x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 27-0668930 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
800 Newport Center Drive, Suite 700 Newport Beach, California | 92660 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ | ||||
Non-Accelerated Filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | x | |||
Emerging growth company | ¨ |
PART I. | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
June 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Real estate held for investment: | ||||||||
Land | $ | 41,771 | $ | 41,771 | ||||
Buildings and improvements | 326,700 | 327,619 | ||||||
Total real estate held for investment, cost | 368,471 | 369,390 | ||||||
Less accumulated depreciation and amortization | (46,984 | ) | (42,622 | ) | ||||
Total real estate held for investment, net | 321,487 | 326,768 | ||||||
Real estate held for sale, net | — | 39,926 | ||||||
Total real estate, net | 321,487 | 366,694 | ||||||
Cash and cash equivalents | 21,213 | 15,998 | ||||||
Restricted cash | 5,090 | 5,099 | ||||||
Prepaid expenses and other assets | 4,013 | 4,146 | ||||||
Total assets | $ | 351,803 | $ | 391,937 | ||||
Liabilities and stockholders’ equity | ||||||||
Notes payable: | ||||||||
Notes payable, net | $ | 249,901 | $ | 252,326 | ||||
Notes payable related to real estate held for sale, net | — | 26,820 | ||||||
Total notes payable, net | 249,901 | 279,146 | ||||||
Accounts payable and accrued liabilities | 4,680 | 5,566 | ||||||
Due to affiliates | 148 | 157 | ||||||
Distributions payable | 934 | 1,154 | ||||||
Other liabilities | 2,640 | 2,778 | ||||||
Total liabilities | 258,303 | 288,801 | ||||||
Commitments and contingencies (Note 7) | ||||||||
Redeemable common stock | 545 | 350 | ||||||
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, 20,937,850 and 20,896,268 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 209 | 209 | ||||||
Additional paid-in capital | 180,391 | 180,196 | ||||||
Cumulative distributions and net losses | (87,645 | ) | (77,619 | ) | ||||
Total stockholders’ equity | 92,955 | 102,786 | ||||||
Total liabilities and stockholders’ equity | $ | 351,803 | $ | 391,937 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 10,381 | $ | 11,367 | $ | 21,347 | $ | 22,521 | |||||||
Total revenues | 10,381 | 11,367 | 21,347 | 22,521 | |||||||||||
Expenses: | |||||||||||||||
Operating, maintenance, and management | 1,523 | 1,559 | 2,907 | 3,185 | |||||||||||
Real estate taxes and insurance | 1,823 | 1,811 | 3,635 | 3,451 | |||||||||||
Asset management fees to affiliate | — | 44 | 234 | 238 | |||||||||||
Property management fees and expenses to affiliate | 1,378 | 1,498 | 2,990 | 2,853 | |||||||||||
General and administrative expenses | 551 | 849 | 1,108 | 1,474 | |||||||||||
Depreciation and amortization | 2,758 | 3,065 | 5,763 | 6,116 | |||||||||||
Interest expense | 2,346 | 2,579 | 5,128 | 5,170 | |||||||||||
Total expenses | 10,379 | 11,405 | 21,765 | 22,487 | |||||||||||
Other income: | |||||||||||||||
Interest and other income | 49 | 14 | 75 | 28 | |||||||||||
Gain on sale of real estate, net | — | — | 16,470 | — | |||||||||||
Total other income | 49 | 14 | 16,545 | 28 | |||||||||||
Net income (loss) | $ | 51 | $ | (24 | ) | $ | 16,127 | $ | 62 | ||||||
Net income per common share, basic and diluted | $ | — | $ | — | $ | 0.77 | $ | — | |||||||
Weighted-average number of common shares outstanding, basic and diluted | 20,920,275 | 20,585,367 | 20,897,493 | 20,543,217 |
Additional Paid-in Capital | Cumulative Distributions and Net Income (Loss) | Total Stockholders’ Equity | |||||||||||||||||
Common Stock | |||||||||||||||||||
Shares | Amounts | ||||||||||||||||||
Balance, December 31, 2015 | 20,508,397 | $ | 205 | $ | 176,476 | $ | (69,310 | ) | $ | 107,371 | |||||||||
Issuance of common stock | 586,585 | 6 | 5,731 | — | 5,737 | ||||||||||||||
Redemptions of common stock | (198,714 | ) | (2 | ) | (2,017 | ) | — | (2,019 | ) | ||||||||||
Distributions declared | — | — | — | (13,430 | ) | (13,430 | ) | ||||||||||||
Other offering costs | — | — | 6 | — | 6 | ||||||||||||||
Net income | — | — | — | 5,121 | 5,121 | ||||||||||||||
Balance, December 31, 2016 | 20,896,268 | 209 | 180,196 | (77,619 | ) | 102,786 | |||||||||||||
Issuance of common stock | 253,129 | 2 | 2,204 | — | 2,206 | ||||||||||||||
Redemptions of common stock | (211,547 | ) | (2 | ) | (1,953 | ) | — | (1,955 | ) | ||||||||||
Transfers to redeemable common stock | — | — | (46 | ) | — | (46 | ) | ||||||||||||
Distributions declared | — | — | — | (26,153 | ) | (26,153 | ) | ||||||||||||
Other offering costs | — | — | (10 | ) | — | (10 | ) | ||||||||||||
Net income | — | — | — | 16,127 | 16,127 | ||||||||||||||
Balance, June 30, 2017 | 20,937,850 | $ | 209 | $ | 180,391 | $ | (87,645 | ) | $ | 92,955 |
Six Months Ended June 30, | ||||||||
2017 | 2016 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 16,127 | $ | 62 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 5,763 | 6,116 | ||||||
Bad debt expense | 217 | 213 | ||||||
Loss due to property damages | 764 | 145 | ||||||
Loss due to extinguishment of debt | 267 | — | ||||||
Amortization of discount on notes payable | 44 | 44 | ||||||
Amortization of deferred financing costs | 226 | 207 | ||||||
Gain on sale of real estate, net | (16,470 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | (176 | ) | 630 | |||||
Accounts payable and accrued liabilities | (1,016 | ) | (750 | ) | ||||
Due to affiliates | (9 | ) | 404 | |||||
Other liabilities | 11 | 31 | ||||||
Net cash provided by operating activities | 5,748 | 7,102 | ||||||
Cash Flows from Investing Activities: | ||||||||
Proceeds from sale of real estate | 56,191 | — | ||||||
Improvements to real estate | (819 | ) | (1,180 | ) | ||||
Insurance proceeds received for property damage | — | 133 | ||||||
Net cash provided by (used in) investing activities | 55,372 | (1,047 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Principal payments on mortgage notes payable | (29,515 | ) | (2,898 | ) | ||||
Prepayment fees related to the extinguishment of debt | (267 | ) | — | |||||
Payments to redeem common stock | (1,955 | ) | (1,769 | ) | ||||
Payments of other offering costs | (10 | ) | (11 | ) | ||||
Distributions paid | (24,167 | ) | (3,776 | ) | ||||
Net cash used in financing activities | (55,914 | ) | (8,454 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 5,206 | (2,399 | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 21,097 | 24,869 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 26,303 | $ | 22,470 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Interest paid | $ | 4,674 | $ | 4,947 | ||||
Supplemental Disclosure of Noncash Transactions: | ||||||||
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | $ | 2,206 | $ | 2,876 | ||||
Increase in redeemable common stock payable | $ | — | $ | 205 | ||||
Increase in accrued improvements to real estate | $ | 130 | $ | — |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
1. | ORGANIZATION |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
• | The Company’s board of directors declared distributions per common share based on daily record dates for each day during the period from January 1, 2017 to February 28, 2017. Each day during the period was a record date for distributions and distributions were calculated at a rate of $0.00178082 per share per day. |
• | On March 9, 2017, the Company’s board of directors declared a March 2017 distribution in the amount of $0.05520548 per share of common stock to stockholders of record as of the close of business on March 20, 2017. |
• | On April 5, 2017, the Company’s board of directors declared a special distribution in the amount of $1.00 per share of common stock to stockholders of record as of the close of business on April 20, 2017. |
• | On May 9, 2017, the Company’s board of directors declared May 2017 and June 2017 distributions in the amounts of $0.04609658 and $0.04460959, respectively, per share of common stock to stockholders of record as of the close of business on May 19, 2017 and June 20, 2017, respectively. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
3. | REAL ESTATE |
Property Name | Date Acquired | Location | Total Real Estate, Cost | Accumulated Depreciation and Amortization | Total Real Estate, Net | |||||||||||
Legacy at Valley Ranch | 10/26/2010 | Irving, TX | $ | 36,609 | $ | (5,622 | ) | $ | 30,987 | |||||||
Poplar Creek | 02/09/2012 | Schaumburg, IL | 27,194 | (3,010 | ) | 24,184 | ||||||||||
The Residence at Waterstone | 04/06/2012 | Pikesville, MD | 65,387 | (8,571 | ) | 56,816 | ||||||||||
Legacy Crescent Park | 05/03/2012 | Greer, SC | 19,717 | (2,967 | ) | 16,750 | ||||||||||
Legacy at Martin’s Point | 05/31/2012 | Lombard, IL | 37,332 | (5,896 | ) | 31,436 | ||||||||||
Watertower Apartments | 01/15/2013 | Eden Prairie, MN | 38,870 | (4,890 | ) | 33,980 | ||||||||||
Crystal Park at Waterford | 05/08/2013 | Frederick, MD | 46,126 | (5,877 | ) | 40,249 | ||||||||||
Millennium Apartment Homes | 06/07/2013 | Greenville, SC | 33,367 | (4,165 | ) | 29,202 | ||||||||||
Legacy Grand at Concord | 02/18/2014 | Concord, NC | 27,949 | (2,775 | ) | 25,174 | ||||||||||
Lofts at the Highlands | 02/25/2014 | St. Louis, MO | 35,920 | (3,211 | ) | 32,709 | ||||||||||
$ | 368,471 | $ | (46,984 | ) | $ | 321,487 |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
4. | NOTES PAYABLE |
Book Value as of June 30, 2017 | Book Value as of December 31, 2016 | Contractual Interest Rate as of June 30, 2017 | Payment Type | Maturity Date | |||||||||||
Legacy at Valley Ranch Mortgage Loan | $ | 30,647 | $ | 30,958 | 3.9% | Principal & Interest | 04/01/2019 | ||||||||
Poplar Creek Mortgage Loan | 19,220 | 19,414 | 4.0% | Principal & Interest | 03/01/2019 | (1) | |||||||||
The Residence at Waterstone Mortgage Loan | 45,187 | 45,653 | 3.8% | Principal & Interest | 05/01/2019 | (1) | |||||||||
Legacy Crescent Park Mortgage Loan | 13,406 | 13,560 | 3.5% | Principal & Interest | 06/01/2019 | (1) | |||||||||
Legacy at Martin’s Point Mortgage Loan | 21,625 | 21,866 | 3.3% | Principal & Interest | 06/01/2019 | (1) | |||||||||
Wesley Village Mortgage Loan (2) | — | 26,862 | (2) | (2) | (2) | ||||||||||
Watertower Mortgage Loan | 23,647 | 23,943 | 2.5% | Principal & Interest | 02/10/2018 | (1) | |||||||||
Crystal Park Mortgage Loan | 26,656 | 27,013 | 2.5% | Principal & Interest | 06/01/2018 | (1) | |||||||||
Millennium Mortgage Loan | 19,934 | 20,190 | 2.7% | Principal & Interest | 07/01/2018 | (1) | |||||||||
Legacy Grand at Concord Mortgage Loan | 22,237 | 22,392 | 4.1% | Principal & Interest | 12/01/2050 | (1) | |||||||||
Lofts at the Highlands Mortgage Loan | 30,531 | 30,754 | 3.4% | Principal & Interest | 08/01/2052 | (1) | |||||||||
Total notes payable principal outstanding | $ | 253,090 | $ | 282,605 | |||||||||||
Discount on note payable, net | (2,600 | ) | (2,644 | ) | |||||||||||
Deferred financing costs, net | (589 | ) | (815 | ) | |||||||||||
Total notes payable, net | $ | 249,901 | $ | 279,146 |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
July 1, 2017 through December 31, 2017 | $ | 2,681 | |
2018 | 72,958 | ||
2019 | 126,682 | ||
2020 | 852 | ||
2021 | 884 | ||
Thereafter | 49,033 | ||
$ | 253,090 |
5. | FAIR VALUE DISCLOSURES |
• | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; |
• | Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and |
• | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
June 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Face Value | Carrying Amount | Fair Value | Face Value | Carrying Amount | Fair Value | |||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||
Notes payable | $ | 253,090 | $ | 249,901 | $ | 254,486 | $ | 282,605 | $ | 279,146 | $ | 279,258 |
6. | RELATED PARTY TRANSACTIONS |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
Incurred | Payable as of | ||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | June 30, | December 31, | ||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Expensed | |||||||||||||||||||||||
Asset management fees (1) | $ | — | $ | 44 | $ | 234 | $ | 238 | $ | — | $ | — | |||||||||||
Reimbursable operating expenses (2) | 55 | 54 | 124 | 120 | 12 | 15 | |||||||||||||||||
Property management fees and expenses (3) | 1,378 | 1,498 | 2,990 | 2,853 | 136 | 142 | |||||||||||||||||
Disposition fees (4) | — | — | 371 | — | — | — | |||||||||||||||||
$ | 1,433 | $ | 1,596 | $ | 3,719 | $ | 3,211 | $ | 148 | $ | 157 |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
Property Name | Effective Date | Management Fee Percentage | ||
Watertower Apartments | 04/07/2015 | 2.75% | ||
Crystal Park at Waterford | 04/14/2015 | 3.00% | ||
The Residence at Waterstone | 04/28/2015 | 3.00% | ||
Lofts at the Highlands | 05/05/2015 | 3.00% | ||
Legacy at Martin’s Point | 05/12/2015 | 3.00% | ||
Poplar Creek | 05/14/2015 | 3.00% | ||
Wesley Village (1) | 05/19/2015 | 3.00% | ||
Legacy Grand at Concord | 05/21/2015 | 3.00% | ||
Millennium Apartment Homes (2) | 05/27/2015 | 3.00% | ||
Legacy Crescent Park (2) | 05/29/2015 | 3.00% | ||
Legacy at Valley Ranch | 06/09/2015 | 3.00% |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
7. | COMMITMENTS AND CONTINGENCIES |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 1. | Financial Statements (continued) |
8. | SUBSEQUENT EVENTS |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | We are dependent on KBS Capital Advisors LLC (“KBS Capital Advisors”), our advisor, and our sub-advisor to manage our investments and to provide certain other services. We are dependent on Legacy Partners, Inc., formerly known as Legacy Partners Residential, Inc. (“LPI”), an affiliate of our sub-advisor, to provide property management services for our investments. |
• | All of our executive officers, some of our directors and other key real estate professionals are also officers, managers, directors, key professionals and/or holders of a controlling interest in our advisor, the sub-advisor, our dealer manager and other sponsor-affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other programs and investors advised by our sponsors. Fees paid to our advisor in connection with the management of our properties are based on the cost of the property, not on the quality of the services rendered to us. This arrangement could result in unanticipated actions. |
• | We did not raise the maximum offering amount in our public offerings. Because we raised substantially less than the maximum offering amount, we were not able to invest in as diverse a portfolio of real estate properties as we otherwise would and the value of an investment in us will vary more widely with the performance of specific assets. There is a greater risk that stockholders will lose money in their investment in us, as we have less diversity in our portfolio. |
• | We pay substantial fees to and expenses of our advisor and its affiliates and, in connection with our public offerings, 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. |
• | From time to time during our operational stage, we have used proceeds from financings to fund distributions. Our organizational documents permit us to pay distributions from any source, including offering proceeds, which may constitute a return of capital. We have not established a limit on the amount of distributions that we may fund from sources other than from cash flows from operations. In addition, if we sell any additional properties, we will likely further adjust the distribution rate and our distribution policy subsequent to such sales. |
• | We may incur debt until our total liabilities would exceed 75% of the cost of our tangible assets (before deducting depreciation and other non-cash reserves), and we may exceed this limit with the approval of the conflicts committee of our board of directors. To the extent financing in excess of this limit is available on attractive terms, our conflicts committee may approve debt such that our total liabilities would exceed this limit. High debt levels could limit the amount of cash we have available to distribute and could result in a decline in the value of an investment in us. |
• | Disruptions in the financial markets and uncertain economic conditions could adversely affect our ability to implement our business strategy and generate returns to stockholders. |
• | We depend on tenants for our revenue. Revenues from our real property investments could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults or early termination or non-renewal of existing tenant leases) and/or lower rental rates, limiting our ability to pay distributions to our stockholders. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
• | During any calendar year, once we have redeemed $1.5 million of shares under our share redemption program, including shares redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” (both as defined in the share redemption program and together with redemptions in connection with a stockholder’s death, “Special Redemptions”), the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for Special Redemptions. In January 2017, we exhausted the $1.5 million of funds available for all redemptions for 2017. Because of the limitations on the dollar value of shares that may be redeemed under our share redemption program, we will only be able to process Special Redemptions for the remainder of 2017. As of June 30, 2017, we may redeem up to $45,000 of shares for the remainder of 2017 in connection with Special Redemptions and had $3.0 million of outstanding and unfulfilled ordinary redemption requests. |
• | Our Special Committee (defined below) has completed its analysis of potential strategic alternatives and as a result, we anticipate that we will continue to pursue asset sales and will likely further adjust the distribution rate and our distribution policy subsequent to such sales. We may use a portion of the net proceeds from additional asset sales, after paying off the notes payable related to such assets and after paying sale-related expenses to: (i) make renovations at certain remaining real estate properties, which we believe could increase property-level net operating income (“NOI”) and create additional stockholder value; (ii) pay special distributions to our stockholders; and/or (iii) potentially provide additional availability under our share redemption program. However, there is no assurance that this process will result in stockholder liquidity or provide a return to stockholders that equals or exceeds our estimated value per share, or that any additional liquidity provided under our share redemption program would be sufficient to redeem the shares of any stockholders that previously have requested that their shares be redeemed pursuant to the terms of the share redemption program and have not withdrawn such request. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
• | U.S. population growth - The U.S. Census Bureau projects that the U.S. population will increase by approximately 38 million (12%) between 2015 and 2030. Note that, currently, about 36% of people choose to rent as opposed to own a home. |
• | Baby Boomers downsizing - The population age 65 and over is increasing, driven by Baby Boomers, from approximately 48 million in 2015 to about 74 million in 2030. Despite generally having enough income to purchase a home, many Baby Boomers are downsizing, opting for the convenience and amenities of Multifamily properties. |
• | Echo Boom - The children of the Baby Boom generation, dubbed the Echo Boomers, will have increased the prime rental age group, 20 to 34 year olds, by 2 million (69 million total) from 2015 to 2020. This age cohort is expected to remain at this elevated level, up 4 million from 2010, through 2030 according to the U.S. Census Bureau. |
• | Proceeds from our now terminated primary Offerings; |
• | Proceeds from our dividend reinvestment plan; |
• | Proceeds from asset sales; |
• | Debt financings; and |
• | Cash flow generated by our real estate investments. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
• | $56.2 million of proceeds from the sale of one apartment complex; and |
• | $0.8 million used for improvements to real estate. |
• | $29.5 million of principal payments on our mortgage notes payable; |
• | $24.2 million of net cash distributions, after giving effect to dividends reinvested by stockholders of $2.2 million; and |
• | $2.0 million of cash used for redemptions of common stock. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
Payments Due During the Years Ending December 31, | ||||||||||||||||||||
Contractual Obligations | Total | Remainder of 2017 | 2018-2019 | 2020-2021 | Thereafter | |||||||||||||||
Outstanding debt obligations (1) | $ | 253,090 | $ | 2,681 | $ | 199,640 | $ | 1,736 | $ | 49,033 | ||||||||||
Interest payments on outstanding debt obligations (2) | 51,064 | 4,334 | 11,217 | 3,670 | 31,843 |
Three Months Ended June 30, | Increase (Decrease) | Percentage Change | $ Change Due to Disposition (1) | $ Change Due to Properties Held Throughout Both Periods (2) | ||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Rental income | $ | 10,381 | $ | 11,367 | $ | (986 | ) | (9 | )% | $ | (1,135 | ) | $ | 149 | ||||||||
Operating, maintenance, and management costs | 1,523 | 1,559 | (36 | ) | (2 | )% | (135 | ) | 99 | |||||||||||||
Real estate taxes and insurance | 1,823 | 1,811 | 12 | 1 | % | (76 | ) | 88 | ||||||||||||||
Asset management fees to affiliate | — | 44 | (44 | ) | (100 | )% | n/a | n/a | ||||||||||||||
Property management fees and expenses to affiliate | 1,378 | 1,498 | (120 | ) | (8 | )% | (137 | ) | 17 | |||||||||||||
General and administrative expenses | 551 | 849 | (298 | ) | (35 | )% | n/a | n/a | ||||||||||||||
Depreciation and amortization expense | 2,758 | 3,065 | (307 | ) | (10 | )% | (331 | ) | 24 | |||||||||||||
Interest expense | 2,346 | 2,579 | (233 | ) | (9 | )% | (189 | ) | (44 | ) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
Six Months Ended June 30, | Increase (Decrease) | Percentage Change | $ Change Due to Disposition (1) | $ Change Due to Properties Held Throughout Both Periods (2) | ||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
Rental income | $ | 21,347 | $ | 22,521 | $ | (1,174 | ) | (5 | )% | $ | (1,413 | ) | $ | 239 | ||||||||
Operating, maintenance, and management costs | 2,907 | 3,185 | (278 | ) | (9 | )% | (186 | ) | (92 | ) | ||||||||||||
Real estate taxes and insurance | 3,635 | 3,451 | 184 | 5 | % | (94 | ) | 278 | ||||||||||||||
Asset management fees to affiliate | 234 | 238 | (4 | ) | (2 | )% | n/a | n/a | ||||||||||||||
Property management fees and expenses to affiliate | 2,990 | 2,853 | 137 | 5 | % | (44 | ) | 181 | ||||||||||||||
General and administrative expenses | 1,108 | 1,474 | (366 | ) | (25 | )% | n/a | n/a | ||||||||||||||
Depreciation and amortization expense | 5,763 | 6,116 | (353 | ) | (6 | )% | (429 | ) | 76 | |||||||||||||
Interest expense | 5,128 | 5,170 | (42 | ) | (1 | )% | 62 | (104 | ) | |||||||||||||
Gain on sale of real estate, net | 16,470 | — | 16,470 | 100 | % | 16,470 | — |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
• | Amortization of a discount on a note payable. Discounts on debt are amortized over the term of the loan as an adjustment to interest expense. This application results in interest expense recognition that is different than the underlying contractual terms of the debt. We have excluded the amortization of a discount in our calculation of MFFO to more appropriately reflect the economic impact of our debt as the amortization of a discount has no ongoing economic impact on our operations. We believe excluding this item provides investors with a useful supplemental metric that directly addresses core operating performance; and |
• | Prepayment fees related to the extinguishment of debt. Prepayment fees related to the extinguishment of debt are generally included in interest expense. Although these amounts reduce net income, we exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income (loss) | $ | 51 | $ | (24 | ) | $ | 16,127 | $ | 62 | ||||||
Depreciation of real estate assets | 2,757 | 3,064 | 5,761 | 6,114 | |||||||||||
Amortization of lease-related costs | 1 | 1 | 2 | 2 | |||||||||||
Gain on sale of real estate, net | — | — | (16,470 | ) | — | ||||||||||
FFO | 2,809 | 3,041 | 5,420 | 6,178 | |||||||||||
Amortization of discount on note payable | 22 | 22 | 44 | 44 | |||||||||||
Prepayment fees related to the extinguishment of debt | — | — | 267 | — | |||||||||||
MFFO | $ | 2,831 | $ | 3,063 | $ | 5,731 | $ | 6,222 |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
Period | Distributions Declared (1) | Distribution Declared Per Share (1) (2) | Distributions Paid (3) | Cash Flows from Operations | ||||||||||||||||||||
Cash | Reinvested | Total | ||||||||||||||||||||||
First Quarter 2017 | $ | 3,346 | $ | 0.160 | $ | 1,983 | $ | 1,365 | $ | 3,348 | $ | 1,753 | ||||||||||||
Second Quarter 2017 | 22,807 | 1.091 | 22,184 | 841 | 23,025 | 3,995 | ||||||||||||||||||
$ | 26,153 | $ | 1.251 | $ | 24,167 | $ | 2,206 | $ | 26,373 | $ | 5,748 |
• | Our board of directors declared distributions per common share based on daily record dates for each day during the period from January 1, 2017 through February 28, 2017. Each day during the period was a record date for distributions and distributions were calculated at a rate of $0.00178082 per share per day. These distributions totaled approximately $2.2 million. |
• | On March 9, 2017, our board of directors declared a March 2017 distribution in the amount of $0.05520548 per share of common stock to stockholders of record as of the close of business on March 20, 2017. This distribution totaled approximately $1.2 million. |
• | On April 5, 2017, our board of directors declared a special distribution in the amount of $1.00 per share of common stock to stockholders of record as of the close of business on April 20, 2017. This special distribution totaled approximately $20.9 million. |
• | On May 9, 2017, our board of directors declared May 2017 and June 2017 distributions in the amounts of $0.04609658 and $0.04460959, respectively, per share of common stock to stockholders of record as of the close of business on May 19, 2017 and June 20, 2017, respectively. These distributions totaled approximately $1.0 million and $0.9 million, respectively. |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) |
PART I. | FINANCIAL INFORMATION (CONTINUED) |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
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. |
• | Unless the shares are being redeemed in connection with a Special Redemption, we may not redeem shares until the stockholder has held his or her shares for one year. |
• | During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year. |
• | We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. |
• | We may redeem only the number of shares that we could purchase with the amount of the 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 $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once we have redeemed $1.5 million of shares under our share redemption program, including in connection with Special Redemptions, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with a Special Redemption. Notwithstanding anything contained in this paragraph to the contrary, we may increase or decrease the funding available for the redemption of shares pursuant to our share redemption program upon ten business days’ notice to our stockholders. We may provide this notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to our stockholders. |
• | For those shares held by the redeeming stockholder for at least one year, 92.5% of our most recent estimated value per share as of the applicable redemption date; |
• | For those shares held by the redeeming stockholder for at least two years, 95.0% of our most recent estimated value per share as of the applicable redemption date; |
• | For those shares held by the redeeming stockholder for at least three years, 97.5% of our most recent estimated value per share as of the applicable redemption date; and |
• | For those shares held by the redeeming stockholder for at least four years, 100% of our most recent estimated value per share as of the applicable redemption date. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds (continued) |
Month | Total Number of Shares Redeemed (1) | Average Price Paid Per Share (2) | Total Number of Shares Purchased as Part of the Share Redemption Program | Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Share Redemption Program | ||||||||
January 2017 | 182,847 | $ | 9.33 | 182,847 | (3) | |||||||
February 2017 | 6,738 | 9.35 | 6,738 | (3) | ||||||||
March 2017 | 3,207 | 9.35 | 3,207 | (3) | ||||||||
April 2017 | 200 | 8.35 | 200 | (3) | ||||||||
May 2017 | 8,198 | 8.35 | 8,198 | (3) | ||||||||
June 2017 | 10,357 | 8.35 | 10,357 | (3) | ||||||||
Total | 211,547 | 211,547 |
Item 3. | Defaults upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Ex. | Description | ||
3.1 | Articles of Amendment and Restatement as adopted on January 8, 2010, incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11, Commission File No. 333-161449, filed January 12, 2010 | ||
3.2 | Second Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Company’s Periodic Report on Form 8-K, filed November 17, 2016 | ||
4.1 | Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-161449, filed October 2, 2009 | ||
4.2 | Third Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013, filed May 10, 2013 | ||
4.3 | Fourth Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017 | ||
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 October 17, 2014 | ||
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 |
KBS LEGACY PARTNERS APARTMENT REIT, INC. | |||
Date: | August 10, 2017 | By: | /s/ W. DEAN HENRY |
W. Dean Henry | |||
Chief Executive Officer | |||
(principal executive officer) | |||
Date: | August 10, 2017 | By: | /s/ JEFFREY K. WALDVOGEL |
Jeffrey K. Waldvogel | |||
Chief Financial Officer, Treasurer and Secretary | |||
(principal financial officer) |
1. | I have reviewed this quarterly report on Form 10-Q of KBS Legacy Partners Apartment REIT, 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: | August 10, 2017 | By: | /S/ W. DEAN HENRY |
W. Dean Henry | |||
Chief Executive Officer | |||
(principal executive officer) |
1. | I have reviewed this quarterly report on Form 10-Q of KBS Legacy Partners Apartment REIT, 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: | August 10, 2017 | By: | /S/ JEFFREY K. WALDVOGEL |
Jeffrey K. Waldvogel | |||
Chief Financial Officer, Treasurer and Secretary | |||
(principal financial officer) |
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: | August 10, 2017 | By: | /S/ W. DEAN HENRY |
W. Dean Henry | |||
Chief Executive Officer | |||
(principal executive officer) |
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: | August 10, 2017 | By: | /S/ JEFFREY K. WALDVOGEL |
Jeffrey K. Waldvogel | |||
Chief Financial Officer, Treasurer and Secretary | |||
(principal financial officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Aug. 04, 2017 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | KBS Legacy Partners Apartment REIT, Inc. | |
Entity Central Index Key | 0001469822 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,028,095 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 20,937,850 | 20,896,268 |
Common stock, shares outstanding (in shares) | 20,937,850 | 20,896,268 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Revenues: | ||||
Rental income | $ 10,381 | $ 11,367 | $ 21,347 | $ 22,521 |
Total revenues | 10,381 | 11,367 | 21,347 | 22,521 |
Expenses: | ||||
Operating, maintenance, and management | 1,523 | 1,559 | 2,907 | 3,185 |
Real estate taxes and insurance | 1,823 | 1,811 | 3,635 | 3,451 |
Asset management fees to affiliate | 0 | 44 | 234 | 238 |
Property management fees and expenses to affiliate | 1,378 | 1,498 | 2,990 | 2,853 |
General and administrative expenses | 551 | 849 | 1,108 | 1,474 |
Depreciation and amortization | 2,758 | 3,065 | 5,763 | 6,116 |
Interest expense | 2,346 | 2,579 | 5,128 | 5,170 |
Total expenses | 10,379 | 11,405 | 21,765 | 22,487 |
Other income: | ||||
Interest and other income | 49 | 14 | 75 | 28 |
Gain on sale of real estate, net | 0 | 0 | 16,470 | 0 |
Total other income | 49 | 14 | 16,545 | 28 |
Net income (loss) | $ 51 | $ (24) | $ 16,127 | $ 62 |
Net income per common share, basic and diluted (in dollars per share) | $ 0.00 | $ 0.00 | $ 0.77 | $ 0.00 |
Weighted-average number of common shares outstanding, basic and diluted (in shares) | 20,920,275 | 20,585,367 | 20,897,493 | 20,543,217 |
ORGANIZATION |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION KBS Legacy Partners Apartment REIT, Inc. (the “Company”) was formed on July 31, 2009 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010. Substantially all of the Company’s business is conducted through KBS Legacy Partners Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on August 4, 2009. The Company is the sole general partner of and owns a 0.1% partnership interest in the Operating Partnership. KBS Legacy Partners Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on August 4, 2009, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings. Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on January 25, 2017 (the “Advisory Agreement”). On August 7, 2009, the Company issued 20,000 shares of its common stock to KBS-Legacy Apartment Community REIT Venture, LLC (the “Sub-Advisor”), an affiliate of the Company, at a purchase price of $10.00 per share. As of June 30, 2017, the Sub-Advisor owned 20,000 shares of common stock of the Company. The Company invested in and manages a portfolio of high quality apartment complexes located throughout the United States. The Company’s portfolio consists of “core” apartment complexes that were already well-positioned and producing rental income at acquisition. As of June 30, 2017, the Company owned 10 apartment complexes. On August 19, 2009, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a minimum of 250,000 shares and a maximum of 280,000,000 shares of common stock for sale to the public (the “Initial Offering”), of which 80,000,000 shares would be offered pursuant to the Company’s dividend reinvestment plan. The SEC declared the Company’s registration statement for the Initial Offering effective on March 12, 2010, and the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Company, to serve as the dealer manager for the Initial Offering pursuant to a dealer manager agreement dated March 12, 2010 (the “Initial Dealer Manager Agreement”). Under the Initial Dealer Manager Agreement, the Dealer Manager was responsible for marketing the Company’s shares being offered pursuant to the Initial Offering. On May 31, 2012, the Company filed a registration statement on Form S-11 with the SEC to register a follow-on public offering (the “Follow-on Offering” and together with the Initial Offering, the “Offerings”). Pursuant to the registration statement, as amended, the Company registered up to an additional $2,000,000,000 of shares of common stock for sale to the public and up to an additional $760,000,000 of shares of common stock pursuant to the dividend reinvestment plan. The SEC declared the Company’s registration statement for the Follow-on Offering effective on March 8, 2013. The Company retained the Dealer Manager to serve as the dealer manager for the Follow-on Offering pursuant to a dealer manager agreement dated March 8, 2013 (the “Follow-on Dealer Manager Agreement” and together with the Initial Dealer Manager Agreement, the “Dealer Manager Agreements”). On March 12, 2013, the Company ceased offering shares pursuant to the Initial Offering and on March 13, 2013, the Company commenced offering shares to the public pursuant to the Follow-on Offering. In the Initial Offering, the Company sold 18,088,084 shares of common stock for gross offering proceeds of $179.2 million, including 368,872 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $3.5 million. The Company ceased offering shares in the primary Follow-on Offering on March 31, 2014 and completed subscription processing procedures on April 30, 2014. The Company sold 1,496,198 shares of common stock in the primary Follow-on Offering for gross offering proceeds of $15.9 million. As of June 30, 2017, the Company had sold an aggregate of 21,937,089 shares of common stock in the Offerings for gross offering proceeds of $218.1 million, including an aggregate of 2,721,679 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $26.6 million. Also, as of June 30, 2017, the Company had redeemed 1,019,239 shares sold in the Offerings for $9.9 million. The Company terminated the dividend reinvestment plan effective as of August 20, 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||
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, 2016. 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, 2016 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The consolidated financial statements include the accounts of the Company, REIT Holdings, 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 unaudited 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 unaudited consolidated financial statements and condensed notes. Actual results could materially differ from those estimates. Segments The Company owned 10 apartment complexes as of June 30, 2017. Substantially all of the Company’s revenue and net income (loss) is from real estate, and therefore, the Company currently operates in one reportable segment. Reclassifications Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the six months ended June 30, 2017, the Company sold one apartment complex. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. Additionally, during the year ended December 31, 2016, the Company elected to early adopt ASU No. 2016-18 (as defined below). As a result, the Company no longer presents the changes within restricted cash in the consolidated statements of cash flows. Instead, restricted cash is included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the consolidated statements of cash flows. Square Footage, Occupancy and Other Measures Any references to square footage or occupancy are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. 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 six months ended June 30, 2017 and 2016. Distributions declared per share of common stock were $1.091 and $1.251 for the three and six months ended June 30, 2017. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions during this period. These distributions declared consisted of the following:
Distributions declared per share of common stock were $0.162 and $0.322 for the three and six months ended June 30, 2016, respectively. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions during these periods. For the three and six months ended June 30, 2016, distributions were based on daily record dates and calculated at a rate of $0.00178082 per share per day. Each day during the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through June 30, 2016 was a record date for distributions. Recently Issued Accounting Standards Update In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which defers the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The primary source of revenue for the Company is generated through leasing arrangements, which are excluded from this standard. The Company’s revenues that may be impacted by this standard primarily include other operating income, sales of real estate and other ancillary income earned at its properties. In 2016, other operating income and other ancillary income were approximately 3% of consolidated revenue. The Company is in process of evaluating how this standard will impact sales of real estate. The Company continues to evaluate the impact that the standard will have on its consolidated financial statements. The Company expects to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the adoption. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”). The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected. ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements. ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application of certain provisions of the standard is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”). ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement); (d) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements, but does not expect the adoption of ASU No. 2016-15 to have a material impact on its financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU No. 2016-18”). ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company elected to early adopt ASU No. 2016-18 for the reporting period ended December 31, 2016 and it was applied retrospectively. As a result of the adoption of ASU No. 2016-18, the Company no longer presents the changes within restricted cash in the consolidated statements of cash flows. |
REAL ESTATE |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REAL ESTATE | REAL ESTATE As of June 30, 2017, the Company owned 10 apartment complexes, containing 2,738 units and encompassing 2.8 million rentable square feet, which were 95% occupied. The following table provides summary information regarding the properties owned by the Company as of June 30, 2017 (dollars in thousands):
Additionally, as of June 30, 2017 and December 31, 2016, the Company had recorded unamortized tax abatement intangible assets, which are included in prepaid expenses and other assets in the accompanying balance sheets, of $2.4 million and $2.5 million, respectively. During the three and six months ended June 30, 2017, the Company recorded amortization expense of $41,000 and $106,000, respectively, related to tax abatement intangible assets. During the three and six months ended June 30, 2016, the Company recorded amortization expense of $65,000 and $130,000, respectively, related to tax abatement intangible assets. Recent Disposition Wesley Village On November 6, 2012, the Company, through an indirect wholly owned subsidiary, purchased a 301-unit apartment complex on approximately 11.0 acres of land and the adjacent 3.8-acre parcel of undeveloped land located in Charlotte, North Carolina (together, “Wesley Village”) for an aggregate purchase price of $45.8 million. On March 9, 2017, the Company sold Wesley Village to Bluerock Real Estate, LLC (the “Purchaser”) for $57.2 million, resulting in a gain of $16.5 million, which gain was reduced by disposition fees related to the sale paid to the Advisor of $0.4 million and which includes a reduction to the net book value of the property due to historical depreciation and amortization expense. For the three months ended June 30, 2016, Wesley Village had revenues and expenses of $1.1 million and $0.9 million, respectively. For the six months ended June 30, 2017 and 2016, Wesley Village had revenues of $0.8 million and $2.2 million, respectively and expenses of $1.1 million and $1.7 million, respectively. The results of operations from Wesley Village and related gain on sale are included in continuing operations on the Company’s consolidated statements of operations. |
NOTES PAYABLE |
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NOTES PAYABLE | NOTES PAYABLE As of June 30, 2017 and December 31, 2016, the Company’s notes payable consisted of the following (dollars in thousands):
(1) The Company has the right to repay the loan subject to certain conditions and prepayment penalties. (2) On March 9, 2017, in connection with the disposition of Wesley Village, the Company paid off the Wesley Village Mortgage Loan. During the three and six months ended June 30, 2017, the Company incurred $2.3 million and $5.1 million of interest expense, respectively. During the three and six months ended June 30, 2016, the Company incurred $2.6 million and $5.2 million of interest expense, respectively. Included in interest expense for the three and six months ended June 30, 2017 were $0.1 million and $0.2 million of amortization of deferred financing costs, respectively, and $0.3 million of prepayment fees during the six months ended June 30, 2017. Included in interest expense for the three and six months ended June 30, 2016 were $0.1 million and $0.2 million of amortization of deferred financing costs, respectively. Also included in interest expense for the three and six months ended June 30, 2017 were $22,000 and $44,000 of amortization of discount on a note payable, respectively, and $22,000 and $44,000 of amortization of discount on a note payable for the three and six months ended June 30, 2016, respectively. As of June 30, 2017 and December 31, 2016, the Company recorded interest payable of $0.7 million and $0.8 million, respectively. The following is a schedule of maturities, including principal payments, for the Company’s notes payable outstanding as of June 30, 2017 (in thousands):
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FAIR VALUE DISCLOSURES |
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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 non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired long-lived assets). Fair value, as defined under GAAP, is 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:
The fair value for certain financial instruments is derived using 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 instrument for which it is practicable to estimate the fair value: Cash and cash equivalents, restricted cash, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items. 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 or 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 value, carrying amount and fair value of the Company’s notes payable as of June 30, 2017 and December 31, 2016 (dollars in thousands):
Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Low levels of transaction volume for certain financial instruments have made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different. |
RELATED PARTY TRANSACTIONS |
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RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company has entered into the Advisory Agreement with the Advisor and the Follow-on 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 Follow-on Offering and entitle the Advisor to specified fees upon the provision of certain services with regard to the management and disposition of the Company’s real estate properties, among other services, 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, which the Company terminated effective as of August 20, 2017, and certain costs incurred by the Advisor in providing services to the Company, such as certain operating costs. The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc. and KBS Growth & Income REIT, Inc. On January 6, 2014, the Company, together with KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2015, KBS Growth & Income REIT, Inc. was added to the insurance program at terms similar to those described above. In June 2017, the Company renewed its participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage. During the three and six months ended June 30, 2017 and 2016, no other business transactions occurred between the Company and KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc. and KBS Growth & Income REIT, Inc. Pursuant to the terms of these agreements and the property management agreements discussed below, summarized below are the related-party costs incurred by the Company for the three and six months ended June 30, 2017 and 2016, respectively, and any related amounts payable as of June 30, 2017 and December 31, 2016 (in thousands):
____________________ (1) See “Advisory Agreement – Asset Management Fee” below. (2) Reimbursable operating expenses primarily consist of marketing research costs and property site visit expenses incurred by the Sub-Advisor and internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $36,000 and $33,000 for the three months ended June 30, 2017 and 2016, respectively, and $72,000 and $75,000 for the six months ended June 30, 2017 and 2016, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement through June 30, 2017. The Company does not reimburse for employee costs in connection with services for which the Advisor earns acquisition 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. In addition to the amounts above, the Company reimburses the Advisor and Sub-Advisor for certain of the Company’s direct property operating costs incurred from third parties that were initially paid by the Advisor and Sub-Advisor on behalf of the Company. (3) Property management fees and expenses are all paid to Legacy Partners, Inc. (“LPI”), an affiliate of the Sub-Advisor, and consist of (i) reimbursable on-site salary and related benefits expenses for personnel at the managed properties, and (ii) fees for account maintenance and bookkeeping services. See “— Property Management Agreements.” (4) Disposition fees with respect to real estate sold are included in the gain on sale of real estate, net, in the accompanying consolidated statements of operations. During the six months ended June 30, 2017, the Advisor reimbursed the Company for a $27,000 property insurance rebate. In connection with the Follow-on Offering, the Company’s sponsors agreed to provide additional indemnification to one of the participating broker-dealers. The Company agreed to add supplemental coverage to its directors’ and officers’ insurance coverage to insure the sponsors’ obligations under this indemnification agreement in exchange for reimbursement by the sponsors to the Company for all costs, expenses and premiums related to this supplemental coverage. During the six months ended June 30, 2017, the Advisor incurred $61,000 for the costs of the supplemental coverage obtained by the Company. On March 9, 2017, the Company sold Wesley Village to the Purchaser. Gary T. Kachadurian, one of the Company’s independent directors, is also a director of a real estate investment trust sponsored by the Purchaser (the “Purchaser REIT”) and is Vice Chairman of the manager of the Purchaser REIT and as such, Mr. Kachadurian (i) recused himself from all of the Company’s deliberations relating to the disposition of Wesley Village, and (ii) informed the Company and its board of directors that he recused himself from all of the Purchaser REIT’s and its manager’s deliberations relating to the acquisition of Wesley Village. Advisory Agreement - Asset Management Fee Pursuant to the Advisory Agreement, the asset management fee payable by the Company to the Advisor with respect to investments in real estate is a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment. The Advisory Agreement defers the Company’s obligation to pay asset management fees, without interest, accruing from February 1, 2013 through July 31, 2013. The Company will only be obligated to pay the Advisor such deferred amounts if and to the extent that the Company’s funds from operations, as such term is defined by the National Association of Real Estate Investment Trusts and interpreted by the Company, as adjusted for the effects of straight-line rents and acquisition costs and expenses (“AFFO”) for the immediately preceding month exceeds the amount of distributions declared for record dates of such prior month (an “AFFO Surplus”). The amount of any AFFO Surplus in a given month shall be applied first to pay to the Advisor asset management fees currently due with respect to such month (including any that would otherwise have been deferred for that month in accordance with the Advisory Agreement) and then to pay asset management fees previously deferred by the Advisor in accordance with the Advisory Agreement that remain unpaid. As of June 30, 2017, the Company had deferred payment of $1.5 million of asset management fees for the period from February 2013 through July 2013, but did not record an accrual on its books as the Company believed that the chance of payment of this amount to the Advisor is remote. In addition, the Advisory Agreement defers without interest under certain circumstances, the Company’s obligation to pay asset management fees accruing from August 1, 2013. Specifically, the Advisory Agreement defers the Company’s obligation to pay an asset management fee for any month in which the Company’s modified funds from operations (“MFFO”) for such month, as such term is defined in the practice guideline issued by the Investment Program Association (“IPA”) in November 2010 and interpreted by the Company, excluding asset management fees, does not exceed the amount of distributions declared by the Company for record dates of that month. The Company remains obligated to pay the Advisor an asset management fee in any month in which the Company’s MFFO, excluding asset management fees, for such month exceeds the amount of distributions declared for the record dates of that month (such excess amount, an “MFFO Surplus”); however, any amount of such asset management fee in excess of the MFFO Surplus is also deferred under the Advisory Agreement. If the MFFO Surplus for any month exceeds the amount of the asset management fee payable for such month, any remaining MFFO Surplus will not be applied to pay asset management fee amounts previously deferred by the Advisor in accordance with the Advisory Agreement. As of June 30, 2017, the Company had deferred payment of $8.0 million of asset management fees for the period from August 2013 through December 2016, but did not record an accrual on its books as the Company believed that the chance of payment of this amount to the Advisor is remote. During the six months ended June 30, 2017, the Company incurred $1.4 million of asset management fees. However, the Company only recorded $0.2 million pursuant to the limitations in the Advisory Agreement as noted above. The Company did not accrue the remaining $1.2 million of these asset management fees as it is uncertain whether any of this amount will be paid in the future. During the six months ended June 30, 2016, the Company incurred $1.4 million of asset management fees. However, the Company only recorded $0.2 million pursuant to the limitations in the Advisory Agreement as noted above. The Company did not accrue the remaining $1.2 million of these asset management fees as it is uncertain whether any of this amount will be paid in the future. However, notwithstanding any of the foregoing, any and all deferred asset management fees shall be immediately due and payable at such time as the Company’s stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to the Company’s share redemption plan, and (ii) an 8.0% per year cumulative, non-compounded return on such net invested capital (the “Stockholders’ 8% Return”). The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the Company’s stockholders to have received any minimum return in order for the Advisor to receive deferred asset management fees. Property Management Agreements The Company, through indirect wholly owned subsidiaries (each, a “Property Owner”), has entered into property management agreements with LPI (each, a “Property Management Agreement”), pursuant to which LPI provides, among other services, general property management services, including bookkeeping and accounting services, construction management services and budgeting and business plans for the Company’s properties as follows:
(1) On March 9, 2017, the Company sold Wesley Village. The Property Management Agreement for Wesley Village was terminated effective as of March 9, 2017. For more information, see Note 3, “Real Estate – Recent Disposition – Wesley Village.” (2) Under the Property Management Agreement, the Property Owner will pay LPI the Management Fee Percentage in an amount equal to the greater of (a) 3% of the Gross Monthly Collections (as defined in the Property Management Agreement) or (b) $4,000 per month. Under the Property Management Agreements, each Property Owner pays LPI: (i) a monthly fee based on a percentage (as described in the table above, the “Management Fee Percentage”) of the Gross Monthly Collections (as defined in each Property Management Agreement), (ii) a construction supervision fee equal to a percentage of construction costs to the extent overseen by LPI and as further detailed in each Property Management Agreement, (iii) a leasing commission at a rate to be agreed upon between the Property Owner and LPI for retail leases executed that were procured or obtained by LPI, (iv) certain reimbursements if included in an approved capital budget and (v) certain reimbursements if included in the approved operating budget, including the reimbursement of the salaries and benefits for on-site personnel and fees for account maintenance and bookkeeping services. Unless otherwise provided for in an approved operating budget, LPI is responsible for all expenses that it incurs in rendering services pursuant to each Property Management Agreement. Each Property Management Agreement had an initial term of one year and each has continued on a month-to-month basis pursuant to its terms. Either party may terminate a Property Management Agreement provided it gives 30 days’ prior written notice of its desire to terminate such agreement. Notwithstanding the foregoing, the Property Owner may terminate each Property Management Agreement at any time without cause upon 30 days’ prior written notice to LPI. The Property Owner may also terminate the Property Management Agreement with cause immediately upon notice to LPI and the expiration of any applicable cure period. LPI may terminate each Property Management Agreement at any time without cause upon prior written notice to the Property Owner which, depending upon the terms of the particular Property Management Agreement, requires either 30, 60 or 90 days prior written notice. LPI may terminate the Property Management Agreement for cause if a Property Owner commits any material default under the Property Management Agreement and the default continues for a period of 30 days after notice from LPI to a Property Owner for a default or, in the case of Watertower Apartments, Lofts at the Highlands, Legacy Grand at Concord, Millennium Apartment Homes and Legacy Crescent Park, if a monetary default continues for a period of 10 days after notice of such monetary default. |
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Economic Dependency The Company is dependent on the Advisor and the Sub-Advisor for certain services that are essential to the Company, including the management of the daily operations of the Company’s investment portfolio; the disposition of investments; and other general and administrative responsibilities. The Company is also dependent on LPI to provide the property management services under the Property Management Agreements. In the event that these companies are unable to provide any of 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. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s property, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities. Legal Matters From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. |
SUBSEQUENT EVENTS |
6 Months Ended |
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Jun. 30, 2017 | |
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 July 5, 2017, the Company paid distributions of $0.9 million, which related to distributions declared for June 2017 in the amount of $0.04460959 per share of common stock to stockholders of record as of the close of business on June 20, 2017. On August 1, 2017, the Company paid distributions of $1.0 million, which related to distributions declared for July 2017 in the amount of $0.04609658 per share of common stock to stockholders of record as of the close of business on July 19, 2017. Distributions Authorized On August 9, 2017, the Company’s board of directors authorized an August 2017 distribution in the amount of $0.04609658 per share of common stock to stockholders of record as of the close of business on August 18, 2017, which the Company expects to pay in cash in September 2017, and a September 2017 distribution in the amount of $0.04460959 per share of common stock to stockholders of record as of the close of business on September 20, 2017, which the Company expects to pay in cash in October 2017. Termination of Dividend Reinvestment Plan The Company terminated the dividend reinvestment plan effective as of August 20, 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Jun. 30, 2017 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Basis of Presentation | The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. |
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Principles of Consolidation | The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. |
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Use of Estimates | The preparation of the unaudited 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 unaudited consolidated financial statements and condensed notes. Actual results could materially differ from those estimates. |
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Segments | The Company owned 10 apartment complexes as of June 30, 2017. Substantially all of the Company’s revenue and net income (loss) is from real estate, and therefore, the Company currently operates in one reportable segment. |
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Reclassifications | Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the six months ended June 30, 2017, the Company sold one apartment complex. As a result, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets for all periods presented. Additionally, during the year ended December 31, 2016, the Company elected to early adopt ASU No. 2016-18 (as defined below). As a result, the Company no longer presents the changes within restricted cash in the consolidated statements of cash flows. Instead, restricted cash is included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the consolidated statements of cash flows. |
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Square Footage, Occupancy and Other Measures | Any references to square footage or occupancy are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. |
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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 six months ended June 30, 2017 and 2016. Distributions declared per share of common stock were $1.091 and $1.251 for the three and six months ended June 30, 2017. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions during this period. These distributions declared consisted of the following:
Distributions declared per share of common stock were $0.162 and $0.322 for the three and six months ended June 30, 2016, respectively. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions during these periods. For the three and six months ended June 30, 2016, distributions were based on daily record dates and calculated at a rate of $0.00178082 per share per day. Each day during the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through June 30, 2016 was a record date for distributions. |
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Recently Issued Accounting Standards Update | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which defers the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The primary source of revenue for the Company is generated through leasing arrangements, which are excluded from this standard. The Company’s revenues that may be impacted by this standard primarily include other operating income, sales of real estate and other ancillary income earned at its properties. In 2016, other operating income and other ancillary income were approximately 3% of consolidated revenue. The Company is in process of evaluating how this standard will impact sales of real estate. The Company continues to evaluate the impact that the standard will have on its consolidated financial statements. The Company expects to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the adoption. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”). The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected. ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements. ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application of certain provisions of the standard is permitted for financial statements that have not been previously issued. The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”). ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement); (d) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements, but does not expect the adoption of ASU No. 2016-15 to have a material impact on its financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU No. 2016-18”). ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company elected to early adopt ASU No. 2016-18 for the reporting period ended December 31, 2016 and it was applied retrospectively. As a result of the adoption of ASU No. 2016-18, the Company no longer presents the changes within restricted cash in the consolidated statements of cash flows. |
REAL ESTATE (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Investments | The following table provides summary information regarding the properties owned by the Company as of June 30, 2017 (dollars in thousands):
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NOTES PAYABLE (Tables) |
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Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | As of June 30, 2017 and December 31, 2016, the Company’s notes payable consisted of the following (dollars in thousands):
(1) The Company has the right to repay the loan subject to certain conditions and prepayment penalties. (2) On March 9, 2017, in connection with the disposition of Wesley Village, the Company paid off the Wesley Village Mortgage Loan. |
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Schedule of Maturities of Long-term Debt | The following is a schedule of maturities, including principal payments, for the Company’s notes payable outstanding as of June 30, 2017 (in thousands):
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FAIR VALUE DISCLOSURES (Tables) |
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Schedule of Face Value, Carrying Amounts and Fair Value | The following were the face value, carrying amount and fair value of the Company’s notes payable as of June 30, 2017 and December 31, 2016 (dollars in thousands):
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RELATED PARTY TRANSACTIONS (Tables) |
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Schedule of Related Party Costs | Pursuant to the terms of these agreements and the property management agreements discussed below, summarized below are the related-party costs incurred by the Company for the three and six months ended June 30, 2017 and 2016, respectively, and any related amounts payable as of June 30, 2017 and December 31, 2016 (in thousands):
____________________ (1) See “Advisory Agreement – Asset Management Fee” below. (2) Reimbursable operating expenses primarily consist of marketing research costs and property site visit expenses incurred by the Sub-Advisor and internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $36,000 and $33,000 for the three months ended June 30, 2017 and 2016, respectively, and $72,000 and $75,000 for the six months ended June 30, 2017 and 2016, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement through June 30, 2017. The Company does not reimburse for employee costs in connection with services for which the Advisor earns acquisition 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. In addition to the amounts above, the Company reimburses the Advisor and Sub-Advisor for certain of the Company’s direct property operating costs incurred from third parties that were initially paid by the Advisor and Sub-Advisor on behalf of the Company. (3) Property management fees and expenses are all paid to Legacy Partners, Inc. (“LPI”), an affiliate of the Sub-Advisor, and consist of (i) reimbursable on-site salary and related benefits expenses for personnel at the managed properties, and (ii) fees for account maintenance and bookkeeping services. See “— Property Management Agreements.” (4) Disposition fees with respect to real estate sold are included in the gain on sale of real estate, net, in the accompanying consolidated statements of operations. |
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Schedule of Property Management Agreements | The Company, through indirect wholly owned subsidiaries (each, a “Property Owner”), has entered into property management agreements with LPI (each, a “Property Management Agreement”), pursuant to which LPI provides, among other services, general property management services, including bookkeeping and accounting services, construction management services and budgeting and business plans for the Company’s properties as follows:
(1) On March 9, 2017, the Company sold Wesley Village. The Property Management Agreement for Wesley Village was terminated effective as of March 9, 2017. For more information, see Note 3, “Real Estate – Recent Disposition – Wesley Village.” (2) Under the Property Management Agreement, the Property Owner will pay LPI the Management Fee Percentage in an amount equal to the greater of (a) 3% of the Gross Monthly Collections (as defined in the Property Management Agreement) or (b) $4,000 per month. |
REAL ESTATE (Narrative) (Details) $ in Thousands, ft² in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
ft²
Units
property
|
Jun. 30, 2016
USD ($)
|
Jun. 30, 2017
USD ($)
ft²
Units
property
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Real Estate Properties [Line Items] | |||||
Number of real estate units | Units | 2,738 | 2,738 | |||
Rentable square feet | ft² | 2.8 | 2.8 | |||
Percentage of portfolio occupied | 95.00% | 95.00% | |||
Tax abatement asset | $ 2,400 | $ 2,400 | $ 2,500 | ||
Property Tax Abatement Intangible Asset | |||||
Real Estate Properties [Line Items] | |||||
Amortization of intangible assets | $ 41 | $ 65 | $ 106 | $ 130 | |
Apartment Complex | |||||
Real Estate Properties [Line Items] | |||||
Number of real estate properties | property | 10 | 10 |
NOTES PAYABLE (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | |||||
Interest expense | $ 2,346 | $ 2,579 | $ 5,128 | $ 5,170 | |
Amortization of deferred financing costs | 100 | 100 | 200 | 200 | |
Prepayment fees | 300 | ||||
Amortization of discount on notes payable | 44 | 44 | |||
Interest payable, current | 700 | 700 | $ 800 | ||
Notes Payable | |||||
Debt Instrument [Line Items] | |||||
Amortization of discount on notes payable | $ 22 | $ 22 | $ 44 | $ 44 |
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Notes Payable [Abstract] | ||
July 1, 2017 through December 31, 2017 | $ 2,681 | |
2018 | 72,958 | |
2019 | 126,682 | |
2020 | 852 | |
2021 | 884 | |
Thereafter | 49,033 | |
Notes payable | $ 253,090 | $ 282,605 |
FAIR VALUE DISCLOSURES (Details) - USD ($) |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Face Value | $ 253,090,000 | $ 282,605,000 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | 249,901,000 | 279,146,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | $ 254,486,000 | $ 279,258,000 |
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 01, 2017 |
Jul. 05, 2017 |
Sep. 30, 2017 |
Aug. 31, 2017 |
Jul. 31, 2017 |
Jun. 30, 2017 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Subsequent Event [Line Items] | |||||||||||
Distributions declared | $ 26,153 | $ 13,430 | |||||||||
Distributions declared per common share (in dollars per share) | $ 1.091 | $ 0.162 | $ 1.251 | $ 0.322 | |||||||
Dividend Paid | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Distributions declared per common share (in dollars per share) | $ 0.04460959 | ||||||||||
Dividend Declared | Forecast | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Distributions declared per common share (in dollars per share) | $ 0.04460959 | $ 0.04609658 | |||||||||
Subsequent Event | Dividend Paid | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Distributions declared | $ 1,000 | $ 900 | |||||||||
Distributions declared per common share (in dollars per share) | $ 0.04609658 |
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