KBS Real Estate Investment Trust, Inc. - FORM 8-K - April 14, 2016


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
 
FORM 8-K
__________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 11, 2016

KBS REAL ESTATE INVESTMENT TRUST, INC.
(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________

Maryland
 
000-52606
 
20-2985918
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Commission File
Number)
 
I.R.S. Employer
Identification No.
 

800 Newport Center Drive, Suite 700
Newport Beach, California 92660
(Address of principal executive offices)

Registrant’s telephone number, including area code: (949) 417-6500

620 Newport Center Drive, Suite 1300
Newport Beach, California 92660
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 
 
 




ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Disposition of the FSI 6000 Properties
On April 11, 2016, KBS Real Estate Investment Trust, Inc. (the “Company”), through indirect wholly owned subsidiaries, First States Investors 6000A, L.P., First States Investors 6000B, L.P., First States Investors 6000C, L.P., and First States Investors 6000D, L.P., sold 61 bank branch properties, containing 245,843 rentable square feet (the “FSI 6000 Properties”), to Pontus Net Lease Advisors, LLC, a buyer unaffiliated with the Company or its advisor (the “FSI 6000 Buyer”), for an aggregate sales price, net of closing credits, of $139.6 million (which includes a payment of $6.6 million by the FSI 6000 Buyer to the Company to compensate the Company for costs and expenses the Company incurred in connection with the defeasance of the FSI 6000 Mortgage Loans, as defined below), excluding closing costs. The carrying value of the FSI 6000 Properties was approximately $105.7 million, which is net of $27.1 million of accumulated depreciation and amortization. The Company recognized a gain on the disposition of the FSI 6000 Properties of approximately $30.0 million after fees and expenses.
In connection with the disposition of the FSI 6000 Properties, the Company entered into a defeasance agreement with each of the lenders under the FSI 6000A Mortgage Loan, FSI 6000B Mortgage Loan, FSI 6000C Mortgage Loan and FSI 6000D Mortgage Loan (collectively, the “FSI 6000 Mortgage Loans”) to defease the entire aggregate outstanding principal balance of $102.3 million under the FSI 6000 Mortgage Loans, releasing the FSI 6000 Properties, which had secured the FSI 6000 Mortgage Loans. The FSI 6000A Mortgage Loan and the FSI 6000C Mortgage Loan each bore interest at a rate of 6.80% and were due to mature on October 5, 2017. The FSI 6000B Mortgage Loan and the FSI 6000D Mortgage Loan each bore interest at a rate of 5.80% and were due to mature on June 5, 2017. The defeasance costs and write-off of an unamortized discount resulted in an aggregate loss on extinguishment of debt of approximately $6.6 million.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS


1


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
KBS REAL ESTATE INVESTMENT TRUST, INC.
 
 
 
Dated: April 14, 2016
 
BY:
 
/s/ Jeffrey K. Waldvogel
 
 
 
 
Jeffrey K. Waldvogel
 
 
 
 
Chief Financial Officer
 
 
 
 
 




KBS REAL ESTATE INVESTMENT TRUST, INC.
SUMMARY OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma information should be read in conjunction with the consolidated balance sheet of KBS Real Estate Investment Trust, Inc. (“KBS REIT”) as of December 31, 2015, the related consolidated statements of operations, comprehensive income (loss) stockholders’ equity, and cash flows for the year ended December 31, 2015, and the notes thereto. The consolidated financial statements of KBS REIT as of and for the year ended December 31, 2015 have been included in KBS REIT's prior filings with the SEC.
The following unaudited pro forma balance sheet as of December 31, 2015 has been prepared to give effect to the disposition of the FSI 6000 Properties as if the disposition occurred on December 31, 2015. The unaudited pro forma balance sheet does not purport to reflect the actual transaction or financial position of KBS REIT as it occurred on April 11, 2016, as certain amounts and balances have changed.
The following unaudited pro forma statement of operations for the year ended December 31, 2015 has been prepared to give effect to the April 11, 2016 disposition of the FSI 6000 Properties as if the disposition occurred on January 1, 2015.
These unaudited pro forma financial statements have been prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the disposition of the FSI 6000 Properties been consummated as of the dates indicated.


F-1

KBS REAL ESTATE INVESTMENT TRUST, INC.
UNAUDITED PRO FORMA BALANCE SHEET
As of December 31, 2015
(in thousands, except share and per share amounts)
 
KBS REIT Historical (a)
 
Pro Forma Adjustments
 
Pro Forma Total
 
 
FSI 6000 Properties (b)
 
Assets
 
 
 
 
 
Real estate held for investment:
 
 
 
 
 
Land
$
236,034

 
$
(31,269
)
 
$
204,765

Buildings and improvements
716,829

 
(68,978
)
 
647,851

Tenant origination and absorption costs
61,708

 
(9,145
)
 
52,563

Total real estate held for investment, at cost and net of impairment charges
1,014,571

 
(109,392
)
 
905,179

Less accumulated depreciation and amortization
(161,243
)
 
20,918

 
(140,325
)
Total real estate held for investment, net
853,328

 
(88,474
)
 
764,854

Real estate held for sale, net
7,552

 
—

 
7,552

Total real estate, net
860,880

 
(88,474
)
 
772,406

Real estate loans receivable, net
27,281

 
—

 
27,281

Total real estate and real estate-related investments, net
888,161

 
(88,474
)
 
799,687

Cash and cash equivalents
46,605

 
26,817

(c)
73,422

Restricted cash
39,874

 
—

 
39,874

Rents and other receivables, net
37,388

 
(5,382
)
 
32,006

Above-market leases, net
17,896

 
(12,088
)
 
5,808

Assets related to real estate held for sale
110

 
—

 
110

Prepaid expenses and other assets, net
24,831

 
(146
)
 
24,685

Total assets
$
1,054,865

 
$
(79,273
)
 
$
975,592

Liabilities and equity
 
 
 
 
 
Notes payable, net
$
428,222

 
$
(102,873
)
(d)
$
325,349

Accounts payable and accrued liabilities
19,152

 
—

 
19,152

Due to affiliates
68

 
—

 
68

Below-market leases, net
25,863

 
(100
)
 
25,763

Liabilities related to real estate held for sale
939

 
—

 
939

Other liabilities
50,958

 
—

 
50,958

Total liabilities
525,202

 
(102,973
)
 
422,229

Commitments and contingencies
 
 
 
 
 
Redeemable common stock
10,000

 
—

 
10,000

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, 186,414,147 shares issued and outstanding as of December 31, 2015
1,864

 
—

 
1,864

Additional paid-in capital
1,656,137

 
—

 
1,656,137

Cumulative distributions and net losses
(1,138,338
)
 
23,700

 
(1,114,638
)
Total stockholders’ equity
529,663

 
23,700

 
553,363

Total liabilities and equity
$
1,054,865

 
$
(79,273
)
 
$
975,592


F-2

KBS REAL ESTATE INVESTMENT TRUST, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
As of December 31, 2015
(a)
Historical financial information derived from KBS REIT’s Annual Report on Form 10-K as of December 31, 2015.
(b)
Represents adjustments to reflect the disposition of the FSI 6000 Properties. The sale price, net of closing credits, of the FSI 6000 Properties was $139.6 million (which includes a payment of $6.6 million by the FSI 6000 Buyer to KBS REIT to compensate KBS REIT for costs and expenses KBS REIT incurred in connection with the defeasance of the FSI 6000 Mortgage Loans), excluding closing costs.
(c)
Represents the amount of proceeds from the disposition of the FSI 6000 Properties, which amount was reduced by the aggregate outstanding balance of the FSI 6000 Mortgage Loans as of December 31, 2015 and estimated costs to defease the FSI 6000 Mortgage Loans.
(d)
Represents the aggregate outstanding principal balance of $102.9 million and $63,000 of unamortized discount, net, on the FSI 6000 Mortgage Loans as of December 31, 2015.



F-3

KBS REAL ESTATE INVESTMENT TRUST, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2015
(in thousands, except share and per share amounts)
 
KBS REIT
Historical (a)
 
Pro Forma Adjustment
 
Pro Forma Total
 
 
FSI 6000
Properties (b)
 
Revenues:
 
 
 
 
 
Rental income
$
135,117

 
$
(10,900
)
 
$
124,217

Tenant reimbursements
47,217

 
(366
)
 
46,851

Interest income from real estate loans receivable
3,089

 
—

 
3,089

Parking revenues and other operating income
2,797

 
(7
)
 
2,790

Total revenues
188,220

 
(11,273
)
 
176,947

Expenses:
 
 
 
 
 
Operating, maintenance, and management
75,034

 
(268
)
 
74,766

Real estate taxes, property-related taxes, and insurance
23,696

 
(234
)
 
23,462

Asset management fees to affiliate
9,547

 
—

 
9,547

General and administrative expenses
32,619

 
—

 
32,619

Depreciation and amortization
59,145

 
(4,979
)
 
54,166

Interest expense
29,517

 
(6,691
)
 
22,826

Impairment charge on real estate
49,306

 
—

 
49,306

Provision for loan losses
2,504

 
—

 
2,504

Total expenses
281,368

 
(12,172
)
 
269,196

Other income:
 
 
 
 
 
Gaines on sales of real estate, net
99,988

 
—

 
99,988

Gain on sales of foreclosed real estate held for sale
2,509

 
—

 
2,509

(Loss) gain from extinguishment of debt
(22,518
)
 
—

 
(22,518
)
Other interest income
605

 
—

 
605

Other income
789

 
(166
)
 
623

Total other income
81,373

 
(166
)
 
81,207

Loss from continuing operations
(11,775
)
 
733

 
(11,042
)
Discontinued operations:
 
 
 
 
 
Gain on sales of real estate, net
124

 
—

 
124

Income from discontinued operations
264

 
—

 
264

Total income from discontinued operations
388

 
—

 
388

Net loss
$
(11,387
)
 
$
733

 
$
(10,654
)
Basic and diluted income (loss) per common share:
 
 
 
 
 
Continuing operations
$
(0.06
)
 
 
 
$
(0.06
)
Discontinued operations
—

 
 
 
—

Net loss per common share
$
(0.06
)
 
 
 
$
(0.06
)
Weighted-average number of common shares outstanding, basic and diluted
187,219,590

 
 
 
187,219,590




F-4

KBS REAL ESTATE INVESTMENT TRUST, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2015
(a)
Historical financial information derived from KBS REIT’s Annual Report on Form 10-K for the year ended December 31, 2015.
(b)
Amount represents the adjustment to remove the historical operations of the FSI 6000 Properties as reflected in the historical statement of operations of KBS REIT for the year ended December 31, 2015.


F-5

KBS Real Estate Investment Trust, Inc. Reports