Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 04, 2016 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | KBS Legacy Partners Apartment REIT, Inc. | |
Entity Central Index Key | 1,469,822 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,848,950 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Real estate: | ||
Land | $ 46,828 | $ 46,828 |
Buildings and improvements | 366,490 | 365,219 |
Total real estate, cost | 413,318 | 412,047 |
Less accumulated depreciation and amortization | (44,592) | (35,713) |
Total real estate, net | 368,726 | 376,334 |
Cash and cash equivalents | 16,906 | 20,193 |
Restricted cash | 4,384 | 4,676 |
Prepaid expenses and other assets | 4,982 | 4,976 |
Total assets | 394,998 | 406,179 |
Liabilities and stockholders’ equity | ||
Notes payable, net | 280,509 | 284,488 |
Accounts payable and accrued liabilities | 5,185 | 5,236 |
Due to affiliates | 279 | 4,894 |
Distributions payable | 1,109 | 1,133 |
Other liabilities | 2,735 | 2,163 |
Total liabilities | 289,817 | 297,914 |
Commitments and contingencies (Note 7) | ||
Redeemable common stock | 411 | 894 |
Stockholders’ equity: | ||
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value; 1,000,000,000 shares authorized, 20,751,787 and 20,508,397 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 207 | 205 |
Additional paid-in capital | 178,786 | 176,476 |
Cumulative distributions and net losses | (74,223) | (69,310) |
Total stockholders’ equity | 104,770 | 107,371 |
Total liabilities and stockholders’ equity | $ 394,998 | $ 406,179 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 20,751,787 | 20,508,397 |
Common stock, shares outstanding | 20,751,787 | 20,508,397 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
Rental income | $ 11,498 | $ 11,330 | $ 34,019 | $ 33,570 |
Total revenues | 11,498 | 11,330 | 34,019 | 33,570 |
Expenses: | ||||
Operating, maintenance, and management | 1,671 | 1,915 | 4,854 | 6,914 |
Real estate taxes and insurance | 1,797 | 1,487 | 5,248 | 4,509 |
Asset management fees to affiliate | 104 | 144 | 343 | 687 |
Property management fees and expenses to affiliate | 1,506 | 1,368 | 4,359 | 2,136 |
General and administrative expenses | 473 | 485 | 1,947 | 1,697 |
Depreciation and amortization | 3,084 | 3,036 | 9,201 | 9,056 |
Interest expense | 2,588 | 2,636 | 7,758 | 7,879 |
Total expenses | 11,223 | 11,071 | 33,710 | 32,878 |
Other income: | ||||
Interest income | 13 | 4 | 41 | 13 |
Other income | 4,752 | 0 | 4,752 | 0 |
Net income | $ 5,040 | $ 263 | $ 5,102 | $ 705 |
Net income per common share, basic and diluted (in dollars per share) | $ 0.24 | $ 0.01 | $ 0.25 | $ 0.03 |
Weighted-average number of common shares outstanding, basic and diluted (in shares) | 20,718,265 | 20,322,618 | 20,601,992 | 20,206,023 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Cumulative Distributions and Net Income (Loss) [Member] |
Balance, shares at Dec. 31, 2014 | 20,084,830 | |||
Balance, value at Dec. 31, 2014 | $ 115,724 | $ 201 | $ 172,448 | $ (56,925) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 595,095 | |||
Issuance of common stock, value | 5,736 | $ 6 | 5,730 | |
Redemptions of common stock, shares | (171,528) | |||
Redemptions of common stock, value | (1,697) | $ (2) | (1,695) | |
Distributions declared | (13,176) | (13,176) | ||
Other offering costs | (7) | (7) | ||
Net income | $ 791 | 791 | ||
Balance, shares at Dec. 31, 2015 | 20,508,397 | 20,508,397 | ||
Balance, value at Dec. 31, 2015 | $ 107,371 | $ 205 | 176,476 | (69,310) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 442,104 | |||
Issuance of common stock, value | 4,324 | $ 4 | 4,320 | |
Redemptions of common stock, shares | (198,714) | |||
Redemptions of common stock, value | (2,019) | $ (2) | (2,017) | |
Distributions declared | (10,015) | (10,015) | ||
Other offering costs | 7 | 7 | ||
Net income | $ 5,102 | 5,102 | ||
Balance, shares at Sep. 30, 2016 | 20,751,787 | 20,751,787 | ||
Balance, value at Sep. 30, 2016 | $ 104,770 | $ 207 | $ 178,786 | $ (74,223) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows from Operating Activities: | ||
Net income | $ 5,102 | $ 705 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 9,201 | 9,056 |
Bad debt expense | 371 | 351 |
Loss due to property damages | 145 | 78 |
Amortization of discount on notes payable | 65 | 65 |
Amortization of deferred financing costs | 311 | 311 |
Changes in operating assets and liabilities: | ||
Restricted cash for operational expenditures | 292 | 310 |
Prepaid expenses and other assets | (709) | (949) |
Accounts payable and accrued liabilities | 159 | (744) |
Due to affiliates | (4,615) | 261 |
Other liabilities | 89 | (24) |
Net cash provided by operating activities | 10,411 | 9,420 |
Cash Flows from Investing Activities: | ||
Improvements to real estate | (1,749) | (1,745) |
Insurance proceeds received for property damage | 133 | 397 |
Net cash used in investing activities | (1,616) | (1,348) |
Cash Flows from Financing Activities: | ||
Principal payments on mortgage notes payable | (4,355) | (4,141) |
Payments to redeem common stock | (2,019) | (1,550) |
Other offering costs | 7 | (7) |
Distributions paid | (5,715) | (5,546) |
Net cash used in financing activities | (12,082) | (11,244) |
Net decrease in cash and cash equivalents | (3,287) | (3,172) |
Cash and cash equivalents, beginning of period | 20,193 | 23,878 |
Cash and cash equivalents, end of period | 16,906 | 20,706 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 7,413 | 7,534 |
Supplemental Disclosure of Noncash Transactions: | ||
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | 4,324 | 4,298 |
Increase in redeemable common stock payable | $ 483 | $ 363 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION KBS Legacy Partners Apartment REIT, Inc. (the “Company”) was formed on July 31, 2009 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010. Substantially all of the Company’s business is conducted through KBS Legacy Partners Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on August 4, 2009. The Company is the sole general partner of and owns a 0.1% partnership interest in the Operating Partnership. KBS Legacy Partners Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on August 4, 2009, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings. Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on January 25, 2016 and amended on March 15, 2016 (as amended, the “Advisory Agreement”). On August 7, 2009, the Company issued 20,000 shares of its common stock to KBS-Legacy Apartment Community REIT Venture, LLC (the “Sub-Advisor”), an affiliate of the Company, at a purchase price of $10.00 per share. As of September 30, 2016 , the Sub-Advisor owned 20,000 shares of common stock of the Company. The Company invested in and manages a portfolio of high quality apartment communities located throughout the United States. The Company’s portfolio consists of “core” apartment buildings that were already well-positioned and producing rental income at acquisition. As of September 30, 2016 , the Company owned 11 apartment complexes. On August 19, 2009, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a minimum of 250,000 shares and a maximum of 280,000,000 shares of common stock for sale to the public (the “Initial Offering”), of which 80,000,000 shares would be offered pursuant to the Company’s dividend reinvestment plan. The SEC declared the Company’s registration statement for the Initial Offering effective on March 12, 2010, and the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Company, to serve as the dealer manager for the Initial Offering pursuant to a dealer manager agreement dated March 12, 2010 (the “Initial Dealer Manager Agreement”). Under the Initial Dealer Manager Agreement, the Dealer Manager was responsible for marketing the Company’s shares being offered pursuant to the Initial Offering. On May 31, 2012, the Company filed a registration statement on Form S-11 with the SEC to register a follow-on public offering (the “Follow-on Offering” and together with the Initial Offering, the “Offerings”). Pursuant to the registration statement, as amended, the Company registered up to an additional $ 2,000,000,000 of shares of common stock for sale to the public and up to an additional $ 760,000,000 of shares of common stock pursuant to the dividend reinvestment plan. The SEC declared the Company’s registration statement for the Follow-on Offering effective on March 8, 2013. The Company retained the Dealer Manager to serve as the dealer manager for the Follow-on Offering pursuant to a dealer manager agreement dated March 8, 2013 (the “Follow-on Dealer Manager Agreement” and together with the Initial Dealer Manager Agreement, the “Dealer Manager Agreements”). On March 12, 2013, the Company ceased offering shares pursuant to the Initial Offering and on March 13, 2013, the Company commenced offering shares to the public pursuant to the Follow-on Offering. In the Initial Offering, the Company sold 18,088,084 shares of common stock for gross offering proceeds of $179.2 million , including 368,872 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $3.5 million . The Company ceased offering shares in the primary Follow-on Offering on March 31, 2014 and completed subscription processing procedures on April 30, 2014. The Company sold 1,496,198 shares of common stock in the primary Follow-on Offering for gross offering proceeds of $15.9 million . As of September 30, 2016 , the Company had sold an aggregate of 21,539,479 shares of common stock in the Offerings for gross offering proceeds of $214.5 million , including an aggregate of 2,324,069 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $23.0 million . Also, as of September 30, 2016 , the Company had redeemed 807,692 shares sold in the Offerings for $7.9 million . The Company continues to offer shares of common stock under the dividend reinvestment plan. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2015 . For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. Use of Estimates The preparation of the unaudited consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and condensed notes. Actual results could materially differ from those estimates. Reclassifications Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the three months ended June 30, 2015, the Company entered into various Property Management Agreements (defined below) with Legacy Partners, Inc., formerly known as Legacy Partners Residential, Inc. (“LPI”), an affiliate of the Sub-Advisor. See Note 6, “Related Party Transactions — Property Management Agreements.” As a result, management fees to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the Company’s real estate properties, have been reclassified from operating, maintenance and management costs to property management fees and expenses to affiliate on the accompanying consolidated statements of operations. Segments The Company had invested in 11 apartment complexes as of September 30, 2016 . Substantially all of the Company’s revenue and net income is from real estate, and therefore, the Company currently operates in one reportable segment. Square Footage, Occupancy and Other Measures Any references to square footage or occupancy are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. Per Share Data Basic net income per share of common stock is calculated by dividing net income by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income per share of common stock equals basic net income per share of common stock as there were no potentially dilutive securities outstanding during the nine months ended September 30, 2016 and 2015 , respectively. Distributions declared per common share were $0.164 and $0.486 for the three and nine months ended September 30, 2016 , respectively, and $0.164 and $0.486 for the three and nine months ended September 30, 2015 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three and nine months ended September 30, 2016 and 2015 . For the three and nine months ended September 30, 2016 and 2015 , distributions were based on daily record dates and calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2016 through February 28, 2016 and March 1, 2016 through September 30, 2016 was a record date for distributions. Each day during the period from January 1, 2015 through September 30, 2015 was a record date for distributions. Recently Issued Accounting Standards Update In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840) . ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which defers the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company is still evaluating the impact of adopting ASU No. 2014-09 on its financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40) , Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU No. 2014-15”). The amendments in ASU No. 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of ASU No. 2014-15 to have a significant impact on its financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”). The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected. ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements. ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”). ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement); (d) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements. |
REAL ESTATE
REAL ESTATE | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate [Abstract] | |
REAL ESTATE | REAL ESTATE As of September 30, 2016 , the Company owned 11 apartment complexes, containing 3,039 units and encompassing 3.1 million rentable square feet, which were 94% occupied. The following table provides summary information regarding the properties owned by the Company as of September 30, 2016 (dollars in thousands): Property Name Date Acquired Location Total Real Estate, Cost Accumulated Depreciation and Amortization Total Real Estate, Net Legacy at Valley Ranch 10/26/2010 Irving, TX $ 36,485 $ (4,995 ) $ 31,490 Poplar Creek 02/09/2012 Schaumburg, IL 27,200 (2,820 ) 24,380 The Residence at Waterstone 04/06/2012 Pikesville, MD 65,270 (7,376 ) 57,894 Legacy Crescent Park 05/03/2012 Greer, SC 20,714 (2,763 ) 17,951 Legacy at Martin’s Point 05/31/2012 Lombard, IL 37,487 (5,198 ) 32,289 Wesley Village 11/06/2012 Charlotte, NC 44,433 (4,659 ) 39,774 Watertower Apartments 01/15/2013 Eden Prairie, MN 38,722 (4,020 ) 34,702 Crystal Park at Waterford 05/08/2013 Frederick, MD 46,050 (4,758 ) 41,292 Millennium Apartment Homes 06/07/2013 Greenville, SC 33,276 (3,376 ) 29,900 Legacy Grand at Concord 02/18/2014 Concord, NC 27,855 (2,143 ) 25,712 Lofts at the Highlands 02/25/2014 St. Louis, MO 35,826 (2,484 ) 33,342 $ 413,318 $ (44,592 ) $ 368,726 Additionally, as of September 30, 2016 and December 31, 2015 , the Company had recorded unamortized tax abatement intangible assets, which are included in prepaid expenses and other assets in the accompanying balance sheets, of $3.0 million and $3.2 million , respectively. During the three and nine months ended September 30, 2016 , the Company recorded amortization expense of $65,000 and $0.2 million , respectively, related to tax abatement intangible assets. During the three and nine months ended September 30, 2015 , the Company recorded amortization expense of $65,000 and $0.2 million , respectively, related to tax abatement intangible assets. Property Damage During the nine months ended September 30, 2016 , one of the Company’s apartment complexes suffered physical damage due to frozen water pipes. The Company’s insurance policies provide coverage for property damage and business interruption subject to a deductible of up to $12,500 per incident. The Company recognized a loss due to damage of $145,000 during the nine months ended September 30, 2016 , which was reduced by a $132,500 insurance recovery related to such damage. The net loss due to damage of $12,500 during the nine months ended September 30, 2016 was classified as operating, maintenance and management expenses on the accompanying consolidated statements of operations and relates to the Company’s insurance deductible. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2016 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of September 30, 2016 and December 31, 2015 , the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of September 30, 2016 Book Value as of December 31, 2015 Contractual Interest Rate as of September 30, 2016 Payment Type Maturity Date Legacy at Valley Ranch Mortgage Loan $ 31,111 $ 31,554 3.9% Principal & Interest 04/01/2019 Poplar Creek Mortgage Loan 19,509 19,785 4.0% Principal & Interest 03/01/2019 The Residence at Waterstone Mortgage Loan 45,883 46,550 3.8% Principal & Interest 05/01/2019 Legacy Crescent Park Mortgage Loan 13,636 13,858 3.5% Principal & Interest 06/01/2019 Legacy at Martin’s Point Mortgage Loan 21,984 22,330 3.3% Principal & Interest 06/01/2019 Wesley Village Mortgage Loan 27,041 27,566 2.6% Principal & Interest 12/01/2017 Watertower Mortgage Loan 24,091 24,525 2.5% Principal & Interest 02/10/2018 Crystal Park Mortgage Loan 27,190 27,709 2.5% Principal & Interest 06/01/2018 Millennium Mortgage Loan 20,317 20,689 2.7% Principal & Interest 07/01/2018 Legacy Grand at Concord Mortgage Loan 22,468 22,693 4.1% Principal & Interest 12/01/2050 Lofts at the Highlands Mortgage Loan 30,864 31,190 3.4% Principal & Interest 08/01/2052 Total notes payable principal outstanding $ 284,094 $ 288,449 Discount on note payable, net (2,666 ) (2,731 ) Deferred financing costs, net (919 ) (1,230 ) Total notes payable, net $ 280,509 $ 284,488 During the three and nine months ended September 30, 2016 , the Company incurred $2.6 million and $7.8 million of interest expense, respectively. During the three and nine months ended September 30, 2015 , the Company incurred $2.6 million and $7.9 million of interest expense, respectively. Included in interest expense for the three and nine months ended September 30, 2016 were $0.1 million and $0.3 million of amortization of deferred financing costs, respectively. Included in interest expense for the three and nine months ended September 30, 2015 were $0.1 million and $0.3 million of amortization of deferred financing costs, respectively. Also included in interest expense were $22,000 and $65,000 of amortization of the discount on a note payable for the three and nine months ended September 30, 2016 , respectively, and $22,000 and $65,000 of amortization of the discount on a note payable for the three and nine months ended September 30, 2015 , respectively. As of September 30, 2016 and December 31, 2015 , the Company recorded interest payable of $0.8 million and $0.8 million , respectively. The following is a schedule of maturities, including principal amortization payments, for the Company’s notes payable outstanding as of September 30, 2016 (in thousands): October 1, 2016 through December 31, 2016 $ 1,488 2017 32,196 2018 72,958 2019 126,682 2020 852 Thereafter 49,918 $ 284,094 |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired long-lived assets). Fair value, as defined under GAAP, is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: • Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; • Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and • Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value: Cash and cash equivalents, restricted cash, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items. Notes payable: The fair value of the Company’s notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. The following were the face value, carrying amount and fair value of the Company’s notes payable as of September 30, 2016 and December 31, 2015 (dollars in thousands): September 30, 2016 December 31, 2015 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial liabilities: Notes payable $ 284,094 $ 280,509 $ 290,036 $ 288,449 $ 284,488 $ 284,160 Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Low levels of transaction volume for certain financial instruments have made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company has entered into the Advisory Agreement with the Advisor and the Follow-on Dealer Manager Agreement with the Dealer Manager. These agreements entitled the Advisor and/or the Dealer Manager to specified fees upon the provision of certain services with regard to the Follow-on Offering and entitle the Advisor to specified fees upon the provision of certain services with regard to the management of the Company’s real estate properties, among other services, as well as reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, such as expenses related to the dividend reinvestment plan, and certain costs incurred by the Advisor in providing services to the Company, such as certain operating costs. 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 DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc. and KBS Growth & Income REIT, Inc. On January 6, 2014, the Company, together with KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2015, KBS Growth & Income REIT, Inc. was added to the insurance program at terms similar to those described above. The insurance program was renewed and is effective through June 30, 2017. During the three and nine months ended September 30, 2016 and 2015 , no other business transactions occurred between the Company and KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc. and KBS Growth & Income REIT, Inc. Pursuant to the terms of these agreements and the property management agreements discussed below, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2016 and 2015 , respectively, and any related amounts payable as of September 30, 2016 and December 31, 2015 (in thousands): Incurred Payable as of Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, 2016 2015 2016 2015 2016 2015 Expensed Asset management fees (1) $ 104 $ 144 $ 343 $ 687 $ 49 $ 4,752 Reimbursable operating expenses (2) 68 58 184 264 12 25 Property management fees and expenses (3) 1,506 1,368 4,359 2,136 218 117 $ 1,678 $ 1,570 $ 4,886 $ 3,087 $ 279 $ 4,894 ____________________ (1) See “Advisory Agreement – Asset Management Fee” below. (2) Reimbursable operating expenses primarily consist of marketing research costs and property site visit expenses incurred by the Sub-Advisor and internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $48,000 and $44,000 for the three months ended September 30, 2016 and 2015 , respectively, and $123,000 and $92,000 for the nine months ended September 30, 2016 and 2015 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement through September 30, 2016 . The Company does not reimburse for employee costs in connection with services for which the Advisor earns acquisition 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 and Sub-Advisor for certain of the Company’s direct property operating costs incurred from third parties that were initially paid by the Advisor and Sub-Advisor on behalf of the Company. (3) Property management fees and expenses consist of property management fees paid to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the properties and through March 31, 2015, fees for account maintenance and bookkeeping services paid to Legacy Partners Residential, L.P., an affiliate of the Sub-Advisor (“LPR”), under the now-terminated account services agreements. See “— Property Management Agreements.” During the nine months ended September 30, 2016 , the Advisor reimbursed the Company $28,000 for a property insurance rebate and $0.1 million for legal and professional fees, respectively. In connection with the Follow-on Offering, the Company’s sponsors agreed to provide additional indemnification to one of the participating broker-dealers. The Company agreed to add supplemental coverage to its directors’ and officers’ insurance coverage to insure the sponsors’ obligations under this indemnification agreement in exchange for reimbursement by the sponsors to the Company for all costs, expenses and premiums related to this supplemental coverage. During the nine months ended September 30, 2016 , the Advisor incurred $61,000 for the costs of the supplemental coverage obtained by the Company. Advisory Agreement - Asset Management Fee Pursuant to the Advisory Agreement, the asset management fee payable by the Company to the Advisor with respect to investments in real estate is a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment. The Advisory Agreement defers the Company’s obligation to pay asset management fees, without interest, accruing from February 1, 2013 through July 31, 2013. The Company will only be obligated to pay the Advisor such deferred amounts if and to the extent that the Company’s funds from operations, as such term is defined by the National Association of Real Estate Investment Trusts and interpreted by the Company, as adjusted for the effects of straight-line rents and acquisition costs and expenses (“AFFO”) for the immediately preceding month exceeds the amount of distributions declared for record dates of such prior month (an “AFFO Surplus”). The amount of any AFFO Surplus in a given month shall be applied first to pay to the Advisor asset management fees currently due with respect to such month (including any that would otherwise have been deferred for that month in accordance with the Advisory Agreement) and then to pay asset management fees previously deferred by the Advisor in accordance with the Advisory Agreement that remain unpaid. The Company had accrued and deferred payment of $1.5 million of asset management fees for February 2013 through July 2013 under the Advisory Agreement, as the Company believed the payment of this amount to the Advisor was probable at the time it was recorded. During the three and nine months ended September 30, 2016 , the Company reversed, as an increase to other income, the liabilities due to affiliates related to the $1.5 million of asset management fees for the period from February 2013 through July 2013 as the Company believes that the payment of this amount to the Advisor is remote. In addition, the Advisory Agreement defers without interest under certain circumstances, the Company’s obligation to pay asset management fees accruing from August 1, 2013. Specifically, the Advisory Agreement defers the Company’s obligation to pay an asset management fee for any month in which the Company’s modified funds from operations (“MFFO”) for such month, as such term is defined in the practice guideline issued by the Investment Program Association (“IPA”) in November 2010 and interpreted by the Company, excluding asset management fees, does not exceed the amount of distributions declared by the Company for record dates of that month. The Company remains obligated to pay the Advisor an asset management fee in any month in which the Company’s MFFO, excluding asset management fees, for such month exceeds the amount of distributions declared for the record dates of that month (such excess amount, an “MFFO Surplus”); however, any amount of such asset management fee in excess of the MFFO Surplus is also deferred under the Advisory Agreement. If the MFFO Surplus for any month exceeds the amount of the asset management fee payable for such month, any remaining MFFO Surplus will not be applied to pay asset management fee amounts previously deferred by the Advisor in accordance with the Advisory Agreement. The Company had accrued and deferred payment of $3.3 million of asset management fees for August 2013 through December 2014 under the Advisory Agreement, as the Company believed the payment of this amount to the Advisor was probable at the time it was recorded. During the three and nine months ended September 30, 2016 , the Company reversed, as an increase to other income, the liabilities due to affiliates related to the $3.3 million of asset management fees for the period from August 2013 through December 2014 as the Company believes that the payment of this amount to the Advisor is remote. During the nine months ended September 30, 2015 , the Company incurred $2.1 million of asset management fees. However, the Company only recorded $0.7 million pursuant to the limitations in the Advisory Agreement as noted above. The Company deferred but did not accrue the remaining $1.4 million of these asset management fees as it is uncertain whether any of this amount will be paid in the future. During the nine months ended September 30, 2016 , the Company incurred $2.2 million of asset management fees. However, the Company only recorded $0.3 million pursuant to the limitations in the Advisory Agreement as noted above. The Company deferred but did not accrue the remaining $1.9 million of these asset management fees as it is uncertain whether any of this amount will be paid in the future. However, notwithstanding any of the foregoing, any and all deferred asset management fees shall be immediately due and payable at such time as the Company’s stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to the Company’s share redemption plan, and (ii) an 8.0% per year cumulative, non-compounded return on such net invested capital (the “Stockholders’ 8% Return”). The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the Company’s stockholders to have received any minimum return in order for the Advisor to receive deferred asset management fees. Property Management Agreements The Company, through indirect wholly owned subsidiaries (each, a “Property Owner”), has entered into property management agreements with LPI (each, a “Property Management Agreement”), pursuant to which LPI provides, among other services, general property management services, including bookkeeping and accounting services, construction management services and budgeting and business plans for the Company’s properties as follows: Property Name Effective Date Management Fee Percentage Watertower Apartments 04/07/2015 2.75% Crystal Park at Waterford 04/14/2015 3.00% The Residence at Waterstone 04/28/2015 3.00% Lofts at the Highlands 05/05/2015 3.00% Legacy at Martin’s Point 05/12/2015 3.00% Poplar Creek 05/14/2015 3.00% Wesley Village 05/19/2015 3.00% Legacy Grand at Concord 05/21/2015 3.00% Millennium Apartment Homes (1) 05/27/2015 3.00% Legacy Crescent Park (1) 05/29/2015 3.00% Legacy at Valley Ranch 06/09/2015 3.00% ____________________ (1) Under the Property Management Agreement, the Property Owner will pay LPI the Management Fee Percentage in an amount equal to the greater of (a) 3% of the Gross Monthly Collections (as defined in the Property Management Agreement) or (b) $4,000 per month. Under the Property Management Agreements, each Property Owner pays LPI: (i) a monthly fee based on a percentage (as described in the table above, the “Management Fee Percentage”) of the Gross Monthly Collections (as defined in each Property Management Agreement), (ii) a construction supervision fee equal to a percentage of construction costs to the extent overseen by LPI and as further detailed in each Property Management Agreement, (iii) a leasing commission at a rate to be agreed upon between the Property Owner and LPI for retail leases executed that were procured or obtained by LPI, (iv) certain reimbursements if included in an approved capital budget and (v) certain reimbursements if included in the approved operating budget, including the reimbursement of the salaries and benefits for on-site personnel. Unless otherwise provided for in an approved operating budget, LPI is responsible for all expenses that it incurs in rendering services pursuant to each Property Management Agreement. Each Property Management Agreement has an initial term of one year and will continue thereafter on a month-to-month basis unless either party gives 30 days’ prior written notice of its desire to terminate the Property Management Agreement. Notwithstanding the foregoing, the Property Owner may terminate each Property Management Agreement at any time without cause upon 30 days’ prior written notice to LPI. The Property Owner may also terminate the Property Management Agreement with cause immediately upon notice to LPI and the expiration of any applicable cure period. LPI may terminate each Property Management Agreement at any time without cause upon prior written notice to the Property Owner which, depending upon the terms of the particular Property Management Agreement, requires either 30 , 60 or 90 days prior written notice. LPI may terminate the Property Management Agreement for cause if a Property Owner commits any material default under the Property Management Agreement and the default continues for a period of 30 days after notice from LPI to a Property Owner for a default or, in the case of Watertower Apartments, Lofts at the Highlands, Wesley Village, Legacy Grand at Concord, Millennium Apartment Homes and Legacy Crescent Park, if a monetary default continues for a period of 10 days after notice of such monetary default. The Management Fee Percentage and any other fees and reimbursements payable to LPI by the Property Owner under each Property Management Agreement are approximately equal to the applicable percentage and other fees and reimbursements payable to LPR by the Property Owner under the now-terminated account services agreements and to the prior third party management companies by the Property Owner under the now-terminated prior property management agreements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Economic Dependency The Company is dependent on the Advisor and the Sub-Advisor for certain services that are essential to the Company, including the management of the daily operations of the Company’s investment portfolio; the disposition of investments; and other general and administrative responsibilities. The Company is also dependent on LPI to provide the property management services under the Property Management Agreements. In the event that these companies are unable to provide any of the respective 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. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s property, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities. Legal Matters From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Distributions Paid On October 3, 2016, the Company paid distributions of $1.1 million , which related to distributions declared for daily record dates for each day in the period from September 1, 2016 through September 30, 2016 . On November 1, 2016, the Company paid distributions of $1.1 million , which related to distributions declared for daily record dates for each day in the period from October 1, 2016 through October 31, 2016. Distributions Declared On October 11, 2016, the Company’s board of directors declared distributions based on daily record dates for the period from November 1, 2016 through November 30, 2016, which the Company expects to pay in December 2016. On November 10, 2016, the Company’s board of directors declared distributions based on daily record dates for the period from December 1, 2016 through December 31, 2016, which the Company expects to pay in January 2017, and distributions based on daily record dates for the period from January 1, 2017 through January 31, 2017, which the Company expects to pay in February 2017. Investors may choose to receive cash distributions or purchase additional shares through the Company’s dividend reinvestment plan. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00178082 per share per day and equal a daily amount that, if paid each day for a 365 -day period, would equal a 6.32% annualized rate based on the Company’s December 8, 2015 estimated value per share of $10.29 . |
SUMMARY OF SIGNIFICANT ACCOUN15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | The preparation of the unaudited consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and condensed notes. Actual results could materially differ from those estimates. |
Reclassifications | Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the three months ended June 30, 2015, the Company entered into various Property Management Agreements (defined below) with Legacy Partners, Inc., formerly known as Legacy Partners Residential, Inc. (“LPI”), an affiliate of the Sub-Advisor. See Note 6, “Related Party Transactions — Property Management Agreements.” As a result, management fees to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the Company’s real estate properties, have been reclassified from operating, maintenance and management costs to property management fees and expenses to affiliate on the accompanying consolidated statements of operations. |
Segments | The Company had invested in 11 apartment complexes as of September 30, 2016 . Substantially all of the Company’s revenue and net income is from real estate, and therefore, the Company currently operates in one reportable segment. |
Square Footage, Occupancy and Other Measures | Any references to square footage or occupancy are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. |
Per Share Data | Basic net income per share of common stock is calculated by dividing net income by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income per share of common stock equals basic net income per share of common stock as there were no potentially dilutive securities outstanding during the nine months ended September 30, 2016 and 2015 , respectively. Distributions declared per common share were $0.164 and $0.486 for the three and nine months ended September 30, 2016 , respectively, and $0.164 and $0.486 for the three and nine months ended September 30, 2015 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three and nine months ended September 30, 2016 and 2015 . For the three and nine months ended September 30, 2016 and 2015 , distributions were based on daily record dates and calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2016 through February 28, 2016 and March 1, 2016 through September 30, 2016 was a record date for distributions. Each day during the period from January 1, 2015 through September 30, 2015 was a record date for distributions. |
Recently Issued Accounting Standards Update | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840) . ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which defers the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company is still evaluating the impact of adopting ASU No. 2014-09 on its financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40) , Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU No. 2014-15”). The amendments in ASU No. 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of ASU No. 2014-15 to have a significant impact on its financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”). The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected. ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements. ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”). ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement); (d) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements |
REAL ESTATE (Tables)
REAL ESTATE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments | The following table provides summary information regarding the properties owned by the Company as of September 30, 2016 (dollars in thousands): Property Name Date Acquired Location Total Real Estate, Cost Accumulated Depreciation and Amortization Total Real Estate, Net Legacy at Valley Ranch 10/26/2010 Irving, TX $ 36,485 $ (4,995 ) $ 31,490 Poplar Creek 02/09/2012 Schaumburg, IL 27,200 (2,820 ) 24,380 The Residence at Waterstone 04/06/2012 Pikesville, MD 65,270 (7,376 ) 57,894 Legacy Crescent Park 05/03/2012 Greer, SC 20,714 (2,763 ) 17,951 Legacy at Martin’s Point 05/31/2012 Lombard, IL 37,487 (5,198 ) 32,289 Wesley Village 11/06/2012 Charlotte, NC 44,433 (4,659 ) 39,774 Watertower Apartments 01/15/2013 Eden Prairie, MN 38,722 (4,020 ) 34,702 Crystal Park at Waterford 05/08/2013 Frederick, MD 46,050 (4,758 ) 41,292 Millennium Apartment Homes 06/07/2013 Greenville, SC 33,276 (3,376 ) 29,900 Legacy Grand at Concord 02/18/2014 Concord, NC 27,855 (2,143 ) 25,712 Lofts at the Highlands 02/25/2014 St. Louis, MO 35,826 (2,484 ) 33,342 $ 413,318 $ (44,592 ) $ 368,726 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Notes Payable [Abstract] | |
Schedule of Long-term Debt Instruments | As of September 30, 2016 and December 31, 2015 , the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of September 30, 2016 Book Value as of December 31, 2015 Contractual Interest Rate as of September 30, 2016 Payment Type Maturity Date Legacy at Valley Ranch Mortgage Loan $ 31,111 $ 31,554 3.9% Principal & Interest 04/01/2019 Poplar Creek Mortgage Loan 19,509 19,785 4.0% Principal & Interest 03/01/2019 The Residence at Waterstone Mortgage Loan 45,883 46,550 3.8% Principal & Interest 05/01/2019 Legacy Crescent Park Mortgage Loan 13,636 13,858 3.5% Principal & Interest 06/01/2019 Legacy at Martin’s Point Mortgage Loan 21,984 22,330 3.3% Principal & Interest 06/01/2019 Wesley Village Mortgage Loan 27,041 27,566 2.6% Principal & Interest 12/01/2017 Watertower Mortgage Loan 24,091 24,525 2.5% Principal & Interest 02/10/2018 Crystal Park Mortgage Loan 27,190 27,709 2.5% Principal & Interest 06/01/2018 Millennium Mortgage Loan 20,317 20,689 2.7% Principal & Interest 07/01/2018 Legacy Grand at Concord Mortgage Loan 22,468 22,693 4.1% Principal & Interest 12/01/2050 Lofts at the Highlands Mortgage Loan 30,864 31,190 3.4% Principal & Interest 08/01/2052 Total notes payable principal outstanding $ 284,094 $ 288,449 Discount on note payable, net (2,666 ) (2,731 ) Deferred financing costs, net (919 ) (1,230 ) Total notes payable, net $ 280,509 $ 284,488 |
Schedule of Maturities of Long-term Debt | The following is a schedule of maturities, including principal amortization payments, for the Company’s notes payable outstanding as of September 30, 2016 (in thousands): October 1, 2016 through December 31, 2016 $ 1,488 2017 32,196 2018 72,958 2019 126,682 2020 852 Thereafter 49,918 $ 284,094 |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Face Value, Carrying Amounts and Fair Value | The following were the face value, carrying amount and fair value of the Company’s notes payable as of September 30, 2016 and December 31, 2015 (dollars in thousands): September 30, 2016 December 31, 2015 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial liabilities: Notes payable $ 284,094 $ 280,509 $ 290,036 $ 288,449 $ 284,488 $ 284,160 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Costs | Pursuant to the terms of these agreements and the property management agreements discussed below, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2016 and 2015 , respectively, and any related amounts payable as of September 30, 2016 and December 31, 2015 (in thousands): Incurred Payable as of Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, 2016 2015 2016 2015 2016 2015 Expensed Asset management fees (1) $ 104 $ 144 $ 343 $ 687 $ 49 $ 4,752 Reimbursable operating expenses (2) 68 58 184 264 12 25 Property management fees and expenses (3) 1,506 1,368 4,359 2,136 218 117 $ 1,678 $ 1,570 $ 4,886 $ 3,087 $ 279 $ 4,894 ____________________ (1) See “Advisory Agreement – Asset Management Fee” below. (2) Reimbursable operating expenses primarily consist of marketing research costs and property site visit expenses incurred by the Sub-Advisor and internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $48,000 and $44,000 for the three months ended September 30, 2016 and 2015 , respectively, and $123,000 and $92,000 for the nine months ended September 30, 2016 and 2015 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement through September 30, 2016 . The Company does not reimburse for employee costs in connection with services for which the Advisor earns acquisition 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 and Sub-Advisor for certain of the Company’s direct property operating costs incurred from third parties that were initially paid by the Advisor and Sub-Advisor on behalf of the Company. (3) Property management fees and expenses consist of property management fees paid to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the properties and through March 31, 2015, fees for account maintenance and bookkeeping services paid to Legacy Partners Residential, L.P., an affiliate of the Sub-Advisor (“LPR”), under the now-terminated account services agreements. See “— Property Management Agreements.” |
Schedule of Property Management Agreements | The Company, through indirect wholly owned subsidiaries (each, a “Property Owner”), has entered into property management agreements with LPI (each, a “Property Management Agreement”), pursuant to which LPI provides, among other services, general property management services, including bookkeeping and accounting services, construction management services and budgeting and business plans for the Company’s properties as follows: Property Name Effective Date Management Fee Percentage Watertower Apartments 04/07/2015 2.75% Crystal Park at Waterford 04/14/2015 3.00% The Residence at Waterstone 04/28/2015 3.00% Lofts at the Highlands 05/05/2015 3.00% Legacy at Martin’s Point 05/12/2015 3.00% Poplar Creek 05/14/2015 3.00% Wesley Village 05/19/2015 3.00% Legacy Grand at Concord 05/21/2015 3.00% Millennium Apartment Homes (1) 05/27/2015 3.00% Legacy Crescent Park (1) 05/29/2015 3.00% Legacy at Valley Ranch 06/09/2015 3.00% ____________________ (1) Under the Property Management Agreement, the Property Owner will pay LPI the Management Fee Percentage in an amount equal to the greater of (a) 3% of the Gross Monthly Collections (as defined in the Property Management Agreement) or (b) $4,000 per month. |
ORGANIZATION (Details)
ORGANIZATION (Details) | 9 Months Ended | 12 Months Ended | 36 Months Ended | 43 Months Ended | 79 Months Ended | |||
Sep. 30, 2016USD ($)propertyshares | Dec. 31, 2015USD ($)shares | Mar. 12, 2013USD ($)shares | Sep. 30, 2016USD ($)propertyshares | Sep. 30, 2016USD ($)propertyshares | May 31, 2012USD ($) | Aug. 19, 2009shares | Aug. 07, 2009$ / sharesshares | |
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% | |||||||
Common stock, shares issued | 20,751,787 | 20,508,397 | 20,751,787 | 20,751,787 | ||||
Issuance of common stock, value | $ | $ 4,324,000 | $ 5,736,000 | $ 179,200,000 | $ 15,900,000 | $ 214,500,000 | |||
Shares of common stock sold under dividend reinvestment plan, value | $ | $ 3,500,000 | 23,000,000 | ||||||
Redemptions of common stock, value | $ | $ 2,019,000 | $ 1,697,000 | $ 7,900,000 | |||||
Apartment Complex [Member] | ||||||||
Organizational Structure [Line Items] | ||||||||
Number of real estate properties | property | 11 | 11 | 11 | |||||
Common Stock [Member] | ||||||||
Organizational Structure [Line Items] | ||||||||
Shares of common stock authorized under dividend reinvestment plan, shares | 80,000,000 | |||||||
Issuance of common stock, shares | 442,104 | 595,095 | 18,088,084 | 1,496,198 | 21,539,479 | |||
Issuance of common stock, value | $ | $ 4,000 | $ 6,000 | ||||||
Shares of common stock sold under dividend reinvestment plan, shares | 368,872 | 2,324,069 | ||||||
Redemptions of common stock, shares | 198,714 | 171,528 | 807,692 | |||||
Redemptions of common stock, value | $ | $ 2,000 | $ 2,000 | ||||||
Common Stock [Member] | Minimum [Member] | ||||||||
Organizational Structure [Line Items] | ||||||||
Number of shares authorized to be repurchased | 250,000 | |||||||
Common Stock [Member] | Maximum [Member] | ||||||||
Organizational Structure [Line Items] | ||||||||
Number of shares authorized to be repurchased | 280,000,000 | |||||||
Stock offering, shares authorized for issuance, value | $ | $ 2,000,000,000 | |||||||
Stock offering, shares authorized for dividend reinvestment plan, value | $ | $ 760,000,000 | |||||||
KBS-Legacy Apartment Community REIT Venture, LLC [Member] | ||||||||
Organizational Structure [Line Items] | ||||||||
Common stock, shares issued | 20,000 | |||||||
Common stock, purchase price per share | $ / shares | $ 10 | |||||||
KBS-Legacy Apartment Community REIT Venture, LLC [Member] | Common Stock [Member] | ||||||||
Organizational Structure [Line Items] | ||||||||
Shares held by affiliate | 20,000 | 20,000 | 20,000 |
SUMMARY OF SIGNIFICANT ACCOUN21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016property$ / shares | Sep. 30, 2015$ / shares | Sep. 30, 2016segmentproperty$ / shares | Sep. 30, 2015$ / shares | |
Real Estate Properties [Line Items] | ||||
Number of reportable segments | segment | 1 | |||
Distributions declared per common share (in dollars per share) | $ 0.164 | $ 0.164 | $ 0.486 | $ 0.486 |
Distribution rate per share per day on annual basis, declared (in dollars per share) | $ 0.00178082 | $ 0.00178082 | $ 0.00178082 | $ 0.00178082 |
Apartment Complex [Member] | ||||
Real Estate Properties [Line Items] | ||||
Number of real estate properties | property | 11 | 11 |
REAL ESTATE (Narrative) (Detail
REAL ESTATE (Narrative) (Details) $ in Thousands, ft² in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)ft²propertyunit | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)ft²propertyunit | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Real Estate Properties [Line Items] | |||||
Number of real estate units | unit | 3,039 | 3,039 | |||
Rentable square feet | ft² | 3.1 | 3.1 | |||
Percentage of portfolio occupied | 94.00% | 94.00% | |||
Tax abatement asset | $ 3,000 | $ 3,000 | $ 3,200 | ||
Property Tax Abatement Intangible Asset [Member] | |||||
Real Estate Properties [Line Items] | |||||
Amortization of intangible assets | $ 65 | $ 65 | $ 200 | $ 200 | |
Apartment Complex [Member] | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties | property | 11 | 11 |
REAL ESTATE (Schedule of Real E
REAL ESTATE (Schedule of Real Estate Investments) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Real Estate Properties [Line Items] | ||
Total Real Estate at Cost | $ 413,318 | $ 412,047 |
Accumulated Depreciation and Amortization | (44,592) | (35,713) |
Total real estate, net | $ 368,726 | $ 376,334 |
Legacy at Valley Ranch [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Oct. 26, 2010 | |
Total Real Estate at Cost | $ 36,485 | |
Accumulated Depreciation and Amortization | (4,995) | |
Total real estate, net | $ 31,490 | |
Poplar Creek [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Feb. 9, 2012 | |
Total Real Estate at Cost | $ 27,200 | |
Accumulated Depreciation and Amortization | (2,820) | |
Total real estate, net | $ 24,380 | |
The Residence at Waterstone [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Apr. 6, 2012 | |
Total Real Estate at Cost | $ 65,270 | |
Accumulated Depreciation and Amortization | (7,376) | |
Total real estate, net | $ 57,894 | |
Legacy Crescent Park [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | May 3, 2012 | |
Total Real Estate at Cost | $ 20,714 | |
Accumulated Depreciation and Amortization | (2,763) | |
Total real estate, net | $ 17,951 | |
Legacy at Martin’s Point [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | May 31, 2012 | |
Total Real Estate at Cost | $ 37,487 | |
Accumulated Depreciation and Amortization | (5,198) | |
Total real estate, net | $ 32,289 | |
Wesley Village [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Nov. 6, 2012 | |
Total Real Estate at Cost | $ 44,433 | |
Accumulated Depreciation and Amortization | (4,659) | |
Total real estate, net | $ 39,774 | |
Watertower Apartments [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Jan. 15, 2013 | |
Total Real Estate at Cost | $ 38,722 | |
Accumulated Depreciation and Amortization | (4,020) | |
Total real estate, net | $ 34,702 | |
Crystal Park at Waterford [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | May 8, 2013 | |
Total Real Estate at Cost | $ 46,050 | |
Accumulated Depreciation and Amortization | (4,758) | |
Total real estate, net | $ 41,292 | |
Millennium Apartment Homes [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Jun. 7, 2013 | |
Total Real Estate at Cost | $ 33,276 | |
Accumulated Depreciation and Amortization | (3,376) | |
Total real estate, net | $ 29,900 | |
Legacy Grand at Concord [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Feb. 18, 2014 | |
Total Real Estate at Cost | $ 27,855 | |
Accumulated Depreciation and Amortization | (2,143) | |
Total real estate, net | $ 25,712 | |
Lofts of the Highlands [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | Feb. 25, 2014 | |
Total Real Estate at Cost | $ 35,826 | |
Accumulated Depreciation and Amortization | (2,484) | |
Total real estate, net | $ 33,342 |
REAL ESTATE (Property Damages)
REAL ESTATE (Property Damages) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)property | Sep. 30, 2015USD ($) | |
Real Estate Properties [Line Items] | ||||
Number of real estate properties suffered from physical damage | property | 1 | |||
Maximum deductible per incident | $ 12,500 | |||
Loss due to property damages | 145,000 | $ 78,000 | ||
Insurance recoveries | 132,500 | |||
Operating, maintenance, and management | $ 1,671,000 | $ 1,915,000 | 4,854,000 | $ 6,914,000 |
Damaged Properties [Member] | ||||
Real Estate Properties [Line Items] | ||||
Operating, maintenance, and management | $ 12,500 |
NOTES PAYABLE (Narrative) (Deta
NOTES PAYABLE (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||||
Interest expense | $ 2,588 | $ 2,636 | $ 7,758 | $ 7,879 | |
Amortization of deferred financing costs | 100 | 100 | 300 | 300 | |
Amortization of discount on notes payable | 65 | 65 | |||
Interest payable, current | 800 | 800 | $ 800 | ||
Notes Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Amortization of discount on notes payable | $ 22 | $ 22 | $ 65 | $ 65 |
NOTES PAYABLE (Schedule of Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 284,094 | $ 288,449 |
Discount on note payable, net | (2,666) | (2,731) |
Deferred financing costs, net | (919) | (1,230) |
Total notes payable, net | 280,509 | 284,488 |
Mortgages [Member] | Legacy at Valley Ranch [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 31,111 | 31,554 |
Contractual Interest Rate | 3.90% | |
Maturity Date | Apr. 1, 2019 | |
Mortgages [Member] | Poplar Creek [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 19,509 | 19,785 |
Contractual Interest Rate | 4.00% | |
Maturity Date | Mar. 1, 2019 | |
Mortgages [Member] | The Residence at Waterstone [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 45,883 | 46,550 |
Contractual Interest Rate | 3.80% | |
Maturity Date | May 1, 2019 | |
Mortgages [Member] | Legacy Crescent Park [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 13,636 | 13,858 |
Contractual Interest Rate | 3.50% | |
Maturity Date | Jun. 1, 2019 | |
Mortgages [Member] | Legacy at Martin’s Point [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 21,984 | 22,330 |
Contractual Interest Rate | 3.30% | |
Maturity Date | Jun. 1, 2019 | |
Mortgages [Member] | Wesley Village [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 27,041 | 27,566 |
Contractual Interest Rate | 2.60% | |
Maturity Date | Dec. 1, 2017 | |
Mortgages [Member] | Watertower Apartments [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 24,091 | 24,525 |
Contractual Interest Rate | 2.50% | |
Maturity Date | Feb. 10, 2018 | |
Mortgages [Member] | Crystal Park Mortgage Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 27,190 | 27,709 |
Contractual Interest Rate | 2.50% | |
Maturity Date | Jun. 1, 2018 | |
Mortgages [Member] | Millennium Mortgage Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 20,317 | 20,689 |
Contractual Interest Rate | 2.70% | |
Maturity Date | Jul. 1, 2018 | |
Mortgages [Member] | Legacy Grand at Concord Mortgage Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 22,468 | 22,693 |
Contractual Interest Rate | 4.10% | |
Maturity Date | Dec. 1, 2050 | |
Mortgages [Member] | Lofts at the Highlands Mortgage Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total notes payable principal outstanding | $ 30,864 | $ 31,190 |
Contractual Interest Rate | 3.40% | |
Maturity Date | Aug. 1, 2052 |
NOTES PAYABLE (Schedule of Matu
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Notes Payable [Abstract] | ||
October 1, 2016 through December 31, 2016 | $ 1,488 | |
2,017 | 32,196 | |
2,018 | 72,958 | |
2,019 | 126,682 | |
2,020 | 852 | |
Thereafter | 49,918 | |
Notes payable | $ 284,094 | $ 288,449 |
FAIR VALUE DISCLOSURES (Details
FAIR VALUE DISCLOSURES (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Face Value | $ 284,094,000 | $ 288,449,000 |
Carrying Amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | 280,509,000 | 284,488,000 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | $ 290,036,000 | $ 284,160,000 |
RELATED PARTY TRANSACTIONS (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 05, 2014 | Aug. 14, 2013 | |
Related Party Transaction [Line Items] | |||||||
Due to affiliates | $ 279 | $ 279 | $ 4,894 | ||||
Non‑compounded return on net invested capital | 8.00% | ||||||
LPR Inc. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Initial term of management agreements | 1 year | ||||||
Period of termination notice | 30 days | ||||||
Period of termination notice 2 | 60 days | ||||||
Period of termination notice 3 | 90 days | ||||||
Period of monetary default | 30 days | ||||||
LPR Inc. [Member] | Watertower Apartments and Lofts at the Highlands [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Period of monetary default | 10 days | ||||||
Option One [Member] | KBS Capital Advisors LLC [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Acquisition advisory fee, percent | 1.00% | 1.00% | |||||
Monthly asset management fee, percent of acquisition expense | 0.083% | ||||||
Option Two [Member] | KBS Capital Advisors LLC [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Acquisition advisory fee, percent | 2.00% | 2.00% | |||||
Monthly asset management fee, percent of acquisition expense | 0.166% | ||||||
Asset Management Fees [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due to affiliates | $ 300 | $ 300 | $ 700 | ||||
Incurred expenses | 2,200 | 2,100 | |||||
Deferred fees | 1,900 | $ 1,400 | |||||
Asset Management Fees [Member] | February through July 2013 [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due to affiliates | 1,500 | 1,500 | |||||
Asset Management Fees [Member] | August 2013 through December 2014 [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due to affiliates | $ 3,300 | ||||||
KBS Capital Advisors LLC [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Incurred expenses | 61 | ||||||
KBS Capital Advisors LLC [Member] | Legal and Professional Fees Reimbursement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due from related parties | 100 | 100 | |||||
KBS Capital Advisors LLC [Member] | Property Insurance Rebate [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Due from related parties | $ 28 | $ 28 |
RELATED PARTY TRANSACTIONS (Sch
RELATED PARTY TRANSACTIONS (Schedule of Related Party Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||||
Payable as of | $ 279 | $ 279 | $ 4,894 | ||
Administrative fees | 48 | $ 44 | 123 | $ 92 | |
Asset Management Fees [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses | 2,200 | 2,100 | |||
Payable as of | 300 | 700 | 300 | 700 | |
Advisor and Dealer Manager [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses | 1,678 | 1,570 | 4,886 | 3,087 | |
Payable as of | 279 | 279 | 4,894 | ||
Advisor and Dealer Manager [Member] | Asset Management Fees [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses | 104 | 144 | 343 | 687 | |
Payable as of | 49 | 49 | 4,752 | ||
Advisor and Dealer Manager [Member] | Reimbursement of Operating Expenses [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses | 68 | 58 | 184 | 264 | |
Payable as of | 12 | 12 | 25 | ||
Advisor and Dealer Manager [Member] | Property Management Fees and Expenses [Member] | |||||
Related Party Transaction [Line Items] | |||||
Expenses | 1,506 | $ 1,368 | 4,359 | $ 2,136 | |
Payable as of | $ 218 | $ 218 | $ 117 |
RELATED PARTY TRANSACTIONS (Pro
RELATED PARTY TRANSACTIONS (Property Management Agreements) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Watertower Apartments [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 2.75% |
Crystal Park at Waterford [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
The Residence at Waterstone [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Lofts of the Highlands [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Legacy at Martin’s Point [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Poplar Creek [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Wesley Village [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Legacy Grand at Concord [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Millennium Apartment Homes [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Property management fee, amount | $ 4 |
Millennium Apartment Homes [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Legacy Crescent Park [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Property management fee, amount | $ 4 |
Legacy Crescent Park [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
Legacy at Valley Ranch [Member] | |
Related Party Transaction [Line Items] | |
Management Fee Percentage | 3.00% |
SUBSEQUENT EVENTS (Distribution
SUBSEQUENT EVENTS (Distributions) (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 10, 2016 | Nov. 01, 2016 | Oct. 11, 2016 | Oct. 03, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
Subsequent Event [Line Items] | |||||||||
Paid distributions | $ 10,015 | $ 13,176 | |||||||
Distribution rate per share per day on annual basis, declared (in dollars per share) | $ 0.00178082 | $ 0.00178082 | $ 0.00178082 | $ 0.00178082 | |||||
Subsequent Event [Member] | Dividend Paid [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Paid distributions | $ 1,100 | $ 1,100 | |||||||
Subsequent Event [Member] | Dividend Declared [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Distribution rate per share per day on annual basis, declared (in dollars per share) | $ 0.00178082 | $ 0.00178082 | |||||||
Distribution rate per share annualized, declared, based on offering price | 6.32% | 6.32% | |||||||
Offering price per share | $ 10.29 | $ 10.29 |