Price Graph
Price
Yield
These terms and conditions govern your use of the website alphaminr.com and its related services.
These Terms and Conditions (“Terms”) are a binding contract between you and Alphaminr, (“Alphaminr”, “we”, “us” and “service”). You must agree to and accept the Terms. These Terms include the provisions in this document as well as those in the Privacy Policy. These terms may be modified at any time.
Your subscription will be on a month to month basis and automatically renew every month. You may terminate your subscription at any time through your account.
We will provide you with advance notice of any change in fees.
You represent that you are of legal age to form a binding contract. You are responsible for any
activity associated with your account. The account can be logged in at only one computer at a
time.
The Services are intended for your own individual use. You shall only use the Services in a
manner that complies with all laws. You may not use any automated software, spider or system to
scrape data from Alphaminr.
Alphaminr is not a financial advisor and does not provide financial advice of any kind. The service is provided “As is”. The materials and information accessible through the Service are solely for informational purposes. While we strive to provide good information and data, we make no guarantee or warranty as to its accuracy.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL ALPHAMINR BE LIABLE TO YOU FOR DAMAGES OF ANY KIND, INCLUDING DAMAGES FOR INVESTMENT LOSSES, LOSS OF DATA, OR ACCURACY OF DATA, OR FOR ANY AMOUNT, IN THE AGGREGATE, IN EXCESS OF THE GREATER OF (1) FIFTY DOLLARS OR (2) THE AMOUNTS PAID BY YOU TO ALPHAMINR IN THE SIX MONTH PERIOD PRECEDING THIS APPLICABLE CLAIM. SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL OR CERTAIN OTHER DAMAGES, SO THE ABOVE LIMITATION AND EXCLUSIONS MAY NOT APPLY TO YOU.
If any provision of these Terms is found to be invalid under any applicable law, such provision shall not affect the validity or enforceability of the remaining provisions herein.
This privacy policy describes how we (“Alphaminr”) collect, use, share and protect your personal information when we provide our service (“Service”). This Privacy Policy explains how information is collected about you either directly or indirectly. By using our service, you acknowledge the terms of this Privacy Notice. If you do not agree to the terms of this Privacy Policy, please do not use our Service. You should contact us if you have questions about it. We may modify this Privacy Policy periodically.
When you register for our Service, we collect information from you such as your name, email address and credit card information.
Like many other websites we use “cookies”, which are small text files that are stored on your computer or other device that record your preferences and actions, including how you use the website. You can set your browser or device to refuse all cookies or to alert you when a cookie is being sent. If you delete your cookies, if you opt-out from cookies, some Services may not function properly. We collect information when you use our Service. This includes which pages you visit.
We use Google Analytics and we use Stripe for payment processing. We will not share the information we collect with third parties for promotional purposes. We may share personal information with law enforcement as required or permitted by law.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
Maryland
|
|
26-3842535
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
800 Newport Center Drive, Suite 700
Newport Beach, California
|
|
92660
|
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
|
Title of Each Class
|
|
Name of Each Exchange on Which Registered
|
|
None
|
|
None
|
|
Large Accelerated Filer
|
|
¨
|
|
Accelerated Filer
|
|
¨
|
|
Non-Accelerated Filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
x
|
|
|
|
|
|
|
|
|
|||
|
|
ITEM 1.
|
||
|
|
ITEM 1A.
|
||
|
|
ITEM 1B.
|
||
|
|
ITEM 2.
|
||
|
|
ITEM 3.
|
||
|
|
ITEM 4.
|
||
|
|
|
||
|
|
ITEM 5.
|
||
|
|
ITEM 6.
|
||
|
|
ITEM 7.
|
||
|
|
ITEM 7A.
|
||
|
|
ITEM 8.
|
||
|
|
ITEM 9.
|
||
|
|
ITEM 9A.
|
||
|
|
ITEM 9B.
|
||
|
|
|
||
|
|
ITEM 10.
|
||
|
|
ITEM 11.
|
||
|
|
ITEM 12.
|
||
|
|
ITEM 13.
|
||
|
|
ITEM14.
|
||
|
|
|
||
|
|
ITEM 15.
|
||
|
|
|
|
|
|
•
|
We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our property investments could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, limiting our ability to pay distributions to our stockholders.
|
|
•
|
Our opportunistic investment strategy involves a higher risk of loss than would a strategy of investing in some other types of real estate and real estate-related investments.
|
|
•
|
We have paid distributions from financings and in the future we may not pay distributions solely from our cash flow from operations or gains from asset sales. To the extent that we pay distributions from sources other than our cash flow from operations or gains from asset sales, we will have less funds available for investment in loans, properties and other assets, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.
|
|
•
|
All of our executive officers and some of our directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other KBS‑affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other KBS‑advised programs and investors and conflicts in allocating time among us and these other programs and investors. These conflicts could result in unanticipated actions. Fees paid to our advisor in connection with transactions involving the origination, acquisition and management of our investments are based on the cost of the investment, not on the quality of the investment or services rendered to us. This arrangement could influence our advisor to recommend riskier transactions to us.
|
|
•
|
We pay substantial fees to and expenses of our advisor and its affiliates and, in connection with our initial public offering, we paid substantial fees to our dealer manager and participating broker-dealers. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase our stockholders’ risk of loss.
|
|
•
|
We cannot predict with any certainty how much, if any, of our dividend reinvestment plan proceeds will be available for general corporate purposes, including, but not limited to, the redemption of shares under our share redemption program, future funding obligations under any real estate loans receivable we acquire the funding of capital expenditures on our real estate investments or the repayment of debt. If such funds are not available from the dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet these cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.
|
|
ITEM 1.
|
BUSINESS
|
|
•
|
to provide our stockholders with attractive and stable returns; and
|
|
•
|
to preserve and return our stockholders’ capital contributions.
|
|
|
|
Current Maturity
|
|
Extended Maturity
|
||||
|
2015
|
|
$
|
2,005
|
|
|
$
|
2,005
|
|
|
2016
|
|
19,079
|
|
|
5,589
|
|
||
|
2017
|
|
402,133
|
|
|
140,287
|
|
||
|
2018
|
|
80,972
|
|
|
225,321
|
|
||
|
2019
|
|
7,805
|
|
|
132,712
|
|
||
|
Thereafter
|
|
18,244
|
|
|
24,324
|
|
||
|
|
|
$
|
530,238
|
|
|
$
|
530,238
|
|
|
•
|
one office property consisting of 490,096 rentable square feet located in Bellevue, Washington for $184.0 million plus closing costs;
|
|
•
|
an investment in a consolidated joint venture that owns one apartment property containing 66 units located in Brooklyn, New York for $39.8 million plus closing costs;
|
|
•
|
an investment in an unconsolidated joint venture that owns one office property consisting of 928,157 rentable square feet located in New York, New York for $261.1 million plus closing costs; and
|
|
•
|
20 acres of undeveloped land in Richardson, Texas for $7.5 million.
|
|
ITEM 1A.
|
RISK FACTORS
|
|
•
|
the values of our investments in commercial properties could decrease below the amounts paid for such investments;
|
|
•
|
the value of collateral securing our loan investment could decrease below the outstanding principal amount of such loan; and/or
|
|
•
|
revenues from our properties could decrease due to fewer tenants and/or lower rental rates, making it more difficult for us to pay distributions or meet our debt service obligations on debt financing.
|
|
•
|
the continuation, renewal or enforcement of our agreements with KBS Capital Advisors and its affiliates, including the advisory agreement;
|
|
•
|
public offerings of equity by us, which may entitle KBS Capital Markets Group to dealer-manager fees and would likely entitle KBS Capital Advisors to increased acquisition and origination fees and asset management fees;
|
|
•
|
sales of investments, which entitle KBS Capital Advisors to disposition fees and possible subordinated incentive fees;
|
|
•
|
acquisitions of investments and originations of loans, which entitle KBS Capital Advisors to acquisition and origination fees and asset management fees and, in the case of acquisitions of investments from other KBS-sponsored programs, might entitle affiliates of KBS Capital Advisors to disposition fees and possible subordinated incentive fees in connection with its services for the seller;
|
|
•
|
borrowings to acquire investments and to originate loans, which borrowings increase the acquisition and origination fees and asset management fees payable to KBS Capital Advisors;
|
|
•
|
whether and when we seek to list our common stock on a national securities exchange, which listing (i) may make it more likely for us to become self-managed or internalize our management or (ii) could entitle our advisor to a subordinated incentive listing fee, and which could also adversely affect the sales efforts for other KBS-sponsored programs, depending on the price at which our shares trade;
|
|
•
|
whether we seek stockholder approval to become self-managed or internalize our management, which we will only pursue if our advisor agrees to do so without the payment of any internalization fee or other consideration; and
|
|
•
|
whether and when we seek to sell the company or its assets, which sale could entitle KBS Capital Advisors to disposition fees or a subordinated incentive fee and terminate the asset management fee.
|
|
•
|
limitations on capital structure;
|
|
•
|
restrictions on specified investments;
|
|
•
|
prohibitions on transactions with affiliates; and
|
|
•
|
compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.
|
|
•
|
is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or
|
|
•
|
is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the “40% test”). “Investment securities” excludes U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).
|
|
•
|
92.5% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least one year;
|
|
•
|
95.0% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least two years;
|
|
•
|
97.5% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least three years; and
|
|
•
|
100% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least four years.
|
|
•
|
a stockholder would be able to resell his or her shares at this estimated value;
|
|
•
|
a stockholder would ultimately realize distributions per share equal to our estimated value per share upon liquidation of our assets and settlement of our liabilities or a sale of the company;
|
|
•
|
our shares of common stock would trade at the estimated value per share on a national securities exchange;
|
|
•
|
an independent third-party appraiser or other third-party valuation firm would agree with our estimated value per share; or
|
|
•
|
the methodology used to estimate our value per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.
|
|
•
|
natural disasters such as hurricanes, earthquakes and floods;
|
|
•
|
acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;
|
|
•
|
adverse changes in national and local economic and real estate conditions;
|
|
•
|
an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;
|
|
•
|
changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws;
|
|
•
|
costs of remediation and liabilities associated with environmental conditions affecting properties; and
|
|
•
|
the potential for uninsured or underinsured property losses.
|
|
•
|
interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates;
|
|
•
|
available interest rate hedging products may not correspond directly with the interest rate risk for which protection is sought;
|
|
•
|
the duration of the hedge may not match the duration of the related liability or asset;
|
|
•
|
the amount of income that a REIT may earn from hedging transactions to offset losses due to fluctuations in interest rates is limited by federal tax provisions governing REITs;
|
|
•
|
the credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction;
|
|
•
|
the party owing money in the hedging transaction may default on its obligation to pay; and
|
|
•
|
we may purchase a hedge that turns out not to be necessary, i.e., a hedge that is out of the money.
|
|
•
|
that our co-venturer or partner in an investment could become insolvent or bankrupt;
|
|
•
|
that such co-venturer or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; or
|
|
•
|
that such co-venturer or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives.
|
|
•
|
In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on the undistributed income.
|
|
•
|
We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.
|
|
•
|
If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.
|
|
•
|
If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our taxable REIT subsidiaries.
|
|
•
|
not be allowed to be offset by a stockholder’s net operating losses;
|
|
•
|
be subject to a tax as unrelated business income if a stockholder were a tax-exempt stockholder;
|
|
•
|
be subject to the application of federal income tax withholding at the maximum rate (without reduction for any otherwise applicable income tax treaty) with respect to amounts allocable to foreign stockholders; and
|
|
•
|
be taxable (at the highest corporate tax rate) to us, rather than to our stockholders, to the extent the excess inclusion income relates to stock held by disqualified organizations (generally, tax-exempt companies not subject to tax on unrelated business income, including governmental organizations).
|
|
•
|
the investment is consistent with their fiduciary and other obligations under ERISA and the Internal Revenue Code;
|
|
•
|
the investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan’s or account’s investment policy;
|
|
•
|
the investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code;
|
|
•
|
the investment in our shares, for which no public market currently exists, is consistent with the liquidity needs of the plan or IRA;
|
|
•
|
the investment will not produce an unacceptable amount of “unrelated business taxable income” for the plan or IRA;
|
|
•
|
our stockholders will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the plan or IRA annually; and
|
|
•
|
the investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
|
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
|
ITEM 2.
|
PROPERTIES
|
|
Property
Location of Property
|
|
Date
Acquired or Foreclosed on
|
|
Property Type
|
|
Rentable Square Feet
|
|
Total
Real Estate
at Cost
(1)
(in thousands)
|
|
Occupancy
|
|
Ownership %
|
|||||
|
Academy Point Atrium I
Colorado Springs, CO
|
|
11/03/2010
|
|
Office
|
|
92,099
|
|
|
$
|
2,600
|
|
|
—
|
%
|
|
100.0
|
%
|
|
Northridge Center I & II
Atlanta, GA
|
|
03/25/2011
|
|
Office
|
|
188,509
|
|
|
8,808
|
|
|
72.2
|
%
|
|
100.0
|
%
|
|
|
Iron Point Business Park
Folsom, CA
|
|
06/21/2011
|
|
Office
|
|
211,887
|
|
|
21,974
|
|
|
85.9
|
%
|
|
100.0
|
%
|
|
|
1635 N. Cahuenga Building
Los Angeles, CA
|
|
08/03/2011
|
|
Office
|
|
34,666
|
|
|
8,137
|
|
|
73.9
|
%
|
|
70.0
|
%
|
|
|
Richardson Portfolio
Richardson, TX
|
|
11/23/2011
|
|
Office/
Undeveloped Land
|
|
569,980
|
|
|
47,028
|
|
|
88.9
|
%
|
|
90.0
|
%
|
|
|
Park Highlands
North Las Vegas, NV
|
|
12/30/2011
|
|
Undeveloped Land
|
|
—
|
|
|
28,229
|
|
|
N/A
|
|
|
50.1
|
%
|
|
|
Bellevue Technology Center
Bellevue, WA
|
|
07/31/2012
|
|
Office
|
|
330,508
|
|
|
80,747
|
|
|
82.5
|
%
|
|
100.0
|
%
|
|
|
Powers Ferry Landing East
Atlanta, GA
|
|
09/24/2012
|
|
Office
|
|
149,324
|
|
|
9,419
|
|
|
84.9
|
%
|
|
100.0
|
%
|
|
|
1800 West Loop
Houston, TX
|
|
12/04/2012
|
|
Office
|
|
400,101
|
|
|
73,283
|
|
|
79.7
|
%
|
|
100.0
|
%
|
|
|
West Loop I & II
Houston, TX
|
|
12/07/2012
|
|
Office
|
|
313,873
|
|
|
39,532
|
|
|
72.9
|
%
|
|
100.0
|
%
|
|
|
Burbank Collection
Burbank, CA
|
|
12/12/2012
|
|
Retail
|
|
39,428
|
|
|
14,231
|
|
|
47.7
|
%
|
|
90.0
|
%
|
|
|
Austin Suburban Portfolio
Austin, TX
|
|
03/28/2013
|
|
Office
|
|
517,974
|
|
|
78,911
|
|
|
77.2
|
%
|
|
100.0
|
%
|
|
|
Westmoor Center
Westminster, CO
|
|
06/12/2013
|
|
Office
|
|
612,890
|
|
|
86,204
|
|
|
78.0
|
%
|
|
100.0
|
%
|
|
|
Central Building
Seattle, WA
|
|
07/10/2013
|
|
Office
|
|
191,784
|
|
|
34,593
|
|
|
85.8
|
%
|
|
100.0
|
%
|
|
|
50 Congress Street
Boston, MA
|
|
07/11/2013
|
|
Office
|
|
179,872
|
|
|
53,690
|
|
|
93.2
|
%
|
|
100.0
|
%
|
|
|
1180 Raymond
Newark, NJ
|
|
08/20/2013
|
|
Apartment
|
|
268,688
|
|
|
44,778
|
|
|
84.5
|
%
|
|
100.0
|
%
|
|
|
Park Highlands II
North Las Vegas, NV
|
|
12/10/2013
|
|
Undeveloped Land
|
|
—
|
|
|
21,224
|
|
|
N/A
|
|
|
99.5
|
%
|
|
|
Maitland Promenade II
Orlando, FL
|
|
12/18/2013
|
|
Office
|
|
230,366
|
|
|
31,851
|
|
|
95.5
|
%
|
|
100.0
|
%
|
|
|
Plaza Buildings
Bellevue, WA
|
|
01/14/2014
|
|
Office
|
|
490,994
|
|
|
192,400
|
|
|
85.0
|
%
|
|
100.0
|
%
|
|
|
424 Bedford
Brooklyn, NY
|
|
01/31/2014
|
|
Apartment
|
|
49,220
|
|
|
33,676
|
|
|
97.0
|
%
|
|
90.0
|
%
|
|
|
Richardson Land II
Richardson, TX
|
|
09/04/2014
|
|
Undeveloped Land
|
|
—
|
|
|
7,944
|
|
|
N/A
|
|
|
90.0
|
%
|
|
|
|
|
|
|
|
|
4,872,163
|
|
|
$
|
919,259
|
|
|
|
|
|
||
|
Industry
|
|
Number of
Tenants
|
|
Annualized
Base Rent
(1)
(in thousands)
|
|
Percentage of
Annualized
Base Rent
|
|||
|
Finance
|
|
49
|
|
$
|
11,619
|
|
|
15.2
|
%
|
|
Computer System Design & Programming
|
|
39
|
|
9,350
|
|
|
12.2
|
%
|
|
|
Insurance Carriers & Related Activities
|
|
26
|
|
7,816
|
|
|
10.2
|
%
|
|
|
Professional, Scientific & Legal
|
|
57
|
|
7,634
|
|
|
10.0
|
%
|
|
|
|
|
|
|
$
|
36,419
|
|
|
47.6
|
%
|
|
Year of Expiration
|
|
Number of Leases Expiring
|
|
Annualized Base Rent
(in thousands)
(1)
|
|
% of Portfolio Annualized Base Rent Expiring
|
|
Leased Rentable Square Feet
Expiring
|
|
% of Portfolio Rentable Square Feet Expiring
|
||||||
|
Month-to-Month
|
|
20
|
|
|
$
|
1,149
|
|
|
1.6
|
%
|
|
125,822
|
|
|
3.5
|
%
|
|
2015
|
|
103
|
|
|
10,525
|
|
|
13.7
|
%
|
|
485,431
|
|
|
13.2
|
%
|
|
|
2016
|
|
76
|
|
|
10,592
|
|
|
13.8
|
%
|
|
551,933
|
|
|
15.1
|
%
|
|
|
2017
|
|
91
|
|
|
10,302
|
|
|
13.4
|
%
|
|
497,675
|
|
|
13.6
|
%
|
|
|
2018
|
|
70
|
|
|
12,189
|
|
|
15.9
|
%
|
|
538,645
|
|
|
14.7
|
%
|
|
|
2019
|
|
60
|
|
|
11,250
|
|
|
14.7
|
%
|
|
559,363
|
|
|
15.3
|
%
|
|
|
2020
|
|
21
|
|
|
5,287
|
|
|
6.9
|
%
|
|
231,690
|
|
|
6.3
|
%
|
|
|
2021
|
|
21
|
|
|
4,431
|
|
|
5.8
|
%
|
|
200,744
|
|
|
5.5
|
%
|
|
|
2022
|
|
5
|
|
|
2,884
|
|
|
3.8
|
%
|
|
139,812
|
|
|
3.8
|
%
|
|
|
2023
|
|
11
|
|
|
4,738
|
|
|
6.2
|
%
|
|
187,556
|
|
|
5.1
|
%
|
|
|
2024
|
|
6
|
|
|
2,487
|
|
|
3.2
|
%
|
|
95,611
|
|
|
2.6
|
%
|
|
|
Thereafter
|
|
4
|
|
|
768
|
|
|
1.0
|
%
|
|
49,671
|
|
|
1.3
|
%
|
|
|
Total
|
|
488
|
|
|
$
|
76,602
|
|
|
100
|
%
|
|
3,663,953
|
|
|
100
|
%
|
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
December 9, 2014
Estimated Value per Share |
|
March 25, 2014 Estimated Value per Share
(1)
|
|
Change in Estimated Value per Share
|
||||||
|
Real estate properties
(2)
|
|
$
|
20.77
|
|
|
$
|
16.09
|
|
|
$
|
4.68
|
|
|
Real estate loan receivable
|
|
0.46
|
|
|
0.37
|
|
|
0.09
|
|
|||
|
Cash
(3)
|
|
0.32
|
|
|
0.97
|
|
|
(0.65
|
)
|
|||
|
Investments in unconsolidated joint ventures
(4)
|
|
1.74
|
|
|
0.35
|
|
|
1.39
|
|
|||
|
Other assets
|
|
0.10
|
|
|
0.27
|
|
|
(0.17
|
)
|
|||
|
Mortgage debt
(5)
|
|
(8.75
|
)
|
|
(4.34
|
)
|
|
(4.41
|
)
|
|||
|
Advisor participation fee potential liability
|
|
(0.17
|
)
|
|
(0.10
|
)
|
|
(0.07
|
)
|
|||
|
Other liabilities
|
|
(0.34
|
)
|
|
(0.37
|
)
|
|
0.03
|
|
|||
|
Non-controlling interest
|
|
(1.89
|
)
|
|
(1.82
|
)
|
|
(0.07
|
)
|
|||
|
Acquisition-related costs subsequent to December 31, 2013
|
|
—
|
|
|
(0.15
|
)
|
|
0.15
|
|
|||
|
Estimated value per share
|
|
$
|
12.24
|
|
|
$
|
11.27
|
|
|
$
|
0.97
|
|
|
Estimated enterprise value premium
|
|
None assumed
|
|
|
None assumed
|
|
|
None assumed
|
|
|||
|
Total estimated value per share
|
|
$
|
12.24
|
|
|
$
|
11.27
|
|
|
$
|
0.97
|
|
|
|
|
Change in Estimated
Value per Share |
||
|
March 25, 2014 estimated value per share
|
|
$
|
11.27
|
|
|
Changes to estimated value per share
|
|
|
||
|
Real estate
|
|
|
||
|
Real estate
|
|
0.92
|
|
|
|
Investments in unconsolidated joint ventures
|
|
0.44
|
|
|
|
Capital expenditures on real estate
|
|
(0.32
|
)
|
|
|
Total change related to real estate
|
|
1.04
|
|
|
|
Operating cash flows in excess of quarterly distributions declared
|
|
0.07
|
|
|
|
Notes payable
|
|
(0.01
|
)
|
|
|
Minority interest in consolidated joint ventures
|
|
(0.04
|
)
|
|
|
Advisor participation fee potential liability
|
|
(0.07
|
)
|
|
|
Other changes, net
|
|
(0.02
|
)
|
|
|
Total change in estimated value per share
|
|
$
|
0.97
|
|
|
December 9, 2014 estimated value per share
|
|
$
|
12.24
|
|
|
|
|
Range in Values
|
|
Weighted-Average Basis
|
|
Consolidated Investments in Real Estate Properties (Excluding Undeveloped Land)
|
|
|
|
|
|
Terminal capitalization rate
|
|
4.50% to 9.00%
|
|
6.99%
|
|
Discount rate
|
|
5.00% to 10.00%
|
|
8.11%
|
|
Net operating income compounded annual growth rate
(1)
|
|
1.66% to 16.36%
|
|
6.91%
|
|
|
|
|
|
|
|
Undeveloped Land
|
|
|
|
|
|
Price per acre
(2) (3)
|
|
$96,673 to $653,548
|
|
$118,037
|
|
|
|
Increase (Decrease) on the Estimated Value per Share due to
|
||||||||||||||
|
|
|
Decrease of 25 basis points
|
|
Increase of 25 basis points
|
|
Decrease of 5%
|
|
Increase of 5%
|
||||||||
|
Terminal capitalization rates
|
|
$
|
0.31
|
|
|
$
|
(0.31
|
)
|
|
$
|
0.46
|
|
|
$
|
(0.43
|
)
|
|
Discount rates
|
|
0.26
|
|
|
(0.27
|
)
|
|
0.43
|
|
|
(0.44
|
)
|
||||
|
|
|
Increase (Decrease) on the Estimated Value per Share due to
|
||||||
|
|
|
Decrease of 5%
|
|
Increase of 5%
|
||||
|
Price per acre
|
|
$
|
(0.09
|
)
|
|
$
|
0.08
|
|
|
|
|
Increase (Decrease) on the Estimated Value per Share due to
|
||||||||||||||
|
|
|
Decrease of 25 basis points
|
|
Increase of 25 basis points
|
|
Decrease of 5%
|
|
Increase of 5%
|
||||||||
|
Terminal capitalization rates
|
|
$
|
0.05
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.07
|
)
|
|
Discount rates
|
|
0.04
|
|
|
(0.04
|
)
|
|
0.06
|
|
|
(0.07
|
)
|
||||
|
|
|
Increase (Decrease) on the Estimated Value per Share due to
|
||||||||||||||
|
|
|
Decrease of 25 basis points
|
|
Increase of 25 basis points
|
|
Decrease of 5%
|
|
Increase of 5%
|
||||||||
|
Discount rates
|
|
$
|
(0.05
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.03
|
|
|
•
|
a stockholder would be able to resell his or her shares at this estimated value;
|
|
•
|
a stockholder would ultimately realize distributions per share equal to our estimated value per share upon liquidation of our assets and settlement of our liabilities or a sale of the company;
|
|
•
|
our shares of common stock would trade at the estimated value per share on a national securities exchange;
|
|
•
|
an independent third-party appraiser or other third-party valuation firm would agree with our estimated value per share; or
|
|
•
|
the methodology used to calculate our estimated value per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.
|
|
|
||||
|
|
|
|
|
|
|
Estimated Value per Share
|
|
Effective Date of Valuation
|
|
Filing with the Securities and Exchange Commission
|
|
$11.27
|
|
March 25, 2014
|
|
Current Report on Form 8-K, filed March 27, 2014
|
|
|
2014
|
||||||||||||||||||
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Total
|
||||||||||
|
Total Distributions Declared
|
$
|
2,937
|
|
|
$
|
3,343
|
|
|
$
|
4,137
|
|
|
$
|
5,279
|
|
|
$
|
15,696
|
|
|
Total Per Share Distribution
|
$
|
0.049
|
|
|
$
|
0.056
|
|
|
$
|
0.069
|
|
|
$
|
0.088
|
|
|
$
|
0.262
|
|
|
Rate Based on Purchase Price of $10.00 Per Share
|
0.5
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
|
0.9
|
%
|
|
2.6
|
%
|
|||||
|
|
2013
|
||||||||||||||||||
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Total
|
||||||||||
|
Total Distributions Declared
|
$
|
3,576
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,103
|
|
|
$
|
25,679
|
|
|
Total Per Share Distribution
|
$
|
0.062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.380
|
|
|
$
|
0.442
|
|
|
Rate Based on Purchase Price of $10.00 Per Share
|
0.6
|
%
|
|
—
|
%
|
|
—
|
%
|
|
3.8
|
%
|
|
4.4
|
%
|
|||||
|
|
|
2014
|
|
2013
|
||
|
Ordinary Income
|
|
—
|
%
|
|
30
|
%
|
|
Return of Capital
|
|
100
|
%
|
|
—
|
%
|
|
Capital Gain
|
|
—
|
%
|
|
70
|
%
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
•
|
Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), we may not redeem shares until the stockholder has held the shares for one year.
|
|
•
|
During each calendar year, redemptions are limited to the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year and the last $1.0 million of such net proceeds shall be reserved exclusively for shares redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” (except that we may increase or decrease this funding limit by providing ten business days’ notice to our stockholders).
|
|
•
|
During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.
|
|
•
|
We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.
|
|
Month
|
|
Total Number
of Shares
Redeemed
|
|
Average
Price Paid
Per Share
(1)
|
|
Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
|
|||
|
January 2014
|
|
13,154
|
|
|
$
|
9.29
|
|
|
(2)
|
|
February 2014
|
|
52,330
|
|
|
$
|
9.00
|
|
|
(2)
|
|
March 2014
|
|
—
|
|
|
$
|
—
|
|
|
(2)
|
|
April 2014
|
|
73,339
|
|
|
$
|
10.88
|
|
|
(2)
|
|
May 2014
|
|
61,507
|
|
|
$
|
10.78
|
|
|
(2)
|
|
June 2014
|
|
42,712
|
|
|
$
|
10.67
|
|
|
(2)
|
|
July 2014
|
|
35,650
|
|
|
$
|
10.72
|
|
|
(2)
|
|
August 2014
|
|
25,634
|
|
|
$
|
10.75
|
|
|
(2)
|
|
September 2014
|
|
29,476
|
|
|
$
|
10.79
|
|
|
(2)
|
|
October 2014
|
|
19,246
|
|
|
$
|
10.89
|
|
|
(2)
|
|
November 2014
|
|
53,697
|
|
|
$
|
10.81
|
|
|
(2)
|
|
December 2014
|
|
69,072
|
|
|
$
|
11.98
|
|
|
(2)
|
|
Total
|
|
475,817
|
|
|
|
|
|
||
|
•
|
92.5% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least one year;
|
|
•
|
95.0% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least two years;
|
|
•
|
97.5% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least three years; and
|
|
•
|
100.0% of our most recent estimated value per share as of the applicable redemption date for those shares held for at least four years.
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
Balance sheet data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total real estate and real estate-related investments, net
|
$
|
882,510
|
|
|
$
|
660,385
|
|
|
$
|
394,356
|
|
|
$
|
166,354
|
|
|
$
|
17,774
|
|
|
Total assets
|
1,022,514
|
|
|
776,138
|
|
|
537,928
|
|
|
258,463
|
|
|
42,404
|
|
|||||
|
Total notes and bond payable, net
|
530,263
|
|
|
257,420
|
|
|
33,751
|
|
|
63,203
|
|
|
—
|
|
|||||
|
Total liabilities
|
562,467
|
|
|
283,879
|
|
|
44,625
|
|
|
66,628
|
|
|
1,346
|
|
|||||
|
Redeemable common stock
|
9,911
|
|
|
17,573
|
|
|
9,651
|
|
|
5,291
|
|
|
—
|
|
|||||
|
Total equity
|
450,136
|
|
|
474,686
|
|
|
483,652
|
|
|
186,544
|
|
|
41,058
|
|
|||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
Operating data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total revenues
|
$
|
106,154
|
|
|
$
|
68,496
|
|
|
$
|
18,880
|
|
|
$
|
3,901
|
|
|
$
|
308
|
|
|
(Loss) income from continuing operations attributable to common stockholders
|
(23,176
|
)
|
|
150
|
|
|
(8,840
|
)
|
|
(7,400
|
)
|
|
(1,975
|
)
|
|||||
|
Loss from continuing operations per common share - basic and diluted
|
$
|
(0.39
|
)
|
|
$
|
—
|
|
|
$
|
(0.25
|
)
|
|
$
|
(0.65
|
)
|
|
(1.18
|
)
|
|
|
Net (loss) income attributable to common stockholders
|
(23,194
|
)
|
|
11,493
|
|
|
(9,762
|
)
|
|
(7,581
|
)
|
|
(1,975
|
)
|
|||||
|
Net (loss) income per common share - basic and diluted
|
$
|
(0.39
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
|
$
|
(0.66
|
)
|
|
$
|
(1.18
|
)
|
|
Other data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash flows provided by (used in) operating activities
|
$
|
11,450
|
|
|
$
|
24,630
|
|
|
$
|
(1,028
|
)
|
|
$
|
(3,507
|
)
|
|
$
|
(1,572
|
)
|
|
Cash flows used in investing activities
|
(285,814
|
)
|
|
(289,875
|
)
|
|
(242,074
|
)
|
|
(154,405
|
)
|
|
(17,885
|
)
|
|||||
|
Cash flows provided by financing activities
|
235,461
|
|
|
197,281
|
|
|
282,683
|
|
|
220,649
|
|
|
42,906
|
|
|||||
|
Distributions declared
|
$
|
15,696
|
|
|
$
|
25,679
|
|
|
$
|
12,885
|
|
|
$
|
6,405
|
|
|
$
|
—
|
|
|
Distributions declared per common share
(1)
|
0.26
|
|
|
0.44
|
|
|
0.40
|
|
|
0.30
|
|
|
—
|
|
|||||
|
Weighted-average number of common shares
outstanding, basic and diluted
|
59,714,540
|
|
|
58,359,568
|
|
|
35,458,656
|
|
|
11,432,823
|
|
|
1,678,335
|
|
|||||
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
•
|
Proceeds from the primary portion of our initial public offering;
|
|
•
|
Proceeds from our dividend reinvestment plan;
|
|
•
|
Debt financing;
|
|
•
|
Proceeds from the sale of real estate and the repayment of real estate-related investments; and
|
|
•
|
Cash flow generated by our real estate and real estate-related investments.
|
|
•
|
Acquisitions of one office property, one apartment property and undeveloped land for an aggregate purchase price of $191.9 million, after giving effect for escrow deposits and liabilities assumed;
|
|
•
|
Investment in an unconsolidated joint venture of $59.0 million;
|
|
•
|
Improvements to real estate of $33.9 million;
|
|
•
|
Advance on real estate loan receivable of $5.0 million, net of a $0.9 million extension fee;
|
|
•
|
Distribution of capital from unconsolidated joint venture of $2.2 million;
|
|
•
|
Proceeds from the sale of real estate of $1.4 million; and
|
|
•
|
Principal repayments on real estate securities of $0.3 million.
|
|
•
|
$243.9 million of net cash provided by debt and other financings as a result of proceeds from notes payable of $307.3 million, partially offset by principal payments on notes payable of $59.2 million and payments of deferred financing costs of $4.1 million;
|
|
•
|
$5.8 million of net cash distributions, after giving effect to distributions reinvested by stockholders of $9.9 million;
|
|
•
|
$5.1 million of cash used for redemptions of common stock; and
|
|
•
|
$2.6 million of contributions from noncontrolling interests.
|
|
|
|
|
|
Payments Due During the Years Ending December 31,
|
||||||||||||||||
|
Contractual Obligations
|
|
Total
|
|
2015
|
|
2016-2017
|
|
2018-2019
|
|
Thereafter
|
||||||||||
|
Outstanding debt obligations
(1)
|
|
$
|
530,238
|
|
|
$
|
2,005
|
|
|
$
|
421,212
|
|
|
$
|
88,777
|
|
|
$
|
18,244
|
|
|
Interest payments on outstanding debt obligations
(2)
|
|
45,496
|
|
|
14,630
|
|
|
20,781
|
|
|
3,370
|
|
|
6,715
|
|
|||||
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
$ Change Due to Acquisitions/ Originations/Dispositions
(1)
|
|
$ Change Due to
Investments Held Throughout Both Periods (2) |
|||||||||||||
|
|
|
2014
|
|
2013
|
|
|
|
|
|||||||||||||||
|
Rental income
|
|
$
|
83,682
|
|
|
$
|
46,191
|
|
|
$
|
37,491
|
|
|
81
|
%
|
|
$
|
33,253
|
|
|
$
|
4,238
|
|
|
Tenant reimbursements
|
|
16,273
|
|
|
9,964
|
|
|
6,309
|
|
|
63
|
%
|
|
5,112
|
|
|
1,197
|
|
|||||
|
Interest income from real estate loans receivable
|
|
3,366
|
|
|
10,276
|
|
|
(6,910
|
)
|
|
(67
|
)%
|
|
(6,910
|
)
|
|
—
|
|
|||||
|
Interest income from real estate securities
|
|
—
|
|
|
91
|
|
|
(91
|
)
|
|
—
|
|
|
(91
|
)
|
|
—
|
|
|||||
|
Other operating income
|
|
2,833
|
|
|
1,974
|
|
|
859
|
|
|
44
|
%
|
|
1,118
|
|
|
(259
|
)
|
|||||
|
Operating, maintenance, and management costs
|
|
35,957
|
|
|
22,804
|
|
|
13,153
|
|
|
58
|
%
|
|
11,611
|
|
|
1,542
|
|
|||||
|
Real estate taxes and insurance
|
|
14,189
|
|
|
9,282
|
|
|
4,907
|
|
|
53
|
%
|
|
4,209
|
|
|
698
|
|
|||||
|
Asset management fees to affiliate
|
|
7,648
|
|
|
4,068
|
|
|
3,580
|
|
|
88
|
%
|
|
3,465
|
|
|
115
|
|
|||||
|
Real estate acquisition fees to affiliate
|
|
2,231
|
|
|
2,784
|
|
|
(553
|
)
|
|
(20
|
)%
|
|
(553
|
)
|
|
n/a
|
|
|||||
|
Real estate acquisition fees and expenses
|
|
2,177
|
|
|
1,218
|
|
|
959
|
|
|
79
|
%
|
|
959
|
|
|
n/a
|
|
|||||
|
General and administrative expenses
|
|
3,418
|
|
|
3,160
|
|
|
258
|
|
|
8
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Depreciation and amortization
|
|
47,063
|
|
|
28,677
|
|
|
18,386
|
|
|
64
|
%
|
|
18,310
|
|
|
76
|
|
|||||
|
Interest expense
|
|
15,598
|
|
|
2,706
|
|
|
12,892
|
|
|
476
|
%
|
|
10,424
|
|
|
2,468
|
|
|||||
|
Impairment charges on real estate held for investment
|
|
579
|
|
|
1,433
|
|
|
(854
|
)
|
|
(60
|
)%
|
|
—
|
|
|
(854
|
)
|
|||||
|
Gain from foreclosure of real estate loan receivable
|
|
—
|
|
|
7,473
|
|
|
(7,473
|
)
|
|
—
|
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Total (loss) income from discontinued operations
|
|
(18
|
)
|
|
11,741
|
|
|
(11,759
|
)
|
|
(100
|
)%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Percentage Change
|
|
$ Change Due to Acquisitions/ Originations
(1)
|
|
$ Change Due to
Investments Held Throughout
Both Periods
(2)
|
|||||||||||||
|
|
|
2013
|
|
2012
|
|
|
|
|
|||||||||||||||
|
Rental income
|
|
$
|
46,191
|
|
|
$
|
13,780
|
|
|
$
|
32,411
|
|
|
235
|
%
|
|
$
|
31,572
|
|
|
$
|
839
|
|
|
Tenant reimbursements
|
|
9,964
|
|
|
1,595
|
|
|
8,369
|
|
|
525
|
%
|
|
8,079
|
|
|
290
|
|
|||||
|
Interest income from real estate loans receivable
|
|
10,276
|
|
|
1,708
|
|
|
8,568
|
|
|
502
|
%
|
|
8,568
|
|
|
—
|
|
|||||
|
Interest income from real estate securities
|
|
91
|
|
|
926
|
|
|
(835
|
)
|
|
(90
|
)%
|
|
—
|
|
|
(835
|
)
|
|||||
|
Other operating income
|
|
1,974
|
|
|
871
|
|
|
1,103
|
|
|
127
|
%
|
|
1,106
|
|
|
(3
|
)
|
|||||
|
Operating, maintenance, and management costs
|
|
22,804
|
|
|
7,779
|
|
|
15,025
|
|
|
193
|
%
|
|
14,558
|
|
|
467
|
|
|||||
|
Real estate taxes and insurance
|
|
9,282
|
|
|
2,476
|
|
|
6,806
|
|
|
275
|
%
|
|
6,971
|
|
|
(165
|
)
|
|||||
|
Asset management fees to affiliate
|
|
4,068
|
|
|
1,625
|
|
|
2,443
|
|
|
150
|
%
|
|
2,654
|
|
|
(211
|
)
|
|||||
|
Real estate acquisition fees to affiliate
|
|
2,784
|
|
|
2,206
|
|
|
578
|
|
|
26
|
%
|
|
578
|
|
|
n/a
|
|
|||||
|
Real estate acquisition fees and expenses
|
|
1,218
|
|
|
1,352
|
|
|
(134
|
)
|
|
(10
|
)%
|
|
(134
|
)
|
|
n/a
|
|
|||||
|
General and administrative expenses
|
|
3,160
|
|
|
3,075
|
|
|
85
|
|
|
3
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Depreciation and amortization
|
|
28,677
|
|
|
8,606
|
|
|
20,071
|
|
|
233
|
%
|
|
20,716
|
|
|
(645
|
)
|
|||||
|
Interest expense
|
|
2,706
|
|
|
2,199
|
|
|
507
|
|
|
23
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Impairment charges on real estate held for investment
|
|
1,433
|
|
|
—
|
|
|
1,433
|
|
|
—
|
|
|
—
|
|
|
1,433
|
|
|||||
|
Gain from foreclosure of real estate loan receivable
|
|
7,473
|
|
|
—
|
|
|
7,473
|
|
|
—
|
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Total income (loss) from discontinued operations
|
|
11,741
|
|
|
(1,023
|
)
|
|
12,764
|
|
|
(1,248
|
)%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
•
|
Adjustments for straight-line rent.
These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease. We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, while also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we expect to receive in a future period or rent that was received in a prior period;
|
|
•
|
Amortization of above- and below-market leases.
Similar to depreciation and amortization of real estate assets and lease related costs that are excluded from FFO, GAAP implicitly assumes that the value of intangible lease assets and liabilities diminishes predictably over time and requires that these charges be recognized currently in revenue. Since market lease rates in the aggregate have historically risen or fallen with local market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the realized economics of the real estate; and
|
|
•
|
Amortization of discounts and closing costs.
Discounts and closing costs related to debt investments are amortized over the term of the loan as an adjustment to interest income. This application results in income recognition that is different than the underlying contractual terms of the debt investments. We have excluded the amortization of discounts and closing costs related to our debt investments in our calculation of MFFO to more appropriately reflect the economic impact of our debt investments, as discounts will not be economically recognized until the loan is repaid and closing costs are essentially the same as acquisition fees and expenses on real estate (discussed below). We believe excluding these items provides investors with a useful supplemental metric that directly addresses core operating performance;
|
|
•
|
Acquisition fees and expenses.
Acquisition fees and expenses related to the acquisition of real estate are expensed. Although these amounts reduce net income, we exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis. Additionally, acquisition costs have been funded from the proceeds from our now terminated initial public offering and debt financings and not from our operations. We believe this exclusion is useful to investors as it allows investors to more accurately evaluate the sustainability of our operating performance.
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net (loss) income attributable to common stockholders
|
$
|
(23,194
|
)
|
|
$
|
11,493
|
|
|
$
|
(9,762
|
)
|
|
Depreciation of real estate assets
|
20,278
|
|
|
10,003
|
|
|
2,484
|
|
|||
|
Depreciation of real estate assets - discontinued operations
|
—
|
|
|
250
|
|
|
190
|
|
|||
|
Amortization of lease-related costs
|
26,785
|
|
|
18,674
|
|
|
6,122
|
|
|||
|
Amortization of lease-related costs - discontinued operations
|
—
|
|
|
807
|
|
|
736
|
|
|||
|
Impairment charges on real estate
|
579
|
|
|
1,433
|
|
|
—
|
|
|||
|
Gain on sale of real estate, net
|
(55
|
)
|
|
(13,108
|
)
|
|
(593
|
)
|
|||
|
Gain on foreclosure of real estate loan receivable, net
|
—
|
|
|
(7,473
|
)
|
|
—
|
|
|||
|
Gain on early payoff of real estate loan receivable
|
—
|
|
|
—
|
|
|
(358
|
)
|
|||
|
Gain on sale of real estate securities, net
|
—
|
|
|
—
|
|
|
(214
|
)
|
|||
|
Adjustments for noncontrolling interests - consolidated entity
(1)
|
(657
|
)
|
|
(89
|
)
|
|
(543
|
)
|
|||
|
Adjustments for investment in unconsolidated entity
(2)
|
5,312
|
|
|
—
|
|
|
—
|
|
|||
|
FFO
|
29,048
|
|
|
21,990
|
|
|
(1,938
|
)
|
|||
|
Straight-line rent and amortization of above- and below-market leases
|
(9,731
|
)
|
|
(4,556
|
)
|
|
(844
|
)
|
|||
|
Amortization of discounts and closing costs
|
(605
|
)
|
|
(806
|
)
|
|
(234
|
)
|
|||
|
Real estate acquisition fees to affiliate
|
2,231
|
|
|
2,784
|
|
|
2,206
|
|
|||
|
Real estate acquisition fees and expenses
|
2,177
|
|
|
1,218
|
|
|
1,352
|
|
|||
|
Amortization of net premium/discount on bond and notes payable
|
(1
|
)
|
|
(92
|
)
|
|
—
|
|
|||
|
Prepayment fees related to the extinguishment of debt
|
332
|
|
|
119
|
|
|
—
|
|
|||
|
Gain from extinguishment of debt
|
—
|
|
|
—
|
|
|
(581
|
)
|
|||
|
Adjustments for noncontrolling interests - consolidated entity
(1)
|
(135
|
)
|
|
12
|
|
|
197
|
|
|||
|
Adjustments for investment in unconsolidated entity
(2)
|
(3,388
|
)
|
|
146
|
|
|
—
|
|
|||
|
MFFO
|
19,928
|
|
|
20,815
|
|
|
158
|
|
|||
|
Other capitalized operating expenses
(3)
|
(2,942
|
)
|
|
(3,390
|
)
|
|
—
|
|
|||
|
Adjustments for noncontrolling interests - consolidated entity
(1)
|
314
|
|
|
314
|
|
|
—
|
|
|||
|
Adjusted MFFO
|
$
|
17,300
|
|
|
$
|
17,739
|
|
|
$
|
158
|
|
|
|
|
Distribution Declared
|
|
Distributions Declared Per Share
|
|
Distributions Paid
|
|
Cash Flows From (Used in) Operations
|
||||||||||||||||
|
Period
|
|
|
|
Cash
|
|
Reinvested
|
|
Total
|
|
|||||||||||||||
|
First Quarter 2014
|
|
$
|
2,937
|
|
|
$
|
0.049
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,931
|
)
|
|
Second Quarter 2014
|
|
3,343
|
|
|
0.056
|
|
|
2,260
|
|
|
4,020
|
|
|
6,280
|
|
|
1,441
|
|
||||||
|
Third Quarter 2014
|
|
4,137
|
|
|
0.069
|
|
|
1,533
|
|
|
2,604
|
|
|
4,137
|
|
|
8,801
|
|
||||||
|
Fourth Quarter 2014
|
|
5,279
|
|
|
0.088
|
|
|
1,992
|
|
|
3,287
|
|
|
5,279
|
|
|
4,139
|
|
||||||
|
|
|
$
|
15,696
|
|
|
$
|
0.262
|
|
|
$
|
5,785
|
|
|
$
|
9,911
|
|
|
$
|
15,696
|
|
|
$
|
11,450
|
|
|
Buildings
|
25-40 years
|
|
Building Improvements
|
10-40 years
|
|
Tenant Improvements
|
Shorter of lease term or expected useful life
|
|
Tenant origination and absorption costs
|
Remaining term of related leases, including below-market renewal periods
|
|
•
|
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.
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
|
|
Maturity Date
|
|
Total Book Value
|
|
|
||||||||||||||||||||||||||
|
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
Thereafter
|
|
|
Fair Value
|
|||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Loan receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Mortgage loan - fixed rate
|
|
$
|
27,422
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,422
|
|
|
$
|
27,813
|
|
|
Annual effective interest rate
(1)
|
|
14.2
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.2
|
%
|
|
|
|||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Notes and Bond Payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
32,836
|
|
|
$
|
32,836
|
|
|
$
|
35,218
|
|
|
Average interest rate
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.5
|
%
|
|
4.5
|
%
|
|
|
|||||||||
|
Variable rate
|
|
$
|
—
|
|
|
$
|
13,693
|
|
|
$
|
403,958
|
|
|
$
|
79,776
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
497,427
|
|
|
$
|
498,827
|
|
|
Average interest rate
(2)
|
|
—
|
|
|
2.5
|
%
|
|
2.7
|
%
|
|
2.3
|
%
|
|
—
|
|
|
—
|
|
|
2.6
|
%
|
|
|
|||||||||
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
|
ITEM 9B.
|
OTHER INFORMATION
|
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
Ex.
|
|
Description
|
|
|
|
|
|
3.1
|
|
Second Articles of Amendment and Restatement, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed February 4, 2010
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-156633
|
|
|
|
|
|
4.1
|
|
Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-156633
|
|
|
|
|
|
4.2
|
|
Fourth Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2014
|
|
|
|
|
|
10.1
|
|
Loan Agreement by and between KBS SOR Westmoor Center, LLC and Bank of America, N.A., dated as of January 8, 2014, incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.2
|
|
Guaranty Agreement by KBS SOR Properties, LLC in favor of Bank of America, N.A., dated as of January 8, 2014, incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.3
|
|
Deed of Trust, Assignment, Security Agreement and Fixture Filing by KBS SOR Westmoor Center, LLC in favor of the Public Trustee of Jefferson County, Colorado, as trustee, and Bank of America, N.A., dated as of January 8, 2014, incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.4
|
|
Loan Agreement by and between KBS SOR Plaza Bellevue, LLC and Wells Fargo Bank, National Association, dated as of January 14, 2014, incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.5
|
|
Limited Guaranty by KBS SOR Properties, LLC in favor of Wells Fargo Bank, National Association, dated as of January 14, 2014, incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.6
|
|
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by KBS SOR Plaza Bellevue, LLC in favor of Chicago Title Company of Washington, as trustee for Wells Fargo Bank, National Association, dated as of January 14, 2014, incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.7
|
|
Loan Agreement by and between KBS SOR Acquisition XXVI, LLC and SBAF Mortgage Fund I/Lender, LLC, dated as of January 14, 2014, incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.8
|
|
Mezzanine Loan Guaranty by KBS SOR Properties, LLC in favor of SBAF Mortgage Fund I/Lender, LLC, dated as of January 14, 2014, incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013
|
|
|
|
|
|
10.9
|
|
Loan Agreement between 110 William, LLC and UBS Real Estate Securities Inc., dated as of June 11, 2012, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for period ended March 31, 2014
|
|
Ex.
|
|
Description
|
|
|
|
|
|
10.10
|
|
Loan Assumption and Substitution Agreement by and among 110 William, LLC, 110 William Property Investors III, LLC, Kent M. Swig and Longwing Incorporated, Savanna Real Estate Fund III, L.P. and US Bank National Association, as Trustee for the Registered Holders of UBS-Barclays Commercial Mortgage Trust 2012-C2, Commercial Mortgage Pass-Through Certificates, Series 2012-C2, dated as of May 2, 2014, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for period ended March 31, 2014
|
|
|
|
|
|
10.11
|
|
Cash Management Agreement among 110 William, LLC and UBS Real Estate Securities Inc. and Wells Fargo Bank, N.A. and Swig Equities, LLC, dated as of June 11, 2012, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for period ended March 31, 2014
|
|
|
|
|
|
10.12
|
|
First Amendment to Cash Management Agreement among 110 William, LLC, 110 William Property Investors III, LLC, US Bank National Association, as Trustee for the Registered Holders of UBS-Barclays Commercial Mortgage Trust 2012-C2, Commercial Mortgage Pass-Through Certificates, Series 2012-C2, Wells Fargo Bank, N.A. and Swig Equities, LLC, dated as of May 2, 2014, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for period ended March 31, 2014
|
|
|
|
|
|
10.13
|
|
Mezzanine Loan Agreement between 110 William Mezz, LLC, Pearlmark Mezzanine Realty Partners III, L.L.C. and TMRP III Co-Investment, L.L.C., dated as of June 11, 2012, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for period ended March 31, 2014
|
|
|
|
|
|
10.14
|
|
Assumption Agreement by and among Pearlmark Mezzanine Realty Partners III, L.L.C., TMRP III Co-Investment, L.L.C, 110 William Mezz, LLC, Longwing Incorporated, Kent M. Swig and Savanna Real Estate Fund III, L.P., dated as of May 2, 2014, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for period ended March 31, 2014
|
|
|
|
|
|
10.15
|
|
Advisory Agreement by and between the Company and KBS Capital Advisors LLC, dated October 8, 2014, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for period ended September 30, 2014
|
|
|
|
|
|
21.1
|
|
Subsidiaries of the Company
|
|
|
|
|
|
23.1
|
|
Consent of Ernst & Young LLP
|
|
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
99.1
|
|
Third Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012
|
|
|
|
|
|
99.2
|
|
Fourth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed February 18, 2014
|
|
|
|
|
|
99.3
|
|
Consent of Duff & Phelps, LLC
|
|
|
|
|
|
99.4
|
|
Consent of Landauer Services, LLC
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
Consolidated Financial Statements
|
|
|
|
|
|
Financial Statement Schedule
|
|
|
|
|
December 31,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Assets
|
|
|
|
|
||||
|
Real estate held for investment, net
|
|
$
|
855,088
|
|
|
$
|
636,885
|
|
|
Real estate held for sale, net
|
|
—
|
|
|
1,274
|
|
||
|
Real estate loan receivable, net
|
|
27,422
|
|
|
21,893
|
|
||
|
Real estate securities
|
|
—
|
|
|
333
|
|
||
|
Total real estate and real estate-related investments, net
|
|
882,510
|
|
|
660,385
|
|
||
|
Cash and cash equivalents
|
|
19,093
|
|
|
57,996
|
|
||
|
Investments in unconsolidated joint ventures
|
|
72,045
|
|
|
16,338
|
|
||
|
Rents and other receivables, net
|
|
18,314
|
|
|
8,540
|
|
||
|
Above-market leases, net
|
|
2,061
|
|
|
2,935
|
|
||
|
Assets related to real estate held for sale
|
|
—
|
|
|
126
|
|
||
|
Prepaid expenses and other assets
|
|
28,491
|
|
|
29,818
|
|
||
|
Total assets
|
|
$
|
1,022,514
|
|
|
$
|
776,138
|
|
|
Liabilities and equity
|
|
|
|
|
||||
|
Notes and bond payable, net
|
|
$
|
530,263
|
|
|
$
|
257,420
|
|
|
Accounts payable and accrued liabilities
|
|
18,609
|
|
|
15,558
|
|
||
|
Below-market leases, net
|
|
4,403
|
|
|
4,420
|
|
||
|
Other liabilities
|
|
9,192
|
|
|
6,481
|
|
||
|
Total liabilities
|
|
562,467
|
|
|
283,879
|
|
||
|
Commitments and contingencies (Note 14)
|
|
|
|
|
|
|
||
|
Redeemable common stock
|
|
9,911
|
|
|
17,573
|
|
||
|
Equity
|
|
|
|
|
||||
|
KBS Strategic Opportunity REIT, Inc. stockholders’ equity
|
|
|
|
|
||||
|
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding
|
|
—
|
|
|
—
|
|
||
|
Common stock, $.01 par value; 1,000,000,000 shares authorized, 60,044,329 and 59,619,000 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively
|
|
600
|
|
|
596
|
|
||
|
Additional paid-in capital
|
|
524,489
|
|
|
512,036
|
|
||
|
Cumulative distributions and net losses
|
|
(91,691
|
)
|
|
(52,801
|
)
|
||
|
Accumulated other comprehensive loss
|
|
—
|
|
|
(9
|
)
|
||
|
Total KBS Strategic Opportunity REIT, Inc. stockholders’ equity
|
|
433,398
|
|
|
459,822
|
|
||
|
Noncontrolling interests
|
|
16,738
|
|
|
14,864
|
|
||
|
Total equity
|
|
450,136
|
|
|
474,686
|
|
||
|
Total liabilities and equity
|
|
$
|
1,022,514
|
|
|
$
|
776,138
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Rental income
|
|
$
|
83,682
|
|
|
$
|
46,191
|
|
|
$
|
13,780
|
|
|
Tenant reimbursements
|
|
16,273
|
|
|
9,964
|
|
|
1,595
|
|
|||
|
Interest income from real estate loans receivable
|
|
3,366
|
|
|
10,276
|
|
|
1,708
|
|
|||
|
Interest income from real estate securities
|
|
—
|
|
|
91
|
|
|
926
|
|
|||
|
Other operating income
|
|
2,833
|
|
|
1,974
|
|
|
871
|
|
|||
|
Total revenues
|
|
106,154
|
|
|
68,496
|
|
|
18,880
|
|
|||
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Operating, maintenance, and management
|
|
35,957
|
|
|
22,804
|
|
|
7,779
|
|
|||
|
Real estate taxes and insurance
|
|
14,189
|
|
|
9,282
|
|
|
2,476
|
|
|||
|
Asset management fees to affiliate
|
|
7,648
|
|
|
4,068
|
|
|
1,625
|
|
|||
|
Real estate acquisition fees to affiliate
|
|
2,231
|
|
|
2,784
|
|
|
2,206
|
|
|||
|
Real estate acquisition fees and expenses
|
|
2,177
|
|
|
1,218
|
|
|
1,352
|
|
|||
|
General and administrative expenses
|
|
3,418
|
|
|
3,160
|
|
|
3,075
|
|
|||
|
Depreciation and amortization
|
|
47,063
|
|
|
28,677
|
|
|
8,606
|
|
|||
|
Interest expense
|
|
15,598
|
|
|
2,706
|
|
|
2,199
|
|
|||
|
Impairment charges on real estate held for investment
|
|
579
|
|
|
1,433
|
|
|
—
|
|
|||
|
Total expenses
|
|
128,860
|
|
|
76,132
|
|
|
29,318
|
|
|||
|
Other income (loss):
|
|
|
|
|
|
|
||||||
|
Other interest income
|
|
22
|
|
|
62
|
|
|
97
|
|
|||
|
Gain from extinguishment of debt
|
|
—
|
|
|
—
|
|
|
581
|
|
|||
|
Income from unconsolidated joint venture
|
|
—
|
|
|
95
|
|
|
116
|
|
|||
|
Equity in loss of unconsolidated joint venture
|
|
(1,101
|
)
|
|
(146
|
)
|
|
—
|
|
|||
|
Gain on sale of real estate, net
|
|
55
|
|
|
—
|
|
|
—
|
|
|||
|
Gain on early payoff of real estate loan receivable
|
|
—
|
|
|
—
|
|
|
358
|
|
|||
|
Gain on sale of real estate securities
|
|
—
|
|
|
—
|
|
|
214
|
|
|||
|
Gain on foreclosure of real estate loan receivable
|
|
—
|
|
|
7,473
|
|
|
—
|
|
|||
|
Total other (loss) income, net
|
|
(1,024
|
)
|
|
7,484
|
|
|
1,366
|
|
|||
|
Loss from continuing operations
|
|
(23,730
|
)
|
|
(152
|
)
|
|
(9,072
|
)
|
|||
|
Discontinued operations:
|
|
|
|
|
|
|
||||||
|
Gain on sale of real estate, net
|
|
—
|
|
|
13,108
|
|
|
593
|
|
|||
|
Loss from discontinued operations
|
|
(18
|
)
|
|
(1,367
|
)
|
|
(1,616
|
)
|
|||
|
Total (loss) income from discontinued operations
|
|
(18
|
)
|
|
11,741
|
|
|
(1,023
|
)
|
|||
|
Net (loss) income
|
|
(23,748
|
)
|
|
11,589
|
|
|
(10,095
|
)
|
|||
|
Net loss (income) attributable to noncontrolling interests
|
|
554
|
|
|
(96
|
)
|
|
333
|
|
|||
|
Net (loss) income attributable to common stockholders
|
|
$
|
(23,194
|
)
|
|
$
|
11,493
|
|
|
$
|
(9,762
|
)
|
|
Basic and diluted (loss) income per common share:
|
|
|
|
|
|
|
||||||
|
Continuing operations
|
|
$
|
(0.39
|
)
|
|
$
|
—
|
|
|
$
|
(0.25
|
)
|
|
Discontinued operations
|
|
—
|
|
|
0.20
|
|
|
(0.03
|
)
|
|||
|
Net (loss) income per common share
|
|
$
|
(0.39
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
|
Weighted-average number of common shares outstanding, basic and diluted
|
|
59,714,540
|
|
|
58,359,568
|
|
|
35,458,656
|
|
|||
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Net (loss) income
|
|
$
|
(23,748
|
)
|
|
$
|
11,589
|
|
|
$
|
(10,095
|
)
|
|
Other comprehensive income:
|
|
|
|
|
|
|
||||||
|
Reclassification of realized gain on sale of real estate securities
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
|||
|
Unrealized gain on real estate securities
|
|
9
|
|
|
4
|
|
|
247
|
|
|||
|
Total other comprehensive income
|
|
9
|
|
|
4
|
|
|
33
|
|
|||
|
Total comprehensive (loss) income
|
|
(23,739
|
)
|
|
11,593
|
|
|
(10,062
|
)
|
|||
|
Total comprehensive loss (income) attributable to noncontrolling interests
|
|
554
|
|
|
(96
|
)
|
|
333
|
|
|||
|
Total comprehensive (loss) income attributable to common stockholders
|
|
$
|
(23,185
|
)
|
|
$
|
11,497
|
|
|
$
|
(9,729
|
)
|
|
|
|
|
|
|
Additional Paid-in Capital
|
|
Cumulative Distributions and
Net Losses
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||
|
|
Common Stock
|
|
|
|
||||||||||||||||||||||||||
|
|
Shares
|
|
Amounts
|
|
|
|
||||||||||||||||||||||||
|
Balance, December 31, 2011
|
22,214,815
|
|
|
$
|
222
|
|
|
$
|
188,817
|
|
|
$
|
(15,968
|
)
|
|
$
|
(46
|
)
|
|
$
|
173,025
|
|
|
$
|
13,519
|
|
|
$
|
186,544
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,762
|
)
|
|
—
|
|
|
(9,762
|
)
|
|
(333
|
)
|
|
(10,095
|
)
|
|||||||
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
33
|
|
|
—
|
|
|
33
|
|
|||||||
|
Issuance of common stock
|
35,993,756
|
|
|
360
|
|
|
356,974
|
|
|
—
|
|
|
—
|
|
|
357,334
|
|
|
—
|
|
|
357,334
|
|
|||||||
|
Transfers to redeemable common stock
|
—
|
|
|
—
|
|
|
(4,360
|
)
|
|
—
|
|
|
—
|
|
|
(4,360
|
)
|
|
—
|
|
|
(4,360
|
)
|
|||||||
|
Redemptions of common stock
|
(80,944
|
)
|
|
(1
|
)
|
|
(754
|
)
|
|
—
|
|
|
—
|
|
|
(755
|
)
|
|
—
|
|
|
(755
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,885
|
)
|
|
—
|
|
|
(12,885
|
)
|
|
—
|
|
|
(12,885
|
)
|
|||||||
|
Commissions on stock sales and related dealer manager fees to affiliate
|
—
|
|
|
—
|
|
|
(31,134
|
)
|
|
—
|
|
|
—
|
|
|
(31,134
|
)
|
|
—
|
|
|
(31,134
|
)
|
|||||||
|
Other offering costs
|
—
|
|
|
—
|
|
|
(3,636
|
)
|
|
—
|
|
|
—
|
|
|
(3,636
|
)
|
|
—
|
|
|
(3,636
|
)
|
|||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,630
|
|
|
2,630
|
|
|||||||
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
(24
|
)
|
|||||||
|
Balance, December 31, 2012
|
58,127,627
|
|
|
$
|
581
|
|
|
$
|
505,907
|
|
|
$
|
(38,615
|
)
|
|
$
|
(13
|
)
|
|
$
|
467,860
|
|
|
$
|
15,792
|
|
|
$
|
483,652
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
11,493
|
|
|
—
|
|
|
11,493
|
|
|
96
|
|
|
11,589
|
|
|||||||
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||||
|
Issuance of common stock
|
1,751,478
|
|
|
18
|
|
|
16,623
|
|
|
—
|
|
|
—
|
|
|
16,641
|
|
|
—
|
|
|
16,641
|
|
|||||||
|
Transfers to redeemable common stock
|
—
|
|
|
—
|
|
|
(7,922
|
)
|
|
—
|
|
|
—
|
|
|
(7,922
|
)
|
|
—
|
|
|
(7,922
|
)
|
|||||||
|
Redemptions of common stock
|
(260,105
|
)
|
|
(3
|
)
|
|
(2,447
|
)
|
|
—
|
|
|
—
|
|
|
(2,450
|
)
|
|
—
|
|
|
(2,450
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,679
|
)
|
|
—
|
|
|
(25,679
|
)
|
|
—
|
|
|
(25,679
|
)
|
|||||||
|
Other offering costs
|
—
|
|
|
—
|
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|
(125
|
)
|
|
—
|
|
|
(125
|
)
|
|||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,213
|
|
|
1,213
|
|
|||||||
|
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,237
|
)
|
|
(2,237
|
)
|
|||||||
|
Balance, December 31, 2013
|
59,619,000
|
|
|
$
|
596
|
|
|
$
|
512,036
|
|
|
$
|
(52,801
|
)
|
|
$
|
(9
|
)
|
|
$
|
459,822
|
|
|
$
|
14,864
|
|
|
$
|
474,686
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,194
|
)
|
|
—
|
|
|
(23,194
|
)
|
|
(554
|
)
|
|
(23,748
|
)
|
|||||||
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||||
|
Issuance of common stock
|
901,146
|
|
|
9
|
|
|
9,902
|
|
|
—
|
|
|
—
|
|
|
9,911
|
|
|
—
|
|
|
9,911
|
|
|||||||
|
Transfers from redeemable common stock
|
—
|
|
|
—
|
|
|
7,662
|
|
|
—
|
|
|
—
|
|
|
7,662
|
|
|
—
|
|
|
7,662
|
|
|||||||
|
Redemptions of common stock
|
(475,817
|
)
|
|
(5
|
)
|
|
(5,099
|
)
|
|
—
|
|
|
—
|
|
|
(5,104
|
)
|
|
—
|
|
|
(5,104
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,696
|
)
|
|
—
|
|
|
(15,696
|
)
|
|
—
|
|
|
(15,696
|
)
|
|||||||
|
Other offering costs
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,585
|
|
|
2,585
|
|
|||||||
|
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|
(157
|
)
|
|||||||
|
Balance, December 31, 2014
|
60,044,329
|
|
|
$
|
600
|
|
|
$
|
524,489
|
|
|
$
|
(91,691
|
)
|
|
$
|
—
|
|
|
$
|
433,398
|
|
|
$
|
16,738
|
|
|
$
|
450,136
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
||||||
|
Net (loss) income
|
|
$
|
(23,748
|
)
|
|
$
|
11,589
|
|
|
$
|
(10,095
|
)
|
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
|
Loss due to property damages
|
|
707
|
|
|
—
|
|
|
—
|
|
|||
|
Equity in loss of unconsolidated joint venture
|
|
1,101
|
|
|
146
|
|
|
—
|
|
|||
|
Depreciation and amortization
|
|
|
|
|
|
|
||||||
|
Continuing operations
|
|
47,063
|
|
|
28,677
|
|
|
8,606
|
|
|||
|
Discontinued operations
|
|
—
|
|
|
1,057
|
|
|
926
|
|
|||
|
Impairment charges on real estate held for investment
|
|
579
|
|
|
1,433
|
|
|
—
|
|
|||
|
Non-cash interest income on real estate related investments
|
|
(614
|
)
|
|
(842
|
)
|
|
(1,053
|
)
|
|||
|
Gain on sale of real estate
|
|
(55
|
)
|
|
(13,108
|
)
|
|
(593
|
)
|
|||
|
Gain on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(581
|
)
|
|||
|
Gain on early payoff of real estate loan receivable
|
|
—
|
|
|
—
|
|
|
(358
|
)
|
|||
|
Gain on sale of real estate securities, net
|
|
—
|
|
|
—
|
|
|
(214
|
)
|
|||
|
Gain on foreclosure of real estate loan receivable, net
|
|
—
|
|
|
(7,473
|
)
|
|
—
|
|
|||
|
Deferred rent
|
|
(8,392
|
)
|
|
(4,694
|
)
|
|
(1,932
|
)
|
|||
|
Bad debt expense
|
|
176
|
|
|
197
|
|
|
52
|
|
|||
|
Amortization of above- and below-market leases, net
|
|
(1,339
|
)
|
|
138
|
|
|
1,088
|
|
|||
|
Amortization of deferred financing costs
|
|
2,778
|
|
|
976
|
|
|
295
|
|
|||
|
Interest accretion on real estate securities
|
|
9
|
|
|
36
|
|
|
819
|
|
|||
|
Amortization of net premium/discount on bond and notes payable
|
|
(1
|
)
|
|
(92
|
)
|
|
—
|
|
|||
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
|
Rents and other receivables
|
|
(1,817
|
)
|
|
(1,312
|
)
|
|
(420
|
)
|
|||
|
Deferred interest receivable
|
|
—
|
|
|
1,001
|
|
|
—
|
|
|||
|
Prepaid expenses and other assets
|
|
(8,314
|
)
|
|
(2,299
|
)
|
|
(1,979
|
)
|
|||
|
Accounts payable and accrued liabilities
|
|
606
|
|
|
6,089
|
|
|
2,302
|
|
|||
|
Due to affiliates
|
|
—
|
|
|
(21
|
)
|
|
4
|
|
|||
|
Other liabilities
|
|
2,711
|
|
|
3,132
|
|
|
2,105
|
|
|||
|
Net cash provided by (used in) operating activities
|
|
11,450
|
|
|
24,630
|
|
|
(1,028
|
)
|
|||
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
||||||
|
Acquisitions of real estate
|
|
(191,925
|
)
|
|
(295,167
|
)
|
|
(211,655
|
)
|
|||
|
Improvements to real estate
|
|
(33,892
|
)
|
|
(22,398
|
)
|
|
(7,054
|
)
|
|||
|
Proceeds from sales of real estate, net
|
|
1,393
|
|
|
30,658
|
|
|
1,843
|
|
|||
|
Escrow deposits for future real estate purchases
|
|
—
|
|
|
(13,000
|
)
|
|
—
|
|
|||
|
Investments in real estate loans receivable
|
|
(5,850
|
)
|
|
(21,568
|
)
|
|
(78,398
|
)
|
|||
|
Payoff of real estate loan receivable
|
|
—
|
|
|
35,750
|
|
|
—
|
|
|||
|
Proceeds from early payoff of real estate loan receivable
|
|
—
|
|
|
—
|
|
|
7,903
|
|
|||
|
Principal repayments on real estate securities
|
|
333
|
|
|
4,452
|
|
|
38,270
|
|
|||
|
Proceeds from sale of real estate securities
|
|
—
|
|
|
—
|
|
|
14,943
|
|
|||
|
Investment in unconsolidated joint venture
|
|
(58,987
|
)
|
|
(9,000
|
)
|
|
(8,000
|
)
|
|||
|
Distribution of capital from unconsolidated joint venture
|
|
2,179
|
|
|
398
|
|
|
74
|
|
|||
|
Extension fee received on real estate loan receivable
|
|
935
|
|
|
—
|
|
|
—
|
|
|||
|
Net cash used in investing activities
|
|
(285,814
|
)
|
|
(289,875
|
)
|
|
(242,074
|
)
|
|||
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
||||||
|
Proceeds from notes payable
|
|
307,254
|
|
|
251,065
|
|
|
4,226
|
|
|||
|
Principal payments on notes payable
|
|
(59,203
|
)
|
|
(36,084
|
)
|
|
(2,896
|
)
|
|||
|
Payments on repurchase agreements
|
|
—
|
|
|
—
|
|
|
(30,201
|
)
|
|||
|
Payments of deferred financing costs
|
|
(4,117
|
)
|
|
(4,988
|
)
|
|
—
|
|
|||
|
Proceeds from issuance of common stock
|
|
—
|
|
|
—
|
|
|
348,790
|
|
|||
|
Payments to redeem common stock
|
|
(5,104
|
)
|
|
(2,450
|
)
|
|
(755
|
)
|
|||
|
Payments of commissions on stock sales and related dealer manager fees
|
|
—
|
|
|
—
|
|
|
(31,134
|
)
|
|||
|
Payments of other offering costs
|
|
(12
|
)
|
|
(200
|
)
|
|
(3,612
|
)
|
|||
|
Distributions paid
|
|
(5,785
|
)
|
|
(9,038
|
)
|
|
(4,341
|
)
|
|||
|
Noncontrolling interests contributions
|
|
2,585
|
|
|
1,213
|
|
|
2,630
|
|
|||
|
Distributions to noncontrolling interests
|
|
(157
|
)
|
|
(2,237
|
)
|
|
(24
|
)
|
|||
|
Net cash provided by financing activities
|
|
235,461
|
|
|
197,281
|
|
|
282,683
|
|
|||
|
Net (decrease) increase in cash and cash equivalents
|
|
(38,903
|
)
|
|
(67,964
|
)
|
|
39,581
|
|
|||
|
Cash and cash equivalents, beginning of period
|
|
57,996
|
|
|
125,960
|
|
|
86,379
|
|
|||
|
Cash and cash equivalents, end of period
|
|
$
|
19,093
|
|
|
$
|
57,996
|
|
|
$
|
125,960
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
||||||
|
Interest paid, net of capitalized interest of $1,987 and $2,718 for the years ended December 31, 2014 and 2013, respectively
|
|
$
|
12,258
|
|
|
$
|
1,635
|
|
|
$
|
2,073
|
|
|
Supplemental Disclosure of Noncash Investing and Financing Activities:
|
|
|
|
|
|
|
||||||
|
Mortgage debt assumed in connection with real estate acquisition (at fair value)
|
|
$
|
24,793
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Application of escrow deposits to acquisition of real estate
|
|
$
|
13,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Investments in real estate acquired through foreclosure
|
|
$
|
—
|
|
|
$
|
45,943
|
|
|
$
|
—
|
|
|
Assets assumed in connection with foreclosure of real estate
|
|
$
|
—
|
|
|
$
|
7,156
|
|
|
$
|
—
|
|
|
Liabilities assumed in connection with foreclosure of real estate
|
|
$
|
—
|
|
|
$
|
9,671
|
|
|
$
|
—
|
|
|
Increase in capital expenses payable
|
|
$
|
3,095
|
|
|
$
|
2,583
|
|
|
$
|
1,230
|
|
|
Increase in lease commissions payable
|
|
$
|
—
|
|
|
$
|
282
|
|
|
$
|
137
|
|
|
Increase in lease incentive payable
|
|
$
|
—
|
|
|
$
|
260
|
|
|
$
|
53
|
|
|
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan
|
|
$
|
9,911
|
|
|
$
|
16,641
|
|
|
$
|
8,544
|
|
|
1.
|
ORGANIZATION
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
•
|
whether the lease stipulates how a tenant improvement allowance may be spent;
|
|
•
|
whether the amount of a tenant improvement allowance is in excess of market rates;
|
|
•
|
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
|
|
•
|
whether the tenant improvements are unique to the tenant or general-purpose in nature; and
|
|
•
|
whether the tenant improvements are expected to have any residual value at the end of the lease.
|
|
Buildings
|
25-40 years
|
|
Building improvements
|
10-40 years
|
|
Tenant improvements
|
Shorter of lease term or expected useful life
|
|
Tenant origination and absorption costs
|
Remaining term of related leases, including below-market renewal periods
|
|
•
|
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.
|
|
•
|
Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), the Company may not redeem shares until the stockholder has held the shares for one year.
|
|
•
|
During each calendar year, redemptions are limited to the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year and the last
$1.0 million
of such net proceeds shall be reserved exclusively for shares redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” (except that the Company may increase or decrease this funding limit by providing ten business days’ notice to its stockholders).
|
|
•
|
During any calendar year, the Company may redeem no more than
5%
of the weighted-average number of shares outstanding during the prior calendar year.
|
|
•
|
The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.
|
|
•
|
92.5%
of the Company’s most recent estimated value per share as of the applicable redemption date for those shares held for at least one year;
|
|
•
|
95.0%
of the Company’s most recent estimated value per share as of the applicable redemption date for those shares held for at least two years;
|
|
•
|
97.5%
of the Company’s most recent estimated value per share as of the applicable redemption date for those shares held for at least three years; and
|
|
•
|
100%
of the Company’s most recent estimated value per share as of the applicable redemption date for those shares held for at least four years.
|
|
3.
|
RECENT ACQUISITIONS OF REAL ESTATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangibles
|
|
|
||||||||||||||||||||
|
Property Name
|
|
City
|
|
State
|
|
Acquisition Date
|
|
Land
|
|
Building and Improvements
|
|
Tenant Origination and Absorption Costs
|
|
Above-Market Lease Assets
|
|
Below-Market
Lease Liabilities
|
|
Other Intangible Assets
|
|
Total
Purchase
Price
|
||||||||||||||
|
Plaza Buildings
|
|
Bellevue
|
|
WA
|
|
01/14/2014
|
|
$
|
53,040
|
|
|
$
|
124,212
|
|
|
$
|
8,945
|
|
|
$
|
196
|
|
|
$
|
(2,392
|
)
|
|
$
|
—
|
|
|
$
|
184,001
|
|
|
424 Bedford
(1)
|
|
Brooklyn
|
|
NY
|
|
01/31/2014
|
|
8,860
|
|
|
24,266
|
|
|
554
|
|
|
—
|
|
|
—
|
|
|
4,547
|
|
(2)
|
38,227
|
|
|||||||
|
|
|
|
|
|
|
|
|
$
|
61,900
|
|
|
$
|
148,478
|
|
|
$
|
9,499
|
|
|
$
|
196
|
|
|
$
|
(2,392
|
)
|
|
$
|
4,547
|
|
|
$
|
222,228
|
|
|
|
|
Tenant Origination and
Absorption Costs
|
|
Above-Market
Lease Assets
|
|
Below-Market
Lease Liabilities |
|
Plaza Buildings
|
|
5.8
|
|
5.2
|
|
4.3
|
|
424 Bedford
|
|
0.5
|
|
—
|
|
—
|
|
4.
|
REAL ESTATE HELD FOR INVESTMENT
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
Land
|
|
$
|
233,221
|
|
|
$
|
159,596
|
|
|
Buildings and improvements
|
|
635,082
|
|
|
459,136
|
|
||
|
Tenant origination and absorption costs
|
|
50,956
|
|
|
48,012
|
|
||
|
Total real estate, cost
|
|
919,259
|
|
|
666,744
|
|
||
|
Accumulated depreciation and amortization
|
|
(64,171
|
)
|
|
(29,859
|
)
|
||
|
Total real estate, net
|
|
$
|
855,088
|
|
|
$
|
636,885
|
|
|
Property
|
|
Date Acquired or Foreclosed on
|
|
City
|
|
State
|
|
Property Type
|
|
Land
|
|
Building
and Improvements
|
|
Tenant Origination and Absorption
|
|
Total
Real Estate, at Cost
(1)
|
|
Accumulated Depreciation and Amortization
|
|
Total
Real Estate,
Net
|
|
Ownership %
|
|||||||||||||
|
Academy Point Atrium I
|
|
11/03/2010
|
|
Colorado Springs
|
|
CO
|
|
Office
|
|
$
|
1,056
|
|
|
$
|
1,544
|
|
|
$
|
—
|
|
|
$
|
2,600
|
|
|
$
|
—
|
|
|
$
|
2,600
|
|
|
100.0
|
%
|
|
Northridge Center I & II
|
|
03/25/2011
|
|
Atlanta
|
|
GA
|
|
Office
|
|
2,234
|
|
|
6,574
|
|
|
—
|
|
|
8,808
|
|
|
(1,233
|
)
|
|
7,575
|
|
|
100.0
|
%
|
||||||
|
Iron Point Business Park
|
|
06/21/2011
|
|
Folsom
|
|
CA
|
|
Office
|
|
2,671
|
|
|
19,153
|
|
|
150
|
|
|
21,974
|
|
|
(2,893
|
)
|
|
19,081
|
|
|
100.0
|
%
|
||||||
|
1635 N. Cahuenga Building
|
|
08/03/2011
|
|
Los Angeles
|
|
CA
|
|
Office
|
|
3,112
|
|
|
4,876
|
|
|
149
|
|
|
8,137
|
|
|
(783
|
)
|
|
7,354
|
|
|
70.0
|
%
|
||||||
|
Richardson Portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Palisades Central I
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
1,037
|
|
|
9,566
|
|
|
847
|
|
|
11,450
|
|
|
(1,575
|
)
|
|
9,875
|
|
|
90.0
|
%
|
||||||
|
Palisades Central II
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
810
|
|
|
17,319
|
|
|
1,554
|
|
|
19,683
|
|
|
(3,690
|
)
|
|
15,993
|
|
|
90.0
|
%
|
||||||
|
Greenway I
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
561
|
|
|
2,186
|
|
|
—
|
|
|
2,747
|
|
|
(405
|
)
|
|
2,342
|
|
|
90.0
|
%
|
||||||
|
Greenway III
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
702
|
|
|
3,829
|
|
|
823
|
|
|
5,354
|
|
|
(1,210
|
)
|
|
4,144
|
|
|
90.0
|
%
|
||||||
|
Undeveloped Land
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Undeveloped Land
|
|
7,794
|
|
|
—
|
|
|
—
|
|
|
7,794
|
|
|
—
|
|
|
7,794
|
|
|
90.0
|
%
|
||||||
|
Total Richardson Portfolio
|
|
|
|
|
|
|
|
|
|
10,904
|
|
|
32,900
|
|
|
3,224
|
|
|
47,028
|
|
|
(6,880
|
)
|
|
40,148
|
|
|
|
|||||||
|
Park Highlands
|
|
12/30/2011
|
|
North Las Vegas
|
|
NV
|
|
Undeveloped Land
|
|
28,229
|
|
|
—
|
|
|
—
|
|
|
28,229
|
|
|
—
|
|
|
28,229
|
|
|
50.1
|
%
|
||||||
|
Bellevue Technology Center
|
|
07/31/2012
|
|
Bellevue
|
|
WA
|
|
Office
|
|
25,506
|
|
|
51,428
|
|
|
3,813
|
|
|
80,747
|
|
|
(5,334
|
)
|
|
75,413
|
|
|
100.0
|
%
|
||||||
|
Powers Ferry Landing East
|
|
09/24/2012
|
|
Atlanta
|
|
GA
|
|
Office
|
|
1,643
|
|
|
7,670
|
|
|
106
|
|
|
9,419
|
|
|
(818
|
)
|
|
8,601
|
|
|
100.0
|
%
|
||||||
|
1800 West Loop
|
|
12/04/2012
|
|
Houston
|
|
TX
|
|
Office
|
|
8,360
|
|
|
59,366
|
|
|
5,557
|
|
|
73,283
|
|
|
(6,987
|
)
|
|
66,296
|
|
|
100.0
|
%
|
||||||
|
West Loop I & II
|
|
12/07/2012
|
|
Houston
|
|
TX
|
|
Office
|
|
7,300
|
|
|
29,228
|
|
|
3,004
|
|
|
39,532
|
|
|
(4,017
|
)
|
|
35,515
|
|
|
100.0
|
%
|
||||||
|
Burbank Collection
|
|
12/12/2012
|
|
Burbank
|
|
CA
|
|
Retail
|
|
4,175
|
|
|
9,111
|
|
|
945
|
|
|
14,231
|
|
|
(854
|
)
|
|
13,377
|
|
|
90.0
|
%
|
||||||
|
Austin Suburban Portfolio
|
|
03/28/2013
|
|
Austin
|
|
TX
|
|
Office
|
|
8,288
|
|
|
66,035
|
|
|
4,588
|
|
|
78,911
|
|
|
(7,465
|
)
|
|
71,446
|
|
|
100.0
|
%
|
||||||
|
Westmoor Center
|
|
06/12/2013
|
|
Westminster
|
|
CO
|
|
Office
|
|
10,058
|
|
|
66,361
|
|
|
9,785
|
|
|
86,204
|
|
|
(9,388
|
)
|
|
76,816
|
|
|
100.0
|
%
|
||||||
|
Central Building
|
|
07/10/2013
|
|
Seattle
|
|
WA
|
|
Office
|
|
7,015
|
|
|
25,277
|
|
|
2,301
|
|
|
34,593
|
|
|
(2,130
|
)
|
|
32,463
|
|
|
100.0
|
%
|
||||||
|
50 Congress Street
|
|
07/11/2013
|
|
Boston
|
|
MA
|
|
Office
|
|
9,876
|
|
|
40,357
|
|
|
3,457
|
|
|
53,690
|
|
|
(3,828
|
)
|
|
49,862
|
|
|
100.0
|
%
|
||||||
|
1180 Raymond
|
|
08/20/2013
|
|
Newark
|
|
NJ
|
|
Apartment
|
|
8,292
|
|
|
36,350
|
|
|
136
|
|
|
44,778
|
|
|
(1,579
|
)
|
|
43,199
|
|
|
100.0
|
%
|
||||||
|
Park Highlands II
|
|
12/10/2013
|
|
North Las Vegas
|
|
NV
|
|
Undeveloped Land
|
|
21,224
|
|
|
—
|
|
|
—
|
|
|
21,224
|
|
|
—
|
|
|
21,224
|
|
|
99.5
|
%
|
||||||
|
Maitland Promenade II
|
|
12/18/2013
|
|
Orlando
|
|
FL
|
|
Office
|
|
3,434
|
|
|
23,606
|
|
|
4,811
|
|
|
31,851
|
|
|
(2,161
|
)
|
|
29,690
|
|
|
100.0
|
%
|
||||||
|
Plaza Buildings
|
|
01/14/2014
|
|
Bellevue
|
|
WA
|
|
Office
|
|
53,040
|
|
|
130,430
|
|
|
8,930
|
|
|
192,400
|
|
|
(7,204
|
)
|
|
185,196
|
|
|
100.0
|
%
|
||||||
|
424 Bedford
|
|
01/31/2014
|
|
Brooklyn
|
|
NY
|
|
Apartment
|
|
8,860
|
|
|
24,816
|
|
|
—
|
|
|
33,676
|
|
|
(617
|
)
|
|
33,059
|
|
|
90.0
|
%
|
||||||
|
Richardson Land II
|
|
09/04/2014
|
|
Richardson
|
|
TX
|
|
Undeveloped Land
|
|
7,944
|
|
|
—
|
|
|
—
|
|
|
7,944
|
|
|
—
|
|
|
7,944
|
|
|
90.0
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
$
|
233,221
|
|
|
$
|
635,082
|
|
|
$
|
50,956
|
|
|
$
|
919,259
|
|
|
$
|
(64,171
|
)
|
|
$
|
855,088
|
|
|
|
|
|
2015
|
$
|
71,423
|
|
|
2016
|
67,503
|
|
|
|
2017
|
57,789
|
|
|
|
2018
|
46,839
|
|
|
|
2019
|
34,868
|
|
|
|
Thereafter
|
70,270
|
|
|
|
|
$
|
348,692
|
|
|
Industry
|
|
Number of
Tenants
|
|
Annualized
Base Rent
(1)
(in thousands)
|
|
Percentage of
Annualized
Base Rent
|
|||
|
Finance
|
|
49
|
|
$
|
11,619
|
|
|
15.2
|
%
|
|
Computer System Design & Programming
|
|
39
|
|
9,350
|
|
|
12.2
|
%
|
|
|
Insurance Carriers & Related Activities
|
|
26
|
|
7,816
|
|
|
10.2
|
%
|
|
|
Professional, Scientific & Legal
|
|
57
|
|
7,634
|
|
|
10.0
|
%
|
|
|
|
|
|
|
$
|
36,419
|
|
|
47.6
|
%
|
|
5.
|
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES
|
|
|
|
Tenant Origination and
Absorption Costs
|
|
Above-Market
Lease Assets
|
|
Below-Market
Lease Liabilities
|
||||||||||||||||||
|
|
|
December 31,
2014 |
|
December 31,
2013 |
|
December 31,
2014 |
|
December 31,
2013 |
|
December 31,
2014 |
|
December 31,
2013 |
||||||||||||
|
Cost
|
|
$
|
50,956
|
|
|
$
|
48,012
|
|
|
$
|
3,752
|
|
|
$
|
4,394
|
|
|
$
|
(7,585
|
)
|
|
$
|
(5,955
|
)
|
|
Accumulated Amortization
|
|
(19,215
|
)
|
|
(10,751
|
)
|
|
(1,691
|
)
|
|
(1,459
|
)
|
|
3,182
|
|
|
1,535
|
|
||||||
|
Net Amount
|
|
$
|
31,741
|
|
|
$
|
37,261
|
|
|
$
|
2,061
|
|
|
$
|
2,935
|
|
|
$
|
(4,403
|
)
|
|
$
|
(4,420
|
)
|
|
|
|
Tenant Origination and
Absorption Costs
|
|
Above-Market
Lease Assets
|
|
Below-Market
Lease Liabilities
|
||||||||||||||||||||||||||||||
|
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||||||||
|
Amortization
|
|
$
|
(15,020
|
)
|
|
$
|
(10,942
|
)
|
|
$
|
(3,689
|
)
|
|
$
|
(1,070
|
)
|
|
$
|
(1,456
|
)
|
|
$
|
(1,095
|
)
|
|
$
|
2,409
|
|
|
$
|
1,565
|
|
|
$
|
229
|
|
|
|
|
Tenant
Origination and Absorption Costs |
|
Above-Market
Lease Assets |
|
Below-Market
Lease Liabilities |
||||||
|
2015
|
|
$
|
(10,381
|
)
|
|
$
|
(760
|
)
|
|
$
|
1,662
|
|
|
2016
|
|
(7,612
|
)
|
|
(581
|
)
|
|
1,122
|
|
|||
|
2017
|
|
(5,223
|
)
|
|
(343
|
)
|
|
745
|
|
|||
|
2018
|
|
(3,389
|
)
|
|
(188
|
)
|
|
488
|
|
|||
|
2019
|
|
(1,998
|
)
|
|
(82
|
)
|
|
159
|
|
|||
|
Thereafter
|
|
(3,138
|
)
|
|
(107
|
)
|
|
227
|
|
|||
|
|
|
$
|
(31,741
|
)
|
|
$
|
(2,061
|
)
|
|
$
|
4,403
|
|
|
Weighted-Average Remaining Amortization Period
|
|
4.4 years
|
|
3.6 years
|
|
3.7 years
|
||||||
|
6.
|
REAL ESTATE LOAN RECEIVABLE
|
|
Loan Name
Location of Related Property or
Collateral
|
|
Date Acquired/ Originated
|
|
Property Type
|
|
Loan Type
|
|
Outstanding Principal Balance as of December 31, 2014
(1)
|
|
Book Value
as of December 31, 2014
(2)
|
|
Book Value as of December 31, 2013
(2)
|
|
Contractual Interest Rate
(3)
|
|
Annualized Effective Interest Rate
(3)
|
|
Maturity Date
|
||||||
|
University House First Mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
New York, New York
(4)
|
|
3/20/2013
|
|
Student Housing
|
|
Mortgage
|
|
$
|
27,850
|
|
|
$
|
27,422
|
|
|
$
|
21,893
|
|
|
11.0%
|
|
14.2%
|
|
06/30/2015
|
|
Real estate loan receivable - December 31, 2013
|
$
|
21,893
|
|
|
Advance on real estate loan receivable
|
5,850
|
|
|
|
Extension fee on real estate loan receivable
|
(935
|
)
|
|
|
Accretion of closing costs and origination fees on real estate loan receivable, net
|
614
|
|
|
|
Real estate loan receivable - December 31, 2014
|
$
|
27,422
|
|
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Contractual interest income (including deferred interest)
|
|
$
|
2,752
|
|
|
$
|
8,248
|
|
|
$
|
1,202
|
|
|
Accretion of closing costs and origination fees, net
|
|
614
|
|
|
842
|
|
|
52
|
|
|||
|
Interest accretion
|
|
—
|
|
|
1,186
|
|
|
454
|
|
|||
|
Interest income from real estate loans receivable
|
|
$
|
3,366
|
|
|
$
|
10,276
|
|
|
$
|
1,708
|
|
|
7.
|
REAL ESTATE HELD FOR SALE AND DISCONTINUED OPERATIONS
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Total revenues
|
$
|
240
|
|
|
$
|
291
|
|
|
$
|
287
|
|
|
|
|
|
|
|
|
||||||
|
Total expenses
|
252
|
|
|
920
|
|
|
436
|
|
|||
|
|
Years Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Total revenues and other income
|
$
|
—
|
|
|
$
|
1,387
|
|
|
$
|
1,029
|
|
|
Total expenses
|
18
|
|
|
2,754
|
|
|
2,645
|
|
|||
|
Loss from discontinued operations before gain on sales of real estate
|
(18
|
)
|
|
(1,367
|
)
|
|
(1,616
|
)
|
|||
|
Gain on sales of real estate, net
|
—
|
|
|
13,108
|
|
|
593
|
|
|||
|
Total (loss) income from discontinued operations
|
$
|
(18
|
)
|
|
$
|
11,741
|
|
|
$
|
(1,023
|
)
|
|
8.
|
NOTES AND BOND PAYABLE
|
|
|
|
Principal as of
December 31, 2014
|
|
Principal as of December 31, 2013
|
|
Contractual Interest Rate as of December 31, 2014
(1)
|
|
Effective Interest Rate at December 31, 2014
(1)
|
|
Payment Type
|
|
Maturity
Date
(2)
|
||||
|
Richardson Portfolio Mortgage Loan
(3)
|
|
$
|
38,000
|
|
|
$
|
31,566
|
|
|
One-Month LIBOR + 2.10%
|
|
2.26%
|
|
Interest Only
|
|
05/01/2017
|
|
Bellevue Technology Center Mortgage Loan
(4)
|
|
49,836
|
|
|
47,408
|
|
|
One-Month LIBOR + 2.25%
|
|
2.41%
|
|
Interest Only
|
|
03/01/2017
|
||
|
Portfolio Revolving Loan Facility
(5)
|
|
12,447
|
|
|
3,379
|
|
|
One-Month LIBOR + 2.25%
|
|
2.41%
|
|
Interest Only
|
|
05/01/2017
|
||
|
Portfolio Mortgage Loan
(6)
|
|
93,751
|
|
|
82,766
|
|
|
One-Month LIBOR + 2.50%
|
|
2.66%
|
|
Interest Only
|
|
07/01/2017
|
||
|
1635 N. Cahuenga Mortgage Loan
(7)
|
|
4,650
|
|
|
4,650
|
|
|
One-Month LIBOR + 2.35%
|
|
2.51%
|
|
Interest Only
|
|
08/01/2016
|
||
|
Burbank Collection Mortgage Loan
(8)
|
|
9,043
|
|
|
8,200
|
|
|
One-Month LIBOR + 2.35%
|
|
2.54%
|
|
Interest Only
|
|
09/30/2016
|
||
|
50 Congress Mortgage Loan
(9)
|
|
26,935
|
|
|
26,535
|
|
|
One-Month LIBOR + 1.90%
|
|
2.06%
|
|
Interest Only
|
|
10/01/2017
|
||
|
1180 Raymond Bond Payable
|
|
6,945
|
|
|
7,085
|
|
|
6.50%
|
|
6.50%
|
|
Principal
& Interest
|
|
09/01/2036
|
||
|
Central Building Mortgage Loan
(10)
|
|
24,896
|
|
|
24,100
|
|
|
One-Month LIBOR + 1.75%
|
|
1.91%
|
|
Interest Only
|
|
11/13/2018
|
||
|
Maitland Promenade II Mortgage Loan
(11)
|
|
20,182
|
|
|
20,182
|
|
|
One-Month LIBOR + 2.90%
|
|
3.25%
|
|
Interest Only
|
|
01/01/2017
|
||
|
Westmoor Center Mortgage Loan
(12)
|
|
54,880
|
|
|
—
|
|
|
One-Month LIBOR + 2.25%
|
|
2.41%
|
|
Interest Only
|
|
02/01/2018
|
||
|
Plaza Buildings Senior Loan
(13)
|
|
109,707
|
|
|
—
|
|
|
One-Month LIBOR + 1.90%
|
|
2.06%
|
|
Interest Only
|
|
01/14/2017
|
||
|
Plaza Buildings Mezzanine Loan
(14)
|
|
25,000
|
|
|
—
|
|
|
(14)
|
|
8.10%
|
|
Interest Only
|
|
01/14/2017
|
||
|
424 Bedford Mortgage Loan
(15)
|
|
25,866
|
|
|
—
|
|
|
3.91%
|
|
3.91%
|
|
Principal
& Interest
|
|
10/01/2022
|
||
|
1180 Raymond Mortgage Loan
|
|
28,100
|
|
|
—
|
|
|
One-Month LIBOR + 2.25%
|
|
2.41%
|
|
Interest Only
|
|
12/01/2017
|
||
|
Total Notes and Bond Payable principal outstanding
|
|
530,238
|
|
|
255,871
|
|
|
|
|
|
|
|
|
|
||
|
Net Premium/Discount on Notes and Bond Payable
(16)
|
|
25
|
|
|
1,549
|
|
|
|
|
|
|
|
|
|
||
|
Total Notes and Bond Payable, net
|
|
$
|
530,263
|
|
|
$
|
257,420
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
$
|
2,005
|
|
|
2016
|
|
19,079
|
|
|
|
2017
|
|
402,133
|
|
|
|
2018
|
|
80,972
|
|
|
|
2019
|
|
7,805
|
|
|
|
Thereafter
|
|
18,244
|
|
|
|
|
|
$
|
530,238
|
|
|
9.
|
FAIR VALUE DISCLOSURES
|
|
•
|
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.
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
|
|
Face Value
|
|
Carrying Amount
|
|
Fair Value
|
|
Face Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||||||
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Real estate loan receivable
|
|
$
|
27,850
|
|
|
$
|
27,422
|
|
|
$
|
27,813
|
|
|
$
|
22,000
|
|
|
$
|
21,893
|
|
|
$
|
22,000
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Notes and bond payable
|
|
$
|
530,238
|
|
|
$
|
530,263
|
|
|
$
|
534,045
|
|
|
$
|
255,871
|
|
|
$
|
257,420
|
|
|
$
|
258,876
|
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
|
Total
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
Nonrecurring Basis
(1)
:
|
|
|
|
|
|
|
|
||||||||
|
424 Bedford Mortgage Loan
|
$
|
(24,793
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(24,793
|
)
|
|
Impaired real estate held for investment
|
$
|
2,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,600
|
|
|
10.
|
RELATED PARTY TRANSACTIONS
|
|
|
|
Incurred
|
|
Payable as of
December 31,
|
||||||||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
||||||||||
|
Expensed
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset management fees
(1)
|
|
$
|
7,648
|
|
|
$
|
4,173
|
|
|
$
|
1,710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Real estate acquisition fees
|
|
2,231
|
|
|
2,784
|
|
|
2,206
|
|
|
—
|
|
|
—
|
|
|||||
|
Reimbursable operating expenses
(2)
|
|
157
|
|
|
139
|
|
|
118
|
|
|
—
|
|
|
—
|
|
|||||
|
Disposition fees
(3)
|
|
—
|
|
|
322
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Additional Paid-in Capital
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Selling commissions
|
|
—
|
|
|
—
|
|
|
20,683
|
|
|
—
|
|
|
—
|
|
|||||
|
Dealer manager fees
|
|
—
|
|
|
—
|
|
|
10,451
|
|
|
—
|
|
|
—
|
|
|||||
|
Reimbursable other offering costs
|
|
—
|
|
|
—
|
|
|
1,825
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Capitalized
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Acquisition and origination fees on real estate loans receivable
|
|
—
|
|
|
220
|
|
|
790
|
|
|
—
|
|
|
—
|
|
|||||
|
Acquisition fee on investment in unconsolidated joint venture
|
|
1,573
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Acquisition fee on undeveloped land
|
|
67
|
|
|
199
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
$
|
11,676
|
|
|
$
|
7,837
|
|
|
$
|
37,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
11.
|
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
|
|
|
|
|
|
|
|
|
|
Investment Balance at December 31,
|
||||||
|
Joint Venture
|
|
Number of Properties
|
|
Location
|
|
Ownership %
|
|
2014
|
|
2013
|
||||
|
NIP Joint Venture
|
|
23
|
|
Various
|
|
Less than 5.0%
|
|
$
|
5,305
|
|
|
$
|
7,484
|
|
|
110 William Joint Venture
|
|
1
|
|
New York, New York
|
|
60.0%
|
|
66,740
|
|
|
8,854
|
|
||
|
|
|
|
|
|
|
|
|
$
|
72,045
|
|
|
$
|
16,338
|
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
Assets:
|
|
|
|
|
||||
|
Real estate assets, net of accumulated depreciation and amortization
|
|
$
|
276,683
|
|
|
$
|
—
|
|
|
Other assets
|
|
15,858
|
|
|
15,000
|
|
||
|
Total assets
|
|
$
|
292,541
|
|
|
$
|
15,000
|
|
|
Liabilities and Equity:
|
|
|
|
|
||||
|
Notes payable, net
|
|
168,178
|
|
|
—
|
|
||
|
Other liabilities
|
|
15,796
|
|
|
243
|
|
||
|
Partners’ capital
|
|
108,567
|
|
|
14,757
|
|
||
|
Total Liabilities and Equity
|
|
$
|
292,541
|
|
|
$
|
15,000
|
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Revenues
|
|
$
|
22,536
|
|
|
$
|
—
|
|
|
Expenses:
|
|
|
|
|
||||
|
Operating, maintenance, and management
|
|
6,869
|
|
|
—
|
|
||
|
Real estate taxes and insurance
|
|
3,476
|
|
|
—
|
|
||
|
Real estate acquisition fees and expenses
|
|
1,016
|
|
|
244
|
|
||
|
Depreciation and amortization
|
|
8,806
|
|
|
—
|
|
||
|
Interest expense
|
|
4,193
|
|
|
—
|
|
||
|
Total expenses
|
|
24,360
|
|
|
244
|
|
||
|
Total other income
|
|
36
|
|
|
—
|
|
||
|
Net loss
|
|
(1,788
|
)
|
|
(244
|
)
|
||
|
Company
’
s equity in loss of unconsolidated joint venture
|
|
$
|
(1,101
|
)
|
|
$
|
(146
|
)
|
|
12.
|
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
|
2014
|
|
2013
|
||||
|
Revenues
|
|
$
|
106,693
|
|
|
$
|
82,168
|
|
|
Depreciation and amortization
|
|
47,317
|
|
|
$
|
34,120
|
|
|
|
Net (loss) income attributable to common stockholders
|
|
(21,137
|
)
|
|
$
|
9,212
|
|
|
|
Net (loss) income per common share, basic and diluted
|
|
(0.35
|
)
|
|
$
|
0.16
|
|
|
|
Weighted-average number of common shares outstanding, basic and diluted
|
|
59,714,540
|
|
|
58,359,568
|
|
||
|
13.
|
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
|
|
2014
|
||||||||||||||
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
Revenues
|
|
$
|
24,626
|
|
|
$
|
26,244
|
|
|
$
|
27,598
|
|
|
$
|
27,686
|
|
|
Net loss
|
|
$
|
(9,894
|
)
|
|
$
|
(5,480
|
)
|
|
$
|
(3,426
|
)
|
|
$
|
(4,948
|
)
|
|
Net loss attributable to common stockholders
|
|
$
|
(9,617
|
)
|
|
$
|
(5,331
|
)
|
|
$
|
(3,367
|
)
|
|
$
|
(4,879
|
)
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.08
|
)
|
|
Distributions declared per common share
(1)
|
|
$
|
0.049
|
|
|
$
|
0.056
|
|
|
$
|
0.069
|
|
|
$
|
0.088
|
|
|
|
|
2013
|
||||||||||||||
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
Revenues
|
|
$
|
10,463
|
|
|
$
|
14,361
|
|
|
$
|
23,281
|
|
|
$
|
20,391
|
|
|
Net income (loss)
|
|
$
|
1,741
|
|
|
$
|
(2,429
|
)
|
|
$
|
7,260
|
|
|
$
|
5,017
|
|
|
Net income (loss) attributable to common
stockholders
|
|
$
|
1,411
|
|
|
$
|
(2,343
|
)
|
|
$
|
7,344
|
|
|
$
|
5,081
|
|
|
Net income (loss) per common share, basic and
diluted
|
|
$
|
0.02
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.13
|
|
|
$
|
0.09
|
|
|
Distributions declared per common share
(1)
|
|
$
|
0.062
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.380
|
|
|
15.
|
EARNINGS PER SHARE
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Numerator
|
|
|
|
|
|
|
||||||
|
Loss from continuing operations
|
|
$
|
(23,730
|
)
|
|
$
|
(152
|
)
|
|
$
|
(9,072
|
)
|
|
Loss from continuing operations attributable to noncontrolling interests
|
|
554
|
|
|
302
|
|
|
232
|
|
|||
|
(Loss) income from continuing operations attributable to common stockholders
|
|
(23,176
|
)
|
|
150
|
|
|
(8,840
|
)
|
|||
|
Total (loss) income from discontinued operations
|
|
(18
|
)
|
|
11,741
|
|
|
(1,023
|
)
|
|||
|
Total (income) loss from discontinued operations attributable to noncontrolling interests
|
|
—
|
|
|
(398
|
)
|
|
101
|
|
|||
|
Total (loss) income from discontinued operations attributable to common stockholders
|
|
(18
|
)
|
|
11,343
|
|
|
(922
|
)
|
|||
|
Net (loss) income attributable to common stockholders
|
|
$
|
(23,194
|
)
|
|
$
|
11,493
|
|
|
$
|
(9,762
|
)
|
|
|
|
|
|
|
|
|
||||||
|
Denominator
|
|
|
|
|
|
|
||||||
|
Weighted-average number of common shares outstanding, basic and diluted
|
|
59,714,540
|
|
|
58,359,568
|
|
|
35,458,656
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Basic and diluted (loss) income per common share:
|
|
|
|
|
|
|
||||||
|
Continuing operations
|
|
$
|
(0.39
|
)
|
|
$
|
—
|
|
|
$
|
(0.25
|
)
|
|
Discontinued operations
|
|
—
|
|
|
0.20
|
|
|
(0.03
|
)
|
|||
|
Net (loss) income per common share
|
|
$
|
(0.39
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
|
16.
|
SUBSEQUENT EVENTS
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
|
|
Gross Amount at which Carried at Close of Period
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Description
|
|
Location
|
|
Ownership Percent
|
|
Encumbrances
|
|
Land
|
|
Building and Improvements
(1)
|
|
Total
|
|
Cost Capitalized Subsequent to Acquisition
(2)
|
|
Land
|
|
Building and Improvements
(1)
|
|
Total
(3)
|
|
Accumulated Depreciation and Amortization
|
|
Original Date of Construction
|
|
Date
Acquired or Foreclosed on |
||||||||||||||||||
|
Properties Held for Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Academy Point Atrium I
|
|
Colorado Springs, CO
|
|
100.0%
|
|
$
|
—
|
|
|
$
|
1,650
|
|
|
$
|
1,223
|
|
|
$
|
2,873
|
|
|
$
|
(273
|
)
|
|
$
|
1,056
|
|
|
$
|
1,544
|
|
|
$
|
2,600
|
|
|
$
|
—
|
|
|
1981
|
|
11/03/2010
|
|
Northridge Center I & II
|
|
Atlanta, GA
|
|
100.0%
|
|
(6)
|
|
2,234
|
|
|
4,457
|
|
|
6,691
|
|
|
2,117
|
|
|
2,234
|
|
|
6,574
|
|
|
8,808
|
|
|
(1,233
|
)
|
|
1985/1989
|
|
03/25/2011
|
||||||||||
|
Iron Point Business Park
|
|
Folsom, CA
|
|
100.0%
|
|
(5)
|
|
2,671
|
|
|
16,576
|
|
|
19,247
|
|
|
2,727
|
|
|
2,671
|
|
|
19,303
|
|
|
21,974
|
|
|
(2,893
|
)
|
|
1999/2001
|
|
06/21/2011
|
||||||||||
|
1635 N. Cahuenga Building
|
|
Los Angeles, CA
|
|
70.0%
|
|
4,650
|
|
|
3,112
|
|
|
4,245
|
|
|
7,357
|
|
|
780
|
|
|
3,112
|
|
|
5,025
|
|
|
8,137
|
|
|
(783
|
)
|
|
1983
|
|
08/03/2011
|
|||||||||
|
Richardson Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Palisades Central I
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
1,037
|
|
|
8,628
|
|
|
9,665
|
|
|
1,785
|
|
|
1,037
|
|
|
10,413
|
|
|
11,450
|
|
|
(1,575
|
)
|
|
1980
|
|
11/23/2011
|
||||||||||
|
Palisades Central II
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
810
|
|
|
17,117
|
|
|
17,927
|
|
|
1,756
|
|
|
810
|
|
|
18,873
|
|
|
19,683
|
|
|
(3,690
|
)
|
|
1985
|
|
11/23/2011
|
||||||||||
|
Greenway I
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
561
|
|
|
1,170
|
|
|
1,731
|
|
|
1,016
|
|
|
561
|
|
|
2,186
|
|
|
2,747
|
|
|
(405
|
)
|
|
1983
|
|
11/23/2011
|
||||||||||
|
Greenway III
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
702
|
|
|
4,083
|
|
|
4,785
|
|
|
569
|
|
|
702
|
|
|
4,652
|
|
|
5,354
|
|
|
(1,210
|
)
|
|
1983
|
|
11/23/2011
|
||||||||||
|
Undeveloped Land
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
5,500
|
|
|
—
|
|
|
5,500
|
|
|
2,294
|
|
|
7,794
|
|
|
—
|
|
|
7,794
|
|
|
—
|
|
|
N/A
|
|
11/23/2011
|
||||||||||
|
Total Richardson Portfolio
|
|
|
|
|
|
38,000
|
|
|
8,610
|
|
|
30,998
|
|
|
39,608
|
|
|
7,420
|
|
|
10,904
|
|
|
36,124
|
|
|
47,028
|
|
|
(6,880
|
)
|
|
|
|
|
|||||||||
|
Park Highlands
|
|
North Las Vegas, NV
|
|
50.1%
|
|
—
|
|
|
21,000
|
|
|
—
|
|
|
21,000
|
|
|
7,229
|
|
|
28,229
|
|
|
—
|
|
|
28,229
|
|
|
—
|
|
|
N/A
|
|
12/30/2011
|
|||||||||
|
Bellevue Technology Center
|
|
Bellevue, WA
|
|
100.0%
|
|
49,836
|
|
|
25,506
|
|
|
52,411
|
|
|
77,917
|
|
|
2,830
|
|
|
25,506
|
|
|
55,241
|
|
|
80,747
|
|
|
(5,334
|
)
|
|
1973-2000
|
|
07/31/2012
|
|||||||||
|
Powers Ferry Landing East
|
|
Atlanta, GA
|
|
100.0%
|
|
(6)
|
|
1,643
|
|
|
3,761
|
|
|
5,404
|
|
|
4,015
|
|
|
1,643
|
|
|
7,776
|
|
|
9,419
|
|
|
(818
|
)
|
|
1980/1982/1985
|
|
09/24/2012
|
||||||||||
|
1800 West Loop
|
|
Houston, TX
|
|
100.0%
|
|
(5)
|
|
8,360
|
|
|
59,292
|
|
|
67,652
|
|
|
5,631
|
|
|
8,360
|
|
|
64,923
|
|
|
73,283
|
|
|
(6,987
|
)
|
|
1982
|
|
12/04/2012
|
||||||||||
|
West Loop I & II
|
|
Houston, TX
|
|
100.0%
|
|
(6)
|
|
7,300
|
|
|
29,742
|
|
|
37,042
|
|
|
2,490
|
|
|
7,300
|
|
|
32,232
|
|
|
39,532
|
|
|
(4,017
|
)
|
|
1980/1981
|
|
12/07/2012
|
||||||||||
|
Burbank Collection
|
|
Burbank, CA
|
|
90.0%
|
|
9,043
|
|
|
4,175
|
|
|
8,799
|
|
|
12,974
|
|
|
1,257
|
|
|
4,175
|
|
|
10,056
|
|
|
14,231
|
|
|
(854
|
)
|
|
2008
|
|
12/12/2012
|
|||||||||
|
Austin Suburban Portfolio
|
|
Austin, TX
|
|
100.0%
|
|
(6)
|
|
8,288
|
|
|
67,745
|
|
|
76,033
|
|
|
2,878
|
|
|
8,288
|
|
|
70,623
|
|
|
78,911
|
|
|
(7,465
|
)
|
|
1985/1986/2000
|
|
03/28/2013
|
||||||||||
|
Westmoor Center
|
|
Westminster, CO
|
|
100.0%
|
|
54,880
|
|
|
10,058
|
|
|
73,510
|
|
|
83,568
|
|
|
2,636
|
|
|
10,058
|
|
|
76,146
|
|
|
86,204
|
|
|
(9,388
|
)
|
|
1998/1999
|
|
06/12/2013
|
|||||||||
|
Central Building
|
|
Seattle, WA
|
|
100.0%
|
|
24,896
|
|
|
7,015
|
|
|
26,124
|
|
|
33,139
|
|
|
1,454
|
|
|
7,015
|
|
|
27,578
|
|
|
34,593
|
|
|
(2,130
|
)
|
|
1907
|
|
07/10/2013
|
|||||||||
|
50 Congress Street
|
|
Boston, MA
|
|
100.0%
|
|
26,935
|
|
|
9,876
|
|
|
43,455
|
|
|
53,331
|
|
|
359
|
|
|
9,876
|
|
|
43,814
|
|
|
53,690
|
|
|
(3,828
|
)
|
|
1910/1915
|
|
07/11/2013
|
|||||||||
|
1180 Raymond
|
|
Newark, NJ
|
|
100.0%
|
|
35,045
|
|
|
8,292
|
|
|
37,651
|
|
|
45,943
|
|
|
(1,165
|
)
|
|
8,292
|
|
|
36,486
|
|
|
44,778
|
|
|
(1,579
|
)
|
|
1929
|
|
08/20/2013
|
|||||||||
|
Park Highlands II
|
|
North Las Vegas, NV
|
|
99.5%
|
|
—
|
|
|
20,255
|
|
|
—
|
|
|
20,255
|
|
|
969
|
|
|
21,224
|
|
|
—
|
|
|
21,224
|
|
|
—
|
|
|
N/A
|
|
12/10/2013
|
|||||||||
|
Maitland Promenade II
|
|
Orlando, FL
|
|
100.0%
|
|
20,182
|
|
|
3,434
|
|
|
27,282
|
|
|
30,716
|
|
|
1,135
|
|
|
3,434
|
|
|
28,417
|
|
|
31,851
|
|
|
(2,161
|
)
|
|
2001
|
|
12/18/2013
|
|||||||||
|
Plaza Buildings
|
|
Bellevue, WA
|
|
100.0%
|
|
134,707
|
|
|
53,040
|
|
|
133,157
|
|
|
186,197
|
|
|
6,203
|
|
|
53,040
|
|
|
139,360
|
|
|
192,400
|
|
|
(7,204
|
)
|
|
1978/1983
|
|
01/14/2014
|
|||||||||
|
424 Bedford
|
|
Brooklyn, NY
|
|
90.0%
|
|
25,866
|
|
|
8,860
|
|
|
24,820
|
|
|
33,680
|
|
|
(4
|
)
|
|
8,860
|
|
|
24,816
|
|
|
33,676
|
|
|
(617
|
)
|
|
2010
|
|
01/31/2014
|
|||||||||
|
Richardson Land II
|
|
Richardson, TX
|
|
90.0%
|
|
—
|
|
|
7,462
|
|
|
—
|
|
|
7,462
|
|
|
482
|
|
|
7,944
|
|
|
—
|
|
|
7,944
|
|
|
—
|
|
|
N/A
|
|
09/04/2014
|
|||||||||
|
|
|
Total Properties Held for Investment
|
|
|
|
$
|
222,841
|
|
|
$
|
645,248
|
|
|
$
|
868,089
|
|
|
$
|
51,170
|
|
|
$
|
233,221
|
|
|
$
|
686,038
|
|
|
$
|
919,259
|
|
|
$
|
(64,171
|
)
|
|
|
|
|
||||
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
Real Estate
(1)
:
|
|
|
|
|
|
|
||||||
|
Balance at the beginning of the year
|
|
$
|
668,018
|
|
|
$
|
326,154
|
|
|
$
|
110,335
|
|
|
Acquisitions
(2)
|
|
227,339
|
|
|
342,985
|
|
|
212,152
|
|
|||
|
Improvements
|
|
36,942
|
|
|
24,670
|
|
|
8,284
|
|
|||
|
Write-off of fully depreciated and fully amortized assets
|
|
(10,362
|
)
|
|
(5,835
|
)
|
|
(3,360
|
)
|
|||
|
Impairments
|
|
(697
|
)
|
|
(2,025
|
)
|
|
—
|
|
|||
|
Loss due to property damages
|
|
(707
|
)
|
|
—
|
|
|
—
|
|
|||
|
Sales
|
|
(1,274
|
)
|
|
(17,931
|
)
|
|
(1,257
|
)
|
|||
|
Balance at the end of the year
|
|
$
|
919,259
|
|
|
$
|
668,018
|
|
|
$
|
326,154
|
|
|
|
|
|
|
|
|
|
||||||
|
Accumulated depreciation and amortization
(1)
:
|
|
|
|
|
|
|
||||||
|
Balance at the beginning of the year
|
|
$
|
29,859
|
|
|
$
|
8,521
|
|
|
$
|
2,583
|
|
|
Depreciation and amortization expense
|
|
44,848
|
|
|
28,956
|
|
|
9,305
|
|
|||
|
Write-off of fully depreciated and fully amortized assets
|
|
(10,362
|
)
|
|
(5,835
|
)
|
|
(3,360
|
)
|
|||
|
Impairments
|
|
(118
|
)
|
|
(638
|
)
|
|
—
|
|
|||
|
Sales
|
|
(56
|
)
|
|
(1,145
|
)
|
|
(7
|
)
|
|||
|
Balance at the end of the year
|
|
$
|
64,171
|
|
|
$
|
29,859
|
|
|
$
|
8,521
|
|
|
|
KBS STRATEGIC OPPORTUNITY REIT, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Keith D. Hall
|
|
|
|
Keith D. Hall
|
|
|
|
Chief Executive Officer and Director
(principal executive officer)
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ KEITH D. HALL
|
|
Chief Executive Officer and Director
(principal executive officer)
|
|
March 9, 2015
|
|
Keith D. Hall
|
|
|
|
|
|
/s/ PETER MCMILLIAN III
|
|
Chairman of the Board, President and Director
|
|
March 9, 2015
|
|
Peter McMillian III
|
|
|
|
|
|
/s/ DAVID E. SNYDER
|
|
Chief Financial Officer
(principal financial officer)
|
|
March 9, 2015
|
|
David E. Snyder
|
|
|
|
|
|
/s/ STACIE K. YAMANE
|
|
Chief Accounting Officer
(principal accounting officer)
|
|
March 9, 2015
|
|
Stacie K. Yamane
|
|
|
|
|
|
/s/ MICHAEL L. MEYER
|
|
Director
|
|
March 9, 2015
|
|
Michael L. Meyer
|
|
|
|
|
|
/s/ WILLIAM M. PETAK
|
|
Director
|
|
March 9, 2015
|
|
William M. Petak
|
|
|
|
|
|
/s/ ERIC J. SMITH
|
|
Director
|
|
March 9, 2015
|
|
Eric J. Smith
|
|
|
|
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|