 shares for $2.7 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 2020 redemption date. Going Concern Basis The Company recorded amounts that were redeemable under the share redemption program as redeemable common stock in the accompanying consolidated balance sheet because the shares were mandatorily redeemable at the option of the holder and therefore their redemption was 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 presented the amounts available for future redemptions in future periods as redeemable common stock in the accompanying consolidated balance sheet. The Company classified financial instruments that represented 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 determined it had a mandatory obligation to redeem shares under the share redemption program, it reclassified such obligations from temporary equity to a liability based upon their respective settlement values. 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 KBS Capital Markets Group LLC (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 |
LIABILITIES FOR ESTIMATED COSTS
LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION | 12 Months Ended |
Dec. 31, 2020 | |
Liability during Liquidation [Abstract] | |
LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION | LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Plan of Liquidation. As of December 31, 2020, the Company estimated that it will have costs in excess of estimated receipts during the liquidation process. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, estimates of tenant improvement costs and capital expenditures, the timing of property sales, direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding down of operations. These costs are estimated and are anticipated to be paid out over the liquidation period. Upon transition to the liquidation basis of accounting on February 1, 2020, the Company accrued the following revenues and expenses expected to be incurred during liquidation (in thousands): As of February 1, 2020 Rental income $ 77,940 Other operating income 7,650 Operating, maintenance, and management (31,311) Real estate taxes and insurance (11,254) Asset management fees due to affiliate (7,883) General and administrative expenses (11,810) Interest expense (9,000) Other interest income 3,448 Liquidating transaction costs (3,500) Capital expenditures (146,524) Liabilities for estimated costs in excess of estimated receipts during liquidation $ (132,244) The change in the liabilities for estimated costs in excess of estimated receipts during liquidation as of December 31, 2020 is as follows (in thousands): February 1, 2020 Cash Payments Remeasurement of December 31, 2020 Assets: Estimated net inflows from investments in real estate $ 34,025 $ (30,312) $ 8,954 $ 12,667 34,025 (30,312) 8,954 12,667 Liabilities: Liquidation transaction costs (3,500) 740 — (2,760) Corporate expenditures (16,245) 9,706 (4,927) (11,466) Capital expenditures (146,524) 50,844 24,711 (70,969) (166,269) 61,290 19,784 (85,195) Total liabilities for estimated costs in excess of estimated receipts during liquidation $ (132,244) $ 30,978 $ 28,738 $ (72,528) |
NET ASSETS IN LIQUIDATION
NET ASSETS IN LIQUIDATION | 12 Months Ended |
Dec. 31, 2020 | |
Assets in Liquidation [Abstract] | |
NET ASSETS IN LIQUIDATION | NET ASSETS IN LIQUIDATION Net assets in liquidation decreased by approximately $322.9 million during the 11 months ended December 31, 2020 as follows (in thousands): For the Period from Changes in net assets in liquidation Change in liquidation value of real estate properties after closing costs/disposition fees $ (90,180) Change in estimated cash flow during liquidation 4,027 Change in estimated capital expenditures 24,711 Redemptions (2,470) Other changes, net (201) Net decrease in liquidation value (64,113) Liquidating distribution to stockholders (258,796) Changes in net assets in liquidation $ (322,909) Pursuant to the Plan of Liquidation, from February 1, 2020 through December 31, 2020, the Company’s board of directors authorized three liquidating distributions as follows, which were the largest component of the decline in net assets in liquidation: • On March 5, 2020, the Company’s board of directors authorized the 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, for an aggregate cash distribution of approximately $138.9 million. The Initial Liquidating Distribution was paid on March 10, 2020 and was funded with proceeds from the sale of the Campus Drive Buildings. • On July 31, 2020, the Company’s board of directors authorized the Second Liquidating Distribution in the amount of $0.25 per share of common stock to the Company’s stockholders of record as of the close of business on August 3, 2020, for an aggregate cash distribution of approximately $46.2 million. The Second Liquidating Distribution was paid on August 7, 2020 and was funded with proceeds from the sale of two office buildings in Corporate Technology Centre - 100 Headquarters and 200 Holger. • On December 24, 2020, the Company’s board of directors authorized the Third Liquidating Distribution in the amount of $0.40 per share of common stock to the Company’s stockholders of record as of the close of business on December 24, 2020, for an aggregate cash distribution of approximately $73.7 million. The Third Liquidating Distribution was paid on December 30, 2020 and was funded with proceeds from the sale of two office buildings in Corporate Technology Centre - 250 Holger and 350 Holger. The estimated net realizable value of real estate decreased by $90.2 million during the 11 months ended December 31, 2020, which was primarily driven by the Company’s investment in an office building located in Los Angeles, California (the “Union Bank Plaza”) and an office property located in Denver, Colorado (“Granite Tower”), as follows: • Union Bank Plaza –The estimated net proceeds from the sale of the Union Bank Plaza decreased by approximately $57.5 million primarily due to changes in leasing projections and related capital investments to account for a longer lease-up period and lower projected rental rates caused by COVID-19. As of December 31, 2020, the Union Bank Plaza was 72% leased and due to the amount of vacancy, its valuation or projected sales price is more sensitive to the disruption caused by COVID-19 as compared to a fully stabilized property. Additionally, the valuation or projected sales price was adjusted to increase the terminal capitalization rates and discount rate to account for the increased risk and uncertainty in the current environment. • Granite Tower – The estimated net proceeds from the sale of Granite Tower decreased by approximately $24.3 million due to changes in leasing projections and related capital investments to account for a longer lease-up period and lower projected rental rates caused by COVID-19. Granite Tower is further impacted by the deteriorating oil and gas industry as its anchor tenant that occupies approximately 50% of the building square footage as of December 31, 2020 is engaged in the exploration and production of oil and gas. The valuation or projected sales price was adjusted to increase the terminal capitalization rates and discount rate to account for the increased risk and uncertainty in the current environment caused by COVID-19 and the deteriorating oil and gas industry. As of December 31, 2020, Granite Tower was 82% leased. • Other Properties – The estimated net proceeds from the sales of the Company’s other real estate properties were adjusted to increase the terminal capitalization rates and discount rates to account for the increased risk and uncertainty caused by COVID-19 resulting in a net reduction in the aggregate estimated net proceeds from sales of $8.4 million. The net assets in liquidation as of December 31, 2020 would result in the payment of additional estimated liquidating distributions of approximately $2.07 per share of common stock to the Company’s stockholders of record as of December 31, 2020. This estimate of additional liquidating distributions includes projections of costs and expenses to be incurred during the estimated period required to complete the Plan of Liquidation. There is inherent uncertainty with these estimates and projections, and they could change materially based on the timing of the sales of the Company’s remaining real estate properties, the performance of the Company’s remaining assets and any changes in the underlying assumptions of the projected cash flows from such properties. See Note 2, “Plan of Liquidation.” |
REAL ESTATE
REAL ESTATE | 12 Months Ended |
Dec. 31, 2020 | |
Real Estate [Abstract] | |
REAL ESTATE | REAL ESTATE As of December 31, 2020, the Company’s real estate investments were composed of four office properties and an office building that is part of an office campus, encompassing in the aggregate approximately 2.4 million rentable square feet. As of December 31, 2020, the Company’s real estate portfolio was 73% occupied. As of December 31, 2020, the Company’s liquidation value of real estate was $698.5 million, exclusive of net operating income to be earned and projected capital expenditures to be incurred over the expected hold period through sale. As a result of adopting the liquidation basis of accounting as of February 1, 2020, as of December 31, 2020, real estate properties were recorded at their estimated liquidation value, which represents the estimated gross amount of cash that the Company will collect through the sale of its real estate properties owned as of December 31, 2020 as it carries out its Plan of Liquidation. Real Estate Sales 100 & 200 Campus Drive Buildings and 300-600 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”). 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 of $3.1 million. In connection with the disposition of the properties, the Company repaid $136.1 million of the outstanding principal balance due under its Portfolio Loan Facility and the properties 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 membership interests in the Property Owners to repay the entire outstanding principal balance of $40.6 million due under the Corporate Centre Technology Mortgage Loan. See Note 7, “Notes Payable.” Corporate Technology Centre - 100 Headquarters, 200 Holger, 250 Holger & 350 Holger On March 28, 2013, the Company, through an indirect wholly owned subsidiary, acquired an office campus consisting of eight office buildings totaling 610,083 rentable square feet located on approximately 32.7 acres of land in San Jose, California (“Corporate Technology Centre”). In 2018, the Company completed the sale of three office buildings in Corporate Technology Centre to three separate purchasers unaffiliated with the Company or the Advisor. On June 25, 2020, the Company completed the sale of two office buildings in Corporate Technology Centre containing 46,070 rentable square feet (“100 Headquarters”) and 96,640 rentable square feet (“200 Holger”), respectively, to a purchaser unaffiliated with the Company or its Advisor, for $95.2 million, or $68.5 million net of credits given to the purchaser primarily for outstanding tenant improvements and lease incentives, before third-party closing costs of approximately $0.9 million and excluding disposition fees payable to the Advisor of $0.7 million. On September 25, 2020, the Company completed the sale of one office building in Corporate Technology Centre containing 76,410 rentable square feet (“250 Holger”) to a purchaser unaffiliated with the Company or the Advisor, for $38.3 million, or $30.2 million net of credits given to the purchaser primarily for outstanding tenant improvements, before third-party closing costs of approximately $0.7 million and excluding disposition fees payable to the Advisor of $0.4 million. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of December 31, 2020 and 2019, the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of Book Value as of Contractual Interest Rate as of December 31, 2020 (1) Effective Interest Rate as of December 31, 2020 (1) Payment Maturity Date (2) Corporate Technology Centre Mortgage Loan (3) $ — $ 40,564 (3) (3) (3) (3) Portfolio Loan Facility (4) 145,170 281,293 One-month LIBOR + 1.45% 1.6% Interest Only 03/29/2021 Granite Tower Mortgage Loan (5) 95,350 95,350 One-month LIBOR + 1.65% 1.8% (5) 09/01/2023 Total notes payable principal outstanding $ 240,520 $ 417,207 Deferred financing costs, net (6) — (600) Total notes payable, net $ 240,520 $ 416,607 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2020. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2020, using interest rate indices as of December 31, 2020, where applicable. (2) Represents the initial maturity date or the maturity date as extended as of December 31, 2020; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) On January 23, 2020, the Company repaid the outstanding principal and accrued interest due under the Corporate Technology Centre Mortgage Loan. (4) As of December 31, 2020, the Portfolio Loan Facility was secured by Willow Oaks Corporate Center, Union Bank Plaza and Fountainhead Plaza. As of December 31, 2020, $145.2 million of term debt of the Portfolio Loan Facility was outstanding and $48.4 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, 2020, there is a one (5) As of December 31, 2020, $95.4 million had been disbursed to the Company with the remaining loan balance of $49.6 million available for future disbursements, subject to certain conditions set forth in the loan agreement. Monthly payments are initially interest-only. Beginning on January 1, 2022, monthly payments for the Granite Tower Mortgage Loan will begin to include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity. (6) As described in Note 3, “Summary of Significant Accounting Policies - Principles of Consolidation and Basis of Presentation,” on February 1, 2020, the Company adopted the liquidation basis of accounting which requires the Company to record notes payable at their contractual amounts. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSThe 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, 2018, the Company, together with 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 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 2020, the Company renewed its participation in the program. The program is effective through June 30, 2021. During the years ended December 31, 2020, 2019 and 2018, 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, 2020, 2019 and 2018, respectively, and any related amounts payable as of December 31, 2020 and 2019 (in thousands): Incurred Payable as of 2020 2019 2018 2020 2019 Expensed Asset management fees (1) $ 6,605 $ 10,196 $ 10,894 $ — $ — Reimbursement of operating expenses (2) 399 325 373 49 59 Disposition fees (3) 4,653 1,334 972 — — $ 11,657 $ 11,855 $ 12,239 $ 49 $ 59 _____________________ (1) During the month ended January 31, 2020, asset management fees were $0.8 million and were presented on a going concern basis. Asset management fees incurred for the 11 months ended December 31, 2020 were $5.8 million. (2) 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 $288,000, $232,000, and $244,000 for the years ended December 31, 2020, 2019 and 2018, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2020, 2019 and 2018. 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. During the month ended January 31, 2020, reimbursable operating expenses were $31,000 as presented on a going concern basis. Reimbursable operating expenses incurred for the 11 months ended December 31, 2020 were $368,000. (3) 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 presented on a going concern basis for the month ended January 31, 2020. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2020 | |
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 month ended January 31, 2020 and the year ended December 31, 2019 (in thousands, except per share amounts): Month Ended January 31, 2020 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 8,590 $ 29,882 $ 27,674 $ 26,423 $ 28,133 Net income (loss) 2,044 (4,900) 26,778 (19,492) (635) Net income (loss) per common share, basic and diluted 0.01 (0.03) 0.14 (0.10) — Distributions declared per common share (1) — 0.062 0.512 0.056 0.019 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
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 execution of the Plan of Liquidation; 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, 2020. Legal Matters |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Updated Estimated Value Per Share On March 11, 2021, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $2.07 based on the Company’s net assets in liquidation, divided by the number of shares outstanding, all as of December 31, 2020. For a description of the methodologies and assumptions used in the determination of the estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” in this Annual Report on Form 10-K. Share Redemption Program |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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”), including Subtopic 205-30, “Liquidation Basis of Accounting,” as indicated, and the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to the Company’s stockholders’ approval of the Plan of Liquidation, the Company adopted the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020 (as the approval of the Plan of Liquidation by the Company’s stockholders became imminent within the first week of February 2020 based on the results of the Company’s solicitation of proxies from its stockholders for their approval of the Plan of Liquidation). Accordingly, on February 1, 2020, assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash that the Company will collect through the disposal of assets as it carries out the Plan of Liquidation. The liquidation values of the Company’s remaining real estate properties are presented on an undiscounted basis. Estimated costs to dispose of assets and estimated capital expenditures through the anticipated disposition date of the properties have been presented separately from the related assets. Liabilities are carried at their contractual amounts due or estimated settlement amounts. The Company accrues costs and income that it expects to incur and earn through the completion of its liquidation, including the estimated amount of cash the Company expects to collect through the disposal of its assets and the estimated costs to dispose of its assets, to the extent it has a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Actual costs and income may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. See Note 2, “Plan of Liquidation” and Note 4, “Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation” for further discussion. Actual costs incurred but unpaid as of December 31, 2020 are included in accounts payable and accrued liabilities, due to affiliates and other liabilities on the Consolidated Statement of Net Assets. Net assets in liquidation represents the remaining estimated liquidation value available to stockholders upon liquidation. Due to the uncertainty in the timing of the sale of the Company's remaining real estate properties and the estimated cash flows from operations, actual liquidation costs and sale proceeds may differ materially from the amounts estimated. |
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 year ended December 31, 2018, the Company reclassified $10.6 million of tenant reimbursement revenue for property taxes, insurance, and common area maintenance to rental income for comparability purposes. |
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 were reported under the lease accounting standards of Topic 840 until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020. In accordance with Topic 842, tenant reimbursements for property taxes and insurance were included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore were accounted for as variable lease payments and were recorded as rental income on the Company’s statement of operations beginning January 1, 2019 until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020. 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 were also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations beginning January 1, 2019 until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020. Until the Company’s adoption of the liquidation basis of accounting as of and for the periods subsequent to February 1, 2020, the Company recognized 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 was probable and recorded amounts expected to be received in later years as deferred rent receivable. If the lease provided for tenant improvements, the Company determined whether the tenant improvements, for accounting purposes, were owned by the tenant or the Company. When the Company was the owner of the tenant improvements, the tenant was not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements were substantially completed. When the tenant was 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 was funded was 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 made a determination of whether the collectibility of the lease payments in an operating lease was probable. If the Company determined the lease payments were not probable of collection, the Company fully reserved for any contractual lease payments, deferred rent receivable, and variable lease payments and recognized rental income only if cash was received. Beginning January 1, 2019, these changes to the Company’s collectibility assessment were 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, were recorded in operating, maintenance, and management expense in the statement of operations. Beginning January 1, 2019, the Company, as a lessor, recorded 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 classified such costs as operating, maintenance, and management expense on the Company’s consolidated statement of operations, as these costs were no longer capitalizable under the definition of initial direct costs under Topic 842. |
Sale of Real Estate | 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) |
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 recognized interest income on its cash and cash equivalents as it was earned and classified such amounts as other interest income. The Company considered 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 were stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2020. 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 considered 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 estimated useful lives of its assets by class to be generally as follows: Land N/A 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 monitored 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 suggested that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assessed the recoverability by estimating whether the Company would 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 did not believe that it would be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company recorded an impairment loss to the extent that the carrying value exceeded the estimated fair value of the real estate and related intangible assets and liabilities. |
Restricted Cash | Restricted cash was comprised of lender impound reserve accounts on the Company’s borrowings for capital improvements and replacements. |
Rents and Other Receivables | Liquidation Basis of Accounting In accordance with the liquidation basis of accounting, as of February 1, 2020, rents and other receivables were adjusted to their net realizable value. The Company periodically evaluates the collectibility of amounts due from tenants. Any changes in the collectibility of the receivables are reflected as a change to the Company’s net assets in liquidation. Going Concern Basis |
Accrued Liquidation Costs Policy | In accordance with the liquidation basis of accounting, the Company accrues for certain estimated liquidation costs to the extent it has a reasonable basis for estimation. These consist of legal fees, dissolution costs, final audit/tax costs, insurance, and distribution processing costs. |
Deferred Financing Costs | Prior to the adoption of the liquidation basis of accounting, deferred financing costs represented commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and were presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs were amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs were generally expensed when the associated debt was refinanced or repaid before maturity unless specific rules were met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability was recognized were included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that did not close were expensed in the period in which it was determined that the financing would not close. |
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. The Company does not expect to have funds available for ordinary redemptions in the future. In connection with the approval by the Company’s stockholders of the Plan of Liquidation, on March 5, 2020, the Company’s board of directors approved the Tenth Amended and Restated Share Redemption Program (the “Amended Share Redemption Program”). The Amended Share Redemption Program became effective on March 20, 2020. Prior to effectiveness of the Amended Share Redemption Program, the redemption price for redemptions made in connection with a Special Redemption was equal to the most recent estimated value per share of the Company’s common stock as of the redemption date. 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 for certain items for which estimated values were adjusted subsequent to September 30, 2019. The change in redemption price became effective for the November 2019 redemption date, which was November 29, 2019, and was effective through the February 2020 redemption date, which was February 28, 2020. The Amended Share Redemption Program changed the redemption price per share of the Company’s common stock eligible for Special Redemptions to take into account the estimated range of liquidating distributions as disclosed in the Company’s Definitive Proxy Statement, filed with the SEC on December 9, 2019, and any liquidating distributions declared by the Company’s board of directors. The Amended Share Redemption Program set 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. Pursuant to the Plan of Liquidation, on March 5, 2020, the Company’s board of directors authorized an initial liquidating distribution on the outstanding shares of the Company’s common stock to the Company’s stockholders of record as of the close of business on March 5, 2020 (the “Initial Liquidating Distribution”) with the amount per share of the Initial Liquidating Distribution equal to $0.75. The Initial Liquidating Distribution was paid on March 10, 2020. Therefore, effective commencing with the March 31, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.87, which was effective through the May 29, 2020 redemption date. On June 15, 2020, the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $2.66, effective June 9, 2020 (the “June 2020 Estimated Value Per Share”). In connection with the approval of the June 2020 Estimated Value Per Share, on June 15, 2020, the Company’s board of directors approved the Eleventh Amended and Restated Share Redemption Program (the “11th Amended Share Redemption Program”), which became effective on June 30, 2020. The 11th Amended Share Redemption Program sets the redemption price per share of the Company’s common stock eligible for redemption at the Company’s most recent estimated value per share as of the applicable redemption date, provided that if the Company’s board of directors has declared liquidating distributions on such share with a record date prior to the applicable redemption date for such share and the most recent estimated value per share has not been updated to reflect the reduction for such liquidating distributions, then the redemption price per share will be reduced to reflect the amount of such liquidating distributions. Thus, effective commencing with the June 30, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.66, which was effective through the July 31, 2020 redemption date. On July 31, 2020, in connection with the authorization of a second liquidating distribution in the amount of $0.25 per share of common stock to the Company’s stockholders of record as of the close of business on August 3, 2020 (the “Second Liquidating Distribution”), the Company’s board of directors approved an updated estimated value per share of Company’s common stock of $2.41, effective August 7, 2020. Therefore, effective commencing with the August 31, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.41, which was effective through the November 30, 2020 redemption date. On December 24, 2020, in connection with the authorization of a third liquidating distribution in the amount of $0.40 per share of common stock to the Company’s stockholders of record as of the close of business on December 24, 2020 (the “Third Liquidating Distribution”), the Company’s board of directors approved an updated estimated value per share of the Company’s common stock of $2.01, effective December 30, 2020. Therefore, effective commencing with the December 31, 2020 redemption date, the redemption price for all shares eligible for redemption was equal to $2.01 and was effective until the redemption price was updated on March 11, 2021. See Note 11, “Subsequent Events.” 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. For the year ended December 31, 2020, the Company redeemed 1,002,536 shares for $2.7 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 2020 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 KBS Capital Markets Group LLC (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. The Company reimburses the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. 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, 2020. As of December 31, 2020, returns for the calendar years 2016 through 2019 remain subject to examination by major tax jurisdictions. |
Per Share Data | Basic net income (loss) per share of common stock was 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 equaled basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the month ended January 31, 2020 and the years ended December 31, 2019 and 2018, 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 and $0.245 in the aggregate for the years ended December 31, 2019 and 2018, 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 2018 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. Pursuant to the Plan of Liquidation, on March 5, 2020, the Company’s board of directors authorized the 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. On July 31, 2020, the Company’s board of directors authorized the Second Liquidating Distribution in the amount of $0.25 per share of common stock to the Company’s stockholders of record as of the close of business on August 3, 2020, and on December 24, 2020, the Company’s board of directors authorized the Third Liquidating Distribution in the amount of $0.40 per share of common stock to the Company’s stockholders of record as of the close of business on December 24, 2020. |
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 used to describe real estate investments included in these notes to the consolidated financial statements are presented on an unaudited basis. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Life | The Company estimated useful lives of its assets by class to be generally as follows: Land N/A 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 |
LIABILITIES FOR ESTIMATED COS_2
LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Liability during Liquidation [Abstract] | |
Schedule of Revenues and Expenses Expected to be Incurred during Liquidation | Upon transition to the liquidation basis of accounting on February 1, 2020, the Company accrued the following revenues and expenses expected to be incurred during liquidation (in thousands): As of February 1, 2020 Rental income $ 77,940 Other operating income 7,650 Operating, maintenance, and management (31,311) Real estate taxes and insurance (11,254) Asset management fees due to affiliate (7,883) General and administrative expenses (11,810) Interest expense (9,000) Other interest income 3,448 Liquidating transaction costs (3,500) Capital expenditures (146,524) Liabilities for estimated costs in excess of estimated receipts during liquidation $ (132,244) |
Summary of Changes in Liquidation Accrual of Company | The change in the liabilities for estimated costs in excess of estimated receipts during liquidation as of December 31, 2020 is as follows (in thousands): February 1, 2020 Cash Payments Remeasurement of December 31, 2020 Assets: Estimated net inflows from investments in real estate $ 34,025 $ (30,312) $ 8,954 $ 12,667 34,025 (30,312) 8,954 12,667 Liabilities: Liquidation transaction costs (3,500) 740 — (2,760) Corporate expenditures (16,245) 9,706 (4,927) (11,466) Capital expenditures (146,524) 50,844 24,711 (70,969) (166,269) 61,290 19,784 (85,195) Total liabilities for estimated costs in excess of estimated receipts during liquidation $ (132,244) $ 30,978 $ 28,738 $ (72,528) |
NET ASSETS IN LIQUIDATION (Tabl
NET ASSETS IN LIQUIDATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Assets in Liquidation [Abstract] | |
Schedule of Change in Net Assets in Liquidation | Net assets in liquidation decreased by approximately $322.9 million during the 11 months ended December 31, 2020 as follows (in thousands): For the Period from Changes in net assets in liquidation Change in liquidation value of real estate properties after closing costs/disposition fees $ (90,180) Change in estimated cash flow during liquidation 4,027 Change in estimated capital expenditures 24,711 Redemptions (2,470) Other changes, net (201) Net decrease in liquidation value (64,113) Liquidating distribution to stockholders (258,796) Changes in net assets in liquidation $ (322,909) |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | As of December 31, 2020 and 2019, the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of Book Value as of Contractual Interest Rate as of December 31, 2020 (1) Effective Interest Rate as of December 31, 2020 (1) Payment Maturity Date (2) Corporate Technology Centre Mortgage Loan (3) $ — $ 40,564 (3) (3) (3) (3) Portfolio Loan Facility (4) 145,170 281,293 One-month LIBOR + 1.45% 1.6% Interest Only 03/29/2021 Granite Tower Mortgage Loan (5) 95,350 95,350 One-month LIBOR + 1.65% 1.8% (5) 09/01/2023 Total notes payable principal outstanding $ 240,520 $ 417,207 Deferred financing costs, net (6) — (600) Total notes payable, net $ 240,520 $ 416,607 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2020. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2020, using interest rate indices as of December 31, 2020, where applicable. (2) Represents the initial maturity date or the maturity date as extended as of December 31, 2020; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown. (3) On January 23, 2020, the Company repaid the outstanding principal and accrued interest due under the Corporate Technology Centre Mortgage Loan. (4) As of December 31, 2020, the Portfolio Loan Facility was secured by Willow Oaks Corporate Center, Union Bank Plaza and Fountainhead Plaza. As of December 31, 2020, $145.2 million of term debt of the Portfolio Loan Facility was outstanding and $48.4 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, 2020, there is a one (5) As of December 31, 2020, $95.4 million had been disbursed to the Company with the remaining loan balance of $49.6 million available for future disbursements, subject to certain conditions set forth in the loan agreement. Monthly payments are initially interest-only. Beginning on January 1, 2022, monthly payments for the Granite Tower Mortgage Loan will begin to include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity. |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2020, 2019 and 2018, respectively, and any related amounts payable as of December 31, 2020 and 2019 (in thousands): Incurred Payable as of 2020 2019 2018 2020 2019 Expensed Asset management fees (1) $ 6,605 $ 10,196 $ 10,894 $ — $ — Reimbursement of operating expenses (2) 399 325 373 49 59 Disposition fees (3) 4,653 1,334 972 — — $ 11,657 $ 11,855 $ 12,239 $ 49 $ 59 _____________________ (1) During the month ended January 31, 2020, asset management fees were $0.8 million and were presented on a going concern basis. Asset management fees incurred for the 11 months ended December 31, 2020 were $5.8 million. (2) 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 $288,000, $232,000, and $244,000 for the years ended December 31, 2020, 2019 and 2018, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2020, 2019 and 2018. 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. During the month ended January 31, 2020, reimbursable operating expenses were $31,000 as presented on a going concern basis. Reimbursable operating expenses incurred for the 11 months ended December 31, 2020 were $368,000. |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Presented below is a summary of the unaudited quarterly financial information for the month ended January 31, 2020 and the year ended December 31, 2019 (in thousands, except per share amounts): Month Ended January 31, 2020 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenues $ 8,590 $ 29,882 $ 27,674 $ 26,423 $ 28,133 Net income (loss) 2,044 (4,900) 26,778 (19,492) (635) Net income (loss) per common share, basic and diluted 0.01 (0.03) 0.14 (0.10) — Distributions declared per common share (1) — 0.062 0.512 0.056 0.019 |
ORGANIZATION (Details)
ORGANIZATION (Details) $ in Millions | 11 Months Ended | 12 Months Ended | ||||
Dec. 31, 2020USD ($)propertyshares | Dec. 31, 2020propertyshares | Jan. 31, 2020shares | Dec. 31, 2019shares | Dec. 31, 2018shares | Dec. 31, 2017shares | |
Organizational Structure [Line Items] | ||||||
Common stock, shares issued (in shares) | 184,299,500 | 184,299,500 | 185,302,037 | |||
Common stock, shares outstanding (in shares) | 184,299,500 | 184,299,500 | 185,302,037 | |||
Number of tenants with rent relief, COVID-19 | property | 8 | 8 | ||||
Office Building | ||||||
Organizational Structure [Line Items] | ||||||
Number of real estate properties | property | 4 | 4 | ||||
Office Campus, Office Building | ||||||
Organizational Structure [Line Items] | ||||||
Number of real estate properties | property | 1 | 1 | ||||
Office Properties and Office Campus | ||||||
Organizational Structure [Line Items] | ||||||
Reduction in real estate property values, COVID-19 | $ | $ 90.2 | |||||
Common Stock | ||||||
Organizational Structure [Line Items] | ||||||
Common stock, shares outstanding (in shares) | 185,228,220 | 185,302,037 | 186,464,794 | 187,666,302 | ||
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 | 20,000 | 20,000 | ||||
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% |
PLAN OF LIQUIDATION (Details)
PLAN OF LIQUIDATION (Details) - property | Mar. 05, 2020 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Period of payment activities upon plan of liquidation | 24 months | |
Percent of base rent from tenants in mining and oil and gas extraction industry | 18.00% | |
Number of tenants with rent relief, COVID-19 | 8 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Liquidation and Fees) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2020 | |
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% | |
Accounting Standards Update 2016-02 | ||
Summary of Significant Accounting Policies [Line Items] | ||
Tenant reimbursement revenue | $ 10.6 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Useful Life) (Details) | 12 Months Ended |
Dec. 31, 2020 | |
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 ($) | 12 Months Ended | |||||||||
Dec. 31, 2020 | Dec. 30, 2020 | Dec. 24, 2020 | Aug. 07, 2020 | Aug. 03, 2020 | Jun. 09, 2020 | Mar. 31, 2020 | Mar. 05, 2020 | Dec. 09, 2019 | Nov. 13, 2019 | |
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 (in dollars per share) | $ 2.01 | $ 2.41 | $ 2.66 | $ 3.79 | ||||||
Redemption price per share (in dollars per share) | $ 2.87 | |||||||||
Initial liquidating distribution (in dollars per share) | $ 0.75 | |||||||||
Second liquidation distribution (in dollars per share) | $ 0.25 | |||||||||
Third liquidation distribution (in dollars per share) | $ 0.40 | |||||||||
Common Stock | ||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||
Common stock redeemed (in shares) | 1,002,536 | |||||||||
Common stock redeemed | $ 2,700,000 | |||||||||
Common Stock | Weighted Average | ||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||
Redemption price per share (in dollars per share) | $ 3.615 | |||||||||
Common Stock | Minimum | ||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||
Redemption price per share (in dollars per share) | 3.40 | |||||||||
Common Stock | Maximum | ||||||||||
Summary of Significant Accounting Policies [Line Items] | ||||||||||
Redemption price per share (in dollars per share) | $ 3.83 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Per Share Data) (Details) - $ / shares | Jun. 17, 2019 | Jan. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
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) | $ 0 | $ 0.019 | $ 0.056 | $ 0.512 | $ 0.062 | $ 0.649 | $ 0.245 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Segments) (Details) | 12 Months Ended |
Dec. 31, 2020numberOfSegments | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
LIABILITIES FOR ESTIMATED COS_3
LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION - Revenues and Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Feb. 01, 2020 | Jan. 31, 2020 |
Item Effected [Line Items] | |||
Liabilities for estimated costs in excess of estimated receipts during liquidation | $ (72,528) | $ (132,244) | $ (132,244) |
Rental income | |||
Item Effected [Line Items] | |||
Revenues | 77,940 | ||
Other operating income | |||
Item Effected [Line Items] | |||
Revenues | 7,650 | ||
Operating, maintenance, and management | |||
Item Effected [Line Items] | |||
Expenses | (31,311) | ||
Real estate taxes and insurance | |||
Item Effected [Line Items] | |||
Expenses | (11,254) | ||
Asset management fees due to affiliate | |||
Item Effected [Line Items] | |||
Expenses | (7,883) | ||
General and administrative expenses | |||
Item Effected [Line Items] | |||
Expenses | (11,810) | ||
Interest expense | |||
Item Effected [Line Items] | |||
Expenses | (9,000) | ||
Other interest income | |||
Item Effected [Line Items] | |||
Revenues | 3,448 | ||
Liquidating transaction costs | |||
Item Effected [Line Items] | |||
Expenses | (3,500) | ||
Capital expenditures | |||
Item Effected [Line Items] | |||
Expenses | $ (146,524) |
LIABILITIES FOR ESTIMATED COS_4
LIABILITIES FOR ESTIMATED COSTS IN EXCESS OF ESTIMATED RECEIPTS DURING LIQUIDATION - Change in Liability (Details) $ in Thousands | 11 Months Ended |
Dec. 31, 2020USD ($) | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | $ (132,244) |
Cash Payments (Receipts) | 30,978 |
Remeasurement of Assets and Liabilities | 28,738 |
Ending balance | (72,528) |
Assets: | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | 34,025 |
Cash Payments (Receipts) | (30,312) |
Remeasurement of Assets and Liabilities | 8,954 |
Ending balance | 12,667 |
Estimated net inflows from investments in real estate | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | 34,025 |
Cash Payments (Receipts) | (30,312) |
Remeasurement of Assets and Liabilities | 8,954 |
Ending balance | 12,667 |
Liabilities: | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | (166,269) |
Cash Payments (Receipts) | 61,290 |
Remeasurement of Assets and Liabilities | 19,784 |
Ending balance | (85,195) |
Liquidation transaction costs | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | (3,500) |
Cash Payments (Receipts) | 740 |
Remeasurement of Assets and Liabilities | 0 |
Ending balance | (2,760) |
Corporate expenditures | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | (16,245) |
Cash Payments (Receipts) | 9,706 |
Remeasurement of Assets and Liabilities | (4,927) |
Ending balance | (11,466) |
Capital expenditures | |
Movement in Liquidation Accrual [Roll Forward] | |
Beginning balance | (146,524) |
Cash Payments (Receipts) | 50,844 |
Remeasurement of Assets and Liabilities | 24,711 |
Ending balance | $ (70,969) |
NET ASSETS IN LIQUIDATION - Add
NET ASSETS IN LIQUIDATION - Additional Information (Details) $ / shares in Units, $ in Millions | Dec. 24, 2020USD ($)$ / shares | Dec. 23, 2020property | Sep. 25, 2020property | Aug. 03, 2020USD ($)$ / shares | Jun. 25, 2020property | Mar. 05, 2020USD ($)$ / shares | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2018property |
Assets in Liquidation [Abstract] | ||||||||
Decrease in assets, net | $ 322.9 | |||||||
Initial liquidating distribution (in dollars per share) | $ / shares | $ 0.75 | |||||||
Aggregate cash distributions | $ 138.9 | |||||||
Second liquidation distribution (in dollars per share) | $ / shares | $ 0.25 | |||||||
Aggregate cash distributions, second liquidation | $ 46.2 | |||||||
Third liquidation distribution (in dollars per share) | $ / shares | $ 0.40 | |||||||
Aggregate cash distributions, third liquidation | $ 73.7 | |||||||
Additional estimated liquidation distribution (in dollars per share) | $ / shares | $ 2.07 | |||||||
Real Estate Properties [Line Items] | ||||||||
Percentage of Real Estate Portfolio Occupied | 73.00% | |||||||
Office Building | Union Bank Plaza | ||||||||
Real Estate Properties [Line Items] | ||||||||
Decrease in estimated net proceeds from sale | $ (57.5) | |||||||
Percentage of Real Estate Portfolio Occupied | 72.00% | |||||||
Office Building | Granite Tower | ||||||||
Real Estate Properties [Line Items] | ||||||||
Decrease in estimated net proceeds from sale | $ (24.3) | |||||||
Percentage of Real Estate Portfolio Occupied | 82.00% | |||||||
Percent of real estate property occupied by oil and gas industry tenants | 50.00% | |||||||
Other Properties | ||||||||
Real Estate Properties [Line Items] | ||||||||
Decrease in estimated net proceeds from sale | $ (8.4) | |||||||
Disposed of by Sale | Corporate Technology Centre | Office Building | ||||||||
Real Estate Properties [Line Items] | ||||||||
Number of real estate properties disposed | property | 1 | 1 | 2 | 3 |
NET ASSETS IN LIQUIDATION - Cha
NET ASSETS IN LIQUIDATION - Change in Liquidation Value (Details) $ in Thousands | 11 Months Ended |
Dec. 31, 2020USD ($) | |
Assets in Liquidation [Abstract] | |
Change in liquidation value of real estate properties after closing costs/disposition fees | $ (90,180) |
Change in estimated cash flow during liquidation | (4,027) |
Change in estimated capital expenditures | (24,711) |
Redemptions | 2,470 |
Other changes, net | 201 |
Net decrease in liquidation value | (64,113) |
Liquidating distribution to stockholders | 258,796 |
Changes in net assets in liquidation | $ (322,909) |
REAL ESTATE - Investments (Deta
REAL ESTATE - Investments (Details) $ in Thousands, ft² in Millions | Dec. 31, 2020USD ($)ft²property |
Real Estate Properties [Line Items] | |
Area of Real Estate Property | ft² | 2.4 |
Percentage of Real Estate Portfolio Occupied | 73.00% |
Real estate | $ | $ 698,491 |
Office Building | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 4 |
Office Campus | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 1 |
REAL ESTATE - Sale of 100 & 200
REAL ESTATE - Sale of 100 & 200 Campus Drive Buildings and 300-600 Campus Drive Buildings (Details) $ in Millions | Jan. 23, 2020USD ($) | Jan. 22, 2020USD ($) | Oct. 10, 2008aft²property | Sep. 09, 2008aft²property |
Portfolio Loan Facility | ||||
Real Estate Properties [Line Items] | ||||
Payoff of principle balance | $ 136.1 | |||
Corporate Centre Technology Mortgage Loan | ||||
Real Estate Properties [Line Items] | ||||
Payoff of principle balance | $ 40.6 | |||
Campus Drive Buildings | Disposed of by Sale | ||||
Real Estate Properties [Line Items] | ||||
Consideration | 311 | |||
Closing cost | 4.3 | |||
Campus Drive Buildings | Disposed of by Sale | Advisor (KBS Capital Advisors LLC) | ||||
Real Estate Properties [Line Items] | ||||
Disposition fees payable | $ 3.1 | |||
100 & 200 Campus Drive Buildings | Office Building | ||||
Real Estate Properties [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 | ||||
Real Estate Properties [Line Items] | ||||
Number of buildings acquired | property | 4 | |||
Net rentable area | ft² | 578,388 | |||
Area of land | a | 64.80 |
REAL ESTATE - Corporate Technol
REAL ESTATE - Corporate Technology Centre - 100 Headquarters and 200 Holger & 250 Holger and 350 Holger (Details) $ in Millions | Dec. 23, 2020USD ($)ft²property | Sep. 25, 2020USD ($)ft²property | Jun. 25, 2020USD ($)ft²property | Dec. 31, 2018property | Dec. 31, 2020property | Mar. 28, 2013aft²property |
Office Campus | ||||||
Real Estate Properties [Line Items] | ||||||
Number of real estate properties | property | 1 | |||||
Office Building | ||||||
Real Estate Properties [Line Items] | ||||||
Number of real estate properties | property | 4 | |||||
Office Building | Corporate Technology Centre | Disposed of by Sale | ||||||
Real Estate Properties [Line Items] | ||||||
Number of real estate properties disposed | property | 1 | 1 | 2 | 3 | ||
Consideration | $ | $ 50.5 | $ 38.3 | $ 95.2 | |||
Consideration, net of credits | $ | 30.2 | 68.5 | ||||
Closing cost | $ | 0.9 | 0.7 | 0.9 | |||
Office Building | Corporate Technology Centre | Disposed of by Sale | Advisor (KBS Capital Advisors LLC) | ||||||
Real Estate Properties [Line Items] | ||||||
Disposition fees payable | $ | $ 0.5 | $ 0.4 | $ 0.7 | |||
Office Building | 100 Headquarters | Disposed of by Sale | ||||||
Real Estate Properties [Line Items] | ||||||
Net rentable area | ft² | 46,070 | |||||
Office Building | 200 Holger | Disposed of by Sale | ||||||
Real Estate Properties [Line Items] | ||||||
Net rentable area | ft² | 96,640 | |||||
Office Building | 250 Holger | Disposed of by Sale | ||||||
Real Estate Properties [Line Items] | ||||||
Net rentable area | ft² | 76,410 | |||||
Office Building | 350 Holger | Disposed of by Sale | ||||||
Real Estate Properties [Line Items] | ||||||
Net rentable area | ft² | 96,502 | |||||
Corporate Technology Centre | Office Campus | ||||||
Real Estate Properties [Line Items] | ||||||
Number of real estate properties | property | 1 | |||||
Corporate Technology Centre | Office Building | ||||||
Real Estate Properties [Line Items] | ||||||
Number of real estate properties | property | 8 | |||||
Net rentable area | ft² | 610,083 | |||||
Area of land | a | 32.7 |
NOTES PAYABLE (Schedule of Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 240,520 | $ 417,207 |
Deferred financing costs, net | 0 | (600) |
Total notes payable, net | 240,520 | 416,607 |
Portfolio Loan Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | 145,200 | |
Remaining borrowing capacity | 48,400 | |
Granite Tower Mortgage Loan | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | 95,400 | |
Remaining borrowing capacity | $ 49,600 | |
Amortization schedule | 30 years | |
Mortgages | Corporate Technology Centre Mortgage Loan | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 0 | 40,564 |
Mortgages | Portfolio Loan Facility | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 145,170 | 281,293 |
Effective Interest Rate | 1.60% | |
Maturity Date | Mar. 29, 2021 | |
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 | $ 95,350 |
Effective Interest Rate | 1.80% | |
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 | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | ||||
Interest expense | $ 1,159 | $ 17,214 | $ 17,884 | |
Amortization of financing cost, net of discontinued operations | $ 100 | $ 1,500 | $ 1,300 | |
Interest payable, current | $ 400 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 1 Months Ended | 11 Months Ended | 12 Months Ended | |||
Jan. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Nov. 01, 2019 | |
Related Party Transaction [Line Items] | ||||||
Payable as of | $ 49 | $ 49 | $ 59 | |||
Administrative fees, amount paid | 288 | 232 | $ 244 | |||
Advisor and Dealer Manager | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 11,657 | 11,855 | 12,239 | |||
Payable as of | 49 | 49 | 59 | |||
Advisor and Dealer Manager | Asset Management Fees | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | $ 800 | 5,800 | 6,605 | 10,196 | 10,894 | |
Payable as of | 0 | 0 | 0 | |||
Advisor and Dealer Manager | Reimbursement of Operating Expenses | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | $ 31 | 368 | 399 | 325 | 373 | |
Payable as of | 49 | 49 | 59 | |||
Advisor and Dealer Manager | Disposition Fees | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 4,653 | 1,334 | 972 | |||
Payable as of | $ 0 | $ 0 | $ 0 | |||
Advisor (KBS Capital Advisors LLC) | Property Insurance Rebate | ||||||
Related Party Transaction [Line Items] | ||||||
Due from related parties | $ 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 | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jan. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||
Revenues | $ 8,590 | $ 28,133 | $ 26,423 | $ 27,674 | $ 29,882 | $ 112,112 | $ 142,215 |
Net income (loss) | $ 2,044 | $ (635) | $ (19,492) | $ 26,778 | $ (4,900) | $ 1,751 | $ 28,528 |
Net (loss) income per common share, basic and diluted (in dollars per share) | $ 0.01 | $ 0 | $ (0.10) | $ 0.14 | $ (0.03) | $ 0.01 | $ 0.15 |
Distributions declared per common share (in dollars per share) | $ 0 | $ 0.019 | $ 0.056 | $ 0.512 | $ 0.062 | $ 0.649 | $ 0.245 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - $ / shares | Mar. 31, 2021 | Mar. 11, 2021 | Dec. 30, 2020 | Aug. 07, 2020 | Jun. 09, 2020 | Mar. 31, 2020 | Nov. 13, 2019 |
Subsequent Event [Line Items] | |||||||
Estimated value per share of company's common stock (in dollars per share) | $ 2.01 | $ 2.41 | $ 2.66 | $ 3.79 | |||
Redemption price per share (in dollars per share) | $ 2.87 | ||||||
Common Stock | Forecast | |||||||
Subsequent Event [Line Items] | |||||||
Redemption price per share (in dollars per share) | $ 2.07 | ||||||
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Estimated value per share of company's common stock (in dollars per share) | $ 2.07 |