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
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Smaller reporting company
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¨
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Emerging growth 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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ITEM 14.
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ITEM 15.
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ITEM 16.
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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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•
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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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•
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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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•
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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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2019
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$
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102,469
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$
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102,469
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2020
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104,070
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52,898
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2021
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272,311
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55,278
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2022
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127,155
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129,320
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2023
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52,158
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264,994
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Thereafter
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5,155
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58,359
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$
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663,318
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$
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663,318
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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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•
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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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•
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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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•
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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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•
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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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•
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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 asset management fees and certain other fees;
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•
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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 to engage KBS Management Group, which may receive fees in connection with the management of our properties regardless of the quality of the services provided to us, to manage our properties; and
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•
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whether we pursue a liquidity event such as a listing of our shares of common stock on a national securities exchange, a sale of the company or a liquidation of our assets, which (i) may make it more likely for us to become self-managed or internalize our management, (ii) could positively or negatively affect the sales efforts for other KBS-sponsored programs, depending on the price at which our shares trade or the consideration received by our stockholders, and/or (iii) affect the advisory fees received by our advisor.
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•
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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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an independent third-party appraiser or other third-party valuation firm would agree with our estimated value per share; or
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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 (which is determined without regard to the dividends paid deduction or net capital gain for this purpose) to you.
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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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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. 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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|||
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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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$
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41,448
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76.7%
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90.0%
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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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30,603
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N/A
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100.0%
(2)
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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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16,860
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89.5%
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90.0%
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Park Centre
Austin, TX |
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03/28/2013
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Office
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205,095
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31,289
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49.1%
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100.0%
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1180 Raymond
Newark, NJ |
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08/20/2013
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Apartment
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268,688
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46,898
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95.0%
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100.0%
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Park Highlands II
(2)
North Las Vegas, NV |
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12/10/2013
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Undeveloped Land
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—
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25,834
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N/A
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100.0%
(2)
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Richardson Land II
Richardson, TX |
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09/04/2014
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Undeveloped Land
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—
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3,418
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N/A
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90.0%
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Crown Pointe
Dunwoody, GA |
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02/14/2017
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Office
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509,792
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93,042
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72.6%
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100.0%
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125 John Carpenter
Irving, TX |
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09/15/2017
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Office
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445,317
|
|
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88,283
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85.3%
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100.0%
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Marquette Plaza
Minneapolis, MN |
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03/01/2018
|
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Office
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522,656
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89,334
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68.3%
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100.0%
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City Tower
Orange, CA |
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03/06/2018
|
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Office
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435,177
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152,784
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78.6%
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100.0%
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Eight & Nine Corporate Centre
Franklin, TN |
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06/08/2018
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Office
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316,334
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76,376
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71.4%
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100.0%
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3,312,074
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$
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696,169
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|
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Industry
|
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Number of Tenants
|
|
Annualized Base Rent
(1)
(in thousands) |
|
Percentage of
Annualized Base Rent |
|||
|
Health Care and Social Services
|
|
16
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$
|
6,716
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|
|
12.1
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%
|
|
Insurance
|
|
21
|
|
5,997
|
|
|
10.8
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%
|
|
|
|
|
|
|
$
|
12,713
|
|
|
22.9
|
%
|
|
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
|
|
9
|
|
|
$
|
467
|
|
|
0.8
|
%
|
|
49,164
|
|
|
2.2
|
%
|
|
2019
|
|
43
|
|
|
5,396
|
|
|
9.7
|
%
|
|
228,902
|
|
|
10.2
|
%
|
|
|
2020
|
|
43
|
|
|
7,007
|
|
|
12.6
|
%
|
|
299,956
|
|
|
13.3
|
%
|
|
|
2021
|
|
33
|
|
|
5,195
|
|
|
9.4
|
%
|
|
209,927
|
|
|
9.3
|
%
|
|
|
2022
|
|
29
|
|
|
7,434
|
|
|
13.4
|
%
|
|
298,861
|
|
|
13.3
|
%
|
|
|
2023
|
|
30
|
|
|
4,437
|
|
|
8.0
|
%
|
|
205,470
|
|
|
9.1
|
%
|
|
|
2024
|
|
14
|
|
|
2,555
|
|
|
4.6
|
%
|
|
97,343
|
|
|
4.3
|
%
|
|
|
2025
|
|
9
|
|
|
5,111
|
|
|
9.2
|
%
|
|
190,379
|
|
|
8.5
|
%
|
|
|
2026
|
|
10
|
|
|
5,749
|
|
|
10.4
|
%
|
|
204,856
|
|
|
9.1
|
%
|
|
|
2027
|
|
11
|
|
|
6,328
|
|
|
11.4
|
%
|
|
242,537
|
|
|
10.8
|
%
|
|
|
2028
|
|
6
|
|
|
2,827
|
|
|
5.1
|
%
|
|
112,421
|
|
|
5.0
|
%
|
|
|
Thereafter
|
|
5
|
|
|
2,987
|
|
|
5.4
|
%
|
|
108,008
|
|
|
4.9
|
%
|
|
|
Total
|
|
242
|
|
|
$
|
55,493
|
|
|
100
|
%
|
|
2,247,824
|
|
|
100
|
%
|
|
Property
Location of Property
|
|
Date Acquired
|
|
Property Type
|
|
Rentable Square Feet
|
|
Total Real Estate at Cost
(1)
(in thousands)
|
|
Occupancy
|
|
Ownership %
|
|||||
|
424 Bedford
(2)
Brooklyn, NY |
|
01/31/2014
|
|
Apartment
|
|
49,220
|
|
|
$
|
34,793
|
|
|
89.4
|
%
|
|
90.0
|
%
|
|
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
|
|
|
|
November 12, 2018
Estimated Value per Share |
|
December 7, 2017
Estimated Value per Share (1) |
|
Change in
Estimated Value per Share
|
||||||
|
Real estate properties
(2)
|
|
$
|
20.57
|
|
|
$
|
30.83
|
|
|
$
|
(10.26
|
)
|
|
Real estate equity securities
(3)
|
|
1.82
|
|
|
0.90
|
|
|
0.92
|
|
|||
|
Real estate debt securities
|
|
0.32
|
|
|
0.33
|
|
|
(0.01
|
)
|
|||
|
Cash
|
|
1.72
|
|
|
0.60
|
|
|
1.12
|
|
|||
|
Investments in unconsolidated joint ventures
(4)
|
|
3.61
|
|
|
3.26
|
|
|
0.35
|
|
|||
|
Other assets
|
|
0.36
|
|
|
0.53
|
|
|
(0.17
|
)
|
|||
|
Mortgage debt
(5)
|
|
(8.98
|
)
|
|
(13.96
|
)
|
|
4.98
|
|
|||
|
Series A Debentures
(6)
|
|
(5.00
|
)
|
|
(5.54
|
)
|
|
0.54
|
|
|||
|
Advisor participation fee potential liability
|
|
(0.62
|
)
|
|
(0.54
|
)
|
|
(0.08
|
)
|
|||
|
Other liabilities
|
|
(0.57
|
)
|
|
(0.71
|
)
|
|
0.14
|
|
|||
|
Non-controlling interest
|
|
(0.37
|
)
|
|
(0.59
|
)
|
|
0.22
|
|
|||
|
Special Dividend authorized on December 7, 2017
|
|
—
|
|
|
(3.61
|
)
|
|
3.61
|
|
|||
|
Estimated value per share prior to November 12, 2018 Special Dividend authorization
|
|
$
|
12.86
|
|
|
$
|
11.50
|
|
|
$
|
1.36
|
|
|
Estimated enterprise value premium
|
|
None assumed
|
|
|
None assumed
|
|
|
None assumed
|
|
|||
|
Special Dividend authorized on November 12, 2018
(7)
|
|
(2.95
|
)
|
|
—
|
|
|
(2.95
|
)
|
|||
|
Total estimated value per share
|
|
$
|
9.91
|
|
|
$
|
11.50
|
|
|
$
|
(1.59
|
)
|
|
|
|
Change in
Estimated Value per Share
|
||
|
December 7, 2017 estimated value per share
|
|
$
|
11.50
|
|
|
Changes to estimated value per share
|
|
|
||
|
Investments
|
|
|
||
|
Real estate
|
|
1.31
|
|
|
|
Investments in unconsolidated joint ventures
|
|
0.64
|
|
|
|
Investments in debt and equity securities
|
|
(0.04
|
)
|
|
|
Capital expenditures on real estate
|
|
(0.66
|
)
|
|
|
Total change related to investments
|
|
1.25
|
|
|
|
Operating cash flows in excess of quarterly distributions declared
(1)
|
|
0.16
|
|
|
|
Foreign currency gain
|
|
0.10
|
|
|
|
Selling, acquisition and financing costs
(2)
|
|
(0.19
|
)
|
|
|
Advisor disposition and acquisition fees
(3)
|
|
(0.11
|
)
|
|
|
Mortgage debt and Series A debentures
|
|
0.14
|
|
|
|
Self-Tender offer price discount
(4)
|
|
0.10
|
|
|
|
Advisor Participation fee potential liability
|
|
(0.10
|
)
|
|
|
Other
|
|
0.01
|
|
|
|
Total change in estimated value per share prior to November 12, 2018 Special Dividend declaration
|
|
$
|
1.36
|
|
|
Estimated value per share prior to November 12, 2018 Special Dividend declaration
|
|
$
|
12.86
|
|
|
Special Dividend
(5)
|
|
(2.95
|
)
|
|
|
November 12, 2018 estimated value per share
|
|
$
|
9.91
|
|
|
|
|
Range in Values
|
|
Weighted-Average Basis
|
|
Consolidated Investments in Real Estate Properties (Excluding Undeveloped Land)
|
|
|
|
|
|
Terminal capitalization rate
|
|
4.00% to 7.50%
|
|
6.66%
|
|
Discount rate
|
|
4.75% to 9.50%
|
|
7.83%
|
|
Net operating income compounded annual growth rate
(1)
|
|
(2.69%) to 22.68%
|
|
5.60%
|
|
|
|
|
|
|
|
Undeveloped Land
|
|
|
|
|
|
Price per acre
(2)
|
|
$128,000 to $866,000
|
|
$139,000
|
|
|
|
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
|
|
$
|
0.29
|
|
|
$
|
(0.27
|
)
|
|
$
|
0.37
|
|
|
$
|
(0.33
|
)
|
|
Discount rates
|
|
0.22
|
|
|
(0.22
|
)
|
|
0.33
|
|
|
(0.32
|
)
|
||||
|
|
|
Increase (Decrease) on the Estimated Value per Share due to
|
||||||
|
|
|
Decrease of 5%
|
|
Increase of 5%
|
||||
|
Price per acre
|
|
$
|
(0.15
|
)
|
|
$
|
0.15
|
|
|
|
|
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
|
|
$
|
0.18
|
|
|
$
|
(0.16
|
)
|
|
$
|
0.19
|
|
|
$
|
(0.18
|
)
|
|
Discount rates
|
|
0.11
|
|
|
(0.11
|
)
|
|
0.16
|
|
|
(0.15
|
)
|
||||
|
|
|
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
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
|
•
|
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
|
|
$11.50
|
|
December 7, 2017
|
|
Current Report on Form 8-K, filed December 13, 2017
|
|
$14.81
|
|
December 8, 2016
|
|
Current Report on Form 8-K, filed December 15, 2016
|
|
$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
|
|
|
2018
|
||||||||||||||||||
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
(1)
|
|
Total
|
||||||||||
|
Total Distributions Declared
|
$
|
1,034
|
|
|
$
|
882
|
|
|
$
|
870
|
|
|
$
|
159,908
|
|
|
$
|
162,694
|
|
|
Total Per Share Distribution
|
$
|
0.016
|
|
|
$
|
0.016
|
|
|
$
|
0.016
|
|
|
$
|
2.950
|
|
|
$
|
2.998
|
|
|
Rate Based on Initial Public Offering Purchase Price of $10.00 Per Share
|
0.16
|
%
|
|
0.16
|
%
|
|
0.16
|
%
|
|
(1)
|
|
(1)
|
|||||||
|
|
2017
|
||||||||||||||||||
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
(2)
|
|
Total
|
||||||||||
|
Total Distributions Declared
|
$
|
5,247
|
|
|
$
|
5,298
|
|
|
$
|
5,350
|
|
|
$
|
187,914
|
|
|
$
|
203,809
|
|
|
Total Per Share Distribution
|
$
|
0.092
|
|
|
$
|
0.093
|
|
|
$
|
0.095
|
|
|
$
|
3.610
|
|
|
$
|
3.890
|
|
|
Rate Based on Initial Public Offering Purchase Price of $10.00 Per Share
|
0.92
|
%
|
|
0.93
|
%
|
|
0.95
|
%
|
|
(2)
|
|
(2)
|
|||||||
|
|
|
2018
|
|
2017
|
||
|
Ordinary Income
|
|
—
|
%
|
|
—
|
%
|
|
Return of Capital
|
|
18
|
%
|
|
5
|
%
|
|
Capital Gain
|
|
82
|
%
|
|
95
|
%
|
|
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.
|
|
•
|
We may redeem no more than
$2.0 million
of shares in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
|
|
•
|
We may redeem no more than
$2.0 million
of shares per fiscal quarter, excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” To the extent any of such capacity is unused in a fiscal quarter, it will be carried over to the next fiscal quarter for redemption of shares excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” In addition, to the extent extra capacity from the bullet above is available with respect to redemptions in the last month of
2019
, such capacity will be made available for redemption of shares other than in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
|
|
•
|
During any calendar year, we may redeem only the number of shares that we can purchase with the amount of net proceeds from the sale of shares under the our dividend reinvestment plan during the prior calendar year; provided, however, that this limit may be increased or decreased by us upon ten business days’ notice to our stockholders. To the extent that we redeem less than the number of shares that we can purchase in any calendar year with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year plus any additional funds approved by us, such excess capacity to redeem shares during any calendar year shall be added to our capacity to otherwise redeem shares during the subsequent calendar year. Furthermore, during any calendar year, once we have received requests for redemptions, whether in connection with a stockholder’s death, “qualifying disability or “determination of incompetence”, or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $1.0 million or less, the last $1.0 million of available funds shall be reserved exclusively for shares being redeemed in connection with a stockholder’s death, “qualifying disability or “determination of incompetence.” 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 amount of available funds reserved for such redemptions in accordance with the previous sentence, any excess funds may be used to redeem shares not in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during such month.
|
|
•
|
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, in a given fiscal quarter, we redeem less than the sum of (a)
$3.0 million
of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) and (b) any excess capacity carried over to such fiscal quarter from a prior fiscal quarter as described below, 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 quarter. We may increase or decrease this limit upon ten business days’ notice to stockholders.
|
|
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 2018
|
|
407,046
|
|
|
$
|
10.97
|
|
|
(2)
|
|
February 2018
|
|
12,526
|
|
|
$
|
11.50
|
|
|
(2)
|
|
March 2018
|
|
—
|
|
|
$
|
—
|
|
|
(2)
|
|
April 2018
|
|
—
|
|
|
$
|
—
|
|
|
(2)
|
|
May 2018
|
|
—
|
|
|
$
|
—
|
|
|
(2)
|
|
June 2018
|
|
577,203
|
|
|
$
|
10.95
|
|
|
(2)
|
|
July 2018
|
|
12,617
|
|
|
$
|
11.50
|
|
|
(2)
|
|
August 2018
|
|
150,137
|
|
|
$
|
11.53
|
|
|
(2)
|
|
September 2018
|
|
299,025
|
|
|
$
|
10.97
|
|
|
(2)
|
|
October 2018
|
|
19,875
|
|
|
$
|
11.49
|
|
|
(2)
|
|
November 2018
|
|
—
|
|
|
$
|
—
|
|
|
(2)
|
|
December 2018
|
|
291,650
|
|
|
$
|
9.59
|
|
|
(2)
|
|
Total
|
|
1,770,079
|
|
|
|
|
|
||
|
•
|
We may redeem no more than
$2.0 million
of shares in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
|
|
•
|
We may redeem no more than
$2.0 million
of shares per fiscal quarter, excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” To the extent any of such capacity is unused in a fiscal quarter, it will be carried over to the next fiscal quarter for redemption of shares excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” In addition, to the extent extra capacity from the bullet above is available with respect to redemptions in the last month of
2019
, such capacity will be made available for redemption of shares other than in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
Balance sheet data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total real estate and real estate-related investments, net
|
$
|
765,855
|
|
|
$
|
640,681
|
|
|
$
|
1,111,714
|
|
|
$
|
850,364
|
|
|
$
|
882,510
|
|
|
Total assets
|
1,004,989
|
|
|
1,101,574
|
|
|
1,310,116
|
|
|
1,004,214
|
|
|
1,016,313
|
|
|||||
|
Total notes and bonds payable, net
|
655,472
|
|
|
603,043
|
|
|
950,624
|
|
|
547,323
|
|
|
524,062
|
|
|||||
|
Total liabilities
|
711,025
|
|
|
836,073
|
|
|
1,014,566
|
|
|
585,565
|
|
|
556,266
|
|
|||||
|
Redeemable common stock
|
—
|
|
|
4,518
|
|
|
—
|
|
|
9,859
|
|
|
9,911
|
|
|||||
|
Total equity
(1)
|
293,964
|
|
|
260,983
|
|
|
295,550
|
|
|
408,790
|
|
|
450,136
|
|
|||||
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
Operating data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total revenues
|
$
|
95,787
|
|
|
$
|
140,714
|
|
|
$
|
134,244
|
|
|
$
|
112,128
|
|
|
$
|
106,154
|
|
|
Income (loss) from continuing operations attributable to common stockholders
|
33,546
|
|
|
210,644
|
|
|
(28,918
|
)
|
|
2,444
|
|
|
(23,194
|
)
|
|||||
|
Income (loss) from continuing operations per common share - basic and diluted
|
$
|
0.57
|
|
|
$
|
3.77
|
|
|
$
|
(0.50
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
Net income (loss) attributable to common stockholders
|
33,546
|
|
|
210,644
|
|
|
(28,918
|
)
|
|
2,444
|
|
|
(23,194
|
)
|
|||||
|
Net income (loss) per common share - basic and diluted
|
$
|
0.57
|
|
|
$
|
3.77
|
|
|
$
|
(0.50
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.39
|
)
|
|
Other data
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash flows provided by operating activities
|
$
|
2,143
|
|
|
$
|
13,432
|
|
|
$
|
26,656
|
|
|
$
|
25,855
|
|
|
$
|
12,285
|
|
|
Cash flows (used in) provided by investing activities
|
(89,061
|
)
|
|
673,323
|
|
|
(306,495
|
)
|
|
6,758
|
|
|
(285,795
|
)
|
|||||
|
Cash flows (used in) provided by financing activities
|
(126,875
|
)
|
|
(374,634
|
)
|
|
311,875
|
|
|
(25,083
|
)
|
|
235,461
|
|
|||||
|
Distributions declared
|
$
|
162,694
|
|
|
$
|
203,809
|
|
|
$
|
21,844
|
|
|
$
|
22,280
|
|
|
$
|
15,696
|
|
|
Distributions declared per common share
(2)
|
3.00
|
|
|
3.89
|
|
|
0.38
|
|
|
0.38
|
|
|
0.26
|
|
|||||
|
Weighted-average number of common shares
outstanding, basic and diluted
|
58,738,732
|
|
|
55,829,708
|
|
|
58,273,335
|
|
|
59,656,667
|
|
|
59,714,540
|
|
|||||
|
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
three
office properties for
$312.3 million
;
|
|
•
|
Proceeds from the sale of
one
office building,
one
office/flex/industrial portfolio consisting of
21
buildings and
124
acres of undeveloped land of
$250.6 million
;
|
|
•
|
Improvements to real estate of
$32.2 million
;
|
|
•
|
Investment in real estate equity securities of
$30.6 million
;
|
|
•
|
Proceeds from the sale of real estate equity securities of
$27.8 million
;
|
|
•
|
Proceeds from the principal repayment on real estate debt securities of
$4.5 million
;
|
|
•
|
Distribution of capital from an unconsolidated joint venture of
$2.2 million
;
|
|
•
|
Reimbursement of construction costs of
$1.6 million
;
|
|
•
|
Contribution to an unconsolidated joint venture of
$1.3 million
;
|
|
•
|
Funding of development obligations of
$1.3 million
;
|
|
•
|
Proceeds for future development obligations of
$2.1 million
; and
|
|
•
|
Purchase of an interest rate cap for
$0.2 million
.
|
|
•
|
$123.6 million
of cash used for redemptions of common stock;
|
|
•
|
$71.0 million
of net cash distributions to stockholders, after giving effect to distributions reinvested by stockholders of
$1.4 million
;
|
|
•
|
$67.5 million
of net cash provided by debt and other financings as a result of proceeds from notes payable of
$223.4 million
, partially offset by principal payments on notes and bonds payable of
$152.5 million
and payments of deferred financing costs of
$3.4 million
;
|
|
•
|
$0.8 million
of contributions from noncontrolling interests; and
|
|
•
|
$0.6 million
of payments made in connection with a potential offering.
|
|
|
|
|
|
Payments Due During the Years Ending December 31,
|
||||||||||||||||
|
Contractual Obligations
|
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
||||||||||
|
Outstanding debt obligations
(1)
|
|
$
|
663,318
|
|
|
$
|
102,469
|
|
|
$
|
376,381
|
|
|
$
|
179,313
|
|
|
$
|
5,155
|
|
|
Interest payments on outstanding debt obligations
(2)
|
|
65,612
|
|
|
25,942
|
|
|
31,356
|
|
|
5,884
|
|
|
2,430
|
|
|||||
|
|
|
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) |
|||||||||||||
|
|
|
2018
|
|
2017
|
|
|
|
|
|||||||||||||||
|
Rental income
|
|
$
|
72,334
|
|
|
$
|
110,690
|
|
|
$
|
(38,356
|
)
|
|
(35
|
)%
|
|
$
|
(38,538
|
)
|
|
$
|
182
|
|
|
Tenant reimbursements
|
|
12,621
|
|
|
21,710
|
|
|
(9,089
|
)
|
|
(42
|
)%
|
|
(8,616
|
)
|
|
(473
|
)
|
|||||
|
Other operating income
|
|
2,812
|
|
|
4,001
|
|
|
(1,189
|
)
|
|
(30
|
)%
|
|
(721
|
)
|
|
(468
|
)
|
|||||
|
Interest income from real estate debt securities
|
|
2,018
|
|
|
1,782
|
|
|
236
|
|
|
13
|
%
|
|
236
|
|
|
—
|
|
|||||
|
Dividend income from real estate equity securities
|
|
6,002
|
|
|
2,531
|
|
|
3,471
|
|
|
137
|
%
|
|
3,471
|
|
|
—
|
|
|||||
|
Operating, maintenance, and management costs
|
|
29,110
|
|
|
42,611
|
|
|
(13,501
|
)
|
|
(32
|
)%
|
|
(13,933
|
)
|
|
432
|
|
|||||
|
Real estate taxes and insurance
|
|
11,762
|
|
|
17,404
|
|
|
(5,642
|
)
|
|
(32
|
)%
|
|
(5,713
|
)
|
|
71
|
|
|||||
|
Asset management fees to affiliate
|
|
8,525
|
|
|
10,686
|
|
|
(2,161
|
)
|
|
(20
|
)%
|
|
(2,163
|
)
|
|
2
|
|
|||||
|
General and administrative expenses
|
|
7,784
|
|
|
5,983
|
|
|
1,801
|
|
|
30
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Foreign currency transaction
(gain) loss
, net
|
|
(10,141
|
)
|
|
15,298
|
|
|
(25,439
|
)
|
|
(166
|
)%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Depreciation and amortization
|
|
35,006
|
|
|
53,446
|
|
|
(18,440
|
)
|
|
(35
|
)%
|
|
(18,172
|
)
|
|
(268
|
)
|
|||||
|
Interest expense
|
|
31,054
|
|
|
37,149
|
|
|
(6,095
|
)
|
|
(16
|
)%
|
|
(6,243
|
)
|
|
148
|
|
|||||
|
Income from unconsolidated joint venture
|
|
428
|
|
|
2,073
|
|
|
(1,645
|
)
|
|
(79
|
)%
|
|
—
|
|
|
(1,645
|
)
|
|||||
|
Equity in
loss
of unconsolidated joint ventures
|
|
(9,830
|
)
|
|
(6,037
|
)
|
|
(3,793
|
)
|
|
63
|
%
|
|
(2,172
|
)
|
|
(1,621
|
)
|
|||||
|
Other interest income
|
|
1,884
|
|
|
1,105
|
|
|
779
|
|
|
70
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Loss
on real estate equity securities
|
|
(19,010
|
)
|
|
—
|
|
|
(19,010
|
)
|
|
n/a
|
|
|
(19,010
|
)
|
|
—
|
|
|||||
|
Gain
on sale of real estate
|
|
80,594
|
|
|
255,935
|
|
|
(175,341
|
)
|
|
(69
|
)%
|
|
(175,341
|
)
|
|
—
|
|
|||||
|
Loss
on extinguishment of debt
|
|
(493
|
)
|
|
(478
|
)
|
|
(15
|
)
|
|
3
|
%
|
|
(15
|
)
|
|
—
|
|
|||||
|
Income tax
provision
|
|
(436
|
)
|
|
(155
|
)
|
|
(281
|
)
|
|
181
|
%
|
|
—
|
|
|
(281
|
)
|
|||||
|
|
|
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) |
|||||||||||||
|
|
|
2017
|
|
2016
|
|
|
|
|
|||||||||||||||
|
Rental income
|
|
$
|
110,690
|
|
|
$
|
106,330
|
|
|
$
|
4,360
|
|
|
4
|
%
|
|
$
|
4,091
|
|
|
$
|
269
|
|
|
Tenant reimbursements
|
|
21,710
|
|
|
20,762
|
|
|
948
|
|
|
5
|
%
|
|
1,353
|
|
|
(405
|
)
|
|||||
|
Other operating income
|
|
4,001
|
|
|
3,387
|
|
|
614
|
|
|
18
|
%
|
|
172
|
|
|
442
|
|
|||||
|
Interest income from real estate debt securities
|
|
1,782
|
|
|
110
|
|
|
1,672
|
|
|
1,520
|
%
|
|
1,672
|
|
|
—
|
|
|||||
|
Dividend income from real estate equity securities
|
|
2,531
|
|
|
—
|
|
|
2,531
|
|
|
n/a
|
|
|
2,531
|
|
|
—
|
|
|||||
|
Interest income from real estate loan receivable
|
|
—
|
|
|
3,655
|
|
|
(3,655
|
)
|
|
n/a
|
|
|
(3,655
|
)
|
|
—
|
|
|||||
|
Operating, maintenance, and management costs
|
|
42,611
|
|
|
41,906
|
|
|
705
|
|
|
2
|
%
|
|
1,724
|
|
|
(1,019
|
)
|
|||||
|
Real estate taxes and insurance
|
|
17,404
|
|
|
16,887
|
|
|
517
|
|
|
3
|
%
|
|
675
|
|
|
(158
|
)
|
|||||
|
Asset management fees to affiliate
|
|
10,686
|
|
|
9,628
|
|
|
1,058
|
|
|
11
|
%
|
|
971
|
|
|
87
|
|
|||||
|
Real estate acquisition fees to affiliate
|
|
—
|
|
|
2,964
|
|
|
(2,964
|
)
|
|
n/a
|
|
|
(2,964
|
)
|
|
—
|
|
|||||
|
Real estate acquisition fees and expenses
|
|
—
|
|
|
543
|
|
|
(543
|
)
|
|
n/a
|
|
|
(543
|
)
|
|
—
|
|
|||||
|
General and administrative expenses
|
|
5,983
|
|
|
5,761
|
|
|
222
|
|
|
4
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Foreign currency transaction loss, net
|
|
15,298
|
|
|
2,997
|
|
|
12,301
|
|
|
410
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Depreciation and amortization
|
|
53,446
|
|
|
52,051
|
|
|
1,395
|
|
|
3
|
%
|
|
1,829
|
|
|
(434
|
)
|
|||||
|
Interest expense
|
|
37,149
|
|
|
29,249
|
|
|
7,900
|
|
|
27
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Income from unconsolidated joint venture
|
|
2,073
|
|
|
—
|
|
|
2,073
|
|
|
n/a
|
|
|
—
|
|
|
2,073
|
|
|||||
|
Other interest income
|
|
1,105
|
|
|
44
|
|
|
1,061
|
|
|
2,411
|
%
|
|
n/a
|
|
|
n/a
|
|
|||||
|
Equity in loss of unconsolidated joint ventures
|
|
(6,037
|
)
|
|
(1,408
|
)
|
|
(4,629
|
)
|
|
329
|
%
|
|
(823
|
)
|
|
(3,806
|
)
|
|||||
|
Gain on sale of real estate
|
|
255,935
|
|
|
—
|
|
|
255,935
|
|
|
n/a
|
|
|
255,935
|
|
|
—
|
|
|||||
|
Loss on extinguishment of debt
|
|
(478
|
)
|
|
—
|
|
|
(478
|
)
|
|
n/a
|
|
|
(478
|
)
|
|
—
|
|
|||||
|
•
|
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.
Prior to our early adoption of ASU No. 2017-01 on January 1, 2017, acquisition fees and expenses related to the acquisition of real estate were generally expensed. Although these amounts reduced net income in 2016, we exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis. Additionally, acquisition fees and expenses have been funded from the proceeds from our now-terminated initial public offering and debt financings and not from our operations. We believe this exclusion is useful to investors as it allows investors to more accurately evaluate the sustainability of our operating performance;
|
|
•
|
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 and foreign currency options 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;
|
|
•
|
Loss on extinguishment of debt.
A loss on extinguishment of debt, which includes prepayment fees related to the extinguishment of debt, represents the difference between the carrying value of any consideration transferred to the lender in return for the extinguishment of a debt and the net carrying value of the debt at the time of settlement. We have excluded the loss from extinguishment of debt in our calculation of MFFO because these losses do not impact the current operating performance of our investments and do not provide an indication of future operating performance; and
|
|
•
|
Other-than-temporary impairment of debt securities.
An impairment charge on real estate debt securities represents a write-down of the carrying value of the real estate debt securities to reflect the current valuation of the asset. Although these losses are included in the calculation of net income (loss), we have excluded other-than-temporary impairment of debt securities in our calculation of MFFO because these losses do not impact the current operating performance of our investments.
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Net
income (loss)
attributable to common stockholders
|
$
|
33,546
|
|
|
$
|
210,644
|
|
|
$
|
(28,918
|
)
|
|
Depreciation of real estate assets
|
19,209
|
|
|
31,761
|
|
|
29,857
|
|
|||
|
Amortization of lease-related costs
|
15,797
|
|
|
21,685
|
|
|
22,194
|
|
|||
|
Gain on sale of real estate
(1)
|
(80,594
|
)
|
|
(255,935
|
)
|
|
—
|
|
|||
|
Loss
on real estate equity securities
|
19,010
|
|
|
—
|
|
|
—
|
|
|||
|
Adjustments for noncontrolling interests - consolidated entities
(2)
|
(480
|
)
|
|
(495
|
)
|
|
(493
|
)
|
|||
|
Adjustments for investments in unconsolidated entities
(3)
|
12,523
|
|
|
11,842
|
|
|
7,815
|
|
|||
|
FFO attributable to common stockholders
|
19,011
|
|
|
19,502
|
|
|
30,455
|
|
|||
|
Straight-line rent and amortization of above- and below-market leases
|
(5,740
|
)
|
|
(4,991
|
)
|
|
(5,414
|
)
|
|||
|
Amortization of discounts and closing costs
|
(108
|
)
|
|
(565
|
)
|
|
(47
|
)
|
|||
|
Real estate acquisition fees to affiliate
|
—
|
|
|
—
|
|
|
2,964
|
|
|||
|
Real estate acquisition fees and expenses
|
—
|
|
|
—
|
|
|
543
|
|
|||
|
Amortization of net premium/discount on bond and notes payable
|
61
|
|
|
49
|
|
|
38
|
|
|||
|
Loss
on extinguishment of debt
|
493
|
|
|
478
|
|
|
—
|
|
|||
|
Unrealized loss on interest rate caps
|
142
|
|
|
105
|
|
|
3
|
|
|||
|
Mark-to-market foreign currency transaction
(gain) loss
, net
|
(10,141
|
)
|
|
15,298
|
|
|
2,997
|
|
|||
|
Other-than-temporary impairment of debt securities
|
2,500
|
|
|
—
|
|
|
—
|
|
|||
|
Adjustments for noncontrolling interests - consolidated entities
(2)
|
(19
|
)
|
|
(35
|
)
|
|
(20
|
)
|
|||
|
Adjustments for investments in unconsolidated entities
(3)
|
(2,296
|
)
|
|
(3,521
|
)
|
|
(4,264
|
)
|
|||
|
MFFO attributable to common stockholders
|
3,903
|
|
|
26,320
|
|
|
27,255
|
|
|||
|
Other capitalized operating expenses
(4)
|
(2,866
|
)
|
|
(2,692
|
)
|
|
(2,414
|
)
|
|||
|
Adjustments for noncontrolling interests - consolidated entities
(2)
|
—
|
|
|
—
|
|
|
61
|
|
|||
|
Adjusted MFFO attributable to common stockholders
|
$
|
1,037
|
|
|
$
|
23,628
|
|
|
$
|
24,902
|
|
|
|
|
Distribution Declared
|
|
Distributions Declared
Per Share
|
|
Distributions Paid
|
|
Cash Flows (Used in) Provided by Operations
|
||||||||||||||||
|
Period
|
|
|
|
Cash
|
|
Reinvested
|
|
Total
|
|
|||||||||||||||
|
First Quarter 2018
(1)
|
|
$
|
1,034
|
|
|
$
|
0.016
|
|
|
$
|
38,170
|
|
|
$
|
479
|
|
|
$
|
38,649
|
|
|
$
|
(5,013
|
)
|
|
Second Quarter 2018
|
|
882
|
|
|
0.016
|
|
|
397
|
|
|
485
|
|
|
882
|
|
|
5,581
|
|
||||||
|
Third Quarter 2018
|
|
870
|
|
|
0.016
|
|
|
416
|
|
|
454
|
|
|
870
|
|
|
(129
|
)
|
||||||
|
Fourth Quarter 2018
|
|
159,908
|
|
|
2.950
|
|
|
31,997
|
|
|
—
|
|
|
31,997
|
|
|
1,704
|
|
||||||
|
|
|
$
|
162,694
|
|
|
$
|
2.998
|
|
|
$
|
70,980
|
|
|
$
|
1,418
|
|
|
$
|
72,398
|
|
|
$
|
2,143
|
|
|
Land
|
N/A
|
|
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
|
|
|
||||||||||||||||||||||||||
|
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
|
Fair Value
|
|||||||||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Real estate debt securities, book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Real estate debt securities - fixed rate
|
|
$
|
10,859
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,859
|
|
|
$
|
10,859
|
|
|
Annual effective interest rate
(1)
|
|
11.4
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.4
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Interest rate caps, notional amount
|
|
$
|
—
|
|
|
$
|
46,875
|
|
|
$
|
77,513
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124,388
|
|
|
$
|
34
|
|
|
Strike rate
(2)
|
|
—
|
|
|
3.0
|
%
|
|
3.5
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.3
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Notes and Bonds Payable, principal outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Fixed rate - notes and bond payable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,710
|
|
|
$
|
—
|
|
|
$
|
6,280
|
|
|
$
|
29,990
|
|
|
$
|
31,854
|
|
|
Average interest rate
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.9
|
%
|
|
—
|
|
|
6.5
|
%
|
|
4.5
|
%
|
|
|
|||||||||
|
Fixed rate - debentures
|
|
$
|
51,903
|
|
|
$
|
51,903
|
|
|
$
|
51,903
|
|
|
$
|
51,903
|
|
|
$
|
51,904
|
|
|
$
|
—
|
|
|
$
|
259,516
|
|
|
$
|
255,814
|
|
|
Average interest rate
(3)
|
|
4.3
|
%
|
|
4.3
|
%
|
|
4.3
|
%
|
|
4.3
|
%
|
|
4.3
|
%
|
|
—
|
|
|
4.3
|
%
|
|
|
|||||||||
|
Variable rate
|
|
$
|
49,757
|
|
|
$
|
51,171
|
|
|
$
|
219,680
|
|
|
$
|
53,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
373,812
|
|
|
$
|
375,595
|
|
|
Average interest rate
(3)
|
|
4.6
|
%
|
|
5.0
|
%
|
|
4.1
|
%
|
|
4.1
|
%
|
|
—
|
|
|
—
|
|
|
4.3
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Foreign currency collar, notional amount
|
|
776,182 ILS
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
776,182 ILS
|
|
|
$
|
4,393
|
|
|||||||
|
Strike price
|
|
3.54 - 3.66 ILS - USD
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.54 - 3.66 ILS - USD
|
|
|
|
|||||||||
|
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
|
|
Name
|
|
Position(s)
|
|
Age*
|
|
Keith D. Hall
|
|
Chief Executive Officer and Director
|
|
60
|
|
Peter McMillan III
|
|
Chairman of the Board, President and Director
|
|
61
|
|
Jeffrey K. Waldvogel
|
|
Chief Financial Officer, Treasurer and Secretary
|
|
41
|
|
Stacie K. Yamane
|
|
Chief Accounting Officer
|
|
54
|
|
William M. Petak
|
|
Independent Director
|
|
57
|
|
Eric J. Smith
|
|
Independent Director
|
|
61
|
|
Kenneth G. Yee
|
|
Independent Director
|
|
59
|
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
|
Name
|
|
Fees Earned or Paid in Cash in 2018
(1)
|
|
All Other Compensation
|
|
Total
|
||||||
|
William M. Petak
|
|
$
|
120,833
|
|
|
$
|
—
|
|
|
$
|
120,833
|
|
|
Eric J. Smith
|
|
127,333
|
|
|
—
|
|
|
127,333
|
|
|||
|
Kenneth G. Yee
|
|
113,333
|
|
|
—
|
|
|
113,333
|
|
|||
|
Peter McMillan III
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Keith D. Hall
(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
•
|
$2,500 for each board meeting attended;
|
|
•
|
$2,500 for each committee meeting attended, except that the chairman of the committee is paid $3,000 for each committee meeting attended;
|
|
•
|
$2,000 for each teleconference board meeting attended; and
|
|
•
|
$2,000 for each teleconference committee meeting attended, except that the chairman of the committee is paid $3,000 for each teleconference committee meeting attended.
|
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
Name and Address of Beneficial Owner
(1)
|
|
Amount and Nature of Beneficial Ownership
(2)
|
|
Percent of all Shares
|
|
|
KBS Capital Advisors LLC
|
|
30,747
|
(3)
|
|
*
|
|
Keith D. Hall, Chief Executive Officer and Director
|
|
541,343
|
(3)(4)
|
|
*
|
|
Peter McMillan III, Chairman of the Board, President and Director
|
|
541,343
|
(3)(4)
|
|
*
|
|
Jeffrey K. Waldvogel, Chief Financial Officer, Treasurer and Secretary
|
|
—
|
|
|
—
|
|
Stacie K. Yamane, Chief Accounting Officer
|
|
—
|
|
|
—
|
|
William M. Petak, Independent Director
|
|
—
|
|
|
—
|
|
Eric J. Smith, Independent Director
|
|
—
|
|
|
—
|
|
Kenneth G. Yee, Independent Director
|
|
—
|
|
|
—
|
|
All directors and executive officers as a group
|
|
541,343
|
(3)(4)
|
|
*
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
|
•
|
finding, presenting and recommending investment opportunities to us consistent with our investment policies and objectives;
|
|
•
|
making investment decisions for us, subject to the limitations in our charter and the direction and oversight of our board of directors;
|
|
•
|
acquiring investments on our behalf;
|
|
•
|
sourcing and structuring our loan originations;
|
|
•
|
arranging for financing and refinancing of our investments;
|
|
•
|
formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, financing and refinancing, marketing, servicing and disposition of our investments;
|
|
•
|
engaging and supervising our agents;
|
|
•
|
performing administrative services and maintaining our accounting; and
|
|
•
|
assisting us with our regulatory compliance.
|
|
•
|
Management Fee – The Manager’s management fee comprises a base fee and a performance fee, which make up a substantial portion of the Manager’s total remuneration for the provision of on-going management services to the SREIT. The base fee equals 10% per year of the SREIT “annual distributable income,” which is calculated before accounting for the base fee and the performance fee. The performance fee is generally equal to 25% of the growth in the SREIT’s distributions per unit of common equity from one year to the next (calculated after accounting for the base fee but before accounting for the performance fee). From
January 1
,
2018
through
January 31
,
2019
, the SREIT incurred
$4.3 million
related to the management fee.
|
|
•
|
Acquisition Fee and Divestment Fee – The Manager will also receive an acquisition fee and a divestment fee from the SREIT. The acquisition fee will generally equal 1% of purchase price of the assets acquired by the SREIT and the divestment fee will generally equal 0.5% of the sale price of the assets disposed of by the SREIT. From
January 1
,
2018
through
January 31
,
2019
, the SREIT incurred
$1.6 million
related to the acquisition fee and did not incur a divestment fee.
|
|
•
|
Acquisition and Origination Fees and Expenses.
Pursuant to our advisory agreement currently in effect with our advisor, we incur acquisition and origination fees payable to our advisor equal to 1.0% of the cost of investments acquired by us, or the amount funded by us to acquire or originate loans, including acquisition and origination expenses and any debt attributable to such investments. We intend to eliminate this fee as part of the Proposed NAV REIT Conversion. However, because we would no longer pay a fee for acquisition and origination services, we would expect to reimburse our advisor for our allocable portion of the salaries, benefits and overhead of personnel providing these services to us. This may represent significant savings, depending on our future investment activity. We intend to continue to reimburse our advisor for customary acquisition and origination expenses, whether or not we ultimately acquire the asset.
|
|
•
|
Fixed Asset Management Fee.
Pursuant to our advisory agreement currently in effect with our advisor, we currently pay the advisor an asset management fee. With respect to investments in loans and any investments other than real property, the asset management fee is a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount actually paid or allocated to acquire or fund the loan or other investment, inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire or fund such investment and (ii) the outstanding principal amount of such loan or other investment, plus the fees and expenses related to the acquisition or funding of such investment, as of the time of calculation. With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the sum of the amount paid or allocated to acquire the investment, inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire such investment. In the case of investments made through joint ventures, the asset management fee will be determined based on our proportionate share of the underlying investment.
|
|
•
|
Incentive Fee.
Please see “Revised Incentive Fee.” below for a description of our current intentions with respect to the incentive fee payable to our advisor.
|
|
•
|
Disposition Fees
. Pursuant to our advisory agreement currently in effect with the advisor, for substantial assistance in connection with the sale of properties or other investments, we currently pay our advisor or its affiliates 1.0% of the contract sales price of each loan, debt-related security, real property or other investment sold (including residential or commercial mortgage-backed securities or collateralized debt obligations issued by a subsidiary of ours as part of a securitization transaction); provided, however, that if in connection with such disposition commissions are paid to third parties unaffiliated with our advisor, the fee paid to our advisor and its affiliates may not exceed the commissions paid to such unaffiliated third parties, and provided further that the disposition fees paid to our advisor, its affiliates and unaffiliated third parties may not exceed 6.0% of the contract sales price.
|
|
•
|
Property Management Fees
. We do not currently pay our advisor or any of its affiliates any property management fees. As an NAV REIT, we may enter into a property management agreement with KBS Management Group or another KBS affiliate and agree to pay a monthly fee equal to a percentage of the rent (to be determined on a property by property basis), payable and actually collected for the month. This could result in additional compensation to affiliates of our advisor.
|
|
•
|
Operating Expenses
. Pursuant to our advisory agreement currently in effect with the advisor, our advisor and its affiliates have the right to seek reimbursement from us for all costs and expenses they incur in connection with their provision of services to us, including our allocable share of our advisor’s overhead, such as rent, employee costs, utilities and information technology costs. Our advisor may seek reimbursement for employee costs under the advisory agreement. Commencing July 1, 2010, we have reimbursed our advisor for our allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to us. In the future, our advisor may seek reimbursement for additional employee costs. However, we will not reimburse our advisor or its affiliates for employee costs in connection with services for which our advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries and benefits our advisor or its affiliates may pay to our executive officers.
|
|
•
|
Each RSU awarded would represent the right to receive one share of our common stock.
|
|
•
|
The RSUs would be awarded on or near the launch of a public offering as an NAV REIT.
|
|
•
|
The number of RSUs awarded would equal the number of our shares of common stock, valued at the then-current NAV per share at the time of the award (i.e., the NAV per share at the time of our conversion to an NAV REIT), with a value equal to the estimated value of the Subordinated Participation in Net Cash Flows based on a hypothetical liquidation of our assets and liabilities at their then-current estimated values used in the NAV calculation, after considering the impact of any potential closing costs and fees related to the disposition of real estate properties. The foregoing would be calculated by our advisor in its good faith and approved by the Special Committee (described below).
|
|
•
|
100% of the RSUs awarded would vest and be paid in shares after two years, provided the advisor is not terminated for “cause” during that time (where “cause” means fraud, criminal conduct if the advisor would have reasonable cause to believe that the conduct was unlawful, willful misconduct, or an uncured material breach of the advisory agreement). Both we and the advisor would have certain rights to accelerate vesting in certain situations, such as change of control of our company.
|
|
•
|
For each RSU awarded, our advisor would have the right to be paid with one share of our common stock, upon vesting, and could elect to receive up to 50% of the payment in cash rather than shares, with the cash payment determined based on the then-current value of our shares. The main reason we would permit the advisor to take a portion in cash is to pay its taxes.
|
|
•
|
Dividend equivalents would accrue on the RSUs. In other words, they would earn dividends as if they were shares of common stock.
|
|
•
|
The shares the advisor receives pursuant to this agreement would not be eligible for redemption under our share redemption program unless the company has satisfied all redemption requests from other stockholders received at that time; this restriction may be lifted in certain situations, such as upon a change of control of our company.
|
|
March 8, 2019
|
|
The Conflicts Committee of the Board of Directors:
|
|
|
|
Eric J. Smith (Chairman), William M. Petak and Kenneth G. Yee
|
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|
|
|
2018
|
|
2017
|
||||
|
Audit Fees
|
|
$
|
634,000
|
|
|
$
|
637,000
|
|
|
Audit-related fees
|
|
497,000
|
|
|
390,000
|
|
||
|
Tax fees
|
|
311,000
|
|
|
459,000
|
|
||
|
All other fees
|
|
2,000
|
|
|
1,000
|
|
||
|
Total
|
|
$
|
1,444,000
|
|
|
$
|
1,487,000
|
|
|
•
|
Audit fees - These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by Ernst & Young in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
|
|
•
|
Audit-related fees - These are fees for assurance and related services that traditionally are performed by independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements, such as due diligence related to acquisitions and disposition, attestation services that are not required by statute or regulation, internal contact reviews and consultation concerning financial accounting and reporting standards.
|
|
•
|
Tax fees - These are fees for all professional services performed by professional staff in our independent registered public accounting firm's tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues. Services may also include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state and local tax issues related to due diligence.
|
|
•
|
All other fees - These are fees for any services not included in the above-described categories.
|
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
Ex.
|
|
Description
|
|
|
|
|
|
3.1
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
4.1
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
10.3
|
|
|
|
|
|
|
|
10.4
|
|
|
|
|
|
|
|
10.5
|
|
|
|
|
|
|
|
10.6
|
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
|
10.8
|
|
|
|
|
|
|
|
10.9
|
|
|
|
|
|
|
|
Ex.
|
|
Description
|
|
10.10
|
|
|
|
|
|
|
|
10.11
|
|
|
|
|
|
|
|
10.12
|
|
|
|
|
|
|
|
10.13
|
|
|
|
|
|
|
|
10.14
|
|
|
|
|
|
|
|
10.15
|
|
|
|
|
|
|
|
10.16
|
|
|
|
|
|
|
|
10.17
|
|
|
|
|
|
|
|
10.18
|
|
|
|
|
|
|
|
10.19
|
|
|
|
|
|
|
|
10.20
|
|
|
|
|
|
|
|
10.21
|
|
|
|
|
|
|
|
10.22
|
|
|
|
|
|
|
|
10.23
|
|
|
|
|
|
|
|
10.24
|
|
|
|
|
|
|
|
10.25
|
|
|
|
|
|
|
|
10.26
|
|
|
|
|
|
|
|
Ex.
|
|
Description
|
|
10.27
|
|
|
|
|
|
|
|
10.28
|
|
|
|
|
|
|
|
10.29
|
|
|
|
|
|
|
|
10.30
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
99.1
|
|
|
|
|
|
|
|
99.3
|
|
|
|
|
|
|
|
99.4
|
|
|
|
|
|
|
|
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,
|
||||||
|
|
|
2018
|
|
2017
|
||||
|
Assets
|
|
|
|
|
||||
|
Real estate held for investment, net
|
|
$
|
649,868
|
|
|
$
|
346,173
|
|
|
Real estate held for sale, net
|
|
31,252
|
|
|
186,694
|
|
||
|
Real estate equity securities
|
|
73,876
|
|
|
90,063
|
|
||
|
Real estate debt securities, net
|
|
10,859
|
|
|
17,751
|
|
||
|
Total real estate and real estate-related investments, net
|
|
765,855
|
|
|
640,681
|
|
||
|
Cash and cash equivalents
|
|
152,385
|
|
|
366,512
|
|
||
|
Restricted cash
|
|
10,342
|
|
|
10,670
|
|
||
|
Investments in unconsolidated joint ventures
|
|
44,869
|
|
|
55,577
|
|
||
|
Rents and other receivables, net
|
|
12,292
|
|
|
7,111
|
|
||
|
Above-market leases, net
|
|
3,377
|
|
|
—
|
|
||
|
Prepaid expenses and other assets
|
|
13,123
|
|
|
12,735
|
|
||
|
Assets related to real estate held for sale, net
|
|
2,746
|
|
|
8,288
|
|
||
|
Total assets
|
|
$
|
1,004,989
|
|
|
$
|
1,101,574
|
|
|
Liabilities and equity
|
|
|
|
|
||||
|
Notes and bonds payable, net
|
|
|
|
|
||||
|
Notes and bonds payable related to real estate held for investment, net
|
|
632,627
|
|
|
467,872
|
|
||
|
Notes payable related to real estate held for sale, net
|
|
22,845
|
|
|
135,171
|
|
||
|
Total notes and bonds payable, net
|
|
655,472
|
|
|
603,043
|
|
||
|
Accounts payable and accrued liabilities
|
|
19,506
|
|
|
16,686
|
|
||
|
Due to affiliate
|
|
36
|
|
|
26
|
|
||
|
Distribution payable
|
|
—
|
|
|
187,914
|
|
||
|
Below-market leases, net
|
|
5,005
|
|
|
2,582
|
|
||
|
Liabilities related to real estate held for sale, net
|
|
—
|
|
|
261
|
|
||
|
Other liabilities
|
|
21,006
|
|
|
16,966
|
|
||
|
Redeemable common stock payable
|
|
10,000
|
|
|
8,595
|
|
||
|
Total liabilities
|
|
711,025
|
|
|
836,073
|
|
||
|
Commitments and contingencies (Note
1
5
)
|
|
|
|
|
|
|
||
|
Redeemable common stock
|
|
—
|
|
|
4,518
|
|
||
|
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,
66,822,861
and
52,053,817
shares issued and outstanding as of December 31,
2018
and
2017
, respectively
|
|
668
|
|
|
521
|
|
||
|
Additional paid-in capital
|
|
547,770
|
|
|
388,800
|
|
||
|
Accumulated other comprehensive
income
|
|
—
|
|
|
25,146
|
|
||
|
Cumulative distributions and net
income
|
|
(256,984
|
)
|
|
(155,454
|
)
|
||
|
Total KBS Strategic Opportunity REIT, Inc. stockholders’ equity
|
|
291,454
|
|
|
259,013
|
|
||
|
Noncontrolling interests
|
|
2,510
|
|
|
1,970
|
|
||
|
Total equity
|
|
293,964
|
|
|
260,983
|
|
||
|
Total liabilities and equity
|
|
$
|
1,004,989
|
|
|
$
|
1,101,574
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Rental income
|
|
$
|
72,334
|
|
|
$
|
110,690
|
|
|
$
|
106,330
|
|
|
Tenant reimbursements
|
|
12,621
|
|
|
21,710
|
|
|
20,762
|
|
|||
|
Other operating income
|
|
2,812
|
|
|
4,001
|
|
|
3,387
|
|
|||
|
Interest income from real estate debt securities
|
|
2,018
|
|
|
1,782
|
|
|
110
|
|
|||
|
Dividend income from real estate equity securities
|
|
6,002
|
|
|
2,531
|
|
|
—
|
|
|||
|
Interest income from real estate loan receivable
|
|
—
|
|
|
—
|
|
|
3,655
|
|
|||
|
Total revenues
|
|
95,787
|
|
|
140,714
|
|
|
134,244
|
|
|||
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Operating, maintenance, and management
|
|
29,110
|
|
|
42,611
|
|
|
41,906
|
|
|||
|
Real estate taxes and insurance
|
|
11,762
|
|
|
17,404
|
|
|
16,887
|
|
|||
|
Asset management fees to affiliate
|
|
8,525
|
|
|
10,686
|
|
|
9,628
|
|
|||
|
Real estate acquisition fees to affiliate
|
|
—
|
|
|
—
|
|
|
2,964
|
|
|||
|
Real estate acquisition fees and expenses
|
|
—
|
|
|
—
|
|
|
543
|
|
|||
|
General and administrative expenses
|
|
7,784
|
|
|
5,983
|
|
|
5,761
|
|
|||
|
Foreign currency transaction
(gain) loss
, net
|
|
(10,141
|
)
|
|
15,298
|
|
|
2,997
|
|
|||
|
Depreciation and amortization
|
|
35,006
|
|
|
53,446
|
|
|
52,051
|
|
|||
|
Interest expense
|
|
31,054
|
|
|
37,149
|
|
|
29,249
|
|
|||
|
Other-than-temporary impairment of debt securities
|
|
2,500
|
|
|
—
|
|
|
—
|
|
|||
|
Total expenses
|
|
115,600
|
|
|
182,577
|
|
|
161,986
|
|
|||
|
Other
income (loss):
|
|
|
|
|
|
|
||||||
|
Income from unconsolidated joint venture
|
|
428
|
|
|
2,073
|
|
|
—
|
|
|||
|
Equity in
loss
of unconsolidated joint ventures
|
|
(9,830
|
)
|
|
(6,037
|
)
|
|
(1,408
|
)
|
|||
|
Other interest income
|
|
1,884
|
|
|
1,105
|
|
|
44
|
|
|||
|
Loss
on real estate equity securities
|
|
(19,010
|
)
|
|
—
|
|
|
—
|
|
|||
|
Gain
on sale of real estate
|
|
80,594
|
|
|
255,935
|
|
|
—
|
|
|||
|
Loss
on extinguishment of debt
|
|
(493
|
)
|
|
(478
|
)
|
|
—
|
|
|||
|
Total other
income (loss)
, net
|
|
53,573
|
|
|
252,598
|
|
|
(1,364
|
)
|
|||
|
Net
income (loss)
before income taxes
|
|
33,760
|
|
|
210,735
|
|
|
(29,106
|
)
|
|||
|
Income tax
provision
|
|
(436
|
)
|
|
(155
|
)
|
|
(20
|
)
|
|||
|
Net
income (loss)
|
|
33,324
|
|
|
210,580
|
|
|
(29,126
|
)
|
|||
|
Net
loss
attributable to noncontrolling interests
|
|
222
|
|
|
64
|
|
|
208
|
|
|||
|
Net
income (loss)
attributable to common stockholders
|
|
$
|
33,546
|
|
|
$
|
210,644
|
|
|
$
|
(28,918
|
)
|
|
Net
income (loss)
per common share, basic and diluted
|
|
$
|
0.57
|
|
|
$
|
3.77
|
|
|
$
|
(0.50
|
)
|
|
Weighted-average number of common shares outstanding, basic and diluted
|
|
58,738,732
|
|
|
55,829,708
|
|
|
58,273,335
|
|
|||
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Net
income
(loss)
|
$
|
33,324
|
|
|
$
|
210,580
|
|
|
$
|
(29,126
|
)
|
|
Other comprehensive
income
:
|
|
|
|
|
|
||||||
|
Unrealized
gain
on real estate securities
|
—
|
|
|
25,146
|
|
|
—
|
|
|||
|
Total other comprehensive
income
|
—
|
|
|
25,146
|
|
|
—
|
|
|||
|
Total comprehensive
income
(loss)
|
33,324
|
|
|
235,726
|
|
|
(29,126
|
)
|
|||
|
Total comprehensive
loss
attributable to noncontrolling interests
|
222
|
|
|
64
|
|
|
208
|
|
|||
|
Total comprehensive
income
(loss)
attributable to common stockholders
|
$
|
33,546
|
|
|
$
|
235,790
|
|
|
$
|
(28,918
|
)
|
|
|
|
|
|
|
Additional Paid-in Capital
|
|
Cumulative Distributions and Net
Income
|
|
Accumulated Other
Comprehensive Income |
|
Total Stockholders’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||
|
|
Common Stock
|
|
|
|
||||||||||||||||||||||||||
|
|
Shares
|
|
Amounts
|
|
|
|
||||||||||||||||||||||||
|
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
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
210,644
|
|
|
—
|
|
|
210,644
|
|
|
(64
|
)
|
|
210,580
|
|
|||||||
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,146
|
|
|
25,146
|
|
|
—
|
|
|
25,146
|
|
|||||||
|
Issuance of common stock
|
585,192
|
|
|
6
|
|
|
8,660
|
|
|
—
|
|
|
—
|
|
|
8,666
|
|
|
—
|
|
|
8,666
|
|
|||||||
|
Transfers to redeemable common stock
|
—
|
|
|
—
|
|
|
(498
|
)
|
|
—
|
|
|
—
|
|
|
(498
|
)
|
|
—
|
|
|
(498
|
)
|
|||||||
|
Redemptions of common stock
|
(5,307,142
|
)
|
|
(53
|
)
|
|
(74,727
|
)
|
|
—
|
|
|
—
|
|
|
(74,780
|
)
|
|
—
|
|
|
(74,780
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(203,809
|
)
|
|
—
|
|
|
(203,809
|
)
|
|
—
|
|
|
(203,809
|
)
|
|||||||
|
Other offering costs
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158
|
|
|
158
|
|
|||||||
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
|||||||
|
Balance, December 31, 2017
|
52,053,817
|
|
|
$
|
521
|
|
|
$
|
388,800
|
|
|
$
|
(155,454
|
)
|
|
$
|
25,146
|
|
|
$
|
259,013
|
|
|
$
|
1,970
|
|
|
$
|
260,983
|
|
|
Cumulative effect adjustments to retained earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
27,618
|
|
|
(25,146
|
)
|
|
2,472
|
|
|
—
|
|
|
2,472
|
|
|||||||
|
Net
income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
33,546
|
|
|
—
|
|
|
33,546
|
|
|
(222
|
)
|
|
33,324
|
|
|||||||
|
Issuance of common stock
|
123,264
|
|
|
1
|
|
|
1,417
|
|
|
—
|
|
|
—
|
|
|
1,418
|
|
|
—
|
|
|
1,418
|
|
|||||||
|
Stock distribution issued
|
25,976,746
|
|
|
259
|
|
|
277,951
|
|
|
—
|
|
|
—
|
|
|
278,210
|
|
|
—
|
|
|
278,210
|
|
|||||||
|
Transfers
from
redeemable common stock
|
—
|
|
|
—
|
|
|
3,113
|
|
|
—
|
|
|
—
|
|
|
3,113
|
|
|
—
|
|
|
3,113
|
|
|||||||
|
Redemptions of common stock
|
(11,330,966
|
)
|
|
(113
|
)
|
|
(123,500
|
)
|
|
—
|
|
|
—
|
|
|
(123,613
|
)
|
|
—
|
|
|
(123,613
|
)
|
|||||||
|
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(162,694
|
)
|
|
—
|
|
|
(162,694
|
)
|
|
—
|
|
|
(162,694
|
)
|
|||||||
|
Other offering costs
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||||||
|
Noncontrolling interests contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
762
|
|
|
762
|
|
|||||||
|
Balance, December 31, 2018
|
66,822,861
|
|
|
$
|
668
|
|
|
$
|
547,770
|
|
|
$
|
(256,984
|
)
|
|
$
|
—
|
|
|
$
|
291,454
|
|
|
$
|
2,510
|
|
|
$
|
293,964
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
|
Net
income (loss)
|
$
|
33,324
|
|
|
$
|
210,580
|
|
|
$
|
(29,126
|
)
|
|
Adjustments to reconcile net
income (loss)
to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
|
Loss due to property damages
|
964
|
|
|
668
|
|
|
1,938
|
|
|||
|
Equity in
loss
of unconsolidated joint ventures
|
9,830
|
|
|
6,037
|
|
|
1,408
|
|
|||
|
Depreciation and amortization
|
35,006
|
|
|
53,446
|
|
|
52,051
|
|
|||
|
Other-than-temporary impairment of debt securities
|
2,500
|
|
|
—
|
|
|
—
|
|
|||
|
Loss
on real estate equity securities
|
19,010
|
|
|
—
|
|
|
—
|
|
|||
|
Gain
on sale of real estate
|
(80,594
|
)
|
|
(255,935
|
)
|
|
—
|
|
|||
|
Loss
on extinguishment of debt
|
493
|
|
|
478
|
|
|
—
|
|
|||
|
Unrealized loss on interest rate caps
|
142
|
|
|
105
|
|
|
3
|
|
|||
|
Deferred rent
|
(4,736
|
)
|
|
(2,416
|
)
|
|
(3,084
|
)
|
|||
|
Bad debt expense
|
161
|
|
|
724
|
|
|
875
|
|
|||
|
Amortization of above- and below-market leases, net
|
(1,152
|
)
|
|
(2,575
|
)
|
|
(2,330
|
)
|
|||
|
Amortization of deferred financing costs
|
3,640
|
|
|
4,363
|
|
|
4,289
|
|
|||
|
Interest accretion on real estate debt securities
|
(108
|
)
|
|
(565
|
)
|
|
(47
|
)
|
|||
|
Net amortization of discount and (premium) on bond and notes payable
|
61
|
|
|
49
|
|
|
38
|
|
|||
|
Foreign currency transaction
(gain) loss
, net
|
(10,141
|
)
|
|
15,298
|
|
|
2,997
|
|
|||
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|||||
|
Rents and other receivables
|
(1,801
|
)
|
|
(1,810
|
)
|
|
(2,128
|
)
|
|||
|
Prepaid expenses and other assets
|
(7,375
|
)
|
|
(5,995
|
)
|
|
(8,498
|
)
|
|||
|
Accounts payable and accrued liabilities
|
3,387
|
|
|
(4,270
|
)
|
|
5,809
|
|
|||
|
Due to affiliates
|
10
|
|
|
(29
|
)
|
|
(4
|
)
|
|||
|
Other liabilities
|
(478
|
)
|
|
(4,721
|
)
|
|
2,465
|
|
|||
|
Net cash
provided by
operating activities
|
2,143
|
|
|
13,432
|
|
|
26,656
|
|
|||
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
|
Acquisitions of real estate
|
(312,348
|
)
|
|
(165,465
|
)
|
|
(293,831
|
)
|
|||
|
Improvements to real estate
|
(32,172
|
)
|
|
(41,224
|
)
|
|
(30,581
|
)
|
|||
|
Proceeds from sales of real estate, net
|
250,576
|
|
|
872,091
|
|
|
—
|
|
|||
|
Reimbursement of construction costs
|
1,636
|
|
|
—
|
|
|
—
|
|
|||
|
Escrow deposits for future real estate purchases
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|||
|
Principal proceeds from assignment of real estate loan receivable
|
—
|
|
|
—
|
|
|
27,850
|
|
|||
|
Insurance proceeds received for property damages
|
—
|
|
|
744
|
|
|
2,453
|
|
|||
|
Purchase of interest rate caps
|
(163
|
)
|
|
(107
|
)
|
|
(15
|
)
|
|||
|
Purchase of foreign currency option
|
—
|
|
|
(3,434
|
)
|
|
—
|
|
|||
|
Proceeds from termination of foreign currency collars
|
—
|
|
|
6,557
|
|
|
—
|
|
|||
|
Contributions to unconsolidated joint venture
|
(1,320
|
)
|
|
—
|
|
|
(2,820
|
)
|
|||
|
Distribution of capital from unconsolidated joint venture
|
2,198
|
|
|
59,800
|
|
|
—
|
|
|||
|
Investment in real estate equity securities
|
(30,609
|
)
|
|
(43,308
|
)
|
|
—
|
|
|||
|
Proceeds from the sale of real estate equity securities
|
27,786
|
|
|
—
|
|
|
—
|
|
|||
|
Investment in real estate debt securities, net
|
—
|
|
|
(12,514
|
)
|
|
(4,625
|
)
|
|||
|
Proceeds from principal repayment on real estate debt securities
|
4,500
|
|
|
—
|
|
|
—
|
|
|||
|
Proceeds for future development obligations
|
2,113
|
|
|
1,367
|
|
|
—
|
|
|||
|
Funding of development obligations
|
(1,258
|
)
|
|
(1,184
|
)
|
|
(2,926
|
)
|
|||
|
Net cash
(used in)
provided by
investing activities
|
(89,061
|
)
|
|
673,323
|
|
|
(306,495
|
)
|
|||
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
|
Proceeds from notes and bonds payable
|
223,425
|
|
|
187,204
|
|
|
564,336
|
|
|||
|
Principal payments on notes and bonds payable
|
(152,516
|
)
|
|
(477,089
|
)
|
|
(154,802
|
)
|
|||
|
Payments of deferred financing costs
|
(3,391
|
)
|
|
(2,396
|
)
|
|
(12,377
|
)
|
|||
|
Payments to redeem common stock
|
(123,613
|
)
|
|
(74,780
|
)
|
|
(38,573
|
)
|
|||
|
Payment of prepaid other offering costs
|
(562
|
)
|
|
(480
|
)
|
|
(865
|
)
|
|||
|
Distributions paid
|
(70,980
|
)
|
|
(7,229
|
)
|
|
(9,228
|
)
|
|||
|
Noncontrolling interests contributions
|
762
|
|
|
158
|
|
|
803
|
|
|||
|
Distributions to noncontrolling interests
|
—
|
|
|
(22
|
)
|
|
(80
|
)
|
|||
|
Acquisitions of noncontrolling interests
|
—
|
|
|
—
|
|
|
(37,986
|
)
|
|||
|
Other financing proceeds, net
|
—
|
|
|
—
|
|
|
647
|
|
|||
|
Net cash
(used in) provided by
financing activities
|
(126,875
|
)
|
|
(374,634
|
)
|
|
311,875
|
|
|||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(662
|
)
|
|
611
|
|
|
3,549
|
|
|||
|
Net
(decrease) increase
in cash, cash equivalents and restricted cash
|
(214,455
|
)
|
|
312,732
|
|
|
35,585
|
|
|||
|
Cash, cash equivalents and restricted cash, beginning of period
|
377,182
|
|
|
64,450
|
|
|
28,865
|
|
|||
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
162,727
|
|
|
$
|
377,182
|
|
|
$
|
64,450
|
|
|
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.
|
|
Land
|
N/A
|
|
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 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.
|
|
•
|
The Company may redeem no more than
$2.0 million
of shares in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
|
|
•
|
The Company may redeem no more than
$2.0 million
of shares per fiscal quarter, excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” To the extent any of such capacity is unused in a fiscal quarter, it will be carried over to the next fiscal quarter for redemption of shares excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” In addition, to the extent extra capacity from the bullet above is available with respect to redemptions in the last month of
2019
, such capacity will be made available for redemption of shares other than in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
|
|
•
|
During any calendar year, the Company may redeem only the number of shares that the Company can purchase with the amount of net proceeds from the sale of shares under the its dividend reinvestment plan during the prior calendar year; provided, however, that this limit may be increased or decreased by us upon
ten
business days’ notice to the Company’s stockholders. To the extent that the Company redeems less than the number of shares that the Company can purchase in any calendar year with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year plus any additional funds approved by the Company, such excess capacity to redeem shares during any calendar year shall be added to the Company’s capacity to otherwise redeem shares during the subsequent calendar year. Furthermore, during any calendar year, once the Company has received requests for redemptions, whether in connection with a stockholder’s death, “qualifying disability or “determination of incompetence”, or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being
$1.0 million
or less, the last
$1.0 million
of available funds shall be reserved exclusively for shares being redeemed in connection with a stockholder’s death, “qualifying disability or “determination of incompetence.” 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 amount of available funds reserved for such redemptions in accordance with the previous sentence, any excess funds may be used to redeem shares not in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during such month.
|
|
•
|
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, in a given fiscal quarter, the Company redeems less than the sum of (a)
$3.0 million
of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) and (b) any excess capacity carried over to such fiscal quarter from a prior fiscal quarter as described below, 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 quarter. The Company may increase or decrease this limit upon
ten
business days’ notice to stockholders.
|
|
3.
|
REAL ESTATE HELD FOR INVESTMENT
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
Land
|
|
$
|
148,880
|
|
|
$
|
110,102
|
|
|
Buildings and improvements
|
|
515,705
|
|
|
245,723
|
|
||
|
Tenant origination and absorption costs
|
|
31,584
|
|
|
15,962
|
|
||
|
Total real estate, cost
|
|
696,169
|
|
|
371,787
|
|
||
|
Accumulated depreciation and amortization
|
|
(46,301
|
)
|
|
(25,614
|
)
|
||
|
Total real estate, net
|
|
$
|
649,868
|
|
|
$
|
346,173
|
|
|
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 %
|
||||||||||||
|
Richardson Portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Palisades Central I
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
1,037
|
|
|
10,896
|
|
|
—
|
|
|
11,933
|
|
|
(2,796
|
)
|
|
9,137
|
|
|
90.0%
|
||||||
|
Palisades Central II
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
810
|
|
|
18,370
|
|
|
—
|
|
|
19,180
|
|
|
(4,352
|
)
|
|
14,828
|
|
|
90.0%
|
||||||
|
Greenway I
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
561
|
|
|
2,136
|
|
|
—
|
|
|
2,697
|
|
|
(745
|
)
|
|
1,952
|
|
|
90.0%
|
||||||
|
Greenway III
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Office
|
|
702
|
|
|
3,688
|
|
|
114
|
|
|
4,504
|
|
|
(1,209
|
)
|
|
3,295
|
|
|
90.0%
|
||||||
|
Undeveloped Land
|
|
11/23/2011
|
|
Richardson
|
|
TX
|
|
Undeveloped Land
|
|
3,134
|
|
|
—
|
|
|
—
|
|
|
3,134
|
|
|
—
|
|
|
3,134
|
|
|
90.0%
|
||||||
|
Total Richardson Portfolio
|
|
|
|
|
|
|
|
|
|
6,244
|
|
|
35,090
|
|
|
114
|
|
|
41,448
|
|
|
(9,102
|
)
|
|
32,346
|
|
|
|
||||||
|
Park Highlands
(1)
|
|
12/30/2011
|
|
North Las Vegas
|
|
NV
|
|
Undeveloped Land
|
|
30,603
|
|
|
—
|
|
|
—
|
|
|
30,603
|
|
|
—
|
|
|
30,603
|
|
|
100.0%
(1)
|
||||||
|
Burbank Collection
|
|
12/12/2012
|
|
Burbank
|
|
CA
|
|
Retail
|
|
4,175
|
|
|
12,322
|
|
|
363
|
|
|
16,860
|
|
|
(2,559
|
)
|
|
14,301
|
|
|
90.0%
|
||||||
|
Park Centre
|
|
03/28/2013
|
|
Austin
|
|
TX
|
|
Office
|
|
3,251
|
|
|
28,038
|
|
|
—
|
|
|
31,289
|
|
|
(4,656
|
)
|
|
26,633
|
|
|
100.0%
|
||||||
|
1180 Raymond
|
|
08/20/2013
|
|
Newark
|
|
NJ
|
|
Apartment
|
|
8,292
|
|
|
38,606
|
|
|
—
|
|
|
46,898
|
|
|
(6,618
|
)
|
|
40,280
|
|
|
100.0%
|
||||||
|
Park Highlands II
(1)
|
|
12/10/2013
|
|
North Las Vegas
|
|
NV
|
|
Undeveloped Land
|
|
25,834
|
|
|
—
|
|
|
—
|
|
|
25,834
|
|
|
—
|
|
|
25,834
|
|
|
100.0%
(1)
|
||||||
|
Richardson Land II
|
|
09/04/2014
|
|
Richardson
|
|
TX
|
|
Undeveloped Land
|
|
3,418
|
|
|
—
|
|
|
—
|
|
|
3,418
|
|
|
—
|
|
|
3,418
|
|
|
90.0%
|
||||||
|
Crown Pointe
|
|
02/14/2017
|
|
Dunwoody
|
|
GA
|
|
Office
|
|
22,590
|
|
|
65,110
|
|
|
5,342
|
|
|
93,042
|
|
|
(7,653
|
)
|
|
85,389
|
|
|
100.0%
|
||||||
|
125 John Carpenter
|
|
09/15/2017
|
|
Irving
|
|
TX
|
|
Office
|
|
2,755
|
|
|
76,779
|
|
|
8,749
|
|
|
88,283
|
|
|
(5,690
|
)
|
|
82,593
|
|
|
100.0%
|
||||||
|
Marquette Plaza
|
|
03/01/2018
|
|
Minneapolis
|
|
MN
|
|
Office
|
|
10,387
|
|
|
74,676
|
|
|
4,271
|
|
|
89,334
|
|
|
(2,902
|
)
|
|
86,432
|
|
|
100.0%
|
||||||
|
City Tower
|
|
03/06/2018
|
|
Orange
|
|
CA
|
|
Office
|
|
13,930
|
|
|
130,895
|
|
|
7,959
|
|
|
152,784
|
|
|
(5,469
|
)
|
|
147,315
|
|
|
100.0%
|
||||||
|
Eight & Nine Corporate Centre
|
|
06/08/2018
|
|
Franklin
|
|
TN
|
|
Office
|
|
17,401
|
|
|
54,189
|
|
|
4,786
|
|
|
76,376
|
|
|
(1,652
|
)
|
|
74,724
|
|
|
100.0%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
$
|
148,880
|
|
|
$
|
515,705
|
|
|
$
|
31,584
|
|
|
$
|
696,169
|
|
|
$
|
(46,301
|
)
|
|
$
|
649,868
|
|
|
|
|
2019
|
$
|
52,261
|
|
|
2020
|
50,946
|
|
|
|
2021
|
46,439
|
|
|
|
2022
|
40,071
|
|
|
|
2023
|
34,839
|
|
|
|
Thereafter
|
104,476
|
|
|
|
|
$
|
329,032
|
|
|
Industry
|
|
Number of Tenants
|
|
Annualized Base Rent
(1)
(in thousands) |
|
Percentage of
Annualized Base Rent |
|||
|
Health Care and Social Services
|
|
16
|
|
$
|
6,716
|
|
|
12.1
|
%
|
|
Insurance
|
|
21
|
|
5,997
|
|
|
10.8
|
%
|
|
|
|
|
|
|
$
|
12,713
|
|
|
22.9
|
%
|
|
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, 2018
|
|
December 31, 2017
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Cost
|
|
$
|
31,584
|
|
|
$
|
15,962
|
|
|
$
|
3,714
|
|
|
$
|
—
|
|
|
$
|
(6,653
|
)
|
|
$
|
(3,178
|
)
|
|
Accumulated Amortization
|
|
(7,421
|
)
|
|
(2,833
|
)
|
|
(337
|
)
|
|
—
|
|
|
1,648
|
|
|
596
|
|
||||||
|
Net Amount
|
|
$
|
24,163
|
|
|
$
|
13,129
|
|
|
$
|
3,377
|
|
|
$
|
—
|
|
|
$
|
(5,005
|
)
|
|
$
|
(2,582
|
)
|
|
|
|
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,
|
||||||||||||||||||||||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
|
Amortization
|
|
$
|
(7,895
|
)
|
|
$
|
(10,265
|
)
|
|
$
|
(10,850
|
)
|
|
$
|
(361
|
)
|
|
$
|
(283
|
)
|
|
$
|
(459
|
)
|
|
$
|
1,513
|
|
|
$
|
2,858
|
|
|
$
|
2,789
|
|
|
|
|
Tenant Origination and
Absorption Costs |
|
Above-Market
Lease Assets |
|
Below-Market
Lease Liabilities |
||||||
|
2019
|
|
$
|
(6,133
|
)
|
|
$
|
(404
|
)
|
|
$
|
1,315
|
|
|
2020
|
|
(5,048
|
)
|
|
(314
|
)
|
|
1,013
|
|
|||
|
2021
|
|
(4,031
|
)
|
|
(297
|
)
|
|
611
|
|
|||
|
2022
|
|
(2,784
|
)
|
|
(297
|
)
|
|
548
|
|
|||
|
2023
|
|
(1,904
|
)
|
|
(297
|
)
|
|
510
|
|
|||
|
Thereafter
|
|
(4,263
|
)
|
|
(1,768
|
)
|
|
1,008
|
|
|||
|
|
|
$
|
(24,163
|
)
|
|
$
|
(3,377
|
)
|
|
$
|
5,005
|
|
|
Weighted-Average Remaining Amortization Period
|
|
5.5 years
|
|
11.1 years
|
|
5.6 years
|
||||||
|
5.
|
REAL ESTATE EQUITY SECURITIES
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||
|
Real Estate Equity Security
|
|
Number of Shares Owned
|
|
Total Carrying Value
|
|
Number of Shares Owned
|
|
Total Carrying Value
|
||||||
|
Whitestone REIT
|
|
1,781,894
|
|
|
$
|
21,846
|
|
|
3,603,189
|
|
|
$
|
51,922
|
|
|
Keppel-KBS US REIT
|
|
56,979,352
|
|
|
34,757
|
|
|
43,999,500
|
|
|
38,141
|
|
||
|
Franklin Street Properties Corp.
|
|
2,772,529
|
|
|
17,273
|
|
|
—
|
|
|
—
|
|
||
|
|
|
61,533,775
|
|
|
$
|
73,876
|
|
|
47,602,689
|
|
|
$
|
90,063
|
|
|
Net
loss
recognized during the period on real estate equity securities
|
|
$
|
(19,010
|
)
|
|
Less: Net
loss
recognized during the period on real estate equity securities sold during the period
|
|
(837
|
)
|
|
|
Unrealized
loss
recognized during the reporting period on real estate equity securities still held at
December 31, 2018
|
|
$
|
(18,173
|
)
|
|
6
.
|
REAL ESTATE DEBT SECURITIES
|
|
Debt Securities Name
|
|
Date Acquired
|
|
Debt Securities Type
|
|
Outstanding Principal Balance as of
December 31, 2018 (1) |
|
Book Value as of
December 31, 2018 (2) |
|
Book Value as of
December 31, 2017 |
|
Contractual Interest Rate
(3)
|
|
Annualized Effective
Interest Rate
(3)
|
|
Maturity Date
|
||||||||
|
Battery Point Series B Preferred Units
|
|
10/28/2016 /
03/30/2017 /
05/12/2017
|
|
Series B Preferred Units
|
|
$
|
13,000
|
|
|
$
|
10,859
|
|
|
$
|
17,751
|
|
|
12.0
|
%
|
|
11.4
|
%
|
|
10/28/2019
|
|
Real estate debt securities -
December 31, 2017
|
|
$
|
17,751
|
|
|
Principal repayment
|
|
(4,500
|
)
|
|
|
Deferred interest receivable and interest accretion
|
|
59
|
|
|
|
Accretion of commitment fee, net of closing costs
|
|
49
|
|
|
|
Other-than-temporary impairment
|
|
(2,500
|
)
|
|
|
Real estate debt securities -
December 31, 2018
|
|
$
|
10,859
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Contractual interest income
|
|
$
|
1,910
|
|
|
$
|
1,217
|
|
|
$
|
63
|
|
|
Interest accretion
|
|
59
|
|
|
315
|
|
|
30
|
|
|||
|
Accretion of commitment fee, net of closing costs and acquisition fee
|
|
49
|
|
|
250
|
|
|
17
|
|
|||
|
Interest income from real estate debt securities
|
|
$
|
2,018
|
|
|
$
|
1,782
|
|
|
$
|
110
|
|
|
7
.
|
REAL ESTATE DISPOSITIONS
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
Assets related to real estate held for sale
|
|
|
|
|
||||
|
Real estate, cost
|
|
$
|
34,793
|
|
|
$
|
202,897
|
|
|
Accumulated depreciation and amortization
|
|
(3,541
|
)
|
|
(16,203
|
)
|
||
|
Real estate, net
|
|
31,252
|
|
|
186,694
|
|
||
|
Other assets
|
|
2,746
|
|
|
8,288
|
|
||
|
Total assets related to real estate held for sale
|
|
$
|
33,998
|
|
|
$
|
194,982
|
|
|
Liabilities related to real estate held for sale
|
|
|
|
|
||||
|
Notes payable, net
|
|
22,845
|
|
|
135,171
|
|
||
|
Other liabilities
|
|
—
|
|
|
261
|
|
||
|
Total liabilities related to real estate held for sale
|
|
$
|
22,845
|
|
|
$
|
135,432
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Revenues
|
|
|
|
|
|
|
||||||
|
Rental income
|
|
$
|
14,418
|
|
|
$
|
73,529
|
|
|
$
|
80,950
|
|
|
Tenant reimbursements and other operating income
|
|
3,278
|
|
|
20,438
|
|
|
19,831
|
|
|||
|
Total revenues
|
|
$
|
17,696
|
|
|
$
|
93,967
|
|
|
$
|
100,781
|
|
|
Expenses
|
|
|
|
|
|
|
||||||
|
Operating, maintenance, and management
|
|
$
|
5,055
|
|
|
$
|
27,464
|
|
|
$
|
29,710
|
|
|
Real estate taxes and insurance
|
|
1,293
|
|
|
11,510
|
|
|
12,470
|
|
|||
|
Asset management fees to affiliate
|
|
1,673
|
|
|
6,152
|
|
|
6,598
|
|
|||
|
Real estate acquisition fees to affiliate
|
|
—
|
|
|
—
|
|
|
1,274
|
|
|||
|
Real estate acquisition fees and expenses
|
|
—
|
|
|
—
|
|
|
275
|
|
|||
|
Depreciation and amortization
|
|
7,578
|
|
|
36,922
|
|
|
41,454
|
|
|||
|
Interest expense
|
|
5,568
|
|
|
17,115
|
|
|
16,196
|
|
|||
|
Total expenses
|
|
$
|
21,167
|
|
|
$
|
99,163
|
|
|
$
|
107,977
|
|
|
8.
|
NOTES AND BONDS PAYABLE
|
|
|
|
Book Value as of
December 31, 2018 |
|
Book Value as of
December 31, 2017 |
|
Contractual Interest Rate as of
December 31, 2018
(1)
|
|
Effective Interest Rate at
December 31, 2018
(1)
|
|
Payment Type
|
|
Maturity Date
(2)
|
||||
|
Richardson Portfolio Mortgage Loan
|
|
$
|
36,000
|
|
|
$
|
36,886
|
|
|
One-Month LIBOR + 2.50%
|
|
4.85%
|
|
Interest Only
(3)
|
|
11/01/2021
|
|
Park Centre Mortgage Loan
|
|
8,404
|
|
|
9,877
|
|
|
One-Month LIBOR + 2.25%
|
|
4.60%
|
|
Principal & Interest
|
|
07/01/2019
|
||
|
Burbank Collection Mortgage Loan
|
|
10,716
|
|
|
10,958
|
|
|
One-Month LIBOR + 2.35%
|
|
4.73%
|
|
Principal & Interest
|
|
09/30/2019
|
||
|
1180 Raymond Mortgage Loan
|
|
30,637
|
|
|
31,000
|
|
|
One-Month LIBOR + 2.25%
|
|
4.60%
|
|
Principal & Interest
|
|
12/01/2019
|
||
|
1180 Raymond Bond Payable
|
|
6,280
|
|
|
6,460
|
|
|
6.50%
|
|
6.50%
|
|
Principal & Interest
|
|
09/01/2036
|
||
|
Central Building Mortgage Loan
|
|
—
|
|
|
27,600
|
|
|
(4)
|
|
(4)
|
|
(4)
|
|
(4)
|
||
|
424 Bedford Mortgage Loan
(5)
|
|
23,710
|
|
|
24,282
|
|
|
3.91%
|
|
3.91%
|
|
Principal & Interest
|
|
10/01/2022
|
||
|
KBS SOR (BVI) Holdings, Ltd. Series A Debentures
(6)
|
|
259,516
|
|
|
278,801
|
|
|
4.25%
|
|
4.25%
|
|
(6)
|
|
03/01/2023
|
||
|
Westpark Portfolio Mortgage Loan
(7)
|
|
—
|
|
|
85,200
|
|
|
(7)
|
|
(7)
|
|
(7)
|
|
(7)
|
||
|
Crown Pointe Mortgage Loan
|
|
51,171
|
|
|
50,500
|
|
|
One-Month LIBOR + 2.60%
|
|
4.95%
|
|
Interest Only
|
|
02/13/2020
|
||
|
125 John Carpenter Mortgage Loan
|
|
53,204
|
|
|
50,130
|
|
|
(8)
|
|
4.10%
|
|
Interest Only
|
|
10/01/2022
|
||
|
City Tower Mortgage Loan
|
|
89,000
|
|
|
—
|
|
|
One-Month LIBOR + 1.55%
|
|
3.90%
|
|
Interest Only
|
|
03/05/2021
|
||
|
Marquette Plaza Mortgage Loan
|
|
50,800
|
|
|
—
|
|
|
One-Month LIBOR + 1.55%
|
|
3.90%
|
|
Interest Only
|
|
06/06/2021
|
||
|
Eight & Nine Corporate Centre Mortgage Loan
|
|
43,880
|
|
|
—
|
|
|
One-Month LIBOR + 1.60%
|
|
3.95%
|
|
Interest Only
|
|
06/08/2021
|
||
|
Total Notes and Bonds Payable principal outstanding
|
|
663,318
|
|
|
611,694
|
|
|
|
|
|
|
|
|
|
||
|
Net Premium/(Discount) on Notes and Bonds Payable
(9)
|
|
198
|
|
|
137
|
|
|
|
|
|
|
|
|
|
||
|
Deferred financing costs, net
|
|
(8,044
|
)
|
|
(8,788
|
)
|
|
|
|
|
|
|
|
|
||
|
Total Notes and Bonds Payable, net
|
|
$
|
655,472
|
|
|
$
|
603,043
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
$
|
102,469
|
|
|
2020
|
|
104,070
|
|
|
|
2021
|
|
272,311
|
|
|
|
2022
|
|
127,155
|
|
|
|
2023
|
|
52,158
|
|
|
|
Thereafter
|
|
5,155
|
|
|
|
|
|
$
|
663,318
|
|
|
9
.
|
DERIVATIVE INSTRUMENTS
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
Strike Price
|
|
Trade Date
|
|
Maturity Date
|
|||||||
|
Derivative Instruments
|
|
Number of Instruments
|
|
Notional Amount
|
|
Number of Instruments
|
|
Notional Amount
|
|
|
|
||||||
|
Derivative instruments not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Foreign currency collar
|
|
1
|
|
776,182
|
ILS
|
|
—
|
|
—
|
|
|
3.54 - 3.66 ILS - USD
|
|
08/20/2018
|
|
02/28/2019
(1)
|
|
|
Foreign currency option
|
|
—
|
|
$
|
—
|
|
|
1
|
|
$285,361
|
|
3.40
ILS-USD |
|
08/03/2017
|
|
08/03/2018
|
|
|
Derivative Instrument
|
|
Effective Date
|
|
Maturity Date
|
|
Notional Value
|
|
Reference Rate
|
||
|
Interest rate cap
|
|
02/21/2017
|
|
02/13/2020
|
|
$
|
46,875
|
|
|
One-month LIBOR at 3.00%
|
|
Interest rate cap
|
|
04/02/2018
|
|
03/05/2021
|
|
$
|
77,513
|
|
|
One-month LIBOR at 3.50%
|
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||
|
Derivative Instruments
|
|
Balance Sheet Location
|
|
Number of Instruments
|
|
Fair Value
|
|
Number of Instruments
|
|
Fair Value
|
||||
|
Derivative instruments not designated as hedging instruments
|
|
|
|
|
||||||||||
|
Interest rate caps
|
|
Prepaid expenses and other assets
|
|
2
|
|
$
|
34
|
|
|
1
|
|
$
|
14
|
|
|
Foreign currency option
|
|
Prepaid expenses and other assets
|
|
—
|
|
$
|
—
|
|
|
1
|
|
$
|
4,243
|
|
|
Foreign currency collar
|
|
Other liabilities
|
|
1
|
|
$
|
(4,393
|
)
|
|
—
|
|
$
|
—
|
|
|
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, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
|
Face Value
|
|
Carrying Amount
|
|
Fair Value
|
|
Face Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||||||
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Real estate debt securities
(1)
|
|
$
|
13,000
|
|
|
$
|
10,859
|
|
|
$
|
10,859
|
|
|
$
|
17,500
|
|
|
$
|
17,751
|
|
|
$
|
17,386
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Notes and bond payable
|
|
$
|
403,802
|
|
|
$
|
400,470
|
|
|
$
|
407,449
|
|
|
$
|
332,893
|
|
|
$
|
330,727
|
|
|
$
|
335,212
|
|
|
KBS SOR (BVI) Holdings, Ltd. Series A Debentures
|
|
$
|
259,516
|
|
|
$
|
255,002
|
|
|
$
|
255,814
|
|
|
$
|
278,801
|
|
|
$
|
272,316
|
|
|
$
|
296,069
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
||||||||
|
Real estate equity securities
|
|
$
|
73,876
|
|
|
$
|
73,876
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Asset derivative - interest rate caps
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
Liability derivative - foreign currency collar
|
|
$
|
(4,393
|
)
|
|
$
|
—
|
|
|
$
|
(4,393
|
)
|
|
$
|
—
|
|
|
11
.
|
RELATED PARTY TRANSACTIONS
|
|
|
|
Incurred
|
|
Payable as of
December 31,
|
||||||||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
||||||||||
|
Expensed
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asset management fees
|
|
$
|
8,525
|
|
|
$
|
10,686
|
|
|
$
|
9,628
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Acquisition fees on real estate
(1)
|
|
—
|
|
|
—
|
|
|
2,964
|
|
|
—
|
|
|
—
|
|
|||||
|
Reimbursable operating expenses
(2)
|
|
410
|
|
|
241
|
|
|
221
|
|
|
29
|
|
|
26
|
|
|||||
|
Disposition fees
(3)
|
|
2,494
|
|
|
8,352
|
|
|
279
|
|
|
—
|
|
|
—
|
|
|||||
|
Capitalized
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Acquisition fees on real estate
(1)
|
|
3,094
|
|
|
907
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Acquisition fees on real estate equity securities
|
|
239
|
|
|
429
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|||||
|
Acquisition fees on real estate debt securities
|
|
—
|
|
|
—
|
|
|
250
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
$
|
14,762
|
|
|
$
|
20,615
|
|
|
$
|
13,342
|
|
|
$
|
36
|
|
|
$
|
26
|
|
|
12
.
|
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
|
|
|
|
Number of Properties at December 31, 2018
|
|
|
|
|
|
Investment Balance at
|
||||||
|
Joint Venture
|
|
|
Location
|
|
Ownership %
|
|
December 31, 2018
|
|
December 31, 2017
|
|||||
|
NIP Joint Venture
|
|
2
|
|
Various
|
|
Less than 5.0%
|
|
$
|
1,476
|
|
|
$
|
3,674
|
|
|
110 William Joint Venture
|
|
1
|
|
New York, New York
|
|
60.0%
|
|
325
|
|
|
7,160
|
|
||
|
353 Sacramento Joint Venture
|
|
1
|
|
San Francisco, California
|
|
55.0%
|
|
43,068
|
|
|
44,743
|
|
||
|
|
|
|
|
|
|
|
|
$
|
44,869
|
|
|
$
|
55,577
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
Assets:
|
|
|
|
|
||||
|
Real estate assets, net of accumulated depreciation and amortization
|
|
$
|
235,613
|
|
|
$
|
248,269
|
|
|
Other assets
|
|
37,337
|
|
|
32,331
|
|
||
|
Total assets
|
|
$
|
272,950
|
|
|
$
|
280,600
|
|
|
Liabilities and equity:
|
|
|
|
|
||||
|
Notes payable, net
|
|
$
|
267,311
|
|
|
$
|
260,108
|
|
|
Other liabilities
|
|
7,485
|
|
|
11,016
|
|
||
|
Partners’
(deficit) capital
|
|
(1,846
|
)
|
|
9,476
|
|
||
|
Total Liabilities and equity
|
|
$
|
272,950
|
|
|
$
|
280,600
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Revenues
|
|
$
|
38,539
|
|
|
$
|
37,338
|
|
|
$
|
33,458
|
|
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Operating, maintenance, and management
|
|
9,844
|
|
|
10,056
|
|
|
10,778
|
|
|||
|
Real estate taxes and insurance
|
|
6,718
|
|
|
6,281
|
|
|
6,017
|
|
|||
|
Depreciation and amortization
|
|
15,596
|
|
|
16,544
|
|
|
12,955
|
|
|||
|
Interest expense
|
|
17,815
|
|
|
13,134
|
|
|
6,049
|
|
|||
|
Total expenses
|
|
49,973
|
|
|
46,015
|
|
|
35,799
|
|
|||
|
Total other income
|
|
112
|
|
|
56
|
|
|
63
|
|
|||
|
Net loss
|
|
$
|
(11,322
|
)
|
|
$
|
(8,621
|
)
|
|
$
|
(2,278
|
)
|
|
Company’s equity in loss of unconsolidated joint venture
|
|
$
|
(6,835
|
)
|
|
$
|
(5,214
|
)
|
|
$
|
(1,408
|
)
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
Assets:
|
|
|
|
|
||||
|
Real estate assets, net of accumulated depreciation and amortization
|
|
$
|
180,852
|
|
|
$
|
171,066
|
|
|
Other assets
|
|
13,123
|
|
|
6,472
|
|
||
|
Total assets
|
|
$
|
193,975
|
|
|
$
|
177,538
|
|
|
Liabilities and equity:
|
|
|
|
|
||||
|
Notes payable, net
|
|
$
|
105,593
|
|
|
$
|
89,423
|
|
|
Other liabilities
|
|
10,863
|
|
|
7,313
|
|
||
|
Partners’
capital
|
|
77,519
|
|
|
80,802
|
|
||
|
Total liabilities and equity
|
|
$
|
193,975
|
|
|
$
|
177,538
|
|
|
|
|
For the Year Ended December 31, 2018
|
|
For the Period from July 6, 2017 to December 31, 2017
|
||||
|
Revenues
|
|
$
|
11,397
|
|
|
$
|
7,053
|
|
|
Expenses:
|
|
|
|
|
||||
|
Operating, maintenance, and management
|
|
3,654
|
|
|
2,189
|
|
||
|
Real estate taxes and insurance
|
|
2,372
|
|
|
1,198
|
|
||
|
Depreciation and amortization
|
|
5,680
|
|
|
3,408
|
|
||
|
Interest expense
|
|
5,374
|
|
|
2,302
|
|
||
|
Total expenses
|
|
17,080
|
|
|
9,097
|
|
||
|
Net loss
|
|
$
|
(5,683
|
)
|
|
$
|
(2,044
|
)
|
|
Company’s equity in loss of unconsolidated joint venture
|
|
$
|
(2,995
|
)
|
|
$
|
(823
|
)
|
|
13.
|
SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES
|
|
|
Years Ended December 31,
|
|||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||||
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|||||
|
Interest paid, net of capitalized interest of
$2,565,
$2,339 and $2,025
for the years ended
December 31, 2018, 2017 and 2016
, respectively
|
$
|
27,029
|
|
|
$
|
32,688
|
|
|
20,759
|
|
|
Supplemental Disclosure of Significant Noncash Transactions:
|
|
|
|
|
|
|||||
|
Assets and liabilities deconsolidated in connection with the 353 Sacramento partial sale:
|
|
|
|
|
|
|||||
|
Real estate, net
|
—
|
|
|
170,586
|
|
|
—
|
|
||
|
Rents and other receivables, net
|
—
|
|
|
1,244
|
|
|
—
|
|
||
|
Prepaid expenses and other assets
|
—
|
|
|
555
|
|
|
—
|
|
||
|
Notes payable, net
|
—
|
|
|
87,132
|
|
|
—
|
|
||
|
Accounts payable and accrued liabilities
|
—
|
|
|
1,574
|
|
|
—
|
|
||
|
Below-market leases, net
|
—
|
|
|
2,960
|
|
|
—
|
|
||
|
Other liabilities
|
—
|
|
|
924
|
|
|
—
|
|
||
|
SREIT units received in connection with the Singapore Transaction
|
—
|
|
|
38,720
|
|
|
—
|
|
||
|
Increase in development obligations related to sale of real estate
|
—
|
|
|
3,816
|
|
|
—
|
|
||
|
Application of escrow deposits to acquisition of real estate
|
—
|
|
|
2,000
|
|
|
—
|
|
||
|
Increase in accrued improvements to real estate
|
—
|
|
|
—
|
|
|
3,547
|
|
||
|
Increase in redeemable common stock payable
|
1,405
|
|
|
—
|
|
|
8,902
|
|
||
|
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan
|
1,418
|
|
|
8,666
|
|
|
12,616
|
|
||
|
Distributions paid to common stockholders through common stock issuances pursuant to the December 2017 special dividend
|
150,299
|
|
|
—
|
|
|
—
|
|
||
|
Distributions paid to common stockholders through common stock issuances pursuant to the November 2018 special dividend
|
127,911
|
|
|
—
|
|
|
—
|
|
||
|
14.
|
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
|
|
2018
|
||||||||||||||
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
Revenues
|
|
$
|
19,636
|
|
|
$
|
25,290
|
|
|
$
|
27,156
|
|
|
$
|
23,705
|
|
|
Net (loss) income
|
|
$
|
(23,702
|
)
|
|
$
|
9,993
|
|
|
$
|
36,421
|
|
|
$
|
10,612
|
|
|
Net (loss) income attributable to common stockholders
|
|
$
|
(23,681
|
)
|
|
$
|
10,036
|
|
|
$
|
36,497
|
|
|
$
|
10,694
|
|
|
Net (loss) income per common share, basic and diluted
|
|
$
|
(0.38
|
)
|
|
$
|
0.16
|
|
|
$
|
0.67
|
|
|
$
|
0.19
|
|
|
Distributions declared per common share
|
|
$
|
0.016
|
|
|
$
|
0.016
|
|
|
$
|
0.016
|
|
|
$
|
2.950
|
|
|
|
|
2017
|
||||||||||||||
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
Revenues
|
|
$
|
37,996
|
|
|
$
|
40,237
|
|
|
$
|
36,414
|
|
|
$
|
26,067
|
|
|
Net (loss) income
|
|
$
|
(9,058
|
)
|
|
$
|
23,809
|
|
|
$
|
(10,542
|
)
|
|
$
|
206,371
|
|
|
Net (loss) income attributable to common stockholders
|
|
$
|
(9,092
|
)
|
|
$
|
23,846
|
|
|
$
|
(10,534
|
)
|
|
$
|
206,424
|
|
|
Net (loss) income per common share, basic and diluted
|
|
$
|
(0.16
|
)
|
|
$
|
0.42
|
|
|
$
|
(0.19
|
)
|
|
$
|
3.88
|
|
|
Distributions declared per common share
|
|
$
|
0.092
|
|
|
$
|
0.093
|
|
|
$
|
0.095
|
|
|
$
|
3.610
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Richardson Portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Palisades Central I
|
|
Richardson, TX
|
|
90.0%
|
$
|
(4)
|
|
$
|
1,037
|
|
|
$
|
8,628
|
|
|
$
|
9,665
|
|
|
$
|
2,268
|
|
|
$
|
1,037
|
|
|
$
|
10,896
|
|
|
$
|
11,933
|
|
|
$
|
(2,796
|
)
|
|
1980
|
|
11/23/2011
|
|
|
Palisades Central II
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
810
|
|
|
17,117
|
|
|
17,927
|
|
|
1,253
|
|
|
810
|
|
|
18,370
|
|
|
19,180
|
|
|
(4,352
|
)
|
|
1985
|
|
11/23/2011
|
|||||||||
|
Greenway I
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
561
|
|
|
1,170
|
|
|
1,731
|
|
|
966
|
|
|
561
|
|
|
2,136
|
|
|
2,697
|
|
|
(745
|
)
|
|
1983
|
|
11/23/2011
|
|||||||||
|
Greenway III
|
|
Richardson, TX
|
|
90.0%
|
|
(4)
|
|
702
|
|
|
4,083
|
|
|
4,785
|
|
|
(281
|
)
|
|
702
|
|
|
3,802
|
|
|
4,504
|
|
|
(1,209
|
)
|
|
1983
|
|
11/23/2011
|
|||||||||
|
Undeveloped Land
|
|
Richardson, TX
|
|
90.0%
|
|
—
|
|
|
1,997
|
|
|
—
|
|
|
1,997
|
|
|
1,137
|
|
|
3,134
|
|
|
—
|
|
|
3,134
|
|
|
—
|
|
|
N/A
|
|
11/23/2011
|
||||||||
|
Total Richardson Portfolio
|
|
|
|
|
|
36,000
|
|
|
5,107
|
|
|
30,998
|
|
|
36,105
|
|
|
5,343
|
|
|
6,244
|
|
|
35,204
|
|
|
41,448
|
|
|
(9,102
|
)
|
|
|
|
|
||||||||
|
Park Highlands
(5)
|
|
North Las Vegas, NV
|
|
100.0%
(5)
|
|
—
|
|
|
17,066
|
|
|
—
|
|
|
17,066
|
|
|
13,537
|
|
|
30,603
|
|
|
—
|
|
|
30,603
|
|
|
—
|
|
|
N/A
|
|
12/30/2011
|
||||||||
|
Burbank Collection
|
|
Burbank, CA
|
|
90.0%
|
|
10,716
|
|
|
4,175
|
|
|
8,799
|
|
|
12,974
|
|
|
3,886
|
|
|
4,175
|
|
|
12,685
|
|
|
16,860
|
|
|
(2,559
|
)
|
|
2008
|
|
12/12/2012
|
||||||||
|
Park Centre
|
|
Austin, TX
|
|
100.0%
|
|
8,404
|
|
|
3,251
|
|
|
27,941
|
|
|
31,192
|
|
|
97
|
|
|
3,251
|
|
|
28,038
|
|
|
31,289
|
|
|
(4,656
|
)
|
|
2000
|
|
03/28/2013
|
||||||||
|
1180 Raymond
|
|
Newark, NJ
|
|
100.0%
|
|
30,637
|
|
|
8,292
|
|
|
37,651
|
|
|
45,943
|
|
|
955
|
|
|
8,292
|
|
|
38,606
|
|
|
46,898
|
|
|
(6,618
|
)
|
|
1929
|
|
08/20/2013
|
||||||||
|
Park Highlands II
(5)
|
|
North Las Vegas, NV
|
|
100.0%
(5)
|
|
—
|
|
|
20,118
|
|
|
—
|
|
|
20,118
|
|
|
5,716
|
|
|
25,834
|
|
|
—
|
|
|
25,834
|
|
|
—
|
|
|
N/A
|
|
12/10/2013
|
||||||||
|
Richardson Land II
|
|
Richardson, TX
|
|
90.0%
|
|
—
|
|
|
3,096
|
|
|
—
|
|
|
3,096
|
|
|
322
|
|
|
3,418
|
|
|
—
|
|
|
3,418
|
|
|
—
|
|
|
N/A
|
|
09/04/2014
|
||||||||
|
Crown Pointe
|
|
Dunwoody, GA
|
|
100.0%
|
|
51,171
|
|
|
22,590
|
|
|
62,610
|
|
|
85,200
|
|
|
7,842
|
|
|
22,590
|
|
|
70,452
|
|
|
93,042
|
|
|
(7,653
|
)
|
|
1985/1989
|
|
02/14/2017
|
||||||||
|
125 John Carpenter
|
|
Irving, TX
|
|
100.0%
|
|
53,204
|
|
|
2,755
|
|
|
82,550
|
|
|
85,305
|
|
|
2,978
|
|
|
2,755
|
|
|
85,528
|
|
|
88,283
|
|
|
(5,690
|
)
|
|
1982/1983
|
|
09/15/2017
|
||||||||
|
Marquette Plaza
|
|
Minneapolis, MN
|
|
100.0%
|
|
50,800
|
|
|
10,387
|
|
|
75,878
|
|
|
86,265
|
|
|
3,069
|
|
|
10,387
|
|
|
78,947
|
|
|
89,334
|
|
|
(2,902
|
)
|
|
1972
|
|
03/01/2018
|
||||||||
|
City Tower
|
|
Orange, CA
|
|
100.0%
|
|
89,000
|
|
|
13,930
|
|
|
136,068
|
|
|
149,998
|
|
|
2,786
|
|
|
13,930
|
|
|
138,854
|
|
|
152,784
|
|
|
(5,469
|
)
|
|
1988
|
|
03/06/2018
|
||||||||
|
Eight & Nine Corporate Centre
|
|
Franklin, TN
|
|
100.0%
|
|
43,880
|
|
|
17,401
|
|
|
58,794
|
|
|
76,195
|
|
|
181
|
|
|
17,401
|
|
|
58,975
|
|
|
76,376
|
|
|
(1,652
|
)
|
|
2007
|
|
06/08/2018
|
||||||||
|
|
|
Total Properties Held for Investment
|
|
|
|
$
|
128,168
|
|
|
$
|
521,289
|
|
|
$
|
649,457
|
|
|
$
|
46,712
|
|
|
$
|
148,880
|
|
|
$
|
547,289
|
|
|
$
|
696,169
|
|
|
$
|
(46,301
|
)
|
|
|
|
|
|||
|
Property Held for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
424 Bedford
|
|
Brooklyn, NY
|
|
90.0%
|
|
23,710
|
|
|
8,860
|
|
|
24,820
|
|
|
33,680
|
|
|
1,113
|
|
|
8,860
|
|
|
25,933
|
|
|
34,793
|
|
|
(3,541
|
)
|
|
2010
|
|
01/31/2014
|
||||||||
|
|
|
Total Property Held for Sale
|
|
|
|
$
|
8,860
|
|
|
$
|
24,820
|
|
|
$
|
33,680
|
|
|
$
|
1,113
|
|
|
$
|
8,860
|
|
|
$
|
25,933
|
|
|
$
|
34,793
|
|
|
$
|
(3,541
|
)
|
|
|
|
|
|||
|
|
|
|
|
Total Properties
|
|
$
|
137,028
|
|
|
$
|
546,109
|
|
|
$
|
683,137
|
|
|
$
|
47,825
|
|
|
$
|
157,740
|
|
|
$
|
573,222
|
|
|
$
|
730,962
|
|
|
$
|
(49,842
|
)
|
|
|
|
|
|||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Real Estate
(1)
:
|
|
|
|
|
|
||||||
|
Balance at the beginning of the year
|
$
|
574,684
|
|
|
$
|
1,227,207
|
|
|
$
|
914,074
|
|
|
Acquisitions
|
312,457
|
|
|
170,505
|
|
|
300,382
|
|
|||
|
Improvements
|
31,818
|
|
|
37,219
|
|
|
33,909
|
|
|||
|
Write-off of fully depreciated and fully amortized assets
|
(7,329
|
)
|
|
(18,735
|
)
|
|
(19,220
|
)
|
|||
|
Loss due to property damages
|
(964
|
)
|
|
(668
|
)
|
|
(1,938
|
)
|
|||
|
Sales
|
(178,068
|
)
|
|
(664,114
|
)
|
|
—
|
|
|||
|
Reimbursement of construction costs
|
(1,636
|
)
|
|
—
|
|
|
—
|
|
|||
|
Deconsolidation
|
—
|
|
|
(176,730
|
)
|
|
—
|
|
|||
|
Balance at the end of the year
|
$
|
730,962
|
|
|
$
|
574,684
|
|
|
$
|
1,227,207
|
|
|
|
|
|
|
|
|
||||||
|
Accumulated depreciation and amortization
(1)
:
|
|
|
|
|
|
||||||
|
Balance at the beginning of the year
|
$
|
41,817
|
|
|
$
|
120,176
|
|
|
$
|
91,560
|
|
|
Depreciation and amortization expense
|
32,661
|
|
|
48,994
|
|
|
47,836
|
|
|||
|
Write-off of fully depreciated and fully amortized assets
|
(7,329
|
)
|
|
(18,735
|
)
|
|
(19,220
|
)
|
|||
|
Sales
|
(17,307
|
)
|
|
(102,474
|
)
|
|
—
|
|
|||
|
Deconsolidation
|
—
|
|
|
(6,144
|
)
|
|
—
|
|
|||
|
Balance at the end of the year
|
$
|
49,842
|
|
|
$
|
41,817
|
|
|
$
|
120,176
|
|
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
|
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 8, 2019
|
|
Keith D. Hall
|
|
|
|
|
|
/s/ PETER MCMILLAN III
|
|
Chairman of the Board, President and Director
|
|
March 8, 2019
|
|
Peter McMillan III
|
|
|
|
|
|
/s/ JEFFREY K. WALDVOGEL
|
|
Chief Financial Officer
(principal financial officer)
|
|
March 8, 2019
|
|
Jeffrey K. Waldvogel
|
|
|
|
|
|
/s/ STACIE K. YAMANE
|
|
Chief Accounting Officer
(principal accounting officer)
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March 8, 2019
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Stacie K. Yamane
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/s/ WILLIAM M. PETAK
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Director
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March 8, 2019
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William M. Petak
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/s/ ERIC J. SMITH
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Director
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March 8, 2019
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Eric J. Smith
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/s/ KENNETH G. YEE
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Director
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March 8, 2019
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Kenneth G. Yee
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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 |
|---|