Price Graph
Price
Yield
These terms and conditions govern your use of the website alphaminr.com and its related services.
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Maryland
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26-3842535
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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800 Newport Center Drive, Suite 700
Newport Beach, California
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92660
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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None
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None
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Large Accelerated Filer
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¨
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Accelerated Filer
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¨
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Non-Accelerated Filer
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x
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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ITEM 1.
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ITEM 1A.
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ITEM 1B.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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ITEM 7.
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ITEM 7A.
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ITEM 8.
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ITEM 9.
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ITEM 9A.
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ITEM 9B.
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ITEM 10.
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ITEM 11.
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ITEM 12.
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ITEM 13.
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ITEM14.
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ITEM 15.
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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We pay substantial fees to and expenses of our advisor and its affiliates. 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.
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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.
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We have focused, and may continue to focus, our investments in non-performing real estate and real estate‑related loans, real estate-related loans secured by non-stabilized assets and real estate-related securities, which involve more risk than investments in performing real estate and real estate-related assets.
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ITEM 1.
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BUSINESS
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•
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to provide our stockholders with attractive and stable returns; and
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to preserve and return our stockholders’ capital contributions.
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Current Maturity
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Extended Maturity
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2017
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$
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402,153
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$
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7,020
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2018
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196,253
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250,343
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2019
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52,251
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307,794
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2020
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132,876
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52,286
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2021
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51,241
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217,331
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Thereafter
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128,156
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128,156
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$
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962,930
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$
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962,930
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ITEM 1A.
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RISK FACTORS
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•
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the values of our investments in commercial properties could decrease below the amounts paid for such investments;
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•
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the value of collateral securing any loan investments we may make could decrease below the outstanding principal amount of such loans; and/or
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•
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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.
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•
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disrupt the proper functioning of our networks and systems and therefore our operations;
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result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines;
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result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;
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result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes;
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require significant management attention and resources to remedy any damages that result;
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subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or
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•
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damage our reputation among our stockholders.
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the continuation, renewal or enforcement of our agreements with KBS Capital Advisors and its affiliates, including the advisory agreement;
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public offerings of equity by us, which may entitle KBS Capital Markets Group to dealer-manager fees and may entitle KBS Capital Advisors to increased acquisition and origination fees and asset management fees;
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sales of investments, which may entitle KBS Capital Advisors to disposition fees and possible subordinated incentive fees;
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•
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acquisitions of investments and originations of loans, which may 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;
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•
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borrowings to acquire investments and to originate loans, which borrowings may increase the acquisition and origination fees and asset management fees payable to KBS Capital Advisors;
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•
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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;
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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
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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.
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limitations on capital structure;
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•
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restrictions on specified investments;
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prohibitions on transactions with affiliates; and
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•
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compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.
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•
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pursuant to section 3(a)(1)(A), 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
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•
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pursuant to section 3(a)(1)(C), 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).
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•
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a stockholder would be able to resell his or her shares at this estimated value per share;
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•
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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;
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our shares of common stock would trade at the estimated value per share on a national securities exchange;
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•
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an independent third-party appraiser or other third-party valuation firm would agree with our estimated value per share; or
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•
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the methodology used to estimate our value per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.
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•
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natural disasters such as hurricanes, earthquakes and floods;
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•
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acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;
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•
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adverse changes in national and local economic and real estate conditions;
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•
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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;
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•
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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;
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•
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costs of remediation and liabilities associated with environmental conditions affecting properties; and
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•
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the potential for uninsured or underinsured property losses.
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•
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interest rate and foreign currency hedging can be expensive, particularly during periods of rising and volatile interest rates or exchange rates, as applicable;
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•
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available interest rate and foreign currency hedging products may not correspond directly with the risk for which protection is sought;
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•
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the duration of the hedge may not match the duration of the related liability or asset;
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•
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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;
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•
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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;
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•
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the party owing money in the hedging transaction may default on its obligation to pay; and
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•
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we may purchase a hedge that turns out not to be necessary, i.e., a hedge that is out of the money.
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•
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that our co-venturer or partner in an investment could become insolvent or bankrupt;
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•
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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
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•
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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.
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•
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In order to continue 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 for this purpose).
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•
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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.
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•
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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.
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•
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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.
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•
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If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business and do not qualify for a safe harbor in the Internal Revenue Code, our gain would be subject to the 100% “prohibited transaction” tax.
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•
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Any domestic taxable REIT subsidiary, or TRS, of ours will be subject to federal corporate income tax on its income, and on any non-arm’s-length transactions between us and any TRS, for instance, excessive rents charged to a TRS could be subject to a 100% tax.
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•
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We may be subject to tax on income from certain activities conducted as a result of taking title to collateral.
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•
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We may be subject to state or local income, property and transfer taxes, such as mortgage recording taxes.
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•
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the investment is consistent with their fiduciary and other obligations under ERISA and the Internal Revenue Code;
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•
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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;
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•
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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;
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•
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the investment in our shares, for which no public market currently exists, is consistent with the liquidity needs of the plan or IRA;
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•
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the investment will not produce an unacceptable amount of “unrelated business taxable income” for the plan or IRA;
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•
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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
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•
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the investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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Property
Location of Property
|
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Date Acquired or
Foreclosed on
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Property Type
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Rentable Square Feet
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Total Real Estate
at Cost
(1)
(in thousands)
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Occupancy
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Ownership %
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Northridge Center I & II
Atlanta, GA
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03/25/2011
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Office
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188,944
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$
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9,729
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|
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93.9
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%
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100.0
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%
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Iron Point Business Park
Folsom, CA
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06/21/2011
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Office
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211,887
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22,186
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97.0
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%
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100.0
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%
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Richardson Portfolio
Richardson, TX
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11/23/2011
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Office/
Undeveloped Land
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569,980
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41,975
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86.1
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%
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90.0
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%
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Park Highlands
(2)
North Las Vegas, NV
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12/30/2011
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Undeveloped Land
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—
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34,162
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N/A
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(2)
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Bellevue Technology Center
Bellevue, WA
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07/31/2012
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Office
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330,508
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85,897
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98.2
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%
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100.0
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%
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Powers Ferry Landing East
Atlanta, GA
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09/24/2012
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Office
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149,324
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9,758
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94.9
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%
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100.0
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%
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1800 West Loop
Houston, TX
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12/04/2012
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Office
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400,101
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73,623
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85.9
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%
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100.0
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%
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West Loop I & II
Houston, TX
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12/07/2012
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Office
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313,873
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41,404
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87.8
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%
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100.0
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%
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Burbank Collection
Burbank, CA
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12/12/2012
|
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Retail
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39,035
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15,990
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45.1
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%
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90.0
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%
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Austin Suburban Portfolio
Austin, TX
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03/28/2013
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Office
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517,974
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78,504
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78.0
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%
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100.0
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%
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Westmoor Center
Westminster, CO
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|
06/12/2013
|
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Office
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612,890
|
|
|
82,390
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|
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82.7
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%
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100.0
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%
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Central Building
Seattle, WA
|
|
07/10/2013
|
|
Office
|
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191,705
|
|
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35,371
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|
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85.4
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%
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|
100.0
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%
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50 Congress Street
Boston, MA
|
|
07/11/2013
|
|
Office
|
|
179,872
|
|
|
53,679
|
|
|
92.0
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%
|
|
100.0
|
%
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1180 Raymond
Newark, NJ
|
|
08/20/2013
|
|
Apartment
|
|
268,688
|
|
|
45,834
|
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|
90.5
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%
|
|
100.0
|
%
|
|
|
Park Highlands II
(3)
North Las Vegas, NV
|
|
12/10/2013
|
|
Undeveloped Land
|
|
—
|
|
|
23,464
|
|
|
N/A
|
|
|
100.0
|
%
|
|
|
Maitland Promenade II
Orlando, FL
|
|
12/18/2013
|
|
Office
|
|
230,366
|
|
|
31,676
|
|
|
99.3
|
%
|
|
100.0
|
%
|
|
|
Plaza Buildings
Bellevue, WA
|
|
01/14/2014
|
|
Office
|
|
490,994
|
|
|
199,241
|
|
|
85.4
|
%
|
|
100.0
|
%
|
|
|
424 Bedford
Brooklyn, NY
|
|
01/31/2014
|
|
Apartment
|
|
49,220
|
|
|
34,358
|
|
|
97.0
|
%
|
|
90.0
|
%
|
|
|
Richardson Land II
Richardson, TX
|
|
09/04/2014
|
|
Undeveloped Land
|
|
—
|
|
|
3,418
|
|
|
N/A
|
|
|
90.0
|
%
|
|
|
Westpark Portfolio
Redmond, WA
|
|
05/10/2016
|
|
Office/Flex/Industrial
|
|
778,472
|
|
|
129,558
|
|
|
81.1
|
%
|
|
100.0
|
%
|
|
|
353 Sacramento
San Francisco, CA
|
|
07/11/2016
|
|
Office
|
|
284,751
|
|
|
174,990
|
|
|
80.2
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
5,808,584
|
|
|
$
|
1,227,207
|
|
|
|
|
|
||
|
Industry
|
|
Number of Tenants
|
|
Annualized Base Rent
(1)
(in thousands)
|
|
Percentage of
Annualized Base Rent
|
|||
|
Finance
|
|
51
|
|
$
|
11,223
|
|
|
10.8
|
%
|
|
Computer System Design & Programming
|
|
57
|
|
11,161
|
|
|
10.7
|
%
|
|
|
Insurance Carriers & Related Activities
|
|
31
|
|
10,474
|
|
|
10.0
|
%
|
|
|
|
|
|
|
$
|
32,858
|
|
|
31.5
|
%
|
|
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
|
|
33
|
|
|
$
|
2,833
|
|
|
2.7
|
%
|
|
179,062
|
|
|
3.8
|
%
|
|
2017
|
|
139
|
|
|
16,093
|
|
|
15.4
|
%
|
|
727,095
|
|
|
15.4
|
%
|
|
|
2018
|
|
124
|
|
|
17,154
|
|
|
16.4
|
%
|
|
736,752
|
|
|
15.6
|
%
|
|
|
2019
|
|
105
|
|
|
14,237
|
|
|
13.6
|
%
|
|
701,384
|
|
|
14.8
|
%
|
|
|
2020
|
|
86
|
|
|
14,320
|
|
|
13.7
|
%
|
|
649,898
|
|
|
13.8
|
%
|
|
|
2021
|
|
76
|
|
|
11,883
|
|
|
11.4
|
%
|
|
527,979
|
|
|
11.2
|
%
|
|
|
2022
|
|
25
|
|
|
8,135
|
|
|
7.8
|
%
|
|
329,663
|
|
|
7.0
|
%
|
|
|
2023
|
|
21
|
|
|
7,139
|
|
|
6.8
|
%
|
|
282,990
|
|
|
6.0
|
%
|
|
|
2024
|
|
9
|
|
|
3,201
|
|
|
3.1
|
%
|
|
133,348
|
|
|
2.8
|
%
|
|
|
2025
|
|
12
|
|
|
4,348
|
|
|
4.2
|
%
|
|
210,912
|
|
|
4.5
|
%
|
|
|
2026
|
|
15
|
|
|
3,082
|
|
|
3.0
|
%
|
|
134,531
|
|
|
2.8
|
%
|
|
|
Thereafter
|
|
4
|
|
|
2,001
|
|
|
1.9
|
%
|
|
110,771
|
|
|
2.3
|
%
|
|
|
Total
|
|
649
|
|
|
$
|
104,426
|
|
|
100
|
%
|
|
4,724,385
|
|
|
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 8, 2016
Estimated Value per Share |
|
December 8, 2015
Estimated Value per Share (1) |
|
Change in
Estimated Value per Share
|
||||||
|
Real estate properties
(2)
|
|
$
|
28.85
|
|
|
$
|
21.97
|
|
|
$
|
6.88
|
|
|
Real estate loan receivable
|
|
—
|
|
|
0.47
|
|
|
(0.47
|
)
|
|||
|
Cash
|
|
0.73
|
|
|
0.43
|
|
|
0.30
|
|
|||
|
Investments in unconsolidated joint ventures
(3)
|
|
2.76
|
|
|
2.38
|
|
|
0.38
|
|
|||
|
Other assets
|
|
0.52
|
|
|
0.20
|
|
|
0.32
|
|
|||
|
Mortgage debt
(4)
|
|
(12.12
|
)
|
|
(9.40
|
)
|
|
(2.72
|
)
|
|||
|
Series A Debentures
(5)
|
|
(4.39
|
)
|
|
—
|
|
|
(4.39
|
)
|
|||
|
Advisor participation fee potential liability
|
|
(0.50
|
)
|
|
(0.33
|
)
|
|
(0.17
|
)
|
|||
|
Other liabilities
|
|
(0.58
|
)
|
|
(0.46
|
)
|
|
(0.12
|
)
|
|||
|
Non-controlling interest
(6)
|
|
(0.46
|
)
|
|
(1.82
|
)
|
|
1.36
|
|
|||
|
Estimated value per share
|
|
$
|
14.81
|
|
|
$
|
13.44
|
|
|
$
|
1.37
|
|
|
Estimated enterprise value premium
|
|
None assumed
|
|
|
None assumed
|
|
|
None assumed
|
|
|||
|
Total estimated value per share
|
|
$
|
14.81
|
|
|
$
|
13.44
|
|
|
$
|
1.37
|
|
|
|
|
Change in
Estimated Value per Share
|
||
|
December 8, 2015 estimated value per share
|
|
$
|
13.44
|
|
|
Changes to estimated value per share
|
|
|
||
|
Real estate
|
|
|
||
|
Real estate
|
|
1.24
|
|
|
|
Investments in unconsolidated joint ventures
|
|
0.25
|
|
|
|
Capital expenditures on real estate
|
|
(0.63
|
)
|
|
|
Total change related to real estate
|
|
0.86
|
|
|
|
Operating cash flows in excess of quarterly distributions declared
|
|
0.16
|
|
|
|
Acquisition and financing costs
|
|
(0.30
|
)
|
|
|
Acquisition of minority interest in consolidated joint ventures
|
|
0.73
|
|
|
|
Advisor participation fee potential liability
|
|
(0.16
|
)
|
|
|
Other changes
|
|
0.08
|
|
|
|
Total change in estimated value per share
|
|
$
|
1.37
|
|
|
December 8, 2016 estimated value per share
|
|
$
|
14.81
|
|
|
|
|
Range in Values
|
|
Weighted-Average Basis
|
|
Consolidated Investments in Real Estate Properties (Excluding Undeveloped Land)
|
|
|
|
|
|
Terminal capitalization rate
|
|
4.00% to 7.50%
|
|
6.65%
|
|
Discount rate
|
|
5.00% to 9.25%
|
|
8.05%
|
|
Net operating income compounded annual growth rate
(1)
|
|
-0.84% to 14.44%
|
|
5.64%
|
|
|
|
|
|
|
|
Undeveloped Land
|
|
|
|
|
|
Price per acre
(2) (3)
|
|
$96,963 to $774,918
|
|
$110,617
|
|
|
|
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
|
|
$
|
0.49
|
|
|
$
|
(0.46
|
)
|
|
$
|
0.70
|
|
|
$
|
(0.63
|
)
|
|
Discount rates
|
|
0.39
|
|
|
(0.38
|
)
|
|
0.65
|
|
|
(0.62
|
)
|
||||
|
|
|
Increase (Decrease) on the Estimated Value per Share due to
|
||||||
|
|
|
Decrease of 5%
|
|
Increase of 5%
|
||||
|
Price per acre
|
|
$
|
(0.14
|
)
|
|
$
|
0.14
|
|
|
|
|
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
|
|
$
|
0.09
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.10
|
)
|
|
Discount rates
|
|
0.06
|
|
|
(0.06
|
)
|
|
0.09
|
|
|
(0.09
|
)
|
||||
|
|
|
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
|
|
$
|
(0.03
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
•
|
a stockholder would be able to resell his or her shares at this estimated value per share;
|
|
•
|
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
|
|
$13.44
|
|
December 8, 2015
|
|
Current Report on Form 8-K, filed December 10, 2015
|
|
$12.24
|
|
December 9, 2014
|
|
Current Report on Form 8-K, filed December 11, 2014
|
|
$11.27
|
|
March 25, 2014
|
|
Current Report on Form 8-K, filed March 27, 2014
|
|
|
2016
|
||||||||||||||||||
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Total
|
||||||||||
|
Total Distributions Declared
|
$
|
5,472
|
|
|
$
|
5,469
|
|
|
$
|
5,527
|
|
|
$
|
5,376
|
|
|
$
|
21,844
|
|
|
Total Per Share Distribution
|
$
|
0.093
|
|
|
$
|
0.093
|
|
|
$
|
0.094
|
|
|
$
|
0.095
|
|
|
$
|
0.375
|
|
|
Rate Based on Initial Public Offering Purchase Price of $10.00 Per Share
|
0.93
|
%
|
|
0.93
|
%
|
|
0.94
|
%
|
|
0.95
|
%
|
|
3.75
|
%
|
|||||
|
|
2015
|
||||||||||||||||||
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Total
|
||||||||||
|
Total Distributions Declared
|
$
|
5,547
|
|
|
$
|
5,620
|
|
|
$
|
5,585
|
|
|
$
|
5,528
|
|
|
$
|
22,280
|
|
|
Total Per Share Distribution
|
$
|
0.092
|
|
|
$
|
0.093
|
|
|
$
|
0.095
|
|
|
$
|
0.095
|
|
|
$
|
0.375
|
|
|
Rate Based on Initial Public Offering Purchase Price of $10.00 Per Share
|
0.92
|
%
|
|
0.93
|
%
|
|
0.95
|
%
|
|
0.95
|
%
|
|
3.75
|
%
|
|||||
|
|
|
2016
|
|
2015
|
||
|
Ordinary Income
|
|
—
|
%
|
|
59
|
%
|
|
Return of Capital
|
|
—
|
%
|
|
8
|
%
|
|
Capital Gain
|
|
100
|
%
|
|
33
|
%
|
|
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 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.
|
|
•
|
During 2016, redemptions were limited to $3.0 million of shares in a given quarter (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”). To the extent that we redeemed less than $3.0 million of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) in a given fiscal quarter, any remaining excess capacity to redeem shares in such fiscal quarter was added to our capacity to otherwise redeem shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) during succeeding fiscal quarters. We may increase or decrease this limit upon ten business days’ notice to stockholders. Our board of directors may approve an increase in this limit to the extent that we have received proceeds from asset sales or the refinancing of debt or for any other reason deemed appropriate by the board of directors. On September 15, 2016, our board of directors approved an additional $25.0 million of funds available for the redemption of shares for the third quarter in 2016. In December 2016, the amount of redemption requests in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” was less than the amount of the $1.0 million reserved for such redemptions under the share redemption program, therefore the excess funds were used to redeem shares not requested in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during such month.
|
|
•
|
In 2017, we may not redeem more than $3.0 million of shares in a given quarter (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”). To the extent that we redeem less than $3.0 million of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) in a given fiscal quarter, any remaining excess capacity to redeem shares in such fiscal quarter will be added to our capacity to otherwise redeem shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) during succeeding fiscal quarters. The last $1.0 million of net proceeds from the dividend reinvestment plan during 2016 is reserved exclusively for shares redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” with any excess funds being available to redeem shares not requested in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during the December 2017 redemption date. We may increase or decrease this limit upon ten business days’ notice to stockholders. Our board of directors may approve an increase in this limit to the extent that we have received proceeds from asset sales or the refinancing of debt or for any other reason deemed appropriate by the board of directors.
|
|
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 2016
|
|
2,722
|
|
|
$
|
13.44
|
|
|
(2)
|
|
February 2016
|
|
500
|
|
|
$
|
13.44
|
|
|
(2)
|
|
March 2016
|
|
252,839
|
|
|
$
|
13.32
|
|
|
(2)
|
|
April 2016
|
|
10,475
|
|
|
$
|
13.44
|
|
|
(2)
|
|
May 2016
|
|
10,012
|
|
|
$
|
13.44
|
|
|
(2)
|
|
June 2016
|
|
248,137
|
|
|
$
|
13.35
|
|
|
(2)
|
|
July 2016
|
|
—
|
|
|
$
|
—
|
|
|
(2)
|
|
August 2016
|
|
15,566
|
|
|
$
|
13.44
|
|
|
(2)
|
|
September 2016
|
|
1,813,892
|
|
|
$
|
13.37
|
|
|
(2)
|
|
October 2016
|
|
10,416
|
|
|
$
|
13.44
|
|
|
(2)
|
|
November 2016
|
|
372
|
|
|
$
|
13.44
|
|
|
(2)
|
|
December 2016
|
|
494,079
|
|
|
$
|
14.12
|
|
|
(2)
|
|
Total
|
|
2,859,010
|
|
|
|
|
|
||
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
Balance sheet data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total real estate and real estate-related investments, net
|
$
|
1,111,714
|
|
|
$
|
850,364
|
|
|
$
|
882,510
|
|
|
$
|
660,385
|
|
|
$
|
394,356
|
|
|
Total assets
|
1,310,116
|
|
|
1,004,214
|
|
|
1,016,313
|
|
|
771,184
|
|
|
537,085
|
|
|||||
|
Total notes and bonds payable, net
|
950,624
|
|
|
547,323
|
|
|
524,062
|
|
|
252,466
|
|
|
32,908
|
|
|||||
|
Total liabilities
|
1,014,566
|
|
|
585,565
|
|
|
556,266
|
|
|
278,925
|
|
|
43,782
|
|
|||||
|
Redeemable common stock
|
—
|
|
|
9,859
|
|
|
9,911
|
|
|
17,573
|
|
|
9,651
|
|
|||||
|
Total equity
|
295,550
|
|
|
408,790
|
|
|
450,136
|
|
|
474,686
|
|
|
483,652
|
|
|||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
Operating data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total revenues
|
$
|
134,244
|
|
|
$
|
112,128
|
|
|
$
|
106,154
|
|
|
$
|
68,496
|
|
|
$
|
18,880
|
|
|
(Loss) income from continuing operations attributable to common stockholders
|
(28,918
|
)
|
|
2,444
|
|
|
(23,194
|
)
|
|
150
|
|
|
(8,840
|
)
|
|||||
|
(Loss) income from continuing operations per common share - basic and diluted
|
$
|
(0.50
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
—
|
|
|
$
|
(0.25
|
)
|
|
Net (loss) income attributable to common stockholders
|
(28,918
|
)
|
|
2,444
|
|
|
(23,194
|
)
|
|
11,493
|
|
|
(9,762
|
)
|
|||||
|
Net (loss) income per common share - basic and diluted
|
$
|
(0.50
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.28
|
)
|
|
Other data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash flows provided by (used in) operating activities
|
$
|
26,656
|
|
|
$
|
25,855
|
|
|
$
|
12,285
|
|
|
$
|
23,518
|
|
|
$
|
(676
|
)
|
|
Cash flows (used in) provided by investing activities
|
(306,495
|
)
|
|
6,758
|
|
|
(285,795
|
)
|
|
(287,755
|
)
|
|
(242,074
|
)
|
|||||
|
Cash flows provided by (used in) financing activities
|
311,875
|
|
|
(25,083
|
)
|
|
235,461
|
|
|
197,281
|
|
|
282,683
|
|
|||||
|
Distributions declared
|
$
|
21,844
|
|
|
$
|
22,280
|
|
|
$
|
15,696
|
|
|
$
|
25,679
|
|
|
$
|
12,885
|
|
|
Distributions declared per common share
(1)
|
0.38
|
|
|
0.38
|
|
|
0.26
|
|
|
0.44
|
|
|
0.40
|
|
|||||
|
Weighted-average number of common shares
outstanding, basic and diluted
|
58,273,335
|
|
|
59,656,667
|
|
|
59,714,540
|
|
|
58,359,568
|
|
|
35,458,656
|
|
|||||
|
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;
|
|
•
|
Proceeds from our public bond offering in Israel;
|
|
•
|
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 an office/flex/industrial portfolio consisting of 21 buildings and an office property for
$293.8 million
;
|
|
•
|
Improvements to real estate of
$30.6 million
;
|
|
•
|
Principal proceeds received from the assignment of University House in the amount of
$27.9 million
;
|
|
•
|
Investment in real estate debt securities, net for
$4.6 million
;
|
|
•
|
Funding of development obligations of
$2.9 million
;
|
|
•
|
Investment in an unconsolidated joint venture of
$2.8 million
;
|
|
•
|
Insurance proceeds for property damages of
$2.5 million
; and
|
|
•
|
Escrow deposit for future real estate purchase of
$2.0 million
.
|
|
•
|
$397.2 million
of net cash provided by debt and other financings as a result of proceeds from bonds and notes payable of
$564.3 million
, partially offset by principal payments on notes payable of
$154.8 million
and payments of deferred financing costs of
$12.4 million
;
|
|
•
|
$38.6 million
of cash used for redemptions of common stock;
|
|
•
|
$38.0 million
of acquisitions of noncontrolling interests;
|
|
•
|
$9.2 million
of net cash distributions to stockholders, after giving effect to distributions reinvested by stockholders of
$12.6 million
;
|
|
•
|
$0.9 million
of payments made in connection with a potential offering;
|
|
•
|
$0.7 million
of net contributions to noncontrolling interests, after giving effect to distributions from noncontrolling interests of
$0.1 million
; and
|
|
•
|
$0.6 million of net cash provided by the issuance of $0.8 million of preferred membership units of our subsidiary, partially offset by sale commissions and other costs of $0.2 million.
|
|
|
|
|
|
Payments Due During the Years Ending December 31,
|
||||||||||||||||
|
Contractual Obligations
|
|
Total
|
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
Thereafter
|
||||||||||
|
Outstanding debt obligations
(1)
|
|
$
|
962,930
|
|
|
$
|
402,153
|
|
|
$
|
248,504
|
|
|
$
|
184,117
|
|
|
$
|
128,156
|
|
|
Interest payments on outstanding debt obligations
(2)
|
|
76,770
|
|
|
24,642
|
|
|
30,331
|
|
|
15,202
|
|
|
6,595
|
|
|||||
|
Outstanding funding obligations under real estate debt securities
(3)
|
|
20,000
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
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) |
|||||||||||||
|
|
|
2016
|
|
2015
|
|
|
|
|
|||||||||||||||
|
Rental income
|
|
$
|
106,330
|
|
|
$
|
88,543
|
|
|
$
|
17,787
|
|
|
20
|
%
|
|
$
|
12,352
|
|
|
$
|
5,435
|
|
|
Tenant reimbursements
|
|
20,762
|
|
|
18,313
|
|
|
2,449
|
|
|
13
|
%
|
|
2,129
|
|
|
320
|
|
|||||
|
Interest income from real estate loan receivable
|
|
3,655
|
|
|
1,968
|
|
|
1,687
|
|
|
86
|
%
|
|
—
|
|
|
1,687
|
|
|||||
|
Interest income from real estate debt securities
|
|
110
|
|
|
—
|
|
|
110
|
|
|
n/a
|
|
|
110
|
|
|
—
|
|
|||||
|
Other operating income
|
|
3,387
|
|
|
3,304
|
|
|
83
|
|
|
3
|
%
|
|
(35
|
)
|
|
118
|
|
|||||
|
Operating, maintenance, and management costs
|
|
41,906
|
|
|
37,512
|
|
|
4,394
|
|
|
12
|
%
|
|
3,189
|
|
|
1,205
|
|
|||||
|
Real estate taxes and insurance
|
|
16,887
|
|
|
14,565
|
|
|
2,322
|
|
|
16
|
%
|
|
1,765
|
|
|
557
|
|
|||||
|
Asset management fees to affiliate
|
|
9,628
|
|
|
8,348
|
|
|
1,280
|
|
|
15
|
%
|
|
1,056
|
|
|
224
|
|
|||||
|
Real estate acquisition fees to affiliate
|
|
2,964
|
|
|
—
|
|
|
2,964
|
|
|
n/a
|
|
|
2,964
|
|
|
n/a
|
|
|||||
|
Real estate acquisition fees and expenses
|
|
543
|
|
|
—
|
|
|
543
|
|
|
n/a
|
|
|
542
|
|
|
n/a
|
|
|||||
|
General and administrative expenses
|
|
5,781
|
|
|
3,246
|
|
|
2,535
|
|
|
78
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Foreign currency transaction loss, net
|
|
2,997
|
|
|
—
|
|
|
2,997
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Depreciation and amortization
|
|
52,051
|
|
|
44,739
|
|
|
7,312
|
|
|
16
|
%
|
|
7,878
|
|
|
(566
|
)
|
|||||
|
Interest expense
|
|
29,249
|
|
|
14,986
|
|
|
14,263
|
|
|
95
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Other income
|
|
—
|
|
|
5,085
|
|
|
(5,085
|
)
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Gain on sale of real estate, net
|
|
—
|
|
|
13,665
|
|
|
(13,665
|
)
|
|
n/a
|
|
|
(13,665
|
)
|
|
n/a
|
|
|||||
|
|
|
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) |
|||||||||||||
|
|
|
2015
|
|
2014
|
|
|
|
|
|||||||||||||||
|
Rental income
|
|
$
|
88,543
|
|
|
$
|
83,682
|
|
|
$
|
4,861
|
|
|
6
|
%
|
|
$
|
138
|
|
|
$
|
4,723
|
|
|
Tenant reimbursements
|
|
18,313
|
|
|
16,273
|
|
|
2,040
|
|
|
13
|
%
|
|
152
|
|
|
1,888
|
|
|||||
|
Interest income from real estate loans receivable
|
|
1,968
|
|
|
3,366
|
|
|
(1,398
|
)
|
|
(42
|
)%
|
|
—
|
|
|
(1,398
|
)
|
|||||
|
Other operating income
|
|
3,304
|
|
|
2,833
|
|
|
471
|
|
|
17
|
%
|
|
593
|
|
|
(122
|
)
|
|||||
|
Operating, maintenance, and management costs
|
|
37,512
|
|
|
35,957
|
|
|
1,555
|
|
|
4
|
%
|
|
302
|
|
|
1,253
|
|
|||||
|
Real estate taxes and insurance
|
|
14,565
|
|
|
14,189
|
|
|
376
|
|
|
3
|
%
|
|
(6
|
)
|
|
382
|
|
|||||
|
Asset management fees to affiliate
|
|
8,348
|
|
|
7,648
|
|
|
700
|
|
|
9
|
%
|
|
526
|
|
|
174
|
|
|||||
|
Real estate acquisition fees to affiliate
|
|
—
|
|
|
2,231
|
|
|
(2,231
|
)
|
|
n/a
|
|
|
(2,231
|
)
|
|
n/a
|
|
|||||
|
Real estate acquisition fees and expenses
|
|
—
|
|
|
2,177
|
|
|
(2,177
|
)
|
|
n/a
|
|
|
(2,177
|
)
|
|
n/a
|
|
|||||
|
General and administrative expenses
|
|
3,246
|
|
|
3,418
|
|
|
(172
|
)
|
|
(5
|
)%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Depreciation and amortization
|
|
44,739
|
|
|
47,063
|
|
|
(2,324
|
)
|
|
(5
|
)%
|
|
(707
|
)
|
|
(1,617
|
)
|
|||||
|
Interest expense
|
|
14,986
|
|
|
15,598
|
|
|
(612
|
)
|
|
(4
|
)%
|
|
(896
|
)
|
|
284
|
|
|||||
|
Other income
|
|
5,085
|
|
|
(18
|
)
|
|
5,103
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Gain on sale of real estate, net
|
|
13,665
|
|
|
55
|
|
|
13,610
|
|
|
n/a
|
|
|
13,610
|
|
|
n/a
|
|
|||||
|
Impairment charges on real estate
|
|
—
|
|
|
579
|
|
|
(579
|
)
|
|
n/a
|
|
|
—
|
|
|
(579
|
)
|
|||||
|
•
|
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;
|
|
•
|
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, including proceeds from our bond offering in Israel, 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;
|
|
•
|
Mark-to-market foreign currency transaction adjustments.
The U.S. dollar is our functional currency. Transactions denominated in currency other than our functional currency are recorded upon initial recognition at the exchange rate on the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured at each reporting date into the foreign currency at the exchange rate on that date. In addition, we have entered into foreign currency collars that results in a foreign currency transaction adjustment. These amounts can increase or 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; and
|
|
•
|
Prepayment fees related to the extinguishment of debt.
Prepayment fees related to the extinguishment of debt are generally included in interest expense. 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, as we do not believe that the infrequent payment of such fees is reflective of the ongoing operations of our portfolio of real estate investments.
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Net (loss) income attributable to common stockholders
|
$
|
(28,918
|
)
|
|
$
|
2,444
|
|
|
$
|
(23,194
|
)
|
|
Depreciation of real estate assets
|
29,857
|
|
|
24,143
|
|
|
20,278
|
|
|||
|
Amortization of lease-related costs
|
22,194
|
|
|
20,596
|
|
|
26,785
|
|
|||
|
Impairment charges on real estate
|
—
|
|
|
—
|
|
|
579
|
|
|||
|
Gain on sale of real estate, net
|
—
|
|
|
(13,665
|
)
|
|
(55
|
)
|
|||
|
Adjustments for noncontrolling interests - consolidated entities
(1)
|
(493
|
)
|
|
3,218
|
|
|
(657
|
)
|
|||
|
Adjustments for investment in unconsolidated entity
(2)
|
7,815
|
|
|
7,599
|
|
|
5,312
|
|
|||
|
FFO attributable to common stockholders
(3)
|
30,455
|
|
|
44,335
|
|
|
29,048
|
|
|||
|
Straight-line rent and amortization of above- and below-market leases
|
(5,414
|
)
|
|
(5,144
|
)
|
|
(9,731
|
)
|
|||
|
Amortization of discounts and closing costs
|
(47
|
)
|
|
(428
|
)
|
|
(605
|
)
|
|||
|
Real estate acquisition fees to affiliate
|
2,964
|
|
|
—
|
|
|
2,231
|
|
|||
|
Real estate acquisition fees and expenses
|
543
|
|
|
—
|
|
|
2,177
|
|
|||
|
Amortization of net premium/discount on bond and notes payable
|
38
|
|
|
25
|
|
|
(1
|
)
|
|||
|
Prepayment fees related to the extinguishment of debt
|
—
|
|
|
250
|
|
|
332
|
|
|||
|
Unrealized loss on derivative
|
3
|
|
|
—
|
|
|
—
|
|
|||
|
Mark-to-market foreign currency transaction loss, net
|
2,997
|
|
|
—
|
|
|
—
|
|
|||
|
Adjustments for noncontrolling interests - consolidated entities
(1)
|
(20
|
)
|
|
(52
|
)
|
|
(135
|
)
|
|||
|
Adjustments for investment in unconsolidated entity
(2)
|
(4,264
|
)
|
|
(4,821
|
)
|
|
(3,388
|
)
|
|||
|
MFFO attributable to common stockholders
(3)
|
27,255
|
|
|
34,165
|
|
|
19,928
|
|
|||
|
Other capitalized operating expenses
(4)
|
(2,414
|
)
|
|
(2,658
|
)
|
|
(2,942
|
)
|
|||
|
Adjustments for noncontrolling interests - consolidated entities
(1)
|
61
|
|
|
262
|
|
|
314
|
|
|||
|
Adjusted MFFO attributable to common stockholders
(3)
|
$
|
24,902
|
|
|
$
|
31,769
|
|
|
$
|
17,300
|
|
|
|
|
Distribution Declared
|
|
Distributions Declared
Per Share
|
|
Distributions Paid
|
|
Cash Flows
Provided by Operations
|
||||||||||||||||
|
Period
|
|
|
|
Cash
|
|
Reinvested
|
|
Total
|
|
|||||||||||||||
|
First Quarter 2016
|
|
$
|
5,472
|
|
|
$
|
0.093
|
|
|
$
|
2,271
|
|
|
$
|
3,201
|
|
|
$
|
5,472
|
|
|
$
|
1,798
|
|
|
Second Quarter 2016
|
|
5,469
|
|
|
0.093
|
|
|
2,309
|
|
|
3,160
|
|
|
5,469
|
|
|
11,665
|
|
||||||
|
Third Quarter 2016
|
|
5,527
|
|
|
0.094
|
|
|
2,368
|
|
|
3,159
|
|
|
5,527
|
|
|
6,563
|
|
||||||
|
Fourth Quarter 2016
|
|
5,376
|
|
|
0.095
|
|
|
2,280
|
|
|
3,096
|
|
|
5,376
|
|
|
6,630
|
|
||||||
|
|
|
$
|
21,844
|
|
|
$
|
0.375
|
|
|
$
|
9,228
|
|
|
$
|
12,616
|
|
|
$
|
21,844
|
|
|
$
|
26,656
|
|
|
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 Value
|
|
|
||||||||||||||||||||||||||
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
|
Fair Value
|
|||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Real estate debt securities, book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Real estate debt securities - fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,683
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,683
|
|
|
$
|
4,683
|
|
|
Annual effective interest rate
(1)
|
|
—
|
|
|
—
|
|
|
13.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.1
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest rate cap, notional amount
|
|
$
|
—
|
|
|
$
|
115,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,500
|
|
|
$
|
12
|
|
|
Strike rate
(2)
|
|
—
|
|
|
3.0
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.0
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Notes and Bonds Payable, principal outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Fixed rate
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
283,278
|
|
|
$
|
283,278
|
|
|
$
|
285,936
|
|
|
Average interest rate
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.3
|
%
|
|
4.3
|
%
|
|
|
|||||||||
|
Variable rate
|
|
$
|
400,475
|
|
|
$
|
195,977
|
|
|
$
|
—
|
|
|
$
|
83,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
679,652
|
|
|
$
|
678,609
|
|
|
Average interest rate
(3)
|
|
2.7
|
%
|
|
3.1
|
%
|
|
—
|
|
|
3.1
|
%
|
|
—
|
|
|
—
|
|
|
2.9
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Foreign currency collars, notional amount
|
|
$
|
250,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,000
|
|
|
$
|
3,910
|
|
|
Average strike rate - ILS - USD
|
|
3.69 - 3.79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.69 - 3.79
|
|
|
|
|||||||||
|
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 to the Company’s Current Report on Form 8-K filed February 4, 2010
|
|
|
|
|
|
3.2
|
|
Second Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed November 17, 2016
|
|
|
|
|
|
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
|
|
Fifth 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, 2015, filed May 14, 2015
|
|
|
|
|
|
10.1
|
|
Underwriting Agreement, dated March 3, 2016, by and among KBS SOR (BVI) Holdings, Ltd and Poalim I.B.I Underwriting and Issuing Ltd. and Leumi Partners Underwriting, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed March 4, 2016
|
|
|
|
|
|
10.2
|
|
Deed of Trust, between KBS SOR (BVI) Holdings, Ltd. and Reznik Paz Nevo Trusts Ltd., incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2016, filed May 11, 2016
|
|
|
|
|
|
10.3
|
|
Agreement of Purchase and Sale by and between Calwest Industrial Properties, LLC and KBS Capital Advisors LLC, dated April 13, 2016, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2016, filed August 12, 2016
|
|
|
|
|
|
10.4
|
|
Assignment and Assumption of Purchase Agreement between KBS Capital Advisors LLC and KBS SOR Westpark Portfolio LLC, dated April 21, 2016, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2016, filed August 12, 2016
|
|
|
|
|
|
10.5
|
|
Purchase and Sale Agreement between Pacific EIH Sacramento LLC and KBS Capital Advisors LLC, dated April 28, 2016, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2016, filed August 12, 2016
|
|
|
|
|
|
10.6
|
|
Assignment and Assumption of Purchase Agreement between KBS Capital Advisors LLC and KBS SOR 353 Sacramento Street LLC, dated May 9, 2016, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2016, filed August 12, 2016
|
|
|
|
|
|
10.7
|
|
Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated October 8, 2016, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2016, filed November 14, 2016
|
|
|
|
|
|
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
|
|
|
|
|
|
Ex.
|
|
Description
|
|
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
|
|
Tenth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed December 15, 2016
|
|
|
|
|
|
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,
|
||||||
|
|
|
2016
|
|
2015
|
||||
|
Assets
|
|
|
|
|
||||
|
Real estate held for investment, net
|
|
$
|
1,107,031
|
|
|
$
|
822,514
|
|
|
Real estate loans receivable, net
|
|
—
|
|
|
27,850
|
|
||
|
Real estate debt securities, net
|
|
4,683
|
|
|
—
|
|
||
|
Total real estate and real estate-related investments, net
|
|
1,111,714
|
|
|
850,364
|
|
||
|
Cash and cash equivalents
|
|
40,432
|
|
|
23,058
|
|
||
|
Restricted cash
|
|
24,018
|
|
|
5,807
|
|
||
|
Investments in unconsolidated joint ventures
|
|
75,849
|
|
|
74,437
|
|
||
|
Rents and other receivables, net
|
|
28,264
|
|
|
24,487
|
|
||
|
Above-market leases, net
|
|
633
|
|
|
1,038
|
|
||
|
Prepaid expenses and other assets
|
|
29,206
|
|
|
25,023
|
|
||
|
Total assets
|
|
$
|
1,310,116
|
|
|
$
|
1,004,214
|
|
|
Liabilities and equity
|
|
|
|
|
||||
|
Notes and bonds payable, net
|
|
$
|
950,624
|
|
|
$
|
547,323
|
|
|
Accounts payable and accrued liabilities
|
|
26,624
|
|
|
17,543
|
|
||
|
Due to affiliate
|
|
55
|
|
|
59
|
|
||
|
Below-market leases, net
|
|
6,551
|
|
|
2,735
|
|
||
|
Other liabilities
|
|
18,095
|
|
|
14,190
|
|
||
|
Redeemable common stock payable
|
|
12,617
|
|
|
3,715
|
|
||
|
Total liabilities
|
|
1,014,566
|
|
|
585,565
|
|
||
|
Commitments and contingencies (Note
15
)
|
|
|
|
|
|
|
||
|
Redeemable common stock
|
|
—
|
|
|
9,859
|
|
||
|
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, 56,775,767 and 58,696,115 shares issued and outstanding as of December 31, 2016 and December 31, 2015, respectively
|
|
568
|
|
|
587
|
|
||
|
Additional paid-in capital
|
|
455,373
|
|
|
504,303
|
|
||
|
Cumulative distributions and net losses
|
|
(162,289
|
)
|
|
(111,527
|
)
|
||
|
Total KBS Strategic Opportunity REIT, Inc. stockholders’ equity
|
|
293,652
|
|
|
393,363
|
|
||
|
Noncontrolling interests
|
|
1,898
|
|
|
15,427
|
|
||
|
Total equity
|
|
295,550
|
|
|
408,790
|
|
||
|
Total liabilities and equity
|
|
$
|
1,310,116
|
|
|
$
|
1,004,214
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Revenues:
|
|
|
|
|
|
||||||
|
Rental income
|
$
|
106,330
|
|
|
$
|
88,543
|
|
|
$
|
83,682
|
|
|
Tenant reimbursements
|
20,762
|
|
|
18,313
|
|
|
16,273
|
|
|||
|
Interest income from real estate loans receivable
|
3,655
|
|
|
1,968
|
|
|
3,366
|
|
|||
|
Interest income from real estate debt securities
|
110
|
|
|
—
|
|
|
—
|
|
|||
|
Other operating income
|
3,387
|
|
|
3,304
|
|
|
2,833
|
|
|||
|
Total revenues
|
134,244
|
|
|
112,128
|
|
|
106,154
|
|
|||
|
Expenses:
|
|
|
|
|
|
||||||
|
Operating, maintenance, and management
|
41,906
|
|
|
37,512
|
|
|
35,957
|
|
|||
|
Real estate taxes and insurance
|
16,887
|
|
|
14,565
|
|
|
14,189
|
|
|||
|
Asset management fees to affiliate
|
9,628
|
|
|
8,348
|
|
|
7,648
|
|
|||
|
Real estate acquisition fees to affiliate
|
2,964
|
|
|
—
|
|
|
2,231
|
|
|||
|
Real estate acquisition fees and expenses
|
543
|
|
|
—
|
|
|
2,177
|
|
|||
|
General and administrative expenses
|
5,781
|
|
|
3,246
|
|
|
3,418
|
|
|||
|
Foreign currency transaction loss, net
|
2,997
|
|
|
—
|
|
|
—
|
|
|||
|
Depreciation and amortization
|
52,051
|
|
|
44,739
|
|
|
47,063
|
|
|||
|
Interest expense
|
29,249
|
|
|
14,986
|
|
|
15,598
|
|
|||
|
Impairment charges on real estate
|
—
|
|
|
—
|
|
|
579
|
|
|||
|
Total expenses
|
162,006
|
|
|
123,396
|
|
|
128,860
|
|
|||
|
Other income (loss):
|
|
|
|
|
|
||||||
|
Other interest income
|
44
|
|
|
18
|
|
|
22
|
|
|||
|
Other income (loss)
|
—
|
|
|
5,085
|
|
|
(18
|
)
|
|||
|
Equity in loss of unconsolidated joint venture
|
(1,408
|
)
|
|
(368
|
)
|
|
(1,101
|
)
|
|||
|
Gain on sale of real estate, net
|
—
|
|
|
13,665
|
|
|
55
|
|
|||
|
Total other (loss) income, net
|
(1,364
|
)
|
|
18,400
|
|
|
(1,042
|
)
|
|||
|
Net (loss) income
|
(29,126
|
)
|
|
7,132
|
|
|
(23,748
|
)
|
|||
|
Net loss (income) attributable to noncontrolling interests
|
208
|
|
|
(4,688
|
)
|
|
554
|
|
|||
|
Net (loss) income attributable to common stockholders
|
$
|
(28,918
|
)
|
|
$
|
2,444
|
|
|
$
|
(23,194
|
)
|
|
Net (loss) income per common share, basic and diluted
|
$
|
(0.50
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
Weighted-average number of common shares outstanding, basic and diluted
|
58,273,335
|
|
|
59,656,667
|
|
|
59,714,540
|
|
|||
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Net (loss) income
|
$
|
(29,126
|
)
|
|
$
|
7,132
|
|
|
$
|
(23,748
|
)
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||
|
Unrealized gain on real estate securities
|
—
|
|
|
—
|
|
|
9
|
|
|||
|
Total other comprehensive income
|
—
|
|
|
—
|
|
|
9
|
|
|||
|
Total comprehensive (loss) income
|
(29,126
|
)
|
|
7,132
|
|
|
(23,739
|
)
|
|||
|
Total comprehensive loss (income) attributable to noncontrolling interests
|
208
|
|
|
(4,688
|
)
|
|
554
|
|
|||
|
Total comprehensive (loss) income attributable to common stockholders
|
$
|
(28,918
|
)
|
|
$
|
2,444
|
|
|
$
|
(23,185
|
)
|
|
|
|
|
|
|
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, 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
|
|
|||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
2,444
|
|
|
—
|
|
|
2,444
|
|
|
4,688
|
|
|
7,132
|
|
|||||||
|
Issuance of common stock
|
1,114,532
|
|
|
11
|
|
|
13,562
|
|
|
—
|
|
|
—
|
|
|
13,573
|
|
|
—
|
|
|
13,573
|
|
|||||||
|
Transfers to redeemable common stock
|
—
|
|
|
—
|
|
|
(3,663
|
)
|
|
—
|
|
|
—
|
|
|
(3,663
|
)
|
|
—
|
|
|
(3,663
|
)
|
|||||||
|
Redemptions of common stock
|
(2,462,746
|
)
|
|
(24
|
)
|
|
(30,076
|
)
|
|
—
|
|
|
—
|
|
|
(30,100
|
)
|
|
—
|
|
|
(30,100
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,280
|
)
|
|
—
|
|
|
(22,280
|
)
|
|
—
|
|
|
(22,280
|
)
|
|||||||
|
Other offering costs
|
|
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
|||||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,343
|
|
|
1,343
|
|
|||||||
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,342
|
)
|
|
(7,342
|
)
|
|||||||
|
Balance, December 31, 2015
|
58,696,115
|
|
|
$
|
587
|
|
|
$
|
504,303
|
|
|
$
|
(111,527
|
)
|
|
$
|
—
|
|
|
$
|
393,363
|
|
|
$
|
15,427
|
|
|
$
|
408,790
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,918
|
)
|
|
—
|
|
|
(28,918
|
)
|
|
(208
|
)
|
|
(29,126
|
)
|
|||||||
|
Issuance of common stock
|
938,662
|
|
|
9
|
|
|
12,607
|
|
|
—
|
|
|
—
|
|
|
12,616
|
|
|
—
|
|
|
12,616
|
|
|||||||
|
Transfers from redeemable common stock
|
—
|
|
|
—
|
|
|
957
|
|
|
—
|
|
|
—
|
|
|
957
|
|
|
—
|
|
|
957
|
|
|||||||
|
Redemptions of common stock
|
(2,859,010
|
)
|
|
(28
|
)
|
|
(38,545
|
)
|
|
—
|
|
|
—
|
|
|
(38,573
|
)
|
|
—
|
|
|
(38,573
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,844
|
)
|
|
—
|
|
|
(21,844
|
)
|
|
—
|
|
|
(21,844
|
)
|
|||||||
|
Acquisitions of noncontrolling interests
|
—
|
|
|
—
|
|
|
(23,942
|
)
|
|
—
|
|
|
—
|
|
|
(23,942
|
)
|
|
(14,044
|
)
|
|
(37,986
|
)
|
|||||||
|
Other offering costs
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
803
|
|
|
803
|
|
|||||||
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
(80
|
)
|
|||||||
|
Balance, December 31, 2016
|
56,775,767
|
|
|
$
|
568
|
|
|
$
|
455,373
|
|
|
$
|
(162,289
|
)
|
|
$
|
—
|
|
|
$
|
293,652
|
|
|
$
|
1,898
|
|
|
$
|
295,550
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
|
Net (loss) income
|
$
|
(29,126
|
)
|
|
$
|
7,132
|
|
|
$
|
(23,748
|
)
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
|
Loss due to property damages
|
1,938
|
|
|
2,260
|
|
|
707
|
|
|||
|
Equity in loss of unconsolidated joint venture
|
1,408
|
|
|
368
|
|
|
1,101
|
|
|||
|
Depreciation and amortization
|
52,051
|
|
|
44,739
|
|
|
47,063
|
|
|||
|
Impairment charges on real estate
|
—
|
|
|
—
|
|
|
579
|
|
|||
|
Non-cash interest income on real estate related investments
|
—
|
|
|
(428
|
)
|
|
(614
|
)
|
|||
|
Gain on sale of real estate, net
|
—
|
|
|
(13,665
|
)
|
|
(55
|
)
|
|||
|
Other income
|
—
|
|
|
(5,085
|
)
|
|
—
|
|
|||
|
Unrealized loss on derivative instrument
|
3
|
|
|
—
|
|
|
—
|
|
|||
|
Deferred rent
|
(3,084
|
)
|
|
(4,499
|
)
|
|
(8,392
|
)
|
|||
|
Bad debt expense
|
875
|
|
|
331
|
|
|
176
|
|
|||
|
Amortization of above- and below-market leases, net
|
(2,330
|
)
|
|
(645
|
)
|
|
(1,339
|
)
|
|||
|
Amortization of deferred financing costs
|
4,289
|
|
|
2,703
|
|
|
2,778
|
|
|||
|
Interest accretion on real estate securities
|
(47
|
)
|
|
—
|
|
|
9
|
|
|||
|
Net amortization of discount and (premium) on bond and notes payable
|
38
|
|
|
25
|
|
|
(1
|
)
|
|||
|
Foreign currency transaction loss, net
|
2,997
|
|
|
—
|
|
|
—
|
|
|||
|
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
|
Rents and other receivables
|
(2,128
|
)
|
|
(1,126
|
)
|
|
(1,817
|
)
|
|||
|
Prepaid expenses and other assets
|
(8,498
|
)
|
|
(7,884
|
)
|
|
(7,479
|
)
|
|||
|
Accounts payable and accrued liabilities
|
5,809
|
|
|
595
|
|
|
606
|
|
|||
|
Due to affiliates
|
(4
|
)
|
|
59
|
|
|
—
|
|
|||
|
Other liabilities
|
2,465
|
|
|
975
|
|
|
2,711
|
|
|||
|
Net cash provided by operating activities
|
26,656
|
|
|
25,855
|
|
|
12,285
|
|
|||
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
|
Acquisitions of real estate
|
(293,831
|
)
|
|
—
|
|
|
(191,925
|
)
|
|||
|
Improvements to real estate
|
(30,581
|
)
|
|
(35,548
|
)
|
|
(33,873
|
)
|
|||
|
Proceeds from sales of real estate, net
|
—
|
|
|
38,772
|
|
|
1,393
|
|
|||
|
Escrow deposits for future real estate purchases
|
(2,000
|
)
|
|
—
|
|
|
—
|
|
|||
|
Investments in real estate loans receivable
|
—
|
|
|
—
|
|
|
(5,850
|
)
|
|||
|
Principal proceeds from assignment of real estate loan receivable
|
27,850
|
|
|
—
|
|
|
—
|
|
|||
|
Proceeds from condemnation proceeds
|
—
|
|
|
5,915
|
|
|
—
|
|
|||
|
Insurance proceeds received for property damages
|
2,453
|
|
|
894
|
|
|
—
|
|
|||
|
Principal repayments on real estate securities
|
—
|
|
|
—
|
|
|
333
|
|
|||
|
Purchase of interest rate cap
|
(15
|
)
|
|
—
|
|
|
—
|
|
|||
|
Investment in unconsolidated joint venture
|
(2,820
|
)
|
|
(2,760
|
)
|
|
(58,987
|
)
|
|||
|
Distribution of capital from unconsolidated joint venture
|
—
|
|
|
—
|
|
|
2,179
|
|
|||
|
Investment in real estate debt securities, net
|
(4,625
|
)
|
|
—
|
|
|
—
|
|
|||
|
Extension fee received on real estate loan receivable
|
—
|
|
|
—
|
|
|
935
|
|
|||
|
Funding of development obligations
|
(2,926
|
)
|
|
(515
|
)
|
|
—
|
|
|||
|
Net cash (used in) provided by investing activities
|
(306,495
|
)
|
|
6,758
|
|
|
(285,795
|
)
|
|||
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
|
Proceeds from notes and bonds payable
|
564,336
|
|
|
61,189
|
|
|
307,254
|
|
|||
|
Principal payments on notes and bonds payable
|
(154,802
|
)
|
|
(40,631
|
)
|
|
(59,203
|
)
|
|||
|
Payments of deferred financing costs
|
(12,377
|
)
|
|
(826
|
)
|
|
(4,117
|
)
|
|||
|
Payments to redeem common stock
|
(38,573
|
)
|
|
(30,100
|
)
|
|
(5,104
|
)
|
|||
|
Payments of other offering costs
|
(865
|
)
|
|
(9
|
)
|
|
(12
|
)
|
|||
|
Distributions paid
|
(9,228
|
)
|
|
(8,707
|
)
|
|
(5,785
|
)
|
|||
|
Noncontrolling interests contributions
|
803
|
|
|
1,343
|
|
|
2,585
|
|
|||
|
Distributions to noncontrolling interests
|
(80
|
)
|
|
(7,342
|
)
|
|
(157
|
)
|
|||
|
Acquisitions of noncontrolling interests
|
(37,986
|
)
|
|
—
|
|
|
—
|
|
|||
|
Other financing proceeds, net
|
647
|
|
|
—
|
|
|
—
|
|
|||
|
Net cash provided by (used in) financing activities
|
311,875
|
|
|
(25,083
|
)
|
|
235,461
|
|
|||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
3,549
|
|
|
—
|
|
|
—
|
|
|||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
35,585
|
|
|
7,530
|
|
|
(38,049
|
)
|
|||
|
Cash, cash equivalents and restricted cash, beginning of period
|
28,865
|
|
|
21,335
|
|
|
59,384
|
|
|||
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
64,450
|
|
|
$
|
28,865
|
|
|
$
|
21,335
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
||||||
|
Interest paid, net of capitalized interest of $2,025, $1,856 and $1,987 for the years ended December 31, 2016, 2015 and 2014, respectively
|
$
|
20,759
|
|
|
$
|
12,265
|
|
|
$
|
12,258
|
|
|
Supplemental Disclosure of Noncash Investing and Financing Activities:
|
|
|
|
|
|
||||||
|
Increase in development obligations
|
$
|
—
|
|
|
$
|
4,128
|
|
|
$
|
—
|
|
|
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
|
|
|
Increase in accrued improvements to real estate
|
$
|
3,547
|
|
|
$
|
—
|
|
|
$
|
3,095
|
|
|
Increase in redeemable common stock payable
|
$
|
8,902
|
|
|
$
|
3,715
|
|
|
$
|
—
|
|
|
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan
|
$
|
12,616
|
|
|
$
|
13,573
|
|
|
$
|
9,911
|
|
|
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
2016
, redemptions were limited to the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during
2015
plus an additional
$25.0 million
. The last
$1.0 million
of net proceeds from the dividend reinvestment plan during
2015
was reserved exclusively for shares redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence”. Any portion of this last
$1.0 million
not used to redeem shares in connection with a stockholder's death, "qualifying disability", or "determination of incompetence" were used to redeem shares not requested in connection with a stockholder’s death, “qualifying disability" or “determination of incompetence” during December
2016
.
|
|
•
|
The Company may not redeem more than
$3.0 million
of shares in a given quarter (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”). To the extent that the Company redeems less than
$3.0 million
of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) in a given fiscal quarter, any remaining excess capacity to redeem shares in such fiscal quarter will be added to the Company’s capacity to otherwise redeem shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) during succeeding fiscal quarters. The last
$1.0 million
of net proceeds from the dividend reinvestment plan during the prior year is reserved exclusively for shares redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence”. The share redemption plan also provides that, to the extent that in the last month of any calendar year the amount of redemption requests in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” is less than the
$1.0 million
reserved for such redemptions under the share redemption plan, any excess funds may be used to redeem shares not requested in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during such month. The Company may increase or decrease this limit upon ten business days’ notice to stockholders. The Company’s board of directors may approve an increase in this limit to the extent that the Company has received proceeds from asset sales or the refinancing of debt or for any other reason deemed appropriate by the board of directors.
|
|
•
|
During any calendar year, the Company may redeem no more than
5%
of the weighted-average number of shares outstanding during the prior calendar year.
|
|
•
|
The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.
|
|
•
|
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
one
year but less than
four
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.
|
REAL ESTATE HELD FOR INVESTMENT
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
Land
|
|
$
|
322,499
|
|
|
$
|
223,201
|
|
|
Buildings and improvements
|
|
855,744
|
|
|
646,979
|
|
||
|
Tenant origination and absorption costs
|
|
48,964
|
|
|
43,894
|
|
||
|
Total real estate, cost
|
|
1,227,207
|
|
|
914,074
|
|
||
|
Accumulated depreciation and amortization
|
|
(120,176
|
)
|
|
(91,560
|
)
|
||
|
Total real estate, net
|
|
$
|
1,107,031
|
|
|
$
|
822,514
|
|
|
Property
|
|
Date Acquired or Foreclosed on
|
|
City
|
|
State
|
|
Property Type
|
|
Land
|
|
Building
and Improvements
|
|
Tenant Origination and Absorption
|
|
Total Real Estate,
at Cost
|
|
Accumulated Depreciation and Amortization
|
|
Total Real Estate, Net
|
|
Ownership %
|
|||||||||||||
|
Northridge Center I & II
|
|
03/25/2011
|
|
Atlanta
|
|
GA
|
|
Office
|
|
$
|
2,234
|
|
|
$
|
7,495
|
|
|
$
|
—
|
|
|
$
|
9,729
|
|
|
$
|
(2,509
|
)
|
|
$
|
7,220
|
|
|
100.0
|
%
|
|
Iron Point Business Park
|
|
06/21/2011
|
|
Folsom
|
|
CA
|
|
Office
|
|
2,671
|
|
|
19,515
|
|
|
—
|
|
|
22,186
|
|
|
(4,914
|
)
|
|
17,272
|
|
|
100.0
|
%
|
||||||
|
Richardson Portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Palisades Central I
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
1,037
|
|
|
10,260
|
|
|
657
|
|
|
11,954
|
|
|
(2,605
|
)
|
|
9,349
|
|
|
90.0
|
%
|
||||||
|
Palisades Central II
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
810
|
|
|
17,835
|
|
|
348
|
|
|
18,993
|
|
|
(4,432
|
)
|
|
14,561
|
|
|
90.0
|
%
|
||||||
|
Greenway I
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
561
|
|
|
2,363
|
|
|
—
|
|
|
2,924
|
|
|
(691
|
)
|
|
2,233
|
|
|
90.0
|
%
|
||||||
|
Greenway III
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
702
|
|
|
3,709
|
|
|
559
|
|
|
4,970
|
|
|
(1,481
|
)
|
|
3,489
|
|
|
90.0
|
%
|
||||||
|
Undeveloped Land
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Undeveloped Land
|
|
3,134
|
|
|
—
|
|
|
—
|
|
|
3,134
|
|
|
—
|
|
|
3,134
|
|
|
90.0
|
%
|
||||||
|
Total Richardson Portfolio
|
|
|
|
|
|
|
|
|
|
6,244
|
|
|
34,167
|
|
|
1,564
|
|
|
41,975
|
|
|
(9,209
|
)
|
|
32,766
|
|
|
|
|||||||
|
Park Highlands
(1)
|
|
12/30/2011
|
|
North Las Vegas
|
|
NV
|
|
Undeveloped Land
|
|
34,162
|
|
|
—
|
|
|
—
|
|
|
34,162
|
|
|
—
|
|
|
34,162
|
|
|
(1)
|
|
||||||
|
Bellevue Technology Center
|
|
07/31/2012
|
|
Bellevue
|
|
WA
|
|
Office
|
|
25,506
|
|
|
56,814
|
|
|
3,577
|
|
|
85,897
|
|
|
(10,810
|
)
|
|
75,087
|
|
|
100.0
|
%
|
||||||
|
Powers Ferry Landing East
|
|
09/24/2012
|
|
Atlanta
|
|
GA
|
|
Office
|
|
1,643
|
|
|
8,016
|
|
|
99
|
|
|
9,758
|
|
|
(2,393
|
)
|
|
7,365
|
|
|
100.0
|
%
|
||||||
|
1800 West Loop
|
|
12/04/2012
|
|
Houston
|
|
TX
|
|
Office
|
|
8,360
|
|
|
60,482
|
|
|
4,781
|
|
|
73,623
|
|
|
(12,894
|
)
|
|
60,729
|
|
|
100.0
|
%
|
||||||
|
West Loop I & II
|
|
12/07/2012
|
|
Houston
|
|
TX
|
|
Office
|
|
7,300
|
|
|
32,240
|
|
|
1,864
|
|
|
41,404
|
|
|
(5,921
|
)
|
|
35,483
|
|
|
100.0
|
%
|
||||||
|
Burbank Collection
|
|
12/12/2012
|
|
Burbank
|
|
CA
|
|
Retail
|
|
4,175
|
|
|
11,090
|
|
|
725
|
|
|
15,990
|
|
|
(1,721
|
)
|
|
14,269
|
|
|
90.0
|
%
|
||||||
|
Austin Suburban Portfolio
|
|
03/28/2013
|
|
Austin
|
|
TX
|
|
Office
|
|
8,288
|
|
|
68,344
|
|
|
1,872
|
|
|
78,504
|
|
|
(10,533
|
)
|
|
67,971
|
|
|
100.0
|
%
|
||||||
|
Westmoor Center
|
|
06/12/2013
|
|
Westminster
|
|
CO
|
|
Office
|
|
10,058
|
|
|
67,157
|
|
|
5,175
|
|
|
82,390
|
|
|
(12,022
|
)
|
|
70,368
|
|
|
100.0
|
%
|
||||||
|
Central Building
|
|
07/10/2013
|
|
Seattle
|
|
WA
|
|
Office
|
|
7,015
|
|
|
26,720
|
|
|
1,636
|
|
|
35,371
|
|
|
(4,013
|
)
|
|
31,358
|
|
|
100.0
|
%
|
||||||
|
50 Congress Street
|
|
07/11/2013
|
|
Boston
|
|
MA
|
|
Office
|
|
9,876
|
|
|
41,396
|
|
|
2,407
|
|
|
53,679
|
|
|
(6,747
|
)
|
|
46,932
|
|
|
100.0
|
%
|
||||||
|
1180 Raymond
|
|
08/20/2013
|
|
Newark
|
|
NJ
|
|
Apartment
|
|
8,292
|
|
|
37,542
|
|
|
—
|
|
|
45,834
|
|
|
(3,925
|
)
|
|
41,909
|
|
|
100.0
|
%
|
||||||
|
Park Highlands II
(2)
|
|
12/10/2013
|
|
North Las Vegas
|
|
NV
|
|
Undeveloped Land
|
|
23,464
|
|
|
—
|
|
|
—
|
|
|
23,464
|
|
|
—
|
|
|
23,464
|
|
|
100.0
|
%
|
||||||
|
Maitland Promenade II
|
|
12/18/2013
|
|
Orlando
|
|
FL
|
|
Office
|
|
3,434
|
|
|
24,722
|
|
|
3,520
|
|
|
31,676
|
|
|
(4,516
|
)
|
|
27,160
|
|
|
100.0
|
%
|
||||||
|
Plaza Buildings
|
|
01/14/2014
|
|
Bellevue
|
|
WA
|
|
Office
|
|
53,040
|
|
|
138,900
|
|
|
7,301
|
|
|
199,241
|
|
|
(18,448
|
)
|
|
180,793
|
|
|
100.0
|
%
|
||||||
|
424 Bedford
|
|
01/31/2014
|
|
Brooklyn
|
|
NY
|
|
Apartment
|
|
8,860
|
|
|
25,498
|
|
|
—
|
|
|
34,358
|
|
|
(2,049
|
)
|
|
32,309
|
|
|
90.0
|
%
|
||||||
|
Richardson Land II
|
|
09/04/2014
|
|
Richardson
|
|
TX
|
|
Undeveloped Land
|
|
3,418
|
|
|
—
|
|
|
—
|
|
|
3,418
|
|
|
—
|
|
|
3,418
|
|
|
90.0
|
%
|
||||||
|
Westpark Portfolio
|
|
05/10/2016
|
|
Redmond
|
|
WA
|
|
Office/Flex/Industrial
|
|
36,085
|
|
|
84,660
|
|
|
8,813
|
|
|
129,558
|
|
|
(4,550
|
)
|
|
125,008
|
|
|
100.0
|
%
|
||||||
|
353 Sacramento
|
|
07/11/2016
|
|
San Francisco
|
|
CA
|
|
Office
|
|
58,374
|
|
|
110,986
|
|
|
5,630
|
|
|
174,990
|
|
|
(3,002
|
)
|
|
171,988
|
|
|
100.0
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
$
|
322,499
|
|
|
$
|
855,744
|
|
|
$
|
48,964
|
|
|
$
|
1,227,207
|
|
|
$
|
(120,176
|
)
|
|
$
|
1,107,031
|
|
|
|
|
|
2017
|
$
|
99,868
|
|
|
2018
|
87,056
|
|
|
|
2019
|
72,682
|
|
|
|
2020
|
57,188
|
|
|
|
2021
|
43,201
|
|
|
|
Thereafter
|
90,412
|
|
|
|
|
$
|
450,407
|
|
|
Industry
|
|
Number of Tenants
|
|
Annualized Base Rent
(1)
(in thousands)
|
|
Percentage of
Annualized Base Rent
|
|||
|
Finance
|
|
51
|
|
$
|
11,223
|
|
|
10.8
|
%
|
|
Computer System Design & Programming
|
|
57
|
|
11,161
|
|
|
10.7
|
%
|
|
|
Insurance Carriers & Related Activities
|
|
31
|
|
10,474
|
|
|
10.0
|
%
|
|
|
|
|
|
|
$
|
32,858
|
|
|
31.5
|
%
|
|
4.
|
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,
2016 |
|
December 31,
2015 |
|
December 31,
2016 |
|
December 31,
2015 |
|
December 31,
2016 |
|
December 31,
2015 |
||||||||||||
|
Cost
|
|
$
|
48,964
|
|
|
$
|
43,894
|
|
|
$
|
1,877
|
|
|
$
|
2,399
|
|
|
$
|
(10,945
|
)
|
|
$
|
(5,826
|
)
|
|
Accumulated Amortization
|
|
(23,989
|
)
|
|
(22,749
|
)
|
|
(1,244
|
)
|
|
(1,361
|
)
|
|
4,394
|
|
|
3,091
|
|
||||||
|
Net Amount
|
|
$
|
24,975
|
|
|
$
|
21,145
|
|
|
$
|
633
|
|
|
$
|
1,038
|
|
|
$
|
(6,551
|
)
|
|
$
|
(2,735
|
)
|
|
|
|
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,
|
||||||||||||||||||||||||||||||
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
|
Amortization
|
|
$
|
(10,850
|
)
|
|
$
|
(10,555
|
)
|
|
$
|
(15,020
|
)
|
|
$
|
(459
|
)
|
|
$
|
(1,023
|
)
|
|
$
|
(1,070
|
)
|
|
$
|
2,789
|
|
|
$
|
1,668
|
|
|
$
|
2,409
|
|
|
|
|
Tenant Origination and
Absorption Costs |
|
Above-Market
Lease Assets |
|
Below-Market
Lease Liabilities |
||||||
|
2017
|
|
$
|
(9,614
|
)
|
|
$
|
(296
|
)
|
|
$
|
3,501
|
|
|
2018
|
|
(6,014
|
)
|
|
(139
|
)
|
|
1,558
|
|
|||
|
2019
|
|
(3,835
|
)
|
|
(89
|
)
|
|
751
|
|
|||
|
2020
|
|
(2,423
|
)
|
|
(65
|
)
|
|
501
|
|
|||
|
2021
|
|
(1,484
|
)
|
|
(44
|
)
|
|
178
|
|
|||
|
Thereafter
|
|
(1,605
|
)
|
|
—
|
|
|
62
|
|
|||
|
|
|
$
|
(24,975
|
)
|
|
$
|
(633
|
)
|
|
$
|
6,551
|
|
|
Weighted-Average Remaining Amortization Period
|
|
3.8 years
|
|
3.1 years
|
|
2.6 years
|
||||||
|
5.
|
REAL ESTATE LOAN RECEIVABLE
|
|
Loan Name
Location of Related Property or
Collateral
|
|
Date Originated
|
|
Property Type
|
|
Loan Type
|
|
Outstanding Principal Balance as of
December 31, 2016
|
|
Book Value as of
December 31, 2016
|
|
Book Value as of
December 31, 2015
(1)
|
|
Contractual Interest Rate
|
|
Annualized Effective Interest Rate
|
|
Maturity Date
|
||||||
|
University House First Mortgage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
New York, New York
|
|
3/20/2013
|
|
Student Housing
|
|
Mortgage
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,850
|
|
|
(2)
|
|
(2)
|
|
(2)
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Contractual interest income (including deferred interest)
|
|
$
|
3,655
|
|
|
$
|
1,540
|
|
|
$
|
2,752
|
|
|
Accretion of closing costs, origination fees and extension fees, net
|
|
—
|
|
|
428
|
|
|
614
|
|
|||
|
Interest income from real estate loans receivable
|
|
$
|
3,655
|
|
|
$
|
1,968
|
|
|
$
|
3,366
|
|
|
6.
|
REAL ESTATE DEBT SECURITIES
|
|
Debt Securities Name
|
|
Date Originated
|
|
Debt Securities Type
|
|
Outstanding Principal Balance as of
December 31, 2016
(1)
|
|
Book Value as of
December 31, 2016
(2)
|
|
Contractual Interest Rate
(3)
|
|
Annualized Effective
Interest Rate
(3)
|
|
Maturity Date
|
||||||
|
Battery Point Series B Preferred Units
|
|
10/28/2016
|
|
Series B Preferred Units
|
|
$
|
5,000
|
|
|
$
|
4,683
|
|
|
7.0
|
%
|
|
13.1
|
%
|
|
10/28/2019
|
|
Real estate debt securities - December 31, 2015
|
|
$
|
—
|
|
|
Face value of real estate debt securities acquired
|
|
5,000
|
|
|
|
Deferred interest receivable and interest accretion
|
|
30
|
|
|
|
Commitment fee, net of closing costs and acquisition fee
|
|
(364
|
)
|
|
|
Accretion of commitment fee, net of closing costs
|
|
17
|
|
|
|
Real estate debt securities - December 31, 2016
|
|
$
|
4,683
|
|
|
Contractual interest income
|
|
$
|
63
|
|
|
Interest accretion
|
|
30
|
|
|
|
Accretion of commitment fee, net of closing costs and acquisition fee
|
|
17
|
|
|
|
Interest income from real estate debt securities
|
|
$
|
110
|
|
|
7.
|
REAL ESTATE SALES
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Total revenues
|
$
|
—
|
|
|
$
|
215
|
|
|
$
|
1,134
|
|
|
|
|
|
|
|
|
||||||
|
Total expenses
|
16
|
|
|
645
|
|
|
2,473
|
|
|||
|
8.
|
NOTES AND BONDS PAYABLE
|
|
|
|
Book Value as of
December 31, 2016 |
|
Book Value as of
December 31, 2015 |
|
Contractual Interest Rate as of December 31, 2016
(1)
|
|
Effective Interest Rate at December 31, 2016
(1)
|
|
Payment Type
|
|
Maturity Date
(2)
|
||||
|
Richardson Portfolio Mortgage Loan
|
|
$
|
40,594
|
|
|
$
|
41,177
|
|
|
One-Month LIBOR + 2.10%
|
|
2.72%
|
|
Principal & Interest
|
|
05/01/2017
|
|
Bellevue Technology Center Mortgage Loan
|
|
59,400
|
|
|
52,960
|
|
|
One-Month LIBOR + 2.25%
|
|
2.87%
|
|
Principal & Interest
|
|
03/01/2017
(3)
|
||
|
Portfolio Revolving Loan Facility
(4)
|
|
11,799
|
|
|
47,087
|
|
|
One-Month LIBOR + 2.25%
|
|
2.87%
|
|
Principal & Interest
|
|
05/01/2017
|
||
|
Portfolio Mortgage Loan
|
|
106,479
|
|
|
100,032
|
|
|
One-Month LIBOR + 2.25%
|
|
2.87%
|
|
Principal & Interest
|
|
07/01/2017
|
||
|
Burbank Collection Mortgage Loan
|
|
9,812
|
|
|
9,098
|
|
|
One-Month LIBOR + 2.35%
|
|
3.04%
|
|
Principal & Interest
|
|
09/30/2017
|
||
|
50 Congress Mortgage Loan
|
|
31,525
|
|
|
28,075
|
|
|
One-Month LIBOR + 1.90%
|
|
2.52%
|
|
Interest Only
(5)
|
|
10/01/2017
|
||
|
1180 Raymond Bond Payable
|
|
6,635
|
|
|
6,795
|
|
|
6.50%
|
|
6.50%
|
|
Principal
& Interest
|
|
09/01/2036
|
||
|
Central Building Mortgage Loan
|
|
27,600
|
|
|
24,896
|
|
|
One-Month LIBOR + 1.75%
|
|
2.37%
|
|
Interest Only
|
|
11/13/2018
|
||
|
Maitland Promenade II Mortgage Loan
(6)
|
|
20,877
|
|
|
20,182
|
|
|
One-Month LIBOR + 2.90%
|
|
3.52%
|
|
Principal
& Interest
|
|
01/01/2018
|
||
|
Westmoor Center Mortgage Loan
|
|
62,000
|
|
|
56,036
|
|
|
One-Month LIBOR + 2.25%
|
|
2.87%
|
|
Interest Only
(5)
|
|
02/01/2018
|
||
|
Plaza Buildings Senior Loan
|
|
109,866
|
|
|
111,000
|
|
|
One-Month LIBOR + 1.90%
|
|
2.52%
|
|
Principal
& Interest
|
|
01/14/2017
(7)
|
||
|
424 Bedford Mortgage Loan
|
|
24,832
|
|
|
25,358
|
|
|
3.91%
|
|
3.91%
|
|
Principal
& Interest
|
|
10/01/2022
|
||
|
1180 Raymond Mortgage Loan
|
|
31,000
|
|
|
28,100
|
|
|
One-Month LIBOR + 2.25%
|
|
2.87%
|
|
Interest Only
|
|
12/01/2017
|
||
|
KBS SOR (BVI) Holdings, Ltd. Series A Debentures
(8)
|
|
251,811
|
|
|
—
|
|
|
4.25%
|
|
4.25%
|
|
(6)
|
|
03/01/2023
|
||
|
Westpark Portfolio Mortgage Loan
|
|
83,200
|
|
|
—
|
|
|
One-Month LIBOR + 2.50%
|
|
3.12%
|
|
Interest Only
(5)
|
|
07/01/2020
|
||
|
353 Sacramento Mortgage Loan
(9)
|
|
85,500
|
|
|
—
|
|
|
One-Month LIBOR + 2.75%
|
|
3.46%
|
|
Interest Only
|
|
10/14/2018
|
||
|
Total Notes and Bonds Payable principal outstanding
|
|
962,930
|
|
|
550,796
|
|
|
|
|
|
|
|
|
|
||
|
Net Premium/(Discount) on Notes and Bonds Payable
(10)
|
|
88
|
|
|
50
|
|
|
|
|
|
|
|
|
|
||
|
Deferred financing costs, net
|
|
(12,394
|
)
|
|
(3,523
|
)
|
|
|
|
|
|
|
|
|
||
|
Total Notes and Bonds Payable, net
|
|
$
|
950,624
|
|
|
$
|
547,323
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
$
|
402,153
|
|
|
2018
|
|
196,253
|
|
|
|
2019
|
|
52,251
|
|
|
|
2020
|
|
132,876
|
|
|
|
2021
|
|
51,241
|
|
|
|
Thereafter
|
|
128,156
|
|
|
|
|
|
$
|
962,930
|
|
|
9.
|
DERIVATIVE INSTRUMENTS
|
|
Derivative Instruments
|
|
Notional Amount
|
|
Strike Price
|
|
Trade Date
|
|
Maturity Date
|
||
|
Derivative instruments not designated as hedging instruments
|
|
|
|
|
|
|
||||
|
Foreign currency collar
|
|
$
|
100,000
|
|
|
3.72 - 3.83 ILS-USD
|
|
08/08/2016
|
|
08/08/2017
|
|
Foreign currency collar
|
|
50,000
|
|
|
3.67 - 3.77 ILS-USD
|
|
08/16/2016
|
|
08/16/2017
|
|
|
Foreign currency collar
|
|
50,000
|
|
|
3.68 - 3.78 ILS-USD
|
|
08/16/2016
|
|
08/16/2017
|
|
|
Foreign currency collar
|
|
50,000
|
|
|
3.67 - 3.77 ILS-USD
|
|
08/22/2016
|
|
08/22/2017
|
|
|
|
|
$
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
||||
|
Derivative Instruments
|
|
Balance Sheet Location
|
|
Number of Instruments
|
|
Fair Value
|
||
|
Derivative instruments not designated as hedging instruments
|
||||||||
|
Interest rate cap
|
|
Prepaid expenses and other assets
|
|
1
|
|
$
|
12
|
|
|
Foreign currency collars
|
|
Other liabilities
|
|
4
|
|
$
|
(3,910
|
)
|
|
10.
|
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, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
|
Face Value
|
|
Carrying Amount
|
|
Fair Value
|
|
Face Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||||||
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Real estate loan receivable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,850
|
|
|
$
|
27,850
|
|
|
$
|
27,850
|
|
|
Real estate debt securities
|
|
$
|
5,000
|
|
|
$
|
4,683
|
|
|
$
|
4,683
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Notes and bond payable
|
|
$
|
711,119
|
|
|
$
|
707,169
|
|
|
$
|
711,425
|
|
|
$
|
550,796
|
|
|
$
|
547,323
|
|
|
$
|
554,007
|
|
|
KBS SOR (BVI) Holdings, Ltd. Series A Debentures
|
|
$
|
251,811
|
|
|
$
|
243,455
|
|
|
$
|
253,120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
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)
|
||||||||
|
Recurring Basis:
|
|
|
|
|
|
|
|
|
||||||||
|
Asset derivative - interest rate cap
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
Liability derivatives - foreign currency collars
|
|
$
|
(3,910
|
)
|
|
$
|
—
|
|
|
$
|
(3,910
|
)
|
|
$
|
—
|
|
|
11
.
|
RELATED PARTY TRANSACTIONS
|
|
|
|
Incurred
|
|
Payable as of
December 31,
|
||||||||||||||||
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
||||||||||
|
Expensed
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset management fees
(1)
|
|
$
|
9,628
|
|
|
$
|
8,348
|
|
|
$
|
7,648
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Real estate acquisition fees
|
|
2,964
|
|
|
—
|
|
|
2,231
|
|
|
—
|
|
|
—
|
|
|||||
|
Reimbursable operating expenses
(2)
|
|
221
|
|
|
178
|
|
|
157
|
|
|
55
|
|
|
59
|
|
|||||
|
Disposition fees
(3)
|
|
279
|
|
|
276
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Capitalized
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Acquisition fees on real estate debt securities
|
|
250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Acquisition fee on investment in unconsolidated joint venture
|
|
—
|
|
|
—
|
|
|
1,573
|
|
|
—
|
|
|
—
|
|
|||||
|
Acquisition fee on undeveloped land
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
$
|
13,342
|
|
|
$
|
8,802
|
|
|
$
|
11,676
|
|
|
$
|
55
|
|
|
$
|
59
|
|
|
12.
|
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
|
|
|
|
|
|
|
|
|
|
Investment Balance at December 31,
|
||||||
|
Joint Venture
|
|
Number of Properties
|
|
Location
|
|
Ownership %
|
|
2016
|
|
2015
|
||||
|
NIP Joint Venture
|
|
17
|
|
Various
|
|
Less than 5.0%
|
|
$
|
5,305
|
|
|
$
|
5,305
|
|
|
110 William Joint Venture
|
|
1
|
|
New York, New York
|
|
60.0%
|
|
70,544
|
|
|
69,132
|
|
||
|
|
|
|
|
|
|
|
|
$
|
75,849
|
|
|
$
|
74,437
|
|
|
|
|
(Unaudited)
December 31, 2016
|
|
(Unaudited)
December 31, 2015
|
||||
|
Assets:
|
|
|
|
|
||||
|
Real estate assets, net of accumulated depreciation and amortization
|
|
$
|
262,192
|
|
|
$
|
269,664
|
|
|
Other assets
|
|
23,355
|
|
|
18,973
|
|
||
|
Total assets
|
|
$
|
285,547
|
|
|
$
|
288,637
|
|
|
Liabilities and Equity:
|
|
|
|
|
||||
|
Notes payable, net
(1)
|
|
$
|
157,628
|
|
|
$
|
162,395
|
|
|
Other liabilities
|
|
12,872
|
|
|
13,617
|
|
||
|
Partners’ capital
|
|
115,047
|
|
|
112,625
|
|
||
|
Total Liabilities and Equity
|
|
$
|
285,547
|
|
|
$
|
288,637
|
|
|
|
|
(Unaudited)
For the Years Ended December 31,
|
||||||||||
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Revenues
|
|
$
|
33,458
|
|
|
$
|
34,188
|
|
|
$
|
22,536
|
|
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Operating, maintenance, and management
|
|
10,778
|
|
|
10,549
|
|
|
6,869
|
|
|||
|
Real estate taxes and insurance
|
|
6,017
|
|
|
5,748
|
|
|
3,476
|
|
|||
|
Real estate acquisition fees and expenses
|
|
—
|
|
|
1
|
|
|
1,016
|
|
|||
|
Depreciation and amortization
|
|
12,955
|
|
|
12,596
|
|
|
8,806
|
|
|||
|
Interest expense
|
|
6,049
|
|
|
6,170
|
|
|
4,193
|
|
|||
|
Total expenses
|
|
35,799
|
|
|
35,064
|
|
|
24,360
|
|
|||
|
Total other income
|
|
63
|
|
|
334
|
|
|
36
|
|
|||
|
Net loss
|
|
$
|
(2,278
|
)
|
|
$
|
(542
|
)
|
|
$
|
(1,788
|
)
|
|
Company
’
s equity in loss of unconsolidated joint venture
|
|
$
|
(1,408
|
)
|
|
$
|
(368
|
)
|
|
$
|
(1,101
|
)
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
|
2016
|
|
2015
|
||||
|
Revenues
|
|
$
|
144,674
|
|
|
$
|
134,612
|
|
|
Depreciation and amortization
|
|
$
|
56,604
|
|
|
$
|
53,879
|
|
|
Net (loss) income
|
|
$
|
(25,298
|
)
|
|
$
|
7,764
|
|
|
14.
|
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
|
|
2016
|
||||||||||||||
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
Revenues
|
|
$
|
28,365
|
|
|
$
|
33,866
|
|
|
$
|
36,133
|
|
|
$
|
35,880
|
|
|
Net loss
|
|
$
|
(4,932
|
)
|
|
$
|
(1,989
|
)
|
|
$
|
(15,007
|
)
|
|
$
|
(7,198
|
)
|
|
Net loss attributable to common stockholders
|
|
$
|
(4,894
|
)
|
|
$
|
(1,959
|
)
|
|
$
|
(14,951
|
)
|
|
$
|
(7,114
|
)
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.12
|
)
|
|
Distributions declared per common share
|
|
$
|
0.093
|
|
|
$
|
0.093
|
|
|
$
|
0.094
|
|
|
$
|
0.095
|
|
|
|
|
2015
|
||||||||||||||
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
Revenues
|
|
$
|
27,943
|
|
|
$
|
28,667
|
|
|
$
|
28,158
|
|
|
$
|
27,360
|
|
|
Net income (loss)
|
|
$
|
5,385
|
|
|
$
|
2,639
|
|
|
$
|
(277
|
)
|
|
$
|
(682
|
)
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
2,235
|
|
|
$
|
1,526
|
|
|
$
|
(462
|
)
|
|
$
|
(922
|
)
|
|
Net income (loss) per common share, basic and diluted
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
Distributions declared per common share
|
|
$
|
0.092
|
|
|
$
|
0.093
|
|
|
$
|
0.095
|
|
|
$
|
0.095
|
|
|
15.
|
COMMITMENTS AND CONTINGENCIES
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Northridge Center I & II
|
|
Atlanta, GA
|
|
100.0%
|
|
(4)
|
|
$
|
2,234
|
|
|
$
|
4,457
|
|
|
$
|
6,691
|
|
|
$
|
3,038
|
|
|
$
|
2,234
|
|
|
$
|
7,495
|
|
|
$
|
9,729
|
|
|
$
|
(2,509
|
)
|
|
1985/1989
|
|
03/25/2011
|
|
|
Iron Point Business Park
|
|
Folsom, CA
|
|
100.0%
|
|
(5)
|
|
2,671
|
|
|
16,576
|
|
|
19,247
|
|
|
2,939
|
|
|
2,671
|
|
|
19,515
|
|
|
22,186
|
|
|
(4,914
|
)
|
|
1999/2001
|
|
06/21/2011
|
|||||||||
|
Richardson Portfolio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Palisades Central I
|
|
Richardson, TX
|
|
90.0%
|
|
(6)
|
|
1,037
|
|
|
8,628
|
|
|
9,665
|
|
|
2,289
|
|
|
1,037
|
|
|
10,917
|
|
|
11,954
|
|
|
(2,605
|
)
|
|
1980
|
|
11/23/2011
|
|||||||||
|
Palisades Central II
|
|
Richardson, TX
|
|
90.0%
|
|
(6)
|
|
810
|
|
|
17,117
|
|
|
17,927
|
|
|
1,066
|
|
|
810
|
|
|
18,183
|
|
|
18,993
|
|
|
(4,432
|
)
|
|
1985
|
|
11/23/2011
|
|||||||||
|
Greenway I
|
|
Richardson, TX
|
|
90.0%
|
|
(6)
|
|
561
|
|
|
1,170
|
|
|
1,731
|
|
|
1,193
|
|
|
561
|
|
|
2,363
|
|
|
2,924
|
|
|
(691
|
)
|
|
1983
|
|
11/23/2011
|
|||||||||
|
Greenway III
|
|
Richardson, TX
|
|
90.0%
|
|
(6)
|
|
702
|
|
|
4,083
|
|
|
4,785
|
|
|
185
|
|
|
702
|
|
|
4,268
|
|
|
4,970
|
|
|
(1,481
|
)
|
|
1983
|
|
11/23/2011
|
|||||||||
|
Undeveloped Land
|
|
Richardson, TX
|
|
90.0%
|
|
(6)
|
|
1,997
|
|
|
—
|
|
|
1,997
|
|
|
1,137
|
|
|
3,134
|
|
|
—
|
|
|
3,134
|
|
|
—
|
|
|
N/A
|
|
11/23/2011
|
|||||||||
|
Total Richardson Portfolio
|
|
|
|
|
|
40,594
|
|
|
5,107
|
|
|
30,998
|
|
|
36,105
|
|
|
5,870
|
|
|
6,244
|
|
|
35,731
|
|
|
41,975
|
|
|
(9,209
|
)
|
|
|
|
|
||||||||
|
Park Highlands
|
|
North Las Vegas, NV
|
|
(7)
|
|
—
|
|
|
20,307
|
|
|
—
|
|
|
20,307
|
|
|
13,855
|
|
|
34,162
|
|
|
—
|
|
|
34,162
|
|
|
—
|
|
|
N/A
|
|
12/30/2011
|
||||||||
|
Bellevue Technology Center
|
|
Bellevue, WA
|
|
100.0%
|
|
59,400
|
|
|
25,506
|
|
|
52,411
|
|
|
77,917
|
|
|
7,980
|
|
|
25,506
|
|
|
60,391
|
|
|
85,897
|
|
|
(10,810
|
)
|
|
1973-2000
|
|
07/31/2012
|
||||||||
|
Powers Ferry Landing East
|
|
Atlanta, GA
|
|
100.0%
|
|
(4)
|
|
1,643
|
|
|
3,761
|
|
|
5,404
|
|
|
4,354
|
|
|
1,643
|
|
|
8,115
|
|
|
9,758
|
|
|
(2,393
|
)
|
|
1980/1982/1985
|
|
09/24/2012
|
|||||||||
|
1800 West Loop
|
|
Houston, TX
|
|
100.0%
|
|
(5)
|
|
8,360
|
|
|
59,292
|
|
|
67,652
|
|
|
5,971
|
|
|
8,360
|
|
|
65,263
|
|
|
73,623
|
|
|
(12,894
|
)
|
|
1982
|
|
12/04/2012
|
|||||||||
|
West Loop I & II
|
|
Houston, TX
|
|
100.0%
|
|
(4)
|
|
7,300
|
|
|
29,742
|
|
|
37,042
|
|
|
4,362
|
|
|
7,300
|
|
|
34,104
|
|
|
41,404
|
|
|
(5,921
|
)
|
|
1980/1981
|
|
12/07/2012
|
|||||||||
|
Burbank Collection
|
|
Burbank, CA
|
|
90.0%
|
|
9,812
|
|
|
4,175
|
|
|
8,799
|
|
|
12,974
|
|
|
3,016
|
|
|
4,175
|
|
|
11,815
|
|
|
15,990
|
|
|
(1,721
|
)
|
|
2008
|
|
12/12/2012
|
||||||||
|
Austin Suburban Portfolio
|
|
Austin, TX
|
|
100.0%
|
|
(4)
|
|
8,288
|
|
|
67,745
|
|
|
76,033
|
|
|
2,471
|
|
|
8,288
|
|
|
70,216
|
|
|
78,504
|
|
|
(10,533
|
)
|
|
1985/1986/2000
|
|
03/28/2013
|
|||||||||
|
Westmoor Center
|
|
Westminster, CO
|
|
100.0%
|
|
62,000
|
|
|
10,058
|
|
|
73,510
|
|
|
83,568
|
|
|
(1,178
|
)
|
|
10,058
|
|
|
72,332
|
|
|
82,390
|
|
|
(12,022
|
)
|
|
1998/1999
|
|
06/12/2013
|
||||||||
|
Central Building
|
|
Seattle, WA
|
|
100.0%
|
|
27,600
|
|
|
7,015
|
|
|
26,124
|
|
|
33,139
|
|
|
2,232
|
|
|
7,015
|
|
|
28,356
|
|
|
35,371
|
|
|
(4,013
|
)
|
|
1907
|
|
07/10/2013
|
||||||||
|
50 Congress Street
|
|
Boston, MA
|
|
100.0%
|
|
31,525
|
|
|
9,876
|
|
|
43,455
|
|
|
53,331
|
|
|
348
|
|
|
9,876
|
|
|
43,803
|
|
|
53,679
|
|
|
(6,747
|
)
|
|
1910/1915
|
|
07/11/2013
|
||||||||
|
1180 Raymond
|
|
Newark, NJ
|
|
100.0%
|
|
6,635
|
|
|
8,292
|
|
|
37,651
|
|
|
45,943
|
|
|
(109
|
)
|
|
8,292
|
|
|
37,542
|
|
|
45,834
|
|
|
(3,925
|
)
|
|
1929
|
|
08/20/2013
|
||||||||
|
Park Highlands II
(8)
|
|
North Las Vegas, NV
|
|
100.0%
|
|
—
|
|
|
20,118
|
|
|
—
|
|
|
20,118
|
|
|
3,346
|
|
|
23,464
|
|
|
—
|
|
|
23,464
|
|
|
—
|
|
|
N/A
|
|
12/10/2013
|
||||||||
|
Maitland Promenade II
|
|
Orlando, FL
|
|
100.0%
|
|
20,877
|
|
|
3,434
|
|
|
27,282
|
|
|
30,716
|
|
|
960
|
|
|
3,434
|
|
|
28,242
|
|
|
31,676
|
|
|
(4,516
|
)
|
|
2001
|
|
12/18/2013
|
||||||||
|
Plaza Buildings
|
|
Bellevue, WA
|
|
100.0%
|
|
109,866
|
|
|
53,040
|
|
|
133,157
|
|
|
186,197
|
|
|
13,044
|
|
|
53,040
|
|
|
146,201
|
|
|
199,241
|
|
|
(18,448
|
)
|
|
1978/1983
|
|
01/14/2014
|
||||||||
|
424 Bedford
|
|
Brooklyn, NY
|
|
90.0%
|
|
24,832
|
|
|
8,860
|
|
|
24,820
|
|
|
33,680
|
|
|
678
|
|
|
8,860
|
|
|
25,498
|
|
|
34,358
|
|
|
(2,049
|
)
|
|
2010
|
|
01/31/2014
|
||||||||
|
Richardson Land II
|
|
Richardson, TX
|
|
90.0%
|
|
—
|
|
|
3,096
|
|
|
—
|
|
|
3,096
|
|
|
322
|
|
|
3,418
|
|
|
—
|
|
|
3,418
|
|
|
—
|
|
|
N/A
|
|
09/04/2014
|
||||||||
|
Westpark Portfolio
|
|
Redmond, WA
|
|
100.0%
|
|
83,200
|
|
|
36,085
|
|
|
90,227
|
|
|
126,312
|
|
|
3,246
|
|
|
36,085
|
|
|
93,473
|
|
|
129,558
|
|
|
(4,550
|
)
|
|
1984-1992
|
|
05/10/2016
|
||||||||
|
353 Sacramento
|
|
San Francisco, CA
|
|
100.0%
|
|
85,500
|
|
|
58,374
|
|
|
115,696
|
|
|
174,070
|
|
|
920
|
|
|
58,374
|
|
|
116,616
|
|
|
174,990
|
|
|
(3,002
|
)
|
|
1982
|
|
07/11/2016
|
||||||||
|
|
|
Total Properties Held for Investment
|
|
|
|
$
|
303,839
|
|
|
$
|
845,703
|
|
|
$
|
1,149,542
|
|
|
$
|
77,665
|
|
|
$
|
322,499
|
|
|
$
|
904,708
|
|
|
$
|
1,227,207
|
|
|
$
|
(120,176
|
)
|
|
|
|
|
|||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Real Estate
(1)
:
|
|
|
|
|
|
||||||
|
Balance at the beginning of the year
|
$
|
914,074
|
|
|
$
|
919,259
|
|
|
$
|
668,018
|
|
|
Acquisitions
(2)
|
300,382
|
|
|
—
|
|
|
227,339
|
|
|||
|
Improvements
|
33,909
|
|
|
32,385
|
|
|
36,942
|
|
|||
|
Write-off of fully depreciated and fully amortized assets
|
(19,220
|
)
|
|
(13,212
|
)
|
|
(10,362
|
)
|
|||
|
Impairments
|
—
|
|
|
—
|
|
|
(697
|
)
|
|||
|
Loss due to property damages
|
(1,938
|
)
|
|
(2,260
|
)
|
|
(707
|
)
|
|||
|
Sales
|
—
|
|
|
(22,098
|
)
|
|
(1,274
|
)
|
|||
|
Balance at the end of the year
|
$
|
1,227,207
|
|
|
$
|
914,074
|
|
|
$
|
919,259
|
|
|
|
|
|
|
|
|
||||||
|
Accumulated depreciation and amortization
(1)
:
|
|
|
|
|
|
||||||
|
Balance at the beginning of the year
|
$
|
91,560
|
|
|
$
|
64,171
|
|
|
$
|
29,859
|
|
|
Depreciation and amortization expense
|
47,836
|
|
|
41,513
|
|
|
44,848
|
|
|||
|
Write-off of fully depreciated and fully amortized assets
|
(19,220
|
)
|
|
(13,212
|
)
|
|
(10,362
|
)
|
|||
|
Impairments
|
—
|
|
|
—
|
|
|
(118
|
)
|
|||
|
Sales
|
—
|
|
|
(912
|
)
|
|
(56
|
)
|
|||
|
Balance at the end of the year
|
$
|
120,176
|
|
|
$
|
91,560
|
|
|
$
|
64,171
|
|
|
|
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 10, 2017
|
|
Keith D. Hall
|
|
|
|
|
|
/s/ PETER MCMILLAN III
|
|
Chairman of the Board, President and Director
|
|
March 10, 2017
|
|
Peter McMillan III
|
|
|
|
|
|
/s/ JEFFREY K. WALDVOGEL
|
|
Chief Financial Officer
(principal financial officer)
|
|
March 10, 2017
|
|
Jeffrey K. Waldvogel
|
|
|
|
|
|
/s/ STACIE K. YAMANE
|
|
Chief Accounting Officer
(principal accounting officer)
|
|
March 10, 2017
|
|
Stacie K. Yamane
|
|
|
|
|
|
/s/ MICHAEL L. MEYER
|
|
Director
|
|
March 10, 2017
|
|
Michael L. Meyer
|
|
|
|
|
|
/s/ WILLIAM M. PETAK
|
|
Director
|
|
March 10, 2017
|
|
William M. Petak
|
|
|
|
|
|
/s/ ERIC J. SMITH
|
|
Director
|
|
March 10, 2017
|
|
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 |
|---|