KBS REAL ESTATE INVESTMENT TRUST III : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF (form 10-K)

OPERATIONS

The following discussion and analysis should be read in conjunction with the
“Selected Financial Data” above and our accompanying consolidated financial
statements and the notes thereto. Also see “Forward-Looking Statements”
preceding Part I and Part I, Item 1A, “Risk Factors.”
Overview
We were formed on December 22, 2009 as a Maryland corporation that elected to be
taxed as a REIT beginning with the taxable year ended December 31, 2011 and we
intend to continue to operate in such a manner. We conduct our business
primarily through our Operating Partnership, of which we are the sole general
partner. Subject to certain restrictions and limitations, our business is
managed by our advisor pursuant to an advisory agreement and our advisor
conducts our operations and manages our portfolio of real estate investments.
Our advisor owns 20,857 shares of our common stock. We have no paid employees.
We have invested in a diverse portfolio of real estate investments. As of
December 31, 2020, we owned 18 office properties (one of which was held for sale
and subsequently sold on January 19, 2021), one mixed-use office/retail property
and an investment in the equity securities of the SREIT, which is accounted for
as an investment in an unconsolidated entity under the equity method of
accounting.
On July 18, 2019, we, through 12 wholly owned subsidiaries, sold 11 of our
properties (the “Singapore Portfolio”) to the SREIT, which was listed on the
SGX-ST on July 19, 2019 (the “Singapore Transaction”).
Our board of directors and management team regularly monitor the real estate and
equity markets in order to find the best opportunities possible to continue to
provide attractive and stable cash distributions to our stockholders and provide
additional liquidity for our stockholders. One alternative for us to achieve
these objectives may be for us to pursue conversion to a non-listed,
perpetual-life NAV REIT that calculates the net asset value or “NAV” per share
on a regular basis that is more frequent than annually (i.e., daily, monthly or
quarterly) and seeks to provide increased liquidity to current and future
stockholders through an expansion of our current share redemption program and/or
periodic self-tender offers. In connection with our pursuit of conversion to an
NAV REIT, on January 10, 2020, we filed a registration statement on Form S-11
with the SEC to register a public offering. Pursuant to the registration
statement and in the event we convert to an NAV REIT, we propose to register up
to $2,000,000,000 of shares of common stock, consisting of up to $1,700,000,000
in shares in a primary offering and up to $300,000,000 in shares pursuant to a
dividend reinvestment plan. As the global impact of the COVID-19 pandemic
continues to evolve, severely impacting global economic activity and causing
significant volatility and negative pressure in the financial markets, including
the U.S. real estate office market and the industries of our tenants, our
conflicts committee and our board of directors continue to evaluate whether the
proposed NAV REIT conversion remains in the best interest of our stockholders.
While we believe our portfolio is well-positioned to continue to successfully
respond to the pandemic, the impact of the COVID-19 pandemic on the capital and
financial markets, including the U.S. real estate office market, has caused us
to further consider the timing and likelihood of success of the proposed NAV
REIT conversion. Regardless of the ultimate decision, we continue to be focused
on providing increased liquidity to stockholders. Accordingly, we can give no
assurance that we will continue to pursue a conversion to an NAV REIT or that if
we do pursue conversion to an NAV REIT that we would commence or complete the
proposed offering. Even if we convert to an NAV REIT, there is no assurance that
we will successfully implement our strategy, and we can provide no assurance
that we will be able to provide additional liquidity to stockholders. See Part
I, Item 1A, “Risk Factors – Risks of the Proposed NAV REIT Conversion.”

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Market Outlook – Real Estate and Real Estate Finance Markets
Volatility in global financial markets and changing political environments can
cause fluctuations in the performance of the U.S. commercial real estate
markets. Possible future declines in rental rates, slower or potentially
negative net absorption of leased space and expectations of future rental
concessions, including free rent to renew tenants early, to retain tenants who
are up for renewal or to attract new tenants, may result in decreases in cash
flows from investment properties. Further, revenues from our properties could
decrease due to a reduction in occupancy (caused by factors including, but not
limited to, tenant defaults, tenant insolvency, early termination of tenant
leases and non-renewal of existing tenant leases), rent deferrals or abatements,
tenants being unable to pay their rent and/or lower rental rates. To the extent
there are increases in the cost of financing due to higher interest rates,
this may cause difficulty in refinancing debt obligations at terms as favorable
as the terms of existing indebtedness. Further, increases in interest rates
would increase the amount of our debt payments on our variable rate debt to the
extent the interest rates on such debt are not fixed through interest rate swap
agreements or limited by interest rate caps. Market conditions can change
quickly, potentially negatively impacting the value of real estate investments.
Management continuously reviews our investment and debt financing strategies to
optimize our portfolio and the cost of our debt exposure. Most recently, the
COVID-19 pandemic has had a negative impact on the real estate market as
discussed below.
COVID-19 Pandemic and Portfolio Outlook
Since initially being reported in December 2019, COVID-19 has spread around the
world, including to every state in the United States. On March 11, 2020, the
World Health Organization declared COVID-19 a pandemic, and on March 13, 2020,
the United States declared a national emergency with respect to COVID-19. The
COVID-19 pandemic has severely impacted global economic activity and caused
significant volatility and negative pressure in financial markets. The global
impact of the pandemic continues to evolve and many countries, states and
localities, including states and localities in the United States, have reacted
by imposing measures to help control the spread of the virus, including
instituting quarantines, “shelter-in-place” and “stay-at-home” orders, travel
restrictions, restrictions on businesses and school closures. As a result, the
COVID-19 pandemic is negatively impacting almost every industry, including the
U.S. office real estate industry and the industries of our tenants, directly or
indirectly. The fluidity of the COVID-19 pandemic continues to preclude any
prediction as to the ultimate adverse impact the pandemic may have on our
business, financial condition, results of operations and cash flows.
During the year ended December 31, 2020, we did not experience significant
disruptions in our operations from the COVID-19 pandemic. Many of our tenants
have suffered reductions in revenue since March 2020. In general, our retail and
restaurant tenants, which comprise approximately 4% of our annualized base rent
as of December 31, 2020, have been more severely impacted by the COVID-19
pandemic than our office tenants. Depending upon the duration of the various
measures imposed to help control the spread of the virus and the corresponding
economic slowdown, these tenants or additional tenants may seek rent deferrals
or abatements in future periods or become unable to pay their rent. Rent
collections for the quarter ended December 31, 2020 were approximately 96%. We
have granted a number of lease concessions related to the effects of the
COVID-19 pandemic but these lease concessions did not have a material impact to
our consolidated balance sheets as of December 31, 2020 or consolidated
statements of operations for the year ended December 31, 2020. As of
December 31, 2020, we had entered into lease amendments related to the effects
of the COVID-19 pandemic, granting $3.5 million of rent deferrals for the period
from March 2020 through March 2021 and granting $1.8 million in rental
abatements during this period.
As of December 31, 2020, 72 tenants were granted rental deferrals and/or rental
abatements, of which 35 of these tenants have begun to pay rent in accordance
with their lease agreements subsequent to the deferral and/or abatement period,
three of these tenants early terminated their leases and three of these tenant
leases were modified at lower rental rates and/or based on a percentage of the
tenant’s gross receipts. As of December 31, 2020, 25 of the 72 tenants continue
to be in the rental deferral and/or rental abatement periods as granted in
accordance with their agreements.
As of December 31, 2020, we had $2.9 million of receivables for lease payments
that had been deferred as lease concessions related to the effects of the
COVID-19 pandemic, of which $1.5 million was reserved for payments not probable
of collection, which were included in rent and other receivables, net on the
accompanying consolidated balance sheets. For the year ended December 31, 2020,
we recorded $1.5 million of rental abatements granted to tenants as a result of
the COVID-19 pandemic. Subsequent to December 31, 2020, we have not seen a
material impact on our rent collections. We will continue to evaluate any
additional short-term rent relief requests from tenants on an individual basis.
Not all tenant requests will ultimately result in modified agreements, nor are
we forgoing our contractual rights under our lease agreements. In most cases, it
is in our best interest to help our tenants remain in business and reopen when
restrictions are lifted. If tenants default on their rent and vacate, the
ability to re-lease this space is likely to be more difficult if the economic
slowdown continues and any long term impact of this situation, even after an
economic rebound, remains unclear. Current collections and rent relief requests
to-date may not be indicative of collections or requests in any future period.
The impact of the COVID-19 pandemic on our rental revenue for the first quarter
of 2021 and thereafter cannot, however, be determined at present.
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In addition to the direct impact on our rental income, we may also need to
recognize additional impairment charges at our properties to the extent rental
projections continue to decline at our properties. During the year ended
December 31, 2020, we recognized an impairment charge of $19.9 million for an
office/retail property due to the continued deterioration of retail demand at
the property which was further impacted by the COVID-19 pandemic.
We have also made a significant investment in the common units of the SREIT. In
addition to the risks similar to above with respect to the SREIT’s investments
in US office properties, our investment in the units of the SREIT is subject to
the risks inherent in investing in traded securities. Since early March 2020,
the trading price of the common units of the SREIT has declined substantially
and experienced substantial volatility. For purposes of the December 7, 2020
estimated value per share, we valued our investment in units of the SREIT at
$203.5 million, based on the trading price of the units of the SREIT as of
closing on December 1, 2020 less a discount for blockage due to the quantity of
units held by us relative to the normal level of trading volume in the SREIT
units. As of March 12, 2021, the aggregate value of our investment in the units
of the SREIT was $230.2 million, which was based solely on the closing price of
the units on the SGX-ST of $0.80 per unit as of March 12, 2021 and did not take
into account potential blockage due to the quantity of units we hold.
We continue to evaluate the impact and uncertainty of the COVID-19 pandemic on
our real estate portfolio’s ongoing cash flows and monthly stockholder
distributions. We can give no certainty to the amount of future monthly
stockholder distributions which will depend in large part on the amount of
tenant rent collections each month and the impact on our operating cash flows.
As of December 31, 2020, we had $406.1 million of revolving debt available for
future disbursement under various loans, subject to certain conditions set forth
in the loan agreements. As of December 31, 2020, we had $472.9 million of notes
payable related to the Modified Portfolio Loan Facility maturing during the 12
months ending December 31, 2021, which could be extended beyond the next 12
months, subject to certain conditions set forth in the loan agreements.
Significant reductions in rental revenue in the future related to the impact of
the COVID-19 pandemic may limit our ability to draw on our revolving credit
facilities or exercise our extension options due to covenants described in our
loan agreements. However, we believe that our cash flow from operations, cash on
hand, proceeds from our dividend reinvestment plan, proceeds from asset sales
and current and anticipated financing activities are sufficient to meet our
liquidity needs for the foreseeable future.
The COVID-19 pandemic or a future pandemic, epidemic or outbreak of infectious
disease affecting states or regions in which we or our tenants operate could
have material and adverse effects on our business, financial condition, results
of operations and cash flows due to, among other factors: health or other
government authorities requiring the closure of offices or other businesses or
instituting quarantines of personnel as the result of, or in order to avoid,
exposure to a contagious disease; disruption in supply and delivery chains; a
general decline in business activity and demand for real estate, especially
office properties; reduced economic activity, general economic decline or
recession, which may impact our tenants’ businesses, financial condition and
liquidity and may cause tenants to be unable to make rent payments to us timely,
or at all, or to otherwise seek modifications of lease obligations; difficulty
accessing debt and equity capital on attractive terms, or at all, and a severe
disruption and instability in the global financial markets or deteriorations in
credit and financing conditions, which may affect our access to capital
necessary to fund business operations or address maturing liabilities on a
timely basis; and the potential negative impact on the health of personnel of
our advisor, particularly if a significant number of our advisor’s employees are
impacted, which would result in a deterioration in our ability to ensure
business continuity during a disruption.
The extent to which the COVID-19 pandemic or any other pandemic, epidemic or
disease impacts our operations and those of our tenants and our investment in
the SREIT depends on future developments, which are highly uncertain and cannot
be predicted with confidence, including the scope, severity and duration of the
pandemic, the actions taken to contain the pandemic or mitigate its impact, and
the direct and indirect economic effects of the pandemic and containment
measures, among others. Nevertheless, the COVID-19 pandemic (or a future
pandemic, epidemic or disease) presents material uncertainty and risk with
respect to our business, financial condition, results of operations and cash
flows.
Our business, like all businesses, is being impacted by the uncertainty
regarding the COVID-19 pandemic, the effectiveness of policies introduced to
neutralize the disease, and the impact of those policies on economic activity.
While there are weakening macroeconomic conditions and some negative impact to
our tenants, we believe with our diverse portfolio of core real estate
properties with tenants across various industries, and with creditworthy tenants
and limited retail exposure in our real estate portfolio, we are positioned to
navigate this unprecedented period.

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Liquidity and Capital Resources
Our principal demands for funds during the short and long-term are and will be
for operating expenses, capital expenditures and general and administrative
expenses; payments under debt obligations; redemptions of common stock; and
payments of distributions to stockholders. Our primary sources of capital for
meeting our cash requirements are as follows:
•Cash flow generated by our real estate and real estate-related investments;
•Debt financings (including amounts currently available under existing loan
facilities);
•Proceeds from the sale of our real estate properties and real estate-related
investments; and
•Proceeds from common stock issued under our dividend reinvestment plan.
Our real estate properties generate cash flow in the form of rental revenues and
tenant reimbursements, which are reduced by operating expenditures, capital
expenditures, debt service payments, the payment of asset management fees and
corporate general and administrative expenses. Cash flow from operations from
our real estate properties is primarily dependent upon the occupancy level of
our portfolio, the net effective rental rates on our leases, the collectability
of rent and operating recoveries from our tenants and how well we manage our
expenditures, all of which may be adversely affected by the impact of the
COVID-19 pandemic as discussed above.
Our investment in an unconsolidated entity generates cash flow in the form of
dividend income. As of December 31, 2020, our investment in an unconsolidated
entity had a carrying value of $233.6 million.
Our real estate loan receivable generated cash flow in the form of interest
income, which was reduced by the payment of asset management fees and corporate
general and administrative expenses. Cash flow from operations from our real
estate loan receivable was primarily dependent on the operating performance of
the underlying collateral and the borrower’s ability to make debt service
payments. The real estate loan was paid off in full on December 11, 2020.
As of December 31, 2020, we had mortgage debt obligations in the aggregate
principal amount of $1.4 billion, with a weighted-average remaining term of 2.2
years. The maturity dates of certain loans may be extended beyond their current
maturity date, subject to certain terms and conditions contained in the loan
documents. As of December 31, 2020, we had $472.9 million of notes payable
related to the Modified Portfolio Loan Facility maturing during the 12 months
ending December 31, 2021, which could be extended beyond the next 12 months,
subject to certain conditions set forth in the loan agreements. We plan to
exercise our extension options available under our loan agreements or pay down
or refinance the related notes payable prior to their maturity dates. As of
December 31, 2020, our debt obligations consisted of $123.0 million of fixed
rate notes payable and $1.3 billion of variable rate notes payable. As of
December 31, 2020, the interest rates on $1.1 billion of our variable rate notes
payable were effectively fixed through interest rate swap agreements. As of
December 31, 2020, we had $406.1 million of revolving debt available for future
disbursement under various loans, subject to certain conditions set forth in the
loan agreements.
We paid cash distributions to our stockholders during the year ended
December 31, 2020 using cash flow from operations from the current period and
debt financing. We believe that our cash flow from operations, cash on hand,
proceeds from our dividend reinvestment plan, proceeds from asset sales and
current and anticipated financing activities are sufficient to meet our
liquidity needs for the foreseeable future.
Under our charter, we are required to limit our total operating expenses to the
greater of 2% of our average invested assets or 25% of our net income for the
four most recently completed fiscal quarters, as these terms are defined in our
charter, unless the conflicts committee has determined that such excess expenses
were justified based on unusual and non-recurring factors. Operating expenses
for the four fiscal quarters ended December 31, 2020 did not exceed the
charter-imposed limitation.
Cash Flows from Operating Activities
During the year ended December 31, 2020, net cash provided by operating
activities was $101.7 million, compared to net cash provided by operating
activities of $70.6 million during the year ended December 31, 2019. Net cash
provided by operating activities was higher in 2020 primarily as a result of
dividends received from our investment in the SREIT and the timing of payments
of operating expenses, offset by the sale of the Singapore Portfolio in July
2019. Cash flows provided by operating activities may decrease in future periods
to the extent our tenants are impacted by COVID-19 and defer rent payments or
are unable to pay rent.
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Cash Flows from Investing Activities
Net cash provided by investing activities was $84.3 million for the year ended
December 31, 2020 and primarily consisted of the following:
•$150.2 million of proceeds from the payoff of our real estate loan receivable;
•$25.1 million of net proceeds from the sale of Hardware Village; offset by
•$87.7 million used for improvements to real estate; and
•$3.3 million used for construction in progress related to Hardware Village.
Cash Flows from Financing Activities
During the year ended December 31, 2020, net cash used in financing activities
was $157.5 million and primarily consisted of the following:
•$75.9 million of net cash used in debt financing as a result of principal
payments on notes payable of $491.4 million and payments of deferred financing
costs of $6.3 million, partially offset by proceeds from notes payable of
$421.8 million;
•$62.8 million of net cash distributions, after giving effect to distributions
reinvested by stockholders of $46.7 million;
•$10.9 million of cash used for redemptions and repurchases of common stock;
•$6.4 million of distributions to noncontrolling interests due to the sale of
Hardware Village;
•Payment of other organization and offering costs of $1.2 million related to our
pursuit of conversion to an NAV REIT; and
•$0.2 million used for interest rate swap settlements for off-market swap
instruments.
We expect that our debt financing and other liabilities will be between 45% and
65% of the cost of our tangible assets (before deducting depreciation and other
non-cash reserves). There is no limitation on the amount we may borrow for the
purchase of any single asset. We limit our total liabilities to 75% of the cost
of our tangible assets (before deducting depreciation and other non-cash
reserves), meaning that our borrowings and other liabilities may exceed our
maximum target leverage of 65% of the cost of our tangible assets without
violating these borrowing restrictions. We may exceed the 75% limit only if a
majority of the conflicts committee approves each borrowing in excess of this
limitation and we disclose such borrowings to our stockholders in our next
quarterly report with an explanation from the conflicts committee of the
justification for the excess borrowing. To the extent financing in excess of
this limit is available on attractive terms, our conflicts committee may approve
debt in excess of this limit. From time to time, our total liabilities could
also be below 45% of the cost of our tangible assets due to the lack of
availability of debt financing. As of December 31, 2020, our borrowings and
other liabilities were approximately 54% of both the cost (before deducting
depreciation and other noncash reserves) and book value (before deducting
depreciation) of our tangible assets.
We also expect to use our capital resources to make certain payments to our
advisor. We currently make payments to our advisor in connection with the
acquisition of investments, the management of our investments and costs incurred
by our advisor in providing services to us. We also pay fees to our advisor in
connection with the disposition of investments. We reimburse our advisor and
dealer manager for certain stockholder services. In addition, our advisor is
entitled to an incentive fee upon achieving certain performance goals.
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Among the fees payable to our advisor is an asset management fee. With respect
to investments in real property, the asset management fee is a monthly fee equal
to one-twelfth of 0.75% of the amount paid or allocated to acquire the
investment, plus the cost of any subsequent development, construction or
improvements to the property. This amount includes any portion of the investment
that was debt financed and is inclusive of acquisition expenses related thereto
(but excludes acquisition fees paid or payable to our advisor). In the case of
investments made through joint ventures, the asset management fee is determined
based on our proportionate share of the underlying investment (but excluding
acquisition fees paid to our advisor). With respect to investments in loans and
any investments other than real property, the asset management fee is a monthly
fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the
amount actually paid or allocated to acquire or fund the loan or other
investment (which amount includes any portion of the investment that was debt
financed and is inclusive of acquisition or origination expenses related thereto
but is exclusive of acquisition or origination fees paid or payable to our
advisor) and (ii) the outstanding principal amount of such loan or other
investment, plus the acquisition or origination expenses related to the
acquisition or funding of such investment (excluding acquisition or origination
fees paid or payable to our advisor), as of the time of calculation. We
currently do not pay asset management fees to our advisor on our investment in
units of the SREIT.
Pursuant to the advisory agreement, with respect to asset management fees
accruing from March 1, 2014, our advisor agreed to defer, without interest, our
obligation to pay asset management fees for any month in which our modified
funds from operations (“MFFO”) for such month, as such term is defined in the
practice guideline issued by the IPA in November 2010 and interpreted by us,
excluding asset management fees, does not exceed the amount of distributions
declared by us for record dates of that month. We remain obligated to pay our
advisor an asset management fee in any month in which our 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 will also
be 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 be applied to pay any asset management fee amounts
previously deferred in accordance with the advisory agreement.
However, notwithstanding the foregoing, any and all deferred asset management
fees that are unpaid will become immediately due and payable at such time as our
stockholders have received, together as a collective group, aggregate
distributions (including distributions that may constitute a return of capital
for federal income tax purposes) sufficient to provide (i) an 8% per year
cumulative, noncompounded return on net invested capital (the “Stockholders’ 8%
Return”) and (ii) a return of their net invested capital, or the amount
calculated by multiplying the total number of shares purchased by stockholders
by the issue price, reduced by any amounts to repurchase shares pursuant to our
share redemption program. The Stockholders’ 8% Return is not based on the return
provided to any individual stockholder. Accordingly, it is not necessary for
each of our stockholders to have received any minimum return in order for our
advisor to receive deferred asset management fees.
As of December 31, 2020, we had accrued and deferred payment of $8.5 million of
asset management fees under the advisory agreement. The amount of asset
management fees deferred, if any, will vary on a month-to-month basis and the
total amount of asset management fees deferred as well as the timing of the
deferrals and repayments are difficult to predict as they will depend on the
amount of and terms of the debt we use to acquire assets, the level of operating
cash flow generated by our real estate investments and other factors. In
addition, deferrals and repayments may occur in the same period, and it is
possible that there could be additional deferrals in the future.
On September 27, 2020, we and our advisor renewed the advisory agreement. The
advisory agreement has a one-year term but may be renewed for an unlimited
number of successive one-year periods upon the mutual consent of our advisor and
our conflicts committee.
If we convert to an NAV REIT, we would implement a revised advisory fee
structure. See Part I, Item 1A, “Risk Factors – Risks of the Proposed NAV REIT
Conversion.”
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Participation Fee Liability and Potential Change in Fee Structure
Pursuant to our advisory agreement currently in effect with our advisor, our
advisor is due a subordinated participation in our net cash flows (the
“Subordinated Participation in Net Cash Flows”) upon meeting certain performance
goals. After our 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 our share redemption program, and (ii)
an 8.0% per year cumulative, noncompounded return on such net invested capital,
our advisor is entitled to receive 15.0% of our net cash flows, whether from
continuing operations, net sale proceeds or otherwise. Net sales proceeds means
the net cash proceeds realized by us after deduction of all expenses incurred in
connection with a sale, including disposition fees paid to our advisor. The 8.0%
per year cumulative, noncompounded return on net invested capital is calculated
on a daily basis. In making this calculation, the net invested capital is
reduced to the extent distributions in excess of a cumulative, noncompounded,
annual return of 8.0% are paid (from whatever source), except to the extent such
distributions would be required to supplement prior distributions paid in order
to achieve a cumulative, noncompounded, annual return of 8.0% (invested capital
is only reduced as described in this sentence; it is not reduced simply because
a distribution constitutes a return of capital for federal income tax purposes).
The 8.0% per year cumulative, noncompounded return is not based on the return
provided to any individual stockholder. Accordingly, it is not necessary for
each of our stockholders to have received any minimum return in order for our
advisor to participate in our net cash flows. In fact, if our advisor is
entitled to participate in our net cash flows, the returns of our stockholders
will differ, and some may be less than an 8.0% per year cumulative,
noncompounded return. This fee is payable only if we are not listed on an
exchange.
On January 9, 2020, we filed a definitive proxy statement with the SEC in
connection with the annual meeting of stockholders to vote on, among other
proposals, two proposals related to our pursuit of conversion to an NAV REIT. On
May 7, 2020 at our annual meeting of stockholders, our stockholders approved the
proposal to accelerate the payment of incentive compensation to our advisor,
upon our conversion to an NAV REIT. However, the proposed acceleration of the
payment of incentive compensation to our advisor remains subject to further
approval of the conflicts committee, after the proposed amount of the
accelerated payment of the incentive fee has been determined. In connection with
the determination of the December 7, 2020 estimated value per share of our
common stock, our advisor determined that there would be no liability related to
the Subordinated Participation in Net Cash Flows at that time, based on a
hypothetical liquidation of the assets and liabilities at their estimated fair
values, after considering the impact of any potential closing costs and fees
related to the disposition of real estate properties; however, changes to the
fair values of assets and liabilities could have a material impact to the
incentive fee calculation.
As discussed herein, our board of directors and management team regularly
monitor the real estate and equity markets in order to find the best
opportunities possible to continue to provide attractive and stable cash
distributions to our stockholders and provide additional liquidity for our
stockholders. One alternative for us to achieve these objectives may be for us
to pursue conversion to a non-listed, perpetual-life NAV REIT. If we convert to
an NAV REIT, we would implement a revised advisory fee structure. As the global
impact of the COVID-19 pandemic continues to evolve, severely impacting global
economic activity and causing significant volatility and negative pressure in
the financial markets, including the U.S. real estate office market and the
industries of our tenants, our conflicts committee and our board of directors
continue to evaluate whether the proposed NAV REIT conversion remains in the
best interest of our stockholders. While we believe our portfolio is
well-positioned to continue to successfully respond to the pandemic, the impact
of the COVID-19 pandemic on the capital and financial markets, including the
U.S. real estate office market, has caused us to further consider the timing and
likelihood of success of the proposed NAV REIT conversion. Regardless of the
ultimate decision, we continue to be focused on providing increased liquidity to
stockholders. Accordingly, we can give no assurance that we will continue to
pursue a conversion to an NAV REIT or that if we do pursue conversion to an NAV
REIT that we would commence or complete the proposed offering. Even if we
convert to an NAV REIT, there is no assurance that we will successfully
implement our strategy, and we can provide no assurance that we will be able to
provide additional liquidity to stockholders. See Part I, Item 1A, “Risk
Factors.”

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Contractual Obligations
The following is a summary of our contractual obligations as of December 31,
2020 (in thousands):
Payments Due During the Years Ended December 31,
Contractual Obligations Total 2021 2022-2023 2024
Outstanding debt obligations (1) $ 1,396,745$ 472,950$ 566,750$ 357,045
Interest payments on outstanding debt
obligations (2) (4) 64,028 27,273 35,391 1,364
Interest payments on interest rate swaps
(3) (4) 36,161 17,339 18,822 –

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(1) Amounts include principal payments only based on maturity dates as of
December 31, 2020; subject to certain conditions, the maturity dates of certain
loans may be extended beyond what is shown above.
(2) Projected interest payments are based on the outstanding principal amounts,
maturity dates and interest rates in effect as of December 31, 2020 (consisting
of the contractual interest rate and using interest rate indices as of
December 31, 2020, where applicable).
(3) Projected interest payments on interest rate swaps are calculated based on
the notional amount, effective term of the swap contract, and fixed rate net of
the swapped floating rate in effect as of December 31, 2020.
(4) We incurred interest expense of $51.6 million, excluding amortization of
deferred financing costs totaling $4.3 million and unrealized losses on
derivative instruments of $25.2 million during the year ended December 31, 2020.

Results of Operations
In this section, we discuss the results of our operations for the year ended
December 31, 2020 compared to the year ended December 31, 2019. For a discussion
of the year ended December 31, 2019 compared to the year ended December 31,
2018, please refer to Item 7 of Part II, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Annual Report on Form
10-K for the fiscal year ended December 31, 2019, which was filed with the SEC
on March 6, 2020 and which specific discussion is incorporated herein by
reference.
As of December 31, 2019, we owned 18 office properties and one mixed-use
office/retail property and had entered into the Hardware Village joint venture
to develop a multifamily apartment complex, which was completed and held for
sale as of December 31, 2019. In addition, we owned an investment in the equity
securities of the SREIT, which is accounted for as an investment in an
unconsolidated entity under the equity method of accounting. Subsequent to
December 31, 2019, we sold the multifamily apartment complex held through the
Hardware Village joint venture and originated one real estate loan receivable
secured by a deed of trust in May 2020, which was paid off in December 2020. As
a result, as of December 31, 2020, we owned 18 office properties (one of which
was held for sale and subsequently sold on January 19, 2021), one mixed-use
office/retail property and an investment in the equity securities of the SREIT.
Therefore, the results of operations presented for the years ended December 31,
2020 and 2019 are not directly comparable.
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Comparison of the year ended December 31, 2020 versus the year ended
December 31, 2019
The following table provides summary information about our results of operations
for the years ended December 31, 2020 and 2019 (dollar amounts in thousands):
$ Changes Due to
Developments
For the Years Ended Completed, $ Change Due
December 31, Dispositions, to Properties Held
Increase Percentage Acquisitions and Throughout Both
2020 2019 (Decrease) Change Origination (1) Periods (2)
Rental income $ 282,527$ 355,438$ (72,911) (21) % $ (64,359) $ (8,552)
Interest income from real estate loan
receivable 5,666 – 5,666 100 % 5,666 –
Other operating income 18,725 29,834 (11,109) (37) % (5,939) (5,170)
Operating, maintenance and management 71,470 92,271 (20,801) (23) % (16,829) (3,972)
Real estate taxes and insurance 57,234 62,989 (5,755) (9) % (8,696) 2,941
Asset management fees to affiliate 20,990 24,614 (3,624) (15) % (4,224) 600
General and administrative expenses 6,600 8,418 (1,818) (22) % n/a n/a
Depreciation and amortization 110,806 141,102 (30,296) (21) % (29,603) (693)
Interest expense 81,139 114,272 (33,133) (29) % (18,119) (15,014)
Impairment charges on real estate 19,896 8,706 11,190 129 % – 11,190
Other income – 4,089 (4,089) (100) % n/a n/a
Other interest income 72 655 (583) (89) % n/a n/a
Equity in loss of an unconsolidated
entity (465) (1,443) 978 (68) % 978 –
Loss from extinguishment of debt (199) (2,229) 2,030 (91) % 2,020 10
Gain on sale of real estate, net 49,457 327,211 (277,754) (85) % (277,754) –

_____________________
(1) Represents the dollar amount increase (decrease) for the year ended
December 31, 2020 compared to the year ended December 31, 2019 related to real
estate developments completed and placed in service, real estate dispositions,
acquisitions and a real estate loan originated and paid off on or after January
1, 2019.
(2) Represents the dollar amount increase (decrease) for the year ended
December 31, 2020 compared to the year ended December 31, 2019 related to real
estate investments owned by us throughout both periods presented.
Rental income from our real estate properties decreased from $355.4 million for
the year ended December 31, 2019 to $282.5 million for the year ended
December 31, 2020. The decrease in rental income was primarily due to the
Singapore Transaction in July 2019, and with respect to properties held
throughout both periods, the decrease in rental income was primarily due to
lease termination fees received in 2019 and an increase in the write-off of
receivables and straight-line rent deemed not probable of collection during the
year ended December 31, 2020 as a result of the COVID-19 pandemic. We expect
rental income to decrease in future periods due to the sale of Anchor Centre on
January 19, 2021 and to vary based on occupancy rates and rental rates of our
real estate investments and uncertainty and business disruptions as a result of
the COVID-19 pandemic. See “Market Outlook – Real Estate and Real Estate Finance
Markets – COVID-19 Pandemic and Portfolio Outlook” for a discussion on the
impact of the COVID-19 pandemic on our business.
Interest income from real estate loan receivable, recognized using the interest
method, was $5.7 million for the year ended December 31, 2020. On May 7, 2020,
in connection with the sale of Hardware Village, we, through an indirect wholly
owned subsidiary, provided seller financing and entered into a promissory note
with the buyer. The promissory note was paid off in full on December 11, 2020.
We did not own any real estate loans receivable during the year ended
December 31, 2019.
Other operating income decreased from $29.8 million during the year ended
December 31, 2019 to $18.7 million for the year ended December 31, 2020. The
decrease in other operating income was primarily due to the Singapore
Transaction in July 2019 and a decrease in parking revenues for properties held
throughout both periods due to the stay-at-home orders and a decrease in
physical occupancy as a result of the COVID-19 pandemic. We expect other
operating income to vary in future periods based on occupancy rates and parking
rates at our real estate properties, and business disruptions as a result of the
COVID-19 pandemic.
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Operating, maintenance and management costs decreased from $92.3 million for the
year ended December 31, 2019 to $71.5 million for the year ended December 31,
2020. The decrease in operating, maintenance and management costs was primarily
due to (i) the Singapore Transaction in July 2019, (ii) the disposition of
Hardware Village in May 2020, (iii) a change in the arrangement whereby a tenant
elected to exercise its right to self-manage at a property held throughout both
periods and paid for operating, maintenance and management costs directly during
the year ended December 31, 2020, and (iv) an overall decrease in operating
costs at properties held throughout both periods due to stay-at-home orders and
a decrease in physical occupancy as a result of the COVID-19 pandemic. We expect
operating, maintenance and management costs to fluctuate in future periods as a
result of general inflation for properties that we continue to own, and business
disruptions as a result of the COVID-19 pandemic, offset by a decrease due to
the dispositions of Hardware Village on May 7, 2020 and Anchor Centre on January
19, 2021.
Real estate taxes and insurance decreased from $63.0 million for the year ended
December 31, 2019 to $57.2 million for the year ended December 31, 2020. The
decrease in real estate taxes and insurance was primarily due to the Singapore
Transaction in July 2019, the disposition of Hardware Village in May 2020 and a
change in the arrangement whereby a tenant elected to exercise its right to
self-manage at a property held throughout both periods and paid property taxes
directly during the year ended December 31, 2020, partially offset by an
increase in real estate taxes due to higher property tax assessments for real
estate properties held throughout both periods. We expect real estate taxes and
insurance to increase in future periods as a result of general inflation and
general increases due to future property tax reassessments for properties that
we continue to own, offset by a decrease due to the dispositions of Hardware
Village on May 7, 2020 and Anchor Centre on January 19, 2021.
Asset management fees with respect to our real estate investments decreased from
$24.6 million for the year ended December 31, 2019 to $21.0 million for the year
ended December 31, 2020, primarily due to the Singapore Transaction in July 2019
and the disposition of Hardware Village in May 2020, partially offset by an
increase in asset management fees due to the origination of a real estate loan
receivable and an increase in capital improvements at real estate properties
held throughout both periods. We expect asset management fees to increase in
future periods as a result of any improvements we make to our properties, offset
by a decrease due to the payoff of our real estate loan receivable on December
11, 2020 and the disposition of Anchor Centre on January 19, 2021. As of
December 31, 2020, there were $8.5 million of accrued and deferred asset
management fees. For a discussion of accrued and deferred asset management fees,
see “- Liquidity and Capital Resources” herein.
General and administrative expenses decreased from $8.4 million for the year
ended December 31, 2019 to $6.6 million for the year ended December 31, 2020.
General and administrative costs consisted primarily of portfolio legal fees,
board of directors fees, audit costs and third party transfer agent fees. During
the year ended December 31, 2019, we incurred professional fees related to
assessing strategic alternatives which we did not incur during the year ended
December 31, 2020. We expect general and administrative expenses to vary in
future periods.
Depreciation and amortization decreased from $141.1 million for the year ended
December 31, 2019 to $110.8 million for the year ended December 31, 2020,
primarily due to the Singapore Transaction in July 2019 and the disposition of
Hardware Village in May 2020. We expect depreciation and amortization to
increase in future periods as a result of additional capital improvements offset
by a decrease in amortization related to fully amortized tenant origination and
absorption costs and as a result of the sale of Anchor Centre on January 19,
2021.
Interest expense decreased from $114.3 million for the year ended December 31,
2019 to $81.1 million for the year ended December 31, 2020. Included in interest
expense was (i) $77.4 million and $37.7 million of interest expense payments for
the years ended December 31, 2019 and 2020, respectively, (ii) the amortization
of deferred financing costs of $5.5 million and $4.3 million for the years ended
December 31, 2019 and 2020, respectively, and (iii) interest expense (including
gains and losses) incurred as a result of our derivative instruments which
increased interest expense by $33.1 million and $39.1 million for the years
ended December 31, 2019 and 2020, respectively. Additionally, during the year
ended December 31, 2019, we capitalized $1.7 million of interest to
construction-in-progress related to Hardware Village. The decrease in interest
expense was primarily due to the repayment of debt related to the Singapore
Transaction in July 2019 and a lower 30-day LIBOR rate during the year ended
December 31, 2020, partially offset by an increase in interest expense due to
changes in fair values with respect to our interest rate swaps that are not
accounted for as cash flow hedges. Our interest expense in future periods will
vary based on fair value changes with respect to our interest rate swaps that
are not accounted for as cash flow hedges and fluctuations in one-month LIBOR
(for our variable rate debt). We also expect interest to increase in future
periods as a result of additional borrowings.
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During the years ended December 31, 2019 and 2020, we recorded non-cash
impairment charges of $8.7 million and $19.9 million, respectively, to write
down the carrying value of an office/retail property to its estimated fair value
as a result of changes in cash flow estimates, including a change to the
anticipated hold period of the property, which triggered the future estimated
undiscounted cash flows to be lower than the net carrying value of the property.
The decrease in cash flow projections during both periods was primarily due to
the continued lack of demand for the property’s retail component resulting in
longer than estimated lease-up periods and lower projected rental rates,
exacerbated during the year ended December 31, 2020 due to the impact of the
COVID-19 pandemic with respect to the first quarter of 2020.
During the year ended December 31, 2019, we recorded a $4.1 million
reimbursement of certain costs and expenses related to the Singapore Transaction
that was indirectly paid by the SREIT. These costs included legal, audit, tax,
printing and other out of pocket costs that we incurred related to the Singapore
Transaction.
Equity in loss of an unconsolidated entity relates to our investment in the
SREIT. We recorded equity in loss of an unconsolidated entity of $1.4 million
and $0.5 million related to our investment in the SREIT during the years ended
December 31, 2019 and 2020, respectively. Equity in loss of an unconsolidated
entity for the year ended December 31, 2020 included $2.6 million related to our
share of the net losses from the SREIT offset by a gain of $2.1 million to
reflect the net effect to our investment as a result of the net proceeds raised
by the SREIT in a private offering in February 2020. Based on our 27.4%
ownership interest in the SREIT as of December 31, 2020, we exercise significant
influence over the operations, financial policies and decision making with
respect to this investment. Accordingly, we accounted for the investment in the
SREIT under the equity method of accounting as of December 31, 2020. We expect
our equity in income (loss) of an unconsolidated entity related to our
investment in the SREIT to vary based on occupancy rates and rental rates of the
SREIT’s real estate investments and uncertainty and business disruptions as a
result of the COVID-19 pandemic.
We recognized a $0.2 million loss from extinguishment of debt during the year
ended December 31, 2020 due to the write-off of unamortized deferred financing
costs as a result of the modification of the Portfolio Revolving Loan Facility
and the pay-off of the Anchor Centre Mortgage Loan. During the year ended
December 31, 2019, we recognized a loss from extinguishment of debt of
$2.2 million related to the write-off of unamortized deferred financing costs as
a result of the early pay-off of the mortgage loans related to properties sold
in the Singapore Transaction.
We recognized a gain on sale of real estate of $49.5 million related to the
disposition of Hardware Village during the year ended December 31, 2020. During
the year ended December 31, 2019, we sold 11 office properties in the Singapore
Transaction that resulted in a gain on sale of real estate of $327.2 million.

Funds from Operations and Modified Funds from Operations
We believe that funds from operations (“FFO”) is a beneficial indicator of the
performance of an equity REIT. We compute FFO in accordance with the current
National Association of Real Estate Investment Trusts (“NAREIT”) definition. FFO
represents net income, excluding gains and losses from sales of operating real
estate assets (which can vary among owners of identical assets in similar
conditions based on historical cost accounting and useful-life estimates), gains
and losses from change in control, impairment losses on real estate assets,
depreciation and amortization of real estate assets, and adjustments for
unconsolidated partnerships and joint ventures. We believe FFO facilitates
comparisons of operating performance between periods and among other REITs.
However, our computation of FFO may not be comparable to other REITs that do not
define FFO in accordance with the NAREIT definition or that interpret the
current NAREIT definition differently than we do. Our management believes that
historical cost accounting for real estate assets in accordance with U.S.
generally accepted accounting principles (“GAAP”) implicitly assumes that the
value of real estate assets diminishes predictably over time. Since real estate
values have historically risen or fallen with market conditions, many industry
investors and analysts have considered the presentation of operating results for
real estate companies that use historical cost accounting to be insufficient by
themselves. As a result, we believe that the use of FFO, together with the
required GAAP presentations, provides a more complete understanding of our
performance relative to our competitors and provides a more informed and
appropriate basis on which to make decisions involving operating, financing, and
investing activities.
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Changes in accounting rules have resulted in a substantial increase in the
number of non-operating and non-cash items included in the calculation of FFO.
As a result, our management also uses MFFO as an indicator of our ongoing
performance as well as our dividend sustainability. MFFO excludes from FFO:
acquisition fees and expenses (to the extent that such fees and expenses have
been recorded as operating expenses); adjustments related to contingent purchase
price obligations; amounts relating to straight-line rents and amortization of
above and below market intangible lease assets and liabilities; accretion of
discounts and amortization of premiums on debt investments; amortization of
closing costs relating to debt investments; impairments of real estate-related
investments; mark-to-market adjustments included in net income; and gains or
losses included in net income for the extinguishment or sale of debt or hedges.
We compute MFFO in accordance with the definition of MFFO included in the
practice guideline issued by the IPA in November 2010 as interpreted by
management. Our computation of MFFO may not be comparable to other REITs that do
not compute MFFO in accordance with the current IPA definition or that interpret
the current IPA definition differently than we do.
We believe that MFFO is helpful as a measure of ongoing operating performance
because it excludes costs that management considers more reflective of investing
activities and other non-operating items included in FFO. Management believes
that excluding acquisition fees and expenses (to the extent that such fees and
expenses have been recorded as operating expenses) from MFFO provides investors
with supplemental performance information that is consistent with management’s
analysis of the operating performance of the portfolio over time. MFFO also
excludes non-cash items such as straight-line rental revenue. Additionally, we
believe that MFFO provides investors with supplemental performance information
that is consistent with the performance indicators and analysis used by
management, in addition to net income and cash flows from operating activities
as defined by GAAP, to evaluate the sustainability of our operating performance.
MFFO provides comparability in evaluating the operating performance of our
portfolio with other non-traded REITs. MFFO, or an equivalent measure, is
routinely reported by non-traded REITs, and we believe often used by analysts
and investors for comparison purposes.
FFO and MFFO are non-GAAP financial measures and do not represent net income as
defined by GAAP. Net income as defined by GAAP is the most relevant measure in
determining our operating performance because FFO and MFFO include adjustments
that investors may deem subjective, such as adding back expenses such as
depreciation and amortization and the other items described above. Accordingly,
FFO and MFFO should not be considered as alternatives to net income as an
indicator of our current and historical operating performance. In addition, FFO
and MFFO do not represent cash flows from operating activities determined in
accordance with GAAP and should not be considered an indication of our
liquidity. We believe FFO and MFFO, in addition to net income and cash flows
from operating activities as defined by GAAP, are meaningful supplemental
performance measures; however, neither FFO nor MFFO reflects adjustments for the
operations of properties sold or under contract to sale during the periods
presented. During periods of significant disposition activity, FFO and MFFO are
much more limited measures of future performance and dividend sustainability. In
connection with our presentation of FFO, MFFO and Adjusted MFFO, we are
providing information related to the proportion of Adjusted MFFO related to
properties sold during the years ended December 31, 2020, 2019 and 2018, the
property held for sale as of December 31, 2020 and the real estate loan
receivable paid off as of December 31, 2020.
Further, during the current period of uncertainty and business disruptions as a
result of the COVID-19 pandemic, FFO and MFFO are much more limited measures of
future performance and dividend sustainability. See “Market Outlook – Real
Estate and Real Estate Finance Markets – COVID-19 Pandemic and Portfolio
Outlook” for a discussion of the impact of the COVID-19 pandemic on our
business.
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Although MFFO includes other adjustments, the exclusion of adjustments for
straight-line rent, the amortization of above- and below-market leases,
amortization of discounts and closing costs, unrealized losses (gains) on
derivative instruments, loss from extinguishment of debt and adjustments related
to contingent purchase price obligations are the most significant adjustments
for the periods presented. We have excluded these items based on the following
economic considerations:
•Adjustments for straight-line rent. These are adjustments to rental revenue as
required by GAAP to recognize contractual lease payments on a straight-line
basis over the life of the respective lease. We have excluded these adjustments
in our calculation of MFFO to more appropriately reflect the current economic
impact of our in-place leases, while also providing investors with a useful
supplemental metric that addresses core operating performance by removing rent
we expect to receive in a future period or rent that was received in a prior
period;
•Amortization of above- and below-market leases. Similar to depreciation and
amortization of real estate assets and lease related costs that are excluded
from FFO, GAAP implicitly assumes that the value of intangible lease assets and
liabilities diminishes predictably over time and requires that these charges be
recognized currently in revenue. Since market lease rates in the aggregate have
historically risen or fallen with local market conditions, management believes
that by excluding these charges, MFFO provides useful supplemental information
on the realized economics of the real estate;
•Amortization of discounts and closing costs. Discounts and closing costs
related to debt investments are amortized over the term of the loan as an
adjustment to interest income. This application results in income recognition
that is different than the underlying contractual terms of the debt investments.
We have excluded the amortization of discounts and closing costs related to our
debt investments in our calculation of MFFO to more appropriately reflect the
economic impact of our debt investments, as discounts will not be economically
recognized until the loan is repaid and closing costs are essentially the same
as acquisition fees and expenses on real estate. We believe excluding these
items provides investors with a useful supplemental metric that directly
addresses core operating performance;
•Unrealized losses (gains) on derivative instruments. These adjustments include
unrealized losses (gains) from mark-to-market adjustments on interest rate
swaps. The change in fair value of interest rate swaps not designated as a hedge
are non-cash adjustments recognized directly in earnings and are included in
interest expense. We have excluded these adjustments in our calculation of MFFO
to more appropriately reflect the economic impact of our interest rate swap
agreements;
•Loss from extinguishment of debt. A loss from extinguishment of debt, which
includes prepayment fees related to the extinguishment of debt, represents the
difference between the carrying value of any consideration transferred to the
lender in return for the extinguishment of a debt and the net carrying value of
the debt at the time of settlement. We have excluded the loss from
extinguishment of debt in our calculation of MFFO because these losses do not
impact the current operating performance of our investments and do not provide
an indication of future operating performance; and
•Adjustments relating to contingent purchase price obligations. These are
adjustments relating to contingent purchase price obligations where such
adjustments have been included in the derivation of GAAP net income. We believe
that the elimination of the contingent purchase price consideration adjustment,
included in other income for GAAP purposes, is appropriate because the
adjustment is a non-cash adjustment that is not reflective of our ongoing
operating performance.
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Our calculation of FFO, which we believe is consistent with the calculation of
FFO as defined by NAREIT, is presented in the following table, along with our
calculation of MFFO and Adjusted MFFO, for the years ended December 31, 2020,
2019 and 2018, respectively (in thousands). No conclusions or comparisons should
be made from the presentation of these periods.
For the

Years Ended December 31,

2020 2019 2018

Net (loss) income attributable to common stockholders $ (18,497)

$ 261,211$ 3,327
Depreciation of real estate assets 83,323 94,546 96,978
Amortization of lease-related costs 27,483 46,556 61,869
Impairment charges on real estate 19,896 8,706 –
Gain on sale of real estate, net (1) (49,457) (327,211) (11,942)

Adjustments for noncontrolling interests – consolidated
entities (2)

6,144 (28) –

Adjustment for investment in unconsolidated entities
(3)

16,040 8,571 1,537

Gain as a result of purchase and consolidation of joint
venture (4)

– – (2,034)
FFO attributable to common stockholders (5) 84,932 92,351 149,735
Straight-line rent and amortization of above- and
below-market leases, net (7,371) (9,739) (13,900)

Amortization of discounts and closing costs on real
estate loan receivable

(2,415) – –
Loss from extinguishment of debt 199 2,229 225
Unrealized losses (gains) on derivative instruments 25,165 35,664 (11,192)
Adjustment relating to contingent purchase price
obligation – – (1,575)

Income tax expense relating to contingent purchase
price obligation (6)

– – 418

Adjustment for investment in unconsolidated entities
(3)

4,426 2,017 (148)
MFFO attributable to common stockholders (5) 104,936 122,522 123,563

Adjustment for a contractual rent payment received but
deferred (7)

3,843 – –

Adjusted MFFO attributable to common stockholders (5) $ 108,779

$ 122,522$ 123,563

_____________________

(1) Reflects an adjustment to eliminate gain on sale of real estate.
(2) Reflects adjustments to eliminate the noncontrolling interest holders’ share
of the adjustments to convert our net (loss) income attributable to common
stockholders to FFO.
(3) Reflects adjustments to add back our noncontrolling interest share of the
adjustments to convert our net (loss) income attributable to common stockholders
to FFO and MFFO for our equity investments in unconsolidated entities.
(4) Reflects the remeasurement gain as a result of change in control upon our
purchase of the developer’s 25% equity interest and consolidation of Village
Center Station II on October 11, 2018, which was previously accounted for under
the equity method of accounting.
(5) FFO, MFFO and Adjusted MFFO include $1.2 million, $8.2 million, and
$1.3 million of lease termination income for the years ended December 31, 2020,
2019 and 2018, respectively.
(6) Relates to income tax expense on the income recorded as a result of a
reduction in contingent liability of $1.6 million, which is included in general
and administrative expenses on the accompanying consolidated statement of
operations.
(7) Adjustment for rent contractually due and collected per the terms of a lease
agreement, but deferred and not recognized into rental income for purposes of
GAAP as the tenant improvements are under construction. This amount is included
in other liabilities on our consolidated balance sheet as of December 31, 2020.
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Our calculation of Adjusted MFFO above includes amounts related to the
operations of the multifamily apartment complex held by the Hardware Village
joint venture that was sold on May 7, 2020, one real estate loan receivable that
was paid off on December 11, 2020, the Singapore Portfolio sold on July 18,
2019, one property sold in May 2018 and a property that was held for sale as of
December 31, 2020. Please refer to the table below with respect to the
proportion of Adjusted MFFO related to the real estate properties sold during
the years ended December 31, 2020, 2019 and 2018, the property held for sale as
of December 31, 2020 and the real estate loan receivable paid off as of
December 31, 2020 (in thousands).
For the Years Ended December 31,
2020 2019 2018
Adjusted MFFO by component:
Assets held for investment $ 101,677$ 99,476$ 94,678
Real estate properties sold 92 19,780 26,233
Real estate property held for sale 4,306 3,266

2,652

Real estate loan receivable paid off 2,704 – –
Adjusted MFFO $ 108,779$ 122,522$ 123,563

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

Distributions

Distributions declared, distributions paid and cash flow from operating
activities were as follows during 2020 (in thousands, except per share amounts):

Distributions Distributions Paid (1) (2) Cash Flow
Distributions Declared from Operating
Period Declared Per Share (1) Cash Reinvested Total Activities
First Quarter 2020 $ 27,149$ 0.149$ 15,573$ 11,904$ 27,477$ 17,410
Second Quarter 2020 27,268 0.149 15,512 11,718 27,230 25,311
Third Quarter 2020 27,388 0.150 15,693 11,655 27,348 30,700
Fourth Quarter 2020 27,517 0.150 16,027 11,445 27,472 28,309
$ 109,322$ 0.598$ 62,805$ 46,722$ 109,527$ 101,730

_____________________
(1) Assumes share was issued and outstanding on each monthly record date for
distributions during the period presented. For each monthly record date for
distributions during the period from January 1, 2020 through December 31, 2020,
distributions were calculated at a rate of $0.04983333 per share.
(2) Distributions are paid on a monthly basis. Distributions for the monthly
record date of a given month are paid on or about the first business day of the
following month.
For the year ended December 31, 2020, we paid aggregate distributions of $109.5
million, including $62.8 million of distributions paid in cash and $46.7 million
of distributions reinvested through our dividend reinvestment plan. Our net loss
attributable to common stockholders for the year ended December 31, 2020 was
$18.5 million. FFO for the year ended December 31, 2020 was $84.9 million and
cash flow from operating activities was $101.7 million. See the reconciliation
of FFO to net loss attributable to common stockholders above. We funded our
total distributions paid, which includes net cash distributions and dividends
reinvested by stockholders, with $97.5 million of cash flow from current
operating activities and $12.0 million from debt financing. For purposes of
determining the source of our distributions paid, we assume first that we use
cash flow from operating activities from the relevant or prior periods to fund
distribution payments.
We continue to evaluate the impact and uncertainty of the COVID-19 pandemic on
our real estate portfolio’s ongoing cash flows and monthly stockholder
distributions. We can give no certainty to the amount of future monthly
stockholder distributions which will depend in large part on the amount of
tenant rent collections each month and the impact on our operating cash flows.
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Over the long-term, we generally expect our distributions will be paid from cash
flow from operating activities from current periods or prior periods (except
with respect to distributions related to sales of our assets and distributions
related to the sales or repayment of real estate-related investments). From time
to time during our operational stage, we may not pay distributions solely from
our cash flow from operating activities, in which case distributions may be paid
in whole or in part from debt financing. To the extent that we pay distributions
from sources other than our cash flow from operating activities, the overall
return to our stockholders may be reduced. Further, our operating performance
cannot be accurately predicted and may deteriorate in the future due to numerous
factors, including those discussed under “Forward-Looking Statements,” “Summary
Risk Factors,” Part I, Item 1A, “Risk Factors” and in this Part II, Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations.” Those factors include: the future operating performance of our real
estate investments in the existing real estate and financial environment; the
success and economic viability of our tenants; our ability to refinance existing
indebtedness at comparable terms; changes in interest rates on any variable rate
debt obligations we incur; the level of participation in our dividend
reinvestment plan; and the extent to which the COVID-19 pandemic impacts our
operations and those of our tenants and our investment in the SREIT. In the
event our FFO and/or cash flow from operating activities decrease in the future,
the level of our distributions may also decrease. In addition, future
distributions declared and paid may exceed FFO and/or cash flow from operating
activities.

Critical Accounting Policies
Our consolidated financial statements have been prepared in accordance with GAAP
and in conjunction with the rules and regulations of the SEC. The preparation of
our financial statements requires significant management judgments, assumptions
and estimates about matters that are inherently uncertain. These judgments
affect the reported amounts of assets and liabilities and our disclosure of
contingent assets and liabilities as of the dates of the financial statements
and the reported amounts of revenue and expenses during the reporting periods.
With different estimates or assumptions, materially different amounts could be
reported in our financial statements. Additionally, other companies may utilize
different estimates that may impact the comparability of our results of
operations to those of companies in similar businesses.
Revenue Recognition – Operating Leases
Real Estate
On January 1, 2019, we adopted ASU 2016-02, Leases Topic 842 including the
package of practical expedients (“Topic 842”) for all leases that commenced
before the effective date of January 1, 2019. Accordingly, we (i) did not
reassess whether any expired or existing contracts are or contain leases, (ii)
did not reassess the lease classification for any expired or existing lease, and
(iii) did not reassess initial direct costs for any existing leases. We did not
elect the practical expedient related to using hindsight to reevaluate the lease
term. In addition, we adopted the practical expedient for land easements and did
not assess whether existing or expired land easements that were not previously
accounted for as leases under the lease accounting standards of Topic 840 are or
contain a lease under Topic 842.
In addition, Topic 842 provides an optional transition method to allow entities
to apply the new lease accounting standards at the adoption date and recognize a
cumulative-effect adjustment to the opening balance of retained earnings. We
adopted this transition method upon our adoption of the lease accounting
standards of Topic 842, which did not result in a cumulative effect adjustment
to the opening balance of retained earnings on January 1, 2019. Our comparative
periods presented in the financial statements will continue to be reported under
the lease accounting standards of Topic 840.
In accordance with Topic 842, tenant reimbursements for property taxes and
insurance are included in the single lease component of the lease contract (the
right of the lessee to use the leased space) and therefore are accounted for as
variable lease payments and are recorded as rental income on our statement of
operations beginning January 1, 2019. In addition, we adopted the practical
expedient available under Topic 842, to not separate nonlease components from
the associated lease component and, instead to account for those components as a
single component if the nonlease components otherwise would be accounted for
under the new revenue recognition standard (Topic 606) and if certain conditions
are met, specifically related to tenant reimbursements for common area
maintenance which would otherwise be accounted for under the revenue recognition
standard. We believe the two conditions have been met for tenant reimbursements
for common area maintenance as (i) the timing and pattern of transfer of the
nonlease components and associated lease components are the same and (ii) the
lease component would be classified as an operating lease. Accordingly, tenant
reimbursements for common area maintenance are also accounted for as variable
lease payments and recorded as rental income on our statement of operations
beginning January 1, 2019.
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We recognize minimum rent, including rental abatements, lease incentives and
contractual fixed increases attributable to operating leases, on a straight-line
basis over the term of the related leases when collectibility is probable and
record amounts expected to be received in later years as deferred rent
receivable. If the lease provides for tenant improvements, we determine whether
the tenant improvements, for accounting purposes, are owned by the tenant or us.
When we are the owner of the tenant improvements, the tenant is not considered
to have taken physical possession or have control of the physical use of the
leased asset until the tenant improvements are substantially completed. When the
tenant is the owner of the tenant improvements, any tenant improvement allowance
(including amounts that can be taken in the form of cash or a credit against the
tenant’s rent) that is funded is treated as a lease incentive and amortized as a
reduction of rental revenue over the lease term. Tenant improvement ownership is
determined based on various factors including, but not limited to:
•whether the lease stipulates how a tenant improvement allowance may be spent;
•whether the lessee or lessor supervises the construction and bears the risk of
cost overruns;
•whether the amount of a tenant improvement allowance is in excess of market
rates;
•whether the tenant or landlord retains legal title to the improvements at the
end of the lease term;
•whether the tenant improvements are unique to the tenant or general purpose in
nature; and
•whether the tenant improvements are expected to have any residual value at the
end of the lease.
We leased apartment units under operating leases with terms generally of one
year or less. Generally, credit investigations were performed for prospective
residents and security deposits were obtained. We recognized rental revenue, net
of concessions, on a straight-line basis over the term of the lease, when
collectibility was determined to be probable.
In accordance with Topic 842, we make a determination of whether the
collectibility of the lease payments in an operating lease is probable. If we
determine the lease payments are not probable of collection, we would fully
reserve for any contractual lease payments, deferred rent receivable, and
variable lease payments and would recognize rental income only if cash is
received. Beginning January 1, 2019, these changes to our collectibility
assessment are reflected as an adjustment to rental income. We make estimates of
the collectability of the lease payments which requires significant judgment by
management. We consider payment history, current credit status, the tenant’s
financial condition, security deposits, letters of credit, lease guarantees and
current market conditions that may impact the tenant’s ability to make payments
in accordance with its lease agreements, including the impact of the COVID-19
pandemic on the tenant’s business, in making the determination.
Prior to January 1, 2019, bad debt expense related to uncollectible accounts
receivable and deferred rent receivable was included in operating, maintenance,
and management expense in the statement of operations. Any subsequent changes to
the collectibility of the allowance for doubtful accounts as of December 31,
2018, which was recorded prior to the adoption of Topic 842, are recorded in
operating, maintenance, and management expense in the statement of operations.
Beginning January 1, 2019, we, as a lessor, record costs to negotiate or arrange
a lease that would have been incurred regardless of whether the lease was
obtained, such as legal costs incurred to negotiate an operating lease, as an
expense and classify such costs as operating, maintenance, and management
expense on our consolidated statement of operations, as these costs are no
longer capitalizable under the definition of initial direct costs under Topic
842.
Sales of Real Estate
Effective January 1, 2018, we adopted the guidance of ASC 610-20, Other Income –
Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”),
which applies to sales or transfers to noncustomers of nonfinancial assets or
in substance nonfinancial assets that do not meet the definition of a business.
Generally, our sales of real estate would be considered a sale of a nonfinancial
asset as defined by ASC 610-20.
ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606). Under ASC 610-20, if we
determine we do not have a controlling financial interest in the entity that
holds the asset and the arrangement meets the criteria to be accounted for as a
contract, we would derecognize the asset and recognize a gain or loss on the
sale of the real estate when control of the underlying asset transfers to the
buyer. The application of these criteria can be complex and incorrect
assumptions on collectability of the transaction price or transfer of control
can result in the improper recognition of the gain or loss from sales of real
estate during the period.
Real Estate Loan Receivable
Interest income on our real estate loan receivable was recognized on an accrual
basis over the life of the investment using the interest method. Direct loan
origination fees and origination or acquisition costs, as well as premiums or
discounts, were amortized over the term of the loan as an adjustment to interest
income.
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Real Estate
Depreciation and Amortization
Real estate costs related to the acquisition and improvement of properties are
capitalized and depreciated over the expected useful life of the asset on a
straight-line basis. Repair and maintenance costs are charged to expense as
incurred and significant replacements and betterments are capitalized. Repair
and maintenance costs include all costs that do not extend the useful life of
the real estate asset. We consider the period of future benefit of an asset to
determine its appropriate useful life. Expenditures for tenant improvements are
capitalized and amortized over the shorter of the tenant’s lease term or
expected useful life. We anticipate the estimated useful lives of our assets by
class to be generally as follows:
Land N/A
Buildings 25-40 years
Building improvements 10-25 years
Tenant improvements Shorter of lease term or

expected useful life
Tenant origination and absorption costs Remaining term of related leases, including

below-market renewal periods

Real Estate Acquisition Valuation
As a result of our adoption of ASU No. 2017-01, Business Combinations (Topic
805): Clarifying the Definition of a Business, acquisitions of real estate
beginning January 1, 2017 could qualify as asset acquisitions (as opposed to
business combinations). We record the acquisition of income-producing real
estate or real estate that will be used for the production of income as a
business combination or an asset acquisition. If substantially all of the fair
value of the gross assets acquired are concentrated in a single identifiable
asset or group of similar identifiable assets, then the set is not a business.
For purposes of this test, land and buildings can be combined along with the
intangible assets for any in-place leases and accordingly, most acquisitions of
investment properties would not meet the definition of a business and would be
accounted for as an asset acquisition. To be considered a business, a set must
include an input and a substantive process that together significantly
contributes to the ability to create an output. All assets acquired and
liabilities assumed in a business combination are measured at their
acquisition-date fair values. For asset acquisitions, the cost of the
acquisition is allocated to individual assets and liabilities on a relative fair
value basis. Acquisition costs associated with business combinations are
expensed as incurred. Acquisition costs associated with asset acquisitions are
capitalized.
We assess the acquisition date fair values of all tangible assets, identifiable
intangibles and assumed liabilities using methods similar to those used by
independent appraisers, generally utilizing a discounted cash flow analysis that
applies appropriate discount and/or capitalization rates and available market
information. Estimates of future cash flows are based on a number of factors,
including historical operating results, known and anticipated trends, and market
and economic conditions. The fair value of tangible assets of an acquired
property considers the value of the property as if it were vacant.
We record above-market and below-market in-place lease values for acquired
properties based on the present value (using a discount rate that reflects the
risks associated with the leases acquired) of the difference between (i) the
contractual amounts to be paid pursuant to the in-place leases and (ii)
management’s estimate of fair market lease rates for the corresponding in-place
leases, measured over a period equal to the remaining non-cancelable term of
above-market in-place leases and for the initial term plus any extended term for
any leases with below-market renewal options. We amortize any recorded
above-market or below-market lease values as a reduction or increase,
respectively, to rental income over the remaining non-cancelable terms of the
respective lease, including any below-market renewal periods.
We estimate the value of tenant origination and absorption costs by considering
the estimated carrying costs during hypothetical expected lease-up periods,
considering current market conditions. In estimating carrying costs, we include
real estate taxes, insurance and other operating expenses and estimates of lost
rentals at market rates during the expected lease-up periods.
We amortize the value of tenant origination and absorption costs to depreciation
and amortization expense over the remaining non-cancelable term of the leases.
Estimates of the fair values of the tangible assets, identifiable intangibles
and assumed liabilities require us to make significant assumptions to estimate
market lease rates, property-operating expenses, carrying costs during lease-up
periods, discount rates, market absorption periods, and the number of years the
property will be held for investment. The use of inappropriate assumptions would
result in an incorrect valuation of our acquired tangible assets, identifiable
intangibles and assumed liabilities, which would impact the amount of our net
income.
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Subsequent to the acquisition of a property, we may incur and capitalize costs
necessary to get the property ready for its intended use. During that time,
certain costs such as legal fees, real estate taxes and insurance and financing
costs are also capitalized.
Impairment of Real Estate and Related Intangible Assets and Liabilities
We continually monitor events and changes in circumstances that could indicate
that the carrying amounts of our real estate and related intangible assets and
liabilities may not be recoverable or realized. When indicators of potential
impairment suggest that the carrying value of real estate and related intangible
assets and liabilities may not be recoverable, we assess the recoverability by
estimating whether we will recover the carrying value of the real estate and
related intangible assets and liabilities through its undiscounted future cash
flows and its eventual disposition. If, based on this analysis, we do not
believe that we will be able to recover the carrying value of the real estate
and related intangible assets and liabilities, we would record an impairment
loss to the extent that the carrying value exceeds the estimated fair value of
the real estate and related intangible assets and liabilities.
Projecting future cash flows involves estimating expected future operating
income and expenses related to the real estate and its related intangible assets
and liabilities as well as market and other trends. Using inappropriate
assumptions to estimate cash flows or the expected hold period until the
eventual disposition could result in incorrect conclusions on recoverability and
incorrect fair values of the real estate and its related intangible assets and
liabilities and could result in the overstatement of the carrying values of our
real estate and related intangible assets and liabilities and an overstatement
of our net income.
Real Estate Loans Receivable
We recorded our real estate loan receivable at amortized cost, net of an
allowance for credit losses (if any). The amortized cost of a real estate loan
receivable is the outstanding unpaid principal balance, net of unamortized
acquisition premiums or discounts and unamortized costs and fees directly
associated with the origination or acquisition of the loan. The allowance for
credit losses is a valuation account that is deducted from the amortized cost
basis of a real estate loan receivable to present the net amount expected to be
collected. This allowance is accounted for under the current expected credit
loss (CECL) model and is measured and recorded upon the initial recognition of
the real estate loan receivable and is re-measured at each balance sheet date
based on changes in facts and circumstances. The allowance is adjusted through
“Provision for credit loss” on our consolidated statements of operations and is
increased or decreased based on the re-measurement of the allowance for credit
loss at each balance sheet date. If we determine that all or a portion of the
real estate loan receivable is no longer collectible, the portion that is deemed
uncollectible will be written off and the allowance for credit losses reduced.
Recoveries of real estate loans receivable that were previously written off are
recorded when cash is received.
We apply a probability-of-default method to measure the allowance for credit
losses which applies the probability of default within a given timeframe by the
percentage of the real estate loan receivable not expected to be collected due
to default. Additionally, we evaluate the potential for adverse changes in the
value of the collateral over the contractual life of the real estate loan
receivable, the financial condition of the borrower, the probability that we
will grant the borrower a concession through modification of the loan terms and
other market conditions in calculating the allowance for credit losses.
Failure to properly measure an allowance for credit loss could result in the
overstatement of earnings and the carrying value of the real estate loan
receivable. Actual losses, if any, could differ significantly from estimated
amounts.
Investments in Unconsolidated Joint Ventures
We account for investments in joint ventures or entities over which we may
exercise significant influence, but do not control, and for investments in joint
ventures that qualify as variable interest entities of which we are not the
primary beneficiary using the equity method of accounting. Under the equity
method, the investment is initially recorded at cost and subsequently adjusted
to reflect additional contributions or distributions and our proportionate share
of equity in the entity’s income (loss). We recognize our proportionate share of
the ongoing income or loss of the unconsolidated entity as equity in income
(loss) of unconsolidated entities on the consolidated statements of operations.
In addition, we account for any share issuances by the unconsolidated entity as
if we sold a proportionate share of our investment. Any gain or loss as a result
of the unconsolidated entity’s share issuance is recognized in equity in income
(loss) of unconsolidated entities on the consolidated statement of operations.
On a quarterly basis, we evaluate our investment in an unconsolidated entity for
other-than-temporary impairments. To evaluate for other-than-temporary
impairments, we must determine if we have the ability to recover the carrying
amount of our investment, which requires us to make assumptions about whether
the unconsolidated entity can sustain earnings and requires us to estimate
projected cash flows from our unconsolidated entity, which may include the
amount we expect to realize upon the sale of our investment. Using inappropriate
assumptions to estimate projected cash flows or sales prices could result in
incorrect conclusions on recoverability. As of December 31, 2020, we did not
identify any indicators of impairment related to our unconsolidated real estate
entity accounted for under the equity method.
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Derivative Instruments
We enter into derivative instruments for risk management purposes to hedge our
exposure to cash flow variability caused by changing interest rates on our
variable rate notes payable. We record these derivative instruments at fair
value on the accompanying consolidated balance sheets. Derivative instruments
designated and qualifying as a hedge of the exposure to variability in expected
future cash flows or other types of forecasted transactions are considered cash
flow hedges. The change in fair value of the effective portion of a derivative
instrument that is designated as a cash flow hedge is recorded as other
comprehensive income (loss) on the accompanying consolidated statements of
comprehensive income (loss) and consolidated statements of equity. The changes
in fair value for derivative instruments that are not designated as a hedge or
that do not meet the hedge accounting criteria are recorded as gain or loss on
derivative instruments and included in interest expense as presented in the
accompanying consolidated statements of operations.
The calculation of the fair value of derivative instruments is complex and
different inputs used in the model can result in significant changes to the fair
value of derivative instruments and the related gain or loss on derivative
instruments included as interest expense in the accompanying consolidated
statements of operations. The valuation of our derivative instruments is based
on a proprietary model using the contractual terms of the derivatives, including
the period to maturity, as well as observable market-based inputs, including
interest rate curves and volatility. The fair values of interest rate swaps are
estimated using the market standard methodology of netting the discounted fixed
cash payments and the discounted expected variable cash receipts. The variable
cash receipts are based on an expectation of interest rates (forward curves)
derived from observable market interest rate curves. In addition, credit
valuation adjustments, which consider the impact of any credit risks to the
contracts, are incorporated in the fair values to account for potential
nonperformance risk.
Fair Value Election of Hybrid Financial Instruments with Embedded Derivatives
When we enter into interest rate swaps which include off-market terms, we
determine if these contracts are hybrid financial instruments with embedded
derivatives requiring bifurcation between the host contract and the derivative
instrument. We elected to initially and subsequently measure these hybrid
financial instruments in their entirety at fair value with concurrent
documentation of this election. Changes in the fair value of the hybrid
financial instrument under this fair value election are recorded in earnings and
are included in interest expense in the accompanying consolidated statements of
operations. The cash flows for these off-market swap instruments which contain
an other-than-insignificant financing element at inception are included in cash
flows provided by or used in financing activities on the accompanying
consolidated statements of cash flows.
Income Taxes
We have elected to be taxed as a REIT under the Internal Revenue Code. To
continue to qualify as a REIT, we must continue to meet certain organizational
and operational requirements, including a requirement to distribute at least 90%
of our annual REIT taxable income to stockholders (which is computed without
regard to the dividends-paid deduction or net capital gain and which does not
necessarily equal net income as calculated in accordance with GAAP). As a REIT,
we generally will not be subject to federal income tax on income that we
distribute as dividends to our stockholders. If we fail to qualify as a REIT in
any taxable year, we will be subject to federal income tax on our taxable income
at regular corporate income tax rates and generally will not be permitted to
qualify for treatment as a REIT for federal income tax purposes for the four
taxable years following the year during which qualification is lost, unless the
Internal Revenue Service grants us relief under certain statutory provisions.
Such an event could materially and adversely affect our net income and net cash
available for distribution to stockholders. However, we believe that we are
organized and operate in such a manner as to qualify for treatment as a REIT.

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Subsequent Events
We evaluate subsequent events up until the date the consolidated financial
statements are issued.
Distributions Paid
On January 4, 2021, we paid distributions of $9.2 million, which related to
distributions in the amount of $0.04983333 per share of common stock to
stockholders of record as of the close of business on December 18, 2020. On
February 1, 2021, we paid distributions of $9.2 million, which related to
distributions in the amount of $0.04983333 per share of common stock to
stockholders of record as of the close of business on January 21, 2021. On
March 1, 2021, we paid distributions of $9.2 million, which related to
distributions in the amount of $0.04983333 per share of common stock to
stockholders of record as of the close of business on February 19, 2021.
Monthly Distributions
On March 11, 2021, our board of directors authorized a March 2021 distribution
in the amount of $0.04983333 per share of common stock to stockholders of record
as of the close of business on March 19, 2021, which we expect to pay in April
2021, and an April 2021 distribution in the amount of $0.04983333 per share of
common stock to stockholders of record as of the close of business on April 20,
2021, which we expect to pay in May 2021.
Investors may choose to receive cash distributions or purchase additional shares
through our dividend reinvestment plan.
Disposition of Anchor Centre
On January 19, 2021, we completed the sale of Anchor Centre to a purchaser
unaffiliated with us or our advisor, for $103.5 million, or $100.5 million net
of credits given to the purchaser primarily for outstanding tenant improvements
and lease incentives, before third-party closing costs of approximately $1.1
million and excluding disposition fees payable to our advisor.
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