Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 15, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
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 | ||
Entity Address, Address Line Two | 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 148,517,218 | ||
Documents Incorporated by Reference | Portions of the Registrant’s Definitive Proxy Statement with respect to its 2024 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the Registrant’s fiscal year are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 hereof as noted therein. | ||
Amendment Flag | false | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001482430 | ||
Document Fiscal Year Focus | 2023 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Firm ID | 42 |
Auditor Name | Ernst & Young LLP |
Auditor Location | Irvine, California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Real estate: | ||
Land | $ 274,315 | $ 290,121 |
Buildings and improvements | 2,244,090 | 2,235,676 |
Tenant origination and absorption costs | 34,574 | 42,555 |
Total real estate held for investment, cost | 2,552,979 | 2,568,352 |
Less accumulated depreciation and amortization | (713,501) | (656,401) |
Total real estate, net | 1,839,478 | 1,911,951 |
Real estate equity securities | 51,802 | 87,416 |
Total real estate and real estate-related investments, net | 1,891,280 | 1,999,367 |
Cash and cash equivalents | 36,836 | 47,767 |
Restricted cash | 14,086 | 6,070 |
Rents and other receivables, net | 99,024 | 93,100 |
Above-market leases, net | 189 | 262 |
Due from affiliates | 0 | 10 |
Prepaid expenses and other assets | 97,970 | 112,411 |
Total assets | 2,139,385 | 2,258,987 |
Liabilities and equity | ||
Notes payable, net | 1,735,896 | 1,667,288 |
Accounts payable and accrued liabilities | 49,646 | 56,071 |
Due to affiliate | 17,408 | 10,365 |
Distributions payable | 0 | 7,374 |
Below-market leases, net | 1,069 | 1,911 |
Other liabilities | 67,954 | 60,918 |
Redeemable common stock payable | 0 | 711 |
Total liabilities | 1,871,973 | 1,804,638 |
Commitments and contingencies (Note 12) | ||
Redeemable common stock | 0 | 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, 148,516,246 and 147,964,954 shares issued and outstanding as of December 31, 2023 and 2022, respectively | 1,485 | 1,480 |
Additional paid-in capital | 1,313,299 | 1,275,833 |
Cumulative distributions in excess of net income | (1,047,372) | (855,645) |
Total stockholders’ equity | 267,412 | 421,668 |
Total liabilities and equity | $ 2,139,385 | $ 2,258,987 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 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) | 148,516,246 | 147,964,954 |
Common stock, shares outstanding (in shares) | 148,516,246 | 147,964,954 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues: | |||
Rental income | $ 270,158,000 | $ 275,026,000 | $ 280,144,000 |
Dividend income from real estate equity securities | 11,850,000 | 14,850,000 | 0 |
Other operating income | 18,669,000 | 18,141,000 | 16,617,000 |
Total revenues | 300,677,000 | 308,017,000 | 296,761,000 |
Expenses: | |||
Operating, maintenance and management | 75,914,000 | 74,783,000 | 68,806,000 |
Real estate taxes and insurance | 52,789,000 | 51,811,000 | 57,687,000 |
Asset management fees to affiliate | 20,839,000 | 20,102,000 | 19,832,000 |
General and administrative expenses | 7,297,000 | 8,115,000 | 6,116,000 |
Depreciation and amortization | 115,235,000 | 111,860,000 | 110,984,000 |
Interest expense | 120,475,000 | 60,259,000 | 34,564,000 |
Net gain on derivative instruments | (14,907,000) | (51,932,000) | (5,263,000) |
Impairment charges on real estate | 45,459,000 | 0 | 0 |
Total expenses | 423,101,000 | 274,998,000 | 292,726,000 |
Other income (loss): | |||
Unrealized (loss) gain on real estate equity securities | (35,614,000) | (92,812,000) | 16,765,000 |
Write-off of prepaid offering costs | 0 | (2,728,000) | 0 |
Other interest income | 505,000 | 63,000 | 52,000 |
Equity in income of unconsolidated entity | 0 | 0 | 8,698,000 |
Loss from extinguishment of debt | 0 | 0 | (214,000) |
Gain on sale of real estate, net | 0 | 0 | 114,321,000 |
Total other (loss) income, net | (35,109,000) | (95,477,000) | 139,622,000 |
Net (loss) income | $ (157,533,000) | $ (62,458,000) | $ 143,657,000 |
Net (loss) income per common share, basic (in dollars per share) | $ (1.06) | $ (0.42) | $ 0.83 |
Net (loss) income per common share, diluted (in dollars per share) | $ (1.06) | $ (0.42) | $ 0.83 |
Weighted-average number of common shares outstanding, basic (in shares) | 148,738,748 | 149,164,231 | 172,330,821 |
Weighted-average number of common shares outstanding, diluted (in shares) | 148,738,748 | 149,164,231 | 172,330,821 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Total Stockholders’ Equity | Common Stock | Additional Paid-in Capital | Cumulative Distributions in Excess of Net Income |
Beginning balance (in shares) at Dec. 31, 2020 | 184,249,076 | ||||
Beginning balance at Dec. 31, 2020 | $ 898,036 | $ 1,842 | $ 1,641,184 | $ (744,990) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | $ 143,657 | 143,657 | 143,657 | ||
Issuance of common stock (in shares) | 4,145,065 | ||||
Issuance of common stock | 42,369 | $ 41 | 42,328 | ||
Transfers from redeemable common stock | 4,354 | 4,354 | |||
Redemptions of common stock (in shares) | (35,243,375) | ||||
Redemptions of common stock | (365,587) | $ (351) | (365,236) | ||
Distributions declared | (102,619) | (102,619) | |||
Other offering costs | (17) | (17) | |||
Ending balance (in shares) at Dec. 31, 2021 | 153,150,766 | ||||
Ending balance at Dec. 31, 2021 | 620,193 | $ 1,532 | 1,322,613 | (703,952) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | $ (62,458) | (62,458) | (62,458) | ||
Issuance of common stock (in shares) | 3,434,632 | ||||
Issuance of common stock | 33,391 | $ 34 | 33,357 | ||
Transfers from redeemable common stock | 8,977 | 8,977 | |||
Redemptions of common stock (in shares) | (8,620,444) | ||||
Redemptions of common stock | (89,183) | $ (86) | (89,097) | ||
Distributions declared | (89,235) | (89,235) | |||
Other offering costs | (17) | (17) | |||
Ending balance (in shares) at Dec. 31, 2022 | 147,964,954 | 147,964,954 | |||
Ending balance at Dec. 31, 2022 | 421,668 | $ 1,480 | 1,275,833 | (855,645) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | $ (157,533) | (157,533) | (157,533) | ||
Issuance of common stock (in shares) | 1,900,374 | ||||
Issuance of common stock | 16,249 | $ 19 | 16,230 | ||
Transfers from redeemable common stock | 33,392 | 33,392 | |||
Redemptions of common stock (in shares) | (1,349,082) | ||||
Redemptions of common stock | (12,142) | $ (14) | (12,128) | ||
Distributions declared | (34,194) | (34,194) | |||
Other offering costs | (28) | (28) | |||
Ending balance (in shares) at Dec. 31, 2023 | 148,516,246 | 148,516,246 | |||
Ending balance at Dec. 31, 2023 | $ 267,412 | $ 1,485 | $ 1,313,299 | $ (1,047,372) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities: | |||
Net (loss) income | $ (157,533,000) | $ (62,458,000) | $ 143,657,000 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Depreciation and amortization | 115,235,000 | 111,860,000 | 110,984,000 |
Impairment charges on real estate | 45,459,000 | 0 | 0 |
Unrealized (loss) gain on real estate equity securities | 35,614,000 | 92,812,000 | (16,765,000) |
Equity in income of unconsolidated entity | 0 | 0 | (8,698,000) |
Distribution of operating cash flow from unconsolidated entity | 0 | 0 | 19,861,000 |
Deferred rents | (7,635,000) | (10,896,000) | (2,550,000) |
Amortization of above- and below-market leases, net | (769,000) | (1,280,000) | (2,754,000) |
Amortization of deferred financing costs | 4,243,000 | 3,940,000 | 3,978,000 |
Unrealized losses (gains) on derivative instruments | 16,451,000 | (52,189,000) | (23,283,000) |
Loss from extinguishment of debt | 0 | 0 | 214,000 |
Gain on sale of real estate | 0 | 0 | (114,321,000) |
Write-off of prepaid offering costs | 0 | 2,728,000 | 0 |
Interest rate swap settlements for off-market swap instruments | (9,138,000) | (1,543,000) | 3,031,000 |
Changes in operating assets and liabilities: | |||
Rents and other receivables | (3,149,000) | 3,044,000 | (5,005,000) |
Due from affiliates | 10,000 | 333,000 | (343,000) |
Prepaid expenses and other assets | (14,441,000) | (16,395,000) | (14,361,000) |
Accounts payable and accrued liabilities | (1,323,000) | (2,598,000) | 4,141,000 |
Due to affiliates | 7,043,000 | 2,239,000 | (500,000) |
Other liabilities | 11,567,000 | 6,368,000 | 3,513,000 |
Net cash provided by operating activities | 41,634,000 | 75,965,000 | 100,799,000 |
Cash Flows from Investing Activities: | |||
Improvements to real estate | (81,219,000) | (121,568,000) | (70,131,000) |
Proceeds from sale of real estate, net | 0 | 0 | 237,683,000 |
Proceeds from the sale of real estate equity securities | 0 | 0 | 58,936,000 |
Purchase of interest rate cap | (25,000) | 0 | 0 |
Net cash (used in) provided by investing activities | (81,244,000) | (121,568,000) | 226,488,000 |
Cash Flows from Financing Activities: | |||
Proceeds from notes payable | 77,170,000 | 282,118,000 | 806,090,000 |
Principal payments on notes payable | (9,952,000) | (83,013,000) | (730,545,000) |
Payments of deferred financing costs | (2,887,000) | (1,155,000) | (2,704,000) |
Interest rate swap settlements for off-market swap instruments | 9,853,000 | 569,000 | (3,017,000) |
Payments to redeem common stock | (12,142,000) | (89,183,000) | (365,587,000) |
Payments of prepaid other offering costs | 0 | (110,000) | (1,180,000) |
Payments of other offering costs | (28,000) | (17,000) | (17,000) |
Distributions paid to common stockholders | (25,319,000) | (56,205,000) | (61,702,000) |
Net cash provided by (used in) financing activities | 36,695,000 | 53,004,000 | (358,662,000) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (2,915,000) | 7,401,000 | (31,375,000) |
Cash, cash equivalents and restricted cash, beginning of period | 53,837,000 | 46,436,000 | 77,811,000 |
Cash, cash equivalents and restricted cash, end of period | 50,922,000 | 53,837,000 | 46,436,000 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 93,657,000 | 55,245,000 | 45,586,000 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||
Distributions payable | 0 | 7,374,000 | 7,735,000 |
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | 16,249,000 | 33,391,000 | 42,369,000 |
Redeemable common stock payable | 0 | 711,000 | 0 |
Accrued improvements to real estate | 14,222,000 | 19,324,000 | 17,985,000 |
Accrued prepaid other offering costs | 0 | 0 | 19,000 |
Accrued interest rate swap settlements related to off-market swap instruments | 0 | (974,000) | 259,000 |
Real estate equity securities reclassed from investment in unconsolidated entity | $ 0 | $ 0 | $ 163,463,000 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 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 December 31, 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 December 31, 2023, the Company owned 16 office properties (of which one property was held for non-sale disposition), 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 December 31, 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 December 31, 2023, the Company had redeemed or repurchased 74,644,349 shares sold in the Offering for $789.2 million. On March 15, 2024, the Company terminated its dividend reinvestment plan and its share redemption program. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | GOING CONCERNThe Company generally finances its real estate investments using notes payable that are typically structured as non-recourse secured mortgages with maturities of approximately three |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). 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 accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Reclassifications Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. Commencing with the year ended December 31, 2022, the Company presented gains and losses on derivative instruments separate from interest expense on the Company’s consolidated statement of operations. Accordingly, the Company’s gains and losses on derivative instruments were reclassified for all periods presented. Comprehensive Income (Loss) Comprehensive income (loss) for each of the years ended December 31, 2023, 2022 and 2021 was equal to net income (loss) for these respective periods. Revenue Recognition - Operating Leases Real Estate The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the lessee or lessor supervises the construction and bears the risk of cost overruns; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. In accordance with ASU 2016-02, Leases (Topic 842) (“Topic 842”), tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s statement of operations. In addition, the Company adopted the practical expedient available under Topic 842 to not separate nonlease components from the associated lease component and instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met, specifically related to tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements for common area maintenance as (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations. In accordance with Topic 842, the Company makes a determination of whether the collectibility of the lease payments in an operating lease is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any contractual lease payments, deferred rent receivable, and variable lease payments and would recognize rental income only to the extent cash has been received. These changes to the Company’s collectibility assessment are reflected as an adjustment to rental income. The Company, as a lessor, records costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease, as an expense and classifies such costs as operating, maintenance, and management expense on the Company’s consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842. Sales of Real Estate The Company follows the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company would derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. Real Estate Equity Securities Dividend income from real estate equity securities is recognized on an accrual basis based on eligible units as of the ex-dividend date. Cash and Cash Equivalents The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income. Real Estate Depreciation and Amortization Real estate costs related to the acquisition and improvement of properties are capitalized and depreciated over the expected useful life of the asset on a straight-line basis. Repair and maintenance costs are charged to expense as incurred and significant replacements and betterments are capitalized. Repair and maintenance costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Expenditures for tenant improvements are capitalized and amortized over the shorter of the tenant’s lease term or expected useful life. The Company anticipates the estimated useful lives of its assets by class to be generally as follows: Land N/A Buildings 25-40 years Building improvements 10-25 years Tenant improvements Shorter of lease term or expected useful life Tenant origination and absorption costs Remaining term of related leases, including below-market renewal periods Real Estate Acquisition Valuation The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination or an asset acquisition. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. For purposes of this test, land and buildings can be combined along with the intangible assets for any in-place leases and accordingly, most acquisitions of investment properties would not meet the definition of a business and would be accounted for as an asset acquisition. To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized. The Company assesses the acquisition date fair values of all tangible assets, identifiable intangibles and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining non-cancelable terms of the respective lease, including any below-market renewal periods. The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. The Company amortizes the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining non-cancelable term of the leases. Subsequent to the acquisition of a property, the Company may incur and capitalize costs necessary to get the property ready for its intended use. During that time, certain costs such as legal fees, real estate taxes and insurance and financing costs are also capitalized. Impairment of Real Estate and Related Intangible Assets and Liabilities The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assesses the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities. The Company did not record any impairment loss on its real estate and related intangible assets during the years ended December 31, 2022 and 2021. During the year ended December 31, 2023, the Company recorded impairment losses of $45.5 million on its real estate and related intangible assets. See Note 4, “Real Estate — Impairment of Real Estate.” Real Estate Held for Sale The Company generally considers real estate to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate held for sale” and “assets related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Notes payable and other liabilities related to real estate held for sale are classified as “notes payable related to real estate held for sale” and “liabilities related to real estate held for sale,” respectively, for all periods presented in the accompanying consolidated financial statements. Real estate classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell. Operating results of properties and related gains on sale of properties that were disposed of or classified as held for sale in the ordinary course of business are included in continuing operations on the Company’s consolidated statements of operations. Real Estate Held for Non-Sale Disposition The Company considers real estate assets that do not meet the criteria for held for sale but are expected to be disposed of other than by sale as real estate held for non-sale disposition. The assets and liabilities related to real estate held for non-sale disposition are included in the Company’s consolidated balance sheets and the results of operations are presented as part of continuing operations in the Company’s consolidated statements of operations for all periods presented. Operating results of properties that will be disposed of other than by sale will be included in continuing operations on the Company’s consolidated statements of operations until the ultimate disposition of real estate. Real Estate Equity Securities Real estate equity securities are carried at fair value based on quoted market prices for the security. Unrealized gains and losses on real estate equity securities are recognized in earnings. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short term investments. Cash and cash equivalents are stated at cost, which approximates fair value. There are no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2023. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2023. The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. Restricted Cash Restricted cash is composed of lender impound reserve accounts on the Company’s borrowings. In addition, restricted cash includes asset management fees restricted from payment to the Advisor pursuant to the Advisory Agreement and held in a separate account for purposes of the Bonus Retention Fund. See below under, “— Related Party Transactions — Asset Management Fee.” Rents and Other Receivables The Company makes a determination of whether the collectibility of the lease payments in its operating leases is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any outstanding rent receivables related to contractual lease payments and variable leases payments, would write-off any deferred rent receivable and would recognize rental income only to the extent cash has been received. The Company exercises judgment in assessing collectibility and considers payment history, current credit status, the tenant’s financial condition, security deposits, letters of credit, lease guarantees and current market conditions that may impact the tenant’s ability to make payments in accordance with its lease agreements, including the impact of the continued disruptions in the financial markets on the tenant’s business, in making the determination. 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 on its variable rate notes payable. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. The changes in fair value for derivative instruments that are not designated as a hedge or that do not meet the hedge accounting criteria are recorded as gain or loss on derivative instruments and presented in the accompanying consolidated statements of operations. Fair Value Election of Hybrid Financial Instruments with Embedded Derivatives When the Company enters into interest rate swaps which include off-market terms, the Company determines if these contracts are hybrid financial instruments with embedded derivatives requiring bifurcation between the host contract and the derivative instrument. The Company elected to initially and subsequently measure these hybrid financial instruments in their entirety at fair value with concurrent documentation of this election. Changes in the fair value of the hybrid financial instrument under this fair value election are recorded in earnings and are recorded as gain or loss on derivative instruments in the accompanying consolidated statements of operations. The cash flows for these off-market swap instruments which contain an other-than-insignificant financing element at inception are included in cash flows provided by or used in financing activities on the accompanying consolidated statements of cash flows. Deferred Financing Costs Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close. Fair Value Measurements 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 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. When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities 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. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. Dividend Reinvestment Plan The Company had a dividend reinvestment plan pursuant to which common stockholders could elect to have all or a portion of their dividends and other distributions, exclusive of dividends and other distributions that the Company’s board of directors designated as ineligible for reinvestment through the dividend reinvestment plan, reinvested in additional shares of the Company’s common stock in lieu of receiving cash distributions. Participants in the dividend reinvestment plan acquired shares of the Company’s common stock at a price equal to 95% of the estimated value per share of the Company’s common stock, as determined by the Advisor or another firm chosen by the Company’s board of directors for that purpose. On March 15, 2024, the Company’s board of directors approved the termination of the Company’s dividend reinvestment plan. Commencing with the January 4, 2021 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $10.21. Commencing with the June 1, 2021 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $10.23. Commencing with the December 1, 2021 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $10.24. Commencing with the October 3, 2022 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $8.55. Commencing December 14, 2023 and until the dividend reinvestment plan was terminated, the purchase price per share under the dividend reinvestment plan was $5.32. No selling commissions or dealer manager fees were paid on shares sold under the dividend reinvestment plan. Redeemable Common Stock Due to certain restrictions and covenants included in one of the Company’s loan agreements, the Company does not expect to redeem any shares of its stock during the term of the loan agreement, which matures on March 1, 2026. See Note 13, “Subsequent Events – Modified Portfolio Revolving Loan Facility.” As a result, the Company terminated its share redemption plan on March 15, 2024. Prior to termination, the Company’s share redemption program enabled stockholders to sell their shares to the Company in limited circumstances. When active, the restrictions of the Company’s share redemption program limited its stockholders’ ability to sell their shares should they require liquidity and limited the stockholders’ ability to recover an amount equal to the Company’s estimated value per share. The following is a description of the Company’s share redemption program from January 1, 2021 through June 30, 2021 and the amendments to the program made by (i) the July 2021 amended and restated share redemption program (the “July 2021 Amended Share Redemption Program”), which became effective as of the July 30, 2021 redemption date, (ii) the March 2022 amended and restated share redemption program (the “March 2022 Amended Share Redemption Program”), which became effective as of the March 31, 2022 redemption date, and (iii) the April 2022 amended and restated share redemption program (the “April 2022 Amended Share Redemption Program”), which became effective as of the April 29, 2022 redemption date. In December 2019, the Company’s board of directors determined to temporarily suspend Ordinary Redemptions under the share redemption program, and Ordinary Redemptions remained suspended through June 30, 2021. Ordinary Redemptions are all redemptions other than those that qualify for the special provisions for redemptions sought in connection with a stockholder’s death, “Qualifying Disability” or “Determination of Incompetence” (each as defined in the share redemption program and, together, “Special Redemptions”). Upon suspension, all Ordinary Redemption requests that had been received were cancelled and no Ordinary Redemption requests were accepted or collected during the suspension of the share redemption program. Further, on June 3, 2021, the Company announced that, in connection with the approval of the Self-Tender (defined below), the Company’s board of directors approved a temporary suspension of all redemptions under the share redemption program, including Special Redemptions. Upon suspension, all outstanding redemption requests under the share redemption program were cancelled, and no requests were accepted or collected under the share redemption program. On July 14, 2021, the Company’s board of directors approved the July 2021 Amended Share Redemption Program and Ordinary Redemptions and Special Redemptions resumed effective for the July 30, 2021 redemption date. On January 17, 2023, the Company’s board of directors determined to suspend Ordinary Redemptions under the share redemption program to preserve capital in the current market environment. On December 12, 2023, the Company’s board of directors suspended all redemptions, including Special Redemptions, under the Company’s share redemption program. All redemption requests that had been received were canceled. No redemptions will be accepted or collected during the suspension of the share redemption program. In order to provide stockholders with additional liquidity that was in excess of that permitted under the Company’s share redemption program, on June 4, 2021, the Company commenced a self-tender offer (the “Self-Tender”) for up to 33,849,130 shares of common stock at a price of $10.34 per share, or approximately $350.0 million of shares. On July 12, 2021, the Company accepted for purchase 26,375,383 shares properly tendered and not properly withdrawn at a purchase price of $10.34 per share, or approximately $272.7 million of shares, excluding fees and expenses relating to the tender offer. There were several limitations on the Company’s ability to redeem shares under the share redemption program: • Unless the shares were being redeemed in connection with a Special Redemption, the Company could not redeem shares unless the stockholder had held the shares for one year. • Except as provided otherwise for calendar years 2022 and 2021 only, during any calendar year, the share redemption program limited the number of shares the Company could redeem to those that the Company could purchase with the amount of net proceeds from the sale of shares under the dividend reinvestment plan during the prior calendar year, provided that once the Company had received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $10.0 million or less, the last $10.0 million of available funds was reserved exclusively for Special Redemptions. Notwithstanding anything contained in the share redemption program to the contrary, the Company could increase or decrease the funding available for the redemption of shares pursuant to the program upon ten • For calendar year 2022 only, ◦ Prior to effectiveness of the March 2022 Amended Share Redemption Program, th |
REAL ESTATE
REAL ESTATE | 12 Months Ended |
Dec. 31, 2023 | |
Real Estate [Abstract] | |
REAL ESTATE | REAL ESTATE As of December 31, 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 December 31, 2023, the Company’s real estate portfolio was collectively 83% occupied. Included in the properties discussed in the preceding sentences is one office property encompassing approximately 0.3 million rentable square feet that was held for non-sale disposition as of December 31, 2023, see “– Real Estate Held for Non-Sale Disposition” below. The following table summarizes the Company’s investments in real estate as of December 31, 2023 (in thousands), including real estate held for non-sale disposition: 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 $ 141,420 $ (52,231) $ 89,189 McEwen Building (2) 04/30/2012 Franklin TN Office 40,187 (11,840) 28,347 Gateway Tech Center 05/09/2012 Salt Lake City UT Office 36,527 (12,257) 24,270 60 South Sixth 01/31/2013 Minneapolis MN Office 185,359 (57,793) 127,566 Preston Commons 06/19/2013 Dallas TX Office 145,122 (41,862) 103,260 Sterling Plaza 06/19/2013 Dallas TX Office 95,175 (30,619) 64,556 201 Spear Street (3) 12/03/2013 San Francisco CA Office 70,571 (1,543) 69,028 Accenture Tower 12/16/2013 Chicago IL Office 572,272 (163,795) 408,477 Ten Almaden 12/05/2014 San Jose CA Office 131,462 (40,615) 90,847 Towers at Emeryville 12/23/2014 Emeryville CA Office 223,213 (65,700) 157,513 3003 Washington Boulevard 12/30/2014 Arlington VA Office 154,953 (46,009) 108,944 Park Place Village 06/18/2015 Leawood KS Office/Retail 87,083 (13,743) 73,340 201 17th Street 06/23/2015 Atlanta GA Office 105,231 (33,579) 71,652 515 Congress 08/31/2015 Austin TX Office 136,248 (35,623) 100,625 The Almaden 09/23/2015 San Jose CA Office 193,101 (49,537) 143,564 3001 Washington Boulevard 11/06/2015 Arlington VA Office 60,977 (14,722) 46,255 Carillon 01/15/2016 Charlotte NC Office 174,078 (42,033) 132,045 $ 2,552,979 $ (713,501) $ 1,839,478 _____________________ (1) Amounts presented are net of impairment charges and write-offs of fully depreciated/amortized assets. (2) Subsequent to December 31, 2023, the Company completed the sale of the McEwen Building to a purchaser unaffiliated with the Company or the Advisor. See Note 13, “Subsequent Events – Disposition of the McEwen Building.” (3) See below “– Real Estate Held for Non-Sale Disposition.” As of December 31, 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 $ 408,477 19.1 % $ 38,012 $ 27.63 94.4 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 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 December 31, 2023, the leases, including leases that have been executed but not yet commenced, had remaining terms, excluding options to extend and excluding leases at a real estate property held for non-sale disposition, of up to 15.5 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 December 31, 2023 and 2022, respectively. During the years ended December 31, 2023, 2022 and 2021, the Company recognized deferred rent from tenants of $7.6 million, $10.9 million and $2.6 million, respectively. As of December 31, 2023 and 2022, the cumulative deferred rent balance was $94.8 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 $16.6 million and $17.3 million of unamortized lease incentives as of December 31, 2023 and 2022, respectively. As of December 31, 2023, the future minimum rental income from the Company’s properties under its non-cancelable operating leases, excluding leases at a real estate property held for non-sale disposition, was as follows (in thousands): 2024 $ 187,815 2025 180,093 2026 165,716 2027 141,079 2028 121,685 Thereafter 447,313 $ 1,243,701 As of December 31, 2023, excluding tenants at a real estate property held for non-sale disposition, 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), excluding tenants at a real estate property held for non-sale disposition, were as follows: Industry Number of Tenants Annualized Base Rent (1) (in thousands) Percentage of Annualized Base Rent Finance 108 $ 37,035 18.7 % Legal Services 52 24,260 12.2 % $ 61,295 30.9 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 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 December 31, 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 December 31, 2023, excluding a real estate property held for non-sale disposition, the Company’s net investments in real estate in California, Illinois and Texas represented 18.3%, 19.1% and 16.7% 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. Impairment of Real Estate During the year ended December 31, 2023, the Company recorded 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. On November 14, 2023, the borrower under the 201 Spear Street Mortgage Loan (the “Spear Street Borrower”) defaulted on such loan as a result of failure to pay in full the entire November 2023 monthly interest payment. On December 29, 2023, the Spear Street Borrower and the lender of the 201 Spear Street Mortgage Loan (the “Spear Street Lender”) entered a deed-in-lieu of foreclosure transaction (the “Deed-in-Lieu Transaction”). Subsequent to December 31, 2023, the Spear Street Lender transferred the title of the 201 Spear Street property to a third-party buyer of the 201 Spear Street Mortgage Loan. See Note 13, “Subsequent Events – Deed-in-Lieu of Foreclosure of 201 Spear Street.” The Company did not record any impairment charges on its real estate properties during the years ended December 31, 2022 and 2021. Real Estate Held for Non-Sale Disposition As of December 31, 2023, the Company owned a real estate property, 201 Spear Street, that was held for non-sale disposition. The 201 Spear Street property was security for the 201 Spear Street Mortgage Loan, and as mentioned above, the Spear Street Borrower defaulted on such loan as a result of failure to pay in full the entire November 2023 monthly interest payment, resulting in an event of default on the loan on November 14, 2023. For information with respect to the Deed-in-Lieu Transaction and subsequent developments, see Note 8, “Notes Payable” and Note 13, “Subsequent Events – Deed-in-Lieu of Foreclosure of 201 Spear Street.” The following table summarizes the revenue and expenses related to 201 Spear Street, which was held for non-sale disposition (in thousands): Years Ended December 31, 2023 2022 2021 Revenues related to real estate held for non-sale disposition Total revenues (1) $ 8,437 $ 21,669 $ 19,859 Expenses related to real estate held for non-sale disposition Operating expenses $ 7,376 $ 8,092 $ 7,725 Depreciation and amortization 3,941 5,617 6,121 Interest expense 10,001 4,256 2,222 Impairment charge 45,459 — — Total expenses related to real estate held for non-sale disposition 66,777 17,965 16,068 Net (loss) income related to real estate held for non-sale disposition $ (58,340) $ 3,704 $ 3,791 _____________________ (1) Total revenues for the year ended December 31, 2023 includes a reserve for straight-line rent of $4.4 million for a lease at 201 Spear Street. The following table summarizes the assets and liabilities related to 201 Spear Street, which was held for non-sale disposition as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Assets related to real estate held for non-sale disposition Total real estate, at cost and net of impairment charges $ 70,571 $ 153,384 Accumulated depreciation and amortization (1,543) (36,246) Real estate held for non-sale disposition, net 69,028 117,138 Cash and cash equivalents — 1,040 Restricted cash 3,103 — Rent and other receivables, net 1,142 5,669 Prepaid expenses and other assets 1,421 1,602 Total assets $ 74,694 $ 125,449 Liabilities related to real estate held for non-sale disposition Notes payable, net $ 125,000 $ 124,743 Accounts payable and accrued liabilities 3,927 2,042 Due to affiliate 16 — Other liabilities 1,816 2,585 Total liabilities $ 130,759 $ 129,370 |
REAL ESTATE DISPOSITIONS
REAL ESTATE DISPOSITIONS | 12 Months Ended |
Dec. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
REAL ESTATE DISPOSITIONS | REAL ESTATE DISPOSITIONS During the year ended December 31, 2021, the Company sold two office properties to purchasers unaffiliated with the Company or the Advisor. In November 2021, the Company completed the sale of one office property for $143.0 million, before third-party closing costs, closing credits and disposition fees payable to the Advisor, and in January 2021, the Company sold one office property for $103.5 million, before third-party closing costs, credits and disposition fees payable to the Advisor. The Company recognized a gain on sale of $114.3 million related to these dispositions. As of December 31, 2023, the Company did not have any real estate properties held for sale. The results of operations for the properties sold during the year ended December 31, 2021 are included in continuing operations on the Company’s consolidated statements of operations. The following table summarizes certain revenues and expenses related to the Company’s real estate properties that were sold during the year ended December 31, 2021, which were included in continuing operations (in thousands): For the Year Ended Revenues Rental income $ 8,262 Other operating income 92 Total revenues $ 8,354 Expenses Operating, maintenance, and management $ 242 Real estate taxes and insurance 137 Asset management fees to affiliate 412 General and administrative expenses 15 Depreciation and amortization 2,429 Interest expense 681 Total expenses $ 3,916 |
TENANT ORIGINATION AND ABSORPTI
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES | 12 Months Ended |
Dec. 31, 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 December 31, 2023 and 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 December 31, December 31, December 31, December 31, December 31, December 31, Cost $ 34,574 $ 42,555 $ 904 $ 983 $ (7,216) $ (8,384) Accumulated Amortization (25,450) (29,524) (715) (721) 6,147 6,473 Net Amount $ 9,124 $ 13,031 $ 189 $ 262 $ (1,069) $ (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 years ended December 31, 2023, 2022 and 2021 were as follows (in thousands): Tenant Origination and Above-Market Below-Market For the Years Ended December 31, For the Years Ended December 31, For the Years Ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 2021 Amortization $ (3,907) $ (5,744) $ (8,175) $ (73) $ (86) $ (101) $ 842 $ 1,366 $ 2,855 The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2023 is estimated to be amortized for the years ending December 31 as follows (in thousands): Tenant Origination and Above-Market Below-Market 2024 $ (2,750) $ (69) $ 525 2025 (2,311) (68) 314 2026 (1,741) (52) 198 2027 (1,033) — 32 2028 (910) — — Thereafter (379) — — $ (9,124) $ (189) $ 1,069 Weighted-Average Remaining Amortization Period 4.1 years 2.8 years 2.4 years |
REAL ESTATE EQUITY SECURITIES
REAL ESTATE EQUITY SECURITIES | 12 Months Ended |
Dec. 31, 2023 | |
Equity Method Investments and Joint Ventures [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 December 31, 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 December 31, 2023, the aggregate book value and fair value of the Company’s investment in the units of the SREIT was $51.8 million, which was based on the closing price of the SREIT units on the SGX-ST of $0.240 per unit as of December 31, 2023. For the period from July 19, 2019 through November 8, 2021, the Company concluded that based on its ownership interest, it exercised significant influence over the operations, financial policies and decision making with respect to the SREIT. Accordingly, the Company accounted for its investment in the SREIT during this period under the equity method of accounting. Income was allocated according to the Company’s ownership interest at each month-end and recorded as equity income (loss) from unconsolidated entity. Any dividends received from the SREIT reduced the carrying amount of the investment. 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. During the period from November 9, 2021 through December 31, 2021, the Company recorded an unrealized gain on real estate equity securities of $16.8 million. During the years ended December 31, 2023 and 2022, the Company recorded an unrealized loss on real estate equity securities of $35.6 million and $92.8 million, respectively. During the years ended December 31, 2023 and 2022, the Company recognized $11.9 million and $14.9 million of dividend income from its investment in the SREIT, respectively. During the period from January 1, 2021 through November 8, 2021, the Company recorded equity in income from unconsolidated entity of $8.7 million related to its investment in the SREIT, including a gain of $3.1 million related to the Company’s sale of 73,720,000 units in the SREIT on November 9, 2021 and a gain of $1.1 million to reflect the net effect to the Company’s investment as a result of the net proceeds raised by the SREIT in a private offering in July 2021. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE As of December 31, 2023 and 2022, the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of Book Value as of Contractual Interest Rate as of December 31, 2023 (1) Effective Interest Rate as of December 31, 2023 (1) Payment Type Maturity Date (2) The Almaden Mortgage Loan (3) $ 119,870 $ 123,000 7.45% 7.45% Interest Only 02/01/2026 201 Spear Street Mortgage Loan (4) 125,000 125,000 One-month Term SOFR + 1.45% 13.50% Interest Only 01/05/2024 Carillon Mortgage Loan (5) 94,400 88,800 One-month Term SOFR + 1.50% 6.85% Interest Only 04/11/2024 Modified Portfolio Revolving Loan Facility (6) 249,145 249,145 One-month Term SOFR + 1.60% 6.95% Interest Only 03/01/2024 3001 & 3003 Washington Mortgage Loan 140,410 142,232 One-month Term SOFR + 0.10% + 1.45% 6.90% Principal & 06/01/2024 Accenture Tower Revolving Loan (7) 306,000 281,250 One-month Term SOFR + 2.35% 7.70% Interest Only 11/02/2024 Unsecured Credit Facility (8) 37,500 37,500 One-month Term SOFR + 2.20% 7.55% Interest Only 07/30/2024 Amended and Restated Portfolio Loan Facility (9) 601,288 559,468 One-month BSBY (10) + 1.80% 7.24% Interest Only 02/06/2024 Park Place Village Mortgage Loan (11) 65,000 65,000 One-month Term SOFR + 1.95% 7.30% Interest Only 08/31/2025 Total notes payable principal outstanding $ 1,738,613 $ 1,671,395 Deferred financing costs, net (2,717) (4,107) Total Notes Payable, net $ 1,735,896 $ 1,667,288 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2023. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2023, consisting of the contractual interest rate and using interest rate indices as of December 31, 2023, where applicable. For information regarding the Company’s derivative instruments, see Note 9, “Derivative Instruments.” (2) Represents the maturity date as of December 31, 2023; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown. See below. (3) See below, “– Recent Financing Transactions - The Almaden Mortgage Loan.” (4) The Spear Street Borrower defaulted on the 201 Spear Street Mortgage Loan as a result of failure to pay in full the entire November 2023 monthly interest payment, resulting in an event of default on the loan on November 14, 2023. During the time the default exists, the interest rate under this loan is calculated at the lesser of (i) the maximum rate allowed by law or (ii) 5.0% plus the greater of (a) one-month term SOFR plus 1.45% or (b) the Prime Rate as determined on the first business day of the month in which the event of default occurred and the first business day of every month thereafter. Additionally, late charges may apply in the amount of the lesser of (i) 4.0% of each late payment or (ii) the maximum amount allowed by law. Subsequent to December 31, 2023, the Spear Street Lender transferred the title of the 201 Spear Street property to a third-party buyer of the 201 Spear Street Mortgage Loan. See Note 13, “Subsequent Events – Deed-in-Lieu of Foreclosure of 201 Spear Street.” (5) As of December 31, 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 December 31, 2023, the outstanding balance under the loan consisted of $88.8 million of term debt and $5.6 million of revolving debt. As of December 31, 2023, $16.6 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. As of December 31, 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 December 31, 2023, the Modified Portfolio Revolving Loan Facility was secured by 515 Congress, the McEwen Building, Gateway Tech Center and 201 17th Street. As of December 31, 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 December 31, 2023, the outstanding balance under the loan consisted of $124.6 million of term debt and $124.6 million of revolving debt. As of December 31, 2023, the Modified Portfolio Revolving Loan Facility had one 12-month extension option, subject to certain terms, conditions and fees as described in the loan documents. Subsequent to December 31, 2023, in connection with the disposition of the McEwen Building, the borrowers under the Modified Portfolio Revolving Loan Facility entered into a loan modification with the lenders. See Note 13, “Subsequent Events – Modified Portfolio Revolving Loan Facility.” (7) See below, “– Recent Financing Transactions - Accenture Tower Revolving Loan.” (8) As of December 31, 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 December 31, 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) See below, “– Recent Financing Transactions - Amended and Restated Portfolio Loan Facility.” (10) Bloomberg Short-Term Bank Yield Index (“BSBY”). (11) As of December 31, 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 $1.2 billion of notes payable maturing during the 12-month period from the issuance of these financial statements. 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. In order to refinance, restructure or extend the Company’s maturing debt obligations, the Company has been required to reduce the loan commitments and/or make paydowns on certain loans, and the Company anticipates it may be required to make additional reductions to loan commitments and paydowns on the loans maturing during the next 12 months in order to refinance, restructure or extend those loans. As a result of reductions in loan commitments and paydowns and the ongoing liquidity needs in the Company’s real estate portfolio, in addition to raising capital through new equity or debt, the Company may consider selling assets into a challenged real estate market in an effort to manage its liquidity needs. Selling real estate assets in the current market would likely impact the ultimate sale price. The Company also may defer noncontractual expenditures. 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, “Going Concern” and Note 13, “Subsequent Events” During the years ended December 31, 2023, 2022 and 2021, the Company’s interest expense related to notes payable was $120.5 million, $60.3 million and $34.6 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 9, “Derivative Instruments.” Included in interest expense was the amortization of deferred financing costs of $4.2 million, $3.9 million and $4.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023 and 2022, $9.9 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 December 31, 2023 (in thousands): 2024 $ 1,553,743 2025 65,000 2026 119,870 2027 — 2028 — Thereafter — $ 1,738,613 The Company’s notes payable contain financial debt covenants. Except as disclosed with respect to the 201 Spear Street Mortgage Loan, as of December 31, 2023, the Company believes it was in compliance with these debt covenants. See Note 13, “Subsequent Events – Deed-in-Lieu of Foreclosure of 201 Spear Street.” In addition, the Company’s loan agreements contain cross default provisions, including that the failure of one or more of the Company’s subsidiaries to pay debt as it matures under one debt facility may trigger the acceleration of the Company’s indebtedness under other debt facilities. Recent Financing Transactions 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 remained available from the original maturity date of November 2, 2023, in each case subject to certain terms and conditions contained in the loan documents. On December 1, 2023, the Company, through the Accenture Tower Borrower, exercised its first extension option pursuant to the loan agreement and extended the maturity date of the Accenture Tower Revolving Loan to November 2, 2024 (the “First Extension Option”). As of December 31, 2023, one 12-month extension option remains available pursuant to the loan agreement, subject to certain terms and conditions contained in the loan documents. In connection with the First Extension Option, the borrowing capacity under the Accenture Tower Revolving Loan was reduced to $306.0 million, of which $229.5 million was term debt and $76.5 million was revolving debt. As of December 31, 2023, the outstanding principal balance of the Accenture Tower Revolving Loan was $306.0 million, which consisted of $229.5 million of term debt and $76.5 million of revolving debt. The Almaden Mortgage Loan On November 18, 2020, the Company, through an indirect wholly owned subsidiary (“The Almaden Borrower”), entered into a three-year mortgage loan with a lender unaffiliated with the Company or the Advisor (“The Almaden Lender”) for $123.0 million (“The Almaden Mortgage Loan”). The Almaden Mortgage Loan is secured by The Almaden property. The Almaden Mortgage Loan had a maturity date of December 1, 2023 with two 12-month extension options, subject to certain terms, conditions and fees as described in the loan documents. On December 1, 2023, the Company, through The Almaden Borrower, entered into a modification agreement with The Almaden Lender to extend the initial maturity date of The Almaden Mortgage Loan to December 22, 2023. The two 12-month extension options pursuant to The Almaden Mortgage Loan remained available from the original maturity date of December 1, 2023, in each case subject to terms and conditions contained in the loan documents. On December 20, 2023, the Company, through The Almaden Borrower, entered into a second modification agreement with The Almaden Lender (“The Almaden Second Loan Modification”). Pursuant to The Almaden Second Loan Modification, The Almaden Lender agreed to extend the maturity of The Almaden Mortgage Loan to February 1, 2026 with no additional extension options. In addition, The Almaden Second Loan Modification required that The Almaden Borrower make a principal paydown on the loan in the amount of $3.0 million, and the aggregate commitment under The Almaden Mortgage Loan was permanently reduced by that amount. Beginning January 1, 2024, The Almaden Borrower is required to make a monthly principal payment in the amount of $130,000. The Almaden Second Loan Modification provides that excess cash flow (“The Almaden Excess Cash Flow”) from The Almaden property be deposited monthly into an escrow account held by The Almaden Lender (“Cash Flow Escrow”). Funds may not be withdrawn from the Cash Flow Escrow without the prior written consent of The Almaden Lender, and upon certain events, The Almaden Lender has the right to withdraw funds from the Cash Flow Escrow and apply such funds to any due and payable obligations of The Almaden Borrower or to pay or reimburse the Almaden Borrower for approved tenant improvements, leasing commissions and capital improvements and for operating shortfalls related to The Almaden property. The Almaden Excess Cash Flow for any calendar month means an amount equal to all income from The Almaden property and any other income received by The Almaden Borrowers or on behalf of The Almaden Borrowers less (a) operating expenses of The Almaden property paid by The Almaden Borrower as reasonably approved by The Almaden Lender, and (b) payment of debt service and allocated operating costs of the Company. Prior to The Almaden Second Loan Modification, The Almaden Mortgage Loan bore interest at a fixed rate of 3.65% for the initial term of the loan. Pursuant to The Almaden Second Loan Modification, The Almaden Mortgage Loan bears interest at a fixed rate of 7.45%. As of December 31, 2023, the outstanding principal balance of The Almaden Mortgage Loan was $119.9 million after the $3.0 million principal paydown and a monthly principal payment in the amount of $130,000. Amended and Restated Portfolio Loan Facility On November 3, 2021, certain of the Company’s indirect wholly owned subsidiaries (the “Amended and Restated Portfolio Loan Facility Borrowers”), entered into a two-year loan agreement with Bank of America, N.A., as administrative agent (the “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 signatory thereto as lenders (as subsequently modified and amended, 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 “Portfolio Loan 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 “Properties”). On December 22, 2023, the Amended and Restated Portfolio Loan Facility matured without repayment. The aggregate outstanding principal balance of the Amended and Restated Portfolio Loan Facility was approximately $606.3 million as of December 22, 2023. On December 29, 2023, the Company, through the Amended and Restated Portfolio Loan Facility Borrowers, entered into a third loan modification and extension agreement with the Agent and the Portfolio Loan Lenders (the “Third Extension Agreement”) effective as of December 22, 2023. Pursuant to the Third Extension Agreement, the Agent and Portfolio Loan Lenders agreed to extend the maturity of the facility to February 6, 2024, and that any default that may have occurred under the Amended and Restated Portfolio Loan Facility or under any related loan document by virtue of the loan not being repaid on any prior maturity date was waived. The Third Extension Agreement provides that 100% of excess cash flow (“Excess Cash Flow”) from the Properties be deposited monthly into a cash collateral account (the “Cash Sweep Collateral Account”). Funds may not be withdrawn from the Cash Sweep Collateral Account without the prior written consent of the Agent, and upon certain events, the Agent has the right to withdraw funds from the Cash Sweep Collateral Account and apply such funds to any due and payable obligations of the Amended and Restated Portfolio Loan Facility Borrowers or to pay certain costs and expenses related to the Properties. Excess Cash Flow for any calendar month means an amount equal to (a) gross revenues of the Amended and Restated Portfolio Loan Facility Borrowers from the Properties less (b) an amount equal to (i) operating expenses of the Properties paid by the Amended and Restated Portfolio Loan Facility Borrowers as reasonably approved by the Agent, plus (ii) principal and interest paid with respect to the Amended and Restated Portfolio Loan Facility, plus (iii) a limited amount of REIT-level general and administrative expenses allocated to the Properties, plus (iv) asset management fees to the Advisor in an amount not to exceed 0.75% of the cost basis of the Properties per annum, plus (v) any required payments under any permitted interest rate swap protection agreements entered into by the Amended and Restated Portfolio Loan Facility Borrowers. In addition, the Third Extension Agreement required that the Amended and Restated Portfolio Loan Facility Borrowers make a principal paydown on the loan in the amount of $5.0 million, and the aggregate commitment under the Amended and Restated Portfolio Loan Facility was permanently reduced by that amount. As of December 31, 2023, the aggregate outstanding principal balance of the Amended and Restated Portfolio Loan Facility was approximately $601.3 million after the $5.0 million principal paydown. The Amended and Restated Portfolio Loan Facility Borrowers also agreed to pay the Portfolio Loan Lenders a non-refundable fee in the amount of $1.4 million and certain fees, commissions and costs incurred by the Agent and its counsel in connection with the Third Extension Agreement. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Dec. 31, 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 December 31, 2023, the Company has entered into 16 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 December 31, 2023 and 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): December 31, 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 December 31, 2023 Derivative instruments not designated as hedging instruments Interest rate swaps (1) 16 $ 1,300,000 20 $ 1,619,190 Fallback SOFR (2) / Fixed at 1.08% - 1.28% One-month Term SOFR/ Fixed at 2.38% - 3.92% 2.8% 2.1 Interest rate cap 1 $ 125,000 — $ — One-month Term SOFR at 6.49% 6.5% 0.1 _____________________ (1) Subsequent to December 31, 2023, the Company terminated two interest rate swap agreements and received aggregate settlement payments of $6.6 million. (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 an 11.448 basis point adjustment. As of December 31, 2023, the Company had four interest rate swaps which had been converted to Fallback SOFR, all with a maturity date of 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 December 31, 2023 and 2022 (dollars in thousands): December 31, 2023 December 31, 2022 Derivative Instruments Balance Sheet Location Number of Fair Value Number of Fair Value Derivative instruments not designated as hedging instruments Interest rate swaps Prepaid expenses and other assets, at fair value (1) 15 $ 23,891 18 $ 40,216 Interest rate swaps Other liabilities, at fair value (2) 1 $ (175) 2 $ (75) Interest rate cap Prepaid expenses and other assets, at fair value 1 $ — — $ — _____________________ (1) As of December 31, 2022, prepaid expenses and other assets included an $8.7 million asset related to the fair value of two off-market interest rate swaps (which expired on November 2, 2023) determined to be hybrid financial instruments for which the Company elected to apply the fair value option. The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands): For the Years Ended December 31, 2023 2022 2021 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps $ — $ 7,152 $ 18,020 Realized gain recognized on interest rate swaps (31,358) (6,895) — Unrealized loss (gain) on interest rate swaps (1) 16,426 (52,189) (23,283) Unrealized loss on interest rate cap 25 — — Net gain on derivative instruments $ (14,907) $ (51,932) $ (5,263) _____________________ (1) |
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES 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 December 31, 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 December 31, 2023 and 2022, which carrying amounts generally do not approximate the fair values (in thousands): December 31, 2023 December 31, 2022 Face Value Carrying Fair Value Face Value Carrying Fair Value Financial liabilities: Notes payable $ 1,738,613 $ 1,735,896 $ 1,679,259 $ 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 December 31, 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 $ 51,802 $ 51,802 $ — $ — Asset derivatives - interest rate swaps 23,891 — 23,891 — Asset derivatives - interest rate caps — — — — Liability derivatives - interest rate swaps (175) — (175) — During the year ended December 31, 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 year ended December 31, 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 | 12 Months Ended |
Dec. 31, 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 REIT II (liquidated May 2023) and KBS Growth & Income REIT. As of January 1, 2021, 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 years ended December 31, 2023, 2022 and 2021, respectively, and any related amounts receivable and payable as of December 31, 2023 and 2022 (in thousands): Incurred Years Ended Receivable as of Payable as of 2023 2022 2021 2023 2022 2023 2022 Expensed Asset management fees (1) $ 20,839 $ 20,102 $ 19,832 $ — $ — $ 16,992 $ 10,191 Reimbursement of operating expenses (2) 420 325 577 — 10 416 174 Disposition fees (3) — — 2,426 — — — — $ 21,259 $ 20,427 $ 22,835 $ — $ 10 $ 17,408 $ 10,365 _____________________ (1) See “Asset Management Fees” below and under Note 3, “Summary of Significant Accounting Policies— Related Party Transactions—Asset Management Fee.” (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 $111,000, $163,000 and $428,000 for the years ended December 31, 2023, 2022 and 2021, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2023, 2022 and 2021. 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 Note 3, “Summary of Significant Accounting Policies— Related Party Transactions—Asset Management Fee”), 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 December 31, 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. As of December 31, 2023, the Advisor had 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. (3) Disposition fees with respect to real estate sold are included in the gain on sale of real estate, net, in the accompanying consolidated statements of operations. 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 each of the years ended December 31, 2023, 2022 and 2021, the Advisor incurred $0.1 million for the costs of the supplemental coverage obtained by the Company. Asset Management Fees As of December 31, 2023 and 2022, the Company had accrued $17.0 million and $10.2 million of asset management fees, respectively, of which $8.5 million were Deferred Asset Management Fees as of December 31, 2023 and 2022, and $8.5 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 December 31, 2023 and 2022, respectively, see Note 3, “Summary of Significant Accounting Policies— Related Party Transactions—Asset Management Fee.” For the year ended December 31, 2022, the Company and the Advisor agreed to adjust MFFO for the purpose of the calculation above to add back the following non-operating expenses: a one-time write-off of prepaid offering costs of $2.7 million and a $0.5 million fee to the conflicts committee’s financial advisor in connection with the conflicts committee’s review of alternatives available to the Company. 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 years ended December 31, 2023, 2022 and 2021, the Company recognized $0.3 million, $0.3 million and $0.3 million 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 7, “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. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 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 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 | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company evaluates subsequent events up until the date the consolidated financial statements are issued. Deed-in-Lieu of Foreclosure of 201 Spear Street On November 14, 2023, the Spear Street Borrower defaulted on the 201 Spear Street Mortgage Loan as a result of failure to pay in full the entire November 2023 monthly interest payment, resulting in an event of default on the loan on November 14, 2023. On December 29, 2023, the Spear Street Borrower and the Spear Street Lender entered the Deed-in-Lieu Transaction. Pursuant to the Deed-in-Lieu Transaction, the Spear Street Lender has the right to transfer title to the 201 Spear Street property to itself or its designee for up to a six-month period ending June 15, 2024. On January 9, 2024, the Spear Street Lender transferred the title of the 201 Spear Street property to a third-party buyer of the 201 Spear Street Mortgage Loan. Amended and Restated Portfolio Loan Facility On February 6, 2024, the Company, through certain of its indirect wholly owned subsidiaries (the “Amended and Restated Portfolio Loan Facility Borrowers”), entered into a fourth loan modification and extension agreement with the Agent and the Portfolio Loan Lenders (the “Fourth Extension Agreement”). Pursuant to the Fourth Extension Agreement, the Agent and Portfolio Loan Lenders agreed to extend the maturity of the Amended and Restated Portfolio Loan Facility to August 6, 2024. Under the Fourth Extension Agreement, the Agent and the Portfolio Loan Lenders waived the requirement for the properties securing the loan (the “Portfolio Loan Properties”) to satisfy the minimum required ongoing debt service coverage ratio as of the December 31, 2023, March 31, 2024 and June 30, 2024 test dates and waived the requirement for REIT Properties III as guarantor to satisfy a net worth covenant for the period between February 6, 2024 and August 6, 2024. The Fourth Extension Agreement also includes, among other requirements, a requirement for the Company to raise not less than $100,000,000 in new equity, debt or a combination of both on or prior to July 15, 2024. The Fourth Extension Agreement provides that 100% of excess cash flow from the Portfolio Loan Properties continues to be deposited monthly into a cash collateral account (the “Cash Sweep Collateral Account”). Funds may not be withdrawn from the Cash Sweep Collateral Account without the prior written consent of the Agent, and upon certain events, the Agent has the right to withdraw funds from the Cash Sweep Collateral Account. The Fourth Extension Agreement provides that, subject to the requirements contained therein, the Amended and Restated Portfolio Loan Facility Borrowers will be permitted to withdraw funds from the Cash Sweep Collateral Account to pay or reimburse the Amended and Restated Portfolio Loan Facility Borrowers for approved tenant improvements, leasing commissions and capital improvements and for operating shortfalls related to the Portfolio Loan Properties to the extent they occur in any month. Additionally, the Fourth Extension Agreement provides a default will occur under the Amended and Restated Portfolio Loan Facility if a written demand for payment following a default under the following loans is delivered by U.S. Bank, National Association under (a) the Company’s unsecured credit facility, (b) the payment guaranty agreement of the Company’s Modified Portfolio Revolving Loan Facility or (c) any other indebtedness of REIT Properties III where the demand made or amount guaranteed is greater than $5.0 million. The Amended and Restated Portfolio Loan Facility Borrowers also agreed to pay the Portfolio Loan Lenders a non-refundable fee in the amount of $0.9 million, to deposit $5.0 million into the Cash Sweep Collateral Account (which will generally be used to fund capital expenditures and operating cash flow needs of the Portfolio Loan Properties), and to pay the Portfolio Loan Lenders an exit fee in the amount of $1.0 million, which is due on the earliest to occur of the maturity date, the repayment of the loan in full and the occurrence of a default under the loan. Disposition of the McEwen Building On April 30, 2012, the Company, through an indirect wholly owned subsidiary, acquired an office building containing 175,262 rentable square feet located on approximately 10.7 acres of land in Franklin, Tennessee (the “McEwen Building”). On February 21, 2024, the Company completed the sale of the McEwen Building to a purchaser unaffiliated with the Company or the Advisor, for $48.8 million, before third-party closing costs of approximately $1.1 million and excluding disposition fees payable to the Advisor. Modified Portfolio Revolving Loan Facility On October 17, 2018, certain of the Company’s indirect wholly owned subsidiaries (the “Modified Portfolio Revolving Loan Borrowers”) entered into a loan facility (as subsequently modified and amended, the “Modified Portfolio Revolving Loan Facility”) with U.S. Bank National Association, as administrative agent (the “Modified Portfolio Revolving Loan Agent”). The current lenders under the Modified Portfolio Revolving Loan Facility are U.S. Bank National Association, Regions Bank, Citizens Bank, City National Bank and Associated Bank, National Association (the “Modified Portfolio Revolving Loan Lenders”). On February 21, 2024, in connection with the disposition of the McEwen Building and pursuant to the Third Modification Agreement (defined below), the Modified Portfolio Revolving Loan Borrowers paid the Modified Portfolio Revolving Loan Agent the net sales proceeds from the sale of the McEwen Building (“Required McEwen Payment”) of $46.2 million, which amount was applied to reduce the outstanding principal amount of the Modified Portfolio Revolving Loan Facility to $203.0 million, and the McEwen Building was released as security for the Modified Portfolio Revolving Loan Facility. Notwithstanding the Required McEwen Payment, the Third Modification Agreement allows the Company to draw back a portion of the loan payment through the holdbacks described below, providing additional liquidity to the Company to fund capital needs in the portfolio. Following the release of the McEwen Building, the Modified Portfolio Revolving Loan Facility is secured by 515 Congress, Gateway Tech Center and 201 17th Street (the “Modified Portfolio Revolving Loan Properties”). On February 9, 2024, the Company, through the Modified Portfolio Revolving Loan Borrowers, entered into an additional advance and third modification agreement (the “Third Modification Agreement”) with the Modified Portfolio Revolving Loan Agent and the Modified Portfolio Revolving Loan Lenders. In connection with the Required McEwen Payment and the release of the McEwen Building, the Third Modification Agreement provides that the following terms apply to the Modified Portfolio Revolving Loan Facility: (i) the maturity date is extended to March 1, 2026, (ii) the interest rate resets to one-month Term SOFR plus 300 basis points and the loan requires quarterly payments of principal in the amount of $880,900, (iii) the revolving portion of the facility is converted into non-revolving debt, the accordion option is eliminated (whereby the Modified Portfolio Revolving Loan Borrowers previously had the ability to request that the commitment be increased subject to the Modified Portfolio Revolving Loan Lenders’ consent and certain additional conditions), and the revolving portion of the Modified Portfolio Revolving Loan Facility and the rights of the Modified Portfolio Revolving Loan Borrowers to reborrow debt under the loan once it has been paid is eliminated, (iv) holdbacks of a portion of the Modified Portfolio Revolving Loan Facility are established, which holdbacks may be disbursed subject to the satisfaction of certain terms and conditions, as described below, (v) the Company is restricted from paying dividends or distributions to its stockholders or redeeming shares of its stock without the Modified Portfolio Revolving Loan Agent’s prior written consent, except for any amounts that the Company is required to distribute to its stockholders to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and (vi) certain cash management sweeps are established, as described below. As a result of the release of the McEwen Building, the Third Modification Agreement allows the Company to draw back a portion of the amount of the loan paydown from the McEwen Building sale proceeds through holdbacks on the Modified Portfolio Revolving Loan Facility, consisting of (i) a holdback for the payment of, or reimbursement of the Modified Portfolio Revolving Loan Borrowers’ payment of, tenant improvements, leasing commissions and capital expenditures related to the Modified Portfolio Revolving Loan Properties equal to $10.0 million and (ii) a holdback for the payment of, or reimbursement of REIT Properties III’s (the “Guarantor”), an indirect wholly owned subsidiary of the Company, and/or its subsidiaries’ payment of, tenant improvements, leasing commissions and capital expenditures for real property and related improvements owned directly or indirectly by the Guarantor in an amount equal to $6.2 million. Disbursements of the holdback amounts are subject to the conditions of the Third Modification Agreement. In the event of disbursements of the holdback amounts, such advances by the Modified Portfolio Revolving Loan Lenders will increase the aggregate principal commitment under the Modified Portfolio Revolving Loan Facility. Also as a result of the release of the McEwen Building, the Third Modification Agreement provides that excess cash flow from the Modified Portfolio Revolving Loan Properties be deposited monthly into an interest-bearing account held by the Modified Portfolio Revolving Loan Agent for the benefit of the Modified Portfolio Revolving Loan Lenders (“Cash Management Account”). So long as no default exists under the Modified Portfolio Revolving Loan Facility and subject to the terms and conditions in the Third Modification Agreement, the Modified Portfolio Revolving Loan Borrowers may request disbursement from the Cash Management Account for the payment of debt service payments (including the quarterly principal payments) and other payments due under the loan, for tenant improvements, leasing commissions, capital expenditures and other operating shortfalls and for certain REIT-level expenses. The Modified Portfolio Revolving Loan Agent has the sole right to make withdrawals from the Cash Management Account. In connection with the Third Modification Agreement, the Guarantor and the Modified Portfolio Revolving Loan Lenders also agreed to amendments to the Guarantor’s financial covenants (increasing the allowed leverage ratio and reducing the required earnings to fixed charges ratios). The Third Modification Agreement provides that disbursements of the holdback amounts and withdrawals from the Cash Management Account are subject to compliance with the above referenced amended Guarantor financial covenants and other covenants that require the Modified Portfolio Revolving Loan Properties to satisfy certain leverage and debt service coverage ratios and that the Modified Portfolio Revolving Loan Agent may demand a pay down of the outstanding principal balance of the loan to the extent of noncompliance with such covenants. Termination of Share Redemption Program and Dividend Reinvestment Plan |
SCHEDULE III REAL ESTATE ASSETS
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | 12 Months Ended |
Dec. 31, 2023 | |
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | Initial Cost to Company Gross Amount at which Description Location Ownership Encumbrances Land Building and Improvements (1) Total Cost Capitalized Subsequent to Acquisition (2) Land Building and Improvements (1) Total (3) Accumulated Original Date of Date Town Center Plano, TX 100% (4) $ 7,428 $ 108,547 $ 115,975 $ 25,445 $ 7,428 $ 133,992 $ 141,420 $ (52,231) 2001/2002/2006 03/27/2012 McEwen Building (5) Franklin, TN 100% (6) 5,600 34,704 40,304 (117) 5,600 34,587 40,187 (11,840) 2009 04/30/2012 Gateway Tech Center Salt Lake City, UT 100% (6) 5,617 20,051 25,668 10,859 5,617 30,910 36,527 (12,257) 1909 05/09/2012 60 South Sixth Minneapolis, MN 100% (4) 16,951 109,191 126,142 59,217 16,951 168,408 185,359 (57,793) 1991 01/31/2013 Preston Commons Dallas, TX 100% (4) 17,188 96,330 113,518 31,604 17,188 127,934 145,122 (41,862) 1958/1986 06/19/2013 Sterling Plaza Dallas, TX 100% (4) 6,800 68,292 75,092 20,083 6,800 88,375 95,175 (30,619) 1984 06/19/2013 201 Spear Street (7) San Francisco, CA 100% $ 125,000 40,279 85,941 126,220 (55,649) 24,473 46,098 70,571 (1,543) 1984 12/03/2013 Accenture Tower Chicago, IL 100% 306,000 49,306 370,662 419,968 152,304 49,306 522,966 572,272 (163,795) 1987 12/16/2013 Ten Almaden San Jose, CA 100% (4) 7,000 110,292 117,292 14,170 7,000 124,462 131,462 (40,615) 1988 12/05/2014 Towers at Emeryville Emeryville, CA 100% (4) 35,774 147,167 182,941 40,272 35,774 187,439 223,213 (65,700) 1972/1975/1985 12/23/2014 3003 Washington Boulevard Arlington, VA 100% (8) 18,800 129,820 148,620 6,333 18,800 136,153 154,953 (46,009) 2014 12/30/2014 Park Place Village Leawood, KS 100% 65,000 11,009 117,070 128,079 (40,996) 8,101 78,982 87,083 (13,743) 2007 06/18/2015 201 17th Street Atlanta, GA 100% (6) 5,277 86,859 92,136 13,095 5,277 99,954 105,231 (33,579) 2007 06/23/2015 515 Congress Austin, TX 100% (6) 8,000 106,261 114,261 21,987 8,000 128,248 136,248 (35,623) 1975 08/31/2015 The Almaden San Jose, CA 100% 119,870 29,000 130,145 159,145 33,956 29,000 164,101 193,101 (49,537) 1980/1981 09/23/2015 3001 Washington Boulevard Arlington, VA 100% (8) 9,900 41,551 51,451 9,526 9,900 51,077 60,977 (14,722) 2015 11/06/2015 Carillon Charlotte, NC 100% 94,400 19,100 126,979 146,079 27,999 19,100 154,978 174,078 (42,033) 1991 01/15/2016 TOTAL $ 293,029 $ 1,889,862 $ 2,182,891 $ 370,088 $ 274,315 $ 2,278,664 $ 2,552,979 $ (713,501) ____________________ (1) Building and improvements includes tenant origination and absorption costs and construction in progress. (2) Costs capitalized subsequent to acquisition is net of impairment charges, write-offs of fully depreciated/amortized assets and property damage. (3) The aggregate cost of real estate for federal income tax purposes was $2.8 billion (unaudited) as of December 31, 2023. (4) As of December 31, 2023, these properties served as the security for the Amended and Restated Portfolio Loan Facility, which had an outstanding principal balance of $601.3 million. (5) Subsequent to December 31, 2023, the Company completed the sale of the McEwen Building to a purchaser unaffiliated with the Company or the Advisor. See Note 13, “Subsequent Events – Disposition of the McEwen Building.” (6) As of December 31, 2023, these properties served as the security for the Modified Portfolio Revolving Loan Facility, which had an outstanding principal balance of $249.1 million. (7) This property was held for non-sale disposition as of December 31, 2023. (8) 2023 2022 2021 Real Estate: Balance at the beginning of the year $ 2,568,352 $ 2,441,266 $ 2,554,572 Improvements 76,346 144,693 69,527 Write off of fully depreciated and fully amortized assets (46,260) (17,607) (15,502) Impairments (45,459) — — Sale — — (167,331) Balance at the end of the year $ 2,552,979 $ 2,568,352 $ 2,441,266 Accumulated depreciation and amortization: Balance at the beginning of the year $ (656,401) $ (572,968) $ (525,629) Depreciation and amortization expense (103,360) (101,040) (100,036) Write off of fully depreciated and fully amortized assets 46,260 17,607 15,502 Sale — — 37,195 Balance at the end of the year $ (713,501) $ (656,401) $ (572,968) |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). |
Use of Estimates | The preparation of the consolidated financial statements and accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. |
Reclassifications | Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. |
Comprehensive Income (Loss) | Comprehensive income (loss) for each of the years ended December 31, 2023, 2022 and 2021 was equal to net income (loss) for these respective periods. |
Revenue Recognition-Operating Leases, Real Estate | Revenue Recognition - Operating Leases Real Estate The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the lessee or lessor supervises the construction and bears the risk of cost overruns; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. In accordance with ASU 2016-02, Leases (Topic 842) (“Topic 842”), tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s statement of operations. In addition, the Company adopted the practical expedient available under Topic 842 to not separate nonlease components from the associated lease component and instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met, specifically related to tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements for common area maintenance as (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations. In accordance with Topic 842, the Company makes a determination of whether the collectibility of the lease payments in an operating lease is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any contractual lease payments, deferred rent receivable, and variable lease payments and would recognize rental income only to the extent cash has been received. These changes to the Company’s collectibility assessment are reflected as an adjustment to rental income. |
Revenue Recognition and Sales of Real Estate | Sales of Real Estate The Company follows the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) |
Real Estate Equity Securities | Real Estate Equity Securities Dividend income from real estate equity securities is recognized on an accrual basis based on eligible units as of the ex-dividend date. Real Estate Equity Securities |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short term investments. Cash and cash equivalents are stated at cost, which approximates fair value. There are no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2023. |
Depreciation and Amortization | Depreciation and Amortization |
Real Estate Acquisition Valuation | Real Estate Acquisition Valuation The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination or an asset acquisition. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the set is not a business. For purposes of this test, land and buildings can be combined along with the intangible assets for any in-place leases and accordingly, most acquisitions of investment properties would not meet the definition of a business and would be accounted for as an asset acquisition. To be considered a business, a set must include an input and a substantive process that together significantly contributes to the ability to create an output. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. For asset acquisitions, the cost of the acquisition is allocated to individual assets and liabilities on a relative fair value basis. Acquisition costs associated with business combinations are expensed as incurred. Acquisition costs associated with asset acquisitions are capitalized. The Company assesses the acquisition date fair values of all tangible assets, identifiable intangibles and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining non-cancelable terms of the respective lease, including any below-market renewal periods. The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. The Company amortizes the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining non-cancelable term of the leases. Subsequent to the acquisition of a property, the Company may incur and capitalize costs necessary to get the property ready for its intended use. During that time, certain costs such as legal fees, real estate taxes and insurance and financing costs are also capitalized. |
Impairment of Real Estate and Related Intangible Assets and Liabilities | Impairment of Real Estate and Related Intangible Assets and Liabilities |
Real Estate Held for Sale | Real Estate Held for Sale |
Real Estate Held for Non-Sale Disposition | Real Estate Held for Non-Sale Disposition The Company considers real estate assets that do not meet the criteria for held for sale but are expected to be disposed of other than by sale as real estate held for non-sale disposition. The assets and liabilities related to real estate held for non-sale disposition are included in the Company’s consolidated balance sheets and the results of operations are presented as part of continuing operations in the Company’s consolidated statements of operations for all periods presented. Operating results of properties that will be disposed of other than by sale will be included in continuing operations on the Company’s consolidated statements of operations until the ultimate disposition of real estate. |
Restricted Cash | Restricted Cash |
Rents and Other Receivables | Rents and Other Receivables |
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 on its variable rate notes payable. The Company records these derivative instruments at fair value on the accompanying consolidated balance sheets. The changes in fair value for derivative instruments that are not designated as a hedge or that do not meet the hedge accounting criteria are recorded as gain or loss on derivative instruments and presented in the accompanying consolidated statements of operations. Fair Value Election of Hybrid Financial Instruments with Embedded Derivatives |
Deferred Financing Costs | Deferred Financing Costs |
Fair Value Measurements | Fair Value Measurements 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 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. When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities 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. Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). |
Dividend Reinvestment Plan | Dividend Reinvestment Plan The Company had a dividend reinvestment plan pursuant to which common stockholders could elect to have all or a portion of their dividends and other distributions, exclusive of dividends and other distributions that the Company’s board of directors designated as ineligible for reinvestment through the dividend reinvestment plan, reinvested in additional shares of the Company’s common stock in lieu of receiving cash distributions. Participants in the dividend reinvestment plan acquired shares of the Company’s common stock at a price equal to 95% of the estimated value per share of the Company’s common stock, as determined by the Advisor or another firm chosen by the Company’s board of directors for that purpose. On March 15, 2024, the Company’s board of directors approved the termination of the Company’s dividend reinvestment plan. Commencing with the January 4, 2021 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $10.21. Commencing with the June 1, 2021 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $10.23. Commencing with the December 1, 2021 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $10.24. Commencing with the October 3, 2022 purchase date and until the estimated value per share was updated, the purchase price per share under the dividend reinvestment plan was $8.55. Commencing December 14, 2023 and until the dividend reinvestment plan was terminated, the purchase price per share under the dividend reinvestment plan was $5.32. |
Redeemable Common Stock | Redeemable Common Stock Due to certain restrictions and covenants included in one of the Company’s loan agreements, the Company does not expect to redeem any shares of its stock during the term of the loan agreement, which matures on March 1, 2026. See Note 13, “Subsequent Events – Modified Portfolio Revolving Loan Facility.” As a result, the Company terminated its share redemption plan on March 15, 2024. Prior to termination, the Company’s share redemption program enabled stockholders to sell their shares to the Company in limited circumstances. When active, the restrictions of the Company’s share redemption program limited its stockholders’ ability to sell their shares should they require liquidity and limited the stockholders’ ability to recover an amount equal to the Company’s estimated value per share. The following is a description of the Company’s share redemption program from January 1, 2021 through June 30, 2021 and the amendments to the program made by (i) the July 2021 amended and restated share redemption program (the “July 2021 Amended Share Redemption Program”), which became effective as of the July 30, 2021 redemption date, (ii) the March 2022 amended and restated share redemption program (the “March 2022 Amended Share Redemption Program”), which became effective as of the March 31, 2022 redemption date, and (iii) the April 2022 amended and restated share redemption program (the “April 2022 Amended Share Redemption Program”), which became effective as of the April 29, 2022 redemption date. In December 2019, the Company’s board of directors determined to temporarily suspend Ordinary Redemptions under the share redemption program, and Ordinary Redemptions remained suspended through June 30, 2021. Ordinary Redemptions are all redemptions other than those that qualify for the special provisions for redemptions sought in connection with a stockholder’s death, “Qualifying Disability” or “Determination of Incompetence” (each as defined in the share redemption program and, together, “Special Redemptions”). Upon suspension, all Ordinary Redemption requests that had been received were cancelled and no Ordinary Redemption requests were accepted or collected during the suspension of the share redemption program. Further, on June 3, 2021, the Company announced that, in connection with the approval of the Self-Tender (defined below), the Company’s board of directors approved a temporary suspension of all redemptions under the share redemption program, including Special Redemptions. Upon suspension, all outstanding redemption requests under the share redemption program were cancelled, and no requests were accepted or collected under the share redemption program. On July 14, 2021, the Company’s board of directors approved the July 2021 Amended Share Redemption Program and Ordinary Redemptions and Special Redemptions resumed effective for the July 30, 2021 redemption date. On January 17, 2023, the Company’s board of directors determined to suspend Ordinary Redemptions under the share redemption program to preserve capital in the current market environment. On December 12, 2023, the Company’s board of directors suspended all redemptions, including Special Redemptions, under the Company’s share redemption program. All redemption requests that had been received were canceled. No redemptions will be accepted or collected during the suspension of the share redemption program. In order to provide stockholders with additional liquidity that was in excess of that permitted under the Company’s share redemption program, on June 4, 2021, the Company commenced a self-tender offer (the “Self-Tender”) for up to 33,849,130 shares of common stock at a price of $10.34 per share, or approximately $350.0 million of shares. On July 12, 2021, the Company accepted for purchase 26,375,383 shares properly tendered and not properly withdrawn at a purchase price of $10.34 per share, or approximately $272.7 million of shares, excluding fees and expenses relating to the tender offer. There were several limitations on the Company’s ability to redeem shares under the share redemption program: • Unless the shares were being redeemed in connection with a Special Redemption, the Company could not redeem shares unless the stockholder had held the shares for one year. • Except as provided otherwise for calendar years 2022 and 2021 only, during any calendar year, the share redemption program limited the number of shares the Company could redeem to those that the Company could purchase with the amount of net proceeds from the sale of shares under the dividend reinvestment plan during the prior calendar year, provided that once the Company had received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $10.0 million or less, the last $10.0 million of available funds was reserved exclusively for Special Redemptions. Notwithstanding anything contained in the share redemption program to the contrary, the Company could increase or decrease the funding available for the redemption of shares pursuant to the program upon ten • For calendar year 2022 only, ◦ Prior to effectiveness of the March 2022 Amended Share Redemption Program, the Company could redeem only the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year, provided that once the Company had received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $10.0 million or less, the last $10.0 million of available funds was reserved exclusively for Special Redemptions. ◦ Upon effectiveness of the March 2022 Amended Share Redemption Program and prior to effectiveness of the April 2022 Amended Share Redemption Program, the Company could redeem only the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year, provided that once the Company had received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $2.0 million or less, the last $2.0 million of available funds was reserved exclusively for redemptions sought in connection with Special Redemptions. ◦ Upon effectiveness of the April 2022 Amended Share Redemption Program, for calendar year 2022, the Company could redeem up to 5% of the weighted-average number of shares outstanding during the 2021 calendar year, provided that once the Company had received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the 2022 calendar year, would result in the number of remaining shares available for redemption in the 2022 calendar year being 500,000 or less, the last 500,000 shares available for redemption was reserved exclusively for redemptions sought in connection with a Special Redemption. • Pursuant to the July 2021 Amended Share Redemption Program, for calendar year 2021 only, the Company could redeem up to 5% of the weighted-average number of shares outstanding during the 2020 calendar year, provided that if the Company received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the 2021 calendar year, would result in the number of remaining shares available for redemption in the 2021 calendar year being 500,000 or less, the last 500,000 shares available for redemption were reserved exclusively for Special Redemptions. • During any calendar year, the Company could redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year. • The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland General Corporation Law, as amended from time to time, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. Pursuant to the share redemption program, redemptions made in connection with Special Redemptions were made at a price per share equal to the most recent estimated value per share of the Company’s common stock as of the applicable redemption date. From January 1, 2021 through June 30, 2021, Ordinary Redemptions were made at a price per share equal to 95% of the Company’s most recent estimated value per share as of the applicable redemption date. Upon effectiveness of the July 2021 Amended Share Redemption Program and commencing with the July 30, 2021 redemption date, Ordinary Redemptions were made at a price per share equal to 96% of the Company’s most recent estimated value per share as of the applicable redemption date. On December 7, 2020, the Company’s board of directors approved an estimated value per share of its common stock of $10.74 (unaudited). This estimated value per share became effective for the December 2020 redemption date, which was December 31, 2020. On May 13, 2021, the Company’s board of directors approved an estimated value per share of its common stock of $10.77 (unaudited). This estimated value per share became effective for the May 2021 redemption date, which was May 28, 2021. On November 1, 2021, the Company’s board of directors approved an estimated value per share of its common stock of $10.78 (unaudited). This estimated value per share became effective for the November 2021 redemption date, which was November 30, 2021. On September 28, 2022, the Company’s board of directors approved an estimated value per share of its common stock of $9.00 (unaudited). This estimated value per share became effective for the October 2022 redemption date, which was October 31, 2022. For purposes of determining the time period a redeeming stockholder had held each share, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to the Company’s dividend reinvestment plan or received as a stock dividend were deemed to have been acquired on the same date as the initial share to which the dividend reinvestment plan shares or stock dividend shares relate. The date of the share’s original issuance by the Company was not determinative. The Company classifies financial instruments that represent a mandatory obligation of the Company to redeem shares as liabilities. During periods in which the share redemption program is active, the Company’s common shares are considered redeemable at the option of the holder and, accordingly, the Company separately classifies an amount equal to the current maximum potential redemption obligation under the share redemption program as redeemable common stock on the consolidated balance sheet. When the Company determines it has a mandatory obligation to repurchase shares under the share redemption program, it reclassifies such obligations from temporary equity to a liability based upon their respective settlement values. During the year ended December 31, 2023, the Company redeemed all Special Redemption requests received in good order and eligible for redemption through the November 2023 redemption date. |
Offering Costs | Offering Costs |
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 (the “AIP 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”). |
Operating Expenses | Operating Expenses |
Asset Management Fee | Asset Management Fee |
Disposition Fee | Disposition Fee |
Income Taxes | Income Taxes The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To continue to qualify as a REIT, the Company must continue to meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT. |
Per Share Data | Per Share Data |
Segments | Segments |
Square Footage, Occupancy and Other Measures | Square Footage, Occupancy and Other Measures |
Recently Issued Accounting Standards Update | 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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Life | The Company anticipates the estimated useful lives of its assets by class to be generally as follows: Land N/A Buildings 25-40 years Building improvements 10-25 years Tenant improvements Shorter of lease term or expected useful life Tenant origination and absorption costs Remaining term of related leases, including below-market renewal periods |
REAL ESTATE (Tables)
REAL ESTATE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Real Estate [Abstract] | |
Schedule of Real Estate Investments | The following table summarizes the Company’s investments in real estate as of December 31, 2023 (in thousands), including real estate held for non-sale disposition: 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 $ 141,420 $ (52,231) $ 89,189 McEwen Building (2) 04/30/2012 Franklin TN Office 40,187 (11,840) 28,347 Gateway Tech Center 05/09/2012 Salt Lake City UT Office 36,527 (12,257) 24,270 60 South Sixth 01/31/2013 Minneapolis MN Office 185,359 (57,793) 127,566 Preston Commons 06/19/2013 Dallas TX Office 145,122 (41,862) 103,260 Sterling Plaza 06/19/2013 Dallas TX Office 95,175 (30,619) 64,556 201 Spear Street (3) 12/03/2013 San Francisco CA Office 70,571 (1,543) 69,028 Accenture Tower 12/16/2013 Chicago IL Office 572,272 (163,795) 408,477 Ten Almaden 12/05/2014 San Jose CA Office 131,462 (40,615) 90,847 Towers at Emeryville 12/23/2014 Emeryville CA Office 223,213 (65,700) 157,513 3003 Washington Boulevard 12/30/2014 Arlington VA Office 154,953 (46,009) 108,944 Park Place Village 06/18/2015 Leawood KS Office/Retail 87,083 (13,743) 73,340 201 17th Street 06/23/2015 Atlanta GA Office 105,231 (33,579) 71,652 515 Congress 08/31/2015 Austin TX Office 136,248 (35,623) 100,625 The Almaden 09/23/2015 San Jose CA Office 193,101 (49,537) 143,564 3001 Washington Boulevard 11/06/2015 Arlington VA Office 60,977 (14,722) 46,255 Carillon 01/15/2016 Charlotte NC Office 174,078 (42,033) 132,045 $ 2,552,979 $ (713,501) $ 1,839,478 _____________________ (1) Amounts presented are net of impairment charges and write-offs of fully depreciated/amortized assets. (2) Subsequent to December 31, 2023, the Company completed the sale of the McEwen Building to a purchaser unaffiliated with the Company or the Advisor. See Note 13, “Subsequent Events – Disposition of the McEwen Building.” (3) See below “– Real Estate Held for Non-Sale Disposition.” |
Schedules of Concentration of Risk, by Risk Factor | As of December 31, 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 $ 408,477 19.1 % $ 38,012 $ 27.63 94.4 % _____________________ (1) Annualized base rent represents annualized contractual base rental income as of December 31, 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. Industry Number of Tenants Annualized Base Rent (1) (in thousands) Percentage of Annualized Base Rent Finance 108 $ 37,035 18.7 % Legal Services 52 24,260 12.2 % $ 61,295 30.9 % _____________________ (1) |
Schedule of Future Minimum Rental Income for Company's Properties | As of December 31, 2023, the future minimum rental income from the Company’s properties under its non-cancelable operating leases, excluding leases at a real estate property held for non-sale disposition, was as follows (in thousands): 2024 $ 187,815 2025 180,093 2026 165,716 2027 141,079 2028 121,685 Thereafter 447,313 $ 1,243,701 |
Schedule Of Revenue And Expenses / Assets and Liabilities of Real Estate For Non Sale Disposition | The following table summarizes the revenue and expenses related to 201 Spear Street, which was held for non-sale disposition (in thousands): Years Ended December 31, 2023 2022 2021 Revenues related to real estate held for non-sale disposition Total revenues (1) $ 8,437 $ 21,669 $ 19,859 Expenses related to real estate held for non-sale disposition Operating expenses $ 7,376 $ 8,092 $ 7,725 Depreciation and amortization 3,941 5,617 6,121 Interest expense 10,001 4,256 2,222 Impairment charge 45,459 — — Total expenses related to real estate held for non-sale disposition 66,777 17,965 16,068 Net (loss) income related to real estate held for non-sale disposition $ (58,340) $ 3,704 $ 3,791 _____________________ (1) Total revenues for the year ended December 31, 2023 includes a reserve for straight-line rent of $4.4 million for a lease at 201 Spear Street. The following table summarizes the assets and liabilities related to 201 Spear Street, which was held for non-sale disposition as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Assets related to real estate held for non-sale disposition Total real estate, at cost and net of impairment charges $ 70,571 $ 153,384 Accumulated depreciation and amortization (1,543) (36,246) Real estate held for non-sale disposition, net 69,028 117,138 Cash and cash equivalents — 1,040 Restricted cash 3,103 — Rent and other receivables, net 1,142 5,669 Prepaid expenses and other assets 1,421 1,602 Total assets $ 74,694 $ 125,449 Liabilities related to real estate held for non-sale disposition Notes payable, net $ 125,000 $ 124,743 Accounts payable and accrued liabilities 3,927 2,042 Due to affiliate 16 — Other liabilities 1,816 2,585 Total liabilities $ 130,759 $ 129,370 |
REAL ESTATE DISPOSITIONS (Table
REAL ESTATE DISPOSITIONS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Revenue and Expenses of Real Estate Held-for-Sale | The following table summarizes certain revenues and expenses related to the Company’s real estate properties that were sold during the year ended December 31, 2021, which were included in continuing operations (in thousands): For the Year Ended Revenues Rental income $ 8,262 Other operating income 92 Total revenues $ 8,354 Expenses Operating, maintenance, and management $ 242 Real estate taxes and insurance 137 Asset management fees to affiliate 412 General and administrative expenses 15 Depreciation and amortization 2,429 Interest expense 681 Total expenses $ 3,916 |
TENANT ORIGINATION AND ABSORP_2
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2023 and 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 December 31, December 31, December 31, December 31, December 31, December 31, Cost $ 34,574 $ 42,555 $ 904 $ 983 $ (7,216) $ (8,384) Accumulated Amortization (25,450) (29,524) (715) (721) 6,147 6,473 Net Amount $ 9,124 $ 13,031 $ 189 $ 262 $ (1,069) $ (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 years ended December 31, 2023, 2022 and 2021 were as follows (in thousands): Tenant Origination and Above-Market Below-Market For the Years Ended December 31, For the Years Ended December 31, For the Years Ended December 31, 2023 2022 2021 2023 2022 2021 2023 2022 2021 Amortization $ (3,907) $ (5,744) $ (8,175) $ (73) $ (86) $ (101) $ 842 $ 1,366 $ 2,855 |
Schedule of Remaining Unamortized Balance | The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2023 is estimated to be amortized for the years ending December 31 as follows (in thousands): Tenant Origination and Above-Market Below-Market 2024 $ (2,750) $ (69) $ 525 2025 (2,311) (68) 314 2026 (1,741) (52) 198 2027 (1,033) — 32 2028 (910) — — Thereafter (379) — — $ (9,124) $ (189) $ 1,069 Weighted-Average Remaining Amortization Period 4.1 years 2.8 years 2.4 years |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | As of December 31, 2023 and 2022, the Company’s notes payable consisted of the following (dollars in thousands): Book Value as of Book Value as of Contractual Interest Rate as of December 31, 2023 (1) Effective Interest Rate as of December 31, 2023 (1) Payment Type Maturity Date (2) The Almaden Mortgage Loan (3) $ 119,870 $ 123,000 7.45% 7.45% Interest Only 02/01/2026 201 Spear Street Mortgage Loan (4) 125,000 125,000 One-month Term SOFR + 1.45% 13.50% Interest Only 01/05/2024 Carillon Mortgage Loan (5) 94,400 88,800 One-month Term SOFR + 1.50% 6.85% Interest Only 04/11/2024 Modified Portfolio Revolving Loan Facility (6) 249,145 249,145 One-month Term SOFR + 1.60% 6.95% Interest Only 03/01/2024 3001 & 3003 Washington Mortgage Loan 140,410 142,232 One-month Term SOFR + 0.10% + 1.45% 6.90% Principal & 06/01/2024 Accenture Tower Revolving Loan (7) 306,000 281,250 One-month Term SOFR + 2.35% 7.70% Interest Only 11/02/2024 Unsecured Credit Facility (8) 37,500 37,500 One-month Term SOFR + 2.20% 7.55% Interest Only 07/30/2024 Amended and Restated Portfolio Loan Facility (9) 601,288 559,468 One-month BSBY (10) + 1.80% 7.24% Interest Only 02/06/2024 Park Place Village Mortgage Loan (11) 65,000 65,000 One-month Term SOFR + 1.95% 7.30% Interest Only 08/31/2025 Total notes payable principal outstanding $ 1,738,613 $ 1,671,395 Deferred financing costs, net (2,717) (4,107) Total Notes Payable, net $ 1,735,896 $ 1,667,288 _____________________ (1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2023. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2023, consisting of the contractual interest rate and using interest rate indices as of December 31, 2023, where applicable. For information regarding the Company’s derivative instruments, see Note 9, “Derivative Instruments.” (2) Represents the maturity date as of December 31, 2023; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown. See below. (3) See below, “– Recent Financing Transactions - The Almaden Mortgage Loan.” (4) The Spear Street Borrower defaulted on the 201 Spear Street Mortgage Loan as a result of failure to pay in full the entire November 2023 monthly interest payment, resulting in an event of default on the loan on November 14, 2023. During the time the default exists, the interest rate under this loan is calculated at the lesser of (i) the maximum rate allowed by law or (ii) 5.0% plus the greater of (a) one-month term SOFR plus 1.45% or (b) the Prime Rate as determined on the first business day of the month in which the event of default occurred and the first business day of every month thereafter. Additionally, late charges may apply in the amount of the lesser of (i) 4.0% of each late payment or (ii) the maximum amount allowed by law. Subsequent to December 31, 2023, the Spear Street Lender transferred the title of the 201 Spear Street property to a third-party buyer of the 201 Spear Street Mortgage Loan. See Note 13, “Subsequent Events – Deed-in-Lieu of Foreclosure of 201 Spear Street.” (5) As of December 31, 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 December 31, 2023, the outstanding balance under the loan consisted of $88.8 million of term debt and $5.6 million of revolving debt. As of December 31, 2023, $16.6 million of revolving debt remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. As of December 31, 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 December 31, 2023, the Modified Portfolio Revolving Loan Facility was secured by 515 Congress, the McEwen Building, Gateway Tech Center and 201 17th Street. As of December 31, 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 December 31, 2023, the outstanding balance under the loan consisted of $124.6 million of term debt and $124.6 million of revolving debt. As of December 31, 2023, the Modified Portfolio Revolving Loan Facility had one 12-month extension option, subject to certain terms, conditions and fees as described in the loan documents. Subsequent to December 31, 2023, in connection with the disposition of the McEwen Building, the borrowers under the Modified Portfolio Revolving Loan Facility entered into a loan modification with the lenders. See Note 13, “Subsequent Events – Modified Portfolio Revolving Loan Facility.” (7) See below, “– Recent Financing Transactions - Accenture Tower Revolving Loan.” (8) As of December 31, 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 December 31, 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) See below, “– Recent Financing Transactions - Amended and Restated Portfolio Loan Facility.” (10) Bloomberg Short-Term Bank Yield Index (“BSBY”). (11) |
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 December 31, 2023 (in thousands): 2024 $ 1,553,743 2025 65,000 2026 119,870 2027 — 2028 — Thereafter — $ 1,738,613 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2023 and 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): December 31, 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 December 31, 2023 Derivative instruments not designated as hedging instruments Interest rate swaps (1) 16 $ 1,300,000 20 $ 1,619,190 Fallback SOFR (2) / Fixed at 1.08% - 1.28% One-month Term SOFR/ Fixed at 2.38% - 3.92% 2.8% 2.1 Interest rate cap 1 $ 125,000 — $ — One-month Term SOFR at 6.49% 6.5% 0.1 _____________________ (1) Subsequent to December 31, 2023, the Company terminated two interest rate swap agreements and received aggregate settlement payments of $6.6 million. (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 an 11.448 basis point adjustment. As of December 31, 2023, the Company had four interest rate swaps which had been converted to Fallback SOFR, all with a maturity date of 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 December 31, 2023 and 2022 (dollars in thousands): December 31, 2023 December 31, 2022 Derivative Instruments Balance Sheet Location Number of Fair Value Number of Fair Value Derivative instruments not designated as hedging instruments Interest rate swaps Prepaid expenses and other assets, at fair value (1) 15 $ 23,891 18 $ 40,216 Interest rate swaps Other liabilities, at fair value (2) 1 $ (175) 2 $ (75) Interest rate cap Prepaid expenses and other assets, at fair value 1 $ — — $ — _____________________ (1) |
Schedule of Derivative Instruments in Statement of Operations | The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands): For the Years Ended December 31, 2023 2022 2021 Derivatives not designated as hedging instruments Realized loss recognized on interest rate swaps $ — $ 7,152 $ 18,020 Realized gain recognized on interest rate swaps (31,358) (6,895) — Unrealized loss (gain) on interest rate swaps (1) 16,426 (52,189) (23,283) Unrealized loss on interest rate cap 25 — — Net gain on derivative instruments $ (14,907) $ (51,932) $ (5,263) _____________________ (1) |
FAIR VALUE DISCLOSURES (Tables)
FAIR VALUE DISCLOSURES (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2023 and 2022, which carrying amounts generally do not approximate the fair values (in thousands): December 31, 2023 December 31, 2022 Face Value Carrying Fair Value Face Value Carrying Fair Value Financial liabilities: Notes payable $ 1,738,613 $ 1,735,896 $ 1,679,259 $ 1,671,395 $ 1,667,288 $ 1,654,046 |
Schedule of Assets and Liabilities at Fair Value | As of December 31, 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 $ 51,802 $ 51,802 $ — $ — Asset derivatives - interest rate swaps 23,891 — 23,891 — Asset derivatives - interest rate caps — — — — Liability derivatives - interest rate swaps (175) — (175) — During the year ended December 31, 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) |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2023, 2022 and 2021, respectively, and any related amounts receivable and payable as of December 31, 2023 and 2022 (in thousands): Incurred Years Ended Receivable as of Payable as of 2023 2022 2021 2023 2022 2023 2022 Expensed Asset management fees (1) $ 20,839 $ 20,102 $ 19,832 $ — $ — $ 16,992 $ 10,191 Reimbursement of operating expenses (2) 420 325 577 — 10 416 174 Disposition fees (3) — — 2,426 — — — — $ 21,259 $ 20,427 $ 22,835 $ — $ 10 $ 17,408 $ 10,365 _____________________ (1) See “Asset Management Fees” below and under Note 3, “Summary of Significant Accounting Policies— Related Party Transactions—Asset Management Fee.” (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 $111,000, $163,000 and $428,000 for the years ended December 31, 2023, 2022 and 2021, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2023, 2022 and 2021. 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 Note 3, “Summary of Significant Accounting Policies— Related Party Transactions—Asset Management Fee”), 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 December 31, 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. As of December 31, 2023, the Advisor had 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. (3) Disposition fees with respect to real estate sold are included in the gain on sale of real estate, net, in the accompanying consolidated statements of operations. |
ORGANIZATION (Details)
ORGANIZATION (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | 55 Months Ended | 153 Months Ended | |||||
Jul. 12, 2021 USD ($) shares | Oct. 03, 2014 USD ($) shares | Dec. 31, 2023 USD ($) property shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | May 29, 2015 USD ($) shares | Dec. 31, 2023 USD ($) property shares | Jan. 26, 2010 $ / shares shares | |
Organizational Structure [Line Items] | ||||||||
Common stock, shares issued (in shares) | 148,516,246 | 147,964,954 | 148,516,246 | |||||
Redemptions of common stock (in shares) | 26,375,383 | |||||||
Redemptions of common stock, value | $ | $ 272,700 | |||||||
Private Placement | ||||||||
Organizational Structure [Line Items] | ||||||||
Issuance of common stock (in shares) | 258,462 | |||||||
Issuance of common stock, value | $ | $ 2,400 | |||||||
Office Building | ||||||||
Organizational Structure [Line Items] | ||||||||
Number of real estate properties | property | 16 | 16 | ||||||
Office Building | Held-for-non-sale Disposition | ||||||||
Organizational Structure [Line Items] | ||||||||
Number of real estate properties held-for-sale | property | 1 | 1 | ||||||
Mixed-use Office/Retail Property | ||||||||
Organizational Structure [Line Items] | ||||||||
Number of real estate properties | property | 1 | 1 | ||||||
Common Stock | ||||||||
Organizational Structure [Line Items] | ||||||||
Issuance of common stock (in shares) | 1,900,374 | 3,434,632 | 4,145,065 | 169,006,162 | ||||
Issuance of common stock, value | $ | $ 19 | $ 34 | $ 41 | $ 1,700,000 | ||||
Shares of common stock sold under dividend reinvestment plan, shares | 46,154,757 | |||||||
Shares of common stock sold under dividend reinvestment plan, value | $ | $ 471,300 | |||||||
Redemptions of common stock (in shares) | 1,349,082 | 8,620,444 | 35,243,375 | 74,644,349 | ||||
Redemptions of common stock, value | $ | $ 14 | $ 86 | $ 351 | $ 789,200 | ||||
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 | 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% |
GOING CONCERN (Details)
GOING CONCERN (Details) $ in Billions | Dec. 31, 2023 USD ($) |
Concentration Risk [Line Items] | |
Debt obligations coming due during the 12-month period | $ 1.2 |
Long term debt, remaining term | 12 months |
Long-term debt, extension term | 12 months |
Mortgages | |
Concentration Risk [Line Items] | |
Debt obligations coming due during the 12-month period | $ 1.2 |
Long term debt, remaining term | 12 months |
Minimum | Mortgages | |
Concentration Risk [Line Items] | |
Long-term debt, term | 3 years |
Maximum | Mortgages | |
Concentration Risk [Line Items] | |
Long-term debt, term | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 6 Months Ended | 9 Months Ended | 12 Months Ended | 29 Months Ended | |||||||||||||||||||||
Nov. 08, 2022 | Oct. 01, 2022 USD ($) | Sep. 30, 2022 USD ($) | Jul. 12, 2021 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) $ / shares | Jun. 30, 2023 $ / shares | Dec. 31, 2021 shares | Jun. 30, 2021 | Dec. 31, 2022 USD ($) shares | Dec. 31, 2023 USD ($) segment $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) | Dec. 14, 2023 $ / shares | Oct. 03, 2022 $ / shares | Sep. 28, 2022 $ / shares | Mar. 31, 2022 USD ($) | Feb. 28, 2022 USD ($) | Dec. 01, 2021 $ / shares | Nov. 01, 2021 $ / shares | Jun. 04, 2021 USD ($) $ / shares shares | Jun. 01, 2021 $ / shares | May 13, 2021 $ / shares | Jan. 04, 2021 $ / shares | Dec. 07, 2020 $ / shares | |
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Impairment of real estate | $ 45,459,000 | $ 0 | $ 0 | ||||||||||||||||||||||
Dividend reinvestment plan, purchase price per share as percent of estimated value | 95% | 95% | 95% | ||||||||||||||||||||||
Estimated value per share of company's common stock (in dollars per share) | $ / shares | $ 9 | $ 10.78 | $ 10.77 | $ 10.74 | |||||||||||||||||||||
Purchase price per share (in dollars per share) | $ / shares | $ 5.32 | $ 8.55 | $ 10.24 | $ 10.23 | $ 10.21 | ||||||||||||||||||||
Stock repurchased during period, price per share (in dollars per share) | $ / shares | $ 10.34 | $ 10.34 | |||||||||||||||||||||||
Redemptions of common stock (in shares) | shares | 26,375,383 | ||||||||||||||||||||||||
Redemptions of common stock, value | $ 272,700,000 | ||||||||||||||||||||||||
Period of increase or decrease of funding available for redemption | 10 days | ||||||||||||||||||||||||
Maximum percentage of weighted-average shares outstanding available for redemption during current calendar year | 5% | 5% | |||||||||||||||||||||||
Maximum number of weighted-average shares outstanding available for redemption during current calendar year (in shares) | shares | 500,000 | 500,000 | 500,000 | 500,000 | |||||||||||||||||||||
Share redemption program, share limitation for special redemptions (in shares) | shares | 500,000 | 500,000 | 500,000 | 500,000 | |||||||||||||||||||||
Maximum percentage of weighted-average shares outstanding available for redemption during any calendar year | 5% | ||||||||||||||||||||||||
Redemption price percentage of most recent estimated value per share | 95% | 96% | |||||||||||||||||||||||
Write off of prepaid offering costs | $ 2,700,000 | ||||||||||||||||||||||||
Restricted cash | $ 14,086,000 | $ 6,070,000 | $ 14,086,000 | $ 6,070,000 | $ 14,086,000 | ||||||||||||||||||||
Antidilutive securities (in shares) | shares | 0 | 0 | 0 | ||||||||||||||||||||||
Distributions declared per common share (in dollars per share) | $ / shares | $ 0 | $ 0.230 | $ 0.598 | $ 0.598 | |||||||||||||||||||||
Distribution rate for share per month, declared (in dollars per share) | $ / shares | $ 0.03833333 | $ 0.04983333 | |||||||||||||||||||||||
Number of reportable segments | segment | 1 | ||||||||||||||||||||||||
Advisor and Dealer Manager | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Incurred costs (reimbursement) | $ 21,259,000 | $ 20,427,000 | $ 22,835,000 | ||||||||||||||||||||||
Advisor and Dealer Manager | Monthly Asset Management Fee, Paid in Cash | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Incurred costs (reimbursement) | $ 1,150,000 | ||||||||||||||||||||||||
Advisor and Dealer Manager | Fully Funded Bonus Retention Fund | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Incurred costs (reimbursement) | $ 8,500,000 | ||||||||||||||||||||||||
Advisor and Dealer Manager | Bonus Retention Fund Deposit | Related Party | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Restricted cash | $ 8,500,000 | 8,500,000 | $ 8,500,000 | ||||||||||||||||||||||
Advisor and Dealer Manager | Payments from Bonus Retention Fund | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Incurred costs (reimbursement) | $ 0 | ||||||||||||||||||||||||
Advisor and Dealer Manager | Deferred Asset Management Fees | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Incurred costs (reimbursement) | $ 8,500,000 | ||||||||||||||||||||||||
Advisor and Dealer Manager | Non Compounded Return on Net Invested Capital | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Related party transaction, rate | 8% | ||||||||||||||||||||||||
Advisor and Dealer Manager | The Renewal Advisory Agreement | Related Party | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Renewal period | 1 year | ||||||||||||||||||||||||
Termination period | 60 days | ||||||||||||||||||||||||
KBS Capital Advisors LLC | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Monthly asset management fee, percent of acquisition expense, excluding acquisition fees related to thereto | 0.0625% | 0.0625% | 0.0625% | ||||||||||||||||||||||
KBS Capital Advisors LLC or Affiliates | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Disposition fees paid, percent of sales price | 1% | 1% | 1% | ||||||||||||||||||||||
Held for One Year | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Share holding term | 1 year | ||||||||||||||||||||||||
Maximum | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Number of shares authorized to be repurchased (in shares) | shares | 33,849,130 | ||||||||||||||||||||||||
Stock repurchase program, authorized amount | $ 350,000,000 | ||||||||||||||||||||||||
Share redemption program, additional amount | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | $ 2,000,000 | $ 10,000,000 | ||||||||||||||||||||
Share redemption program, special redemptions | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | $ 2,000,000 | $ 10,000,000 | ||||||||||||||||||||
Maximum | KBS Capital Advisors LLC, Affiliates or Unaffiliated Third Parties | |||||||||||||||||||||||||
Summary of Significant Accounting Policies [Line Items] | |||||||||||||||||||||||||
Disposition fees paid, percent of sales price | 6% | 6% | 6% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Useful Life (Details) | Dec. 31, 2023 |
Buildings | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 25 years |
Buildings | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 40 years |
Building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 25 years |
REAL ESTATE - Additional Inform
REAL ESTATE - Additional Information (Details) ft² in Millions | 12 Months Ended |
Dec. 31, 2023 ft² property | |
Real Estate Properties [Line Items] | |
Rentable square feet | ft² | 7.3 |
Percentage of portfolio occupied | 83% |
Held-for-non-sale Disposition | |
Real Estate Properties [Line Items] | |
Rentable square feet | ft² | 0.3 |
Office Building | |
Real Estate Properties [Line Items] | |
Number of real estate properties | 16 |
Office Building | Held-for-non-sale Disposition | |
Real Estate Properties [Line Items] | |
Number of real estate properties disposed | 1 |
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 | Dec. 31, 2023 | Dec. 31, 2022 |
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | $ 2,552,979 | $ 2,568,352 |
Accumulated depreciation and amortization | (713,501) | (656,401) |
Total real estate, net | 1,839,478 | $ 1,911,951 |
Town Center | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 141,420 | |
Accumulated depreciation and amortization | (52,231) | |
Total real estate, net | 89,189 | |
McEwen Building | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 40,187 | |
Accumulated depreciation and amortization | (11,840) | |
Total real estate, net | 28,347 | |
Gateway Tech Center | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 36,527 | |
Accumulated depreciation and amortization | (12,257) | |
Total real estate, net | 24,270 | |
60 South Sixth | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 185,359 | |
Accumulated depreciation and amortization | (57,793) | |
Total real estate, net | 127,566 | |
Preston Commons | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 145,122 | |
Accumulated depreciation and amortization | (41,862) | |
Total real estate, net | 103,260 | |
Sterling Plaza | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 95,175 | |
Accumulated depreciation and amortization | (30,619) | |
Total real estate, net | 64,556 | |
201 Spear Street | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 70,571 | |
Accumulated depreciation and amortization | (1,543) | |
Total real estate, net | 69,028 | |
Accenture Tower | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 572,272 | |
Accumulated depreciation and amortization | (163,795) | |
Total real estate, net | 408,477 | |
Ten Almaden | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 131,462 | |
Accumulated depreciation and amortization | (40,615) | |
Total real estate, net | 90,847 | |
Towers at Emeryville | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 223,213 | |
Accumulated depreciation and amortization | (65,700) | |
Total real estate, net | 157,513 | |
3003 Washington Boulevard | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 154,953 | |
Accumulated depreciation and amortization | (46,009) | |
Total real estate, net | 108,944 | |
Park Place Village | Office/Retail | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 87,083 | |
Accumulated depreciation and amortization | (13,743) | |
Total real estate, net | 73,340 | |
201 17th Street | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 105,231 | |
Accumulated depreciation and amortization | (33,579) | |
Total real estate, net | 71,652 | |
515 Congress | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 136,248 | |
Accumulated depreciation and amortization | (35,623) | |
Total real estate, net | 100,625 | |
The Almaden | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 193,101 | |
Accumulated depreciation and amortization | (49,537) | |
Total real estate, net | 143,564 | |
3001 Washington Boulevard | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 60,977 | |
Accumulated depreciation and amortization | (14,722) | |
Total real estate, net | 46,255 | |
Carillon | Office Building | ||
Real Estate Properties [Line Items] | ||
Total real estate held for investment, cost | 174,078 | |
Accumulated depreciation and amortization | (42,033) | |
Total real estate, net | $ 132,045 |
REAL ESTATE - Schedule of Conce
REAL ESTATE - Schedule of Concentration of Risk, by Assets (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 USD ($) ft² $ / ft² | Dec. 31, 2022 USD ($) | |
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 7,300,000 | |
Total Real Estate, Net | $ 1,839,478 | $ 1,911,951 |
Annualized Base Rent | $ 61,295 | |
Occupancy | 83% | |
Accenture Tower | Assets, Total | ||
Real Estate Properties [Line Items] | ||
Rentable Square Feet | ft² | 1,457,724 | |
Total Real Estate, Net | $ 408,477 | |
Annualized Base Rent | $ 38,012 | |
Average annualized base rent per square foot (usd per sqft) | $ / ft² | 27.63 | |
Occupancy | 94.40% | |
Accenture Tower | Assets, Total | Customer Concentration Risk | ||
Real Estate Properties [Line Items] | ||
Percentage of Total Assets | 19.10% |
REAL ESTATE - Operating Leases
REAL ESTATE - Operating Leases (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) tenant | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Lessor, Lease, Description [Line Items] | |||
Deferred rent recognized | $ 7,635 | $ 10,896 | $ 2,550 |
Deferred rent receivables | 94,800 | 89,900 | |
Incentive to lessee | $ 16,600 | 17,300 | |
Office/Retail | |||
Lessor, Lease, Description [Line Items] | |||
Number of tenants | tenant | 530 | ||
Other liabilities, at fair value | |||
Lessor, Lease, Description [Line Items] | |||
Security deposit liability | $ 10,000 | $ 9,300 | |
Maximum | |||
Lessor, Lease, Description [Line Items] | |||
Operating leases, term of contract | 15 years 6 months | ||
Weighted Average | |||
Lessor, Lease, Description [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 | Dec. 31, 2023 USD ($) |
Real Estate [Abstract] | |
2024 | $ 187,815 |
2025 | 180,093 |
2026 | 165,716 |
2027 | 141,079 |
2028 | 121,685 |
Thereafter | 447,313 |
Future minimum rental income | $ 1,243,701 |
REAL ESTATE - Schedule of Con_2
REAL ESTATE - Schedule of Concentration of Risk, by Risk Factor (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) tenant | |
Concentration Risk [Line Items] | |
Annualized base rent | $ 61,295 |
Industry | Customer Concentration Risk | Revenue | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 30.90% |
Finance | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 108 |
Annualized base rent | $ 37,035 |
Finance | Customer Concentration Risk | Revenue | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 18.70% |
Legal Services | |
Concentration Risk [Line Items] | |
Number of Tenants | tenant | 52 |
Annualized base rent | $ 24,260 |
Legal Services | Customer Concentration Risk | Revenue | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 12.20% |
REAL ESTATE - Geographic Concen
REAL ESTATE - Geographic Concentration Risk (Details) - Assets, Total - Geographic Concentration Risk | 12 Months Ended |
Dec. 31, 2023 | |
California | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 18.30% |
Illinois | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 19.10% |
Texas | |
Concentration Risk [Line Items] | |
Percentage of Annualized Base Rent | 16.70% |
REAL ESTATE - Impairment of Rea
REAL ESTATE - Impairment of Real Estate (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Real Estate [Abstract] | |||
Impairment of real estate | $ 45,459,000 | $ 0 | $ 0 |
REAL ESTATE - Schedule Of Reven
REAL ESTATE - Schedule Of Revenue And Expenses For Non Sale Disposition (Details) - Held-for-non-sale Disposition - 201 Spear Street - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues related to real estate held for non-sale disposition | |||
Total revenues | $ 8,437 | $ 21,669 | $ 19,859 |
Expenses related to real estate held for non-sale disposition | |||
Operating, maintenance, and management | 7,376 | 8,092 | 7,725 |
Depreciation and amortization | 3,941 | 5,617 | 6,121 |
Interest expense | 10,001 | 4,256 | 2,222 |
Impairment charge | 45,459 | 0 | 0 |
Total expenses | 66,777 | 17,965 | 16,068 |
Net (loss) income related to real estate held for non-sale disposition | (58,340) | $ 3,704 | $ 3,791 |
Straight line rent | $ 4,400 |
REAL ESTATE - Schedule of Asset
REAL ESTATE - Schedule of Assets and Liabilities of Real Estate, Non-Sale Disposition (Details) - Held-for-non-sale Disposition - 201 Spear Street - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Assets related to real estate held for non-sale disposition | ||
Total real estate, at cost and net of impairment charges | $ 70,571 | $ 153,384 |
Accumulated depreciation and amortization | (1,543) | (36,246) |
Disposal Group, Including Discontinued Operation, Real Estate | 69,028 | 117,138 |
Cash and cash equivalents | 0 | 1,040 |
Restricted cash | 3,103 | 0 |
Rent and other receivables, net | 1,142 | 5,669 |
Prepaid expenses and other assets | 1,421 | 1,602 |
Total assets | 74,694 | 125,449 |
Liabilities related to real estate held for non-sale disposition | ||
Notes payable, net | 125,000 | 124,743 |
Accounts payable and accrued liabilities | 3,927 | 2,042 |
Due to affiliate | 16 | 0 |
Other liabilities | 1,816 | 2,585 |
Total liabilities | $ 130,759 | $ 129,370 |
REAL ESTATE DISPOSITIONS - Addi
REAL ESTATE DISPOSITIONS - Additional Information (Details) ft² in Millions | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2021 USD ($) property | Jan. 31, 2021 USD ($) property | Dec. 31, 2023 USD ($) ft² property | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) property | |
Real Estate Properties [Line Items] | |||||
Rentable square feet | ft² | 7.3 | ||||
Percentage of portfolio occupied | 83% | ||||
Deferred rent recognized | $ 7,635,000 | $ 10,896,000 | $ 2,550,000 | ||
Deferred rent receivables | 94,800,000 | 89,900,000 | |||
Incentive to lessee | 16,600,000 | 17,300,000 | |||
Impairment of real estate | 45,459,000 | 0 | 0 | ||
Gains (losses) on sales of investment real estate | $ 0 | 0 | $ 114,321,000 | ||
California | Assets, Total | Geographic Concentration Risk | |||||
Real Estate Properties [Line Items] | |||||
Percentage of Total Assets | 18.30% | ||||
Illinois | Assets, Total | Geographic Concentration Risk | |||||
Real Estate Properties [Line Items] | |||||
Percentage of Total Assets | 19.10% | ||||
Texas | Assets, Total | Geographic Concentration Risk | |||||
Real Estate Properties [Line Items] | |||||
Percentage of Total Assets | 16.70% | ||||
Other liabilities, at fair value | |||||
Real Estate Properties [Line Items] | |||||
Security deposit liability | $ 10,000,000 | $ 9,300,000 | |||
Maximum | |||||
Real Estate Properties [Line Items] | |||||
Operating leases, term of contract | 15 years 6 months | ||||
Weighted Average | |||||
Real Estate Properties [Line Items] | |||||
Operating leases, term of contract | 5 years 8 months 12 days | ||||
Office Building | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties | property | 16 | ||||
Mixed-use Office/Retail Property | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties | property | 1 | ||||
Disposed of by Sale | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties disposed | property | 1 | 1 | 2 | ||
Disposal group, consideration | $ 143,000,000 | $ 103,500,000 | |||
Gains (losses) on sales of investment real estate | $ 114,300,000 | ||||
Held-for-sale | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties | property | 0 | ||||
Held-for-non-sale Disposition | |||||
Real Estate Properties [Line Items] | |||||
Rentable square feet | ft² | 0.3 | ||||
Held-for-non-sale Disposition | Office Building | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties disposed | property | 1 |
REAL ESTATE DISPOSITIONS - Sche
REAL ESTATE DISPOSITIONS - Schedule of Revenue and Expenses of Real Estate Held-for-Sale (Details) - Disposed of by Sale $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Revenues: | |
Rental income | $ 8,262 |
Other operating income | 92 |
Total revenues | 8,354 |
Expenses | |
Operating, maintenance, and management | 242 |
Real estate taxes and insurance | 137 |
Asset management fees to affiliate | 412 |
General and administrative expenses | 15 |
Depreciation and amortization | 2,429 |
Interest expense | 681 |
Total expenses | $ 3,916 |
TENANT ORIGINATION AND ABSORP_3
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES - Schedule of Amortization of Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract] | |||
Tenant origination and absorption costs, cost | $ 34,574 | $ 42,555 | |
Tenant origination and absorption costs, accumulated amortization | (25,450) | (29,524) | |
Tenant origination and absorption costs, net amount | 9,124 | 13,031 | |
Tenant origination and absorption costs, amortization | (3,907) | (5,744) | $ (8,175) |
Above-market leases, cost | 904 | 983 | |
Above-market leases, accumulated amortization | (715) | (721) | |
Above market leases, net amount | 189 | 262 | |
Above-market lease assets, amortization | (73) | (86) | (101) |
Below-market lease, cost | (7,216) | (8,384) | |
Below-market lease, accumulated amortization | 6,147 | 6,473 | |
Below-market lease, net amount | (1,069) | (1,911) | |
Below-market lease liabilities, amortization | $ 842 | $ 1,366 | $ 2,855 |
TENANT ORIGINATION AND ABSORP_4
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES - Schedule of Remaining Unamortized Balance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | ||
2024 | $ 525 | |
2025 | 314 | |
2026 | 198 | |
2027 | 32 | |
2028 | 0 | |
Thereafter | 0 | |
Net amount | 1,069 | $ 1,911 |
Tenant Origination and Absorption Costs | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2024 | (2,750) | |
2025 | (2,311) | |
2026 | (1,741) | |
2027 | (1,033) | |
2028 | (910) | |
Thereafter | (379) | |
Net Amount | $ (9,124) | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | ||
Weighted-Average Remaining Amortization Period | 4 years 1 month 6 days | |
Above-Market Lease Assets | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2024 | $ (69) | |
2025 | (68) | |
2026 | (52) | |
2027 | 0 | |
2028 | 0 | |
Thereafter | 0 | |
Net Amount | $ (189) | |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | ||
Weighted-Average Remaining Amortization Period | 2 years 9 months 18 days | |
Below-Market Lease Liabilities | ||
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | ||
Weighted-Average Remaining Amortization Period | 2 years 4 months 24 days |
REAL ESTATE EQUITY SECURITIES (
REAL ESTATE EQUITY SECURITIES (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 2 Months Ended | 10 Months Ended | 12 Months Ended | |||||||
Nov. 09, 2021 USD ($) shares | Aug. 21, 2019 USD ($) shares | Jul. 19, 2019 USD ($) $ / shares shares | Jul. 18, 2019 property | Nov. 30, 2021 property | Jan. 31, 2021 property | Dec. 31, 2021 USD ($) | Nov. 08, 2021 USD ($) | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) property | |
Schedule of Equity Method Investments [Line Items] | |||||||||||
Real estate equity securities | $ 51,802 | $ 87,416 | |||||||||
Dividend income from real estate equity securities | 11,850 | 14,850 | $ 0 | ||||||||
Equity in income of unconsolidated entity | $ 0 | 0 | $ 8,698 | ||||||||
REIT Properties III | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Ownership percentage after transaction | 31.30% | ||||||||||
Units disposed (in shares) | shares | 18,392,100 | ||||||||||
Units disposed | $ 16,200 | ||||||||||
Purchase and Sales Agreement | REIT Properties III | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Units acquired (in shares) | shares | 307,953,999 | ||||||||||
Units acquired | $ 271,000 | ||||||||||
Units acquired (in dollars per share) | $ / shares | $ 0.88 | ||||||||||
Ownership percentage after transaction | 33.30% | ||||||||||
SREIT | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Ownership percentage after transaction | 18.50% | 18.20% | |||||||||
Units held (in shares) | shares | 215,841,899 | ||||||||||
Real estate equity securities | $ 51,800 | ||||||||||
Units, closing price (in dollars per share) | $ / shares | $ 0.240 | ||||||||||
Unrealized gain on real estate equity securities | $ 16,800 | ||||||||||
Unrealized loss on equity securities | $ 35,600 | 92,800 | |||||||||
Dividend income from real estate equity securities | $ 11,900 | $ 14,900 | |||||||||
Equity in income of unconsolidated entity | $ 8,700 | ||||||||||
Gain on sale of investments | 3,100 | ||||||||||
Investment income, dividend | 19,900 | ||||||||||
SREIT | Private Offering in July 2021 | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Equity in income of unconsolidated entity | $ 1,100 | ||||||||||
Disposed of by Sale | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Number of real estate properties disposed | property | 1 | 1 | 2 | ||||||||
SREIT | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Units disposed (in shares) | shares | 73,720,000 | ||||||||||
Units disposed | $ 58,900 | ||||||||||
SREIT | Disposed of by Sale | |||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||
Number of real estate properties disposed | property | 11 |
NOTES PAYABLE - Schedule of Lon
NOTES PAYABLE - Schedule of Long-term Debt Instruments (Details) | 12 Months Ended | |||||||
Nov. 18, 2020 USD ($) extension_option | Nov. 02, 2020 USD ($) extension_option | Dec. 31, 2023 USD ($) extension_option | Dec. 22, 2023 USD ($) | Dec. 20, 2023 | Dec. 19, 2023 | Dec. 01, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Total notes payable principal outstanding | $ 1,738,613,000 | $ 1,671,395,000 | ||||||
Deferred financing costs, net | (2,717,000) | (4,107,000) | ||||||
Total Notes Payable, net | 1,735,896,000 | 1,667,288,000 | ||||||
Face amount of debt | 1,738,613,000 | 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 | |||||||
Maximum borrowing capacity | 5,600,000 | |||||||
Carillon Mortgage Loan | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum borrowing capacity | 22,200,000 | |||||||
Unused borrowing capacity, amount | $ 16,600,000 | |||||||
Number of extensions | extension_option | 1 | |||||||
Extension period | 24 months | |||||||
Modified Portfolio Revolving Loan Facility | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan, amount outstanding | $ 124,600,000 | |||||||
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 | |||||||
Mortgages | The Almaden Mortgage Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Total notes payable principal outstanding | $ 119,870,000 | 123,000,000 | ||||||
Stated percentage | 7.45% | 7.45% | 3.65% | |||||
Effective Interest Rate | 7.45% | |||||||
Maximum borrowing capacity | $ 123,000,000 | |||||||
Mortgages | 201 Spear Street Mortgage Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Total notes payable principal outstanding | $ 125,000,000 | 125,000,000 | ||||||
Stated percentage | 5% | |||||||
Effective Interest Rate | 13.50% | |||||||
Mortgages | 201 Spear Street Mortgage Loan | One-month SOFR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.45% | |||||||
Debt instrument, interest rate, late payment percentage | 0.040 | |||||||
Mortgages | Carillon Mortgage Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Total notes payable principal outstanding | $ 94,400,000 | 88,800,000 | ||||||
Effective Interest Rate | 6.85% | |||||||
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 | $ 140,410,000 | 142,232,000 | ||||||
Effective Interest Rate | 6.90% | |||||||
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 (ASOFR) | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 0.10% | |||||||
Mortgages | Park Place Village Mortgage Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Total notes payable principal outstanding | $ 65,000,000 | 65,000,000 | ||||||
Effective Interest Rate | 7.30% | |||||||
Number of extensions | extension_option | 2 | |||||||
Extension period | 12 months | |||||||
Mortgages | Park Place Village Mortgage Loan | One-month SOFR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.95% | |||||||
Secured Debt | The Almaden Mortgage Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Number of extensions | extension_option | 2 | |||||||
Extension period | 12 months | |||||||
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 | 6.95% | |||||||
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 | $ 306,000,000 | 281,250,000 | ||||||
Total Notes Payable, net | $ 306,000,000 | $ 306,000,000 | ||||||
Effective Interest Rate | 7.70% | |||||||
Maximum borrowing capacity | $ 375,000,000 | |||||||
Number of extensions | extension_option | 2 | 1 | ||||||
Extension period | 12 months | 12 months | ||||||
Loan, amount outstanding | $ 281,300,000 | $ 229,500,000 | 229,500,000 | |||||
Secured Debt | Accenture Tower Revolving Loan | Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan, amount outstanding | $ 93,700,000 | $ 76,500,000 | $ 76,500,000 | |||||
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 | $ 601,288,000 | 559,468,000 | ||||||
Effective Interest Rate | 7.24% | |||||||
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 | 7.55% | |||||||
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 | |||||||
Loan, amount outstanding | 37,500,000 | |||||||
Line of Credit | Amended and Restated Portfolio Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Total Notes Payable, net | $ 601,300,000 | $ 606,300,000 |
NOTES PAYABLE - Additional Info
NOTES PAYABLE - Additional Information (Details) | 12 Months Ended | ||||||||||
Dec. 29, 2023 USD ($) | Dec. 20, 2023 USD ($) | Nov. 18, 2020 USD ($) extension_option | Nov. 02, 2020 USD ($) extension_option | Dec. 31, 2023 USD ($) extension_option | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 22, 2023 USD ($) | Dec. 19, 2023 | Dec. 01, 2023 USD ($) | Nov. 03, 2021 | |
Debt Instrument [Line Items] | |||||||||||
Debt obligations coming due during the 12-month period | $ 1,200,000,000 | ||||||||||
Long term debt, remaining term | 12 months | ||||||||||
Interest expense | $ 120,475,000 | $ 60,259,000 | $ 34,564,000 | ||||||||
Amortization of deferred financing costs | 4,243,000 | 3,940,000 | 3,978,000 | ||||||||
Interest payable, current | 9,900,000 | 8,000,000 | |||||||||
Long-term debt | 1,735,896,000 | 1,667,288,000 | |||||||||
Repayments of lines of credit | 3,000,000 | ||||||||||
Total notes payable principal outstanding | 1,738,613,000 | 1,671,395,000 | |||||||||
Mortgages | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt obligations coming due during the 12-month period | $ 1,200,000,000 | ||||||||||
Long term debt, remaining term | 12 months | ||||||||||
Accenture Tower Revolving Loan | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, term | 3 years | ||||||||||
Maximum borrowing capacity | $ 375,000,000 | ||||||||||
Loan, amount outstanding | $ 281,300,000 | $ 229,500,000 | $ 229,500,000 | ||||||||
Number of extensions | extension_option | 2 | 1 | |||||||||
Extension period | 12 months | 12 months | |||||||||
Long-term debt | $ 306,000,000 | 306,000,000 | |||||||||
Total notes payable principal outstanding | 306,000,000 | 281,250,000 | |||||||||
Accenture Tower Revolving Loan | Secured Debt | Revolving Credit Facility | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Loan, amount outstanding | $ 93,700,000 | $ 76,500,000 | $ 76,500,000 | ||||||||
The Almaden Mortgage Loan | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of extensions | extension_option | 2 | ||||||||||
Extension period | 12 months | ||||||||||
The Almaden Mortgage Loan | Mortgages | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, term | 3 years | ||||||||||
Maximum borrowing capacity | $ 123,000,000 | ||||||||||
Repayments of lines of credit | $ 3,000,000 | ||||||||||
Debt instrument, periodic payment, principal | $ 130,000 | ||||||||||
Stated percentage | 7.45% | 7.45% | 3.65% | ||||||||
Total notes payable principal outstanding | $ 119,870,000 | 123,000,000 | |||||||||
Repayment of monthly principal | 130,000 | ||||||||||
Amended and Restated Portfolio Loan Facility | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt, term | 2 years | ||||||||||
Total notes payable principal outstanding | 601,288,000 | 559,468,000 | |||||||||
Amended and Restated Portfolio Loan Facility | Line of Credit | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt | 601,300,000 | $ 606,300,000 | |||||||||
Debt instrument, excess cash flow deposit requirement, percentage | 100% | ||||||||||
Asset management fee | 0.75% | ||||||||||
Repayments of debt | $ 5,000,000 | 5,000,000 | |||||||||
Debt instrument, fee amount | $ 1,400,000 | ||||||||||
Interest Expense | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Amortization of deferred financing costs | $ 4,200,000 | $ 3,900,000 | $ 4,000,000 |
NOTES PAYABLE - Schedule of Mat
NOTES PAYABLE - Schedule of Maturities Including Principal Amortization Payments, for All Notes Payable Outstanding (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
2024 | $ 1,553,743 | |
2025 | 65,000 | |
2026 | 119,870 | |
2027 | 0 | |
2028 | 0 | |
Thereafter | 0 | |
Total notes payable principal outstanding | $ 1,738,613 | $ 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 | 3 Months Ended | 12 Months Ended | ||
Mar. 18, 2024 USD ($) investment_instrument | Dec. 31, 2023 USD ($) investment_instrument | Jun. 30, 2023 investment_instrument | Dec. 31, 2022 USD ($) investment_instrument | |
Interest rate swaps | ||||
Derivative [Line Items] | ||||
Number of Instruments | 16 | 20 | ||
Notional Amount | $ | $ 1,300,000,000 | $ 1,619,190,000 | ||
Weighted-Average Fix Pay Rate | 2.80% | |||
Weighted-Average Remaining Term in Years | 2 years 1 month 6 days | |||
Interest rate swaps | Subsequent Event | ||||
Derivative [Line Items] | ||||
Derivative, number of instruments terminated | 2 | |||
Proceeds from aggregate derivative settlement | $ | $ 6,600,000 | |||
Interest rate swaps | Secured Overnight Financing Rate (SOFR) Fallback | ||||
Derivative [Line Items] | ||||
Number of Instruments | 4 | |||
Derivative, basis spread on variable rate | 0.11448% | |||
Interest rate swaps | One-month LIBOR | ||||
Derivative [Line Items] | ||||
Number of Instruments | 8 | |||
Interest rate swaps | Minimum | Secured Overnight Financing Rate (SOFR) Fallback | ||||
Derivative [Line Items] | ||||
Reference rate | 1.08% | |||
Interest rate swaps | Minimum | One-month SOFR | ||||
Derivative [Line Items] | ||||
Reference rate | 2.38% | |||
Interest rate swaps | Maximum | Secured Overnight Financing Rate (SOFR) Fallback | ||||
Derivative [Line Items] | ||||
Reference rate | 1.28% | |||
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 | 1 month 6 days | |||
Interest rate cap | One-month SOFR | ||||
Derivative [Line Items] | ||||
Reference rate | 6.49% |
DERIVATIVE INSTRUMENTS - Sche_2
DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments as well as their Classification on the Consolidated Balance Sheets (Details) $ in Thousands | Dec. 31, 2023 USD ($) investment_instrument | Dec. 31, 2022 USD ($) investment_instrument | Dec. 31, 2021 investment_instrument |
Derivative [Line Items] | |||
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other assets | Prepaid expenses and other assets | |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities | |
Interest rate swaps | |||
Derivative [Line Items] | |||
Fair value, liability | $ | $ 175 | ||
Interest rate swaps | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Number of Instruments | 16 | 20 | |
Fair value, asset | $ | $ 23,891 | $ 40,216 | |
Fair value, liability | $ | $ (175) | $ (75) | |
Interest rate cap | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | 0 | |
Fair value, asset | $ | $ 0 | $ 0 | |
Interest Rate Swap at Fair Value | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Number of Instruments | 2 | 2 | 2 |
Prepaid expenses and other assets, at fair value | |||
Derivative [Line Items] | |||
Hybrid instruments | $ | $ 8,700 | ||
Prepaid expenses and other assets, at fair value | Interest rate swaps | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Number of Instruments | 15 | 18 | |
Prepaid expenses and other assets, at fair value | Interest rate cap | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | 0 | |
Other liabilities, at fair value | Interest rate swaps | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Number of Instruments | 1 | 2 |
DERIVATIVE INSTRUMENTS - Sche_3
DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments in Statement of Operations (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) investment_instrument | Dec. 31, 2022 USD ($) investment_instrument | Dec. 31, 2021 USD ($) investment_instrument | |
Derivative [Line Items] | |||
Net gain on derivative instruments | $ (14,907) | $ (51,932) | $ (5,263) |
Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Net gain on derivative instruments | (14,907) | (51,932) | (5,263) |
Interest rate swaps | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Realized loss recognized on interest rate swaps | 0 | 7,152 | 18,020 |
Realized gain recognized on interest rate swaps | (31,358) | (6,895) | 0 |
Unrealized loss (gain) on interest rate derivative | $ 16,426 | $ (52,189) | (23,283) |
Number of Instruments | investment_instrument | 16 | 20 | |
Interest rate cap | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Unrealized loss (gain) on interest rate derivative | $ 25 | $ 0 | 0 |
Number of Instruments | investment_instrument | 1 | 0 | |
Interest Rate Swap at Fair Value | Derivative instruments not designated as hedging instruments | |||
Derivative [Line Items] | |||
Unrealized loss (gain) | $ 8,700 | $ (10,700) | $ (5,800) |
Number of Instruments | investment_instrument | 2 | 2 | 2 |
FAIR VALUE DISCLOSURES - Schedu
FAIR VALUE DISCLOSURES - Schedule of Face Value, Carrying Amounts and Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Financial liabilities: | ||
Face Value | $ 1,738,613 | $ 1,671,395 |
Carrying Amount | ||
Financial liabilities: | ||
Notes payable | 1,735,896 | 1,667,288 |
Fair Value | ||
Financial liabilities: | ||
Notes payable | $ 1,679,259 | $ 1,654,046 |
FAIR VALUE DISCLOSURES - Sche_2
FAIR VALUE DISCLOSURES - Schedule of Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | $ 51,802 | $ 87,416 |
Interest rate swaps | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability derivatives | (175) | |
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] | ||
Liability derivatives | 0 | |
Interest rate swaps | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability derivatives | (175) | |
Interest rate swaps | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability derivatives | 0 | |
Recurring Basis: | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Real estate equity securities | 51,802 | |
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 | 51,802 | |
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] | ||
Asset derivatives | 23,891 | |
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] | ||
Asset derivatives | 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] | ||
Asset derivatives | 23,891 | |
Recurring Basis: | Interest rate swaps | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset derivatives | 0 | |
Recurring Basis: | Interest rate cap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset derivatives | 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] | ||
Asset derivatives | 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] | ||
Asset derivatives | 0 | |
Recurring Basis: | Interest rate cap | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset derivatives | $ 0 |
FAIR VALUE DISCLOSURES - Sche_3
FAIR VALUE DISCLOSURES - Schedule of Fair Value, Assets Measured on Nonrecurring Basis (Details) - Nonrecurring Basis $ in Thousands | Dec. 31, 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) - Nonrecurring Basis - Valuation Technique, Discounted Cash Flow | Dec. 31, 2023 |
Measurement Input, Discount Rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 9.75% |
Measurement Input, Terminal Cap Rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 7.75% |
RELATED PARTY TRANSACTIONS - Sc
RELATED PARTY TRANSACTIONS - Schedule of Related Party Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | |||
Receivable | $ 0 | $ 10 | |
Payable | 17,408 | 10,365 | |
Advisor and Dealer Manager | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | 21,259 | 20,427 | $ 22,835 |
Advisor and Dealer Manager | Related Party | |||
Related Party Transaction [Line Items] | |||
Receivable | 0 | 10 | |
Payable | 17,408 | 10,365 | |
Advisor and Dealer Manager | Asset management fees | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | 20,839 | 20,102 | 19,832 |
Advisor and Dealer Manager | Asset management fees | Related Party | |||
Related Party Transaction [Line Items] | |||
Receivable | 0 | 0 | |
Payable | 16,992 | 10,191 | |
Advisor and Dealer Manager | Reimbursement of operating expenses | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | 420 | 325 | 577 |
Advisor and Dealer Manager | Reimbursement of operating expenses | Related Party | |||
Related Party Transaction [Line Items] | |||
Receivable | 0 | 10 | |
Payable | 416 | 174 | |
Advisor and Dealer Manager | Disposition fees | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | 0 | 0 | 2,426 |
Advisor and Dealer Manager | Disposition fees | Related Party | |||
Related Party Transaction [Line Items] | |||
Receivable | 0 | 0 | |
Payable | 0 | 0 | |
Advisor and Dealer Manager | Salaries, benefits and overhead | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | 111 | 163 | 428 |
Advisor and Dealer Manager | Vendor services, overcharged fees | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | $ 800 | ||
Advisor and Dealer Manager | Overcharged fees, legal and accounting | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | $ 1,600 | ||
Advisor and Dealer Manager | Asset management fee credit, vendor services and overcharged fees | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | 500 | ||
Advisor and Dealer Manager | Reimbursement of overcharged fees and associated legal and accounting cost | |||
Related Party Transaction [Line Items] | |||
Incurred costs (reimbursement) | $ 1,900 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) $ in Thousands | 12 Months Ended | ||||||
Sep. 30, 2022 USD ($) | Jul. 18, 2019 USD ($) | Mar. 14, 2019 USD ($) $ / ft² | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | May 29, 2015 ft² | |
Related Party Transaction [Line Items] | |||||||
Payable | $ 17,408 | $ 10,365 | |||||
Annualized base rent | 61,295 | ||||||
Rental income | 270,158 | 275,026 | $ 280,144 | ||||
Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Rental income | 300 | 300 | 300 | ||||
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] | |||||||
Incurred costs (reimbursement) | 21,259 | 20,427 | 22,835 | ||||
Advisor and Dealer Manager | Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Payable | 17,408 | 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] | |||||||
Incurred costs (reimbursement) | 100 | 100 | 100 | ||||
Asset management fees | Advisor and Dealer Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Incurred costs (reimbursement) | 20,839 | 20,102 | $ 19,832 | ||||
Asset management fees | Advisor and Dealer Manager | Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Payable | 16,992 | 10,191 | |||||
Deferred asset management fees | Advisor and Dealer Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Incurred costs (reimbursement) | $ 8,500 | ||||||
Deferred asset management fees | Advisor and Dealer Manager | Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Payable | 8,500 | 8,500 | |||||
Bonus retention fund deposit | Advisor and Dealer Manager | Related Party | |||||||
Related Party Transaction [Line Items] | |||||||
Payable | $ 8,500 | 1,700 | |||||
One-time write-off of prepaid offering costs | Advisor and Dealer Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Incurred costs (reimbursement) | 2,700 | ||||||
Conflicts committee financial advisor fee | Advisor and Dealer Manager | |||||||
Related Party Transaction [Line Items] | |||||||
Incurred costs (reimbursement) | $ 500 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 12 Months Ended | ||||||
Feb. 21, 2024 USD ($) | Feb. 09, 2024 USD ($) | Feb. 06, 2024 USD ($) | Dec. 29, 2023 | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Apr. 30, 2012 a ft² | |
Subsequent Event [Line Items] | |||||||
Total notes payable principal outstanding | $ 1,738,613,000 | $ 1,671,395,000 | |||||
Office Building | McEwen Building | |||||||
Subsequent Event [Line Items] | |||||||
Real estate property acquired, net rentable area (sq ft) | ft² | 175,262 | ||||||
Real estate property acquired, area of land | a | 10.7 | ||||||
Subsequent Event | Office Building | McEwen Building | |||||||
Subsequent Event [Line Items] | |||||||
Proceeds from sale of real estate | $ 48,800,000 | ||||||
Subsequent Event | Office Building | McEwen Building | Disposed of by Sale | |||||||
Subsequent Event [Line Items] | |||||||
Excluding disposition fees payable to the advisor | 1,100,000 | ||||||
201 Spear Street Mortgage Loan | Mortgages | |||||||
Subsequent Event [Line Items] | |||||||
Debt instrument, deed-in-lieu transaction period, maximum | 6 months | ||||||
Total notes payable principal outstanding | $ 125,000,000 | 125,000,000 | |||||
201 Spear Street Mortgage Loan | Mortgages | One-month SOFR | |||||||
Subsequent Event [Line Items] | |||||||
Basis spread on variable rate | 1.45% | ||||||
Amended and Restated Portfolio Loan Facility | Secured Debt | |||||||
Subsequent Event [Line Items] | |||||||
Total notes payable principal outstanding | $ 601,288,000 | 559,468,000 | |||||
Amended and Restated Portfolio Loan Facility | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Other indebtedness demand made or guaranteed, amount | $ 5,000,000 | ||||||
Non-refundable fee payment | 900,000 | ||||||
Cash sweep collateral account deposit | 5,000,000 | ||||||
Exit fee payment | 1,000,000 | ||||||
Amended and Restated Portfolio Loan Facility | Subsequent Event | Secured Debt | |||||||
Subsequent Event [Line Items] | |||||||
Minimum equity and debt raise | $ 100,000,000 | ||||||
Debt instrument, excess cash flow deposit requirement, percentage | 100% | ||||||
Modified Portfolio Revolving Loan Facility | Secured Debt | |||||||
Subsequent Event [Line Items] | |||||||
Total notes payable principal outstanding | $ 249,145,000 | $ 249,145,000 | |||||
Modified Portfolio Revolving Loan Facility | Secured Debt | One-month SOFR | |||||||
Subsequent Event [Line Items] | |||||||
Basis spread on variable rate | 1.60% | ||||||
Modified Portfolio Revolving Loan Facility | Subsequent Event | Loan Borrower | |||||||
Subsequent Event [Line Items] | |||||||
Debt instrument, covenant, approved holdback costs | $ 10,000,000 | ||||||
Modified Portfolio Revolving Loan Facility | Subsequent Event | Loan Guarantor | |||||||
Subsequent Event [Line Items] | |||||||
Debt instrument, covenant, approved holdback costs | 6,200,000 | ||||||
Modified Portfolio Revolving Loan Facility | Subsequent Event | Secured Debt | |||||||
Subsequent Event [Line Items] | |||||||
Repayments of debt | 46,200,000 | ||||||
Total notes payable principal outstanding | $ 203,000,000 | ||||||
Debt instrument, periodic payment, principal | $ 880,900 | ||||||
Modified Portfolio Revolving Loan Facility | Subsequent Event | Secured Debt | One-month SOFR | |||||||
Subsequent Event [Line Items] | |||||||
Basis spread on variable rate | 3% |
SCHEDULE III REAL ESTATE ASSE_2
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION - Schedule of Assets, Depreciation and Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Real Estate and Accumulated Depreciation [Line Items] | ||||
Initial Cost to Company, Land | $ 293,029 | |||
Initial Cost to Company, Building and Improvements | 1,889,862 | |||
Initial Cost to Company, Total | 2,182,891 | |||
Cost Capitalized Subsequent to Acquisition | 370,088 | |||
Gross Amount at which Carried at Close of Period, Land | 274,315 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 2,278,664 | |||
Gross Amount at which Carried at Close of Period, Total | 2,552,979 | $ 2,568,352 | $ 2,441,266 | $ 2,554,572 |
Accumulated Depreciation and Amortization | (713,501) | $ (656,401) | $ (572,968) | $ (525,629) |
Aggregate cost of real estate for federal income tax purposes | 2,800,000 | |||
Secured Debt | Amended and Restated Portfolio Loan Facility | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Encumbrances | 601,300 | |||
Secured Debt | Modified Portfolio Revolving Loan Facility | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Encumbrances | 249,100 | |||
Mortgages | 3001 & 3003 Washington Mortgage Loan | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Encumbrances | $ 140,400 | |||
Town Center | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 7,428 | |||
Initial Cost to Company, Building and Improvements | 108,547 | |||
Initial Cost to Company, Total | 115,975 | |||
Cost Capitalized Subsequent to Acquisition | 25,445 | |||
Gross Amount at which Carried at Close of Period, Land | 7,428 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 133,992 | |||
Gross Amount at which Carried at Close of Period, Total | 141,420 | |||
Accumulated Depreciation and Amortization | $ (52,231) | |||
McEwen Building | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 5,600 | |||
Initial Cost to Company, Building and Improvements | 34,704 | |||
Initial Cost to Company, Total | 40,304 | |||
Cost Capitalized Subsequent to Acquisition | (117) | |||
Gross Amount at which Carried at Close of Period, Land | 5,600 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 34,587 | |||
Gross Amount at which Carried at Close of Period, Total | 40,187 | |||
Accumulated Depreciation and Amortization | $ (11,840) | |||
Gateway Tech Center | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 5,617 | |||
Initial Cost to Company, Building and Improvements | 20,051 | |||
Initial Cost to Company, Total | 25,668 | |||
Cost Capitalized Subsequent to Acquisition | 10,859 | |||
Gross Amount at which Carried at Close of Period, Land | 5,617 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 30,910 | |||
Gross Amount at which Carried at Close of Period, Total | 36,527 | |||
Accumulated Depreciation and Amortization | $ (12,257) | |||
60 South Sixth | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 16,951 | |||
Initial Cost to Company, Building and Improvements | 109,191 | |||
Initial Cost to Company, Total | 126,142 | |||
Cost Capitalized Subsequent to Acquisition | 59,217 | |||
Gross Amount at which Carried at Close of Period, Land | 16,951 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 168,408 | |||
Gross Amount at which Carried at Close of Period, Total | 185,359 | |||
Accumulated Depreciation and Amortization | $ (57,793) | |||
Preston Commons | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 17,188 | |||
Initial Cost to Company, Building and Improvements | 96,330 | |||
Initial Cost to Company, Total | 113,518 | |||
Cost Capitalized Subsequent to Acquisition | 31,604 | |||
Gross Amount at which Carried at Close of Period, Land | 17,188 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 127,934 | |||
Gross Amount at which Carried at Close of Period, Total | 145,122 | |||
Accumulated Depreciation and Amortization | $ (41,862) | |||
Sterling Plaza | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 6,800 | |||
Initial Cost to Company, Building and Improvements | 68,292 | |||
Initial Cost to Company, Total | 75,092 | |||
Cost Capitalized Subsequent to Acquisition | 20,083 | |||
Gross Amount at which Carried at Close of Period, Land | 6,800 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 88,375 | |||
Gross Amount at which Carried at Close of Period, Total | 95,175 | |||
Accumulated Depreciation and Amortization | $ (30,619) | |||
201 Spear Street | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Encumbrances | $ 125,000 | |||
Initial Cost to Company, Land | 40,279 | |||
Initial Cost to Company, Building and Improvements | 85,941 | |||
Initial Cost to Company, Total | 126,220 | |||
Cost Capitalized Subsequent to Acquisition | (55,649) | |||
Gross Amount at which Carried at Close of Period, Land | 24,473 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 46,098 | |||
Gross Amount at which Carried at Close of Period, Total | 70,571 | |||
Accumulated Depreciation and Amortization | $ (1,543) | |||
Accenture Tower | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Encumbrances | $ 306,000 | |||
Initial Cost to Company, Land | 49,306 | |||
Initial Cost to Company, Building and Improvements | 370,662 | |||
Initial Cost to Company, Total | 419,968 | |||
Cost Capitalized Subsequent to Acquisition | 152,304 | |||
Gross Amount at which Carried at Close of Period, Land | 49,306 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 522,966 | |||
Gross Amount at which Carried at Close of Period, Total | 572,272 | |||
Accumulated Depreciation and Amortization | $ (163,795) | |||
Ten Almaden | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 7,000 | |||
Initial Cost to Company, Building and Improvements | 110,292 | |||
Initial Cost to Company, Total | 117,292 | |||
Cost Capitalized Subsequent to Acquisition | 14,170 | |||
Gross Amount at which Carried at Close of Period, Land | 7,000 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 124,462 | |||
Gross Amount at which Carried at Close of Period, Total | 131,462 | |||
Accumulated Depreciation and Amortization | $ (40,615) | |||
Towers at Emeryville | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 35,774 | |||
Initial Cost to Company, Building and Improvements | 147,167 | |||
Initial Cost to Company, Total | 182,941 | |||
Cost Capitalized Subsequent to Acquisition | 40,272 | |||
Gross Amount at which Carried at Close of Period, Land | 35,774 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 187,439 | |||
Gross Amount at which Carried at Close of Period, Total | 223,213 | |||
Accumulated Depreciation and Amortization | $ (65,700) | |||
3003 Washington Boulevard | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 18,800 | |||
Initial Cost to Company, Building and Improvements | 129,820 | |||
Initial Cost to Company, Total | 148,620 | |||
Cost Capitalized Subsequent to Acquisition | 6,333 | |||
Gross Amount at which Carried at Close of Period, Land | 18,800 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 136,153 | |||
Gross Amount at which Carried at Close of Period, Total | 154,953 | |||
Accumulated Depreciation and Amortization | $ (46,009) | |||
Park Place Village | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Encumbrances | $ 65,000 | |||
Initial Cost to Company, Land | 11,009 | |||
Initial Cost to Company, Building and Improvements | 117,070 | |||
Initial Cost to Company, Total | 128,079 | |||
Cost Capitalized Subsequent to Acquisition | (40,996) | |||
Gross Amount at which Carried at Close of Period, Land | 8,101 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 78,982 | |||
Gross Amount at which Carried at Close of Period, Total | 87,083 | |||
Accumulated Depreciation and Amortization | $ (13,743) | |||
201 17th Street | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 5,277 | |||
Initial Cost to Company, Building and Improvements | 86,859 | |||
Initial Cost to Company, Total | 92,136 | |||
Cost Capitalized Subsequent to Acquisition | 13,095 | |||
Gross Amount at which Carried at Close of Period, Land | 5,277 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 99,954 | |||
Gross Amount at which Carried at Close of Period, Total | 105,231 | |||
Accumulated Depreciation and Amortization | $ (33,579) | |||
515 Congress | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 8,000 | |||
Initial Cost to Company, Building and Improvements | 106,261 | |||
Initial Cost to Company, Total | 114,261 | |||
Cost Capitalized Subsequent to Acquisition | 21,987 | |||
Gross Amount at which Carried at Close of Period, Land | 8,000 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 128,248 | |||
Gross Amount at which Carried at Close of Period, Total | 136,248 | |||
Accumulated Depreciation and Amortization | $ (35,623) | |||
The Almaden | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Encumbrances | $ 119,870 | |||
Initial Cost to Company, Land | 29,000 | |||
Initial Cost to Company, Building and Improvements | 130,145 | |||
Initial Cost to Company, Total | 159,145 | |||
Cost Capitalized Subsequent to Acquisition | 33,956 | |||
Gross Amount at which Carried at Close of Period, Land | 29,000 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 164,101 | |||
Gross Amount at which Carried at Close of Period, Total | 193,101 | |||
Accumulated Depreciation and Amortization | $ (49,537) | |||
3001 Washington Boulevard | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Initial Cost to Company, Land | $ 9,900 | |||
Initial Cost to Company, Building and Improvements | 41,551 | |||
Initial Cost to Company, Total | 51,451 | |||
Cost Capitalized Subsequent to Acquisition | 9,526 | |||
Gross Amount at which Carried at Close of Period, Land | 9,900 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 51,077 | |||
Gross Amount at which Carried at Close of Period, Total | 60,977 | |||
Accumulated Depreciation and Amortization | $ (14,722) | |||
Carillon | ||||
Real Estate and Accumulated Depreciation [Line Items] | ||||
Ownership Percent | 100% | |||
Encumbrances | $ 94,400 | |||
Initial Cost to Company, Land | 19,100 | |||
Initial Cost to Company, Building and Improvements | 126,979 | |||
Initial Cost to Company, Total | 146,079 | |||
Cost Capitalized Subsequent to Acquisition | 27,999 | |||
Gross Amount at which Carried at Close of Period, Land | 19,100 | |||
Gross Amount at which Carried at Close of Period, Building and Improvements | 154,978 | |||
Gross Amount at which Carried at Close of Period, Total | 174,078 | |||
Accumulated Depreciation and Amortization | $ (42,033) |
SCHEDULE III REAL ESTATE ASSE_3
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION - Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Real Estate: | |||
Balance at the beginning of the year | $ 2,568,352 | $ 2,441,266 | $ 2,554,572 |
Improvements | 76,346 | 144,693 | 69,527 |
Write off of fully depreciated and fully amortized assets | (46,260) | (17,607) | (15,502) |
Impairments | (45,459) | 0 | 0 |
Sale | 0 | 0 | (167,331) |
Balance at the end of the year | 2,552,979 | 2,568,352 | 2,441,266 |
Accumulated depreciation and amortization: | |||
Balance at the beginning of the year | (656,401) | (572,968) | (525,629) |
Depreciation and amortization expense | (103,360) | (101,040) | (100,036) |
Write off of fully depreciated and fully amortized assets | 46,260 | 17,607 | 15,502 |
Sale | 0 | 0 | 37,195 |
Balance at the end of the year | $ (713,501) | $ (656,401) | $ (572,968) |