Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 09, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-54687 | |
Entity Registrant Name | KBS REAL ESTATE INVESTMENT TRUST III, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 27-1627696 | |
Entity Address, Address Line One | 800 Newport Center Drive, Suite 700 | |
Entity Address, City or Town | Newport Beach, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92660 | |
City Area Code | 949 | |
Local Phone Number | 417-6500 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 148,647,490 | |
Amendment flag | false | |
Document fiscal period focus | Q3 | |
Entity Central Index Key | 0001482430 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Real estate: | ||
Land | $ 274,315 | $ 290,121 |
Buildings and improvements | 2,227,486 | 2,235,676 |
Tenant origination and absorption costs | 38,670 | 42,555 |
Total real estate held for investment, cost | 2,540,471 | 2,568,352 |
Less accumulated depreciation and amortization | (691,602) | (656,401) |
Total real estate, net | 1,848,869 | 1,911,951 |
Real estate equity securities | 29,786 | 87,416 |
Total real estate and real estate-related investments, net | 1,878,655 | 1,999,367 |
Cash and cash equivalents | 33,093 | 47,767 |
Restricted cash | 12,038 | 6,070 |
Rents and other receivables, net | 98,035 | 93,100 |
Above-market leases, net | 207 | 262 |
Due from affiliate | 0 | 10 |
Prepaid expenses and other assets | 125,445 | 112,411 |
Total assets | 2,147,473 | 2,258,987 |
Liabilities and equity | ||
Notes payable, net | 1,715,243 | 1,667,288 |
Accounts payable and accrued liabilities | 56,322 | 56,071 |
Due to affiliate | 15,677 | 10,365 |
Distributions payable | 0 | 7,374 |
Below-market leases, net | 1,263 | 1,911 |
Other liabilities | 65,468 | 60,918 |
Redeemable common stock payable | 0 | 711 |
Total liabilities | 1,853,973 | 1,804,638 |
Commitments and contingencies (Note 10) | ||
Redeemable common stock | 39,633 | 32,681 |
Stockholders’ equity: | ||
Preferred stock, $.01 par value per share; 10,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value per share; 1,000,000,000 shares authorized, 148,752,927 and 147,964,954 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 1,487 | 1,480 |
Additional paid-in capital | 1,275,812 | 1,275,833 |
Cumulative distributions in excess of net income | (1,023,432) | (855,645) |
Total stockholders’ equity | 253,867 | 421,668 |
Total liabilities and equity | $ 2,147,473 | $ 2,258,987 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 148,752,927 | 147,964,954 |
Common stock, shares outstanding (in shares) | 148,752,927 | 147,964,954 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Rental income | $ 69,489 | $ 67,897 | $ 200,859 | $ 204,939 |
Dividend income from real estate equity securities | 5,310 | 7,598 | 11,850 | 14,850 |
Other operating income | 4,748 | 4,724 | 13,857 | 13,468 |
Total revenues | 79,547 | 80,219 | 226,566 | 233,257 |
Expenses: | ||||
Operating, maintenance and management | 19,789 | 19,674 | 55,728 | 54,506 |
Real estate taxes and insurance | 12,542 | 13,069 | 39,994 | 41,231 |
Asset management fees to affiliate | 5,268 | 5,091 | 15,542 | 14,952 |
General and administrative expenses | 1,630 | 1,889 | 4,766 | 5,689 |
Depreciation and amortization | 29,154 | 29,905 | 86,263 | 83,763 |
Interest expense | 31,059 | 17,166 | 87,137 | 36,992 |
Net gain on derivative instruments | (12,180) | (20,205) | (32,110) | (49,143) |
Impairment charges on real estate | 0 | 0 | 45,459 | 0 |
Total expenses | 87,262 | 66,589 | 302,779 | 187,990 |
Other (loss) income: | ||||
Unrealized loss on real estate equity securities | (15,541) | (29,138) | (57,630) | (63,673) |
Write-off of prepaid offering costs | 0 | 0 | 0 | (2,728) |
Other interest income | 140 | 12 | 250 | 35 |
Total other loss, net | (15,401) | (29,126) | (57,380) | (66,366) |
Net loss | $ (23,116) | $ (15,496) | $ (133,593) | $ (21,099) |
Net loss per common share, basic (in dollars per share) | $ (0.16) | $ (0.11) | $ (0.90) | $ (0.14) |
Net loss per common share, diluted (in dollars per share) | $ (0.16) | $ (0.11) | $ (0.90) | $ (0.14) |
Weighted-average number of common shares outstanding, basic (in shares) | 149,007,610 | 147,247,890 | 148,775,325 | 149,647,042 |
Weighted-average number of common shares outstanding, diluted (in shares) | 149,007,610 | 147,247,890 | 148,775,325 | 149,647,042 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Net Income |
Beginning balance (in shares) at Dec. 31, 2021 | 153,150,766 | |||
Beginning balance at Dec. 31, 2021 | $ 620,193 | $ 1,532 | $ 1,322,613 | $ (703,952) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (21,099) | (21,099) | ||
Issuance of common stock (in shares) | 2,382,581 | |||
Issuance of common stock | 24,397 | $ 24 | 24,373 | |
Transfers from redeemable common stock | 15,356 | 15,356 | ||
Redemptions of common stock (in shares) | (8,329,738) | |||
Redemptions of common stock | (86,567) | $ (83) | (86,484) | |
Distributions declared | (67,148) | (67,148) | ||
Other offering costs | (9) | (9) | ||
Ending balance (in shares) at Sep. 30, 2022 | 147,203,609 | |||
Ending balance at Sep. 30, 2022 | 485,123 | $ 1,473 | 1,275,849 | (792,199) |
Beginning balance (in shares) at Jun. 30, 2022 | 147,273,576 | |||
Beginning balance at Jun. 30, 2022 | 522,210 | $ 1,473 | 1,275,423 | (754,686) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (15,496) | (15,496) | ||
Issuance of common stock (in shares) | 878,188 | |||
Issuance of common stock | 8,992 | $ 9 | 8,983 | |
Transfers from redeemable common stock | 1,388 | 1,388 | ||
Redemptions of common stock (in shares) | (948,155) | |||
Redemptions of common stock | (9,946) | $ (9) | (9,937) | |
Distributions declared | (22,017) | (22,017) | ||
Other offering costs | (8) | (8) | ||
Ending balance (in shares) at Sep. 30, 2022 | 147,203,609 | |||
Ending balance at Sep. 30, 2022 | $ 485,123 | $ 1,473 | 1,275,849 | (792,199) |
Beginning balance (in shares) at Dec. 31, 2022 | 147,964,954 | 147,964,954 | ||
Beginning balance at Dec. 31, 2022 | $ 421,668 | $ 1,480 | 1,275,833 | (855,645) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (133,593) | (133,593) | ||
Issuance of common stock (in shares) | 1,900,374 | |||
Issuance of common stock | 16,248 | $ 19 | 16,229 | |
Transfers to redeemable common stock | (6,241) | (6,241) | ||
Redemptions of common stock (in shares) | (1,112,401) | |||
Redemptions of common stock | (10,012) | $ (12) | (10,000) | |
Distributions declared | (34,194) | (34,194) | ||
Other offering costs | $ (9) | (9) | ||
Ending balance (in shares) at Sep. 30, 2023 | 148,752,927 | 148,752,927 | ||
Ending balance at Sep. 30, 2023 | $ 253,867 | $ 1,487 | 1,275,812 | (1,023,432) |
Beginning balance (in shares) at Jun. 30, 2023 | 148,864,885 | |||
Beginning balance at Jun. 30, 2023 | 276,987 | $ 1,489 | 1,275,814 | (1,000,316) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (23,116) | (23,116) | ||
Issuance of common stock (in shares) | 255,509 | |||
Issuance of common stock | 2,183 | $ 3 | 2,180 | |
Transfers from redeemable common stock | 1,123 | 1,123 | ||
Redemptions of common stock (in shares) | (367,467) | |||
Redemptions of common stock | (3,307) | $ (5) | (3,302) | |
Other offering costs | $ (3) | (3) | ||
Ending balance (in shares) at Sep. 30, 2023 | 148,752,927 | 148,752,927 | ||
Ending balance at Sep. 30, 2023 | $ 253,867 | $ 1,487 | $ 1,275,812 | $ (1,023,432) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (133,593) | $ (21,099) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 86,263 | 83,763 |
Impairment charges on real estate | 45,459 | 0 |
Unrealized loss on real estate equity securities | 57,630 | 63,673 |
Deferred rents | (5,842) | (7,230) |
Amortization of above- and below-market leases, net | (593) | (1,050) |
Amortization of deferred financing costs | 3,085 | 2,898 |
Unrealized gain on derivative instruments | (9,248) | (54,578) |
Write-off of prepaid offering costs | 0 | 2,728 |
Interest rate swap settlements for off-market swap instruments | (8,104) | 248 |
Changes in operating assets and liabilities: | ||
Rents and other receivables | (2,674) | 1,218 |
Due from affiliate | 10 | 343 |
Prepaid expenses and other assets | (12,416) | (13,320) |
Accounts payable and accrued liabilities | 3,926 | (3,045) |
Due to affiliate | 5,312 | 1,274 |
Other liabilities | 7,977 | 2,940 |
Net cash provided by operating activities | 37,192 | 58,763 |
Cash Flows from Investing Activities: | ||
Improvements to real estate | (63,188) | (83,230) |
Purchase of interest rate cap | (25) | 0 |
Net cash used in investing activities | (63,213) | (83,230) |
Cash Flows from Financing Activities: | ||
Proceeds from notes payable | 46,820 | 236,618 |
Principal payments on notes payable | (1,356) | (82,575) |
Payments of deferred financing costs | (628) | (1,062) |
Interest rate swap settlements for off-market swap instruments | 7,820 | (834) |
Payments to redeem common stock | (10,012) | (86,567) |
Payments of prepaid other offering costs | 0 | (110) |
Payments of other offering costs | (9) | (9) |
Distributions paid to common stockholders | (25,320) | (43,150) |
Net cash provided by financing activities | 17,315 | 22,311 |
Net decrease in cash, cash equivalents and restricted cash | (8,706) | (2,156) |
Cash, cash equivalents and restricted cash, beginning of period | 53,837 | 46,436 |
Cash, cash equivalents and restricted cash, end of period | 45,131 | 44,280 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 67,995 | 37,814 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | ||
Distributions payable | 0 | 7,336 |
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | 16,248 | 24,397 |
Redeemable common stock payable | 0 | 11,109 |
Accrued improvements to real estate | 15,650 | 23,230 |
Accrued interest rate swap settlements related to off-market swap instruments | $ (999) | $ (327) |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION KBS Real Estate Investment Trust III, Inc. (the “Company”) was formed on December 22, 2009 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2011 and it intends to continue to operate in such manner. Substantially all of the Company’s business is conducted through KBS Limited Partnership III (the “Operating Partnership”), a Delaware limited partnership. The Company is the sole general partner of and owns a 0.1% partnership interest in the Operating Partnership. KBS REIT Holdings III LLC (“REIT Holdings III”), the limited partner of the Operating Partnership, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings III. Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company entered into with the Advisor (the “Advisory Agreement”). On January 26, 2010, the Company issued 20,000 shares of its common stock to the Advisor at a purchase price of $10.00 per share. As of September 30, 2023, the Advisor owned 20,857 shares of the Company’s common stock. The Company owns a diverse portfolio of real estate investments. As of September 30, 2023, the Company owned 16 office properties, one mixed-use office/retail property and an investment in the equity securities of Prime US REIT, a Singapore real estate investment trust (the “SREIT”). The Company commenced its initial public offering (the “Offering”) on October 26, 2010. Upon commencing the Offering, the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Company, to serve as the dealer manager of the Offering pursuant to a dealer manager agreement, as amended and restated (the “Dealer Manager Agreement”). The Company ceased offering shares of common stock in the primary Offering on May 29, 2015 and terminated the primary Offering on July 28, 2015. The Company sold 169,006,162 shares of common stock in the primary Offering for gross proceeds of $1.7 billion. As of September 30, 2023, the Company had also sold 46,154,757 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $471.3 million. Also as of September 30, 2023, the Company had redeemed or repurchased 74,407,668 shares sold in the Offering for $787.1 million. Additionally, on October 3, 2014, the Company issued 258,462 shares of common stock for $2.4 million in private transactions exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Liquidity The Company generally finances its real estate investments using notes payable that are typically structured as non-recourse secured mortgages with maturities of approximately three to five years, with short-term extension options available upon the Company meeting certain debt covenants. Each reporting period, management evaluates the Company’s ability to continue as a going concern by evaluating conditions and events, including assessing the Company’s liquidity needs in order to satisfy upcoming debt obligations and the Company’s ability to satisfy debt covenant requirements. Through the normal course of operations, the Company has $1.7 billion of notes payable maturing over the 12-month period commencing October 1, 2023. Considering the current commercial real estate lending environment, this raises substantial doubt as to the Company’s ability to continue as a going concern for at least a year from the date of issuance of these financial statements. Certain loans have available extension options beyond the next 12 months, subject to terms and conditions specified in the respective loan documents, including loan-to-value, debt service coverage or other requirements. In order to satisfy these debt obligations as they mature, management and the board of directors will evaluate the Company’s options and may seek to utilize the extension options available in the respective loan agreements, may have to make partial loan paydowns to meet extension test requirements, may agree to reduce the loan commitment by a substantial amount, will likely seek to refinance or restructure certain debt instruments, may be required to sell real estate assets or equity securities to make loan paydowns to meet extension tests and may defer noncontractual expenditures or further suspend or cease distributions and redemptions. Additionally, the Company anticipates it may relinquish ownership of one or more secured properties to the mortgage lender. Historically, the Company has successfully refinanced its debt instruments or utilized extension options in order to satisfy debt obligations as they come due and has not yet relinquished ownership of a secured property to a lender; however, the Company may utilize such option if necessary. However, there can be no assurances as to the certainty or timing of management’s plans to be effectively implemented within one year from the date the financial statements are issued, as certain elements of management’s plans are outside the control of the Company, including its ability to sell assets or successfully refinance or restructure certain of its debt instruments. As a result of the Company’s upcoming loan maturities, the challenging commercial real estate lending environment, the current interest rate environment, leasing challenges in certain markets where the Company owns properties and the lack of transaction volume in the U.S. office market as well as general market instability, management’s plans cannot be considered probable and thus do not alleviate substantial doubt about the Company’s ability to continue as a going concern. See Note 6, “Notes Payable” for further information regarding the Company’s notes payable. Use of Estimates The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and condensed notes. Actual results could materially differ from those estimates. Per Share Data Basic net income (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three and nine months ended September 30, 2023 and 2022, respectively. Distributions declared per common share were $0.230 in the aggregate for the nine months ended September 30, 2023. No distributions were declared for the three months ended September 30, 2023. Distributions declared per common share were $0.150 and $0.448 in the aggregate for the three and nine months ended September 30, 2022, respectively. Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions and were based on a monthly record date for each month during the periods commencing January 2022 through September 2022 and January 2023 through June 2023. For each monthly record date for distributions during the period from January 1, 2022 through September 30, 2022, distributions were calculated at a rate of $0.04983333 per share. For each monthly record date for distributions during the period from January 1, 2023 through June 30, 2023, distributions were calculated at a rate of $0.03833333 per share. Segments The Company has invested in core real estate properties and real estate-related investments with the goal of acquiring a portfolio of income-producing investments. The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. Accordingly, the Company aggregated its investments in real estate properties into one reportable business segment. Square Footage, Occupancy and Other Measures Square footage, occupancy, number of tenants and other measures, including annualized base rent and annualized base rent per square foot, used to describe real estate investments included in these condensed notes to the consolidated financial statements are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. Recently Issued Accounting Standards Update In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”) to provide temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Modified contracts that meet the following criteria are eligible for relief from the modification accounting requirements under GAAP: (1) the contract references LIBOR or another rate that is expected to be discontinued due to reference rate reform, (2) the modified terms directly replace or have the potential to replace the reference rate that is expected to be discontinued due to reference rate reform, and (3) any contemporaneous changes to other terms (i.e., those that do not directly replace or have the potential to replace the reference rate) that change or have the potential to change the amount and timing of contractual cash flows must be related to the replacement of the reference rate. For a contract that meets the criteria, the guidance generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. In addition, ASU No. 2020-04 provides various optional expedients for hedging relationships affected by reference rate reform, if certain criteria are met. The amendments in ASU No. 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06, to extend the temporary accounting relief provided under ASU No. 2020-04 to December 31, 2024. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments in this update must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. An entity may elect to apply the amendments in ASU No. 2020-04 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. |
REAL ESTATE
REAL ESTATE | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
REAL ESTATE | REAL ESTATE As of September 30, 2023, the Company’s real estate portfolio was composed of 16 office properties and one mixed-use office/retail property encompassing in the aggregate approximately 7.3 million rentable square feet. As of September 30, 2023, the Company’s real estate portfolio was collectively 83.0% occupied. The following table summarizes the Company’s investments in real estate as of September 30, 2023 (in thousands): Property Date Acquired City State Property Type Total Real Estate, at Cost (1) Accumulated Depreciation and Amortization (1) Total Real Estate, Net (1) Town Center 03/27/2012 Plano TX Office $ 141,199 $ (50,707) $ 90,492 McEwen Building 04/30/2012 Franklin TN Office 40,012 (11,478) 28,534 Gateway Tech Center 05/09/2012 Salt Lake City UT Office 36,048 (11,787) 24,261 60 South Sixth 01/31/2013 Minneapolis MN Office 183,897 (55,896) 128,001 Preston Commons 06/19/2013 Dallas TX Office 144,845 (40,325) 104,520 Sterling Plaza 06/19/2013 Dallas TX Office 94,041 (29,555) 64,486 201 Spear Street 12/03/2013 San Francisco CA Office 70,345 (852) 69,493 Accenture Tower 12/16/2013 Chicago IL Office 563,307 (157,722) 405,585 Ten Almaden 12/05/2014 San Jose CA Office 131,365 (39,368) 91,997 Towers at Emeryville 12/23/2014 Emeryville CA Office 222,916 (63,592) 159,324 3003 Washington Boulevard 12/30/2014 Arlington VA Office 154,916 (44,711) 110,205 Park Place Village 06/18/2015 Leawood KS Office/Retail 85,900 (12,712) 73,188 201 17th Street 06/23/2015 Atlanta GA Office 104,917 (32,520) 72,397 515 Congress 08/31/2015 Austin TX Office 135,260 (34,263) 100,997 The Almaden 09/23/2015 San Jose CA Office 195,222 (49,852) 145,370 3001 Washington Boulevard 11/06/2015 Arlington VA Office 60,971 (14,241) 46,730 Carillon 01/15/2016 Charlotte NC Office 175,310 (42,021) 133,289 $ 2,540,471 $ (691,602) $ 1,848,869 _____________________ (1) Amounts presented are net of impairment charges and write-offs of fully depreciated/amortized assets. As of September 30, 2023, the following property represented more than 10% of the Company’s total assets: Property Location Rentable Square Feet Total Real Estate, Net Percentage of Total Assets Annualized Base Rent (in thousands) (1) Average Annualized Base Rent per sq. ft. Occupancy Accenture Tower Chicago, IL 1,457,724 $ 405,585 18.9 % $ 37,580 $ 27.65 93.2 % ___________________ (1) Annualized base rent represents annualized contractual base rental income as of September 30, 2023, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. Operating Leases The Company’s office and office/retail properties are leased to tenants under operating leases for which the terms and expirations vary. As of September 30, 2023, the leases, including leases that have been executed but not yet commenced, had remaining terms, excluding options to extend, of up to 15.8 years with a weighted-average remaining term of 5.7 years. Some of the leases have provisions to extend the term of the leases, options for early termination for all or a part of the leased premises after paying a specified penalty, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $10.0 million and $9.3 million as of September 30, 2023 and December 31, 2022, respectively. During the nine months ended September 30, 2023 and 2022, the Company recognized deferred rent from tenants of $5.8 million and $7.2 million, respectively. As of September 30, 2023 and December 31, 2022, the cumulative deferred rent balance was $93.9 million and $89.9 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $16.9 million and $17.3 million of unamortized lease incentives as of September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, the future minimum rental income from the Company’s properties under its non-cancelable operating leases was as follows (in thousands): October 1, 2023 through December 31, 2023 $ 51,426 2024 199,479 2025 185,827 2026 168,313 2027 142,329 Thereafter 559,908 $ 1,307,282 As of September 30, 2023, the Company’s office and office/retail properties were leased to approximately 530 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows: Industry Number of Tenants Annualized Base Rent (1) (in thousands) Percentage of Finance 107 $ 38,108 18.3 % Legal Services 53 24,032 11.5 % $ 62,140 29.8 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of September 30, 2023, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term. As of September 30, 2023, no other tenant industries accounted for more than 10% of annualized base rent and no tenant accounted for more than 10% of annualized base rent. Geographic Concentration Risk As of September 30, 2023, the Company’s net investments in real estate in California, Illinois and Texas represented 21.7%, 18.9% and 16.8% of the Company’s total assets, respectively. As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California, Illinois and Texas real estate markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to pay distributions to stockholders. Impairment of Real Estate During the nine months ended September 30, 2023, the Company recorded non-cash impairment charges of $45.5 million to write down the carrying value of 201 Spear Street (located in San Francisco, California) to its estimated fair value as a result of continued market uncertainty due to rising interest rates, increased vacancy rates as a result of slow return to office in San Francisco, additional projected vacancy due to anticipated tenant turnover and further declining values of comparable sales in the market, all of which impacted ongoing cash flow estimates and leasing projections, which resulted in the future estimated undiscounted cash flows to be lower than the net carrying value of the property. As of September 30, 2023, 201 Spear Street was 64.5% occupied. The Company is projecting longer lease-up periods for the vacant space, and increased tenant turnover for currently occupied space, as demand for office space in San Francisco has significantly declined as a result of the continued work-from-home arrangements, which increased due to the COVID-19 pandemic, and due to the economic slowdown and the current rising interest rate environment. The Company did not record any non-cash impairment charges during the three and nine months ended September 30, 2022, respectively. |
TENANT ORIGINATION AND ABSORPTI
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES As of September 30, 2023 and December 31, 2022, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands): Tenant Origination and Above-Market Below-Market September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Cost $ 38,670 $ 42,555 $ 904 $ 983 $ (7,534) $ (8,384) Accumulated Amortization (28,635) (29,524) (697) (721) 6,271 6,473 Net Amount $ 10,035 $ 13,031 $ 207 $ 262 $ (1,263) $ (1,911) Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands): Tenant Origination and Above-Market Below-Market For the Three Months Ended For the Three Months Ended For the Three Months Ended 2023 2022 2023 2022 2023 2022 Amortization $ (947) $ (1,332) $ (18) $ (21) $ 201 $ 284 Tenant Origination and Above-Market Below-Market For the Nine Months Ended For the Nine Months Ended For the Nine Months Ended 2023 2022 2023 2022 2023 2022 Amortization $ (2,996) $ (4,570) $ (55) $ (66) $ 648 $ 1,116 |
REAL ESTATE EQUITY SECURITIES
REAL ESTATE EQUITY SECURITIES | 9 Months Ended |
Sep. 30, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
REAL ESTATE EQUITY SECURITIES | REAL ESTATE EQUITY SECURITIES Investment in Prime US REIT In connection with the Company’s sale of 11 properties to the SREIT on July 18, 2019 (the “Singapore Portfolio”), on July 19, 2019, the Company, through an indirect wholly owned subsidiary (“REIT Properties III”), acquired 307,953,999 units in the SREIT at a price of $271.0 million, or $0.88 per unit, representing a 33.3% ownership interest in the SREIT (such transactions, the “Singapore Transaction”). On August 21, 2019, REIT Properties III sold 18,392,100 of its units in the SREIT for $16.2 million pursuant to an over-allotment option granted to the underwriters of the SREIT’s offering, reducing REIT Properties III’s ownership in the SREIT to 31.3% of the outstanding units of the SREIT as of that date. On November 9, 2021, REIT Properties III sold 73,720,000 of its units in the SREIT for $58.9 million, net of fees and costs, reducing REIT Properties III’s ownership in the SREIT to 18.5% of the outstanding units of the SREIT as of that date. As of September 30, 2023, REIT Properties III held 215,841,899 units of the SREIT which represented 18.2% of the outstanding units of the SREIT. As of September 30, 2023, the aggregate book value and fair value of the Company’s investment in the units of the SREIT was $29.8 million, which was based on the closing price of the SREIT units on the SGX-ST of $0.138 per unit as of September 30, 2023. On November 9, 2021, upon the Company’s sale of 73,720,000 units in the SREIT, the Company determined that based on its ownership interest of 18.5% of the outstanding units of the SREIT as of that date, it no longer had significant influence over the operations, financial policies and decision making with respect to the SREIT. Accordingly, effective November 9, 2021, the Company’s investment in the units of the SREIT represent an investment in marketable securities and is therefore presented at fair value at each reporting date based on the closing price of the SREIT units on the SGX-ST on that date and dividend income is recognized as it is declared based on eligible units as of the ex-dividend date. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2023 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of September 30, 2023 and December 31, 2022, the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of September 30, 2023 Book Value as of December 31, 2022 Contractual Interest Rate as of September 30, 2023 (1) Effective Interest Rate as of September 30, 2023 (1) Payment Type Maturity Date (2) The Almaden Mortgage Loan (3) $ 123,000 $ 123,000 3.65% 3.65% Interest Only 12/01/2023 201 Spear Street Mortgage Loan (4) 125,000 125,000 One-month Term SOFR + 1.45% 6.77% Interest Only 01/05/2024 Carillon Mortgage Loan (5) 88,800 88,800 One-month Term SOFR +1.50% 6.82% Interest Only 04/11/2024 Modified Portfolio Revolving Loan Facility (6) 249,145 249,145 One-month Term SOFR + 1.60% 6.92% Interest Only 03/01/2024 3001 & 3003 Washington Mortgage Loan 140,876 142,232 One-month Term SOFR + 0.10% + 1.45% 6.87% Principal & Interest 06/01/2024 Accenture Tower Revolving Loan (7) 281,250 281,250 One-month Term SOFR + 2.35% 7.67% Interest Only 11/02/2023 Unsecured Credit Facility (8) 37,500 37,500 One-month Term SOFR + 2.20% 7.52% Interest Only 07/30/2024 Amended and Restated Portfolio Loan Facility (9) 606,288 559,468 One-month BSBY (10) +1.80% 7.19% Interest Only 11/03/2023 Park Place Village Mortgage Loan (11) 65,000 65,000 One-month Term SOFR + 1.95% 7.27% Interest Only 08/31/2025 Total notes payable principal outstanding $ 1,716,859 $ 1,671,395 Deferred financing costs, net (1,616) (4,107) Total Notes Payable, net $ 1,715,243 $ 1,667,288 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2023. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2023, consisting of the contractual interest rate and using interest rate indices as of September 30, 2023, where applicable. For information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.” (2) Represents the maturity date as of September 30, 2023; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown. See below. (3) As of September 30, 2023, The Almaden Mortgage Loan has two 12-month extension options, subject to certain terms, conditions and fees as described in the loan documents. The Almaden Mortgage Loan bears interest at a fixed rate of 3.65% for the initial term of the loan and a floating rate of 350 basis points over one-month LIBOR during the extension options, subject to a minimum interest rate of 3.65%. Pursuant to the loan documents, the Almaden Mortgage Loan includes provisions for a LIBOR successor rate in the event LIBOR is unascertainable or ceases to be available. (4) As a result of the borrower’s failure to pay in full the entire November 2023 monthly interest payment under the 201 Spear Street Mortgage Loan on the due date, on November 9, 2023, the 201 Spear Street Mortgage Loan lender notified the borrower that if such amount is not paid by November 14, 2023, then the borrower will be in default under the loan. The borrower does not expect to make the full interest payment by this date, and as a result, will likely default on the loan. If the borrower defaults, interest on the loan will accrue at the default rate and additional daily or late charges will apply. (5) As of September 30, 2023, the borrowing capacity under the Carillon Mortgage Loan was $111.0 million, of which $88.8 million is term debt and $22.2 million is revolving debt. As of September 30, 2023, the outstanding balance under the loan consisted of $88.8 million of term debt. As of September 30, 2023, $22.2 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. As of September 30, 2023, the Carillon Mortgage Loan has one 24-month extension option, subject to certain terms and conditions contained in the loan documents. (6) As of September 30, 2023, the Modified Portfolio Revolving Loan Facility was secured by 515 Congress, the McEwen Building, Gateway Tech Center and 201 17th Street. As of September 30, 2023, the borrowing capacity under the Modified Portfolio Revolving Loan Facility was $249.2 million, of which $124.6 million is term debt and $124.6 million is revolving debt. As of September 30, 2023, the outstanding balance under the loan consisted of $124.6 million of term debt and $124.6 million of revolving debt. As of September 30, 2023, the Modified Portfolio Revolving Loan Facility has one 12-month extension option, subject to certain terms, conditions and fees as described in the loan documents. (7) As of September 30, 2023, the outstanding balance under the Accenture Tower Revolving Loan consisted of $281.3 million of term debt and an additional $93.7 million of revolving debt remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of September 30, 2023, the Accenture Tower Revolving Loan has two 12-month extension options, subject to certain terms and conditions contained in the loan documents. Subsequent to September 30, 2023, the Company entered into a second modification agreement with the lenders under the Accenture Tower Revolving Loan and extended the maturity date to December 4, 2023, among other modifications. See Note 11, “Subsequent Events – Accenture Tower Revolving Loan.” (8) As of September 30, 2023, the borrowing capacity under the Unsecured Credit Facility was $75.0 million, of which $37.5 million is term debt and $37.5 million is revolving debt. As of September 30, 2023, the outstanding balance under the Unsecured Credit Facility consisted of $37.5 million of term debt and an additional $37.5 million of revolving debt remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. (9) As of September 30, 2023, the Amended and Restated Portfolio Loan Facility was secured by 60 South Sixth, Preston Commons, Sterling Plaza, Towers at Emeryville, Ten Almaden and Town Center. As of September 30, 2023, the borrowing capacity under the Amended and Restated Portfolio Loan Facility was $613.2 million, of which $459.9 million is term debt and $153.3 million is revolving debt. As of September 30, 2023, the outstanding balance under the loan consisted of $459.9 million of term debt and $146.4 million of revolving debt. As of September 30, 2023, the Company determined it did not meet the debt service coverage ratio required under the Amended and Restated Portfolio Loan Facility. Pursuant to the terms of the Amended and Restated Portfolio Loan Facility, the Company is required to notify the lenders by November 29, 2023. At such time, the Company would have 30 days from receipt of notice from the lenders to make a principal paydown of up to $29.7 million. Subsequent to September 30, 2023, the Company entered into a loan modification and extension agreement with the lenders under the Amended and Restated Portfolio Loan Facility and extended the maturity date to November 17, 2023, among other modifications. See Note 11, “Subsequent Events – Amended and Restated Portfolio Loan Facility.” (10) Bloomberg Short-Term Bank Yield Index (“BSBY”). (11) As of September 30, 2023, the Park Place Village Mortgage Loan has two 12-month extension options, subject to certain terms, conditions and fees as described in the loan documents. Monthly payments are interest only during the initial term and the first extension option. During the second extension option, certain future monthly payments due under the Park Place Village Mortgage Loan also include amortizing principal payments. Through the normal course of operations, the Company has $1.7 billion of notes payable maturing over the 12-month period commencing October 1, 2023. Considering the current commercial real estate lending environment, this raises substantial doubt as to the Company’s ability to continue as a going concern for at least a year from the date of the issuance of these financial statements. The maturity dates of certain notes payable may be extended beyond their current maturity dates; however, the extension options are subject to certain terms and conditions contained in the loan documents some of which are more stringent than the Company’s current loan compliance tests, including loan-to-value, debt service coverage or other requirements. In order to satisfy these debt obligations as they mature, management and the board of directors will evaluate the Company’s options and may seek to utilize the extension options available in the respective loan agreements, may have to make partial loan paydowns to meet extension test requirements, may agree to reduce the loan commitment by a substantial amount, will likely seek to refinance or restructure certain debt instruments, may be required to sell real estate assets or equity securities to make loan paydowns to meet extension tests and may defer noncontractual expenditures or further suspend or cease distributions and redemptions. Additionally, the Company anticipates it may relinquish ownership of one or more secured properties to the mortgage lender. Such actions would reduce the Company’s liquidity. Additionally, continued increases in interest rates, reductions in real estate values and future tenant turnover in the portfolio will have a further impact on the Company’s ability to meet loan compliance tests and may further reduce the available liquidity under the Company’s loan agreements. See also, Note 2, “Summary of Significant Accounting Policies — Liquidity.” During the three and nine months ended September 30, 2023, the Company’s interest expense related to notes payable was $31.1 million and $87.1 million, respectively, and during the three and nine months ended September 30, 2022, the Company’s interest expense related to notes payable was $17.2 million and $37.0 million, respectively, which excludes the impact of interest rate swaps and caps put in place to mitigate the Company’s exposure to rising interest rates on its variable rate notes payable. See Note 7, “Derivative Instruments.” Included in interest expense was the amortization of deferred financing costs of $1.0 million and $3.1 million for the three and nine months ended September 30, 2023, respectively, and $1.0 million and $2.9 million for the three and nine months ended September 30, 2022, respectively. As of September 30, 2023 and December 31, 2022, $9.8 million and $8.0 million of interest expense were payable, respectively. The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of September 30, 2023 (in thousands): October 1, 2023 through December 31, 2023 $ 1,011,004 2024 640,855 2025 65,000 2026 — 2027 — Thereafter — $ 1,716,859 |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes. The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero. The Company enters into interest rate caps to mitigate its exposure to rising interest rates on its variable rate notes payable. The values of interest rate caps are primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of interest rate caps. As the remaining life of an interest rate cap decreases, the value of the instrument will generally decrease towards zero. As of September 30, 2023, the Company has entered into 19 interest rate swaps and one interest rate cap, which were not designated as hedging instruments. The following table summarizes the notional amount and other information related to the Company’s interest rate swaps and interest rate cap as of September 30, 2023 and December 31, 2022. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands): September 30, 2023 December 31, 2022 Weighted-Average Fix Pay Rate Weighted-Average Remaining Term in Years Derivative Instruments Number of Instruments Notional Amount Number of Instruments Notional Amount Reference Rate as of September 30, 2023 Derivative instruments not designated as hedging instruments Interest rate swaps (1) 19 $ 1,646,250 20 $ 1,619,190 Fallback SOFR (2) / Fixed at 0.70% - 1.40% One-month Term SOFR/ Fixed at 2.38% - 3.92% 2.4% 1.9 Interest rate cap 1 $ 125,000 — $ — One-month Term SOFR at 6.49% 6.5% 0.3 _____________________ (1) Includes eight forward interest rate swaps: (i) four forward interest rate swaps in the total amount of $200.0 million became effective on November 1, 2023 and mature on February 1, 2026, (ii) one forward interest rate swap in the amount of $100.0 million became effective on November 1, 2023 and matures on May 1, 2026, (iii) one forward interest rate swap in the amount of $100.0 million became effective on November 1, 2023 and matures on July 1, 2026, (iv) one forward interest rate swap in the amount of $100.0 million became effective on November 1, 2023 and matures on November 1, 2026 and (v) one forward interest rate swap in the amount of $100.0 million will become effective on December 1, 2023 and will mature on November 1, 2026. (2) Upon cessation of one-month LIBOR on June 30, 2023, eight of the Company’s interest rate swaps which bore interest at one-month LIBOR were automatically converted to a fallback rate (“Fallback SOFR”) plus a 11.448 basis point adjustment. As of September 30, 2023, the Company had seven interest rate swaps which had been converted to Fallback SOFR with maturity dates between November 1, 2023 and January 1, 2025. The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2023 and December 31, 2022 (dollars in thousands): September 30, 2023 December 31, 2022 Derivative Instruments Balance Sheet Location Number of Instruments Fair Value Number of Instruments Fair Value Derivative instruments not designated as hedging instruments Interest rate swaps Prepaid expenses and other assets, at fair value (1) 19 $ 49,415 18 $ 40,216 Interest rate swaps Other liabilities, at fair value — $ — 2 $ (75) Interest rate cap Prepaid expenses and other assets, at fair value 1 $ — — $ — _____________________ (1) Includes eight forward interest rate swaps. See footnote (1) to the table immediately above. As of September 30, 2023 and December 31, 2022, prepaid expenses and other assets included a $1.1 million and $8.7 million asset related to the fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option, respectively. The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands): For the Three Months Ended For the Nine Months Ended 2023 2022 2023 2022 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps $ — $ 184 $ — $ 7,152 Realized gain recognized on interest rate swaps (8,551) (1,681) (22,862) (1,717) Unrealized gain on interest rate swaps (1) (3,630) (18,708) (9,273) (54,578) Unrealized loss on interest rate cap 1 — 25 — Net gain on derivative instruments $ (12,180) $ (20,205) $ (32,110) $ (49,143) _____________________ (1) For the three and nine months ended September 30, 2023, unrealized gain on interest rate swaps included a $3.0 million and $7.6 million unrealized loss, respectively, and for the three and nine months ended September 30, 2022, unrealized gain on interest rate swaps included a $2.2 million and $11.6 million unrealized gain, respectively, in each case related to the change in fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option. |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: • Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; • Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and • Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value: Cash and cash equivalents, restricted cash, rent and other receivables, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items. Real estate equity securities: At September 30, 2023, the Company’s investment in the units of the SREIT was presented at fair value on the accompanying consolidated balance sheet. The fair value of the units of the SREIT was based on a quoted price in an active market on a major stock exchange. The Company classifies these inputs as Level 1 inputs. Derivative instruments: The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk. The fair value of interest rate caps (floors) are determined using the market standard methodology of discounting the future expected cash payments (receipts) which would occur if variable interest rates rise above (below) the strike rate of the caps (floors). The variable interest rates used in the calculation of projected payments (receipts) on the cap (floors) are based on an expectation of future interest rates derived from observed market interest rate curves and volatilities. Notes payable: The fair values of the Company’s notes payable are estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of a liability in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. The following were the face values, carrying amounts and fair values of the Company’s notes payable as of September 30, 2023 and December 31, 2022, which carrying amounts generally do not approximate the fair values (in thousands): September 30, 2023 December 31, 2022 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial liabilities: Notes payable $ 1,716,859 $ 1,715,243 $ 1,656,701 $ 1,671,395 $ 1,667,288 $ 1,654,046 Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Low levels of transaction volume for certain financial instruments have made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different. As of September 30, 2023, the Company measured the following assets and liabilities at fair value (in thousands): Fair Value Measurements Using Total Quoted Prices in Significant Other Significant Recurring Basis: Real estate equity securities $ 29,786 $ 29,786 $ — $ — Asset derivatives - interest rate swaps (1) $ 49,415 $ — $ 49,415 $ — Asset derivatives - interest rate caps $ — $ — $ — $ — _____________________ (1) Includes eight forward interest rate swaps. See Note 7, “Derivative Instruments.” Also includes a $1.1 million asset related to the fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option. During the nine months ended September 30, 2023, the Company measured the following asset at fair value on a nonrecurring basis (in thousands): Fair Value Measurements Using Total Quoted Prices in Significant Other Significant Nonrecurring Basis: Impaired real estate (1) $ 71,918 $ — $ — $ 71,918 _____________________ (1) Amount represents the fair value for a real estate asset impacted by an impairment charge during the nine months ended September 30, 2023, as of the date that the fair value measurement was made, which was June 30, 2023. The carrying value for the real estate asset measured at a reporting date other than June 30, 2023 may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company has entered into the Advisory Agreement with the Advisor and the Dealer Manager Agreement with the Dealer Manager. These agreements entitled the Advisor and/or the Dealer Manager to specified fees upon the provision of certain services with regard to the Offering and reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company and entitle the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate investments, the management of those investments, among other services, and the disposition of investments, as well as entitle the Advisor and/or the Dealer Manager to reimbursement of offering costs related to the dividend reinvestment plan incurred by the Advisor and the Dealer Manager on behalf of the Company and certain costs incurred by the Advisor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”) (liquidated May 2023) and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”). As of January 1, 2022, the Company, together with KBS REIT II, KBS Growth & Income REIT, the Dealer Manager, the Advisor and other KBS-affiliated entities, had entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage were shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. In June 2023, the Company renewed its participation in the program, and the program is effective through June 30, 2024. At renewal on June 30, 2022, due to its liquidation, KBS REIT II elected to cease participation in the program and obtained separate insurance coverage. At renewal on June 30, 2023, due to its liquidation, KBS Growth & Income REIT elected to cease participation in the program and obtained separate insurance coverage. Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2023 and 2022, respectively, and any related amounts receivable and payable as of September 30, 2023 and December 31, 2022 (in thousands): Incurred Incurred Receivable as of Payable as of Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, September 30, December 31, 2023 2022 2023 2022 2023 2022 2023 2022 Expensed Asset management fees (1) $ 5,268 $ 5,091 $ 15,542 $ 14,952 $ — $ — $ 15,383 $ 10,191 Reimbursement of operating expenses (2) 79 53 273 245 — 10 294 174 $ 5,347 $ 5,144 $ 15,815 $ 15,197 $ — $ 10 $ 15,677 $ 10,365 _____________________ (1) See “Asset Management Fees” below. (2) Reimbursable operating expenses primarily consists of internal audit personnel costs, accounting software costs and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $30,000 and $86,000 for the three and nine months ended September 30, 2023, respectively, and $48,000 and $150,000 for the three and nine months ended September 30, 2022, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the three and nine months ended September 30, 2023 and 2022, respectively. The Company currently does not reimburse for employee costs in connection with services for which the Advisor earns acquisition or origination fees or disposition fees (other than reimbursement of travel and communication expenses) and other than future payments pursuant to the Bonus Retention Fund (see below, “–Asset Management Fees”), the Company does not reimburse the Advisor for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers and affiliated directors. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company. As of December 31, 2021, the Company was charged $0.8 million by certain vendors for services for which the Company believes it was either overcharged or which were never performed. Additionally, during the year ended December 31, 2022, the Company incurred $1.6 million of legal and accounting costs related to the investigation of this matter. The Advisor agreed to reimburse the Company for any amounts inappropriately charged to the Company for these vendor services, including legal and accounting costs incurred related to the investigation of this matter. As of September 30, 2023, the Company recorded a credit against the liability for asset management fees that were deferred in prior periods of $0.5 million that would have been due by the Company to the Advisor in those periods as a result of the increase in the Company’s net income and MFFO for such periods, and corresponding decrease in expenses, related to the charges that the Company should not have incurred and additionally, the Advisor reimbursed the Company $1.9 million in cash for amounts inappropriately charged to the Company and for legal and accounting costs related to the investigation of this matter. In connection with the Offering, Messrs. Bren, Hall, McMillan and Schreiber agreed to provide additional indemnification to one of the participating broker-dealers. The Company agreed to add supplemental coverage to its directors’ and officers’ insurance coverage to insure Messrs. Bren, Hall, McMillan and Schreiber’s obligations under this indemnification agreement in exchange for reimbursement by Messrs. Bren, Hall, McMillan and Schreiber to the Company for all costs, expenses and premiums related to this supplemental coverage. During the nine months ended September 30, 2023 and 2022, the Advisor incurred $72,000 and $79,000, respectively, for the costs of the supplemental coverage obtained by the Company. Asset Management Fees For asset management services, the Company pays the Advisor a monthly fee. With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property. This amount includes any portion of the investment that was debt financed and is inclusive of acquisition expenses related thereto (but excludes acquisition fees paid or payable to the Advisor). In the case of investments made through joint ventures, the asset management fee is determined based on the Company’s proportionate share of the underlying investment (but excluding acquisition fees paid or payable to the Advisor). 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 (which amount includes any portion of the investment that was debt financed and is inclusive of acquisition or origination expenses related thereto, but is exclusive of acquisition or origination fees paid or payable to the Advisor) and (ii) the outstanding principal amount of such loan or other investment, plus the acquisition or origination expenses related to the acquisition or funding of such investment (excluding acquisition or origination fees paid or payable to the Advisor), as of the time of calculation. The Company currently does not pay any asset management fees in connection with the Company’s investment in the equity securities of the SREIT. Notwithstanding the foregoing, on November 8, 2022, the Company and the Advisor amended the advisory agreement and commencing with asset management fees accruing from October 1, 2022, the Company pays $1.15 million of the monthly asset management fee to the Advisor in cash and the Company deposits the remainder of the monthly asset management fee into an interest bearing account in the Company’s name, which amounts will be paid to the Advisor from such account solely as reimbursement for payments made by the Advisor pursuant to the Advisor’s employee retention program (such account, the “Bonus Retention Fund”). The Bonus Retention Fund was established in order to incentivize and retain key employees of the Advisor. The Company will be deemed to have fully funded the Bonus Retention Fund once the Company has deposited $8.5 million in cash into such account, at which time the monthly asset management fee will be payable in full to the Advisor. The Advisor has acknowledged and agreed that payments by the Advisor to employees under the Advisor’s employee retention program that are reimbursed by the Company from the Bonus Retention Fund will be conditioned on (a) the Company’s liquidation and dissolution; (b) a transaction involving the acquisition, merger, conversion or consolidation, either directly or indirectly, of the Company in which (i) the Company is not the surviving entity and (ii) the Advisor is no longer serving as an advisor or asset manager to the surviving entity in such transaction; (c) the sale or other disposition of all or substantially all of the Company’s assets; (d) the non-renewal or termination of the Advisory Agreement without cause; or (e) the termination of the employee without cause. To the extent the Bonus Retention Fund is not fully paid out to employees as set forth above, the Advisory Agreement provides that the residual amount will be deemed additional Deferred Asset Management Fees (defined below) and be treated in accordance with the provisions for payment of Deferred Asset Management Fees. Two of the Company’s executive officers, Jeff Waldvogel and Stacie Yamane, and one of the Company’s directors, Marc DeLuca, participate in and have been allocated awards under the Advisor’s employee retention program, which awards would only be paid as set forth above. As of September 30, 2023, the Company has deposited $6.9 million of restricted cash into the Bonus Retention Fund and the Company had not made any payments to the Advisor from the Bonus Retention Fund. Prior to amending the Advisory Agreement in November 2022, the prior advisory agreement had provided that with respect to asset management fees accruing from March 1, 2014, the Advisor would defer, without interest, the Company’s obligation to pay asset management fees for any month in which the Company’s modified funds from operations (“MFFO”) for such month, as such term is defined in the practice guideline issued by the Institute for Portfolio Alternatives (“IPA”) in November 2010 and interpreted by the Company, excluding asset management fees, did not exceed the amount of distributions declared by the Company for record dates of that month. The Company remained obligated to pay the Advisor an asset management fee in any month in which the Company’s MFFO, excluding asset management fees, for such month exceeded the amount of distributions declared for the record dates of that month (such excess amount, an “MFFO Surplus”); however, any amount of such asset management fee in excess of the MFFO Surplus was deferred under the prior advisory agreement. If the MFFO Surplus for any month exceeded the amount of the asset management fee payable for such month, any remaining MFFO Surplus was applied to pay any asset management fee amounts previously deferred in accordance with the prior advisory agreement. Pursuant to the current Advisory Agreement, asset management fees accruing from October 1, 2022 are no longer subject to the deferral provision described above. Asset management fees that remained deferred as of September 30, 2022 are “Deferred Asset Management Fees.” As of September 30, 2022, Deferred Asset Management Fees totaled $8.5 million. The Advisory Agreement also provides that the Company remains obligated to pay the Advisor outstanding Deferred Asset Management Fees in any month to the extent that MFFO for such month exceeds the amount of distributions declared for the record dates of that month (such excess amount, a “RMFFO Surplus”); provided however, that any amount of outstanding Deferred Asset Management Fees in excess of the RMFFO Surplus will continue to be deferred. As of September 30, 2023 and December 31, 2022, the Company had accrued $15.4 million and $10.2 million of asset management fees, respectively, of which $8.5 million were Deferred Asset Management Fees as of September 30, 2023 and December 31, 2022, and $6.9 million and $1.7 million were related to asset management fees that were restricted for payment and deposited in the Bonus Retention Fund as of September 30, 2023 and December 31, 2022, respectively. Consistent with the prior advisory agreement, the current Advisory Agreement provides that notwithstanding the foregoing, any and all Deferred Asset Management Fees that are unpaid will become immediately due and payable at such time as the Company’s stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) an 8.0% per year cumulative, noncompounded return on such net invested capital (the “Stockholders’ 8% Return”) and (ii) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to the Company’s share redemption program. The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the Company’s stockholders to have received any minimum return in order for the Advisor to receive Deferred Asset Management Fees. In addition, the current Advisory Agreement provides that any and all Deferred Asset Management Fees that are unpaid will also be immediately due and payable upon the earlier of: (i) a listing of the Company’s shares of common stock on a national securities exchange; (ii) the Company’s liquidation and dissolution; (iii) a transaction involving the acquisition, merger, conversion or consolidation, either directly or indirectly, of the Company in which (y) the Company is not the surviving entity and (z) the Advisor is no longer serving as an advisor or asset manager to the surviving entity in such transaction; and (iv) the sale or other disposition of all or substantially all of the Company’s assets. The Advisory Agreement has a term expiring on September 27, 2024 but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of the Company and the Advisor. The Advisory Agreement may be terminated (i) upon 60 days written notice without cause or penalty by either the Company (acting through the conflicts committee) or the Advisor or (ii) immediately by the Company for cause or upon the bankruptcy of the Advisor. If the Advisory Agreement is terminated without cause, then the Advisor will be entitled to receive from the Company any residual amount of the Bonus Retention Fund deemed to be additional Deferred Asset Management Fees, provided that upon such non-renewal or termination the Company does not retain an advisor in which the Advisor or its affiliates have a majority interest. Upon termination of the Advisory Agreement, all unpaid Deferred Asset Management Fees will automatically be forfeited by the Advisor, and if the Advisory Agreement is terminated for cause, any residual amount of the Bonus Retention Fund deemed to be additional Deferred Asset Management Fees will also automatically be forfeited by the Advisor. Lease to Affiliate On May 29, 2015, the indirect wholly owned subsidiary (the “Lessor”) of the Company that owns 3003 Washington Boulevard entered into a lease with an affiliate of the Advisor (the “Lessee”) for 5,046 rentable square feet, or approximately 2.4% of the total rentable square feet, at 3003 Washington Boulevard. The lease commenced on October 1, 2015 and was amended on March 14, 2019 (the “Amended Lease”) to extend the lease period commencing on September 1, 2019 and terminating on August 31, 2024 and set the annual base rent during the extension period. The annualized base rent from the commencement of the Amended Lease is approximately $0.3 million, and the average annual rental rate (net of rental abatements) over the term of the Amended Lease through its termination is $62.55 per square foot. During the three and nine months ended September 30, 2023, the Company recognized $83,000 and $248,000 of revenue related to this lease, respectively. During the three and nine months ended September 30, 2022, the Company recognized $82,000 and $247,000 of revenue related to this lease, respectively. Prior to their approval of the lease and the Amended Lease, the Company’s conflicts committee and board of directors determined the lease to be fair and reasonable to the Company. Portfolio Sale On July 18, 2019, the Company sold the Singapore Portfolio to the SREIT, which is affiliated with Charles J. Schreiber, Jr., a director and executive officer of the Company. See Note 5, “Real Estate Equity Securities” for information related to the Company’s investment in the SREIT. The SREIT is externally managed by an entity (the “Manager”) in which Charles J. Schreiber, Jr. currently holds an indirect ownership interest. Mr. Schreiber is also a former director of the Manager. The SREIT pays the Manager an annual base fee of 10% of annual distributable income and an annual performance fee of 25% of the increase in distributions per unit of the SREIT from the preceding year. For acquisitions other than the Singapore Portfolio, the SREIT pays the Manager an acquisition fee of 1% of the acquisition price. The SREIT will also pay the Manager a divestment fee of 0.5% of the sale price of any real estate sold and a development management fee of 3% of the total project costs incurred for development projects. A portion of the fees paid to the Manager are paid to KBS Realty Advisors LLC, an entity controlled by Mr. Schreiber, for sub-advisory services. The Schreiber Trust, a trust whose beneficiaries are Charles J. Schreiber, Jr. and his family members, and the Linda Bren 2017 Trust also acquired units in the SREIT. The Schreiber Trust agreed it will not sell any portion of its units in the SREIT unless it has received the consent of the Company’s conflicts committee. The Linda Bren 2017 Trust has agreed it will not sell $5.0 million of its investment in the SREIT unless it has received the consent of the Company’s conflicts committee. During the nine months ended September 30, 2023 and 2022, no other business transactions occurred between the Company and KBS REIT II, KBS Growth & Income REIT, the Advisor, the Dealer Manager or other KBS-affiliated entities. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Economic Dependency The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide the respective services, the Company will be required to obtain such services from other sources. Legal Matters From time to time, the Company may be party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. Environmental |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Accenture Tower Revolving Loan On November 2, 2020, the Company, through an indirect wholly owned subsidiary (the “Accenture Tower Borrower”), entered into a three-year loan facility with U.S. Bank, National Association, as administrative agent, joint lead arranger and co-book runner; Bank of America, N.A., as syndication agent, joint lead arranger and co-book runner; and Deutsche Pfandbriefbank AG (together, with the National Bank of Kuwait S.A.K.P. Grand Caymans Branch (which was subsequently added as a lender), the “Accenture Tower Lenders”), for a committed amount of up to $375.0 million (as amended and modified, the “Accenture Tower Revolving Loan”), of which $281.3 million was term debt and $93.7 million was revolving debt. The Accenture Tower Revolving Loan is secured by Accenture Tower. The Accenture Tower Revolving Loan had a maturity date of November 2, 2023, with two 12-month extension options, subject to certain terms and conditions contained in the loan documents. On November 2, 2023, the Company, through the Accenture Tower Borrower, entered into a second modification agreement with the Accenture Tower Lenders to extend the initial maturity date of the Accenture Tower Revolving Loan to December 4, 2023. The two 12-month extension options pursuant to the loan agreement remain available from the original maturity date of November 2, 2023, in each case subject to certain terms and conditions contained in the loan documents. As of November 2, 2023, the outstanding principal balance of the Accenture Tower Revolving Loan consisted of $281.3 million of term debt and the $93.7 million of revolving debt was undrawn. Pursuant to the second modification agreement, the Accenture Tower Borrower shall have no right to request and the Accenture Tower Lenders shall have no obligation to disburse, any advances of the revolving debt until the Accenture Tower Borrower successfully extends the term of the Accenture Tower Revolving Loan by satisfying the terms and conditions of the first extension option. The Company continues to have discussions with the Accenture Tower Lenders regarding potential modifications to the Accenture Tower Revolving Loan, which would include, among other modifications, an extension of the maturity date, but the Company can give no assurance that such modification will be completed. Amended and Restated Portfolio Loan Facility On November 3, 2021, the Company, through indirect wholly owned subsidiaries (each a “Borrower” and together, the “Borrowers”), entered into a two-year loan agreement with Bank of America, N.A., as administrative agent; BofA Securities, Inc., Wells Fargo Securities, LLC and Capital One, National Association as joint lead arrangers and joint book runners; Wells Fargo Bank, N.A., as syndication agent, and each of the financial institutions a signatory thereto, for an amount up to $613.2 million, of which $459.9 million was term debt and $153.3 million was revolving debt (the “Amended and Restated Portfolio Loan Facility”). The current lenders under the Amended and Restated Portfolio Loan Facility are Bank of America, N.A.; Wells Fargo Bank, National Association; U.S. Bank, National Association; Capital One, National Association; PNC Bank, National Association; Regions Bank; and Zions Bankcorporation, N.A., DBA California Bank & Trust (together, the “Amended and Restated Portfolio Loan Facility Lenders”). The Amended and Restated Portfolio Loan Facility is secured by 60 South Sixth, Preston Commons, Sterling Plaza, Towers at Emeryville, Ten Almaden and Town Center. The Amended and Restated Portfolio Loan Facility had a maturity date of November 3, 2023, with one 12-month extension option, subject to certain terms and conditions as described in the loan documents. As of November 3, 2023, the Company did not meet the conditions necessary to exercise the one-year extension option. On November 8, 2023, the Company, through the Borrowers, entered into a loan modification and extension agreement with the Amended and Restated Portfolio Loan Facility Lenders, effective as of November 3, 2023 (the “Extension Agreement”). Pursuant to the Extension Agreement, the maturity date of Amended and Restated Portfolio Loan Facility was extended to November 17, 2023 with no additional options to extend the maturity date. As of November 3, 2023, the aggregate outstanding principal balance of the Amended and Restated Portfolio Loan Facility was approximately $606.3 million. The unadvanced portion of the commitment of approximately $6.9 million was permanently cancelled. The Company continues to have discussions with the Amended and Restated Portfolio Loan Facility Lenders regarding a potential modification of the Amended and Restated Portfolio Loan Facility which would include, among other modifications, an extension of the maturity date, but the Company can give no assurance that such modification will be completed. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company, REIT Holdings III, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and condensed notes. Actual results could materially differ from those estimates. |
Per Share Data | Basic net income (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three and nine months ended September 30, 2023 and 2022, respectively. |
Segments | The Company has invested in core real estate properties and real estate-related investments with the goal of acquiring a portfolio of income-producing investments. The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other. Accordingly, the Company aggregated its investments in real estate properties into one reportable business segment. |
Square Footage, Occupancy and Other Measures | Square footage, occupancy, number of tenants and other measures, including annualized base rent and annualized base rent per square foot, used to describe real estate investments included in these condensed notes to the consolidated financial statements are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. |
Recently Issued Accounting Standards Update | In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”) to provide temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Modified contracts that meet the following criteria are eligible for relief from the modification accounting requirements under GAAP: (1) the contract references LIBOR or another rate that is expected to be discontinued due to reference rate reform, (2) the modified terms directly replace or have the potential to replace the reference rate that is expected to be discontinued due to reference rate reform, and (3) any contemporaneous changes to other terms (i.e., those that do not directly replace or have the potential to replace the reference rate) that change or have the potential to change the amount and timing of contractual cash flows must be related to the replacement of the reference rate. For a contract that meets the criteria, the guidance generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. In addition, ASU No. 2020-04 provides various optional expedients for hedging relationships affected by reference rate reform, if certain criteria are met. The amendments in ASU No. 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06, to extend the temporary accounting relief provided under ASU No. 2020-04 to December 31, 2024. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments in this update must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. An entity may elect to apply the amendments in ASU No. 2020-04 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. |
Fair Value Measurement | Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: • Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; • Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and |
REAL ESTATE (Tables)
REAL ESTATE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments | The following table summarizes the Company’s investments in real estate as of September 30, 2023 (in thousands): Property Date Acquired City State Property Type Total Real Estate, at Cost (1) Accumulated Depreciation and Amortization (1) Total Real Estate, Net (1) Town Center 03/27/2012 Plano TX Office $ 141,199 $ (50,707) $ 90,492 McEwen Building 04/30/2012 Franklin TN Office 40,012 (11,478) 28,534 Gateway Tech Center 05/09/2012 Salt Lake City UT Office 36,048 (11,787) 24,261 60 South Sixth 01/31/2013 Minneapolis MN Office 183,897 (55,896) 128,001 Preston Commons 06/19/2013 Dallas TX Office 144,845 (40,325) 104,520 Sterling Plaza 06/19/2013 Dallas TX Office 94,041 (29,555) 64,486 201 Spear Street 12/03/2013 San Francisco CA Office 70,345 (852) 69,493 Accenture Tower 12/16/2013 Chicago IL Office 563,307 (157,722) 405,585 Ten Almaden 12/05/2014 San Jose CA Office 131,365 (39,368) 91,997 Towers at Emeryville 12/23/2014 Emeryville CA Office 222,916 (63,592) 159,324 3003 Washington Boulevard 12/30/2014 Arlington VA Office 154,916 (44,711) 110,205 Park Place Village 06/18/2015 Leawood KS Office/Retail 85,900 (12,712) 73,188 201 17th Street 06/23/2015 Atlanta GA Office 104,917 (32,520) 72,397 515 Congress 08/31/2015 Austin TX Office 135,260 (34,263) 100,997 The Almaden 09/23/2015 San Jose CA Office 195,222 (49,852) 145,370 3001 Washington Boulevard 11/06/2015 Arlington VA Office 60,971 (14,241) 46,730 Carillon 01/15/2016 Charlotte NC Office 175,310 (42,021) 133,289 $ 2,540,471 $ (691,602) $ 1,848,869 _____________________ (1) Amounts presented are net of impairment charges and write-offs of fully depreciated/amortized assets. |
Schedule of Concentration of Risk, by Assets | As of September 30, 2023, the following property represented more than 10% of the Company’s total assets: Property Location Rentable Square Feet Total Real Estate, Net Percentage of Total Assets Annualized Base Rent (in thousands) (1) Average Annualized Base Rent per sq. ft. Occupancy Accenture Tower Chicago, IL 1,457,724 $ 405,585 18.9 % $ 37,580 $ 27.65 93.2 % ___________________ |
Schedule of Future Minimum Rental Income for Company's Properties | As of September 30, 2023, the future minimum rental income from the Company’s properties under its non-cancelable operating leases was as follows (in thousands): October 1, 2023 through December 31, 2023 $ 51,426 2024 199,479 2025 185,827 2026 168,313 2027 142,329 Thereafter 559,908 $ 1,307,282 |
Schedule of Concentration of Risk, by Risk Factor | The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows: Industry Number of Tenants Annualized Base Rent (1) (in thousands) Percentage of Finance 107 $ 38,108 18.3 % Legal Services 53 24,032 11.5 % $ 62,140 29.8 % _____________________ |
TENANT ORIGINATION AND ABSORP_2
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |
Schedule of Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities | As of September 30, 2023 and December 31, 2022, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands): Tenant Origination and Above-Market Below-Market September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Cost $ 38,670 $ 42,555 $ 904 $ 983 $ (7,534) $ (8,384) Accumulated Amortization (28,635) (29,524) (697) (721) 6,271 6,473 Net Amount $ 10,035 $ 13,031 $ 207 $ 262 $ (1,263) $ (1,911) |
Schedule of Amortization of Tenant Origination and Absorption Costs, Above-Market Leases and Below-Market Lease Liabilities | Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands): Tenant Origination and Above-Market Below-Market For the Three Months Ended For the Three Months Ended For the Three Months Ended 2023 2022 2023 2022 2023 2022 Amortization $ (947) $ (1,332) $ (18) $ (21) $ 201 $ 284 Tenant Origination and Above-Market Below-Market For the Nine Months Ended For the Nine Months Ended For the Nine Months Ended 2023 2022 2023 2022 2023 2022 Amortization $ (2,996) $ (4,570) $ (55) $ (66) $ 648 $ 1,116 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Payable [Abstract] | |
Schedule of Long-term Debt Instruments | As of September 30, 2023 and December 31, 2022, the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of September 30, 2023 Book Value as of December 31, 2022 Contractual Interest Rate as of September 30, 2023 (1) Effective Interest Rate as of September 30, 2023 (1) Payment Type Maturity Date (2) The Almaden Mortgage Loan (3) $ 123,000 $ 123,000 3.65% 3.65% Interest Only 12/01/2023 201 Spear Street Mortgage Loan (4) 125,000 125,000 One-month Term SOFR + 1.45% 6.77% Interest Only 01/05/2024 Carillon Mortgage Loan (5) 88,800 88,800 One-month Term SOFR +1.50% 6.82% Interest Only 04/11/2024 Modified Portfolio Revolving Loan Facility (6) 249,145 249,145 One-month Term SOFR + 1.60% 6.92% Interest Only 03/01/2024 3001 & 3003 Washington Mortgage Loan 140,876 142,232 One-month Term SOFR + 0.10% + 1.45% 6.87% Principal & Interest 06/01/2024 Accenture Tower Revolving Loan (7) 281,250 281,250 One-month Term SOFR + 2.35% 7.67% Interest Only 11/02/2023 Unsecured Credit Facility (8) 37,500 37,500 One-month Term SOFR + 2.20% 7.52% Interest Only 07/30/2024 Amended and Restated Portfolio Loan Facility (9) 606,288 559,468 One-month BSBY (10) +1.80% 7.19% Interest Only 11/03/2023 Park Place Village Mortgage Loan (11) 65,000 65,000 One-month Term SOFR + 1.95% 7.27% Interest Only 08/31/2025 Total notes payable principal outstanding $ 1,716,859 $ 1,671,395 Deferred financing costs, net (1,616) (4,107) Total Notes Payable, net $ 1,715,243 $ 1,667,288 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2023. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2023, consisting of the contractual interest rate and using interest rate indices as of September 30, 2023, where applicable. For information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.” (2) Represents the maturity date as of September 30, 2023; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown. See below. (3) As of September 30, 2023, The Almaden Mortgage Loan has two 12-month extension options, subject to certain terms, conditions and fees as described in the loan documents. The Almaden Mortgage Loan bears interest at a fixed rate of 3.65% for the initial term of the loan and a floating rate of 350 basis points over one-month LIBOR during the extension options, subject to a minimum interest rate of 3.65%. Pursuant to the loan documents, the Almaden Mortgage Loan includes provisions for a LIBOR successor rate in the event LIBOR is unascertainable or ceases to be available. (4) As a result of the borrower’s failure to pay in full the entire November 2023 monthly interest payment under the 201 Spear Street Mortgage Loan on the due date, on November 9, 2023, the 201 Spear Street Mortgage Loan lender notified the borrower that if such amount is not paid by November 14, 2023, then the borrower will be in default under the loan. The borrower does not expect to make the full interest payment by this date, and as a result, will likely default on the loan. If the borrower defaults, interest on the loan will accrue at the default rate and additional daily or late charges will apply. (5) As of September 30, 2023, the borrowing capacity under the Carillon Mortgage Loan was $111.0 million, of which $88.8 million is term debt and $22.2 million is revolving debt. As of September 30, 2023, the outstanding balance under the loan consisted of $88.8 million of term debt. As of September 30, 2023, $22.2 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. As of September 30, 2023, the Carillon Mortgage Loan has one 24-month extension option, subject to certain terms and conditions contained in the loan documents. (6) As of September 30, 2023, the Modified Portfolio Revolving Loan Facility was secured by 515 Congress, the McEwen Building, Gateway Tech Center and 201 17th Street. As of September 30, 2023, the borrowing capacity under the Modified Portfolio Revolving Loan Facility was $249.2 million, of which $124.6 million is term debt and $124.6 million is revolving debt. As of September 30, 2023, the outstanding balance under the loan consisted of $124.6 million of term debt and $124.6 million of revolving debt. As of September 30, 2023, the Modified Portfolio Revolving Loan Facility has one 12-month extension option, subject to certain terms, conditions and fees as described in the loan documents. (7) As of September 30, 2023, the outstanding balance under the Accenture Tower Revolving Loan consisted of $281.3 million of term debt and an additional $93.7 million of revolving debt remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. As of September 30, 2023, the Accenture Tower Revolving Loan has two 12-month extension options, subject to certain terms and conditions contained in the loan documents. Subsequent to September 30, 2023, the Company entered into a second modification agreement with the lenders under the Accenture Tower Revolving Loan and extended the maturity date to December 4, 2023, among other modifications. See Note 11, “Subsequent Events – Accenture Tower Revolving Loan.” (8) As of September 30, 2023, the borrowing capacity under the Unsecured Credit Facility was $75.0 million, of which $37.5 million is term debt and $37.5 million is revolving debt. As of September 30, 2023, the outstanding balance under the Unsecured Credit Facility consisted of $37.5 million of term debt and an additional $37.5 million of revolving debt remained available for future disbursements, subject to certain terms and conditions contained in the loan documents. (9) As of September 30, 2023, the Amended and Restated Portfolio Loan Facility was secured by 60 South Sixth, Preston Commons, Sterling Plaza, Towers at Emeryville, Ten Almaden and Town Center. As of September 30, 2023, the borrowing capacity under the Amended and Restated Portfolio Loan Facility was $613.2 million, of which $459.9 million is term debt and $153.3 million is revolving debt. As of September 30, 2023, the outstanding balance under the loan consisted of $459.9 million of term debt and $146.4 million of revolving debt. As of September 30, 2023, the Company determined it did not meet the debt service coverage ratio required under the Amended and Restated Portfolio Loan Facility. Pursuant to the terms of the Amended and Restated Portfolio Loan Facility, the Company is required to notify the lenders by November 29, 2023. At such time, the Company would have 30 days from receipt of notice from the lenders to make a principal paydown of up to $29.7 million. Subsequent to September 30, 2023, the Company entered into a loan modification and extension agreement with the lenders under the Amended and Restated Portfolio Loan Facility and extended the maturity date to November 17, 2023, among other modifications. See Note 11, “Subsequent Events – Amended and Restated Portfolio Loan Facility.” (10) Bloomberg Short-Term Bank Yield Index (“BSBY”). (11) As of September 30, 2023, the Park Place Village Mortgage Loan has two 12-month extension options, subject to certain terms, conditions and fees as described in the loan documents. Monthly payments are interest only during the initial term and the first extension option. During the second extension option, certain future monthly payments due under the Park Place Village Mortgage Loan also include amortizing principal payments. |
Schedule of Maturities Including Principal Amortization Payments, for All Notes Payable Outstanding | The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of September 30, 2023 (in thousands): October 1, 2023 through December 31, 2023 $ 1,011,004 2024 640,855 2025 65,000 2026 — 2027 — Thereafter — $ 1,716,859 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amount and Other Information Related to the Interest Rate Swaps and Interest Rate Cap | The following table summarizes the notional amount and other information related to the Company’s interest rate swaps and interest rate cap as of September 30, 2023 and December 31, 2022. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands): September 30, 2023 December 31, 2022 Weighted-Average Fix Pay Rate Weighted-Average Remaining Term in Years Derivative Instruments Number of Instruments Notional Amount Number of Instruments Notional Amount Reference Rate as of September 30, 2023 Derivative instruments not designated as hedging instruments Interest rate swaps (1) 19 $ 1,646,250 20 $ 1,619,190 Fallback SOFR (2) / Fixed at 0.70% - 1.40% One-month Term SOFR/ Fixed at 2.38% - 3.92% 2.4% 1.9 Interest rate cap 1 $ 125,000 — $ — One-month Term SOFR at 6.49% 6.5% 0.3 _____________________ (1) Includes eight forward interest rate swaps: (i) four forward interest rate swaps in the total amount of $200.0 million became effective on November 1, 2023 and mature on February 1, 2026, (ii) one forward interest rate swap in the amount of $100.0 million became effective on November 1, 2023 and matures on May 1, 2026, (iii) one forward interest rate swap in the amount of $100.0 million became effective on November 1, 2023 and matures on July 1, 2026, (iv) one forward interest rate swap in the amount of $100.0 million became effective on November 1, 2023 and matures on November 1, 2026 and (v) one forward interest rate swap in the amount of $100.0 million will become effective on December 1, 2023 and will mature on November 1, 2026. (2) Upon cessation of one-month LIBOR on June 30, 2023, eight of the Company’s interest rate swaps which bore interest at one-month LIBOR were automatically converted to a fallback rate (“Fallback SOFR”) plus a 11.448 basis point adjustment. As of September 30, 2023, the Company had seven interest rate swaps which had been converted to Fallback SOFR with maturity dates between November 1, 2023 and January 1, 2025. |
Schedule of Derivative Instruments as well as their Classification on the Consolidated Balance Sheets | The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2023 and December 31, 2022 (dollars in thousands): September 30, 2023 December 31, 2022 Derivative Instruments Balance Sheet Location Number of Instruments Fair Value Number of Instruments Fair Value Derivative instruments not designated as hedging instruments Interest rate swaps Prepaid expenses and other assets, at fair value (1) 19 $ 49,415 18 $ 40,216 Interest rate swaps Other liabilities, at fair value — $ — 2 $ (75) Interest rate cap Prepaid expenses and other assets, at fair value 1 $ — — $ — _____________________ (1) Includes eight forward interest rate swaps. See footnote (1) to the table immediately above. As of September 30, 2023 and December 31, 2022, prepaid expenses and other assets included a $1.1 million and $8.7 million asset related to the fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option, respectively. |
Schedule of Derivative Instruments in Consolidated Statements of Operations | The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands): For the Three Months Ended For the Nine Months Ended 2023 2022 2023 2022 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps $ — $ 184 $ — $ 7,152 Realized gain recognized on interest rate swaps (8,551) (1,681) (22,862) (1,717) Unrealized gain on interest rate swaps (1) (3,630) (18,708) (9,273) (54,578) Unrealized loss on interest rate cap 1 — 25 — Net gain on derivative instruments $ (12,180) $ (20,205) $ (32,110) $ (49,143) _____________________ (1) For the three and nine months ended September 30, 2023, unrealized gain on interest rate swaps included a $3.0 million and $7.6 million unrealized loss, respectively, and for the three and nine months ended September 30, 2022, unrealized gain on interest rate swaps included a $2.2 million and $11.6 million unrealized gain, respectively, in each case related to the change in fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option. |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Face Value, Carrying Amounts and Fair Value | The following were the face values, carrying amounts and fair values of the Company’s notes payable as of September 30, 2023 and December 31, 2022, which carrying amounts generally do not approximate the fair values (in thousands): September 30, 2023 December 31, 2022 Face Value Carrying Amount Fair Value Face Value Carrying Amount Fair Value Financial liabilities: Notes payable $ 1,716,859 $ 1,715,243 $ 1,656,701 $ 1,671,395 $ 1,667,288 $ 1,654,046 |
Schedule of Fair Value, Assets Measured on Recurring and Nonrecurring Basis | As of September 30, 2023, the Company measured the following assets and liabilities at fair value (in thousands): Fair Value Measurements Using Total Quoted Prices in Significant Other Significant Recurring Basis: Real estate equity securities $ 29,786 $ 29,786 $ — $ — Asset derivatives - interest rate swaps (1) $ 49,415 $ — $ 49,415 $ — Asset derivatives - interest rate caps $ — $ — $ — $ — _____________________ (1) Includes eight forward interest rate swaps. See Note 7, “Derivative Instruments.” Also includes a $1.1 million asset related to the fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option. During the nine months ended September 30, 2023, the Company measured the following asset at fair value on a nonrecurring basis (in thousands): Fair Value Measurements Using Total Quoted Prices in Significant Other Significant Nonrecurring Basis: Impaired real estate (1) $ 71,918 $ — $ — $ 71,918 _____________________ |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Costs | Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2023 and 2022, respectively, and any related amounts receivable and payable as of September 30, 2023 and December 31, 2022 (in thousands): Incurred Incurred Receivable as of Payable as of Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, September 30, December 31, 2023 2022 2023 2022 2023 2022 2023 2022 Expensed Asset management fees (1) $ 5,268 $ 5,091 $ 15,542 $ 14,952 $ — $ — $ 15,383 $ 10,191 Reimbursement of operating expenses (2) 79 53 273 245 — 10 294 174 $ 5,347 $ 5,144 $ 15,815 $ 15,197 $ — $ 10 $ 15,677 $ 10,365 _____________________ (1) See “Asset Management Fees” below. (2) Reimbursable operating expenses primarily consists of internal audit personnel costs, accounting software costs and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $30,000 and $86,000 for the three and nine months ended September 30, 2023, respectively, and $48,000 and $150,000 for the three and nine months ended September 30, 2022, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the three and nine months ended September 30, 2023 and 2022, respectively. The Company currently does not reimburse for employee costs in connection with services for which the Advisor earns acquisition or origination fees or disposition fees (other than reimbursement of travel and communication expenses) and other than future payments pursuant to the Bonus Retention Fund (see below, “–Asset Management Fees”), the Company does not reimburse the Advisor for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers and affiliated directors. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company. As of December 31, 2021, the Company was charged $0.8 million by certain vendors for services for which the Company believes it was either overcharged or which were never performed. Additionally, during the year ended December 31, 2022, the Company incurred $1.6 million of legal and accounting costs related to the investigation of this matter. The Advisor agreed to reimburse the Company for any amounts inappropriately charged to the Company for these vendor services, including legal and accounting costs incurred related to the investigation of this matter. As of September 30, 2023, the Company recorded a credit against the liability for asset management fees that were deferred in prior periods of $0.5 million that would have been due by the Company to the Advisor in those periods as a result of the increase in the Company’s net income and MFFO for such periods, and corresponding decrease in expenses, related to the charges that the Company should not have incurred and additionally, the Advisor reimbursed the Company $1.9 million in cash for amounts inappropriately charged to the Company and for legal and accounting costs related to the investigation of this matter. |
ORGANIZATION (Details)
ORGANIZATION (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 55 Months Ended | 150 Months Ended | |||||
Oct. 03, 2014 USD ($) shares | Sep. 30, 2023 USD ($) property shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2023 USD ($) property shares | Sep. 30, 2022 USD ($) shares | May 29, 2015 USD ($) shares | Sep. 30, 2023 USD ($) property shares | Dec. 31, 2022 shares | Jan. 26, 2010 $ / shares shares | |
Organizational Structure [Line Items] | |||||||||
Common stock, shares issued (in shares) | 148,752,927 | 148,752,927 | 148,752,927 | 147,964,954 | |||||
Issuance of common stock, value | $ | $ 2,183 | $ 8,992 | $ 16,248 | $ 24,397 | |||||
Redemptions of common stock, value | $ | $ 3,307 | $ 9,946 | $ 10,012 | $ 86,567 | |||||
Private Placement | |||||||||
Organizational Structure [Line Items] | |||||||||
Issuance of common stock (in shares) | 258,462 | ||||||||
Issuance of common stock, value | $ | $ 2,400 | ||||||||
Office | |||||||||
Organizational Structure [Line Items] | |||||||||
Number of real estate properties | property | 16 | 16 | 16 | ||||||
Mixed-use Office/Retail Property | |||||||||
Organizational Structure [Line Items] | |||||||||
Number of real estate properties | property | 1 | 1 | 1 | ||||||
Common Stock | |||||||||
Organizational Structure [Line Items] | |||||||||
Issuance of common stock (in shares) | 255,509 | 878,188 | 1,900,374 | 2,382,581 | 169,006,162 | ||||
Issuance of common stock, value | $ | $ 3 | $ 9 | $ 19 | $ 24 | $ 1,700,000 | ||||
Shares of common stock sold under dividend reinvestment plan (in shares) | 46,154,757 | ||||||||
Shares of common stock sold under dividend reinvestment plan, value | $ | $ 471,300 | ||||||||
Redemptions of common stock (in shares) | 367,467 | 948,155 | 1,112,401 | 8,329,738 | 74,407,668 | ||||
Redemptions of common stock, value | $ | $ 5 | $ 9 | $ 12 | $ 83 | $ 787,100 | ||||
KBS Capital Advisors LLC | |||||||||
Organizational Structure [Line Items] | |||||||||
Common stock, shares issued (in shares) | 20,000 | ||||||||
Common stock, purchase price per share (in dollars per share) | $ / shares | $ 10 | ||||||||
KBS Capital Advisors LLC | Common Stock | |||||||||
Organizational Structure [Line Items] | |||||||||
Shares held by affiliate (in shares) | 20,857 | 20,857 | 20,857 | ||||||
Operating Partnership | |||||||||
Organizational Structure [Line Items] | |||||||||
Partnership interest in operating partnership | 0.10% | ||||||||
Partnership interest in the operating partnership and is its sole limited partner | 99.90% |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Billions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 $ / shares shares | Sep. 30, 2023 USD ($) segment $ / shares shares | Sep. 30, 2022 $ / shares shares | |
Accounting Policies [Abstract] | ||||
Debt obligations coming due over the 12-month period | $ | $ 1.7 | $ 1.7 | ||
Potentially dilutive securities (in shares) | shares | 0 | 0 | 0 | 0 |
Distributions declared per share (in dollars per share) | $ 0 | $ 0.150 | $ 0.230 | $ 0.448 |
Common share, distribution rate for share per month, declared (in dollars per share) | $ 0.03833333 | $ 0.04983333 | ||
Number of reportable segments | segment | 1 |
REAL ESTATE - Additional Inform
REAL ESTATE - Additional Information (Details) ft² in Millions | Sep. 30, 2023 ft² property |
Real Estate Properties [Line Items] | |
Rentable square feet | ft² | 7.3 |
Percentage of portfolio occupied | 83% |
Office | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 16 |
Mixed-use Office/Retail Property | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 1 |
REAL ESTATE - Schedule of Real
REAL ESTATE - Schedule of Real Estate Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Real Estate Properties [Line Items] | ||
Total real estate at cost | $ 2,540,471 | $ 2,568,352 |
Accumulated depreciation and amortization | (691,602) | (656,401) |
Total real estate, net | 1,848,869 | $ 1,911,951 |
Town Center | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 141,199 | |
Accumulated depreciation and amortization | (50,707) | |
Total real estate, net | 90,492 | |
McEwen Building | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 40,012 | |
Accumulated depreciation and amortization | (11,478) | |
Total real estate, net | 28,534 | |
Gateway Tech Center | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 36,048 | |
Accumulated depreciation and amortization | (11,787) | |
Total real estate, net | 24,261 | |
60 South Sixth | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 183,897 | |
Accumulated depreciation and amortization | (55,896) | |
Total real estate, net | 128,001 | |
Preston Commons | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 144,845 | |
Accumulated depreciation and amortization | (40,325) | |
Total real estate, net | 104,520 | |
Sterling Plaza | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 94,041 | |
Accumulated depreciation and amortization | (29,555) | |
Total real estate, net | 64,486 | |
201 Spear Street | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 70,345 | |
Accumulated depreciation and amortization | (852) | |
Total real estate, net | 69,493 | |
Accenture Tower | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 563,307 | |
Accumulated depreciation and amortization | (157,722) | |
Total real estate, net | 405,585 | |
Ten Almaden | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 131,365 | |
Accumulated depreciation and amortization | (39,368) | |
Total real estate, net | 91,997 | |
Towers at Emeryville | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 222,916 | |
Accumulated depreciation and amortization | (63,592) | |
Total real estate, net | 159,324 | |
3003 Washington Boulevard | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 154,916 | |
Accumulated depreciation and amortization | (44,711) | |
Total real estate, net | 110,205 | |
Park Place Village | Office/Retail | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 85,900 | |
Accumulated depreciation and amortization | (12,712) | |
Total real estate, net | 73,188 | |
201 17th Street | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 104,917 | |
Accumulated depreciation and amortization | (32,520) | |
Total real estate, net | 72,397 | |
515 Congress | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 135,260 | |
Accumulated depreciation and amortization | (34,263) | |
Total real estate, net | 100,997 | |
The Almaden | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 195,222 | |
Accumulated depreciation and amortization | (49,852) | |
Total real estate, net | 145,370 | |
3001 Washington Boulevard | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 60,971 | |
Accumulated depreciation and amortization | (14,241) | |
Total real estate, net | 46,730 | |
Carillon | Office | ||
Real Estate Properties [Line Items] | ||
Total real estate at cost | 175,310 | |
Accumulated depreciation and amortization | (42,021) | |
Total real estate, net | $ 133,289 |
REAL ESTATE - Schedule of Conce
REAL ESTATE - Schedule of Concentration of Risk, by Assets (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 USD ($) ft² $ / ft² | Dec. 31, 2022 USD ($) | |
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 7,300,000 | |
Total Real Estate, Net | $ 1,848,869 | $ 1,911,951 |
Annualized Base Rent | $ 62,140 | |
Occupancy | 83% | |
Accenture Tower | Assets, Total | ||
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 1,457,724 | |
Total Real Estate, Net | $ 405,585 | |
Annualized Base Rent | $ 37,580 | |
Average Annualized Base Rent per sq. ft. | $ / ft² | 27.65 | |
Occupancy | 93.20% | |
Accenture Tower | Assets, Total | Customer Concentration Risk | ||
Real Estate Properties [Line Items] | ||
Percentage of Total Assets | 18.90% |
REAL ESTATE - Operating Leases
REAL ESTATE - Operating Leases (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 USD ($) tenant | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Operating Leased Assets [Line Items] | |||
Deferred rent recognized | $ 5,842 | $ 7,230 | |
Deferred rent receivables | 93,900 | $ 89,900 | |
Incentive to lessee | $ 16,900 | 17,300 | |
Number of tenants | tenant | 530 | ||
Other liabilities, at fair value | |||
Operating Leased Assets [Line Items] | |||
Security deposit liability | $ 10,000 | $ 9,300 | |
Maximum | |||
Operating Leased Assets [Line Items] | |||
Operating leases, term of contract | 15 years 9 months 18 days | ||
Weighted Average | |||
Operating Leased Assets [Line Items] | |||
Operating leases, term of contract | 5 years 8 months 12 days |
REAL ESTATE - Schedule of Futur
REAL ESTATE - Schedule of Future Minimum Rental Income for Company's Properties (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Real Estate [Abstract] | |
October 1, 2023 through December 31, 2023 | $ 51,426 |
2024 | 199,479 |
2025 | 185,827 |
2026 | 168,313 |
2027 | 142,329 |
Thereafter | 559,908 |
Future minimum rental income | $ 1,307,282 |
REAL ESTATE - Schedule of Con_2
REAL ESTATE - Schedule of Concentration of Risk, by Risk Factor (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) tenant | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 530 |
Annualized base rent | $ | $ 62,140 |
Industry | Customer Concentration Risk | Revenue | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 29.80% |
Finance | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 107 |
Annualized base rent | $ | $ 38,108 |
Finance | Customer Concentration Risk | Revenue | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 18.30% |
Legal Services | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 53 |
Annualized base rent | $ | $ 24,032 |
Legal Services | Customer Concentration Risk | Revenue | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 11.50% |
REAL ESTATE - Geographic Concen
REAL ESTATE - Geographic Concentration Risk (Details) - Assets, Total - Geographic Concentration Risk | 9 Months Ended |
Sep. 30, 2023 | |
California | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 21.70% |
Illinois | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 18.90% |
Texas | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 16.80% |
REAL ESTATE - Impairment of Rea
REAL ESTATE - Impairment of Real Estate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Real Estate [Abstract] | ||||
Impairment charges on real estate | $ 0 | $ 0 | $ 45,459 | $ 0 |
Occupancy of real estate (as a percentage) | 64.50% | 64.50% |
TENANT ORIGINATION AND ABSORP_3
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |||||
Tenant origination and absorption costs, gross | $ 38,670 | $ 38,670 | $ 42,555 | ||
Tenant origination and absorption costs, accumulated amortization | (28,635) | (28,635) | (29,524) | ||
Tenant origination and absorption costs, net amount | 10,035 | 10,035 | 13,031 | ||
Tenant origination and absorption costs, amortization | (947) | $ (1,332) | (2,996) | $ (4,570) | |
Above-market lease assets, cost | 904 | 904 | 983 | ||
Above-market lease assets, accumulated amortization | (697) | (697) | (721) | ||
Above market leases, net amount | 207 | 207 | 262 | ||
Above-market lease assets, amortization | (18) | (21) | (55) | (66) | |
Below-market lease liabilities, cost | (7,534) | (7,534) | (8,384) | ||
Below-market lease liabilities, accumulated amortization | 6,271 | 6,271 | 6,473 | ||
Below-market lease liabilities, net amount | (1,263) | (1,263) | $ (1,911) | ||
Below-market lease liabilities, amortization | $ 201 | $ 284 | $ 648 | $ 1,116 |
REAL ESTATE EQUITY SECURITIES (
REAL ESTATE EQUITY SECURITIES (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Nov. 09, 2021 USD ($) shares | Aug. 21, 2019 USD ($) shares | Jul. 19, 2019 USD ($) $ / shares shares | Jul. 18, 2019 property | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Marketable Securities [Line Items] | |||||||||
Real estate equity securities | $ 29,786 | $ 29,786 | $ 87,416 | ||||||
Dividend income from real estate equity securities | $ 5,310 | $ 7,598 | 11,850 | $ 14,850 | |||||
Unrealized loss on equity securities | $ 57,630 | 63,673 | |||||||
SREIT | |||||||||
Marketable Securities [Line Items] | |||||||||
Ownership percentage | 18.50% | 18.20% | |||||||
Units held (in units) | shares | 215,841,899 | 215,841,899 | |||||||
Real estate equity securities | $ 29,800 | $ 29,800 | |||||||
Units, closing price (in dollars per share) | $ / shares | $ 0.138 | $ 0.138 | |||||||
Dividend income from real estate equity securities | $ 5,300 | 7,600 | $ 11,900 | 14,900 | |||||
Unrealized loss on equity securities | $ 15,500 | $ 29,100 | $ 57,600 | $ 63,700 | |||||
REIT Properties III | |||||||||
Marketable Securities [Line Items] | |||||||||
Ownership percentage | 31.30% | ||||||||
Units disposed (in shares) | shares | 18,392,100 | ||||||||
Units disposed | $ 16,200 | ||||||||
Purchase and Sales Agreement | REIT Properties III | |||||||||
Marketable Securities [Line Items] | |||||||||
Units acquired (in units) | shares | 307,953,999 | ||||||||
Units acquired | $ 271,000 | ||||||||
Units acquired (in dollars per share) | $ / shares | $ 0.88 | ||||||||
Ownership percentage | 33.30% | ||||||||
SREIT | |||||||||
Marketable Securities [Line Items] | |||||||||
Units disposed (in shares) | shares | 73,720,000 | ||||||||
Units disposed | $ 58,900 | ||||||||
Disposed of by Sale | SREIT | |||||||||
Marketable Securities [Line Items] | |||||||||
Number of real estate properties disposed | property | 11 |
NOTES PAYABLE - Schedule of Lon
NOTES PAYABLE - Schedule of Long-term Debt Instruments (Details) | 9 Months Ended | |||
Nov. 03, 2021 USD ($) Investments | Nov. 02, 2020 USD ($) Investments | Sep. 30, 2023 USD ($) extension_option | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 1,716,859,000 | $ 1,671,395,000 | ||
Deferred financing costs, net | (1,616,000) | (4,107,000) | ||
Total Notes Payable, net | 1,715,243,000 | 1,667,288,000 | ||
Face amount of debt | 1,716,859,000 | 1,671,395,000 | ||
Carillon Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total Notes Payable, net | 88,800,000 | |||
Face amount of debt | $ 111,000,000 | |||
Carillon Mortgage Loan | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Number of extensions | extension_option | 1 | |||
Extension period | 24 months | |||
Maximum borrowing capacity | $ 22,200,000 | |||
Unused borrowing capacity, amount | 22,200,000 | |||
Modified Portfolio Revolving Loan Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Total Notes Payable, net | 124,600,000 | |||
Face amount of debt | 249,200,000 | |||
Line of credit | 124,600,000 | |||
Accenture Tower Revolving Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Total Notes Payable, net | 281,300,000 | |||
Amended and Restated Portfolio Loan Facility | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Total Notes Payable, net | 459,900,000 | |||
Line of credit | 146,400,000 | |||
Mortgages | The Almaden Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 123,000,000 | 123,000,000 | ||
Stated percentage | 3.65% | |||
Effective interest rate | 3.65% | |||
Number of extensions | extension_option | 2 | |||
Extension period | 12 months | |||
Mortgages | The Almaden Mortgage Loan | One-month LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.50% | |||
Mortgages | 201 Spear Street Mortgage Loan (4) | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 125,000,000 | 125,000,000 | ||
Effective interest rate | 6.77% | |||
Mortgages | 201 Spear Street Mortgage Loan (4) | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.45% | |||
Mortgages | Carillon Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 88,800,000 | 88,800,000 | ||
Effective interest rate | 6.82% | |||
Mortgages | Carillon Mortgage Loan | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.50% | |||
Mortgages | 3001 & 3003 Washington Mortgage Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 140,876,000 | 142,232,000 | ||
Effective interest rate | 6.87% | |||
Mortgages | 3001 & 3003 Washington Mortgage Loan | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.45% | |||
Mortgages | 3001 & 3003 Washington Mortgage Loan | Adjusted-term secured overnight financing rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.10% | |||
Mortgages | Park Place Village Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 65,000,000 | 65,000,000 | ||
Effective interest rate | 7.27% | |||
Number of extensions | extension_option | 2 | |||
Extension period | 12 months | |||
Mortgages | Park Place Village Loan | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.95% | |||
Secured Debt | Modified Portfolio Revolving Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 249,145,000 | 249,145,000 | ||
Effective interest rate | 6.92% | |||
Number of extensions | extension_option | 1 | |||
Extension period | 12 months | |||
Secured Debt | Modified Portfolio Revolving Loan Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 124,600,000 | |||
Secured Debt | Modified Portfolio Revolving Loan Facility | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.60% | |||
Secured Debt | Accenture Tower Revolving Loan | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 281,250,000 | 281,250,000 | ||
Effective interest rate | 7.67% | |||
Number of extensions | Investments | 2 | |||
Extension period | 12 months | |||
Maximum borrowing capacity | $ 375,000,000 | |||
Line of credit | 281,300,000 | |||
Secured Debt | Accenture Tower Revolving Loan | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Number of extensions | extension_option | 2 | |||
Extension period | 12 months | |||
Maximum borrowing capacity | $ 93,700,000 | |||
Line of credit | $ 93,700,000 | |||
Secured Debt | Accenture Tower Revolving Loan | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.35% | |||
Secured Debt | Amended and Restated Portfolio Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 606,288,000 | 559,468,000 | ||
Effective interest rate | 7.19% | |||
Number of extensions | Investments | 1 | |||
Extension period | 12 months | |||
Face amount of debt | $ 613,200,000 | |||
Maximum borrowing capacity | $ 613,200,000 | |||
Line of credit | 459,900,000 | |||
Debt service coverage ratio, required principal paydown, maximum | 29,700,000 | |||
Secured Debt | Amended and Restated Portfolio Loan Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 153,300,000 | |||
Line of credit | $ 153,300,000 | |||
Secured Debt | Amended and Restated Portfolio Loan Facility | One-month BSBY | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.80% | |||
Unsecured Debt | Unsecured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $ 37,500,000 | $ 37,500,000 | ||
Effective interest rate | 7.52% | |||
Face amount of debt | $ 75,000,000 | |||
Unsecured Debt | Unsecured Credit Facility | One-month SOFR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.20% | |||
Line of Credit | Unsecured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total Notes Payable, net | $ 37,500,000 | |||
Line of Credit | Unsecured Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 37,500,000 | |||
Line of credit | $ 37,500,000 |
NOTES PAYABLE - Additional Info
NOTES PAYABLE - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||||
Debt obligations coming due over the 12-month period | $ 1,700,000 | $ 1,700,000 | |||
Interest expense | 31,059 | $ 17,166 | 87,137 | $ 36,992 | |
Amortization of deferred financing costs | 3,085 | 2,898 | |||
Interest payable, current | 9,800 | 9,800 | $ 8,000 | ||
Interest Expense | |||||
Debt Instrument [Line Items] | |||||
Amortization of deferred financing costs | $ 1,000 | $ 1,000 | $ 3,100 | $ 2,900 |
NOTES PAYABLE - Schedule of Mat
NOTES PAYABLE - Schedule of Maturities Including Principal Amortization Payments, for All Notes Payable Outstanding (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Notes Payable [Abstract] | ||
October 1, 2023 through December 31, 2023 | $ 1,011,004 | |
2024 | 640,855 | |
2025 | 65,000 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total notes payable | $ 1,716,859 | $ 1,671,395 |
DERIVATIVE INSTRUMENTS - Schedu
DERIVATIVE INSTRUMENTS - Schedule of Notional Amount and Other Information Related to the Interest Rate Swaps and Interest Rate Cap (Details) - Derivative instruments not designated as hedging instruments | 9 Months Ended | ||
Sep. 30, 2023 USD ($) investment_instrument | Jun. 30, 2023 investment_instrument | Dec. 31, 2022 USD ($) investment_instrument | |
Interest Rate Swaps | |||
Derivative [Line Items] | |||
Number of Instruments | 19 | 20 | |
Notional Amount | $ | $ 1,646,250,000 | $ 1,619,190,000 | |
Weighted-Average Fix Pay Rate | 2.40% | ||
Weighted-Average Remaining Term in Years | 1 year 10 months 24 days | ||
Interest Rate Swaps | One-month Fallback SOFR | |||
Derivative [Line Items] | |||
Number of Instruments | 7 | ||
Basis points adjustment | 0.11448% | ||
Interest Rate Swaps | One-month LIBOR | |||
Derivative [Line Items] | |||
Number of Instruments | 8 | ||
Interest Rate Swaps | Minimum | One-month Fallback SOFR | |||
Derivative [Line Items] | |||
Reference rate | 0.70% | ||
Interest Rate Swaps | Minimum | One-month SOFR | |||
Derivative [Line Items] | |||
Reference rate | 2.38% | ||
Interest Rate Swaps | Maximum | One-month Fallback SOFR | |||
Derivative [Line Items] | |||
Reference rate | 1.40% | ||
Interest Rate Swaps | Maximum | One-month SOFR | |||
Derivative [Line Items] | |||
Reference rate | 3.92% | ||
Interest Rate Cap | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | 0 | |
Notional Amount | $ | $ 125,000,000 | $ 0 | |
Weighted-Average Fix Pay Rate | 6.50% | ||
Weighted-Average Remaining Term in Years | 3 months 18 days | ||
Interest Rate Cap | One-month SOFR | |||
Derivative [Line Items] | |||
Reference rate | 6.49% | ||
Interest Rate Swap, Future Effectiveness | |||
Derivative [Line Items] | |||
Number of Instruments | 8 | ||
Interest Rate Swap, Future Effectiveness on November 1, 2023 & Maturity on February 1, 2026 | |||
Derivative [Line Items] | |||
Number of Instruments | 4 | ||
Notional Amount | $ | $ 200,000,000 | ||
Interest Rate Swap, Future Effectiveness on November 1, 2023 & Maturity on May 1, 2026 | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | ||
Notional Amount | $ | $ 100,000,000 | ||
Interest Rate Swap, Future Effectiveness on November 1, 2023 & Maturity on July 1, 2026 | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | ||
Notional Amount | $ | $ 100,000,000 | ||
Interest Rate Swap, Future Effectiveness on November 1, 2023 & Maturity on November 1, 2026 | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | ||
Notional Amount | $ | $ 100,000,000 | ||
Interest Rate Swap, Future Effectiveness on December 1, 2023 & Maturity on November 1, 2026 | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | ||
Notional Amount | $ | $ 100,000,000 |
DERIVATIVE INSTRUMENTS - Sche_2
DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments as well as their Classification on the Consolidated Balance Sheets (Details) $ in Thousands | Sep. 30, 2023 USD ($) investment_instrument | Dec. 31, 2022 USD ($) investment_instrument |
Prepaid expenses and other assets, at fair value | ||
Derivative [Line Items] | ||
Hybrid instruments | $ | $ 1,100 | $ 8,700 |
Derivative instruments not designated as hedging instruments | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Number of Instruments | 19 | 20 |
Derivative instruments not designated as hedging instruments | Interest Rate Swaps | Prepaid expenses and other assets, at fair value | ||
Derivative [Line Items] | ||
Number of Instruments | 19 | 18 |
Asset, fair value | $ | $ 49,415 | $ 40,216 |
Derivative instruments not designated as hedging instruments | Interest Rate Swaps | Other liabilities, at fair value | ||
Derivative [Line Items] | ||
Number of Instruments | 0 | 2 |
Liability, fair value | $ | $ 0 | $ (75) |
Derivative instruments not designated as hedging instruments | Interest Rate Cap | ||
Derivative [Line Items] | ||
Number of Instruments | 1 | 0 |
Derivative instruments not designated as hedging instruments | Interest Rate Cap | Prepaid expenses and other assets, at fair value | ||
Derivative [Line Items] | ||
Number of Instruments | 1 | 0 |
Asset, fair value | $ | $ 0 | $ 0 |
Derivative instruments not designated as hedging instruments | Hybrid Financial Instruments | ||
Derivative [Line Items] | ||
Number of Instruments | 2 |
DERIVATIVE INSTRUMENTS - Sche_3
DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments in Consolidated Statements of Operations (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) investment_instrument | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) investment_instrument | Sep. 30, 2022 USD ($) | Dec. 31, 2022 investment_instrument | |
Derivative [Line Items] | |||||
Net gain on derivative instruments | $ (12,180) | $ (20,205) | $ (32,110) | $ (49,143) | |
Derivative instruments not designated as hedging instruments | |||||
Derivative [Line Items] | |||||
Net gain on derivative instruments | (12,180) | (20,205) | (32,110) | (49,143) | |
Derivative instruments not designated as hedging instruments | Interest Rate Swaps | |||||
Derivative [Line Items] | |||||
Realized loss recognized on interest rate swaps | 0 | 184 | 0 | 7,152 | |
Realized gain recognized on interest rate swaps | (8,551) | (1,681) | (22,862) | (1,717) | |
Unrealized loss (gain) on derivatives | $ (3,630) | (18,708) | $ (9,273) | (54,578) | |
Number of Instruments | investment_instrument | 19 | 19 | 20 | ||
Derivative instruments not designated as hedging instruments | Interest Rate Cap | |||||
Derivative [Line Items] | |||||
Unrealized loss (gain) on derivatives | $ 1 | 0 | $ 25 | 0 | |
Number of Instruments | investment_instrument | 1 | 1 | 0 | ||
Derivative instruments not designated as hedging instruments | Interest Rate Swap at Fair Value | |||||
Derivative [Line Items] | |||||
Unrealized gain (loss) | $ 3,000 | $ 2,200 | $ 7,600 | $ 11,600 | |
Number of Instruments | investment_instrument | 2 | 2 |
FAIR VALUE DISCLOSURES - Schedu
FAIR VALUE DISCLOSURES - Schedule of Face Value, Carrying Amounts and Fair Value (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Financial liabilities: | ||
Face Value | $ 1,716,859,000 | $ 1,671,395,000 |
Carrying Amount | ||
Financial liabilities: | ||
Notes payable | 1,715,243,000 | 1,667,288,000 |
Fair Value | ||
Financial liabilities: | ||
Notes payable | $ 1,656,701,000 | $ 1,654,046,000 |
FAIR VALUE DISCLOSURES - Sche_2
FAIR VALUE DISCLOSURES - Schedule of Fair Value, Assets Measured on Recurring Basis (Details) $ in Thousands | Sep. 30, 2023 USD ($) investment_instrument | Dec. 31, 2022 USD ($) investment_instrument |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | $ 29,786 | $ 87,416 |
Prepaid expenses and other assets, at fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Hybrid instruments | $ 1,100 | $ 8,700 |
Interest Rate Swaps | Derivative instruments not designated as hedging instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of Instruments | investment_instrument | 19 | 20 |
Interest Rate Swaps | Derivative instruments not designated as hedging instruments | Prepaid expenses and other assets, at fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of Instruments | investment_instrument | 19 | 18 |
Interest Rate Cap | Derivative instruments not designated as hedging instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of Instruments | investment_instrument | 1 | 0 |
Interest Rate Cap | Derivative instruments not designated as hedging instruments | Prepaid expenses and other assets, at fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of Instruments | investment_instrument | 1 | 0 |
Interest Rate Swap, Future Effectiveness | Derivative instruments not designated as hedging instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of Instruments | investment_instrument | 8 | |
Interest Rate Swap at Fair Value | Derivative instruments not designated as hedging instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of Instruments | investment_instrument | 2 | |
Recurring Basis: | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | $ 29,786 | |
Recurring Basis: | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | 29,786 | |
Recurring Basis: | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | 0 | |
Recurring Basis: | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | 0 | |
Recurring Basis: | Interest Rate Swaps | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 49,415 | |
Recurring Basis: | Interest Rate Swaps | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | |
Recurring Basis: | Interest Rate Swaps | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 49,415 | |
Recurring Basis: | Interest Rate Swaps | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | |
Recurring Basis: | Interest Rate Cap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | |
Recurring Basis: | Interest Rate Cap | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | |
Recurring Basis: | Interest Rate Cap | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | |
Recurring Basis: | Interest Rate Cap | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | $ 0 |
FAIR VALUE DISCLOSURES - Sche_3
FAIR VALUE DISCLOSURES - Schedule of Fair Value, Assets Measured on Nonrecurring Basis (Details) - Nonrecurring Basis $ in Thousands | Sep. 30, 2023 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate | $ 71,918 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate | 0 |
Significant Other Observable Inputs (Level 2) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate | 0 |
Significant Unobservable Inputs (Level 3) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Impaired real estate | $ 71,918 |
FAIR VALUE DISCLOSURES - Additi
FAIR VALUE DISCLOSURES - Additional Information (Details) - Valuation Technique, Discounted Cash Flow - Nonrecurring Basis | Sep. 30, 2023 |
Discount Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Real estate properties, measurement input | 0.0975 |
Terminal Cap Rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Real estate properties, measurement input | 0.0775 |
RELATED PARTY TRANSACTIONS - Sc
RELATED PARTY TRANSACTIONS - Schedule of Related Party Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||||||
Receivable as of | $ 0 | $ 0 | $ 10 | |||
Payable as of | 15,677 | 15,677 | 10,365 | |||
Advisor and Dealer Manager | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | 5,347 | $ 5,144 | 15,815 | $ 15,197 | ||
Advisor and Dealer Manager | Related Party | ||||||
Related Party Transaction [Line Items] | ||||||
Receivable as of | 0 | 0 | 10 | |||
Payable as of | 15,677 | 15,677 | 10,365 | |||
Advisor and Dealer Manager | Asset management fees | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | 5,268 | 5,091 | 15,542 | 14,952 | ||
Advisor and Dealer Manager | Asset management fees | Related Party | ||||||
Related Party Transaction [Line Items] | ||||||
Receivable as of | 0 | 0 | 0 | |||
Payable as of | 15,383 | 15,383 | 10,191 | |||
Advisor and Dealer Manager | Reimbursement of operating expenses | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | 79 | 53 | 273 | 245 | ||
Advisor and Dealer Manager | Reimbursement of operating expenses | Related Party | ||||||
Related Party Transaction [Line Items] | ||||||
Receivable as of | 0 | 0 | 10 | |||
Payable as of | 294 | 294 | 174 | |||
Advisor and Dealer Manager | Salaries, benefits and overhead | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | $ 30 | $ 48 | 86 | $ 150 | ||
Advisor and Dealer Manager | Vendor services, overcharged fees | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | $ 800 | |||||
Advisor and Dealer Manager | Overcharged fees, legal and accounting | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | $ 1,600 | |||||
Advisor and Dealer Manager | Asset Management Fee Credit, Vendor Services and Overcharged Fees | Related Party | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | 500 | |||||
Advisor and Dealer Manager | Reimbursement of overcharged fees and associated legal and accounting cost | ||||||
Related Party Transaction [Line Items] | ||||||
Related party, transaction amount | $ 1,900 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||
Nov. 08, 2022 | Oct. 01, 2022 USD ($) | Sep. 30, 2022 USD ($) | Jul. 18, 2019 USD ($) | Mar. 14, 2019 USD ($) $ / ft² | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | May 29, 2015 ft² | |
Related Party Transaction [Line Items] | |||||||||||
Restricted cash | $ 12,038 | $ 12,038 | $ 6,070 | ||||||||
Payable as of | 15,677 | 15,677 | 10,365 | ||||||||
Annualized base rent | 62,140 | ||||||||||
Rental income | $ 69,489 | $ 67,897 | $ 200,859 | $ 204,939 | |||||||
Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Monthly asset management fee, percent of acquisition expense, excluding acquisition fees related to thereto (percent) | 0.0625% | 0.0625% | |||||||||
Rental income | $ 83 | 82 | $ 248 | 247 | |||||||
Related Party | Subsidiaries | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Net rentable area (in sq feet) | ft² | 5,046 | ||||||||||
Total rentable square feet (percentage) | 2.40% | ||||||||||
Annualized base rent | $ 300 | ||||||||||
Average annualized base rent per square foot (usd per sqft) | $ / ft² | 62.55 | ||||||||||
Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | 5,347 | 5,144 | 15,815 | 15,197 | |||||||
Advisor and Dealer Manager | Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Payable as of | 15,677 | 15,677 | 10,365 | ||||||||
SREIT | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Acquisition fee as percent of acquisition price of real estate | 1% | ||||||||||
Dividend fee as percent of sale price of real estate | 0.50% | ||||||||||
Development management fee as percent of total project cost | 3% | ||||||||||
SREIT | Linda Bren 2017 Trust | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Investment in an unconsolidated entity | $ 5,000 | ||||||||||
SREIT | Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Annual base fee (percent) | 10% | ||||||||||
Annual performance fee (percent) | 25% | ||||||||||
Incurred costs of supplemental coverage | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | 72 | 79 | |||||||||
Monthly asset management cash fee | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | $ 1,150 | ||||||||||
Fully funded bonus retention funded | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | $ 8,500 | ||||||||||
Bonus retention fund deposit | Advisor and Dealer Manager | Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Restricted cash | 6,900 | 6,900 | |||||||||
Payable as of | 6,900 | 6,900 | 1,700 | ||||||||
Bonus retention fund payments | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | 0 | ||||||||||
Deferred asset management fees | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | $ 8,500 | ||||||||||
Deferred asset management fees | Advisor and Dealer Manager | Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Payable as of | 8,500 | 8,500 | 8,500 | ||||||||
Asset management fees | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party, transaction amount | 5,268 | $ 5,091 | 15,542 | $ 14,952 | |||||||
Asset management fees | Advisor and Dealer Manager | Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Payable as of | $ 15,383 | $ 15,383 | $ 10,191 | ||||||||
Non compounded return on net invested capital | Advisor and Dealer Manager | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party transaction rate (percent) | 8% | ||||||||||
The renewal advisory agreement | Advisor and Dealer Manager | Related Party | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Renewal period | 1 year | ||||||||||
Termination period | 60 days |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 9 Months Ended | |||||
Nov. 03, 2023 USD ($) | Nov. 03, 2021 USD ($) Investments | Nov. 02, 2020 USD ($) Investments | Sep. 30, 2023 USD ($) extension_option | Nov. 02, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Subsequent Event [Line Items] | ||||||
Term debt | $ 1,715,243,000 | $ 1,667,288,000 | ||||
Accenture Tower Revolving Loan | Secured Debt | ||||||
Subsequent Event [Line Items] | ||||||
Long-term debt, term | 3 years | |||||
Maximum borrowing capacity | $ 375,000,000 | |||||
Loan, amount outstanding | $ 281,300,000 | |||||
Number of extensions | Investments | 2 | |||||
Extension period | 12 months | |||||
Accenture Tower Revolving Loan | Secured Debt | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Loan, amount outstanding | $ 281,300,000 | |||||
Accenture Tower Revolving Loan | Secured Debt | Revolving Credit Facility | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | $ 93,700,000 | |||||
Loan, amount outstanding | $ 93,700,000 | |||||
Number of extensions | extension_option | 2 | |||||
Extension period | 12 months | |||||
Accenture Tower Revolving Loan | Secured Debt | Revolving Credit Facility | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Unused borrowing capacity, amount | $ 93,700,000 | |||||
Amended and Restated Portfolio Loan Facility | Secured Debt | ||||||
Subsequent Event [Line Items] | ||||||
Long-term debt, term | 2 years | |||||
Maximum borrowing capacity | $ 613,200,000 | |||||
Loan, amount outstanding | $ 459,900,000 | |||||
Number of extensions | Investments | 1 | |||||
Extension period | 12 months | |||||
Amended and Restated Portfolio Loan Facility | Secured Debt | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Extension period | 1 year | |||||
Amended and Restated Portfolio Loan Facility | Secured Debt | Revolving Credit Facility | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | $ 153,300,000 | |||||
Loan, amount outstanding | $ 153,300,000 | |||||
Amended and Restated Portfolio Loan Facility | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Term debt | $ 606,300,000 | |||||
Unadvanced commitment permanetly cancelled | $ 6,900,000 |