Related Party Transactions

6 Months Ended

Jun. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

RELATED PARTY TRANSACTIONS

The Company has executed the Advisory Agreement with the Advisor and a Dealer Manager Agreement with the Dealer Manager. These agreements entitle the Advisor and the Dealer Manager to specified fees upon the provision of certain services with regard to the Offering and the investment of proceeds from the Offering in real estate related investments, among other services, as well as reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company and certain costs incurred by the Advisor in providing services to the Company.

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and six months ended June 30, 2011, and any related amounts payable as of June 30, 2011 and December 31, 2010 (in thousands):

	Incurred				Payable as of
	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011		June 30, 2011		December 31, 2010
Expensed
Asset management fees	$	90	$	179	$	90	$	—
Reimbursable operating expenses (1)	14		30		21		149
Related party interest expense (2)	135		347		504		156
Additional Paid-in Capital
Selling commissions	354		614		—		—
Dealer manager fees	171		297		—		—
Reimbursable other offering costs	336		585		585		7
	$	1,100	$	2,052	$	1,200	$	312

_____________________

⁽¹⁾     In addition, our Advisor may seek reimbursement for employee costs under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company's allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These were the only employee costs reimbursable under the Advisory Agreement through June 30, 2011. The Company will not reimburse for employee costs in connection with services for which KBS Capital Advisors earns acquisition or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company's executive officers.

⁽²⁾    Related party interest expense relates to the Advisor Bridge Loan. See note 4, “Notes Payable.”

From inception through June 30, 2011, the Advisor has incurred organization and offering costs on behalf of the Company of approximately $3.1 million, which represent the Company's maximum liability for organization and offering costs as of June 30, 2011. The Company will be liable for such costs up to an amount that, when combined with selling commissions and dealer manager fees, does not exceed 15% of the gross proceeds of the Offering. Through June 30, 2011, the Company has recognized and paid $1.2 million in selling commissions and dealer manager fees and recognized $0.8 million of other organization and offering expenses, of which $0.8 million has been reimbursed or was reimbursable to the Advisor, as of June 30, 2011.  As of June 30, 2011, the Company's selling commissions, dealer manager fees, and organization and other offering costs were 15% of the gross offering proceeds.

As discussed in note 4, "Note Payable," the Company, as of June 30, 2011 and December 31, 2010, had $4.5 million and $14.0 million, respectively, outstanding under the Advisor Bridge Loan.