10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-Q

______________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-53649

______________________________________________________

KBS REAL ESTATE INVESTMENT TRUST II, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________

Maryland	26-0658752
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
620 Newport Center Drive, Suite 1300 Newport Beach, California	92660
(Address of Principal Executive Offices)	(Zip Code)

(949) 417-6500

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨		Accelerated Filer	¨
Non-Accelerated Filer	x	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    

Yes  ¨  No  x

As of May 7, 2013, there were 192,191,903 outstanding shares of common stock of KBS Real Estate Investment Trust II, Inc.

KBS REAL ESTATE INVESTMENT TRUST II, INC.

FORM 10-Q

March 31, 2013

INDEX

PART I.	FINANCIAL INFORMATION		2
	Item 1.	Financial Statements	2
		Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012	2
		Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2013 and 2012	3
		Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three Months Ended March 31, 2013 and 2012	4
		Consolidated Statements of Stockholders’ Equity for the Year Ended December 31, 2012 and the Three Months Ended March 31, 2013 (unaudited)	5
		Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2013 and 2012	6
		Condensed Notes to Consolidated Financial Statements as of March 31, 2013 (unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
	Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION		43
	Item 1.	Legal Proceedings	43
	Item 1A.	Risk Factors	43
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 3.	Defaults upon Senior Securities	44
	Item 4.	Mine Safety Disclosures	45
	Item 5.	Other Information	45
	Item 6.	Exhibits	45
SIGNATURES			47

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	March 31, 2013			December 31, 2012
	(unaudited)
Assets
Real estate:
Land	$	336,357		$	265,197
Buildings and improvements	2,137,959			1,992,264
Tenant origination and absorption costs	316,541			304,732
Total real estate, cost	2,790,857			2,562,193
Less accumulated depreciation and amortization	(292,091		)	(270,538		)
Total real estate, net	2,498,766			2,291,655
Real estate loans receivable, net	350,256			348,846
Total real estate and real estate-related investments, net	2,849,022			2,640,501
Cash and cash equivalents	45,415			48,390
Rents and other receivables, net	62,152			57,349
Above-market leases, net	58,991			49,215
Deferred financing costs, prepaid expenses and other assets	35,550			26,495
Total assets	$	3,051,130		$	2,821,950
Liabilities and stockholders’ equity
Notes payable	$	1,581,514		$	1,334,514
Accounts payable and accrued liabilities	22,790			20,416
Due to affiliates	—			168
Distributions payable	10,585			10,521
Below-market leases, net	28,711			26,519
Other liabilities	40,785			34,355
Total liabilities	1,684,385			1,426,493
Commitments and contingencies (Note 11)
Redeemable common stock	70,912			66,426
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $.01 par value; 1,000,000,000 shares authorized, 191,436,608 and 190,274,167 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively	1,914			1,903
Additional paid-in capital	1,633,977			1,633,994
Cumulative distributions in excess of net income	(324,314		)	(289,737		)
Accumulated other comprehensive loss	(15,744		)	(17,129		)
Total stockholders’ equity	1,295,833			1,329,031
Total liabilities and stockholders’ equity	$	3,051,130		$	2,821,950

See accompanying condensed notes to consolidated financial statements.

2

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended March 31,
	2013		2012
Revenues:
Rental income	$	61,725	$	62,320
Tenant reimbursements	14,302		14,317
Interest income from real estate loans receivable	8,262		10,120
Other operating income	2,598		2,501
Total revenues	86,887		89,258
Expenses:
Operating, maintenance, and management	16,167		15,119
Real estate taxes and insurance	10,886		10,835
Asset management fees to affiliate	5,491		5,566
Real estate acquisition fees to affiliates	1,797		—
Real estate acquisition fees and expenses	616		—
General and administrative expenses	1,115		1,154
Depreciation and amortization	29,094		31,458
Interest expense	15,293		14,693
Total expenses	80,459		78,825
Other income:
Other interest income	4		18
Total other income	4		18
Income from continuing operations	6,432		10,451
Discontinued operations:
Income from discontinued operations	—		12
Total income from discontinued operations	—		12
Net income	$	6,432	$	10,463
Basic and diluted income per common share:
Continuing operations	$	0.03	$	0.05
Discontinued operations	—		—
Net income per common share	$	0.03	$	0.05
Weighted-average number of common shares outstanding, basic and diluted	191,305,215		191,916,690

See accompanying condensed notes to consolidated financial statements.

3

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2013		2012
Net income	$	6,432	$	10,463
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments	1,305		(373		)
Reclassification of realized losses on derivative instruments	80		—
Total other comprehensive income (loss)	1,385		(373		)
Total comprehensive income	$	7,817	$	10,090

See accompanying condensed notes to consolidated financial statements.

4

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Year Ended December 31, 2012 and the Three Months Ended March 31, 2013 (unaudited)

(dollars in thousands)

						Additional Paid-in Capital			Cumulative Distributions and Net Income (Loss)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
	Common Stock
	Shares		Amounts
Balance, December 31, 2011	191,725,167		$	1,917		$	1,649,029		$	(214,137	)	$	(17,465	)	$	1,419,344
Net income	—		—			—			48,374			—			48,374
Other comprehensive income	—		—			—			—			336			336
Issuance of common stock	6,804,964		67			66,393			—			—			66,460
Redemptions of common stock	(8,255,964	)	(81		)	(82,737		)	—			—			(82,818		)
Transfers from redeemable common stock	—		—			1,329			—			—			1,329
Distributions declared	—		—			—			(123,974		)	—			(123,974		)
Other offering costs	—		—			(20		)	—			—			(20		)
Balance, December 31, 2012	190,274,167		$	1,903		$	1,633,994		$	(289,737	)	$	(17,129	)	$	1,329,031
Net income	—		—			—			6,432			—			6,432
Other comprehensive income	—		—			—			—			1,385			1,385
Issuance of common stock	2,202,149		22			21,515			—			—			21,537
Redemptions of common stock	(1,039,708	)	(11		)	(10,516		)	—			—			(10,527		)
Transfers to redeemable common stock	—		—			(11,010		)	—			—			(11,010		)
Distributions declared	—		—			—			(41,009		)	—			(41,009		)
Other offering costs	—		—			(6		)	—			—			(6		)
Balance, March 31, 2013	191,436,608		$	1,914		$	1,633,977		$	(324,314	)	$	(15,744	)	$	1,295,833

See accompanying condensed notes to consolidated financial statements.

5

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2013			2012
Cash Flows from Operating Activities:
Net income	$	6,432		$	10,463
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Continuing operations	29,094			31,458
Discontinued operations	—			106
Noncash interest income on real estate-related investments	(1,168		)	(1,867		)
Deferred rent	(3,563		)	(4,880		)
Bad debt expense (recovery)	241			(61		)
Amortization of above- and below-market leases, net	496			159
Amortization of deferred financing costs	791			801
Reclassification of realized losses on derivative instruments	80			—
Change in fair value of contingent consideration	(10		)	11
Changes in operating assets and liabilities:
Rents and other receivables	(1,582		)	(1,341		)
Prepaid expenses and other assets	(8,732		)	(5,849		)
Accounts payable and accrued liabilities	465			(156		)
Other liabilities	1,043			712
Net cash provided by operating activities	23,587			29,556
Cash Flows from Investing Activities:
Acquisitions of real estate	(238,952		)	—
Improvements to real estate	(2,778		)	(4,335		)
Investments in real estate loans receivable	(716		)	(47,379		)
Principal repayments on real estate loans receivable	474			324
Net cash used in investing activities	(241,972		)	(51,390		)
Cash Flows from Financing Activities:
Proceeds from notes payable	328,000			5,000
Principal payments on notes payable	(81,000		)	—
Payments of deferred financing costs	(1,783		)	(22		)
Return of contingent consideration related to acquisition of real estate	134			541
Payments to redeem common stock	(10,527		)	(21,128		)
Payments of other offering costs	(6		)	(9		)
Distributions paid to common stockholders	(19,408		)	(14,037		)
Net cash provided by (used in) financing activities	215,410			(29,655		)
Net decrease in cash and cash equivalents	(2,975		)	(51,489		)
Cash and cash equivalents, beginning of period	48,390			95,554
Cash and cash equivalents, end of period	$	45,415		$	44,065
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	14,450		$	13,831
Supplemental Disclosure of Noncash Transactions:
Increase (decrease) in distributions payable	$	64		$	(22	)
Increase in redeemable common stock payable	$	6,524		$	—
Increase in accrued improvements to real estate	$	1,919		$	66
Increase in lease commissions payable	$	53		$	—
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan	$	21,537		$	16,746

See accompanying condensed notes to consolidated financial statements.

6

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

(unaudited)

1. ORGANIZATION

KBS Real Estate Investment Trust II, Inc. (the “Company”) was formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008. The Company conducts its business primarily through KBS Limited Partnership II, a Delaware limited partnership formed on August 23, 2007 (the “Operating Partnership”), and its subsidiaries. The Company is the sole general partner of and directly owns a 0.1% partnership interest in the Operating Partnership. The Company’s wholly-owned subsidiary, KBS REIT Holdings II LLC, a Delaware limited liability company formed on August 23, 2007 (“KBS REIT Holdings II”), owns the remaining 99.9% partnership interest in the Operating Partnership and is its sole limited partner.

The Company owns a diverse portfolio of real estate and real estate-related investments. As of March 31, 2013, the Company owned 27 real estate properties (consisting of 20 office properties, one office/flex property, a portfolio of four industrial properties, an office campus consisting of eight office buildings and one individual industrial property), a leasehold interest in one industrial property and seven real estate loans receivable.

Subject to certain restrictions and limitations, the business of the Company is managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on May 21, 2012 (the “Advisory Agreement”). The Advisory Agreement may be renewed for an unlimited number of one-year periods upon the mutual consent of the Advisor and the Company. Either party may terminate the Advisory Agreement upon 60 days’ written notice. The Advisor owns 20,000 shares of the Company’s common stock.

Upon commencing its initial public offering (the “Offering”), the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Advisor, to serve as the dealer manager of the Offering pursuant to a dealer manager agreement, as amended and restated on April 30, 2010 (the “Dealer Manager Agreement”). The Company ceased offering shares of common stock in its primary offering on December 31, 2010 and terminated its primary offering on March 22, 2011. The Company continues to offer shares of common stock under its dividend reinvestment plan.

The Company sold 182,681,633 shares of common stock in its primary offering for gross offering proceeds of $1.8 billion. As of March 31, 2013, the Company had sold 23,141,841 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $222.3 million. Also as of March 31, 2013, the Company had redeemed 14,406,865 shares sold in the Offering for $142.2 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2012, except for the addition of an accounting policy with respect to fees paid in connection with termination of a derivative. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). 

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements.  In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods.  Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

7

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries.  All significant intercompany balances and transactions are eliminated in consolidation. 

Use of Estimates

The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

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. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) on the accompanying consolidated statements of comprehensive income (loss) and consolidated statements of equity. 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 in the accompanying consolidated statements of operations.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded in accumulated other comprehensive income (loss) to earnings.

The termination of a cash flow hedge prior to the maturity date may result in a net derivative instrument gain or loss that continues to be reported in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction (i.e., LIBOR based debt service payments) unless it is probable that the original forecasted hedged transaction will not occur by the end of the originally specified time period (as documented at the inception of the hedging relationship) or within an additional two-month period of time thereafter. If it is probable that the hedged forecasted transaction will not occur either by the end of the originally specified time period or within the additional two-month period of time, that derivative instrument gain or loss reported in accumulated other comprehensive income (loss) shall be reclassified into earnings immediately.

8

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

Redeemable Common Stock

The Company has a share redemption program that may enable stockholders to sell their shares to the Company in limited circumstances.

Pursuant to the share redemption program, there are several limitations on the Company’s ability to redeem shares under the program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program), the Company may not redeem shares unless the stockholder has held the shares for one year, provided that if the Company is redeeming all of a stockholder’s shares, then there is no holding period requirement for shares purchased pursuant to the Company’s dividend reinvestment plan.

• During any calendar year, the Company may 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 the Company may not redeem more than $3.0 million of shares in the aggregate each month, excluding shares redeemed in connection with a stockholder’s death, qualifying disability or determination of incompetence.

• During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.

• The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland 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 a stockholder’s death, qualifying disability or determination of incompetence are 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 (as defined in the share redemption program), and the price at which the Company redeems all other shares eligible for redemption is as follows:

• For stockholders who have held their shares for at least one year, 92.5% of the Company’s most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least two years, 95.0% of the Company’s most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least three years, 97.5% of the Company’s most recent estimated value per share as of the applicable Redemption Date; and

• For stockholders who have held their shares for at least four years, 100% of the Company’s most recent estimated value per share as of the applicable Redemption Date.

On December 18, 2012, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $10.29 (unaudited), based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2012. The change in the redemption price, which is calculated based on the most recent estimated value per share, was effective for the December 2012 Redemption Date, which was December 31, 2012. The Company currently expects to engage the Advisor and/or an independent valuation firm to update the Company’s estimated value per share in December 2013, but is not required to update the estimated value per share more frequently than every 18 months.

9

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

On March 6, 2013, the Company’s board of directors approved the Sixth Amended and Restated Share Redemption Program (the “Sixth Amended Share Redemption Program”). Pursuant to the Sixth Amended Share Redemption Program, the Company has modified how the Company will process redemptions that would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currentlyeffective, or the most recently effective, registration statement as such registration statement has been amended or supplemented (the “Minimum Purchase Requirement”). Specifically, if the Company cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the program, then the Company will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the Minimum Purchase Requirement, then the Company would redeem all of such stockholder’s shares. If the Company is redeeming all of a stockholder’s shares, there would be no holding period requirement for shares purchased pursuant to the Company’s dividend reinvestment plan.

The Company’s board of directors may amend, suspend or terminate the share redemption program with 30 days’ notice to its stockholders. The Company may provide this notice by including such information in a Current Report on Form 8‑K or in the Company’s annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to its stockholders.

The Company limits the dollar value of shares that may be redeemed under the share redemption program as described above. For the three months ended March 31, 2013, the Company redeemed $10.5 million of shares, which represented all redemption requests received in good order and eligible for redemption through the March 2013 Redemption Date, except for 648,000 shares due to the limitations discussed above. The Company recorded $6.6 million of other liabilities on the accompanying consolidated balance sheet as of March 31, 2013 related to these unfulfilled redemption requests. Based on the amount of net proceeds raised from the sale of shares under the dividend reinvestment plan during 2012, the Company has $55.9 million available for redemptions during the remainder of 2013, subject to the limitations described above, including the monthly limitation for ordinary redemptions.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three months ended March 31, 2013 and 2012, respectively.

Distributions declared per common share were $0.214 and $0.160 for the three months ended March 31, 2013 and 2012, respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three months ended March 31, 2013 and 2012, respectively. For each day that was a record date for distributions during the three months ended March 31, 2013 and 2012, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2013 through March 31, 2013 was a record date for distributions. Each day during the periods from January 1, 2012 through February 28, 2012 and March 1, 2012 through March 31, 2012 was a record date for distributions. Additionally, the Company’s board of directors declared a distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on February 4, 2013.

Segments

The Company’s segments are based on the Company’s method of internal reporting, which classifies its operations by investment type: real estate and real estate-related. For financial data by segment, see Note 10, “Segment Information.”

10

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

Recently Issued Accounting Standards Update

In December 2011, FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU No. 2011-11”). ASU No. 2011-11 requires entities to provide enhanced disclosures about financial instruments and derivative instruments that are either presented on a net basis on the balance sheet or subject to an enforceable master netting arrangement or similar agreement including (i) a description of the rights of offset associated with relevant agreements and (ii) both net and gross information, including amounts of financial collateral, for relevant assets and liabilities. The purpose of the update is to enhance comparability between those companies that prepare their financial statements on the basis of GAAP and those that prepare their financial statements in accordance with IFRS and to enable users of the financial statements to understand the effect or potential effect of the offsetting arrangements on the balance sheet. ASU No. 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and for interim periods within those years. Disclosures are required retrospectively for all comparative periods presented in an entity’s financial statements. The adoption of ASU No. 2011-11 did not have a material impact to the Company’s consolidated financial statements.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU No. 2013-01”). ASU No. 2013-01 clarifies that the scope of ASU No. 2011-11 applies to derivatives accounted for in accordance with ASC 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with ASC 210-20-45, Balance Sheet - Other Presentation Matters, or ASC 815-10-45, Derivatives and Hedging - Other Presentation Matters, or subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 is effective for fiscal years beginning on or after January 1, 2013 and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The adoption of ASU No. 2013-01 did not have a material impact to the Company’s consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU No. 2013-02”). ASU No. 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. An entity is also required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by respective line items of net income only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts, such as when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. ASU No. 2013-02 is effective for reporting periods beginning after December 31, 2012. The adoption of ASU No. 2013-02 did not have a material impact to the Company’s consolidated financial statements.

11

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

3. REAL ESTATE

As of March 31, 2013, the Company’s real estate portfolio was composed of 20 office properties, one office/flex property, a portfolio of four industrial properties, an office campus consisting of eight office buildings, one industrial property and a leasehold interest in one industrial property, encompassing in the aggregate approximately 11.7 million rentable square feet. As of March 31, 2013, the Company’s real estate portfolio was 95% occupied. The following table summarizes the Company’s investments in real estate as of March 31, 2013 and December 31, 2012 (in thousands):

	Land		Buildings and Improvements			Tenant Origination and Absorption Costs			Total Real Estate
As of March 31, 2013:
Office	$	326,057	$	2,049,040		$	298,511		$	2,673,608
Industrial (1)	10,300		88,919			18,030			117,249
Total real estate, cost	$	336,357	$	2,137,959		$	316,541		$	2,790,857
Accumulated depreciation and amortization	—		(190,071		)	(102,020		)	(292,091		)
Net Amount	$	336,357	$	1,947,888		$	214,521		$	2,498,766
As of December 31, 2012:
Office	$	254,897	$	1,903,298		$	286,291		$	2,444,486
Industrial (1)	10,300		88,966			18,441			117,707
Total real estate, cost	$	265,197	$	1,992,264		$	304,732		$	2,562,193
Accumulated depreciation and amortization	—		(173,917		)	(96,621		)	(270,538		)
Net Amount	$	265,197	$	1,818,347		$	208,111		$	2,291,655

_____________________

⁽¹⁾ Includes an investment in the rights to a ground lease. The ground lease expires in February 2050.

As of March 31, 2013, the following property represented more than 10% of the Company’s total assets:

Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) (1)		Average Annualized Base Rent per sq. ft.		Occupancy
300 N. LaSalle Building	Chicago, IL	1,302,901	$	566,197	18.6	%	$	45,211	$	34.80	100	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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.

12

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

Operating Leases

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases had remaining terms, excluding options to extend, of up to 15.9 years with a weighted-average remaining term of 5.8 years. The leases may have provisions to extend the term of the leases, options for early termination for all or part of the leased premises after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, 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 security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. 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 $4.6 million and $4.2 million as of March 31, 2013 and December 31, 2012, respectively.

During the three months ended March 31, 2013 and 2012, the Company recognized deferred rent from tenants, net of lease incentive amortization, of $3.6 million and $4.9 million, respectively. As of March 31, 2013 and December 31, 2012, the cumulative deferred rent balance was $57.3 million and $53.5 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $5.5 million and $5.3 million of unamortized lease incentives as of March 31, 2013 and December 31, 2012, respectively.

As of March 31, 2013, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands):

April 1, 2013 through December 31, 2013	$	186,699
2014	241,382
2015	218,730
2016	200,727
2017	180,840
Thereafter	755,157
	$	1,783,535

As of March 31, 2013, the Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Legal Services	57	$	51,147	19.4	%
Finance	90	50,058		19.0	%
Computer System Design & Programming	21	34,029		12.9	%
		$	135,234	51.3	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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.

13

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

No other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time. During the three months ended March 31, 2013, the Company recorded bad debt expense of $0.2 million. During the three months ended March 31, 2012, the Company reduced its bad debt expense reserve and recorded a net recovery of bad debt related to its tenant receivables of $61,000. As of March 31, 2013, the Company had a bad debt expense reserve of approximately $0.1 million, which represents less than 1% of its annualized base rent.

As of March 31, 2013, there were no leases that accounted for more than 10% of annualized base rent.

Geographic Concentration Risk

As of March 31, 2013, the Company’s net investments in real estate in Illinois, California and New Jersey represented 18.6%, 18.0% and 14.5% 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 Illinois, California and New Jersey real estate markets.  Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

In addition, the Company’s investment in the 300 N. LaSalle Building, located in Chicago, Illinois, represented 18.6% of the Company’s total assets and 20.3% of the Company’s total revenues as of March 31, 2013. As a result of this investment, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the Chicago real estate market. Any adverse economic or real estate developments in this market, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Recent Acquisition

Corporate Technology Centre

On March 28, 2013, the Company, through an indirect wholly owned subsidiary (the “Corporate Technology Centre Owner”), acquired an office campus consisting of eight office buildings totaling 610,083 rentable square feet located on approximately 32.7 acres of land in San Jose, California (“Corporate Technology Centre”). The seller is not affiliated with the Company or the Advisor. The purchase price of Corporate Technology Centre was $239.0 million plus closing costs. At acquisition, Corporate Technology Centre was 100% leased to five tenants.

14

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

4. TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW‑MARKET LEASE LIABILITIES

As of March 31, 2013 and December 31, 2012, 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 Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
Cost	$	316,541		$	304,732		$	77,567		$	70,176		$	(50,383	)	$	(46,607	)
Accumulated Amortization	(102,020		)	(96,621		)	(18,576		)	(20,961		)	21,672			20,088
Net Amount	$	214,521		$	208,111		$	58,991		$	49,215		$	(28,711	)	$	(26,519	)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three months ended March 31, 2013 and 2012 were as follows (in thousands):

	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	For the Three Months Ended March 31,						For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2013			2012			2013			2012			2013		2012
Amortization	$	(10,172	)	$	(12,831	)	$	(2,192	)	$	(2,233	)	$	1,696	$	2,095

15

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

5. REAL ESTATE LOANS RECEIVABLE

As of March 31, 2013 and December 31, 2012, the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands):

Loan Name      Location of Related Property or Collateral	Date Acquired/ Originated	Property Type	Loan Type	Outstanding Principal Balance as of March 31, 2013 (1)		Book Value as of March 31, 2013 (2)		Book Value as of December 31, 2012 (2)		Contractual Interest Rate (3)	Annualized Effective Interest Rate (3)	Maturity Date (4)
One Liberty Plaza Notes
New York, New York	02/11/2009	Office	Mortgage	$	112,845	$	82,081	$	81,163	6.1%	15.0%	08/06/2017
Tuscan Inn First Mortgage Origination
San Francisco, California	01/21/2010	Hotel	Mortgage	20,200		19,998		19,973		8.3%	9.0%	01/21/2015
Chase Tower First Mortgage Origination
Austin, Texas	01/25/2010	Office	Mortgage	59,090		59,098		59,210		8.4%	8.5%	02/01/2015
Pappas Commerce First Mortgage Origination (5)
Boston, Massachusetts	04/05/2010	Industrial	Mortgage	32,673		32,673		32,673		(5)	9.8%	07/01/2014
One Kendall Square First Mortgage Origination (6)
Cambridge, Massachusetts	11/22/2010	Mixed-use Facility	Mortgage Participation	87,500		87,873		88,006		(6)	7.0%	12/01/2013
Sheraton Charlotte Airport Hotel First Mortgage
Charlotte, North Carolina	07/11/2011	Hotel	Mortgage	14,500		14,518		14,519		7.5%	7.6%	08/01/2018
Summit I & II First Mortgage (7)
Reston, Virginia	01/17/2012	Office	Mortgage	53,976		54,015		53,302		7.5%	7.6%	02/01/2017
				$	380,784	$	350,256	$	348,846

_____________________

⁽¹⁾ Outstanding principal balance as of March 31, 2013 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns.

⁽²⁾ Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs.

⁽³⁾ Contractual interest rates are the stated interest rates on the face of the loans. Annualized effective interest rates are calculated as the actual interest income recognized in 2013, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of March 31, 2013.

⁽⁴⁾ Maturity dates are as of March 31, 2013; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown.

⁽⁵⁾ As of March 31, 2013, $31.9 million had been disbursed under the Pappas Commerce First Mortgage. Interest on the first mortgage is calculated at a fixed rate of 9.5%. Outstanding principal balance also includes a protective advance of $0.8 million made on June 22, 2011 to cover property taxes and to fund the tax and insurance reserve account. Interest on the protective advance is calculated at a fixed rate of 14.5%.

⁽⁶⁾ The One Kendall Square First Mortgage bears interest at a floating rate of 550 basis points over one-month LIBOR, but at no point shall the interest rate be less than 7.5%.

⁽⁷⁾ As of March 31, 2013, $54.0 million had been disbursed under the Summit I & II First Mortgage and another $4.8 million remained available for future fundings, subject to certain conditions set forth in the loan agreement.

16

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

The following summarizes the activity related to the real estate loans receivable for the three months ended March 31, 2013 (in thousands):

Real estate loans receivable - December 31, 2012	$	348,846
Additional principal funded under real estate loans receivable	716
Principal repayments received on real estate loan receivable	(474		)
Accretion of discounts on purchased real estate loans receivable	1,301
Amortization of closing costs and origination fees on real estate loans receivable	(133		)
Real estate loans receivable - March 31, 2013	$	350,256

For the months ended March 31, 2013 and 2012, interest income from real estate loans receivable consisted of the following (in thousands):

	Three Months Ended March 31,
	2013			2012
Contractual interest income	$	7,094		$	8,253
Accretion of purchase discounts	1,301			2,007
Amortization of closing costs and origination fees	(133		)	(140		)
Interest income from real estate loans receivable	$	8,262		$	10,120

As of March 31, 2013 and December 31, 2012, interest receivable from real estate loans receivable was $2.3 million and $2.3 million, respectively, and was included in rents and other receivables.

17

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

6. NOTES PAYABLE

As of March 31, 2013 and December 31, 2012, the Company’s notes payable consisted of the following (dollars in thousands):

	Principal as of March 31, 2013		Principal as of December 31, 2012		Contractual Interest Rate as of March 31, 2013(1)	Effective Interest Rate as of March 31, 2013 (1)	Payment Type	Maturity Date (2)
100 & 200 Campus Drive Mortgage Loan (3)	$	—	$	55,000	(3)	(3)	(3)	(3)
300-600 Campus Drive Mortgage Loan	93,850		93,850		5.90%	5.9%	Interest Only	04/10/2014
Portfolio Revolving Loan Facility (4)	55,000		55,000		One-month LIBOR + 3.00% (4)	5.2%	Interest Only	04/30/2014
Willow Oaks Revolving Loan (3)	—		13,000		(3)	(3)	(3)	(3)
300 N. LaSalle Building Mortgage Loan	350,000		350,000		4.25%	4.3%	Interest Only	08/01/2015
Union Bank Plaza Mortgage Loan (5)	105,000		105,000		One-month LIBOR + 1.75%	3.5%	Interest Only	09/15/2015
Emerald View at Vista Center Mortgage Loan	19,800		19,800		One-month LIBOR + 2.25%	4.6%	Interest Only	01/01/2016
Portfolio Loan (6)	341,544		341,544		One-month LIBOR + 2.15%	3.7%	Interest Only	01/27/2016
One Kendall Square Borrowing (7)	45,000		45,000		One-month LIBOR + 2.50%	4.0%	Interest Only	12/01/2013
601 Tower Mortgage Loan (8)	16,320		16,320		(8)	3.5%	Interest Only	06/03/2015
CityPlace Tower Mortgage Loan	71,000		71,000		3.59%	3.6%	Interest Only	08/01/2015
Fountainhead Plaza Mortgage Loan	80,000		80,000		One-month LIBOR + 1.90%	2.9%	Interest Only	12/01/2015
Metropolitan Center Mortgage Loan (3)	—		13,000		(3)	(3)	(3)	(3)
CIBC Portfolio Mortgage Loan (9)	76,000		76,000		One-month LIBOR + 2.75%	3.0%	Interest Only	01/01/2016
U.S. Bank/TD Bank Credit Facility (10)	188,000		—		One-month LIBOR + 1.75% - 1.85%	2.2%	Interest Only	03/01/2016
Corporate Technology Centre Mortgage Loan (11)	140,000		—		3.50%	3.5%	(12)	04/01/2020
	$	1,581,514	$	1,334,514

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2013. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates), using interest rate indices as of March 31, 2013, where applicable. For further information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.”

⁽²⁾ Represents the initial maturity date or the maturity date as extended as of March 31, 2013; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown.

⁽³⁾ On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay these loans in full. See “ — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽⁴⁾ On April 30, 2010, the Company entered into a four-year revolving loan facility for an amount up to $100.0 million. As of March 31, 2013, $55.0 million of principal was outstanding and $45.0 million remained available for future disbursements, subject to certain conditions set forth in the loan agreement. The interest rate under this loan is calculated at a variable rate of 300 basis points over one-month LIBOR, but at no point shall the interest rate be less than 4.25%; however, there is no minimum floor rate for any portion of the loan that is subject to a swap contract with a minimum initial term of two years or any shorter term expiring on the maturity date. The Portfolio Revolving Loan Facility is secured by Mountain View Corporate Center, the 350 E. Plumeria Building, the Pierre Laclede Center and One Main Place.

⁽⁵⁾ On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of March 31, 2013, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement.

⁽⁶⁾ The Portfolio Loan is secured by Plano Business Park, Horizon Tech Center, Dallas Cowboys Distribution Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center, I-81 Industrial Portfolio, Two Westlake Park and Torrey Reserve West.

⁽⁷⁾ This note bears interest at a floating rate of 250 basis points over one-month LIBOR, subject to a minimum interest rate of 4.0%.

⁽⁸⁾ On June 6, 2011, the Company entered into a four-year $32.6 million revolving credit loan. As of March 31, 2013, $16.3 million had been disbursed to the Company under the mortgage loan and $16.3 million remained available for future disbursements under the revolving loan facility, subject to certain conditions set forth in the loan agreement. The interest rate on the $16.3 million outstanding as of March 31, 2013 was calculated at a fixed rate of 3.54% per annum. The interest rate on the $16.3 million available for future disbursements as of March 31, 2013 would be calculated at a variable rate of 220 basis points over one-month LIBOR.

⁽⁹⁾ The CIBC Portfolio Mortgage Loan is secured by the Tuscan Inn First Mortgage Origination, the Chase Tower First Mortgage Origination, the Pappas Commerce First Mortgage Origination and the Sheraton Charlotte Airport Hotel First Mortgage.

⁽¹⁰⁾ The U.S. Bank/TD Bank Credit Facility is secured by 100 & 200 Campus Drive Buildings, Metropolitan Center and Willow Oaks Corporate Center. See “— Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽¹¹⁾ See “— Recent Financing Transactions — Corporate Technology Centre Mortgage Loan.”

⁽¹²⁾ Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity.

18

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

As of March 31, 2013 and December 31, 2012, the Company’s deferred financing costs were $8.1 million and $7.0 million, respectively, net of amortization, and are included in deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets.

During the three months ended March 31, 2013 and 2012, the Company incurred $15.3 million and $14.7 million of interest expense, respectively. As of March 31, 2013 and December 31, 2012, $4.4 million and $4.3 million, respectively, of interest expense were payable. Included in interest expense for the three months ended March 31, 2013 and 2012 were $0.8 million and $0.8 million of amortization of deferred financing costs, respectively. Interest expense incurred as a result of the Company’s interest rate swap agreements was $2.4 million and $2.3 million for the three months ended March 31, 2013 and 2012, respectively.

The following is a schedule of maturities for all notes payable outstanding as of March 31, 2013 (in thousands):

April 1, 2013 through December 31, 2013	$	45,000
2014	148,850
2015	622,320
2016	625,344
2017	—
Thereafter	140,000
	$	1,581,514

Certain of the Company’s notes payable contain financial debt covenants. As of March 31, 2013, the Company was in compliance with these debt covenants.

Recent Financing Transactions

U.S. Bank/TD Bank Credit Facility

On March 6, 2013, the Company, through certain indirect wholly owned subsidiaries (together, the “U.S. Bank/TD Bank Borrowers”), entered into a three-year senior secured credit facility with U.S. Bank National Association and TD Bank, N.A. (together, the “U.S. Bank/TD Bank Lenders”), unaffiliated lenders, for borrowings of up to $235.0 million (the “U.S. Bank/TD Bank Credit Facility”), of which $141.0 million is non-revolving debt and $94.0 million is revolving debt. The U.S. Bank/TD Bank Credit Facility is secured by the 100 & 200 Campus Drive Buildings, Metropolitan Center and Willow Oaks Corporate Center. As of March 31, 2013, the $141.0 million non-revolving portion and $47.0 million of the revolving portion were funded, and $47.0 million of the revolving portion remains available for future disbursements, subject to certain terms and conditions contained in the loan documents. The Company used $81.0 million of the proceeds funded at closing to repay the outstanding principal balances due under the 100 & 200 Campus Drive Mortgage Loan, the Metropolitan Center Mortgage Loan and the Willow Oaks Revolving Loan. Also, in connection with the repayment of these loans, the Company terminated the swap agreements with respect to eight swaps which were subject to an aggregate breakage fee of $1.1 million, which fee was paid with loan proceeds.

The U.S. Bank/TD Bank Credit Facility matures on March 1, 2016, with two one-year extension options, subject to certain terms and conditions contained in the loan documents.  For each calendar quarter, the interest rate on the U.S. Bank/TD Bank Credit Facility will be equal to (i) the applicable margin, which will be based on the borrowing base leverage ratio as determined pursuant to the loan agreement, and which will vary between 175 and 185 basis points, plus (ii) one-month LIBOR. Monthly payments are interest only with the entire principal balance and all outstanding interest and fees due at maturity. The Company will have the right to prepay the loan in whole at any time or in part from time to time, subject to the payment of certain expenses potentially incurred by the lender as a result of the prepayment and subject to certain other conditions and possible fees contained in the loan documents.

19

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

On March 6, 2013, the Company, through the U.S. Bank/TD Bank Borrowers, also entered into four swap agreements to hedge the interest rate for certain portions of the U.S. Bank/TD Bank Credit Facility. The interest rate on $85.1 million of the non-revolving debt has been fixed at 2.25% - 2.35% through March 1, 2016 and the interest rate on $55.9 million of the non-revolving debt has been fixed at 2.46% - 2.56% through March 1, 2017, assuming the Company exercises the first of its two extension options.

KBS REIT Properties II, LLC, the wholly owned subsidiary through which the Company indirectly owns all of its real estate assets (“KBS REIT Properties II”), is providing a guaranty of 25% of the outstanding principal amount due and payable under the U.S. Bank/TD Bank Credit Facility. KBS REIT Properties II is also providing a guaranty of: (i) certain monetary obligations relating to the above-referenced swap agreements; (ii) in certain circumstances, any amounts owed by the U.S. Bank/TD Bank Borrowers pursuant to the related environmental indemnity; and (iii) any deficiency, loss or damage suffered by the U.S. Bank/TD Bank Lenders resulting from (a) certain intentional acts committed by the U.S. Bank/TD Bank Borrowers and, in certain circumstances, KBS REIT Properties II, or (b) certain bankruptcy or insolvency proceedings involving the U.S. Bank/TD Bank Borrowers.

Corporate Technology Centre Mortgage Loan

On March 28, 2013, in connection with the acquisition of Corporate Technology Centre, the Company, through the Corporate Technology Centre Owner, entered into a seven-year mortgage loan with an unaffiliated lender, for borrowings of $140.0 million secured by Corporate Technology Centre (the “Corporate Technology Centre Mortgage Loan”). The Corporate Technology Centre Mortgage Loan matures on April 1, 2020 and bears interest at a fixed rate of 3.50%. Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity.  The Corporate Technology Centre Owner has the right to repay the loan in whole (but not in part, except in connection with a parcel release) on or after March 31, 2014, subject to certain conditions and a formula‑based yield prepayment premium. The loan is fully assumable by a subsequent purchaser of Corporate Technology Centre, subject to certain terms and conditions contained in the loan agreement.

KBS REIT Properties II is providing a limited guaranty of the Corporate Technology Centre Mortgage Loan with respect to certain potential costs, expenses, losses, damages and other sums which may result from certain actions or inactions by the Corporate Technology Centre Owner.  KBS REIT Properties II is also providing a guaranty of the principal balance and any interest or other sums outstanding under the Corporate Technology Centre Mortgage Loan in the event of (i) certain bankruptcy or insolvency proceedings involving the Corporate Technology Centre Owner, certain of its affiliates, or KBS REIT Properties II and (ii) certain other intentional actions committed by the Corporate Technology Centre Owner in violation of the loan documents.

7. 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 the 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. All of the Company’s interest rate swaps are designated as cash flow hedges.

20

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

The following table summarizes the notional and fair value of the Company’s interest rate swaps designated as cash flow hedges as of March 31, 2013 and December 31, 2012. The notional value 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):

						Fair Value of Asset (Liability)				Fair Value of Asset (Liability)
Derivative Instruments	Effective Date	Maturity Date	Notional Value		Reference Rate	March 31, 2013				December 31, 2012
Interest Rate Swap (1)	02/26/2010	02/26/2014	$	—	One-month LIBOR/ Fixed at 2.30%	$	—		(1)	$	(239	)
Interest Rate Swap (1)	02/26/2010	02/26/2014	—		One-month LIBOR/ Fixed at 2.30%	—			(1)	(239		)
Interest Rate Swap (2)	04/30/2010	04/30/2014	55,000		One-month LIBOR/ Fixed at 2.17%	(953		)		(1,214		)
Interest Rate Swap (1)	07/26/2010	08/01/2013	—		One-month LIBOR/ Fixed at 1.33%	—			(1)	(43		)
Interest Rate Swap (1)	07/26/2010	08/01/2013	—		One-month LIBOR/ Fixed at 1.33%	—			(1)	(43		)
Interest Rate Swap	09/15/2010	09/15/2015	105,000		One-month LIBOR/ Fixed at 1.70%	(3,503		)		(3,788		)
Interest Rate Swap (1)	12/15/2010	02/26/2014	—		One-month LIBOR/ Fixed at 1.53%	—			(1)	(262		)
Interest Rate Swap (1)	12/15/2010	02/26/2014	—		One-month LIBOR/ Fixed at 1.53%	—			(1)	(262		)
Interest Rate Swap	12/16/2010	01/01/2016	19,800		One-month LIBOR/ Fixed at 2.39%	(1,084		)		(1,166		)
Interest Rate Swap	12/20/2010	06/16/2015	69,000		One-month LIBOR/ Fixed at 1.94%	(2,469		)		(2,700		)
Interest Rate Swap	02/01/2011	01/01/2016	56,150		One-month LIBOR/ Fixed at 2.16%	(2,732		)		(2,929		)
Interest Rate Swap	02/01/2011	02/01/2015	8,400		One-month LIBOR/ Fixed at 1.75%	(226		)		(254		)
Interest Rate Swap	02/01/2011	02/01/2014	80,150		One-month LIBOR/ Fixed at 1.29%	(719		)		(928		)
Interest Rate Swap	03/08/2011	02/01/2014	85,900		One-month LIBOR/ Fixed at 1.45%	(889		)		(1,147		)
Interest Rate Swap	03/10/2011	02/01/2014	13,750		One-month LIBOR/ Fixed at 1.32%	(127		)		(164		)
Interest Rate Swap	12/01/2011	12/01/2015	80,000		One-month LIBOR/ Fixed at 1.04%	(1,455		)		(1,547		)
Interest Rate Swap (1)	01/01/2012	01/01/2016	—		One-month LIBOR/ Fixed at 1.02%	—			(1)	(145		)
Interest Rate Swap (1)	02/01/2012	01/01/2016	—		One-month LIBOR/ Fixed at 0.77%	—			(1)	(59		)
Interest Rate Swap	03/06/2013	03/01/2017	32,113		One-month LIBOR/ Fixed at 0.71%	(159		)		—
Interest Rate Swap	03/06/2013	03/01/2017	23,787		One-month LIBOR/ Fixed at 0.71%	(117		)		—
Interest Rate Swap	03/06/2013	03/01/2016	48,887		One-month LIBOR/ Fixed at 0.50%	(148		)		—
Interest Rate Swap	03/06/2013	03/01/2016	36,213		One-month LIBOR/ Fixed at 0.50%	(110		)		—
Total derivatives designated  as hedging instruments			$	714,150		$	(14,691	)		$	(17,129	)

_____________________

⁽¹⁾ On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay the loans related to these swaps in full. In connection with the repayment of these loans, the Company terminated these swap agreements with respect to eight swaps which were subject to an aggregate breakage fee of $1.1 million. See Note 6, “Notes Payable — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽²⁾ In connection with entering into the Portfolio Revolving Loan Facility, the Company entered into an interest rate swap agreement with Wells Fargo Bank, N.A. which effectively fixes the interest rate on the initial $55.0 million drawn under the loan at approximately 5.17% for the first three years of the loan and fixes the interest rate on $45.0 million of this amount at approximately 5.17% for the last year of the initial loan term.

21

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

Asset derivatives are recorded as deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets, and liability derivatives are recorded as other liabilities on the accompanying consolidated balance sheets. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) in the accompanying consolidated statements of stockholders’ equity. The Company recorded unrealized gains (losses) of $1.3 million and $(0.4) million on derivative instruments designated as cash flow hedges in accumulated other comprehensive income (loss) during the three months ended March 31, 2013 and 2012, respectively. Amounts in other comprehensive income (loss) will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow.  As a result of utilizing derivative instruments designated as cash flow hedges to hedge its variable rate notes payable, the Company recognized an additional $2.4 million and $2.3 million of interest expense related to the effective portion of cash flow hedges during the three months ended March 31, 2013 and 2012, respectively. The change in fair value of the ineffective portion is recognized directly in earnings. During the three months ended March 31, 2013 and 2012, there was no ineffective portion related to the change in fair value of the cash flow hedges. During the next 12 months, the Company expects to recognize additional interest expense related to derivative instruments designated as cash flow hedges. The present value of the additional interest expense totaled $9.9 million as of March 31, 2013 and was included in accumulated other comprehensive income (loss).

In conjunction with the refinancing of the U.S. Bank/TD Bank Credit Facility, the Company terminated the swap agreements with respect to eight swaps and paid an aggregate breakage fee of $1.1 million. Because it remains probable that the original hedged forecasted transactions (i.e., LIBOR-based debt service payments) will occur, the loss related to the termination of these swap agreements is included in accumulated other comprehensive income (loss) and will be reclassified into earnings over the period of the original forecasted hedged transaction. During the three months ended March 31, 2013, the Company reclassified $0.1 million of the loss related to the termination of swap agreements into earnings as an increase to interest expense.

8. FAIR VALUE DISCLOSURES

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

22

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instruments 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 loans receivable: The Company’s real estate loans receivable are presented in the accompanying consolidated balance sheets at their amortized cost net of recorded loan loss reserves and not at fair value. The fair values of real estate loans receivable were estimated using an internal valuation model that considered the expected cash flows for the loans, underlying collateral values (for collateral-dependent loans) and estimated yield requirements of institutional investors for loans with similar characteristics, including remaining loan term, loan-to-value, type of collateral and other credit enhancements. The Company classifies these inputs as Level 3 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 by a third-party expert 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.

Notes payable: The fair value of the Company’s notes payable is 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 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. The Company classifies these inputs as Level 3 inputs.

The following were the face values, carrying amounts and fair values of the Company’s real estate loans receivable and notes payable as of March 31, 2013 and December 31, 2012, which carrying amounts do not approximate the fair values (in thousands):

	March 31, 2013						December 31, 2012
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial assets:
Real estate loans receivable	$	380,784	$	350,256	$	390,816	$	380,542	$	348,846	$	390,145
Financial liabilities:
Notes payable	$	1,581,514	$	1,581,514	$	1,595,264	$	1,334,514	$	1,334,514	$	1,341,363

23

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

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. Despite increased capital market and credit market activity, transaction volume for certain financial instruments remains relatively low. This has 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.

During the three months ended March 31, 2013, the Company measured the following liabilities at fair value (in thousands):

				Fair Value Measurements Using
	Total			Quoted Prices in Active Markets  for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Recurring Basis:
Liability derivatives	$	(14,691	)	$	—	$	(14,691	)	$	—

9. 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 entitle the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate and real estate-related investments, the management of those investments, among other services, and the disposition of investments, as well as reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, such as expenses related to the dividend reinvestment plan, 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 as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc. and KBS Legacy Partners Apartment REIT, Inc. During the three months ended March 31, 2013 and 2012, no transactions occurred between the Company and these other KBS-sponsored programs.

24

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2013 and 2012, respectively, and any related amounts payable as of March 31, 2013 and December 31, 2012 (in thousands):

	Incurred					Payable as of
	Three Months Ended March 31,					March 31,		December 31,
	2013		2012			2013		2012
Expensed
Asset management fees	$	5,491	$	5,587	(1)	$	—	$	—
Reimbursement of operating expenses (2)	25		15			—		168
Acquisition fees	1,797		—			—		—
Capitalized
Origination fees	—		588			—		—
	$	7,313	$	6,190		$	—	$	168

_____________________

⁽¹⁾ Amount includes asset management fees from discontinued operations totaling $21,000 for the three months ended March 31, 2012.

⁽²⁾ The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses 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 $25,000 and $15,000 for the three months ended March 31, 2013 and 2012, respectively, and were the only employee costs reimbursed under the Advisory Agreement through March 31, 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers.

10. SEGMENT INFORMATION

The Company presently operates in two reportable business segments based on its investment types: real estate and real estate‑related. Under the real estate segment, the Company has invested in office, office/flex and industrial properties. Under the real estate-related segment, the Company has invested in or originated mortgage loans, a mortgage participation and an A‑Note. All revenues earned from the Company’s two reporting segments were from external customers and there were no intersegment sales or transfers. The Company does not allocate corporate-level accounts to its reporting segments. Corporate‑level accounts include corporate general and administrative expenses, non-operating interest income, non-operating interest expense and other corporate-level expenses. The accounting policies of the segments are consistent with those described in Note 2, “Summary of Significant Accounting Policies.”

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non‑GAAP supplemental financial measure. The Company defines NOI for its real estate segment as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees and provision for bad debt) less interest expense. The Company defines NOI for its real estate-related segment as interest income less loan servicing costs, asset management fees and interest expense. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non‑property income and expenses, depreciation and amortization, and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate and real estate-related investments and to make decisions about resource allocations. The Company believes that net income is the GAAP measure that is most directly comparable to NOI; however, NOI should not be considered as an alternative to net income as the primary indicator of operating performance, as it excludes the items described above. Additionally, NOI as defined above may not be comparable to other REITs or companies as their definitions of NOI may differ from the Company’s definition.

25

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

The following tables summarize total revenues and NOI for each reportable segment for the three months ended March 31, 2013 and 2012 and total assets and total liabilities for each reportable segment as of March 31, 2013 and December 31, 2012 (in thousands):

	For the Three Months Ended March 31,
	2013		2012
Revenues:
Real estate segment	$	78,625	$	79,138	(1)
Real estate-related segment	8,262		10,120
Total segment revenues	$	86,887	$	89,258
Interest Expense:
Real estate segment	$	13,950	$	13,287	(1)
Real estate-related segment	1,131		1,151
Total segment interest expense	15,081		14,438
Corporate-level	212		255
Total interest expense	$	15,293	$	14,693
NOI:
Real estate segment	$	32,678	$	34,968	(1)
Real estate-related segment	6,584		8,332
Total NOI	$	39,262	$	43,300
	As of March 31,		As of December 31,
	2013		2012
Assets:
Real estate segment	$	2,669,856	$	2,441,112
Real estate-related segment	353,677		352,377
Total segment assets	3,023,533		2,793,489
Corporate-level (2)	27,597		28,461
Total assets	$	3,051,130	$	2,821,950
Liabilities:
Real estate segment	$	1,545,319	$	1,293,854
Real estate-related segment	121,366		121,332
Total segment liabilities	1,666,685		1,415,186
Corporate-level (3)	17,700		11,307
Total liabilities	$	1,684,385	$	1,426,493

_____________________

⁽¹⁾ Amounts do not include real estate held for sale and discontinued operations.

⁽²⁾ Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $27.1 million and $28.2 million as of March 31, 2013 and December 31, 2012, respectively.

⁽³⁾ As of March 31, 2013 and December 31, 2012, corporate-level liabilities consisted primarily of distributions payable and redemptions payable.

26

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

The following table reconciles the Company’s net income to its NOI for the three months ended March 31, 2013 and 2012 (in thousands):

	For the Three Months Ended March 31,
	2013			2012
Net income	$	6,432		$	10,463
Other interest income	(4		)	(18		)
Real estate acquisition fees to affiliates	1,797			—
Real estate acquisition fees and expenses	616			—
General and administrative expenses	1,115			1,154
Depreciation and amortization	29,094			31,458
Corporate-level interest expense	212			255
Total income from discontinued operations	—			(12		)
NOI	$	39,262		$	43,300

11. COMMITMENTS AND CONTINGENCIES

Economic Dependency

The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, acquisition or origination, and disposition of real estate and real estate-related investments; management of the daily operations of the Company’s real estate and real estate-related investment portfolio; and other general and administrative responsibilities. In the event the Advisor is unable to provide the respective services, the Company will be required to obtain such services from other sources.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Compliance with existing environmental laws is not expected to have a material adverse effect on the Company’s financial condition and results of operations as of March 31, 2013.

Legal Matters

From time to time, the Company is 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 its 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.

27

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

March 31, 2013

(unaudited)

12. SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Distributions Paid

On April 1, 2013, the Company paid distributions of $10.6 million, which related to distributions declared for daily record dates for each day in the period from March 1, 2013 through March 31, 2013. On May 1, 2013, the Company paid distributions of $10.3 million, which related to distributions declared for daily record dates for each day in the period from April 1, 2013 through April 30, 2013.

Distributions Declared

On May 10, 2013, the Company’s board of directors declared distributions based on daily record dates for the period from June 1, 2013 through June 30, 2013, which the Company expects to pay in July 2013, and distributions based on daily record dates for the period from July 1, 2013 through July 31, 2013, which the Company expects to pay in August 2013. Investors may choose to receive cash distributions or purchase additional shares through the Company’s dividend reinvestment plan.

Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00178082 per share per day and equal a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on a purchase price of $10.00 per share in the Company’s now terminated primary initial public offering or a 6.3% annualized rate based on the Company’s December 18, 2012 estimated value per share of $10.29.

Third Amended and Restated Dividend Reinvestment Plan

On April 9, 2013, the Company’s board of directors approved a third amended and restated dividend reinvestment plan (the “Amended Dividend Reinvestment Plan”). Pursuant to the Amended Dividend Reinvestment Plan, in order to terminate participation in the dividend reinvestment plan, a participant must provide the Company with written notice.  The Amended Dividend Reinvestment Plan reduces the advance notice that a stockholder must provide in order to terminate participation in the dividend reinvestment plan from ten business days prior to the last day of the month to which a distribution relates to four business days prior to the last business day of the month to which a distribution relates.

There were no other changes made in the Amended Dividend Reinvestment Plan. The Amended Dividend Reinvestment Plan will be effective April 20, 2013.

28

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of KBS Real Estate Investment Trust II, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to KBS Real Estate Investment Trust II, Inc., a Maryland corporation, and, as required by context, KBS Limited Partnership II, a Delaware limited partnership, which we refer to as the “Operating Partnership,” and to their subsidiaries.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of KBS Real Estate Investment Trust II, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

• We have a limited operating history. This inexperience makes our future performance difficult to predict.

• All of our executive officers and some of our directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, the entity that acted as our dealer manager and/or other KBS-affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other KBS-advised programs and investors and conflicts in allocating time among us and these other programs and investors. These conflicts could result in unanticipated actions. Fees paid to our advisor in connection with transactions involving the origination or acquisition and management of our investments are based on the cost of the investment, not on the quality of the investment or services rendered to us. This arrangement could influence our advisor to recommend riskier transactions to us.

• Because investment opportunities that are suitable for us may also be suitable for other KBS-advised programs or investors, our advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.

• We pay substantial fees to and expenses of our advisor and its affiliates and, in connection with our public offering, we paid substantial fees to participating broker-dealers. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase the risk of loss to our stockholders.

• We have used and from time to time expect to continue to use proceeds from financings, if necessary, to fund a portion of our distributions during our operational stage. We may also fund such distributions from the net proceeds from the sale of real estate and from the receipt of principal payments on our real estate-related investments.

• We depend on tenants for the revenue generated by our real estate investments and, accordingly, the revenue generated by our real estate investments is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in occupancy (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, making it more difficult for us to meet our debt service obligations and limiting our ability to pay distributions to our stockholders.

• Our investments in real estate, mortgage loans and a participation in a mortgage loan may be affected by unfavorable real estate market and general economic conditions, which could decrease the value of those assets and reduce the investment return to our stockholders. Revenues from our properties and the properties and other assets directly securing our loan investments could decrease. Such events would make it more difficult for the borrowers under our loan investments to meet their payment obligations to us. It could also make it more difficult for us to meet our debt service obligations and limit our ability to pay distributions to our stockholders.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

• Continued disruptions in the financial markets and uncertain economic conditions could adversely affect our ability to implement our business strategy and generate returns to our stockholders.

• Certain of our debt obligations have variable interest rates and related payments that vary with the movement of LIBOR or other indexes. Increases in these indexes could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

• We cannot predict with any certainty how much, if any, of our dividend reinvestment plan proceeds will be available for general corporate purposes, including, but not limited to, the redemption of shares under our share redemption program, the funding of capital expenditures on our real estate investments, or the repayment of debt. If such funds are not available from our dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet these cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (the “SEC”).

Overview

We were formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008 and intend to operate in such a manner. We have invested in a diverse portfolio of real estate and real estate-related investments. We conduct our business primarily through our Operating Partnership, of which we are the sole general partner. Subject to certain restrictions and limitations, our business is managed by our advisor, KBS Capital Advisors LLC, pursuant to an advisory agreement. KBS Capital Advisors conducts our operations and manages our portfolio of real estate and real estate-related investments. Our advisor owns 20,000 shares of our common stock. We have no paid employees.

We own a diverse portfolio of real estate and real estate-related investments. As of March 31, 2013, we owned 27 real estate properties (consisting of 20 office properties, one office/flex property, a portfolio of four industrial properties, an office campus consisting of eight office buildings and one individual industrial property), a leasehold interest in one industrial property and seven real estate loans receivable.

On September 27, 2007, we filed a registration statement on Form S-11 with the SEC to offer a maximum of 280,000,000 shares of common stock for sale to the public, of which 200,000,000 shares were registered in our primary offering and 80,000,000 shares were registered under our dividend reinvestment plan. We ceased offering shares of common stock in our primary offering on December 31, 2010. We sold 182,681,633 shares of common stock in the primary offering for gross offering proceeds of $1.8 billion. We continue to offer shares of common stock under our dividend reinvestment plan. As of March 31, 2013, we had sold 23,141,841 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $222.3 million. Also as of March 31, 2013, we had redeemed 14,406,865 shares sold in our offering for $142.2 million.

Market Outlook – Real Estate and Real Estate Finance Markets

The following discussion is based on management’s beliefs, observations and expectations with respect to the real estate and real estate finance markets.

Since 2007 and the emergence of the global economic crisis, there have been persistent concerns regarding the creditworthiness and refinancing capabilities of both corporations and sovereign governments. Economies throughout the world have experienced lingering levels of high unemployment and low levels of consumer and business confidence due to a global downturn in economic activity. While some markets have shown some signs of recovery, concerns remain regarding job growth, income growth and the overall economic health of consumers, businesses and governments.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Recent global economic events remain centered on the potential for the default of several European sovereign debt issuers and the impact that such an event would have on the European Union and the rest of the world’s financial markets. During 2011, Standard and Poor’s (“S&P”) downgraded the credit rating of the United States to AA+ from AAA. In November 2012, Moody’s downgraded France’s sovereign debt rating to Aa1 from AAA and, in February 2013, Moody’s downgraded the U.K. government debt to Aa1 from AAA as well. The global ratings agencies continue to have a number of western sovereign issuers on negative watch as governments have struggled to resolve their fiscal obligations. At the end of 2012 the U.S. government barely escaped the self-imposed fiscal cliff by enacting legislation that temporarily postponed legislated spending cuts to many government programs, commonly referred to as “sequestration,” until March of 2013. However, these cuts began to take effect in March 2013. European governments have been unable to resolve their own political and fiscal issues. These events continue to build in importance as government and political leaders have been unable to establish plans to correct the economic imbalances that are increasingly dominating and driving global economic performance. Uncertainty and volatility have crept back into the capital markets.

In the U.S., the banking industry has been experiencing improved earnings. This is a positive, but the relatively low growth economic environment and the slow recovery in the residential mortgage segment of the industry, has caused investors to question whether financial institutions are adequately capitalized. The credit downgrade of the United States and the continued political infighting between the branches of government have increased these concerns. The U.S. Federal Reserve has taken a number of actions to ensure that banks have adequate access to the capital markets, but the slow recovery in the values of single family homes remains a material concern.

In Europe, the unresolved sovereign debt crisis continues. Some European banks hold material quantities of sovereign debt on their balance sheets. The possible default or restructuring of the sovereign debt obligations of certain European Union countries and the resulting negative impact on the global banking system is a significant concern. The uncertainty surrounding the size of the problem and how regulators and governments intend to deal with the situation has caused many investors to reassess their pricing of risks. In response to the growing crisis some nations have experienced a significant increase in the cost of capital. In some cases the increase in the cost of debt has pushed nations to the brink of default.

From 2008 through 2011, the financial crisis and global economic downturn caused transaction volumes in the U.S. commercial real estate market to experience a sharp decline. While high-quality assets in primary (top-tier) markets experienced some transaction volume, most markets remained illiquid, with little or no buying or selling. Uncertainty in areas such as the cost of capital and the ability to hedge asset risks produced enough friction to bring transaction volumes down.

In 2012, however, the economic stimulus provided by the Federal Reserve programs and an increased demand for U.S.- based assets began to fuel the U.S. commercial real estate market recovery. Transaction volumes have rebounded and the re-emergence of the CMBS market and the availability of debt capital have spurred on the recovery. Commercial real estate transaction volumes have improved, as the U.S. has become a safe haven for global capital.

While these signs of improvement for commercial real estate are heartening, outstanding economic, credit and regulatory issues remain. Certain markets will continue to benefit from employment gains specific to the location and regionally-based growth industries such as technology, energy and health care. Lending activity increased in 2012, but not evenly. Certain markets in the commercial real estate sector are still having problems attracting capital, while others are experiencing increased development and construction.

Residential real estate markets have also been experiencing an uneven recovery. The market for residential mortgages saw significant gains in 2012, but problem loans on bank balance sheets still remain a material challenge for U.S. banks. The slow and steady recovery in the single family home market continues to progress. The Federal Reserve’s low interest rate policy has pushed capital into the residential mortgage markets and has helped consumer balance sheets by establishing some stability in home valuations.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The global capital markets have begun to improve, but uncertainties still exist and it is unlikely that transaction volumes will return to pre-2007 levels. Central bank interventions in the banking system and the persistence of a highly expansionary monetary policy by a number of government entities have introduced additional complexity and uncertainty to the markets. These conditions are expected to continue, and combined with a challenging macro-economic environment, may interfere with the implementation of our business strategy and/or force us to modify it.

Impact on Our Real Estate Investments

These market conditions have had and will likely continue to have a significant impact on our real estate investments and have created a highly competitive leasing environment. In addition, these market conditions have impacted our tenants’ businesses, which may make it more difficult for them to meet current lease obligations and may place pressure on them to negotiate favorable lease terms upon renewal in order for their businesses to remain viable. Possible future declines in rental rates, slower or potentially negative net absorption of leased space and potential future rental concessions, including free rent to retain tenants who are up for renewal or to sign new tenants, may result in decreases in cash flow. Historically low interest rates could help offset some of the impact of decreases in operating cash flow for properties financed with variable rate mortgages; however, interest rates likely will not remain at these historically low levels for the life of many of our investments.

Impact on Our Real Estate-Related Investments

Our real estate-related investments are directly secured by commercial real estate. As a result, our real estate-related investments have been and likely will continue to be impacted to some degree by the same factors impacting our real estate investments.

As of March 31, 2013, we had fixed-rate real estate loans receivable with an aggregate outstanding principal balance of $293.3 million and an aggregate carrying value (including origination and closing costs) of $262.4 million that mature between 2014 and 2018 and a variable rate real estate loan receivable with a principal balance of $87.5 million and a carrying value (including origination and closing costs) of $87.9 million that matures in December 2013.

Impact on Our Financing Activities

In light of the risks associated with possible declines of operating cash flows from our real estate properties and the current underwriting environment for commercial real estate mortgages, we may have difficulty refinancing some of our mortgage notes at maturity or we may not be able to refinance our obligations at terms as favorable as the terms of our existing indebtedness. As of March 31, 2013, we had debt obligations in the aggregate principal amount of $1.6 billion, all of which have an initial maturity between 2013 and 2020. We have a total of $671.2 million of fixed rate notes payable and $910.3 million of variable rate notes payable. The interest rates on $714.2 million of our variable rate notes payable are effectively fixed through interest rate swap agreements. As of March 31, 2013, we had a total of $45.0 million of debt obligations scheduled to mature within 12 months of that date.

Liquidity and Capital Resources

Our principal demand for funds during the short- and long-term is and will be for: the payment of operating expenses, capital expenditures and general and administrative expenses; payments under debt obligations; redemptions of common stock pursuant to our share redemption program; the acquisition or origination of some additional investments; and payments of distributions to stockholders. To date, we have had five primary sources of capital for meeting our cash requirements:

• Proceeds from our now terminated primary offering;

• Proceeds from common stock issued under our dividend reinvestment plan;

• Debt financings;

• Proceeds from the sale of real estate and the repayment of a real estate-related investment; and

• Cash flow generated by our real estate operations and real estate-related investments.

We ceased offering shares of common stock in our primary offering on December 31, 2010 and continue to offer shares under our dividend reinvestment plan. To date, we have invested substantially all of the net proceeds from our initial public offering but could potentially make some additional investments in the future. We intend to use our cash on hand, cash flow generated by our real estate operations and real estate-related investments, proceeds from debt financing, proceeds from our dividend reinvestment plan, proceeds from the sale of real estate properties and principal repayments on our real estate loans receivable as our primary sources of immediate and long-term liquidity. As of March 31, 2013, we had an aggregate of $108.3 million available for future disbursements under three credit facilities, subject to certain conditions and restrictions set forth in the respective loan agreements.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our investments in real estate generate cash flow in the form of rental revenues and tenant reimbursements, which are reduced by operating expenditures, debt service payments, the payment of asset management fees and corporate general and administrative expenses. Cash flow from operations from our real estate investments is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates on our leases, the collectibility of rent and operating recoveries from our tenants and how well we manage our expenditures. As of March 31, 2013, our real estate portfolio was 95% occupied and our bad debt reserve was less than 1% of annualized base rent.

Our real estate-related investments generate cash flow in the form of interest income, which is reduced by loan servicing fees, debt service payments, the payment of asset management fees and corporate general and administrative expenses. Cash flows from operations from our real estate-related investments are primarily dependent on the operating performance of the underlying collateral and the borrower’s ability to make debt service payments. As of March 31, 2013, the borrowers under our real estate loans receivable were current on their debt service payments to us.

For the three months ended March 31, 2013, our cash needs for acquisitions or originations, capital expenditures and the payment of debt obligations were met with the proceeds from debt financing, proceeds from asset sales and the repayment of one of our real estate loans receivable and proceeds from our dividend reinvestment plan. Operating cash needs during the same period were met through cash flow generated by our real estate and real estate-related investments. We made distributions to our stockholders during the three months ended March 31, 2013 using current period and prior period cash flows from operations and proceeds from asset sales in the prior year. We believe that our cash on hand, proceeds from our dividend reinvestment plan, cash flows from operations, availability under our credit facilities, proceeds from asset sales and the repayment of our real estate loans receivable and anticipated financing activities will be sufficient to meet our liquidity needs for the foreseeable future.

Cash Flows from Operating Activities

As of March 31, 2013, we owned 27 real estate properties (consisting of 20 office properties, one office/flex property, a portfolio consisting of four industrial properties, an office campus consisting of eight office buildings and one individual industrial property), a leasehold interest in one industrial property and seven real estate loans receivable. During the three months ended March 31, 2013, net cash provided by operating activities was $23.6 million, compared to $29.6 million during the three months ended March 31, 2012. Net cash from operations decreased in 2013 primarily as a result of the early payoff of a real estate loan receivable and the disposition of a real estate property in 2012.

Cash Flows from Investing Activities

Net cash used in investing activities was $242.0 million for the three months ended March 31, 2013, and primarily consisted of the following:

• $239.0 million for the acquisition of an office property;

• $2.8 million used for improvements to real estate;

• $0.7 million of funding obligations under one real estate loan receivable; and

• $0.5 million of proceeds from principal repayment on a real estate loan receivable.

Cash Flows from Financing Activities

During the three months ended March 31, 2013, net cash provided by financing activities was $215.4 million and consisted primarily of the following:

• $245.2 million of net cash provided by debt financings as a result of proceeds from notes payable of $328.0 million, partially offset by principal payments on notes payable of $81.0 million and payments of deferred financing costs of $1.8 million;

• $10.5 million of cash used for redemptions of common stock; and

• $19.4 million of net cash distributions, after giving effect to dividends reinvested by stockholders of $21.5 million.

In addition to using our capital resources to meet our debt service obligations, for capital expenditures and for operating costs, we use our capital resources to make certain payments to our advisor. We pay our advisor fees in connection with the acquisition and origination, management and disposition of our assets and for certain costs incurred by our advisor in providing services to us. We will also continue to reimburse our advisor and our dealer manager for certain offering costs related to our dividend reinvestment plan and for certain stockholder services.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

As of March 31, 2013, we had $45.4 million of cash and cash equivalents and up to $108.3 million available for future disbursements under our credit facilities, subject to certain conditions and restrictions set forth in the respective loan agreements, to meet our operational and capital needs.

In order to execute our investment strategy, we primarily utilize secured debt to finance a portion of our investment portfolio. Management remains vigilant in monitoring the risks inherent with the use of debt in our portfolio and is taking actions to ensure that these risks, including refinance and interest rate risks, are properly balanced with the benefit of using leverage. Our charter limits our total liabilities to 75% of the cost (before deducting depreciation or other noncash reserves) of our tangible assets; however, we may exceed that limit if the majority of the conflicts committee approves each borrowing in excess of our charter limitation and we disclose such borrowings to our stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. As of March 31, 2013, our borrowings and other liabilities were approximately 50% of the cost (before depreciation or other noncash reserves) and book value (before depreciation) of our tangible assets, respectively.

Contractual Commitments and Contingencies

The following is a summary of our contractual obligations as of March 31, 2013 (in thousands):

			Payments Due During the Years Ending December 31,
Contractual Obligations	Total		Remainder of 2013		2014-2015		2016-2017		Thereafter
Outstanding debt obligations (1)	$	1,581,514	$	45,000	$	771,170	$	625,344	$	140,000
Interest payments on outstanding debt obligations (2)	161,566		44,156		91,270		11,440		14,700
Outstanding funding obligations under real estate loan receivable	4,774		(3)		(3)		(3)		(3)

_____________________

⁽¹⁾ Amounts include principal payments only.

⁽²⁾ Projected interest payments are based on the outstanding principal amounts and interest rates in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate floors and swaps). We incurred interest expense of $14.5 million, excluding amortization of deferred financing costs totaling $0.8 million, during the three months ended March 31, 2013.

⁽³⁾ As of March 31, 2013, $54.0 million had been disbursed under the Summit I & II First Mortgage Loan and another $4.8 million remained available for future funding, subject to certain conditions set forth in the loan agreement. This amount is available for funding until July 2013, subject to certain conditions set forth in the loan agreement. The Summit I & II First Mortgage matures on February 1, 2017.

Results of Operations

Overview

As of March 31, 2012, we owned 20 office properties, one office/flex property, a portfolio of four industrial properties, two individual industrial properties, a leasehold interest in one industrial property and eight real estate loans receivable. As of March 31, 2013, we owned 20 office properties, one office/flex property, a portfolio of four industrial properties, an office campus consisting of eight office buildings, one individual industrial property, a leasehold interest in one industrial property and seven real estate loans receivable. The results of operations presented for the three months ended March 31, 2013 and 2012 are not directly comparable due to the early payoff of a real estate loan receivable in 2012 and the acquisition of an office property in 2013. In general, we expect income and expenses to vary in future periods depending on our acquisition and disposition activities.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Comparison of the three months ended March 31, 2013 versus the three months ended March 31, 2012

The following table provides summary information about our results of operations for the three months ended March 31, 2013 and 2012 (dollar amounts in thousands):

	Three Months Ended March 31,				Increase (Decrease)			Percentage Change		$ Change Due to Acquisitions/ Originations (1)		$ Change Due to Properties  or Loans Held Throughout Both Periods (2)
	2013		2012
Rental income	$	61,725	$	62,320	$	(595	)	(1	)%	$	196	$	(791	)
Tenant reimbursements	14,302		14,317		(15		)	—	%	42		(57		)
Interest income from real estate loans receivable	8,262		10,120		(1,858		)	(18	)%	267		(2,125		)
Other operating income	2,598		2,501		97			4	%	—		97
Operating, maintenance, and management costs	16,167		15,119		1,048			7	%	8		1,040
Real estate taxes, property-related taxes, and insurance	10,886		10,835		51			—	%	28		23
Asset management fees to affiliate	5,491		5,566		(75		)	(1	)%	47		(122		)
Real estate acquisition fees to affiliates	1,797		—		1,797			100	%	1,797		—
Real estate acquisition fees and expenses	616		—		616			100	%	616		—
General and administrative expenses	1,115		1,154		(39		)	(3	)%	n/a		n/a
Depreciation and amortization	29,094		31,458		(2,364		)	(8	)%	—		(2,364		)
Interest expense	15,293		14,693		600			4	%	54		546
Other interest income	4		18		(14		)	(78	)%	n/a		n/a
Income from discontinued operations	—		12		(12		)	(100	)%	n/a		n/a

_____________________

⁽¹⁾ Represents the dollar amount increase (decrease) for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 related to real estate and real estate-related investments acquired or originated on or after January 1, 2012.

⁽²⁾ Represents the dollar amount increase (decrease) for the three months ended March 31, 2013 compared to the three months ended March 31, 2012 with respect to real estate and real estate-related investments owned by us throughout both periods presented.

Rental income and tenant reimbursements decreased from $76.6 million for the three months ended March 31, 2012 to $76.0 million for the three months ended March 31, 2013. This decrease primarily relates to lower occupancy in one of our office properties. This was offset by an increase in rental income and tenant reimbursements relating to the acquisition of an office campus consisting of eight office buildings in March 2013. We expect rental income and tenant reimbursements to vary in future periods depending on occupancy rates and rental rates of our real estate investments. To the extent that we acquire additional real estate investments and as a result of owning the asset acquired during 2013 for an entire period, we expect rental income and tenant reimbursements to increase in future periods.

Interest income from our real estate loans receivable, recognized using the interest method, decreased from $10.1 million for the three months ended March 31, 2012 to $8.3 million for the three months ended March 31, 2013, primarily as a result of the early pay-off of the Northern Trust Notes in 2012. Interest income included $1.9 million and $1.2 million in accretion of purchase price discounts, net of amortization of closing costs, for the three months ended March 31, 2012 and March 31, 2013, respectively. Interest income from real estate loans receivable in future periods compared to historical periods will be impacted by fluctuations in LIBOR, to the extent we have variable rate loans receivable, and the potential impact of future principal repayments and future acquisitions or originations.

Operating, maintenance and management costs increased from $15.1 million for the three months ended March 31, 2012 to $16.2 million for the three months ended March 31, 2013. This increase primarily relates to higher utility costs and snow removal costs from properties held throughout both periods. Operating, maintenance and management costs may increase in future periods, as compared to historical periods, as a result of inflation. We expect operating, maintenance and management costs to increase in future periods as a result of owning the asset acquired during 2013 for an entire period and to the extent that we acquire additional real estate investments.

Real estate taxes, property-related taxes and insurance increased from $10.8 million for the three months ended March 31, 2012 to $10.9 million for the three months ended March 31, 2013. This increase primarily relates to inflation from properties held throughout both periods and the acquisition of an office campus consisting of eight office buildings in 2013. We expect real estate taxes, property-related taxes and insurance to generally increase in future periods as a result of inflation, owning the asset acquired during 2013 for an entire period, and to the extent that we acquire additional real estate investments, but these expenses may fluctuate up or down over time.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Asset management fees with respect to our real estate and real estate-related investments decreased from $5.6 million for the three months ended March 31, 2012 to $5.5 million for the three months ended March 31, 2013, as a result of the early pay-off of the Northern Trust Notes. All asset management fees incurred as of March 31, 2013 have been paid. We expect asset management fees to increase in future periods as a result of owning the asset acquired during 2013 for an entire period and to the extent that we acquire additional real estate and real estate-related investments.

Real estate acquisition fees and expenses to affiliates and non-affiliates were $2.4 million for the three months ended March 31, 2013 and related to the acquisition of an office campus consisting of eight office buildings. We did not incur any real estate acquisition fees and expenses during the three months ended March 31, 2012. We do not expect to incur significant amounts of real estate acquisition fees and expenses in the future as we have invested substantially all of the proceeds from our now terminated public offering, though we may make some additional investments.

Depreciation and amortization decreased from $31.5 million for the three months ended March 31, 2012 to $29.1 million for the three months ended March 31, 2013. Depreciation and amortization related to properties held throughout both periods decreased by $2.4 million due to a decrease in amortization of tenant origination costs related to lease expirations subsequent to March 31, 2012. We expect depreciation and amortization to increase in future periods as a result of owning the asset acquired during 2013 for an entire period and to the extent that we acquire additional real estate investments.

Interest expense increased from $14.7 million for the three months ended March 31, 2012 to $15.3 million for the three months ended March 31, 2013. Included in interest expense is the amortization of deferred financing costs of $0.8 million and $0.8 million for the three months ended March 31, 2012 and March 31, 2013, respectively. The increase in interest expense is primarily a result of an increase in the average loan balance due to refinancings of our properties. Our interest expense in future periods will vary based on fluctuations in one-month LIBOR (for our variable rate debt) and our level of future borrowings, which will depend on the availability and cost of debt financing and draws on our credit facilities.

Funds from Operations and Modified Funds from Operations

We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. FFO represents net income, excluding gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with U.S. generally accepted accounting principles (“GAAP”) implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income or loss.

Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. Items such as acquisition fees and expenses, which had previously been capitalized prior to 2009, are currently expensed and accounted for as operating expenses. As a result, our management also uses modified funds from operations (“MFFO”) as an indicator of our ongoing performance as well as our dividend sustainability. MFFO excludes from FFO: acquisition fees and expenses; adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above and below market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. We compute MFFO in accordance with the definition of MFFO included in the practice guideline issued by the Investment Program Association (“IPA”) in November 2010. Our computation of MFFO may not be comparable to other REITs that do not compute MFFO in accordance with the current IPA definition or that interpret the current IPA definition differently than we do.

36

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

We believe that MFFO is helpful as a measure of ongoing operating performance because it excludes costs that management considers more reflective of investing activities and other non-operating items included in FFO.  Management believes that excluding acquisition costs from MFFO provides investors with supplemental performance information that is consistent with management’s analysis of the operating performance of the portfolio over time, including periods after our acquisition stage.  MFFO also excludes non-cash items such as straight-line rental revenue.  Additionally, we believe that MFFO provides investors with supplemental performance information that is consistent with the performance indicators and analysis used by management, in addition to net income and cash flows from operating activities as defined by GAAP, to evaluate the sustainability of our operating performance.  MFFO provides comparability in evaluating the operating performance of our portfolio with other non-traded REITs which typically have limited lives with short and defined acquisition periods and targeted exit strategies.  MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes.   

FFO and MFFO are non-GAAP financial measures and do not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO and MFFO include adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization and the other items described above. Accordingly, FFO and MFFO should not be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, FFO and MFFO do not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an indication of our liquidity. We believe FFO and MFFO, in addition to net income and cash flows from operating activities as defined by GAAP, are meaningful supplemental performance measures.

Although MFFO includes other adjustments, the exclusion of straight-line rent, the amortization of discounts and closing costs and acquisition fees and expenses are the most significant adjustments for the periods presented.  We have excluded these items based on the following economic considerations:

• Adjustments for straight-line rent.  These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease.  We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we hope to receive in a future period or rent that was received in a prior period;

• Amortization of discounts and closing costs.  Discounts and closing costs related to debt investments are amortized over the term of the loan as an adjustment to interest income.  This application results in income recognition that is different than the underlying contractual terms of the debt investments.  We have excluded the amortization of discounts and closing costs related to our debt investments in our calculation of MFFO to more appropriately reflect the economic impact of our debt investments, as discounts will not be economically recognized until the loan is repaid and closing costs are essentially the same as acquisition fees and expenses on real estate (discussed below).  We believe excluding these items provides investors with a useful supplemental metric that directly addresses core operating performance; and

• Acquisition fees and expenses.  Acquisition fees and expenses related to the acquisition of real estate are expensed.  Although these amounts reduce net income, we exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis.  Additionally, acquisition costs have been funded from the proceeds from our now terminated initial public offering and debt financings and not from our operations.  We believe this exclusion is useful to investors as it allows investors to more accurately evaluate the sustainability of our operating performance.

37

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculation of MFFO, for the three months ended March 31, 2013 and 2012 (in thousands). No conclusions or comparisons should be made from the presentation of these periods.

	For the Three Months Ended March 31,
	2013			2012
Net income	$	6,432		$	10,463
Depreciation of real estate assets	13,645			13,009
Depreciation of real estate assets - discontinued operations	—			39
Amortization of lease-related costs	15,449			18,449
Amortization of lease-related costs - discontinued operations	—			67
FFO	35,526			42,027
Straight-line rent and amortization of above- and below-market leases	(3,067		)	(4,721		)
Amortization of discounts and closing costs	(1,168		)	(1,867		)
Adjustment to valuation of contingent purchase consideration	(10		)	11
Reclassification of realized losses from other comprehensive income	80			—
Real estate acquisition fees and expenses to affiliates	1,797			—
Real estate acquisition fees and expenses	616			—
MFFO	$	33,774		$	35,450

FFO and MFFO may be used to fund all or a portion of certain capitalizable items that are excluded from FFO and MFFO, such as tenant improvements, building improvements and deferred leasing costs.

Distributions

From time to time during our operational stage, we may not pay distributions solely from our cash flows from operations or FFO, in which case distributions may be paid in part from debt financing and proceeds from asset sales. Distributions declared, distributions paid and cash flows from operations were as follows for the first quarter of 2013 (in thousands, except per share amounts):

	Distributions Declared (1)		Distributions Declared Per Share (1) (2)		Distributions Paid (3)						Cash  Flows From Operations
Period					Cash		Reinvested		Total
First Quarter 2013	$	41,009	$	0.214	$	19,408	$	21,537	$	40,945	$	23,587

_____________________

⁽¹⁾ Distributions for the period from January 1, 2013 through March 31, 2013 were based in part on daily record dates and were calculated at a rate of $0.00178082 per share per day. In addition, on January 16, 2013, our board of directors declared a distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on February 4, 2013.

⁽²⁾ Assumes share was issued and outstanding each day during the periods presented.

⁽³⁾ Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the first business day of the following month.

For the three months ended March 31, 2013, we paid aggregate distributions of $40.9 million, including $19.4 million of distributions paid in cash and $21.5 million of distributions reinvested through our dividend reinvestment plan. FFO and cash flows from operations for the three months ended March 31, 2013 were $35.5 million and $23.6 million, respectively. We funded our total distributions paid, which includes net cash distributions and dividends reinvested by stockholders, with $23.6 million of current period operating cash flows, $4.6 million of operating cash flows in excess of distributions paid for the year ended December 31, 2012 and $12.7 million of cash on hand. For purposes of determining the source of our distributions paid, we assume first that we use cash flow from operations from the relevant periods to fund distribution payments. See the reconciliation of FFO to net income above.

38

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Over the long-term, we expect that substantially all of our distributions will continue to be paid from cash flows from operations and FFO from current or prior periods (except with respect to distributions related to sales of our assets and distributions related to the repayment of principal under investments we have made in mortgage and other real estate-related loans). However, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements,” “Market Outlook — Real Estate and Real Estate Finance Markets” and “Results of Operations” herein, and the risks discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC. Those factors include: the future operating performance of our investments in the existing real estate and financial environment; the success and economic viability of our tenants; the ability of our borrowers and their sponsors to continue to make their debt service payments and/or to repay their loans upon maturity; our ability to refinance existing indebtedness at comparable terms; changes in interest rates on our variable rate debt obligations; and the level of participation in our dividend reinvestment plan. In the event our FFO and/or cash flows from operations decrease in the future, the level of our distributions may also decrease. In addition, future distributions declared and paid may exceed FFO and/or cash flows from operations.

Critical Accounting Policies

Our consolidated interim financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC. There have been no significant changes to our policies during 2013, except as follows:

Derivative Instruments

We enter into derivative instruments for risk management purposes to hedge our exposure to cash flow variability caused by changing interest rates on our variable rate notes payable. We record these derivative instruments at fair value on the accompanying consolidated balance sheets. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) on the accompanying consolidated statements of comprehensive income (loss) and consolidated statements of equity. 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 on the accompanying consolidated statements of operations.

We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. We also assess and document, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When we determine that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and reclassify amounts recorded in accumulated other comprehensive income (loss) to earnings.

The termination of a cash flow hedge prior to the maturity date may result in a net derivative instrument gain or loss that continues to be reported in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction (i.e., LIBOR based debt service payments) unless it is probable that the original forecasted hedged transaction will not occur by the end of the originally specified time period (as documented at the inception of the hedging relationship) or within an additional two-month period of time thereafter. If it is probable that the hedged forecasted transaction will not occur either by the end of the originally specified time period or within the additional two-month period of time, that derivative instrument gain or loss reported in accumulated other comprehensive income (loss) shall be reclassified into earnings immediately.

39

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Subsequent Events

We evaluate subsequent events up until the date the consolidated financial statements are issued.

Distributions Paid

On April 1, 2013, we paid distributions of $10.6 million, which related to distributions declared for daily record dates for each day in the period from March 1, 2013 through March 31, 2013. On May 1, 2013, we paid distributions of $10.3 million, which related to distributions declared for daily record dates for each day in the period from April 1, 2013 through April 30, 2013.

Distributions Declared

On May 10, 2013, our board of directors declared distributions based on daily record dates for the period from June 1, 2013 through June 30, 2013, which we expect to pay in July 2013, and distributions based on daily record dates for the period from July 1, 2013 through July 31, 2013, which we expect to pay in August 2013. Investors may choose to receive cash distributions or purchase additional shares through our dividend reinvestment plan.

Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00178082 per share per day and equal a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on a purchase price of $10.00 per share in our now terminated primary initial public offering or a 6.3% annualized rate based on our December 18, 2012 estimated value per share of $10.29.

Third Amended and Restated Dividend Reinvestment Plan

On April 9, 2013, our board of directors approved a third amended and restated dividend reinvestment plan (the “Amended Dividend Reinvestment Plan”). Pursuant to the Amended Dividend Reinvestment Plan, in order to terminate participation in the dividend reinvestment plan, a participant must provide us with written notice.  The Amended Dividend Reinvestment Plan reduces the advance notice that a stockholder must provide in order to terminate participation in the dividend reinvestment plan from ten business days prior to the last day of the month to which a distribution relates to four business days prior to the last business day of the month to which a distribution relates.

There were no other changes made in the Amended Dividend Reinvestment Plan. The Amended Dividend Reinvestment Plan will be effective April 20, 2013.

40

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the acquisition, expansion and refinancing of our real estate investment portfolio and operations. We are also exposed to the effects of changes in interest rates as a result of our acquisitions and originations of mortgage and other loans. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We have managed and will continue to manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. In addition, we may utilize a variety of financial instruments, including interest rate caps, floors, and swap agreements, in order to limit the effects of changes in interest rates on our operations. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for payments to holders of our common stock and that the losses may exceed the amount we invested in the instruments.

We borrow funds and make investments at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt or fixed rate real estate loans receivable unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. As of March 31, 2013, the fair value and carrying value of our fixed rate real estate loans receivable were $303.5 million and $262.4 million, respectively. The fair value estimate of our real estate loans receivable is estimated using an internal valuation model that considers the expected cash flows for the loans, underlying collateral values (for collateral-dependent loans) and the estimated yield requirements of institutional investors for loans with similar characteristics, including remaining loan term, loan-to-value, type of collateral and other credit enhancements. As of March 31, 2013, the fair value of our fixed rate debt was $684.4 million and the carrying value of our fixed rate debt was $671.2 million. The fair value estimate of our fixed rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated as of March 31, 2013. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.

Conversely, movements in interest rates on our variable rate debt and loans receivable would change our future earnings and cash flows, but not significantly affect the fair value of those instruments. However, changes in required risk premiums would result in changes in the fair value of floating rate instruments. As of March 31, 2013, we were exposed to market risks related to fluctuations in interest rates on $196.1 million of variable rate debt outstanding, after giving consideration to the impact of interest rate swap agreements on approximately $714.2 million of our variable rate debt. Based on interest rates as of March 31, 2013, if interest rates were 100 basis points higher during the 12 months ending March 31, 2014, interest expense on our variable rate debt would increase by $1.5 million. As of March 31, 2013, one-month LIBOR was 0.20370% and if this index was reduced to 0% during the 12 months ending March 31, 2014, interest expense on our variable rate debt would decrease by $0.2 million. As of March 31, 2013, we were exposed to market risks related to fluctuations in interest rates on our variable rate loan receivable outstanding with an outstanding principal balance of $87.5 million. An increase or decrease of 100 basis points in interest rates would have no impact on our future earnings and cash flows due to an interest rate floor on our variable rate loan receivable.

The weighted-average annual effective interest rates of our fixed rate real estate loans receivable and variable rate real estate loan receivable as of March 31, 2013 were 10.5% and 7.0%, respectively. The weighted-average annual effective interest rate represents the effective interest rate as of March 31, 2013, using the interest method, that we use to recognize interest income on our real estate loans receivable. The weighted-average interest rates of our fixed rate debt and variable rate debt as of March 31, 2013 were 4.2% and 3.4%, respectively. The weighted-average interest rate represents the actual interest rate in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate swaps and floors), using interest rate indices as of March 31, 2013, where applicable.

41

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

42

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Please see the risks discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a) During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933.

b) Not applicable.

c) We have a share redemption program that may enable stockholders to sell their shares to us in limited circumstances.

Pursuant to the share redemption program, there are several limitations on our ability to redeem shares under the program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program), we may not redeem shares unless the stockholder has held the shares for one year, provided that if we are redeeming all of a stockholder’s shares, then there is no holding period requirement for shares purchased pursuant to our dividend reinvestment plan.

• During any calendar year, we may redeem only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year, provided that we may not redeem more than $3.0 million of shares in the aggregate each month, excluding shares redeemed in connection with a stockholder’s death, qualifying disability or determination of incompetence.

• During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.

• We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland 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 a stockholder’s death, qualifying disability or determination of incompetence are made at a price per share equal to the most recent estimated value per share of our common stock as of the applicable Redemption Date (as defined in the share redemption program), and the price at which we redeem all other shares eligible for redemption is as follows:

• For stockholders who have held their shares for at least one year, 92.5% of our most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least two years, 95.0% of our most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least three years, 97.5% of our most recent estimated value per share as of the applicable Redemption Date; and

• For stockholders who have held their shares for at least four years, 100% of our most recent estimated value per share as of the applicable Redemption Date.

43

PART II. OTHER INFORMATION (CONTINUED)

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds (continued)

On December 18, 2012, our board of directors approved an estimated value per share of our common stock of $10.29 (unaudited), based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2012. The change in the redemption price, which is calculated based on the most recent estimated value per share, was effective for the December 2012 Redemption Date, which was December 31, 2012. We currently expect to engage our advisor and/or an independent valuation firm to update our estimated value per share in December 2013, but we are not required to update our estimated value per share more frequently than every 18 months. For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the estimated value per share, see our Annual Report on Form 10-K at Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.”

On March 6, 2013, our board of directors approved the Sixth Amended and Restated Share Redemption Program (the “Sixth Amended Share Redemption Program”). Pursuant to the Sixth Amended Share Redemption Program, we have modified how we will process redemptions that would result in a stockholder owning less than the minimum purchase requirement described in our currently effective, or the most recently effective, registration statement as such registration statement has been amended or supplemented (the “Minimum Purchase Requirement”). Specifically, if we cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the program, then we will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the Minimum Purchase Requirement, then we would redeem all of such stockholder’s shares. If we are redeeming all of a stockholder’s shares, there would be no holding period requirement for shares purchased pursuant to our dividend reinvestment plan.

Our board of directors may amend, suspend or terminate the share redemption program with 30 days’ notice to our stockholders. We may provide this notice by including such information in a Current Report on Form 8‑K or in our annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to our stockholders.

We funded redemptions during the three months ended March 31, 2013 with proceeds from our dividend reinvestment plan and debt financing. During the three months ended March 31, 2013, we redeemed shares pursuant to our share redemption program as follows:

Month	Total Number of Shares Redeemed (1)	Average Price Paid Per Share (2)		Approximate Dollar Value of Shares Available That May Yet Be  Redeemed Under the Program
January 2013	340,248	$	10.12	(3)
February 2013	347,042	$	10.11	(3)
March 2013	352,418	$	10.15	(3)
Total	1,039,708

_____________________

⁽¹⁾ We announced the adoption and commencement of the program on April 8, 2008. We announced amendments to the program on May 13, 2009 (which amendment became effective on June 12, 2009), on March 11, 2011 (which amendment became effective on April 10, 2011), on May 18, 2012 (which amendment became effective on June 17, 2012), on June 29, 2012 (which amendment became effective on July 29, 2012), on October 18, 2012 (which amendment became effective on November 17, 2012) and on March 8, 2013 (which amendment became effective on April 7, 2013).

⁽²⁾ On December 18, 2012, our board of directors approved an estimated value per share of our common stock of $10.29 (unaudited), based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2012. The change in the redemption price, which is calculated based on the most recent estimated value per share, was effective for the December 2012 Redemption Date, which was December 31, 2012. We currently expect to engage our advisor and/or an independent valuation firm to update our estimated value per share in December 2013, but we are not required to update our estimated value per share more frequently than every 18 months.

⁽³⁾ We limit the dollar value of shares that may be redeemed under the share redemption program as described above. For the three months ended March 31, 2013, we redeemed $10.5 million of shares, which represented all redemption requests received in good order and eligible for redemption through the March 2013 Redemption Date, except for 648,000 shares due to the limitations discussed above. We recorded $6.6 million of other liabilities on the accompanying consolidated balance sheet as of March 31, 2013 related to these unfulfilled redemption requests. Based on the amount of net proceeds raised from the sale of shares under the dividend reinvestment plan during 2012, we have $55.9 million available for redemptions during the remainder of 2013, subject to the limitations described above, including the monthly limitation for ordinary redemptions.

Item 3. Defaults upon Senior Securities

None.

44

PART II. OTHER INFORMATION (CONTINUED)

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Ex.	Description
3.1	Second Articles of Amendment and Restatement of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008
3.2	Second Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.2 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
4.1	Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-146341
4.2	Second Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2012
4.3	Third Amended and Restated Dividend Reinvestment Plan
10.1	Loan Agreement (related to U.S. Bank/TD Bank Credit Facility), by and among KBSII Campus Drive, LLC, KBS One Meadowlands, LLC, KBS II Willow Oaks, LLC, U.S. Bank National Association and TD Bank, N.A., dated as of February 27, 2013
10.2	Mortgage, Assignment of Rents, Security Agreement and Fixture Filing (related to U.S. Bank/TD Bank Credit Facility), by KBSII Campus Drive, LLC for the benefit of U.S. Bank National Association, dated as of February 27, 2013
10.3	Mortgage, Assignment of Rents, Security Agreement and Fixture Filing (related to U.S. Bank/TD Bank Credit Facility), by KBSII One Meadowlands, LLC for the benefit of U.S. Bank National Association, dated as of February 27, 2013
10.4	Promissory Note (Revolving Loan) (related to U.S. Bank/TD Bank Credit Facility), by and among KBSII Campus Drive, LLC, KBS One Meadowlands, LLC, KBS II Willow Oaks, LLC for the benefit of TD Bank, N.A., dated as of February 27, 2013
10.5	Promissory Note (Revolving Loan) (related to U.S. Bank/TD Bank Credit Facility), by and among KBSII Campus Drive, LLC, KBS One Meadowlands, LLC, KBS II Willow Oaks, LLC for the benefit of U.S. Bank National Association, dated as of February 27, 2013
10.6	Repayment Guaranty (related to U.S. Bank/TD Bank Credit Facility), by and among KBS REIT Properties II, LLC for the benefit of U.S. Bank National Association and TD Bank, N.A., dated as of February 27, 2013
10.7	Credit Line Deed of Trust (With Assignment of Leases and Rents, Security Agreement and Fixture Filing) (related to U.S. Bank/TD Bank Credit Facility), by KBS II Willow Oaks, LLC for the benefit of U.S. Bank National Association, dated as of February 27, 2013

45

PART II. OTHER INFORMATION (CONTINUED)

Item 6.    Exhibits (continued)

Ex.	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes‑Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes‑Oxley Act of 2002
99.1	Fifth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on October 18, 2012
99.2	Sixth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

46

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		KBS REAL ESTATE INVESTMENT TRUST II, INC.
Date:	May 13, 2013	By:	/S/ CHARLES J. SCHREIBER, JR.
			Charles J. Schreiber, Jr.
			Chairman of the Board, Chief Executive Officer and Director
			(principal executive officer)
Date:	May 13, 2013	By:	/S/ DAVID E. SNYDER
			David E. Snyder
			Chief Financial Officer
			(principal financial officer)

47

EX-4.3

Exhibit 4.3

THIRD AMENDED AND RESTATED DIVIDEND REINVESTMENT PLAN

KBS Real Estate Investment Trust II, Inc., a Maryland corporation (the “Company”), has adopted a Third Amended and Restated Dividend Reinvestment Plan (the “DRP”), the terms and conditions of which are set forth below. Capitalized terms shall have the same meaning as set forth in the Company’s charter unless otherwise defined herein.

1.Number of Shares Issuable. The number of shares of Common Stock authorized for issuance under the DRP is 80,000,000.

2.Participants. “Participants” are holders of the Company’s shares of Common Stock who elect to participate in the DRP.

3.Dividend Reinvestment. The Company will apply that portion (as designated by a Participant) of the dividends and other distributions (“Distributions”) declared and paid in respect of a Participant’s shares of Common Stock to the purchase of additional shares of Common Stock for such Participant. To the extent required by state securities laws, such shares will be sold through the broker-dealer and/or dealer manager through whom the Company sold the underlying shares to which the Distributions relate unless the Participant makes a new election through a different distribution channel. The Company will not pay selling commissions on shares of Common Stock purchased in the DRP.

4.Procedures for Participation. Qualifying stockholders may elect to become Participants by completing and executing the Subscription Agreement, an enrollment form or any other Company-approved authorization form as may be available from the Company, the dealer manager or participating broker-dealers. To increase their participation, Participants must complete a new enrollment form and, to the extent required by state securities laws, make the election through the dealer manager or the Participant’s broker-dealer, as applicable. Participation in the DRP will begin with the next Distribution payable after receipt of a Participant’s Subscription Agreement, enrollment form or other Company-approved authorization form. Shares will be purchased under the DRP on the date that the Company makes a Distribution. Distributions will be paid monthly as authorized and declared by the Company’s board of directors.

5.Purchase of Shares. Participants will acquire Common Stock at a price equal to 95% of the estimated value per share of the Company’s Common Stock, as determined by the Company’s advisor or another firm chosen for that purpose. The Company expects to engage its advisor or another firm to determine the estimated value per share of the Company’s Common Stock every 12 to 18 months. The Company will report the estimated value per share of the Company’s Common Stock in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the Securities and Exchange Commission. Participants in the DRP may purchase fractional shares so that 100% of the Distributions will be used to acquire shares. However, a Participant will not be able to acquire shares under the DRP to the extent such purchase would cause it to exceed limits set forth in the Company’s charter, as amended.

6.Taxation of Distributions. The reinvestment of Distributions in the DRP does not relieve Participants of any taxes that may be payable as a result of those Distributions and their reinvestment pursuant to the terms of this DRP.

7.Share Certificates. The shares issuable under the DRP shall be uncertificated until the board of directors determines otherwise.

8.Voting of DRP Shares. In connection with any matter requiring the vote of the Company’s stockholders, each Participant will be entitled to vote all shares acquired by the Participant through the DRP.

9.Reports. Within 90 days after the end of the calendar year, the Company shall provide each Participant with (i) an individualized report on the Participant’s investment, including the purchase date(s), purchase price and number of shares owned, as well as the amount of Distributions received during the prior year; and (ii) all material information regarding the DRP and the effect of reinvesting dividends, including the tax consequences thereof. The Company shall provide such information reasonably requested by the dealer manager or a participating broker-dealer, in order for the dealer manager or participating broker-dealer to meet its obligations to deliver written notification to Participants of the information required by Rule 10b-10(b) promulgated under the Securities Exchange Act of 1934.

10.Termination by Participant. A Participant may terminate participation in the DRP at any time by delivering to the Company a written notice. To be effective for any Distribution, such notice must be received by the Company at least four business days prior to the last business day of the month to which the Distribution relates. Notwithstanding the preceding sentence, if the Company publicly announces in a filing with the Securities and Exchange Commission a new estimated value per share of its Common Stock, then a Participant shall have no less than two business days after the date of such announcement to notify the Company in writing of Participant’s termination of participation in the DRP and Participant’s termination will be effective for the next date shares are purchased under the DRP. Any transfer of shares by a Participant will terminate participation in the DRP with respect to the transferred shares. Upon termination of DRP participation, Distributions will be distributed to the stockholder in cash.

11.Amendment or Termination of DRP by the Company. The Company may amend or terminate the DRP for any reason upon ten days’ notice to the Participants. The Company may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the Securities and Exchange Commission or (b) in a separate mailing to Participants.

12.Liability of the Company. The Company shall not be liable for any act done in good faith, or for any good faith omission to act.

13.Governing Law. The DRP shall be governed by the laws of the State of Maryland.

EX-10.2

Exhibit 10.2

LOAN AGREEMENT

Between

KBSII 100-200 CAMPUS DRIVE, LLC,
KBSII ONE MEADOWLANDS, LLC, and
KBSII WILLOW OAKS, LLC,
each a Delaware limited liability company,
as Borrowers,

U.S. BANK NATIONAL ASSOCIATION,
a national banking association,
as Agent, lead arranger and book manager,

TD BANK, N.A.,

a national banking association, as a Lender

and

U.S. BANK NATIONAL ASSOCIATION,
a national banking association,
as a Lender

TABLE OF CONTENTS

Page
I. LOAN			20
	1.1	Principal	20
	1.2	Interest	20
	1.3	LIBOR Rate Option	21
	1.4	Maturity Date; Extension	22
	1.5	Prepayment	25
	1.6	Yield Protection	25
	1.7	Inability to Determine LIBOR	26
	1.8	Illegality	27
	1.9	Capital Adequacy	27
	1.10	Indemnification of Agent and the Lenders	28
	1.11	Default Rate	29
	1.12	Late Payment Charge	29
	1.13	Effective Rate	29
	1.14	Application of Payments	30
	1.15	Fees	30
	1.16	No Waiver by Agent	30
II. CONDITIONS OF BORROWING			30
	2.1	Pre-Closing Requirements	30
	2.2	Loan Documents	32
	2.3	Recordation of Deeds of Trust; Title Insurance	33
	2.4	Opinion of Borrower's Attorneys	33
	2.5	Fees	33
	2.6	SNDA's and Estoppels	33
	2.7	Conditions for Disbursement	34
	2.8	Borrower Operating Accounts	34
	2.9	Credit Approval	34
	2.10	[Intentionally Omitted]
	2.11	First Disbursement Hereunder Shall be Used Only for the Repayment of the Original One Meadowlands Loan, the Original 100-200 Campus Drive Loan and the Original Willow Oaks Loan and Other Expenses Reasonably Approved by Agent	34
	2.12	Successful Syndication	35
III. ADVANCES OF LOAN PROCEEDS			35
	3.1	General	35
	3.2	Inspections	36
	3.3	Responsibility of Agent and the Lenders	36
	3.4	[Intentionally Declared]	36
	3.5	Initial Advance and Additional Advances	36
	3.6	Additional Conditions to Each Disbursement	37

-i- Loan Agreement (KBS REIT II)

IV. REPRESENTATIONS AND WARRANTIES OF BORROWER			38
	4.1	Legal Status of Borrower	38
	4.2	Title	38
	4.3	No Breach of Applicable Agreements or Laws	38
	4.4	No Litigation or Defaults	39
	4.5	Financial and Other Information	39
	4.6	No Defaults under Loan Documents or Other Agreements	39
	4.7	Boundary Lines; Conformance with Governmental Requirements and Restrictions	39
	4.8	Utilities, Etc.	39
	4.9	Personal Property	40
	4.10	Condemnation	40
	4.11	Governmental Regulations	40
	4.12	Employee Benefit Plans	40
	4.13	Brokers	40
	4.14	Defects and Hazards	40
	4.15	Permits	40
	4.16	No Consumer Purpose	40
V. COVENANTS OF BORROWER			41
	5.1	Paying Costs of Property and Loan	41
	5.2	Using Loan Proceeds	41
	5.3	Keeping of Records	41
	5.4	Providing Financial Information	42
	5.5	Providing Operating Budgets and Operating Statements	42
	5.6	Providing Leasing Information	42
	5.7	Maintaining Insurance Coverage	43
	5.8	Complying with Other Documents	43
	5.9	Lease Approval Rights	43
	5.10	Compliance with Laws	43
	5.11	Ownership of Personal Property	44
	5.12	Representations and Warranties	44
	5.13	Trade Names	44
	5.14	No Distributions	44
	5.15	Future Development	44
	5.16	Further Assurances	45
	5.17	Notice of Litigation, Etc.	45
	5.18	USA Patriot Act Compliance Covenant	45
	5.19	Maintenance of Existence	46
	5.20	Borrower Operating Account	46
	5.21	Single Purpose Entity Provisions	46
	5.22	No Other Debt	46
	5.23	Minimum Required Debt Service Coverage Ratio	46
	5.24	Affiliate Transactions	47
	5.25	Borrower and Guarantor Covenants	47
	5.26	EIN	47

-ii- Loan Agreement (KBS REIT II)

VI. DEFAULTS			47
	6.1	Event of Default	47
	6.2	Rights and Remedies	49
VII. MISCELLANEOUS			50
	7.1	Binding Effect; Waivers; Cumulative Rights and Remedies	50
	7.2	Survival	50
	7.3	Governing Law; Waiver of Jury Trial	50
	7.4	Counterparts	50
	7.5	Notices	50
	7.6	Agent's Sign	51
	7.7	No Third Party Reliance	51
	7.8	Time of the Essence	51
	7.9	Entire Agreement; No Oral Modifications	52
	7.10	Captions	52
	7.11	Joint and Several Liability	52
	7.12	Borrower's Relationship with Agent and the Lenders	52
	7.13	Swap Transactions	52
	7.14	Automatic Deduction and Credit	53
	7.15	Borrower Waiver	53
	7.16	Reduction of Committed Amount	53
	7.17	USA Patriot Act Notice	54
	7.18	Statute of Frauds	54
	7.19	Joint Borrower Provisions	54
	7.20	Possible Increase in the Committed Amount	58
	7.21	Additional Property Collateral	60
	7.22	Releases of Properties	65
	7.23	Collateral Documents	66
	7.24	[Intentionally Omitted.]	67
	7.25	Limited Recourse Provision	67
	7.26	Release of a Borrower	67
	7.27	The Non-revolving Portion Must Always Constitute at Least Sixty Percent (60%) of the total Committed Amount	68
VIII. AGENCY PROVISIONS			68
	8.1	Agency	68
	8.2	Resignation of Agent; Removal	69
	8.3	Administration	70
	8.4	Actions by Agent; Required Consents	70
	8.5	Payments	72
	8.6	Management of Acquired Collateral	74
	8.7	Defaulting Lender	75
	8.8	Representations, Warranties and Acknowledgments	77
	8.9	Assignments; Participation.	78
	8.10	Other Business	81
	8.11	Consents	81
	8.12	Agent as Lender	81

-iii- Loan Agreement (KBS REIT II)

8.13	Notification of Defaults and Events of Default	81
8.14	No Reliance by Borrower	81
8.15	Reliance	81
8.16	Pledge of Federal Reserve Bank	82
8.17	Confidentiality	82

-iv- Loan Agreement (KBS REIT II)

LIST OF EXHIBITS

EXHIBIT A        ‑    Assignment and Assumption Agreement

EXHIBIT B         ‑    Description of Improvements

EXHIBIT C-1    ‑    Legal Description of the KBS 100-200 Campus Drive Land

EXHIBIT C-2    -    Legal Description of the KBS One Meadowlands Land

EXHIBIT C-3    -    Legal Description of the KBS Willow Oaks Land

EXHIBIT D        ‑    Permitted Encumbrances

EXHIBIT E        ‑    [Intentionally Omitted]

EXHIBIT F        ‑    Title Insurance Requirements

EXHIBIT G        ‑    Insurance Requirements

EXHIBIT H        ‑    Notices and Wire Instructions

EXHIBIT I        ‑    Commitments and Commitment Percentages of Lenders

EXHIBIT J        ‑    Form of Draw Request

EXHIBIT K        ‑    Borrower EIN Numbers

EXHIBIT L        ‑    Form of Joinder Agreement

-v- Loan Agreement (KBS REIT II)

LOAN AGREEMENT

THIS LOAN AGREEMENT is made and entered into as of February 27, 2013, by and between (i) KBSII 100-200 CAMPUS DRIVE, LLC, a Delaware limited liability company, KBSII ONE MEADOWLANDS, LLC, a Delaware limited liability company, and KBSII WILLOW OAKS, LLC, a Delaware limited liability company (collectively, "Initial Borrowers"), (ii) U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent, lead arranger and book manager (in such capacity, "Agent"), and (iii) TD BANK, N.A., a national banking association, as a Lender, and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as a Lender, and any other bank that becomes a "Lender" after the Closing Date (each, a "Lender" and collectively, the "Lenders").

WITNESSETH THAT, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

DEFINITIONS

For the purposes of this Agreement, the following terms shall have the following respective meanings, unless the context hereof clearly requires otherwise:

Accordion Option: Has the meaning set forth in Section 7.20.

Additional Property: Has the meaning set forth in Section 7.21, and shall be deemed to include all Land, Improvements, Equipment and other "Trust Estate" or "Mortgaged Property" described in the Deed of Trust encumbering such property.

Advance: Any portion of the Loan advanced to or for the benefit of Borrower in accordance with the terms hereof.

Advance Date: Has the meaning set forth in Section 3.5.

Affiliate: Means, as to any Person, (a) any corporation in which such Person or any partner, shareholder, director, officer, member, or manager of such Person, at any level, directly or indirectly owns or controls more than ten percent (10%) of the beneficial interest, (b) any partnership, joint venture or limited liability company in which such Person or any partner, shareholder, director, officer, member, or manager of such Person, at any level, is a partner, joint venturer or member, (c) any trust in which such Person or any partner, shareholder, director, officer, member or manager of such Person, at any level, or any individual related by birth, adoption or marriage to such Person, is a trustee or beneficiary, (d) any entity of any type which is directly or indirectly owned or controlled by (or is under common control with) such Person or any partner, shareholder, director, officer, member or manager of such Person, at any level, (e) any partner, shareholder, director, officer, member, manager or employee of such Person, or (f) any individual related by birth, adoption or marriage to any partner, shareholder, director, officer, member, manager, or employee of such Person. Controls (which includes the correlative meanings of "controlled by" and "under common control with") means effective power,

- 6- Loan Agreement (KBS REIT II)

directly or indirectly, to direct or cause the direction of the management and policies of such Person.

Agent: U.S. Bank National Association, as agent for itself and for other financial institutions which are now or may in the future become parties to this Agreement.

Agreement: This Loan Agreement, including any amendments hereof and supplements hereto executed by Borrower and Agent.

Annualized Net Operating Income: Means annualized Net Operating Income before payment of debt service from the Properties securing the Loan as of the date of calculation, calculated by annualizing the Net Operating Income for the immediately preceding prior two calendar quarters, provided that if the Debt Service Coverage Ratio is being calculated within 45 days after the end of a calendar quarter, the Net Operating Income shall be calculated by looking at the Net Operating Income during the two calendar quarters preceding the immediately prior calendar quarter; e.g., if the Debt Service Coverage Ratio is being calculated on January 10, 2014, the two calendar quarter period would be the period commencing on April 1, 2013 and ending on September 30, 2013 and if the Debt Service Coverage Ratio is being calculated on February 20, 2014, the two calendar quarter period would be the period commencing on July 1, 2013, and ending on December 31, 2013). Notwithstanding the foregoing, if any Property has been owned by a Borrower for less than the entire applicable foregoing period, then Net Operating Income for such Property shall be calculated by annualizing the Net Operating Income for such Property for the portion of such period during which a Borrower owned such Property. In addition, until an Additional Property has secured the Loan for one full calendar quarter, the Net Operating Income for that Property shall be calculated using the Agent's underwritten projected year one Rental Income and Operating Expenses for such Additional Property based on the Appraisal obtained for such Additional Property in accordance with Section 7.21 (e.g., if an Additional Property is added on June 15, 2013, this sentence would apply to such Additional Property until September 30, 2013).

Applicable Interest Rate: Has the meaning set forth in Section 1.2.

Applicable Margin: Means the applicable percentage set forth below in the "Applicable Margin" column, based on the Borrowing Base Leverage Ratio calculated by Agent as of the last day of the immediately preceding calendar quarter:

Borrowing Base Leverage Ratio	Applicable Margin
≤ 50%	1.75%
> 50%	1.85%

Any change in the Applicable Margin shall result in an immediate change in the LIBOR Rate applicable to any then outstanding LIBOR Rate Advances and to the Monthly Reset LIBOR Rate applicable to any then outstanding Monthly Reset LIBOR Rate Advances.

- 7- Loan Agreement (KBS REIT II)

Appraisal: A written appraisal of each Property prepared by an Appraiser and requested by or delivered to Agent, in each case in form, content and methodology satisfactory to Agent and Majority Lenders, each in their reasonable discretion, and in compliance with all applicable legal and regulatory requirements (including the requirements of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 U.S.C. §§ 3331, et seq., as amended (or any successor statute thereto), and the regulations promulgated thereunder); provided, no new appraisals are required to be provided for any Initial Property or after a Property constitutes an Additional Property under the Loan except (i) in connection with the extension of the Maturity Date, (ii) after the occurrence of an Event of Default if required by Agent, (iii) in connection with the release of any Property from the lien of a Deed of Trust (as to any Appraisals that are then more than six (6) months old), (iv) in connection with the exercise of the Accordion Option (as to any Appraisals that are then more than twelve (12) months old), or (v) as may otherwise be provided in the Loan Documents and/or as may be expressly requested by Borrower (in its sole discretion, but not more than once in each six (6) month period; provided that such limitation shall not apply to any Extension (defined below), partial releases under Section 7.22 below or adding an Additional Property (defined below) under Section 7.21 below) under the terms of the Loan Documents.

Appraiser: Any independent appraiser selected by Agent who meets all regulatory requirements applicable to Agent, who is a member of the Appraisal Institute with a national practice and who has experience with real estate of the same type as the Property to be appraised.

Assignee Lender: Has the meaning set forth in Section 8.9.

Assignment and Assumption Agreement: An instrument in the form of Exhibit A, duly completed and executed and delivered.

Availability Amount: Means the lesser of (a) the Committed Amount (as such amount may from time-to-time be increased and/or decreased in accordance with the terms of this Agreement), or (b) the Borrowing Base Amount.

Availability Period: Has the meaning set forth in Section 3.5.

BASF Lease: Means that certain Agreement of Lease between KBSII 100-200 CAMPUS DRIVE, LLC, a Delaware limited liability, as lessor, and BASF Corporation and BASF Americas Corporation, as co-tenants and co-obligors, as lessee, dated March 31, 2004 (as amended).

Borrower or Borrowers: Shall mean, individually or collectively as the context may require, each Initial Borrower and each New Borrower that executes a Joinder Agreement and thereby becomes a Borrower hereunder pursuant to the provisions of Section 7.21.

Borrowing Base Amount: Shall mean the Loan balance resulting in a Debt Service Coverage Ratio equal to the Minimum Borrowing Base DSCR, calculated by dividing (a) Annualized Net Operating Income for the Properties then securing the Loan by (b) the product obtained by multiplying (i) the Minimum Borrowing Base DSCR by (ii) the Borrowing Base Loan Constant.

- 8- Loan Agreement (KBS REIT II)

Borrowing Base Leverage Ratio: Shall mean the ratio, expressed as a percentage, obtained by dividing the Principal Balance by the Borrowing Base Value.

Borrowing Base Loan Constant: Shall mean the greater of (a) a loan constant of 0.0819 (which is based on an interest rate of seven and one-quarter percent (7.25%) per annum and principal amortization based on a 30-year amortization schedule), and (b) a loan constant, expressed as a decimal, based on an interest rate of two and one-quarter percent (2.25%) per annum in excess of the Treasury Note Rate as of the date of calculation and principal amortization based on a 30-year amortization schedule, as reasonably determined by Agent.

Borrowing Base Value: Shall mean the aggregate value of the Properties securing the Loan as of the date of calculation. The value of each Property shall be the then-current "As-Is" appraised value of the Property, based on the most recent Appraisal for such Property. Borrower may request (in its sole discretion) that Agent reappraise any Property and in connection therewith order new Appraisals from time to time (but in no event more than once in any six-month period). Borrower shall pay the costs of any and all such Appraisals within ten days of written demand by Agent. In addition to any of the rights of Agent or Lenders hereunder to order Appraisals, Agent may at any time and from time to time order new Appraisals of the Properties during the existence of an Event of Default, and Borrower shall pay the costs of any and all such Appraisals within ten days of written demand by Agent.

Business Day: Any day other than a Saturday, a Sunday, or a legal holiday on which Agent is not open for business.

Change: Has the meaning set forth in Section 1.9.

Closing Date: The date upon which all of the conditions set forth in Section 2 are satisfied and the Deeds of Trust are recorded in the official records of the counties in which the Initial Properties are located, which date must, in no event, be later than the Termination Date.

Committed Amount: Shall mean the Revolving Portion plus the Non-revolving Portion (i.e., $235,000,000 in the aggregate initially, subject to possible increase upon exercise of the Accordion Option in accordance with Sections 7.20 and 7.21, ordecrease in accordance with an extension of the Maturity Date under Section 1.4 or the release of a Property under Section 7.22, or as set forth in Section 7.16). The Revolving Portion plus the Non-revolving Portion constitute a single aggregate commitment equal to the Committed Amount. The Committed Amount shall always be reduced dollar for dollar with paydowns of the principal amount of the Term Loan; provided, however, that the foregoing shall not apply in the event of a reallocation from the Non-revolving Portion to the Revolving Portion as permitted in Section 7.27 below.

Commitment Percentage: Means, as to each Lender, such Lender's pro rata share of all right, title and interest in each of the Non-revolving Portion, the Revolving Portion and the Loan Documents, as set forth on Exhibit I attached hereto, as amended and modified by unilateral action of Agent from time to time to reflect the sale or assignment of a portion of the Loan or any exercise of the Accordion Option. Unless otherwise specified, each Lender's Commitment Percentage shall be the amount of such Lender's commitment divided by the aggregate amount of the commitments of all Lenders.

- 9- Loan Agreement (KBS REIT II)

Commitment Resizing Debt Service Coverage Ratio: Shall mean a fraction, the numerator of which is the projected stabilized net operating income less a replacement reserve equal to $0.25 per square foot for all of the Improvements consisting of office space and $0.10 per square foot for any of the Improvements consisting of industrial space, to the extent not already taken into account in calculating Net Operating Income, as determined in the most recent Appraisal approved by Agent, from the Properties then securing the Loan before payment of debt service for a twelve (12) month period as specified in the Appraisal, and the denominator of which is an amount equivalent to the sum of (a) an amount, as reasonably determined by Agent, equivalent to the interest that would accrue on the Loan (assuming a fully disbursed Committed Amount) during such twelve (12) month period at a rate of interest which is the greater of (i) seven and one-quarter percent (7.25%) per annum, or (ii) the rate of two and one-quarter percent (2.25%) per annum above the Treasury Note Rate (herein defined), and (b) an amount for such period, as reasonably determined by Agent, equivalent to the amount of principal (assuming a fully disbursed Committed Amount, as the same may be decreased by Borrower in accordance with Section 7.16 hereof) that would be payable during such twelve (12) month period according to a schedule that would fully amortize the Loan over a thirty year period given the foregoing rate of interest.

Commitment-to-Value Ratio: Has the meaning set forth in Section 1.4.

Consultants: Third party experts retained by Agent to assist it in connection with closing, advancing, disbursing or administering the Loan.

Debt Service Coverage Ratio: Shall mean a fraction, the numerator of which is the Annualized Net Operating Income and the denominator of which is the product obtained by multiplying (a) the outstanding Principal Balance as of the date of calculation by (b) the Borrowing Base Loan Constant.

Deed of Trust: Each first priority deed of trust, mortgage or deed to secure debt (as applicable) executed by a Borrower in favor of Agent, creating a first lien on a Property and securing the Note and the other obligations specified therein, to be recorded in the official records of the county in which the Property is located, including any amendments to such Deed of Trust and supplements thereto executed by Borrower and Agent.

Default Rate: Has the meaning set forth in Section 1.11.

Defaulting Lender: Any Lender, as determined by the Agent, who for any reason shall fail or refuse to abide by its obligations under the Loan Documents or this Agreement within the time periods specified for performance of such obligation or, if no time frame is specified, if such failure or refusal continues for a period of five (5) Business Days, including, but not limited to any Lender that has (a) failed to fund any portion of its Loan within one Business Day of the date required to be funded by it hereunder, (b) notified the Borrower, the Agent, or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within one Business Day after request by the Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund its prospective

- 10- Loan Agreement (KBS REIT II)

Loan, (d) otherwise failed to pay over to the Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment. Nothing contained in the foregoing shall be deemed to constitute a waiver by the Borrower of any of its rights or remedies (whether in equity or law) against any Lender which fails to fund any portion of its Loan hereunder at the time or in the amount required to be funded under the terms of this Agreement.

Draw Request: A written request by Borrower, in the form attached hereto as Exhibit J, for an advance of Loan proceeds under this Agreement.

Environmental Indemnity: That certain Unsecured Environmental Indemnity of even date herewith, executed by Borrower in favor of Agent, setting forth certain indemnification obligations relating to "Hazardous Substances" (as defined therein), as the same may be amended, modified, replaced or substituted from time to time.

Environmental Insurance Policy: Means, collectively, the environmental insurance policy or policies covering any or all of the Properties, in form and substance reasonably acceptable to Agent, naming Agent (on behalf of Lenders) as additional insured.

Equipment: All fixtures, equipment and personal property owned by any Borrower and located or to be located in or on, and used in connection with the construction, development, management, maintenance or operation of any or all of the Properties.

Event of Default: Any event set forth in Section 6.1.

Excluded Taxes: Means, in the case of each Lender or applicable Lending Installation and Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (a) the jurisdiction under the laws of which such Lender or Agent is incorporated or organized or (b) the jurisdiction in which Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located.

Federal Funds Rate: As of any date of determination, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such date opposite the caption "Federal Funds (Effective)". If for any relevant date such rate is not yet published in H.15(519), the rate for such date will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such date under the caption "Federal Funds Effective Rate". If on any relevant date the appropriate rate for such date is not yet

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published in either H.15(519) or the Composite 3:30 p.m. Quotation, the rate for such date will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by each of three leading brokers of Federal funds transactions in New York City selected by Agent.

Fee Letter: That certain Fee Letter between Borrower and U.S. Bank dated as of February 27, 2013.

GAAP: Generally accepted accounting principles as set forth in the Statement of Financial Accounting Principles No. 162: The Hierarchy of Generally Accepted Accounting Principles, as such may be subsequently revised, or in any successor pronouncement issued by the Financial Accounting Standard Board or Securities and Exchange Commission.

Governmental Authority: Means any governmental or quasi-governmental entity, including any court, department, commissions, board, bureau, agency, administration, service, district or other instrumentality of any governmental entity.

Governmental Requirements: All laws, statutes, codes, ordinances, and governmental rules, regulations and requirements applicable to any Borrower, Agent and/or any Property.

Guarantor: Means Properties REIT.

Guaranty: The Repayment Guaranty of even date herewith executed by Guarantor in favor of Agent and Lenders, as the same may be amended, modified, replaced or substituted from time to time.

Improvements: The buildings and other improvements located on one or more of the Properties, including all sitework, utilities, infrastructure, paving, striping, signage, curb and gutter, landscaping and installation of all "common area" improvements required under any covenants encumbering a Property, required by applicable law, or required by zoning approvals entered into by Borrower, or improvements required to be constructed by any Borrower pursuant to leases entered into by such Borrower.

Initial Advance: The first advance of Loan proceeds to be made on or about the Closing Date in the amount of $141,000,000.

Initial Borrowers: Has the meaning assigned in the opening paragraph of this Agreement.

Initial Properties: Shall mean, collectively, the KBS 100-200 Campus Drive Property, the KBS One Meadowlands Property and the KBS Willow Oaks Property.

Interest Differential: That sum equal to the greater of zero (0) or the financial loss incurred by the Lenders resulting from prepayment, calculated as the difference between the amount of interest the Lenders would have earned (from like investments in the Money Markets as of the first day of the LIBOR Rate Period) had prepayment not occurred and the interest the Lenders will actually earn (from like investments in the Money Markets as of the date of prepayment) as a result of the redeployment of funds from the prepayment. The Interest

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Differential shall (i) be calculated by Agent on behalf of Lenders in accordance with Agent's customary underwriting practices and (ii) not be charged for any portion of the Loan prepaid that is accruing interest at the Monthly Reset LIBOR Rate.

Internal Revenue Code: The Internal Revenue Code of 1986, as amended.

Joinder Agreement: Means an Assumption and Joinder Agreement substantially in the form of Exhibit L hereto, executed by a New Borrower in favor of Agent for itself and the Lenders, and any amendments, supplements and other modifications thereto.

KBS 100-200 Campus Drive Improvements: Shall mean the Improvements located on the KBS 100-200 Campus Drive Land, including without limitation those described on Exhibit B hereto.

KBS 100-200 Campus Drive Land: Shall mean the land described on Exhibit C-1 hereto.

KBS 100-200 Campus Drive Property: Shall mean the KBS 100-200 Campus Drive Land, the KBS 100-200 Campus Drive Improvements, the Equipment pertaining thereto and all other "Trust Estate" or "Mortgaged Property" described in the Deed of Trust encumbering such property.

KBS One Meadowlands Improvements: Shall mean the buildings and other improvements located on the KBS One Meadowlands Land, including without limitation those described on Exhibit B hereto.

KBS One Meadowlands Land: Shall mean the land described on Exhibit C-2 hereto.

KBS One Meadowlands Property: Shall mean the KBS One Meadowlands Land, the KBS One Meadowlands Improvements, the Equipment pertaining thereto and all other "Trust Estate" or "Mortgaged Property" described in the Deed of Trust encumbering such property.

KBS Willow Oaks Improvements: Shall mean the buildings and other improvements located on the KBS Willow Oaks Land, including without limitation those described on Exhibit B hereto.

KBS Willow Oaks Land: Shall mean the land described on Exhibit C-3 hereto.

KBS Willow Oaks Property: Shall mean the KBS Willow Oaks Land, the KBS Willow Oaks Improvements, the Equipment pertaining thereto and all other "Trust Estate" or "Mortgaged Property" described in the Deed of Trust encumbering such property.

Land: Shall mean, individually or collectively as the context shall require, the KBS 100-200 Campus Drive Land, the KBS Willow Oaks Land, the KBS One Meadowlands Land and, for each Additional Property, the land described in Exhibit A to the Deed of Trust encumbering such Additional Property.

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Leasehold Property: Shall mean any Additional Property in which a Borrower holds a leasehold interest and which becomes a Property in accordance with Section 7.21.

Lenders: Each Lender that is a party to this Agreement and which hereafter becomes party to this Agreement, collectively, and each of their respective permitted successors and assigns.

Lending Installation: Means, with respect to a Lender or Agent, the office, branch, subsidiary or affiliate of such Lender or Agent listed on the signature pages hereof (in the case of Agent) or on its administrative questionnaire (in the case of a Lender) or otherwise selected by such Lender or Agent.

LIBOR: With respect to each LIBOR Rate Period applicable to any requested LIBOR Rate Advance, a per annum rate of interest (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the rate which appears on the Reuters Screen LIBOR01 (or any successor or substitute thereto selected by Agent in its sole discretion) as of 11:00 a.m., London time, two (2) New York Banking Days prior to the first day of the applicable LIBOR Rate Period selected by Borrower, for United States dollar deposits having a term coinciding with the LIBOR Rate Period selected by Borrower, adjusted for any reserve requirements and any subsequent costs arising from a change in government regulation.

LIBOR Rate: An annual rate of interest equal to the Applicable Margin plus LIBOR. Agent's internal records of applicable interest rates shall be determinative in the absence of manifest error.

LIBOR Rate Advance: Any portion of the Principal Balance which bears interest at a LIBOR Rate; provided, however, that any LIBOR Rate Advance must be in the aggregate principal amount of at least $1,000,000and in minimum increments of $250,000 thereafter.

LIBOR Rate Notice: A written notice from Borrower to Agent, received by Agent prior to 10:00 o'clock a.m. (California time) on a New York Banking Day at least two (2) New York Banking Days prior to the commencement date of any LIBOR Rate Period hereunder referred to therein (or the expiration of a previous LIBOR Rate Period with respect thereto), whereby Borrower elects to have an advance or a portion of the principal balance of the Note, as specified in said notice, be a LIBOR Rate Advance.

LIBOR Rate Period: The period commencing on the date any LIBOR Rate Advance is made and ending one (1) month, three (3) months, or six (6) months thereafter as selected by Borrower in its LIBOR Rate Notice pertaining thereto; provided, however, that (a) if any LIBOR Rate Period would end on a day that is not a New York Banking Day, such LIBOR Rate Period shall extend to the next New York Banking Day, unless, in the case of said LIBOR Rate Advance, such New York Banking Day would fall in the next calendar month, in which event such LIBOR Rate Period shall end on the immediately preceding New York Banking Day, (b) any LIBOR Rate Period that begins on the last New York Banking Day of a calendar month (or a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Rate Period) shall end on the last New York Banking Day of the calendar month at

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the end of such LIBOR Rate Period, and (c) no LIBOR Rate Period shall end later than the then applicable Maturity Date.

Loan: The loan made hereunder, evidenced by the Note (consisting of both the Revolving Portion and the Non-revolving Portion), by Agent and the Lenders to Borrower in advances to be made pursuant to the terms of this Agreement. During the Availability Period, Borrower may repay principal amounts outstanding under the Revolving Loans and reborrow them up to the Revolving Portion subject to the terms and conditions of this Agreement. Amounts borrowed under the Non-revolving Portion and repaid may not be subsequently reborrowed.

Loan Documents: The documents described in this Agreement, which evidence and secure the Loan, including, but not limited to, the Note, the Deeds of Trust, this Agreement, each Joinder Agreement, the Environmental Indemnity, the Guaranty and including any amendments thereof and supplements thereto executed by Borrower, Guarantor and/or and Agent.

Majority Lenders: Lenders holding, in the aggregate, not less than sixty-six and two-thirds of one percent (66 ⅔%) of the Committed Amount or, if no such principal amount is then outstanding, not less than sixty-six and two-thirds of one percent (66 ⅔%) of the Commitment Percentages.

Maturity Date: March 1, 2016, as such date may be extended in accordance with the provisions of Section 1.4.

Maximum Committed Amount Leverage Ratio: Shall mean (a) so long as at least two (2) Properties are simultaneously securing the Loan, sixty-five percent (65%); and (b) if only one (1) Property is then securing the Loan, sixty percent (60%).

Minimum Borrowing Base DSCR: Shall mean 1.25 to 1.0.

Money Markets: One or more wholesale funding markets available to Agent and Lenders, including negotiable certificates of deposit, commercial paper, eurodollar deposits, bank notes, federal funds and interest rate swaps, or others.

Monthly Reset LIBOR Rate. Shall mean an annual rate of interest equal to the Applicable Margin plus the one-month LIBOR rate quoted by Agent from Reuters Screen LIBOR01 Page or any successor thereto, which shall be that one-month LIBOR rate in effect two New York Banking Days prior to the beginning of each calendar month, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation, such rate to be reset at the beginning of each succeeding month. Notwithstanding the immediately preceding sentence, if on any date for determining the one-month LIBOR rate, Agent shall determine (which determination shall be conclusive in the absence of manifest error) that (a) because of circumstances affecting the Money Markets, adequate and fair means do not exist for ascertaining the one-month LIBOR rate, or (b) it is unlawful to maintain any advance of the Loan at a rate based on the one-month LIBOR rate, Agent shall promptly give to Borrower telephonic notice (confirmed as soon as practicable in writing) of the nature and effect of such circumstances and/or illegality. After receipt of such notice and during the existence of such circumstances and/or illegality, the interest rate shall be determined based upon an alternate

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index selected by Agent, in its sole discretion, reasonably comparable to that of one-month LIBOR, intended to generate a return substantially the same as that generated by the one-month LIBOR rate, and all references in the Loan Documents to the one-month LIBOR rate shall be deemed to be references to such alternate rate while such rate is in effect.

Monthly Reset LIBOR Rate Advance. Any portion of the Principal Balance which bears interest at a Monthly Reset LIBOR Rate.

Net Operating Income: Shall mean the amount of (a) Rental Income for the applicable period of time in question, less (b) the amount of Operating Expenses for such period of time, less (c) a replacement reserve equal to $0.25 per square foot for all of the Improvements consisting of office buildings and $0.10 per square foot for all Improvements consisting of industrial buildings. In calculating Net Operating Income, Agent shall include in Rental Income the base rent payable under any lease which is then in a free rent period, subject to the following conditions: (i) the tenant under such lease is not in default, (ii) Agent has approved the terms of the lease in its reasonable discretion, and (iii) Agent shall make such adjustment to Rental Income for the lesser of the free rent period under the lease or six (6) months prior to the date rent commences under such lease, after which the actual collections with respect to such lease shall be measured. The preceding sentence shall not be deemed to modify Section 5.9 hereof and shall provide Agent with approval rights only with respect to including base rent payable under leases in a "free-rent" period in the calculation of Net Operating Income. With respect to the calculation of Net Operating Income, beginning March 31, 2016, and continuing at all times thereafter, any rents or other income attributable to the BASF Lease shall be excluded from the calculation of Net Operating Income if Borrower has not released the space applicable thereto (or renewed the existing BASF Lease) pursuant to a lease which satisfies the requirements of Section 5.9 hereof.

Net Worth: Has the meaning set forth in the Guaranty.

New Borrower: Has the meaning set forth in Section 7.21.

New York Banking Day: A Business Day which is also a day on which commercial banks are open for international business (including dealings in dollar deposits) in New York, New York and London, England.

Non-revolving Portion. Shall mean the non-revolving portion of the Loan in the amount of $141,000,000.00, subject to possible increase or decrease in accordance with an increase or decrease in the Committed Amount, or a reallocation of the Committed Amount from the Non-revolving Portion to the Revolving Portion under Section 7.27 hereof.

Note: The Promissory Note(s) executed and delivered by Borrower to the order of a Lender in the aggregate maximum principal amount of up to the Committed Amount, to evidence the Loan, as the same may be amended, modified, replaced or substituted from time to time (including any replacements or substitutions pursuant to Section 8.9(b) hereof, and including any additional or new Notes executed in connection with any increase in the Committed Amount and/or the addition of Lenders in accordance with the provisions of Section 7.20 or other applicable provisions hereof).

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Obligations: The obligations of Borrower to Agent and the Lenders described in the Loan Documents or arising under or in connection with any Swap Transaction between Borrower (or its Affiliate) and any one or more of the Lenders (or their respective Affiliates) in connection with the Loan, including any termination or breakage fees, or other amounts owing, in connection with any termination of a Swap Contract.

Operating Budget: A detailed listing of all anticipated annual income and expenses from and for managing, maintaining and operating each Property, prepared by Borrower or its agent and in form and substance acceptable to Agent.

Operating Expenses: Shall mean any and all costs and expenses incurred in connection with the Properties then remaining encumbered by the Deeds of Trust during the applicable time period in question, including without limitation (a) taxes and assessments imposed upon the Property payable by Borrower which are reasonably allocable to such time period, (b) bond assessments which are reasonably allocable to such time period, (c) insurance premiums for casualty insurance and liability insurance carried in connection with the Property which are reasonably allocable to such time period, and (d) operating expenses incurred by Borrower for the management, operation, cleaning, leasing, maintenance and repair of the Property which are reasonably allocable to such time period. Operating Expenses shall not include any interest, principal, loan fees, extension fees or other payments on the Loanor capital expenditures (such as building improvements, tenant improvements or leasing costs).

Operating Statement: A current, detailed statement of income and expenses from and for managing, maintaining and operating each Property, in form and substance acceptable to Agent, certified as true, correct and complete by the Borrower's advisor's account controller or any other authorized agent, and expressly showing all variations from the Operating Budget for the period covered thereby.

Original 100-200 Campus Drive Loan: Means the loan in the original committed amount of $64,600,000 made by U.S. Bank and TD Bank, as lenders, to KBS II 100-200 Campus Drive, LLC, as borrower, pursuant to the Original 100-200 Campus Drive Loan Agreement.

Original 100-200 Campus Drive Loan Agreement: Means that certain Loan Agreement dated as of February 26, 2010, by and between KBSII 100-200 Campus Drive, LLC, as borrower, TD Bank, as agent, and the other "Lenders" described therein, pursuant to which the Original 100-200 Campus Drive Loan was made.

Original 100-200 Campus Drive Loan Documents: Means the "Loan Documents" as that term is defined in the Original 100-200 Campus Drive Loan Agreement.

Original One Meadowlands Loan: Means the loan in the original committed amount of $65,000,000 made by U.S. Bank and TD Bank, as lenders, to KBSII One Meadowlands, LLC, as borrower, pursuant to the Original One Meadowlands Loan Agreement.

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Original One Meadowlands Loan Agreement: Means that certain Loan Agreement dated as of December 13, 2011, by and between KBSII One Meadowlands, LLC, as borrower, U.S. Bank, as agent, and the other "Lenders" described therein, pursuant to which the Original One Meadowlands Loan was made.

Original One Meadlowlands Loan Documents: Means the "Loan Documents" as that term is defined in the Original One Meadowlands Loan Agreement.

Original Willow Oaks Loan: Means the loan in the original committed amount of $65,000,000 made by U.S. Bank and TD Bank, as lenders, to KBSII Willow Oaks, LLC, as borrower, pursuant to the Original Willow Oaks Loan Agreement.

Original Willow Oaks Loan Agreement: Means that certain Loan Agreement dated as of July 20, 2010, by and between KBSII Willow Oaks, LLC, as borrower, U.S. Bank, as agent, and the other "Lenders" described therein, pursuant to which the Original Willow Oaks Loan was made.

Original Willow Oaks Loan Documents: Means the "Loan Documents" as that term is defined in the Original Willow Oaks Loan Agreement.

Other Taxes: Means any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note.

Parent REIT: KBS Real Estate Investment Trust II, Inc., a Maryland corporation.

Permitted Encumbrances: The liens, charges and encumbrances on title to the Property listed on Exhibit D hereto, if any.

Person: Any natural person, corporation, limited liability company, partnership (general or limited), limited liability partnership, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.

Principal Balance: The outstanding principal balance of the Loan that has been advanced and remains unpaid from time to time.

Properties REIT: KBS REIT Properties II, LLC, a Delaware limited liability company.

Properties: Shall mean, collectively, the Initial Properties and all Additional Properties.

Protective Advances: Any amount advanced or expended by the Agent and/or the Lenders to preserve or protect the Lenders' rights with respect to the Loan, or the Property or other collateral for the Loan.

Regulation D: Regulation D (or any substitute regulations) of the Board of Governors of the Federal Reserve System (or any successor thereto), together with all amendments from time to time thereto.

Rental Income: Shall mean the rental income received by Borrower for the applicable period of time in question from the tenant leases of the Improvements which are then in effect (and as to which the tenants thereunder are paying rent).

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Revolving Portion: Shall mean the revolving portion of the Loan in the amount of $94,000,000.00, subject to possible increase or decrease in accordance with an increase or decrease in the Committed Amount, or a reallocation of the Committed Amount from the Non-revolving Portion to the Revolving Portion under Section 7.27 hereof.

Revolving Loans: Shall mean the aggregate of the Advances made at any one time by the Lenders under the Revolving Portion.

Swap Contract: Means any agreement, whether or not in writing, relating to any Swap Transaction, including, unless the context otherwise clearly requires, any form of master agreement (the "Master Agreement") published by the International Swaps and Derivatives Association, Inc., or any other master agreement, entered into between Swap Counterparty and Borrower (or its Affiliate) in connection with the Loan, together with any related schedule and confirmation, as amended, supplemented, superseded or replaced from time to time, relating to or governing any Swap Transaction.

Swap Counterparty: Means any of the Lenders or an Affiliate of any of the Lenders, in its capacity as counterparty under any Swap Contract, in each case subject to Agent's reasonable approval.

Swap Transaction: Means (a) any and all rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any Master Agreement, or (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of Master Agreement (as such agreement may be amended, restated, extended, supplemented or otherwise modified in writing from time to time), including any such obligations or liabilities under any Master Agreement, entered into between Swap Counterparty and Borrower (or its Affiliate) in connection with the Loan.

Taxes: Means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

Term Loan. Shall mean the aggregate of the Advances made by the Lenders under the Non-revolving Portion.

Termination Date: The date that is thirty (30) daysfollowing the date of this Agreement.

Tests: Such soil tests, chemical tests, materials tests and other tests and analyses as are reasonably required to confirm, with relative certainty, the absence of toxic or hazardous substances from any Property.

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Title Company: Commonwealth Land Title Insurance Company.

Title Policy: A loan policy of title insurance in favor of Agent issued by the Title Company and complying with the requirements of Exhibit F attached hereto and hereby made a part hereof.

Treasury Note Rate: The yields reported, as of 10:00 a.m. (New York time) on any Business Day (hereinafter defined), on the display designated as "Page 678" on the Telerate Data Service (or such other display as may replace Page 678 on the Telerate Data Service) for actively traded U.S. Treasury securities having a maturity equal to ten (10) years, or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, the latest Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the applicable Business Day, in Federal Reserve statistical Release H. 15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to ten (10) years. Such implied yield shall be determined, if necessary, by (i) converting U.S. Treasury bill quotations from bond‑equivalent yields in accordance with accepted financial practice, and (ii) interpolating linearly between reported yields. The term "Business Day" as used in this paragraph means a day on which banks are open for business in New York, New York.

U.S. Bank: U.S. Bank National Association, a national banking association, in its capacity as a Lender, and not as Agent.

I. LOAN

1.1Principal. Subject to the terms, provisions and conditions of this Agreement, each Lender severally, but not jointly, agrees to lend to Borrower, pro rata in accordance with its Commitment Percentage, and Borrower agrees to borrow from the Lenders, the proceeds of the Loan, from time to time, in accordance with the terms hereof until the Maturity Date (as may be extended pursuant to the terms of Section 1.4 below). All advances of Loan proceeds shall be evidenced by the Note. In no event shall the Lenders be obligated hereunder to lend to Borrower more than Borrower has qualified to receive under the terms of Article III hereof. Amounts borrowed under the Revolving Portion and repaid can be re-borrowed subject to satisfaction of the terms and conditions set forth in this Agreement. Amounts borrowed under the Non-revolving Portion and repaid may not be subsequently re-borrowed. The Revolving Portion and the Non-revolving Portion constitute a single facility in the Committed Amount represented by the Note.

1.2Interest.

(a)    Absent an Event of Default hereunder, the outstanding principal balance hereunder shall bear interest at the Applicable Interest Rate (as defined below). The "Applicable Interest Rate" shall mean (a) the Monthly Reset LIBOR Rate, as the same may fluctuate from time to time, as to all amounts outstanding on the Loan, other than LIBOR Rate Advances, and (b) the LIBOR Rate as to those portions of the Loan that are LIBOR Rate Advances. Changes in the Monthly Reset LIBOR Rate (if applicable) shall become effective on the same day as the date of any change in the Monthly Reset LIBOR Rate, and shall apply to all advances made

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hereunder (other than LIBOR Rate Advances), whether such advances are made prior to, the same day as, or subsequent to any particular change in the Monthly Reset LIBOR Rate.

(b)    Interest accrued during each calendar month shall be payable, as accrued, on the first Business Day of the next calendar month, commencing on the first Business Day of the next calendar month following the calendar month in which the Initial Advance of the Loan is made, and all unpaid, accrued interest shall be paid in full at the time all advances are paid in full. If all unpaid advances made by Agent and Lenders have not been repaid on or before the Maturity Date, then the entire unpaid balance of all advances made by Agent and Lenders shall (without notice to or demand upon Borrower) become due and payable on said date, together with all unpaid, accrued interest thereon, and with interest computed from and after that date in accordance with the terms of this Agreement and the Note, until all advances are paid in full.

(c)    All payments of principal and interest due hereunder must be made without deduction of any present and future taxes, levies, imposts, deductions, charges or withholdings, which amounts must be paid by Borrower. Borrower shall pay the amounts necessary such that the gross amount of the principal and interest received by Agent and Lenders is not less than that required by this Agreement and the Note. If Borrower is required by law to deduct any such amounts from or in respect of any principal or interest payment hereunder, then (i) the sum payable to Agent and Lenders shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this provision) Agent and Lenders receive an amount equal to the sum they would have received had no deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. Borrower shall pay all stamp and documentary taxes. If, notwithstanding the foregoing, Agent or Lenders pay such taxes, Borrower shall reimburse Agent and Lenders for the amount paid. Borrower shall furnish Agent official tax receipts or other evidence of payment of all taxes.

(d)    Throughout the term of the Loan, interest will be calculated on the basis of a 360 day year and shall be computed for the actual number of days elapsed in the period for which interest is charged. If any payment of interest to be made by Borrower hereunder becomes due on a day which is not a Business Day, such payment must be made on the next succeeding Business Day.

(e)    Absent manifest error, Agent's records as to the amounts of principal, interest and other sums owing hereunder shall be conclusive and binding.

1.3LIBOR Rate Option. If no Event of Default, or event which, with notice or lapse of time or both, could become an Event of Default, has occurred and is continuing under any Loan Document, Borrower may from time to time elect, by a LIBOR Rate Notice, to pay interest on the LIBOR Rate Advance described in said LIBOR Rate Notice at a LIBOR Rate during the LIBOR Rate Period specified in said LIBOR Rate Notice. Agent shall notify Borrower of the LIBOR Rate applicable to any LIBOR Rate Period promptly after the same is determined by Agent, which determination, in the absence of manifest error, shall be final, conclusive and binding on Borrower. From and after the end of each LIBOR Rate Period, if Borrower does not timely select another interest rate option at least two New York Banking Days

- 21- Loan Agreement (KBS REIT II)

before the end of the LIBOR Rate Period for a LIBOR Rate Advance, Agent may at any time after the end of the LIBOR Rate Period convert the LIBOR Rate Advance to a Monthly Reset LIBOR Rate Advance accruing interest at the Monthly Reset LIBOR Rate, but until such conversion, such LIBOR Rate Advance shall continue to accrue interest at the same rate as the interest rate in effect for such LIBOR Rate Advance prior to the end of the LIBOR Rate Period, unless and until Borrower has again properly elected, by a LIBOR Rate Notice, to pay interest thereon at a LIBOR Rate pursuant to this Agreement. Notwithstanding the foregoing, no more than four (4) LIBOR Rate Advances may be outstanding at any time. Subject to the terms and conditions set forth in Section 1.5 and Section 1.10, LIBOR Rate Advances may be repaid or prepaid on any day; provided, however, Borrower shall also pay to Agent, from time to time, on demand, any sums necessary to compensate Agent and Lenders for all costs, expenses, claims, penalties and liabilities incurred by Agent and Lenders by virtue of the repayment or prepayment of funds, or Agent's and Lenders' inability to repay or prepay funds, borrowed by Agent in the London interbank market to advance to Borrower or to make a LIBOR Rate available to Borrower including, without limitation, the Interest Differential.

1.4Maturity Date; Extension. All principal owing on the Loan, and all accrued interest and other sums owing under the Loan Documents not otherwise paid when due, shall be due and payable in full on the Maturity Date. Borrower shall have the option to extend (each extension, an "Extension") the term of the Loan (the "First Extension") from the Maturity Date (the "Original Maturity Date") to a date that is twelve (12) months following the Original Maturity Date (for purposes of this Section, the "First Extended Maturity Date"), and upon the expiration of the First Extension, Borrower shall have the option to extend the term of the Loan (the "Second Extension") from the First Extended Maturity Date to a date that is twelve (12) months following the First Extended Maturity Date (for purposes of this Section, the "Second Extended Maturity Date"), each such Extension being subject to the satisfaction of each of the following conditions precedent:

(a)    Borrower shall provide Agent with written notice of Borrower's request to exercise its option to extend the Maturity Date not more than one hundred twenty (120) days but not less than forty-five (45) days prior to the (i) the Original Maturity Date, in the case of the First Extension, and (ii) the First Extended Maturity Date, in the case of the Second Extension.

(b)    As of the date of Borrower's delivery of the notice of request to exercise its option to extend, and as of the then existing Maturity Date, no Event of Default shall have occurred and be continuing, and no event or condition which, with the giving of notice or the passage of time or both, would constitute an Event of Default shall have occurred and be continuing, and Borrower shall so certify in writing to the best of its knowledge.

(c)    Prior to the commencement of the Extension, Borrower shall deliver to Agent, at Borrower's sole cost and expense, a date-down to the Title Policy in form and substance acceptable to Agent and such title insurance endorsements reasonably required by Agent to the extent available in each jurisdiction in which an applicable Property is located.

(d)    Immediately prior to the commencement of the Extension, Borrower shall pay to Agent an extension fee in the amount specified in the Fee Letter.

- 22- Loan Agreement (KBS REIT II)

(e)    Borrower shall be in compliance with the financial covenants contained in the Loan Documents.

(f)    Immediately prior to the commencement of the Extension, Borrower shall be in compliance with Section 5.23 hereof.

(g)    Immediately prior to the commencement of the Extension, the ratio of the then applicable Committed Amount to the then "As-Is" appraised value (based on evidence reasonably satisfactory to Agent, including, if required by Agent or Borrower, updated Appraisals approved by Agent) of the Properties (the "Commitment-to-Value Ratio") shall not exceed the Maximum Committed Amount Leverage Ratio, as calculated by Agent; provided, however, if the required Commitment-to-Value Ratio is not met, Borrower may (1) pay down the outstanding principal amount of the Loan and permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount (as reasonably determined by Agent) sufficient to cause the above-required Commitment-to-Value Ratio to not exceed the Maximum Committed Amount Leverage Ratio (without the payment of any prepayment fee, other than Interest Differential amounts and sums owing under Section 1.10, and Swap Contract fees or breakage amounts), or (2) to the extent that a principal payment is not required to permanently reduce the Committed Amount to the required amount, permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount (as reasonably determined by Agent) sufficient to cause the above-required Commitment-to-Value Ratio to not exceed the Maximum Committed Amount Leverage Ratio.

(h)    Immediately prior to the commencement of the Extension, the Commitment Resizing Debt Service Coverage Ratio shall not be less than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then secures the Loan), as calculated by Agent (using the then Committed Amount (as the same may be reduced by Borrower in accordance with Section 7.16 hereof) and, if required by Agent or Borrower, new updated Appraisals); provided, however, if the required Commitment Resizing Debt Service Coverage Ratio is not met, Borrower may (1) pay down the outstanding principal amount of the Loan and permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount (as reasonably determined by Agent) sufficient to cause the Commitment Resizing Debt Service Coverage Ratio to be equal to or greater than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then secures the Loan) or (2) to the extent that a principal payment is not required to permanently reduce the Committed Amount to the required amount, permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount (as the same may be reduced by Borrower in accordance with Section 7.16 hereof) by an amount (as reasonably determined by Agent) sufficient to cause the Commitment Resizing Debt Service Coverage Ratio to be equal to or greater than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then secures the Loan).

(i)    Guarantor shall be in compliance with its financial covenants set forth in the Guaranty, and Agent shall have received a certificate from Guarantor certifying such compliance and such other information reasonably required by Agent to confirm that Guarantor is in compliance with such financial covenants to the extent such information is required pursuant to Section 5.4 below.

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Notwithstanding the foregoing, the Second Extension may not come into effect unless the First Extension shall have been in effect. If each of the foregoing conditions precedent are satisfied with respect to the First Extension, and the Original Maturity Date is extended as provided above to the First Extended Maturity Date, as used herein and in the other Loan Documents, the term "Maturity Date" shall thereafter mean the First Extended Maturity

[Remainder of page intentionally blank.]

- 24- Loan Agreement (KBS REIT II)

Date. If each of the foregoing conditions precedent are satisfied with respect to the Second Extension, and the First Extended Maturity Date is extended as provided above to the Second Extended Maturity Date, as used herein and in the other Loan Documents, the term "Maturity Date" shall thereafter mean the Second Extended Maturity Date.

1.5Prepayment.

(a)    Subject to Section 1.10 hereto, and (as to the Non-revolving Portion) Section 1.5(b) below, Borrower may prepay, in full or in part, principal advanced under the Revolving Portion and Non-revolving Portion and accrued interest thereon, provided that Borrower shall give Agent two (2) Business Days' prior written notice of the date of prepayment. If Borrower prepays all or any portion of the Revolving Portion or Non-revolving Portion, Borrower shall also pay to Agent and Lenders any and all sums necessary to compensate Agent and Lenders for all costs, expenses, claims, penalties and liabilities incurred by Agent and Lenders by virtue of the repayment or prepayment of funds, or Agent's and/or Lenders' inability to repay or prepay funds borrowed by Agent and/or Lenders in the London interbank market to advance to Borrower or to make a LIBOR Rate available to Borrower, including, without limitation, the Interest Differential. In addition to the foregoing, any prepayment of principal advanced under any of the Revolving Loans and Term Loan shall be subject to the provisions of Section 1.10.

(b)    In addition to all other sums then owing hereunder, Borrower shall pay to Agent for the benefit of Lenders (i) a prepayment fee equal to one percent (1.0%) of any principal amount of the Non-revolving Portion that is paid prior to March 1, 2014, and (ii) no prepayment fee shall be due and payable for any payment that is made on or following March 1, 2014. Notwithstanding the foregoing, the amount of any principal paydown which results directly from the application of the release price from the release of one of the three buildings on the KBS Willow Oaks Property pursuant to Section 7.22 hereof shall not be subject to the prepayment fee specified in this Section 1.5(b) (provided, however, that those prepayments resulting from the release of any other Properties, shall be subject to the prepayment fee specified in this subsection 1.5(b)). For the avoidance of doubt, no prepayment fee shall be payable with respect to the Revolving Portion. Borrower expressly waives any and all rights it may have under applicable law (including without limitation Section 2954.10 of the California Civil Code) to repay the Loan in whole or in part without premium or penalty, including without limitation the payment of a prepayment fee or penalty for prepayment upon acceleration. Borrower acknowledges that the foregoing prepayment fee is a material part of the consideration for the Agent and Lenders making the Loan, which has been given individual weight to the consideration for the Loan and this waiver and agreement.

BORROWER'S INITIALS: /s/ CJS /s/ CJS /s/ CJS

1.6Yield Protection. If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation, promulgation, implementation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof including, notwithstanding the foregoing, all requests, rules, guidelines or directives in

Loan Agreement (KBS REIT II)

connection with Dodd-Frank Wall Street Reform and Consumer Protection Act regardless of the date enacted, adopted or issued, or compliance by Agent or any Lender (or applicable Lending Installation) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

(a)    subjects Agent and/or any Lender (or any applicable Lending Installation) to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to Agent and/or any Lender in respect of the Loan or participations therein, including without limitation the principal of or interest on any LIBOR Rate Advance or any other fees or amounts payable hereunder (other than with respect to Excluded Taxes), or

(b)    imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, Agent and/or any Lender (or any applicable Lending Installation), or

(c)    imposes any other condition the result of which is to increase the cost to Agent and/or any Lender (or any applicable Lending Installation) of making, funding or maintaining the Loan or any LIBOR Rate Advance (or any related Loan commitment), or to reduce any amount receivable by Agent and/or any Lender (or any applicable Lending Installation) in connection with the Loan or participations therein (whether of principal, interest or otherwise), or requires Agent and/or any Lender (or any applicable Lending Installation) to make any payment calculated by reference to the amount of the Loan by an amount deemed material by Agent and/or such Lender,

and the result of any of the foregoing is to increase the cost to Agent and/or such Lender (or applicable Lending Installation) of making or maintaining the Loan or to reduce the return received by Agent and/or such Lender (or applicable Lending Installation), as the case may be, in connection with the Loan, then, upon written demand by Agent, Borrower shall pay Agent and/or such Lender such additional amount or amounts as will compensate Agent and/or such Lender for such increased cost or reduction in amount received, as reasonably determined by Agent and/or such Lender. A statement from Agent setting forth such amount or amounts as shall be necessary to so compensate Agent and/or such Lender shall be delivered to Borrower and shall, in the absence of manifest error, be conclusive and binding upon Borrower. Borrower shall pay Agent (for the benefit of Agent and/or such Lender) the amount shown as due on any such statement within fifteen (15) days after its receipt of the same. Failure on the part of Agent and/or such Lender to demand compensation for any increased costs, lost income or reduction in amounts received or receivable shall not constitute a waiver of Agent's or such Lender's rights to demand compensation for any increased costs or reduction in amounts received or receivable. The protection under this section shall be available to Agent and the Lenders regardless of any possible contention of the invalidity or inapplicability of any law, regulation or directive which shall give rise to any demand by Agent or any Lender.

1.7Inability to Determine LIBOR. In the event that on the date for determining LIBOR in respect of the LIBOR Rate Period for any LIBOR Rate Advance, Agent shall determine (which determination shall be conclusive in the absence of manifest error) that, by reason of circumstances affecting the London interbank market, adequate and fair means do not

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exist for ascertaining LIBOR for such LIBOR Rate Period, Agent shall promptly give to Borrower notice (confirmed as soon as practicable in writing) of the nature and effect of such circumstances, and the LIBOR Rate Advance in question shall bear interest, or continue to bear interest, as the case may be, at the Monthly Reset LIBOR Rate. If at any time subsequent to Agent's giving of such notice, Agent determines that because of a change in circumstances the LIBOR Rate is again available to Borrower, Agent shall so notify Borrower and shall convert the rate of interest payable with respect to such portion of the Principal Balance from the Monthly Reset LIBOR Rate to the LIBOR Rate. Nothing in this Section shall affect the LIBOR Rate then in effect on any LIBOR Rate Advance outstanding at the time of receipt by Borrower of such notice until the expiration of the LIBOR Rate Period in effect with respect to such LIBOR Rate Advance at such time.

1.8Illegality. Notwithstanding anything to the contrary herein contained, if any Change shall make it unlawful for Agent and/or the Lenders to make or maintain any LIBOR Rate Advance or to give effect to its obligations as contemplated hereby, then, by written notice to Borrower, Agent may:

(a)    declare that LIBOR Rate Advances will not thereafter be made hereunder, in which event Borrower shall be prohibited from requesting LIBOR Rate Advances from Agent, and Agent shall not be required to make LIBOR Rate Advances to Borrower, hereunder unless such declaration is subsequently withdrawn; and

(b)    require, but only to the extent the Change affects outstanding LIBOR Rate Advances, that all outstanding LIBOR Rate Advances made by Agent and/or the Lenders be added to, and become a part of, the Monthly Reset LIBOR Rate Advances hereunder, in which event all such LIBOR Rate Advances shall automatically be added to, and become a part of, the Monthly Reset LIBOR Rate Advances as of the effective date of such notice as is hereinafter provided for (notwithstanding any provisions of the Note or this Agreement to the contrary), and interest shall accrue thereon, from and after said date, at the Monthly Reset LIBOR Rate or the Default Rate, whichever is then applicable. For purposes of this Section, a notice to Borrower by Agent shall be effective, if lawful, on the date of receipt by Borrower.

1.9Capital Adequacy. If Agent determines the amount of capital required or expected to be maintained by Agent or any Lender, any Lending Installation of Agent or any Lender, or any corporation or other Person controlling Agent or any Lender is increased as a result of a Change, then, within fifteen (15) days of demand by Agent, the Borrower shall pay to Agent the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which Agent determines is attributable to this Agreement or any Loan or commitment made hereunder (after taking into account Agent's policies as to capital adequacy). Without limiting the foregoing, such compensation shall include an amount equal to any reduction in return on assets or return on equity to a level below that which Agent or any Lender could have achieved absent its extension of credit hereunder and but for such Change. Agent will notify Borrower as promptly as practicable after it determines to demand such compensation. "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines (defined below) or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) or in the interpretation, promulgation,

- 27- Loan Agreement (KBS REIT II)

implementation or administration thereof after the date of this Agreement which affects the amount of capital required or expected to be maintained by Agent or any Lender (or any Lending Installation) or any corporation or other Person controlling Agent or any Lender, including without limitation, (a) any such law, regulation or change which affects the London interbank market, and (b) any such change which results in an adjustment (i) of the Federal Deposit Insurance Corporation assessment rate, (ii) of the reserve requirement specified by Regulation D. Notwithstanding the foregoing, for purposes of this Agreement, all requests, rules, guidelines or directives in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act shall be deemed to be a Change regardless of the date enacted, adopted or issued and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) or the United States financial regulatory authorities shall be deemed to be a Change regardless of the date adopted, issued, promulgated or implemented. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement.

1.10Indemnification of Agent and the Lenders. Except for a failure caused by Agent's default, Borrower shall indemnify Agent and Lenders against any loss or expense that Agent and/or Lenders may sustain or incur (including, without limitation, any loss or expense sustained or incurred in obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any LIBOR Rate Advance, but excluding any Lender's (other than Agent's attorneys' fees) as a consequence of (a) any failure of the Borrower to make any payment when due of any amount due under the Loan Documents, (b) any failure of the Borrower to borrow, continue or convert a LIBOR Rate Advance on a date specified therefor in a notice thereof, (c) any failure to fulfill on the scheduled commencement date of any LIBOR Rate Period hereunder the applicable conditions set forth herein as prerequisites to an advance that is to be a LIBOR Rate Advance or to the election of a LIBOR Rate Advance at a LIBOR Rate, (d) any failure to borrow hereunder after a LIBOR Rate Notice has been given, (e) any payment or prepayment permitted or mandated hereunder of a LIBOR Rate Advance on a date other than the last day of the relevant LIBOR Rate Period, including without limitation upon acceleration following an Event of Default, or (f) the occurrence of any Event of Default, including but not limited to any loss or expense sustained or incurred or to be sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain a LIBOR Rate Advance. Without limiting the foregoing, such loss or expense shall conclusively be deemed to include the Interest Differential. Because of the short‑term nature of this facility, the Borrower agrees that the Interest Differential shall not be discounted to its present value. Any prepayment of an Advance bearing interest at the LIBOR Rate shall be in an amount equal to the remaining entire principal balance of such advance. Agent shall provide to Borrower a statement, signed by an officer of Agent, explaining any such loss or expense and the Interest Differential, and setting forth, if applicable, the computations used to determine such loss or expense and the Interest Differential, which shall be conclusive and binding on Borrower, absent manifest error. All such loss, expense and Interest Differential shall be payable by Borrower to Agent within five (5) days of demand by Agent.

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Borrower acknowledges that payment or prepayment of any LIBOR Rate Advance on a date other than the last day of an applicable LIBOR Rate Period shall result in Agent and Lenders incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities, and any such payment or prepayment therefore must include the Interest Differential and other sums set forth above. Borrower hereby expressly (a) waives any rights it may have under California Civil Code Section 2954.10 to prepay any LIBOR Rate Advance without penalty, upon acceleration of the maturity of the Loan, and (b) agrees that if a prepayment of any LIBOR Rate Advance is made, following any acceleration of the maturity of the Loan by the Agent on account of any transfer or disposition as prohibited or restricted by this Agreement or by any Deed of Trust, then Borrower shall be obligated to pay, concurrently therewith, as a prepayment premium, the applicable Interest Differential and other sums specified above. By initialing this provision in the space provided below, Borrower hereby declares that the Agent and Lenders' agreement to make the subject Loan at the interest rate and for the term set forth in this Agreement constitutes adequate consideration, given individual weight by Borrower, for this waiver and agreement.

BORROWER'S INITIALS: /s/ CJS /s/ CJS /s/ CJS

1.11Default Rate. If an Event of Default shall occur and be continuing under the Note, this Agreement or under any of the other Loan Documents, or the entire Principal Balance, all interest accrued thereon, and all other amounts payable under the Loan have not been repaid on or before the Maturity Date, then the entire Principal Balance shall (without notice to or demand upon Borrower) become due and payable on said date, together with all unpaid, accrued interest thereon and all other amounts payable under the Loan, and with interest computed on all such sums from and after that date at a rate which is five percent (5.0%) per annum in excess of the rate(s) of interest then accruing on the Principal Balance, or at the maximum lawful rate of interest which may be charged thereon by Agent, if any, whichever is less (hereinafter called "Default Rate"), until all such amounts are paid in full.

1.12Late Payment Charge. In the event that any required payment of principal and/or interest hereunder is not made on or before the due date thereof, taking into account any grace period, (but expressly excluding payment of principal due upon maturity (by acceleration or otherwise), Borrower shall pay to Agent, for the benefit of Lenders, a late payment charge equal to five percent (5.0%) of the amount of the overdue payment, for the purpose of reimbursing Agent and Lenders for a portion of the expense incident to handling the overdue payment.

1.13Effective Rate. Borrower, Agent and the Lenders agree that no payment of interest or other consideration made or agreed to be made by Borrower to Agent and/or the Lenders pursuant to this Agreement, the Note, any Deed of Trust or any other instrument referring to or securing the Loan shall, at any time, be deemed to have been computed at an interest rate in excess of the maximum rate of interest permissible by law, if any. In the event such payments of interest or other consideration provided for in this Agreement, the Note, any Deed of Trust or any other instrument referring to or securing the Loan shall result in payment of an effective rate of interest which, for any period of time, is in excess of the limit of the usury law or any other law applicable to the Loan evidenced by the Note, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or

Loan Agreement (KBS REIT II)

notice between or by any party or parties hereto, be applied to the Principal Balance immediately upon receipt of such monies by Agent with the same force and effect as though Borrower had specifically designated, and Agent had agreed to accept, such extra payments as a principal payment, without premium or penalty. If principal has been fully paid, any such excess amount shall be refunded to Borrower. This provision shall control over every other obligation of Borrower, Agent and the Lenders hereunder and under the Note, the Deeds of Trust and any other instrument which secures the Note.

1.14Application of Payments. Unless Agent otherwise consents in writing, all proceeds and payments made and received under the Note shall be applied in the manner set forth in Section 8.5(b); provided, that if an Event of Default exists and is continuing, with the written consent of all Lenders, Agent may apply any payments and proceeds received to the obligations owing under the Loan Documents and any Swap Contracts in such order and manner as Agent, with the consent of all Lenders, may elect (and if such consent is not forthcoming, in the order and manner set forth in Section 8.5(b)).

1.15Fees. On the date hereof and on or before the dates set forth therein, Borrower shall pay U.S. Bank all fees, costs and expenses referenced in the Fee Letter. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, all fees, costs and expenses payable to U.S. Bank under the Fee Letter shall be solely for the account of U.S. Bank, and need not be shared with any other Lender (except only, if at all, as set forth in a separate letter agreement between U.S. Bank and such other Lender).

1.16No Waiver by Agent. Agent shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies, and no waiver of any kind shall be valid unless in writing and signed by Agent. All rights and remedies of Agent under the terms of this Agreement, the Note, or any of the other Loan Documents, and under any statutes or rules of law shall be cumulative and may be exercised successively or concurrently. Any provision of this Agreement and the Note which may be unenforceable or invalid under any law shall be ineffective to the extent of such unenforceability or invalidity without affecting the enforceability or validity of any other provision hereof.

II. CONDITIONS OF BORROWING

Neither Agent nor the Lenders shall be required to make any advances hereunder until the pre‑closing requirements, conditions and other requirements set forth below and in Article III have been completed and fulfilled to the satisfaction of Agent, at Borrower's sole cost and expense. It is agreed, however, that Agent and the Lenders may, in their discretion, make advances prior to completion and fulfillment of any or all of such pre‑closing requirements, conditions and requirements, without waiving its right to require such completion and fulfillment before any additional advances are made. If all conditions to the disbursement of the Initial Advance are not satisfied by the Termination Date, Agent at its option and in its sole discretion may terminate this Agreement and all obligations of Agent and Lenders hereunder and under the other Loan Documents.

2.1Pre-Closing Requirements. Prior to the closing of the Loan, Borrower shall provide to Agent each of the following, in form and substance acceptable to Agent.

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(a)    A commitment for each Title Policy or a preliminary title report for each Initial Property from the Title Company, complying with the standard requirements of Agent therefor, a copy of each of which has been delivered to Borrower.

(b)    Three (3) copies of a current, certified ALTA/ACSM LAND TITLE SURVEY of each Initial Property, which shall also be prepared in accordance with Agent's standard requirements therefor, a copy of each of which has been delivered to Borrower.

(c)    [Intentionally Deleted].

(d)    An environmental report for each Initial Property showing that no remedial environmental action is recommended or required and other information produced in connection with the Tests. Each environmental report shall also specify whether or not any environmental assessment, study or statement with respect to the Initial Property covered thereby is required by any Governmental Requirement. If such an assessment, study or statement is so required for any Initial Property, Borrower shall provide a copy thereof to Agent, and, if none is so required, Borrower shall provide Agent with an appropriate declaration of environmental nonsignificance relating to such Initial Property, if available in the jurisdiction in which such Initial Property is located.

(e)    Insurance policies or insurance certificates (conforming to the requirements of Exhibit G) written by insurers satisfactory to Agent and in amounts satisfactory to Agent, prepared in accordance with Agent's standard requirements therefor, a copy of each of which has been delivered to Borrower.

(f)    Agent shall have received a flood zone and landslide hazard certification for each Initial Property from a qualified Consultant indicating that the improvements on such Initial Property are not located in a flood plain or any other flood prone area, or within an area subject to landslide hazards, as designated by the Federal Emergency Management Agency or any other Governmental Authority.

(g)    A zoning endorsement for each Initial Property (to the extent available) insuring that such Initial Property is in compliance with the applicable zoning and building codes.

(h)    An Agent-commissioned Appraisal of each Initial Property, addressed to Agent prepared in substantial conformance with applicable Governmental Requirements, and signed by an Appraiser acceptable to Agent and Lenders.

(i)    UCC chattel lien searches from the office of the Secretary of State of Delaware, covering the name of each Borrower.

(j)    A copy of each Borrower's limited liability company agreement (certified by a manager as being true, correct, complete, unamended and in full force and effect) and a copy of each Borrower's Articles of Organization (certified by the appropriate governmental officials in whose offices the same must be filed under applicable law), together with evidence, satisfactory to Agent, that each Borrower has complied with all other filing requirements and fictitious name requirements, if any, necessary to permit such Borrower to do business in the

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state in which such Borrower's Initial Property is located, and evidence, satisfactory to Agent, that each Borrower has complied with the above-mentioned documents in executing the Loan Documents; together with all formation documents for each Guarantor.

(k)    The standard form of office lease and industrial lease to be used by Borrower in leasing space within the Properties.

(l)    A copy of each noncancelable agreement relating to the management, operation or maintenance of the Properties and of each such agreement which cannot be cancelled by thirty (30) days' or less notice.

(m)    A proposed Operating Budget for each Initial Property for its first year of operation.

(n)    The most current available financial statements of each Borrower and each Guarantor certified by the applicable party to be true, correct and complete in all material respects.

(o)    [Intentionally Deleted].

(p)    All title, zoning and entitlement information and documentation requested by Agent.

(q)    Other agreements, documents and exhibits, without limitation, which may be required, in Agent's judgment, to assure compliance with the requirements of this Agreement.

(r)    Receipt and approval by Agent of the Environmental Insurance Policy covering the Initial Properties.

2.2Loan Documents.

(a)    On or before the Closing Date, Borrower shall execute and deliver (or cause to be executed and delivered) to Agent the following documents in form and substance acceptable to Agent and to its counsel, to evidence and secure the Loan:

(b)    A Note for each Lender in an amount equal to the total initial Committed Amount times such Lender's Commitment Percentage.

(c)    The Deeds of Trust.

(d)    A general assignment of all leases of and rents and income from each Initial Property.

(e)    A first security interest in all Equipment and in all of Borrower's intangible property relating to the Initial Properties, created and evidenced by a security agreement (which may be incorporated within the Deeds of Trust) and by appropriate Uniform Commercial Code financing statements.

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(f)    The Guaranty.

(g)    All other Loan Documents.

(h)    Such other documents as Agent may reasonably require to evidence and secure the Loan.

Agent may designate which of the Loan Documents are to be placed of record, the order of recording thereof, and the offices in which the same are to be recorded. Borrower shall pay all documentary, recording and/or registration taxes and/or fees, if any, due upon the Loan Documents.

2.3Recordation of Deeds of Trust; Title Insurance. The Deeds of Trust shall have recorded against the Initial Properties, and Agent shall have received Title Policy for each Deed of Trust.

2.4Opinion of Borrower's Attorneys. Agent shall have received from outside counsel for Borrower a current written opinion or opinions, in scope, form and substance reasonably acceptable to Agent.

2.5Fees. Borrower shall have paid to U.S. Bank each of the fees specified in, and in accordance with the terms of, the Fee Letter.

2.6SNDA's and Estoppels. Borrower shall on a commercially reasonable basis have provided to Agent, in form and substance satisfactory to Agent, (a) estoppels with respect to 85% of the current tenants for each Initial Property, and (b) subordination, non-disturbance and attornment agreements for the following tenants:

Park Avenue

Philadelphia Financial Admin

Jacobs Levy Equity Mgmt, Inc.

Merrill Lynch, P, F & S, Inc

BASF Corp & BASF Americas Corp

Wells Fargo Advisors, LLC

Wilson Elser Moskowitz Edelman

One Meadowlands

Russell Marketing Research Inc

Hudson Group Retail, LLC

Michael Kors

RGN - East Rutherford, LLC

Aegis Insurance Services, Inc.

The MWW Group, Inc.

Cushman & Wakefield of NJ

Willow Oaks

United Negro College Fund

ACS State Local Solutions

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SRA International Inc

BAUM Romstedt Technology

Dell Services Federal Govt

General Dynamics

AM Society for Therapeutic

Direct Holdings Americas

2.7Conditions for Disbursement. Borrower shall have satisfied all conditions for disbursement set forth in Article III (with respect to the initial disbursement of Loan proceeds being requested by Borrower).

2.8Borrower Operating Accounts. Borrower shall maintain all of its operating accounts (which shall expressly exclude any initial collection accounts into which any rents from a Property are initially deposited, if any, provided such funds shall be promptly deposited into the operating account with U.S. Bank) (collectively, the "Borrower Operating Account") for the Properties with U.S. Bank at all times during the term of the Loan (including any extensions thereof). Borrower hereby grants to Agent and Lenders a first priority lien and security interest in any funds and proceeds deposited with U.S. Bank in such Borrower Operating Account and in all other deposit accounts of Borrower with Agent or U.S. Bank to secure the Loan and all obligations of Borrower under the Loan Documents (collectively for the purposes of this Section 2.8, the "Collateral"). U.S. Bank, in its capacity as the depository bank for the Borrower Operating Account and any other deposit accounts of Borrower held with Agent or U.S. Bank, hereby acknowledges notice of the above pledge and security interest, and agrees to follow all instructions of Agent with respect thereto. The parties to this Agreement acknowledge that U.S. Bank, as depository bank, holds or will hold possession of the Collateral for the benefit of Agent and Lenders, as secured parties, and will take directions from U.S. Bank, as Agent, with respect to the Collateral.

2.9Credit Approval. On or before the date of closing of the Loan, Agent and Lenders shall have completed their due diligence of Borrower, Guarantor and the Initial Properties and received full credit approval with respect to the transaction.

2.10[Intentionally Omitted].

2.11First Disbursement Hereunder Shall be Used Only for the Repayment of the Original One Meadowlands Loan, the Original 100-200 Campus Drive Loan and the Original Willow Oaks Loan and Other Expenses Reasonably Approved by Agent. Notwithstanding anything contained herein which may be construed to the contrary, the Initial Advance hereunder shall be used to repay the outstanding principal amount of the Original One Meadowlands Loan, the Original 100-200 Campus Drive Loan and the Original Willow Oaks Loan (and Borrower shall concurrently therewith pay all accrued and unpaid interest and all other sums then owing under the Original One Meadowlands Loan and the Original One Meadowlands Loan Documents, the Original 100-200 Campus Drive Loan and the Original 100-200 Campus Drive Loan Documents, and the Original Willow Oaks Loan and the Original Willow Oaks Loan Documents), closing costs and expenses associated therewith, future working capital and operating expenses, distributions to any direct or indirect owners of Borrowers and any other lawful uses to be determined by Borrower. All advances to repay the Original One Meadowlands Loan, the Original 100-200 Campus Drive Loan and the Original Willow Oaks Loan made hereunder, as well as all other advances on the Loan governed by this Agreement, shall be evidenced by the Notes executed pursuant hereto and governed by the Loan Documents executed in connection herewith. Following the first disbursement of the Loan hereunder, the Original One

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Meadowlands Loan Agreement and the other Original One Meadowlands Loan Documents and the Original Willow Oaks Loan Agreement and the other Original Willow Oaks Loan Documents and the Original 100-200 Campus Drive Loan Agreement and the Original 100-200 Campus Drive Loan Documents shall be deemed to be superseded and replaced in their entirety by this Agreement and the other Loan Documents executed in connection herewith, and the Loan being made pursuant hereto shall be evidenced and governed by this Agreement and the other Loan Documents executed in connection herewith (and not by any of the Original One Meadowlands Loan Documents, the Original Willow Oaks Loan Documents or the Original 100-200 Campus Drive Loan Documents.

2.12Successful Syndication. It shall be a condition to the closing of the Loan, and of any obligations of Agent and U.S. Bank under this Agreement and the other Loan Documents, that Agent shall have successfully syndicated with Lenders under this Agreement commitments to make Advances under this Agreement in an aggregate amount of not less than Two Hundred Thirty-Five Million Dollars (235,000,000), with U.S. Bank retaining no more than a commitment of One Hundred Thirty-Five Million Dollars ($135,000,000), and other Lenders having committed to not less than One Hundred Million Dollars ($100,000,000).

Notwithstanding anything stated to the contrary in this Article II and/or in Article III herein or elsewhere in this Agreement, the initial funding of the Loan and/or recordation of the Deeds of Trust shall be deemed a confirmation by Agent and the Lenders that all conditions precedent to the funding of the Initial Advance as set forth in this Article II have been satisfied or waived for all purposes, including for purposes of making of any Additional Advances under Article III (except as otherwise expressly reserved by Agent in a writing delivered to Borrower prior to the closing of the Loan).

III. ADVANCES OF LOAN PROCEEDS

3.1General. Subject to the terms and conditions set forth in this Agreement, each Lender shall, pro rata according to such Lender's Commitment Percentage of the Committed Amount, make advances to Borrower in such amounts as Borrower may request in accordance with the terms of this Agreement. All monies advanced by Agent and the Lenders (including amounts payable to Agent and the Lenders and advanced by Agent and the Lenders to themselves pursuant to the terms hereof) shall constitute loans made to Borrower under this Agreement, evidenced by the Note and this Agreement and secured by the other Loan Documents, and interest shall be computed thereon, as prescribed by this Agreement and the Note, from the date Borrower's Loan account is charged with the amount of the advance, whether or not an advance made to the Title Company is fully disbursed by the Title Company or is withheld in full or in part.

No advance shall constitute a waiver of any condition precedent to the obligation of the Lenders to make any further advance or preclude Agent from thereafter declaring the failure of Borrower to satisfy any such condition precedent to be an Event of Default. All

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conditions precedent to the obligation of the Lenders to make any advance are imposed hereby solely for the benefit of Agent and the Lenders, and no other party may require satisfaction of any such condition precedent or shall be entitled to assume that Agent and the Lenders will make or refuse to make any advance in the absence of strict compliance with such condition precedent.

Agent may, at Agent's option, without any obligation to do so, advance to Agent and/or Lenders from the proceeds of the Loan all other sums due or to become due Agent and/or Lenders under this Agreement, under any Swap Contract entered into with Borrower or under any of the other Loan Documents, including but not limited to their fees, attorneys' fees, Appraisal fees, internal Appraisal review and other fees, administrative fees and expenses, syndication and transfer costs, and all other out-of-pocket expenses incurred by Agent in connection with this Agreement and with the Loan. Agent shall also have the right, but not the obligation, to advance and directly apply the proceeds of the Loan to the satisfaction of any of Borrower's other obligations hereunder, under any Swap Contracts entered into with Borrower or under any of the other Loan Documents.

In no event shall Agent and Lenders have any obligation to make any advance if the requested advance, plus the sum of all outstanding advances, would exceed the then current Availability Amount.

3.2Inspections. Agent, the Title Company, Consultants and their representatives shall have access to the Properties at all reasonable times and upon not less than twenty four hours prior notice, and shall have the right to enter any Property and to conduct such inspections thereof at their sole cost and expense, and subject to the rights of tenants under their leases, provided if an Event of Default exists, such inspection shall be at Borrower's expense, as they shall deem necessary or desirable for the protection of the interests of Agent and the Lenders.

3.3Responsibility of Agent and the Lenders. It is expressly understood and agreed that neither Agent nor the Lenders assume any liability or responsibility for protection of the Properties, for any representations made by Borrower, or for any acts on the part of Borrower to be performed under the Loan Documents.

3.4    [Intentionally Deleted].

3.5Initial Advance and Additional Advances. Provided that all of the terms and conditions precedent set forth in Article II above and this Article III (including without limitation Section 3.6 below) shall have been satisfied or deemed satisfied as provided in Article II above, Lenders shall make the Initial Advance of the Loan in the amount of $141,000,000 from the Non-revolving Portion and $ 0 from the Revolving Portion (collectively, the "Initial Advance") to or for the benefit of Borrower. At any time from and after the Closing Date through the date that is sixty (60) days prior to the initial Maturity Date (or to the date that is sixty (60) days prior to the applicable extended Maturity Date if Borrower exercises one or both of its extension options pursuant to the provisions of Section 1.4 herein) (the "Availability Period"), provided that all of the terms and conditions set forth in this Article III have been satisfied (or deemed satisfied) or waived, Borrower shall have the right to request and receive additional advances of the Loan (each, an "Additional Advance") in an amount not to exceed the then existing Availability Amount. Whenever Borrower desires to obtain an advance of

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Loan proceeds, Borrower shall submit a signed Draw Request, in the form attached hereto as Exhibit J, to Agent at least two (2) business days prior to the date on which the requested advance is to be made ("Advance Date"). The funding of any Additional Advance shall be subject to the satisfaction of the following additional conditions:

(a)    If requested by Agent in connection with any advance, Borrower shall provide to Agent one or more endorsements (to the full extent available) to and continuation of each Title Policy, showing that there have been no mechanic's or materialmen's liens or other liens filed since the date of the issuance of such Title Policy, ensuring that each Additional Advance shall be secured by the Deeds of Trusts in a first lien position, subject to no other liens or title exceptions, other than the Permitted Encumbrances, and/or updating the effective date of each Title Policy to the relevant Advance Date, which endorsements shall be provided at Borrower's expense. If any liens or other matters, which in Agent's good faith reasonable judgment jeopardize or otherwise impair its security interest (and/or the first priority thereof) in any Property, are disclosed by said endorsement and continuation or are in any other manner discovered by the Title Company or Agent, no further advances shall be made until such liens or other matters have been waived by Agent or satisfied in a manner acceptable to Agent. Upon written demand of Agent, Borrower shall immediately cause any such liens or other matters to be satisfied or released, of record, or bonded around and removed from the Property encumbered thereby or affirmatively insured over by the Title Company to Agent's satisfaction, or shall make other arrangements with respect to the discharge thereof and the releases thereof from the Property encumbered thereby as are acceptable to Agent, in its reasonable discretion.

(b)    No Event of Default (or event that with the giving of notice and/or the passage of time could become an Event of Default) shall have occurred and be continuing. In no event shall Agent be required to make any advance unless, at the time of the advance, there shall exist no Event of Default hereunder (or event that with the giving of notice and/or the passage of time could become an Event of Default), and all representations and warranties made herein shall be true and correct in all material respects on and as of each Advance Date with the same effect as if made on that date.

(c)    Unless otherwise agreed by Agent, Borrower shall not be entitled to more than two (2) disbursements of Loan proceeds per month.

(d)    Each Advance under the Loan must be for at least Two Hundred Fifty Thousand Dollars ($250,000), or for the amount of the remaining available Committed Amount if less.

(e)    In no event shall Agent and Lenders have any obligation to make any advance if the requested advance, plus the sum of all the previous advances, would exceed the then existing Availability Amount.

3.6Additional Conditions to Each Disbursement. In addition to all other conditions and requirements set forth in this Agreement and any of the other Loan Documents, Agent may require that each of the following conditions be satisfied (or deemed satisfied or waived as provided in Article II herein) with respect to each disbursement of Loan proceeds:

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(a)    As of the date of each disbursement, no suit or proceeding at law or in equity, and no investigation or proceeding of any governmental body, has been instituted or, to the knowledge of Borrower, has been threatened, which in either case would substantially, negatively affect the condition or business operations of Borrower or the Property.

(b)    As of the date of each disbursement, no default or Event of Default under this Agreement or under any of the other Loan Documents shall have occurred and be continuing, and no event shall have occurred which, upon the service of notice and/or the lapse of time, would constitute an Event of Default thereunder.

(c)    As of the date of each disbursement, the representations and warranties set forth in Article IV of this Agreement shall each be true and correct in all material respects as of the date of each disbursement.

(d)    Agent shall have determined, in its reasonable discretion, that immediately following the requested disbursements of Loan proceeds, the outstanding principal amount of the Loan would not exceed the Availability Amount.

IV.REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants to Agent and the Lenders that, except as disclosed by Borrower to Agent in writing:

4.1Legal Status of Borrower. Each Borrower is a limited liability companyduly formed, validly existing and in good standing under the laws of the State of Delaware and is duly registered and qualified to transact business in, and is in good standing under the laws of, the state in which the Property it owns is located, and has all power, authority, permits, consents, authorizations and licenses necessary to carry on its business, to construct, equip, own and operate such Property and to execute, deliver and perform this Agreement and the other Loan Documents; all consents of the members of each Borrower necessary to authorize the execution, delivery and performance of this Agreement and of the other Loan Documents which have been or are to be executed by and on behalf of each Borrower have been duly obtained and are in full force and effect; this Agreement and such other Loan Documents have been duly authorized, executed and delivered by and on behalf of each Borrower so as to constitute this Agreement and such other Loan Documents the valid and binding obligations of each Borrower, enforceable in accordance with their terms; and each Borrower has complied with all applicable assumed and/or fictitious name requirements of the state in which it is organized and of the state in which the Property it owns is located, if different.

4.2Title. Each Borrower is the owner, in fee simple, of one of the Properties (or, if approved by Agent and Lenders with respect to an Additional Property, the owner of a valid leasehold estate in such Additional Property), subject to no lien, charge, mortgage, deed of trust, restriction or encumbrance, except Permitted Encumbrances.

4.3No Breach of Applicable Agreements or Laws. The consummation of the transactions contemplated hereby and the execution, delivery and/or performance of this Agreement and the other Loan Documents will not result in any breach of or constitute a default under any mortgage, deed of trust, lease, bank loan, credit agreement, or other instrument or

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violate any Governmental Requirements, to which any Borrower or Guarantor is a party, or by which any Borrower or Guarantor may be bound or affected.

4.4No Litigation or Defaults. To the knowledge of Borrower, there are no actions, suits or proceedings pending or threatened in writing against any Borrower, Guarantor or any Property, or involving the validity or enforceability of the Loan Documents or the priority of the lien thereof, at law or in equity; and no Borrower or Guarantor is in default under any order, writ, injunction, decree or demand of any court or any administrative body having jurisdiction over such Borrower or Guarantor.

4.5Financial and Other Information. The financial statements of each Borrower and Guarantor previously or hereafter delivered to Agent fairly and accurately present, or will fairly and accurately present, the financial condition of such Borrower and Guarantor as of the dates of such statements, and neither this Agreement nor any document, financial statement, financial or credit information, certificate or statement referred to herein or furnished to Agent by Borrower or Guarantor contains, or will contain, any untrue statement of a material fact or omits, or will omit, a material fact, or is or will be misleading in any material respect.

4.6No Defaults under Loan Documents or Other Agreements. There is, and, until the Lenders have been fully repaid the entire indebtedness evidenced or to be evidenced by the Note, there will be, no default or Event of Default on the part of any Borrower or Guarantor under the Loan Documents or under any other document to which any Borrower or Guarantor is a party and which relates to the ownership, occupancy, use, development, construction or management of any Property; and no Borrower or Guarantor is in default or will be in default in the payment of the principal or interest on any of its indebtedness for borrowed money, and no Borrower or Guarantor is, or will be, in default under any instrument or agreement under and subject to which any indebtedness for borrowed money has been issued or is secured; and no event has occurred, or will occur, which, with the lapse of time or the giving of notice or both, would constitute a default thereunder.

4.7Boundary Lines; Conformance with Governmental Requirements and Restrictions. The exterior lines of the Improvements are, and at all times will be, within the boundary lines of the Land pertaining thereto (except as specifically disclosed on the survey(s) delivered to Agent), and Borrower has examined and is familiar with all applicable covenants, conditions, restrictions and reservations, and with all applicable Governmental Requirements, including but not limited to building codes and zoning, environmental, hazardous substance, energy and pollution control laws, ordinances and regulations affecting each Property, and each Property will conform to and comply in all material respects with said covenants, conditions, restrictions, reservations and Governmental Requirements.

4.8Utilities, Etc. Telephone services, gas, electric power, storm sewers, sanitary sewer and water facilities are available to the boundaries of each Property, adequate to serve the Property and not subject to any conditions (other than normal charges to the utility supplier) which would limit the use of such utilities. All streets and easements necessary for operation of each Property are available to the boundaries of the Property.

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4.9Personal Property. Each Borrower is now and shall continue to be the sole owner of the Equipment pertaining to its Property, free from any lien, security interest or adverse claim of any kind whatsoever, except for liens or security interests in favor of Agent, the interest of a lessor pursuant to a lease of personal property approved by Agent, in Agent's sole discretion, or liens or security interests otherwise approved by Agent in Agent's sole discretion.

4.10Condemnation. To Borrower's knowledge, no condemnation proceeding or moratorium is pending or threatened against any Property which would impair the construction, use, sale or occupancy of such Property (or any portion thereof) in any manner whatsoever.

4.11Governmental Regulations. No Borrower is subject to regulation under the Investment Company Act of 1940, the Federal Power Act, the Public Utility Holding Company Act of 1935, the Interstate Commerce Act or any federal or state statute or regulation limiting its ability to incur indebtedness for money borrowed.

4.12Employee Benefit Plans. No Borrower maintains any pension, retirement or profit sharing employee benefit plan that is subject to any provision of the Employee Retirement Income Security Act of 1974, as amended from time to time.

4.13Brokers. There are no brokerage commissions or finders' fees due or claimed by any party to be due in connection with or with respect to the transaction contemplated hereby.

4.14Defects and Hazards. To Borrower's knowledge, Borrower does not know of any defects, facts or conditions affecting the Land that would make it unsuitable for the use contemplated hereunder or of any abnormal hazards (including earth movement or slippage) affecting the Land.

4.15Permits. To Borrower's knowledge and except as disclosed in any zoning reports obtained by Agent (if any), each Borrower has obtained all permits for the Improvements, annexation agreements, plot plan approvals, subdivision approvals (including the approval and recordation of any required subdivision map), environmental approvals (including a negative declaration or an environmental impact report if required under applicable law), sewer and water permits and zoning and land use entitlements necessary for the operation of such Borrower's Property.

4.16No Consumer Purpose. Borrower represents and warrants that the Note evidences a business loan and that no portion of the proceeds of the Loan evidenced by the Note will be used by any Borrower for family or household purposes.

THE WARRANTIES AND REPRESENTATIONS IN THIS ARTICLE IV, AND ANY ADDITIONAL WARRANTIES AND REPRESENTATIONS CONTAINED HEREIN AND IN THE OTHER LOAN DOCUMENTS, SHALL BE DEEMED TO HAVE BEEN RENEWED AND RESTATED BY BORROWER EACH TIME BORROWER SUBMITS A REQUEST FOR AN ADDITIONAL ADVANCE TO AGENT OR DELIVERS A QUARTERLY CERTIFICATE TO AGENT PURSUANT TO SECTION 5.4, SUBJECT TO THE QUALIFICATIONS AS TO SUCH REPRESENTATIONS AND WARRANTIES CONTAINED THEREIN (PROVIDED, FOR PURPOSES OF CLARIFICATION, THIS SHALL IN NO EVENT PREVENT AGENT AND LENDERS FROM EXERCISING THEIR

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RIGHTS AND REMEDIES UNDER THIS AGREEMENT IN ACCORDANCE WITH SECTION 5.12 AND SECTION 6.1 OF THIS AGREEMENT IF AT ANY TIME AGENT OR LENDERS DETERMINE THAT A REPRESENTATION OR WARRANTY IS NOT TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS).

V. COVENANTS OF BORROWER

While this Agreement is in effect, and until the Lenders have been paid in full the principal of and interest on all advances made by the Lenders hereunder and under the other Loan Document, Borrower hereby covenants as set forth in this Article V:

5.1Paying Costs of Property and Loan. Borrower shall pay and discharge, when due, all taxes, assessments and other governmental charges upon each Property, as well as all claims for labor and materials which, if unpaid, might become a lien or charge upon any Property; provided, however, that Borrower shall have the right to contest the amount, validity and/or applicability of any of the foregoing with respect to any Property in strict accordance with the terms of the Deed of Trust encumbering such Property.

Borrower shall also pay all costs and expenses of Agent (but not any of the other Lenders) and Borrower in connection with each Property, the preparation and review of the Loan Documents and the making, closing, administration and repayment of the Loan, including, but not limited to, the fees of Agent's attorneys (which shall be limited to reasonable attorneys' fees), appraisal fees, environmental fees, survey and title search fees, title insurance costs, disbursement expenses, and all other costs and expenses payable to third parties incurred by Agent or Borrower in connection with the Loan. Without limiting the foregoing, Borrower shall pay all reasonable fees, charges and disbursements of outside counsel for Agent (determined on the basis of such counsel's generally applicable rates) and/or the allocated costs of in-house counsel incurred from time to time. Such costs and expenses shall be so paid by Borrower whether or not the Loan is fully advanced or disbursed.

5.2Using Loan Proceeds. Borrower shall use the Loan proceeds only for investments in commercial real estate and for other business and investment purposes (which shall include distributions to its members when such distributions are permitted under the terms and conditions of this Agreement), and in no event shall Borrower use the proceeds of the Loan for family or household purposes. Borrower agrees not to permit, at any time, the outstanding principal balance of the Loan to exceed the Committed Amount (as it may be reduced hereunder), and if Agent determines at any time that the outstanding principal balance of the Loan exceeds the Committed Amount, Borrower shall immediately pay to Agent upon demand by Agent, an amount sufficient to reduce the outstanding principal balance of the Loan to an amount equal to or less than the then existing Committed Amount. Borrower's failure to comply with this Section shall constitute an immediate Event of Default under the Loan Documents.

5.3Keeping of Records. Borrower shall set up and maintain accurate and complete books, accounts and records pertaining to each Property in a manner reasonably acceptable to Agent. Borrower will permit representatives of Agent to have free access to and to inspect and copy all books, records and contracts of Borrower. Any such inspection by Agent and/or its

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Consultants shall be for the sole benefit and protection of Agent and the Lenders, and Agent shall have no obligation to disclose the results thereof to Borrower or to any third party.

5.4Providing Financial Information. Beginning with the quarter ending March 31, 2013, Borrower shall furnish to Agent (a) evidence of payment of real estate taxes assessed against each Property on or before each due date thereof during the term of the Loan, (b) annual unaudited financial statements for each Borrower and Guarantor within one hundred twenty (120) days of each fiscal year end, including balance sheets, income statements, a statement of cash flow and supporting schedules reasonably requested by Agent, (c) quarterly unaudited financial statements for each Borrower and Guarantor, within forty-five (45) days of each fiscal quarter end (except for the fiscal quarters ending December 31, for which such statements shall be delivered within one hundred twenty (120) days of each December 31), including balance sheets and income statements, and at Agent's request, a statement of funds available for distribution and a supplementary real estate schedule (including, when applicable, covenant compliance certificates from Guarantor in form and substance satisfactory to Agent with respect to Guarantor's financial covenants set forth in the Guaranty), (d) to the extent there is a balance outstanding under the Loan during such period, a quarterly certification statement and Availability Amount calculation within forty-five (45) days of each fiscal quarter end, (except for the fiscal quarters ending December 31, for which such statements shall be delivered within one hundred twenty (120) days of each December 31), including Borrower's Borrowing Base Amount calculation, in form and substance satisfactory to Agent, and (e) such additional information as Agent shall reasonably request (not more than once per month) regarding any Borrower, Guarantor and any Property, within thirty (30) days (or such reasonably necessary time period as may be required by Borrower or Guarantor) after Agent's written request therefor. All such financial statements shall be in reasonable detail, shall be prepared in accordance with GAAP, and shall be certified by the party to which they apply as true, correct and complete.

5.5Providing Operating Budgets and Operating Statements. Borrower shall deliver to Agent within forty-five (45) days after the end of each fiscal quarter (except for the fiscal quarters ending December 31, for which such statements shall be delivered within one hundred twenty (120) days of each December 31) (or, upon Agent's written request, within thirty (30) days after the end of the applicable month, and not more frequently than once per calendar month), a Borrower prepared Operating Statement and rent roll for each Property for the preceding calendar quarter, which shall specifically note all material variations from such Property's current Operating Budget. Borrower shall also deliver to Agent an annual Operating Statement and rent roll for each Property within one hundred twenty (120) days following the end of each fiscal year. All such Operating Statements shall be certified as true, correct and complete by Borrower.

5.6Providing Leasing Information. Borrower shall provide a leasing status report for each Property within forty-five (45) days of the end of each fiscal quarter (except for the fiscal quarters ending December 31, for which such statements shall be delivered within one hundred twenty (120) days of each December 31) (or, upon Agent's request, thirty (30) days following the end of the applicable month).

5.7Maintaining Insurance Coverage. Borrower shall, at all times until all Obligations have been fully repaid, maintain, or cause to be maintained, in effect (and shall

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furnish to Agent copies of), insurance policies or insurance certificates, as required under the terms of Exhibit G attached hereto, and shall furnish to Agent on an annual basis with proof of payment of all premiums therefor within thirty (30) days of payment.

5.8Complying with Other Documents. Borrower shall comply with and perform all of its agreements and obligations under all other contracts and agreements to which any Borrower is a party relating to the ownership, occupancy, use, development, construction or management of the Properties to the extent, at such time, a reasonably prudent owner of commercial property would do so, and shall comply with all requests by Agent which are consistent with the terms thereof.

5.9Lease Approval Rights. Except as specified below, Borrower shall not enter into, amend or modify any lease covering any portion of any Property without Agent's prior written consent, in Agent's reasonable discretion, and shall furnish to Agent, upon execution, a fully executed copy of each such lease entered into by Borrower, together with all exhibits and attachments thereto and all amendments and modifications thereof. For leases that require Agent approval, Borrower shall provide Agent with a copy of the Letter of Intent ("LOI") for each proposed lease and, to the extent available, with financial information on the proposed tenant to aid Agent in determining whether it will consent thereto. Agent may declare any future leases with key tenants at any Property to be prior or subordinate to the Deed of Trust encumbering such Property, at Agent's sole option, and Borrower shall use commercially reasonable efforts to obtain SNDAs to achieve such subordination. A proposed LOI shall be deemed approved by Agent unless Agent disapproves such LOI in writing within five (5) Business Days after such LOI is submitted to Agent for approval.  Upon approval (or deemed approval) of the LOI, no further approval will be required by Agent and Agent will have granted its consent to the lease that results from the LOI so long as such lease is on a lease form approved by Agent (which lease form may be modified to address customary lease modifications in the marketplace), and the business terms in the lease are not materially different from the terms outlined in the approved (or deemed approved) LOI.

Notwithstanding the first sentence of this Section 5.9, with respect to Qualifying Leases (as defined below), Borrower shall not be obligated to obtain Agent's prior written consent so long as such lease (i) is on a lease form approved by Agent (which lease form may be modified to address customary lease modifications in the marketplace); (ii) the net effective rent payable under such lease is equal to or in excess of 85% of market rents at the time the lease is executed; and (iii) the term for such lease is equal to or greater than 1-year.

Borrower shall use commercially reasonable efforts to obtain SNDAs and estoppel statements, in form and substance reasonably satisfactory to Agent, as to those leases and tenants requested by Agent, within thirty (30) days of Agent's request.

For purposes of this Section 5.9, "Qualifying Lease" shall mean a lease for less than 50,000 square feet.

5.10Compliance with Laws. Borrower will comply and, to the extent it is able, will cause others to comply with all laws and requirements of Governmental Authorities having jurisdiction over the processing, approving and recording of any subdivision map, any of the

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Land or construction or sale of any of the Improvements and will furnish Agent with reports of any official searches for violation of any requirements established by such Governmental Authorities. Borrower will use commercially reasonable efforts to comply and, to the extent it is able, will use commercially reasonable efforts to cause others to comply with all restrictive covenants and all obligations created by private contracts and leases which affect ownership, construction, equipping, fixturing, use, occupancy, sale or leasing of each Property (or any portion thereof). Each Property and the leasing and sale thereof shall be in compliance with all permits and approvals issued by Governmental Authorities with respect to such Property, applicable building, zoning and use laws, requirements, regulations and ordinances and such leasing and sale will not violate any restrictions of record against such Property. Borrower will deliver to Agent, promptly after receipt thereof, copies of all permits and approvals received from Governmental Authorities relating to the use, development, leasing and/or sale of the Improvements for each Property.

5.11Ownership of Personal Property. Each Borrower is, and after the date hereof, will be the sole owner of all Equipment pertaining to such Borrower's Property, free from any adverse lien, security interest or adverse claim of any kind whatsoever, except for security interests and liens in favor of Agent and other liens approved by Agent, in Agent's sole discretion. Borrower will not convey or transfer any portion of the Equipment without the prior written consent of Agent.

5.12Representations and Warranties. Until repayment of the Note and all other obligations secured by the Deeds of Trust, Borrower shall ensure that the representations and warranties of Article IV remain true and complete in all material respects, provided Agent shall not declare an Event of Default based solely on a breach of this covenant unless Agent reasonably determines that such breach (a) would have a material adverse effect on any Property, any Borrower and/or Guarantor or (b) was intentional.

5.13Trade Names. Borrower shall immediately notify Agent in writing of any change in the jurisdiction of organization or place of business of, or the change in the legal, trade or fictitious business names used by, any Borrower, any of its constituent members or Guarantor, and Agent is hereby authorized to file or record any additional financing statements, amendments and other certificates necessary to reflect any such changes.

5.14No Distributions. If an Event of Default exists and is continuing, no Borrower will, without the prior written consent of Agent in its sole discretion, make any distribution of assets to any member in any Borrower, whether or not such a distribution is permitted under the terms of such Borrower's limited liability company agreement, including repayment of any loans made by a member in any Borrower to such Borrower, return of capital contributions, distributions upon termination, liquidation or dissolution of such Borrower or any development, property management, accounting or other fees payable to a member in such Borrower (unless any such fee has been approved by Agent, in Agent's sole discretion).

5.15Future Development. Borrower shall not undertake any on-site construction, demolition or rehabilitation work at any Property (other than tenant improvements under leases approved by Agent or under leases which do not require Agent's consent and capital

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improvements on the Properties done in the ordinary course of business) without the prior written consent of Agent, which consent shall not be unreasonably withheld or delayed.

5.16Further Assurances. Borrower shall execute and deliver from time to time, promptly after any request therefore by Agent, any and all instruments, agreements and documents and shall take such other action as may be necessary or desirable in the opinion of Agent to maintain, perfect or insure Agent's security provided for herein and in the other Loan Documents, including the filing or recording of UCC renewal statements or amendments, the execution of such amendments to the Deeds of Trust and the other Loan Documents and the delivery of such endorsements to the Title Company, all as Agent reasonably requires, and shall pay all fees and expenses (including reasonable attorneys' fees) related thereto or incurred by Agent in connection therewith.

5.17Notice of Litigation, Etc.. Promptly upon receiving notice thereof, Borrower will give, or cause to be given, prompt written notice to Agent of (a) any action or proceeding instituted by or against any Borrower or Guarantor in any federal or state court or before any commission or other regulatory body, Federal, state or local, foreign or domestic; or (b) any such proceedings that are threatened against any Borrower, or Guarantor which, if adversely determined, could have a material and adverse effect upon any Borrower's or Guarantor's businesses, operations, properties, assets, managements, natures of ownership or conditions (financial or otherwise) or which would constitute an event of default or a default under any other contract, instrument or agreement to which any of them is a party or by or to which any of them or any of their properties or assets may be bound or subject; or (c) any actions, proceedings or notices materially adversely affecting any Property (or any portion thereof) or Agent's interest therein or any zoning, building or other municipal officers, offices or departments having jurisdiction with respect to any Property or the leasing of it.

5.18USA Patriot Act Compliance Covenant. No Borrower or Guarantor, and no Affiliate or agent of any Borrower or Guarantor shall (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person; (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224; or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224, the USA Patriot Act of 2001 (Public Law 107-56) (the "USA Patriot Act") or any other Anti-Terrorism Law.  Borrower shall deliver to Agent any certification or other evidence requested from time to time by Agent in its sole discretion, confirming Borrower's compliance with this Section. For the purposes of this Section, (1) "Blocked Person" shall mean (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (iii) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a Person that commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order No. 13224; (v) a Person that is named as a "specially designated national" on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement

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official publication of such list; or (vi) a Person who is affiliated or associated with a person or entity listed above and (2) "Anti-Terrorism Laws" shall mean any laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the laws comprising or implementing the Bank Secrecy Act, and the Law administered by the United States Treasury Department's Office of Foreign Asset Control (as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced).

5.19Maintenance of Existence. Borrowers, Guarantor and their respective constituent members each shall maintain and preserve its existence and all rights and franchises material to its business.

5.20Borrower Operating Account. Borrower shall at all times maintain the Borrower Operating Account described in Section 2.8 with Agent.

5.21Single Purpose Entity Provisions. Each Borrower's sole business purpose shall be to own, finance and operate a Property and to take such other actions as are ancillary thereto. Each Borrower (i) shall conduct business only in its own name and under any trade name for the Improvements, (ii) shall not engage in any business or have any assets unrelated to its Property, (iii) shall not have any indebtedness other than as permitted by this Agreement or except as permitted in writing by Agent, (iv) shall have its own separate books, records, and accounts (with no commingling of assets), (v) shall hold itself out as being an entity separate and apart from any other person or entity, (vi) shall observe limited liability companyformalities independent of any other entity, and (vii) shall not change its name, identity, or organizational structure, unless Borrower shall have obtained the prior written consent of Agent to such change, and shall have taken all actions necessary or requested by Agent to file or amend any financing statement or continuation statement to assure perfection and continuation of perfection of security interests under the Loan Documents.

5.22No Other Debt. Without Agent's written consent, no Borrower shall incur any other indebtedness, whether secured or unsecured, other than the Loan, trade debt and other expenditures contemplated under this Agreement (including payment of taxes, insurance, tenant improvements and capital expenditures) reasonably incurred in the ordinary course of operating such Borrower's Property (all of which are debts which are expressly permitted under the Loan Documents); provided that the foregoing shall not be deemed to prohibit up to $1,000,000 in the aggregate at each Property owing under equipment leases for equipment to be used by Borrowers in connection with the Properties; and provided further, however, that in no case may such leased equipment be incorporated into any Improvements as part of the structure thereof or otherwise installed as part of any Improvements in such a way that the removal thereof would result in material damage to such Improvements.

5.23Minimum Required Debt Service Coverage Ratio. Subject to the immediately following sentence, commencing on the March 31, 2013 reporting period, Borrower shall maintain a Debt Service Coverage Ratio of not less than the Minimum Borrowing Base DSCR tested as of the end of each calendar quarter, on the extension of the Maturity Date under Section 1.4, and upon the occurrence of any Event of Default (each a "DSCR Testing Date") during the term of the Loan and, only for the purposes of determining whether the applicable disbursement condition has been met, in connection with any Draw Request. Notwithstanding the foregoing,

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so long as no Event of Default exists, if at the end of any calendar quarter (or on any other DSCR Testing Date), Agent determines that the Debt Service Coverage Ratio is equal to or greater than 1.10 to 1.0 but less than the Minimum Borrowing Base DSCR ("Temporary Permitted Debt Service Coverage Ratio"), Borrower shall have two (2) calendar quarters following the applicable DSCR Testing Date (the "Compliance Period") to cause the Debt Service Coverage Ratio to be equal to or greater than the Minimum Borrowing Base DSCR. If Agent or Borrower determines that the Debt Service Coverage Ratio (i) as of any DSCR Testing Date is less than 1.10 to 1.00 or (ii) at any time is within the Temporary Permitted Debt Service Coverage Ratio and the applicable Compliance Period has expired, Borrower shall, within 45 days of demand by Agent, pay down the outstanding principal amount of the Loan by an amount (as reasonably determined by Agent but without paying any prepayment or exit fees other than Interest Differential amounts and sums owing under Section 1.10, and Swap Contract fees or breakage amounts) sufficient to cause the Debt Service Coverage Ratio to be equal to or greater than the Minimum Borrowing Base DSCR.

5.24Affiliate Transactions. No Borrower shall engage in any transaction affecting any Property with an Affiliate of any Borrower or of Guarantor unless (a) the Affiliate is either a taxable REIT subsidiary of Parent REIT or KBS Capital Advisors LLC, (b) the terms are commercially reasonable and Borrower's payment terms thereunder are competitive with amounts that would be paid to or received from third parties on an "arm's-length" basis, (c) the terms are reduced to a writing covering all material aspects of such arrangement, and (d) the agreement with the Affiliate is terminable without cause by Borrower or Agent, without penalty or fee, upon thirty (30) days' prior written notice.

5.25Borrower and Guarantor Covenants. Borrower shall cause Guarantor to comply with the financial covenants set forth in Section 13 of the Guaranty. Failure to comply with this Section 5.25 shall constitute an immediate Event of Default hereunder.

5.26EIN. Each Borrower's U.S. employer identification number is set forth on Exhibit K attached hereto.

VI. DEFAULTS

6.1Events of Default. Any of the following events shall constitute an Event of Default under this Agreement:

(a)    Borrower shall fail to make payment of principal within three (3) business days after the same becomes due according to the terms hereof or of any Note.

(b)    Borrower shall fail to make payment of interest on advances made by Agent or Lenders, or fail to pay any fees or other amounts payable to Agent or Lenders, hereunder, under any Note or under any of the other Loan Documents within three (3) business days after the same becomes due.

(c)    Any Borrower or Guarantor shall fail to perform or observe any obligation or covenant (other than those obligations and covenants described in subparagraphs (a) and (b), above, or otherwise set forth in subparagraphs (d) through (l), below, of this Section 6.1) under this Agreement or any other Loan Document within thirty (30) days after receipt of written

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notice that such obligation was not performed; provided that, if cure cannot reasonably be effected within such 30-day period, such failure shall not be an event of default hereunder so long as Borrower or Guarantor, as applicable, promptly (in any event, within ten (10) days after receipt of such notice) commences cure, and thereafter diligently (in any event, within sixty (60) days after receipt of such notice) prosecutes such cure to completion; and provided further, however, that notwithstanding the 30-day cure period or extended cure period described above in this subparagraph (c), if a different notice or cure period is specified under any Loan Document or under any provision of the Loan Documents as to any such failure or breach, the specific Loan Document or provision shall control, and Borrower and Guarantor, as applicable, shall have no more time to cure the failure or breach than is allowed under the specific Loan Document or provision as to such failure or breach.

(d)    Any representation or warranty made by any Borrower in this Agreement, in any of the other Loan Documents, or in any certificate or document furnished under the terms of this Agreement or in connection with the Loan, shall be untrue or incomplete in any material respect provided, to the extent curable and to the extent Agent determines a breach was not intentional, Borrower shall have thirty (30) days to remedy the untrue or incomplete representation, warranty, document or other material (so that it is true and complete in all material respects), before such event constitutes an Event of Default hereunder.

(e)    Any Borrower shall be in default under the terms of any of the other Loan Documents beyond any applicable grace or cure period specified therein, and such default shall not be waived by Agent, or an Event of Default shall exist under the terms of any such instrument.

(f)    Any Borrower or Guarantor shall apply for, consent to or permit the appointment of a receiver, custodian, trustee or liquidator for it or any of its property or assets; or shall fail to, or admit in writing its inability to, pay its debts as they mature; or shall make a general assignment for the benefit of creditors or shall be adjudicated bankrupt or insolvent; or shall take other similar action for the benefit or protection of its creditors; or shall give notice to any governmental body of insolvency or pending insolvency or suspension of operations; or shall file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors, or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, rearrangement, dissolution, liquidation or other similar debtor relief law or statute; or shall file an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or statute; or shall be dissolved, liquidated, terminated or merged; or shall effect a plan or other arrangement with creditors; or a trustee, receiver, liquidator or custodian shall be appointed for it or for any of its property or assets and shall not be discharged within ninety (90) days after the date of his appointment; or a petition in involuntary bankruptcy or similar proceedings is filed against it and is not dismissed within ninety (90) days after the date of its filing.

(g)    Any of the Guaranty or the Environmental Indemnity, at any time and for any reason ceases to be in full force and effect, or Guarantor or indemnitor contests or denies the validity or enforceability of the Guaranty or the Environmental Indemnity, or gives notice to Agent to such effect, or otherwise attempts to revoke or repudiate any of the foregoing as to any existing or future obligations, or any Borrower has Guarantor as a general partner (or otherwise

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has a structure where Guarantor would be liable for such Borrower's obligations under the Loan Documents absent the Guaranty).

(h)    Any Borrower shall fail to maintain insurance as required by this Agreement (which, for purposes of clarification, shall not include the Environmental Insurance Policy, it being understood by the parties that termination of such Environmental Insurance Policy shall not be an Event of Default, or constitute a breached obligation under this Agreement, but instead shall only trigger liability of the Guarantor under the Guaranty for any amounts owing by Borrower under the Environmental Indemnity, as more fully set forth in the Guaranty) or shall fail to furnish to Agent proof of payment of all premiums for such insurance within five (5) business days following Agent's written request for same (provided that Borrower has received proof of such payment at the time Agent requests such proof).

(i)    A transfer, encumbrance, lien, change of ownership or other action or occurrence prohibited by any Deed of Trust shall occur (and all notice and cure periods, if any, have elapsed).

(j)    Guarantor shall fail to perform or observe or comply with any covenant, agreement or obligation set forth in Section 13 of Guaranty applicable to Guarantor.

(k)    Any Borrower fails at any time to satisfy or otherwise comply with (i) the terms, conditions and covenants set forth in (i) Section 5.2 or (ii) Section 5.23.

6.2Rights and Remedies. Upon the occurrence of an Event of Default, unless such Event of Default is subsequently waived in writing by Agent and Majority Lenders, Agent shall be entitled, at the option of Agent, to exercise any or all of the following rights and remedies, consecutively or simultaneously, and in any order:

(a)    Lenders may make one (1) or more further advances of Loan proceeds, without liability to make any subsequent advances thereof.

(b)    Lenders may suspend their obligation to make advances under this Agreement, without notice to Borrower.

(c)    Lenders may terminate their obligation to make advances under this Agreement, and Agent may declare the entire unpaid principal balance of the advances made under this Agreement to be immediately due and payable, together with accrued and unpaid interest on such advances, without notice to or demand on Borrower.

(d)    Agent may exercise any or all remedies specified herein and in the other Loan Documents, including (without limiting the generality of the foregoing) the right to foreclose the Deeds of Trust (or any of them), and/or any other remedies which it may have therefor at law, in equity or under statute.

(e)    Agent may cure the Event of Default on behalf of Borrower, and, in doing so, may enter upon the Properties, and may expend such sums as it may deem desirable, including attorneys' fees, all of which shall be deemed to be advances hereunder, even though

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causing the Loan to exceed the face amount of the Note, shall bear interest at the Default Rate and shall be payable by Borrower on demand.

VII. MISCELLANEOUS

7.1Binding Effect; Waivers; Cumulative Rights and Remedies. The provisions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, personal representatives, legal representatives, successors and assigns; provided, however, that neither this Agreement nor the proceeds of the Loan may be assigned by any Borrower voluntarily, by operation of law or otherwise, without the prior written consent of Agent. No delay on the part of Agent in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder constitute such a waiver or exhaust the same, all of which shall be continuing. The rights and remedies of Agent specified in this Agreement shall be in addition to, and not exclusive of, any other rights and remedies which Agent would otherwise have at law, in equity or by statute, and all such rights and remedies, together with Agent's rights and remedies under the other Loan Documents, are cumulative and may be exercised individually, concurrently, successively and in any order.

7.2Survival. All agreements, representations and warranties made in this Agreement shall survive the execution of this Agreement, the making of the advances by the Lenders, and the execution of the other Loan Documents, and shall continue until Agent on behalf of the Lenders receives payment in full of all indebtedness of Borrower incurred under this Agreement and under the other Loan Documents.

7.3Governing Law; Waiver of Jury Trial. This Agreement, the rights of the parties hereunder and the interpretation hereof shall be governed by, and construed in accordance with, the laws of the State of California in all respects. To the maximum extent permitted by applicable law, Borrower hereby waives any right to a trial by jury in any action relating to the Loan and/or the Loan Documents.

7.4Counterparts. This Agreement may be executed in any number of counterparts, all of which shall constitute a single Agreement.

7.5Notices. Any notice required or permitted to be given by either party hereto to the other under the terms of this Agreement, or documents related hereto, shall be deemed to have been given on the date the same is deposited in the United States Mail, registered or certified, return receipt requested, postage prepaid, addressed to the party to which the notice is to be given at the address set forth opposite its name below, or at any other address specified in a notice given by such party to the other not less than ten (10) days prior to the effective date of the address change.

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If to Borrower:	KBSII Willow Oaks, LLC c/o KBS Capital Advisors LLC 1909 K Street NW, Suite 340 Washington, DC 20006 Attention: Robin Burke KBSII 100-200 Campus Drive, LLC KBSII One Meadowlands, LLC c/o KBS Capital Advisors LLC 590 Madison Ave., 26th Floor New York, NY 10022 Attention: Randi Kaufman
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300  Newport Beach, CA 92660 Attention: Todd Smith
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300  Newport Beach, CA 92660 Attention: Jeff Waldvogel
With a copy to:	Greenberg Traurig, LLP 3161 Michelson Drive, Suite 1000 Irvine, CA 92612 Attention: Bruce Fischer, Esq.
If to Agent:	U.S. Bank National Association Commercial Real Estate 4100 Newport Place, Suite 900 Newport Beach, CA 92660 Attention: Loan Administration

7.6Agent's Sign. Agent may, if it so desires, publicize its involvement with the Properties, including, but not limited to, issuing press releases, but it may not place any signage on any Property without Borrower's prior written consent (which consent may be withheld, conditioned or delayed in Borrower's sole and absolute discretion).

7.7No Third Party Reliance. No third party shall be entitled to rely upon this Agreement or to have any of the benefits of Agent's and the Lenders' interest hereunder, unless such third party is an express assignee of all or a portion of the interest of Agent and/or any Lender hereunder.

7.8Time of the Essence. Time is of the essence hereof with respect to the dates, terms and conditions of this Agreement.

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7.9Entire Agreement; No Oral Modifications. This Agreement, the other Loan Documents and the other documents mentioned herein set forth the entire agreement of the parties with respect to the Loan and supersede all prior written or oral understandings and agreements with respect thereto. No modification or waiver of any provision of this Agreement shall be effective unless set forth in writing and signed by the parties hereto.

7.10Captions. The headings or captions of the Articles and Sections set forth herein are for convenience only, are not a part of this Agreement and are not to be considered in interpreting this Agreement.

7.11Joint and Several Liability. If Borrower consists of more than one (1) individual and/or entity, each of said individuals and/or entities shall be jointly and severally liable for each covenant, agreement, representation and warranty of Borrower hereunder.

7.12Borrower's Relationship with Agent and the Lenders. The relationship between Borrower, Agent and the Lenders created hereby and by the other Loan Documents shall be that of a borrower and a lender only, and in no event shall Agent and/or the Lenders be deemed to be a partner of, or a joint venturer with, any Borrower.

7.13Swap Transactions. Borrower may enter into one or more Swap Transactions and Swap Contracts with the Swap Counterparty on terms that are acceptable to Swap Counterparty in its sole discretion for the purpose of hedging and protecting against interest rate fluctuation risks with respect to the Loan. Upon the Maturity Date, or such earlier date that the Loan becomes due by reason of an Event of Default, or otherwise, or upon payment of the Loan in full, Agent may direct that all existing Swap Contracts be broken and discontinued, and any and all breakage fees, discontinuance fees, settlement obligations, and any and all other sums, fees and costs with respect to such Swap Transactions and Swap Contracts shall become due and payable by Borrower in accordance with the respective Swap Contract, with the Borrower as the sole defaulting party as contemplated by the Swap Contract. Unless otherwise specifically agreed in writing by Borrower, Agent and Swap Counterparty, Borrower's obligations (including any payment obligations) with respect to any such Swap Contracts provided by or entered into with Swap Counterparty (that is a Lender hereunder) with respect to the Loan shall be secured by the Deeds of Trust and all other collateral for the Loan, and any default by Borrower (after the expiration of any applicable notice and cure period) under any such Swap Contracts shall, at the discretion of the Agent, constitute an Event of Default under this Agreement. As additional security for the obligations of Borrower under the Loan Documents, Borrower hereby transfers, assigns, and conveys to Agent and grants to Agent a security interest in, subject to the terms and conditions contained herein, all of Borrower's present and future rights, titles and interests, but not its obligations, duties or liabilities for any breach, in, under and to all Swap Contracts and all Swap Transactions, any and all amounts received by Borrower in connection therewith or to which Borrower is entitled thereunder, and all proceeds of the foregoing. At Agent's option, if an Event of Default exists, all net amounts payable to Borrower under the Swap Contract shall be paid to Agent and shall be applied to pay interest or other amounts under the Loan. Borrower acknowledges and agrees that, notwithstanding the terms of the Swap Contract, Borrower shall not modify or terminate the Swap Contract without the prior written consent of Agent.

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Additionally, subject to the terms of the Swap Contract, if there is an uncured default under any Swap Contract, if an Event of Default exists, Agent shall have the right at any time (but shall have no obligation) to take in its name or in the name of Borrower (or its Affiliate) such action as Agent may at any time determine to be necessary or advisable to cure any uncured default under any Swap Contract or to protect the rights of Borrower (or its Affiliate) or Swap Counterparty thereunder; provided, however, that before the occurrence of an Event of Default, Agent shall give prior written notice to Borrower before taking any such action. For this purpose, Borrower hereby constitutes Agent its true and lawful attorney-in-fact with full power of substitution, which power of attorney is coupled with an interest and irrevocable by Borrower in any manner, or for any reason, to exercise, at the election of Agent and so long as an Event of Default exists, any and all rights and remedies of Borrower (or its Affiliate) under the Swap Contract, including making any payments thereunder and consummating any transactions contemplated thereby, and to take any action that Agent may deem proper in order to collect, assert or enforce any claim, right or title, in and to the Swap Contract hereby assigned and conveyed, from time to time to institute and prosecute in the name and at the expense of Borrower, or otherwise, but for the benefit of Agent, any and all proceedings at law, in equity, or otherwise, that Agent may deem proper in order to collect, assert or enforce any claim, right or title, of any kind, in and to the Swap Contract hereby assigned and conveyed, or intended so to be, and to defend and compromise, at the election of Agent, any and all actions, suits or proceedings with respect to the Swap Contract, and generally to do all and any such action in relation thereto as Agent shall deem advisable. Agent shall not incur any liability if any action so taken by Agent or on its behalf shall prove to be inadequate or invalid. Borrower expressly understands and agrees that Agent is not hereby assuming any duties or obligations of Borrower (or its Affiliate) to make payments to Swap Counterparty under any Swap Contract or under any other Loan Document. Such payment duties and obligations remain the responsibility of Borrower (or its Affiliate) notwithstanding any language in this Agreement. In no event shall any terms and conditions set forth in this Section 7.13 be deemed to diminish or otherwise restrict any rights of a Swap Counterparty under a Swap Contract.

7.14Automatic Deduction and Credit. So long as Agent is the sole Lender hereunder, at Agent's option, payments owed by Agent as Swap Counterparty under any Swap Contract may be credited against accrued interest and other payments owed by Borrower under the Loan provided Agent will provide written notice to Borrower of any such credit. Agent will credit the applicable amounts on the dates the foregoing payments become due; provided, however, that if a due date does not fall on a Business Day, Agent will credit the applicable amounts on the first Business Day following such due date.

7.15Borrower Waiver. In the event that, at any time, any surety exists that is liable upon only a portion of Borrower's obligations under the Loan Documents and Borrower provides partial satisfaction of any such obligation(s), Borrower hereby waives any right it would otherwise have under applicable law, if any, or otherwise to designate the portion of the obligation to be satisfied. The designation of the portion of the obligation to be satisfied shall, to the extent not expressly made by the terms of the Loan Documents, be made by Agent rather than by Borrower.

7.16Reduction of Committed Amount. Provided (a) no Draw Request is pending that would result in the Principal Balance exceeding the sum of the Non-revolving Portion and

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the available proposed reduced Revolving Portion, and (b) that immediately after such reduction the outstanding principal amount of the Revolving Loans is less than or equal to the reduced Revolving Portion as determined by Agent indicated in any such notice (which for the purposes of this Section shall include any amounts requested under a pending Draw Request), Borrower may, subject to Section 7.27 hereof, permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the available Revolving Portion of the Loan (without the payment of any prepayment fee, other than break funding, including any sums owing under Section 1.10 hereof, and any charges relating to early termination of any Swap Contracts), by giving Agent irrevocable notice of such reduction (including the new maximum Revolving Portion) to Agent at least two (2) Business Days prior to the indicated effective date of the reduction. Each such reduction shall (a) be in a minimum amount of $1,000,000 (and in increments of $500,000 thereafter), (b) in no event reduce the Committed Amount below $20,000,000 (unless Agent otherwise agrees in writing) and (c) permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the maximum Revolving Portion of the Loan available to Borrower. Borrower may not make more than one reduction election during each calendar month. For purposes of clarification, Borrower may not reduce the amount of the Non-revolving Portion except as expressly provided in Section 1.5 above.

7.17USA Patriot Act Notice. The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an "account" with such financial institution. Consequently, Agent and/or Lenders) may from time-to-time request in writing, and each Borrower shall provide to Agent and/or Lenders, such Borrower's name, address, tax identification number and/or such other identification information as shall be reasonably necessary for Agent and/or Lenders to comply with federal law. An "account" for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

7.18Statute of Frauds. The rights and obligations of Borrower, Agent and Lenders under the Loan Documents shall be determined solely from the Loan Documents, and any prior oral agreements between the Borrower, Agent and Lenders relating to the Loan are superseded by and merged into the Loan Documents.

7.19Joint Borrower Provisions. Each Borrower acknowledges and agrees that it shall be jointly and severally liable for the Loan and all other Obligations arising under this Agreement and/or any of the other Loan Documents. In furtherance thereof, each Borrower acknowledges and agrees as follows:

(a)    For the purpose of implementing the joint borrower provisions of the Loan Documents, each Borrower hereby irrevocably appoints each other Borrower as its agent and attorney-in-fact for all purposes of the Loan Documents, including the giving and receiving of notices and other communications.

(b)    To induce the Lenders to make the Loan, and in consideration thereof, each Borrower hereby agrees to indemnify the Agent and Lenders against, and hold the Agent

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and Lenders harmless from, any and all liabilities, expenses, losses, damages and/or claims of damage or injury asserted against Agent and/or Lenders by any Borrower or by any other Person arising from or incurred by reason of (i) reliance by the Agent and/or Lenders on any requests or instructions from any Borrower, or (ii) any other action taken by Agent and/or Lenders in good faith with respect to this Agreement or the other Loan Documents.

(c)    Each Borrower acknowledges that the liens and security interests created or granted herein and by the other Loan Documents will secure Obligations of all Borrowers under the Loan Documents and, in full recognition of that fact, each Borrower consents and agrees that the Agent and/or Lenders may, at any time and from time to time, without notice or demand, and without affecting the enforceability or security hereof or of any other Loan Document:

(1)    agree with any Borrower to supplement, modify, amend, extend, renew, accelerate, or otherwise change the time for payment or the terms of the Obligations or any part thereof, including any increase or decrease of the rate(s) of interest thereon;

(2)    agree with any Borrower to supplement, modify, amend or waive, or enter into or give any agreement, approval or consent with respect to, the Obligations or any part thereof or any of the Loan Documents or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder;

(3)    accept new or additional instruments, documents or agreements in exchange for or relative to any of the Loan Documents or the Obligations or any part thereof;

(4)    accept partial payments on the Obligations;

(5)    receive and hold additional security or guaranties for the Obligations or any part thereof;

(6)    release, reconvey, terminate, waive, abandon, subordinate, exchange, substitute, transfer and enforce any security for or guaranties of the Obligations, and apply any security and direct the order or manner of sale thereof as Agent, in its sole and absolute discretion may determine;

(7)    release any Person or any guarantor from any personal liability with respect to the Obligations or any part thereof;

(8)    settle, release on terms satisfactory to Agent or by operation of applicable laws or otherwise liquidate or enforce any Obligations and any security therefor or guaranty thereof in any manner, consent to the transfer of any such security and bid and purchase at any sale; and consent to the merger, change or any other restructuring or termination of the corporate existence of any Borrower or any other Person, and correspondingly restructure the obligations of such Borrower or other Person, and any such merger, change, restructuring or termination shall not affect the liability of any Borrower or the continuing existence of any lien or security interest hereunder, under any other Loan Document to which any Borrower is a party or the enforceability hereof or thereof with respect to all or any part of the Obligations.

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(d)    Upon the occurrence of and during the continuance of any Event of Default, Agent may enforce this Agreement and the other Loan Documents independently as to each Borrower and independently of any other remedy or security Agent and/or Lenders at any time may have or hold in connection with the Obligations, and in collecting on the Loan it shall not be necessary for Agent to marshal assets in favor of any Borrower or any other Person or to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce this Agreement and the other Loan Documents. Each Borrower expressly waives any right to require Agent and/or Lenders, in connection with Agent and/or Lender's efforts to obtain repayment of the Loan and other Obligations, to marshal assets in favor of any Borrower or any other Person or to proceed against any other Person or any collateral provided by any other Person, and agrees that Agent and/or Lenders may proceed against any Persons and/or collateral in such order as it shall determine in its sole and absolute discretion in connection with Agent's efforts to obtain repayment of the Loan and other Obligations. Agent may file a separate action or actions against each Borrower to enforce the Obligations, whether action is brought or prosecuted with respect to any other security or against any other Person, or whether any other Person is joined in any such action or actions. Each Borrower agrees that Agent, Lenders, each Borrower and/or any other Person may deal with each other in connection with the Obligations or otherwise, or alter any contracts or agreements now or hereafter existing between any of them, in any manner whatsoever, all without in any way altering or affecting the security of this Agreement or the other Loan Documents. The rights of Agent and/or Lenders hereunder and under the other Loan Documents shall be reinstated and revived, and the enforceability of this Agreement and the other Loan Documents shall continue, with respect to any amount at any time paid on account of the Obligations which thereafter shall be required to be restored or returned by Agent and/or Lenders as a result of the bankruptcy, insolvency or reorganization of any Borrower or any other Person, or otherwise, all as though such amount had not been paid. The enforceability of this Agreement and the other Loan Documents at all times shall remain effective even though the any or all Obligations, or any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against any Borrower or any other Person and whether or not any Borrower or any other Person shall have any personal liability with respect thereto. Each Borrower expressly waives any and all defenses to the enforcement of its obligations under the Loan Documents now or hereafter arising or asserted by reason of (i) any disability or other defense of any Borrower or any other Person with respect to the Obligations, (ii) the unenforceability or invalidity of any security or guaranty for the Obligations or the lack of perfection or continuing perfection or failure of priority of any security for the Obligations, (iii) the cessation for any cause whatsoever of the liability of any Borrower or any other Person (otherthan by reason of the full and final payment and performance of all Obligations), (iv) any failure of Agent and/or Lenders to marshal assets in favor of any of the Borrowers or any other Person, (v) any failure of Agent and/or Lenders to give notice of sale or other disposition of any Collateral for the Obligations to any Borrower or to any other Person or any defect in any notice that may be given in connection with any such sale or disposition, (vi) any failure of Agent and/or Lenders to comply in any non‑material respect with applicable laws in connection with the sale or other disposition of any Collateral or other security for any Obligation, (vii) any act or omission of Agent and/or Lenders or others that directly or indirectly results in or aids the discharge or release of any Borrower or of any other Person or of any of the Obligations or any other security or guaranty therefor by operation of law or otherwise, (viii) any law which provides that the obligation of a surety or guarantor must neither be larger in amount

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nor in other respects more burdensome than that of the principal or which reduces a surety's or guarantor's obligation in proportion to the principal obligation, (ix) any failure of Agent and/or Lenders to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person, (x) the election by Agent, in any bankruptcy proceeding of any Person, of the application or non-application of Section 1111(b)(2) of the United States Bankruptcy Code, (xi) any extension of credit or the grant of any lien under Section 364 of the United States Bankruptcy Code except to extent otherwise provided in this Agreement, (xii) any use of cash collateral under Section 363 of the United States Bankruptcy Code, (xiii) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person, (xiv) the avoidance of any lien or security interest in favor of Agent securing the Obligations for any reason, or (xv) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any of the Obligations (or any interest thereon) in or as a result of any such proceeding. Without in any way limiting the foregoing, with respect to the Loan Documents and the Obligations, each Borrower: (A) waives all rights and defenses arising out of an election of remedies by Agent, even though that election of remedies, such as non-judicial foreclosure with respect to security for Borrowers' obligations, has destroyed each of their rights of subrogation and reimbursement against the other by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise; and (B) waives any right to a fair value hearing or similar proceeding following a nonjudicial foreclosure of the Obligations, whether arising under California Code of Civil Procedure Section 580a or otherwise.

(e)    The Borrowers represent and warrant to Agent and Lenders that they have established adequate means of obtaining from each other, on a continuing basis, financial and other information pertaining to their respective businesses, operations and condition (financial and otherwise) and their respective properties, and each now is and hereafter will be completely familiar with the businesses, operations and condition (financial and otherwise) of the other and their respective properties. Each Borrower hereby expressly waives and relinquishes any duty on the part of Agent and/or Lenders to disclose to such Borrower any matter, fact or thing related to the businesses, operations or condition (financial or otherwise) of the other Borrowers or the other Borrowers' properties, whether now known or hereafter known by Agent and/or Lenders during the life of this Agreement. With respect to any of the Obligations, the Agent and/or Lenders need not inquire into the powers of any Borrower or the officers, employees or other Persons acting or purporting to act on such Borrower's behalf.

(f)    Without limiting the foregoing, or anything else contained in this Agreement, each Borrower waives all rights and defenses that it may have because the Obligations are secured by real property. This means, among other things:

(1)    Agent and/or Lenders may collect on the Obligations from any Borrower without first foreclosing on any real or personal property collateral pledged by the other Borrowers; and

(2)    If Agent forecloses on any real property collateral pledged by any Borrower for the Obligations: (A) the amount of the indebtedness owed by the other Borrowers may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if

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the collateral is worth more than the sale price; and (B) Agent may collect from any Borrower even if Agent, by foreclosing on the real property collateral, has destroyed any right any Borrower may have to collect from the other Borrowers.

(g)    This is an unconditional and irrevocable waiver of any rights and defenses each Borrower may have because the Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Sections 580a, 580b, 580d or 726 of the California Code of Civil Procedure. Each Borrower expressly waives any right to receive notice of any judicial or nonjudicial foreclosure or sale of any real property collateral provided by the other Borrower to secure the Obligations and failure to receive any such notice shall not impair or affect such Borrower's obligations hereunder or the enforceability of this Agreement or the other Loan Documents or any liens created or granted hereby or thereby.

(h)    Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan Document to which any Borrower is a party, with respect to the Loan and all other Obligations, each Borrower hereby waives with respect to the other Borrowers and their successors and assigns (including any surety) and any other Person any and all rights at law or in equity, to subrogation, to reimbursement, to exoneration, to contribution, to setoff, to any other rights and defenses available to it by reason of California Civil Code Sections 2787 and 2855, inclusive, or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated, or to a holder or transferee against a maker and which each of them may have or hereafter acquire against the other or any other Person in connection with or as a result of such Borrower's execution, delivery and/or performance of this Agreement or any other Loan Document to which it is a party until the Obligations are paid and performed in full. Each Borrower agrees that it shall not have or assert any such rights against any other Borrower or any other Borrower's successors and assigns or any other Person (including any surety), either directly or as an attempted setoff to any action commenced against such Borrower by any other Borrower (as borrower or in any other capacity) or any other Person until the all Obligations are paid and performed in full. Each Borrower hereby acknowledges and agrees that this waiver is intended to benefit Agent and Lenders and shall not limit or otherwise affect any Borrower's liability under this Agreement or any other Loan Document to which it is a party, or the enforceability hereof or thereof.

(i)    Each Borrower warrants and agrees that each of the waivers and consents set forth herein is made with full knowledge of its significance and consequences, with the understanding that events giving rise to any defense waived may diminish, destroy or otherwise adversely affect rights which each otherwise may have against the other, against Agent and Lenders or others, or against any collateral. If any of the waivers or consents herein are determined to be contrary to any applicable law or public policy, such waivers and consents shall be effective to the maximum extent permitted by law.

7.20Possible Increase in the Committed Amount. As of the Closing Date, the maximum Committed Amount shall be $235,000,000. However, subsequent to the Closing Date Borrower shall have the option to increase the Committed Amount based, in part, on the addition of one or more Additional Properties in accordance with Section 7.21 to secure the Loan (such

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option shall be referred to herein as the "Accordion Option"), subject to the following: (a) one or more new lenders shall have been added to this Agreement (each, a "New Lender") and/or one or more existing Lenders (each, an "Additionally Committed Lender"), in their sole and absolute discretion, shall have elected to increase their individual commitments, so that the Committed Amount may be increased, provided that each New Lender and/or Additionally Committed Lender shall be approved by Agent and Borrower (but not the other Lenders), (b) the Committed Amount may be increased up to a maximum of $335,000,000, (c) unless Agent otherwise consents, the allocation of the increased Committed Amount between the Revolving Portion and the Non-revolving Portion must be such that the Non-revolving Portion (and the Term Loan) always constitutes at least sixty percent (60%) of the total Committed Amount, (d) each exercise of the Accordion Option shall be in an amount not less than $10,000,000, (e) the Accordion Option may be exercised a maximum of two (2) times, and (f) Borrower's right to exercise the Accordion Option shall terminate on March 1, 2015 (and all conditions to exercising such option must have been satisfied as of such date). Each Lender acknowledges and agrees that its consent to any such increase in the Committed Amount shall not be required and additional Lenders may be added to this Agreement, and any Additionally Committed Lenders under this Agreement may increase their individual commitments, without the consent or agreement of the other Lenders (provided, however, that no Lender's individual commitment may be increased without such Lender's consent), so long as Agent and Borrower have consented in writing to any New Lenders or the increase in the commitment of any Additionally Committed Lender, as applicable.

The addition of any New Lender to this Agreement, and/or the increase in the commitment of any Additionally Committed Lender, shall be effective upon the satisfaction of the following:

(a)    Agent and Borrower shall have approved such New Lender and/or such increase in the commitment of any Additionally Committed Lender, as applicable; and Agent shall have sent written notice to all Lenders of such New Lender and its commitment amount and/or the amount of the increase in the commitment of any Additionally Committed Lender (each, an "Accordion Notice").

(b)    Agent shall have calculated each Lender's new Commitment Percentage, based on each Lender's commitment and the new Committed Amount, and Agent shall have determined the portion of the Non-revolving Portion (and outstanding Term Loan) and the Revolving Portion (and outstanding Revolving Loans) allocable to each Lender based on such Lender's new Commitment Percentage.

(c)    Borrower shall have executed and delivered to Agent a new Note with respect to any New Lender in the amount of such New Lender's commitment; or with respect to an increase in the Commitment of an Additionally Committed Lender, Borrower shall have executed a replacement Note for such Additionally Committed Lender in an amount equal to such Additionally Committed Lender's increased commitment amount.

(d)    The Lenders shall execute such Assignment and Assumption Agreements as Agent shall require to evidence each New Lender's acquisition of its Commitment Percentage of the Non-revolving Portion, Revolving Portion and Loan Documents, and to evidence each

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Additionally Committed Lender's increased commitment amount. Alternatively (or in addition), at Agent's option each New Lender shall acknowledge in writing (in a form reasonably satisfactory to Agent) that it is assuming the rights and obligations of a "Lender" under this Agreement, and if required by Agent shall execute a copy of this Agreement. Each New Lender and/or each Additionally Committed Lender shall pay to the other existing Lenders a portion of the then outstanding Term Loan and Revolving Loans so that upon the closing of the exercise of the Accordion Option and increase in the Committed Amount, each Lender shall have owing to it its Commitment Percentage of the then outstanding principal amount of the Term Loan and the Revolving Loans (as set forth in the revised Exhibit I to be delivered in accordance with subparagraph (e) below). For the avoidance of doubt, each New Lender must acquire the same percentage (i.e., its Commitment Percentage) of the Term Loan and the Revolving Loans, and each Additionally Committed Lender must increase its commitment with respect to the Term Loan and the Revolving Loans by the same percentage.

(e)    Agent shall have prepared an updated Exhibit I, revised to reflect each Lender's the Commitment Percentage, commitment amount and share of the Non-revolving Portion and Revolving Portion, which updated Exhibit I shall be delivered to the Lenders with the Accordion Notice.

(f)    Guarantor shall have executed and delivered to Agent such reaffirmations of its Guaranty and acknowledgment of its increased liability thereunder as Agent shall reasonably require; provided, however, that with the exception of the Guarantor's increased liability due to the increase in the Committed Amount, Guarantor's liability shall remain unmodified as set forth in the Guaranty.

(g)    Borrower shall have paid the applicable fees set forth in the Fee Letter.

(h)    The Accordion Option may only be exercised in connection with the addition of an Additional Property under Section 7.21 below.

(i)    Borrower, each New Lender and each Additionally Committed Lender shall execute and deliver to Agent such additional documents as Agent and its legal counsel shall reasonably require to carry out the intent of this Section 7.20.

7.21Additional Property Collateral. During the term of the Loan, Borrower shall have the option of adding new properties to secure the Loan and/or to increase the Committed Amount, subject to Agent's approval in its sole discretion, and satisfaction of all of the following conditions precedent with respect to each such additional property (each, an "Additional Property") (and each item delivered below shall be subject to Agent's (and, where indicated, Lenders') receipt, review, approval and/or confirmation, at Borrower's cost and expense (whether or not the addition of the Additional Property is ultimately approved), each in form and substance satisfactory to Agent in its sole discretion (and, where indicated, Lenders):

(a)    The Additional Property must be (i) a fully developed and operating "Class A" or "Class B" property utilized principally as an office or industrial property, (ii) located in the contiguous United States (including the District of Columbia) or Hawaii, and

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(iii) at least 85% occupied by tenants who are not the subject of any bankruptcy, reorganization, insolvency, liquidation, dissolution, receivership or similar proceeding.

(b)    The owner of the Additional Property (the "New Borrower") shall be a single purpose entity wholly-owned, directly or indirectly, by Properties REIT and otherwise satisfactory to Agent and Lenders in their sole discretion which (i) has no indebtedness or claims against it other than non-delinquent trade debt incurred in the ordinary course of business, (ii) shall assume, on a joint and several basis, the Loan and the other obligations of Borrowers hereunder and under the other Loan Documents pursuant to a Joinder Agreement and such other documents reasonably satisfactory to Agent and Lenders in their sole discretion, and (iii) does not have Guarantor as a general partner, and does not otherwise have a structure where Guarantor would be liable for such New Borrower's obligations under the Joinder Agreement absent the Guaranty.

(c)    Agent shall have received a Deed of Trust covering the Additional Property and all personal property directly related thereto (and such Deed of Trust shall have been properly recorded in the official records of the county or counties in which the Additional Property is located) and such other Loan Documents, and amendments, modifications or supplements to any existing Loan Documents, as reasonably required by Agent, executed by New Borrower, Borrower and Guarantor; provided that Borrower's and Guarantor's obligations or rights under the Loan Documents shall not be modified or affected beyond what is contemplated pursuant to the transaction.

(d)    The New Borrower owns fee title to, or holds a leasehold interest as a lessee in, the Additional Property. In connection with any Additional Property in which a New Borrower holds a leasehold interest, Agent and Lenders shall have received and approved (i) a copy of the ground lease creating such leasehold interest, and (ii) a ground lessor's estoppel and consent executed by the ground lessor under any such ground lease.

(e)    New Borrower shall deliver to Agent a certificate executed by an officer of New Borrower certifying that New Borrower is qualified to transact business in the state in which the Additional Property is located.

(f)    Agent shall have received a Title Policy, containing no exceptions or exclusions other than Permitted Encumbrances or as may be reasonably approved by Agent, insuring that the insured Deed of Trust for the Additional Property is a valid, first priority lien on the Additional Property and related collateral, in an insured amount as reasonably required by Agent. Borrower also shall obtain, at its sole cost and expense, any endorsements, continuations or modifications to the existing Title Policies as Agent may reasonably request and to the extent available, including endorsements to increase the insured amounts under such Title Policies.

(g)    If the Additional Property is being acquired by New Borrower, Agent shall have received certified and complete copies of any purchase agreement for the Additional Property.

(h)    Agent and Lenders shall have received a recent Appraisal for the Additional Property.

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(i)    New Borrower shall have provided Agent with current title, tax, UCC chattel lien and bankruptcy searches (and any other searches which Agent may require) for the Additional Property, New Borrower, New Borrower's constituent members and such other parties as Agent shall require in its reasonable discretion.

(j)    A copy of New Borrower's limited liability company agreement (certified by a manager as being true, correct, complete, unamended (except as disclosed to Agent in writing) and in full force and effect) and a copy of New Borrower's Articles of Organization (certified by the appropriate governmental officials in whose offices the same must be filed under applicable law, as applicable), together with evidence reasonably satisfactory to Agent, that New Borrower has complied with all other filing requirements and fictitious name requirements, if any, necessary to permit New Borrower to do business in the state in which the Additional Property is located, and evidence reasonably satisfactory to Agent, that New Borrower has complied with the above‑mentioned documents in executing the Deed of Trust and other documents which it is required to execute pursuant to this Section 7.21.

(k)    Agent shall have received insurance policies or insurance certificates for the Additional Property (conforming to the requirements of Exhibit G) written by insurers reasonably satisfactory to Agent and in amounts reasonably satisfactory to Agent, prepared in accordance with Agent's standard requirements therefor.

(l)    Agent shall have received a flood zone and landslide hazard certification for the Additional Property from a qualified Consultant indicating that the improvements on such Additional Property are not located in a flood plain or any other flood prone area, or within an area subject to landslide hazards, as designated by the Federal Emergency Management Agency or any other Governmental Authority.

(m)    Agent shall have received a current "as built" ALTA/ACSM Land Title Survey of the Additional Property, dated or updated to a date not earlier than thirty (30) days prior to the recordation of the Deed of Trust for the Additional Property, certified to Agent and the Title Company, prepared by a licensed surveyor reasonably acceptable to Agent and such title insurer, and conforming to Agent's current standard survey requirements.

(n)    Agent and Lenders shall have received a current, reasonably acceptable engineering report with respect to the Additional Property, covering, among other matters, inspection of heating and cooling systems, roof and structural details and showing no failure of compliance with building plans and specifications, applicable legal requirements (including requirements of the Americans with Disabilities Act) and fire, safety and health standards. As requested by Agent, such report shall also include an assessment of the Additional Property's tolerance for earthquake and seismic activity.

(o)    An environmental report for the Additional Property reasonably acceptable to Agent and Majority Lenders, showing that no remedial environmental action is recommended or required and other information produced in connection with the Tests.

(p)    Agent shall have received either (i) reasonably satisfactory evidence that the Additional Property is covered by the Environmental Insurance Policy or (ii) confirmation

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from the Guarantor of its liability under the Guaranty for any amounts owing by Borrower under the Environmental Indemnity with respect to such Additional Property, as more fully set forth in the Guaranty.

(q)    Agent and Lenders shall have received the following financial information for the Additional Property: (i) annual operating statements for the preceding two fiscal years, if applicable, and for the current fiscal year through the fiscal quarter most recently ending, provided that if New Borrower or any Affiliate of New Borrower has not owned the Additional Property for such entire period, then Borrower shall provide operating statements for the period of New Borrower's (and any such Affiliate's) ownership and, only to the extent available, operating statements for the balance of such period, (ii) a pro forma operating statement and proposed Operating Budget for the current and next succeeding fiscal years.

(r)    Agent and Lenders shall have received a current rent roll for the Additional Property, together with all leases for the Additional Property not previously delivered to Agent. Such rent roll shall include the following: (i) tenant names; (ii) unit/suite numbers; (iii) area of each demised premises and total area of the related Additional Property (stated in net rentable square feet); (iv) rental rate (including escalations) (stated in gross amount and in amount per net rentable square foot per year); (v) lease term (commencement, expiration and renewal options); (vi) expense pass-throughs; (vii) cancellation/termination provisions; (viii) security deposit; and (ix) material operating covenants and co-tenancy clauses.

(s)    If requested, Agent shall have received copies of all material agreements with respect to the Additional Property, including without limitation all noncancelable agreements relating to the management, operation or maintenance of the Additional Property and of each such agreement which cannot be cancelled by thirty (30) days' or less notice.

(t)    Agent shall have received all title, zoning and entitlement information and documentation regarding the Additional Property reasonably requested by Agent and reasonably available to New Borrower.

(u)    Agent shall have received reasonable evidence that the Additional Property and the operation thereof comply with all governmental requirements, including that all requisite certificates of occupancy, building permits, and other licenses, certificates, approvals or consents required of any governmental authority have been issued without variance or condition and that there is no litigation, action, citation, injunctive proceedings, or like matter pending or threatened with respect to the validity of such matters except as may be consented to by Agent in writing. New Borrower shall provide Agent with copies of all certificates of occupancy, and shall deliver letters (to the extent reasonably available to Borrower) from applicable zoning, building and municipal agencies evidencing the foregoing.

(v)    New Borrower shall have established all accounts and escrows for the Additional Property as required by the express terms of this Agreement and delivered to Agent reasonably satisfactory evidence thereof.

(w)    No condemnation or adverse zoning or usage change proceeding shall have occurred or shall have been threatened against the Additional

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Property; the Additional Property shall have not suffered any significant damage by fire or other casualty which has not been repaired; no law, moratorium, injunctive proceeding, restriction, litigation, action, citation or similar proceeding or matter shall have been enacted, adopted, or threatened by any governmental authority, which would have, in Agent's judgment, a material adverse effect.

(x)    All fees and commissions payable to real estate brokers, mortgage brokers, or any other brokers or agents in connection with the acquisition of the Additional Property shall have been paid.

(y)    At Agent's discretion and written request, New Borrower shall have used commercially reasonable efforts to obtain estoppel certificates and, where required by Agent, subordination, nondisturbance and attornment agreements from key tenants as reasonably requested by Agent.

(z)    Agent shall have received such other authorizations, documents, certificates, opinions of counsel, updates, reports, searches or items as Agent reasonably may require with respect to New Borrower or the Additional Property.

(aa)    Agent shall have prepared revised Exhibits B, C, and D, in each case revised to include the applicable information for the Additional Property (the "Replacement Exhibits").

(bb)    Agent shall have approved the inclusion of the Additional Property as security for the Loan. Unless otherwise agreed to by Agent in writing, Agent shall be deemed to have disapproved the inclusion of the Additional Property if it has not notified Borrower in writing of its approval of the inclusion of such Additional Property, within fifteen (15) days after receiving all of the items to be delivered to Agent and Lenders pursuant to this Section 7.21.

(cc)    An Additional Property may be added to the collateral for the Loan only in connection with an increase to the Committed Amount under Section 7.20 above.

From and after the date a Deed of Trust is recorded against the Additional Property in accordance with Agent's written instructions to the Title Company, (i) such Additional Property shall be included in the definition of "Property" set forth in this Agreement and in the other Loan Documents, (ii) the Deed of Trust recorded against such Additional Property shall be included in the definition of "Deed of Trust" as set forth is this Agreement and in the other Loan Documents, (iii) New Borrower shall be included in the definition of "Borrower" set forth in this Agreement and the other Loan Documents, (iv) the Replacement Exhibits shall be attached to this Agreement in substitution of the then existing corresponding exhibits and shall thereafter be deemed to replace such exhibits, and (v) all of the foregoing requirements set forth in Sections 7.21(a) through (cc), shall be deemed satisfied by New Borrower, Borrower and Guarantor, as to such Additional Property, except as reasonably reserved or specified by Agent in writing.

Following the addition of an Additional Property to the collateral for the Loan, the Committed Amount shall be recalculated (inclusive of the new Additional Property), as reasonably determined by Agent (based on a new Appraisal as to the Additional Property and updated Appraisals satisfactory to Agent as to any Appraisals more than twelve (12) months old as to the existing Properties), to be an amount equal to the lesser of (a) an amount such that the ratio of the

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Committed Amount to the Borrowing Base Value would not exceed the Maximum Committed Amount Leverage Ratio, and (b) an amount such that the Commitment Resizing Debt Service Coverage Ratio would not be less than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then secures the Loan).

7.22Releases of Properties. Except as expressly set forth below in this Section 7.22, Agent shall have no obligation to release any of the Properties (or any portion thereof) until the Loan and all other Obligations have been paid in full and all obligations of Agent and Lenders under this Agreement and the other Loan Documents have terminated. Borrower shall be entitled to obtain the release of a Property, and as to Properties that contain more than one building and are legally sub-divided, a portion of such Property containing a building (each, a "Release Property"), from the lien of the Loan Documents, provided that all of the following conditions are satisfied:

(a)    Borrower shall have submitted to Agent a written request for such release at least twenty (20) days prior to the proposed release date, together with copies of any documents which Borrower requests Agent to execute in connection with such proposed release.

(b)    No Event of Default shall have occurred and be continuing, and no event shall have occurred and be continuing that with the giving of notice and/or the lapse of time would constitute an Event of Default.

(c)    After giving effect to the proposed release, at least one (1) Property remains as security for the Loan.

(d)    Borrower shall have paid to Agent, for application to the Principal Balance, an amount equal to the amount, if any, by which the Principal Balance exceeds the then current Availability Amount. In calculating the Availability Amount, the Borrowing Base Amount shall be determined based only on the Properties or portions thereof remaining after the proposed release (i.e., without regard to the Release Property).

(e)    Immediately following the release, the Commitment-to-Value-Ratio shall not exceed the Maximum Committed Amount Leverage Ratio, as determined by the Appraisals and calculated by Agent (using the then Committed Amount and, if required by Majority Lenders or Borrower, new updated Appraisals as to any Appraisals more than six (6) months old); provided, however, if the required Committment-to-Value Ratio is not met, Borrower may (1) pay down the outstanding principal amount of the Loan and permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount sufficient to cause the above-required Commitment-to-Value Ratio to not exceed the Maximum Committed Amount Leverage Ratio, or (2) to the extent that a principal payment is not required to reduce the Committed Amount to the required amount, permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount sufficient to cause the above-required Commitment-to-Value Ratio to not exceed the Maximum Committed Amount Leverage Ratio.

(f)    Immediately following the release, the Commitment Resizing Debt Service Coverage Ratio shall not be less than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then

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secures the Loan), as calculated by Agent (using the then Committed Amount and, if required by Majority Lenders or Borrower, new updated Appraisals as to any Appraisals more than six (6) months old); provided, however, if the required Commitment Resizing Debt Service Coverage Ratio is not met, Borrower may (1) pay down the outstanding principal amount of the Loan and permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount sufficient to cause the Commitment Resizing Debt Service Coverage Ratio to be equal to or greater than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then secures the Loan) or (2) to the extent that a principal payment is not required to reduce the Committed Amount to the required amount, permanently (except in connection with a Property addition under Sections 7.20 and 7.21) reduce the Committed Amount by an amount sufficient to cause the Commitment Resizing Debt Service Coverage Ratio to be equal to or greater than 1.25 to 1.0 (or 1.35 to 1.0 if only one Property then secures the Loan).

(g)    Borrower shall have provided Agent with such certifications from the Guarantor(s) that, after giving effect to the proposed release, Guarantor(s) shall be in compliance with their financial covenants under the Guaranty.

(h)    As to any Appraisals then more than six (6) months old as to any remaining Properties, Agent may require new Appraisals (at Borrowers' cost) and may calculate the Borrowing Base Amount on the basis of such updated Appraisals.

(i)    Borrower shall provide to Agent at Borrower's sole cost and expense such title insurance endorsements to the Title Policies for the remaining Deeds of Trust as Agent shall reasonably request (including, without limitation, CLTA Form 111 Endorsements (or its equivalent), to the extent available and in form and substance reasonably satisfactory to Agent, which shall insure that after such release, each remaining Deed of Trust shall continue as a valid first position lien against the Property encumbered thereby, subject only to such new title exceptions as Agent shall approve in writing.

(j)    The Property or portion thereof being released, as well as all remaining Properties and portions thereof remaining encumbered by Deeds of Trust, shall constitute legally subdivided interests in real property, and such release shall not violate any applicable law pertaining to the subdivision of lots or parcels of real property.

(k)    Borrower shall pay, or caused to be paid, to Agent all reasonable costs and expenses incurred in connection with such release, including without limitation all breakage fees, recording fees, transfer and other taxes, trustee's fees, reasonable attorneys' fees, appraisal fees, escrow fees, and fees for title insurance and similar charges.

Following the release of any Property, such Release Property shall no longer be included in the definition of "Property" except with respect to any indemnities and other provisions of the Loan Documents that expressly survive repayment of the Loan.

7.23Collateral Documents. If any Deed of Trust shall for any reason (other than pursuant to the terms thereof) cease to create a valid lien and security interest in the collateral purported to be covered thereby or such lien or security interest shall for any reason cease to be a perfected and first priority lien and security interest subject only to Permitted Encumbrances, and

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any such defect or infirmity is not cured to Agent's reasonable satisfaction within ninety (90) days of demand by Agent, the Property encumbered by such Deed of Trust shall immediately (following the expiration of such ninety (90) day cure period) cease to be included in the calculation of Borrowing Base Value and Borrowing Base Amount, and Borrower shall repay to Agent for the ratable benefit of Lenders, within ten (10) days of demand by Agent, any amounts by which the total outstanding Obligations exceed the Availability Amount.

7.24    [Intentionally Omitted.]

7.25Limited Recourse Provision. Except as to Guarantor as set forth in the Guaranty, Agent and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of Borrower, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Borrower (except for the Guarantor as provided in the Guaranty) with respect to the obligations of Borrower and Guarantor under the Loan. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower's liability or obligations under the Loan Documents, Guarantor's liability or obligations under the Guaranty or Agent's right to exercise any rights or remedies against any collateral securing the Loan.

7.26Release of a Borrower. As to any ReleaseProperty released from the lien of a Deed of Trust pursuant to the terms of Section 7.22 hereinabove, the Borrower owning such ReleaseProperty (a "Release Borrower") shall be automatically released from any and all obligations and liabilities under this Agreement and the other Loan Documents (excepting, however, any obligations that may arise under the Environmental Indemnity) upon the consummation of the release of such ReleaseProperty, as evidenced by a written release from Agent to be delivered concurrently with the consummation of such release (and Agent hereby agrees to deliver such written release to such Release Borrower upon satisfaction of all release conditions set forth in Section 7.22) provided that such Release Borrower shall also be automatically released from any and all of its obligations under the Environmental Indemnity if, at the time of such release, (i) such Release Borrower shall have delivered to Agent a current environmental site assessment for such Release Property and such report does not disclose the existence of any violation of any Environmental Regulation (as defined in the Environmental Indemnity) or any Environmental Claims (as defined in the Environmental Indemnity) applicable to such Release Property, which reports shall be dated, or last updated, to a date which is no more than thirty days earlier than the date on which the Deed of Trust securing such Release Property is discharged or released of record, (ii) no Environmental Claim shall be pending or threatened in writing with respect to such Release Property, and (iii) Borrower maintains for such Release Property an environmental insurance policy substantially in the form of the Environmental Insurance Policy approved by Agent when such Release Property was added as collateral for the Loan, which policy shall have a term of no less than one year after the date of the release of such Release Property and which policy (or endorsement thereto) shall name Agent as an additional insured. Additionally, notwithstanding the foregoing, upon the bankruptcy, insolvency or reorganization of a Release Borrower, to the extent that any payment made by such Release Borrower is rescinded or otherwise must be returned by Agent, any Lender or any other Person, such Release Borrower's liability shall be reinstated (solely to the extent rescinded or returned plus any amounts payable pursuant to Section 5.1 of this Loan Agreement), all as though such payment had not occurred. For purposes of clarification, in no event shall the

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release of a Release Borrower under this Section 7.26 release any other Borrower or Guarantor from any obligations owing under the Loan Documents (including, without limitation, such parties continuing indemnity obligations under the Environmental Indemnity relating to a Release Property following the release of a Release Borrower).

7.27The Non-revolving Portion Must Always Constitute at Least Sixty Percent (60%) of the total Committed Amount. Notwithstanding anything else contained in this Agreement which may be construed to the contrary, the Non-revolving Portion (and the Term Loan) must always constitute at least sixty percent (60%) of the total Committed Amount, so that upon any increase or decrease of the Committed Amount as provided for in this Agreement, the Non-revolving Portion of the Committed Amount shall equal at least 60% of the total Committed Amount, and the Revolving Portion shall equal no more than 40% of the total Committed Amount. To the extent, at any time, the outstanding amount of the Revolving Loans exceeds 40% of the then total Committed Amount, Borrower shall promptly pay to Agent for the benefit of Lenders the amounts by which the outstanding Revolving Loans exceed such percentage (for application by Agent to pay down the outstanding principal amount of the Revolving Loans so that such percentage is brought into compliance), and the Revolving Portion of the Committed Amount shall be reduced accordingly. Provided that no Event of Default shall have occurred and be continuing, and so long as the Non-revolving Portion (and the outstanding amount of the Term Loan) of the Committed Amount shall at all times be equal to at least 60% of the total Committed Amount, the Borrower may, upon three (3) days prior written notice to Agent, reallocate a portion of the Committed Amount from the Non-revolving Portion to the Revolving Portion of the Loan (and concurrently therewith reduce the outstanding principal amount of the Term Loan by the amount of such reallocation from the Non-revolving Portion to the Revolving Portion and increase the outstanding principal amount of the Revolving Portion by the same amount); and, provided further, however any such reallocation shall in no event increase the total Committed Amount.  For avoidance of doubt, so long as no Event of Default then exists, the foregoing reallocation and reduction in the principal amount of the Non-revolving Portion and increase in the principal amount of the Revolving Portion will be implemented without Borrower’s being required to request an Additional Advance under Article III hereof and without Borrower’s being obligated to satisfy any of the conditions in Article III hereof.

VIII. AGENCY PROVISIONS

8.1Agency.

(a)    Appointment and Authorization. Each Lender hereby appoints and authorizes Agent to act as sole administrative agent under this Agreement and the other Loan Documents, authorizes and directs Agent to enter into the Loan Documents other than this Agreement for the benefit of the Lenders, and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and the Loan Documents and to exercise such powers as are set forth herein or therein, together with such other powers as are reasonably incidental thereto. In furtherance thereof, Lenders hereby ratify the execution and delivery by Agent of this Agreement, the acceptance by Agent of all of the other Loan Documents and the terms and conditions of the Loan Documents. The Agent hereby accepts such appointment as administrative agent. Agent shall exercise all rights and powers of Agent under this Agreement, including the administration of the Loan and disbursement of Advances, except as otherwise

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expressly provided in this Agreement. The Borrower, without further inquiry or investigation, shall, and is hereby authorized by the Lenders to, assume that all actions taken by the Agent hereunder and in connection with or under the Loan Documents are duly authorized by the Lenders and Borrower shall be entitled to rely on Agent's acknowledgment of consent and approvals when required under the Loan.

(b)    Non‑Liability of Agent and Indemnity.

(1)    Agent shall have no duties or responsibilities except those expressly set forth in this Agreement or in the other Loan Documents. Agent shall administer the Loan in accordance with the terms and conditions of this Agreement in the same manner as it customarily does for similar loans for its own account. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any Loan Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or any Loan Document except as expressly set forth herein or therein. In the absence of gross negligence or willful misconduct, neither Agent nor any of its respective directors, officers, agents or employees shall be liable to any Lender for any action taken or not taken by them under or in connection with this Agreement or under any of the other Loan Documents. In this regard, Agent may consult with independent legal counsel, accountants and other professionals or experts selected by it, and shall not be liable for any action taken or not taken by it or them in good faith in accordance with the advice of such legal counsel, accountants or other professionals or experts. In the absence of gross negligence or willful misconduct, Agent shall not be liable for any apportionment or distribution of payments made by it in good faith pursuant to the terms of this Agreement, and if any such apportionment or distribution is subsequently determined to have been made in error, the sole recourse of any person to whom payment was due, but not made, shall be to recover from the recipients of such payments any payment in excess of the amount to which they are determined to have been entitled.

(2)    In the event the Agent is not reimbursed and indemnified by the Borrower, within ten (10) Business Days of demand therefor by Agent, each Lender will reimburse and indemnify the Agent, and its directors, officers, agents and employees, in proportion to its respective Commitment Percentage of the Loan (or commitment), for and against any claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Agent, or its directors, officers, agents, or employees in performing its duties hereunder or under any Loan Document, except for claims, actions, judgments, costs, expenses or disbursements incurred solely due to the Agent's gross negligence or willful misconduct. The obligations of the Lenders under this Section 8.1(b) shall survive the payment in full of all obligations of Borrower and the termination of this Agreement.

8.2Resignation of Agent; Removal.

(a)    Except as expressly provided below, U.S. Bank shall remain the Agent and shall not resign as Agent. In the event of Agent's gross negligence or willful misconduct, Agent may be removed pursuant to the unanimous approval of all Lenders by giving thirty (30)

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days prior written notice to Agent and Borrower; provided, however, for purposes of calculating such unanimous approval in this context, Agent shall be deemed a Defaulting Lender and its Commitment Percentage shall therefore be disregarded and excluded for voting purposes only.

(b)    In the case of any of the events described in Section 8.2(a), (1) the Majority Lenders shall appoint a successor Agent from among the Lenders (which appointment shall require Borrower's written consent so long as no Event of Default exists, which consent shall not be unreasonably withheld or delayed) so long as such successor meets the requirements described in Sections 8.9(a)(2) and 8.9(a)(3) hereof; (2) upon a successor's acceptance of appointment (and assumption of the Agent's obligations hereunder arising after the date of such appointment), the successor will thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent; and (3) upon the effectiveness of any removal, the removed Agent will thereupon be discharged from the duties and obligations of Agent which thereafter arise under this Agreement.

8.3Administration.

(a)    Expenses. Each Lender shall reimburse the Agent for its Commitment Percentage of any expenses with respect to the administration, enforcement or collection of the Loan which are not reimbursed by the Borrower pursuant to and within the period required by the Loan Documents, or if not specified in the Loan Documents, on the date of demand therefor made by the Agent. The Agent shall have the right, but not the obligation, to incur such expenditures prior to reimbursement therefor by the Lenders. Notwithstanding anything stated to the contrary in this Article 8 or elsewhere in this Loan Agreement, Borrower shall have no obligation to pay, or reimburse for any costs or expenses incurred by Lenders (other than Agent) in connection with this Loan Agreement or any of the other Loan Documents or arising out of the exercise of remedies under any of the Loan Documents.

(b)    Documents; Information; Inspection. Except for the Note executed in favor of each Lender and for Loan Documents sent for filing or recording (which are not returned following recording), Agent shall hold and maintain a duplicate set of all original Loan Documents. The Agent shall promptly deliver to each Lender a copy or counterpart of execution copy of each Loan Document. Agent shall promptly forward to each Lender a copy of each financial statement of Borrower or rent roll or other financial statement for the Property received from Borrower. Agent shall promptly forward to such Lender each financial statement of Borrower and Guarantor received by Agent. The Lenders may, upon reasonable prior notice and during the Agent's normal business hours, inspect and make copies of such books and records of Agent that relate to this Loan.

8.4Actions by Agent; Required Consents.

(a)    Except as specified below, Agent shall exercise its sole discretion to act or not to act under the Loan Documents. Such discretion may be exercised with respect to the granting of approvals, consents, and modifications under the Loan Documents and with respect to the exercise or refraining from exercise of rights under the Loan Documents.

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(b)    Notwithstanding Section 8.4(a), the following matters shall require the prior consent of all of the Lenders:

(1)    any reduction (other than by operation of the Loan Documents) in the interest rate under the Loan;

(2)    any reduction in the amount of any payment of any fees payable to Lenders;

(3)    any change (other than by operation of the Loan Documents) in the principal amount or Maturity Date of the Loan or in the conditions for any extension of the Maturity Date;

(4)    any release, termination, modification or amendment of the Guaranty or any indemnity provided in the Loan Documents (except to the extent expressly provided for in the Loan Documents);

(5)    any forgiveness of principal, interest or other amounts payable under the Loan (other than late fees) or any extension of time for payment of principal or interest;

(6)    any increase in the Committed Amount (except to the extent expressly provided for in the Loan Documents);

(7)    any release of Borrower or Guarantor (except to the extent expressly provided for in the Loan Documents);

(8)    acceptance and approval of a new Borrower;

(9)    any amendment to this Section 8.4(b);

(10)    any amendment to the definition of Majority Lenders;

(11)    any release of any material portion of the collateral securing the Loan (except to the extent expressly provided for in the Loan Documents).

(c)    Notwithstanding Section 8.4(a) or Section 8.4(b), the prior consent of the Majority Lenders shall be required for the acceleration of any indebtedness under the Loan Documents, or the pursuit of remedies against the Borrower or Guarantor; provided, however, if the Majority Lenders cannot agree on a course of action within sixty (60) days following notice from Agent, Agent may, without the consent of the Majority Lenders, accelerate the Loan and exercise any and all rights and remedies under the Loan Documents and applicable law (and in equity) that Agent in its sole discretion deems appropriate and in the best interests of the Lenders.

(d)    In case one or more Events of Default have occurred and shall be continuing, and whether or not acceleration of the Loan shall have occurred, the Agent shall, if (1) so requested by the Majority Lenders and (2) the Lenders have provided to the Agent such

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additional indemnities and assurances against expenses and liabilities as the Agent may reasonably request, proceed to enforce the provisions of this Agreement and the other Loan Documents and exercise all or any such other legal and equitable and other rights or remedies as it may have in respect of enforcement of the Lenders' rights against the Borrower and the Guarantor under this Agreement and the other Loan Documents. The Majority Lenders may direct the Agent in writing as to the method and the extent of any such enforcement, the Lenders (including any Lender which is not one of the Majority Lenders so directing the Agent in writing) hereby agreeing to ratably and severally indemnify and hold the Agent harmless from all liabilities and expenses incurred in respect of all actions taken or omitted in accordance with such directions, provided that the Agent need not comply with any such direction to the extent that the Agent reasonably believes the Agent's compliance with such direction to be unlawful or commercially unreasonable in any applicable jurisdiction. Lenders also agree, ratably and severally, to indemnify and hold the Agent harmless from all liabilities and expenses incurred in respect of all actions taken or omitted to be taken under Section 8.4(c) above should the Majority Lenders not be able to agree upon a course of action within the time period specified therein, and Agent exercises any and all rights and remedies under the Loan Documents and applicable law (or in equity) that Agent in its sole discretion deems appropriate and in the best interests of the Lenders under the circumstances.

8.5Payments.

(a)    Interest Rates and Disbursement Matters. Lenders and Agent specifically agree to the following operational and administrative procedures as between themselves:

(1)    Agent shall notify each Lender by telephone or facsimile of the LIBOR Rate two (2) Business Days prior to the date on which the LIBOR Rate shall be effective. Agent shall notify each Lender by telephone or facsimile of its Commitment Percentage of a proposed Advance of the Loan and the date of such disbursement two (2) Business Days prior to such disbursement with respect to disbursements which are to bear interest at the LIBOR Rate, such notice to be delivered by facsimile. Each Lender shall deposit by wire transfer of immediately available funds to Agent's account as specified on Exhibit H hereto the amount of such Commitment Percentage no later than 10:00 a.m. (California time) on the date of such disbursement.

Unless Agent shall have been notified by any Lender not later than the close of business (California time) on the Business Day immediately preceding the date for funding in respect of any Advance that such Lender does not intend to make available to Agent such Lender's Commitment Percentage of such Advance, Agent may assume that such Lender has made such amount available to Agent. In any case where a Lender does not for any reason make available to Agent such Lender's Commitment Percentage of such Advance, Agent, in its sole discretion, may, but shall not be obligated to, fund to Borrower such Lender's Commitment Percentage of such Advance. If the amount so funded by Agent is not in fact made available to Agent by the responsible Lender, then such Lender hereby assigns to Agent any payments received by Agent from Borrower in repayment of such amount, together with interest thereon at the rate applicable to such Advance.

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(2)    If any Lender fails to deliver funds to Agent for a disbursement by the time required by subsection (1) above, such Lender shall pay to Agent interest on such funds at the Federal Funds Rate, for each day (or portion thereof) until such funds are delivered. Any interest paid pursuant to this section shall be divided among the Lenders which funded the applicable disbursement.

(3)    Agent shall wire transfer to each Lender at such Lender's account as designated on Exhibit H hereto (or otherwise specified by each Lender) its Commitment Percentage of any payments (to the extent payable pursuant to Section 8.5(b)) within one (1) Business Day of Agent's receipt of such payment. Agent shall pay to the Lenders interest thereon, at the Federal Funds Rate from the Business Day following receipt of such funds by Agent until such funds are paid in immediately available funds to the Lender.

(4)    Any Lender desiring to make a claim for costs or taxes payable by Borrower shall deliver a certificate to Agent setting forth the basis and calculation thereof and the Agent shall forward such certificate to the Borrower. Except as provided in the Loan Documents, each Lender shall be responsible for any taxes payable in respect of amounts paid hereunder. All payments made by Agent to Lenders shall be made without withholding for taxes, charges, or levies, except as may be required by law. Each Lender shall on demand from Agent provide completed and signed copies of certificates required to show exemption of such Lender from United States withholding taxes.

(b)    Application of Recoveries. Except to the extent otherwise provided in Section 8.7 hereof, all payments and proceeds received by Agent in connection with the Loan and the Note and all proceeds from the liquidation of collateral, if any, and from any enforcement action (or other realization), from any source related to the Loan, shall be applied in the following order of priority (unless Agent otherwise agrees in writing, or, during the existence and continuance of an Event of Default, unless Agent and all of the Lenders otherwise agree in writing):

(1)    to the reimbursement of any costs incurred by the Agent to administer, enforce, collect or deal with the Loan (including payments made pursuant to Sections 8.5(a)(2) and (3) hereof (or to reimbursement of the Lenders to the extent such costs have been paid by the Lenders);

(2)    to the repayment of any Protective Advances (to the extent not paid pursuant to clause (1) above);

(3)    to the payment of all interest (including interest calculated at the Default Rate) due and payable on each Note and to the payment of all amounts owing to Swap Counterparty under all Swap Contracts that are secured by the Deeds of Trust (which shall be paid parri passu with interest);

(4)    to the payment of fees payable under the Loan Documents;

(5)    to the payment of principal of each Note; and

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(6)    to the payment of any other amounts owing under the Loan Documents.

(c)    Excess Payments. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set‑off or otherwise) on account of its interest in the Loan in excess of its Commitment Percentage in the Loan, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise, as shall result in each Lender receiving in respect of the Note held by it its proportionate payment as contemplated by this Agreement; provided, however, that if all or any portion of such excess payment is thereafter recovered by the Borrower or other party entitled thereto through legal action or otherwise, each Lender shall reimburse the party returning such excess payment in an amount equal to such Lender's Commitment Percentage of the excess payment.

(d)    Liability for Advances. If in the reasonable opinion of the Agent the distribution of any amount received by it in such capacity hereunder or under any of the other Loan Documents might involve it in material liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction, provided that the Agent shall invest any such undistributed amounts in overnight obligations on behalf of the Lenders and interest thereon shall be paid pro rata to the Lenders in accordance with their respective Commitment Percentages. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.

8.6Management of Acquired Collateral. If the Majority Lenders or Agent elect to take title to any of the Properties, whether by the exercise of remedies under the Loan Documents or by a consensual agreement with Borrower or otherwise, Agent shall form a limited liability company (the "Ownership LLC") to hold such ownership interest in the Properties. The manager of the Ownership LLC shall be a wholly owned subsidiary of Agent (the "Manager"). The member interests in the Ownership LLC shall be held by Lenders (or their designees or affiliates) in accordance with their respective Commitment Percentages (the "Members"). The operating agreement for the Ownership LLC shall have terms and provisions similar to this Agreement with respect to the ownership and administration of the Properties (the "Operating Agreement"). The Manager shall have a right to resign, and the Members shall have the right to remove the Manager for cause only under the same terms and conditions as are required for removal or replacement of Agent under Section 8.2(a). The Members shall have voting control of the Ownership LLC in accordance with their respective Commitment Percentages. The Operating Agreement shall require each Member to fund all amounts due from it in connection with the Ownership LLC with respect to the Properties. If any Member is a designee of a Lender, such Lender shall execute an agreement in favor of the Manager and the other Members guarantying the payment of any indemnity and other payment obligations made by such non-Lender Member in connection with the Ownership LLC (each a "Lender Guaranty" and collectively, the "Lender Guaranties"). Notwithstanding the foregoing, if Agent determines that, to protect the collateral securing the Loan or to otherwise avoid significant delays, title to any of the Properties should be transferred for the benefit of Lenders

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before the ownership structure described above can be completed, then Agent shall have the right to take title to such Properties in the name of its wholly-owned subsidiary, on behalf of itself and each Lender, and thereafter, cause such subsidiary to transfer title to the Ownership LLC as soon as reasonably practicable. The specific terms and provisions of the (A) Operating Agreement and all other agreements, instruments, certificates, articles and other documents evidencing, governing and creating the Ownership LLC (the "Formation Documents"), and (B) Lender Guaranties, if any, shall be subject to the approval of Lenders by vote of the Majority Lenders. If the terms and provisions of any such agreements are so approved and are not inconsistent with the provisions of this Agreement, all Lenders or their respective designees, as applicable, shall join in executing and delivering the Formation Documents and the Lender Guaranties, if applicable. Each Lender hereby irrevocably waives any right to seek a partition of any interests in any Property. Prior to entering into the Formation Documents, or if the form or terms thereof are not approved by the Majority Lenders, Agent or its wholly owned subsidiary shall have the sole and exclusive right to make (or to refrain from making) all decisions with respect to, and to perform (or refrain from performing) all actions with respect to, the leasing, encumbering, use, operation, maintenance, improvement, repair and restoration of the Properties (and any Improvements located thereon) or disposition of any other collateral; provided, however, that, notwithstanding anything contained in this Agreement to the contrary, Agent or its wholly owned subsidiary shall not, without the prior written consent of the Majority Lenders, (a) sell (or lease as a whole) any Property or encumber any Property with a mortgage, deed of trust or similar instrument securing indebtedness for borrowed money, or (b) make any single expenditure with respect to any Property in an amount in excess of $500,000 (exclusive of taxes and assessments, insurance premiums, utility charges and expenditures required to comply with applicable laws), (c) make any material repairs, restorations and/or improvements to any Property (except to the extent required by applicable Governmental Requirements) or (d) dispose of any other material collateral. Subject to the foregoing, each Lender, pro rata in accordance with its Commitment Percentage, shall reimburse Agent or its wholly owned subsidiary, as the case may be, on demand, for all costs and expenses incurred by Agent or its wholly owned subsidiary in connection with the sale, lease, encumbering, use, operation, maintenance, improvement, repair and restoration of any Property (including all costs and expenses incurred by Agent to pay taxes and assessments, utility charges, insurance premiums, common area maintenance charges, leasing commissions, tenant improvement costs, repair costs and restoration costs). The indemnity provisions contained in Section 8.1(b) above, shall apply equally to actions (and omissions) by Agent or its wholly owned subsidiary with respect to the Properties so acquired by Agent or its wholly owned subsidiary. Each Lender shall participate pro rata in accordance with their respective Commitment Percentage in all income, expenses, profits and losses of the Properties. The foregoing provisions of this Section 8.6 shall remain in full force and effect following the entering into of the Formation Documents unless the terms thereof specifically contradict the foregoing provisions. Unless all Lenders otherwise consent in writing, the terms and provisions of the Formation Documents for the Ownership LLC shall be consistent with the foregoing provisions of this Section 8.6, this Article 8 and the other applicable provisions of the Loan Documents.

8.7Defaulting Lender.

(a)    Defaults. If for any reason any Lender becomes a Defaulting Lender, then in addition to the rights and remedies that may be available to the Agent and the other Lenders at

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law and in equity, such Defaulting Lender's right to participate in the administration of the Loan and the Loan Documents, including, without limitation, any rights to consent to or direct any action or inaction of the Agent, shall be suspended during the pendency of such failure or refusal. Borrower acknowledges and agrees that (1) the obligations of the Lenders under this Agreement are several, (2) no Lender is or will be obligated to lend Borrower more than the amount set forth in Exhibit I hereto (or the applicable Assignment and Assumption Agreement) for such Lender, nor to fund any part of any advance except upon fulfillment of all applicable conditions precedent provided herein and in the other Loan Documents, (3) except to the extent expressly provided in this Agreement, Borrower shall have no recourse or claim against a non‑defaulting Lender nor against Agent (so long as the same have otherwise complied with their obligations under this Agreement), for any deficiency or any liability, loss, damage or expense resulting from the default of a Defaulting Lender, and (4) the Commitment Percentage of the Committed Amount of any Lender shall not be increased or decreased as a result of the failure by any other Lender to perform its obligation to make an advance.

(b)    Remedies. If for any reason the Defaulting Lender fails to make timely payment to any other party to this Agreement of any amount required to be paid to it hereunder, in addition to other rights and remedies which such other party may have under Section 8.7(a) or otherwise, such other party shall be entitled (1) to collect interest from the Defaulting Lender for the period from the date on which the payment was due until the date on which the payment is made for each day during such period at the Federal Funds Rate, (2) to withhold or set off, and to apply to the payment of the defaulted amount and any related interest, any amounts to be paid to the Defaulting Lender under this Agreement, (3) to bring an action or suit against the Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest, (4) to arrange for the purchase of the Commitment Percentage of the Defaulting Lender as provided in Section 8.7(d), and (5) to advance funds on behalf of the Defaulting Lender as provided in Section 8.7(e).

(c)    Indemnity. The Defaulting Lender shall indemnify, defend, and hold Agent and each of the other Lenders harmless from and against any and all losses, damages, liabilities, and expense (including attorneys' fees) which they may sustain or incur by reason of or in consequence of the Defaulting Lender's failure or refusal to abide by the terms of this Agreement.

(d)    Purchase Right. If a Lender becomes a Defaulting Lender, the other Lenders who are not Defaulting Lenders shall have the right, but not the obligation, in their sole discretion, to acquire (pro rata based on the Commitment Percentages of the Lenders exercising such right) all of such Defaulting Lender's right, title, and interest in and to the Loan. The purchase price shall be the principal and accrued interest allocable to the Defaulting Lender's Commitment Percentage of the Loan and shall be paid on the closing day of such purchase. On the date of closing of such purchase, the Defaulting Lender shall pay the Agent a processing fee of $5,000. The Defaulting Lender shall retain liability for all obligations in respect of the Loan and this Agreement arising prior to the date of transfer and shall execute and deliver such documents as may be reasonably necessary to effect such transfer.

(e)    Default Loans. If a Lender becomes a Defaulting Lender, the other Lenders may (pro rata based on the Commitment Percentages of the Lenders exercising such

- 76- Loan Agreement (KBS REIT II)

right), but are not obligated to, make advances to the Agent in the aggregate amount that the Defaulting Lender is obligated to advance under this Agreement. Such advances shall be treated as loans made to the Defaulting Lender, shall bear interest at the Default Rate (payable on demand), shall be due and payable upon demand, and shall be paid prior to any payment being made to the Defaulting Lender.

(f)    Payments Owed to Defaulting Lender. If a Lender becomes a Defaulting Lender, any amount payable to such Defaulting Lender under the Loan Documents (whether on account of principal, interest, fees or otherwise) shall, in lieu of being distributed to such Defaulting Lender, be retained by Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by Agent: (i) first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder, (ii) second, to the funding of any advances in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Agent, and any related interest as described in Section 8.7(b) above, (iii), third, to the repayment of any default loans described in Section 8.7(e) above, (iv) fourth, if so determined by the Agent, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, (v) fifth, pro rata, to the payment of any amounts owing to the Borrower or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by the Borrower or any Lender against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement, and (vi) sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction.

(g)    Cumulative Remedies and Survival. The exercise of the above remedies shall not reduce, diminish or liquidate the Defaulting Lender's obligation for the sharing of losses and reimbursement of costs, liabilities, and expenses under the Loan Documents and this Agreement. The obligations of the Defaulting Lender arising prior to any purchase pursuant to Section 8.7(d) shall survive any such purchase.

8.8Representations, Warranties and Acknowledgments.

(a)    Authorization, etc. Each Lender represents and warrants, as of the date hereof, as follows:

(1)    Such Lender has all necessary corporate power and authority to own its interest in the Loan and the Loan Documents, and has all necessary corporate power and authority to perform its obligations with respect to this Agreement and the Loan Documents;

(2)    The execution and delivery of this Agreement and all other instruments and documents executed and delivered in connection therewith by such Lender have been duly authorized by all requisite corporate action of such Lender; and

(3)    No approval, authorization, order, license or consent of, or registration of filing with, any Governmental Authority or other person is required in connection with such Lender's execution and delivery of this Agreement by such Lender.

(b)    Independent Decision. Each Lender agrees that it has, independently and without reliance upon any other party hereto, or upon the directors, officers, agents or employees

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of any other party hereto, but only in reliance upon information supplied to it by or on behalf of the Borrower and upon such other information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement and the Loan Documents. Without limiting the foregoing, each Lender acknowledges that it has received copies of the Loan Documents and financial statements, certificates, instruments, documents, affidavits, resolutions and agreements as it deems necessary to make its credit analysis and decisions in respect of the Loan. Each Lender also agrees that it shall, independently and without reliance upon any other party hereto, continue to make its own independent credit analyses and decisions in acting or not acting under the Loan Documents. Except as specifically provided herein, the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the Closing Date or at any time or times thereafter.

(c)    No Reliance. Each Lender hereby acknowledges that, except as specifically set forth herein, Agent (i) makes no warranty or representation to Lenders for any statements, warranties or representations (written or otherwise, express or implied) made in or in connection with the Loan Documents of for the financial condition of the Borrower or for the title or the value of any of the collateral for the Loan, and (ii) shall not be responsible to the Lenders for any recitals, statements, representations or warranties herein or for the due execution, effectiveness, legality, validity, enforceability, genuineness, sufficiency, or collectability of any of the Loan Documents or any other instrument or document furnished pursuant thereto or in connection with the Loan or the legality, validity, enforceability, genuineness, sufficiency, perfection or priority of any rights in all or any portion of the collateral for the Loan. The Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by the Borrower or Guarantor or any holder of any Note shall have been duly authorized or is true, accurate and complete. Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any of the other Loan Documents or the financial condition of the Borrower or any of its Affiliates, or the existence or possible existence of any Event of Default or any default which, with the giving of notice, passage of time, or both, would become an Event of Default.

8.9Assignments; Participation.

(a)    Permitted Assignments. Any Lender may, upon the prior approval of Agent and Borrower (which consent shall not be unreasonably withheld or delayed), assign to any affiliate of such Lender all or a portion of its respective Commitment Percentage of the Loan, in such a manner as to create privity of contract between such affiliate and the Borrower and to make such affiliate a Lender for all purposes hereunder. Any Lender may, upon the prior approval of Agent (and so long as no Event of Default has occurred and is continuing, the prior approval of Borrower, which shall not be unreasonably withheld or delayed), assign to any entity which meets the following conditions ("Assignee Lender") all or a portion of its respective Commitment Percentage of the Loan, in such a manner as to create privity of contract between such person and the Borrower and to make such person a Lender for all purposes hereunder:

(1)    The minimum portion of the total commitment which the assigning Lender may assign to an Assignee Lender shall be Ten Million Dollars ($10,000,000.00).

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(2)    Without limiting the power of consent in subsection (4) below, an Assignee Lender (or its direct or indirect parent) shall be either (A) a commercial lender organized under the laws of the United States, or any state thereof, and having total assets in excess of Two Billion Dollars ($2,000,000,000) or (B) a commercial bank organized under the laws of any other country which has total assets in excess of Ten Billion Dollars ($10,000,000,000) or (C) any other financial institution which has total assets in excess of Ten Billion Dollars ($10,000,000,000).

(3)    The senior unsecured debt of an Assignee Lender (or its direct or indirect parent) shall have a rating of Baa‑2 (stable outlook) or higher from Moody's Investors Service, Inc. or a comparable rating agency.

(4)    Such assignment shall have been approved by Agent, which approval shall not be unreasonably withheld. No sub‑assignments shall be permitted.

(5)    The Assignee Lender shall have paid to the Agent an administrative fee of $3,500.00 to process the admission of such Assignee Lender.

(6)    The Assignee Lender shall not be Borrower or any of Borrower's Affiliates.

(b)    Assignment and Assumption. The Borrower and Agent may continue to deal solely and directly with the assigning Lender in connection with the interest so assigned to an Assignee Lender (or to an affiliate of such Lender) until such time as (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee Lender (or such affiliate) shall have been given to the Borrower and Agent by the assigning Lender and the Assignee Lender (or such affiliate); (ii) the assigning Lender and the Assignee Lender (or such affiliate) shall have delivered to the Borrower and Agent an Assignment and Assumption.

Upon request, Borrower will execute and deliver to Agent, at Borrower's cost to the extent such costs do not exceed $10,000, an appropriate replacement promissory note or replacement promissory notes in favor of each assignee (and assignor, if such assignor is retaining a portion of its Commitment Percentage and advances) reflecting such assignee's (and assignor's) Commitment Percentage of the Committed Amount. Upon execution and delivery of such replacement promissory note(s) the original promissory note or notes evidencing all or a portion of the Commitment Percentage of the Committed Amount and advances being assigned shall be canceled and returned to Borrower. For purposes of clarification, if Borrower's costs relating to an Assignment and Assumption exceed $10,000, such costs exceeding $10,000 shall be borne by the Lenders receiving replacement notes pro rata in accordance with such Lenders' Commitment Percentage of the Committed Amount. Under no circumstances shall Borrower be required to execute any certifications or similar documents or to provide any representations or warranties confirming the accuracy of any information or otherwise in connection with any assignment or participation.

(c)    Notice by Agent. Promptly following receipt by Agent of an executed Assignment and Assumption, Agent shall give notice to the Borrower and to the Lenders of:

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(i) the effectiveness of the assignment by the assigning Lender to the Assignee Lender (or the affiliate of the Lender); and (ii) the revised percentages and maximum amounts of the Commitment Percentage of the Committed Amount in effect as a result of such assignment.

(d)    Adjustment of Shares. Immediately upon delivery of the Assignment and Assumption to Agent, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee Lender (or affiliate of the Lender) and the resulting adjustment of the Commitment Percentage arising therefrom. The Commitment Percentage of the Committed Amount assigned to each Assignee Lender (or such affiliate) shall reduce the Commitment Percentage of the Committed Amount of the assigning Lender by a like amount.

(e)    Rights of Assignee. From and after the date upon which Agent notifies the assigning Lender that it has received an executed Assignment and Assumption: (1) the Assignee Lender (or the Lender's affiliate) thereunder shall be a party to this Agreement and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, shall have the rights and obligations of a Lender under this Agreement; provided, however, that the Assignee Lender's consent shall be required only with respect to matters particularly set forth in Sections 8.4(b)(1), (3), (4) and (7) hereof, and (2) the assigning Lender shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its obligations under this Agreement.

(f)    Assignee's Agreements. By executing and delivering an Assignment and Assumption, the Assignee Lender (or the Lender's affiliate) thereunder confirms and agrees as follows: (1) other than as provided in such Assignment and Assumption, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the Note or any other instrument or document furnished pursuant to the Loan; (2) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any other parties or the performance or observance by the Borrower of any of its obligations under the Note and this Agreement; (3) the Assignee Lender (or such affiliate) has received a copy of this Agreement, together with such other documents and information as the Assignee Lender (or such affiliate) has deemed appropriate to make its own credit analysis and decision to enter into the Assignment and Assumption; (4) the Assignee Lender (or such affiliate) will, independently and without reliance upon Agent, continue to make its own credit decisions in taking or not taking action under this Agreement; (5) the Assignee Lender (or such affiliate) hereby appoints and authorizes Agent to take such action as administrative agent on its behalf and to exercise such powers under the Loan Documents and this Agreement as are delegated to Agent thereunder and hereunder, together with such powers as are reasonably incidental thereto; and (6) the Assignee Lender (or such affiliate) agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender and confirms the representations and warranties of the assigning Lender under this Agreement.

- 80- Loan Agreement (KBS REIT II)

(g)    Participations. Any Lender may upon prior written notice to Borrower and Agent sell a participation interest in all or any portion of the Loan without the prior consent of the Agent and the other Lenders; provided, however, the voting rights of any participants shall be limited to actions with respect to increases in the maximum Committed Amount, extensions of the maturity date beyond the extension option terms and changes in the interest rates applicable to the Loan.

8.10Other Business. The Agent and each Lender may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with Borrower or any affiliate of Borrower as if it were not performing the duties specified herein, and may accept fees and other considerations from the Borrower or any such affiliate for services in connection with this Agreement and otherwise without having to account for the same to the other parties hereto.

8.11Consents. If the Agent requests in writing consent or approval from the Lenders and any Lender does not respond to such written request within ten (10) Business Days (or such other period as may be provided herein), such Lender shall be deemed to have given such consent or approval.

8.12Agent as Lender. In its individual capacity as a Lender, U.S. Bank shall have the same obligations and the same rights, powers and privileges in respect to its Commitment Percentage and the Advances made by it, and as the holder of any Note as it would have were it not also the Agent.

8.13Notification of Defaults and Events of Default. Each Lender hereby agrees that, upon learning of the existence of a default or an Event of Default, it shall (to the extent notice has not previously been provided) promptly notify the Agent thereof. The Agent hereby agrees that upon receipt of any notice under this provision it shall promptly notify the other Lenders of the existence of such default or Event of Default.

8.14No Reliance by Borrower. Except for the provisions contained in Sections 8.1(a), 8.2(a) and 8.3(a),Sections 8.9(a), (b) and (c) and Section 8.17 hereof (which Borrower shall have the right to enforce), the provisions of this Article VIII are solely for the benefit of Agent and the Lenders, and Borrower shall have no right to rely on or enforce any of the provisions under this Article VIII and in no event shall Borrower have any additional obligations arising solely out of the provisions contained in this Article VIII, except for those obligations expressly provided for in Sections 8.2(b), 8.7(a) and Section 8.9(a), and 8.9(b) of this Agreement. In performing its functions and duties under this Agreement, Agent shall act solely as Agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for Borrower or any other person.

8.15Reliance. Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents, telecopies or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper person, and with respect to all matters pertaining to this Agreement or any of the other Loan Documents and its duties hereunder or thereunder, upon advice of legal counsel (including counsel for Borrower), independent public accountants and other experts selected by it.

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8.16Pledge to Federal Reserve Bank. Anything in this Agreement to the contrary notwithstanding, without the need to comply with any of the formal or procedural requirements of this Agreement, including this Section 8.16, any Lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from its obligations thereunder. To facilitate any such pledge or assignment, Agent shall, at the request of such Lender, enter into a letter agreement with the Federal Reserve Bank in, or substantially in, the form of the exhibit to Appendix C to the Federal Reserve Bank of New York Operating Circular No. 10.

8.17Confidentiality.

(a)    Lenders agree to use commercially reasonable efforts to preserve the confidential nature of financial information obtained pursuant to the requirements of this Agreement and identified as confidential by Borrower or Guarantor; provided, however, that the foregoing shall not apply to (i) disclosures required of any Lender pursuant to any applicable law, rule, regulation or order of any Governmental Authority, (ii) any information contained in any report prepared or delivered pursuant to the reporting requirements of federal or state securities laws and regulations, including, but not limited to, any prospectus, registration statement, proxy materials or periodic reports, (iii) any disclosures made in connection with the enforcement of any of the Loan Documents or any litigation in connection therewith, or (iv) disclosures of information that is publicly available other than as a result of a disclosure by any Lender. In addition, and notwithstanding the foregoing, Agent agrees not to share any confidential information of Borrower or Guarantor with any potential or actual Loan Participant or Assignees without first obtaining Borrower's or Guarantor's consent (which consent shall require an execution of a confidentiality agreement or confidentiality agreements, in form and substance reasonably satisfactory to Borrower).

(b)    Notwithstanding anything to the contrary set forth herein or in any other written or oral understanding or agreement to which the parties hereto are parties or by which they are bound, the parties hereto acknowledge and agree that (i) any obligations of confidentiality contained herein and therein do not apply and have not applied from the commencement of discussions between the parties to the tax treatment and tax structure of the transactions contemplated by the Loan Documents (and any related transactions or arrangements), and (ii) each party (and each of its employees, representatives, or other agents) may disclose to any and all parties as required by applicable laws, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by the Loan Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, all within the meaning of Treasury Regulations Section 1.6011‑4; provided, however, that each party acknowledges that any privilege that may exist for the benefit of a party, in such party's sole discretion, to maintain the confidentiality of a communication relating to the transactions contemplated by the Loan Documents, including a confidential communication with its attorney or a confidential communication with a federally authorized tax practitioner under Section 7525 of the Internal Revenue Code, is not intended to be affected by the foregoing.

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[Signatures on Following Page]

- 83- Loan Agreement (KBS REIT II)

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed and delivered this Agreement, under seal, as of the date first written above.

Borrower:

KBSII 100-200 CAMPUS DRIVE, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION I, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited partnership,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation, its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1 Loan Agreement (KBS REIT II)

KBSII ONE MEADOWLANDS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION XXV, LLC

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation, its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.

Chief Executive Officer

KBSII WILLOW OAKS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION V, LLC

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation, its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.

Chief Executive Officer

S-2 Loan Agreement (KBS REIT II)

Agent:

U.S. BANK NATIONAL ASSOCIATION,

as Agent

By: /s/ Adrian B. Montero

Name: Adrian B. Montero

Title: Senior Vice President

Lender(s):

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Adrian B. Montero

Name: Adrian B. Montero

Title: Senior Vice President

TD BANK, N.A.

By: /s/ Brian S. Welch

Name: Brian S. Welch

Title: Senior Vice President

(Lender signatures continued on next page)

S-3 Loan Agreement (KBS REIT II)

EXHIBIT A

ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is dated as of _______________, 20___, between __________________________________ ("Assignor") and _________________________________________ ("Assignee").

RECITALS:

Assignor is a Lender under that certain Loan Agreement dated as of ______, 2013 (the "Loan Agreement") by and between U.S. Bank National Association in its capacity as a Lender and as Agent (the "Agent") and certain other Lenders named therein, as modified from time to time. The Lenders made a loan to KBSII 100-200 CAMPUS DRIVE, LLC, KBSII ONE MEADOWLANDS, LLC, and KBSII WILLOW OAKS, LLC, each a Delaware limited liability company (collectively, "Borrower"). Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Loan Agreement. Assignor desires to assign to Assignee and Assignee desires to accept and assume [a portion of] the rights and obligations of Assignor under the Loan Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

1.Assignment. Effective on the Assignment Effective Date (as defined in Section 3 below), Assignor hereby assigns to Assignee an Assigned Share (as defined below) of all of Assignor's right, title, interest and obligations under the Loan Agreement and other Loan Documents. The Assigned Share of all such rights, title, interest and obligations is referred to collectively as the "Assigned Rights and Obligations".

The "Assigned Share" means (a) a $________________ portion of the total Committed Amount on the Assignment Effective Date (which shall include Assignee's Commitment Percentage of all Advances outstanding under the Loan Agreement on the Assignment Effective Date). Following the assignment, the Assignee's Commitment Percentage shall equal the quotient of the above portion of the Committed Amount divided by $________________ [insert Loan amount] expressed as a percentage rounded to eight decimal places (i.e., _________%), and the Assignor's Commitment Percentage shall equal _________%.

2.    Assumption. Effective on the Assignment Effective Date, Assignee hereby accepts the foregoing assignment of, and hereby assumes from Assignor, the Assigned Rights and Obligations.

3.    Effectiveness. This Agreement shall become effective on a date (the "Assignment Effective Date") selected by Assignor, which shall be on or as soon as practicable after the execution and delivery of counterparts of this Agreement by Assignor, Assignee, Agent

EXHIBIT A - Page 1 Loan Agreement (KBS REIT II)

and Borrower. Assignor shall promptly notify Assignee, Agent and Borrower in writing of the Assignment Effective Date.

4.    Payments on Assignment Effective Date. In consideration of the assignment by Assignor to and the assumption by Assignee of the Assigned Rights and Obligations, on the Assignment Effective Date (a) Assignee shall pay to Assignor the amount of $________ [usually the Assignee's Commitment Percentage of the outstanding principal], and (b) Assignee shall pay to Agent an assignment processing fee of $3,500.

5.    Allocation and Payment of Interest and Fees.

(a)    Agent shall pay to Assignee all interest, and other amounts not constituting principal that are paid by or on behalf of Borrower pursuant to the Loan Documents and are attributable to the Assigned Rights and Obligations ("Borrower Amounts"), that accrue on and after the Assignment Effective Date. If Assignor receives or collects any such Borrower Amounts, Assignor shall promptly pay them to Assignee.

(b)    Agent shall pay to Assignor all Borrower Amounts that accrue before the Assignment Effective Date when and as the same are paid by Agent to the other the Lenders. If Assignee receives or collects any such Borrower Amounts, Assignee shall promptly pay such amounts to Assignor.

(c)    Unless specifically assumed by Assignee, Assignor shall be responsible and liable for all reimbursable liabilities and costs and indemnification obligations which accrue prior to the Assignment Effective Date, and such liability shall survive the Assignment Effective Date.

(d)    Agent shall not be liable for any allocation or payment to either Assignor or Assignee subsequently determined to be erroneous, unless resulting from Agent's willful misconduct or gross negligence.

6.    Representations and Warranties.

(a)    Each of Assignor and Assignee represents and warrants to the other and Agent as follows:

(i)    It has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by this Agreement;

(ii)    The making and performance of this Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate any law or regulation applicable to it;

(iii)    This Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms; and

EXHIBIT A - Page 2 Loan Agreement (KBS REIT II)

(iv)    All approvals, authorizations or other actions by, or filings with, any Governmental Authority necessary for the validity or enforceability of its obligations under this Agreement have been made or obtained.

(b)    Assignor represents and warrants to Assignee that Assignor owns the Assigned Rights and Obligations, free and clear of any lien or other encumbrance.

(c)    Assignee represents and warrants to Assignor as follows:

(i)    Assignee has made and shall continue to make its own independent investigation of the financial condition, affairs and creditworthiness of the Borrower and Guarantor and any other person or entity obligated under the Loan Documents (collectively, "Credit Parties"), and the value of any collateral now or hereafter securing any of the Obligations; and

(ii)    Assignee has received a copy of those Loan Documents and such other documents, financial statements and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement.

7.    No Assignor Responsibility. Assignor makes no representation or warranty and assumes no responsibility to Assignee for:

(a)    the execution (by any party other than Assignor), effectiveness, genuineness, validity, enforceability, collectability or sufficiency of the Loan Documents or for any representations, warranties, recitals or statements made in the Loan Documents or in any financial or other written or oral statement, instrument, report, certificate or any other document made or furnished or made available by Assignor to Assignee or by or on behalf of Borrower or Guarantor to Assignor or Assignee in connection with the Loan Documents and the transactions contemplated thereby;

(b)    the performance or observance of any of the terms, covenants or agreements contained in any of the Loan Documents or as to the existence or possible existence of any default or Event of Default under the Loan Documents; or

(c)    the accuracy or completeness of any information provided to Assignee, whether by Assignor or by or on behalf of Borrower or Guarantor.

Assignor shall have no initial or continuing duty or responsibility to make any investigation of the financial condition, affairs or creditworthiness of Borrower or Guarantor, in connection with the assignment of the Assigned Rights and Obligations or to provide Assignee with any credit or other information with respect thereto, whether coming into its possession before the date hereof or at any time or times thereafter.

8.    Assignee Bound By Loan Agreement. Effective on the Assignment Effective Date, Assignee (a) shall be deemed to be a party to the Loan Agreement, (b) agrees to be bound by the Loan Agreement as it would have been if it had been an original Lender thereunder, and (c) agrees to perform in accordance with their respective terms all of the obligations which are required under the Loan Documents to be performed by it as a Lender. Assignee appoints and

EXHIBIT A - Page 3 Loan Agreement (KBS REIT II)

authorizes Agent to take such actions as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto.

9.    Assignor Released From Loan Agreement. Effective on the Assignment Effective Date, Assignor shall be released from the Assigned Rights and Obligations; provided, however, that Assignor shall retain all of its rights to indemnification under the Loan Agreement and the other Loan Documents for any events, acts or omissions occurring before the Assignment Effective Date, and to the extent not assumed by Assignee, Assignor shall continue to be responsible for the liabilities and obligations described in Section 5(c).

10.    New Notes. On or promptly after the Assignment Effective Date, Borrower, Agent, Assignor and Assignee shall make appropriate arrangements so that [a] new Note[s] executed by Borrower, dated as of the Assignment Effective Date and in the amount of the [respective] commitment[s] of [Assignor and] Assignee, after giving effect to this Agreement, are issued to [Assignor and] Assignee, in exchange for the surrender by Assignor [and Assignee] to Borrower of any applicable outstanding Note marked "Exchanged". The provisions of this Section 10 are subject to Section 8.9(b) of the Loan Agreement.

11.    General.

(a)    No term or provision of this Agreement may be amended, waived or terminated orally, but only by an instrument signed by the parties hereto.

(b)    This Agreement may be executed in one or more counterparts. Each set of executed counterparts shall be an original. Executed counterparts may be delivered by facsimile transmission.

(c)    If Assignor has not assigned its entire remaining commitment of the Loan to Assignee, Assignor may at any time and from time to time grant to others pursuant to the Loan Agreement assignments of or participation in all or part of Assignor's remaining Loan or commitment.

(d)    This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Neither Assignor nor Assignee may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other and Agent. The preceding sentence shall not limit the right of Assignee to grant to others assignment of or participation in all or part of the Assigned Rights and Obligations to the extent permitted by the terms of the Loan Agreement.

(e)    All payments to Assignor or Assignee hereunder shall, unless otherwise specified by the party entitled thereto, be made in Dollars, in immediately available funds, and to the address or account specified on the signature pages of this Agreement. The address of Assignee for notice purposes under the Loan Agreement shall be as specified on the signature pages of this Agreement.

(f)    If any provision of this Agreement is held invalid, illegal or unenforceable, the remaining provisions hereof will not be affected or impaired in any way.

EXHIBIT A - Page 4 Loan Agreement (KBS REIT II)

(g)    Each party shall bear its owns expenses in connection with the preparation and execution of this Agreement.

(h)    This Agreement shall be governed by and construed in accordance with the laws of the State of California.

IN WITNESS WHEREOF, the parties have executed this Agreement, under seal, as of the day and year first above written.

	Assignor:
Address:   ___________________________________ ___________________________________ ___________________________________ Attention: __________________________	___________________________________ By: ________________________________ Name: _______________________________ Title: _______________________________
	Assignee:
Address:   ___________________________________ ___________________________________ ___________________________________ Attention: __________________________	___________________________________ By: ________________________________ Name: _______________________________ Title: _______________________________

EXHIBIT A - Page 5 Loan Agreement (KBS REIT II)

ACKNOWLEDGED AND AGREED: [Borrower is executing in signature blocks below solely for the purpose of acknowledging receipt of the Assignment and Assumption Agreement to which this acknowledgment is attached and, by signing below, Borrower shall not incur any additional obligations or additional liability except as contemplated by the Loan Documents.]

Borrower:

KBSII 100-200 CAMPUS DRIVE, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION I, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation, its general partner

Charles J. Schreiber, Jr.,

Chief Executive Officer

EXHIBIT A - Page 6 Loan Agreement (KBS REIT II)

KBSII ONE MEADOWLANDS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION XXV, LLC

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation, its general partner

By: ______________________

Charles J. Schreiber, Jr.

Chief Executive Officer

KBSII WILLOW OAKS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION V, LLC

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation, its general partner

By: ______________________

Charles J. Schreiber, Jr.

Chief Executive Officer

EXHIBIT A - Page 7 Loan Agreement (KBS REIT II)

Agent:

U.S. BANK NATIONAL ASSOCIATION,

as Agent

By: _____________________________

Name: _____________________________

Title: _____________________________

Address:

EXHIBIT A - Page 8 Loan Agreement (KBS REIT II)

EXHIBIT B

DESCRIPTION OF IMPROVEMENTS

The KBS 100-200 Campus Drive Improvements include two 4-story class A office buildings totaling approximately 574,970 square feet.  

The KBS One Meadowlands Improvements include one 15-story class A office building totaling approximately 421,719 square feet.

The KBS Willow Oaks Improvements include three class A office buildings totaling approximately 570, 038 square feet.

EXHIBIT B Loan Agreement (KBS REIT II)

EXHIBIT C-1

LEGAL DESCRIPTION OF THE KBS 100-200 CAMPUS DRIVE LAND

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE BOROUGH OF FLORHAM PARK, COUNTY OF MORRIS, AND STATE OF NEW JERSEY, AND IS DESCRIBED AS FOLLOWS:

All that real property located in the Borough of Florham Park, County of Morris and State of New Jersey, more particularly described as follows:

TRACT ONE:

Lot 4.02, Block 1201 as shown on a map entitled "Final Plat of Major Subdivision, Florham Park Corporate Centre, Phase 1, Block 1201, Lot 4, Borough of Florham Park, Morris County, New Jersey", prepared by Storch Engineers and filed in the Morris County Clerk's Office on November 23, 1988 as Map No. 4720.

TRACT TWO:

Lot 4.04 in Block 1201 as shown on a map entitled "Final Plat of Major Subdivision, Florham Park Corporate Centre, Phase II, Block 1201, Lot 4, Borough of Florham Park, Morris County, New Jersey", prepared by Storch Engineers and filed in the Morris County Clerk's Office on September 15, 1989 as Map No. 4799.

FOR INFORMATION PURPOSES ONLY:

"In compliance with Chapter 157, Laws of 1977, premises herein is Lots 5 and 7 in Block 1201 on the Tax Map of the Borough of Florham Park, County of Morris, State of New Jersey."

TRACT THREE:

A perpetual non-exclusive access easement over and across Campus Drive, the Landscaping Islands (as defined in the Landscaping Maintenance Agreement), the Campus Drive Jug Handle (as defined in the Landscaping Maintenance Agreement) and the Campus Drive Jug Handle Basin (as defined int he Landscaping Maintenance Agreement) as provided in the Deed recorded in Book 3503, page 287, and in that Landscaping Maintenance Agreement dated October 17, 2000, recorded in Deed Book 5270, page 150, Morris County Clerk's Office, Morris County, New Jersey.

TRACTOR FOUR:

A non-exclusive easement to develop, install, use, maintain, repair, inspect, remove and replace the Common Facilities (as defined in the Declaration), a non-exclusive easement in, upon, over, under, across, and through the Lots (as defined in the Declaration) for surface water drainage and runoff, and a non-exclusive blanket easement for entry upon, over, across, and through the Lots for the purpose for carrying out the objectives of the Declaration, as described in that Declaration of Cross-Easements as set forth in Deed Book 4262, page 258, as amended by First Amended Declaration of Cross-Easements as set forth in Deed Book 4748, page 36.

BEING ALSO KNOWN AS (FOR INFORMATIONAL PURPOSES ONLY):

Being known and designated as Block 1201, Lot 5 and 7 on the official tax map of the Borough of Florham Park, County of Morris, NJ.

EXHIBIT C-1 Loan Agreement (KBS REIT II)

EXHIBIT C-2

LEGAL DESCRIPTION OF THE KBS ONE MEADOWLANDS LAND

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE BOROUGH OF EAST RUTHERFORD, COUNTY OF BERGEN, AND STATE OF NEW JERSEY, AND IS DESCRIBED AS FOLLOWS:

All that certain tract or parcel of land and premises, situate, lying and being in the Borough of East Rutherford, County of Bergen and State of New Jersey, more particularly described as follows:

PARCEL ONE;

Beginning at a B2A Capped Pin Found at the point of intersection of the Southerly line of the South Service Road, and Lands of the New Jersey Turnpike, said point having New Jersey State Plane Coordinates (NAD 27 feet) of N-719251.185, E=608547.407, and from said beginning point running thence;

1.    Along said South Service Road, South 75 Degrees 49 minutes 41 seconds East a distance of 621.82 feet to a point of curve, thence;

2.    Still along same, along a curve to the right having a radius of 643.00 feet a Delta of 28 degrees 43 minutes 23 seconds, an arc length 322.34 feet and a chord which bears South 61 degrees 27 minutes 58 seconds East having a chord distance of 318.98 feet to a point of compound curve, thence;

3.    Still along same, along a curve to the right having a radius of 5,123.63 feet a Delta of 00 degrees 32 minutes 40 seconds, an arc length 48.69 feet and a chord which bears South 46 degrees 49 minutes 56 seconds East having a chord distance of 48.69 feet to a point and corner in a common with Lot 3 of Block 108.03 as shown on the Municipal Tax map of the Borough of East Rutherford, Bergen County, New Jersey, thence;

4.    Along Westerly line of Lot 3, South 37 degrees 55 minutes 44 seconds West a distance of 458.80 feet to a point and corner in common with Lot 1.02 of said Block, thence;

5.    Along Northerly line of said Lot 1.02, the following two courses, North 52 degrees 06 minutes 17 seconds West a distance of 360.86 feet to a point, thence;

6.    South 83 degrees 04 minutes 52 seconds West a distance of 610.55 feet to a point in the Easterly line of the aforementioned lands of the New Jersey Turnpike, thence;

7.    Along said lands of the New Jersey Turnpike Authority, the following two courses, North 04 degrees 07 minutes 39 seconds West a distance of 121.93 feet to a B2A Capped Pin Found, Thence;

8.    North 31 degrees 26 minutes 50 seconds East a distance of 504.15 feet to the point and place of beginning.

PARCEL TWO:

Together with the benefit of title rights set forth in Declaration of Easements, Covenants and Restrictions for Meadowlands Plaza recorded In Deed Book 8278, page 204, including, but not limited to, access easements for vehicular and pedestrian ingress and egress, easements for use of certain common areas, and easements for drainage facilities, utility lines and street lighting.

EXHIBIT C-2 Loan Agreement (KBS REIT II)

BEING ALSO KNOWN AS (REPORTED FOR INFORMATIONAL PURPOSES ONLY):

Block 108.03, Lot 1.01 on the tax map of the Borough of East Rutherford, County of Bergen, State of New Jersey.

EXHIBIT C-2 Loan Agreement (KBS REIT II)

EXHIBIT C-3

LEGAL DESCRIPTION OF THE KBS WILLOW OAKS LAND

All of that certain lot or parcel of land situated, lying and being in Fairfax County, Virginia, and being more particularly described as follows:

TRACTI:

All of Parcel E-2-1, WILLOW OAKS CORPORATE CENTER, and containing 4.19681 acres, more or less, as the same is more particularly shown on plat attached to Deed of Resubdivision of Parcel E-2, Providence Park, recorded in Deed Book 7085 at page 884, among the land records of Fairfax County, Virginia.

TOGETHER WITH AND SUBJECT TO easements for vehicular and pedestrian passage as shown on the Deed of Resubdivision as recorded in Deed Book 7085 at page 884, among the aforesaid land records and as more particularly set forth in that certain Roadway Easement Agreement as recorded in Deed Book 7108 at page 375, among the aforesaid land records.

TRACT II:

All of Parcel E-4, WILLOW OAKS CORPORATE CENTER, and containing 4.05294 acres (erroneously referenced in the Deed recorded in Deed Book 18135, at page 539 as 4.06294 acres), more or less, as the same is more particularly shown on plat attached to Deed of Resubdivision of Parcel E-2, Providence Park, recorded in Deed Book 7085 at page 884, among the land records of Fairfax County, Virginia.

TOGETHER WITH AND SUBJECT TO easements for vehicular and pedestrian passage as shown on the Deed of Resubdivision as recorded in Deed Book 7085 at page 884, among the aforesaid land records and as more particularly set forth in that certain Roadway Easement Agreement as recorded in Deed Book 7108 at page 375, among the aforesaid land records.

TRACT III:

All of Parcel E-3, WILLOW OAKS CORPORATE CENTER, as more particularly shown on plat attached to Deed of Resubdivision of Parcel E-2, Providence Park, recorded in Deed Book

7085 at page 884, among the land records of Fairfax County, Virginia.

TOGETHER WITH AND SUBJECT TO easements for vehicular and pedestrian passage as shown on the Deed of Resubdivision as recorded in Deed Book 7085 at page 884, among the aforesaid land records and as more particularly set forth in that certain Roadway Easement Agreement as recorded in Deed Book 7108 at page 375, among the aforesaid land records.

EXHIBIT C-3 Loan Agreement (KBS REIT II)

EXHIBIT D

PERMITTED ENCUMBRANCES

As set forth in Agent's letter of title instructions to the Title Company setting forth Agent's requirements for the Title Policy for each Deed of Trust encumbering a Property. In no event shall any deeds of trust, mortgages or other liens securing indebtedness or monetary obligations (other than the Deeds of Trust in favor of Agent for the benefit of Lenders) be "Permitted Encumbrances."

EXHIBIT D Loan Agreement (KBS REIT II)

EXHIBIT E

[Intentionally Omitted.]

EXHIBIT E Loan Agreement (KBS REIT II)

EXHIBIT F

TITLE INSURANCE REQUIREMENTS

For each Deed of Trust, an ALTA form extended coverage lender's policy of title insurance] [a title insurance policy in the form of an American Land Title Association Extended Coverage Loan Policy 1970, amended 10/17/70 (without further modification, revision or amendment) with ALTA Endorsement Form 1 Coverage, with such endorsements as Agent requires in its sole discretion (including but not limited to variable rate, survey, creditors' rights (if applicable), comprehensive coverage, access, zoning (with parking), subdivision, usury, separate tax lot, contiguity, first-loss and tie-in endorsements as available), insuring that such Deed of Trust is a valid, first priority lien on the Property encumbered thereby, and in an insured amount as reasonably required by Agent. Each Title Policy must not contain any exceptions or exclusions other than Permitted Encumbrances or as may be approved by Agent in writing. Each Title Policy must contain such reinsurance agreements and direct access agreements as Agent may require. During the term of the Loan, Agent may require other endorsements to the Title Policies, as specified in the Loan Agreement.

EXHIBIT F Loan Agreement (KBS REIT II)

EXHIBIT G

Insurance Requirements

I.PROPERTY INSURANCE

An ORIGINAL (or certified copy) All-Risk Hazard Insurance Policy or Acord 28 Certificate of Insurance naming the borrowing entity as an insured, reflecting coverage of 100% of the replacement cost, and written by a carrier approved by Lender with a current A.M. Best's Insurance Guide Rating of at least A-IX (which is authorized to do business in the state in which the property is located) that affirmatively includes the following:

1. Mortgage Clause naming Agent as Mortgagee ISAA ATIMA with a 30-day notice to Agent in the event of cancellation, non-renewal or material change or the Lenders Loss Payable Endorsement specified in 2 below.

Address for Agent is as follows:

U.S. Bank National Association, ISAA ATIMA

Commercial Real Estate

4100 Newport Place, Suite 900

Newport Beach, CA 92660

Attention: Loan Administration

2. Lender's Loss Payable Endorsement (ISO 1218 or similar) with a 30-day notice to Lender in the event of cancellation, non-renewal or material change.

3. Replacement Cost Endorsement.

4. No Exclusion for Acts of Terrorism (United States Certified Acts of Terrorism coverage – TERRORISM RISK INSURANCE PROGRAM REAUTHORIZATION ACT OF 2007).

5. No Coinsurance Clause.

6. Boiler and Machinery Coverage (aka Electrical and Mechanical Breakdown).

7. Sprinkler Leakage Coverage.

8. Vandalism and Malicious Mischief Coverage.

9. Flood Insurance (with respect to the Initial Properties, initially required only for the KBS One Meadowlands Property; but will be required for all

EXHIBIT G - Page 1 Loan Agreement (KBS REIT II)

Properties that Agent determines are, at any time, in a Special Flood Hazard Area).

10. Loss of Rents Insurance in an amount of not less than 100% of one year's Rental Value of the Property. "Rental Value" shall include:

(a)The total projected gross rental income from tenant occupancy of the Property as determined by Agent.

(b)The amount of all charges which are the legal obligation of tenants and which would otherwise be the obligation of Borrower; and

(c)The fair rental value of any portion of the Property which is occupied by Borrower.

11. One year's business interruption insurance in an amount acceptable to Lender.

12. Coastal & Other Wind Coverage.

13. Extra Expense Coverage.

14. Borrower’s coverage is primary and non-contributory with any insurance or self-insurance carried by U.S. Bank National Association (or any other Lender)

15. Demolition and Increased Cost of Construction.

II.LIABILITY INSURANCE

BORROWER: An Acord 25 Certificate of Liability Insurance naming the borrowing entity as an insured, providing coverage on an “occurrence” rather than a “claims made” basis and written by a carrier approved by the Lender, with a current A.M. Best's Insurance Guide Rating of at least A- IX (which is authorized to do business in the state in which the property is located) that affirmatively includes the following:

1. Combined general liability policy limit of at least $5,000,000.00 each occurrence and aggregate applying liability for Bodily Injury, Personal Injury, Property Damage, Contractual, Products and Completed Operations which combined limit may be satisfied by the limit afforded under the Commercial General Liability Policy, or by such Policy in combination with the limits afforded by an Umbrella or Excess Liability Policy (or policies); provided, the coverage afforded under any such Umbrella or Excess Liability Policy is at least as broad in all material respects as that afforded by the underlying Commercial General Liability Policy. Such policies must contain a Separations of Insureds / Severability of Interest clause.

EXHIBIT G - Page 2 Loan Agreement (KBS REIT II)

2. No Exclusion for Acts of Terrorism (United States Certified Acts of Terrorism coverage – TERRORISM RISK INSURANCE PROGRAM REAUTHORIZATION ACT OF 2007).

3. Aggregate limit to apply per location.

4. Borrower’s coverage is primary and non-contributory with any insurance or self-insurance carried by U.S. Bank National Association.

5. Additional Insured Endorsement naming U.S. Bank National Association as an additional insured with a 30-day notice to Lender in the event of cancellation, non-renewal or material change. A Severability of Interests provision should be included.

Address for Agent is as follows:

U.S. Bank National Association, ISAA ATIMA

Commercial Real Estate

4100 Newport Place, Suite 900

Newport Beach, CA 92660

Attention: Loan Administration

III.GENERAL REQUIREMENTS

1. All policies of insurance required herein must contain an endorsement or agreement by the insurer that any loss will be payable in accordance with the terms of such policy notwithstanding any act or negligence of Borrower or any party holding under Borrower which might otherwise result in forfeiture of said insurance and the further agreement of the insurer waiving all rights of setoff, counterclaim or deductions against Borrower.

2. If Agent consents, Borrower may provide any of the required insurance through blanket policies carried by Borrower and covering more than one location, or by policies procured by a party holding under Borrower; provided, however, all such policies must be in form and substance and issued by companies reasonably satisfactory to Agent.

IV.OTHER COVERAGES

At Agent's request, Borrower shall procure and maintain such other insurance, or such additional amounts of insurance, covering Borrower and/or the Property, as Agent shall from time to time require, in the exercise of its reasonable business judgment in light of the commercial real estate practice existing at the time the insurance is issued and in the place where the Property is located, provided such insurance is available at commercially reasonable rates. In addition, the above insurance requirements are subject to change or the imposition of additional coverages if

EXHIBIT G - Page 3 Loan Agreement (KBS REIT II)

required by applicable laws, regulations or policies applicable to Agent or Lenders or the Property.

EXHIBIT G - Page 4 Loan Agreement (KBS REIT II)

EXHIBIT H

NOTICES AND WIRE INSTRUCTIONS

U.S. Bank National Association

Commercial Real Estate

4100 Newport Place, Suite 900

Newport Beach, CA 92660

Attention: Loan Administration

U.S. Bank National Association

Commercial Real Estate

Newport Beach, CA 92660

Account #0003136260600

ABA #123000220

Attention: Susanie Samson

Tel.: (949) 863-2376

EXHIBIT H Loan Agreement (KBS REIT II)

EXHIBIT I

COMMITMENTS AND COMMITMENT PERCENTAGES OF LENDERS

Lender	Total Commitment	Commitment Percentage
U.S. Bank National Association	$135,000,000	57.446808510638
TD Bank	$100,000,000	42.553191489362

EXHIBIT I Loan Agreement (KBS REIT II)

EXHIBIT J

FORM OF DRAW REQUEST

(See Attached)

EXHIBIT J Loan Agreement (KBS REIT II)

Draw Request

Borrower hereby requests an advance of Loan proceeds in the amount of $________, which request is supported by the attached (which includes information required by Agent regarding Availability Amount calculations).

Borrower hereby certifies as follows (all terms herein having the meanings set forth in the Loan Agreement (the "Loan Agreement") dated as of ______, 2013, between Borrower and U.S. Bank National Association, as "Agent" and the Lenders from time to time a party thereto ("Lenders"):

1.    At the date hereof, to the knowledge of Borrower, no suit or proceeding at law or in equity, and, to the knowledge of Borrower, no investigation or proceeding of any governmental body, has been instituted or is threatened, which in either case would substantially, negatively affect the condition or business operations of any Borrower or any Property, except the following:

__________________________________________________________________________________________________________________________________________________________________________________________________________________

2.    At the date hereof, to the knowledge of Borrower, no default or Event of Default under the Loan Agreement or under any of the other Loan Documents has occurred and is continuing, and, to the knowledge of Borrower, no event has occurred which, upon the service of notice and/or the lapse of time, would constitute an Event of Default thereunder, except the following:

__________________________________________________________________________________________________________________________________________________________________________________________________________________

3.    Guarantor is in compliance with all required financial covenants under the Loan Documents.

4.    All bills for labor, materials, equipment, work, services and supplies furnished in connection with any Property, which could give rise to a mechanic's lien if unpaid, have been paid or will be paid before they become delinquent.

5.    Immediately following the disbursement of the requested funds, the outstanding principal amount of the Loan will not exceed the Availability Amount (and the calculation of that Availability Amount is attached as Schedule 1).

6.    Borrower authorizes and requests Agent and Lenders to charge the total amount of this Draw Request against Borrower's Loan account and to advance from the proceeds of the Loan the funds hereby requested. The advance made pursuant to this Draw Request is acknowledged to be an accommodation to Borrower and is not a waiver by Agent or Lenders of any defaults or events of default under the Loan Documents or any other claims of Agent or Lenders against Borrower or Guarantor(s).

EXHIBIT J Loan Agreement (KBS REIT II)

The advances and disbursements on the attached sheets are hereby approved and authorized.

BORROWER:

EXHIBIT J Loan Agreement (KBS REIT II)

Schedule 1 to Draw Request
(Calculation of Availability Amount)

EXHIBIT J Loan Agreement (KBS REIT II)

EXHIBIT K

BORROWER EIN NUMBERS

Borrower	U.S. EIN
KBSII 100-200 Campus Drive, LLC	26-2983460
KBSII One Meadowlands, LLC	38-3854864
KBSII Willow Oaks, LLC	27-0731730

EXHIBIT K Loan Agreement (KBS REIT II)

EXHIBIT L

FORM OF JOINDER AGREEMENT

EXHIBIT L Loan Agreement (KBS REIT II)

EX-10.3

Exhibit 10.3

Prepared By and Return To:

Sheppard, Mullin, Richter & Hampton LLP

650 Town Center Drive, 4th Floor

Costa Mesa, CA 92626-1993

Attn: David E. Hengstler, Esq.

Lots: 5 & 7

Block: 1201

THIS SPACE ABOVE FOR RECORDER'S USE

MORTGAGE, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

by and between

KBSII 100-200 CAMPUS DRIVE, LLC,

a Delaware limited liability company

("Mortgagor")

and

U.S. BANK NATIONAL ASSOCIATION,

a National Banking Association, as administrative bank and lead arranger

("Mortgagee")

Amount: $235,000,000.00 (subject to increase in an aggregate amount of up to $335,000,000)

Dated: February 27, 2013

Premises:	Borough of Florham Park
	County of Morris
	State of New Jersey

-1-

MORTGAGE, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THIS MORTGAGE SECURES FUTURE ADVANCES

(The promissory notes secured hereby provide for a fluctuating interest rate)

THIS MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING is made as of February 27, 2013 by KBSII 100-200 CAMPUS DRIVE, LLC, a Delaware limited liability company, as mortgagor ("Mortgagor") to U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent as described below (in such capacity, "Mortgagee"). The address of Mortgagor is c/o KBS Capital Advisors LLC, 590 Madison Avenue, 26th Floor, New York, NY 10022, Attention: Randi Kaufman, Senior Vice President, Asset Management. The address of Mortgagee is Commercial Real Estate, 4100 Newport Place, Suite 900, Newport Beach, CA 92660, Attention: Loan Administration. Mortgagee is acting as the agent for itself and all other "Lenders" now or hereafter existing under that certain Loan Agreement of even date herewith (the "Loan Agreement") between Mortgagor and each of the other borrowers (individually, each a "Borrower" and collectively, the "Borrowers") from time to time a party thereto, Mortgagee, as "Agent" and the "Lenders" described therein. As used herein, the term "Lenders" shall have the same meaning that is given to such term in the Loan Agreement.

THIS MORTGAGE is given, among other things, for the purpose of securing a revolving and term loan (the "Loan") from Lenders, as lenders, to Borrowers, as borrowers, as more fully described in the Loan Agreement, the proceeds of which are to be used to pay, among other things, a portion of the costs of financing certain real property located in the Borough of Florham Park, County of Morris, State of New Jersey, which real property is more particularly described in Exhibit A attached hereto and by this reference incorporated herein (the "Land").

FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Mortgagor, as mortgagor, hereby irrevocably mortgages, grants, bargains, sells, transfers, conveys and assigns to Mortgagee for the benefit and security of Mortgagee (as agent for the Lenders), under and subject to the terms and conditions hereinafter set forth, the Land;

TOGETHER WITH any and all buildings and improvements now or hereafter erected on the Land including, without limitation, the fixtures, attachments, appliances, equipment, machinery, and other articles attached to said buildings and improvements (the "Improvements"), all of which are deemed and construed to be a part of the realty (the Land and the Improvements are collectively referred to herein as the "Premises");

TOGETHER WITH all Leases (as defined in Section 2.1 below) and all Rents (as defined in Section 2.1 below);

-2-

TOGETHER WITH all interests, estates or other claims, both in law and in equity, which Mortgagor now has or may hereafter acquire in the Premises;

TOGETHER WITH all right, title, and interest of Mortgagor in (a) the property and interests in property described on Exhibit B attached hereto and incorporated herein by reference, (b) all other personal property now or hereafter owned by Mortgagor that is now or hereafter located on or used in connection with the Premises, (c) all other rights and interests of Mortgagor now or hereafter held in personal property that is now or hereafter located on or used in connection with the Premises, and (d) all proceeds thereof (such personal property and proceeds are collectively referred to in this Mortgage as the "Personal Property");

TOGETHER WITH all easements, rights-of-way and rights now owned or hereafter acquired by Mortgagor used in connection therewith or as a means of access thereto, including, without limitation, all rights pursuant to any trackage agreement and all rights to the nonexclusive use of common drive entries, and all tenements, hereditaments and appurtenances thereof and thereto, and all water and water rights and shares of stock evidencing the same;

TOGETHER WITH all leasehold estate, right, title and interest of Mortgagor in and to all leases, subleases, licenses, franchises and other agreements covering the Premises or any portion thereof now or hereafter existing or entered into, and all right, title and interest of Mortgagor thereunder including, without limitation, all cash or security deposits, advance rentals, and deposits or payments of similar nature;

TOGETHER WITH all right, title and interest now owned or hereafter acquired by Mortgagor in and to any greater estate in the Premises;

TOGETHER WITH all right, title and interest of Mortgagor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Premises, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Premises;

TOGETHER WITH all the estate, interest, right, title, other claim or demand, both in law and in equity, including claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Mortgagor now has or may hereafter acquire in the Premises, and any and all awards made for the taking by eminent domain, or by any proceeding of purchase in lieu thereof, of the whole or any part of the Mortgaged Property (as hereinafter defined), including, without limitation, any awards resulting from a change of grade of streets and awards for severance damages.

The entire estate, property and interest hereby conveyed to Mortgagee may hereafter be collectively referred to as the "Mortgaged Property."

FOR THE PURPOSE OF SECURING:

(a) payment of all principal, interest, prepayment fees and other charges, late charges and loan fees, and all other sums owing under or evidenced by one or more promissory notes in the aggregate stated principal amount of $235,000,000, subject to increase in an aggregate amount of up to $335,000,000.00 on the terms

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and conditions set forth in the Loan Agreement, each now or hereafter executed and delivered by Borrowers to the order of one or more Lenders pursuant to the Loan Agreement (together with all other promissory notes now or hereafter given and/or executed pursuant to the terms of the Loan Agreement and/or given in substitution thereof or in modification, supplement, increase, addition, renewal or extension thereof, in whole or in part, whether one or more, as any or all of such promissory notes may from time to time be renewed, extended, supplemented, increased or modified, collectively, the "Notes") which Notes and Loan Agreement and any and all modifications, extensions, renewals, supplements, additions, and replacements thereof are by this reference hereby made a part hereof;

(b) payment of all sums advanced by Mortgagee or Lenders to protect the Mortgaged Property, with interest thereon from the date of the advance at the Default Rate (as defined in the Notes);

(c) payment of all sums owing by any Borrower to Mortgagee or Lenders under the Deeds of Trust (as defined in the Loan Agreement);

(d) payment of all other sums, with interest thereon, which may hereafter be loaned to Borrowers, or their successors or assigns, by Lenders, or their successors or assigns when evidenced by a promissory note or notes executed by a Borrower reciting that they are secured by this Mortgage and/or the other Deeds of Trust;

(e) performance of every obligation, covenant or agreement of each Borrower contained herein and in the Loan Agreement and/or the other Deeds of Trust, and all supplements, amendments and modifications thereto and all extensions and renewals thereof;

(f) performance of every obligation, covenant and agreement of each Borrower contained in any agreement now or hereafter executed by Mortgagor which recites that the obligations thereunder are secured by this Mortgage and/or the other Deeds of Trust;

(g) compliance with and performance of each and every material provision of any declaration of covenants, conditions and restrictions pertaining to the Mortgaged Property or any portion thereof; and

(h) all present and future debts, obligations and liabilities of Borrowers or one or more Borrowers (or any Affiliate of Borrowers or one or more Borrowers) under or relating to any and all present and future Swap Transactions and Swap Contracts which Borrowers or one or more Borrowers (or any Affiliate of Borrowers or one or more Borrowers) elects to enter into with U.S. Bank National Association or another Lender or any Affiliate of U.S. Bank National Association or another Lender in connection with or relating to the Loan, heretofore, now, or hereafter made, incurred, or created, whether voluntary or involuntary and

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however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined.

Notwithstanding the above or anything in this Mortgage or any other Loan Document to the contrary, however, this Mortgage shall not secure (i) Borrowers' obligations under the Environmental Indemnity (as defined in the Loan Agreement), (ii) any third party guaranty of the Loan or Borrowers' obligations under the Loan Documents, or (iii) any other Loan Document that specifically states that it is not secured by this Mortgage. All initially capitalized terms used herein without definition are as defined in the Loan Agreement. The rate of interest of the obligation secured hereunder may vary from time to time.

TO PROTECT THE SECURITY OF THIS MORTGAGE, MORTGAGOR HEREBY COVENANTS AND AGREES AS FOLLOWS:

ARTICLE I

COVENANTS AND AGREEMENTS OF MORTGAGOR

1.1Payment of Secured Obligations. Mortgagor shall pay when due the principal of and the interest on the indebtedness evidenced by the Notes, all charges, fees and other sums as provided in the Loan Documents (including, without limitation, any prepayment fee); the principal of and interest on any future advances secured by this Mortgage; and the principal of and interest on any other indebtedness secured by this Mortgage.

1.2    Maintenance, Repair, Alterations, and Compliance with Laws. Mortgagor shall keep the Mortgaged Property in good condition and repair; Mortgagor shall not remove, demolish or substantially alter any of the Improvements except upon the prior written consent of Mortgagee except that the foregoing shall not limit Mortgagor's right to undertake any tenant improvements for tenants under their leases (approved or deemed approved by Mortgagee) or any capital improvements to the Improvements; Mortgagor shall complete promptly and in a good and workmanlike manner any Improvement which may be now or hereafter constructed on the Land and promptly restore in like manner any portion of the Improvements which may be damaged or destroyed thereon from any cause whatsoever, and pay when due all claims for labor performed and materials furnished therefor; Mortgagor shall comply with all laws, ordinances, regulations, covenants, conditions and restrictions now or hereafter affecting the Mortgaged Property or any part thereof or requiring any alterations or improvements, and the requirements of insurance companies and any bureau or agency which establishes standards of insurability; Mortgagor shall not commit or permit any physical waste or deterioration of the Mortgaged Property, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Mortgagor shall not commit, suffer or permit any act to be done in or upon the Mortgaged Property in violation of any law, ordinance or regulation; and Mortgagor shall do all other acts which from the character or use of the Mortgaged Property may be reasonably necessary to maintain and preserve its value. Mortgagor shall not apply for, willingly suffer or permit any change in zoning, subdivision, or land use regulations affecting the Premises without the consent of Mortgagee. Mortgagor shall not drill or extract or enter into any lease for the drilling for or extraction of oil,

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gas or other hydrocarbon substances or any mineral of any kind or character on or from the Mortgaged Property or any part thereof without first obtaining Mortgagee's written consent.

1.3    Required Insurance. Mortgagor shall at all times provide, maintain and keep in force or cause to be provided, maintained and kept in force, at no expense to Mortgagee or Lenders, all policies of insurance that are required pursuant to the Loan Agreement or other Loan Documents, or that are otherwise reasonably required by Mortgagee. The insurers, coverages, endorsements, certificates, liability limits and all other matters relating to such insurance policies shall be subject to the requirements set forth in Exhibit "G" to the Loan Agreement which is incorporated herein by this reference.

1.4    Delivery of Policies, Payment of Premiums.

(a)At Mortgagee's option all policies of insurance must either have attached thereto a lender's loss payable endorsement for the benefit of Mortgagee in form satisfactory to Mortgagee or must name Mortgagee as an additional insured (in each case, in accordance with the requirements of the Loan Agreement). At Mortgagee's option, Mortgagor shall furnish Mortgagee with an original of all policies of insurance required under Section 1.3 above or a certificate of insurance for each required policy setting forth the coverage, the limits of liability, the name of the carrier, the policy number and the period of coverage (and subject to any further requirements set forth in the Loan Agreement). If Mortgagee consents, Mortgagor may provide any of the required insurance through blanket policies carried by Mortgagor and covering more than one location, or by policies procured by a party holding under Mortgagor; provided, however, all such policies must be in form and substance and issued by companies reasonably satisfactory to Mortgagee. No less than 5 days prior to the expiration of each required policy, Mortgagor shall deliver to Mortgagee evidence satisfactory to Mortgagee of the renewal or replacement of such policy continuing insurance in the form required by this Mortgage and payment of premiums for any such policies within 10 days of the availability of same. All such policies must contain a provision that, notwithstanding any contrary agreement between Mortgagor and an insurance company, such policies will not be cancelled, allowed to lapse without renewal, surrender, reduced in scope or limits of coverage or otherwise materially amended, without at least thirty (30) days' prior written notice to Mortgagee.

(b)In the event Mortgagor fails to provide, maintain, keep in force or deliver to Mortgagee the policies of insurance required by this Mortgage or by any Loan Document, Mortgagee may (but has no obligation to), following no less than five (5) business days prior written notice to Mortgagor, (provided such notice shall not be required if any policy could lapse), procure such insurance or single-interest insurance for such risks covering Mortgagee's interest, and Mortgagor will pay all premiums thereon promptly upon demand by Mortgagee, and until such payment is made by Mortgagor, the amount advanced by Mortgagee with respect to all such premiums will bear interest at the Default Rate.

1.5    Casualties; Insurance Proceeds. Mortgagor shall give prompt written notice thereof to Mortgagee after the occurrence of any casualty to or in connection with the

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Mortgaged Property or any part thereof, whether or not covered by insurance. In the event of such casualty, all proceeds of insurance must be payable to Mortgagee, and Mortgagor hereby authorizes and directs any affected insurance company to make payment of such proceeds directly to Mortgagee. If Mortgagor receives any proceeds of insurance resulting from such casualty, Mortgagor shall promptly pay over such proceeds to Mortgagee. Notwithstanding the above, provided that (i) such proceeds do not exceed $500,000 for the Mortgaged Property, (ii) no Event of Default exists, and (iii) the casualty does not materially impair the value of the Mortgaged Property, Mortgagor may retain such proceeds (which shall be applied to the restoration of the Improvements to the extent required to repair a casualty). At all times during the existence of an Event of Default, Mortgagee is hereby authorized and empowered by Mortgagor to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance. In the event of any damage or destruction of the Premises, Mortgagee shall apply all loss proceeds remaining after deductions of all expenses of collection and settlement thereof, including, without limitation, reasonable attorneys' and adjustors' fees and expenses, to the restoration of the Improvements but only as repairs or replacements are effected and continuing expenses become due and payable; provided that the following conditions are met: (a) no Event of Default exists that has not been cured; (b) the Loan is in Balance (taking into account all costs of reconstruction and the amount of the loss proceeds, if any, the amount of operating expenses and interest that will accrue under the Notes, and any additional funds deposited by Mortgagor with Mortgagee to pay for such costs of reconstruction); (c) Mortgagee has determined, in its sole discretion, that the damage or destruction can be repaired and that the damaged portion of the Improvements can be completed according to the requirements of the Loan Agreement; (d) Mortgagee and all applicable governmental authorities have approved the final plans and specifications for reconstruction of the damaged portion of the Improvements; (e) Mortgagee has approved, for the reconstruction of the damaged portion of the Improvements, in its sole discretion, the budget, the construction schedule and the construction contract; and (f) Mortgagee has determined, in its sole discretion, that after the reconstruction work is completed, the ratio of the then applicable Committed Amount to the then "As-Is" appraised value (based on evidence reasonably satisfactory to Mortgagee, including, if required by Mortgagee or Mortgagor, updated Appraisals approved by Mortgagee, which approval shall not be withheld unreasonably) of the Properties does not exceed the Maximum Committed Amount Leverage Ratio (as defined in the Loan Agreement), provided Mortgagor may pay down the outstanding principal amount of the Loan, or cancel applicable undisbursed amount(s) of the Revolving Portion so that the Maximum Committed Amount Leverage Ratio is satisfied. If any one or more of such conditions set forth herein have not been met, Mortgagee will not be obligated to make any further disbursements pursuant to the Loan Agreement, and Mortgagee shall apply all loss proceeds, after deductions as herein provided, to the repayment of the outstanding balance of the Notes (without payment of a prepayment premium other than the Interest Differential), together with all accrued interest thereon, in such order as Mortgagee may elect, notwithstanding that the outstanding balance may not be due and payable. Nothing herein contained will be deemed to excuse Mortgagor from repairing or maintaining the Mortgaged Property as provided in Section 1.2 hereof or restoring all damage or destruction to the Mortgaged Property, regardless of whether or not there are insurance proceeds available to Mortgagor or whether any such proceeds are sufficient in amount, and the application or release by Mortgagee of any insurance proceeds will not cure or

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waive any default or notice of default under this Mortgage or invalidate any act done pursuant to such notice.

1.6    Assignment of Policies Upon Foreclosure. In the event of foreclosure of this Mortgage or other transfer of title or assignment of the Mortgaged Property in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Mortgagor in and to all policies of insurance required by Section 1.3 will inure to the benefit of and pass to the successor in interest to Mortgagor or the purchaser or grantee of the Mortgaged Property.

1.7    Indemnification; Subrogation; Waiver of Offset.

(a)If Mortgagee or any Lenders are made a party to any litigation concerning the Notes, this Mortgage, the other Deeds of Trust, any of the Loan Documents, the Mortgaged Property or any part thereof or interest therein, or the occupancy of the Mortgaged Property by Mortgagor, then Mortgagor shall indemnify, defend and hold Mortgagee and such Lenders harmless from all liability by reason of said litigation, including reasonable attorneys' fees and expenses incurred by Mortgagee and such Lenders as a result of any such litigation, whether or not any such litigation is prosecuted to judgment. However, Mortgagor will not be obligated to indemnify, defend and hold Mortgagee and such Lenders harmless from any claims which arise solely out of the gross negligence or willful misconduct of Mortgagee or such Lenders. Mortgagee and such Lenders may employ an attorney or attorneys to protect their rights hereunder, and in the event of such employment following any breach by Mortgagor, Mortgagor shall pay Mortgagee and such Lenders reasonable attorneys' fees and expenses incurred by them, whether or not an action is actually commenced against Mortgagor by reason of its breach. This Section 1.7 will not apply to any matters covered by the Environmental Indemnity.

(b)Mortgagor waives any and all right to claim or recover against Mortgagee or any Lender, its officers, employees, agents and representatives, for loss of or damage to Mortgagor, the Mortgaged Property, Mortgagor's property or the property of others under Mortgagor's control from any cause insured against or required to be insured against by the provisions of this Mortgage.

(c)All sums payable by Mortgagor pursuant to this Mortgage must be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Mortgagor hereunder will in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of or any condemnation or similar taking of the Mortgaged Property or any part thereof; (ii) any restriction or prevention of or interference by any third party with any use of the Mortgaged Property or any part thereof; (iii) any title defect or encumbrance or any eviction from the Premises or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Mortgagee or any Lender, or any action taken with respect to this Mortgage by any trustee or receiver of Mortgagee, or

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by any court, in any such proceeding; (v) any claim which Mortgagor has or might have against Mortgagee or any Lender; (vi) any default or failure on the part of Mortgagee or any Lender to perform or comply with any of the terms hereof or of any other agreement with Mortgagor; or (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing; whether or not Mortgagor has notice or knowledge of any of the foregoing. Except as expressly provided herein, Mortgagor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Mortgagor.

1.8    Taxes and Impositions.

(a)Mortgagor shall pay, or cause to be paid prior to delinquency, all real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including, without limitation, nongovernmental levies or assessments such as maintenance charges, levies or charges resulting from covenants, conditions and restrictions affecting the Mortgaged Property, which are assessed or imposed upon the Mortgaged Property, or become due and payable, and which create, may create or appear to create a lien upon the Mortgaged Property, or any part thereof, or upon any person, property, equipment or other facility used in the operation or maintenance thereof (all the above collectively hereinafter referred to as "Impositions"); provided, however, that if, by law any such Imposition is payable, or may at the option of the taxpayer be paid, in installments, Mortgagor may pay the same or cause it to be paid, together with any accrued interest on the unpaid balance of such Imposition, in installments before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such installment and interest.

(b)If at any time after the date hereof there is assessed or imposed (i) a tax or assessment on the Mortgaged Property in lieu of or in addition to the Impositions payable by Mortgagor pursuant to Section 1.8(a), or (ii) a license fee, tax or assessment imposed on Mortgagee or any Lender and measured by or based in whole or in part upon the amount of the outstanding obligations secured hereby, then all such taxes, assessments or fees will be deemed to be included within the term "Impositions" as defined in Section 1.8(a) and Mortgagor shall pay and discharge the same as herein provided with respect to the payment of Impositions. If Mortgagor fails to pay such Impositions prior to delinquency, Mortgagee may at its option declare all obligations secured hereby together with all accrued interest thereon, immediately due and payable. Anything to the contrary herein notwithstanding, Mortgagor will have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax levied on Mortgagee or any Lender or on the obligations secured hereby.

(c)Subject to the provisions of Section 1.8(d) and upon request by Mortgagee, Mortgagor shall deliver to Mortgagee before any such Imposition is due and payable official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Mortgagee, evidencing the payment thereof.

(d)Mortgagor has the right before any delinquency occurs to contest or object to the amount or validity of any such Imposition by appropriate proceedings,

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but this will not be deemed or construed in any way as relieving, modifying or extending Mortgagor's covenant to pay any such Imposition at the time and in the manner provided in this Section 1.8, unless Mortgagor has given prior written notice to Mortgagee of Mortgagor's intent to so contest or object to an Imposition, and unless, at Mortgagee's sole option, (i) Mortgagor demonstrates to Mortgagee's reasonable satisfaction that the proceedings to be initiated by Mortgagor will conclusively operate to prevent the sale of the Mortgaged Property, or any part thereof, to satisfy such Imposition prior to final determination of such proceedings; or (ii) Mortgagor furnishes a good and sufficient bond or surety as requested by and reasonably satisfactory to Mortgagee; or (iii) Mortgagor demonstrates to Mortgagee's reasonable satisfaction that Mortgagor has provided as good and sufficient undertaking as may be required or permitted by law to accomplish a stay of any such sale.

(e)[Intentionally Deleted].

(f)Mortgagor shall not suffer, permit or initiate the joint assessment of any real and personal property which may constitute all or a portion of the Mortgaged Property or suffer, permit or initiate any other procedure whereby the lien of the real property taxes and the lien of the personal property taxes will be assessed, levied or charged to the Mortgaged Property as a single lien.

(g)Upon the request of Mortgagee, Mortgagor shall promptly cause to be furnished to Mortgagee, at Mortgagor's expense, a tax reporting service covering the Mortgaged Property of the type, duration and with a company satisfactory to Mortgagee.

1.9    Utilities. Mortgagor shall pay or shall cause to be paid when due all utility charges that are incurred by Mortgagor for the benefit of the Mortgaged Property or that may become a charge or lien against the Mortgaged Property for gas, electricity, water or sewer services furnished to the Mortgaged Property and all other assessments or charges of a similar nature, whether public or private, affecting or related to the Mortgaged Property or any portion thereof, whether or not such taxes, assessments or charges are or may become liens thereon.

1.10    Actions Affecting Mortgaged Property. Mortgagor shall give Mortgagee prompt written notice of the assertion of any claim with respect to, or the filing of any action or proceeding purporting to affect the Mortgaged Property, the security hereof or the rights or powers of Mortgagee. Mortgagor shall appear in and contest any such action or proceeding and shall pay all costs and expenses, including cost of evidence of title and attorneys' fees, in any such action or proceeding in which Mortgagee may appear.

1.11    Actions By Mortgagee to Preserve Mortgaged Property. If Mortgagor fails to make any payment or to do any act as and in the manner provided in any of the Loan Documents, Mortgagee, in its own discretion, without obligation so to do, without releasing Mortgagor from any obligation, and without notice to or demand upon Mortgagor, may make or do the same in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof, provided Mortgagee shall send one Business Day prior written notice of same to Mortgagor. In connection therewith (without limiting their general powers, whether conferred herein, in other Loan Documents or by law), during the continuance of an Event of Default, and

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subject to the rights of tenants under their leases Mortgagee have and are hereby given the right, but not the obligation, following written notice to Mortgagor, (i) to enter upon and take possession of the Mortgaged Property in accordance and compliance with applicable law; (ii) to make additions, alterations, repairs and improvements to the Mortgaged Property that Mortgagee may consider necessary or proper to keep the Mortgaged Property in good condition and repair; (iii) to appear and participate in any action or proceeding affecting or that may affect the security hereof or the rights or powers of Mortgagee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt that in the judgment of Mortgagee may affect or appears to affect the security of this Mortgage or be prior or superior hereto; and (v) in exercising such powers, to pay necessary expenses, including attorneys' fees and costs or other necessary or desirable consultants. Mortgagor shall, immediately upon demand therefor by Mortgagee, pay to Mortgagee an amount equal to all costs and expenses reasonably incurred by Mortgagee in connection with the exercise by Mortgagee of the foregoing rights, including, without limitation, costs of evidence of title, court costs, appraisals, surveys and receiver's, trustee's and attorneys' fees, together with interest thereon from the date of such expenditures at the Default Rate.

1.12    Transfer of Mortgaged Property Or Ownership Interests by Mortgagor. In order to induce Lenders to make the loan secured hereby, Mortgagor agrees that, in the event of any "transfer" (as defined below), without the prior written consent of Mortgagee, Mortgagee has the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent to one such transfer will not be deemed to be a waiver of the right to require consent to future or successive transfers. Mortgagee may grant or deny such consent in its sole discretion, and may impose any conditions to such consent in its sole discretion (including, without limitation, changes to the terms of the loan and the imposition of fees) and, if consent should be given, any such transfer will be subject to this Mortgage, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption will not, however, release Mortgagor or any maker or guarantor of the Notes from any liability thereunder without the prior written consent of Mortgagee. As used herein, "transfer" includes the direct or indirect sale, agreement to sell, transfer, conveyance, pledge, mortgage, encumbrance, lien, collateral assignment or hypothecation of the Mortgaged Property, or any portion thereof or interest therein (other than the Permitted Encumbrances), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Mortgaged Property, or the lease of all or substantially all of the Mortgaged Property (excluding, however, any leases entered into in accordance with the requirements of the Loan Agreement, and any other transfers that are specifically permitted by the terms of the Loan Agreement). The term "transfer" also includes the direct or indirect transfer, assignment, withdrawal, hypothecation or conveyance of legal or beneficial ownership of any membership, partnership, stock or other ownership interest (an "ownership interest") that results in a change in control of Mortgagor or in any member or partner of Mortgagor (excluding, however, transfers of stock or limited partnership interests in a publicly traded company, or a change in control of a publicly traded company). Notwithstanding anything stated to the contrary in this Mortgage or in any of the other Loan Documents, any transfers (or the pledge or encumbrance ) of equity interests or other interests in KBSII REIT Acquisition I, LLC, or in any of the direct or indirect owners of KBSII REIT Acquisition I, LLC (including, without limitation, KBS REIT Properties II, LLC, KBS Limited Partnership II or KBS Real Estate Investment Trust II, Inc.) shall not be

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prohibited (and shall be expressly permitted) provided that KBS Real Estate Investment Trust II, Inc. continues to own, either directly or indirectly, 100% of the ownership interests in Mortgagor.

1.13    Full Performance Required; Survival of Warranties. All representations, warranties and covenants of Mortgagor contained in any loan application or made to Mortgagee or Lenders in connection with the loan secured hereby or contained in the Loan Documents or incorporated by reference therein, will survive the execution and delivery of this Mortgage and will remain continuing obligations, warranties and representations of Mortgagor so long as any portion of the obligations secured by this Mortgage remains outstanding.

1.14    Eminent Domain. If any proceeding or action is commenced for the taking of the Mortgaged Property, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, condemnation or otherwise, or if the same is taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner, or should Mortgagor receive any notice or other information regarding such proceeding, action, taking or damage, Mortgagor shall give prompt written notice thereof to Mortgagee. If an Event of Default exists, Mortgagee is entitled at its option, if Mortgagee determines its security is impaired, to commence, appear in and prosecute in its own name any such action or proceeding. If an Event of Default exists, Mortgagee is also entitled to make any compromise or settlement in connection with such taking or damage. All compensation, awards, damages, rights of action and proceeds awarded to Mortgagor by reason of any such taking or damage to the Premises or any part thereof or any interest therein for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other manner (the "Condemnation Proceeds") are hereby assigned to Mortgagee and Mortgagor agrees to execute such further assignments of the Condemnation Proceeds as Mortgagee may require. After deducting therefrom all costs and expenses (regardless of the particular nature thereof and whether incurred with or without suit), including attorneys' fees, incurred by it in connection with any such action or proceeding, Mortgagee shall apply all such Condemnation Proceeds to the restoration of the Improvements (other than Condemnation Proceeds attributable to temporary use or occupancy which may be applied, at Mortgagee's option, to installments of principal and interest and other charges due under the Notes and other Loan Documents when the same become due and payable, without payment of a prepayment premium other than the Interest Differential) provided that:

(a)the taking or damage will not, in Mortgagee's reasonable judgment, materially impair the security for the Loan; and

(b)all conditions set forth in Section 1.5 are met.

If all of the above conditions are met, Mortgagee shall disburse the Condemnation Proceeds in accordance with the Loan Agreement and only as repairs or replacements are effected and continuing expenses become due and payable. If any one or more of the above conditions are not met, Mortgagee shall apply all of the Condemnation Proceeds, after deductions as herein provided, to the repayment of the outstanding balance of the Notes (without payment of prepayment premiums other than the Interest Differential), together with all accrued interest

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thereon, in such order as Mortgagee may elect, notwithstanding that said outstanding balance may not be due and payable, and Mortgagee will have no further obligation to make disbursements pursuant to the Loan Agreement or the other Loan Documents. If the Condemnation Proceeds are not sufficient to repay the portion of the Loan allocable to the Mortgaged Property encumbered by this Mortgage, and Mortgagee or Lenders have determined that its security for the Loan is materially impaired, Mortgagor shall immediately pay any remaining balance allocable to the Mortgaged Property, together with all accrued interest thereon. Application or release of the Condemnation Proceeds as provided herein will not cure or waive any default or notice of default hereunder or under any other Loan Document or invalidate any act done pursuant to such notice. Notwithstanding the above, provided that the Condemnation Proceeds do not exceed $500,000 for the Mortgaged Property, no Event of Default exists, and the taking has not materially impaired the value of the Mortgaged Property, Mortgagor may retain such Condemnation Proceeds.

1.15    Additional Security. No other security now existing, or hereafter taken, to secure the obligations secured hereby will be impaired or affected by the execution of this Mortgage; and all additional security will be taken, considered and held as cumulative. The taking of additional security, execution of partial releases of the security, or any extension of the time of payment of the indebtedness will not diminish the force, effect or lien of this Mortgage and will not affect or impair the liability of any maker, surety or endorser for the payment of said indebtedness. If Mortgagee at any time holds additional security for any of the obligations secured hereby, Mortgagee may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently, or after a sale is made hereunder.

1.16    [Intentionally Deleted].

1.17    Successors and Assigns. This Mortgage applies to, inures to the benefit of (subject, however, to all restrictions on transfer provided in Section 1.12) and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Mortgagee" includes the present agent and all future agents of the Lenders pursuant to the provisions of the Loan Agreement, whether or not named as Mortgagee herein. This Section 1.17 will not be deemed a waiver of the provisions of Section 1.12 hereof.

1.18    Inspections. Mortgagee, or its agents, representatives or workers, are authorized to, upon no less than twenty-four (24) hours prior written notice to Mortgagor, and subject to the rights of tenants under their leases and, if no Event of Default exists, at Mortgagee's sole cost and expense, enter at any reasonable time upon or in any part of the Mortgaged Property for the purpose of inspecting the same and for the purpose of performing any of the acts it is authorized to perform hereunder or under the terms of any of the Loan Documents.

1.19    Liens.

(a)Mortgagor shall pay and promptly discharge, at Mortgagor's cost and expense, all liens, encumbrances and charges (collectively, "Liens") upon the Mortgaged Property, or any part thereof or interest therein; provided, however, that Mortgagor has the right to contest in good faith and with reasonable diligence the validity

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of any such Liens, and pending such contest Mortgagor shall not be deemed in default hereunder if Mortgagor, within twenty (20) days of Mortgagee's written request, obtains an appropriate surety bond and takes all other actions required to remove and release such Lien as an encumbrance against all and any portion of the Mortgaged Property; provided, further, however, Mortgagee and Lenders will not be required to make any further disbursements of the Loan until all such Liens have been removed as encumbrances against all and any portion of the Mortgaged Property, and have been insured against by the Title Company to Mortgagee's satisfaction.

(b)Intentionally Deleted.

(c)Intentionally Deleted.

(d)Mortgagor shall cause, as a condition precedent to the closing of the loan secured hereby, Mortgagee’s title insurer to insure in a manner acceptable to Mortgagee in its sole discretion, that this Mortgage shall be a valid and existing first priority lien on the Mortgaged Property free and clear of any and all exceptions for mechanic’s and materialman’s liens and all other liens and exceptions except as set forth in the mortgagee’s policy of title insurance accepted by Mortgagee, and such title insurance policy may not contain an exception for broken lien priority and may not include any pending disbursement endorsement, or any similar limitation or coverage or requiring future endorsements to increase mechanic lien coverage under the Title Policy (as defined in the Loan Agreement).

(e)Subject to the terms of Section 1.19(a) above and Section 1.19(f) below, Mortgagor shall pay and promptly discharge, at Mortgagor’s cost and expense, all liens, encumbrances and charges upon the Mortgaged Property, or any part thereof or interest therein whether inferior or superior to this Mortgage and keep and maintain the same free from the claim of all persons supplying labor, services or materials that will be used in connection with or enter into the construction of any and all buildings now being erected or that hereafter may be erected on the Mortgaged Property regardless of by whom such services, labor or materials may have been contracted.

(f)Notwithstanding the foregoing or anything else contained in this Agreement which may be construed to the contrary, in the event that any action or other proceeding is instituted to enforce or foreclose any Lien against any of the Mortgaged Property, the Mortgagor shall immediately (and in any event within five days of request by Mortgagee, or five days prior to any scheduled foreclosure sale, whichever is sooner) make such payments, obtain such surety bonds and/or take such other action as the Mortgagee may, in its sole discretion, require in order to release the Lien. If Mortgagor fails to remove and discharge any such Lien as required above, then, in addition to any other right or remedy of Mortgagee, Mortgagee may, but is not obligated to, subject to Mortgagor's right to contest same, discharge the same, either by paying the amount claimed to be due, providing alternate security in the manner set forth above, or by procuring such discharge in such manner as is or may be prescribed by law. Mortgagor shall, immediately upon demand therefor by Mortgagee, pay to Mortgagee an amount equal to all costs and expenses incurred by Mortgagee in connection with the exercise by

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Mortgagee of the foregoing right to discharge any such Lien together with interest thereon from the date of such expenditure at the Default Rate.

1.20    [Intentionally Deleted]

1.21    Mortgagee's Powers. Without affecting the liability of any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Mortgage upon any portion of the Mortgaged Property not then or theretofore released as security for the full amount of all unpaid obligations, Mortgagee or any Lender may, from time to time and without notice (i) release any person so liable, (ii) extend the maturity or alter any of the terms of any such obligation, (iii) grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed at any time at Mortgagee's option any parcel, portion or all of the Mortgaged Property, (v) take or release any other or additional security for any obligation herein mentioned, or (vi) make compositions or other arrangements with debtors in relation thereto. For purposes of clarification, this Section 1.21 does not grant Mortgagee the right to modify the terms of the Loan without Mortgagor's consent.

1.22    Financial Statements. Mortgagor shall deliver to Mortgagee copies of such financial statements, balance sheets, profit and loss statements, operating statements, income and expense statements and other financial information in reasonable detail and at the times required by the Loan Agreement. All such statements must be prepared in accordance with the requirements of the Loan Agreement and Mortgagee has the right to audit and inspect all books and records relating thereto, provided, if no Event of Default exists, such audit and inspection shall be at its sole cost and expense.

1.23    Trade Names. At the request of Mortgagee, Mortgagor shall execute a certificate in form satisfactory to Mortgagee listing the trade names or fictitious business names under which Mortgagor intends to operate the Mortgaged Property or any business located thereon and representing and warranting that Mortgagor does business under no other trade names or fictitious business names with respect to the Mortgaged Property. Mortgagor shall immediately notify Mortgagee in writing of any change in said trade names or fictitious business names, and will, upon request of Mortgagee, execute any additional financing statements and other certificates necessary to reflect the change in trade names or fictitious business names.

1.24    Leasehold. If a leasehold estate constitutes a portion of the Mortgaged Property, Mortgagor agrees not to amend, change, terminate or modify such leasehold estate or any interest therein without the prior written consent of Mortgagee. Consent to one amendment, change, agreement or modification will not be deemed to be a waiver of the right to require consent to other, future or successive amendments, changes, agreements or modifications. Mortgagor shall perform all obligations and agreements under said leasehold and shall not take any action or omit to take any action which would effect or permit the termination of said leasehold. Mortgagor agrees to promptly notify Mortgagee in writing with respect to any default or alleged default by any party thereto and to deliver to Mortgagee copies of all notices, demands, complaints or other communications received or given by Mortgagor with respect to any such default or alleged default. Mortgagee has the option to cure any such default and to perform any or all of Mortgagor's obligations thereunder. All sums expended by Mortgagee or Lenders in curing any such default will be secured hereby and will be immediately due and

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payable without demand or notice and will bear interest from date of expenditure at the Default Rate.

ARTICLE II

ASSIGNMENT OF RENTS AND LEASES

2.1    Assignment. Mortgagor does hereby absolutely, unconditionally and irrevocably grant, convey, assign, transfer and set over unto Mortgagee the following, as security for the payment and performance of the obligations secured by this Mortgage:

(a)all rights, title, interests, estates, powers, privileges, options and other benefits of Mortgagor in, to and under any and all leases, subleases, licenses, concessions, tenancies and any other agreements creating the right of possession without a transfer of title, whether oral or written, and whether now or hereafter existing, which cover or affect all or any portion of the Premises, together with all renewals, extensions, modifications, amendments, guaranties, subleases and assignments thereof (herein collectively referred to as the "Leases"); and

(b)all of the rents, income, receipts, revenues, issues, profits and other sums of money (hereinafter collectively called the "Rents") that are now and/or at any time hereafter become due and payable to Mortgagor under the terms of the Leases or arising or issuing from or out of the Leases or from or out of the Premises or any part thereof, including but not limited to minimum rents, additional rents, percentage rents, deficiency rents and liquidated damages following default, security deposits, advance rents, all proceeds payable under any policy of insurance covering loss of rents resulting from untenantability caused by destruction or damage to the Premises and all of Mortgagor's rights to recover monetary amounts from any lessee in bankruptcy, conservatorship, receivership or similar proceeding including, without limitation, rights of recovery for use and occupancy and damage claims arising out of lease defaults, including rejections, disaffirmances, repudiations, and similar actions, under the Federal Bankruptcy Code, the Federal Deposit Insurance Act and other statutes governing the rights of creditors, including specifically the immediate and continuing right to collect and receive each and all of the foregoing.

2.2    Mortgagor hereby represents and warrants unto Mortgagee and Lenders that: (i) Mortgagor is the sole owner of the entire lessor's interest in the Leases and has good title and good right to assign the Leases and Rents hereby assigned and no other person or entity has any right, title or interest therein; (ii) Mortgagor has duly and punctually performed all of the terms, covenants, conditions and warranties of the Leases that were to be kept, observed and performed by it to date; (iii) Mortgagor has not at any time prior to the date hereof exercised any right to subordinate any Lease to any deed of trust or mortgage or any other encumbrance of any kind; (iv) Mortgagor has not executed any prior assignments of the Leases or the Rents; (v) except as disclosed to Mortgagee in writing, (and approved or deemed approved by Mortgagee) no Rents owing under any existing Lease for any period subsequent to the date hereof (other than the first month's rent or the current month's rent) has been collected in advance; (vi) Mortgagor has not performed any act or executed any other instrument which

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might prevent Mortgagee from enjoying and exercising any of its rights and privileges evidenced hereby; and (vii) except as disclosed to Mortgagee in writing, each of the existing Leases are valid and subsisting and in full force and effect and unmodified, there exists no defense, counterclaim or set-off to the payment of the Rents thereunder, there are no defaults now existing thereunder and no event has occurred which with the passage of time or the giving of notice, or both, would constitute such a default.

2.3    Mortgagor agrees that, so long as the indebtedness evidenced by the Notes or any part thereof or any other indebtedness secured by this Mortgage shall remain unpaid, Mortgagor shall not (and any such actions taken by Mortgagor in violation of the following provisions shall be null and void), unless Mortgagee consents thereto in advance in writing in Mortgagee's sole discretion: (i)  to the extent the same is prohibited under the terms of the Loan Agreement enter into any Lease covering any portion of the Premises, nor renew or extend the term of any Lease (unless an option therefor was originally reserved by the lessee in the Lease), or relocate or expand the floor space of any lessee under a Lease within the Premises (unless an option therefor was originally reserved by the lessee in the Lease); (ii) make any assignment, pledge or disposition of the Leases or the Rents; (iii) subordinate any of the Leases to any deed of trust or mortgage or any other encumbrance of any kind or permit, consent or agree to such subordination; (iv) to the extent the same is prohibited under the terms of the Loan Agreement reduce the Rents payable under any of the Leases, nor modify, alter or amend any of the Leases or waive, excuse, condone, discount, set off, compromise or in any manner release or discharge any lessee under any Lease of and from any obligations, covenants, conditions and agreements to be kept, observed and performed by such lessee, including the obligation to pay the Rents thereunder in the manner and at the place and time specified therein; (v) incur any indebtedness to a lessee under or guarantor of any Lease which may under any circumstance be used as an offset against the Rents or other payments due under said Lease; (vi) to the extent the same is prohibited under the terms of the Loan Agreement exercise any option required or permitted by the terms of any of the Leases without the prior written consent of Mortgagee; (vii) receive or collect any Rents from any present or future lessee of the Premises or any part thereof for a period of more than one month in advance of the date on which such payment is due; (ix) to the extent the same is prohibited under the terms of the Loan Agreement cancel or terminate any of the Leases, accept a surrender thereof, commence an action of ejectment or any summary proceedings for dispossession of a lessee under any of the Leases, or convey or transfer or suffer or permit a conveyance or transfer of the premises demised thereby or of any interest therein so as to effect directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of any lessee thereunder; (x) to the extent the same is prohibited under the terms of the Loan Agreement consent to an assignment or sublease of the interest and estate of any lessee under any of the Leases, whether or not in accordance with its terms; or (xi) modify or change the terms of any guaranty of any of the Leases or cancel or terminate such guaranty.

2.4    Mortgagor covenants with Mortgagee, for so long as the indebtedness evidenced by the Notes or any part thereof or any other indebtedness secured by this Mortgage or the other Deeds of Trust shall remain unpaid, that Mortgagor shall: (i) observe and perform duly and punctually all the obligations imposed upon any lessor under the Leases and not to do or permit to be done anything to impair the value thereof; (ii) enforce the performance of each and every term, provision, covenant, agreement and condition in Leases to be performed by any

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lessee thereunder; (iii) appear in and defend any action or proceeding arising under, occurring out of or in any manner connected with any of the Leases, or the obligations, liabilities or duties of Mortgagor or any lessee under the Leases and, upon request by Mortgagee, to make appearance in the name and on behalf of Mortgagee, but at the expense of Mortgagor; (iv) exercise any option or election contained in or relating to any of the Leases which Mortgagee shall require; (v) upon written request by Mortgagee deliver to Mortgagee executed copies of any and all Leases, renewals and extensions of existing Leases and any and all subsequent Leases upon all or any part of the Premises; (vi) deliver to Mortgagee, promptly upon request by Mortgagee, duly executed tenant estoppel certificates with respect to Leases designated by Mortgagee to the extent the same is required under the terms of the Loan Agreement; (vii) if an Event of Default occurs, and the Loan has been accelerated deliver to Mortgagee, promptly upon request by Mortgagee, all security deposits held by Mortgagor pursuant to the terms of the Leases, which Mortgagee shall hold and disburse in accordance with the terms of the Leases; (viii) execute and deliver at the request of Mortgagee all such further assignments and other documents, instruments and assurances with respect to the Leases, Rents and Premises as Mortgagee shall from time to time require in order to effectuate the purposes of this Article; and (ix) if an Event of Default occurs, promptly upon request by Mortgagee deliver other records and instruments, including but not limited to rent rolls and books of account, that Mortgagee shall from time to time require.

2.5    This is a present, absolute, effective, irrevocable and completed assignment by Mortgagor to Mortgagee of the Leases and Rents and of the right to collect and apply the same, which is not contingent upon Mortgagee being in possession of the Premises. However, so long as there exists no Event of Default (beyond any applicable notice and cure period), Mortgagor shall have a conditional license to collect, but not more than one (1) month in advance, all Rents from the Premises, in trust for Mortgagee, and to use the same for payment of Impositions, insurance premiums which Mortgagor is required to pay hereunder or under the other Loan Documents, all amounts owing to Mortgagee or Lenders under the Notes and the other Loan Documents, and all other costs and expenses relating to the Premises which Mortgagor is required to pay under the Loan Documents, as and when due, before using said Rents for any other purpose.

2.6    Upon or at any time after and during the continuance of an Event of Default, or if any representation or warranty made by Mortgagor to Mortgagee in connection with the loan evidenced by the Notes is untrue in any material respect, Mortgagee may, at its option, but without obligation to do so, without notice to or consent of Mortgagor, either in person or by agent, without regard for the adequacy of the security for the indebtedness secured hereby, the commission of waste or the solvency of Mortgagor, with or without bringing any action or proceeding, or by a receiver or trustee to be appointed by a court, enter upon, take possession of, maintain, manage and operate the Premises, make, execute, enforce, modify, alter, cancel and accept the surrender of Leases (whether or not the same extend beyond the term of this Mortgage), obtain or evict tenants, fix or modify Rents, refund and collect security deposits, and do any acts which Mortgagee deems proper to protect the security hereof, and during the continuance of an Event of Default, either with or without taking possession of the Premises, in its own name or in the name of Mortgagor, sue for or otherwise demand, collect, receive, and give receipts for all Rents, and apply the same upon the costs of collection thereof, including the fees and costs of agents and attorneys employed by Mortgagee; upon the costs of managing,

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operating and leasing the Premises, including taxes, insurance, maintenance, repairs, improvements, the fees of professional managing agents, architects, engineers and appraisers, license and permit fees, leasing fees and commissions, and Mortgagee's out‑of‑pocket expenses; and upon any indebtedness secured hereby, in such order as Mortgagee may determine, subject to applicable statutory requirements, if any. Mortgagee or such a receiver shall be entitled to remain in possession of the Premises and to collect the Rents throughout any statutory period of redemption from a foreclosure sale. The entering upon and taking possession of the Premises, the collection of such Rents and the application thereof as aforesaid shall not cure or waive any Event of Default, or invalidate any act done pursuant to such Event of Default or notice of default. Mortgagee may, without entering into possession or pursuing any other remedy as provided in this section or at law or in equity, or in conjunction with such possession or pursuit of other remedy, give notice to any or all lessees authorizing and directing said lessees to pay Rents directly to Mortgagee. If a lessee receives such a notice, Mortgagor hereby directs such lessee to make payment pursuant thereto, and it shall be conclusively presumed, as between Mortgagor and such lessee, that such lessee is obligated and entitled to make such payment to Mortgagee, and that such payment constitutes payment of Rents under the Lease in question. Such notice may be given either in Mortgagee's or in Mortgagor's name. Mortgagor shall in every way facilitate the payment of Rents to Mortgagee, when Mortgagee has the right to receive the same hereunder. Mortgagee shall be accountable only for Rents actually collected hereunder and not for the rental value of the Premises. Mortgagee shall not be liable for any security deposit made by any lessee unless and until Mortgagee comes into actual, physical possession and control thereof. Failure of Mortgagee to collect, or discontinuance by Mortgagee from collecting, at any time, and from time to time, any Rents, shall not in any manner affect the rights of Mortgagee to thereafter collect the same.

2.7    During the existence of an Event of Default, Mortgagee shall have the right to take possession of and use, without rental or charge, any fixtures, equipment, furniture, appliances, personal property, books of account and records of Mortgagor or its agents located in or constituting a part of the Premises in connection with Mortgagee's occupancy, management and operation of the Premises. Mortgagee shall be deemed to be the creditor of any lessee in respect of any assignment for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor‑relief proceeding affecting such lessee; provided, however, that Mortgagee shall not be obligated to file timely claims in such proceedings or to otherwise pursue any creditor's rights therein.

2.8    Mortgagor shall, at Mortgagor's sole cost and expense, appear in and defend any dispute, action or proceeding arising under, growing out of or in any manner connected with or affecting any of the Leases or the obligations, duties or liabilities of Mortgagor or any lessee thereunder, and shall pay all costs and expenses of Mortgagee, including attorneys' fees (prior to trial, at trial and on appeal), in connection with any such dispute, action or proceeding in which Mortgagee may appear or with respect to which it may otherwise incur costs or expenses, whether or not Mortgagee prevails therein.

2.9    Should Mortgagor fail to make any payment or to do any act as herein provided, then Mortgagee may, but without obligation to do so, without notice or demand to or upon Mortgagor, and without releasing Mortgagor from any obligation hereof, make or do the same in such manner and to such extent as Mortgagee may deem necessary or desirable to

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protect the security hereof, including specifically, without limiting its general powers, appearing in and defending any action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee, and observing, performing and discharging all or any of the obligations, covenants and agreements of Mortgagor in the Leases, provided Mortgagee shall give Mortgagor one Business Day prior written notice of same. In exercising any such powers, Mortgagee may pay its costs and expenses, employ counsel and incur and pay attorneys' fees (prior to trial, at trial and on appeal), and shall receive reimbursement thereof from Mortgagor upon demand. Mortgagor hereby grants to Mortgagee an irrevocable power of attorney, coupled with an interest, to perform all of the acts and things provided for in this Article as Mortgagor's agent and in Mortgagor's name.

2.10    Mortgagor agrees to reimburse Mortgagee and Lenders, upon demand, for all sums expended by Mortgagee and Lenders under the authority hereof, together with interest thereon at the Default Rate specified in the Notes from the date expended, and the same shall be added to the indebtedness evidenced by the Notes and shall be secured by this Mortgage.

2.11    MORTGAGEE SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM MORTGAGEE'S FAILURE TO LET THE PREMISES, OR ANY PART THEREOF, OR FROM ANY OTHER ACT OR OMISSION OF MORTGAGEE UNDER OR RELATING TO THE LEASES (REGARDLESS OF WHETHER SUCH LOSS IS THE RESULT OF MORTGAGEE'S NEGLIGENCE) UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MORTGAGEE, NOR SHALL MORTGAGEE BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY UNDER THE LEASES BY REASON OF THIS INSTRUMENT OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER. Mortgagee shall not be liable for its failure to collect, or its failure to exercise diligence in the collection of, Rents under the Leases, but shall be accountable only for Rents that Mortgagee actually receives. Mortgagor will indemnify and hold harmless Mortgagee (for purposes of this paragraph, the term "Mortgagee" shall include the directors, officers, partners, employees and agents of Mortgagee and Lenders and any persons or entities owned or controlled by, owning or controlling, or under common control or affiliated with Mortgagee) from and against, and reimburse Mortgagee for, all claims, demands, liabilities, losses, damages, causes of action, judgments, penalties, costs and expenses (including, without limitation, reasonable attorneys' fees) incurred under the Leases by reason of this instrument or the exercise of rights or remedies hereunder, or which may be asserted against Mortgagee by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases, including specifically any obligation or responsibility for any security deposits or other deposits delivered to Mortgagor by any lessee under any Lease and not assigned and delivered to Mortgagee. THE RELEASES AND INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL INCLUDE CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) RESULTING FROM THE NEGLIGENCE OF MORTGAGEE OR ANY STRICT LIABILITY, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MORTGAGEE. The foregoing releases and indemnities shall not terminate upon release or other termination of the assignment pursuant to this paragraph. Any amount to be paid under this paragraph by

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Mortgagor to Mortgagee shall be a demand obligation owing by Mortgagor to Mortgagee, shall bear interest from the date such amount becomes due until paid at the Default Rate stated in the Notes, and shall be secured by this Mortgage and by any other instrument securing the Notes. The assignment pursuant to this paragraph shall not operate to place responsibility upon Mortgagee for the control, care, management or repair of the Premises, nor for the carrying out of any of the terms and conditions of the Leases; nor shall it operate to make Mortgagee responsible or liable for any waste committed on the Premises by the tenants or by any other parties or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, licensee, employee or stranger. Mortgagee shall not be deemed to be a partner of, or a joint venturer with, Mortgagor with respect to the Premises or to be a participant of any kind in the management or operation of the Premises. Neither this assignment, nor the exercise by Mortgagee of its rights hereunder, shall be deemed to constitute Mortgagee a mortgagee in possession of the Premises, unless Mortgagee elects in writing to be so constituted.

2.12    The assignment pursuant to this Article is primary in nature to the obligation evidenced and secured by the Notes, this Mortgage and any other document given to secure and collateralize the indebtedness secured by this Mortgage. Mortgagor agrees that Mortgagee may enforce this assignment without first resorting to or exhausting any other security or collateral; provided however, that nothing herein contained shall prevent Mortgagee from suing on the Notes, foreclosing this Mortgage and/or exercising any other right under any document securing the payment of the Notes or at law or equity.

2.13    In the event any lessee under the Leases relating to a Lease for more than 50,000 square feet should be the subject of any proceeding under the Federal Bankruptcy Code or any other federal, state or local statute which provides for the possible termination or rejection of any of the Leases assigned hereby, Mortgagor covenants and agrees that if any Lease is so rejected, no settlement for damages shall be made without the prior written consent of Mortgagee (which shall not be unreasonably withheld or delayed and which consent shall be deemed to have been given if Mortgagee does not notify Mortgagor of its decision within five (5) Business Days after Mortgagor's request for such consent), and any check in payment of damages for rejection of any such Lease will be made payable to both Mortgagor and Mortgagee. Mortgagor hereby assigns any such payment to Mortgagee and further covenants and agrees that upon the request of Mortgagee, it will duly endorse to the order of Mortgagee any such check, the proceeds of which will be applied to the Notes and other indebtedness secured by this Mortgage, principal, interest, attorneys' and collection fees and other amounts, in such order as Mortgagee in its sole discretion may determine.

2.14    Nothing contained herein and no act done or omitted by Mortgagee pursuant to the powers and rights granted it hereunder shall be deemed to be a waiver by Mortgagee or Lenders of their rights and remedies under the Notes or a waiver or curing of any default hereunder or under the Notes, and the assignment pursuant to this Article is made and accepted without prejudice to any of the rights and remedies possessed by Mortgagee or Lenders under the terms of the Notes. The right of Mortgagee to collect said principal sum, interest and indebtedness and to enforce any other security therefor held by it may be exercised by Mortgagee either prior to, simultaneously with, or subsequent to any action taken by it hereunder.

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2.15    Notwithstanding (a) the fact that any Lease or the leasehold estate created thereby may be held, directly or indirectly, by or for the account of any person or entity which shall have an interest in the fee estate of the Premises, (b) the operation of law or (c) any other event, lessee's leasehold estate under such Lease shall not merge into the fee estate and the lessee shall remain obligated under such lease as assigned by this assignment.

ARTICLE III

REMEDIES UPON DEFAULT

3.1    Events of Default. Upon written notice to Mortgagor, any of the following events will constitute an Event of Default hereunder (an "Event of Default"):

(a)default in the payment of principal or interest as provided under the terms of the Notes or the Loan Agreement, which is not cured within any applicable grace and/or notice and cure period, if any, provided in the Notes or the Loan Agreement with respect to such default; or

(b)a breach by Mortgagor of any representation, warranty or covenant in this Mortgage which is not cured within any applicable notice and cure period, if any, provided in the Loan Agreement with respect to such breach;

(c)a default occurs under any of the other Deeds of Trust and is not cured within any applicable notice and cure period provided for therein or in the Loan Agreement; or

(d)the occurrence of an Event of Default, as defined in the Loan Agreement.

3.2    Acceleration Upon Default, Additional Remedies. Upon the occurrence of an Event of Default, Mortgagee may, at its option, declare all indebtedness secured hereby to be immediately due and payable without presentment, demand, protest or notice of any kind. Thereafter Mortgagee may:

(a)Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Mortgaged Property, or any part thereof, in its own name, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Mortgaged Property, or any part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Mortgaged Property, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including, without limitation, attorneys' fees, upon any indebtedness secured hereby, all in such order as Mortgagee may determine. The entering upon and taking possession of the Mortgaged Property, the collection of such Rents, and the application thereof as aforesaid, will not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of

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all or any portion of the Mortgaged Property or the collection, receipt and application of Rents, Mortgagee will be entitled to exercise every right provided for in any of the Loan Documents or by law upon occurrence of any Event of Default;

(b)Commence an action to foreclose this Mortgage as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof;

(c)Deliver to Mortgagor a written demand to turn over to Mortgagee all Rents in the possession or control of Mortgagor at the time of the written demand or collected thereafter, less payment of any expenses authorized by Mortgagee in writing; or

(d)Exercise all other rights and remedies provided herein, in any Loan Document or other document or agreement now or hereafter securing all or any portion of the obligations secured hereby, or by law or equity.

3.3    Foreclosure. Mortgagee may institute any one or more actions of mortgage foreclosure against all or any part of the Mortgaged Property, or take such other action at law, equity or by contract for the enforcement of this Mortgage and realization on the security herein or elsewhere provided for, as the law may allow, and may proceed therein to final judgment and execution for the entire unpaid balance of the Loan. The unpaid balance of any judgment shall bear interest at the greater of: (a) the statutory rate provided for judgments, or (b) the Default Rate. Without limiting the foregoing, Mortgagee may foreclose this Mortgage and exercise its rights as a secured party for all or any portion of the Loan which are then due and payable, subject to the continuing lien of this Mortgage for the balance not then due and payable. In case of any sale of the Mortgaged Property by judicial proceedings, the Mortgaged Property may be sold in one parcel or in such parcels, manner or order as Mortgagee in its sole discretion may elect. Mortgagor, for itself and anyone claiming by, through or under it, hereby agrees that Mortgagee shall in no manner, in law or in equity, be limited, except as herein provided, in the exercise of its rights in the Mortgaged Property or in any other security hereunder or otherwise appertaining to the Loan or any other obligation secured by this Mortgage, whether by any statute, rule or precedent which may otherwise require said security to be marshalled in any manner and Mortgagor, for itself and others as aforesaid, hereby expressly waives and releases any right to or benefit thereof. The failure to make any tenant a defendant to a foreclosure proceeding shall not be asserted by Mortgagor as a defense in any proceeding instituted by Mortgagee to collect the Loan or any deficiency remaining unpaid after the foreclosure sale of the Mortgaged Property. If Mortgagee shall have the right to foreclose this Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose this Mortgage subject to the rights of any tenants of the Mortgaged Property, and the failure to make any such tenants parties defendant to any such foreclosure proceeding and to foreclose their rights will not be asserted by Mortgagor as a defense to any proceeding instituted by Mortgagee to collect the Debt or any deficiency remaining unpaid after the foreclosure sale of the Mortgaged Property, it being expressly understood and agreed, however, that nothing herein contained shall prevent Mortgagee from asserting in any proceeding disputing the amount of the deficiency or the sufficiency of any bid at such foreclosure sale, that any such tenancies adversely affect the value of the Mortgaged Property.

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3.4    Possession. To the extent permitted by applicable law and while an Event of Default exists Mortgagee may enter into possession of the Mortgaged Property, with or without legal action, collect therefrom all rentals (which term shall also include sums payable for use and occupation) and, after deducting all reasonable costs of collection and administration expense, apply the net rentals to any or all of the following in such order and amounts as Mortgagee, in Mortgagee's sole discretion, may elect: the payment of any sums due under any Lien, Taxes, insurance premiums and all other carrying charges, and to the maintenance, repair or restoration of the Mortgaged Property, and on account and in reduction of the Debt; in and for that purpose, Mortgagor hereby assigns to Mortgagee all rentals due and to become due under the Leases or rights to use and occupation of the Mortgaged Property hereafter created, as well as all rights and remedies provided in such Leases or at law or in equity for the collection of the rentals. The taking of possession and collections of rents by Mortgagee shall not be construed to be an affirmation of any Leases or acceptance of attornment with respect to any Leases of all or any portion of the Mortgaged Property. Mortgagee, in its reasonable discretion, may, as attorney in fact or agent of Mortgagor, or in its own name as Mortgagee and under the powers herein granted, hold, operate, manage and control the Mortgaged Property and conduct the business, if any, thereof, either personally or by its agents, and with full power to use such measures, legal or equitable, as in its reasonable discretion or in the discretion of its successors or assigns may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Mortgaged Property, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent, and with full power: to cancel or terminate any Leases for any cause or on any ground which would entitle Mortgagor to cancel the same; to elect to disaffirm any Leases which are then subordinate to the lien of this Mortgage; to extend or modify any then-existing Leases and to make new Leases, which extensions, modifications and new Leases may provide for terms to expire, or for options to extend or renew terms to expire, beyond the maturity date of the indebtedness hereunder and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such Leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Mortgaged Property is subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Mortgage indebtedness, satisfaction of any foreclosure decree, or issuance of any certificate of sale or deed to any purchaser; and to enter into any management, leasing or brokerage agreements covering the Mortgaged Property.

3.5    Appointment of Receiver. Upon the occurrence of an Event of Default, Mortgagee, as a matter of right and without notice to Mortgagor or anyone claiming under Mortgagor, and without regard to the then value of the Mortgaged Property or the adequacy of any security for the obligations then secured hereby, will have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Mortgaged Property, and Mortgagor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers will have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Mortgagee in case of entry as provided herein and in the Loan Agreement and will continue as such and exercise all such powers until the later of (i) the date of delivery of a deed-in-lieu of foreclosure or a sheriff’s deed, as the case may be; (ii) the disbursement of all proceeds of the Mortgaged Property collected by such receiver and the payment of all expenses incurred in connection therewith; or (iii) the termination of such

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receivership with the consent of Mortgagee or pursuant to an order of a court of competent jurisdiction.

3.6    Remedies Not Exclusive. Mortgagee is entitled to enforce payment and performance of any indebtedness or obligations secured hereby and to exercise all rights and powers under this Mortgage or under any Loan Document or other agreement or any laws now or hereafter in force, notwithstanding some or all of the said indebtedness and obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement whether by court action or other powers herein contained, will prejudice or in any manner affect Mortgagee's right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee is entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as it may in its absolute discretion determine. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided or permitted, but each is cumulative and is in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to Mortgagee or to which Mortgagee may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Mortgagee and Mortgagee may pursue inconsistent remedies. Upon any sale made under or by virtue of this Article III, Mortgagee may bid for and then acquire the Mortgaged Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Obligations of Mortgagor the net sales price after deducting therefrom the reasonable expenses of the sale and the costs of the action and any other sums which the Mortgagee is authorized to deduct under this Mortgage or under any of the Loan Documents.

3.7    Request for Notice. Mortgagor hereby requests a copy of any notice of default and that any notice of sale hereunder be mailed to it at the address set forth in Section 5.5 of this Mortgage.

ARTICLE IV

SECURITY AGREEMENT

4.1    Creation of Security Interest. Mortgagor hereby grants to Mortgagee a security interest in and to all the Personal Property to secure Mortgagor's obligations hereunder and under the other Loan Documents.

4.2    Representations, Warranties and Covenants of Mortgagor. Mortgagor hereby represents, warrants and covenants (which representations, warranties and covenants will survive creation of any indebtedness of Mortgagor to Mortgagee or Lenders and any extension of credit thereunder) as follows:

(a)The Personal Property is not used or bought for personal, family or household purposes.

(b)The tangible portion of the Personal Property will be kept on or at the Premises; and Mortgagor shall not, without the prior written consent of Mortgagee,

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remove the Personal Property or any portion thereof therefrom except such portions or items of Personal Property which are consumed or worn out in ordinary usage, all of which will be promptly replaced by Mortgagor with similar items of comparable value.

(c)At the request of Mortgagee, Mortgagor shall join Mortgagee in executing one or more financing statements and fixture filings pursuant to the Uniform Commercial Code of New Jersey as in effect in the State of New Jersey ("Uniform Commercial Code"), in form satisfactory to Mortgagee and shall pay the cost of recording and filing the same in all public offices wherever recording or filing is deemed by Mortgagee to be necessary or desirable.

(d)Mortgagor does not do business under any trade name except as previously disclosed in writing to Mortgagee. Mortgagor shall immediately notify Mortgagee in writing of any change in its place of business or the adoption or change of any trade name or fictitious business name and shall, upon request of Mortgagee, execute any additional financing statements or other certificates necessary to reflect the adoption or change in trade name or fictitious business name.

(e)Mortgagor shall immediately notify Mortgagee of any claim against the Personal Property adverse to the interest of Mortgagee therein.

4.3    Use of Personal Property by Mortgagor. Until the occurrence and during the continuance of an Event of Default, Mortgagor may have possession of the Personal Property and use it in any lawful manner not inconsistent with this Mortgage and not inconsistent with any policy of insurance thereon.

4.4    Remedies Upon an Event of Default.

(a)In addition to the remedies provided in Section 3.2, upon the occurrence and during the continuance of an Event of Default, Mortgagee may, at its option, do any one or more of the following:

(i)Either personally, or by means of a court appointed receiver, take possession of all or any of the Personal Property and exclude therefrom Mortgagor and all others claiming under Mortgagor, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of Mortgagor with respect to the Personal Property or any part thereof. In the event Mortgagee demands or attempts to take possession of the Personal Property in the exercise of any rights under this Mortgage, Mortgagor agrees to promptly turn over and deliver possession thereof to Mortgagee;

(ii)Without notice to or demand upon Mortgagor, make such payments and do such acts as Mortgagee may deem necessary to protect its security interest in the Personal Property (including, without limitation, paying, purchasing, contesting or compromising any lien or encumbrance, whether superior or inferior to such security interest) and in exercising any such powers or

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authority to pay all expenses (including, without limitation, litigation costs and reasonable attorneys' fees) incurred in connection therewith;

(iii)Require Mortgagor from time to time to assemble the Personal Property, or any portion thereof, at a place designated by Mortgagee and reasonably convenient to both parties, and promptly deliver such Personal Property to Mortgagee or an agent or representative designated by Mortgagee. Mortgagee and its agents and representatives have the right to enter upon any or all of Mortgagor's premises and property to exercise Mortgagee's rights hereunder;

(iv)Realize upon the Personal Property or any part thereof as herein provided or in any manner permitted by law and exercise any and all of the other rights and remedies conferred upon Mortgagee by this Mortgage, by any other Loan Document or by law, either concurrently or in such order as Mortgagee may determine. Without limiting the generality of the foregoing, Mortgagee may proceed, in any sequence, (i) to exercise its rights under Section 3.2 and Section 3.3 with respect to all or any portion of the Mortgaged Property and all or any portion of the Personal Property, (ii) to exercise its rights under this Section 4.4 with respect to all or any portion of the Personal Property, and (iii) to exercise its rights under the provisions of Section 12A:9-604 of the Uniform Commercial Code;

(v)Sell or cause to be sold in such order as Mortgagee may determine, as a whole or in such parcels as Mortgagee may determine, the Personal Property and the remainder of the Mortgaged Property;

(vi)Sell, lease or otherwise dispose of the Personal Property at public sale, upon terms and in such manner as Mortgagee may determine. Mortgagee or any Lender may be a purchaser at any sale; and

(vii)Exercise any remedies of a secured party under the Uniform Commercial Code or any other applicable law.

(b)Unless the Personal Property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Mortgagee shall give Mortgagor at least five (5) days' prior written notice of the time and place of any public sale of the Personal Property or other intended disposition thereof to be made. Such notice may be mailed to Mortgagor at the address set forth in Section 5.5.

(c)Subject to the terms of Sections 1.14 and 8.5(b) of the Loan Agreement, the proceeds of any sale under Section 4.4(a) will be applied as follows:

(i)To the repayment of the reasonable costs and expenses of taking, holding and preparing for the sale and the selling of the Personal Property (including, without limitation, costs of litigation and attorneys' fees) and the discharge of all Impositions, liens and encumbrances, and claims thereof, if any, on the Personal Property prior to the security interest granted herein (except any

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Impositions or liens and encumbrances subject to which such sale has been made);

(ii)To the payment of all indebtedness and obligations owing to Mortgagee or Lenders under the Notes and other Loan Documents, all Swap Contracts and all other obligations that are secured by this Mortgage, in such order as Mortgagee determines; and

(iii)The surplus, if any, will be paid to Mortgagor or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

(d)Mortgagee has the right to enforce one or more remedies under this Section 4.4 successively or concurrently; and such action will not operate to estop or prevent Mortgagee from pursuing any further remedy that it may have. Any repossession or retaking or sale of the Personal Property pursuant to the provisions hereof will not operate to release Mortgagor until full payment of any deficiency has been made in cash.

4.5    Security Agreement. This Mortgage constitutes and is deemed to be a "security agreement" for all purposes of the Uniform Commercial Code; and Mortgagee is entitled to all the rights and remedies of a "secured party" under the Uniform Commercial Code.

4.6    Financing Statement and Fixture Filing. This Mortgage is intended to be and constitutes a fixture filing pursuant to the provisions of the Uniform Commercial Code with respect to all fixtures included within the Mortgaged Property and is being recorded as a fixture financing statement and filing under the Uniform Commercial Code, and covers property, goods and equipment which are or are to become fixtures related to the Premises. Mortgagor covenants and agrees that this Mortgage is to be filed in the real estate records of the county where the Premises is located and shall also operate from the date of such filing as a fixture filing in accordance with Subsections 9‑502(b) and (c) and other applicable provisions of the Uniform Commercial Code. This Mortgage shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the Uniform Commercial Code, as amended, and is to be filed for record in the real estate records of the county where the Premises is situated. Mortgagor shall be deemed to be the "debtor" and Mortgagee shall be deemed to be the "secured party" for all purposes under the Uniform Commercial Code. The full name of Mortgagor and Mortgagor's type of organization, and the full name of Mortgagee and Mortgagee's type of organization, are set forth on the signature page of this Mortgage. The mailing address of Mortgagor and Mortgagee are set forth in Section 5.5 (Notices) below. Mortgagor is the record owner of the Premises. Mortgagor grants to Mortgagee a security interest in all existing and future goods which are now or in the future become fixtures relating to the Premises and the proceeds thereof, including, without limitation, the goods and proceeds thereof described in Exhibit B. Mortgagor hereby authorizes Mortgagee to file any financing statement or financing statement amendment covering the Personal Property or relating to the security interested created herein without the signature of Mortgagor, as debtor. Mortgagor shall pay all costs of filing such financing statements and any extensions, renewals, amendments and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements as Mortgagee may require. Without the prior written consent of Mortgagee,

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Mortgagor shall not create or suffer to be created pursuant to the Uniform Commercial Code any other security interest in such items, including replacements and additions thereto. Upon the occurrence and during the continuance of an Event of Default, Mortgagee will have the remedies of a secured party under the Uniform Commercial Code and, at Mortgagee's option, may also invoke the other remedies provided in this Mortgage.

ARTICLE V

MISCELLANEOUS

5.1    Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought.

5.2    Mortgagor Waiver of Rights. Mortgagor waives to the extent permitted by law, (i) the benefit of all laws now existing or that may hereafter be enacted providing for any appraisement before sale of any portion of the Mortgaged Property, (ii) all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the liens hereby created (provided Mortgagor is not waiving notice and cure rights expressly provided for in the Loan Documents), and (iii) all rights and remedies which Mortgagor may have or be able to assert by reason of the laws of the State of New Jersey pertaining to the rights and remedies of sureties. Without limiting the generality of the foregoing, Mortgagor waives, to the extent permitted by law, all rights to direct the order in which any of the Mortgaged Property will be sold in the event of any sale or sales pursuant hereto and to have any of the Mortgaged Property or any other property now or hereafter constituting security for the indebtedness secured hereby marshaled upon any foreclosure of this Mortgage or of any other security for any of such indebtedness.

5.3    Statements by Mortgagor. Mortgagor shall, within ten (10) days after written notice thereof from Mortgagee, deliver to Mortgagee a written statement stating the unpaid principal of and interest on the Notes and any other amounts secured by this Mortgage and stating whether any offset or defense exists against such principal and interest.

5.4    Loan Statement Fees. Mortgagor shall pay the amount demanded by Mortgagee or its authorized loan servicing agent for any statement regarding the obligations secured hereby; provided, however, that such amount may not exceed the maximum amount allowed by law at the time request for the statement is made.

5.5    Notices. All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) by a nationally recognized air courier service, (c) electronic communication, whether by telex, telegram or telecopying (if confirmed in writing sent by a nationally recognized air courier service or by registered or certified, first class mail, return receipt requested); or (d) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a),

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(b) or (c) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (d) will be deemed received three (3) days following deposit in the mail.

If to Mortgagor:	KBSII 100-200 CAMPUS DRIVE, LLC c/o KBS Capital Advisors LLC 590 Madison Avenue, 26th Floor New York, NY 10022 Attention: Randi Kaufman, Senior Vice President, Asset Management
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, CA 92660 Attention: Todd Smith, VP Controller, Corporate
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, CA 92660 Attention: Jeff Waldvogel, Director of Finance & Reporting
With a copy to:	Greenberg Traurig, LLP 3161 Michelson Drive, Suite 1000 Irvine, CA 92612 Attention: Bruce Fischer, Esq.
If to Mortgagee:	U.S. Bank National Association Commercial Real Estate 4100 Newport Place, Suite 900 Newport Beach, CA 92660 Attention: Loan Administration

5.6    Intentionally Omitted.

5.7    Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Mortgage.

5.8    Invalidity of Certain Provisions. Every provision of this Mortgage is intended to be severable. If any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction, such illegality or invalidity will not affect the balance of the terms and provisions hereof, which terms and provisions will remain binding and enforceable. If the lien of this Mortgage is invalid or unenforceable as to any part of the debt, or if such lien is invalid or unenforceable as to any part of the Mortgaged Property, the unsecured or partially unsecured portion of the debt must be completely paid prior to the payment of the remaining secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, will be

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considered to have been first paid on and applied to the full payment of that portion of the debt which is not secured or fully secured by the lien of this Mortgage.

5.9    Subrogation. To the extent that proceeds of the Notes are used to pay any outstanding lien, charge or prior encumbrance against the Mortgaged Property, such proceeds have been or will be advanced by Mortgagee at Mortgagor's request and Mortgagee will be subrogated to any and all rights and liens held by any owner or holder of such outstanding liens, charges and prior encumbrances, irrespective of whether said liens, charges or encumbrances are released.

5.10    Attorneys' Fees. If the Notes are not paid when due or if any Event of Default occurs, Mortgagor promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not such enforcement and collection includes the filing of a lawsuit.

5.11    GOVERNING LAW. THIS MORTGAGE IS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW JERSEY. MORTGAGOR AGREES THAT THE VENUE OF ANY ACTION ARISING FROM OR RELATING TO THIS MORTGAGE MAY BE LAID IN MORRIS COUNTY, NEW JERSEY.

5.12    Joint and Several Obligations. Should this Mortgage be signed by more than one party, all obligations herein contained will be deemed to be the joint and several obligations of each party executing this Mortgage. Any married person signing this Mortgage agrees that recourse may be had against community assets and against his separate property for the satisfaction of all obligations contained herein. Section 7.19 of the Loan Agreement (the joint borrower provisions) is by this reference incorporated herein in its entirety.

5.13    Interpretation. In this Mortgage the singular includes the plural and the masculine includes the feminine and neuter gender and vice versa, if the context so requires.

5.14    Intentionally Deleted.

5.15    Release by Mortgagee - Swap Contracts. Notwithstanding the foregoing or anything else contained in the Loan Documents which may be construed to the contrary, prior to any full release or full reconveyance of the Mortgage, all Swap Contracts shall have been terminated, and any and all settlement payments and other payments, fees and costs owing by Mortgagor with respect to such Swap Contracts shall be paid prior to any such release or reconveyance. Mortgagee's rights under this Section 5.15 shall be in addition to any and all other rights of Mortgagee under the Swap Contracts and applicable law.

5.16    Counterparts. This document may be executed and acknowledged in counterparts, all of which executed and acknowledged counterparts together constitute a single document. Signature and acknowledgment pages may be detached from the counterparts and attached to a single copy of this document to physically form one document, which may be recorded.

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5.17    Debtor-Creditor Relationship. Nothing contained herein or in any Loan Document will be deemed to create or construed to create a partnership, joint venture or any relationship other than that of debtor-creditor. Mortgagor and Mortgagee expressly disclaim any intent to create a partnership or joint venture pursuant to this Mortgage, any other Loan Document, or any other document related hereto or thereto.

5.18    Nonforeign Entity. Section 1445 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform Mortgagee that the withholding of tax will not be required in the event of the disposition of the Mortgaged Property pursuant to the terms of this Mortgage, Mortgagor hereby certifies, under penalty of perjury, that:

(a)Mortgagor is not a foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder; and

(b)Intentionally Deleted.

(c)Mortgagor is duly qualified to do business in New Jersey.

It is understood that Mortgagee may disclose the contents of this certification to the Internal Revenue Service and that any false statement contained herein could be punished by fine, imprisonment or both. Mortgagor covenants and agrees to execute such further certificates, which must be signed under penalty of perjury, as Mortgagee reasonably requires. The covenant set forth herein will survive the foreclosure of the lien of this Mortgage or acceptance of a deed in lieu thereof.

5.19    Limited Recourse Provision. Except as to Guarantor as set forth in the Guaranty, Mortgagee and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of Mortgagor, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Mortgagor (except for the Guarantor as provided in the Guaranty, but including KBSII REIT ACQUISITION I, LLC, KBSII REIT ACQUISITION XXV, LLC, KBSII REIT ACQUISITION V, LLC, KBS LIMITED PARTNERSHIP II or KBS REAL ESTATE INVESTMENT TRUST II, INC.). For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Mortgagor's liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty or Mortgagee's right to exercise any rights or remedies against any collateral securing the Loan.

5.20    Modification of Mortgage. This Mortgage is subject to modification pursuant to N.J.S.A. Sections 46:9-8.1 and 8.2. and shall be entitled to the priority provisions thereof.

5.51    Future Advances. Without limiting any other provision of this Mortgage, Mortgagee may make future advances and this Mortgage shall also secure repayment of any future advances made by Mortgagee and the unpaid balances of other advances made for the payment of taxes, assessments, maintenance, charges, insurance premiums or costs similar or

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dissimilar incurred for the protection of the Mortgaged Property or for the lien of this Mortgage, expenses incurred by Mortgagee, or advances made, if any, to enable the completion of the improvements for which the loan was originally made.

5.22    Commercial Loan. Mortgagor hereby stipulates and warrants that the Loan secured hereby is a commercial loan, and that all of the proceeds of such Loan will be used solely to acquire or carry on a business or commercial enterprise.

[Signatures on Following Page]

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IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year first above written.

"MORTGAGOR"

KBSII 100-200 CAMPUS DRIVE, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION I, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

ACKNOWLEDGMENTS
STATE OF CALIFORNIA     COUNTY OF Orange    )
On February 27, 2013, before me,	K. Godin, Notary Public
	(insert name and title of the officer)
personally appeared Charles J. Schreiber, Jr. who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /s/ K. Godin(Seal)

EXHIBIT A

LEGAL DESCRIPTION

That certain real property located in the Borough of Florham Park, County of Morris, State of New Jersey and more particularly described as follows:

Lot 4.02, block 1201 as shown on a map entitled "Final Plat of Major Subdivision, Florham Park corporate Centre, Phase 1, Block 1201, Lot 4, Borough of Florham Park, Morris County, New Jersey", prepared by Storch Engineers and file din the Morris County Clerks Officer on November 23, 1988 as Map No. 4720.

Lot 4.04 in Block 1201 as shown on a map entitled "Final Plat of Major Subdivision Florham Park Corporate Centre, Phase II, Block 1201, Lot 4, Borough of Florham Park, Morris County, New Jersey", prepared by Storch Engineers and filed in the Morris County Clerk's Office on September 15, 1989 as Map No. 4799.

FOR INFORMATION PURPOSES ONLY:

"In compliance with Chapter 157, Laws of 1977, premises herein is Lots 5 and 7 in Block 1201 on the Tax Map of the Borough of Florham Park, County of Morris, State of New Jersey.

A perpetual non-exclusive access easement over and across Campus Drive, the Landscaping Islands (as defined in the Landscaping Maintenance Agreement), the Campus Drive Jug Handle (as defined in the Landscaping Maintenance Agreement) and the Campus Drive Jug Handle Basin (as defined in the Landscaping Maintenance Agreement) as provided in that Deed recorded in Book 3503, page 287, and in that Landscaping Maintenance Agreement dated October 17, 2000, recorded in Deed Book 5270, page 150, Morris County Clerk's Office, Morris County, New Jersey.

A non-exclusive easement to develop, install, use, maintain, repair, inspect, remove and replace the Common Facilities (as defined in the Declaration), a non-exclusive easement in, upon, over, under, across, and through the Lots (as defined in the Declaration) for surface water drainage and runoff, an a non-exclusive blanket easement for entry upon, over, across, and through the Lots for the purpose for carrying out the objectives of the Declaration, as described in that Declaration of Cross-Easements as set forth in Deed Book 4262, page 369, as amended by First Amended Declaration of Cross-Easements as set forth in Deed Book 4748, page 36.

BEING ASLO KNOWN AS (REPORTED FOR INFORMATIONAL PURPOSES ONLY);

Block 1201, Lot 5 7 7 on the official tax map of the Borough of Florham Park, County of Morris, State of New Jersey

EXHIBIT A

EXHIBIT B

DESCRIPTION OF PERSONAL PROPERTY

(a)All personal property, including all goods, supplies, equipment, furniture, furnishings, fixtures, machinery, inventory and construction materials which Mortgagor now or hereafter owns or in which Mortgagor now or hereafter acquires an interest or right, including those which are now or hereafter located on or affixed to the Premises or used or useful in the operation, use or occupancy thereof or the construction of any improvements thereon, including any interest of Mortgagor in and to personal property which is leased or subject to any superior security interest, and all books, records, leases and other documents, of whatever kind or character, relating to the Premises;

(b)All fees, income, rents, issues, profits, earnings, receipts, royalties and revenues which, after the date hereof and while any portion of the indebtedness secured hereby remains unpaid, may accrue from said goods, fixtures, furnishings, equipment and building materials or any part thereof or from the Premises or any part thereof, or which may be received or receivable by Mortgagor from any hiring, using, letting, leasing, subhiring, subletting, or subleasing thereof;

(c)All of Mortgagor's present and future rights to receive payments of money, services or property, including rights to all deposits from tenants of the Premises, accounts receivable, deposit accounts, chattel paper, notes, drafts, contract rights (including all rights to payment under all purchase and sale agreements and other contracts), instruments, general intangibles and principal, interest and payments due on account of goods sold, services rendered, loans made or credit extended, together with title or interest in all documents evidencing or securing the same; provided, however, notwithstanding Mortgagor's grant of a security interest in its rights under all purchase and sale agreements now or hereafter relating to the Premises, Mortgagor shall be free, without the approval or consent of Beneficiary, to amend, modify and/or terminate, at any time, and from time to time, such purchase and sale agreements;

(d)All of Mortgagor's present and future rights, titles and interests, but not Mortgagor's obligations, duties or liabilities for any breach, in, under and to all Swap Contracts (as defined in the Loan Agreement) and all Swap Transactions (as defined in the Loan Agreement), and all amounts received by Mortgagor in connection therewith or to which Mortgagor is entitled thereunder;

(e)All other intangible property and rights relating to the Premises or the operation thereof, or used in connection therewith, including all governmental permits relating to construction or other activities on the Premises, all names under or by which the Premises may at any time be operated or known, all rights to carry on business under any such names, or any variant thereof, all trade names and trademarks relating in any way to the Premises, good will in any way relating to the Premises, and all licenses and permits relating in any way to, or to the operation of, the Premises;

EXHIBIT B - Page 1

(f)Mortgagor's rights under all insurance policies covering the Premises or any of the aforesaid collateral, and all proceeds, loss payments and premium refunds payable regarding the same;

(g)All reserves, deferred payments, deposits, refunds, cost savings and payments of any kind relating to the construction of any improvements on the Premises;

(h)All water stock relating to the Premises;

(i)All causes of action, claims, compensation and recoveries for any damage to or condemnation or taking of the Premises or the aforesaid collateral, or for any conveyance in lieu thereof, whether direct or consequential, or for any damage or injury to the Premises or the aforesaid collateral, or for any loss or diminution in value of the Premises or the aforesaid collateral;

(j)All architectural, structural, mechanical and engineering plans and specifications prepared for construction of improvements or extraction of minerals or gravel from the Premises and all studies, data and drawings related thereto; and also all contracts and agreements of Mortgagor relating to the aforesaid plans and specifications or to the aforesaid studies, data and drawings or to the construction of improvements on or extraction of minerals or gravel from the Premises;

(k)All Mortgagor's rights in proceeds of the loan evidenced by the Note (as defined in the Loan Agreement);

(l)all present and future deposit accounts of Mortgagor (but not from any parent entity (direct or indirect) or any other Affiliate) held with Mortgagee, including, without limitation, any demand, time, savings, passbook or like accounts maintained by Mortgagor with Mortgagee, and all money, funds, instruments, securities, cash, cash equivalents and all other property of any nature whatsoever held with Mortgagee, whether or not deposited in any such deposit account.

(m)without limiting any of the foregoing, any or all other present or future "fixtures," "equipment," "software," "inventory," "goods," "general intangibles," "payment intangibles," "commercial tort claims," "accounts," "contract rights," "instruments," "promissory notes," "investment property," "letter of credit rights," "letters of credit," "deposit accounts" and "documents" (as such quoted terms are defined in or encompassed by the New Jersey Uniform Commercial Code, as now or hereafter amended) located on, used in the operation of, arising or derived from or in way relating to the Premises, Swap Contracts (as defined in the Loan Agreement) or Swap Transactions (as defined in the Loan Agreement); and

(n)all proceeds of the foregoing.

All terms used herein which are defined in the New Jersey Uniform Commercial Code (as now or hereafter amended) shall have the same meanings when used herein, unless the context requires otherwise.

EXHIBIT B - Page 2

EX-10.4

Exhibit 10.4

Prepared By and Return To:

Sheppard, Mullin, Richter & Hampton LLP

650 Town Center Drive, 4th Floor

Costa Mesa, CA 92626-1993

Attn: David E. Hengstler, Esq.

Lot: 1.01

Block: 108.3

THIS SPACE ABOVE FOR RECORDER'S USE

MORTGAGE, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

by and between

KBSII ONE MEADOWLANDS, LLC,

a Delaware limited liability company

("Mortgagor")

and

U.S. BANK NATIONAL ASSOCIATION,

a National Banking Association, as administrative bank and lead arranger

("Mortgagee")

Amount: $235,000,000.00 (subject to increase in an aggregate amount of up to $335,000,000)

Dated: February 27, 2013

Premises:	Borough of East Rutherford
	County of Bergen
	State of New Jersey

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MORTGAGE, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

THIS MORTGAGE SECURES FUTURE ADVANCES

(The promissory notes secured hereby provide for a fluctuating interest rate)

THIS MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING is made as of February 27, 2013 by KBSII ONE MEADOWLANDS, LLC, a Delaware limited liability company, as mortgagor ("Mortgagor") to U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent as described below (in such capacity, "Mortgagee"). The address of Mortgagor is c/o KBS Capital Advisors LLC, 590 Madison Avenue, 26th Floor, New York, NY 10022, Attention: Randi Kaufman, Senior Vice President, Asset Management. The address of Mortgagee is Commercial Real Estate, 4100 Newport Place, Suite 900, Newport Beach, CA 92660, Attention: Loan Administration. Mortgagee is acting as the agent for itself and all other "Lenders" now or hereafter existing under that certain Loan Agreement of even date herewith (the "Loan Agreement") between Mortgagor and each of the other borrowers (individually, each a "Borrower" and collectively, the "Borrowers") from time to time a party thereto, Mortgagee, as "Agent" and the "Lenders" described therein. As used herein, the term "Lenders" shall have the same meaning that is given to such term in the Loan Agreement.

THIS MORTGAGE is given, among other things, for the purpose of securing a revolving and term loan (the "Loan") from Lenders, as lenders, to Borrowers, as borrowers, as more fully described in the Loan Agreement, the proceeds of which are to be used to pay, among other things, a portion of the costs of financing certain real property located in the Borough of East Rutherford, County of Bergen, State of New Jersey, which real property is more particularly described in Exhibit A attached hereto and by this reference incorporated herein (the "Land").

FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Mortgagor, as mortgagor, hereby irrevocably mortgages, grants, bargains, sells, transfers, conveys and assigns to Mortgagee for the benefit and security of Mortgagee (as agent for the Lenders), under and subject to the terms and conditions hereinafter set forth, the Land;

TOGETHER WITH any and all buildings and improvements now or hereafter erected on the Land including, without limitation, the fixtures, attachments, appliances, equipment, machinery, and other articles attached to said buildings and improvements (the "Improvements"), all of which are deemed and construed to be a part of the realty (the Land and the Improvements are collectively referred to herein as the "Premises");

TOGETHER WITH all Leases (as defined in Section 2.1 below) and all Rents (as defined in Section 2.1 below);

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TOGETHER WITH all interests, estates or other claims, both in law and in equity, which Mortgagor now has or may hereafter acquire in the Premises;

TOGETHER WITH all right, title, and interest of Mortgagor in (a) the property and interests in property described on Exhibit B attached hereto and incorporated herein by reference, (b) all other personal property now or hereafter owned by Mortgagor that is now or hereafter located on or used in connection with the Premises, (c) all other rights and interests of Mortgagor now or hereafter held in personal property that is now or hereafter located on or used in connection with the Premises, and (d) all proceeds thereof (such personal property and proceeds are collectively referred to in this Mortgage as the "Personal Property");

TOGETHER WITH all easements, rights-of-way and rights now owned or hereafter acquired by Mortgagor used in connection therewith or as a means of access thereto, including, without limitation, all rights pursuant to any trackage agreement and all rights to the nonexclusive use of common drive entries, and all tenements, hereditaments and appurtenances thereof and thereto, and all water and water rights and shares of stock evidencing the same;

TOGETHER WITH all leasehold estate, right, title and interest of Mortgagor in and to all leases, subleases, licenses, franchises and other agreements covering the Premises or any portion thereof now or hereafter existing or entered into, and all right, title and interest of Mortgagor thereunder including, without limitation, all cash or security deposits, advance rentals, and deposits or payments of similar nature;

TOGETHER WITH all right, title and interest now owned or hereafter acquired by Mortgagor in and to any greater estate in the Premises;

TOGETHER WITH all right, title and interest of Mortgagor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Premises, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Premises;

TOGETHER WITH all the estate, interest, right, title, other claim or demand, both in law and in equity, including claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Mortgagor now has or may hereafter acquire in the Premises, and any and all awards made for the taking by eminent domain, or by any proceeding of purchase in lieu thereof, of the whole or any part of the Mortgaged Property (as hereinafter defined), including, without limitation, any awards resulting from a change of grade of streets and awards for severance damages.

The entire estate, property and interest hereby conveyed to Mortgagee may hereafter be collectively referred to as the "Mortgaged Property."

FOR THE PURPOSE OF SECURING:

(a) payment of all principal, interest, prepayment fees and other charges, late charges and loan fees, and all other sums owing under or evidenced by one or more promissory notes in the aggregate stated principal amount of $235,000,000, subject to increase in an aggregate amount of up to $335,000,000.00 on the terms

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and conditions set forth in the Loan Agreement, each now or hereafter executed and delivered by Borrowers to the order of one or more Lenders pursuant to the Loan Agreement (together with all other promissory notes now or hereafter given and/or executed pursuant to the terms of the Loan Agreement and/or given in substitution thereof or in modification, supplement, increase, addition, renewal or extension thereof, in whole or in part, whether one or more, as any or all of such promissory notes may from time to time be renewed, extended, supplemented, increased or modified, collectively, the "Notes") which Notes and Loan Agreement and any and all modifications, extensions, renewals, supplements, additions, and replacements thereof are by this reference hereby made a part hereof;

(b) payment of all sums advanced by Mortgagee or Lenders to protect the Mortgaged Property, with interest thereon from the date of the advance at the Default Rate (as defined in the Notes);

(c) payment of all sums owing by any Borrower to Mortgagee or Lenders under the Deeds of Trust (as defined in the Loan Agreement);

(d) payment of all other sums, with interest thereon, which may hereafter be loaned to Borrowers, or their successors or assigns, by Lenders, or their successors or assigns when evidenced by a promissory note or notes executed by a Borrower reciting that they are secured by this Mortgage and/or the other Deeds of Trust;

(e) performance of every obligation, covenant or agreement of each Borrower contained herein and in the Loan Agreement and/or the other Deeds of Trust, and all supplements, amendments and modifications thereto and all extensions and renewals thereof;

(f) performance of every obligation, covenant and agreement of each Borrower contained in any agreement now or hereafter executed by Mortgagor which recites that the obligations thereunder are secured by this Mortgage and/or the other Deeds of Trust;

(g) compliance with and performance of each and every material provision of any declaration of covenants, conditions and restrictions pertaining to the Mortgaged Property or any portion thereof; and

(h) all present and future debts, obligations and liabilities of Borrowers or one or more Borrowers (or any Affiliate of Borrowers or one or more Borrowers) under or relating to any and all present and future Swap Transactions and Swap Contracts which Borrowers or one or more Borrowers (or any Affiliate of Borrowers or one or more Borrowers) elects to enter into with U.S. Bank National Association or another Lender or any Affiliate of U.S. Bank National Association or another Lender in connection with or relating to the Loan, heretofore, now, or hereafter made, incurred, or created, whether voluntary or involuntary and

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however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined.

Notwithstanding the above or anything in this Mortgage or any other Loan Document to the contrary, however, this Mortgage shall not secure (i) Borrowers' obligations under the Environmental Indemnity (as defined in the Loan Agreement), (ii) any third party guaranty of the Loan or Borrowers' obligations under the Loan Documents, or (iii) any other Loan Document that specifically states that it is not secured by this Mortgage. All initially capitalized terms used herein without definition are as defined in the Loan Agreement. The rate of interest of the obligation secured hereunder may vary from time to time.

TO PROTECT THE SECURITY OF THIS MORTGAGE, MORTGAGOR HEREBY COVENANTS AND AGREES AS FOLLOWS:

ARTICLE I

COVENANTS AND AGREEMENTS OF MORTGAGOR

1.1Payment of Secured Obligations. Mortgagor shall pay when due the principal of and the interest on the indebtedness evidenced by the Notes, all charges, fees and other sums as provided in the Loan Documents (including, without limitation, any prepayment fee); the principal of and interest on any future advances secured by this Mortgage; and the principal of and interest on any other indebtedness secured by this Mortgage.

1.2    Maintenance, Repair, Alterations, and Compliance with Laws. Mortgagor shall keep the Mortgaged Property in good condition and repair; Mortgagor shall not remove, demolish or substantially alter any of the Improvements except upon the prior written consent of Mortgagee except that the foregoing shall not limit Mortgagor's right to undertake any tenant improvements for tenants under their leases (approved or deemed approved by Mortgagee) or any capital improvements to the Improvements; Mortgagor shall complete promptly and in a good and workmanlike manner any Improvement which may be now or hereafter constructed on the Land and promptly restore in like manner any portion of the Improvements which may be damaged or destroyed thereon from any cause whatsoever, and pay when due all claims for labor performed and materials furnished therefor; Mortgagor shall comply with all laws, ordinances, regulations, covenants, conditions and restrictions now or hereafter affecting the Mortgaged Property or any part thereof or requiring any alterations or improvements, and the requirements of insurance companies and any bureau or agency which establishes standards of insurability; Mortgagor shall not commit or permit any physical waste or deterioration of the Mortgaged Property, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Mortgagor shall not commit, suffer or permit any act to be done in or upon the Mortgaged Property in violation of any law, ordinance or regulation; and Mortgagor shall do all other acts which from the character or use of the Mortgaged Property may be reasonably necessary to maintain and preserve its value. Mortgagor shall not apply for, willingly suffer or permit any change in zoning, subdivision, or land use regulations affecting the Premises without the consent of Mortgagee. Mortgagor shall not drill or extract or enter into any lease for the drilling for or extraction of oil,

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gas or other hydrocarbon substances or any mineral of any kind or character on or from the Mortgaged Property or any part thereof without first obtaining Mortgagee's written consent.

1.3    Required Insurance. Mortgagor shall at all times provide, maintain and keep in force or cause to be provided, maintained and kept in force, at no expense to Mortgagee or Lenders, all policies of insurance that are required pursuant to the Loan Agreement or other Loan Documents, or that are otherwise reasonably required by Mortgagee. The insurers, coverages, endorsements, certificates, liability limits and all other matters relating to such insurance policies shall be subject to the requirements set forth in Exhibit "G" to the Loan Agreement which is incorporated herein by this reference.

1.4    Delivery of Policies, Payment of Premiums.

(a)At Mortgagee's option all policies of insurance must either have attached thereto a lender's loss payable endorsement for the benefit of Mortgagee in form satisfactory to Mortgagee or must name Mortgagee as an additional insured (in each case, in accordance with the requirements of the Loan Agreement). At Mortgagee's option, Mortgagor shall furnish Mortgagee with an original of all policies of insurance required under Section 1.3 above or a certificate of insurance for each required policy setting forth the coverage, the limits of liability, the name of the carrier, the policy number and the period of coverage (and subject to any further requirements set forth in the Loan Agreement). If Mortgagee consents, Mortgagor may provide any of the required insurance through blanket policies carried by Mortgagor and covering more than one location, or by policies procured by a party holding under Mortgagor; provided, however, all such policies must be in form and substance and issued by companies reasonably satisfactory to Mortgagee. No less than 5 days prior to the expiration of each required policy, Mortgagor shall deliver to Mortgagee evidence satisfactory to Mortgagee of the renewal or replacement of such policy continuing insurance in the form required by this Mortgage and payment of premiums for any such policies within 10 days of the availability of same. All such policies must contain a provision that, notwithstanding any contrary agreement between Mortgagor and an insurance company, such policies will not be cancelled, allowed to lapse without renewal, surrender, reduced in scope or limits of coverage or otherwise materially amended, without at least thirty (30) days' prior written notice to Mortgagee.

(b)In the event Mortgagor fails to provide, maintain, keep in force or deliver to Mortgagee the policies of insurance required by this Mortgage or by any Loan Document, Mortgagee may (but has no obligation to), following no less than five (5) business days prior written notice to Mortgagor, (provided such notice shall not be required if any policy could lapse), procure such insurance or single-interest insurance for such risks covering Mortgagee's interest, and Mortgagor will pay all premiums thereon promptly upon demand by Mortgagee, and until such payment is made by Mortgagor, the amount advanced by Mortgagee with respect to all such premiums will bear interest at the Default Rate.

1.5    Casualties; Insurance Proceeds. Mortgagor shall give prompt written notice thereof to Mortgagee after the occurrence of any casualty to or in connection with the

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Mortgaged Property or any part thereof, whether or not covered by insurance. In the event of such casualty, all proceeds of insurance must be payable to Mortgagee, and Mortgagor hereby authorizes and directs any affected insurance company to make payment of such proceeds directly to Mortgagee. If Mortgagor receives any proceeds of insurance resulting from such casualty, Mortgagor shall promptly pay over such proceeds to Mortgagee. Notwithstanding the above, provided that (i) such proceeds do not exceed $500,000 for the Mortgaged Property, (ii) no Event of Default exists, and (iii) the casualty does not materially impair the value of the Mortgaged Property, Mortgagor may retain such proceeds (which shall be applied to the restoration of the Improvements to the extent required to repair a casualty). At all times during the existence of an Event of Default, Mortgagee is hereby authorized and empowered by Mortgagor to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance. In the event of any damage or destruction of the Premises, Mortgagee shall apply all loss proceeds remaining after deductions of all expenses of collection and settlement thereof, including, without limitation, reasonable attorneys' and adjustors' fees and expenses, to the restoration of the Improvements but only as repairs or replacements are effected and continuing expenses become due and payable; provided that the following conditions are met: (a) no Event of Default exists that has not been cured; (b) the Loan is in Balance (taking into account all costs of reconstruction and the amount of the loss proceeds, if any, the amount of operating expenses and interest that will accrue under the Notes, and any additional funds deposited by Mortgagor with Mortgagee to pay for such costs of reconstruction); (c) Mortgagee has determined, in its sole discretion, that the damage or destruction can be repaired and that the damaged portion of the Improvements can be completed according to the requirements of the Loan Agreement; (d) Mortgagee and all applicable governmental authorities have approved the final plans and specifications for reconstruction of the damaged portion of the Improvements; (e) Mortgagee has approved, for the reconstruction of the damaged portion of the Improvements, in its sole discretion, the budget, the construction schedule and the construction contract; and (f) Mortgagee has determined, in its sole discretion, that after the reconstruction work is completed, the ratio of the then applicable Committed Amount to the then "As-Is" appraised value (based on evidence reasonably satisfactory to Mortgagee, including, if required by Mortgagee or Mortgagor, updated Appraisals approved by Mortgagee, which approval shall not be withheld unreasonably) of the Properties does not exceed the Maximum Committed Amount Leverage Ratio (as defined in the Loan Agreement), provided Mortgagor may pay down the outstanding principal amount of the Loan, or cancel applicable undisbursed amount(s) of the Revolving Portion so that the Maximum Committed Amount Leverage Ratio is satisfied. If any one or more of such conditions set forth herein have not been met, Mortgagee will not be obligated to make any further disbursements pursuant to the Loan Agreement, and Mortgagee shall apply all loss proceeds, after deductions as herein provided, to the repayment of the outstanding balance of the Notes (without payment of a prepayment premium other than the Interest Differential), together with all accrued interest thereon, in such order as Mortgagee may elect, notwithstanding that the outstanding balance may not be due and payable. Nothing herein contained will be deemed to excuse Mortgagor from repairing or maintaining the Mortgaged Property as provided in Section 1.2 hereof or restoring all damage or destruction to the Mortgaged Property, regardless of whether or not there are insurance proceeds available to Mortgagor or whether any such proceeds are sufficient in amount, and the application or release by Mortgagee of any insurance proceeds will not cure or

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waive any default or notice of default under this Mortgage or invalidate any act done pursuant to such notice.

1.6    Assignment of Policies Upon Foreclosure. In the event of foreclosure of this Mortgage or other transfer of title or assignment of the Mortgaged Property in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Mortgagor in and to all policies of insurance required by Section 1.3 will inure to the benefit of and pass to the successor in interest to Mortgagor or the purchaser or grantee of the Mortgaged Property.

1.7    Indemnification; Subrogation; Waiver of Offset.

(a)If Mortgagee or any Lenders are made a party to any litigation concerning the Notes, this Mortgage, the other Deeds of Trust, any of the Loan Documents, the Mortgaged Property or any part thereof or interest therein, or the occupancy of the Mortgaged Property by Mortgagor, then Mortgagor shall indemnify, defend and hold Mortgagee and such Lenders harmless from all liability by reason of said litigation, including reasonable attorneys' fees and expenses incurred by Mortgagee and such Lenders as a result of any such litigation, whether or not any such litigation is prosecuted to judgment. However, Mortgagor will not be obligated to indemnify, defend and hold Mortgagee and such Lenders harmless from any claims which arise solely out of the gross negligence or willful misconduct of Mortgagee or such Lenders. Mortgagee and such Lenders may employ an attorney or attorneys to protect their rights hereunder, and in the event of such employment following any breach by Mortgagor, Mortgagor shall pay Mortgagee and such Lenders reasonable attorneys' fees and expenses incurred by them, whether or not an action is actually commenced against Mortgagor by reason of its breach. This Section 1.7 will not apply to any matters covered by the Environmental Indemnity.

(b)Mortgagor waives any and all right to claim or recover against Mortgagee or any Lender, its officers, employees, agents and representatives, for loss of or damage to Mortgagor, the Mortgaged Property, Mortgagor's property or the property of others under Mortgagor's control from any cause insured against or required to be insured against by the provisions of this Mortgage.

(c)All sums payable by Mortgagor pursuant to this Mortgage must be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Mortgagor hereunder will in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of or any condemnation or similar taking of the Mortgaged Property or any part thereof; (ii) any restriction or prevention of or interference by any third party with any use of the Mortgaged Property or any part thereof; (iii) any title defect or encumbrance or any eviction from the Premises or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Mortgagee or any Lender, or any action taken with respect to this Mortgage by any trustee or receiver of Mortgagee, or

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by any court, in any such proceeding; (v) any claim which Mortgagor has or might have against Mortgagee or any Lender; (vi) any default or failure on the part of Mortgagee or any Lender to perform or comply with any of the terms hereof or of any other agreement with Mortgagor; or (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing; whether or not Mortgagor has notice or knowledge of any of the foregoing. Except as expressly provided herein, Mortgagor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Mortgagor.

1.8    Taxes and Impositions.

(a)Mortgagor shall pay, or cause to be paid prior to delinquency, all real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including, without limitation, nongovernmental levies or assessments such as maintenance charges, levies or charges resulting from covenants, conditions and restrictions affecting the Mortgaged Property, which are assessed or imposed upon the Mortgaged Property, or become due and payable, and which create, may create or appear to create a lien upon the Mortgaged Property, or any part thereof, or upon any person, property, equipment or other facility used in the operation or maintenance thereof (all the above collectively hereinafter referred to as "Impositions"); provided, however, that if, by law any such Imposition is payable, or may at the option of the taxpayer be paid, in installments, Mortgagor may pay the same or cause it to be paid, together with any accrued interest on the unpaid balance of such Imposition, in installments before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such installment and interest.

(b)If at any time after the date hereof there is assessed or imposed (i) a tax or assessment on the Mortgaged Property in lieu of or in addition to the Impositions payable by Mortgagor pursuant to Section 1.8(a), or (ii) a license fee, tax or assessment imposed on Mortgagee or any Lender and measured by or based in whole or in part upon the amount of the outstanding obligations secured hereby, then all such taxes, assessments or fees will be deemed to be included within the term "Impositions" as defined in Section 1.8(a) and Mortgagor shall pay and discharge the same as herein provided with respect to the payment of Impositions. If Mortgagor fails to pay such Impositions prior to delinquency, Mortgagee may at its option declare all obligations secured hereby together with all accrued interest thereon, immediately due and payable. Anything to the contrary herein notwithstanding, Mortgagor will have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax levied on Mortgagee or any Lender or on the obligations secured hereby.

(c)Subject to the provisions of Section 1.8(d) and upon request by Mortgagee, Mortgagor shall deliver to Mortgagee before any such Imposition is due and payable official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Mortgagee, evidencing the payment thereof.

(d)Mortgagor has the right before any delinquency occurs to contest or object to the amount or validity of any such Imposition by appropriate proceedings,

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but this will not be deemed or construed in any way as relieving, modifying or extending Mortgagor's covenant to pay any such Imposition at the time and in the manner provided in this Section 1.8, unless Mortgagor has given prior written notice to Mortgagee of Mortgagor's intent to so contest or object to an Imposition, and unless, at Mortgagee's sole option, (i) Mortgagor demonstrates to Mortgagee's reasonable satisfaction that the proceedings to be initiated by Mortgagor will conclusively operate to prevent the sale of the Mortgaged Property, or any part thereof, to satisfy such Imposition prior to final determination of such proceedings; or (ii) Mortgagor furnishes a good and sufficient bond or surety as requested by and reasonably satisfactory to Mortgagee; or (iii) Mortgagor demonstrates to Mortgagee's reasonable satisfaction that Mortgagor has provided as good and sufficient undertaking as may be required or permitted by law to accomplish a stay of any such sale.

(e)[Intentionally Deleted].

(f)Mortgagor shall not suffer, permit or initiate the joint assessment of any real and personal property which may constitute all or a portion of the Mortgaged Property or suffer, permit or initiate any other procedure whereby the lien of the real property taxes and the lien of the personal property taxes will be assessed, levied or charged to the Mortgaged Property as a single lien.

(g)Upon the request of Mortgagee, Mortgagor shall promptly cause to be furnished to Mortgagee, at Mortgagor's expense, a tax reporting service covering the Mortgaged Property of the type, duration and with a company satisfactory to Mortgagee.

1.9    Utilities. Mortgagor shall pay or shall cause to be paid when due all utility charges that are incurred by Mortgagor for the benefit of the Mortgaged Property or that may become a charge or lien against the Mortgaged Property for gas, electricity, water or sewer services furnished to the Mortgaged Property and all other assessments or charges of a similar nature, whether public or private, affecting or related to the Mortgaged Property or any portion thereof, whether or not such taxes, assessments or charges are or may become liens thereon.

1.10    Actions Affecting Mortgaged Property. Mortgagor shall give Mortgagee prompt written notice of the assertion of any claim with respect to, or the filing of any action or proceeding purporting to affect the Mortgaged Property, the security hereof or the rights or powers of Mortgagee. Mortgagor shall appear in and contest any such action or proceeding and shall pay all costs and expenses, including cost of evidence of title and attorneys' fees, in any such action or proceeding in which Mortgagee may appear.

1.11    Actions By Mortgagee to Preserve Mortgaged Property. If Mortgagor fails to make any payment or to do any act as and in the manner provided in any of the Loan Documents, Mortgagee, in its own discretion, without obligation so to do, without releasing Mortgagor from any obligation, and without notice to or demand upon Mortgagor, may make or do the same in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof, provided Mortgagee shall send one Business Day prior written notice of same to Mortgagor. In connection therewith (without limiting their general powers, whether conferred herein, in other Loan Documents or by law), during the continuance of an Event of Default, and

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subject to the rights of tenants under their leases Mortgagee have and are hereby given the right, but not the obligation, following written notice to Mortgagor, (i) to enter upon and take possession of the Mortgaged Property in accordance and compliance with applicable law; (ii) to make additions, alterations, repairs and improvements to the Mortgaged Property that Mortgagee may consider necessary or proper to keep the Mortgaged Property in good condition and repair; (iii) to appear and participate in any action or proceeding affecting or that may affect the security hereof or the rights or powers of Mortgagee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt that in the judgment of Mortgagee may affect or appears to affect the security of this Mortgage or be prior or superior hereto; and (v) in exercising such powers, to pay necessary expenses, including attorneys' fees and costs or other necessary or desirable consultants. Mortgagor shall, immediately upon demand therefor by Mortgagee, pay to Mortgagee an amount equal to all costs and expenses reasonably incurred by Mortgagee in connection with the exercise by Mortgagee of the foregoing rights, including, without limitation, costs of evidence of title, court costs, appraisals, surveys and receiver's, trustee's and attorneys' fees, together with interest thereon from the date of such expenditures at the Default Rate.

1.12    Transfer of Mortgaged Property Or Ownership Interests by Mortgagor. In order to induce Lenders to make the loan secured hereby, Mortgagor agrees that, in the event of any "transfer" (as defined below), without the prior written consent of Mortgagee, Mortgagee has the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent to one such transfer will not be deemed to be a waiver of the right to require consent to future or successive transfers. Mortgagee may grant or deny such consent in its sole discretion, and may impose any conditions to such consent in its sole discretion (including, without limitation, changes to the terms of the loan and the imposition of fees) and, if consent should be given, any such transfer will be subject to this Mortgage, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption will not, however, release Mortgagor or any maker or guarantor of the Notes from any liability thereunder without the prior written consent of Mortgagee. As used herein, "transfer" includes the direct or indirect sale, agreement to sell, transfer, conveyance, pledge, mortgage, encumbrance, lien, collateral assignment or hypothecation of the Mortgaged Property, or any portion thereof or interest therein (other than the Permitted Encumbrances), whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or similar instrument affecting all or a portion of the Mortgaged Property, or the lease of all or substantially all of the Mortgaged Property (excluding, however, any leases entered into in accordance with the requirements of the Loan Agreement, and any other transfers that are specifically permitted by the terms of the Loan Agreement). The term "transfer" also includes the direct or indirect transfer, assignment, withdrawal, hypothecation or conveyance of legal or beneficial ownership of any membership, partnership, stock or other ownership interest (an "ownership interest") that results in a change in control of Mortgagor or in any member or partner of Mortgagor (excluding, however, transfers of stock or limited partnership interests in a publicly traded company, or a change in control of a publicly traded company). Notwithstanding anything stated to the contrary in this Mortgage or in any of the other Loan Documents, any transfers (or the pledge or encumbrance ) of equity interests or other interests in KBSII REIT Acquisition XXV, LLC, or in any of the direct or indirect owners of KBSII REIT Acquisition XXV, LLC (including, without limitation, KBS REIT Properties II, LLC, KBS Limited Partnership II or KBS Real Estate Investment Trust II, Inc.) shall not be

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prohibited (and shall be expressly permitted) provided that KBS Real Estate Investment Trust II, Inc. continues to own, either directly or indirectly, 100% of the ownership interests in Mortgagor.

1.13    Full Performance Required; Survival of Warranties. All representations, warranties and covenants of Mortgagor contained in any loan application or made to Mortgagee or Lenders in connection with the loan secured hereby or contained in the Loan Documents or incorporated by reference therein, will survive the execution and delivery of this Mortgage and will remain continuing obligations, warranties and representations of Mortgagor so long as any portion of the obligations secured by this Mortgage remains outstanding.

1.14    Eminent Domain. If any proceeding or action is commenced for the taking of the Mortgaged Property, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, condemnation or otherwise, or if the same is taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner, or should Mortgagor receive any notice or other information regarding such proceeding, action, taking or damage, Mortgagor shall give prompt written notice thereof to Mortgagee. If an Event of Default exists, Mortgagee is entitled at its option, if Mortgagee determines its security is impaired, to commence, appear in and prosecute in its own name any such action or proceeding. If an Event of Default exists, Mortgagee is also entitled to make any compromise or settlement in connection with such taking or damage. All compensation, awards, damages, rights of action and proceeds awarded to Mortgagor by reason of any such taking or damage to the Premises or any part thereof or any interest therein for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other manner (the "Condemnation Proceeds") are hereby assigned to Mortgagee and Mortgagor agrees to execute such further assignments of the Condemnation Proceeds as Mortgagee may require. After deducting therefrom all costs and expenses (regardless of the particular nature thereof and whether incurred with or without suit), including attorneys' fees, incurred by it in connection with any such action or proceeding, Mortgagee shall apply all such Condemnation Proceeds to the restoration of the Improvements (other than Condemnation Proceeds attributable to temporary use or occupancy which may be applied, at Mortgagee's option, to installments of principal and interest and other charges due under the Notes and other Loan Documents when the same become due and payable, without payment of a prepayment premium other than the Interest Differential) provided that:

(a)the taking or damage will not, in Mortgagee's reasonable judgment, materially impair the security for the Loan; and

(b)all conditions set forth in Section 1.5 are met.

If all of the above conditions are met, Mortgagee shall disburse the Condemnation Proceeds in accordance with the Loan Agreement and only as repairs or replacements are effected and continuing expenses become due and payable. If any one or more of the above conditions are not met, Mortgagee shall apply all of the Condemnation Proceeds, after deductions as herein provided, to the repayment of the outstanding balance of the Notes (without payment of prepayment premiums other than the Interest Differential), together with all accrued interest

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thereon, in such order as Mortgagee may elect, notwithstanding that said outstanding balance may not be due and payable, and Mortgagee will have no further obligation to make disbursements pursuant to the Loan Agreement or the other Loan Documents. If the Condemnation Proceeds are not sufficient to repay the portion of the Loan allocable to the Mortgaged Property encumbered by this Mortgage, and Mortgagee or Lenders have determined that its security for the Loan is materially impaired, Mortgagor shall immediately pay any remaining balance allocable to the Mortgaged Property, together with all accrued interest thereon. Application or release of the Condemnation Proceeds as provided herein will not cure or waive any default or notice of default hereunder or under any other Loan Document or invalidate any act done pursuant to such notice. Notwithstanding the above, provided that the Condemnation Proceeds do not exceed $500,000 for the Mortgaged Property, no Event of Default exists, and the taking has not materially impaired the value of the Mortgaged Property, Mortgagor may retain such Condemnation Proceeds.

1.15    Additional Security. No other security now existing, or hereafter taken, to secure the obligations secured hereby will be impaired or affected by the execution of this Mortgage; and all additional security will be taken, considered and held as cumulative. The taking of additional security, execution of partial releases of the security, or any extension of the time of payment of the indebtedness will not diminish the force, effect or lien of this Mortgage and will not affect or impair the liability of any maker, surety or endorser for the payment of said indebtedness. If Mortgagee at any time holds additional security for any of the obligations secured hereby, Mortgagee may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently, or after a sale is made hereunder.

1.16    [Intentionally Deleted].

1.17    Successors and Assigns. This Mortgage applies to, inures to the benefit of (subject, however, to all restrictions on transfer provided in Section 1.12) and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Mortgagee" includes the present agent and all future agents of the Lenders pursuant to the provisions of the Loan Agreement, whether or not named as Mortgagee herein. This Section 1.17 will not be deemed a waiver of the provisions of Section 1.12 hereof.

1.18    Inspections. Mortgagee, or its agents, representatives or workers, are authorized to, upon no less than twenty-four (24) hours prior written notice to Mortgagor, and subject to the rights of tenants under their leases and, if no Event of Default exists, at Mortgagee's sole cost and expense, enter at any reasonable time upon or in any part of the Mortgaged Property for the purpose of inspecting the same and for the purpose of performing any of the acts it is authorized to perform hereunder or under the terms of any of the Loan Documents.

1.19    Liens.

(a)Mortgagor shall pay and promptly discharge, at Mortgagor's cost and expense, all liens, encumbrances and charges (collectively, "Liens") upon the Mortgaged Property, or any part thereof or interest therein; provided, however, that Mortgagor has the right to contest in good faith and with reasonable diligence the validity

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of any such Liens, and pending such contest Mortgagor shall not be deemed in default hereunder if Mortgagor, within twenty (20) days of Mortgagee's written request, obtains an appropriate surety bond and takes all other actions required to remove and release such Lien as an encumbrance against all and any portion of the Mortgaged Property; provided, further, however, Mortgagee and Lenders will not be required to make any further disbursements of the Loan until all such Liens have been removed as encumbrances against all and any portion of the Mortgaged Property, and have been insured against by the Title Company to Mortgagee's satisfaction.

(b)Intentionally Deleted.

(c)Intentionally Deleted.

(d)Mortgagor shall cause, as a condition precedent to the closing of the loan secured hereby, Mortgagee’s title insurer to insure in a manner acceptable to Mortgagee in its sole discretion, that this Mortgage shall be a valid and existing first priority lien on the Mortgaged Property free and clear of any and all exceptions for mechanic’s and materialman’s liens and all other liens and exceptions except as set forth in the mortgagee’s policy of title insurance accepted by Mortgagee, and such title insurance policy may not contain an exception for broken lien priority and may not include any pending disbursement endorsement, or any similar limitation or coverage or requiring future endorsements to increase mechanic lien coverage under the Title Policy (as defined in the Loan Agreement).

(e)Subject to the terms of Section 1.19(a) above and Section 1.19(f) below, Mortgagor shall pay and promptly discharge, at Mortgagor’s cost and expense, all liens, encumbrances and charges upon the Mortgaged Property, or any part thereof or interest therein whether inferior or superior to this Mortgage and keep and maintain the same free from the claim of all persons supplying labor, services or materials that will be used in connection with or enter into the construction of any and all buildings now being erected or that hereafter may be erected on the Mortgaged Property regardless of by whom such services, labor or materials may have been contracted.

(f)Notwithstanding the foregoing or anything else contained in this Agreement which may be construed to the contrary, in the event that any action or other proceeding is instituted to enforce or foreclose any Lien against any of the Mortgaged Property, the Mortgagor shall immediately (and in any event within five days of request by Mortgagee, or five days prior to any scheduled foreclosure sale, whichever is sooner) make such payments, obtain such surety bonds and/or take such other action as the Mortgagee may, in its sole discretion, require in order to release the Lien. If Mortgagor fails to remove and discharge any such Lien as required above, then, in addition to any other right or remedy of Mortgagee, Mortgagee may, but is not obligated to, subject to Mortgagor's right to contest same, discharge the same, either by paying the amount claimed to be due, providing alternate security in the manner set forth above, or by procuring such discharge in such manner as is or may be prescribed by law. Mortgagor shall, immediately upon demand therefor by Mortgagee, pay to Mortgagee an amount equal to all costs and expenses incurred by Mortgagee in connection with the exercise by

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Mortgagee of the foregoing right to discharge any such Lien together with interest thereon from the date of such expenditure at the Default Rate.

1.20    [Intentionally Deleted]

1.21    Mortgagee's Powers. Without affecting the liability of any other person liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Mortgage upon any portion of the Mortgaged Property not then or theretofore released as security for the full amount of all unpaid obligations, Mortgagee or any Lender may, from time to time and without notice (i) release any person so liable, (ii) extend the maturity or alter any of the terms of any such obligation, (iii) grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed at any time at Mortgagee's option any parcel, portion or all of the Mortgaged Property, (v) take or release any other or additional security for any obligation herein mentioned, or (vi) make compositions or other arrangements with debtors in relation thereto. For purposes of clarification, this Section 1.21 does not grant Mortgagee the right to modify the terms of the Loan without Mortgagor's consent.

1.22    Financial Statements. Mortgagor shall deliver to Mortgagee copies of such financial statements, balance sheets, profit and loss statements, operating statements, income and expense statements and other financial information in reasonable detail and at the times required by the Loan Agreement. All such statements must be prepared in accordance with the requirements of the Loan Agreement and Mortgagee has the right to audit and inspect all books and records relating thereto, provided, if no Event of Default exists, such audit and inspection shall be at its sole cost and expense.

1.23    Trade Names. At the request of Mortgagee, Mortgagor shall execute a certificate in form satisfactory to Mortgagee listing the trade names or fictitious business names under which Mortgagor intends to operate the Mortgaged Property or any business located thereon and representing and warranting that Mortgagor does business under no other trade names or fictitious business names with respect to the Mortgaged Property. Mortgagor shall immediately notify Mortgagee in writing of any change in said trade names or fictitious business names, and will, upon request of Mortgagee, execute any additional financing statements and other certificates necessary to reflect the change in trade names or fictitious business names.

1.24    Leasehold. If a leasehold estate constitutes a portion of the Mortgaged Property, Mortgagor agrees not to amend, change, terminate or modify such leasehold estate or any interest therein without the prior written consent of Mortgagee. Consent to one amendment, change, agreement or modification will not be deemed to be a waiver of the right to require consent to other, future or successive amendments, changes, agreements or modifications. Mortgagor shall perform all obligations and agreements under said leasehold and shall not take any action or omit to take any action which would effect or permit the termination of said leasehold. Mortgagor agrees to promptly notify Mortgagee in writing with respect to any default or alleged default by any party thereto and to deliver to Mortgagee copies of all notices, demands, complaints or other communications received or given by Mortgagor with respect to any such default or alleged default. Mortgagee has the option to cure any such default and to perform any or all of Mortgagor's obligations thereunder. All sums expended by Mortgagee or Lenders in curing any such default will be secured hereby and will be immediately due and

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payable without demand or notice and will bear interest from date of expenditure at the Default Rate.

ARTICLE II

ASSIGNMENT OF RENTS AND LEASES

2.1    Assignment. Mortgagor does hereby absolutely, unconditionally and irrevocably grant, convey, assign, transfer and set over unto Mortgagee the following, as security for the payment and performance of the obligations secured by this Mortgage:

(a)all rights, title, interests, estates, powers, privileges, options and other benefits of Mortgagor in, to and under any and all leases, subleases, licenses, concessions, tenancies and any other agreements creating the right of possession without a transfer of title, whether oral or written, and whether now or hereafter existing, which cover or affect all or any portion of the Premises, together with all renewals, extensions, modifications, amendments, guaranties, subleases and assignments thereof (herein collectively referred to as the "Leases"); and

(b)all of the rents, income, receipts, revenues, issues, profits and other sums of money (hereinafter collectively called the "Rents") that are now and/or at any time hereafter become due and payable to Mortgagor under the terms of the Leases or arising or issuing from or out of the Leases or from or out of the Premises or any part thereof, including but not limited to minimum rents, additional rents, percentage rents, deficiency rents and liquidated damages following default, security deposits, advance rents, all proceeds payable under any policy of insurance covering loss of rents resulting from untenantability caused by destruction or damage to the Premises and all of Mortgagor's rights to recover monetary amounts from any lessee in bankruptcy, conservatorship, receivership or similar proceeding including, without limitation, rights of recovery for use and occupancy and damage claims arising out of lease defaults, including rejections, disaffirmances, repudiations, and similar actions, under the Federal Bankruptcy Code, the Federal Deposit Insurance Act and other statutes governing the rights of creditors, including specifically the immediate and continuing right to collect and receive each and all of the foregoing.

2.2    Mortgagor hereby represents and warrants unto Mortgagee and Lenders that: (i) Mortgagor is the sole owner of the entire lessor's interest in the Leases and has good title and good right to assign the Leases and Rents hereby assigned and no other person or entity has any right, title or interest therein; (ii) Mortgagor has duly and punctually performed all of the terms, covenants, conditions and warranties of the Leases that were to be kept, observed and performed by it to date; (iii) Mortgagor has not at any time prior to the date hereof exercised any right to subordinate any Lease to any deed of trust or mortgage or any other encumbrance of any kind; (iv) Mortgagor has not executed any prior assignments of the Leases or the Rents; (v) except as disclosed to Mortgagee in writing, (and approved or deemed approved by Mortgagee) no Rents owing under any existing Lease for any period subsequent to the date hereof (other than the first month's rent or the current month's rent) has been collected in advance; (vi) Mortgagor has not performed any act or executed any other instrument which

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might prevent Mortgagee from enjoying and exercising any of its rights and privileges evidenced hereby; and (vii) except as disclosed to Mortgagee in writing, each of the existing Leases are valid and subsisting and in full force and effect and unmodified, there exists no defense, counterclaim or set‑off to the payment of the Rents thereunder, there are no defaults now existing thereunder and no event has occurred which with the passage of time or the giving of notice, or both, would constitute such a default.

2.3    Mortgagor agrees that, so long as the indebtedness evidenced by the Notes or any part thereof or any other indebtedness secured by this Mortgage shall remain unpaid, Mortgagor shall not (and any such actions taken by Mortgagor in violation of the following provisions shall be null and void), unless Mortgagee consents thereto in advance in writing in Mortgagee's sole discretion: (i)  to the extent the same is prohibited under the terms of the Loan Agreement enter into any Lease covering any portion of the Premises, nor renew or extend the term of any Lease (unless an option therefor was originally reserved by the lessee in the Lease), or relocate or expand the floor space of any lessee under a Lease within the Premises (unless an option therefor was originally reserved by the lessee in the Lease); (ii) make any assignment, pledge or disposition of the Leases or the Rents; (iii) subordinate any of the Leases to any deed of trust or mortgage or any other encumbrance of any kind or permit, consent or agree to such subordination; (iv) to the extent the same is prohibited under the terms of the Loan Agreement reduce the Rents payable under any of the Leases, nor modify, alter or amend any of the Leases or waive, excuse, condone, discount, set off, compromise or in any manner release or discharge any lessee under any Lease of and from any obligations, covenants, conditions and agreements to be kept, observed and performed by such lessee, including the obligation to pay the Rents thereunder in the manner and at the place and time specified therein; (v) incur any indebtedness to a lessee under or guarantor of any Lease which may under any circumstance be used as an offset against the Rents or other payments due under said Lease; (vi) to the extent the same is prohibited under the terms of the Loan Agreement exercise any option required or permitted by the terms of any of the Leases without the prior written consent of Mortgagee; (vii) receive or collect any Rents from any present or future lessee of the Premises or any part thereof for a period of more than one month in advance of the date on which such payment is due; (ix) to the extent the same is prohibited under the terms of the Loan Agreement cancel or terminate any of the Leases, accept a surrender thereof, commence an action of ejectment or any summary proceedings for dispossession of a lessee under any of the Leases, or convey or transfer or suffer or permit a conveyance or transfer of the premises demised thereby or of any interest therein so as to effect directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of any lessee thereunder; (x) to the extent the same is prohibited under the terms of the Loan Agreement consent to an assignment or sublease of the interest and estate of any lessee under any of the Leases, whether or not in accordance with its terms; or (xi) modify or change the terms of any guaranty of any of the Leases or cancel or terminate such guaranty.

2.4    Mortgagor covenants with Mortgagee, for so long as the indebtedness evidenced by the Notes or any part thereof or any other indebtedness secured by this Mortgage or the other Deeds of Trust shall remain unpaid, that Mortgagor shall: (i) observe and perform duly and punctually all the obligations imposed upon any lessor under the Leases and not to do or permit to be done anything to impair the value thereof; (ii) enforce the performance of each and every term, provision, covenant, agreement and condition in Leases to be performed by any

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lessee thereunder; (iii) appear in and defend any action or proceeding arising under, occurring out of or in any manner connected with any of the Leases, or the obligations, liabilities or duties of Mortgagor or any lessee under the Leases and, upon request by Mortgagee, to make appearance in the name and on behalf of Mortgagee, but at the expense of Mortgagor; (iv) exercise any option or election contained in or relating to any of the Leases which Mortgagee shall require; (v) upon written request by Mortgagee deliver to Mortgagee executed copies of any and all Leases, renewals and extensions of existing Leases and any and all subsequent Leases upon all or any part of the Premises; (vi) deliver to Mortgagee, promptly upon request by Mortgagee, duly executed tenant estoppel certificates with respect to Leases designated by Mortgagee to the extent the same is required under the terms of the Loan Agreement; (vii) if an Event of Default occurs, and the Loan has been accelerated deliver to Mortgagee, promptly upon request by Mortgagee, all security deposits held by Mortgagor pursuant to the terms of the Leases, which Mortgagee shall hold and disburse in accordance with the terms of the Leases; (viii) execute and deliver at the request of Mortgagee all such further assignments and other documents, instruments and assurances with respect to the Leases, Rents and Premises as Mortgagee shall from time to time require in order to effectuate the purposes of this Article; and (ix) if an Event of Default occurs, promptly upon request by Mortgagee deliver other records and instruments, including but not limited to rent rolls and books of account, that Mortgagee shall from time to time require.

2.5    This is a present, absolute, effective, irrevocable and completed assignment by Mortgagor to Mortgagee of the Leases and Rents and of the right to collect and apply the same, which is not contingent upon Mortgagee being in possession of the Premises. However, so long as there exists no Event of Default (beyond any applicable notice and cure period), Mortgagor shall have a conditional license to collect, but not more than one (1) month in advance, all Rents from the Premises, in trust for Mortgagee, and to use the same for payment of Impositions, insurance premiums which Mortgagor is required to pay hereunder or under the other Loan Documents, all amounts owing to Mortgagee or Lenders under the Notes and the other Loan Documents, and all other costs and expenses relating to the Premises which Mortgagor is required to pay under the Loan Documents, as and when due, before using said Rents for any other purpose.

2.6    Upon or at any time after and during the continuance of an Event of Default, or if any representation or warranty made by Mortgagor to Mortgagee in connection with the loan evidenced by the Notes is untrue in any material respect, Mortgagee may, at its option, but without obligation to do so, without notice to or consent of Mortgagor, either in person or by agent, without regard for the adequacy of the security for the indebtedness secured hereby, the commission of waste or the solvency of Mortgagor, with or without bringing any action or proceeding, or by a receiver or trustee to be appointed by a court, enter upon, take possession of, maintain, manage and operate the Premises, make, execute, enforce, modify, alter, cancel and accept the surrender of Leases (whether or not the same extend beyond the term of this Mortgage), obtain or evict tenants, fix or modify Rents, refund and collect security deposits, and do any acts which Mortgagee deems proper to protect the security hereof, and during the continuance of an Event of Default, either with or without taking possession of the Premises, in its own name or in the name of Mortgagor, sue for or otherwise demand, collect, receive, and give receipts for all Rents, and apply the same upon the costs of collection thereof, including the fees and costs of agents and attorneys employed by Mortgagee; upon the costs of managing,

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operating and leasing the Premises, including taxes, insurance, maintenance, repairs, improvements, the fees of professional managing agents, architects, engineers and appraisers, license and permit fees, leasing fees and commissions, and Mortgagee's out‑of‑pocket expenses; and upon any indebtedness secured hereby, in such order as Mortgagee may determine, subject to applicable statutory requirements, if any. Mortgagee or such a receiver shall be entitled to remain in possession of the Premises and to collect the Rents throughout any statutory period of redemption from a foreclosure sale. The entering upon and taking possession of the Premises, the collection of such Rents and the application thereof as aforesaid shall not cure or waive any Event of Default, or invalidate any act done pursuant to such Event of Default or notice of default. Mortgagee may, without entering into possession or pursuing any other remedy as provided in this section or at law or in equity, or in conjunction with such possession or pursuit of other remedy, give notice to any or all lessees authorizing and directing said lessees to pay Rents directly to Mortgagee. If a lessee receives such a notice, Mortgagor hereby directs such lessee to make payment pursuant thereto, and it shall be conclusively presumed, as between Mortgagor and such lessee, that such lessee is obligated and entitled to make such payment to Mortgagee, and that such payment constitutes payment of Rents under the Lease in question. Such notice may be given either in Mortgagee's or in Mortgagor's name. Mortgagor shall in every way facilitate the payment of Rents to Mortgagee, when Mortgagee has the right to receive the same hereunder. Mortgagee shall be accountable only for Rents actually collected hereunder and not for the rental value of the Premises. Mortgagee shall not be liable for any security deposit made by any lessee unless and until Mortgagee comes into actual, physical possession and control thereof. Failure of Mortgagee to collect, or discontinuance by Mortgagee from collecting, at any time, and from time to time, any Rents, shall not in any manner affect the rights of Mortgagee to thereafter collect the same.

2.7    During the existence of an Event of Default, Mortgagee shall have the right to take possession of and use, without rental or charge, any fixtures, equipment, furniture, appliances, personal property, books of account and records of Mortgagor or its agents located in or constituting a part of the Premises in connection with Mortgagee's occupancy, management and operation of the Premises. Mortgagee shall be deemed to be the creditor of any lessee in respect of any assignment for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor‑relief proceeding affecting such lessee; provided, however, that Mortgagee shall not be obligated to file timely claims in such proceedings or to otherwise pursue any creditor's rights therein.

2.8    Mortgagor shall, at Mortgagor's sole cost and expense, appear in and defend any dispute, action or proceeding arising under, growing out of or in any manner connected with or affecting any of the Leases or the obligations, duties or liabilities of Mortgagor or any lessee thereunder, and shall pay all costs and expenses of Mortgagee, including attorneys' fees (prior to trial, at trial and on appeal), in connection with any such dispute, action or proceeding in which Mortgagee may appear or with respect to which it may otherwise incur costs or expenses, whether or not Mortgagee prevails therein.

2.9    Should Mortgagor fail to make any payment or to do any act as herein provided, then Mortgagee may, but without obligation to do so, without notice or demand to or upon Mortgagor, and without releasing Mortgagor from any obligation hereof, make or do the same in such manner and to such extent as Mortgagee may deem necessary or desirable to

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protect the security hereof, including specifically, without limiting its general powers, appearing in and defending any action or proceeding purporting to affect the security hereof or the rights or powers of Mortgagee, and observing, performing and discharging all or any of the obligations, covenants and agreements of Mortgagor in the Leases, provided Mortgagee shall give Mortgagor one Business Day prior written notice of same. In exercising any such powers, Mortgagee may pay its costs and expenses, employ counsel and incur and pay attorneys' fees (prior to trial, at trial and on appeal), and shall receive reimbursement thereof from Mortgagor upon demand. Mortgagor hereby grants to Mortgagee an irrevocable power of attorney, coupled with an interest, to perform all of the acts and things provided for in this Article as Mortgagor's agent and in Mortgagor's name.

2.10    Mortgagor agrees to reimburse Mortgagee and Lenders, upon demand, for all sums expended by Mortgagee and Lenders under the authority hereof, together with interest thereon at the Default Rate specified in the Notes from the date expended, and the same shall be added to the indebtedness evidenced by the Notes and shall be secured by this Mortgage.

2.11    MORTGAGEE SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY MORTGAGOR RESULTING FROM MORTGAGEE'S FAILURE TO LET THE PREMISES, OR ANY PART THEREOF, OR FROM ANY OTHER ACT OR OMISSION OF MORTGAGEE UNDER OR RELATING TO THE LEASES (REGARDLESS OF WHETHER SUCH LOSS IS THE RESULT OF MORTGAGEE'S NEGLIGENCE) UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MORTGAGEE, NOR SHALL MORTGAGEE BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY UNDER THE LEASES BY REASON OF THIS INSTRUMENT OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER. Mortgagee shall not be liable for its failure to collect, or its failure to exercise diligence in the collection of, Rents under the Leases, but shall be accountable only for Rents that Mortgagee actually receives. Mortgagor will indemnify and hold harmless Mortgagee (for purposes of this paragraph, the term "Mortgagee" shall include the directors, officers, partners, employees and agents of Mortgagee and Lenders and any persons or entities owned or controlled by, owning or controlling, or under common control or affiliated with Mortgagee) from and against, and reimburse Mortgagee for, all claims, demands, liabilities, losses, damages, causes of action, judgments, penalties, costs and expenses (including, without limitation, reasonable attorneys' fees) incurred under the Leases by reason of this instrument or the exercise of rights or remedies hereunder, or which may be asserted against Mortgagee by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases, including specifically any obligation or responsibility for any security deposits or other deposits delivered to Mortgagor by any lessee under any Lease and not assigned and delivered to Mortgagee. THE RELEASES AND INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL INCLUDE CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) RESULTING FROM THE NEGLIGENCE OF MORTGAGEE OR ANY STRICT LIABILITY, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF MORTGAGEE. The foregoing releases and indemnities shall not terminate upon release or other termination of the assignment pursuant to this paragraph. Any amount to be paid under this paragraph by

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Mortgagor to Mortgagee shall be a demand obligation owing by Mortgagor to Mortgagee, shall bear interest from the date such amount becomes due until paid at the Default Rate stated in the Notes, and shall be secured by this Mortgage and by any other instrument securing the Notes. The assignment pursuant to this paragraph shall not operate to place responsibility upon Mortgagee for the control, care, management or repair of the Premises, nor for the carrying out of any of the terms and conditions of the Leases; nor shall it operate to make Mortgagee responsible or liable for any waste committed on the Premises by the tenants or by any other parties or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, licensee, employee or stranger. Mortgagee shall not be deemed to be a partner of, or a joint venturer with, Mortgagor with respect to the Premises or to be a participant of any kind in the management or operation of the Premises. Neither this assignment, nor the exercise by Mortgagee of its rights hereunder, shall be deemed to constitute Mortgagee a mortgagee in possession of the Premises, unless Mortgagee elects in writing to be so constituted.

2.12    The assignment pursuant to this Article is primary in nature to the obligation evidenced and secured by the Notes, this Mortgage and any other document given to secure and collateralize the indebtedness secured by this Mortgage. Mortgagor agrees that Mortgagee may enforce this assignment without first resorting to or exhausting any other security or collateral; provided however, that nothing herein contained shall prevent Mortgagee from suing on the Notes, foreclosing this Mortgage and/or exercising any other right under any document securing the payment of the Notes or at law or equity.

2.13    In the event any lessee under the Leases relating to a Lease for more than 50,000 square feet should be the subject of any proceeding under the Federal Bankruptcy Code or any other federal, state or local statute which provides for the possible termination or rejection of any of the Leases assigned hereby, Mortgagor covenants and agrees that if any Lease is so rejected, no settlement for damages shall be made without the prior written consent of Mortgagee (which shall not be unreasonably withheld or delayed and which consent shall be deemed to have been given if Mortgagee does not notify Mortgagor of its decision within five (5) Business Days after Mortgagor's request for such consent), and any check in payment of damages for rejection of any such Lease will be made payable to both Mortgagor and Mortgagee. Mortgagor hereby assigns any such payment to Mortgagee and further covenants and agrees that upon the request of Mortgagee, it will duly endorse to the order of Mortgagee any such check, the proceeds of which will be applied to the Notes and other indebtedness secured by this Mortgage, principal, interest, attorneys' and collection fees and other amounts, in such order as Mortgagee in its sole discretion may determine.

2.14    Nothing contained herein and no act done or omitted by Mortgagee pursuant to the powers and rights granted it hereunder shall be deemed to be a waiver by Mortgagee or Lenders of their rights and remedies under the Notes or a waiver or curing of any default hereunder or under the Notes, and the assignment pursuant to this Article is made and accepted without prejudice to any of the rights and remedies possessed by Mortgagee or Lenders under the terms of the Notes. The right of Mortgagee to collect said principal sum, interest and indebtedness and to enforce any other security therefor held by it may be exercised by Mortgagee either prior to, simultaneously with, or subsequent to any action taken by it hereunder.

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2.15    Notwithstanding (a) the fact that any Lease or the leasehold estate created thereby may be held, directly or indirectly, by or for the account of any person or entity which shall have an interest in the fee estate of the Premises, (b) the operation of law or (c) any other event, lessee's leasehold estate under such Lease shall not merge into the fee estate and the lessee shall remain obligated under such lease as assigned by this assignment.

ARTICLE III

REMEDIES UPON DEFAULT

3.1    Events of Default. Upon written notice to Mortgagor, any of the following events will constitute an Event of Default hereunder (an "Event of Default"):

(a)default in the payment of principal or interest as provided under the terms of the Notes or the Loan Agreement, which is not cured within any applicable grace and/or notice and cure period, if any, provided in the Notes or the Loan Agreement with respect to such default; or

(b)a breach by Mortgagor of any representation, warranty or covenant in this Mortgage which is not cured within any applicable notice and cure period, if any, provided in the Loan Agreement with respect to such breach;

(c)a default occurs under any of the other Deeds of Trust and is not cured within any applicable notice and cure period provided for therein or in the Loan Agreement; or

(d)the occurrence of an Event of Default, as defined in the Loan Agreement.

3.2    Acceleration Upon Default, Additional Remedies. Upon the occurrence of an Event of Default, Mortgagee may, at its option, declare all indebtedness secured hereby to be immediately due and payable without presentment, demand, protest or notice of any kind. Thereafter Mortgagee may:

(a)Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Mortgaged Property, or any part thereof, in its own name, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Mortgaged Property, or any part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Mortgaged Property, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including, without limitation, attorneys' fees, upon any indebtedness secured hereby, all in such order as Mortgagee may determine. The entering upon and taking possession of the Mortgaged Property, the collection of such Rents, and the application thereof as aforesaid, will not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of

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all or any portion of the Mortgaged Property or the collection, receipt and application of Rents, Mortgagee will be entitled to exercise every right provided for in any of the Loan Documents or by law upon occurrence of any Event of Default;

(b)Commence an action to foreclose this Mortgage as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof;

(c)Deliver to Mortgagor a written demand to turn over to Mortgagee all Rents in the possession or control of Mortgagor at the time of the written demand or collected thereafter, less payment of any expenses authorized by Mortgagee in writing; or

(d)Exercise all other rights and remedies provided herein, in any Loan Document or other document or agreement now or hereafter securing all or any portion of the obligations secured hereby, or by law or equity.

3.3    Foreclosure. Mortgagee may institute any one or more actions of mortgage foreclosure against all or any part of the Mortgaged Property, or take such other action at law, equity or by contract for the enforcement of this Mortgage and realization on the security herein or elsewhere provided for, as the law may allow, and may proceed therein to final judgment and execution for the entire unpaid balance of the Loan. The unpaid balance of any judgment shall bear interest at the greater of: (a) the statutory rate provided for judgments, or (b) the Default Rate. Without limiting the foregoing, Mortgagee may foreclose this Mortgage and exercise its rights as a secured party for all or any portion of the Loan which are then due and payable, subject to the continuing lien of this Mortgage for the balance not then due and payable. In case of any sale of the Mortgaged Property by judicial proceedings, the Mortgaged Property may be sold in one parcel or in such parcels, manner or order as Mortgagee in its sole discretion may elect. Mortgagor, for itself and anyone claiming by, through or under it, hereby agrees that Mortgagee shall in no manner, in law or in equity, be limited, except as herein provided, in the exercise of its rights in the Mortgaged Property or in any other security hereunder or otherwise appertaining to the Loan or any other obligation secured by this Mortgage, whether by any statute, rule or precedent which may otherwise require said security to be marshalled in any manner and Mortgagor, for itself and others as aforesaid, hereby expressly waives and releases any right to or benefit thereof. The failure to make any tenant a defendant to a foreclosure proceeding shall not be asserted by Mortgagor as a defense in any proceeding instituted by Mortgagee to collect the Loan or any deficiency remaining unpaid after the foreclosure sale of the Mortgaged Property. If Mortgagee shall have the right to foreclose this Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose this Mortgage subject to the rights of any tenants of the Mortgaged Property, and the failure to make any such tenants parties defendant to any such foreclosure proceeding and to foreclose their rights will not be asserted by Mortgagor as a defense to any proceeding instituted by Mortgagee to collect the Debt or any deficiency remaining unpaid after the foreclosure sale of the Mortgaged Property, it being expressly understood and agreed, however, that nothing herein contained shall prevent Mortgagee from asserting in any proceeding disputing the amount of the deficiency or the sufficiency of any bid at such foreclosure sale, that any such tenancies adversely affect the value of the Mortgaged Property.

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3.4    Possession. To the extent permitted by applicable law and while an Event of Default exists Mortgagee may enter into possession of the Mortgaged Property, with or without legal action, collect therefrom all rentals (which term shall also include sums payable for use and occupation) and, after deducting all reasonable costs of collection and administration expense, apply the net rentals to any or all of the following in such order and amounts as Mortgagee, in Mortgagee's sole discretion, may elect: the payment of any sums due under any Lien, Taxes, insurance premiums and all other carrying charges, and to the maintenance, repair or restoration of the Mortgaged Property, and on account and in reduction of the Debt; in and for that purpose, Mortgagor hereby assigns to Mortgagee all rentals due and to become due under the Leases or rights to use and occupation of the Mortgaged Property hereafter created, as well as all rights and remedies provided in such Leases or at law or in equity for the collection of the rentals. The taking of possession and collections of rents by Mortgagee shall not be construed to be an affirmation of any Leases or acceptance of attornment with respect to any Leases of all or any portion of the Mortgaged Property. Mortgagee, in its reasonable discretion, may, as attorney in fact or agent of Mortgagor, or in its own name as Mortgagee and under the powers herein granted, hold, operate, manage and control the Mortgaged Property and conduct the business, if any, thereof, either personally or by its agents, and with full power to use such measures, legal or equitable, as in its reasonable discretion or in the discretion of its successors or assigns may be deemed proper or necessary to enforce the payment or security of the avails, rents, issues, and profits of the Mortgaged Property, including actions for the recovery of rent, actions in forcible detainer and actions in distress for rent, and with full power: to cancel or terminate any Leases for any cause or on any ground which would entitle Mortgagor to cancel the same; to elect to disaffirm any Leases which are then subordinate to the lien of this Mortgage; to extend or modify any then-existing Leases and to make new Leases, which extensions, modifications and new Leases may provide for terms to expire, or for options to extend or renew terms to expire, beyond the maturity date of the indebtedness hereunder and beyond the date of the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such Leases, and the options or other such provisions to be contained therein, shall be binding upon Mortgagor and all persons whose interests in the Mortgaged Property is subject to the lien hereof and upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Mortgage indebtedness, satisfaction of any foreclosure decree, or issuance of any certificate of sale or deed to any purchaser; and to enter into any management, leasing or brokerage agreements covering the Mortgaged Property.

3.5    Appointment of Receiver. Upon the occurrence of an Event of Default, Mortgagee, as a matter of right and without notice to Mortgagor or anyone claiming under Mortgagor, and without regard to the then value of the Mortgaged Property or the adequacy of any security for the obligations then secured hereby, will have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Mortgaged Property, and Mortgagor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers will have all the usual powers and duties of receivers in like or similar cases and all the powers and duties of Mortgagee in case of entry as provided herein and in the Loan Agreement and will continue as such and exercise all such powers until the later of (i) the date of delivery of a deed-in-lieu of foreclosure or a sheriff’s deed, as the case may be; (ii) the disbursement of all proceeds of the Mortgaged Property collected by such receiver and the payment of all expenses incurred in connection therewith; or (iii) the termination of such

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receivership with the consent of Mortgagee or pursuant to an order of a court of competent jurisdiction.

3.6    Remedies Not Exclusive. Mortgagee is entitled to enforce payment and performance of any indebtedness or obligations secured hereby and to exercise all rights and powers under this Mortgage or under any Loan Document or other agreement or any laws now or hereafter in force, notwithstanding some or all of the said indebtedness and obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement whether by court action or other powers herein contained, will prejudice or in any manner affect Mortgagee's right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee is entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as it may in its absolute discretion determine. No remedy herein conferred upon or reserved to Mortgagee is intended to be exclusive of any other remedy herein or by law provided or permitted, but each is cumulative and is in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to Mortgagee or to which Mortgagee may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Mortgagee and Mortgagee may pursue inconsistent remedies. Upon any sale made under or by virtue of this Article III, Mortgagee may bid for and then acquire the Mortgaged Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Obligations of Mortgagor the net sales price after deducting therefrom the reasonable expenses of the sale and the costs of the action and any other sums which the Mortgagee is authorized to deduct under this Mortgage or under any of the Loan Documents.

3.7    Request for Notice. Mortgagor hereby requests a copy of any notice of default and that any notice of sale hereunder be mailed to it at the address set forth in Section 5.5 of this Mortgage.

ARTICLE IV

SECURITY AGREEMENT

4.1    Creation of Security Interest. Mortgagor hereby grants to Mortgagee a security interest in and to all the Personal Property to secure Mortgagor's obligations hereunder and under the other Loan Documents.

4.2    Representations, Warranties and Covenants of Mortgagor. Mortgagor hereby represents, warrants and covenants (which representations, warranties and covenants will survive creation of any indebtedness of Mortgagor to Mortgagee or Lenders and any extension of credit thereunder) as follows:

(a)The Personal Property is not used or bought for personal, family or household purposes.

(b)The tangible portion of the Personal Property will be kept on or at the Premises; and Mortgagor shall not, without the prior written consent of Mortgagee,

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remove the Personal Property or any portion thereof therefrom except such portions or items of Personal Property which are consumed or worn out in ordinary usage, all of which will be promptly replaced by Mortgagor with similar items of comparable value.

(c)At the request of Mortgagee, Mortgagor shall join Mortgagee in executing one or more financing statements and fixture filings pursuant to the Uniform Commercial Code of New Jersey as in effect in the State of New Jersey ("Uniform Commercial Code"), in form satisfactory to Mortgagee and shall pay the cost of recording and filing the same in all public offices wherever recording or filing is deemed by Mortgagee to be necessary or desirable.

(d)Mortgagor does not do business under any trade name except as previously disclosed in writing to Mortgagee. Mortgagor shall immediately notify Mortgagee in writing of any change in its place of business or the adoption or change of any trade name or fictitious business name and shall, upon request of Mortgagee, execute any additional financing statements or other certificates necessary to reflect the adoption or change in trade name or fictitious business name.

(e)Mortgagor shall immediately notify Mortgagee of any claim against the Personal Property adverse to the interest of Mortgagee therein.

4.3    Use of Personal Property by Mortgagor. Until the occurrence and during the continuance of an Event of Default, Mortgagor may have possession of the Personal Property and use it in any lawful manner not inconsistent with this Mortgage and not inconsistent with any policy of insurance thereon.

4.4    Remedies Upon an Event of Default.

(a)In addition to the remedies provided in Section 3.2, upon the occurrence and during the continuance of an Event of Default, Mortgagee may, at its option, do any one or more of the following:

(i)Either personally, or by means of a court appointed receiver, take possession of all or any of the Personal Property and exclude therefrom Mortgagor and all others claiming under Mortgagor, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of Mortgagor with respect to the Personal Property or any part thereof. In the event Mortgagee demands or attempts to take possession of the Personal Property in the exercise of any rights under this Mortgage, Mortgagor agrees to promptly turn over and deliver possession thereof to Mortgagee;

(ii)Without notice to or demand upon Mortgagor, make such payments and do such acts as Mortgagee may deem necessary to protect its security interest in the Personal Property (including, without limitation, paying, purchasing, contesting or compromising any lien or encumbrance, whether superior or inferior to such security interest) and in exercising any such powers or

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authority to pay all expenses (including, without limitation, litigation costs and reasonable attorneys' fees) incurred in connection therewith;

(iii)Require Mortgagor from time to time to assemble the Personal Property, or any portion thereof, at a place designated by Mortgagee and reasonably convenient to both parties, and promptly deliver such Personal Property to Mortgagee or an agent or representative designated by Mortgagee. Mortgagee and its agents and representatives have the right to enter upon any or all of Mortgagor's premises and property to exercise Mortgagee's rights hereunder;

(iv)Realize upon the Personal Property or any part thereof as herein provided or in any manner permitted by law and exercise any and all of the other rights and remedies conferred upon Mortgagee by this Mortgage, by any other Loan Document or by law, either concurrently or in such order as Mortgagee may determine. Without limiting the generality of the foregoing, Mortgagee may proceed, in any sequence, (i) to exercise its rights under Section 3.2 and Section 3.3 with respect to all or any portion of the Mortgaged Property and all or any portion of the Personal Property, (ii) to exercise its rights under this Section 4.4 with respect to all or any portion of the Personal Property, and (iii) to exercise its rights under the provisions of Section 12A:9-604 of the Uniform Commercial Code;

(v)Sell or cause to be sold in such order as Mortgagee may determine, as a whole or in such parcels as Mortgagee may determine, the Personal Property and the remainder of the Mortgaged Property;

(vi)Sell, lease or otherwise dispose of the Personal Property at public sale, upon terms and in such manner as Mortgagee may determine. Mortgagee or any Lender may be a purchaser at any sale; and

(vii)Exercise any remedies of a secured party under the Uniform Commercial Code or any other applicable law.

(b)Unless the Personal Property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Mortgagee shall give Mortgagor at least five (5) days' prior written notice of the time and place of any public sale of the Personal Property or other intended disposition thereof to be made. Such notice may be mailed to Mortgagor at the address set forth in Section 5.5.

(c)Subject to the terms of Sections 1.14 and 8.5(b) of the Loan Agreement, the proceeds of any sale under Section 4.4(a) will be applied as follows:

(i)To the repayment of the reasonable costs and expenses of taking, holding and preparing for the sale and the selling of the Personal Property (including, without limitation, costs of litigation and attorneys' fees) and the discharge of all Impositions, liens and encumbrances, and claims thereof, if any, on the Personal Property prior to the security interest granted herein (except any

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Impositions or liens and encumbrances subject to which such sale has been made);

(ii)To the payment of all indebtedness and obligations owing to Mortgagee or Lenders under the Notes and other Loan Documents, all Swap Contracts and all other obligations that are secured by this Mortgage, in such order as Mortgagee determines; and

(iii)The surplus, if any, will be paid to Mortgagor or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

(d)Mortgagee has the right to enforce one or more remedies under this Section 4.4 successively or concurrently; and such action will not operate to estop or prevent Mortgagee from pursuing any further remedy that it may have. Any repossession or retaking or sale of the Personal Property pursuant to the provisions hereof will not operate to release Mortgagor until full payment of any deficiency has been made in cash.

4.5    Security Agreement. This Mortgage constitutes and is deemed to be a "security agreement" for all purposes of the Uniform Commercial Code; and Mortgagee is entitled to all the rights and remedies of a "secured party" under the Uniform Commercial Code.

4.6    Financing Statement and Fixture Filing. This Mortgage is intended to be and constitutes a fixture filing pursuant to the provisions of the Uniform Commercial Code with respect to all fixtures included within the Mortgaged Property and is being recorded as a fixture financing statement and filing under the Uniform Commercial Code, and covers property, goods and equipment which are or are to become fixtures related to the Premises. Mortgagor covenants and agrees that this Mortgage is to be filed in the real estate records of the county where the Premises is located and shall also operate from the date of such filing as a fixture filing in accordance with Subsections 9‑502(b) and (c) and other applicable provisions of the Uniform Commercial Code. This Mortgage shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the Uniform Commercial Code, as amended, and is to be filed for record in the real estate records of the county where the Premises is situated. Mortgagor shall be deemed to be the "debtor" and Mortgagee shall be deemed to be the "secured party" for all purposes under the Uniform Commercial Code. The full name of Mortgagor and Mortgagor's type of organization, and the full name of Mortgagee and Mortgagee's type of organization, are set forth on the signature page of this Mortgage. The mailing address of Mortgagor and Mortgagee are set forth in Section 5.5 (Notices) below. Mortgagor is the record owner of the Premises. Mortgagor grants to Mortgagee a security interest in all existing and future goods which are now or in the future become fixtures relating to the Premises and the proceeds thereof, including, without limitation, the goods and proceeds thereof described in Exhibit B. Mortgagor hereby authorizes Mortgagee to file any financing statement or financing statement amendment covering the Personal Property or relating to the security interested created herein without the signature of Mortgagor, as debtor. Mortgagor shall pay all costs of filing such financing statements and any extensions, renewals, amendments and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements as Mortgagee may require. Without the prior written consent of Mortgagee,

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Mortgagor shall not create or suffer to be created pursuant to the Uniform Commercial Code any other security interest in such items, including replacements and additions thereto. Upon the occurrence and during the continuance of an Event of Default, Mortgagee will have the remedies of a secured party under the Uniform Commercial Code and, at Mortgagee's option, may also invoke the other remedies provided in this Mortgage.

ARTICLE V

MISCELLANEOUS

5.1    Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought.

5.2    Mortgagor Waiver of Rights. Mortgagor waives to the extent permitted by law, (i) the benefit of all laws now existing or that may hereafter be enacted providing for any appraisement before sale of any portion of the Mortgaged Property, (ii) all rights of redemption, valuation, appraisement, stay of execution, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the liens hereby created (provided Mortgagor is not waiving notice and cure rights expressly provided for in the Loan Documents), and (iii) all rights and remedies which Mortgagor may have or be able to assert by reason of the laws of the State of New Jersey pertaining to the rights and remedies of sureties. Without limiting the generality of the foregoing, Mortgagor waives, to the extent permitted by law, all rights to direct the order in which any of the Mortgaged Property will be sold in the event of any sale or sales pursuant hereto and to have any of the Mortgaged Property or any other property now or hereafter constituting security for the indebtedness secured hereby marshaled upon any foreclosure of this Mortgage or of any other security for any of such indebtedness.

5.3    Statements by Mortgagor. Mortgagor shall, within ten (10) days after written notice thereof from Mortgagee, deliver to Mortgagee a written statement stating the unpaid principal of and interest on the Notes and any other amounts secured by this Mortgage and stating whether any offset or defense exists against such principal and interest.

5.4    Loan Statement Fees. Mortgagor shall pay the amount demanded by Mortgagee or its authorized loan servicing agent for any statement regarding the obligations secured hereby; provided, however, that such amount may not exceed the maximum amount allowed by law at the time request for the statement is made.

5.5    Notices. All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) by a nationally recognized air courier service, (c) electronic communication, whether by telex, telegram or telecopying (if confirmed in writing sent by a nationally recognized air courier service or by registered or certified, first class mail, return receipt requested); or (d) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a),

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(b) or (c) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (d) will be deemed received three (3) days following deposit in the mail.

If to Mortgagor:	KBSII ONE MEADOWLANDS, LLC c/o KBS Capital Advisors LLC 590 Madison Avenue, 26th Floor New York, NY 10022 Attention: Randi Kaufman, Senior Vice President, Asset Management
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, CA 92660 Attention: Todd Smith, VP Controller, Corporate
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, CA 92660 Attention: Jeff Waldvogel, Director of Finance & Reporting
With a copy to:	Greenberg Traurig, LLP 3161 Michelson Drive, Suite 1000 Irvine, CA 92612 Attention: Bruce Fischer, Esq.
If to Mortgagee:	U.S. Bank National Association Commercial Real Estate 4100 Newport Place, Suite 900 Newport Beach, CA 92660 Attention: Loan Administration

5.6    Intentionally Omitted.

5.7    Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Mortgage.

5.8    Invalidity of Certain Provisions. Every provision of this Mortgage is intended to be severable. If any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction, such illegality or invalidity will not affect the balance of the terms and provisions hereof, which terms and provisions will remain binding and enforceable. If the lien of this Mortgage is invalid or unenforceable as to any part of the debt, or if such lien is invalid or unenforceable as to any part of the Mortgaged Property, the unsecured or partially unsecured portion of the debt must be completely paid prior to the payment of the remaining secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, will be

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considered to have been first paid on and applied to the full payment of that portion of the debt which is not secured or fully secured by the lien of this Mortgage.

5.9    Subrogation. To the extent that proceeds of the Notes are used to pay any outstanding lien, charge or prior encumbrance against the Mortgaged Property, such proceeds have been or will be advanced by Mortgagee at Mortgagor's request and Mortgagee will be subrogated to any and all rights and liens held by any owner or holder of such outstanding liens, charges and prior encumbrances, irrespective of whether said liens, charges or encumbrances are released.

5.10    Attorneys' Fees. If the Notes are not paid when due or if any Event of Default occurs, Mortgagor promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not such enforcement and collection includes the filing of a lawsuit.

5.11    GOVERNING LAW. THIS MORTGAGE IS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW JERSEY. MORTGAGOR AGREES THAT THE VENUE OF ANY ACTION ARISING FROM OR RELATING TO THIS MORTGAGE MAY BE LAID IN BERGEN COUNTY, NEW JERSEY.

5.12    Joint and Several Obligations. Should this Mortgage be signed by more than one party, all obligations herein contained will be deemed to be the joint and several obligations of each party executing this Mortgage. Any married person signing this Mortgage agrees that recourse may be had against community assets and against his separate property for the satisfaction of all obligations contained herein. Section 7.19 of the Loan Agreement (the joint borrower provisions) is by this reference incorporated herein in its entirety.

5.13    Interpretation. In this Mortgage the singular includes the plural and the masculine includes the feminine and neuter gender and vice versa, if the context so requires.

5.14    Intentionally Deleted.

5.15    Release by Mortgagee - Swap Contracts. Notwithstanding the foregoing or anything else contained in the Loan Documents which may be construed to the contrary, prior to any full release or full reconveyance of the Mortgage, all Swap Contracts shall have been terminated, and any and all settlement payments and other payments, fees and costs owing by Mortgagor with respect to such Swap Contracts shall be paid prior to any such release or reconveyance. Mortgagee's rights under this Section 5.15 shall be in addition to any and all other rights of Mortgagee under the Swap Contracts and applicable law.

5.16    Counterparts. This document may be executed and acknowledged in counterparts, all of which executed and acknowledged counterparts together constitute a single document. Signature and acknowledgment pages may be detached from the counterparts and attached to a single copy of this document to physically form one document, which may be recorded.

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5.17    Debtor-Creditor Relationship. Nothing contained herein or in any Loan Document will be deemed to create or construed to create a partnership, joint venture or any relationship other than that of debtor-creditor. Mortgagor and Mortgagee expressly disclaim any intent to create a partnership or joint venture pursuant to this Mortgage, any other Loan Document, or any other document related hereto or thereto.

5.18    Nonforeign Entity. Section 1445 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform Mortgagee that the withholding of tax will not be required in the event of the disposition of the Mortgaged Property pursuant to the terms of this Mortgage, Mortgagor hereby certifies, under penalty of perjury, that:

(a)Mortgagor is not a foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder; and

(b)Intentionally Deleted.

(c)Mortgagor is duly qualified to do business in New Jersey.

It is understood that Mortgagee may disclose the contents of this certification to the Internal Revenue Service and that any false statement contained herein could be punished by fine, imprisonment or both. Mortgagor covenants and agrees to execute such further certificates, which must be signed under penalty of perjury, as Mortgagee reasonably requires. The covenant set forth herein will survive the foreclosure of the lien of this Mortgage or acceptance of a deed in lieu thereof.

5.19    Limited Recourse Provision. Except as to Guarantor as set forth in the Guaranty, Mortgagee and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of Mortgagor, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Mortgagor (except for the Guarantor as provided in the Guaranty, but including KBSII REIT ACQUISITION I, LLC, KBSII REIT ACQUISITION XXV, LLC, KBSII REIT ACQUISITION V, LLC, KBS LIMITED PARTNERSHIP II or KBS REAL ESTATE INVESTMENT TRUST II, INC.). For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Mortgagor’s liability or obligations under the Loan Documents, Guarantor's liability or obligations under the Guaranty or Mortgagee's right to exercise any rights or remedies against any collateral securing the Loan.

5.20    Modification of Mortgage. This Mortgage is subject to modification pursuant to N.J.S.A. Sections 46:9-8.1 and 8.2. and shall be entitled to the priority provisions thereof.

5.51    Future Advances. Without limiting any other provision of this Mortgage, Mortgagee may make future advances and this Mortgage shall also secure repayment of any future advances made by Mortgagee and the unpaid balances of other advances made for the payment of taxes, assessments, maintenance, charges, insurance premiums or costs similar or

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dissimilar incurred for the protection of the Mortgaged Property or for the lien of this Mortgage, expenses incurred by Mortgagee, or advances made, if any, to enable the completion of the improvements for which the loan was originally made.

5.22    Commercial Loan. Mortgagor hereby stipulates and warrants that the Loan secured hereby is a commercial loan, and that all of the proceeds of such Loan will be used solely to acquire or carry on a business or commercial enterprise.

[Signatures on Following Page]

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IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and year first above written.

"MORTGAGOR"

KBSII ONE MEADOWLANDS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION XXV, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

ACKNOWLEDGMENTS
STATE OF CALIFORNIA     COUNTY OF Orange    )
On February 27, 2013, before me,	K. Godin, Notary Public
	(insert name and title of the officer)
personally appeared Charles J. Schreiber, Jr. who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /s/ K. Godin(Seal)

EXHIBIT A

LEGAL DESCRIPTION

That certain real property located in the Borough of East Rutherford, County of Bergen, State of New Jersey and more particularly described as follows:

Beginning at a B2A Capped Pin Found at the point of intersection of the Southerly line of the South Service Road, and Lands of the New Jersey Turnpike, said point having New Jersey Sate Plane Coordinates (NAD 27 feet0 of N-719251.185, E=608547.407, and from said beginning point running thence;

1.    Along said South Service Road, South 75 Degrees 49 minutes 41 seconds East a distance of 621.82 feet to a point of curve, thence;

2.    Still along same, along a curve to the right having a radius of 643.00 feet a Delta of 28 degrees 43 minutes 23 seconds, an arc length 322.34 feet and a chord which bears South 61 degrees 27 minutes 58 seconds East having a chord distance of 318.98 feet to a point of compound curve, thence;

3.    Still along same, along a curve to the right having a radius of 5,123.63 feet a Delta of 00 degrees 32 minutes 40 seconds, an arc length 48.69 feet and chord which bears South 46 degrees 49 minutes 56 seconds East having a chord distance of 48.69 feet to a point and corner in common with Lot 3 of Block 108.03 as shown on the Municipal Tax Map of The Borough of East Rutherford, Bergen County, New Jersey, thence;

4.    Along Westerly line of Lot 3, South 37 degrees 55 minutes 44 seconds west a distance of 458.80 feet to a point and corner in common with Lot 1.02 of said Block, thence;

5.    Along Northerly line of said Lot 1.02, the following two courses, North 52 degrees 06 minutes 17 seconds West a distance of 360.86 feet to a point, thence;

6.    South 83 degrees 04 minutes 52 seconds West a distance of 610.55 feet to a point in the Easterly line of the aforementioned lands of the New Jersey Turnpike, thence;

7.    Along said lands of the New Jersey Turnpike Authority the following twb courses, North 04 degrees 07 minutes 39 seconds West a distance of 121.93 feet to a B2A Capped Pin Found, Thence;

8.    North 31 degrees 25 minutes 50 seconds East a distance of 504.15 feet to the point and place of beginning

Together with the benefit of title rights set forth in Declaration of Easements, Covenants and Restrictions for Meadowlands Plaza recorded In Deed Book 8278, page 204.

EXHIBIT A

FOR INFORMATION PURPOSES ONLY:

"in compliance with Chapter 157, Laws of 1977, premises herein is Lot 1.01 in Block 108.3 on the Tax Map of the Borough of East Rutherford, County of Bergen, State of New Jersey."

EXHIBIT A

EXHIBIT B

DESCRIPTION OF PERSONAL PROPERTY

(a)    All personal property, including all goods, supplies, equipment, furniture, furnishings, fixtures, machinery, inventory and construction materials which Mortgagor now or hereafter owns or in which Mortgagor now or hereafter acquires an interest or right, including those which are now or hereafter located on or affixed to the Premises or used or useful in the operation, use or occupancy thereof or the construction of any improvements thereon, including any interest of Mortgagor in and to personal property which is leased or subject to any superior security interest, and all books, records, leases and other documents, of whatever kind or character, relating to the Premises;

(b)    All fees, income, rents, issues, profits, earnings, receipts, royalties and revenues which, after the date hereof and while any portion of the indebtedness secured hereby remains unpaid, may accrue from said goods, fixtures, furnishings, equipment and building materials or any part thereof or from the Premises or any part thereof, or which may be received or receivable by Mortgagor from any hiring, using, letting, leasing, subhiring, subletting, or subleasing thereof;

(c)    All of Mortgagor's present and future rights to receive payments of money, services or property, including rights to all deposits from tenants of the Premises, accounts receivable, deposit accounts, chattel paper, notes, drafts, contract rights (including all rights to payment under all purchase and sale agreements and other contracts), instruments, general intangibles and principal, interest and payments due on account of goods sold, services rendered, loans made or credit extended, together with title or interest in all documents evidencing or securing the same; provided, however, notwithstanding Mortgagor's grant of a security interest in its rights under all purchase and sale agreements now or hereafter relating to the Premises, Mortgagor shall be free, without the approval or consent of Beneficiary, to amend, modify and/or terminate, at any time, and from time to time, such purchase and sale agreements;

(d)    All of Mortgagor's present and future rights, titles and interests, but not Mortgagor's obligations, duties or liabilities for any breach, in, under and to all Swap Contracts (as defined in the Loan Agreement) and all Swap Transactions (as defined in the Loan Agreement), and all amounts received by Mortgagor in connection therewith or to which Mortgagor is entitled thereunder;

(e)    All other intangible property and rights relating to the Premises or the operation thereof, or used in connection therewith, including all governmental permits relating to construction or other activities on the Premises, all names under or by which the Premises may at any time be operated or known, all rights to carry on business under any such names, or any variant thereof, all trade names and trademarks relating in any way to the Premises, good will in any way relating to the Premises, and all licenses and permits relating in any way to, or to the operation of, the Premises;

EXHIBIT B - Page 1

(f)    Mortgagor's rights under all insurance policies covering the Premises or any of the aforesaid collateral, and all proceeds, loss payments and premium refunds payable regarding the same;

(g)    All reserves, deferred payments, deposits, refunds, cost savings and payments of any kind relating to the construction of any improvements on the Premises;

(h)    All water stock relating to the Premises;

(i)    All causes of action, claims, compensation and recoveries for any damage to or condemnation or taking of the Premises or the aforesaid collateral, or for any conveyance in lieu thereof, whether direct or consequential, or for any damage or injury to the Premises or the aforesaid collateral, or for any loss or diminution in value of the Premises or the aforesaid collateral;

(j)    All architectural, structural, mechanical and engineering plans and specifications prepared for construction of improvements or extraction of minerals or gravel from the Premises and all studies, data and drawings related thereto; and also all contracts and agreements of Mortgagor relating to the aforesaid plans and specifications or to the aforesaid studies, data and drawings or to the construction of improvements on or extraction of minerals or gravel from the Premises;

(k)    All Mortgagor's rights in proceeds of the loan evidenced by the Note (as defined in the Loan Agreement);

(l)    all present and future deposit accounts of Mortgagor (but not from any parent entity (direct or indirect) or any other Affiliate) held with Mortgagee, including, without limitation, any demand, time, savings, passbook or like accounts maintained by Mortgagor with Mortgagee, and all money, funds, instruments, securities, cash, cash equivalents and all other property of any nature whatsoever held with Mortgagee, whether or not deposited in any such deposit account.

(m)    without limiting any of the foregoing, any or all other present or future "fixtures," "equipment," "software," "inventory," "goods," "general intangibles," "payment intangibles," "commercial tort claims," "accounts," "contract rights," "instruments," "promissory notes," "investment property," "letter of credit rights," "letters of credit," "deposit accounts" and "documents" (as such quoted terms are defined in or encompassed by the New Jersey Uniform Commercial Code, as now or hereafter amended) located on, used in the operation of, arising or derived from or in way relating to the Premises, Swap Contracts (as defined in the Loan Agreement) or Swap Transactions (as defined in the Loan Agreement); and

(n)    all proceeds of the foregoing.

All terms used herein which are defined in the New Jersey Uniform Commercial Code (as now or hereafter amended) shall have the same meanings when used herein, unless the context requires otherwise.

EXHIBIT B - Page 2

EX-10.5

Exhibit 10.5

PROMISSORY NOTE(Revolving Loan)

$100,000,000 February 27, 2013

FOR VALUE RECEIVED, KBSII 100-200 CAMPUS DRIVE, LLC, a Delaware limited liability company, KBSII ONE MEADOWLANDS, LLC, a Delaware limited liability company, and KBSII WILLOW OAKS, LLC, a Delaware limited liability company (together with each New Borrower now or hereafter bound under the Loan Agreement and this Note as a Borrower pursuant to a Joinder Agreement, hereinafter called "Borrower"), promises to pay to the order of TD BANK, N.A., a national banking association (hereinafter, together with any subsequent holder hereof, called "Lender"), or permitted assigns, at the office of U.S. Bank National Association, as agent ("Agent") for itself and for the other financial institutions (collectively, the "Lenders") which are or may in the future become parties to the Loan Agreement (as hereinafter defined), at its office at 4100 Newport Place, Suite 900, Newport Beach, California 92660, Attn: Commercial Real Estate, or at such other place as Agent may from time to time designate in writing, on or before the Maturity Date, the principal sum of One Hundred Million and No/100 Dollars ($100,000,000.00), or so much thereof as may have been advanced to or for the benefit of Borrower from time to time in accordance with the terms set forth in that certain Loan Agreement of even date herewith by and between, inter alia, Borrower, the lenders named therein, as Lenders, and Agent (the "Loan Agreement") and remains unpaid from time to time (hereinafter called "Principal Balance"), with interest on the Principal Balance, until paid in full, at the rates per annum specified in the Loan Agreement, in coin or currency, which, at the time or times of payment, is legal tender for the payment of public and private debts in the United States of America, all in accordance with the terms hereinafter set forth and set forth in the Loan Agreement.

This Note is one of one or more promissory notes in the initial aggregate principal amount of $235,000,000.00 issued pursuant to the Loan Agreement (collectively, the "Note"), which Note is secured, inter alia, by each Deed of Trust (as defined in the Loan Agreement), executed by a Borrower and given to Agent, covering a Property (as defined in the Loan Agreement). All of the agreements, conditions, covenants, warranties, representations, provisions and stipulations made by or imposed upon Borrower under the Loan Documents are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully inserted herein, and Borrower covenants and agrees to keep and perform the same, or cause them to be kept and performed, strictly in accordance with their terms.

From and after the date hereof, and until the date on which this Note is paid in full, interest shall accrue and Borrower shall pay interest on the Principal Balance on the terms more particularly set forth in the Loan Agreement. A portion of the Principal Balance on this Note shall constitute a revolving loan that Borrower may borrow, repay and re-borrow for the purposes stated in the Loan Agreement upon the satisfaction of the terms and conditions set forth therein.

Time is of the essence hereof. Upon the occurrence and during the continuation of an Event of Default under the Loan Agreement or any of the other Loan Documents (as defined in

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the Loan Agreement), then, in any such case, the entire Principal Balance, with all accrued interest thereon, together with all other sums evidenced or secured by the Loan Documents, shall, at the option of Agent on behalf of Lenders, become immediately due and payable and Lender's obligation to make additional advances hereunder or under the Loan Agreement shall, at the option of Agent on behalf of Lenders, be terminated, without notice, demand or presentment for payment, and without notice of intention to accelerate or of acceleration, at the place of payment aforesaid. Except as herein expressly provided, no modification or amendment of the terms of this Note shall be effective unless made in a writing signed by Borrower and Lender.

Each Borrower, co–borrower, endorser or other party who may become liable under this Note hereby, agrees to make payment of this Note, and waives demand for payment, presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of intention to accelerate maturity, notice of acceleration of maturity, all other notices as to this Note (provided however, this shall not affect such Person's notice and cure rights which are expressly provided for in the Loan Documents), diligence in collection as to each and every payment due hereunder, and all other requirements necessary to charge or hold such person or entity to any obligation hereunder, and agrees that without any notice Agent on behalf of Lenders may take security herefor or may release any or all security herefor, or may from time to time extend, renew, or otherwise modify the date or dates or amount or amounts of payment above recited, and that, in any such case, each Borrower, co–borrower, endorser or other party who may become liable under this Note (including each New Borrower upon execution of a Joinder Agreement), shall continue to be bound hereby and to be liable to pay the unpaid balance of the indebtedness evidenced hereby, as so additionally secured, extended, renewed or modified, and notwithstanding any such release; and further agrees to pay all costs and expenses of collection, including court costs and attorneys' fees (prior to trial, at trial and on appeal) incurred in collecting the indebtedness evidenced hereby, or in exercising or defending, or obtaining the right to exercise the rights of Agent on behalf of Lenders hereunder, under the Loan Agreement or under any other Loan Document, whether suit be brought or not, and in bankruptcy, insolvency, arrangement, reorganization and other debtor–relief proceedings, in probate, in other court proceedings, or otherwise, whether or not Agent prevails therein except in the event Borrower prevails pursuant to a final judicial determination, and, except as may be expressly otherwise set forth in any of the Loan Documents, all costs and expenses incurred by Agent and/or Lenders in protecting or preserving the interests which are the subject of the Loan Documents. Section 7.19 of the Loan Agreement (the joint borrower provisions) is by this reference incorporated herein in its entirety.

This Note is made with reference to and shall be construed in accordance with and governed by the laws of the State of California for all purposes, including, but not limited to, the purpose of determining the maximum rate of interest, if any, which may be lawfully received hereunder by the holder hereof.

The term "Borrower" as used in this Note shall mean and have reference to, collectively, all parties and each of them directly or indirectly obligated for the indebtedness evidenced by this Note, whether as principal borrower, maker, endorser, or otherwise, together with the respective heirs, administrators, executors, legal representatives, successors and assigns of each of the foregoing.

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All capitalized terms not otherwise defined herein shall have the meaning given them in the Loan Agreement.

Each party to this Note hereby expressly waives any right to trial by jury of any claim, demand, action or cause of action (1) arising under this Note or any other instrument, document or agreement executed or delivered in connection therewith, or (2) in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to this Note or any other instrument, document or agreement executed or delivered in connection herewith, or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to this Note may file an original counterpart or a copy of this section with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury.

Limited Recourse Provision. Except as to Guarantor as set forth in the Guaranty, Agent and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of any Borrower, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of any Borrower (except for Guarantor as provided in the Guaranty, but including KBSII REIT ACQUISITION I, LLC, KBSII REIT ACQUISITION XXV, LLC, KBSII REIT ACQUISITION V, LLC, KBS LIMITED PARTNERSHIP II or KBS REAL ESTATE INVESTMENT TRUST II, INC.) with respect to the obligations of Borrower and Guarantor under the Loan. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower's liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty or Agent's right to exercise any rights or remedies against any collateral securing the Loan.

[SIGNATURE ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, each Borrower has caused this Note to be duly executed and delivered as of the day and year first above set forth.

KBSII 100-200 CAMPUS DRIVE, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION I, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

KBSII ONE MEADOWLANDS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION XXV, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

KBSII WILLOW OAKS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION V, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

EX-10.6

Exhibit 10.6

PROMISSORY NOTE(Revolving Loan)

$135,000,000 February 27, 2013

FOR VALUE RECEIVED, KBSII 100-200 CAMPUS DRIVE, LLC, a Delaware limited liability company, KBSII ONE MEADOWLANDS, LLC, a Delaware limited liability company, and KBSII WILLOW OAKS, LLC, a Delaware limited liability company (together with each New Borrower now or hereafter bound under the Loan Agreement and this Note as a Borrower pursuant to a Joinder Agreement, hereinafter called "Borrower"), promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association (hereinafter, together with any subsequent holder hereof, called "Lender"), or permitted assigns, at the office of U.S. Bank National Association, as agent ("Agent") for itself and for the other financial institutions (collectively, the "Lenders") which are or may in the future become parties to the Loan Agreement (as hereinafter defined), at its office at 4100 Newport Place, Suite 900, Newport Beach, California 92660, Attn: Commercial Real Estate, or at such other place as Agent may from time to time designate in writing, on or before the Maturity Date, the principal sum of One Hundred Thirty-Five Million and No/100 Dollars ($135,000,000.00), or so much thereof as may have been advanced to or for the benefit of Borrower from time to time in accordance with the terms set forth in that certain Loan Agreement of even date herewith by and between, interalia, Borrower, the lenders named therein, as Lenders, and Agent (the "Loan Agreement") and remains unpaid from time to time (hereinafter called "Principal Balance"), with interest on the Principal Balance, until paid in full, at the rates per annum specified in the Loan Agreement, in coin or currency, which, at the time or times of payment, is legal tender for the payment of public and private debts in the United States of America, all in accordance with the terms hereinafter set forth and set forth in the Loan Agreement.

This Note is one of one or more promissory notes in the initial aggregate principal amount of $235,000,000.00 issued pursuant to the Loan Agreement (collectively, the "Note"), which Note is secured, inter alia, by each Deed of Trust (as defined in the Loan Agreement), executed by a Borrower and given to Agent, covering a Property (as defined in the Loan Agreement). All of the agreements, conditions, covenants, warranties, representations, provisions and stipulations made by or imposed upon Borrower under the Loan Documents are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully inserted herein, and Borrower covenants and agrees to keep and perform the same, or cause them to be kept and performed, strictly in accordance with their terms.

From and after the date hereof, and until the date on which this Note is paid in full, interest shall accrue and Borrower shall pay interest on the Principal Balance on the terms more particularly set forth in the Loan Agreement. A portion of the Principal Balance on this Note shall constitute a revolving loan that Borrower may borrow, repay and re-borrow for the purposes stated in the Loan Agreement upon the satisfaction of the terms and conditions set forth therein.

Time is of the essence hereof. Upon the occurrence and during the continuation of an Event of Default under the Loan Agreement or any of the other Loan Documents (as defined

-1-

in the Loan Agreement), then, in any such case, the entire Principal Balance, with all accrued interest thereon, together with all other sums evidenced or secured by the Loan Documents, shall, at the option of Agent on behalf of Lenders, become immediately due and payable and Lender's obligation to make additional advances hereunder or under the Loan Agreement shall, at the option of Agent on behalf of Lenders, be terminated, without notice, demand or presentment for payment, and without notice of intention to accelerate or of acceleration, at the place of payment aforesaid. Except as herein expressly provided, no modification or amendment of the terms of this Note shall be effective unless made in a writing signed by Borrower and Lender.

Each Borrower, co–borrower, endorser or other party who may become liable under this Note hereby, agrees to make payment of this Note, and waives demand for payment, presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of intention to accelerate maturity, notice of acceleration of maturity, all other notices as to this Note (provided however, this shall not affect such Person's notice and cure rights which are expressly provided for in the Loan Documents), diligence in collection as to each and every payment due hereunder, and all other requirements necessary to charge or hold such person or entity to any obligation hereunder, and agrees that without any notice Agent on behalf of Lenders may take security herefor or may release any or all security herefor, or may from time to time extend, renew, or otherwise modify the date or dates or amount or amounts of payment above recited, and that, in any such case, each Borrower, co–borrower, endorser or other party who may become liable under this Note (including each New Borrower upon execution of a Joinder Agreement), shall continue to be bound hereby and to be liable to pay the unpaid balance of the indebtedness evidenced hereby, as so additionally secured, extended, renewed or modified, and notwithstanding any such release; and further agrees to pay all costs and expenses of collection, including court costs and attorneys' fees (prior to trial, at trial and on appeal) incurred in collecting the indebtedness evidenced hereby, or in exercising or defending, or obtaining the right to exercise the rights of Agent on behalf of Lenders hereunder, under the Loan Agreement or under any other Loan Document, whether suit be brought or not, and in bankruptcy, insolvency, arrangement, reorganization and other debtor–relief proceedings, in probate, in other court proceedings, or otherwise, whether or not Agent prevails therein except in the event Borrower prevails pursuant to a final judicial determination, and, except as may be expressly otherwise set forth in any of the Loan Documents, all costs and expenses incurred by Agent and/or Lenders in protecting or preserving the interests which are the subject of the Loan Documents. Section 7.19 of the Loan Agreement (the joint borrower provisions) is by this reference incorporated herein in its entirety.

This Note is made with reference to and shall be construed in accordance with and governed by the laws of the State of California for all purposes, including, but not limited to, the purpose of determining the maximum rate of interest, if any, which may be lawfully received hereunder by the holder hereof.

The term "Borrower" as used in this Note shall mean and have reference to, collectively, all parties and each of them directly or indirectly obligated for the indebtedness evidenced by this Note, whether as principal borrower, maker, endorser, or otherwise, together with the respective heirs, administrators, executors, legal representatives, successors and assigns of each of the foregoing.

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All capitalized terms not otherwise defined herein shall have the meaning given them in the Loan Agreement.

Each party to this Note hereby expressly waives any right to trial by jury of any claim, demand, action or cause of action (1) arising under this Note or any other instrument, document or agreement executed or delivered in connection therewith, or (2) in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to this Note or any other instrument, document or agreement executed or delivered in connection herewith, or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and each party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that any party to this Note may file an original counterpart or a copy of this section with any court as written evidence of the consent of the parties hereto to the waiver of their right to trial by jury.

Limited Recourse Provision. Except as to Guarantor as set forth in the Guaranty, Agent and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of any Borrower, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of any Borrower (except for Guarantor as provided in the Guaranty, but including KBSII REIT ACQUISITION I, LLC, KBSII REIT ACQUISITION XXV, LLC, KBSII REIT ACQUISITION V, LLC, KBS LIMITED PARTNERSHIP II or KBS REAL ESTATE INVESTMENT TRUST II, INC.) with respect to the obligations of Borrower and Guarantor under the Loan. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower's liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty or Agent's right to exercise any rights or remedies against any collateral securing the Loan.

[SIGNATURE ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, each Borrower has caused this Note to be duly executed and delivered as of the day and year first above set forth.

KBSII 100-200 CAMPUS DRIVE, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION I, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.,

Charles J. Schreiber, Jr.,

Chief Executive Officer

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KBSII ONE MEADOWLANDS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION XXV, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

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KBSII WILLOW OAKS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION V, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

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EX-10.7

Exhibit 10.7

REPAYMENT GUARANTY

THIS REPAYMENT GUARANTY (this "Guaranty") is made as of February 27, 2013, by KBS REIT PROPERTIES II, LLC, a Delaware limited liability company (individually and collectively referred to herein as "Guarantor") in favor of U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for the "Lenders" pursuant to the Loan Agreement described below (in such capacity, "Agent") and in favor of each party that now or hereafter is bound under the Loan Agreement as a "Lender" (referred to herein individually as a "Lender" and collectively as the "Lenders").

1.Except as otherwise provided in this Guaranty, initially capitalized terms used in this Guaranty without definition are defined in that certain Loan Agreement of even date herewith by and between KBSII 100-200 CAMPUS DRIVE, LLC, a Delaware limited liability company, KBSII ONE MEADOWLANDS, LLC, a Delaware limited liability company, and KBSII WILLOW OAKS, LLC, a Delaware limited liability company (together with each New Borrower now or hereafter bound under the Loan Agreement as a Borrower, collectively, "Borrower"), Agent and Lenders (the "Loan Agreement").

2.    In order to induce Agent and Lenders to enter into the Loan Agreement and to induce Lenders to loan to Borrower the sum of $235,000,000.00, subject to potential increase to $335,000,000 upon the exercise of an "Accordion Option" as defined in the Loan Agreement on the terms and conditions set forth in the Loan Agreement (as it may be increased, the "Loan"), evidenced by one or more secured promissory notes (collectively, the "Notes"), in the aggregate principal amount of $235,000,000.00 (subject to increase as described above), each now or hereafter executed by Borrower and payable to the order of one or more Lenders, subject to the paragraphs set forth in this Section 2 below, Guarantor hereby unconditionally and irrevocably guarantees to Agent and Lenders (and to each Lender and Swap Counterparty) and to their successors, endorsees and/or assigns , the full and prompt payment of (a) subject to the limitations on Guarantor's liability contained in this Section 2 below, the principal sum of the Notes (as such sum may be increased as described above) in accordance with their terms when due, by acceleration or otherwise when due under the terms of the Notes, and any and all other sums of money that become owing by Borrower to Lenders under the Notes, the Loan Agreement and/or any other "Loan Document" as such term is defined in the Loan Agreement, and (b) all present and future indebtedness, settlement obligations, termination fees and costs, and all other sums and obligations (collectively, the "Swap Contract Obligations") now and hereafter owing to U.S. Bank National Association and/or Swap Counterparty by Borrower or one or more Borrowers (or any Affiliate of Borrower or one or more Borrowers) under or in connection with any and all present and future Swap Transactions and Swap Contracts in connection with the Loan (which Notes, Loan Agreement, Swap Contracts and other "Loan Documents" are also collectively referred to herein as the "Loan Documents"). The obligations guaranteed pursuant to this Section 2 are hereinafter referred to as the "Guaranteed Obligations."

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Notwithstanding anything else to the contrary contained in this Guaranty, the maximum amount for which the Guarantor shall be liable under this Guaranty shall not exceed (i) the Base Guaranteed Amount (defined below as the same shall be determined from time to time), plus (ii) all Swap Contract Obligations relating to the Loan, and any and all other present and future Swap Transactions and Swap Contracts, plus (iii) 100% of all amounts owing under the Environmental Indemnity by any Borrower if (and only if) the Environmental Insurance Policy (as defined in the Loan Agreement and substantially and materially in the form approved by Agent (A) pursuant to Section 2.1(r) of the Loan Agreement as to the Initial Properties and (B) at the time a Property is added as collateral for the Loan as to all other Properties) is not then in place or, if not then in place, does not otherwise cover Borrower for claims relating to environmental matters when and if demand is made by Agent under the Environmental Indemnity (i.e., Guarantor shall have no liability under this Guaranty for amounts owing under the Environmental Indemnity so long as the Environmental Insurance Policy is in place or otherwise covers the liability of Borrower for environmental matters at the time demand is made by Agent to Borrower under the Environmental Indemnity, whether or not the claim relating to any such environmental matter is a covered claim under such Environmental Insurance Policy), plus (iv) 100% of any deficiency, loss or damage suffered by Agent and Lenders because of: (1) the intentional misapplication or misappropriation by Borrower of any funds derived from any Property, including the misapplication or misappropriation by Borrower of rent, security deposits, insurance proceeds, condemnation awards, or other income arising with respect to any Property; (2) Borrower's intentional commission of physical waste with respect to any Property; (3) the fraud or intentional misrepresentation by Borrower or Guarantor made in or in connection with the Loan Documents or the Loan; or (4) Borrower's voluntary or collusive filing, or the filing against Borrower by any party, of any proceeding for relief under any federal or state bankruptcy, insolvency or receivership laws or any assignment for the benefit of creditors made by Borrower not dismissed within 90 days.

Notwithstanding the foregoing or anything stated to the contrary in this Guaranty, under no circumstances whatsoever shall the liability of Guarantor arising under clause (i) above exceed $58,750,000 in the aggregate (or after any exercise of an Accordion Option, 25% of the principal amount of the Loan, so that if the maximum amount of the Loan was increased to $300,000,000, the maximum liability under clause (i) above would equal $75,000,000 in the aggregate).

For the purposes of this Guaranty, "Base Guaranteed Amount" shall mean, as the same is determined from time to time and subject to adjustment as set forth in the following sentence, an amount equal to twenty-five percent (25.0%) of all principal owing under the Notes (as such principal amount(s) may be borrowed, increased, repaid and re-borrowed pursuant to the terms and conditions of the Loan Agreement), such amount calculated as of the date the Notes become due and payable in full (whether at maturity or by acceleration or otherwise) (the "Due Date"). In determining the Base Guaranteed Amount, no payments or recoveries from any source whatsoever (including without limitation payments received from Borrower and proceeds from the foreclosure sales or other liquidation of collateral for the Loan, or any credit bids made by Agent and Lenders at any foreclosure sales) received by Agent or Lenders after the Due Date shall be applied to reduce the Base Guaranteed Amount. Guarantor's maximum liability under this Guaranty shall be reduced only by payments received from Guarantor under this Guaranty following the Due Date from its own funds (and not, as noted above, from liquidation of

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collateral). Additional advances (such as Protective Advances) made after the Due Date shall increase the Base Guaranteed Amount by an amount equal to twenty-five percent (25.0%) of the amount advanced (subject to the aggregate liability cap of $58,750,000 set forth above).

Within five (5) Business Days following Guarantor's written request (which requests shall be limited to one request per month), Agent shall confirm in writing its calculation of the current Base Guaranteed Amount based on information known to Agent as of the specified date.

Guarantor agrees that any indebtedness which remains owing under the Loan Documents from time to time, including all indebtedness that remains owing after the application of payments received from Borrower and the application of proceeds received from the foreclosure of any deed of trust or mortgage (or after application of the credit bid of the Lenders at the foreclosure sale) and other liquidation of the collateral for the indebtedness secured thereby, shall be deemed to be indebtedness guaranteed hereby (subject to the limitation on the Base Guaranteed Amount guaranteed hereby as set forth herein) (so that, for example, if following foreclosure and receipt of the foreclosure proceeds, the total principal indebtedness owing to Agent and Lenders under the Loan Documents is $58,750,000, and the Base Guaranteed Amount as calculated herein is $58,750,000, the principal amount for which Guarantor would be liable to Agent and Lenders hereunder is the full $58,750,000), and Guarantor may not claim or contend so long as any such indebtedness remains outstanding that any payments received by Agent or Lenders from Borrower or otherwise (but expressly excepting any payments or proceeds received by Agent and Lenders from Guarantor under this Guaranty), or proceeds received by Agent and Lenders in connection with the liquidation of collateral, shall have reduced or discharged Guarantor's liability or obligations hereunder. Nothing contained in this paragraph shall be deemed to (a) limit or otherwise impair any of the waivers or agreements of Guarantor contained in the preceding or following sections of this Guaranty, (b) require Agent or Lenders to proceed against Borrower or any collateral before proceeding against Guarantor (any such requirement having been specifically waived), or (c) limit or otherwise impair any right Agent and Lenders would have in the absence of this paragraph.

Agent shall have the right to apply payments received from Borrower to the Loan in any manner elected by Agent, even if the manner of application does not reduce at all or to the greatest extent Guarantor's maximum aggregate obligation hereunder for payment of the Guaranteed Obligations.

3.    NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, in accordance with California Civil Code ("CC") Section 2856, the Guarantor hereby agrees as follows:

(a)    Guarantor waives any and all rights of subrogation, reimbursement, indemnification and contribution, and any other rights and defenses that are or may become available to Guarantor by reason of CC Sections 2787 to 2855, inclusive, 2899 and 3433 including, without limitation, any and all rights or defenses Guarantor may have by reason of protection afforded to the principal with respect to any of the Guaranteed Obligations or to any other guarantor of any of the Guaranteed Obligations with respect to such guarantor's obligations under its guaranty, in either case, pursuant to the antideficiency or other laws of this state limiting or discharging the principal's indebtedness or such other guarantor's obligations,

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including, without limitation, California Code of Civil Procedure ("CCP") Sections 580a, 580b, 580d or 726; and

(b)    Guarantor waives all rights and defenses that Guarantor may have because Borrower's debt is secured by real property. This means, among other things:

(i)    Agent and Lenders may collect from Guarantor without first foreclosing on any real or personal property collateral pledged by Borrower;

(ii)    If Agent or any Lender forecloses on any real property collateral pledged by Borrower:

(A)    The amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price;

(B)    An action to collect from Guarantor may be commenced more than three months after a foreclosure sale of the real property collateral or any part thereof; and

(C)    Agent and Lenders may collect from Guarantor even if Agent or any Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower.

This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because Borrower's debt is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon CCP Sections 580a, 580b, 580d, or 726; and

(c)    Guarantor waives all rights and defenses arising out of an election of remedies by Agent or Lenders, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Guaranteed Obligations, has destroyed Guarantor's rights of subrogation and reimbursement against Borrower by the operation of CCP Section 580d or otherwise, and even though that election of remedies by Agent or Lenders has destroyed Guarantor's rights of contribution against another guarantor of any of the Guaranteed Obligations.

(d)    Guarantor hereby waives any right it might otherwise have under Section 2822 of the California Civil Code or similar law or otherwise to have Borrower designate the portion of any such obligation to be satisfied in the event that Borrower provides partial satisfaction of such obligation. Guarantor acknowledges and agrees that Borrower may already have agreed with Agent or Lenders, or may hereafter agree, that in any such event the designation of the portion of the obligation to be satisfied shall, to the extent not expressly made by the terms of the Loan Documents, be made by Agent or Lenders rather than by Borrower.

No other provision of this Guaranty shall be construed as limiting the generality of any of the covenants and waivers set forth in this Section 3.

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4.    Guarantor represents and warrants to Agent and Lenders that Guarantor has a financial interest in Borrower or is otherwise affiliated with Borrower. In that regard, Guarantor agrees that Agent's and Lenders' entering into the Loan Agreement and Lenders' agreement to make the Loan to Borrower is of substantial and material benefit to Guarantor and further agrees as follows:

(a)    Guarantor shall continue to be liable under this Guaranty and the provisions hereof will remain in full force and effect notwithstanding (i) any modification, agreement or stipulation between Borrower and Agent or their respective successors and assigns, with respect to the Loan Documents or the obligations encompassed thereby, including, without limitation, the Guaranteed Obligations, (ii) Agent's waiver of or failure to enforce any of the terms, covenants or conditions contained in the Loan Documents or in any modification thereof, (iii) any discharge or release of Borrower or any other guarantor from any liability with respect to the Guaranteed Obligations, (iv) any discharge, release, exchange or subordination of any real or personal property then held by Agent or any Lender as security for the performance of the Guaranteed Obligations, (v) any additional security taken for the Guaranteed Obligations, whether real or personal property, (vi) any foreclosure or other realization on any security for the Guaranteed Obligations, regardless of the effect upon Guarantor's subrogation, contribution or reimbursement rights against Borrower or any other guarantor, (vii) any additional loans or financial accommodations to Borrower or (viii) the manner or order by which payments are applied to principal, interest or other obligations under the Loan Documents. Without limiting the generality of the foregoing, Guarantor hereby waives the rights and benefits under CC Section 2819, and agrees that by doing so Guarantor's liability shall continue even if Agent or any Lender alters any obligations under the Loan Documents in any respect or Agent's or Lenders' remedies or rights against Borrower are in any way impaired or suspended without Guarantor's consent.

(b)    Guarantor's liability under this Guaranty shall continue until all sums due under the Notes have been paid in full and until all Guaranteed Obligations to Agent and Lenders have been satisfied, and shall not, except as expressly provided above in this Guaranty, be reduced by virtue of any payment by Borrower of any amount due under the Notes or under any of the Loan Documents (except to the extent that Borrower makes a voluntary payment and such payment reduces the outstanding principal amount of the Loan prior to the Due Date) or by Agent's and Lenders' recourse to any collateral or security.

(c)    Guarantor represents and warrants to Agent and Lenders that Guarantor now has and will continue to have full and complete access to any and all information concerning the transactions contemplated by the Loan Documents or referred to therein, the value of the assets owned or to be acquired by Borrower, Borrower's financial status and its ability to pay and perform the Guaranteed Obligations owed to Agent and Lenders. Guarantor further represents and warrants that Guarantor has reviewed and approved copies of the Loan Documents and is fully informed of the remedies Agent and Lenders may pursue, with or without notice to Borrower, in the Event of Default under the Notes or other Loan Documents. So long as any of the Guaranteed Obligations remains unsatisfied or owing to Agent or Lenders, Guarantor shall keep fully informed as to all aspects of Borrower's financial condition and the performance of the Guaranteed Obligations.

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(d)    Guarantor acknowledges and agrees that Guarantor may be required to perform the Guaranteed Obligations in accordance with the terms hereof notwithstanding the fact that the Loan has fully matured, that the outstanding principal balance thereof is fully due and payable and that Borrower is in default of its obligation to pay the full amount due under the Notes on the maturity thereof.

5.    The liability of Guarantor under this Guaranty is a guaranty of payment and performance and not of collectibility, and is not conditioned or contingent upon the genuineness, validity, regularity or enforceability of the Loan Documents or other instruments relating to the creation or performance of the Guaranteed Obligations or the pursuit by Agent or any Lender of any remedies which Agent or any Lender now has or may hereafter have with respect thereto under the Loan Documents, at law, in equity or otherwise. Guarantor hereby waives any and all benefits and defenses under CC Section 2810 and agrees that by doing so Guarantor shall be liable even if Borrower had no liability at the time of execution of any of the Loan Documents or thereafter ceases to be liable. Guarantor hereby waives any and all benefits and defenses under CC Section 2809 and agrees that by doing so Guarantor's liability may be larger in amount and more burdensome than that of Borrower. Guarantor's liability hereunder shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for the Loan, whether caused by hazardous substances or otherwise, Agent's or any Lender's failure to perfect a security interest in such security or collateral or any disability or other defense of Borrower or any other guarantor.

6.    Guarantor hereby waives to the extent permitted by law: (i) all notices to Guarantor except as expressly required by the terms of this Guaranty, to Borrower, or to any other Person, including without limitation notices of the acceptance of this Guaranty or the creation, renewal, extension, modification, accrual of any of the Guaranteed Obligations owed to Agent and Lenders, enforcement of any right or remedy with respect thereto and notice of any other matters relating thereto; (ii) diligence and demand of payment, presentment, protest, dishonor, notice of intent to accelerate, notice of acceleration and notice of dishonor; (iii) any statute of limitations affecting Guarantor's liability hereunder or the enforcement thereof; and (iv) all principles or provisions of law which conflict with the terms of this Guaranty. Guarantor further agrees that Agent may enforce this Guaranty upon the occurrence of an Event of Default under the Notes or the other Loan Documents (as Event of Default is described therein), notwithstanding the existence of any dispute between Borrower and Agent or any Lender with respect to the existence of said Event of Default or performance of the Guaranteed Obligations or any counterclaim, set-off or other claim which Borrower may allege against Agent or any Lender with respect thereto. Moreover, Guarantor agrees that Guarantor's obligations shall not be affected by any circumstances which constitute a legal or equitable discharge of a guarantor or surety.

7.    Guarantor agrees that Agent may enforce this Guaranty without the necessity of resorting to or exhausting any security or collateral (including, without limitation, pursuant to a judicial or nonjudicial foreclosure) and without the necessity of proceeding against Borrower or any other guarantor. Guarantor hereby waives any and all benefits under CC Sections 2845, 2849 and 2850, including, without limitation, the right to require Agent to proceed against Borrower, to proceed against any other guarantor, to foreclose any lien on any real or personal property, to exercise any right or remedy under the Loan Documents, to draw upon any letter of

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credit issued in connection herewith, or to pursue any other remedy or to enforce any other right.

8.(a)    Guarantor agrees that nothing contained herein shall prevent Agent and Lenders from suing on the Notes or from exercising any rights available to them under the Notes or under any of the other Loan Documents and that the exercise of any of the aforesaid rights will not constitute a legal or equitable discharge of Guarantor. Guarantor understands that the exercise by Agent and Lenders of certain rights and remedies contained in the Loan Documents (such as a nonjudicial foreclosure) may affect or eliminate Guarantor's right of subrogation against Borrower and that Guarantor may therefore incur a partially or totally non-reimbursable liability hereunder; nevertheless, Guarantor hereby authorizes and empowers Agent to exercise, in its sole discretion, any rights and remedies, or any combination thereof, which may then be available to Agent and Lenders, since it is the intent and purpose of Guarantor that the obligations hereunder are absolute, independent and unconditional under any and all circumstances. Guarantor expressly waives any defense (which defense, if Guarantor had not given this waiver, Guarantor might otherwise have) to a judgment against Guarantor by reason of a nonjudicial foreclosure sale. Without limiting the generality of the foregoing, Guarantor hereby expressly waives any and all benefits and defenses under (i) CCP Section 580a (which Section, if Guarantor had not given this waiver, would otherwise limit Guarantor's liability after a nonjudicial foreclosure sale to the difference between the obligations guaranteed herein and the fair market value of the property or interests sold at such nonjudicial foreclosure sale), (ii) CCP Sections 580b and 580d (which Sections, if Guarantor had not given this waiver, would otherwise limit Agent's and Lenders' right to recover a deficiency judgment with respect to purchase money obligations and after a nonjudicial foreclosure sale, respectively), and (iii) CCP Section 726 (which Section, if Guarantor had not given this waiver, among other things, would otherwise require Agent and Lenders to exhaust all of its security before a personal judgment may be obtained for a deficiency). Notwithstanding any foreclosure of the lien of any deed of trust or mortgage or security agreement with respect to any or all of the real or personal property secured thereby, whether by the exercise of the power of sale contained therein, by an action for judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, Guarantor shall remain bound under this Guaranty.

(b)    Guarantor waives all benefits and defenses under CC Sections 2847, 2848 and 2849 and agrees that Guarantor shall have no right of subrogation against Borrower or against any collateral or security provided for in the Loan Documents and no right of reimbursement or contribution against any other guarantor unless and until all Guaranteed Obligations have been indefeasibly paid and satisfied in full, and Agent and Lenders have released, transferred or disposed of all of their rights, title and interest in any collateral or security. To the extent the waiver of Guarantor's rights of subrogation, reimbursement and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, Guarantor further agrees that Guarantor's rights of subrogation and reimbursement against Borrower and Guarantor's rights of subrogation against any collateral or security shall be junior and subordinate to any rights Agent or Lenders may have against Borrower and to all rights, title and interest Agent or Lenders may have in such collateral or security, and Guarantor's rights of contribution against any other guarantor shall be junior and subordinate to any rights Agent or Lenders may have against such other guarantor. Agent and Lenders may use, sell or dispose of any item of collateral or security as it sees fit without regard to Guarantor's subrogation and contribution rights, and upon disposition or sale of any item, Guarantor's rights with respect to such item will terminate. Guarantor understands that Guarantor may record a Request for Notice of Default pursuant to CC Section 2924(b) and thereby receive notice of any proposed foreclosure of any real property collateral then securing the Guaranteed Obligations. With respect to the foreclosure of any security interest in any personal property collateral then securing the Guaranteed Obligations, Agent and

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Lenders agree to give Guarantor five (5) days' prior written notice, in the manner set forth in Section 10 hereof, of any sale or disposition of any such personal property collateral, other than collateral which is perishable, threatens to decline speedily in value, is of a type customarily sold on a recognized market, or is cash, cash equivalents, certificates of deposit or the like.

(c)    Guarantor's sole right with respect to any such foreclosure of real or personal property collateral shall be to bid at such sale in accordance with applicable law. Guarantor acknowledges and agrees that Agent or any Lender may also bid at any such sale and in the event such collateral is sold to Agent or any Lender in whole or in partial satisfaction of the Guaranteed Obligations (or any portion thereof), Guarantor shall have no further right or interest with respect thereto. Notwithstanding anything to the contrary contained herein, no provision of this Guaranty shall be deemed to limit, decrease, or in any way to diminish any rights of set-off Agent and Lenders may have with respect to any cash, cash equivalents, certificates of deposit, letters of credit or the like which may now or hereafter be deposited with Agent or any Lender by Borrower.

(d)    To the extent any dispute exists at any time between or among Guarantor and any other guarantor of the Guaranteed Obligations as to Guarantor's or any other guarantor's right to contribution or otherwise, Guarantor agrees to indemnify, defend and hold Agent and Lenders harmless from and against any loss, damage, claim, demand, cost or any other liability (including, without limitation, reasonable attorneys' fees and costs) Agent and Lenders may suffer as a result of such dispute.

(e)    So long as any of the Guaranteed Obligations are owing to Agent or any Lender, Guarantor shall not, without the prior written consent of Agent, commence or join with any other party in commencing any bankruptcy, reorganization or insolvency proceedings of or against Borrower. The obligations of Guarantor under this Guaranty shall not be altered, limited or affected by any case, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or by any defense which Borrower may have by reason of the order, decree or decision of any court or administrative body resulting from any such case. Agent shall have the sole right to accept or reject any plan on behalf of Guarantor proposed in such case and to take any other action which Guarantor would be entitled to take, including, without limitation, the decision to file or not file a claim. Guarantor acknowledges and agrees that any interest on the Guaranteed Obligations which accrues after the commencement of any such proceeding (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on any such portion of the Guaranteed Obligations if said proceedings had not been commenced) will be included in the Guaranteed Obligations because it is the intention of the parties that the Guaranteed Obligations should be determined without regard to any rule or law or order which may relieve Borrower of any portion

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of such Guaranteed Obligations. Guarantor hereby permits any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay Agent and Lenders, or allow the claim of Agent and Lenders in respect of, any such interest accruing after the date on which such proceeding is commenced. Guarantor hereby assigns to Agent (for the benefit of Lenders) Guarantor's right to receive any payments from any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person by way of dividend, adequate protection payment or otherwise. If all or any portion of the Guaranteed Obligations are paid or performed by Borrower, the obligations of Guarantor hereunder shall continue and remain in full force and effect in the event that all or any part of such payment(s) or performance(s) is avoided or recovered directly or indirectly from Agent or Lenders as a preference, fraudulent transfer or otherwise in such case irrespective of payment in full of all obligations under the Loan Documents.

9.(a)    Guarantor represents and warrants that any financial statements, tax returns or other documents of Guarantor heretofore delivered to Agent are true and correct in all material respects. Such statements were prepared in accordance with generally accepted accounting principles, consistently applied and fairly present the financial position of Guarantor as of the date thereof. Guarantor further represents and warrants that no material adverse change has occurred in Guarantor's financial position since the date of such statements.

(b)    Guarantor covenants and agrees to provide Agent with any and all financial information required by Agent pursuant to the Loan Agreement. Guarantor further covenants and agrees to immediately notify Agent if it determines it does not satisfy the financial covenants set forth in Section 13 of this Guaranty.

10.    All notices, requests and demands to be made hereunder to the parties hereto must be in writing and given as provided in the notice provisions of the Loan Agreement (at the addresses set forth below).

To Agent:	U.S. Bank National Association 4100 Newport Place, Suite 900 Newport Beach, California 92660 Attention: Loan Administration Telephone: 949-863-2376 Facsimile: 949-252-1759
To Guarantor:	KBS REIT PROPERTIES II, LLC c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, California 92660 Attention: Jeff Waldvogel, VP/Controller; Director of Finance & Reporting

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With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, California 92660 Attention: Todd Smith, VP Controller, Corporate
With a copy to:	Greenberg Traurig, LLP 3161 Michelson Drive, Suite 1000 Irvine, California 92612 Attention: Bruce Fischer, Esq.

11.    Guarantor represents and warrants to Agent and Lenders as follows:

(a)    No consent of any other Person, including, without limitation, any creditors of Guarantor, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by Guarantor in connection with this Guaranty or the execution, delivery, performance, validity or enforceability of this Guaranty and all obligations required hereunder. This Guaranty has been duly executed and delivered by Guarantor, and constitutes the legally valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms.

(b)    The execution, delivery and performance of this Guaranty will not violate any provision of any existing law or regulation binding on Guarantor, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on Guarantor, or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which Guarantor is a party or by which Guarantor or any of its assets may be bound, and will not result in, or require, the creation or imposition of any lien on any of Guarantor's property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

12.    Guarantor's performance of a portion, but not all, of the Guaranteed Obligations will in no way limit, affect, modify or abridge Guarantor's liability for that portion of the Guaranteed Obligations that is not performed. Without in any way limiting the generality of the foregoing, in the event that Agent or any Lender is awarded a judgment in any suit brought to enforce Guarantor's covenant to perform a portion of the Guaranteed Obligation, such judgment will in no way be deemed to release Guarantor from its covenant to perform any portion of the Guaranteed Obligation which is not the subject of such suit.

13.    Guarantor covenants and agrees as follows:

(a)Financial Covenants. Guarantor covenants and agrees to provide the financial information required to be provided by Guarantor in Section 5.4 of the Loan Agreement.

(b)Minimum Fixed Charge Coverage Ratio. Measured as of the end of each semi-annual period ending on each December 31 and June 30 that occurs during the term of the Loan, Guarantor shall not permit the ratio of EBITDA to Fixed Charges for the preceding four

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trailing consecutive fiscal quarters to be less than 1.50 to 1.0. As used herein, "EBITDA" shall mean an amount equal to (i) net income as defined by GAAP for Guarantor and its subsidiaries on a consolidated basis for the applicable measuring period, plus (1) interest expense, income taxes, depreciations and amortization expense, acquisition costs and expenses, and extraordinary or non-recurring losses or losses from sales of assets, plus (2) any non-cash expense or contra revenue reducing net income, minus (3) any extraordinary or non-recurring gains or gains from asset sales, minus (4) any non-cash income or gains increasing net income with the exception of any straight line rent, and minus (5) an amount equal to $0.25 multiplied by the aggregate number of square feet of buildings owned by Guarantor not under construction, each as determined in accordance with GAAP or, if not determined by GAAP, as determined in accordance with industry practice; plus (ii) Guarantor's share of EBITDA (using the definition under subsection (i) above) in all unconsolidated joint ventures, without duplication, each as determined by Agent in its reasonable discretion. As used herein, "Fixed Charges" shall mean the sum of Guarantor's and Guarantor's subsidiaries (A) interest expense (excluding any amortized loan costs relating to loan fees or hedging instruments), plus (B) the aggregate amount of scheduled principal payments, excluding balloon payments, and (C) distributions on preferred interests and/or preferred stock.

(c)Maximum Leverage Ratio. Guarantor shall not permit its Leverage Ratio to be greater than 0.65 to 1.0 as of the end of each semi-annual period ending on each December 31 and June 30 that occurs during the term of the Loan. As used herein, (i) "Leverage Ratio" shall mean Total Liabilities to Total Asset Value, (ii) "Total Liabilities" shall mean all debt of Guarantor and its subsidiaries (including guaranties) determined on a consolidated basis for the applicable measuring period in accordance with GAAP, and (iii) "Total Asset Value" shall mean the sum of (a) the value of all real properties owned by Guarantor and its subsidiaries determined  by utilizing the capped value of real estate assets (with the trailing 12-month net operating income of all real properties capped at 7.50%) plus the book value of all other real estate related assets (including but not limited to, loans secured by real estate, mezzanine loans, and real estate securities) owned by Guarantor and its Affiliates, determined on a consolidated basis in accordance with GAAP, plus (b) all unencumbered cash and cash equivalent investments the use of which is unrestricted, plus (c) the book value of all notes receivable. For the purpose of clarification, guarantees provided by Guarantor for liabilities of Guarantor's subsidiaries shall only be counted once for the purpose of calculating "Total Liabilities."

(d)Minimum Net Worth. Measured as of the end of each semi-annual period ending on each December 31 and June 30 that occurs during the term of the Loan, Guarantor shall maintain a Net Worth of at least $500,000,000, adjusted downward quarterly, on a cumulative basis, for any net asset dispositions by Guarantor, provided, in no event shall the Net Worth (before or after adjustment) at any time be less than $250,000,000. As used herein, "Net Worth" shall mean an amount equal to the Total Asset Value less Total Liabilities, determined in accordance with GAAP.

14.    This Guaranty is solely for the benefit of Agent and Lenders and is not intended to nor may it be deemed to be for the benefit of any third party, including Borrower.

15.    Guarantor represents and warrants to Agent and Lenders as follows:

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(a)    Guarantor is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, has the power to own its assets and to transact the business in which it is now engaged and is in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification.

(b)    Guarantor has the power, authority and legal right to execute, deliver and perform this Guaranty and all obligations required hereunder and has taken all necessary action to authorize its execution, delivery and performance of this Guaranty and all obligations required hereunder. The execution, delivery and performance of this Guaranty will not violate any of the formation or governing documents of Guarantor or of any laws pursuant to which Guarantor has been formed.

16.[Intentionally Deleted].

17.    Agent may at Agent's cost assign this Guaranty with any Loan Document, without in any way affecting Guarantor's liability hereunder. Any married person executing this Guaranty in its capacity as a guarantor under this Guaranty agrees that recourse may be had against community property and separate property for the satisfaction of all obligations hereby guaranteed. This Guaranty shall be binding upon Guarantor, Guarantor's heirs, representatives, administrators, executors, successors and assigns and shall inure to the benefit of and shall be enforceable by Agent and Lenders, and their successors, endorsees and assigns. As used herein, the singular includes the plural, and the masculine includes the feminine and neuter and vice versa, if the context so requires.

18.    In the event of any dispute or litigation regarding the enforcement or validity of this Guaranty, Guarantor shall be obligated to pay all charges, costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by Agent and Lenders, whether or not any action or proceeding is commenced regarding such dispute and whether or not such litigation is prosecuted to judgment.

19.THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

20.    Guarantor, Agent and Lenders hereby voluntarily, knowingly and intentionally, to the extent permitted by applicable law, WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY in any legal action or proceeding arising under or in connection with this Guaranty or any other Loan Document or concerning the Guaranteed Obligations and/or any collateral therefor or pertaining to any transaction related to or contemplated in any Loan Document, regardless of whether such action or proceeding concerns any contractual or tortious or other claim. Guarantor acknowledges that this waiver of jury trial is a material inducement to Agent and Lenders entering into the Loan Agreement and to Lenders in extending credit to Borrower, that Agent and Lenders would not have entered into the Loan Agreement and Lenders would not have extended such credit without this jury trial waiver, and that Guarantor has been represented by an attorney or has had an opportunity to consult with an attorney regarding this Guaranty and understands the legal effect of this jury trial waiver.

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21.    Guarantor hereby submits to the jurisdiction of the state and federal courts in the State of California for purposes of any action arising from or growing out of this Guaranty, and further agrees that the venue of any such action may be laid in Orange County, California and that (in addition to any other method provided by law for service of process) service of process in any such action may be made on Guarantor by the delivery of the process to KBS CAPITAL ADVISORS LLC, attention: David Snyder, whose present address is 620 Newport Center Drive, Suite 1300, Newport Beach, California, whom Guarantor hereby appoints as Guarantor's agent for service of process. Nothing contained in this Guaranty, however, shall be deemed to constitute, or to imply the existence of, any agreement by Agent or Lenders to bring any such action only in said courts or to restrict in any way any of Agent's and Lenders' remedies or rights to enforce the terms of this Guaranty as, when and where Agent shall deem appropriate, in its sole discretion.

22.    No provision of this Guaranty may be changed, waived, revoked or amended without Agent's prior written consent. Every provision of this Guaranty is intended to be severable. If any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction, such illegality or invalidity will not affect the balance of the terms and provisions hereof, which terms and provisions will remain binding and enforceable.

23.    This Guaranty may be executed in any number of counterparts each of which shall be deemed an original and all of which shall constitute one and the same guaranty with the same effect as if all parties had signed the same signature page. Any signature page of this Guaranty may be detached from any counterpart of this Guaranty and reattached to any other counterpart of this Guaranty identical in form hereto but having attached to it one or more additional signature pages.

24.    No failure or delay on the part of Agent or Lenders to exercise any power, right or privilege under this Guaranty will impair any such power, right or privilege, or be construed to be a waiver of any default or an acquiescence therein, nor will any single or partial exercise of such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

25.    This Guaranty embodies the entire agreement among the parties hereto with respect to the matters set forth herein, and supersedes all prior agreements among the parties with respect to the matters set forth herein. No course of prior dealing among the parties, no usage of trade, and no parol or extrinsic evidence of any nature may be used to supplement, modify or vary any of the terms hereof. There are no conditions to the full effectiveness of this Guaranty.

26.    This Guaranty is in addition to all other guaranties of Guarantor and any other guarantors of Borrower's obligations to Agent and Lenders.

27.GUARANTOR ACKNOWLEDGES THAT GUARANTOR HAS BEEN AFFORDED THE OPPORTUNITY TO READ THIS DOCUMENT CAREFULLY AND TO REVIEW IT WITH AN ATTORNEY OF GUARANTOR'S CHOICE BEFORE SIGNING IT. GUARANTOR ACKNOWLEDGES HAVING READ AND

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UNDERSTOOD THE MEANING AND EFFECT OF THIS DOCUMENT BEFORE SIGNING IT.

28.    When two or more persons or entities have executed this Guaranty, unless the context clearly indicates otherwise, all references herein to "Guarantor" shall mean the guarantors hereunder or either or any of them. All of the obligations and liabilities of said guarantors under this Guaranty (and the obligations of other guarantors under any similar or other guaranties of part or all of the Guaranteed Obligations) shall be joint and several. Suit may be brought against said guarantors, jointly and severally, or against any one or more of them (even if less than all), without impairing the rights of Agent and Lenders against the other or others of said guarantors; and Agent may settle with any one or more of said guarantors for such sums or sum as it may see fit and/or Agent may release any of said guarantors from all further liability to Agent and Lenders for such indebtedness without impairing the right of Agent and Lenders to demand and collect the balance of such indebtedness from the other or others of said guarantors not so released; but it is agreed among said guarantors themselves, however, that such settlement and release shall in no way impair the rights of said guarantors as among themselves.

29.    Notwithstanding anything stated to the contrary in this Guaranty, none of the constituent members or partners (whether direct or indirect) in Guarantor (including, without limitation, KBS Limited Partnership II or KBS Real Estate Investment Trust II, Inc.) shall have any liability whatsoever for any of Guarantor’s obligations under this Guaranty. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower's liability or obligations under the Loan Documents or Agent's right to exercise any rights or remedies against any collateral securing the Loan.

30.    Notwithstanding anything stated to the contrary in this Guaranty, in the event that Agent or its nominee or any third party takes record title to any Property following the exercise of Agent's rights and remedies under the Loan Documents (an "Acquired Property"), Guarantor shall nonetheless have the right to terminate its continuing liability under Section 2 of this Guaranty with respect to Borrower's obligations under the Environmental Indemnity (and only as to such obligations), upon fulfillment of each of the following conditions to the reasonable satisfaction of Agent as it relates to any such Acquired Property:

(1) Guarantor or Borrower shall have delivered to Agent a new environmental insurance policy which insures Agent (on behalf of Lenders) ("New Environmental Insurance Policy") as to each such Acquired Property and which:

(a) is comparable to the existing Environmental Insurance Policy for each such Acquired Property approved by Agent except the policy limits shall be at least $5,000,000 for each occurrence and in the aggregate with a retention of no greater than $100,000; and

(b) is issued by the same company as the existing Environmental Insurance Policy or a replacement company with an AM Best's Rating equivalent or better than A‑ (Excellent)/IX; and

(c) has a term of three (3) years from the date of issuance; and

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(2) Agent shall have received evidence that all premiums for three (3) years coverage under such New Environmental Insurance Policy have been prepaid in full.

Such termination of Guarantor's liability under Section 2 of this Guaranty with respect to Borrower's obligations under the Environmental Indemnity for any Acquired Property, shall become effective only upon the delivery by Agent to Guarantor of a specific written acknowledgment of the satisfaction of all of the foregoing conditions and the termination of such obligations, which acknowledgment Agent agrees to provide unless any of the conditions to such termination have not been satisfied. This Section 30 shall under no circumstance be interpreted to terminate or limit any of Guarantor's liabilities in Section 2 of this Guaranty except to the extent such liabilities relate to Borrower's obligations under the Environmental Indemnity. For purposes of clarification, Guarantor's termination rights under this Section 30 shall only apply so long as the above conditions have been met as to each Acquired Property that Agent or its nominee or any third party takes record title to following the exercise of Agent's rights and remedies under the Loan Documents.

31.    Notwithstanding anything stated to the contrary in this Guaranty, in the event that Borrower, as Indemnitor (as defined in the Environmental Indemnity), successfully exercises its right to terminate its continuing liability under the Environmental Indemnity pursuant to and in accordance with the terms and conditions of Section 6 thereof, Guarantor's liability under Section 2 of this Guaranty with respect to its guaranty of Borrower's obligations under the Environmental Indemnity (and only as to such obligations) shall automatically terminate.

[Signatures on Following Page]

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date first above written.

"GUARANTOR"

KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.

Chief Executive Officer

S-1

EX-10.8

Exhibit 10.8

Real Estate Tax Index Numbers: 0493-01-0138

0493-01-0139

0493-01-0140

This instrument was prepared

outside of the Commonwealth of

Virginia.

RECORDING REQUESTED BY:

Commonwealth Land Title Insurance Company

1015 15th Street, NW, Suite 300

Washington, DC 20005

File Number 12-002128/TWD

THIS SPACE ABOVE FOR RECORDER'S USE

THIS IS A CREDIT LINE DEED OF TRUST

FOR PURPSOES OF SECTION 55-58.2 OF THE CODE OF VIRGINIA (1950), AS AMENDED, THE NAME OF THE NOTEHOLDER OR HOLDER OF THE OBLIGATIONS SECURED BY THIS CREDIT LINE DEED OF TRUST IS U.S. BANK NATIONAL ASSOCIATION, AS BENEFICIARY (AS AGENT OF THE LENDERS), AND ITS ADDRESS TO WHICH COMMUNICATIONS MAY BE MAILED OR DELIVERED IS 4100 NEWPORT PLACE, SUITE 900, NEWPORT BEACH, CALIFORNIA 92660, ATTN: COMMERCIAL REAL ESTATE. THE MATURITY DATE OF THE LOAN IS MARCH 1, 2016, AS MAY BE EXTENDED.

THIS DEED OF TRUST CONVEYS CERTAIN REAL PROPERTY AND THE IMPROVEMENTS THEREON LOCATED IN FAIRFAX COUNTY, VIRGINIA AS SECURITY FOR INDEBTEDNESS IN THE AMOUNT OF $235,000,000.00. THIS DEED OF TRUST IS A REFINANCE OF THAT CERTAIN CREDIT LINE DEE DOF TRUST (WITH FILING) (THIS "EXISTING DEED OF TRUST") DATED JULY 20, 2010, FROM KBSII WILLOW OAKS, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS GRANTOR, IN FAVOR OF LAWYERS TITLE REALTY SERVICES, INC., A VIRGINIA CORPORATION, AS TRUSTEE FOR THE BENEFIT OF U.S. BANK NATIONAL ASSOCIATION, A NATIONAL AMOUNT OF $65,000,000.00, RECORDED IN THE CLERK’S OFFICE OF FAIRFAX COUNTY, VIRGINIA IN DEED BOOK 21147, AT PAGE 721. RECORDATION TAXES WERE PAID AT THE TIME OF RECORDING OF THE EXISTING DEED OF TRUST.

THIS DEED OF TRUST ALSO IS SECURED BY CERTAIN REAL PROPERTY AND THE IMPROVEMENTS THEREON LOCATED IN OTHERE JURISDICTIONS OUTSIDE THE COMMONWEALTH OF VERGINIA. THE AGGREGATE VALUE OF ALL PROPERTY, LOCATED WITHIN AND OUTSIDE OF THE COMMONWEALTH OF VIRGINIA, WHICH

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SERVES AS SECURITY FOR THE INDEBTEDNESS IS $385,697,200, AS INDICATED ON THE ATTACHED VIRGINIA RECORDING TAX AFFIDAVIT. THE VALURE OF THE PROPERTY LOCATED IN THE COMMONWEALTH OF VIRGINIA WHICH SERVES AS SECURITY FOR THE INDEBTEDNESS IS $125,197,200.00, AS INDICATED ON THE ATTACHED VIRGINIA RECORDING TAX AFFIDAVIT. REFERENCE IS MADE TO THE ATTACHED VIRGINIA RECORDING TAX AFFIDAVIT FOR THE CALCULATION OF THE STATE AND LOCAL RECORDATION TAXES ON THIS DEED OF TRUST.

CREDIT LINE DEED OF TRUST

(WITH ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING)

(The promissory notes secured hereby provide for a fluctuating interest rate)

THIS CREDIT LINE DEED OF TRUST (WITH ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING) (the "Deed of Trust")is made as of February 27, 2013 by KBSII WILLOW OAKS, LLC, a Delaware limited liability company, as trustor ("Grantor"), to Lawyers Title Realty Services, Inc., a Virginia corporation, whose business address is 7130 Glen Forest Drive, Suite 403, Richmond, Virginia 23226, with a mailing address c/o Commonwealth Land Title Insurance Company, 1015 15th Street, N.W., Suite 300, Washington, D.C. 20005 as trustee ("Trustee"), for the benefit of U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent as described below (in such capacity, "Beneficiary"). The respective addresses of Grantor and Trustee are set forth in Section 5.5. Beneficiary is acting as the agent for itself and all other "Lenders" now or hereafter existing under that certain Loan Agreement of even date herewith (the "Loan Agreement") between Grantor and each of the other borrowers (individually, each a "Borrower" and collectively, the "Borrowers") from time to time a party thereto, Beneficiary, as "Agent" and the "Lenders" described therein. As used herein, the term "Lenders" shall have the same meaning that is given to such term in the Loan Agreement.

THIS DEED OF TRUST is given, among other things, for the purpose of securing a revolving and term loan (the "Loan") from Lenders, as lenders, to Borrowers, as borrowers, as more fully described in the Loan Agreement, the proceeds of which are to be used, in part, to finance certain real property located in County of Fairfax, Commonwealth of Virginia, which real property is more particularly described in Exhibit A attached hereto and by this reference incorporated herein (the "Land").

FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Grantor, as trustor, hereby irrevocably grants, bargains, sells, transfers, conveys and assigns to Trustee, as trustee, IN TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for the benefit and security of Beneficiary (as agent for the Lenders), under and subject to the terms and conditions hereinafter set forth, the Land;

TOGETHER WITH any and all buildings and improvements now or hereafter erected on the Land including, without limitation, the fixtures, attachments, appliances, equipment,

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machinery, and other articles attached to said buildings and improvements (the "Improvements"), all of which are deemed and construed to be a part of the realty (the Land and the Improvements are collectively referred to herein as the "Premises");

TOGETHER WITH all Leases (as defined in Section 2.1 below) and all Rents (as defined in Section 2.1 below);

TOGETHER WITH all interests, estates or other claims, both in law and in equity, which Grantor now has or may hereafter acquire in the Premises;

TOGETHER WITH all right, title, and interest of Grantor in (a) the property and interests in property described on Exhibit B attached hereto and incorporated herein by reference, (b) all other personal property now or hereafter owned by Grantor that is now or hereafter located on or used in connection with the Premises, (c) all other rights and interests of Grantor now or hereafter held in personal property that is now or hereafter located on or used in connection with the Premises, and (d) all proceeds thereof (such personal property and proceeds are collectively referred to in this Deed of Trust as the "Personal Property");

TOGETHER WITH all easements, rights-of-way and rights now owned or hereafter acquired by Grantor used in connection therewith or as a means of access thereto, including, without limitation, all rights pursuant to any trackage agreement and all rights to the nonexclusive use of common drive entries, and all tenements, hereditaments and appurtenances thereof and thereto, and all water and water rights and shares of stock evidencing the same;

TOGETHER WITH all leasehold estate, right, title and interest of Grantor in and to all leases, subleases, licenses, franchises and other agreements covering the Premises or any portion thereof now or hereafter existing or entered into, and all right, title and interest of Grantor thereunder including, without limitation, all cash or security deposits, advance rentals, and deposits or payments of similar nature;

TOGETHER WITH all right, title and interest now owned or hereafter acquired by Grantor in and to any greater estate in the Premises;

TOGETHER WITH all right, title and interest of Grantor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, adjoining the Premises, and any and all sidewalks, alleys and strips and gores of land adjacent to or used in connection with the Premises;

TOGETHER WITH all the estate, interest, right, title, other claim or demand, both in law and in equity, including claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Grantor now has or may hereafter acquire in the Premises, and any and all awards made for the taking by eminent domain, or by any proceeding of purchase in lieu thereof, of the whole or any part of the Trust Estate (as hereinafter defined), including, without limitation, any awards resulting from a change of grade of streets and awards for severance damages.

The entire estate, property and interest hereby conveyed to Trustee may hereafter be collectively referred to as the "Trust Estate."

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FOR THE PURPOSE OF SECURING:

(a) payment of all principal, interest, prepayment fees and other charges, late charges and loan fees, and all other sums owing under or evidenced by one or more promissory notes in the aggregate stated principal amount of $235,000,000.00, each now or hereafter executed and delivered by Borrowers to the order of one or more Lenders pursuant to the Loan Agreement (together with all other promissory notes now or hereafter given and/or executed pursuant to the terms of the Loan Agreement and/or given in substitution thereof or in modification, supplement, increase, addition, renewal or extension thereof, in whole or in part, whether one or more, as any or all of such promissory notes may from time to time be renewed, extended, supplemented, increased or modified, collectively, the "Notes") which Notes and Loan Agreement and any and all modifications, extensions, renewals, supplements, additions, and replacements thereof are by this reference hereby made a part hereof;

(b) payment of all sums advanced by Beneficiary or Lenders to protect the Trust Estate, with interest thereon from the date of the advance at the Default Rate (as defined in the Loan Agreement);

(c) payment of all sums owing by any Borrower to Beneficiary or Lenders under the Deeds of Trust (as defined in the Loan Agreement);

(d) payment of all other sums, with interest thereon, which may hereafter be loaned to Borrowers, or their successors or assigns, by Lenders, or their successors or assigns when evidenced by a promissory note or notes executed by Borrower reciting that they are secured by this Deed of Trust and/or the other Deeds of Trust;

(e) performance of every obligation, covenant or agreement of each Borrower contained herein and in the Loan Agreement and/or the other Deeds of Trust, and all supplements, amendments and modifications thereto and all extensions and renewals thereof;

(f) performance of every obligation, covenant and agreement of each Borrower contained in any agreement now or hereafter executed by a Borrower which recites that the obligations thereunder are secured by this Deed of Trust and/or the other Deeds of Trust;

(g) compliance with and performance of each and every material provision of any declaration of covenants, conditions and restrictions pertaining to the Trust Estate or any portion thereof; and

(h) all present and future debts, obligations and liabilities of Borrowers or one or more Borrowers (or any Affiliate of Borrowers or one or more Borrowers) under or relating to any and all present and future Swap Transactions and Swap Contracts which Borrowers or one or more Borrowers (or any Affiliate of Borrowers or one or more Borrowers) elects to enter into with U.S. Bank National

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Association or another Lender or any Affiliate of U.S. Bank National Association or another Lender in connection with or relating to the Loan, heretofore, now, or hereafter made, incurred, or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined.

Notwithstanding the above or anything in this Deed of Trust or any other Loan Document to the contrary, however, this Deed of Trust shall not secure (i) Borrowers' obligations under the Environmental Indemnity (as defined in the Loan Agreement), (ii) any third party guaranty of the Loan or Borrowers' obligations under the Loan Documents, or (iii) any other Loan Document that specifically states that it is not secured by this Deed of Trust. All initially capitalized terms used herein without definition are as defined in the Loan Agreement. The rate of interest of the obligation secured hereunder may vary from time to time.

This Deed of Trust is expressly made, executed and delivered pursuant and subject to and shall be construed in accordance with the provisions of Sections 55-59, 55-59.1, 55-59.2, 55-59.3, 55-59.4, 55-60 and 55-63 of the Code of Virginia (1950), as amended and now enacted as if such Sections were fully set forth and stated in this Deed of Trust. All obligations and duties imposed upon Grantor and the Trustee by such code provisions and all rights and remedies conferred upon the Beneficiary thereby and hereby are expressly affirmed. All of the terms, covenants, agreements and conditions hereinafter contained, to the extent the same may differ from or supplement such code provisions, shall be construed as providing the Beneficiary with rights and remedies additional and cumulative to those specified in such code provisions and shall not be construed in any way as excluding such code provisions or depriving the Beneficiary of any of their rights, privileges or remedies thereunder; provided, however, to the extent that any term, covenant, agreement or condition in this Deed of Trust conflicts with any such code provisions, the code provisions shall prevail.

TO PROTECT THE SECURITY OF THIS DEED OF TRUST, GRANTOR HEREBY COVENANTS AND AGREES AS FOLLOWS:

ARTICLE I

COVENANTS AND AGREEMENTS OF GRANTOR

1.1    Payment of Secured Obligations. Grantor shall pay when due the principal of and the interest on the indebtedness evidenced by the Notes, all charges, fees and other sums as provided in the Loan Documents (including, without limitation, any prepayment fee); the principal of and interest on any future advances secured by this Deed of Trust; and the principal of and interest on any other indebtedness secured by this Deed of Trust.

1.2    Maintenance, Repair, Alterations, and Compliance with Laws. Grantor shall keep the Trust Estate in good condition and repair; Grantor shall not remove, demolish or substantially alter any of the Improvements except upon the prior written consent of Beneficiary except that the foregoing shall not limit Grantor's right to undertake any tenant improvements for tenants under their leases (approved or deemed approved by Beneficiary) or any capital improvements to the Improvements; Grantor shall complete promptly and in a good

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and workmanlike manner any Improvement which may be now or hereafter constructed on the Land and promptly restore in like manner any portion of the Improvements which may be damaged or destroyed thereon from any cause whatsoever, and pay when due all claims for labor performed and materials furnished therefor; Grantor shall comply with all laws, ordinances, regulations, covenants, conditions and restrictions now or hereafter affecting the Trust Estate or any part thereof or requiring any alterations or improvements, and the requirements of insurance companies and any bureau or agency which establishes standards of insurability; Grantor shall not commit or permit any physical waste or deterioration of the Trust Estate, and shall keep and maintain abutting grounds, sidewalks, roads, parking and landscape areas in good and neat order and repair; Grantor shall not commit, suffer or permit any act to be done in or upon the Trust Estate in violation of any law, ordinance or regulation; and Grantor shall do all other acts which from the character or use of the Trust Estate may be reasonably necessary to maintain and preserve its value. Grantor shall not apply for, willingly suffer or permit any change in zoning, subdivision, or land use regulations affecting the Premises without the consent of Beneficiary. Grantor shall not drill or extract or enter into any lease for the drilling for or extraction of oil, gas or other hydrocarbon substances or any mineral of any kind or character on or from the Trust Estate or any part thereof without first obtaining Beneficiary's written consent.

1.3    Required Insurance. Grantor shall at all times provide, maintain and keep in force or cause to be provided, maintained and kept in force, at no expense to Trustee, Beneficiary or Lenders, all policies of insurance that are required pursuant to the Loan Agreement or other Loan Documents, or that are otherwise reasonably required by Beneficiary. The insurers, coverages, endorsements, certificates, liability limits and all other matters relating to such insurance policies shall be subject to the requirements set forth in Exhibit "G" to the Loan Agreement which is incorporated herein by this reference.

1.4    Delivery of Policies, Payment of Premiums.

(a)At Beneficiary's option all policies of insurance must either have attached thereto a lender's loss payable endorsement for the benefit of Beneficiary in form satisfactory to Beneficiary or must name Beneficiary as an additional insured (in each case, in accordance with the requirements of the Loan Agreement). At Beneficiary's option, Grantor shall furnish Beneficiary with an original of all policies of insurance required under Section 1.3 above or a certificate of insurance for each required policy setting forth the coverage, the limits of liability, the name of the carrier, the policy number and the period of coverage (and subject to any further requirements set forth in the Loan Agreement). If Beneficiary consents, Grantor may provide any of the required insurance through blanket policies carried by Grantor and covering more than one location, or by policies procured by a party holding under Grantor; provided, however, all such policies must be in form and substance and issued by companies reasonably satisfactory to Beneficiary. No less than 5 days prior to the expiration of each required policy, Grantor shall deliver to Beneficiary evidence satisfactory to Beneficiary of the renewal or replacement of such policy continuing insurance in the form required by this Deed of Trust and payment of premiums for any such policies within 10 days of availability of same. All such policies must contain a provision that, notwithstanding any contrary agreement between Grantor and an insurance company, such policies will not be cancelled, allowed to lapse without renewal, surrender, reduced in scope or limits of

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coverage or otherwise materially amended, without at least thirty (30) days' prior written notice to Beneficiary.

(b)In the event Grantor fails to provide, maintain, keep in force or deliver to Beneficiary the policies of insurance required by this Deed of Trust or by any Loan Document, Beneficiary may (but has no obligation to), following no less than five (5) business days prior written notice to Grantor, (provided such notice shall not be required if any policy could lapse), procure such insurance or single-interest insurance for such risks covering Beneficiary's interest, and Grantor will pay all premiums thereon promptly upon demand by Beneficiary, and until such payment is made by Grantor, the amount advanced by Beneficiary with respect to all such premiums will bear interest at the Default Rate.

1.5    Casualties; Insurance Proceeds. Grantor shall give prompt written notice thereof to Beneficiary after the occurrence of any casualty to or in connection with the Trust Estate or any part thereof, whether or not covered by insurance. In the event of such casualty, all proceeds of insurance must be payable to Beneficiary, and Grantor hereby authorizes and directs any affected insurance company to make payment of such proceeds directly to Beneficiary. If Grantor receives any proceeds of insurance resulting from such casualty, Grantor shall promptly pay over such proceeds to Beneficiary. Notwithstanding the above, provided that (i) such proceeds do not exceed $500,000 for the Trust Estate, (ii) no Event of Default exists, and (iii) the casualty does not materially impair the value of the Trust Estate, Grantor may retain such proceeds (which shall be applied to the restoration of the Improvements to the extent required to repair a casualty). At all times during the existence of an Event of Default, Beneficiary is hereby authorized and empowered by Grantor to settle, adjust or compromise any and all claims for loss, damage or destruction under any policy or policies of insurance. In the event of any damage or destruction of the Premises, Beneficiary shall apply all loss proceeds remaining after deductions of all expenses of collection and settlement thereof, including, without limitation, reasonable attorneys' and adjustors' fees and expenses, to the restoration of the Improvements but only as repairs or replacements are effected and continuing expenses become due and payable; provided that the following conditions are met: (a) no Event of Default exists that has not been cured; (b) the Loan is in Balance (taking into account all costs of reconstruction and the amount of the loss proceeds, if any, the amount of operating expenses and interest that will accrue under the Notes, and any additional funds deposited by Grantor with Beneficiary to pay for such costs of reconstruction); (c) Beneficiary has determined, in its sole discretion, that the damage or destruction can be repaired and that the damaged portion of the Improvements can be completed according to the requirements of the Loan Agreement; (d) Beneficiary and all applicable governmental authorities have approved the final plans and specifications for reconstruction of the damaged portion of the Improvements; (e) Beneficiary has approved, for the reconstruction of the damaged portion of the Improvements, in its sole discretion, the budget, the construction schedule and the construction contract; and (f) Beneficiary has determined, in its sole discretion, that after the reconstruction work is completed, the ratio of the then applicable Committed Amount to the then "As-Is" appraised value (based on evidence reasonably satisfactory to Beneficiary, including, if required by Beneficiary or Grantor, updated Appraisals approved by Beneficiary) (which approval shall not be withheld unreasonably) of the Properties does not exceed the Maximum Committed Amount Leverage Ratio (as defined in the Loan Agreement), provided Grantor may pay down the

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outstanding principal amount of the Loan, or cancel applicable undisbursed amount(s) of the Revolving Portion so that the Maximum Committed Amount Leverage Ratio is satisfied. If any one or more of such conditions set forth herein have not been met, Beneficiary will not be obligated to make any further disbursements pursuant to the Loan Agreement, and Beneficiary shall apply all loss proceeds, after deductions as herein provided, to the repayment of the outstanding balance of the Notes, (without payment of a prepayment premium other than the Interest Differential) together with all accrued interest thereon, in such order as Beneficiary may elect, notwithstanding that the outstanding balance may not be due and payable. Nothing herein contained will be deemed to excuse Grantor from repairing or maintaining the Trust Estate as provided in Section 1.2 hereof or restoring all damage or destruction to the Trust Estate, regardless of whether or not there are insurance proceeds available to Grantor or whether any such proceeds are sufficient in amount, and the application or release by Beneficiary of any insurance proceeds will not cure or waive any default or notice of default under this Deed of Trust or invalidate any act done pursuant to such notice.

1.6    Assignment of Policies Upon Foreclosure. In the event of foreclosure of this Deed of Trust or other transfer of title or assignment of the Trust Estate in extinguishment, in whole or in part, of the debt secured hereby, all right, title and interest of Grantor in and to all policies of insurance required by Section 1.3 will inure to the benefit of and pass to the successor in interest to Grantor or the purchaser or grantee of the Trust Estate.

1.7    Indemnification; Subrogation; Waiver of Offset.

(a)If Beneficiary or any Lenders are made a party to any litigation concerning the Notes, this Deed of Trust, the other Deeds of Trust, any of the Loan Documents, the Trust Estate or any part thereof or interest therein, or the occupancy of the Trust Estate by Grantor, then Grantor shall indemnify, defend and hold Beneficiary and such Lenders harmless from all liability by reason of said litigation, including reasonable attorneys' fees and expenses incurred by Beneficiary and such Lenders as a result of any such litigation, whether or not any such litigation is prosecuted to judgment. WITHOUT LIMITATION, IT IS THE INTENTION OF GRANTOR AND GRANTOR AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY WITH RESPECT TO CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF BENEFICIARY OR ANY LENDER OR ANY STRICT LIABILITY. However, Grantor will not be obligated to indemnify, defend and hold Beneficiary and such Lenders harmless from any claims which arise solely out of the gross negligence or willful misconduct of Beneficiary or such Lenders. Beneficiary and such Lenders may employ an attorney or attorneys to protect their rights hereunder, and in the event of such employment following any breach by Grantor, Grantor shall pay Beneficiary and such Lenders reasonable attorneys' fees and expenses incurred by them, whether or not an action is actually commenced against Grantor by reason of its breach. This Section 1.7 will not apply to any matters covered by the Environmental Indemnity.

(b)Grantor waives any and all right to claim or recover against Beneficiary or any Lender, its officers, employees, agents and representatives, for loss of or damage to Grantor, the Trust Estate, Grantor's property or the property of others under Grantor's control from any cause insured against or required to be insured against by the

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provisions of this Deed of Trust, EVEN IF SUCH RIGHT TO CLAIM ARISES AS A RESULT OF THE NEGLIGENCE OF BENEFICIARY, LENDERS, OR THEIR RESPECTIVE OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES.

(c)All sums payable by Grantor pursuant to this Deed of Trust must be paid without notice, demand, counterclaim, setoff, deduction or defense and without abatement, suspension, deferment, diminution or reduction, and the obligations and liabilities of Grantor hereunder will in no way be released, discharged or otherwise affected (except as expressly provided herein) by reason of: (i) any damage to or destruction of or any condemnation or similar taking of the Trust Estate or any part thereof; (ii) any restriction or prevention of or interference by any third party with any use of the Trust Estate or any part thereof; (iii) any title defect or encumbrance or any eviction from the Premises or any part thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to Beneficiary or any Lender, or any action taken with respect to this Deed of Trust by any trustee or receiver of Beneficiary, or by any court, in any such proceeding; (v) any claim which Grantor has or might have against Beneficiary or any Lender; (vi) any default or failure on the part of Beneficiary or any Lender to perform or comply with any of the terms hereof or of any other agreement with Grantor; or (vii) any other occurrence whatsoever, whether similar or dissimilar to the foregoing; whether or not Grantor has notice or knowledge of any of the foregoing. Except as expressly provided herein, Grantor waives all rights now or hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution or reduction of any sum secured hereby and payable by Grantor.

1.8    Taxes and Impositions.

(a)Grantor shall pay, or cause to be paid prior to delinquency, all real property taxes and assessments, general and special, and all other taxes and assessments of any kind or nature whatsoever, including, without limitation, nongovernmental levies or assessments such as maintenance charges, levies or charges resulting from covenants, conditions and restrictions affecting the Trust Estate, which are assessed or imposed upon the Trust Estate, or become due and payable, and which create, may create or appear to create a lien upon the Trust Estate, or any part thereof, or upon any person, property, equipment or other facility used in the operation or maintenance thereof (all the above collectively hereinafter referred to as "Impositions"); provided, however, that if, by law any such Imposition is payable, or may at the option of the taxpayer be paid, in installments, Grantor may pay the same or cause it to be paid, together with any accrued interest on the unpaid balance of such Imposition, in installments before any fine, penalty, interest or cost may be added thereto for the nonpayment of any such installment and interest.

(b)If at any time after the date hereof there is assessed or imposed (i) a tax or assessment on the Trust Estate in lieu of or in addition to the Impositions payable by Grantor pursuant to Section 1.8(a), or (ii) a license fee, tax or assessment imposed on Beneficiary or any Lender and measured by or based in whole or in part upon the amount of the outstanding obligations secured hereby, then all such taxes,

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assessments or fees will be deemed to be included within the term "Impositions" as defined in Section 1.8(a) and Grantor shall pay and discharge the same as herein provided with respect to the payment of Impositions. If Grantor fails to pay such Impositions prior to delinquency, Beneficiary may at its option declare all obligations secured hereby together with all accrued interest thereon, immediately due and payable. Anything to the contrary herein notwithstanding, Grantor will have no obligation to pay any franchise, estate, inheritance, income, excess profits or similar tax levied on Beneficiary or any Lender or on the obligations secured hereby.

(c)Subject to the provisions of Section 1.8(d) and upon request by Beneficiary, Grantor shall deliver to Beneficiary before any such Imposition is due and payable official receipts of the appropriate taxing authority, or other proof reasonably satisfactory to Beneficiary, evidencing the payment thereof.

(d)Grantor has the right before any delinquency occurs to contest or object to the amount or validity of any such Imposition by appropriate proceedings, but this will not be deemed or construed in any way as relieving, modifying or extending Grantor's covenant to pay any such Imposition at the time and in the manner provided in this Section 1.8, unless Grantor has given prior written notice to Beneficiary of Grantor's intent to so contest or object to an Imposition, and unless, at Beneficiary's sole option, (i) Grantor demonstrates to Beneficiary's reasonable satisfaction that the proceedings to be initiated by Grantor will conclusively operate to prevent the sale of the Trust Estate, or any part thereof, to satisfy such Imposition prior to final determination of such proceedings; or (ii) Grantor furnishes a good and sufficient bond or surety as requested by and reasonably satisfactory to Beneficiary; or (iii) Grantor demonstrates to Beneficiary's reasonable satisfaction that Grantor has provided as good and sufficient undertaking as may be required or permitted by law to accomplish a stay of any such sale.

(e)[Intentionally Deleted].

(f)Grantor shall not suffer, permit or initiate the joint assessment of any real and personal property which may constitute all or a portion of the Trust Estate or suffer, permit or initiate any other procedure whereby the lien of the real property taxes and the lien of the personal property taxes will be assessed, levied or charged to the Trust Estate as a single lien.

(g)Upon the request of Beneficiary, Grantor shall promptly cause to be furnished to Beneficiary, at Grantor's expense, a tax reporting service covering the Trust Estate of the type, duration and with a company satisfactory to Beneficiary.

1.9    Utilities. Grantor shall pay or shall cause to be paid when due all utility charges that are incurred by Grantor for the benefit of the Trust Estate or that may become a charge or lien against the Trust Estate for gas, electricity, water or sewer services furnished to the Trust Estate and all other assessments or charges of a similar nature, whether public or private, affecting or related to the Trust Estate or any portion thereof, whether or not such taxes, assessments or charges are or may become liens thereon.

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1.10    Actions Affecting Trust Estate. Grantor shall give Beneficiary and Trustee prompt written notice of the assertion of any claim with respect to, or the filing of any action or proceeding purporting to affect the Trust Estate, the security hereof or the rights or powers of Beneficiary or Trustee. Grantor shall appear in and contest any such action or proceeding and shall pay all costs and expenses, including cost of evidence of title and attorneys' fees, in any such action or proceeding in which Beneficiary or Trustee may appear.

1.11    Actions By Beneficiary to Preserve Trust Estate. If Grantor fails to make any payment or to do any act as and in the manner provided in any of the Loan Documents, Beneficiary, in its own discretion, without obligation so to do, without releasing Grantor from any obligation, and without notice to or demand upon Grantor, may make or do the same in such manner and to such extent as it may deem necessary to protect the security hereof, provided Beneficiary shall send one Business Day prior written notice of same to Grantor. In connection therewith (without limiting its general powers, whether conferred herein, in other Loan Documents or by law), during the continuance of an Event of Default, and subject to the rights of tenants under their leases, Beneficiary has and is hereby given the right, but not the obligation, following written notice to Grantor (i) to enter upon and take possession of the Trust Estate in accordance and compliance with applicable law; (ii) to make additions, alterations, repairs and improvements to the Trust Estate that it may consider necessary or proper to keep the Trust Estate in good condition and repair; (iii) to appear and participate in any action or proceeding affecting or that may affect the security hereof or the rights or powers of Beneficiary or Trustee; (iv) to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or debt that in the judgment of Beneficiary may affect or appears to affect the security of this Deed of Trust or be prior or superior hereto; and (v) in exercising such powers, to pay necessary expenses, including attorneys' fees and costs or other necessary or desirable consultants. Grantor shall, immediately upon demand therefor by Beneficiary, pay to Beneficiary an amount equal to all costs and expenses reasonably incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing rights, including, without limitation, costs of evidence of title, court costs, appraisals, surveys and receiver's, trustee's and attorneys' fees, together with interest thereon from the date of such expenditures at the Default Rate.

1.12    Transfer of Trust Estate Or Ownership Interests by Grantor. In order to induce Lenders to make the loan secured hereby, Grantor agrees that, in the event of any "transfer" (as defined below), without the prior written consent of Beneficiary, Beneficiary has the absolute right at its option, without prior demand or notice, to declare all sums secured hereby immediately due and payable. Consent to one such transfer will not be deemed to be a waiver of the right to require consent to future or successive transfers. Beneficiary may grant or deny such consent in its sole discretion, and may impose any conditions to such consent in its sole discretion (including, without limitation, changes to the terms of the loan and the imposition of fees) and, if consent should be given, any such transfer will be subject to this Deed of Trust, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption will not, however, release Grantor or any maker or guarantor of the Notes from any liability thereunder without the prior written consent of Beneficiary. As used herein, "transfer" includes the direct or indirect sale, agreement to sell, transfer, conveyance, pledge, mortgage, encumbrance, lien, collateral assignment or hypothecation of the Trust Estate, or any portion thereof or interest therein (other than the Permitted Encumbrances), whether voluntary, involuntary, by operation of law or otherwise, the

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execution of any installment land sale contract or similar instrument affecting all or a portion of the Trust Estate, or the lease of all or substantially all of the Trust Estate (excluding, however, any leases entered into in accordance with the requirements of the Loan Agreement, and any other transfers that are specifically permitted by the terms of the Loan Agreement). The term "transfer" also includes the direct or indirect transfer, assignment, withdrawal, hypothecation or conveyance of legal or beneficial ownership of any membership, partnership, stock or other ownership interest (an "ownership interest") that results in a change in control of Grantor or in any member or partner of Grantor (excluding, however, transfers of stock or limited partnership interests in a publicly traded company, or a change in control of a publicly traded company). Notwithstanding anything stated to the contrary in this Deed of Trust or in any of the other Loan Documents, any transfers (or the pledge or encumbrance ) of equity interests or other interests in KBS II REIT ACQUISITION V, LLC, or in any of the direct or indirect owners of KBS II REIT Acquisition V, LLC (including, without limitation, KBS REIT Properties II, LLC, KBS Limited Partnership II or KBS Real Estate Investment Trust II, Inc.) shall not be prohibited (and shall be expressly permitted) provided that KBS Real Estate Investment Trust II, Inc. continues to own, either directly or indirectly, 100% of the ownership interests in Grantor.

1.13    Full Performance Required; Survival of Warranties. All representations, warranties and covenants of Grantor contained in any loan application or made to Beneficiary or Lenders in connection with the loan secured hereby or contained in the Loan Documents or incorporated by reference therein, will survive the execution and delivery of this Deed of Trust and will remain continuing obligations, warranties and representations of Grantor so long as any portion of the obligations secured by this Deed of Trust remains outstanding.

1.14    Eminent Domain. If any proceeding or action is commenced for the taking of the Trust Estate, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, condemnation or otherwise, or if the same is taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner, or should Grantor receive any notice or other information regarding such proceeding, action, taking or damage, Grantor shall give prompt written notice thereof to Beneficiary. If an Event of Default exists, Beneficiary is entitled at its option, if Beneficiary determines its security is impaired, to commence, appear in and prosecute in its own name any such action or proceeding. If an Event of Default exists, Beneficiary is also entitled to make any compromise or settlement in connection with such taking or damage. All compensation, awards, damages, rights of action and proceeds awarded to Grantor by reason of any such taking or damage to the Premises or any part thereof or any interest therein for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other manner (the "Condemnation Proceeds") are hereby assigned to Beneficiary and Grantor agrees to execute such further assignments of the Condemnation Proceeds as Beneficiary or Trustee may require. After deducting therefrom all costs and expenses (regardless of the particular nature thereof and whether incurred with or without suit), including attorneys' fees, incurred by it in connection with any such action or proceeding, Beneficiary shall apply all such Condemnation Proceeds to the restoration of the Improvements (other than Condemnation Proceeds attributable to temporary use or occupancy which may be applied, at Beneficiary's option, to installments of principal and interest and other charges due under the Notes and other Loan Documents when the same become due and payable, without payment of a prepayment premium other than the Interest Differential) provided that:

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(a)the taking or damage will not, in Beneficiary's reasonable judgment, materially impair the security for the Loan; and

(b)all conditions set forth in Section 1.5 are met.

If all of the above conditions are met, Beneficiary shall disburse the Condemnation Proceeds in accordance with the Loan Agreement and only as repairs or replacements are effected and continuing expenses become due and payable. If any one or more of the above conditions are not met, Beneficiary shall apply all of the Condemnation Proceeds, after deductions as herein provided, to the repayment of the outstanding balance of the Notes (without payment of prepayment premiums other than the Interest Differential), together with all accrued interest thereon, in such order as Beneficiary may elect, notwithstanding that said outstanding balance may not be due and payable, and Beneficiary will have no further obligation to make disbursements pursuant to the Loan Agreement or the other Loan Documents. If the Condemnation Proceeds are not sufficient to repay the portion of the Loan allocable to the Trust Estate covered by this Deed of Trust and Beneficiary or Lenders have determined that its security for the Loan is materially impaired, Grantor shall immediately pay any such remaining balance allocable to the Trust Estate, together with all accrued interest thereon. Application or release of the Condemnation Proceeds as provided herein will not cure or waive any default or notice of default hereunder or under any other Loan Document or invalidate any act done pursuant to such notice. Notwithstanding the above, provided the Condemnation Proceeds do not exceed $500,000 for the Trust Estate, no Event of Default exists, and the taking has not materially impaired the value of the Trust Estate, Grantor may retain such Condemnation Proceeds.

1.15    Additional Security. No other security now existing, or hereafter taken, to secure the obligations secured hereby will be impaired or affected by the execution of this Deed of Trust; and all additional security will be taken, considered and held as cumulative. The taking of additional security, execution of partial releases of the security, or any extension of the time of payment of the indebtedness will not diminish the force, effect or lien of this Deed of Trust and will not affect or impair the liability of any maker, surety or endorser for the payment of said indebtedness. If Beneficiary at any time holds additional security for any of the obligations secured hereby, Beneficiary may enforce the sale thereof or otherwise realize upon the same, at its option, either before, concurrently, or after a sale is made hereunder.

1.16    Appointment of Successor Trustee. Beneficiary may, from time to time, by a written instrument executed and acknowledged by Beneficiary and recorded in the County in which the Trust Estate is located and by otherwise complying with the provisions of applicable law, substitute a successor or successors to any Trustee named herein or acting hereunder; and said successor will, without conveyance from the Trustee predecessor, succeed to all title, estate, rights, powers and duties of said predecessor.

1.17    Successors and Assigns. This Deed of Trust applies to, inures to the benefit of (subject, however, to all restrictions on transfer provided in Section 1.12) and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Beneficiary" includes the present agent and all future agents of the Lenders pursuant

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to the provisions of the Loan Agreement, whether or not named as Beneficiary herein. This Section 1.17 will not be deemed a waiver of the provisions of Section 1.12 hereof.

1.18    Inspections. Beneficiary, or its agents, representatives or workers, are authorized to, upon no less than twenty-four (24) hours prior written notice to Grantor, and subject to the rights of tenants under their leases and, if no Event of Default exists, at Beneficiary's sole cost and expense, enter at any reasonable time upon or in any part of the Trust Estate for the purpose of inspecting the same and for the purpose of performing any of the acts it is authorized to perform hereunder or under the terms of any of the Loan Documents.

1.19    Liens. Grantor shall pay and promptly discharge, at Grantor's cost and expense, all liens, encumbrances and charges (collectively, "Liens") upon the Trust Estate, or any part thereof or interest therein; provided, however, that Grantor has the right to contest in good faith and with reasonable diligence the validity of any such Liens, and pending such contest Grantor shall not be deemed in default hereunder if Grantor, within twenty (20) days of Beneficiary's written request, obtains an appropriate surety bond and takes all other actions required to remove and release such Lien as an encumbrance against all and any portion of the Trust Estate; provided, further, however, Beneficiary and Lenders will not be required to make any further disbursements of the Loan until all such Liens have been removed as encumbrances against all and any portion of the Trust Estate, and have been insured against by the Title Company to Beneficiary's satisfaction. In the case of stop notices, Grantor has the right to contest, in good faith and with reasonable diligence, the validity of any stop notice, provided Grantor has filed with Beneficiary a bond in form and amount sufficient to release such stop notice. Grantor shall cause any such stop notice to be released within twenty (20) days of Beneficiary's request, and, without limiting the foregoing, neither Beneficiary nor Lenders shall have any obligation to make any further disbursements of the Loan until all stop notices have been fully released or discharged. Notwithstanding the foregoing or anything else contained in this Agreement which may be construed to the contrary, in the event that any action or other proceeding is instituted to enforce or foreclose any Lien against any of the Trust Estate, the Grantor shall immediately (and in any event within five business days of request by Beneficiary, or five days prior to any scheduled foreclosure sale, whichever is sooner) make such payments, obtain such surety bonds and/or take such other action as Beneficiary may, in its sole discretion, require in order to release the Lien. If Grantor fails to remove and discharge any such Lien or stop notice as required above, then, in addition to any other right or remedy of Beneficiary, Beneficiary may, but is not obligated to, but subject to Grantor's right to contest the same, discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of such Lien or stop notice by depositing in a court a bond or the amount claimed or otherwise giving security for such claim, or by procuring such discharge in such manner as is or may be prescribed by law. Grantor shall, immediately upon demand therefor by Beneficiary, pay to Beneficiary an amount equal to all costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing right to discharge any such Lien or stop notice together with interest thereon from the date of such expenditure at the Default Rate.

1.20    Intentionally Omitted.

1.21    Beneficiary's Powers. Without affecting the liability of any other person

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liable for the payment of any obligation herein mentioned, and without affecting the lien or charge of this Deed of Trust upon any portion of the Trust Estate not then or theretofore released as security for the full amount of all unpaid obligations, Beneficiary or any Lender may, from time to time and without notice (i) release any person so liable, (ii) extend the maturity or alter any of the terms of any such obligation, (iii) grant other indulgences, (iv) release or reconvey, or cause to be released or reconveyed at any time at Beneficiary's option any parcel, portion or all of the Trust Estate, (v) take or release any other or additional security for any obligation herein mentioned, or (vi) make compositions or other arrangements with debtors in relation thereto. For purposes of clarification, this Section 1.21 does not grant Beneficiary the right to modify the terms of the Loan without Grantor's consent.

1.22    Financial Statements. Grantor shall deliver to Beneficiary copies of such financial statements, balance sheets, profit and loss statements, operating statements, income and expense statements and other financial information in reasonable detail and at the times required by the Loan Agreement. All such statements must be prepared in accordance with the requirements of the Loan Agreement and Beneficiary has the right to audit and inspect all books and records relating thereto, provided, if no Event of Default exists, such audit and inspection shall be at its sole cost and expense.

1.23    Trade Names. At the request of Beneficiary, Grantor shall execute a certificate in form satisfactory to Beneficiary listing the trade names or fictitious business names under which Grantor intends to operate the Trust Estate or any business located thereon and representing and warranting that Grantor does business under no other trade names or fictitious business names with respect to the Trust Estate. Grantor shall immediately notify Beneficiary in writing of any change in said trade names or fictitious business names, and will, upon request of Beneficiary, execute any additional financing statements and other certificates necessary to reflect the change in trade names or fictitious business names.

1.24    Leasehold. If a leasehold estate constitutes a portion of the Trust Estate, Grantor agrees not to amend, change, terminate or modify such leasehold estate or any interest therein without the prior written consent of Beneficiary. Consent to one amendment, change, agreement or modification will not be deemed to be a waiver of the right to require consent to other, future or successive amendments, changes, agreements or modifications. Grantor shall perform all obligations and agreements under said leasehold and shall not take any action or omit to take any action which would effect or permit the termination of said leasehold. Grantor agrees to promptly notify Beneficiary in writing with respect to any default or alleged default by any party thereto and to deliver to Beneficiary copies of all notices, demands, complaints or other communications received or given by Grantor with respect to any such default or alleged default. Beneficiary has the option to cure any such default and to perform any or all of Grantor's obligations thereunder. All sums expended by Beneficiary or Lenders in curing any such default will be secured hereby and will be immediately due and payable without demand or notice and will bear interest from date of expenditure at the Default Rate.

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ARTICLE II

ASSIGNMENT OF RENTS AND LEASES

2.1    Assignment. Grantor does hereby absolutely, unconditionally and irrevocably grant, convey, assign, transfer and set over unto Beneficiary the following, as security for the payment and performance of the obligations secured by this Deed of Trust:

(a)all rights, title, interests, estates, powers, privileges, options and other benefits of Grantor in, to and under any and all leases, subleases, licenses, concessions, tenancies and any other agreements creating the right of possession without a transfer of title, whether oral or written, and whether now or hereafter existing, which cover or affect all or any portion of the Premises, together with all renewals, extensions, modifications, amendments, guaranties, subleases and assignments thereof (herein collectively referred to as the "Leases"); and

(b)all of the rents, income, receipts, revenues, issues, profits and other sums of money (hereinafter collectively called the "Rents") that are now and/or at any time hereafter become due and payable to Grantor under the terms of the Leases or arising or issuing from or out of the Leases or from or out of the Premises or any part thereof, including but not limited to minimum rents, additional rents, percentage rents, deficiency rents and liquidated damages following default, security deposits, advance rents, all proceeds payable under any policy of insurance covering loss of rents resulting from untenantability caused by destruction or damage to the Premises and all of Grantor's rights to recover monetary amounts from any lessee in bankruptcy, conservatorship, receivership or similar proceeding including, without limitation, rights of recovery for use and occupancy and damage claims arising out of lease defaults, including rejections, disaffirmances, repudiations, and similar actions, under the Federal Bankruptcy Code, the Federal Deposit Insurance Act and other statutes governing the rights of creditors, including specifically the immediate and continuing right to collect and receive each and all of the foregoing.

2.2    Grantor hereby represents and warrants unto Beneficiary and Lenders that: (i) Grantor is the sole owner of the entire lessor's interest in the Leases and has good title and good right to assign the Leases and Rents hereby assigned and no other person or entity has any right, title or interest therein; (ii) Grantor has duly and punctually performed all of the terms, covenants, conditions and warranties of the Leases that were to be kept, observed and performed by it to date; (iii) Grantor has not at any time prior to the date hereof exercised any right to subordinate any Lease to any deed of trust or mortgage or any other encumbrance of any kind; (iv) Grantor has not executed any prior assignments of the Leases or the Rents; (v) except as disclosed to Beneficiary in writing (and approved or deemed approved by Beneficiary) no Rents owing under any existing Lease for any period subsequent to the date hereof (other than the first month's rent or the current month's rent) has been collected in advance; (vi) Grantor has not performed any act or executed any other instrument which might prevent Beneficiary from enjoying and exercising any of its rights and privileges evidenced hereby; and (vii) except as disclosed to Beneficiary in writing, each of the existing Leases are valid and subsisting and in full force and effect and unmodified, there exists no defense, counterclaim or set-off to the payment of the Rents thereunder, there are no defaults now existing thereunder and no event has

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occurred which with the passage of time or the giving of notice, or both, would constitute such a default.

2.3    Grantor agrees that, so long as the indebtedness evidenced by the Notes or any part thereof or any other indebtedness secured by this Deed of Trust shall remain unpaid, Grantor shall not (and any such actions taken by Grantor in violation of the following provisions shall be null and void), unless Beneficiary consents thereto in advance in writing in Beneficiary's sole discretion: (i)  to the extent the same is prohibited under the terms of the Loan Agreement enter into any Lease covering any portion of the Premises, nor renew or extend the term of any Lease (unless an option therefor was originally reserved by the lessee in the Lease), or relocate or expand the floor space of any lessee under a Lease within the Premises (unless an option therefor was originally reserved by the lessee in the Lease); (ii) make any assignment, pledge or disposition of the Leases or the Rents; (iii) subordinate any of the Leases to any deed of trust or mortgage or any other encumbrance of any kind or permit, consent or agree to such subordination; (iv) to the extent the same is prohibited under the terms of the Loan Agreement reduce the Rents payable under any of the Leases, nor modify, alter or amend any of the Leases or waive, excuse, condone, discount, set off, compromise or in any manner release or discharge any lessee under any Lease of and from any obligations, covenants, conditions and agreements to be kept, observed and performed by such lessee, including the obligation to pay the Rents thereunder in the manner and at the place and time specified therein; (v) incur any indebtedness to a lessee under or guarantor of any Lease which may under any circumstance be used as an offset against the Rents or other payments due under said Lease; (vi) to the extent the same is prohibited under the terms of the Loan Agreement exercise any option required or permitted by the terms of any of the Leases without the prior written consent of Beneficiary; (vii) receive or collect any Rents from any present or future lessee of the Premises or any part thereof for a period of more than one month in advance of the date on which such payment is due; (ix) to the extent the same is prohibited under the terms of the Loan Agreement cancel or terminate any of the Leases, accept a surrender thereof, commence an action of ejectment or any summary proceedings for dispossession of a lessee under any of the Leases, or convey or transfer or suffer or permit a conveyance or transfer of the premises demised thereby or of any interest therein so as to effect directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of the obligations of any lessee thereunder; (x) to the extent the same is prohibited under the terms of the Loan Agreement consent to an assignment or sublease of the interest and estate of any lessee under any of the Leases, whether or not in accordance with its terms; or (xi) modify or change the terms of any guaranty of any of the Leases or cancel or terminate such guaranty.

2.4    Grantor covenants with Beneficiary, for so long as the indebtedness evidenced by the Notes or any part thereof or any other indebtedness secured by this Deed of Trust or the other Deeds of Trust shall remain unpaid, that Grantor shall: (i) observe and perform duly and punctually all the obligations imposed upon any lessor under the Leases and not to do or permit to be done anything to impair the value thereof; (ii) enforce the performance of each and every term, provision, covenant, agreement and condition in Leases to be performed by any lessee thereunder; (iii) appear in and defend any action or proceeding arising under, occurring out of or in any manner connected with any of the Leases, or the obligations, liabilities or duties of Grantor or any lessee under the Leases and, upon request by Beneficiary, to make appearance in the name and on behalf of Beneficiary, but at the expense of Grantor; (iv) exercise any option

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or election contained in or relating to any of the Leases which Beneficiary shall require; (v) upon written request by Beneficiary, deliver to Beneficiary executed copies of any and all Leases, renewals and extensions of existing Leases and any and all subsequent Leases upon all or any part of the Premises; (vi) deliver to Beneficiary, promptly upon request by Beneficiary, duly executed tenant estoppel certificates with respect to Leases designated by Beneficiary to the extent the same is required under the terms of the Loan Agreement; (vii) if an Event of Default occurs and the Loan has been accelerated, deliver to Beneficiary, promptly upon request by Beneficiary, all security deposits held by Grantor pursuant to the terms of the Leases, which Beneficiary shall hold and disburse in accordance with the terms of the Leases; (viii) execute and deliver at the request of Beneficiary all such further assignments and other documents, instruments and assurances with respect to the Leases, Rents and Premises as Beneficiary shall from time to time require in order to effectuate the purposes of this Article; and (ix) if an Event of Default occurs, promptly upon request by Beneficiary, deliver other records and instruments, including but not limited to rent rolls and books of account, that Beneficiary shall from time to time require.

2.5    This is a present, absolute, effective, irrevocable and completed assignment by Grantor to Beneficiary of the Leases and Rents and of the right to collect and apply the same, which is not contingent upon Beneficiary being in possession of the Premises. However, so long as there exists no Event of Default, Grantor shall have a conditional license to collect, but not more than one (1) month in advance, all Rents from the Premises, in trust for Beneficiary, and to use the same for payment of Impositions, insurance premiums which Grantor is required to pay hereunder or under the other Loan Documents, all amounts owing to Beneficiary or Lenders under the Notes and the other Loan Documents, and all other costs and expenses relating to the Premises which Grantor is required to pay under the Loan Documents, as and when due, before using said Rents for any other purpose.

2.6    Upon or at any time after and during the continuance of an Event of Default, or if any representation or warranty made by Grantor to Beneficiary in connection with the loan evidenced by the Notes is untrue in any material respect, Beneficiary may, at its option, but without obligation to do so, without notice to or consent of Grantor, either in person or by agent, without regard for the adequacy of the security for the indebtedness secured hereby, the commission of waste or the solvency of Grantor, with or without bringing any action or proceeding, or by a receiver or trustee to be appointed by a court, enter upon, take possession of, maintain, manage and operate the Premises, make, execute, enforce, modify, alter, cancel and accept the surrender of Leases (whether or not the same extend beyond the term of this Deed of Trust), obtain or evict tenants, fix or modify Rents, refund and collect security deposits, and do any acts which Beneficiary deems proper to protect the security hereof, and during the continuance of an Event of Default, either with or without taking possession of the Premises, in its own name or in the name of Grantor, sue for or otherwise demand, collect, receive, and give receipts for all Rents, and apply the same upon the costs of collection thereof, including the fees and costs of agents and attorneys employed by Beneficiary; upon the costs of managing, operating and leasing the Premises, including taxes, insurance, maintenance, repairs, improvements, the fees of professional managing agents, architects, engineers and appraisers, license and permit fees, leasing fees and commissions, and Beneficiary's out-of-pocket expenses; and upon any indebtedness secured hereby, in such order as Beneficiary may determine, subject to applicable statutory requirements, if any. Beneficiary or such a receiver shall be entitled to

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remain in possession of the Premises and to collect the Rents throughout any statutory period of redemption from a foreclosure sale. The entering upon and taking possession of the Premises, the collection of such Rents and the application thereof as aforesaid shall not cure or waive any Event of Default, or invalidate any act done pursuant to such Event of Default or notice of default. Beneficiary may, without entering into possession or pursuing any other remedy as provided in this section or at law or in equity, or in conjunction with such possession or pursuit of other remedy, give notice to any or all lessees authorizing and directing said lessees to pay Rents directly to Beneficiary. If a lessee receives such a notice, Grantor hereby directs such lessee to make payment pursuant thereto, and it shall be conclusively presumed, as between Grantor and such lessee, that such lessee is obligated and entitled to make such payment to Beneficiary, and that such payment constitutes payment of Rents under the Lease in question. Such notice may be given either in Beneficiary's or in Grantor's name. Grantor shall in every way facilitate the payment of Rents to Beneficiary, when Beneficiary has the right to receive the same hereunder. Beneficiary shall be accountable only for Rents actually collected hereunder and not for the rental value of the Premises. Beneficiary shall not be liable for any security deposit made by any lessee unless and until Beneficiary comes into actual, physical possession and control thereof. Failure of Beneficiary to collect, or discontinuance by Beneficiary from collecting, at any time, and from time to time, any Rents, shall not in any manner affect the rights of Beneficiary to thereafter collect the same.

2.7    During the existence of an Event of Default, Beneficiary shall have the right to take possession of and use, without rental or charge, any fixtures, equipment, furniture, appliances, personal property, books of account and records of Grantor or its agents located in or constituting a part of the Premises in connection with Beneficiary's occupancy, management and operation of the Premises. Beneficiary shall be deemed to be the creditor of any lessee in respect of any assignment for the benefit of creditors and any bankruptcy, arrangement, reorganization, insolvency, dissolution, receivership or other debtor‑relief proceeding affecting such lessee; provided, however, that Beneficiary shall not be obligated to file timely claims in such proceedings or to otherwise pursue any creditor's rights therein.

2.8    Grantor shall, at Grantor's sole cost and expense, appear in and defend any dispute, action or proceeding arising under, growing out of or in any manner connected with or affecting any of the Leases or the obligations, duties or liabilities of Grantor or any lessee thereunder, and shall pay all costs and expenses of Beneficiary, including attorneys' fees (prior to trial, at trial and on appeal), in connection with any such dispute, action or proceeding in which Beneficiary may appear or with respect to which it may otherwise incur costs or expenses, whether or not Beneficiary prevails therein.

2.9    Should Grantor fail to make any payment or to do any act as herein provided, then Beneficiary may, but without obligation to do so, without notice or demand to or upon Grantor, and without releasing Grantor from any obligation hereof, make or do the same in such manner and to such extent as Beneficiary may deem necessary or desirable to protect the security hereof, including specifically, without limiting its general powers, appearing in and defending any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary, and observing, performing and discharging all or any of the obligations, covenants and agreements of Grantor in the Leases, provided Beneficiary shall give Grantor one Business Day prior written notice of same. In exercising any such powers, Beneficiary may pay

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its costs and expenses, employ counsel and incur and pay attorneys' fees (prior to trial, at trial and on appeal), and shall receive reimbursement thereof from Grantor upon demand. Grantor hereby grants to Beneficiary an irrevocable power of attorney, coupled with an interest, to perform all of the acts and things provided for in this Article as Grantor's agent and in Grantor's name.

2.10    Grantor agrees to reimburse Beneficiary and Lenders, upon demand, for all sums expended by Beneficiary and Lenders under the authority hereof, together with interest thereon at the Default Rate specified in the Loan Agreement from the date expended, and the same shall be added to the indebtedness evidenced by the Notes and shall be secured by this Deed of Trust.

2.11    BENEFICIARY SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY GRANTOR RESULTING FROM BENEFICIARY'S FAILURE TO LET THE PREMISES, OR ANY PART THEREOF, OR FROM ANY OTHER ACT OR OMISSION OF BENEFICIARY UNDER OR RELATING TO THE LEASES (REGARDLESS OF WHETHER SUCH LOSS IS THE RESULT OF BENEFICIARY'S NEGLIGENCE) UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BENEFICIARY, NOR SHALL BENEFICIARY BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY UNDER THE LEASES BY REASON OF THIS INSTRUMENT OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER. Beneficiary shall not be liable for its failure to collect, or its failure to exercise diligence in the collection of, Rents under the Leases, but shall be accountable only for Rents that Beneficiary actually receives. Grantor will indemnify and hold harmless Beneficiary (for purposes of this paragraph, the term "Beneficiary" shall include the directors, officers, partners, employees and agents of Beneficiary and any persons or entities owned or controlled by, owning or controlling, or under common control or affiliated with Beneficiary) from and against, and reimburse Beneficiary for, all claims, demands, liabilities, losses, damages, causes of action, judgments, penalties, costs and expenses (including, without limitation, reasonable attorneys' fees) incurred under the Leases by reason of this instrument or the exercise of rights or remedies hereunder, or which may be asserted against Beneficiary by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases, including specifically any obligation or responsibility for any security deposits or other deposits delivered to Grantor by any lessee under any Lease and not assigned and delivered to Beneficiary. THE RELEASES AND INDEMNITIES CONTAINED IN THIS PARAGRAPH SHALL INCLUDE CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) RESULTING FROM THE NEGLIGENCE OF BENEFICIARY OR ANY STRICT LIABILITY, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BENEFICIARY. The foregoing releases and indemnities shall not terminate upon release or other termination of the assignment pursuant to this paragraph. Any amount to be paid under this paragraph by Grantor to Beneficiary shall be a demand obligation owing by Grantor to Beneficiary, shall bear interest from the date such amount becomes due until paid at the Default Rate stated in the Notes, and shall be secured by this Deed of Trust and by any other instrument securing the Notes. The assignment pursuant to this paragraph shall not operate to place responsibility upon Beneficiary

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for the control, care, management or repair of the Premises, nor for the carrying out of any of the terms and conditions of the Leases; nor shall it operate to make Beneficiary responsible or liable for any waste committed on the Premises by the tenants or by any other parties or for any dangerous or defective condition of the Premises, or for any negligence in the management, upkeep, repair or control of the Premises resulting in loss or injury or death to any tenant, licensee, employee or stranger. Beneficiary shall not be deemed to be a partner of, or a joint venturer with, Grantor with respect to the Premises or to be a participant of any kind in the management or operation of the Premises. Neither this assignment, nor the exercise by Beneficiary of its rights hereunder, shall be deemed to constitute Beneficiary a mortgagee in possession of the Premises, unless Beneficiary elects in writing to be so constituted.

2.12    The assignment pursuant to this Article is primary in nature to the obligation evidenced and secured by the Notes, this Deed of Trust and any other document given to secure and collateralize the indebtedness secured by this Deed of Trust. Grantor agrees that Beneficiary may enforce this assignment without first resorting to or exhausting any other security or collateral; provided however, that nothing herein contained shall prevent Beneficiary from suing on the Notes, foreclosing this Deed of Trust and/or exercising any other right under any document securing the payment of the Notes or at law or equity.

2.13    In the event any lessee under the Leases relating to a Lease for more than 50,000 square feet should be the subject of any proceeding under the Federal Bankruptcy Code or any other federal, state or local statute which provides for the possible termination or rejection of any of the Leases assigned hereby, Grantor covenants and agrees that if any Lease is so rejected, no settlement for damages shall be made without the prior written consent of Beneficiary (which shall not be unreasonably withheld or delayed and which consent shall be deemed to have been given if Beneficiary does not notify Grantor of its decision within five (5) Business Days after Grantor's request for such consent), and any check in payment of damages for rejection of any such Lease will be made payable to both Grantor and Beneficiary. Grantor hereby assigns any such payment to Beneficiary and further covenants and agrees that upon the request of Beneficiary, it will duly endorse to the order of Beneficiary any such check, the proceeds of which will be applied to the Notes and other indebtedness secured by this Deed of Trust, principal, interest, attorneys' and collection fees and other amounts, in such order as Beneficiary in its sole discretion may determine.

2.14    Nothing contained herein and no act done or omitted by Beneficiary pursuant to the powers and rights granted it hereunder shall be deemed to be a waiver by Beneficiary or Lenders of their rights and remedies under the Notes or a waiver or curing of any default hereunder or under the Notes, and the assignment pursuant to this Article is made and accepted without prejudice to any of the rights and remedies possessed by Beneficiary or Lenders under the terms of the Notes. The right of Beneficiary to collect said principal sum, interest and indebtedness and to enforce any other security therefor held by it may be exercised by Beneficiary either prior to, simultaneously with, or subsequent to any action taken by it hereunder.

2.15    Notwithstanding (a) the fact that any Lease or the leasehold estate created thereby may be held, directly or indirectly, by or for the account of any person or entity which shall have an interest in the fee estate of the Premises, (b) the operation of law or (c) any other

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event, lessee's leasehold estate under such Lease shall not merge into the fee estate and the lessee shall remain obligated under such lease as assigned by this assignment.

2.16    Grantor and Beneficiary hereby confirm, agree and intend that the provisions of this Article 2 of this Deed of Trust comply with Section 55‑220.1 of the Code of Virginia (1950), as amended and now enacted.

ARTICLE III

REMEDIES UPON DEFAULT

3.1    Events of Default. Upon written notice to Grantor, any of the following events will constitute an Event of Default hereunder (an "Event of Default"):

(a)default in the payment of principal or interest as provided under the terms of the Notes or the Loan Agreement, which is not cured within any applicable notice and cure period, if any, provided in the Notes or the Loan Agreement with respect to such default; or

(b)a breach by Grantor of any representation, warranty or covenant in this Deed of Trust which is not cured within any applicable notice and cure period, if any, provided in the Loan Agreement with respect to such breach;

(c)a default occurs under any of the other Deeds of Trust and is not cured within any applicable notice and cure period provided for therein or in the Loan Agreement; or

(d)the occurrence of any Event of Default as defined in the other Loan Documents.

3.2    Acceleration Upon Default, Additional Remedies. Upon the occurrence of an Event of Default, Beneficiary may, at its option, declare all indebtedness secured hereby to be immediately due and payable without presentment, demand, protest or notice of any kind. Thereafter Beneficiary may to the maximum extent permitted by applicable law:

(a)Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Trust Estate, or any part thereof, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value, marketability or rentability of the Trust Estate, or any part thereof or interest therein, increase the income therefrom or protect the security hereof and, with or without taking possession of the Trust Estate, sue for or otherwise collect the Rents, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including, without limitation, attorneys' fees, upon any indebtedness secured hereby, all in such order as Beneficiary may determine. The entering upon and taking possession of the Trust Estate, the collection of such Rents, and the application thereof as aforesaid, will not cure or waive any default or notice of default

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hereunder or invalidate any act done in response to such default or pursuant to such notice of default and, notwithstanding the continuance in possession of all or any portion of the Trust Estate or the collection, receipt and application of Rents, Trustee or Beneficiary will be entitled to exercise every right provided for in any of the Loan Documents or by law upon occurrence of any Event of Default, including the right to exercise the power of sale;

(b)Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof;

(c)Instruct Trustee to cause Grantor's interest in the Trust Estate to be sold in accordance with applicable law; or

(d)Exercise all other rights and remedies provided herein, in any Loan Document or other document or agreement now or hereafter securing all or any portion of the obligations secured hereby, or by law.

3.3    Foreclosure. Upon the occurrence of an Event of Default, Trustee, Trustee's successor or substitute, is authorized and empowered and it shall be Trustee's special duty at the request of Beneficiary to sell the Premises or any part thereof situated in the Commonwealth of Virginia at the courthouse of any county in the Commonwealth of Virginia in which any part of the Premises is situated, at public venue to the highest bidder for cash between the hours of 10 o'clock a.m. and 4 o'clock p.m. on the first Tuesday in any month after having given notice of such sale in accordance with the statutes of the Commonwealth of Virginia then in force governing sales of real estate under powers conferred by deed of trust. Any sale made by Trustee hereunder may be as an entirety or in such parcels as Beneficiary may request, and any sale may be adjourned by announcement at the time and place appointed for such sale without further notice except as may be required by law. The sale by Trustee of less than the whole of the Premises shall not exhaust the power of sale herein granted, and Trustee is specifically empowered to make successive sale or sales under such power until the whole of the Premises shall be sold; and, if the proceeds of such sale of less than the whole of the Premises shall be less than the aggregate of the indebtedness secured hereby and the expense of executing this trust as provided herein, this Deed of Trust and the lien hereof shall remain in full force and effect as to the unsold portion of the Premises just as though no sale had been made; provided, however, that Grantor shall never have any right to require the sale of less than the whole of the Premises but Beneficiary shall have the right, at its sole election, to request Trustee to sell less than the whole of the Premises. After each sale, Trustee shall make to the purchaser or purchasers at such sale good and sufficient conveyances in the name of Grantor, conveying the property so sold to the purchaser or purchasers in fee simple with general warranty of title, and shall receive the proceeds of said sale or sales and apply the same as herein provided. Payment of the purchase price to Trustee shall satisfy the obligation of purchaser at such sale therefor, and such purchaser shall not be responsible for the application thereof. The power of sale granted herein shall not be exhausted by any sale held hereunder by Trustee or Trustee's substitute or successor, and such power of sale may be exercised from time to time and as many times as Beneficiary may deem necessary until all of the Premises has been duly sold and all secured indebtedness has been fully paid. In the event any sale hereunder is not completed or is defective in the opinion of Beneficiary, such sale shall not exhaust the power of sale hereunder and

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Beneficiary shall have the right to cause a subsequent sale or sales to be made hereunder. Any and all statements of fact or other recitals made in any deed or deeds given by Trustee or any successor or substitute appointed hereunder as to nonpayment of the indebtedness secured hereby, or as to the occurrence of any default, or as to Beneficiary or Lenders having declared all of such indebtedness to be due and payable, or as to the request to sell, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to the refusal, failure or inability to act of Trustee or any substitute or successor, or as to the appointment of any substitute or successor trustee, or as to any other act or thing having been duly done by Beneficiary or by such Trustee, substitute or successor, shall be taken as prima facie evidence of the truth of the facts so stated and recited. Trustee, Trustee's successor or substitute, may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Trustee, including the posting of notices and the conduct of sale, but in the name and on behalf of Trustee, Trustee's successor or substitute.

3.4    Judicial Foreclosure. This instrument shall be effective as a mortgage as well as a deed of trust and upon the occurrence of an Event of Default may be foreclosed as to any of the Trust Estate in any manner permitted by the laws of the Commonwealth of Virginia or of any other state in which any part of the Trust Estate is situated, and any foreclosure suit may be brought by Trustee or by Beneficiary. In the event a foreclosure hereunder shall be commenced by Trustee, or Trustee's substitute or successor, Beneficiary may at any time before the sale of the Trust Estate direct the said Trustee to abandon the sale, and may then institute suit for the collection of the Note and the other secured indebtedness, and for the foreclosure of this Deed of Trust. It is agreed that if Beneficiary should institute a suit for the collection of the Note or any other secured indebtedness and for the foreclosure of this Deed of Trust, Beneficiary may at any time before the entry of a final judgment in said suit dismiss the same, and require Trustee, Trustee's substitute or successor to sell the Trust Estate in accordance with the provisions of this Deed of Trust.

3.5    Receiver. In addition to all other remedies herein provided for, Grantor agrees that upon the occurrence of an Event of Default, Beneficiary and Lenders shall as a matter of right be entitled to the appointment of a receiver or receivers for all or any part of the Trust Estate in accordance with applicable law, whether such receivership be incident to a proposed sale of such property or otherwise, and without regard to the value of the Trust Estate or the solvency of any person or persons liable for the payment of the indebtedness secured hereby, and Grantor does hereby consent to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees not to oppose any application therefor by Beneficiary or Lenders, but nothing herein is to be construed to deprive Beneficiary or Lenders of any other right, remedy or privilege it may now have under the law to have a receiver appointed; provided, however, that the appointment of such receiver, trustee or other appointee by virtue of any court order, statute or regulation shall not impair or in any manner prejudice the rights of Beneficiary or Lenders to receive payment of the rents and income pursuant to Section 2.1 hereof. Any money advanced by Beneficiary and Lenders in connection with any such receivership shall be a demand obligation owing by Grantor to Beneficiary and Lenders and shall bear interest from the date of making such advancement by Lenders until paid at the Default Rate and shall be a part of the secured indebtedness and shall be secured by this Deed of Trust and by any other instrument securing the secured indebtedness.

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3.6    Proceeds of Sale. To the extent permitted by applicable law, the proceeds of any sale held by Trustee or any receiver or public officer in foreclosure of the liens evidenced hereby shall be applied:

FIRST, to the payment of all necessary costs and expenses incident to such foreclosure sale, including but not limited to all court costs and charges of every character in the event foreclosed by suit, and a reasonable fee to Trustee acting under the provisions of Section 3.3 if foreclosed by power of sale as provided in said Section;

SECOND, to the payment in full of the secured indebtedness (including specifically without limitation the principal, interest and attorney's fees due and unpaid on the Note, any Swap Contracts and the amounts due and unpaid and owed to Beneficiary and Lenders under this Deed of Trust and the other Loan Documents) in such order as Beneficiary may elect; and

THIRD, the remainder, if any there shall be, shall be paid to Grantor or to such other party or parties as may be entitled thereto by law.

3.7    Beneficiary as Purchaser. Beneficiary and Lenders shall have the right to become the purchaser at any sale held by any Trustee or substitute or successor or by any receiver or public officer, and any lender purchasing at any such sale shall have the right to credit upon the amount of the bid made therefor, to the extent necessary to satisfy such bid, the secured indebtedness owing to such lender, or if such lender holds less than all of such indebtedness the pro rata part thereof owing to such lender, accounting to all other lenders not joining in such bid in cash for the portion of such bid or bids apportionable to such nonbidding lender or lenders.

3.8    Remedies Not Exclusive. Trustee and Beneficiary, and each of them, are entitled to enforce payment and performance of any indebtedness or obligations secured hereby and to exercise all rights and powers under this Deed of Trust or under any Loan Document or other agreement or any laws now or hereafter in force, notwithstanding some or all of the said indebtedness and obligations secured hereby may now or hereafter be otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor its enforcement whether by court action or pursuant to the power of sale or other powers herein contained, will prejudice or in any manner affect Trustee's or Beneficiary's right to realize upon or enforce any other security now or hereafter held by Trustee or Beneficiary, it being agreed that Trustee and Beneficiary, and each of them, is entitled to enforce this Deed of Trust and any other security now or hereafter held by Beneficiary or Trustee in such order and manner as they or either of them may in their absolute discretion determine. No remedy herein conferred upon or reserved to Trustee or Beneficiary is intended to be exclusive of any other remedy herein or by law provided or permitted, but each is cumulative and is in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Every power or remedy given by any of the Loan Documents to Trustee or Beneficiary or to which either of them may be otherwise entitled, may be exercised, concurrently or independently, from time to time and as often as may be deemed expedient by Trustee or Beneficiary and either of them may pursue inconsistent remedies.

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3.9    Delivery of Possession After Foreclosure. In the event there is a foreclosure sale hereunder and at the time of such sale Grantor or Grantor's heirs, devisees, representatives, successors or assigns or any other person claiming any interest in the Trust Estate by, through or under Grantor are occupying or using the Trust Estate, or any part thereof, each and all shall immediately become the tenant of the purchaser at such sale. Subject to the terms of any applicable non-disturbance and/or attornment agreement between Beneficiary and any tenant(s) of the Trust Estate, such tenancy shall be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser. In the event the tenant fails to surrender possession of said property upon demand, the purchaser shall be entitled to institute and maintain an action for forcible entry and detainer of said property in the Justice of the Peace Court in the Justice Precinct in which such property, or any party thereof, is situated.

3.10    Tender After Acceleration. If, following the occurrence of an Event of Default and the acceleration of the secured indebtedness but prior to the foreclosure of this Deed of Trust against the Trust Estate, Grantor shall tender to Beneficiary payment of an amount sufficient to pay the entire secured indebtedness, such tender shall be deemed to be a voluntary prepayment under the Note and, consequently, Grantor shall also pay to Beneficiary any charge or premium required under the Note to be paid in order to prepay principal and, if such principal payment is made during any period when prepayment is prohibited by this Deed of Trust or the Note, the applicable charge or premium shall be the maximum prepayment penalty provided for in the Note; provided, however, that in no event shall any amount payable under this paragraph, when added to the interest otherwise payable on the Note and the other secured indebtedness, exceed the maximum interest permitted under applicable law.

3.11    Deficiency. In the event an interest in any of the Trust Estate is foreclosed upon pursuant to a judicial or nonjudicial foreclosure sale, Grantor agrees as follows:

To the extent permitted by applicable law, Grantor agrees that Beneficiary and Lenders shall be entitled to seek a deficiency judgment from Grantor and any other party obligated on the Note equal to the difference between the amount owing on the Note and the amount for which the Trust Estate was sold pursuant to judicial or nonjudicial foreclosure sale. Grantor expressly recognizes that this section constitutes a waiver of any applicable law which would otherwise permit Grantor and other persons against whom recovery of deficiencies is sought or any guarantor independently (even absent the initiation of deficiency proceedings against them) to present competent evidence of the fair market value of the Trust Estate as of the date of the foreclosure sale and offset against any deficiency the amount by which the foreclosure sale price is determined to be less than such fair market value. Grantor further recognizes and agrees that this waiver creates an irrebuttable presumption that the foreclosure sale price is equal to the fair market value of the Trust Estate for purposes of calculating deficiencies owed by Grantor, any guarantor, and others against whom recovery of a deficiency is sought.

Alternatively, in the event the waiver provided for above is determined by a court of competent jurisdiction to be unenforceable, the following shall be the basis for the finder of fact's determination of the fair market value of the Trust Estate as of the date of the foreclosure sale in proceedings governed by any applicable law: (i) the Trust Estate shall be valued in an "as is" condition as of the date of the foreclosure sale, without any assumption or expectation that the

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Trust Estate will be repaired or improved in any manner before a resale of the Trust Estate after foreclosure; (ii) the valuation shall be based upon an assumption that the foreclosure purchaser desires a resale of the Trust Estate for cash promptly (but no later than twelve (12) months) following the foreclosure sale; (iii) all reasonable closing costs customarily borne by the seller in commercial real estate transactions should be deducted from the gross fair market value of the Trust Estate, including, without limitation, brokerage commissions, title insurance, a survey of the Trust Estate, tax prorations, attorneys' fees, and marketing costs; (iv) the gross fair market value of the Trust Estate shall be further discounted to account for any estimated holding costs associated with maintaining the Trust Estate pending sale, including, without limitation, utilities expenses, property management fees, taxes and assessments (to the extent not accounted for in (iii) above), and other maintenance, operational and ownership expenses; and (v) any expert opinion testimony given or considered in connection with a determination of the fair market value of the Trust Estate must be given by persons having at least five (5) years experience in appraising property similar to the Trust Estate and who have conducted and prepared a complete written appraisal of the Trust Estate taking into consideration the factors set forth above.

3.12    In addition to all other rights and remedies provided herein, any sale of the Trust Estate shall be made in accordance with the provisions of Sections 55-59.1, 55-59.2, 55-59.3, 55-59.4 and 55-63 of the Code of Virginia (1950), as amended and now enacted, or other applicable general local laws of the Commonwealth of Virginia or judicial rules or procedures relating to the foreclosure of deeds of trust.

The following provisions of Sections 55‑59 et. seq. and 55‑60 of the Code of Virginia (1950) are hereby incorporated herein by the short-term references below:

EXEMPTIONS WAIVED

SUBJECT TO CALL UPON DEFAULT

RENEWAL, EXTENSION OR REINSTATEMENT PERMITTED

ADVERTISEMENT REQUIRED ONCE A WEEK FOR TWO CONSECUTIVE WEEKS IN A NEWSPAPER PUBLISHED OR HAVING GENERAL CIRCULATION IN THE COUNTY OF FAIRFAX, VIRGINIA

SUBSTITUTION OF TRUSTEE PERMITTED

ANY TRUSTEE MAY ACT

ARTICLE IV

SECURITY AGREEMENT

4.1    Creation of Security Interest. Grantor hereby grants to Beneficiary a security interest in and to all the Personal Property to secure Grantor's obligations hereunder and under the other Loan Documents.

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4.2    Representations, Warranties and Covenants of Grantor. Grantor hereby represents, warrants and covenants (which representations, warranties and covenants will survive creation of any indebtedness of Grantor to Beneficiary or Lenders and any extension of credit thereunder) as follows:

(a)The Personal Property is not used or bought for personal, family or household purposes.

(b)The tangible portion of the Personal Property will be kept on or at the Premises; and Grantor shall not, without the prior written consent of Beneficiary, remove the Personal Property or any portion thereof therefrom except such portions or items of Personal Property which are consumed or worn out in ordinary usage, all of which will be promptly replaced by Grantor with similar items of comparable value.

(c)At the request of Beneficiary, Grantor shall join Beneficiary in executing one or more financing statements and fixture filings pursuant to the Uniform Commercial Code of Virginia as in effect in the Commonwealth of Virginia ("Uniform Commercial Code"), in form satisfactory to Beneficiary and shall pay the cost of recording and filing the same in all public offices wherever recording or filing is deemed by Beneficiary to be necessary or desirable.

(d)Grantor does not do business under any trade name except as previously disclosed in writing to Beneficiary. Grantor shall immediately notify Beneficiary in writing of any change in its place of business or the adoption or change of any trade name or fictitious business name and shall, upon request of Beneficiary, execute any additional financing statements or other certificates necessary to reflect the adoption or change in trade name or fictitious business name.

(e)Grantor shall immediately notify Beneficiary of any claim against the Personal Property adverse to the interest of Beneficiary therein.

4.3    Use of Personal Property by Grantor. Until the occurrence and during the continuance of an Event of Default, Grantor may have possession of the Personal Property and use it in any lawful manner not inconsistent with this Deed of Trust and not inconsistent with any policy of insurance thereon.

4.4    Remedies Upon an Event of Default.

(a)In addition to the remedies provided in Section 3.2, upon the occurrence and during the continuance of an Event of Default, Beneficiary may, at its option, do any one or more of the following to the extent permitted by applicable law:

(i)Either personally, or by means of a court appointed receiver, take possession of all or any of the Personal Property and exclude therefrom Grantor and all others claiming under Grantor, and thereafter hold, store, use, operate, manage, maintain and control, make repairs, replacements, alterations, additions and improvements to and exercise all rights and powers of Grantor with respect to the Personal Property or any part thereof. In the event

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Beneficiary demands or attempts to take possession of the Personal Property in the exercise of any rights under this Deed of Trust, Grantor agrees to promptly turn over and deliver possession thereof to Beneficiary;

(ii)Without notice to or demand upon Grantor, make such payments and do such acts as Beneficiary may deem necessary to protect its security interest in the Personal Property (including, without limitation, paying, purchasing, contesting or compromising any lien or encumbrance, whether superior or inferior to such security interest) and in exercising any such powers or authority to pay all expenses (including, without limitation, litigation costs and reasonable attorneys' fees) incurred in connection therewith;

(iii)Require Grantor from time to time to assemble the Personal Property, or any portion thereof, at a place designated by Beneficiary and reasonably convenient to both parties, and promptly deliver such Personal Property to Beneficiary or an agent or representative designated by Beneficiary. Beneficiary and its agents and representatives have the right to enter upon any or all of Grantor's premises and property to exercise Beneficiary's rights hereunder;

(iv)Realize upon the Personal Property or any part thereof as herein provided or in any manner permitted by law and exercise any and all of the other rights and remedies conferred upon Beneficiary by this Deed of Trust, by any other Loan Document or by law, either concurrently or in such order as Beneficiary may determine. Without limiting the generality of the foregoing, Beneficiary may proceed, in any sequence, (i) to exercise its rights under Section 3.2 and Section 3.3 with respect to all or any portion of the Trust Estate and all or any portion of the Personal Property, (ii) to exercise its rights under this Section 4.4 with respect to all or any portion of the Personal Property, and (iii) to exercise its rights under the provisions of Section 9604 of the Uniform Commercial Code;

(v)Sell or cause to be sold in such order as Beneficiary may determine, as a whole or in such parcels as Beneficiary may determine, the Personal Property and the remainder of the Trust Estate;

(vi)Sell, lease or otherwise dispose of the Personal Property at public sale, upon terms and in such manner as Beneficiary may determine. Beneficiary or any Lender may be a purchaser at any sale; and

(vii)Exercise any remedies of a secured party under the Uniform Commercial Code or any other applicable law.

(b)Unless the Personal Property is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Beneficiary shall give Grantor at least five (5) days' prior written notice of the time and place of any public sale of the Personal Property or other intended disposition thereof to be made. Such notice may be mailed to Grantor at the address set forth in Section 5.5.

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(c)Subject to the terms of Sections 1.14 and 8.5(b) of the Loan Agreement and applicable law, the proceeds of any sale under Section 4.4(a) will be applied as follows:

(i)To the repayment of the reasonable costs and expenses of taking, holding and preparing for the sale and the selling of the Personal Property (including, without limitation, costs of litigation and attorneys' fees) and the discharge of all Impositions, liens and encumbrances, and claims thereof, if any, on the Personal Property prior to the security interest granted herein (except any Impositions or liens and encumbrances subject to which such sale has been made);

(ii)To the payment of all indebtedness and obligations owing to Beneficiary or Lenders under the Notes and other Loan Documents, all Swap Contracts and all other obligations that are secured by this Deed of Trust, in such order as Beneficiary determines; and

(iii)The surplus, if any, will be paid to Grantor or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

(d)Beneficiary has the right to enforce one or more remedies under this Section 4.4 successively or concurrently; and such action will not operate to estop or prevent Beneficiary from pursuing any further remedy that it may have. Any repossession or retaking or sale of the Personal Property pursuant to the provisions hereof will not operate to release Grantor until full payment of any deficiency has been made in cash.

4.5    Security Agreement. This Deed of Trust constitutes and is deemed to be a "security agreement" for all purposes of the Uniform Commercial Code; and Beneficiary is entitled to all the rights and remedies of a "secured party" under the Uniform Commercial Code.

4.6    Financing Statement and Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the Uniform Commercial Code with respect to all fixtures included within the Trust Estate and is being recorded as a fixture financing statement and filing under the Uniform Commercial Code, and covers property, goods and equipment which are or are to become fixtures related to the Premises. Grantor covenants and agrees that this Deed of Trust is to be filed in the real estate records of the county where the Premises is located and shall also operate from the date of such filing as a fixture filing in accordance with Subsections 9‑502(b) and (c) and other applicable provisions of the Uniform Commercial Code. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the Uniform Commercial Code, as amended, and is to be filed for record in the real estate records of the county where the Premises is situated. Grantor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the Uniform Commercial Code. The full name of Grantor and Grantor's type of organization, and the full name of Beneficiary and Beneficiary's type of organization, are set forth on the signature page of this Deed of Trust. The

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mailing address of Grantor and Beneficiary are set forth in Section 5.5 (Notices) below. Grantor is the record owner of the Premises. Grantor grants to Beneficiary a security interest in all existing and future goods which are now or in the future become fixtures relating to the Premises and the proceeds thereof, including, without limitation, the goods and proceeds thereof described in Exhibit B. Grantor hereby authorizes Beneficiary or Trustee to file any financing statement or financing statement amendment covering the Personal Property or relating to the security interested created herein without the signature of Grantor, as debtor. Grantor shall pay all costs of filing such financing statements and any extensions, renewals, amendments and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements as Beneficiary may require. Without the prior written consent of Beneficiary, Grantor shall not create or suffer to be created pursuant to the Uniform Commercial Code any other security interest in such items, including replacements and additions thereto. Upon the occurrence and during the continuance of an Event of Default, Beneficiary will have the remedies of a secured party under the Uniform Commercial Code and, at Beneficiary's option, may also invoke the other remedies provided in this Deed of Trust.

ARTICLE V

MISCELLANEOUS

5.5    Amendments. This instrument cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought.

5.2    Grantor Waiver of Rights. Grantor waives to the extent permitted by law, (i) the benefit of all laws now existing or that may hereafter be enacted providing for any appraisement before sale of any portion of the Trust Estate, and (ii) all rights of redemption, valuation, appraisement, stay of execution, notice of intent to accelerate, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the liens hereby created (provided Grantor is not waiving notice and cure rights expressly provided for in the Loan Documents). Without limiting the generality of the foregoing, Grantor waives, to the extent permitted by law, all rights to direct the order in which any of the Trust Estate will be sold in the event of any sale or sales pursuant hereto and to have any of the Trust Estate or any other property now or hereafter constituting security for the indebtedness secured hereby marshaled upon any foreclosure of this Deed of Trust or of any other security for any of such indebtedness.

5.3    Statements by Grantor. Grantor shall, within ten (10) days after written notice thereof from Beneficiary, deliver to Beneficiary a written statement stating the unpaid principal of and interest on the Notes and any other amounts secured by this Deed of Trust and stating whether any offset or defense exists against such principal and interest.

5.4    Loan Statement Fees. Grantor shall pay the amount demanded by Beneficiary or its authorized loan servicing agent for any statement regarding the obligations secured hereby; provided, however, that such amount may not exceed the maximum amount allowed by law at the time request for the statement is made.

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5.5    Notices. All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) by a nationally recognized air courier service, (c) electronic communication, whether by telex, telegram or telecopying (if confirmed in writing sent by a nationally recognized air courier service or by registered or certified, first class mail, return receipt requested); or (d) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (c) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (d) will be deemed received three (3) days following deposit in the mail.

To Beneficiary:	U.S. Bank National Association 4100 Newport Place, Suite 900 Newport Beach, California 92660 Attention: Loan Administration Telephone: 949-863-2376 Facsimile: 949-252-1759
If to Grantor:	KBSII WILLOW OAKS, LLC c/o KBS Capital Advisors LLC 1909 K Street NW, Suite 340 Washington, DC 2006 Attention: Robin Burke, Senior Vice President, Asset Manager
With a copy to:	c/o KBS Capital Advisors LLC 620 Newport Center Drive, Suite 1300 Newport Beach, CA 92660 Attention: Todd Smith, VP Controller, Corporate
With a copy to:	Greenberg Traurig, LLP 3161 Michelson Drive, Suite 1000 Irvine, CA 92612 Attention: Bruce Fischer, Esq.
To Trustee:	Lawyers Title Realty Services, Inc. c/o Commonwealth Land Title Insurance Company 1015 15th Street, N.W., Suite 300, Washington, D.C. 20005

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5.6    Intentionally Omitted.

5.7    Captions. The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust.

5.8    Invalidity of Certain Provisions. Every provision of this Deed of Trust is intended to be severable. If any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction, such illegality or invalidity will not affect the balance of the terms and provisions hereof, which terms and provisions will remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if such lien is invalid or unenforceable as to any part of the Trust Estate, the unsecured or partially unsecured portion of the debt must be completely paid prior to the payment of the remaining secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, will be considered to have been first paid on and applied to the full payment of that portion of the debt which is not secured or fully secured by the lien of this Deed of Trust.

5.9    Subrogation. To the extent that proceeds of the Notes are used to pay any outstanding lien, charge or prior encumbrance against the Trust Estate, such proceeds have been or will be advanced by Beneficiary at Grantor's request and Beneficiary will be subrogated to any and all rights and liens held by any owner or holder of such outstanding liens, charges and prior encumbrances, irrespective of whether said liens, charges or encumbrances are released.

5.10    Attorneys' Fees. If the Notes are not paid when due or if any Event of Default occurs, Grantor promises to pay all costs of enforcement and collection, including but not limited to, reasonable attorneys' fees, whether or not such enforcement and collection includes the filing of a lawsuit.

5.11    GOVERNING LAW. THIS DEED OF TRUST IS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA.

5.12    Joint and Several Obligations. Should this Deed of Trust be signed by more than one party, all obligations herein contained will be deemed to be the joint and several obligations of each party executing this Deed of Trust. Any married person signing this Deed of Trust agrees that recourse may be had against community assets and against his separate property for the satisfaction of all obligations contained herein. Section 7.19 of the Loan Agreement (the joint borrower provisions) is by this reference incorporated herein in its entirety.

5.13    Interpretation. In this Deed of Trust the singular includes the plural and the masculine includes the feminine and neuter and vice versa, if the context so requires.

5.14    Intentionally Omitted.

5.15    Release. Upon the payment in full of the Notes and all other sums secured hereby and performance and discharge in full of all obligations under the Loan Documents (including all amounts owing by, and all other obligations of, Grantor under any Swap Transactions or Swap Contracts), Beneficiary shall release the Premises and surrender this

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Deed of Trust and the Notes, as appropriate, to the Grantor; provided Grantor shall pay all costs of the preparation and recordation of the release of the liens, as applicable. Notwithstanding the foregoing or anything else contained in the Loan Documents which may be construed to the contrary, prior to any full release or full reconveyance of the Deed of Trust, all Swap Contracts shall have been terminated, and any and all settlement payments and other payments, fees and costs owing by Grantor with respect to such Swap Contracts shall be paid prior to any such release or reconveyance. Beneficiary's rights under this Section 5.15 shall be in addition to any and all other rights of Beneficiary or any Swap Counterparty under the Swap Contracts and applicable law.

5.16    Counterparts. This document may be executed and acknowledged in counterparts, all of which executed and acknowledged counterparts together constitute a single document. Signature and acknowledgment pages may be detached from the counterparts and attached to a single copy of this document to physically form one document, which may be recorded.

5.17    Debtor-Creditor Relationship. Nothing contained herein or in any Loan Document will be deemed to create or construed to create a partnership, joint venture or any relationship other than that of debtor-creditor. Grantor and Beneficiary expressly disclaim any intent to create a partnership or joint venture pursuant to this Deed of Trust, any other Loan Document, or any other document related hereto or thereto.

5.18    Nonforeign Entity. Section 1445 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform Beneficiary that the withholding of tax will not be required in the event of the disposition of the Trust Estate pursuant to the terms of this Deed of Trust, Grantor hereby certifies, under penalty of perjury, that:

(a)Grantor is not a foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder; and

(b)Grantor is duly qualified to do business in California and Virginia.

It is understood that Beneficiary may disclose the contents of this certification to the Internal Revenue Service and that any false statement contained herein could be punished by fine, imprisonment or both. Grantor covenants and agrees to execute such further certificates, which must be signed under penalty of perjury, as Beneficiary reasonably requires. The covenant set forth herein will survive the foreclosure of the lien of this Deed of Trust or acceptance of a deed in lieu thereof.

5.19    Liability and Indemnification of Trustee. TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING TRUSTEE'S NEGLIGENCE), EXCEPT FOR TRUSTEE'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action

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taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder. GRANTOR WILL REIMBURSE TRUSTEE FOR, AND INDEMNIFY AND SAVE TRUSTEE HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) WHICH MAY BE INCURRED BY TRUSTEE IN THE PERFORMANCE OF TRUSTEE'S DUTIES HEREUNDER (INCLUDING ANY LIABILITY AND EXPENSES RESULTING FROM TRUSTEE'S OWN NEGLIGENCE). The foregoing indemnity shall not terminate upon release, foreclosure or other termination of this Deed of Trust.

5.20    Intentionally Deleted.

5.21    Interest Rate Limitation. It is the intent of Beneficiary and Grantor in the execution of this Deed of Trust to contract in strict compliance with applicable usury law. In furtherance thereof, Beneficiary and Grantor stipulate and agree that none of the terms and provisions contained herein or in any of the other Loan Documents, shall ever be construed to create a contract to pay for the use, forbearance or detention of money, interest at a rate in excess of the maximum interest rate permitted to be charged by applicable law. Neither Grantor nor any guarantors, endorsers or other parties now or hereafter becoming liable for payment of the obligations secured hereby shall ever be obligated or required to pay interest on such obligations at a rate or in an amount in excess of the maximum interest that may be lawfully charged under applicable law, and the provisions of this paragraph shall control over all other provisions of this Deed of Trust and the other Loan Documents which may be in apparent conflict herewith. Beneficiary and Lenders expressly disavow any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of the Note is accelerated. If the maturity of the Note shall be accelerated for any reason or if the principal of the Note is paid prior to the end of the term of the Note, and as a result thereof the interest received for the actual period of existence of the loan evidenced by the Note exceeds the amount of interest that would have accrued at the applicable maximum lawful rate, Beneficiary (on behalf of Lenders) shall, at its option, either refund to Grantor the amount of such excess or credit the amount of such excess against the principal balance of the Note then outstanding and thereby shall render inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest. In the event that Beneficiary or Lenders shall contract for, charge or receive any amounts and/or any other thing of value which are determined to constitute interest which would increase the effective interest rate on the Note or other obligations secured hereby to a rate in excess of that permitted to be charged by applicable law, all such sums determined to constitute interest in excess of interest at the lawful rate shall, upon such determination, at the option of Beneficiary, be either immediately returned to Grantor or credited against the principal balance of the Note then outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. By execution of this Deed of Trust, Grantor acknowledges that it believes the obligations secured hereby to be non usurious and agrees that if, at any time, Grantor should have reason to believe that such obligations are in fact usurious, it will give Beneficiary notice of such condition and Grantor agrees that Beneficiary (on behalf of Lenders) shall have ninety (90) days in which to make appropriate refund or other adjustment in

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order to correct such condition if in fact such exists. The term "applicable law" as used in this Deed of Trust shall mean the laws of the Commonwealth of Virginia or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

5.22    Limited Recourse Provision. Except as to Guarantor as set forth in the Guaranty, Beneficiary and Lenders shall have no recourse against, nor shall there be any personal liability to, the members of Grantor, or to any shareholders, members, partners, beneficial interest holders or any other entity or person in the ownership (directly or indirectly) of Grantor (except for the Guarantor as provided in the Guaranty, but including KBSII REIT ACQUISITION I, LLC, KBSII REIT ACQUISITION XXV, LLC, KBSII REIT ACQUISITION V, LLC, KBS LIMITED PARTNERSHIP II or KBS REAL ESTATE INVESTMENT TRUST II, INC.) with respect to the obligations of Grantor and Guarantor under the Loan. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Grantor's liability or obligations under the Loan Documents, Guarantor's liability or obligations under the Guaranty or Beneficiary's right to exercise any rights or remedies against any collateral securing the Loan.

[Signatures(s) to Follow]

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IN WITNESS WHEREOF, Grantor has executed this Deed of Trust as of the day and year first above written.

"GRANTOR"

KBSII WILLOW OAKS, LLC,

a Delaware limited liability company,

By: KBSII REIT ACQUISITION V, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

STATE OF CALIFORNIA )

)

COUNTY OF Orange )

On February 27, 2013, before me, K. Godin, a Notary Public, personally appeared Charles J. Schreiber, Jr. who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/ K. Godin

S-1 Deed of Trust (Willow Oaks)

EXHIBIT A

LEGAL DESCRIPTION

All of that certain lot or parcel of land situated, lying and being in Fairfax County, Virginia, and being more particularly described as follows:

TRACT I:

All of Parcel E-2-1, WILLOW OAKS CORPORATE CENTER, and containing 4.19681 acres, more or less, as the same is more particularly shown on plat attached to Deed of Resubdivision of Parcel E-2, Providence Park, recorded in Deed book 7085 at page 884, among the land records of Fairfax County, Virginia.

TOGETHER WITH AND SUBJECT TO easements for vehicular and pedestrian passage as shown on the Deed of Resubdivision as recorded in Deed Book 7085 at page 884, among the aforesaid land records and as more particularly set forth in that certain Roadway Easement Agreement as recorded in Deed Book 7108 at page 375, among the aforesaid land records.

TRACT II:

All of Parcel E-4, WILLOW OAKS CORPORATE CENTER, and containing 4.05294 acres (erroneously referenced in the Deed recorded in Deed Book 18135, at page 539 as 4.06294 acres), more or less, as the same is more particularly shown on plat attached to Deed of Resubdivision of Parcel E-2, Providence Park, recorded in Deed Book 7085 at page 884, among the land records of Fairfax County, Virginia.

TOGETHER WITH AND SUBJECT TO easements for vehicular and pedestrian passage as shown on the Deed of Resubdivision as recorded in Deed Book 7085 at page 884, among the aforesaid land records and as more particularly set forth in that certain Roadway Easement Agreement as recorded in Deed Book 7108 at page 375, among the aforesaid land records.

TRACT III:

All of Parcel E-3, WILLOW OAKS CORPORATE CENTER, as more particularly shown on plat attached to Deed of Resubdivision of Parcel E-2, Providence Park, recorded in Deed Book 7085 at page 884, among the land records of Fairfax County, Virginia.

TOGEHTER WITH AND SUBJECT TO easements for vehicular and pedestrian passage as shown on the Deed of Resubdivision as recorded in Deed Book 7085 at page 884, among the aforesaid land records and as more particularly set forth in that certain Roadway Easement Agreement as recorded in Deed Book 7108 at page 375, among the aforesaid land records.

EXHIBIT A Deed of Trust (Willow Oaks)

EXHIBIT B

DESCRIPTION OF PERSONAL PROPERTY

(a)    All personal property, including all goods, supplies, equipment, furniture, furnishings, fixtures, machinery, inventory and construction materials which Grantor now or hereafter owns or in which Grantor now or hereafter acquires an interest or right, including those which are now or hereafter located on or affixed to the Premises or used or useful in the operation, use or occupancy thereof or the construction of any improvements thereon, including any interest of Grantor in and to personal property which is leased or subject to any superior security interest, and all books, records, leases and other documents, of whatever kind or character, relating to the Premises;

(b)    All fees, income, rents, issues, profits, earnings, receipts, royalties and revenues which, after the date hereof and while any portion of the indebtedness secured hereby remains unpaid, may accrue from said goods, fixtures, furnishings, equipment and building materials or any part thereof or from the Premises or any part thereof, or which may be received or receivable by Grantor from any hiring, using, letting, leasing, subhiring, subletting, or subleasing thereof;

(c)    All Grantor's present and future rights to receive payments of money, services or property, including rights to all deposits from tenants of the Premises, accounts receivable, deposit accounts, chattel paper, notes, drafts, contract rights (including all rights to payment under all purchase and sale agreements and other contracts), instruments, general intangibles and principal, interest and payments due on account of goods sold, services rendered, loans made or credit extended, together with title or interest in all documents evidencing or securing the same; provided, however, notwithstanding Grantor's grant of a security interest in its rights under all purchase and sale agreements now or hereafter relating tot he Premises, Grantor shall be free, without the approval or consent of Beneficiary, to amend, modify and/or terminate, at any time, and from time to time, such purchase and sale agreements;

(d)    All of Grantor's present and future rights, titles and interests, but not Grantor's obligations, duties or liabilities for any breach, in, under and to all Swap Contracts (as defined in the Loan Agreement) and all Swap Transactions (as defined in the Loan Agreement), and all amounts received by Grantor in connection therewith or to which Grantor is entitled thereunder;

(e)    All other intangible property and rights relating to the Premises or the operation thereof, or used in connection therewith, including all governmental permits relating to construction or other activities on the Premises, all names under or by which the Premises may at any time be operated or known, all rights to carry on business under any such names, or any variant thereof, all trade names and trademarks relating in any way to the Premises, good will in any way relating to the Premises, and all licenses and permits relating in any ways to, or to the operation of, the Premises;

EXHIBIT B -- Page 1 Deed of Trust (Willow Oaks)

(f)    Grantor's rights under all insurance policies covering the Premises or any of the aforesaid collateral, and all proceeds, loss payments and premium refunds payable regarding the same;

(g)    All reserves, deferred payments, deposits, refunds, cost savings and payments of any kind relating to the construction of any improvements on the Premises;

(h)    All water stock relating to the Premises;

(i)    All causes of action, claims, compensation and recoveries for any damage to or condemnation or taking of the Premises or the aforesaid collateral, or for any conveyance in lieu thereof, whether direct or consequential, or for any damage or injury to the Premises or the aforesaid collateral, or for an loss or diminution in value of the Premises or the aforesaid collateral;

(j)    All architectural, structural, mechanical and engineering plans and specifications prepared for construction of improvements or extraction of minerals or gravel from the Premises and all studies, data and drawings related thereto; and also all contracts and agreements of Grantor relating to the aforesaid plans and specification or to the aforesaid studies, data and drawings or to the construction of improvements on or extraction of minerals or gravel from the Premises;

(k)    All Grantor's rights in proceeds of the loan evidenced by the Note (as defined in the Loan Agreement);

(l)    all present and future deposit accounts of Grantor 9but not from any parent entity (direct or indirect) or any other Affiliate) held with Beneficiary, including, without limitation, any demand, time, savings, passbook or like accounts maintained by Grantor with Beneficiary, and all money, funds, instruments, securities, cash, cash equivalent and all other property of any nature whatsoever held with Beneficiary, whether or not deposited in any such deposit account.

(m)    without limiting any of the foregoing, any or all other present or future "fixtures," "equipment," "software," "inventory," "goods," "general intangibles," "payment intangibles," "commercial tort claims," "accounts," "contract rights," "instruments," "promissory notes," "inventory property," "letter of credit rights," "letters of credit," "deposit accounts" and "documents" (as such quoted terms are define din or encompassed by the Virginia Uniform Commercial Code, as now or hereafter amended) located on, used in the operation of, arising or derived from or in way relating to the Premises, Swap contracts (as defined in the Loan Agreement) or Swap Transactions (as defined in the Loan Agreement); and

(n)    all proceeds of the foregoing.

All terms used herein which are defined in the Virginia Uniform Commercial Code (as now or hereafter amended) shall have the same meanings when used herein, unless the context requires otherwise.

EXHIBIT B -- Page 2 Deed of Trust (Willow Oaks)

VIRGINIA RECORDATION TAX AFFIDAVIT

To: Clerk, Circuit Court for the County of Fairfax:

The undersigned Grantor under a Credit Line Deed of Trust 9with Assignment of Leases and Rents, Security Agreement and Fixture Filings) (the "Deed of Trust"), dated as of February27, 2013, hereby certifies that:

1.    The total principal indebtedness secured by the instruments referenced in the Deed of Trust presented for recording herewith is $235,000,000.00.

2.    The properties standing as security for the indebtedness are situated in the following locations and are valued as follows;

VIRGINIA PROPERTIES
Address	Assessed Value
8260 Willow Oaks Corporate Drive (0493-01-0138)	$39,803,980.00
8260 Willow Oaks Corporate Drive (0493-01-0140)	$40,567,980.00
8260 Willow Oaks Corporate Drive (0493-01-0139)	$44,825,240.00
TOTAL VALUE OF VIRGINIA PROPERTIES:	$125,197,200.00
PROPERTIES OUTSIDE VIRGINIA
The value of the properties outside of Virginia is $260,500,000.
TOTAL VALUE OF PROPERTIES OUTSIDE VIRGINIA:	$260,500,000.00
TOTAL VALUE OF ALL PROPERTIES:	$385,697,200.00

3.    The value of the property located in the Commonwealth of Virginia is $125,197,200.00 or 32.46% of the total value of all properties located within or without the Commonwealth of Virginia, and secured by the Deed of Trust ($125,197,200.00/$385,697,200.00 = 0.3246 or 32.46%). The Virginia State Recordation Tax to be paid on the Deed of Trust is thus calculated on 32.46% of the amount secured, being the sum of $76,281,000.00 ($235,000,000.00 x 0.3246 = $76,281,000.00).

4.    This is a refinance deed of trust and the Virginia State Recordation Tax is being calculated in accordance with the provisions of Section 58.1-803(D) of the Code of

Virginia of 1950, as amended. The total Virginia State Recordation Tax on the portion of the Deed of Trust applicable to the Virginia property ($76,281,000.00) is $96,281.00.

5.    The total local recordation tax due on the amount secured attributable to the Virginia property, or $76, 281,000.00, is $32,093.67, being one third of the Virginia State Recordation Tax.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the undersigned Grantor under the Deed of Trust has duly executed and delivered this Affidavit under seal as of the 6th day of March, 2013.

KBSII WILLOW OAKS, LLC,

a Delaware limited liability company

By: KBSII REIT ACQUISITION V, LLC,

a Delaware limited liability company,

its sole member

By: KBS REIT PROPERTIES II, LLC,

a Delaware limited liability company,

its sole member

By: KBS LIMITED PARTNERSHIP II,

a Delaware limited partnership,

its sole member

By: KBS REAL ESTATE INVESTMENT TRUST II, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.

Chief Executive Officer

ACKNOWLEDGMENTS
STATE OF CALIFORNIA     COUNTY OF Orange    )
On February 27, 2013, before me,	K. Godin, Notary Public
	(insert name and title of the officer)
personally appeared Charles J. Schreiber, Jr. who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /s/ K. Godin(Seal)

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles J. Schreiber, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of KBS Real Estate Investment Trust II, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 13, 2013	By:	/S/ CHARLES J. SCHREIBER, JR.
			Charles J. Schreiber, Jr.
			Chairman of the Board, Chief Executive Officer and Director
			(principal executive officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, David E. Snyder, certify that:

1. I have reviewed this quarterly report on Form 10-Q of KBS Real Estate Investment Trust II, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 13, 2013	By:	/S/ DAVID E. SNYDER
			David E. Snyder
			Chief Financial Officer
			(principal financial officer)

EX-32.1

Exhibit 32.1

Certification pursuant to 18 U.S.C. Section 1350,

as Adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of KBS Real Estate Investment Trust II, Inc. (the “Registrant”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Charles J. Schreiber Jr., Chief Executive Officer and Director of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	May 13, 2013	By:	/S/ CHARLES J. SCHREIBER, JR.
			Charles J. Schreiber, Jr.
			Chairman of the Board, Chief Executive Officer and Director
			(principal executive officer)

EX-32.2

Exhibit 32.2

Certification pursuant to 18 U.S.C. Section 1350,

as Adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of KBS Real Estate Investment Trust II, Inc. (the “Registrant”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David E. Snyder, the Chief Financial Officer of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	May 13, 2013	By:	/S/ DAVID E. SNYDER
			David E. Snyder
			Chief Financial Officer
			(principal financial officer)

XML

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]
Tenant Origination And Absorption Costs, Cost	$ 316,541		$ 304,732
Tenant Origination and Absorption Costs, Accumulated Amortization	(102,020)		(96,621)
Tenant Origination and Absorption Costs, Net Amount	214,521		208,111
Tenant Origination and Absorption Costs, Amortization expense	(10,172)	(12,831)
Above-Market Lease Assets, Cost	77,567		70,176
Above-Market Lease Assets, Accumulated Amortization	(18,576)		(20,961)
Above-Market Lease Assets, Net Amount	58,991		49,215
Above-Market Lease Assets, Amortization expense	(2,192)	(2,233)
Below-Market Lease Liabilities, Cost	(50,383)		(46,607)
Below-Market Lease Liabilities, Accumulated Amortization	21,672		20,088
Below-Market Lease Liabilities, Net Amount	(28,711)		(26,519)
Below-Market Lease Liabilities, Amortization expense	$ 1,696	$ 2,095

XML

SUBSEQUENT EVENTS (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	0 Months Ended	3 Months Ended		0 Months Ended		0 Months Ended
	Feb. 04, 2013	Mar. 31, 2013	Mar. 31, 2012	Dec. 19, 2011 Dividend Declared [Member]	Dec. 18, 2012 Dividend Declared [Member]	May 01, 2013 Subsequent Event [Member] Dividend Paid [Member]	Apr. 01, 2013 Subsequent Event [Member] Dividend Paid [Member]
Subsequent Event [Line Items]
Distributions paid to common stockholders						$ 10.3	$ 10.6
Distribution rate per share per day, declared	$ 0.05416667	$ 0.00178082	$ 0.00178082	$ 0.00178082
Distribution rate per share annualized, declared, based on purchase price				6.50%
Purchase price per share				$ 10.00	$ 10.29
Distribution rate per share annualized, declared, based on current estimated value				6.30%

XML

DERIVATIVE INSTRUMENTS (Details) (USD $)	3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended		3 Months Ended				3 Months Ended				3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended				3 Months Ended				3 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 1 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 1 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 2 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 2 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 3 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 3 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 4 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 4 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 5 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 5 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 6 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 6 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 7 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 7 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 8 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 8 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 9 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 9 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 10 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 10 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 11 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 11 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 12 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 12 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 13 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 13 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 14 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 14 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 15 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 15 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 16 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 16 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 17 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 17 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 18 [Member] Interest Rate Swap [Member]		Dec. 31, 2012 Interest Rate Swap 18 [Member] Interest Rate Swap [Member]		Mar. 31, 2013 Interest Rate Swap 19 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 19 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 20 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 20 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 21 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 21 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Interest Rate Swap 22 [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Interest Rate Swap 22 [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Three Year Term [Member] Interest Rate Swap [Member]	Mar. 31, 2013 Four Year Term [Member] Interest Rate Swap [Member]
Derivative [Line Items]
Effective Date					Feb. 26, 2010	[1]			Feb. 26, 2010	[1]			Apr. 30, 2010	[2]			Jul. 26, 2010	[1]			Jul. 26, 2010	[1]			Sep. 15, 2010		Dec. 15, 2010	[1]			Dec. 15, 2010	[1]			Dec. 16, 2010		Dec. 20, 2010		Feb. 01, 2011		Feb. 01, 2011		Feb. 01, 2011		Mar. 08, 2011		Mar. 10, 2011		Dec. 01, 2011		Jan. 01, 2012	[1]			Feb. 01, 2012	[1]			Mar. 06, 2013		Mar. 06, 2013		Mar. 06, 2013		Mar. 06, 2013
Maturity Date					Feb. 26, 2014	[1]			Feb. 26, 2014	[1]			Apr. 30, 2014	[2]			Aug. 01, 2013	[1]			Aug. 01, 2013	[1]			Sep. 15, 2015		Feb. 26, 2014	[1]			Feb. 26, 2014	[1]			Jan. 01, 2016		Jun. 16, 2015		Jan. 01, 2016		Feb. 01, 2015		Feb. 01, 2014		Feb. 01, 2014		Feb. 01, 2014		Dec. 01, 2015		Jan. 01, 2016	[1]			Jan. 01, 2016	[1]			Mar. 01, 2017		Mar. 01, 2017		Mar. 01, 2016		Mar. 01, 2016
Notional Value			$ 714,150,000		$ 0	[1]			$ 0	[1]			$ 55,000,000	[2]			$ 0	[1]			$ 0	[1]			$ 105,000,000		$ 0	[1]			$ 0	[1]			$ 19,800,000		$ 69,000,000		$ 56,150,000		$ 8,400,000		$ 80,150,000		$ 85,900,000		$ 13,750,000		$ 80,000,000		$ 0	[1]			$ 0	[1]			$ 32,113,000		$ 23,787,000		$ 48,887,000		$ 36,213,000		$ 55,000,000	$ 45,000,000
Derivative, Description of Variable Rate Basis			One-month LIBOR		One-month LIBOR				One-month LIBOR				One-month LIBOR	[2]			One-month LIBOR				One-month LIBOR				One-month LIBOR		One-month LIBOR				One-month LIBOR				One-month LIBOR		One-month LIBOR		One-month LIBOR		One-month LIBOR		One-month LIBOR		One-month LIBOR		One-month LIBOR		One-month LIBOR		One-month LIBOR				One-month LIBOR				One-month LIBOR		One-month LIBOR		One-month LIBOR
Derivative, Fixed Interest Rate					2.30%				2.30%				2.17%	[2]			1.33%				1.33%				1.70%		1.53%				1.53%				2.39%		1.94%		2.16%		1.75%		1.29%		1.45%		1.32%		1.04%		1.02%				0.77%				0.71%		0.71%		0.50%		0.50%
Fair Value of Asset (Liability)			(14,691,000)	(17,129,000)	0	[1]	(239,000)	[1]	0	[1]	(239,000)	[1]	(953,000)	[2]	(1,214,000)	[2]	0	[1]	(43,000)	[1]	0	[1]	(43,000)	[1]	(3,503,000)	(3,788,000)	0	[1]	(262,000)	[1]	0	[1]	(262,000)	[1]	(1,084,000)	(1,166,000)	(2,469,000)	(2,700,000)	(2,732,000)	(2,929,000)	(226,000)	(254,000)	(719,000)	(928,000)	(889,000)	(1,147,000)	(127,000)	(164,000)	(1,455,000)	(1,547,000)	0	[1]	(145,000)	[1]	0	[1]	(59,000)	[1]	(159,000)	0	(117,000)	0	(148,000)	0	(110,000)	0
Fixed interest rate																																																																			5.17%	5.17%
Unrealized gains (losses) on derivative instruments	1,305,000	(373,000)
Gain (loss) recognized in OCI, efective portion	2,400,000	2,300,000
Additional unrealized losses	9,900,000
Reclassification of realized losses on derivative instruments	$ 80,000	$ 0

[1] On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay the loans related to these swaps in full. In connection with the repayment of these loans, the Company terminated these swap agreements with respect to eight swaps which were subject to an aggregate breakage fee of $1.1 million. See Note 6, “Notes Payable — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

[2] In connection with entering into the Portfolio Revolving Loan Facility, the Company entered into an interest rate swap agreement with Wells Fargo Bank, N.A. which effectively fixes the interest rate on the initial $55.0 million drawn under the loan at approximately 5.17% for the first three years of the loan and fixes the interest rate on $45.0 million of this amount at approximately 5.17% for the last year of the initial loan term.

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NOTES PAYABLE (U.S. Bank/TD Bank Credit Facility) (Details) (U.S. Bank/TD Bank Credit Facility [Member], USD $) In Millions, unless otherwise specified								0 Months Ended
	Mar. 31, 2013	Mar. 06, 2013	Mar. 06, 2013 Minimum [Member] Through March 1, 2016 [Member]	Mar. 06, 2013 Minimum [Member] Through March1, 2017 [Member]	Mar. 06, 2013 Maximum [Member] Through March 1, 2016 [Member]	Mar. 06, 2013 Maximum [Member] Through March1, 2017 [Member]	Mar. 06, 2013 Swap [Member] swap	May 06, 2013 Secured Debt [Member]	Mar. 06, 2013 Secured Debt [Member]	Mar. 06, 2013 Secured Debt [Member] Minimum [Member]	Mar. 06, 2013 Secured Debt [Member] Maximum [Member]	Mar. 06, 2013 Non-Revolving Credit Facility [Member]	Mar. 06, 2013 Non-Revolving Credit Facility [Member] Through March 1, 2016 [Member]	Mar. 06, 2013 Non-Revolving Credit Facility [Member] Through March1, 2017 [Member]	Mar. 06, 2013 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Term of credit facility								3 years
Borrowing capacity									$ 235.0			$ 141.0	$ 85.1	$ 55.9	$ 94.0
Percent of outstanding balance under guarantees		25.00%
Used borrowing capacity, amount		81.0													47.0
Remaining borrowing capacity															47.0
Derivative, number of instruments held							8
Interest rate swap agreements, termination, breakage fees	$ 1.1
Description of variable rate									one-month LIBOR
Basis spread on variable rate										1.75%	1.85%
Fixed rate			2.25%	2.46%	2.35%	2.56%
Payment type									Monthly payments are interest only

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REAL ESTATE (300 N. LaSalle Building) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 sqft		Dec. 31, 2012
Real Estate Properties [Line Items]
Rentable Square Feet	11,700,000.0
Total Real Estate, Net	$ 2,498,766,000		$ 2,291,655,000
Percentage of Total Assets	51.30%
Annualized Base Rent	135,234,000	[1]
Occupancy	95.00%
300 N. Lasalle [Member] | Assets, Total [Member]
Real Estate Properties [Line Items]
Rentable Square Feet	1,302,901
Total Real Estate, Net	566,197,000
Percentage of Total Assets	18.60%
Annualized Base Rent	45,211,000	[1]
Average Annualized Base Rent per sq. ft.	$ 34.80
Occupancy	100.00%

[1] Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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.

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DERIVATIVE INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional and Fair Value of Interest Rate Swaps Designated as Cash Flow Hedges

The following table summarizes the notional and fair value of the Company’s interest rate swaps designated as cash flow hedges as of March 31, 2013 and December 31, 2012. The notional value 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):

						Fair Value of Asset (Liability)				Fair Value of Asset (Liability)
Derivative Instruments	Effective Date	Maturity Date	Notional Value		Reference Rate	March 31, 2013				December 31, 2012
Interest Rate Swap (1)	02/26/2010	02/26/2014	$	—	One-month LIBOR/ Fixed at 2.30%	$	—		(1)	$	(239	)
Interest Rate Swap (1)	02/26/2010	02/26/2014	—		One-month LIBOR/ Fixed at 2.30%	—			(1)	(239		)
Interest Rate Swap (2)	04/30/2010	04/30/2014	55,000		One-month LIBOR/ Fixed at 2.17%	(953		)		(1,214		)
Interest Rate Swap (1)	07/26/2010	08/01/2013	—		One-month LIBOR/ Fixed at 1.33%	—			(1)	(43		)
Interest Rate Swap (1)	07/26/2010	08/01/2013	—		One-month LIBOR/ Fixed at 1.33%	—			(1)	(43		)
Interest Rate Swap	09/15/2010	09/15/2015	105,000		One-month LIBOR/ Fixed at 1.70%	(3,503		)		(3,788		)
Interest Rate Swap (1)	12/15/2010	02/26/2014	—		One-month LIBOR/ Fixed at 1.53%	—			(1)	(262		)
Interest Rate Swap (1)	12/15/2010	02/26/2014	—		One-month LIBOR/ Fixed at 1.53%	—			(1)	(262		)
Interest Rate Swap	12/16/2010	01/01/2016	19,800		One-month LIBOR/ Fixed at 2.39%	(1,084		)		(1,166		)
Interest Rate Swap	12/20/2010	06/16/2015	69,000		One-month LIBOR/ Fixed at 1.94%	(2,469		)		(2,700		)
Interest Rate Swap	02/01/2011	01/01/2016	56,150		One-month LIBOR/ Fixed at 2.16%	(2,732		)		(2,929		)
Interest Rate Swap	02/01/2011	02/01/2015	8,400		One-month LIBOR/ Fixed at 1.75%	(226		)		(254		)
Interest Rate Swap	02/01/2011	02/01/2014	80,150		One-month LIBOR/ Fixed at 1.29%	(719		)		(928		)
Interest Rate Swap	03/08/2011	02/01/2014	85,900		One-month LIBOR/ Fixed at 1.45%	(889		)		(1,147		)
Interest Rate Swap	03/10/2011	02/01/2014	13,750		One-month LIBOR/ Fixed at 1.32%	(127		)		(164		)
Interest Rate Swap	12/01/2011	12/01/2015	80,000		One-month LIBOR/ Fixed at 1.04%	(1,455		)		(1,547		)
Interest Rate Swap (1)	01/01/2012	01/01/2016	—		One-month LIBOR/ Fixed at 1.02%	—			(1)	(145		)
Interest Rate Swap (1)	02/01/2012	01/01/2016	—		One-month LIBOR/ Fixed at 0.77%	—			(1)	(59		)
Interest Rate Swap	03/06/2013	03/01/2017	32,113		One-month LIBOR/ Fixed at 0.71%	(159		)		—
Interest Rate Swap	03/06/2013	03/01/2017	23,787		One-month LIBOR/ Fixed at 0.71%	(117		)		—
Interest Rate Swap	03/06/2013	03/01/2016	48,887		One-month LIBOR/ Fixed at 0.50%	(148		)		—
Interest Rate Swap	03/06/2013	03/01/2016	36,213		One-month LIBOR/ Fixed at 0.50%	(110		)		—
Total derivatives designated  as hedging instruments			$	714,150		$	(14,691	)		$	(17,129	)

_____________________

⁽¹⁾ On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay the loans related to these swaps in full. In connection with the repayment of these loans, the Company terminated these swap agreements with respect to eight swaps which were subject to an aggregate breakage fee of $1.1 million. See Note 6, “Notes Payable — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽²⁾ In connection with entering into the Portfolio Revolving Loan Facility, the Company entered into an interest rate swap agreement with Wells Fargo Bank, N.A. which effectively fixes the interest rate on the initial $55.0 million drawn under the loan at approximately 5.17% for the first three years of the loan and fixes the interest rate on $45.0 million of this amount at approximately 5.17% for the last year of the initial loan term.

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FAIR VALUE DISCLOSURES (Schedule of Assets and Liabilities at Fair Value) (Details) (Recurring Basis [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivatives	$ (14,691)
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivatives	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivatives	(14,691)
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivatives	$ 0

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REAL ESTATE LOANS RECEIVABLE (Schedule of Interest Income from Real Estate Loans Receivable) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Receivables [Abstract]
Contractual interest income	$ 7,094,000	$ 8,253,000
Accretion of purchase discounts	1,301,000	2,007,000
Amortization of closing costs and origination fees	(133,000)	(140,000)
Interest income from real estate loans receivable	8,262,000	10,120,000
Interest receivable	$ 2,300,000		$ 2,300,000

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REAL ESTATE REAL ESTATE (Geographic Concentration Risk) (Details)	3 Months Ended
	Mar. 31, 2013
Concentration Risk [Line Items]
Concentration risk, percentage	51.30%
ILLINOIS [Member] | Assets, Total [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	18.60%
CALIFORNIA [Member] | Assets, Total [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	18.00%
NEW JERSEY [Member] | Assets, Total [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	14.50%
300 N. Lasalle [Member] | Assets, Total [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	18.60%
300 N. Lasalle [Member] | Revenues, Total [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	20.30%

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SEGMENT INFORMATION (Schedule of Segment Reporting Information, by Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 segments		Mar. 31, 2012		Dec. 31, 2012		Dec. 31, 2011
Segment Reporting Information [Line Items]
Number of reportable segments	2
Revenues	$ 86,887		$ 89,258
Interest expense	15,293		14,693
Total net operating income	39,262		43,300
Assets	3,051,130				2,821,950
Liabilities	1,684,385				1,426,493
Cash and cash equivalents	45,415		44,065		48,390		95,554
Real Estate Segment [Member]
Segment Reporting Information [Line Items]
Revenues	78,625	[1]	79,138	[1]
Interest expense	13,950	[1]	13,287	[1]
Total net operating income	32,678	[1]	34,968	[1]
Assets	2,669,856				2,441,112
Liabilities	1,545,319				1,293,854
Real Estate-Related Segment [Member]
Segment Reporting Information [Line Items]
Revenues	8,262		10,120
Interest expense	1,131		1,151
Total net operating income	6,584		8,332
Assets	353,677				352,377
Liabilities	121,366				121,332
Operating Segments [Member]
Segment Reporting Information [Line Items]
Interest expense	15,081		14,438
Assets	3,023,533				2,793,489
Liabilities	1,666,685				1,415,186
Corporate-Level [Member]
Segment Reporting Information [Line Items]
Interest expense	212		255
Assets	27,597	[2]			28,461	[2]
Liabilities	17,700	[3]			11,307	[3]
Cash and cash equivalents	$ 27,100				$ 28,200

[1] Amounts do not include real estate held for sale and discontinued operations.

[2] Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $27.1 million and $28.2 million as of March 31, 2013 and December 31, 2012, respectively.

[3] As of March 31, 2013 and December 31, 2012, corporate-level liabilities consisted primarily of distributions payable and redemptions payable.

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NOTES PAYABLE (Corporate Technology Centre Mortgage Loan) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended
	Mar. 28, 2013	Mar. 31, 2013		Dec. 31, 2012
Debt Instrument [Line Items]
Borrowings		$ 1,581,514
Mortgages [Member]
Debt Instrument [Line Items]
Borrowings		1,581,514		1,334,514
Corporate Technology Centre [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Term of credit facility	7
Borrowings	$ 140,000	$ 140,000		$ 0
Fixed rate	3.50%	3.50%	[1]
Payment type	Monthly payments are initially interest-only
Amortization schedule of mortgage loans on real estate	30 years

[1] Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2013. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates), using interest rate indices as of March 31, 2013, where applicable. For further information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.”

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2012, except for the addition of an accounting policy with respect to fees paid in connection with termination of a derivative. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). 

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements.  In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods.  Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries.  All significant intercompany balances and transactions are eliminated in consolidation. 

Use of Estimates

The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

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. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) on the accompanying consolidated statements of comprehensive income (loss) and consolidated statements of equity. 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 in the accompanying consolidated statements of operations.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded in accumulated other comprehensive income (loss) to earnings.

The termination of a cash flow hedge prior to the maturity date may result in a net derivative instrument gain or loss that continues to be reported in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction (i.e., LIBOR based debt service payments) unless it is probable that the original forecasted hedged transaction will not occur by the end of the originally specified time period (as documented at the inception of the hedging relationship) or within an additional two-month period of time thereafter. If it is probable that the hedged forecasted transaction will not occur either by the end of the originally specified time period or within the additional two-month period of time, that derivative instrument gain or loss reported in accumulated other comprehensive income (loss) shall be reclassified into earnings immediately.

Redeemable Common Stock

The Company has a share redemption program that may enable stockholders to sell their shares to the Company in limited circumstances.

Pursuant to the share redemption program, there are several limitations on the Company’s ability to redeem shares under the program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program), the Company may not redeem shares unless the stockholder has held the shares for one year, provided that if the Company is redeeming all of a stockholder’s shares, then there is no holding period requirement for shares purchased pursuant to the Company’s dividend reinvestment plan.

• During any calendar year, the Company may 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 the Company may not redeem more than $3.0 million of shares in the aggregate each month, excluding shares redeemed in connection with a stockholder’s death, qualifying disability or determination of incompetence.

• During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.

• The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland 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 a stockholder’s death, qualifying disability or determination of incompetence are 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 (as defined in the share redemption program), and the price at which the Company redeems all other shares eligible for redemption is as follows:

• For stockholders who have held their shares for at least one year, 92.5% of the Company’s most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least two years, 95.0% of the Company’s most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least three years, 97.5% of the Company’s most recent estimated value per share as of the applicable Redemption Date; and

• For stockholders who have held their shares for at least four years, 100% of the Company’s most recent estimated value per share as of the applicable Redemption Date.

On December 18, 2012, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $10.29 (unaudited), based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2012. The change in the redemption price, which is calculated based on the most recent estimated value per share, was effective for the December 2012 Redemption Date, which was December 31, 2012. The Company currently expects to engage the Advisor and/or an independent valuation firm to update the Company’s estimated value per share in December 2013, but is not required to update the estimated value per share more frequently than every 18 months.

On March 6, 2013, the Company’s board of directors approved the Sixth Amended and Restated Share Redemption Program (the “Sixth Amended Share Redemption Program”). Pursuant to the Sixth Amended Share Redemption Program, the Company has modified how the Company will process redemptions that would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currentlyeffective, or the most recently effective, registration statement as such registration statement has been amended or supplemented (the “Minimum Purchase Requirement”). Specifically, if the Company cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the program, then the Company will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the Minimum Purchase Requirement, then the Company would redeem all of such stockholder’s shares. If the Company is redeeming all of a stockholder’s shares, there would be no holding period requirement for shares purchased pursuant to the Company’s dividend reinvestment plan.

The Company’s board of directors may amend, suspend or terminate the share redemption program with 30 days’ notice to its stockholders. The Company may provide this notice by including such information in a Current Report on Form 8‑K or in the Company’s annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to its stockholders.

The Company limits the dollar value of shares that may be redeemed under the share redemption program as described above. For the three months ended March 31, 2013, the Company redeemed $10.5 million of shares, which represented all redemption requests received in good order and eligible for redemption through the March 2013 Redemption Date, except for 648,000 shares due to the limitations discussed above. The Company recorded $6.6 million of other liabilities on the accompanying consolidated balance sheet as of March 31, 2013 related to these unfulfilled redemption requests. Based on the amount of net proceeds raised from the sale of shares under the dividend reinvestment plan during 2012, the Company has $55.9 million available for redemptions during the remainder of 2013, subject to the limitations described above, including the monthly limitation for ordinary redemptions.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three months ended March 31, 2013 and 2012, respectively.

Distributions declared per common share were $0.214 and $0.160 for the three months ended March 31, 2013 and 2012, respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three months ended March 31, 2013 and 2012, respectively. For each day that was a record date for distributions during the three months ended March 31, 2013 and 2012, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2013 through March 31, 2013 was a record date for distributions. Each day during the periods from January 1, 2012 through February 28, 2012 and March 1, 2012 through March 31, 2012 was a record date for distributions. Additionally, the Company’s board of directors declared a distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on February 4, 2013.

Segments

The Company’s segments are based on the Company’s method of internal reporting, which classifies its operations by investment type: real estate and real estate-related. For financial data by segment, see Note 10, “Segment Information.”

Recently Issued Accounting Standards Update

In December 2011, FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU No. 2011-11”). ASU No. 2011-11 requires entities to provide enhanced disclosures about financial instruments and derivative instruments that are either presented on a net basis on the balance sheet or subject to an enforceable master netting arrangement or similar agreement including (i) a description of the rights of offset associated with relevant agreements and (ii) both net and gross information, including amounts of financial collateral, for relevant assets and liabilities. The purpose of the update is to enhance comparability between those companies that prepare their financial statements on the basis of GAAP and those that prepare their financial statements in accordance with IFRS and to enable users of the financial statements to understand the effect or potential effect of the offsetting arrangements on the balance sheet. ASU No. 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and for interim periods within those years. Disclosures are required retrospectively for all comparative periods presented in an entity’s financial statements. The adoption of ASU No. 2011-11 did not have a material impact to the Company’s consolidated financial statements.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU No. 2013-01”). ASU No. 2013-01 clarifies that the scope of ASU No. 2011-11 applies to derivatives accounted for in accordance with ASC 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with ASC 210-20-45, Balance Sheet - Other Presentation Matters, or ASC 815-10-45, Derivatives and Hedging - Other Presentation Matters, or subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 is effective for fiscal years beginning on or after January 1, 2013 and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The adoption of ASU No. 2013-01 did not have a material impact to the Company’s consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU No. 2013-02”). ASU No. 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. An entity is also required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by respective line items of net income only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about these amounts, such as when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. ASU No. 2013-02 is effective for reporting periods beginning after December 31, 2012. The adoption of ASU No. 2013-02 did not have a material impact to the Company’s consolidated financial statements.

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NOTES PAYABLE (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Interest expense	$ 15,293,000	$ 14,693,000
Interest payable, current	4,400,000		4,300,000
Amortization of financing cost, net of discontinued operations	800,000	800,000
Additional interest expense related to the effective portion of cash flow hedges	2,400,000	2,300,000
Deferred Financing Costs, Prepaid Expenses and Other Assets [Member]
Debt Instrument [Line Items]
Deferred financing costs	$ 8,100,000		$ 7,000,000

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ORGANIZATION (Details) (USD $)	3 Months Ended	12 Months Ended	35 Months Ended	59 Months Ended
	Mar. 31, 2013 properties LoansReceivables	Dec. 31, 2012	Mar. 22, 2011	Mar. 31, 2013 properties LoansReceivables
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%
Number of real estate properties	27			27
Number of real estate loans receivable	7			7
Issuance of common stock, value	$ 21,537,000	$ 66,460,000	$ 1,800,000,000
Shares of common stock sold under dividend reinvestment plan, value				222,300,000
Redemptions of common stock, value	10,527,000	82,818,000		142,200,000
Common Stock [Member]
Organizational Structure [Line Items]
Issuance of common stock, shares	2,202,149	6,804,964	182,681,633
Issuance of common stock, value	22,000	67,000
Shares of common stock sold under dividend reinvestment plan, shares				23,141,841
Redemptions of common stock, shares	1,039,708	8,255,964		14,406,865
Redemptions of common stock, value	$ 11,000	$ 81,000
Common Stock [Member] | KBS Capital Advisors LLC [Member]
Organizational Structure [Line Items]
Shares held by affiliate	20,000			20,000
Office Properties [Member]
Organizational Structure [Line Items]
Number of real estate properties	20			20
Office-Flex Properties [Member]
Organizational Structure [Line Items]
Number of real estate properties	1			1
Industrial Properties Porfolio-1 [Member]
Organizational Structure [Line Items]
Number of real estate properties	4			4
Industrial Properties Portfolio-2 [Member]
Organizational Structure [Line Items]
Number of real estate properties	1			1
Industrial Property-Leasehold Interest [Member]
Organizational Structure [Line Items]
Number of real estate properties	1			1
Office Buildings, Campus [Member]
Organizational Structure [Line Items]
Number of real estate properties	8			8

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following tables summarize total revenues and NOI for each reportable segment for the three months ended March 31, 2013 and 2012 and total assets and total liabilities for each reportable segment as of March 31, 2013 and December 31, 2012 (in thousands):

	For the Three Months Ended March 31,
	2013		2012
Revenues:
Real estate segment	$	78,625	$	79,138	(1)
Real estate-related segment	8,262		10,120
Total segment revenues	$	86,887	$	89,258
Interest Expense:
Real estate segment	$	13,950	$	13,287	(1)
Real estate-related segment	1,131		1,151
Total segment interest expense	15,081		14,438
Corporate-level	212		255
Total interest expense	$	15,293	$	14,693
NOI:
Real estate segment	$	32,678	$	34,968	(1)
Real estate-related segment	6,584		8,332
Total NOI	$	39,262	$	43,300
	As of March 31,		As of December 31,
	2013		2012
Assets:
Real estate segment	$	2,669,856	$	2,441,112
Real estate-related segment	353,677		352,377
Total segment assets	3,023,533		2,793,489
Corporate-level (2)	27,597		28,461
Total assets	$	3,051,130	$	2,821,950
Liabilities:
Real estate segment	$	1,545,319	$	1,293,854
Real estate-related segment	121,366		121,332
Total segment liabilities	1,666,685		1,415,186
Corporate-level (3)	17,700		11,307
Total liabilities	$	1,684,385	$	1,426,493

_____________________

⁽¹⁾ Amounts do not include real estate held for sale and discontinued operations.

⁽²⁾ Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $27.1 million and $28.2 million as of March 31, 2013 and December 31, 2012, respectively.

⁽³⁾ As of March 31, 2013 and December 31, 2012, corporate-level liabilities consisted primarily of distributions payable and redemptions payable.

Reconciliation of Net Income (Loss) to Net Operating Income (Loss)

The following table reconciles the Company’s net income to its NOI for the three months ended March 31, 2013 and 2012 (in thousands):

	For the Three Months Ended March 31,
	2013			2012
Net income	$	6,432		$	10,463
Other interest income	(4		)	(18		)
Real estate acquisition fees to affiliates	1,797			—
Real estate acquisition fees and expenses	616			—
General and administrative expenses	1,115			1,154
Depreciation and amortization	29,094			31,458
Corporate-level interest expense	212			255
Total income from discontinued operations	—			(12		)
NOI	$	39,262		$	43,300

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NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) (USD $)				3 Months Ended				3 Months Ended			3 Months Ended								3 Months Ended				3 Months Ended			3 Months Ended						3 Months Ended			3 Months Ended				3 Months Ended								3 Months Ended						3 Months Ended			3 Months Ended			3 Months Ended			3 Months Ended				3 Months Ended							0 Months Ended	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2013 Mortgage [Member]	Dec. 31, 2012 Mortgage [Member]	Mar. 31, 2013 Mortgage [Member] 100 & 200 Campus Drive [Member]		Dec. 31, 2012 Mortgage [Member] 100 & 200 Campus Drive [Member]		Mar. 31, 2013 Mortgage [Member] 300-600 Campus Drive [Member]		Dec. 31, 2012 Mortgage [Member] 300-600 Campus Drive [Member]	Mar. 31, 2013 Mortgage [Member] Portfolio Revolving Loan [Member]		Dec. 31, 2012 Mortgage [Member] Portfolio Revolving Loan [Member]		Jun. 06, 2011 Mortgage [Member] Portfolio Revolving Loan [Member]		Mar. 31, 2013 Mortgage [Member] Portfolio Revolving Loan [Member] Minimum [Member]		Mar. 31, 2013 Mortgage [Member] Willow Oaks Revolving [Member]		Dec. 31, 2012 Mortgage [Member] Willow Oaks Revolving [Member]		Mar. 31, 2013 Mortgage [Member] 300 N. Lasalle [Member]		Dec. 31, 2012 Mortgage [Member] 300 N. Lasalle [Member]	Mar. 31, 2013 Mortgage [Member] Union Bank Plaza [Member]		Dec. 31, 2012 Mortgage [Member] Union Bank Plaza [Member]		Sep. 15, 2010 Mortgage [Member] Union Bank Plaza [Member]		Mar. 31, 2013 Mortgage [Member] Emerald View at Vista Center [Member]		Dec. 31, 2012 Mortgage [Member] Emerald View at Vista Center [Member]	Mar. 31, 2013 Mortgage [Member] Portfolio Loan [Member]		Dec. 31, 2012 Mortgage [Member] Portfolio Loan [Member]		Mar. 31, 2013 Mortgage [Member] One Kendall Square [Member]		Dec. 31, 2012 Mortgage [Member] One Kendall Square [Member]		Apr. 05, 2011 Mortgage [Member] One Kendall Square [Member]		Mar. 31, 2013 Mortgage [Member] One Kendall Square [Member] Minimum [Member]		Mar. 31, 2013 Mortgage [Member] 601 Tower at Carlson Center [Member]		Dec. 31, 2012 Mortgage [Member] 601 Tower at Carlson Center [Member]		Jun. 06, 2011 Mortgage [Member] 601 Tower at Carlson Center [Member]		Mar. 31, 2013 Mortgage [Member] CityPlace Tower [Member]		Dec. 31, 2012 Mortgage [Member] CityPlace Tower [Member]	Mar. 31, 2013 Mortgage [Member] Fountainhead Plaza [Member]		Dec. 31, 2012 Mortgage [Member] Fountainhead Plaza [Member]	Mar. 31, 2013 Mortgage [Member] Metropolitan Center [Member]		Dec. 31, 2012 Mortgage [Member] Metropolitan Center [Member]	Mar. 31, 2013 Mortgage [Member] CIBC Portfolio Mortgage Loan [Member]		Dec. 31, 2012 Mortgage [Member] CIBC Portfolio Mortgage Loan [Member]		Mar. 31, 2013 Mortgage [Member] U.S. Bank/TD Bank Credit Facility [Member]		Dec. 31, 2012 Mortgage [Member] U.S. Bank/TD Bank Credit Facility [Member]	Mar. 31, 2013 Mortgage [Member] U.S. Bank/TD Bank Credit Facility [Member] Minimum [Member]		Mar. 31, 2013 Mortgage [Member] U.S. Bank/TD Bank Credit Facility [Member] Maximum [Member]		Mar. 28, 2013 Mortgage [Member] Corporate Technology Centre [Member]	Mar. 31, 2013 Mortgage [Member] Corporate Technology Centre [Member]		Dec. 31, 2012 Mortgage [Member] Corporate Technology Centre [Member]
Debt Instrument [Line Items]
Principal Balance	$ 1,581,514,000	$ 1,581,514,000	$ 1,334,514,000	$ 0	[1]	$ 55,000,000	[1]	$ 93,850,000		$ 93,850,000	$ 55,000,000	[2]	$ 55,000,000	[2]	$ 100,000,000	[3]			$ 0	[3]	$ 13,000,000	[3]	$ 350,000,000		$ 350,000,000	$ 105,000,000	[4]	$ 105,000,000	[4]	$ 119,300,000	[3]	$ 19,800,000		$ 19,800,000	$ 341,544,000	[5]	$ 341,544,000	[5]			$ 45,000,000	[6]	$ 45,000,000	[6]			$ 16,320,000	[7]	$ 16,320,000	[7]	$ 32,600,000	[3]	$ 71,000,000		$ 71,000,000	$ 80,000,000		$ 80,000,000	$ 0		$ 13,000,000	$ 76,000,000	[8]	$ 76,000,000	[8]	$ 188,000,000		$ 0					$ 140,000,000	$ 140,000,000		$ 0
Description of variable rate				One-month LIBOR	[9]						One-month LIBOR	[2],[9]														One-month LIBOR	[9]					One-month LIBOR	[9]		One-month LIBOR	[9]			One-month LIBOR	[9]																One-month LIBOR	[9]		One-month LIBOR	[9]		One-month LIBOR	[8],[9]			One-month LIBOR	[9]
Debt Instrument, Basis Spread on Variable Rate				3.25%	[9]						3.00%	[2],[9]							3.00%	[9]						1.75%	[9]					2.25%	[9]		2.15%	[9]			2.50%	[9]							2.20%	[9]								1.90%	[9]		2.20%	[9]		2.75%	[8],[9]						1.75%	[9]	1.85%	[9]
Contractual Interest Rate, Percentage								5.90%	[9]								4.25%	[2],[9]					4.25%	[9]																					4.00%	[9]	3.54%						3.59%	[7],[9]																			3.50%	3.50%	[9]
Effective Interest Rate								5.90%	[9]		5.20%	[2],[9]											4.30%	[9]		3.50%	[9]					4.60%	[9]		3.70%	[9]			4.00%	[9]							3.50%	[7],[9]					3.60%	[9]		2.90%	[9]					3.00%	[8],[9]			2.20%	[9]							3.50%	[9]
Payment Type								Interest Only			Interest Only												Interest Only			Interest Only						Interest Only			Interest Only				Interest Only								Interest Only						Interest Only			Interest Only						Interest Only				Interest Only							Monthly payments are initially interest-only
Debt Instrument, Maturity Date								Apr. 10, 2014	[10]		Apr. 30, 2014	[10]											Aug. 01, 2015	[10]		Sep. 15, 2015	[10]					Jan. 01, 2016	[10]		Jan. 27, 2016	[10]			Dec. 01, 2013	[10]							Jun. 03, 2015	[10]					Aug. 01, 2015	[10]		Dec. 01, 2015	[10]					Jan. 01, 2016	[10]			Mar. 01, 2016	[10]							Apr. 01, 2020	[10]
Amount outstanding											55,000,000	[3]														105,000,000																					16,300,000	[3]
Unused borrowing capacity, amount											$ 0															$ 14,300,000																					$ 16,300,000
Term of credit facility											4 years								3 years							5 years																					4 years																										7

[1] On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay these loans in full. See “ — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

[2] On April 30, 2010, the Company entered into a four-year revolving loan facility for an amount up to $100.0 million. As of March 31, 2013, $55.0 million of principal was outstanding and $45.0 million remained available for future disbursements, subject to certain conditions set forth in the loan agreement. The interest rate under this loan is calculated at a variable rate of 300 basis points over one-month LIBOR, but at no point shall the interest rate be less than 4.25%; however, there is no minimum floor rate for any portion of the loan that is subject to a swap contract with a minimum initial term of two years or any shorter term expiring on the maturity date. The Portfolio Revolving Loan Facility is secured by Mountain View Corporate Center, the 350 E. Plumeria Building, the Pierre Laclede Center and One Main Place.

[3] On June 6, 2011, the Company entered into a four-year $32.6 million revolving credit loan. As of March 31, 2013, $16.3 million had been disbursed to the Company under the mortgage loan and $16.3 million remained available for future disbursements under the revolving loan facility, subject to certain conditions set forth in the loan agreement. The interest rate on the $16.3 million outstanding as of March 31, 2013 was calculated at a fixed rate of 3.54% per annum. The interest rate on the $16.3 million available for future disbursements as of March 31, 2013 would be calculated at a variable rate of 220 basis points over one-month LIB

[4] On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of March 31, 2013, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement.

[5] The Portfolio Loan is secured by Plano Business Park, Horizon Tech Center, Dallas Cowboys Distribution Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center, I-81 Industrial Portfolio, Two Westlake Park and Torrey Reserve West.

[6] This note bears interest at a floating rate of 250 basis points over one-month LIBOR, subject to a minimum interest rate of 4.0%.

[7] The U.S. Bank/TD Bank Credit Facility is secured by 100 & 200 Campus Drive Buildings, Metropolitan Center and Willow Oaks Corporate Center. See “— Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

[8] The CIBC Portfolio Mortgage Loan is secured by the Tuscan Inn First Mortgage Origination, the Chase Tower First Mortgage Origination, the Pappas Commerce First Mortgage Origination and the Sheraton Charlotte Airport Hotel First Mortgage.

[9] Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2013. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates), using interest rate indices as of March 31, 2013, where applicable. For further information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.”

[10] Represents the initial maturity date or the maturity date as extended as of March 31, 2013; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	0 Months Ended	3 Months Ended				3 Months Ended			3 Months Ended
	Feb. 04, 2013	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Mar. 31, 2013 Unfulfilled Redemption Request [Member]	Mar. 31, 2013 Third Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Fourth Amended and Restated Share Redemption Program [Member]	Dec. 18, 2012 Fourth Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Common Stock [Member]	Mar. 31, 2013 Held for One Year [Member] Third Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for One Year [Member] Fourth Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for Two Years [Member] Third Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for Two Years [Member] Fourth Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for Three Years [Member] Third Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for Three Years [Member] Fourth Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for Four Years [Member] Third Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Held for Four Years [Member] Fourth Amended and Restated Share Redemption Program [Member]	Mar. 31, 2013 Maximum [Member] Third Amended and Restated Share Redemption Program [Member]
Summary of Significant Accounting Policies [Line Items]
Maximum number of shares redeemable per month, value																		$ 3,000,000
Maximum percentage of weighted-average shares outstanding available for redemption during any calendar year																		5.00%
Redemption price percentage of most recent estimated value per share											92.50%		95.00%		97.50%		100.00%
Estimated value per share of company's common stock								$ 10.29
Offering stage completion term									18 months
Common stock redeemed									10,500,000
Number of shares non-redeemable do to limitatios									648,000
Other liabilities		40,785,000		34,355,000	6,600,000
Amount available for redemption							$ 55,900,000
Distrubutions declared per common share		$ 0.214	$ 0.160
Distribution rate per share per day, declared	$ 0.05416667	$ 0.00178082	$ 0.00178082
Minimum share holding period to be available for redemption						1 year
Share holding term										1 year		2 years		3 years		4 years

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REAL ESTATE (Narrative) (Details)	Mar. 31, 2013 sqft properties
Real Estate Properties [Line Items]
Number of real estate properties	27
Rentable square feet	11,700,000.0
Percentage of portfolio occupied	95.00%
Office Campus [Member]
Real Estate Properties [Line Items]
Number of real estate properties	1
Office Buildings, Campus [Member]
Real Estate Properties [Line Items]
Number of real estate properties	8
Office Properties [Member]
Real Estate Properties [Line Items]
Number of real estate properties	20
Office-Flex Properties [Member]
Real Estate Properties [Line Items]
Number of real estate properties	1
Industrial Properties Porfolio-1 [Member]
Real Estate Properties [Line Items]
Number of real estate properties	4
Industrial Properties Portfolio-2 [Member]
Real Estate Properties [Line Items]
Number of real estate properties	1
Industrial Property-Leasehold Interest [Member]
Real Estate Properties [Line Items]
Number of real estate properties	1

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ORGANIZATION

3 Months Ended

Mar. 31, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

KBS Real Estate Investment Trust II, Inc. (the “Company”) was formed on July 12, 2007 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2008. The Company conducts its business primarily through KBS Limited Partnership II, a Delaware limited partnership formed on August 23, 2007 (the “Operating Partnership”), and its subsidiaries. The Company is the sole general partner of and directly owns a 0.1% partnership interest in the Operating Partnership. The Company’s wholly-owned subsidiary, KBS REIT Holdings II LLC, a Delaware limited liability company formed on August 23, 2007 (“KBS REIT Holdings II”), owns the remaining 99.9% partnership interest in the Operating Partnership and is its sole limited partner.

The Company owns a diverse portfolio of real estate and real estate-related investments. As of March 31, 2013, the Company owned 27 real estate properties (consisting of 20 office properties, one office/flex property, a portfolio of four industrial properties, an office campus consisting of eight office buildings and one individual industrial property), a leasehold interest in one industrial property and seven real estate loans receivable.

Subject to certain restrictions and limitations, the business of the Company is managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on May 21, 2012 (the “Advisory Agreement”). The Advisory Agreement may be renewed for an unlimited number of one-year periods upon the mutual consent of the Advisor and the Company. Either party may terminate the Advisory Agreement upon 60 days’ written notice. The Advisor owns 20,000 shares of the Company’s common stock.

Upon commencing its initial public offering (the “Offering”), the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Advisor, to serve as the dealer manager of the Offering pursuant to a dealer manager agreement, as amended and restated on April 30, 2010 (the “Dealer Manager Agreement”). The Company ceased offering shares of common stock in its primary offering on December 31, 2010 and terminated its primary offering on March 22, 2011. The Company continues to offer shares of common stock under its dividend reinvestment plan.

The Company sold 182,681,633 shares of common stock in its primary offering for gross offering proceeds of $1.8 billion. As of March 31, 2013, the Company had sold 23,141,841 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $222.3 million. Also as of March 31, 2013, the Company had redeemed 14,406,865 shares sold in the Offering for $142.2 million.

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REAL ESTATE (Schedule of Real Estate Investments) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Real Estate Properties [Line Items]
Total real estate, cost	$ 2,790,857		$ 2,562,193
Accumulated depreciation and amortization	(292,091)		(270,538)
Total real estate held for investment, net	2,498,766		2,291,655
Office [Member]
Real Estate Properties [Line Items]
Total real estate, cost	2,673,608		2,444,486
Industrial [Member]
Real Estate Properties [Line Items]
Total real estate, cost	117,249	[1]	117,707	[1]
Land [Member]
Real Estate Properties [Line Items]
Total real estate, cost	336,357		265,197
Total real estate held for investment, net	336,357		265,197
Land [Member] | Office [Member]
Real Estate Properties [Line Items]
Total real estate, cost	326,057		254,897
Land [Member] | Industrial [Member]
Real Estate Properties [Line Items]
Total real estate, cost	10,300	[1]	10,300	[1]
Buildings and Improvements [Member]
Real Estate Properties [Line Items]
Total real estate, cost	2,137,959		1,992,264
Accumulated depreciation and amortization	(190,071)		(173,917)
Total real estate held for investment, net	1,947,888		1,818,347
Buildings and Improvements [Member] | Office [Member]
Real Estate Properties [Line Items]
Total real estate, cost	2,049,040		1,903,298
Buildings and Improvements [Member] | Industrial [Member]
Real Estate Properties [Line Items]
Total real estate, cost	88,919	[1]	88,966	[1]
Tenant Origination and Absorption Costs [Member]
Real Estate Properties [Line Items]
Total real estate, cost	316,541		304,732
Accumulated depreciation and amortization	(102,020)		(96,621)
Total real estate held for investment, net	214,521		208,111
Tenant Origination and Absorption Costs [Member] | Office [Member]
Real Estate Properties [Line Items]
Total real estate, cost	298,511		286,291
Tenant Origination and Absorption Costs [Member] | Industrial [Member]
Real Estate Properties [Line Items]
Total real estate, cost	$ 18,030	[1]	$ 18,441	[1]

[1] Includes an investment in the rights to a ground lease. The ground lease expires in February 2050.

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REAL ESTATE LOANS RECEIVABLE (Schedule of Real Estate Loans Receivable) (Details) (USD $)			3 Months Ended		3 Months Ended			3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				3 Months Ended				0 Months Ended	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Pappas Commerce First Mortgage Origination [Member]	Mar. 31, 2013 Pappas Commerce First Mortgage Origination [Member] Face Amount [Member]	Mar. 31, 2013 One Kendall Square First Mortgage Origination [Member]	Mar. 31, 2013 One Kendall Square First Mortgage Origination [Member] Minimum [Member]	Mar. 31, 2013 Origination of Summit I & II First Mortgage [Member]	Mar. 31, 2013 Mortgages [Member] One Liberty Plaza Notes [Member]		Dec. 31, 2012 Mortgages [Member] One Liberty Plaza Notes [Member]		Mar. 31, 2013 Mortgages [Member] Tuscan Inn First Mortgage Origination [Member]		Dec. 31, 2012 Mortgages [Member] Tuscan Inn First Mortgage Origination [Member]		Mar. 31, 2013 Mortgages [Member] Chase Tower First Mortgage Origination [Member]		Dec. 31, 2012 Mortgages [Member] Chase Tower First Mortgage Origination [Member]		Mar. 31, 2013 Mortgages [Member] Pappas Commerce First Mortgage Origination [Member]		Dec. 31, 2012 Mortgages [Member] Pappas Commerce First Mortgage Origination [Member]		Mar. 31, 2013 Mortgages [Member] Sheraton Charlotte Airport Hotel First Mortgage [Member]		Dec. 31, 2012 Mortgages [Member] Sheraton Charlotte Airport Hotel First Mortgage [Member]		Mar. 31, 2013 Mortgages [Member] Origination of Summit I & II First Mortgage [Member]		Dec. 31, 2012 Mortgages [Member] Origination of Summit I & II First Mortgage [Member]		Mar. 31, 2013 Mortgage Participation [Member] One Kendall Square First Mortgage Origination [Member]		Dec. 31, 2012 Mortgage Participation [Member] One Kendall Square First Mortgage Origination [Member]		Jun. 22, 2011 Protective Advance [Member] Pappas Commerce First Mortgage Origination [Member]	Mar. 31, 2013 Protective Advance [Member] Pappas Commerce First Mortgage Origination [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Date Acquired/ Originated								Feb. 11, 2009				Jan. 21, 2010				Jan. 25, 2010				Apr. 05, 2010	[1]			Jul. 11, 2011				Jan. 17, 2012	[2]			Nov. 22, 2010	[3]
Outstanding Principal Balance	$ 380,784,000			$ 31,900,000				$ 112,845,000	[4]			$ 20,200,000	[4]			$ 59,090,000	[4]			$ 32,673,000	[1],[4]			$ 14,500,000	[4]			$ 53,976,000	[2],[4]			$ 87,500,000	[3],[4]
Book Value	350,256,000	348,846,000						82,081,000	[5]	81,163,000	[5]	19,998,000	[5]	19,973,000	[5]	59,098,000	[5]	59,210,000	[5]	32,673,000	[1],[5]	32,673,000	[1],[5]	14,518,000	[5]	14,519,000	[5]	54,015,000	[2],[5]	53,302,000	[2],[5]	87,873,000	[3],[5]	88,006,000	[3],[5]
Contractual Interest Rate								6.10%	[6]			8.30%	[6]			8.40%	[6]							7.50%	[6]			7.50%	[2],[6]
Annualized Effective Interest Rate			9.50%			7.50%		15.00%	[6]			9.00%	[6]			8.50%	[6]			9.80%	[1],[6]			7.60%	[6]			7.60%	[2],[6]			7.00%	[3],[6]				14.50%
Maturity Date								Aug. 06, 2017	[7]			Jan. 21, 2015	[7]			Feb. 01, 2015	[7]			Jul. 01, 2014	[1],[7]			Aug. 01, 2018	[7]			Feb. 01, 2017	[2],[7]			Dec. 01, 2013	[3],[7]
Additional advance under mortgage loans																																				800,000
Basis spread on variable rate					5.50%
Description of variable rate basis					one-month LIBOR
Mortgage loans on real estate	380,784,000	380,542,000					54,000,000
Unused borrowing capacity, amount							$ 4,800,000

[1] As of March 31, 2013, $31.9 million had been disbursed under the Pappas Commerce First Mortgage. Interest on the first mortgage is calculated at a fixed rate of 9.5%. Outstanding principal balance also includes a protective advance of $0.8 million made on June 22, 2011 to cover property taxes and to fund the tax and insurance reserve account. Interest on the protective advance is calculated at a fixed rate of 14.5%.

[2] As of March 31, 2013, $54.0 million had been disbursed under the Summit I & II First Mortgage and another $4.8 million remained available for future fundings, subject to certain conditions set forth in the loan agreement.

[3] The One Kendall Square First Mortgage bears interest at a floating rate of 550 basis points over one-month LIBOR, but at no point shall the interest rate be less than 7.5%.

[4] Outstanding principal balance as of March 31, 2013 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns.

[5] Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs.

[6] Contractual interest rates are the stated interest rates on the face of the loans. Annualized effective interest rates are calculated as the actual interest income recognized in 2013, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of March 31, 2013.

[7] Maturity dates are as of March 31, 2013; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown.

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SEGMENT INFORMATION (Reconciliation of Net Income (Loss) to Net Operating Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Net income	$ 6,432	$ 10,463	$ 48,374
Other interest income	(4)	(18)
Real estate acquisition fees to affiliates	1,797	0
Real estate acquisition fees and expenses	616	0
General and administrative expenses	1,115	1,154
Depreciation and amortization	29,094	31,458
Interest expense	15,293	14,693
Total (income) loss from discontinued operations	0	(12)
Total net operating income	39,262	43,300
Corporate-Level [Member]
Segment Reporting Information [Line Items]
Interest expense	$ 212	$ 255

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CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Real estate:
Land	$ 336,357	$ 265,197
Buildings and improvements	2,137,959	1,992,264
Tenant origination and absorption costs	316,541	304,732
Total real estate held for investment, cost	2,790,857	2,562,193
Less accumulated depreciation and amortization	(292,091)	(270,538)
Total real estate held for investment, net	2,498,766	2,291,655
Real estate loans receivable, net	350,256	348,846
Total real estate and real estate-related investments, net	2,849,022	2,640,501
Cash and cash equivalents	45,415	48,390
Rents and other receivables, net	62,152	57,349
Above-market leases, net	58,991	49,215
Deferred financing costs, prepaid expenses and other assets	35,550	26,495
Total assets	3,051,130	2,821,950
Liabilities and stockholders’ equity
Notes payable	1,581,514	1,334,514
Accounts payable and accrued liabilities	22,790	20,416
Due to affiliates	0	168
Distributions payable	10,585	10,521
Below-market leases, net	28,711	26,519
Other liabilities	40,785	34,355
Total liabilities	1,684,385	1,426,493
Commitments and contingencies (Note 11)
Redeemable common stock	70,912	66,426
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $.01 par value; 1,000,000,000 shares authorized, 191,436,608 and 190,274,167 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively	1,914	1,903
Additional paid-in capital	1,633,977	1,633,994
Cumulative distributions in excess of net income	(324,314)	(289,737)
Accumulated other comprehensive loss	(15,744)	(17,129)
Total stockholders’ equity	1,295,833	1,329,031
Total liabilities and stockholders’ equity	$ 3,051,130	$ 2,821,950

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NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Notes Payable [Abstract]
April 1, 2013 through December 31, 2013	$ 45,000
2014	148,850
2015	622,320
2016	625,344
2017	0
Thereafter	140,000
Total notes payable	$ 1,581,514

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Cumulative Distributions and Net Income (Loss) [Member]	Accumulated Other Comprehensive Loss [Member]
Balance, value at Apr. 21, 2008
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Redemptions of common stock, shares		(14,406,865)
Redemptions of common stock, value	$ (142,200)
Balance, value at Mar. 31, 2013	1,295,833	1,914
Balance, shares at Mar. 31, 2013	191,436,608	191,436,608
Balance, value at Dec. 31, 2011	1,419,344	1,917	1,649,029	(214,137)	(17,465)
Balance, shares at Dec. 31, 2011		191,725,167
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	48,374			48,374
Other comprehensive loss	336				336
Issuance of common stock, shares		6,804,964
Issuance of common stock, value	66,460	67	66,393
Redemptions of common stock, shares		(8,255,964)
Redemptions of common stock, value	(82,818)	(81)	(82,737)
Transfers to redeemable common stock	1,329		1,329
Distributions declared	(123,974)			(123,974)
Other offering costs	(20)		(20)
Balance, value at Dec. 31, 2012	1,329,031	1,903	1,633,994	(289,737)	(17,129)
Balance, shares at Dec. 31, 2012	190,274,167	190,274,167
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,432			6,432
Other comprehensive loss	1,385				1,385
Issuance of common stock, shares		2,202,149
Issuance of common stock, value	21,537	22	21,515
Redemptions of common stock, shares		(1,039,708)
Redemptions of common stock, value	(10,527)	(11)	(10,516)
Transfers to redeemable common stock	(11,010)		(11,010)
Distributions declared	(41,009)			(41,009)
Other offering costs	(6)		(6)
Balance, value at Mar. 31, 2013	$ 1,295,833	$ 1,914	$ 1,633,977	$ (324,314)	$ (15,744)
Balance, shares at Mar. 31, 2013	191,436,608	191,436,608

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REAL ESTATE (Future Minimum Rental Income) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Real Estate [Abstract]
April 1, 2013 through December 31, 2013	$ 186,699
2014	241,382
2015	218,730
2016	200,727
2017	180,840
Thereafter	755,157
Future minimum rental income	$ 1,783,535

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TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2013

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]

Tenant Origination and Absorption Costs, Above-Market Lease Assests and Below-Market Lease Liabiities

As of March 31, 2013 and December 31, 2012, 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 Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
Cost	$	316,541		$	304,732		$	77,567		$	70,176		$	(50,383	)	$	(46,607	)
Accumulated Amortization	(102,020		)	(96,621		)	(18,576		)	(20,961		)	21,672			20,088
Net Amount	$	214,521		$	208,111		$	58,991		$	49,215		$	(28,711	)	$	(26,519	)

Amortization of Tenant Origination and Absorptoin Costs, Above-Market Leases and Below-Market Lease Liabilities

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three months ended March 31, 2013 and 2012 were as follows (in thousands):

	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	For the Three Months Ended March 31,						For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2013			2012			2013			2012			2013		2012
Amortization	$	(10,172	)	$	(12,831	)	$	(2,192	)	$	(2,233	)	$	1,696	$	2,095

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REAL ESTATE (Highes Tenant Industry Concentrations- Grater than 10% of Annual Base Rent) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Concentration Risk [Line Items]
Annualized Base Rent	$ 135,234	[1]
Percentage of Annualized Base Rent	51.30%
Industry - Legal Services [Member]
Concentration Risk [Line Items]
Number of Tenants	57
Annualized Base Rent	51,147	[1]
Percentage of Annualized Base Rent	19.40%
Industry - Finance [Member]
Concentration Risk [Line Items]
Number of Tenants	90
Annualized Base Rent	50,058	[1]
Percentage of Annualized Base Rent	19.00%
Industry - Computer System Design & Programming [Member]
Concentration Risk [Line Items]
Number of Tenants	21
Annualized Base Rent	$ 34,029	[1]
Percentage of Annualized Base Rent	12.90%

[1] Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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.

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NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2013

Notes Payable [Abstract]

Schedule of Long-term Debt Instruments

As of March 31, 2013 and December 31, 2012, the Company’s notes payable consisted of the following (dollars in thousands):

	Principal as of March 31, 2013		Principal as of December 31, 2012		Contractual Interest Rate as of March 31, 2013(1)	Effective Interest Rate as of March 31, 2013 (1)	Payment Type	Maturity Date (2)
100 & 200 Campus Drive Mortgage Loan (3)	$	—	$	55,000	(3)	(3)	(3)	(3)
300-600 Campus Drive Mortgage Loan	93,850		93,850		5.90%	5.9%	Interest Only	04/10/2014
Portfolio Revolving Loan Facility (4)	55,000		55,000		One-month LIBOR + 3.00% (4)	5.2%	Interest Only	04/30/2014
Willow Oaks Revolving Loan (3)	—		13,000		(3)	(3)	(3)	(3)
300 N. LaSalle Building Mortgage Loan	350,000		350,000		4.25%	4.3%	Interest Only	08/01/2015
Union Bank Plaza Mortgage Loan (5)	105,000		105,000		One-month LIBOR + 1.75%	3.5%	Interest Only	09/15/2015
Emerald View at Vista Center Mortgage Loan	19,800		19,800		One-month LIBOR + 2.25%	4.6%	Interest Only	01/01/2016
Portfolio Loan (6)	341,544		341,544		One-month LIBOR + 2.15%	3.7%	Interest Only	01/27/2016
One Kendall Square Borrowing (7)	45,000		45,000		One-month LIBOR + 2.50%	4.0%	Interest Only	12/01/2013
601 Tower Mortgage Loan (8)	16,320		16,320		(8)	3.5%	Interest Only	06/03/2015
CityPlace Tower Mortgage Loan	71,000		71,000		3.59%	3.6%	Interest Only	08/01/2015
Fountainhead Plaza Mortgage Loan	80,000		80,000		One-month LIBOR + 1.90%	2.9%	Interest Only	12/01/2015
Metropolitan Center Mortgage Loan (3)	—		13,000		(3)	(3)	(3)	(3)
CIBC Portfolio Mortgage Loan (9)	76,000		76,000		One-month LIBOR + 2.75%	3.0%	Interest Only	01/01/2016
U.S. Bank/TD Bank Credit Facility (10)	188,000		—		One-month LIBOR + 1.75% - 1.85%	2.2%	Interest Only	03/01/2016
Corporate Technology Centre Mortgage Loan (11)	140,000		—		3.50%	3.5%	(12)	04/01/2020
	$	1,581,514	$	1,334,514

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2013. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates), using interest rate indices as of March 31, 2013, where applicable. For further information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.”

⁽²⁾ Represents the initial maturity date or the maturity date as extended as of March 31, 2013; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown.

⁽³⁾ On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay these loans in full. See “ — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽⁴⁾ On April 30, 2010, the Company entered into a four-year revolving loan facility for an amount up to $100.0 million. As of March 31, 2013, $55.0 million of principal was outstanding and $45.0 million remained available for future disbursements, subject to certain conditions set forth in the loan agreement. The interest rate under this loan is calculated at a variable rate of 300 basis points over one-month LIBOR, but at no point shall the interest rate be less than 4.25%; however, there is no minimum floor rate for any portion of the loan that is subject to a swap contract with a minimum initial term of two years or any shorter term expiring on the maturity date. The Portfolio Revolving Loan Facility is secured by Mountain View Corporate Center, the 350 E. Plumeria Building, the Pierre Laclede Center and One Main Place.

⁽⁵⁾ On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of March 31, 2013, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement.

⁽⁶⁾ The Portfolio Loan is secured by Plano Business Park, Horizon Tech Center, Dallas Cowboys Distribution Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center, I-81 Industrial Portfolio, Two Westlake Park and Torrey Reserve West.

⁽⁷⁾ This note bears interest at a floating rate of 250 basis points over one-month LIBOR, subject to a minimum interest rate of 4.0%.

⁽⁸⁾ On June 6, 2011, the Company entered into a four-year $32.6 million revolving credit loan. As of March 31, 2013, $16.3 million had been disbursed to the Company under the mortgage loan and $16.3 million remained available for future disbursements under the revolving loan facility, subject to certain conditions set forth in the loan agreement. The interest rate on the $16.3 million outstanding as of March 31, 2013 was calculated at a fixed rate of 3.54% per annum. The interest rate on the $16.3 million available for future disbursements as of March 31, 2013 would be calculated at a variable rate of 220 basis points over one-month LIBOR.

⁽⁹⁾ The CIBC Portfolio Mortgage Loan is secured by the Tuscan Inn First Mortgage Origination, the Chase Tower First Mortgage Origination, the Pappas Commerce First Mortgage Origination and the Sheraton Charlotte Airport Hotel First Mortgage.

⁽¹⁰⁾ The U.S. Bank/TD Bank Credit Facility is secured by 100 & 200 Campus Drive Buildings, Metropolitan Center and Willow Oaks Corporate Center. See “— Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽¹¹⁾ See “— Recent Financing Transactions — Corporate Technology Centre Mortgage Loan.”

⁽¹²⁾ Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity.

Schedule of Maturities of Long-term Debt

The following is a schedule of maturities for all notes payable outstanding as of March 31, 2013 (in thousands):

April 1, 2013 through December 31, 2013	$	45,000
2014	148,850
2015	622,320
2016	625,344
2017	—
Thereafter	140,000
	$	1,581,514

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash Flows from Operating Activities:
Net income	$ 6,432	$ 10,463
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, continuing operations	29,094	31,458
Depreciation and amortization, discontinued operations	0	106
Noncash interest income on real estate-related investments	(1,168)	(1,867)
Deferred rent	(3,563)	(4,880)
Bad debt expense	241	(61)
Amortization of above- and below-market leases, net	496	159
Amortization of deferred financing costs	791	801
Reclassification of realized losses on derivative instruments	80	0
Change in fair value of contingent consideration	(10)	11
Changes in operating assets and liabilities:
Rents and other receivables	(1,582)	(1,341)
Prepaid expenses and other assets	(8,732)	(5,849)
Accounts payable and accrued liabilities	465	(156)
Other liabilities	1,043	712
Net cash provided by operating activities	23,587	29,556
Cash Flows from Investing Activities:
Acquisitions of real estate	(238,952)	0
Improvements to real estate	(2,778)	(4,335)
Investments in real estate loans receivable	(716)	(47,379)
Principal repayments on real estate loans receivable	474	324
Net cash provided by (used in) investing activities	(241,972)	(51,390)
Cash Flows from Financing Activities:
Proceeds from notes payable	328,000	5,000
Principal payments on notes payable	(81,000)	0
Payments of deferred financing costs	(1,783)	(22)
Return of contingent consideration related to acquisition of real estate	134	541
Payments to redeem common stock	(10,527)	(21,128)
Payments of other offering costs	(6)	(9)
Distributions paid to common stockholders	(19,408)	(14,037)
Net cash (used in) provided by financing activities	215,410	(29,655)
Net decrease in cash and cash equivalents	(2,975)	(51,489)
Cash and cash equivalents, beginning of period	48,390	95,554
Cash and cash equivalents, end of period	45,415	44,065
Supplemental Disclosure of Cash Flow Information:
Interest paid	14,450	13,831
Supplemental Disclosure of Noncash Transactions:
Increase (decrease) in distributions payable	64	(22)
Increase in redeemable common stock payable	6,524	0
Increase in accrued improvements to real estate	1,919	66
Increase in lease commissions payable	53	0
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan	$ 21,537	$ 16,746

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	191,436,608	190,274,167
Common stock, shares outstanding	191,436,608	190,274,167

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company presently operates in two reportable business segments based on its investment types: real estate and real estate‑related. Under the real estate segment, the Company has invested in office, office/flex and industrial properties. Under the real estate-related segment, the Company has invested in or originated mortgage loans, a mortgage participation and an A‑Note. All revenues earned from the Company’s two reporting segments were from external customers and there were no intersegment sales or transfers. The Company does not allocate corporate-level accounts to its reporting segments. Corporate‑level accounts include corporate general and administrative expenses, non-operating interest income, non-operating interest expense and other corporate-level expenses. The accounting policies of the segments are consistent with those described in Note 2, “Summary of Significant Accounting Policies.”

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non‑GAAP supplemental financial measure. The Company defines NOI for its real estate segment as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees and provision for bad debt) less interest expense. The Company defines NOI for its real estate-related segment as interest income less loan servicing costs, asset management fees and interest expense. NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non‑property income and expenses, depreciation and amortization, and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate and real estate-related investments and to make decisions about resource allocations. The Company believes that net income is the GAAP measure that is most directly comparable to NOI; however, NOI should not be considered as an alternative to net income as the primary indicator of operating performance, as it excludes the items described above. Additionally, NOI as defined above may not be comparable to other REITs or companies as their definitions of NOI may differ from the Company’s definition.

The following tables summarize total revenues and NOI for each reportable segment for the three months ended March 31, 2013 and 2012 and total assets and total liabilities for each reportable segment as of March 31, 2013 and December 31, 2012 (in thousands):

	For the Three Months Ended March 31,
	2013		2012
Revenues:
Real estate segment	$	78,625	$	79,138	(1)
Real estate-related segment	8,262		10,120
Total segment revenues	$	86,887	$	89,258
Interest Expense:
Real estate segment	$	13,950	$	13,287	(1)
Real estate-related segment	1,131		1,151
Total segment interest expense	15,081		14,438
Corporate-level	212		255
Total interest expense	$	15,293	$	14,693
NOI:
Real estate segment	$	32,678	$	34,968	(1)
Real estate-related segment	6,584		8,332
Total NOI	$	39,262	$	43,300
	As of March 31,		As of December 31,
	2013		2012
Assets:
Real estate segment	$	2,669,856	$	2,441,112
Real estate-related segment	353,677		352,377
Total segment assets	3,023,533		2,793,489
Corporate-level (2)	27,597		28,461
Total assets	$	3,051,130	$	2,821,950
Liabilities:
Real estate segment	$	1,545,319	$	1,293,854
Real estate-related segment	121,366		121,332
Total segment liabilities	1,666,685		1,415,186
Corporate-level (3)	17,700		11,307
Total liabilities	$	1,684,385	$	1,426,493

_____________________

⁽¹⁾ Amounts do not include real estate held for sale and discontinued operations.

⁽²⁾ Total corporate-level assets consisted primarily of cash and cash equivalents of approximately $27.1 million and $28.2 million as of March 31, 2013 and December 31, 2012, respectively.

⁽³⁾ As of March 31, 2013 and December 31, 2012, corporate-level liabilities consisted primarily of distributions payable and redemptions payable.

The following table reconciles the Company’s net income to its NOI for the three months ended March 31, 2013 and 2012 (in thousands):

	For the Three Months Ended March 31,
	2013			2012
Net income	$	6,432		$	10,463
Other interest income	(4		)	(18		)
Real estate acquisition fees to affiliates	1,797			—
Real estate acquisition fees and expenses	616			—
General and administrative expenses	1,115			1,154
Depreciation and amortization	29,094			31,458
Corporate-level interest expense	212			255
Total income from discontinued operations	—			(12		)
NOI	$	39,262		$	43,300

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 07, 2013
Document Information [Line Items]
Entity Registrant Name	KBS Real Estate Investment Trust II, Inc.
Entity Central Index Key	0001411059
Current Fiscal Year end	--12-31
Entity Filer category	Non-accelerated Filer
Document type	10-Q
Document period end date	Mar. 31, 2013
Document fiscal year focus	2013
Document fiscal period focus	Q1
Amendment flag	false
Entity Common Stock, Shares Outstanding		192,191,903

XML

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Economic Dependency

The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, acquisition or origination, and disposition of real estate and real estate-related investments; management of the daily operations of the Company’s real estate and real estate-related investment portfolio; and other general and administrative responsibilities. In the event the Advisor is unable to provide the respective services, the Company will be required to obtain such services from other sources.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Compliance with existing environmental laws is not expected to have a material adverse effect on the Company’s financial condition and results of operations as of March 31, 2013.

Legal Matters

From time to time, the Company is 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 its 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.

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenues:
Rental income	$ 61,725	$ 62,320
Tenant reimbursements	14,302	14,317
Interest income from real estate loans receivable	8,262	10,120
Other operating income	2,598	2,501
Total revenues	86,887	89,258
Expenses:
Operating, maintenance, and management	16,167	15,119
Real estate taxes and insurance	10,886	10,835
Asset management fees to affiliate	5,491	5,566
Real estate acquisition fees to affiliates	1,797	0
Real estate acquisition fees and expenses	616	0
General and administrative expenses	1,115	1,154
Depreciation and amortization	29,094	31,458
Interest expense	15,293	14,693
Total expenses	80,459	78,825
Other income:
Other interest income	4	18
Total other income	4	18
Income from continuing operations	6,432	10,451
Discontinued operations:
Income (loss) from discontinued operations	0	12
Total income (loss) from discontinued operations	0	12
Net income	$ 6,432	$ 10,463
Basic and diluted income per common share:
Continuing operations	$ 0.03	$ 0.05
Discontinued operations	$ 0.00	$ 0.00
Net income per common share	$ 0.03	$ 0.05
Weighted-average number of common shares outstanding, basic and diluted	191,305,215	191,916,690

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REAL ESTATE LOANS RECEIVABLE

3 Months Ended

Mar. 31, 2013

Receivables [Abstract]

REAL ESTATE LOANS RECEIVABLE

REAL ESTATE LOANS RECEIVABLE

As of March 31, 2013 and December 31, 2012, the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands):

Loan Name      Location of Related Property or Collateral	Date Acquired/ Originated	Property Type	Loan Type	Outstanding Principal Balance as of March 31, 2013 (1)		Book Value as of March 31, 2013 (2)		Book Value as of December 31, 2012 (2)		Contractual Interest Rate (3)	Annualized Effective Interest Rate (3)	Maturity Date (4)
One Liberty Plaza Notes
New York, New York	02/11/2009	Office	Mortgage	$	112,845	$	82,081	$	81,163	6.1%	15.0%	08/06/2017
Tuscan Inn First Mortgage Origination
San Francisco, California	01/21/2010	Hotel	Mortgage	20,200		19,998		19,973		8.3%	9.0%	01/21/2015
Chase Tower First Mortgage Origination
Austin, Texas	01/25/2010	Office	Mortgage	59,090		59,098		59,210		8.4%	8.5%	02/01/2015
Pappas Commerce First Mortgage Origination (5)
Boston, Massachusetts	04/05/2010	Industrial	Mortgage	32,673		32,673		32,673		(5)	9.8%	07/01/2014
One Kendall Square First Mortgage Origination (6)
Cambridge, Massachusetts	11/22/2010	Mixed-use Facility	Mortgage Participation	87,500		87,873		88,006		(6)	7.0%	12/01/2013
Sheraton Charlotte Airport Hotel First Mortgage
Charlotte, North Carolina	07/11/2011	Hotel	Mortgage	14,500		14,518		14,519		7.5%	7.6%	08/01/2018
Summit I & II First Mortgage (7)
Reston, Virginia	01/17/2012	Office	Mortgage	53,976		54,015		53,302		7.5%	7.6%	02/01/2017
				$	380,784	$	350,256	$	348,846

_____________________

⁽¹⁾ Outstanding principal balance as of March 31, 2013 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns.

⁽²⁾ Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs.

⁽³⁾ Contractual interest rates are the stated interest rates on the face of the loans. Annualized effective interest rates are calculated as the actual interest income recognized in 2013, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of March 31, 2013.

⁽⁴⁾ Maturity dates are as of March 31, 2013; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown.

⁽⁵⁾ As of March 31, 2013, $31.9 million had been disbursed under the Pappas Commerce First Mortgage. Interest on the first mortgage is calculated at a fixed rate of 9.5%. Outstanding principal balance also includes a protective advance of $0.8 million made on June 22, 2011 to cover property taxes and to fund the tax and insurance reserve account. Interest on the protective advance is calculated at a fixed rate of 14.5%.

⁽⁶⁾ The One Kendall Square First Mortgage bears interest at a floating rate of 550 basis points over one-month LIBOR, but at no point shall the interest rate be less than 7.5%.

⁽⁷⁾ As of March 31, 2013, $54.0 million had been disbursed under the Summit I & II First Mortgage and another $4.8 million remained available for future fundings, subject to certain conditions set forth in the loan agreement.

The following summarizes the activity related to the real estate loans receivable for the three months ended March 31, 2013 (in thousands):

Real estate loans receivable - December 31, 2012	$	348,846
Additional principal funded under real estate loans receivable	716
Principal repayments received on real estate loan receivable	(474		)
Accretion of discounts on purchased real estate loans receivable	1,301
Amortization of closing costs and origination fees on real estate loans receivable	(133		)
Real estate loans receivable - March 31, 2013	$	350,256

For the months ended March 31, 2013 and 2012, interest income from real estate loans receivable consisted of the following (in thousands):

	Three Months Ended March 31,
	2013			2012
Contractual interest income	$	7,094		$	8,253
Accretion of purchase discounts	1,301			2,007
Amortization of closing costs and origination fees	(133		)	(140		)
Interest income from real estate loans receivable	$	8,262		$	10,120

As of March 31, 2013 and December 31, 2012, interest receivable from real estate loans receivable was $2.3 million and $2.3 million, respectively, and was included in rents and other receivables.

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TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

3 Months Ended

Mar. 31, 2013

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 March 31, 2013 and December 31, 2012, 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 Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012			March 31, 2013			December 31, 2012
Cost	$	316,541		$	304,732		$	77,567		$	70,176		$	(50,383	)	$	(46,607	)
Accumulated Amortization	(102,020		)	(96,621		)	(18,576		)	(20,961		)	21,672			20,088
Net Amount	$	214,521		$	208,111		$	58,991		$	49,215		$	(28,711	)	$	(26,519	)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three months ended March 31, 2013 and 2012 were as follows (in thousands):

	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	For the Three Months Ended March 31,						For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2013			2012			2013			2012			2013		2012
Amortization	$	(10,172	)	$	(12,831	)	$	(2,192	)	$	(2,233	)	$	1,696	$	2,095

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REAL ESTATE LOANS RECEIVABLE (Tables)

3 Months Ended

Mar. 31, 2013

Receivables [Abstract]

Schedule of Real Estate Loans Receivable

As of March 31, 2013 and December 31, 2012, the Company, through indirect wholly owned subsidiaries, had invested in or originated real estate loans receivable as follows (dollars in thousands):

Loan Name      Location of Related Property or Collateral	Date Acquired/ Originated	Property Type	Loan Type	Outstanding Principal Balance as of March 31, 2013 (1)		Book Value as of March 31, 2013 (2)		Book Value as of December 31, 2012 (2)		Contractual Interest Rate (3)	Annualized Effective Interest Rate (3)	Maturity Date (4)
One Liberty Plaza Notes
New York, New York	02/11/2009	Office	Mortgage	$	112,845	$	82,081	$	81,163	6.1%	15.0%	08/06/2017
Tuscan Inn First Mortgage Origination
San Francisco, California	01/21/2010	Hotel	Mortgage	20,200		19,998		19,973		8.3%	9.0%	01/21/2015
Chase Tower First Mortgage Origination
Austin, Texas	01/25/2010	Office	Mortgage	59,090		59,098		59,210		8.4%	8.5%	02/01/2015
Pappas Commerce First Mortgage Origination (5)
Boston, Massachusetts	04/05/2010	Industrial	Mortgage	32,673		32,673		32,673		(5)	9.8%	07/01/2014
One Kendall Square First Mortgage Origination (6)
Cambridge, Massachusetts	11/22/2010	Mixed-use Facility	Mortgage Participation	87,500		87,873		88,006		(6)	7.0%	12/01/2013
Sheraton Charlotte Airport Hotel First Mortgage
Charlotte, North Carolina	07/11/2011	Hotel	Mortgage	14,500		14,518		14,519		7.5%	7.6%	08/01/2018
Summit I & II First Mortgage (7)
Reston, Virginia	01/17/2012	Office	Mortgage	53,976		54,015		53,302		7.5%	7.6%	02/01/2017
				$	380,784	$	350,256	$	348,846

_____________________

⁽¹⁾ Outstanding principal balance as of March 31, 2013 represents original principal balance outstanding under the loan, increased for any subsequent fundings and reduced for any principal paydowns.

⁽²⁾ Book value represents outstanding principal balance, adjusted for unamortized acquisition discounts, origination fees and direct origination and acquisition costs.

⁽³⁾ Contractual interest rates are the stated interest rates on the face of the loans. Annualized effective interest rates are calculated as the actual interest income recognized in 2013, using the interest method, annualized and divided by the average amortized cost basis of the investment. The contractual interest rates and annualized effective interest rates presented are as of March 31, 2013.

⁽⁴⁾ Maturity dates are as of March 31, 2013; subject to certain conditions, the maturity dates of certain real estate loans receivable may be extended beyond the maturity date shown.

⁽⁵⁾ As of March 31, 2013, $31.9 million had been disbursed under the Pappas Commerce First Mortgage. Interest on the first mortgage is calculated at a fixed rate of 9.5%. Outstanding principal balance also includes a protective advance of $0.8 million made on June 22, 2011 to cover property taxes and to fund the tax and insurance reserve account. Interest on the protective advance is calculated at a fixed rate of 14.5%.

⁽⁶⁾ The One Kendall Square First Mortgage bears interest at a floating rate of 550 basis points over one-month LIBOR, but at no point shall the interest rate be less than 7.5%.

⁽⁷⁾ As of March 31, 2013, $54.0 million had been disbursed under the Summit I & II First Mortgage and another $4.8 million remained available for future fundings, subject to certain conditions set forth in the loan agreement.

Schedule of Activity Related to Real Estate Loans Receivable

The following summarizes the activity related to the real estate loans receivable for the three months ended March 31, 2013 (in thousands):

Real estate loans receivable - December 31, 2012	$	348,846
Additional principal funded under real estate loans receivable	716
Principal repayments received on real estate loan receivable	(474		)
Accretion of discounts on purchased real estate loans receivable	1,301
Amortization of closing costs and origination fees on real estate loans receivable	(133		)
Real estate loans receivable - March 31, 2013	$	350,256

Schedule of Interest Income from Real Estate Loans Receivable

For the months ended March 31, 2013 and 2012, interest income from real estate loans receivable consisted of the following (in thousands):

	Three Months Ended March 31,
	2013			2012
Contractual interest income	$	7,094		$	8,253
Accretion of purchase discounts	1,301			2,007
Amortization of closing costs and origination fees	(133		)	(140		)
Interest income from real estate loans receivable	$	8,262		$	10,120

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Distributions Paid

On April 1, 2013, the Company paid distributions of $10.6 million, which related to distributions declared for daily record dates for each day in the period from March 1, 2013 through March 31, 2013. On May 1, 2013, the Company paid distributions of $10.3 million, which related to distributions declared for daily record dates for each day in the period from April 1, 2013 through April 30, 2013.

Distributions Declared

On May 10, 2013, the Company’s board of directors declared distributions based on daily record dates for the period from June 1, 2013 through June 30, 2013, which the Company expects to pay in July 2013, and distributions based on daily record dates for the period from July 1, 2013 through July 31, 2013, which the Company expects to pay in August 2013. Investors may choose to receive cash distributions or purchase additional shares through the Company’s dividend reinvestment plan.

Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00178082 per share per day and equal a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on a purchase price of $10.00 per share in the Company’s now terminated primary initial public offering or a 6.3% annualized rate based on the Company’s December 18, 2012 estimated value per share of $10.29.

Third Amended and Restated Dividend Reinvestment Plan

On April 9, 2013, the Company’s board of directors approved a third amended and restated dividend reinvestment plan (the “Amended Dividend Reinvestment Plan”). Pursuant to the Amended Dividend Reinvestment Plan, in order to terminate participation in the dividend reinvestment plan, a participant must provide the Company with written notice.  The Amended Dividend Reinvestment Plan reduces the advance notice that a stockholder must provide in order to terminate participation in the dividend reinvestment plan from ten business days prior to the last day of the month to which a distribution relates to four business days prior to the last business day of the month to which a distribution relates.

There were no other changes made in the Amended Dividend Reinvestment Plan. The Amended Dividend Reinvestment Plan will be effective April 20, 2013.

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FAIR VALUE DISCLOSURES

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instruments 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 loans receivable: The Company’s real estate loans receivable are presented in the accompanying consolidated balance sheets at their amortized cost net of recorded loan loss reserves and not at fair value. The fair values of real estate loans receivable were estimated using an internal valuation model that considered the expected cash flows for the loans, underlying collateral values (for collateral-dependent loans) and estimated yield requirements of institutional investors for loans with similar characteristics, including remaining loan term, loan-to-value, type of collateral and other credit enhancements. The Company classifies these inputs as Level 3 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 by a third-party expert 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.

Notes payable: The fair value of the Company’s notes payable is 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 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. The Company classifies these inputs as Level 3 inputs.

The following were the face values, carrying amounts and fair values of the Company’s real estate loans receivable and notes payable as of March 31, 2013 and December 31, 2012, which carrying amounts do not approximate the fair values (in thousands):

	March 31, 2013						December 31, 2012
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial assets:
Real estate loans receivable	$	380,784	$	350,256	$	390,816	$	380,542	$	348,846	$	390,145
Financial liabilities:
Notes payable	$	1,581,514	$	1,581,514	$	1,595,264	$	1,334,514	$	1,334,514	$	1,341,363

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. Despite increased capital market and credit market activity, transaction volume for certain financial instruments remains relatively low. This has 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.

During the three months ended March 31, 2013, the Company measured the following liabilities at fair value (in thousands):

				Fair Value Measurements Using
	Total			Quoted Prices in Active Markets  for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Recurring Basis:
Liability derivatives	$	(14,691	)	$	—	$	(14,691	)	$	—

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NOTES PAYABLE

3 Months Ended

Mar. 31, 2013

Notes Payable [Abstract]

NOTES PAYABLE

NOTES PAYABLE

As of March 31, 2013 and December 31, 2012, the Company’s notes payable consisted of the following (dollars in thousands):

	Principal as of March 31, 2013		Principal as of December 31, 2012		Contractual Interest Rate as of March 31, 2013(1)	Effective Interest Rate as of March 31, 2013 (1)	Payment Type	Maturity Date (2)
100 & 200 Campus Drive Mortgage Loan (3)	$	—	$	55,000	(3)	(3)	(3)	(3)
300-600 Campus Drive Mortgage Loan	93,850		93,850		5.90%	5.9%	Interest Only	04/10/2014
Portfolio Revolving Loan Facility (4)	55,000		55,000		One-month LIBOR + 3.00% (4)	5.2%	Interest Only	04/30/2014
Willow Oaks Revolving Loan (3)	—		13,000		(3)	(3)	(3)	(3)
300 N. LaSalle Building Mortgage Loan	350,000		350,000		4.25%	4.3%	Interest Only	08/01/2015
Union Bank Plaza Mortgage Loan (5)	105,000		105,000		One-month LIBOR + 1.75%	3.5%	Interest Only	09/15/2015
Emerald View at Vista Center Mortgage Loan	19,800		19,800		One-month LIBOR + 2.25%	4.6%	Interest Only	01/01/2016
Portfolio Loan (6)	341,544		341,544		One-month LIBOR + 2.15%	3.7%	Interest Only	01/27/2016
One Kendall Square Borrowing (7)	45,000		45,000		One-month LIBOR + 2.50%	4.0%	Interest Only	12/01/2013
601 Tower Mortgage Loan (8)	16,320		16,320		(8)	3.5%	Interest Only	06/03/2015
CityPlace Tower Mortgage Loan	71,000		71,000		3.59%	3.6%	Interest Only	08/01/2015
Fountainhead Plaza Mortgage Loan	80,000		80,000		One-month LIBOR + 1.90%	2.9%	Interest Only	12/01/2015
Metropolitan Center Mortgage Loan (3)	—		13,000		(3)	(3)	(3)	(3)
CIBC Portfolio Mortgage Loan (9)	76,000		76,000		One-month LIBOR + 2.75%	3.0%	Interest Only	01/01/2016
U.S. Bank/TD Bank Credit Facility (10)	188,000		—		One-month LIBOR + 1.75% - 1.85%	2.2%	Interest Only	03/01/2016
Corporate Technology Centre Mortgage Loan (11)	140,000		—		3.50%	3.5%	(12)	04/01/2020
	$	1,581,514	$	1,334,514

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2013. Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2013 (consisting of the contractual interest rate and the effect of interest rate swaps and contractual floor rates), using interest rate indices as of March 31, 2013, where applicable. For further information regarding the Company’s derivative instruments, see Note 7, “Derivative Instruments.”

⁽²⁾ Represents the initial maturity date or the maturity date as extended as of March 31, 2013; subject to certain conditions, the maturity dates of certain loans may be extended beyond the maturity date shown.

⁽³⁾ On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay these loans in full. See “ — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽⁴⁾ On April 30, 2010, the Company entered into a four-year revolving loan facility for an amount up to $100.0 million. As of March 31, 2013, $55.0 million of principal was outstanding and $45.0 million remained available for future disbursements, subject to certain conditions set forth in the loan agreement. The interest rate under this loan is calculated at a variable rate of 300 basis points over one-month LIBOR, but at no point shall the interest rate be less than 4.25%; however, there is no minimum floor rate for any portion of the loan that is subject to a swap contract with a minimum initial term of two years or any shorter term expiring on the maturity date. The Portfolio Revolving Loan Facility is secured by Mountain View Corporate Center, the 350 E. Plumeria Building, the Pierre Laclede Center and One Main Place.

⁽⁵⁾ On September 15, 2010, in connection with the acquisition of the Union Bank Plaza, the Company entered into a five-year mortgage loan for borrowings of up to $119.3 million secured by the Union Bank Plaza. As of March 31, 2013, $105.0 million had been disbursed to the Company with the remaining loan balance of $14.3 million available for future disbursements, subject to certain conditions set forth in the loan agreement.

⁽⁶⁾ The Portfolio Loan is secured by Plano Business Park, Horizon Tech Center, Dallas Cowboys Distribution Center, Crescent VIII, National City Tower, Granite Tower, Gateway Corporate Center, I-81 Industrial Portfolio, Two Westlake Park and Torrey Reserve West.

⁽⁷⁾ This note bears interest at a floating rate of 250 basis points over one-month LIBOR, subject to a minimum interest rate of 4.0%.

⁽⁸⁾ On June 6, 2011, the Company entered into a four-year $32.6 million revolving credit loan. As of March 31, 2013, $16.3 million had been disbursed to the Company under the mortgage loan and $16.3 million remained available for future disbursements under the revolving loan facility, subject to certain conditions set forth in the loan agreement. The interest rate on the $16.3 million outstanding as of March 31, 2013 was calculated at a fixed rate of 3.54% per annum. The interest rate on the $16.3 million available for future disbursements as of March 31, 2013 would be calculated at a variable rate of 220 basis points over one-month LIBOR.

⁽⁹⁾ The CIBC Portfolio Mortgage Loan is secured by the Tuscan Inn First Mortgage Origination, the Chase Tower First Mortgage Origination, the Pappas Commerce First Mortgage Origination and the Sheraton Charlotte Airport Hotel First Mortgage.

⁽¹⁰⁾ The U.S. Bank/TD Bank Credit Facility is secured by 100 & 200 Campus Drive Buildings, Metropolitan Center and Willow Oaks Corporate Center. See “— Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽¹¹⁾ See “— Recent Financing Transactions — Corporate Technology Centre Mortgage Loan.”

⁽¹²⁾ Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity.

As of March 31, 2013 and December 31, 2012, the Company’s deferred financing costs were $8.1 million and $7.0 million, respectively, net of amortization, and are included in deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets.

During the three months ended March 31, 2013 and 2012, the Company incurred $15.3 million and $14.7 million of interest expense, respectively. As of March 31, 2013 and December 31, 2012, $4.4 million and $4.3 million, respectively, of interest expense were payable. Included in interest expense for the three months ended March 31, 2013 and 2012 were $0.8 million and $0.8 million of amortization of deferred financing costs, respectively. Interest expense incurred as a result of the Company’s interest rate swap agreements was $2.4 million and $2.3 million for the three months ended March 31, 2013 and 2012, respectively.

The following is a schedule of maturities for all notes payable outstanding as of March 31, 2013 (in thousands):

April 1, 2013 through December 31, 2013	$	45,000
2014	148,850
2015	622,320
2016	625,344
2017	—
Thereafter	140,000
	$	1,581,514

Certain of the Company’s notes payable contain financial debt covenants. As of March 31, 2013, the Company was in compliance with these debt covenants.

Recent Financing Transactions

U.S. Bank/TD Bank Credit Facility

On March 6, 2013, the Company, through certain indirect wholly owned subsidiaries (together, the “U.S. Bank/TD Bank Borrowers”), entered into a three-year senior secured credit facility with U.S. Bank National Association and TD Bank, N.A. (together, the “U.S. Bank/TD Bank Lenders”), unaffiliated lenders, for borrowings of up to $235.0 million (the “U.S. Bank/TD Bank Credit Facility”), of which $141.0 million is non-revolving debt and $94.0 million is revolving debt. The U.S. Bank/TD Bank Credit Facility is secured by the 100 & 200 Campus Drive Buildings, Metropolitan Center and Willow Oaks Corporate Center. As of March 31, 2013, the $141.0 million non-revolving portion and $47.0 million of the revolving portion were funded, and $47.0 million of the revolving portion remains available for future disbursements, subject to certain terms and conditions contained in the loan documents. The Company used $81.0 million of the proceeds funded at closing to repay the outstanding principal balances due under the 100 & 200 Campus Drive Mortgage Loan, the Metropolitan Center Mortgage Loan and the Willow Oaks Revolving Loan. Also, in connection with the repayment of these loans, the Company terminated the swap agreements with respect to eight swaps which were subject to an aggregate breakage fee of $1.1 million, which fee was paid with loan proceeds.

The U.S. Bank/TD Bank Credit Facility matures on March 1, 2016, with two one-year extension options, subject to certain terms and conditions contained in the loan documents.  For each calendar quarter, the interest rate on the U.S. Bank/TD Bank Credit Facility will be equal to (i) the applicable margin, which will be based on the borrowing base leverage ratio as determined pursuant to the loan agreement, and which will vary between 175 and 185 basis points, plus (ii) one-month LIBOR. Monthly payments are interest only with the entire principal balance and all outstanding interest and fees due at maturity. The Company will have the right to prepay the loan in whole at any time or in part from time to time, subject to the payment of certain expenses potentially incurred by the lender as a result of the prepayment and subject to certain other conditions and possible fees contained in the loan documents.

On March 6, 2013, the Company, through the U.S. Bank/TD Bank Borrowers, also entered into four swap agreements to hedge the interest rate for certain portions of the U.S. Bank/TD Bank Credit Facility. The interest rate on $85.1 million of the non-revolving debt has been fixed at 2.25% - 2.35% through March 1, 2016 and the interest rate on $55.9 million of the non-revolving debt has been fixed at 2.46% - 2.56% through March 1, 2017, assuming the Company exercises the first of its two extension options.

KBS REIT Properties II, LLC, the wholly owned subsidiary through which the Company indirectly owns all of its real estate assets (“KBS REIT Properties II”), is providing a guaranty of 25% of the outstanding principal amount due and payable under the U.S. Bank/TD Bank Credit Facility. KBS REIT Properties II is also providing a guaranty of: (i) certain monetary obligations relating to the above-referenced swap agreements; (ii) in certain circumstances, any amounts owed by the U.S. Bank/TD Bank Borrowers pursuant to the related environmental indemnity; and (iii) any deficiency, loss or damage suffered by the U.S. Bank/TD Bank Lenders resulting from (a) certain intentional acts committed by the U.S. Bank/TD Bank Borrowers and, in certain circumstances, KBS REIT Properties II, or (b) certain bankruptcy or insolvency proceedings involving the U.S. Bank/TD Bank Borrowers.

Corporate Technology Centre Mortgage Loan

On March 28, 2013, in connection with the acquisition of Corporate Technology Centre, the Company, through the Corporate Technology Centre Owner, entered into a seven-year mortgage loan with an unaffiliated lender, for borrowings of $140.0 million secured by Corporate Technology Centre (the “Corporate Technology Centre Mortgage Loan”). The Corporate Technology Centre Mortgage Loan matures on April 1, 2020 and bears interest at a fixed rate of 3.50%. Monthly payments are initially interest-only. Beginning on May 1, 2017, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years for the balance of the loan term, with the remaining principal balance, all accrued and unpaid interest and any other amounts due at maturity.  The Corporate Technology Centre Owner has the right to repay the loan in whole (but not in part, except in connection with a parcel release) on or after March 31, 2014, subject to certain conditions and a formula‑based yield prepayment premium. The loan is fully assumable by a subsequent purchaser of Corporate Technology Centre, subject to certain terms and conditions contained in the loan agreement.

KBS REIT Properties II is providing a limited guaranty of the Corporate Technology Centre Mortgage Loan with respect to certain potential costs, expenses, losses, damages and other sums which may result from certain actions or inactions by the Corporate Technology Centre Owner.  KBS REIT Properties II is also providing a guaranty of the principal balance and any interest or other sums outstanding under the Corporate Technology Centre Mortgage Loan in the event of (i) certain bankruptcy or insolvency proceedings involving the Corporate Technology Centre Owner, certain of its affiliates, or KBS REIT Properties II and (ii) certain other intentional actions committed by the Corporate Technology Centre Owner in violation of the loan documents.

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DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2013

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 the 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. All of the Company’s interest rate swaps are designated as cash flow hedges.

The following table summarizes the notional and fair value of the Company’s interest rate swaps designated as cash flow hedges as of March 31, 2013 and December 31, 2012. The notional value 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):

						Fair Value of Asset (Liability)				Fair Value of Asset (Liability)
Derivative Instruments	Effective Date	Maturity Date	Notional Value		Reference Rate	March 31, 2013				December 31, 2012
Interest Rate Swap (1)	02/26/2010	02/26/2014	$	—	One-month LIBOR/ Fixed at 2.30%	$	—		(1)	$	(239	)
Interest Rate Swap (1)	02/26/2010	02/26/2014	—		One-month LIBOR/ Fixed at 2.30%	—			(1)	(239		)
Interest Rate Swap (2)	04/30/2010	04/30/2014	55,000		One-month LIBOR/ Fixed at 2.17%	(953		)		(1,214		)
Interest Rate Swap (1)	07/26/2010	08/01/2013	—		One-month LIBOR/ Fixed at 1.33%	—			(1)	(43		)
Interest Rate Swap (1)	07/26/2010	08/01/2013	—		One-month LIBOR/ Fixed at 1.33%	—			(1)	(43		)
Interest Rate Swap	09/15/2010	09/15/2015	105,000		One-month LIBOR/ Fixed at 1.70%	(3,503		)		(3,788		)
Interest Rate Swap (1)	12/15/2010	02/26/2014	—		One-month LIBOR/ Fixed at 1.53%	—			(1)	(262		)
Interest Rate Swap (1)	12/15/2010	02/26/2014	—		One-month LIBOR/ Fixed at 1.53%	—			(1)	(262		)
Interest Rate Swap	12/16/2010	01/01/2016	19,800		One-month LIBOR/ Fixed at 2.39%	(1,084		)		(1,166		)
Interest Rate Swap	12/20/2010	06/16/2015	69,000		One-month LIBOR/ Fixed at 1.94%	(2,469		)		(2,700		)
Interest Rate Swap	02/01/2011	01/01/2016	56,150		One-month LIBOR/ Fixed at 2.16%	(2,732		)		(2,929		)
Interest Rate Swap	02/01/2011	02/01/2015	8,400		One-month LIBOR/ Fixed at 1.75%	(226		)		(254		)
Interest Rate Swap	02/01/2011	02/01/2014	80,150		One-month LIBOR/ Fixed at 1.29%	(719		)		(928		)
Interest Rate Swap	03/08/2011	02/01/2014	85,900		One-month LIBOR/ Fixed at 1.45%	(889		)		(1,147		)
Interest Rate Swap	03/10/2011	02/01/2014	13,750		One-month LIBOR/ Fixed at 1.32%	(127		)		(164		)
Interest Rate Swap	12/01/2011	12/01/2015	80,000		One-month LIBOR/ Fixed at 1.04%	(1,455		)		(1,547		)
Interest Rate Swap (1)	01/01/2012	01/01/2016	—		One-month LIBOR/ Fixed at 1.02%	—			(1)	(145		)
Interest Rate Swap (1)	02/01/2012	01/01/2016	—		One-month LIBOR/ Fixed at 0.77%	—			(1)	(59		)
Interest Rate Swap	03/06/2013	03/01/2017	32,113		One-month LIBOR/ Fixed at 0.71%	(159		)		—
Interest Rate Swap	03/06/2013	03/01/2017	23,787		One-month LIBOR/ Fixed at 0.71%	(117		)		—
Interest Rate Swap	03/06/2013	03/01/2016	48,887		One-month LIBOR/ Fixed at 0.50%	(148		)		—
Interest Rate Swap	03/06/2013	03/01/2016	36,213		One-month LIBOR/ Fixed at 0.50%	(110		)		—
Total derivatives designated  as hedging instruments			$	714,150		$	(14,691	)		$	(17,129	)

_____________________

⁽¹⁾ On March 6, 2013, the Company used proceeds from the U.S. Bank/TD Bank Credit Facility to repay the loans related to these swaps in full. In connection with the repayment of these loans, the Company terminated these swap agreements with respect to eight swaps which were subject to an aggregate breakage fee of $1.1 million. See Note 6, “Notes Payable — Recent Financing Transactions — U.S. Bank/TD Bank Credit Facility.”

⁽²⁾ In connection with entering into the Portfolio Revolving Loan Facility, the Company entered into an interest rate swap agreement with Wells Fargo Bank, N.A. which effectively fixes the interest rate on the initial $55.0 million drawn under the loan at approximately 5.17% for the first three years of the loan and fixes the interest rate on $45.0 million of this amount at approximately 5.17% for the last year of the initial loan term.

Asset derivatives are recorded as deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets, and liability derivatives are recorded as other liabilities on the accompanying consolidated balance sheets. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) in the accompanying consolidated statements of stockholders’ equity. The Company recorded unrealized gains (losses) of $1.3 million and $(0.4) million on derivative instruments designated as cash flow hedges in accumulated other comprehensive income (loss) during the three months ended March 31, 2013 and 2012, respectively. Amounts in other comprehensive income (loss) will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flow.  As a result of utilizing derivative instruments designated as cash flow hedges to hedge its variable rate notes payable, the Company recognized an additional $2.4 million and $2.3 million of interest expense related to the effective portion of cash flow hedges during the three months ended March 31, 2013 and 2012, respectively. The change in fair value of the ineffective portion is recognized directly in earnings. During the three months ended March 31, 2013 and 2012, there was no ineffective portion related to the change in fair value of the cash flow hedges. During the next 12 months, the Company expects to recognize additional interest expense related to derivative instruments designated as cash flow hedges. The present value of the additional interest expense totaled $9.9 million as of March 31, 2013 and was included in accumulated other comprehensive income (loss).

In conjunction with the refinancing of the U.S. Bank/TD Bank Credit Facility, the Company terminated the swap agreements with respect to eight swaps and paid an aggregate breakage fee of $1.1 million. Because it remains probable that the original hedged forecasted transactions (i.e., LIBOR-based debt service payments) will occur, the loss related to the termination of these swap agreements is included in accumulated other comprehensive income (loss) and will be reclassified into earnings over the period of the original forecasted hedged transaction. During the three months ended March 31, 2013, the Company reclassified $0.1 million of the loss related to the termination of swap agreements into earnings as an increase to interest expense.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

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 entitle the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate and real estate-related investments, the management of those investments, among other services, and the disposition of investments, as well as reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, such as expenses related to the dividend reinvestment plan, 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 as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc. and KBS Legacy Partners Apartment REIT, Inc. During the three months ended March 31, 2013 and 2012, no transactions occurred between the Company and these other KBS-sponsored programs.

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2013 and 2012, respectively, and any related amounts payable as of March 31, 2013 and December 31, 2012 (in thousands):

	Incurred					Payable as of
	Three Months Ended March 31,					March 31,		December 31,
	2013		2012			2013		2012
Expensed
Asset management fees	$	5,491	$	5,587	(1)	$	—	$	—
Reimbursement of operating expenses (2)	25		15			—		168
Acquisition fees	1,797		—			—		—
Capitalized
Origination fees	—		588			—		—
	$	7,313	$	6,190		$	—	$	168

_____________________

⁽¹⁾ Amount includes asset management fees from discontinued operations totaling $21,000 for the three months ended March 31, 2012.

⁽²⁾ The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses 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 $25,000 and $15,000 for the three months ended March 31, 2013 and 2012, respectively, and were the only employee costs reimbursed under the Advisory Agreement through March 31, 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers.

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REAL ESTATE (Operating Leases) (Narrative) (Details) (USD $)	3 Months Ended					3 Months Ended	9 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Mar. 31, 2013 Other Liabilities [Member]	Dec. 31, 2012 Other Liabilities [Member]	Mar. 31, 2013 Maximum [Member]	Sep. 30, 2012 Maximum [Member]	Sep. 30, 2012 Weighted Average [Member]
Operating Leased Assets [Line Items]
Operating lease, term							15 years 10 months 24 days	5 years 9 months 18 days
Security deposit liability				$ 4,600,000	$ 4,200,000
Deferred rent recognized	3,563,000	4,880,000
Deferred rent receivables	57,300,000		53,500,000
Unamortized lease incentives	5,500,000		5,300,000
Recorded bad debt expense related to tenant	241,000	(61,000)
Bad debt reserve	$ 100,000
Bad debt reserve of annualized base rent						1.00%

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RELATED PARTY TRANSACTIONS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012
Related Party Transaction [Line Items]
Incurred	$ 7,313,000		$ 6,190,000
Payable as of	0				168,000
Asset management fees from discontinued operations			21,000
Administrative fees, amount paid	25,000	[1]	15,000	[1]
Expensed [Member] | Asset Management Fees [Member] | Advisor and Dealer Manager [Member]
Related Party Transaction [Line Items]
Expenses	5,491,000		5,587,000	[2]
Payable as of	0				0
Expensed [Member] | Reimbursement of Operating Expenses [Member] | Advisor and Dealer Manager [Member]
Related Party Transaction [Line Items]
Payable as of	0	[1]			168,000	[1]
Expensed [Member] | Acquisition Fees [Member] | Advisor and Dealer Manager [Member]
Related Party Transaction [Line Items]
Expenses	1,797,000		0
Payable as of	0				0
Capitalized [Member] | Origination Fees [Member] | Advisor and Dealer Manager [Member]
Related Party Transaction [Line Items]
Incurred	0		588,000
Payable as of	$ 0				$ 0

[1] The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses 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 $25,000 and $15,000 for the three months ended March 31, 2013 and 2012, respectively, and were the only employee costs reimbursed under the Advisory Agreement through March 31, 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers.

[2] Amount includes asset management fees from discontinued operations totaling $21,000 for the three months ended March 31, 2012.

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REAL ESTATE (Tables)

3 Months Ended

Mar. 31, 2013

Real Estate [Abstract]

Schedule of Real Estate Investments

The following table summarizes the Company’s investments in real estate as of March 31, 2013 and December 31, 2012 (in thousands):

	Land		Buildings and Improvements			Tenant Origination and Absorption Costs			Total Real Estate
As of March 31, 2013:
Office	$	326,057	$	2,049,040		$	298,511		$	2,673,608
Industrial (1)	10,300		88,919			18,030			117,249
Total real estate, cost	$	336,357	$	2,137,959		$	316,541		$	2,790,857
Accumulated depreciation and amortization	—		(190,071		)	(102,020		)	(292,091		)
Net Amount	$	336,357	$	1,947,888		$	214,521		$	2,498,766
As of December 31, 2012:
Office	$	254,897	$	1,903,298		$	286,291		$	2,444,486
Industrial (1)	10,300		88,966			18,441			117,707
Total real estate, cost	$	265,197	$	1,992,264		$	304,732		$	2,562,193
Accumulated depreciation and amortization	—		(173,917		)	(96,621		)	(270,538		)
Net Amount	$	265,197	$	1,818,347		$	208,111		$	2,291,655

_____________________

⁽¹⁾ Includes an investment in the rights to a ground lease. The ground lease expires in February 2050.

Schedules of Concentration of Risk, by Risk Factor

As of March 31, 2013, the Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Legal Services	57	$	51,147	19.4	%
Finance	90	50,058		19.0	%
Computer System Design & Programming	21	34,029		12.9	%
		$	135,234	51.3	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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 March 31, 2013, the following property represented more than 10% of the Company’s total assets:

Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) (1)		Average Annualized Base Rent per sq. ft.		Occupancy
300 N. LaSalle Building	Chicago, IL	1,302,901	$	566,197	18.6	%	$	45,211	$	34.80	100	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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.

Schedule of Future Minimum Rental Income for Company's Properties

As of March 31, 2013, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands):

April 1, 2013 through December 31, 2013	$	186,699
2014	241,382
2015	218,730
2016	200,727
2017	180,840
Thereafter	755,157
	$	1,783,535

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FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Mar. 31, 2013

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 real estate loans receivable and notes payable as of March 31, 2013 and December 31, 2012, which carrying amounts do not approximate the fair values (in thousands):

	March 31, 2013						December 31, 2012
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial assets:
Real estate loans receivable	$	380,784	$	350,256	$	390,816	$	380,542	$	348,846	$	390,145
Financial liabilities:
Notes payable	$	1,581,514	$	1,581,514	$	1,595,264	$	1,334,514	$	1,334,514	$	1,341,363

Schedule of Assets and Liabilities at Fair Value

During the three months ended March 31, 2013, the Company measured the following liabilities at fair value (in thousands):

				Fair Value Measurements Using
	Total			Quoted Prices in Active Markets  for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Recurring Basis:
Liability derivatives	$	(14,691	)	$	—	$	(14,691	)	$	—

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FAIR VALUE DISCLOSURES (Schedule of Face Value, Carrying Amounts and Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Real estate loan receivable, Face Value	$ 380,784	$ 380,542
Notes payable, Face Value	1,581,514	1,334,514
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Real estate loans receivable, Value	350,256	348,846
Notes payable, Value	1,581,514	1,334,514
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Real estate loans receivable, Value	390,816	390,145
Notes payable, Value	$ 1,595,264	$ 1,341,363

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REAL ESTATE LOANS RECEIVABLE (Schedule of Activity Related to Real Estate Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Real Estate Loans Receivable [Roll Forward]
Real estate loans receivables, Beginning Balance	$ 348,846
Face value of real estate loan receivable originated and acquired	716
Principal repayment received on real estate loan receivable	(474)	(324)
Accretion of discounts on purchased real estate loans receivable	1,301
Amortization of closing costs and origination fees on real estate loans receivable	(133)	(140)
Real estate loans receivables, Ending Balance	$ 350,256

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income	$ 6,432	$ 10,463
Other comprehensive loss:
Unrealized losses on derivative instruments	1,305	(373)
Reclassification of realized losses on derivative instruments	80	0
Total other comprehensive loss	1,385	(373)
Total comprehensive income (loss)	$ 7,817	$ 10,090

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REAL ESTATE

3 Months Ended

Mar. 31, 2013

Real Estate [Abstract]

REAL ESTATE

REAL ESTATE

As of March 31, 2013, the Company’s real estate portfolio was composed of 20 office properties, one office/flex property, a portfolio of four industrial properties, an office campus consisting of eight office buildings, one industrial property and a leasehold interest in one industrial property, encompassing in the aggregate approximately 11.7 million rentable square feet. As of March 31, 2013, the Company’s real estate portfolio was 95% occupied. The following table summarizes the Company’s investments in real estate as of March 31, 2013 and December 31, 2012 (in thousands):

	Land		Buildings and Improvements			Tenant Origination and Absorption Costs			Total Real Estate
As of March 31, 2013:
Office	$	326,057	$	2,049,040		$	298,511		$	2,673,608
Industrial (1)	10,300		88,919			18,030			117,249
Total real estate, cost	$	336,357	$	2,137,959		$	316,541		$	2,790,857
Accumulated depreciation and amortization	—		(190,071		)	(102,020		)	(292,091		)
Net Amount	$	336,357	$	1,947,888		$	214,521		$	2,498,766
As of December 31, 2012:
Office	$	254,897	$	1,903,298		$	286,291		$	2,444,486
Industrial (1)	10,300		88,966			18,441			117,707
Total real estate, cost	$	265,197	$	1,992,264		$	304,732		$	2,562,193
Accumulated depreciation and amortization	—		(173,917		)	(96,621		)	(270,538		)
Net Amount	$	265,197	$	1,818,347		$	208,111		$	2,291,655

_____________________

⁽¹⁾ Includes an investment in the rights to a ground lease. The ground lease expires in February 2050.

As of March 31, 2013, the following property represented more than 10% of the Company’s total assets:

Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) (1)		Average Annualized Base Rent per sq. ft.		Occupancy
300 N. LaSalle Building	Chicago, IL	1,302,901	$	566,197	18.6	%	$	45,211	$	34.80	100	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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 real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2013, the leases had remaining terms, excluding options to extend, of up to 15.9 years with a weighted-average remaining term of 5.8 years. The leases may have provisions to extend the term of the leases, options for early termination for all or part of the leased premises after paying a specified penalty, rights of first refusal to purchase the property at competitive market rates, 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 security deposits from tenants in the form of a cash deposit and/or a letter of credit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. 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 $4.6 million and $4.2 million as of March 31, 2013 and December 31, 2012, respectively.

During the three months ended March 31, 2013 and 2012, the Company recognized deferred rent from tenants, net of lease incentive amortization, of $3.6 million and $4.9 million, respectively. As of March 31, 2013 and December 31, 2012, the cumulative deferred rent balance was $57.3 million and $53.5 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $5.5 million and $5.3 million of unamortized lease incentives as of March 31, 2013 and December 31, 2012, respectively.

As of March 31, 2013, the future minimum rental income from the Company’s properties under non-cancelable operating leases was as follows (in thousands):

April 1, 2013 through December 31, 2013	$	186,699
2014	241,382
2015	218,730
2016	200,727
2017	180,840
Thereafter	755,157
	$	1,783,535

As of March 31, 2013, the Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Legal Services	57	$	51,147	19.4	%
Finance	90	50,058		19.0	%
Computer System Design & Programming	21	34,029		12.9	%
		$	135,234	51.3	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of March 31, 2013, 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.

No other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time. During the three months ended March 31, 2013, the Company recorded bad debt expense of $0.2 million. During the three months ended March 31, 2012, the Company reduced its bad debt expense reserve and recorded a net recovery of bad debt related to its tenant receivables of $61,000. As of March 31, 2013, the Company had a bad debt expense reserve of approximately $0.1 million, which represents less than 1% of its annualized base rent.

As of March 31, 2013, there were no leases that accounted for more than 10% of annualized base rent.

Geographic Concentration Risk

As of March 31, 2013, the Company’s net investments in real estate in Illinois, California and New Jersey represented 18.6%, 18.0% and 14.5% 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 Illinois, California and New Jersey real estate markets.  Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

In addition, the Company’s investment in the 300 N. LaSalle Building, located in Chicago, Illinois, represented 18.6% of the Company’s total assets and 20.3% of the Company’s total revenues as of March 31, 2013. As a result of this investment, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the Chicago real estate market. Any adverse economic or real estate developments in this market, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Recent Acquisition

Corporate Technology Centre

On March 28, 2013, the Company, through an indirect wholly owned subsidiary (the “Corporate Technology Centre Owner”), acquired an office campus consisting of eight office buildings totaling 610,083 rentable square feet located on approximately 32.7 acres of land in San Jose, California (“Corporate Technology Centre”). The seller is not affiliated with the Company or the Advisor. The purchase price of Corporate Technology Centre was $239.0 million plus closing costs. At acquisition, Corporate Technology Centre was 100% leased to five tenants.

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RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

Schedule of Related Party Costs

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2013 and 2012, respectively, and any related amounts payable as of March 31, 2013 and December 31, 2012 (in thousands):

	Incurred					Payable as of
	Three Months Ended March 31,					March 31,		December 31,
	2013		2012			2013		2012
Expensed
Asset management fees	$	5,491	$	5,587	(1)	$	—	$	—
Reimbursement of operating expenses (2)	25		15			—		168
Acquisition fees	1,797		—			—		—
Capitalized
Origination fees	—		588			—		—
	$	7,313	$	6,190		$	—	$	168

_____________________

⁽¹⁾ Amount includes asset management fees from discontinued operations totaling $21,000 for the three months ended March 31, 2012.

⁽²⁾ The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company reimburses 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 $25,000 and $15,000 for the three months ended March 31, 2013 and 2012, respectively, and were the only employee costs reimbursed under the Advisory Agreement through March 31, 2013. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers.

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REAL ESTATE (Recent Acquisition) (Narrative) (Details) (USD $) In Millions, unless otherwise specified		0 Months Ended
	Mar. 31, 2013 sqft	Mar. 28, 2013 Corporate Technology Centre [Member] acre sqft Tenants	Mar. 28, 2013 Corporate Technology Centre [Member] Office Campus [Member] properties	Mar. 28, 2013 Corporate Technology Centre [Member] Office Buildings, Campus [Member] properties
Real Estate Properties [Line Items]
Number of real estate properties acquired			1	8
Rentable square feet	11,700,000	610,083
Area of land		32.7
Contractual purchase price		$ 239.0
Percent of property leased		100.00%
Number of tenants		5

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements.  In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods.  Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The consolidated financial statements include the accounts of the Company, KBS REIT Holdings II, the Operating Partnership, and their direct and indirect wholly owned subsidiaries.  All significant intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

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. Derivative instruments designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) on the accompanying consolidated statements of comprehensive income (loss) and consolidated statements of equity. 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 in the accompanying consolidated statements of operations.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded in accumulated other comprehensive income (loss) to earnings.

The termination of a cash flow hedge prior to the maturity date may result in a net derivative instrument gain or loss that continues to be reported in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction (i.e., LIBOR based debt service payments) unless it is probable that the original forecasted hedged transaction will not occur by the end of the originally specified time period (as documented at the inception of the hedging relationship) or within an additional two-month period of time thereafter. If it is probable that the hedged forecasted transaction will not occur either by the end of the originally specified time period or within the additional two-month period of time, that derivative instrument gain or loss reported in accumulated other comprehensive income (loss) shall be reclassified into earnings immediately.

Redeemable Common Stock

The Company has a share redemption program that may enable stockholders to sell their shares to the Company in limited circumstances.

Pursuant to the share redemption program, there are several limitations on the Company’s ability to redeem shares under the program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined in the share redemption program), the Company may not redeem shares unless the stockholder has held the shares for one year, provided that if the Company is redeeming all of a stockholder’s shares, then there is no holding period requirement for shares purchased pursuant to the Company’s dividend reinvestment plan.

• During any calendar year, the Company may 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 the Company may not redeem more than $3.0 million of shares in the aggregate each month, excluding shares redeemed in connection with a stockholder’s death, qualifying disability or determination of incompetence.

• During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.

• The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland 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 a stockholder’s death, qualifying disability or determination of incompetence are 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 (as defined in the share redemption program), and the price at which the Company redeems all other shares eligible for redemption is as follows:

• For stockholders who have held their shares for at least one year, 92.5% of the Company’s most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least two years, 95.0% of the Company’s most recent estimated value per share as of the applicable Redemption Date;

• For stockholders who have held their shares for at least three years, 97.5% of the Company’s most recent estimated value per share as of the applicable Redemption Date; and

• For stockholders who have held their shares for at least four years, 100% of the Company’s most recent estimated value per share as of the applicable Redemption Date.

On December 18, 2012, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $10.29 (unaudited), based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2012. The change in the redemption price, which is calculated based on the most recent estimated value per share, was effective for the December 2012 Redemption Date, which was December 31, 2012. The Company currently expects to engage the Advisor and/or an independent valuation firm to update the Company’s estimated value per share in December 2013, but is not required to update the estimated value per share more frequently than every 18 months.

On March 6, 2013, the Company’s board of directors approved the Sixth Amended and Restated Share Redemption Program (the “Sixth Amended Share Redemption Program”). Pursuant to the Sixth Amended Share Redemption Program, the Company has modified how the Company will process redemptions that would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currentlyeffective, or the most recently effective, registration statement as such registration statement has been amended or supplemented (the “Minimum Purchase Requirement”). Specifically, if the Company cannot repurchase all shares presented for redemption in any month because of the limitations on redemptions set forth in the program, then the Company will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the Minimum Purchase Requirement, then the Company would redeem all of such stockholder’s shares. If the Company is redeeming all of a stockholder’s shares, there would be no holding period requirement for shares purchased pursuant to the Company’s dividend reinvestment plan.

The Company’s board of directors may amend, suspend or terminate the share redemption program with 30 days’ notice to its stockholders. The Company may provide this notice by including such information in a Current Report on Form 8‑K or in the Company’s annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to its stockholders.

The Company limits the dollar value of shares that may be redeemed under the share redemption program as described above. For the three months ended March 31, 2013, the Company redeemed $10.5 million of shares, which represented all redemption requests received in good order and eligible for redemption through the March 2013 Redemption Date, except for 648,000 shares due to the limitations discussed above. The Company recorded $6.6 million of other liabilities on the accompanying consolidated balance sheet as of March 31, 2013 related to these unfulfilled redemption requests. Based on the amount of net proceeds raised from the sale of shares under the dividend reinvestment plan during 2012, the Company has $55.9 million available for redemptions during the remainder of 2013, subject to the limitations described above, including the monthly limitation for ordinary redemptions.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three months ended March 31, 2013 and 2012, respectively.

Distributions declared per common share were $0.214 and $0.160 for the three months ended March 31, 2013 and 2012, respectively. Distributions declared per common share assumes each share was issued and outstanding each day during the three months ended March 31, 2013 and 2012, respectively. For each day that was a record date for distributions during the three months ended March 31, 2013 and 2012, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the period from January 1, 2013 through March 31, 2013 was a record date for distributions. Each day during the periods from January 1, 2012 through February 28, 2012 and March 1, 2012 through March 31, 2012 was a record date for distributions. Additionally, the Company’s board of directors declared a distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on February 4, 2013.

Segments

The Company’s segments are based on the Company’s method of internal reporting, which classifies its operations by investment type: real estate and real estate-related. For financial data by segment, see Note 10, “Segment Information.”