OPERATIONS

The next dialogue and evaluation needs to be learn along with the
"Chosen Monetary Knowledge" above and our accompanying consolidated monetary
statements and the notes thereto. Additionally see "Ahead-Trying Statements" and
"Abstract Danger Components" previous Half I and Half I, Merchandise 1A, "Danger Components."
Overview
We had been fashioned on July 12, 2007 as a Maryland company that elected to be
taxed as an actual property funding belief ("REIT") starting with the taxable yr
ended December 31, 2008 and we intend to proceed to function in such a fashion.
We conduct our enterprise primarily by way of our Working Partnership, of which we
are the only basic associate. Topic to sure restrictions and limitations,
our enterprise is managed by our advisor, KBS Capital Advisors LLC, pursuant to an
advisory settlement. KBS Capital Advisors conducts our operations and manages our
portfolio of actual property investments. Our advisor owns 20,000 shares of our
widespread inventory. We've got no paid staff.
As of December 31, 2020, we owned 4 workplace properties and an workplace constructing
that's a part of an workplace campus.
As of December 31, 2020, we had 184,299,500 shares of widespread inventory issued and
excellent.
On November 13, 2019, in reference to a overview of potential strategic
alternate options out there to us, a particular committee composed of all of our
unbiased administrators (the "Particular Committee") and our board of administrators
unanimously accepted the sale of all of our property and our dissolution pursuant
to the phrases of the plan of full liquidation and dissolution (the "Plan of
Liquidation"). The principal goal of the Plan of Liquidation is to offer
liquidity to our stockholders by promoting our property, paying our money owed and
distributing the web proceeds from liquidation to our stockholders. On March 5,
2020, our stockholders accepted the Plan of Liquidation. The Plan of Liquidation
is included as an exhibit to this Annual Report on Kind 10-Okay.
Plan of Liquidation
In accordance with the Plan of Liquidation, our goals are to pursue an
orderly liquidation of our firm by promoting all of our remaining property,
paying our money owed and our recognized liabilities, offering for the cost of unknown
or contingent liabilities, distributing the web proceeds from liquidation to our
stockholders and winding up our operations and dissolving our firm. Whereas
pursuing our liquidation pursuant to the Plan of Liquidation, we intend to
proceed to handle our portfolio of property to take care of and, if attainable, enhance
the standard and income-producing potential of our properties to reinforce property
stability and higher place our remaining property on the market.
We count on to distribute considerably the entire web proceeds from liquidation
to our stockholders inside 24 months from March 5, 2020. Pursuant to the Plan of
Liquidation, on March 5, 2020, our board of administrators approved the Preliminary
Liquidating Distribution within the quantity of $0.75 per share of widespread inventory to
stockholders of report as of the shut of enterprise on March 5, 2020. On July 31,
2020, our board of administrators approved the Second Liquidating Distribution in
the quantity of $0.25 per share of widespread inventory to stockholders of report as of
the shut of enterprise on August 3, 2020, and on December 24, 2020, our board of
administrators approved the Third Liquidating Distribution within the quantity of $0.40
per share of widespread inventory to stockholders of report as of the shut of enterprise
on December 24, 2020. We count on to proceed to pay liquidating distribution
funds to our stockholders by way of the completion of our liquidation course of.
Nevertheless, if we can't promote our property and pay our money owed inside 24 months from
March 5, 2020, or if the board of administrators and the Particular Committee decide
that it's in any other case advisable to take action, pursuant to the Plan of Liquidation, we
might switch and assign our remaining property to a liquidating belief. Upon such
switch and task, our stockholders will obtain helpful pursuits in
the liquidating belief.
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Our expectations in regards to the implementation of the Plan of Liquidation and the
quantity of any extra liquidating distributions that we are going to pay to our
stockholders and after we pays them are topic to dangers and uncertainties
and are primarily based on sure estimates and assumptions, a number of of which can
show to be incorrect. In consequence, the precise quantity of any extra
liquidating distributions we pay to stockholders could also be kind of than we
estimate and the liquidating distributions could also be paid later than we predict.
There are numerous elements which will have an effect on the quantity of liquidating distributions
we'll in the end pay to our stockholders. If we underestimate our current
obligations and liabilities or the quantity of taxes, transaction charges and
bills referring to the liquidation and dissolution, or if unanticipated or
contingent liabilities come up, the quantity of liquidating distributions in the end
paid to our stockholders might be lower than estimated. Furthermore, the liquidation
worth will fluctuate over time in response to developments associated to particular person
property in our portfolio and the administration of these property, in response to the
actual property and finance markets, primarily based on the precise liquidation timing and the
quantity of web proceeds acquired from the disposition of the remaining property and
because of different elements. Given the uncertainty and present enterprise disruptions as
a results of the outbreak of COVID-19, our implementation of the Plan of
Liquidation could also be materially and adversely impacted and this may occasionally have a
materials impact on the last word quantity and timing of liquidating distributions
acquired by our stockholders. Whereas we've thought of the influence from COVID-19
in our web property in liquidation introduced on the Consolidated Assertion of Web
Property as of December 31, 2020, the extent to which our enterprise could also be affected
by COVID-19 depends upon future developments with respect to the continued unfold
and therapy of the virus, the actions taken to include the pandemic or
mitigate its influence, and the direct and oblique financial results of the
pandemic and containment measures. Any long-term influence of this example, even
after an financial rebound, stays unclear. See " - Market Outlook - Actual Property
and Actual Property Finance Markets - COVID-19 Pandemic and Portfolio Outlook" for a
dialogue of the influence of the outbreak of COVID-19 on our enterprise and our
liquidation. We can provide no assurance concerning the timing of asset tendencies
in reference to the implementation of the Plan of Liquidation, the sale
costs we'll obtain for our property, and the quantity or timing of liquidating
distributions to be acquired by our stockholders.

Market Outlook - Actual Property and Actual Property Finance Markets
Volatility in world monetary markets and altering political environments can
trigger fluctuations within the efficiency of the U.S. business actual property
markets. Doable future declines in rental charges, slower or probably
destructive web absorption of leased house and expectations of future rental
concessions, together with free hire to resume tenants early, to retain tenants who
are up for renewal or to draw new tenants, might lead to decreases in money
flows from our properties. Additional, revenues from our properties may lower
because of a discount in occupancy (attributable to elements together with, however not restricted
to, tenant defaults, tenant insolvency, early termination of tenant leases and
non-renewal of current tenant leases), hire deferrals or abatements, tenants
being unable to pay their hire and/or decrease rental charges. Reductions in revenues
from our properties would adversely influence the timing of asset gross sales and/or the
gross sales worth we'll obtain for our properties. To the extent there are
will increase in the price of financing because of greater rates of interest, this may occasionally trigger
issue in refinancing debt obligations at phrases as favorable because the phrases of
current indebtedness. Additional, will increase in rates of interest would improve the
quantity of our debt funds on our variable charge debt. Administration repeatedly
evaluations our debt financing methods to optimize our portfolio and the price of
our debt publicity. Market situations can change shortly, probably negatively
impacting the worth of actual property investments. Most not too long ago, the outbreak of
COVID-19 has had a destructive influence on the true property market as mentioned beneath.
COVID-19 Pandemic and Portfolio Outlook
Since initially being reported in December 2019, COVID-19 has unfold across the
world, together with to each state in the US. On March 11, 2020, the
World Well being Group declared COVID-19 a pandemic, and on March 13, 2020,
the US declared a nationwide emergency with respect to COVID-19. The
COVID-19 pandemic has severely impacted world financial exercise and induced
important volatility and destructive stress in monetary markets. The worldwide
influence of the pandemic continues to evolve and plenty of nations, states and
localities, together with states and localities in the US, have reacted
by imposing measures to assist management the unfold of the virus, together with
instituting quarantines, "shelter-in-place" and "stay-at-home" orders, journey
restrictions, restrictions on companies and college closures. In consequence, the
COVID-19 pandemic is negatively impacting virtually each business, together with the
U.S. workplace actual property business and the industries of our tenants, straight or
not directly. As of December 31, 2020, tenants within the mining and oil and gasoline
extraction business represented roughly 18% of our base hire. Tenants in
this sector have been adversely impacted by the lowered demand for oil as a
results of the slowdown in financial exercise ensuing from the pandemic unfold
of COVID-19 and the collapse in oil costs. The fluidity of the COVID-19
pandemic continues to preclude any prediction as to the last word hostile influence
the pandemic might have on our enterprise, monetary situation, outcomes of
operations, money flows and liquidation.
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Through the yr ended December 31, 2020, we didn't expertise important
influence to rental earnings collections from the COVID-19 pandemic. Lease collections
for the quarter ended December 31, 2020 had been roughly 99%. Lots of our
tenants have suffered reductions in income. As of December 31, 2020, we had
entered into lease amendments associated to the consequences of the COVID-19 pandemic,
granting $0.2 million of hire deferrals for the interval from March 2020 by way of
December 31, 2020 and granting $0.2 million in rental abatements throughout this
interval. From March 2020 by way of December 31, 2020, eight tenants had been granted
rental deferrals or rental abatements on account of the pandemic, of which
three tenants have begun to pay hire in accordance with their lease agreements
subsequent to the deferral or abatement interval. 4 of the eight tenants
proceed to have hire abated by way of March 2021. Relying upon the length of
the pandemic, the assorted measures imposed to assist management the unfold of the
virus and the corresponding financial slowdown, these tenants or extra
tenants might search hire deferrals or abatements in future durations or turn into unable
to pay their hire. We are going to proceed to judge any extra short-term hire
aid requests from tenants on a person foundation. Any future hire aid
preparations are anticipated to be structured as short-term short-term deferrals of
base hire that can be paid again over time. Not all tenant requests will
in the end lead to modified agreements, nor are we forgoing our contractual
rights below our lease agreements. Most often, it's in our greatest curiosity to
assist our tenants stay in enterprise and reopen when restrictions are lifted. If
tenants default on their hire and vacate, the power to re-lease this house is
more likely to be harder if the financial slowdown continues and any long run
influence of this example, even after an financial rebound, stays unclear.
Subsequent to December 31, 2020, we've not seen a fabric influence on our hire
collections. Nevertheless, present collections and hire aid requests to-date might
not be indicative of collections or requests in any future interval. The influence of
the COVID-19 pandemic on our rental income for the primary quarter of 2021 and
thereafter can't be decided at current.
Though we didn't expertise important disruptions in rental earnings, throughout
the yr ended December 31, 2020, we lowered the estimated liquidation worth of
our actual property portfolio by $90.2 million because of adjustments in leasing projections
throughout our portfolio leading to decrease projected money movement and projected gross sales
costs attributable to the influence of the COVID-19 pandemic. See "- Modifications in Web
Property in Liquidation" for a dialogue of the change in liquidation worth of
actual property properties. We may have to acknowledge extra decreases within the
values of our actual property properties to the extent leasing projections and
projected gross sales costs proceed to say no at our properties.
As of December 31, 2020, we had $48.4 million of revolving debt out there for
rapid future disbursement below our portfolio mortgage facility, topic to
sure situations set forth within the mortgage agreements. Important reductions in
rental income sooner or later might restrict our potential to attract on our portfolio mortgage
facility because of covenants described in our mortgage agreements. Nevertheless, we consider
that our money readily available, proceeds from asset gross sales and proceeds out there below
our portfolio mortgage facility and mortgage mortgage can be adequate to satisfy our
liquidity wants throughout our liquidation.
The COVID-19 pandemic or a future pandemic, epidemic or outbreak of infectious
illness affecting states or areas wherein we or our tenants function may
have materials and hostile results on our enterprise, monetary situation, outcomes
of operations, money flows and our liquidation because of, amongst different elements:
well being or different authorities authorities requiring the closure of workplaces or different
companies or instituting quarantines of personnel as the results of, or so as
to keep away from, publicity to a contagious illness; disruption in provide and supply
chains; a basic decline in enterprise exercise and demand for actual property,
particularly workplace properties; lowered financial exercise, basic financial
decline or recession, which can influence our tenants' companies, monetary
situation and liquidity and should trigger tenants to be unable to make hire funds
to us well timed, or in any respect, or to in any other case search modifications of lease
obligations; issue accessing debt and fairness capital on enticing phrases,
or in any respect, and a extreme disruption and instability within the world monetary
markets or deteriorations in credit score and financing situations, which can have an effect on
our entry to capital essential to fund enterprise operations or deal with maturing
liabilities on a well timed foundation and should lead to fewer patrons searching for to amass
business actual property; and the potential destructive influence on the well being of
personnel of our advisor, notably if a major variety of our advisor's
staff are impacted, which might lead to a deterioration in our potential to
guarantee enterprise continuity throughout a disruption.
The extent to which the COVID-19 pandemic or every other pandemic, epidemic or
illness impacts our operations and people of our tenants and our potential to
implement our Plan of Liquidation depends upon future developments, that are
extremely unsure and can't be predicted with confidence, together with the scope,
severity and length of the pandemic, the actions taken to include the pandemic
or mitigate its influence, and the direct and oblique financial results of the
pandemic and containment measures, amongst others. However, the COVID-19
pandemic (or a future pandemic, epidemic or illness) presents materials
uncertainty and danger with respect to our enterprise, monetary situation, outcomes
of operations, money flows and our liquidation.
Our enterprise, like all companies, is being impacted by the uncertainty
concerning the COVID-19 pandemic, the effectiveness of insurance policies launched to
neutralize the illness, and the influence of these insurance policies on financial exercise.
Given the uncertainty and present enterprise disruptions on account of the
outbreak of COVID-19, our implementation of the Plan of Liquidation could also be
materially and adversely impacted and this may occasionally have a fabric impact on the
final quantity and timing of liquidating distributions acquired by our
stockholders.
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Liquidity and Capital Sources
As described above below "- Overview - Plan of Liquidation," on March 5, 2020,
our stockholders accepted the sale of all of our property and our dissolution
pursuant to the phrases of the Plan of Liquidation. We count on to promote all of our
property, pay all of our recognized liabilities, present for unknown liabilities and
distribute the web proceeds from liquidation to our stockholders. Our principal
calls for for funds throughout our liquidation are and can be for: the cost of
working bills, capital expenditures and basic and administrative
bills, together with bills in reference to the Plan of Liquidation;
funds below debt obligations; Particular Redemptions of widespread inventory pursuant to
our share redemption program; and funds of distributions to stockholders
pursuant to the Plan of Liquidation. Throughout our liquidation, we intend to make use of
our money readily available and proceeds from the sale of actual property properties as our
major sources of liquidity. To the extent out there, we additionally intend to make use of
money movement generated by our actual property investments and proceeds from debt
financing; nonetheless, asset gross sales will additional scale back money flows from these
sources throughout the implementation of the Plan of Liquidation.
Our share redemption program gives just for Particular Redemptions. Throughout every
calendar yr, such Particular Redemptions are restricted to an annual greenback quantity
decided by the board of administrators, which can be reviewed throughout the yr and
elevated or decreased upon ten enterprise days' discover to our stockholders. We do
not count on to make peculiar redemptions sooner or later. On December 24, 2020, our
board of administrators accepted an annual greenback limitation of $10.0 million within the
combination for the calendar yr 2021 for Particular Redemptions (topic to overview
and adjustment throughout the yr by the board of administrators), and additional topic
to the restrictions described within the share redemption program.
Our investments in actual property generate money movement within the type of rental revenues
and tenant reimbursements, that are lowered by working expenditures, debt
service funds, the cost of asset administration charges and company basic and
administrative bills. Money movement from operations from our actual property
investments is primarily dependent upon the occupancy degree of our portfolio,
the web efficient rental charges on our leases, the collectibility of hire and
working recoveries from our tenants and the way properly we handle our expenditures,
all of which can be adversely affected by the influence of the COVID-19 pandemic as
mentioned above. As of December 31, 2020, our actual property properties had been
73% occupied.
For the yr ended December 31, 2020, our money wants for capital expenditures
and the cost of debt obligations had been met with money readily available and proceeds from
asset gross sales. Working money wants throughout the identical interval had been met with money movement
generated by our actual property. We consider that our money readily available, proceeds from
the gross sales of actual property properties and, to the extent out there, our money movement
from operations and proceeds out there below our portfolio mortgage facility and
mortgage mortgage can be adequate to satisfy our liquidity wants throughout our
liquidation. As mentioned above, asset gross sales will additional scale back money flows from
operations and proceeds out there from debt financing throughout the implementation
of the Plan of Liquidation.
On March 5, 2020, our board of administrators approved the Preliminary Liquidating
Distribution within the quantity of $0.75 per share of widespread inventory to our
stockholders of report as of the shut of enterprise on March 5, 2020. This
Preliminary Liquidating Distribution was paid on March 10, 2020 and was funded from
proceeds from the sale of the Campus Drive Buildings. On July 31, 2020, our
board of administrators approved the Second Liquidating Distribution within the quantity
of $0.25 per share of widespread inventory to our stockholders of report as of the shut
of enterprise on August 3, 2020. This Second Liquidating Distribution was paid on
August 7, 2020 and was funded from proceeds from the sale of two workplace
buildings in Company Expertise Centre - 100 Headquarters and 200 Holger. On
December 24, 2020, our board of administrators approved the Third Liquidating
Distribution within the quantity of $0.40 per share of widespread inventory to our
stockholders of report as of the shut of enterprise on December 24, 2020. This
Third Liquidating Distribution was paid on December 30, 2020 and was funded from
the proceeds from the sale of two workplace buildings in Company Expertise
Centre - 250 Holger and 350 Holger. We don't count on to pay common month-to-month
distributions throughout the liquidating course of. Through the liquidating course of, we
intend to take care of satisfactory money reserves for liquidity, capital expenditures,
debt repayments, future Particular Redemptions below our share redemption program
and different future capital wants.
We count on to proceed to pay liquidating distribution funds to our
stockholders by way of the completion of our liquidation course of and to pay the
remaining liquidating distribution after we promote all of our property, pay all of our
recognized liabilities and supply for unknown liabilities. We count on to
considerably full these actions inside 24 months from March 5, 2020, the
day our stockholders accepted the Plan of Liquidation. Nevertheless, our expectations
in regards to the quantity of liquidating distributions that we are going to pay and after we will
pay them are primarily based on many estimates and assumptions, a number of of which can
show to be incorrect. In consequence, the precise quantity of liquidating
distributions we pay to our stockholders could also be kind of than we estimate
and the liquidating distributions could also be paid later than we predict. See "-
Overview - Plan of Liquidation" and "-Market Outlook - Actual Property and Actual
Property Finance Markets - COVID-19 Pandemic and Portfolio Outlook" for a
dialogue of the influence of the outbreak of COVID-19 on our enterprise and our
liquidation.
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Money Flows from Working Actions
Through the month ended January 31, 2020, web money utilized in working actions
was $7.4 million.
Money Flows from Investing Actions
Web money offered by investing actions was $299.3 million for the month ended
January 31, 2020 and consisted of the next:
•$302.0 million of web proceeds from the sale of the Campus Drive Buildings; and
•$2.7 million used for enhancements to actual property.
Money Flows from Financing Actions
Through the month ended January 31, 2020, web money utilized in financing actions
was $177.0 million and consisted of the next:
•$176.7 million of principal funds on notes payable; and
•$0.3 million of money used for redemptions of widespread inventory.
Along with utilizing our capital assets to satisfy our debt service obligations,
for capital expenditures and for working prices, we use our capital assets
to make sure funds to our advisor. We paid our advisor charges in connection
with the acquisition and origination of our property and pay our advisor charges in
reference to the administration and disposition of our property and for sure
prices incurred by our advisor in offering providers to us. Among the many charges
payable to our advisor is an asset administration price. With respect to investments
in actual property, we pay our advisor a month-to-month asset administration price equal to
one-twelfth of 0.75% of the quantity paid or allotted to amass the funding,
plus the price of any subsequent improvement, development or enhancements to the
property. This quantity contains any portion of the funding that was debt
financed and is inclusive of acquisition charges and bills associated thereto. We
additionally proceed to reimburse our advisor and our supplier supervisor for sure
stockholder providers.
Through the interval from February 1, 2020 to December 31, 2020, money and money
equivalents decreased by $139.7 million primarily on account of the funds of
the $138.9 million Preliminary Liquidating Distribution, the $46.2 million Second
Liquidating Distribution, the $73.7 million Third Liquidating Distribution and
$50.8 million of capital expenditure funds offset by $152.9 million of web
proceeds from the sale of 4 buildings in Company Expertise Centre and
$20.6 million of web money flows from operations.
With a view to execute our funding technique, we primarily utilized secured debt
to finance a portion of our funding portfolio. Administration stays vigilant in
monitoring the dangers inherent with using debt in our portfolio and is
taking actions to make sure that these dangers, together with refinance and rate of interest
dangers, are correctly balanced with the advantage of utilizing leverage. We restrict our
complete liabilities to 75% of the associated fee (earlier than deducting depreciation and different
noncash reserves) of our tangible property; nonetheless, we might exceed that restrict if
nearly all of the conflicts committee approves every borrowing in extra of
such limitation and we disclose such borrowings to our stockholders in our subsequent
quarterly report with a proof from the conflicts committee of the
justification for the surplus borrowing. As of December 31, 2020, our borrowings
and different liabilities had been roughly 37% of each the associated fee (earlier than deducting
depreciation and different noncash reserves) and e-book worth (earlier than deducting
depreciation) of our tangible property, respectively.
Pursuant to our stockholders' approval of the Plan of Liquidation, we adopted
the liquidation foundation of accounting as of February 1, 2020 (because the approval of
the Plan of Liquidation by our stockholders grew to become imminent throughout the first
week of February 2020 primarily based on the outcomes of our solicitation of proxies from
our stockholders for his or her approval of the Plan of Liquidation) and for the
durations subsequent to February 1, 2020 in accordance with GAAP. Accordingly, on
February 1, 2020, property had been adjusted to their estimated web realizable worth,
or liquidation worth, which represents the estimated amount of money that we are going to
gather by way of the disposal of our property as we supply out our Plan of
Liquidation. The liquidation values of our working properties are introduced on
an undiscounted foundation. Estimated prices to eliminate property and estimated
capital expenditures by way of the anticipated disposition date of the properties
have been introduced individually from the associated property. Liabilities are carried
at their contractual quantities due or estimated settlement quantities.

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Contractual Obligations
The next is a abstract of our contractual obligations as of December 31,
2020 (in hundreds):
                                                                            

Funds due in years ending the thirty first of December, Contractual obligations

                                Complete               2021               2022             2023              2024
Excellent debt obligations (1)                    $ 240,520$  145,170$ 5,175$ 90,175          $     -
Curiosity funds on excellent debt
obligations (2)                                     $   5,170$    2,282$ 1,685$  1,203          $     -


_____________________
(1) Quantities embrace principal funds solely primarily based on maturity dates as of
December 31, 2020; topic to sure situations, the maturity dates of sure
loans could also be prolonged past what's proven above.
(2) Projected curiosity funds are primarily based on the excellent principal quantities,
maturity dates and rates of interest in impact as of December 31, 2020 (consisting
of the contractual rate of interest). We incurred curiosity expense of $1.1 million,
excluding amortization of deferred financing prices of $0.1 million throughout the
month ended January 31, 2020. Through the 11 months ended December 31, 2020, we
incurred curiosity expense of $4.7 million.

Modifications in Web Property in Liquidation
Interval from February 1, 2020 by way of December 31, 2020
Web property in liquidation decreased by roughly $322.9 million from $704.4
million on February 1, 2020 to $381.5 million on December 31, 2020. Pursuant to
the Plan of Liquidation, on March 5, 2020, our board of administrators approved the
Preliminary Liquidating Distribution within the quantity of $0.75 per share of widespread
inventory to our stockholders of report as of the shut of enterprise on March 5,
2020, for an combination money distribution of roughly $138.9 million. The
Preliminary Liquidating Distribution was paid on March 10, 2020 and was funded with
proceeds from the sale of the Campus Drive Buildings. On July 31, 2020, our
board of administrators approved the Second Liquidating Distribution within the quantity
of $0.25 per share of widespread inventory to our stockholders of report as of the shut
of enterprise on August 3, 2020, for an combination money distribution of
roughly $46.2 million. The Second Liquidating Distribution was paid on
August 7, 2020 and was funded with proceeds from the sale of two workplace
buildings in Company Expertise Centre - 100 Headquarters and 200 Holger. On
December 24, 2020, our board of administrators approved the Third Liquidating
Distribution within the quantity of $0.40 per share of widespread inventory to our
stockholders of report as of the shut of enterprise on December 24, 2020, for an
combination money distribution of roughly $73.7 million. The Third
Liquidating Distribution was paid on December 30, 2020 and was funded with
proceeds from the sale of two workplace buildings in Company Expertise Centre -
250 Holger and 350 Holger. These liquidating distributions had been the biggest
part of the decline in web property in liquidation.
The estimated web realizable worth of actual property decreased by $90.2 million
throughout the 11 months ended December 31, 2020, which was primarily pushed by our
funding in an workplace constructing situated in Los Angeles, California (the "Union
Financial institution Plaza") and an workplace property situated in Denver, Colorado ("Granite
Tower"), as follows:
•Union Financial institution Plaza -The estimated web proceeds from the sale of the Union Financial institution
Plaza decreased by roughly $57.5 million primarily because of adjustments in
leasing projections and associated capital investments to account for an extended
lease-up interval and decrease projected rental charges attributable to COVID-19. As of
December 31, 2020, the Union Financial institution Plaza was 72% leased and as a result of quantity of
emptiness, its valuation or projected gross sales worth is extra delicate to the
disruption attributable to COVID-19 as in comparison with a totally stabilized property.
Moreover, the valuation or projected gross sales worth was adjusted to extend
the terminal capitalization charges and low cost charge to account for the elevated
danger and uncertainty within the present surroundings.
•Granite Tower - The estimated web proceeds from the sale of Granite Tower
decreased by roughly $24.3 million because of adjustments in leasing projections
and associated capital investments to account for an extended lease-up interval and
decrease projected rental charges attributable to COVID-19. Granite Tower is additional
impacted by the deteriorating oil and gasoline business as its anchor tenant that
occupies roughly 50% of the constructing sq. footage as of December 31,
2020 is engaged within the exploration and manufacturing of oil and gasoline. The valuation
or projected gross sales worth was adjusted to extend the terminal capitalization
charges and low cost charge to account for the elevated danger and uncertainty within the
present surroundings attributable to COVID-19 and the deteriorating oil and gasoline
business. As of December 31, 2020, Granite Tower was 82% leased.
•Different Properties - The estimated web proceeds from the gross sales of our different actual
property properties had been adjusted to extend the terminal capitalization charges
and low cost charges to account for the elevated danger and uncertainty attributable to
COVID-19 leading to a web discount within the combination estimated web proceeds
from gross sales of $8.4 million.

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Outcomes of Operations
In mild of the adoption of liquidation foundation accounting as of February 1, 2020,
the outcomes of operations for the present yr interval aren't corresponding to the
prior yr interval. The sale of property below the Plan of Liquidation could have a
important influence on our operations. Modifications in liquidation values of our
property are mentioned above below "- Modifications in Web Property in Liquidation." See
"- Overview - Plan of Liquidation" and "- Market Outlook - Actual Property and Actual
Property Finance Markets - COVID-19 Pandemic and Portfolio Outlook" for a
dialogue of the influence of the outbreak of COVID-19 on our enterprise and our
liquidation. For a dialogue of the yr ended December 31, 2019 in comparison with
the yr ended December 31, 2018, please consult with   Merchandise 7 of Half II,
"Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations    "   in our Annual Report on Kind 10-Okay for the fiscal yr ended
December 31, 2019, which was filed with the SEC on March 6, 2020 and which
particular dialogue is integrated herein by reference.
Because of the adoption of the Plan of Liquidation, we're not reporting funds
from operations and modified funds from operations as we not think about
these to be key efficiency measures.

Important Accounting Insurance policies
Beneath is a dialogue of the accounting insurance policies that administration considers
essential in that they contain important administration judgments and assumptions,
require estimates about issues which might be inherently unsure and since they
are essential for understanding and evaluating our reported monetary outcomes.
These judgments have an effect on the reported quantities of property and liabilities and our
disclosure of contingent property and liabilities as of the dates of the monetary
statements and the reported quantities of income and bills throughout the reporting
durations. With completely different estimates or assumptions, materially completely different quantities
might be reported in our monetary statements. Moreover, different corporations might
make the most of completely different estimates which will influence the comparability of our outcomes of
operations to these of corporations in related companies.
Subsequent to the adoption of the liquidation foundation of accounting, we're
required to estimate all prices and earnings we count on to incur and earn by way of
the top of liquidation together with the estimated amount of money we count on to
gather by way of the disposal of our property and the estimated prices to eliminate
our property.
Pursuant to our stockholders' approval of the Plan of Liquidation, we adopted
the liquidation foundation of accounting as of and for the durations subsequent to
February 1, 2020 (as approval of the Plan of Liquidation grew to become imminent inside
the primary week of February 2020 primarily based on the outcomes of our solicitation of
proxies from our stockholders for his or her approval of the Plan of Liquidation).
Accordingly, on February 1, 2020, property had been adjusted to their estimated web
realizable worth, or liquidation worth, which represents the estimated quantity of
money that we are going to gather by way of the disposal of our property as we supply out our
Plan of Liquidation. The liquidation values of our remaining actual property
properties are introduced on an undiscounted foundation. Estimated prices to eliminate
property and estimated capital expenditures by way of the anticipated disposition
date of the properties have been introduced individually from the associated property.
Liabilities are carried at their contractual quantities due or estimated settlement
quantities.
We accrue prices and earnings that we count on to incur and earn by way of the
completion of our liquidation, together with the estimated amount of money we count on
to gather by way of the disposal of our property and the estimated prices to dispose
of our property, to the extent we've an affordable foundation for estimation. These
quantities are labeled as a legal responsibility for estimated prices in extra of estimated
receipts throughout liquidation on the Consolidated Assertion of Web Property. Precise
prices and earnings might differ from quantities mirrored within the monetary statements
due to the inherent uncertainty in estimating future occasions. These
variations could also be materials. See Observe 2, "Plan of Liquidation" and Observe 4,
"Liabilities for Estimated Prices in Extra of Estimated Receipts Throughout
Liquidation" for additional dialogue. Precise prices incurred however unpaid as of
December 31, 2020 are included in accounts payable and accrued liabilities, due
to affiliate and different liabilities on the Consolidated Assertion of Web Property.
Income Recognition - Working Leases
Liquidation Foundation of Accounting
Beneath the liquidation foundation of accounting, we've accrued all earnings that we
count on to earn by way of the completion of our liquidation to the extent we've a
cheap foundation for estimation. Income from tenants is estimated primarily based on the
contractual in-place leases and projected leases by way of the anticipated
disposition date of the property. These quantities are labeled in liabilities
for estimated prices in extra of estimated receipts throughout liquidation on the
Consolidated Assertion of Web Property.
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Going Concern Foundation
Actual Property
On January 1, 2019, we adopted the lease accounting requirements below Subject 842
together with the bundle of sensible expedients for all leases that commenced
earlier than the efficient date of January 1, 2019. Accordingly, we (i) didn't
reassess whether or not any expired or current contracts are or include leases, (ii)
didn't reassess the lease classification for any expired or current lease, and
(iii) didn't reassess preliminary direct prices for any current leases. We didn't
elect the sensible expedient associated to utilizing hindsight to reevaluate the lease
time period. As well as, we adopted the sensible expedient for land easements and did
not assess whether or not current or expired land easements that weren't beforehand
accounted for as leases below the lease accounting requirements of Subject 840 are or
include a lease below Subject 842.
As well as, Subject 842 gives an non-obligatory transition technique to permit entities
to use the brand new lease accounting requirements on the adoption date and acknowledge a
cumulative-effect adjustment to the opening stability of retained earnings. We
adopted this transition technique upon our adoption of the lease accounting
requirements of Subject 842, which didn't lead to a cumulative impact adjustment
to the opening stability of retained earnings on January 1, 2019. Our comparative
durations introduced within the monetary statements had been reported below the lease
accounting requirements of Subject 840 till our adoption of the liquidation foundation of
accounting as of and for the durations subsequent to February 1, 2020.
In accordance with Subject 842, tenant reimbursements for property taxes and
insurance coverage had been included within the single lease part of the lease contract (the
proper of the lessee to make use of the leased house) and due to this fact had been accounted for as
variable lease funds and had been recorded as rental earnings on our assertion of
operations starting January 1, 2019 till our adoption of the liquidation foundation
of accounting as of and for the durations subsequent to February 1, 2020. In
addition, we adopted the sensible expedient out there below Subject 842 to not
separate nonlease parts from the related lease part and as an alternative to
account for these parts as a single part if the nonlease parts
in any other case can be accounted for below the brand new income recognition customary
(Subject 606) and if sure situations are met, particularly associated to tenant
reimbursements for widespread space upkeep which might in any other case be accounted
for below the income recognition customary. We consider the 2 situations have
been met for tenant reimbursements for widespread space upkeep as (i) the timing
and sample of switch of the nonlease parts and related lease
parts are the identical and (ii) the lease part can be labeled as an
working lease. Accordingly, tenant reimbursements for widespread space upkeep
had been additionally accounted for as variable lease funds and recorded as rental earnings
on our assertion of operations starting January 1, 2019 till our adoption of
the liquidation foundation of accounting as of and for the durations subsequent to
February 1, 2020.
Till our adoption of the liquidation foundation of accounting as of and for the
durations subsequent to February 1, 2020, we acknowledged minimal hire, together with
rental abatements, lease incentives and contractual mounted will increase attributable
to working leases, on a straight-line foundation over the time period of the associated
leases when collectibility was possible and recorded quantities anticipated to be
acquired in later years as deferred hire receivable. If the lease offered for
tenant enhancements, we decided whether or not the tenant enhancements, for
accounting functions, had been owned by the tenant or us. Once we had been the proprietor of
the tenant enhancements, the tenant was not thought of to have taken bodily
possession or have management of the bodily use of the leased asset till the
tenant enhancements had been considerably accomplished. When the tenant was the proprietor
of the tenant enhancements, any tenant enchancment allowance (together with quantities
that may be taken within the type of money or a credit score towards the tenant's hire)
that was funded was handled as a lease incentive and amortized as a discount of
rental income over the lease time period. Tenant enchancment possession is decided
primarily based on numerous elements together with, however not restricted to:
•whether or not the lease stipulates how a tenant enchancment allowance could also be spent;
•whether or not the lessee or lessor supervises the development and bears the chance of
value overruns;
•whether or not the quantity of a tenant enchancment allowance is in extra of market
charges;
•whether or not the tenant or landlord retains authorized title to the enhancements on the
finish of the lease time period;
•whether or not the tenant enhancements are distinctive to the tenant or basic goal in
nature; and
•whether or not the tenant enhancements are anticipated to have any residual worth on the
finish of the lease.
In accordance with Subject 842, we made a willpower of whether or not the
collectibility of the lease funds in an working lease was possible. If we
decided the lease funds weren't possible of assortment, we absolutely reserved
for any contractual lease funds, deferred hire receivable, and variable lease
funds and acknowledged rental earnings provided that money was acquired. Starting
January 1, 2019, these adjustments to our collectibility evaluation had been mirrored
as an adjustment to rental earnings. Previous to January 1, 2019, dangerous debt expense
associated to uncollectible accounts receivable and deferred hire receivable was
included in working, upkeep, and administration expense within the assertion of
operations. Any subsequent adjustments to the collectibility of the allowance for
uncertain accounts as of December 31, 2018, which was recorded previous to the
adoption of Subject 842, had been recorded in working, upkeep, and administration
expense within the assertion of operations.
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Starting January 1, 2019, we, as a lessor, recorded prices to barter or
organize a lease that might have been incurred no matter whether or not the lease
was obtained, reminiscent of authorized prices incurred to barter an working lease, as
an expense and labeled such prices as working, upkeep, and administration
expense on our consolidated assertion of operations, as these prices had been no
longer capitalizable below the definition of preliminary direct prices below Subject
842.
Gross sales of Actual Property
Efficient January 1, 2018, we adopted the steerage of ASC 610-20, Different Earnings -
Features and Losses from the Derecognition of Nonfinancial Property ("ASC 610-20"),
which applies to gross sales or transfers to noncustomers of nonfinancial property or in
substance nonfinancial property that don't meet the definition of a enterprise.
Usually, our gross sales of actual property can be thought of a sale of a nonfinancial
asset as outlined by ASC 610-20.
ASC 610-20 refers back to the income recognition rules below ASU No. 2014-09,
Income from Contracts with Prospects (Subject 606). Beneath ASC 610-20, if we
decided we didn't have a controlling monetary curiosity within the entity that
held the asset and the association met the standards to be accounted for as a
contract, we derecognized the asset and acknowledged a achieve or loss on the sale of
the true property when management of the underlying asset transferred to the client.
Actual Property
Liquidation Foundation of Accounting
As of February 1, 2020, our investments in actual property had been adjusted to their
estimated web realizable worth, or liquidation worth, to mirror the change to
the liquidation foundation of accounting. The liquidation worth represents the
estimated amount of money that we are going to gather by way of the disposal of our
property, together with any residual worth attributable to lease intangibles, as we
perform the Plan of Liquidation. As of December 31, 2020, we estimated the
liquidation worth of our actual property investments primarily based on inner valuation
methodologies utilizing a mix of the direct capitalization strategy, gross sales
comparability strategy and discounted money movement analyses and relied totally on
discounted money movement analyses for the estimated liquidation worth for every of
the 4 workplace properties and relied on a gross sales comparability strategy for the
workplace constructing that's a part of an workplace campus, which was vacant. The
liquidation values of our investments in actual property are introduced on an
undiscounted foundation and investments in actual property are not depreciated.
Estimated prices to dispose of those investments are carried at their contractual
quantities due or estimated settlement quantities and are introduced individually from
the associated property. Subsequent to February 1, 2020, all adjustments within the estimated
liquidation worth of the investments in actual property are mirrored as a change to
our web property in liquidation.
Going Concern Foundation
Depreciation and Amortization
Actual property prices associated to the acquisition and enchancment of properties are
capitalized and amortized over the anticipated helpful lifetime of the asset on a
straight-line foundation. Restore and upkeep prices are charged to expense as
incurred and important replacements and betterments are capitalized. Restore
and upkeep prices embrace all prices that don't prolong the helpful lifetime of
the true property asset. We thought of the interval of future good thing about an asset to
decide its applicable helpful life. Expenditures for tenant enhancements are
capitalized and amortized over the shorter of the tenant's lease time period or
anticipated helpful life. We estimated helpful lives of our property by class to be
typically as follows:
Land                                         N/A
Buildings                                    25-40 years
Constructing enhancements                        10-25 years
Tenant enhancements                          Shorter of lease time period or

anticipated helpful life Tenant creation and absorption prices Remaining time period of associated leases, together with

                                             below-market renewal durations




Impairment of Actual Property and Associated Intangible Property and Liabilities
We frequently monitored occasions and adjustments in circumstances that would point out
that the carrying quantities of our actual property and associated intangible property and
liabilities is probably not recoverable or realized. When indicators of potential
impairment steered that the carrying worth of actual property and associated
intangible property and liabilities is probably not recoverable, we assessed the
recoverability by estimating whether or not we might get better the carrying worth of the
actual property and associated intangible property and liabilities by way of its
undiscounted future money flows and its eventual disposition. If, primarily based on this
evaluation, we didn't consider that we might be capable of get better the carrying worth
of the true property and associated intangible property and liabilities, we recorded an
impairment loss to the extent that the carrying worth exceeded the estimated
honest worth of the true property and associated intangible property and liabilities.
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Projecting future money flows entails estimating anticipated future working
earnings and bills associated to the true property and its associated intangible property
and liabilities in addition to market and different tendencies. Utilizing inappropriate
assumptions to estimate money flows or the anticipated maintain interval till the
eventual disposition may lead to incorrect conclusions on recoverability and
incorrect honest values of the true property and its associated intangible property and
liabilities and will consequence within the overstatement of the carrying values of our
actual property and associated intangible property and liabilities and an overstatement
of our web earnings.
Rents and Different Receivables
Liquidation Foundation of Accounting
In accordance with the liquidation foundation of accounting, as of February 1, 2020,
rents and different receivables had been adjusted to their web realizable worth. We
periodically consider the collectibility of quantities due from tenants. Any
adjustments within the collectibility of the receivables are mirrored as a change to
our web property in liquidation.
Going Concern Foundation
We made a willpower of whether or not the collectibility of the lease funds in
our working leases was possible. If we decided the lease funds weren't
possible of assortment, we absolutely reserved for any excellent hire receivables
associated to contractual lease funds and variable leases funds, wrote-off
any deferred hire receivable and acknowledged rental earnings provided that money was
acquired. We exercised judgment in assessing collectibility and thought of
cost historical past, present credit score standing, the tenant's monetary situation,
safety deposits, letters of credit score, lease ensures and present market
situations which will influence the tenant's potential to make funds in accordance
with its lease agreements in making the willpower.
Accrued Liquidation Prices
We accrue for sure estimated liquidation prices to the extent we've a
cheap foundation for estimation. These encompass authorized charges, dissolution prices,
remaining audit/tax prices, insurance coverage, and distribution processing prices.
Earnings Taxes
We've got elected to be taxed as a REIT below the Inner Income Code. To
proceed to qualify as a REIT, we should meet sure organizational and
operational necessities, together with a requirement to distribute at the least 90% of
our annual REIT taxable earnings to stockholders (which is computed with out regard
to the dividends-paid deduction or web capital achieve and which doesn't
essentially equal web earnings as calculated in accordance with GAAP). As a REIT,
we typically is not going to be topic to federal earnings tax on earnings that we
distribute as dividends to our stockholders. If we fail to qualify as a REIT in
any taxable yr, we can be topic to federal earnings tax on our taxable earnings
at common company earnings tax charges and usually is not going to be permitted to
qualify for therapy as a REIT for federal earnings tax functions for the 4
taxable years following the yr throughout which qualification is misplaced, until the
Inner Income Service grants us aid below sure statutory provisions.
Such an occasion may materially and adversely have an effect on our web earnings and web money
out there for distribution to stockholders. Nevertheless, we consider that we're
organized and function in such a fashion as to qualify for therapy as a REIT.

Subsequent Occasions
We consider subsequent occasions up till the date the consolidated monetary
statements are issued.
Up to date Estimated Worth Per Share
On March 11, 2021, our board of administrators accepted an estimated worth per share
of our widespread inventory of $2.07 primarily based on our web property in liquidation, divided by
the variety of shares excellent, all as of December 31, 2020. For an outline
of the methodologies and assumptions used within the willpower of the estimated
worth per share, see Half II, Merchandise 5, "Marketplace for Registrant's Frequent Fairness,
Associated Stockholder Issues and Issuer Purchases of Fairness Securities - Market
Data" on this Annual Report on Kind 10-Okay.
Share Redemption Program
Our share redemption program gives just for redemptions that qualify as
Particular Redemptions. In accordance with our share redemption program, these
Particular Redemptions are made at a worth per share equal to our most up-to-date
estimated worth per share as of the relevant redemption date, offered that if
our board of administrators has declared liquidating distributions on such share with
a report date previous to the relevant redemption date for such share and the
most up-to-date estimated worth per share has not been up to date to mirror the
discount for such liquidating distributions, then the redemption worth per
share can be lowered to mirror the quantity of such liquidating distributions.
The redemption worth per share of our widespread inventory eligible for redemption on
the March 31, 2021 redemption date will equal $2.07. We are going to report future
redemption costs in a Present Report on Kind 8-Okay or in our annual or quarterly
reviews, all publicly filed with the SEC.

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