10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-K

______________________________________________________

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-207471

______________________________________________________

KBS GROWTH & INCOME REIT, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________

Maryland	47-2778257
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
800 Newport Center Drive, Suite 700 Newport Beach, California	92660
(Address of Principal Executive Offices)	(Zip Code)

(949) 417-6500

(Registrant’s Telephone Number, Including Area Code)

______________________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

None

________________________________________ 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨  No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨  No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment of this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes  ¨  No  x

There is no established market for the Registrant’s shares of common stock. The Registrant conducted an initial public offering of its shares of common stock pursuant to a Registration Statement on Form S-11 (Commission File No. 333-207471) from April 28, 2016 through June 30, 2017. Shares were sold in the public offering at $10.39 for Class A shares and $10.00 for Class T shares, with discounts available to certain categories of purchasers. On August 9, 2017 and December 8, 2017, the board of directors of the Registrant approved an estimated value per share of its common stock as of June 30, 2017 and September 30, 2017 (with the exception of an adjustment for acquisition and financing costs related to an acquisition subsequent to September 30, 2017) of $8.75 and $8.79, respectively. For a full description of the methodologies used to value the Registrant’s assets and liabilities in connection with the calculation of the estimated value per share as of August 9, 2017 and December 8, 2017, see the Current Report on Form 8-K filed with the SEC on August 10, 2017 and Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” in this Annual Report on Form 10-K, respectively. In addition, the Registrant is currently conducting a private offering of its Class A shares pursuant to Rule 506(c) of Regulation D. From October 3, 2017 through December 11, 2017, Class A shares were sold in the offering at the estimated value per share of $8.75. Effective December 12, 2017, Class A shares are being sold in the private offering at $8.79 per share.

There were approximately 9,035,038 shares of Class A common stock and 274,871 of Class T common stock held by non-affiliates as of June 30, 2017, the last business day of the Registrant’s most recently completed second fiscal quarter.

As of March 5, 2018, there were 8,931,071 outstanding shares of Class A common stock and 284,606 outstanding shares of Class T common stock of the Registrant.

TABLE OF CONTENTS

PART I			4
	ITEM 1.	BUSINESS	4
	ITEM 1A.	RISK FACTORS	9
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	32
	ITEM 2.	PROPERTIES	32
	ITEM 3.	LEGAL PROCEEDINGS	33
	ITEM 4.	MINE SAFETY DISCLOSURES	33
PART II			34
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	34
	ITEM 6.	SELECTED FINANCIAL DATA	46
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	47
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	60
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	61
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	61
	ITEM 9A.	CONTROLS AND PROCEDURES	62
	ITEM 9B.	OTHER INFORMATION	62
PART III			63
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	63
	ITEM 11.	EXECUTIVE COMPENSATION	67
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	68
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	69
	ITEM14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	72
PART IV			73
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	73
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

1

FORWARD-LOOKING STATEMENTS

Certain statements included in this Annual Report on Form 10-K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of KBS Growth & Income REIT, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

• We depend on our advisor and its affiliates to conduct our operations. We pay fees to our advisor and its affiliates in connection with the management of our investments that are based on the cost of the investment, not on the quality of the investment or services rendered to us. These fees decrease the amount of cash available for distribution to our stockholders.

• We commenced investment operations on August 12, 2015 in connection with the acquisition of an office property and we have a limited operating history. As of December 31, 2017, we owned four office buildings with a fair value of $197.8 million and we have not acquired or identified any additional real estate investments that it is reasonably probable we will acquire with the proceeds from our offering stage. As such, our stockholders will not have an opportunity to evaluate investments before we make them.

• All of our executive officers, our affiliated directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, and/or other KBS‑affiliated entities. As a result, our executive officers, our affiliated directors, some of our key real estate and debt finance professionals, our advisor and its affiliates face conflicts of interest, including significant conflicts created by our advisor’s and its affiliates’ compensation arrangements with us and other KBS‑sponsored programs and KBS‑advised investors and conflicts in allocating time among us and these other programs and investors. Although we have adopted corporate governance measures to ameliorate some of the risks posed by these conflicts, these conflicts could result in action or inaction that is not in the best interests of our stockholders.

• Because investment opportunities that are suitable for us may also be suitable for other KBS‑sponsored programs or KBS‑advised investors, our advisor and its affiliates face conflicts of interest relating to the purchase of properties. Any such conflicts in directing investment opportunities may not be resolved in our favor.

• If we are unable to raise substantial funds in our offering stage, we may not be able to acquire a diverse portfolio of real estate investments, which may cause the value of an investment in us to vary more widely with the performance of specific assets and cause our general and administrative expenses to constitute a greater percentage of our revenue. Raising fewer proceeds in our offering stage, therefore, could increase the risk that our stockholders will lose money in their investment.

• We may fund distributions from any source, including, without limitation, offering proceeds or borrowings. Distributions paid through December 31, 2017 have been funded in part with debt financing, including advances from our advisor. Distributions funded from sources other than our cash flow from operations will result in dilution to subsequent investors, reduce funds available for investment in assets and may reduce the overall return to our stockholders.

• Our policies do not limit us from incurring debt until our aggregate borrowings would exceed 75% of the cost (before deducting depreciation or other non‑cash reserves) of our tangible assets, and we may exceed this limit with the approval of the conflicts committee of our board of directors. High debt levels could limit the amount of cash we have available to distribute and could result in a decline in the value of our stockholders’ investment.

• We have debt obligations with variable interest rates and may incur additional variable rate debt in the future. The interest and related payments will vary with the movement of LIBOR or other indexes. Increases in the indexes could increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

• If we are unable to locate investments with attractive yields while we are investing the proceeds raised in our offering stage, our distributions and the long‑term returns of our investors may be lower.

2

• We depend on tenants for the revenue generated by any real estate investments we make and, accordingly, the revenue generated by our real estate investments is dependent upon the success and economic viability of our tenants. Revenues from any properties we acquire could decrease due to a reduction in occupancy and/or lower rental rates, making it more difficult for us to meet any debt service obligations we have incurred and limiting our ability to pay distributions to our stockholders.

• Any real estate investments we make may be affected by unfavorable real estate market and general economic conditions, which could decrease the value of those assets and reduce the investment return to our stockholders. These events could make it more difficult for us to meet debt service obligations and limit our ability to pay distributions to our stockholders.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of this Annual Report on Form 10-K.

3

PART I

ITEM 1. BUSINESS

Overview

KBS Growth & Income REIT, Inc. (the “Company”) was formed on January 12, 2015 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2015 and it intends to continue to operate in such a manner. As used herein, the terms “we,” “our” and “us” refer to the Company and as required by context, KBS Growth & Income Limited Partnership, a Delaware limited partnership, which we refer to as our “Operating Partnership,” and to their subsidiaries. We conduct our business through our Operating Partnership, of which we are the sole general partner. Subject to certain restrictions and limitations, our business is externally managed by our advisor pursuant to an advisory agreement. KBS Capital Advisors manages our operations and our portfolio of core real estate properties and real estate-related assets. KBS Capital Advisors also provides asset-management, marketing, investor-relations and other administrative services on our behalf. Our advisor acquired 20,000 shares of our Class A common stock for an initial investment of $200,000. We have no paid employees.

We commenced a private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), on June 11, 2015, pursuant to which we offered a maximum of $105,000,000 of shares of our Class A common stock for sale to accredited investors, of which $5,000,000 of Class A shares were offered pursuant to our distribution reinvestment plan. We ceased offering shares in the primary portion of our private offering on April 27, 2016 and processed subscriptions for the primary portion of the private offering dated on or prior to April 27, 2016 through May 30, 2016. KBS Capital Markets Group LLC, an affiliate of our advisor, served as the dealer manager of the offering pursuant to a dealer manager agreement.

We sold 8,548,972 shares of our Class A common stock for gross offering proceeds of $76.8 million in our private offering, including 74,744 shares of our Class A common stock under our distribution reinvestment plan for gross offering proceeds of $0.7 million.

On February 4, 2015, we filed a registration statement on Form S-11 with the SEC to register an initial public offering to offer a maximum of $1,500,000,000 in shares of common stock for sale to the public in the primary offering, consisting of two classes of shares: Class A and Class T and a maximum of $800,000,000 in both classes of shares of our common stock pursuant to our distribution reinvestment plan. The SEC declared our registration statement effective on April 28, 2016 and we retained KBS Capital Markets Group LLC to serve as the dealer manager of the initial public offering. We terminated our primary initial public offering effective June 30, 2017. We are continuing to offer shares of common stock pursuant to our publicly registered distribution reinvestment plan offering.

We sold 122,721 and 270,415 shares of Class A and Class T common stock in the public offering, respectively, for aggregate gross offering proceeds of $3.9 million. As of December 31, 2017, we had sold 355,087 and 9,348 shares of Class A and Class T common stock under our distribution reinvestment plan, respectively, for aggregate gross offering proceeds of $3.5 million.

On October 3, 2017, we launched a second private placement offering exempt from registration pursuant to Rule 506(c) of Regulation D of the Securities Act pursuant to which we are currently offering a maximum of $1,000,000,000 in shares of our Class A common stock to accredited investors. Prior to the launch of the second private placement offering, on September 29, 2017, we entered a dealer manager agreement (the “NCPS Dealer Agreement”) with KBS Capital Advisors and North Capital Private Securities Corporation (“NCPS”) in connection with the second private placement offering. As of December 31, 2017, we had sold 65,130 Class A common stock for gross offering proceeds of $0.6 million in our second private offering.

As of December 31, 2017, we had redeemed 145,214 Class A shares for $1.2 million.

We intend to use substantially all of the net proceeds from our offerings to invest in a diverse portfolio of core real estate properties. We consider core properties to be existing properties with at least 80% occupancy. Based on the current market outlook, we expect our core focus in the U.S. office sector to reflect a value-creating core strategy, which is also known as a core-plus strategy. As of December 31, 2017, we owned four office buildings.

KBS Capital Advisors makes recommendations on all investments to our board of directors. All proposed real estate investments must be approved by at least a majority of our board of directors, including a majority of the conflicts committee. Unless otherwise provided by our charter, the conflicts committee may approve a proposed real estate investment without action by the full board of directors if the approving members of the conflicts committee constitute at least a majority of the board of directors.

4

Objectives and Strategies

Our primary investment objectives are to preserve and return our stockholders’ capital contributions and to provide our stockholders with attractive and stable cash distributions. We will also seek to realize growth in the value of our investments by timing asset sales to maximize asset value.

2017 Investment Highlights

During 2017, we acquired one office property consisting of an office building containing 155,385 rentable square feet and a parking lot containing 8,038 square feet located in Chicago, Illinois for $43.5 million plus closing costs.

Real Estate Portfolio

We have invested in and expect to continue to invest in core real estate properties. We consider core properties to be existing properties with at least 80% occupancy. Based on the current market outlook, we expect our core focus in the U.S. office sector to reflect a value-creating core strategy, which is also known as a core-plus strategy. In many cases, these core properties will have slightly higher (10% to 20%) vacancy rates and/or higher near-term lease rollover at acquisition than more conservative value-maintaining core properties. These characteristics provide us with opportunities to lease space at higher rates, especially in markets with increasing absorption, or to re-lease space in these properties at higher rates, bringing below-market rates of in-place expiring leases up to market rates. Many of these properties will require a moderate level of additional investment for capital expenditures and tenant improvement costs in order to improve or rebrand the properties and increase rental rates. Thus, we believe these properties provide an opportunity for us to achieve more significant capital appreciation by increasing occupancy, negotiating new leases with higher rental rates and/or executing enhancement projects.

We will seek to invest in core real estate properties that we believe can produce a property-level return of between 10% and 14% over the life of the investment. Property-level return objectives do not take into account corporate-level fees and expenses, including corporate general and administrative expenses and asset management fees. We expect to focus our investments in real properties in office properties located throughout the United States. The primary types of office properties we intend to invest in include low-rise, mid-rise and high-rise office buildings and office parks in urban and suburban locations, especially those that are in or near central business districts or have access to transportation. In addition, we may consider acquiring industrial properties (including warehouse and distribution facilities, office/warehouse flex properties, research and development properties and light industrial properties) and retail properties.

We will generally hold fee title or a long-term leasehold estate in the properties we acquire. We may also invest in or acquire operating companies or other entities that own and operate assets that meet our investment objectives. We may also participate with other entities (including affiliated entities) in property ownership through joint ventures, limited liability companies, partnerships and other types of common ownership.

Our advisor intends to diversify our real estate property investments by geographic region, investment size and investment risk. 

We generally intend to hold our core real estate properties for three to seven years. However, economic and market conditions may influence us to hold our properties for different periods of time. We generally expect that as we move toward the end of our offering stage the hold period of assets we will consider will be shorter. We may sell an asset before the end of the expected holding period if we believe that market conditions and asset positioning have maximized its value to us or the sale of the asset would otherwise be in the best interests of our stockholders.

We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forego a good investment because it does not precisely fit our expected portfolio composition. We believe that we are most likely to meet our investment objectives through the careful selection and underwriting of assets. When making an acquisition, we will emphasize the performance and risk characteristics of that investment, how that investment will fit with our portfolio-level performance objectives, the other assets in our portfolio and how the returns and risks of that investment compare to the returns and risks of available investment alternatives. Thus, to the extent that our advisor presents us with what we believe to be good investment opportunities that allow us to meet the REIT requirements under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), our portfolio composition may vary from what we initially expect. However, we will attempt to construct a portfolio that produces stable and attractive returns by spreading risk across different real estate investments.

We acquired our first real estate property on August 12, 2015. As of December 31, 2017, our real estate portfolio was composed of four office buildings containing 683,952 rentable square feet, which were collectively 97% occupied. For more information on our real estate investments, including tenant information, see Part 1, Item 2, “Properties.”

5

The following charts illustrate the geographic diversification of our real estate properties based on total leased square feet and total annualized base rent as of December 31, 2017:

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

We have a stable tenant base and we have tried to diversify our tenant base in order to limit exposure to any one tenant or industry. Our top ten tenants leasing space in our real estate portfolio represented approximately 53.7% of our total annualized base rent as of December 31, 2017. The chart below illustrates the diversity of tenant industries in our real estate portfolio based on total annualized base rent as of December 31, 2017:

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

* “Other” includes any industry less than 4% of total.

6

Financing Objectives

We financed our real estate acquisitions to date with proceeds raised in our offerings and debt. We may use proceeds from borrowings to finance acquisitions of new properties; to pay for capital improvements, repairs or tenant build-outs to properties; to refinance existing indebtedness; to pay distributions; or to provide working capital. Careful use of debt will help us to achieve our diversification goals because we will have more funds available for investment. Our investment strategy is to utilize primarily secured and possibly unsecured debt to finance our investment portfolio. We may elect to secure financing subsequent to the acquisition date of real estate properties and initially acquire investments without debt financing. To the extent that we do not finance our properties, our ability to acquire additional real estate investments will be restricted.

We expect to borrow funds at fixed and variable rates. As of December 31, 2017, we had debt obligations in the aggregate principal amount of $113.8 million, with a weighted-average remaining term of 3.2 years. We have a total of $113.8 million of variable rate notes payable. The interest rate and weighted-average interest rate of our variable rate debt as of December 31, 2017 was 3.4%. The weighted-average interest rate represents the actual interest rate in effect as of December 31, 2017 (consisting of the contractual interest rate), using interest rate indices as of December 31, 2017, where applicable.

We have tried to spread the maturity dates of our debt to minimize maturity and refinance risk in our portfolio. In addition, a majority of our debt allows us to extend the maturity dates, subject to certain conditions contained in the applicable loan documents. Although we believe we will satisfy the conditions to extend the maturity of our debt obligations, we can give no assurance in this regard. The following table shows the current maturities, including principal amortization payments, of our debt obligations as of December 31, 2017 (in thousands):

2018	$	—
2019	—
2020	72,800
2021	41,000
2022	—
Thereafter	—
	$	113,800

We expect that once we have fully invested the proceeds raised during our offering stage, 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). Though this is our target leverage, our charter does not limit us from incurring debt until our aggregate borrowings would exceed 300% of our net assets (before deducting depreciation and other non-cash reserves), though we may exceed this limit under certain circumstances. To the extent financing in excess of this limit is available at attractive terms, the conflicts committee may approve debt in excess of this limit. As of December 31, 2017, our aggregate borrowings were approximately 65% of our net assets before deducting depreciation and other non-cash reserves.

Economic Dependency

We are dependent on our advisor for certain services that are essential to us, including identification, evaluation, negotiation, acquisition and disposition of investments; management of the daily operations and leasing of our portfolio; and other general and administrative responsibilities. In the event that our advisor is unable to provide these services, we will be required to obtain such services from other sources.

Competitive Market Factors

The U.S. commercial real estate leasing markets remain competitive. We face competition from various entities for prospective tenants and to retain our current tenants, including other REITs, pension funds, insurance companies, investment funds and companies, partnerships and developers. Many of these entities have substantially greater financial resources than we do and may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of a tenant. As a result of their greater resources, those entities may have more flexibility than we do in their ability to offer rental concessions to attract and retain tenants. This could put pressure on our ability to maintain or raise rents and could adversely affect our ability to attract or retain tenants. As a result, our financial condition, results of operations, cash flow, ability to satisfy our debt service obligations and ability to pay distributions to our stockholders may be adversely affected.

Although we believe that we are well-positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively.

7

Compliance with Federal, State and Local Environmental Law

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances and governments may seek recovery for natural resource damage. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury, property damage or natural resource damage claims could reduce our cash available for distribution to our stockholders. All of our real estate acquisitions are subject to Phase I environmental assessments prior to the time they are acquired.

Employees

We have no paid employees. The employees of our advisor or its affiliates provide management, acquisition, disposition, advisory and certain administrative services for us.

Principal Executive Office

Our principal executive offices are located at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660.  Our telephone number and general facsimile number are (949) 417-6500 and (949) 417-6501 , respectively.

Industry Segments

As of December 31, 2017, we had invested in four office buildings. Substantially all of our revenue and net income (loss) is from real estate, and therefore, we currently operate in one business segment.

Available Information

Access to copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other filings with the SEC, including amendments to such filings, may be obtained free of charge from the following website, http://www.kbsgireit.com, through a link to the SEC’s website, http://www.sec.gov. These filings are available promptly after we file them with, or furnish them to, the SEC.

8

ITEM 1A. RISK FACTORS

The following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements. The risks and uncertainties described below are not the only ones we face but do represent those risks and uncertainties that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business.

Risks Related to an Investment in Our Common Stock

No public trading market for our shares currently exists. In addition, shares purchased in our private placement offering are subject to restrictions on transferability and resale. Therefore, it will be difficult for our stockholders to sell their shares and, if our stockholders are able to sell their shares, they will likely sell them at a loss.

No public market currently exists for our shares, and we have no plans to list our shares on a national securities exchange. In addition, shares purchased in our private placement offering are not freely transferable and stockholders must bear the economic risk of investment is us for an indefinite period of time because the shares have not been registered under the Securities Act or certain applicable state and federal securities laws, and such shares cannot be sold unless they are subsequently registered or an exemption from such registration is available. Our charter does not require our directors to seek stockholder approval to liquidate our assets and dissolve by a specified date or at all, nor does our charter require our directors to list our shares for trading on a national securities exchange by a specified date or at all. Our charter prohibits the ownership of more than 9.8% of our stock by any person, unless exempted by our board of directors, which may inhibit large investors from purchasing our stockholders’ shares. Moreover, our share redemption program includes numerous restrictions that limit our stockholders’ ability to sell their shares to us, and our board of directors may amend, suspend or terminate our share redemption program upon 30 days’ notice to our stockholders, provided that we may increase or decrease the funding available for the redemption of shares pursuant to our share redemption program upon ten business days’ notice to our stockholders. Therefore, it will be difficult for our stockholders to sell their shares promptly or at all. If our stockholders are able to sell their shares, they will likely have to sell them at a loss. It is also likely that our stockholders’ shares will not be accepted as the primary collateral for a loan. In addition, certain KBS-sponsored non-traded REITs have amended their share redemptions programs to limit redemptions to Special Redemptions or provide a dollar limit on the amount of redemptions that may be honored and these REITs have been unable to honor redemption requests received in certain periods due to limits adopted by their respective board of directors. Investors should purchase our shares only as a long-term investment and be prepared to hold them for an indefinite period of time because of the illiquid nature of our shares.

We face significant competition for real estate investment opportunities, which may limit our ability to acquire suitable investments. If we are unable to find suitable investments, we may not be able to achieve our investment objectives or pay distributions.

Our ability to achieve our investment objectives and to pay distributions will depend upon the performance of our advisor in the acquisition of our investments, including the determination of any financing arrangements. We face competition from various entities for real estate investment opportunities, including other REITs, pension funds, banks and insurance companies, investment funds and companies, partnerships and developers. Competition from these entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property owners seeking to sell. Additionally, disruptions and dislocations in the credit markets could impact the cost and availability of debt to finance real estate investments, which is a key component of our acquisition strategy. A downturn in the credit markets and a potential lack of available debt could result in a further reduction of suitable investment opportunities and create a competitive advantage for other entities that have greater financial resources than we do. If we acquire investments at higher prices and/or by using less-than-ideal capital structures, our returns will be lower and the value of our assets may not appreciate or may decrease significantly below the amount we paid for such assets.

We also depend upon the performance of our property managers, including our affiliated property manager, in the selection of tenants and negotiation of leasing arrangements. The highly competitive U.S. commercial real estate industry has created increased pressure on real estate investors and their property managers to find new tenants and keep existing tenants. In order to do so, we may have to offer inducements, such as free rent and tenant improvements, to compete for attractive tenants. The more shares we sell during our offering stage, the greater our challenge will be to invest the net offering proceeds on attractive terms. We can give no assurance that our advisor will be successful in obtaining suitable investments on financially attractive terms or that, if our advisor makes investments on our behalf, our objectives will be achieved. If we, through our advisor, are unable to find suitable investments promptly, we will hold the proceeds from our initial public offering in an interest-bearing account or invest the proceeds in short-term assets. In the event we are unable to timely locate suitable investments, we may be unable or limited in our ability to pay distributions, we may not be able to meet our investment objectives and our stockholders may experience a lower return on their investment.

9

If we are unable to raise substantial funds during our offering stage, we will be limited in the number and type of additional investments we make and the value of our stockholders’ investment in us will fluctuate with the performance of the specific assets we own or may acquire in the future and cause our general and administrative expenses to constitute a greater percentage of our revenue.

We can provide no assurance that we will raise significant proceeds during our offering stage, and the amount of proceeds we raise may be substantially less than the amount we would need to achieve a fully diversified portfolio of investments. If we are unable to raise substantial funds, we will make fewer investments resulting in less diversification in terms of the number, size and geographic location of investments that we make. In that case, the likelihood that any single property’s performance would adversely affect our profitability will increase. If most of our properties are located in a single geographic area, our operating results and ability to make distributions are likely to be impacted by economic changes affecting the real estate market in that area. Our stockholders’ investment in our shares will be subject to greater risk to the extent that we lack a diversified portfolio of investments. Further, we will have certain fixed operating expenses regardless of whether we are able to raise substantial funds during our offering stage. Our inability to raise significant funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and cash flow and limiting our ability to pay distributions to our stockholders.

Our stockholders will not have the opportunity to evaluate all additional investments we may make before we make them, as a result we may make investments with which our stockholders do not agree.

As of December 31, 2017, we owned four office buildings with a fair value of approximately $197.8 million and, we had not acquired or identified any additional real estate investments that it is reasonably probable we will acquire with the proceeds from our offering stage. As a result, we are not able to provide our stockholders with any information to assist them in evaluating the merits of any specific assets that we may acquire. We will seek to invest substantially all of the net proceeds from our offering stage in real estate investments after the payment of typical third‑party acquisition expenses. Our board of directors and our advisor has broad discretion when identifying, evaluating and making such investments. Our stockholders will have no opportunity to evaluate the transaction terms or other financial or operational data concerning specific investments before we invest in them. Furthermore, our board of directors will have broad discretion in implementing policies regarding tenant creditworthiness and our stockholders will likewise have no opportunity to evaluate potential tenants. We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities, and we may change our targeted investments and investment guidelines at any time without the consent of our stockholder, which could result in our making investments that are different from, and possibly riskier than, the investment. As a result, our stockholders must rely on our board of directors and our advisor to identify and evaluate our investment opportunities, and they may not be able to achieve our business objectives or may make investments with which our stockholders do not agree.

If we fail to diversify our investment portfolio, downturns relating to certain geographic regions, industries or business sectors may have a more significant adverse impact on our assets and our ability to pay distributions than if we had a diversified investment portfolio.

While we intend to diversify our portfolio of investments, we are not required to observe specific diversification criteria. Therefore, our investments may at times be concentrated in certain assets that are located in a limited number of geographic locations. To the extent that our portfolio is concentrated in limited geographic regions, industries or business sectors, downturns relating generally to such region, industry or business sector may result in defaults on a number of our investments within a short time period, which may reduce our net income and the value of our common stock and accordingly limit our ability to pay distributions to our stockholders.

We have a limited operating history and we may not be able to operate our business successfully or generate sufficient revenue to sustain distributions to our stockholders.

We were incorporated in the State of Maryland on January 12, 2015 and commenced investment operations in August 2015 in connection with the acquisition of an office property. As of December 31, 2017, we owned four office buildings with a fair value of approximately $197.8 million. We cannot assure our stockholders that we will be able to operate our business successfully or implement our operating policies and strategies. We can provide no assurance that our performance will replicate the past performance of other KBS‑sponsored programs. Our investment returns could be substantially lower than the returns achieved by other KBS‑sponsored programs. The results of our operations depend on several factors, including the availability of opportunities for the acquisition of target assets, the level and volatility of interest rates, the availability of short and long‑term financing, and conditions in the financial markets and economic conditions.

10

Any significant disruption in service on KBSDirect.com or in its computer or communications systems could reduce its attractiveness and result in a loss of users, limiting our ability to raise capital in our private offering and our ability to implement our investment strategy.

We expect to raise significant proceeds during our offering stage through KBSDirect.com, which is owned by our advisor and operated by an experienced third party. The success of our offering stage depends on our ability to sell shares through KBSDirect.com. If a catastrophic event resulted in a KBSDirect.com outage and physical data loss, KBSDirect.com’s ability to perform and function would be materially and adversely affected. The satisfactory and consistent performance, reliability, and availability of KBSDirect.com are important factors in our ability to successfully sell shares through KBSDirect.com. There is no guarantee that access to KBSDirect.com will be uninterrupted, error‑free or secure. Our advisor will depend on a third‑party hosting provider’s ability to protect its and our advisor’s systems in its facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. If our advisor’s arrangement with the third-party hosting provider is terminated, or there is a lapse of service or damage to its facilities, KBSDirect.com could experience interruptions in its service as well as delays and additional expense in arranging new facilities. If such events were to occur, our ability to raise capital during our offering stage and our ability to implement our investment strategy would be adversely affected.

There can be no assurance that we can or will achieve any targeted return objectives disclosed as estimating such returns involves significant judgement by management as well as numerous estimates and assumptions.

We will seek to invest in core real estate properties that we believe can produce a property-level return of between 10% and 14% over the life of the investment. There can be no assurance that such objectives can or will be achieved as estimating property-level returns involves significant judgement by management as well as numerous estimates and assumptions that may later prove to be false.

We have paid distributions from advances from our advisor and debt financing. In the future we may continue to pay distributions from financings, including an advance from our advisor, and we may not pay distributions solely from our cash flow from operations. To the extent we pay distributions from sources other than our cash flow from operations, we will have less funds available for investment in assets, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

We expect to have little, if any, cash flow from operations available for distribution until we make substantial investments, and we therefore expect that portions of distributions made during our first few years of operations will be considered a return of capital. During our offering stage, when we may raise capital more quickly than we acquire income‑producing assets, and for some period after our offering stage, we may not be able to pay distributions solely from our cash flow from operations, in which case distributions may be paid in whole or in part from debt financing, including advances from our advisor. Our distributions paid through December 31, 2017 have been paid in part from advances from our advisor and debt financing and we expect that in the future we may not pay distributions solely from our cash flow from operations.

We may fund distributions from any source, including, without limitation, offering proceeds or borrowings. We may also fund such distributions from the sale of assets. If we fund distributions from borrowings, our interest expense and other financing costs, as well as the repayment of such borrowings, will reduce our earnings and cash flow from operations available for distribution in future periods. If we fund distributions from the sale of assets, this will affect our ability to generate cash flow from operations in future periods. To the extent that we pay distributions from sources other than our cash flow from operations, we will have fewer funds available with which to make real estate investments, the overall return to our stockholders may be reduced and subsequent investors will experience dilution. In addition, to the extent distributions exceed cash flow from operations, a stockholder’s basis in our stock will be reduced and, to the extent distributions exceed a stockholder’s basis, the stockholder may recognize capital gain. There is no limit on the amount of distributions we may fund from sources other than from cash flow from operations.

For the year ended December 31, 2017, we paid aggregate distributions of $4.6 million, including $2.3 million of distributions paid in cash and $2.3 million of distributions reinvested through our distribution reinvestment plan. We funded our total distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with $3.6 million of cash flows from operations and $1.0 million of debt financing.

11

We depend on our advisor and its affiliates to conduct our operations. Adverse changes in the financial health of our advisor or the loss of or the inability of our advisor to retain or obtain key real estate and debt finance professionals could delay or hinder implementation of our investment strategies, which could limit our ability to make distributions and decrease the value of an investment in our shares.

Our success depends to a significant degree upon our advisor and the contributions of Messrs. Bren and Schreiber, each of whom would be difficult to replace. Neither we nor our affiliates have employment agreements with these individuals and they may not remain associated with us, our advisor or its affiliates. If any of these persons were to cease their association with us, our advisor or its affiliates, we may be unable to find suitable replacements and our operating results could suffer as a result. We believe that our future success depends, in large part, upon our advisor’s and its affiliates’ financial health and ability to attract and retain highly skilled managerial, operational and marketing professionals. Competition for such professionals is intense, and our advisor and its affiliates may be unsuccessful in attracting and retaining such skilled professionals. Further, our sponsor has established and intends to establish strategic relationships with firms that have special expertise in certain services or detailed knowledge regarding real properties in certain geographic regions. Maintaining such relationships will be important for us to effectively compete with other investors for properties and tenants in such regions. We may be unsuccessful in growing and retaining such relationships. If we lose or are unable to obtain the services of highly skilled professionals or do not establish or maintain appropriate strategic relationships, our ability to implement our investment strategies could be delayed or hindered.

Our rights and the rights of our stockholders to recover claims against our independent directors are limited, which could reduce our stockholders’ and our recovery against our independent directors if they negligently cause us to incur losses.

Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter provides that none of our independent directors shall be liable to us or our stockholders for monetary damages and that we will generally indemnify them for losses unless they are grossly negligent or engage in willful misconduct. As a result, our stockholders and we may have more limited rights against our independent directors than might otherwise exist under common law, which could reduce our stockholders’ and our recovery from these persons if they act in a negligent manner. In addition, we may be obligated to fund the defense costs incurred by our independent directors (as well as by our other directors, officers, employees (if we ever have employees) and agents) in some cases, which would decrease the cash otherwise available for distribution to our stockholders.

Risks Related to Conflicts of Interest

KBS Capital Advisors and its affiliates, including all of our executive officers and our affiliated directors and other key real estate and debt finance professionals, face conflicts of interest caused by their compensation arrangements with us and with other KBS-sponsored programs, which could result in actions that are not in the long-term best interests of our stockholders.

All of our executive officers and our affiliated directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, and/or other KBS‑affiliated entities. Subject to limitations in our charter and approval by our conflicts committee, KBS Capital Advisors and its affiliates receive fees from us. These fees could influence our advisor’s advice to us as well as the judgment of its affiliates. Among other matters, these compensation arrangements could affect their judgment with respect to:

• the continuation, renewal or enforcement of our agreements with KBS Capital Advisors and its affiliates, including the advisory agreement, and the affiliated property management agreement;

• offerings of equity by us, which will likely entitle KBS Capital Advisors to increased asset management fees;

• sales of real estate investments, which will entitle KBS Capital Advisors to disposition fees and possible subordinated incentive fees;

• borrowings to acquire real estate investments, which borrowings will increase the asset management fee payable to KBS Capital Advisors;

• whether and when we seek to list our shares of common stock on a national securities exchange, which listing (i) may make it more likely for us to become self‑managed or internalize our management or (ii) could entitle KBS Capital Advisors to a subordinated incentive fee, and which could also adversely affect the sales efforts for other KBS‑sponsored programs, depending on the price at which our shares trade; and

• whether and when we seek to sell the company or its assets, which sale could entitle KBS Capital Advisors to disposition fees or a subordinated incentive fee and terminate the asset management fee.

12

Our advisor and its affiliates face conflicts of interest relating to the acquisition of assets and leasing of properties due to their relationship with other KBS-sponsored programs and KBS-advised investors, which could result in decisions that are not in our best interest or the best interests of our stockholders.

We rely on key real estate and debt finance professionals at our advisor, including Messrs. Bren and Schreiber, to identify suitable investment opportunities for us. KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”), KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT, KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”) and KBS Strategic Opportunity REIT II are also advised by KBS Capital Advisors and rely on many of the same real estate and debt finance professionals as will future KBS‑sponsored programs advised by our advisor. Messrs. Bren and Schreiber and several of the other key real estate professionals at KBS Capital Advisors are also the key real estate professionals at KBS Realty Advisors and its affiliates, the advisors to the private KBS‑sponsored programs and the investment advisors to KBS‑advised investors. As such, we and the other KBS‑sponsored programs that are currently raising funds for investment, or that otherwise have funds available for investment, and KBS‑advised investors rely on many of the same real estate and debt finance professionals, as will future KBS‑sponsored programs and KBS‑advised investors. Many investment opportunities that are suitable for us may also be suitable for other KBS‑sponsored programs and KBS‑advised investors. In addition, other KBS‑sponsored programs advised by KBS Capital Advisors pay an acquisition fee to KBS Capital Advisors in connection with an investment. This may incentivize our advisor to direct an investment opportunity away from us and to a program that pays our advisor an acquisition fee. When these real estate and debt finance professionals direct an investment opportunity to any KBS‑sponsored program or KBS‑advised investor they, in their sole discretion, will offer the opportunity to the program or investor for which the investment opportunity is most suitable based on the investment objectives, portfolio and criteria of each program or investor. Our acquisition stage will overlap to some extent with KBS Strategic Opportunity REIT II, KBS Strategic Opportunity REIT, five private KBS‑sponsored programs and possibly future KBS‑sponsored programs and KBS‑advised investors. It is the duty of our board of directors, including the independent directors, to ensure that the allocation method established by our advisor is applied fairly to us. Further, our advisory agreement with KBS Capital Advisors requires that KBS Capital Advisors inform the conflicts committee each quarter of the investments that have been purchased by other KBS‑sponsored programs and KBS‑advised investors for whom KBS Capital Advisors, KBS Realty Advisors or one of their affiliates serves as an investment advisor so that the conflicts committee can evaluate whether we are receiving our fair share of opportunities.

For so long as we are externally advised, our charter provides that it shall not be a proper purpose of the corporation for us to make any significant investment unless our advisor has recommended the investment to us. Thus, the real estate and debt finance professionals of KBS Capital Advisors could direct attractive investment opportunities to other KBS‑sponsored programs or KBS‑advised investors. Such events could result in us investing in properties that provide less attractive returns, which would reduce the level of distributions we may be able to pay our stockholders.

We and other KBS‑sponsored programs and KBS‑advised investors also rely on these real estate professionals to supervise the property management and leasing of properties. If the KBS team of real estate professionals directs creditworthy prospective tenants to properties owned by another KBS‑sponsored program or KBS‑advised investor when it could direct such tenants to our properties, our tenant base may have more inherent risk and our properties’ occupancy may be lower than might otherwise be the case.

Further, existing and future KBS‑sponsored programs and KBS‑advised investors and the principals and executive officers of our sponsor and our advisor generally are not and will not be prohibited from engaging, directly or indirectly, in any business or from possessing interests in any other business venture or ventures, including businesses and ventures involved in the acquisition, origination, development, ownership, leasing or sale of real estate‑related investments.

Our advisor and its affiliates will face conflicts of interest relating to joint ventures that we may form with affiliates of our advisor, which conflicts could result in a disproportionate benefit to other venture partners at our expense.

If approved by a majority of our independent directors, we may enter into joint venture agreements with other KBS‑sponsored programs or affiliated entities for the acquisition, development or improvement of properties or other investments. KBS Capital Advisors, our advisor, and KBS Realty Advisors and its affiliates, the advisors to the other KBS‑sponsored programs and the investment advisers to institutional investors in real estate and real estate‑related assets, have some of the same executive officers, affiliated directors and other key real estate and debt finance professionals; and these persons will face conflicts of interest in determining which KBS program or investor should enter into any particular joint venture agreement. These persons may also face a conflict in structuring the terms of the relationship between our interests and the interests of the KBS‑affiliated co‑venturer and in managing the joint venture. Any joint venture agreement or transaction between us and a KBS‑affiliated co‑venturer will not have the benefit of arm’s‑length negotiation of the type normally conducted between unrelated co‑venturers. The KBS‑affiliated co‑venturer may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. These co‑venturers may thus benefit to our and our stockholders’ detriment.

13

All of our executive officers, our affiliated directors and the key real estate and debt finance professionals assembled by our advisor face conflicts of interest related to their positions and/or interest in KBS Capital Advisors and its affiliates, which could hinder our ability to implement our business strategy and to generate returns to our stockholders.

All of our executive officers, our affiliated directors and the key real estate and debt finance professionals assembled by our advisor are also executive officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor and/or other KBS‑affiliated entities. Through KBS‑affiliated entities, some of these persons also serve as the investment advisors to KBS‑advised investors and, through KBS Capital Advisors and KBS Realty Advisors, these persons serve as the advisor to KBS REIT I, KBS REIT II, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS REIT III, KBS Strategic Opportunity REIT II and other KBS‑sponsored programs. As a result, they owe fiduciary duties to each of these entities, their members and limited partners and these investors, which fiduciary duties may from time to time conflict with the duties that they owe to us and our stockholders. Notwithstanding their fiduciary duties to us, their loyalties to these other entities and investors could result in action or inaction that is detrimental to our business, which could harm the implementation of our business strategy and our investment and leasing opportunities. Further, the principals and executive officers of our sponsor and our advisor and existing and future KBS‑sponsored programs and KBS‑advised investors generally are not and will not be prohibited from engaging, directly or indirectly, in any business or from possessing interests in any other business venture or ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to make distributions to our stockholders and to maintain or increase the value of our assets.

Our board of directors’ loyalties to KBS REIT I, KBS REIT II, KBS REIT III, KBS Legacy Partners Apartment REIT and possibly to future KBS-sponsored programs could influence its judgment, resulting in actions that may not be in our stockholders’ best interest or that result in a disproportionate benefit to another KBS-sponsored program at our expense.

One of our affiliated directors is also an affiliated director of KBS REIT I, KBS REIT II and KBS REIT III. Our other affiliated director is also an affiliated director of KBS Legacy Partners Apartment REIT. Notwithstanding their fiduciary duties to us, the loyalties of our directors serving on the boards of directors of KBS REIT I, KBS REIT II, KBS REIT III, and KBS Legacy Partners Apartment REIT or possibly on the boards of directors of future KBS‑sponsored programs, may influence the judgment of our board of directors when considering issues for us that also may affect other KBS‑sponsored programs, such as the following:

• We could enter into transactions with other KBS‑sponsored programs, such as property sales, acquisitions or financing arrangements. Such transactions might entitle our advisor or its affiliates to fees and other compensation from both parties to the transaction. For example, acquisitions from other KBS‑sponsored programs might entitle our advisor or its affiliates to disposition fees and possible subordinated incentive fees in connection with its services for the seller in addition to any fees and other fees that we might pay to our advisor in connection with such transaction. Similarly, property sales to other KBS‑sponsored programs might entitle our advisor or its affiliates to acquisition fees in connection with its services to the purchaser in addition to disposition and other fees that we might pay to our advisor in connection with such transaction. Decisions of our board regarding the terms of those transactions may be influenced by our board’s loyalties to such other KBS‑sponsored programs.

• A decision of our board regarding the timing of a debt or equity offering could be influenced by concerns that the offering would compete with offerings of other KBS‑sponsored programs.

• A decision of our board regarding the timing of property sales could be influenced by concerns that the sales would compete with those of other KBS‑sponsored programs.

• A decision of our board regarding whether and when we seek to list our common stock on a national securities exchange could be influenced by concerns that such listing could adversely affect the sales efforts of other KBS‑sponsored programs, depending on the price at which our shares trade.

Risks Related to Our Corporate Structure

Our charter limits the number of shares a person may own, which may discourage a takeover that could otherwise result in a premium price to our stockholders.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. To help us comply with the REIT ownership requirements of the Internal Revenue Code, our charter prohibits a person from directly or constructively owning more than 9.8% of our outstanding shares, unless exempted by our board of directors. This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

14

Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our board of directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms or conditions of redemption of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

Our stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks our stockholders face.

Our board of directors determines our major policies, including our policies regarding financing, growth, debt capitalization, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under Maryland General Corporation Law and our charter, our stockholders have a right to vote only on limited matters. Our board’s broad discretion in setting policies and our stockholders’ inability to exert control over those policies increases the uncertainty and risks our stockholders face.

Our stockholders may not be able to sell their shares under our share redemption program and, if our stockholders are able to sell their shares under the program, they may not be able to recover the amount of their investment in our shares.

Our share redemption program includes numerous restrictions that severely limit our stockholders’ ability to sell their shares should they require liquidity and will limit our stockholders’ ability to recover the value they invested in our common stock. Our stockholders must hold their shares for at least one year in order to participate in our share redemption program, except for Special Redemptions. We limit the number of shares redeemed pursuant to our share redemption program as follows: (i) during any calendar year, we may redeem no more than 5% of the weighted‑average number of shares outstanding during the prior calendar year and (ii) during each calendar year, redemptions will be limited to the amount of net proceeds from the sale of shares under our distribution reinvestment plan during the prior calendar year; however, we may increase or decrease the funding available for the redemption of shares upon ten business days’ notice to our stockholders. Further, we have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. These limits may prevent us from accommodating all redemption requests made in any year.

To the extent we have funds available for redemption, with respect to Ordinary Redemptions, for those shares held by the redeeming stockholder for at least one year, we will redeem all shares at 95.0% of our estimated NAV per share as of the applicable redemption date.

For purposes of determining whether a redeeming stockholder has held the share submitted for redemption for at least one year, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to our distribution reinvestment plan or received as a stock dividend will be deemed to have been acquired on the same date as the initial share to which the distribution reinvestment plan shares or stock dividend shares relate. The date of the share’s original issuance by us is not determinative.

On December 8, 2017, our board of directors approved an estimated NAV per share of our common stock of $8.79 based on the estimated value of our assets less the estimated value of our liabilities, or NAV, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. We generally expect to update the estimated NAV per share annually in December. We will report the estimated NAV per share in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC.

During their operating stages, other KBS‑sponsored REITs have amended their share redemption programs to limit redemptions to Special Redemptions or place restrictive limitations on the amount of funds available for redemptions. As a result, these programs have not been able to honor all redemption requests and stockholders in these programs have been unable to have their shares redeemed when requested. In two instances, Ordinary Redemptions have been suspended for several years. When implementing these amendments, stockholders did not always have a final opportunity to submit redemptions prior to the effectiveness of the amendment to the program.

Our board may amend, suspend or terminate our share redemption program upon 30 days’ notice to our stockholders, provided that we may increase or decrease the funding available for the redemption of shares pursuant to our share redemption program upon ten business days’ notice to our stockholders.

15

If funds are not available from our distribution reinvestment plan offering for general corporate purposes, then we may have to use a greater proportion of our cash flow from operations to meet our general cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.

We depend on the proceeds from our distribution reinvestment plan offering for general corporate purposes including, but not limited to: the repurchase of shares under our share redemption program; capital expenditures, tenant improvement costs and leasing costs related to our real estate properties; reserves required by any financings of our real estate investments; the acquisition of real estate investments; and the repayment of debt. We cannot predict with any certainty how much, if any, distribution reinvestment plan proceeds will be available for general corporate purposes. If such funds are not available from our distribution reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet our general cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.

The estimated NAV per share of our common stock may not reflect the value that stockholders will receive for their investment and does not take into account how developments subsequent to the establishment of the estimated NAV per share related to individual assets, the financial or real estate markets or other events may have increased or decreased the value of our portfolio.

On December 8, 2017, our board of directors approved an estimated NAV per share of our common stock of $8.79 based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017, see Part II, Item 5, “Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.” This valuation was designed to follow the prescribed methodologies of Practice Guideline 2013-01, Valuations of Publicly Registered Non‑Listed REITs, issued by the Investment Program Association (“IPA”) in April 2013 (the “IPA Valuation Guidelines”).

As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated NAV per share, and these differences could be significant. The estimated NAV per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to GAAP.

Accordingly, with respect to our estimated NAV per share, we can give no assurance that:

• a stockholder would be able to resell his or her shares at our estimated NAV per share;

• a stockholder would ultimately realize distributions per share equal to our estimated NAV per share upon liquidation of our assets and settlement of our liabilities or a sale of the company;

• our shares of common stock would trade at our estimated NAV per share on a national securities exchange;

• a third party would offer our estimated NAV per share in an arm’s‑length transaction to purchase all or substantially all of our shares of common stock;

• another independent third‑party appraiser or third‑party valuation firm would agree with our estimated NAV per share; or

• the methodology used to determine our estimated NAV per share would be acceptable to the Financial Industry Regulatory Authority or for compliance with ERISA reporting requirements.

Further, our estimated NAV per share is based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. As of September 30, 2017, we had 9,126,625 and 274,439 shares of common stock issued and outstanding of Class A and Class T common stock, respectively. We did not make any other adjustments to our estimated NAV subsequent to September 30, 2017, including, adjustments relating to the following, among others: (i) the issuance of common stock and the payment of related offering costs; (ii) net operating income earned and distributions declared; and (iii) the redemption of shares. The value of our shares will fluctuate over time in response to developments related to future investments, the performance of individual assets in our portfolio and the management of those assets and the real estate and finance markets. Our estimated NAV per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. Our estimated NAV per share does not take into account estimated disposition costs and fees for real estate properties, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or, the impact of restrictions on the assumption of debt. The estimated NAV per share does not take into consideration acquisition‑related costs and financing costs related to future acquisitions. We currently expect to utilize our advisor and/or an independent valuation firm to update our estimated NAV per share annually in December. We cannot assure our stockholders that our estimated NAV per share will increase or that it will not decrease.

16

For a full description of the methodologies and assumptions used to value our assets and liabilities in connection with the calculation of the estimated NAV per share, see Part II, Item 5, “Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.”

Our stockholders will not have the benefit of an independent due diligence review of our offerings of the type normally performed by an unaffiliated, independent underwriter in a listed public securities offering, which may increase the risks and uncertainty our stockholders face.

Our stockholders do not have the benefit of an independent review and investigation of our offerings of the type normally performed by an unaffiliated, independent underwriter in a listed public securities offering. The absence of an independent due diligence review may increase the risks and uncertainty that our stockholders face.

Our investors’ interest in us will be diluted if we issue additional shares, which could reduce the overall value of their investment.

Our common stockholders do not have preemptive rights to any shares we issue in the future. Our charter authorizes us to issue 1,010,000,000 shares of capital stock, of which 1,000,000,000 shares are designated as common stock with 500,000,000 shares being designated as Class A common stock and 500,000,000 shares being designated as Class T common stock, and 10,000,000 shares are designated as preferred stock. Our board of directors may increase the number of authorized shares of capital stock without stockholder approval. After our investors purchase shares, our board may elect to (i) sell additional shares; (ii) issue shares to our advisor, or its successors or assigns, in payment of an outstanding fee obligation; (iii) issue shares of our common stock to sellers of properties or assets we acquire in connection with an exchange of limited partnership interests of our Operating Partnership; or (iv) otherwise issue additional shares of our capital stock. To the extent we issue additional equity interests after our investors purchase shares, whether in our current offering or future primary offerings, pursuant to our distribution reinvestment plan or otherwise, our investors’ percentage ownership interest in us would be diluted. In addition, depending upon the terms and pricing of any additional issuances of shares, the use of the proceeds and the value of our real estate investments, our investors may also experience dilution in the book value and fair value of their shares and in the earnings and distributions per share.

Payment of fees to KBS Capital Advisors and its affiliates reduces cash available for distribution to stockholders.

For providing services to us in connection with the management and leasing of our real estate properties and the disposition of our real estate investments, we pay KBS Capital Advisors fees, which will reduce the amount of cash available for distribution to stockholders. Subject to limitations in our charter and approval by our conflicts committee, compensation to be paid to our advisor and its affiliates may be increased without stockholder approval, which would reduce the amount of cash available for distribution to stockholders. For a discussion of our fee arrangement with KBS Capital Advisors and its affiliates, see Part III, Item 13, “Certain Relationships and Related Transactions and Director Independence – Certain Transactions with Related Persons.”

If we are unable to obtain funding for future capital needs, cash distributions to our stockholders and the value of our investments could decline.

Because of our focus on more value‑creating core properties, we may make investments in core properties that have an occupancy rate of less than 95%, higher near term lease rollover at acquisition than more conservative value maintaining core properties, or other characteristics that could provide an opportunity for us to achieve appreciation by increasing occupancy, negotiating new leases with higher rental rates and/or executing enhancement projects. We likely will need to fund reserves or maintain capacity under credit facilities to fund capital expenditures, tenant improvements and other improvements in order to attract new tenants to these properties. In addition, when tenants do not renew their leases or otherwise vacate their space, we will often need to expend substantial funds for improvements to the vacated space in order to attract replacement tenants. Even when tenants do renew their leases we may agree to make improvements to their space as part of our negotiations. If we need additional capital in the future to improve or maintain our properties or for any other reason, we may have to obtain funding from sources other than our cash flow from operations or proceeds from our distribution reinvestment plan, such as borrowings or future equity offerings. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions to our stockholders and could reduce the value of our stockholders’ investment.

17

Our stockholders may be more likely to sustain a loss on their investment because our sponsor and its affiliates do not have as strong an economic incentive to avoid losses as do sponsors who have made significant equity investments in their companies.

Our sponsor and its affiliates have not made a significant investment in us. Our advisor acquired 20,000 shares of our Class A common stock for an initial investment of $200,000. On August 11, 2015, Charles J. Schreiber, Jr., our chief executive officer, the chairman of the board and one of our directors, and one of the indirect owners of our advisor, and Peter M. Bren, our president, one of our directors, and one of the indirect owners of our advisor, purchased 21,181.2380 and 21,181.2390 shares of our Class A common stock, respectively, each for an aggregate purchase price of $172,500 or $8.144 per share. The purchase price reflected an 8.5% discount to the $8.90 initial offering price in our initial private offering for our Class A common stock because selling commissions and dealer manager fees were not paid in connection with the sales. Mr. Bren’s investment was made on behalf of and for the accounts of three of his children, and he has disclaimed beneficial ownership of the shares. In addition, on October 4, 2017, each of Charles J. Schreiber and Peter M. Bren purchased an additional 11,428.57 shares of our Class A common stock for an aggregate purchase price of $100,000 or $8.75 per share. The purchase price was our estimated NAV per share as established by our board of directors on August 9, 2017 and the offering price in our second private offering as of their date of purchase. Therefore, our sponsor and its affiliates will have little exposure to loss in the value of our shares. With this limited exposure, our investors may be at a greater risk of loss because our sponsor does not have as much to lose from a decrease in the value of our shares as do those sponsors who make more significant equity investments in their companies.

Although we will not currently be afforded the protection of the Maryland General Corporation Law relating to deterring or defending hostile takeovers, our board of directors could opt into these provisions of Maryland law in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their stock in connection with a business combination.

Under Maryland law, “business combinations” between a Maryland corporation and certain interested stockholders or affiliates of interested stockholders are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two‑thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. Should our board of directors opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law could provide similar anti‑takeover protection.

Our charter includes an anti-takeover provision that may discourage a stockholder from launching a tender offer for our shares.

Our charter provides that any tender offer made by a stockholder, including any “mini‑tender” offer, must comply with most provisions of Regulation 14D of the Exchange Act. The offering stockholder must provide our company notice of such tender offer at least 10 business days before initiating the tender offer. If the offering stockholder does not comply with these requirements, all tendering stockholders will have the ability to rescind the tender of their shares. In addition, the noncomplying stockholder shall be responsible for all of our company’s expenses in connection with that stockholder’s noncompliance. This provision of our charter may discourage a stockholder from initiating a tender offer for our shares and prevent our stockholders from receiving a premium price for our stockholders’ shares in such a transaction.

18

We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.

We face risks associated with security breaches, whether through cyber‑attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e‑mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber‑attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day‑to‑day operations. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

A security breach or other significant disruption involving our IT networks and related systems could:

• disrupt the proper functioning of our networks and systems and therefore our operations;

• result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines;

• result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;

• result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us or which could expose us to damage claims by third‑parties for disruptive, destructive or otherwise harmful purposes and outcomes;

• require significant management attention and resources to remedy any damages that result;

• subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or

• damage our reputation among our stockholders.

Any or all of the foregoing could have a material adverse effect on our results of operations, financial condition and cash flows.

General Risks Related to Investments in Real Estate

Economic, market and regulatory changes that impact the real estate market generally may decrease the value of our real estate properties and weaken our operating results.

The performance of the real estate properties we acquire will be subject to the risks typically associated with real estate, any of which could decrease the value of our real estate properties and could weaken our operating results, including:

• downturns in national, regional and local economic conditions;

• competition from other office and industrial buildings;

• adverse local conditions, such as oversupply or reduction in demand for office and industrial buildings and changes in real estate zoning laws that may reduce the desirability of real estate in an area;

• vacancies, changes in market rental rates and the need to periodically repair, renovate and re‑let space;

• changes in interest rates and the availability of permanent mortgage financing, which may render the sale of a property or loan difficult or unattractive;

• changes in tax (including real and personal property tax), real estate, environmental and zoning laws;

• natural disasters such as hurricanes, earthquakes and floods;

• acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;

• the potential for uninsured or underinsured property losses; and

• periods of high interest rates and tight money supply.

19

Any of the above factors, or a combination thereof, could result in a decrease in our cash flow from operations and a decrease in the value of our real estate properties, which would have an adverse effect on our operations, on our ability to pay distributions to our stockholders and on the value of our stockholders’ investment.

Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties and adversely affect our ability to pay distributions to our stockholders.

A property may incur vacancies either by the expiration and non‑renewal of tenant leases or the continued default of tenants under their leases. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash available for distribution to our stockholders. In addition, the resale value of the property could be diminished because the market value of the core real estate properties, which we intend to target depends principally upon the value of the cash flow generated by the leases associated with that property. Such a reduction in the resale value of a property could also reduce the value of our stockholders’ investment.

We may enter into long-term leases with tenants in certain properties, which may not result in fair market rental rates over time.

We may enter into long‑term leases with tenants of certain of our properties, or include renewal options that specify a maximum rate increase. These leases would provide for rent to increase over time; however, if we do not accurately judge the potential for increases in market rental rates, we may set the terms of these long‑term leases at levels such that, even after contractual rent increases, the rent under our long‑term leases is less than then‑current market rates. Further, we may have no ability to terminate those leases or to adjust the rent to then‑prevailing market rates. As a result, our cash available for distribution could be lower than if we did not enter into long‑term leases.

Certain property types that we may acquire, such as industrial properties, may not have efficient alternative uses and we may have difficulty leasing them to new tenants and/or have to make significant capital expenditures to them to do so.

Certain property types, particularly industrial properties, can be difficult to lease to new tenants, should the current tenant terminate or choose not to renew its lease. These properties generally have received significant tenant‑specific improvements and only very specific tenants may be able to use such improvements, making the properties very difficult to re‑lease in their current condition. Additionally, an interested tenant may demand that, as a condition of executing a lease for the property, we finance and construct significant improvements so that the tenant could use the property. This expense may decrease cash available for distribution, as we likely would have to (i) pay for the improvements up‑front or (ii) finance the improvements at potentially unattractive terms.

We depend on tenants for our revenue generated by our real estate properties and, accordingly, our revenue generated by our real estate properties and our ability to make distributions to our stockholders are partially dependent upon the success and economic viability of our tenants and our ability to retain and attract tenants. Non-renewals, terminations, lease defaults or tenant bankruptcies could reduce our net income and limit our ability to make distributions to our stockholders.

The success of our real estate properties materially depends upon the financial stability of the tenants leasing the properties we own. The inability of a single major tenant or a significant number of smaller tenants to meet their rental obligations would significantly lower our net income. A non‑renewal after the expiration of a lease term, termination or default by a tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord of a property and may incur substantial costs in protecting our investment and re‑leasing the property. Tenants may have the right to terminate their leases upon the occurrence of certain customary events of default and, in other circumstances, may not renew their leases or, because of market conditions, may only be able to renew their leases on terms that are less favorable to us than the terms of their initial leases. Further, some of our properties may be outfitted to suit the particular needs of the tenants. We may have difficulty replacing the tenants of these properties if the outfitted space limits the types of businesses that could lease that space without major renovation. If a tenant does not renew, terminates or defaults on a lease, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss. Because the market value of a particular property generally depends upon the value of the cash flow generated by the leases associated with such property, we may incur a loss upon the sale of a property with significant vacant space. These events could cause us to reduce distributions to stockholders.

20

Our inability to sell a property at the time and on the terms we want could limit our ability to pay distributions to our stockholders.

Many factors that are beyond our control affect the real estate market and could affect our ability to sell properties for the price, on the terms or within the time frame that we desire. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. Because real estate investments are relatively illiquid, we have a limited ability to vary our portfolio in response to changes in economic or other conditions. Further, before we can sell a property on the terms we want, it may be necessary to expend funds to correct defects or to make improvements. However, we can give no assurance that we will have the funds available to correct such defects or to make such improvements. We may be unable to sell our properties at a profit. Our inability to sell properties at the time and on the terms we want could reduce our cash flow, limit our ability to make distributions to our stockholders and reduce the value of our stockholders’ investment.

Actions of our potential future joint venture partners could reduce the returns on joint venture investments and decrease our stockholders’ overall return.

We may enter into joint ventures with third parties or affiliates to acquire assets. We may also purchase and develop properties in joint ventures or in partnerships, co‑tenancies or other co‑ownership arrangements. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

• that our co‑venturer, co‑tenant or partner in an investment could become insolvent or bankrupt;

• that such co‑venturer, co‑tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

• that such co‑venturer, co‑tenant or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

• that disputes between us and our co‑venturer, co‑tenant or partner may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our operations.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of our stockholders’ investment in us. In addition, see the risks discussed under the heading “Our advisor and its affiliates will face conflicts of interest relating to joint ventures that we may form with affiliates of our advisor, which conflicts could result in a disproportionate benefit to other venture partners at our expense” with respect to joint ventures with affiliates.

Costs imposed pursuant to laws and governmental regulations may reduce our net income and our cash available for distribution to our stockholders.

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to protection of the environment and human health. We could be subject to liability in the form of fines, penalties or damages for noncompliance with these laws and regulations. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above‑ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, the remediation of contamination associated with the release or disposal of solid and hazardous materials, the presence of toxic building materials and other health and safety‑related concerns.

Some of these laws and regulations may impose joint and several liability on the tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Activities of our tenants, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties or damages we must pay will reduce our ability to pay distributions to our stockholders and may reduce the value of our stockholders’ investment.

21

The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property or of paying personal injury or other damage claims could reduce our cash available for distribution to our stockholders.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos‑containing materials and lead‑based paint. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances and governments may seek recovery for natural resource damage. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury, property damage or natural resource damage claims could reduce our cash available for distribution to our stockholders. If any of our properties were found to contain hazardous or toxic substances after our acquisition, the value of our investment could decrease below the amount paid for such investment.

Risks Associated with Debt Financing and the Use of Derivatives to Hedge Interest Rate Risk

We are likely to obtain lines of credit, mortgage indebtedness and other borrowings, which may increase our risk of loss due to potential foreclosure.

We plan to obtain lines of credit and long‑term financing that may be secured by our real estate investments. In some instances, we may acquire real properties by financing a portion of the price of the properties and mortgaging or pledging some or all of the properties purchased as security for that debt. We may also incur mortgage debt on properties that we already own in order to obtain funds to acquire additional properties, to fund property improvements and other capital expenditures, to pay distributions and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for U.S. federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders (computed without regard to the dividends‑paid deduction and excluding net capital gain). However, we can give our stockholders no assurance that we will be able to obtain such borrowings on satisfactory terms or at all.

If we do mortgage a property and there is a shortfall between the cash flow generated by that property and the cash flow needed to service mortgage debt on that property, then the amount of cash available for distribution to our stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, reducing the value of our stockholders’ investment. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though we would not necessarily receive any cash proceeds. We may give full or partial guaranties to lenders of mortgage or other debt on behalf of the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of all or a part of the debt or other amounts related to the debt if it is not paid by such entity. If any mortgages contain cross‑collateralization or cross‑default provisions, a default on a mortgage secured by a single property could affect mortgages secured by other properties.

We may also obtain recourse debt to finance our acquisitions and meet our REIT distribution requirements. If we have insufficient income to service our recourse debt obligations, our lenders could institute proceedings against us to foreclose upon our assets. If a lender successfully forecloses upon any of our assets, our ability to pay cash distributions to our stockholders will be reduced and our stockholders may lose part of their investment.

22

High mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash available for distribution to our stockholders.

If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on a property, we run the risk of being unable to refinance part or all of the debt when it becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance properties subject to mortgage debt, our income could be reduced. We may be unable to refinance or may only be able to partly refinance properties if underwriting standards, including loan to value ratios and yield requirements, among other requirements, are stricter than when we originally financed the properties. If any of these events occurs, our cash flow could be reduced and/or we might have to pay down existing mortgages. This, in turn, would reduce cash available for distribution to our stockholders, could cause us to require additional capital and may hinder our ability to raise capital by issuing more stock or by borrowing more money.

Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to pay distributions to our stockholders.

When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan agreements into which we enter may contain covenants that limit our ability to further mortgage a property or that prohibit us from discontinuing insurance coverage or replacing our advisor. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives and limit our ability to pay distributions to our stockholders.

Increases in interest rates would increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

We expect that we will incur debt in the future and increases in interest rates will increase the cost of that debt, which could reduce our cash flow from operations and the cash we have available for distribution to our stockholders. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments.

We have broad authority to incur debt and high debt levels could hinder our ability to make distributions and may decrease the value of our stockholders’ investment.

We are not limited in the amount of debt we may incur. Although we expect that once we have fully invested the proceeds raised during our offering stage, 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), our debt financing and other liabilities may exceed this level during our offering stage. High debt levels would cause us to incur higher interest charges and higher debt service payments and could also be accompanied by restrictive covenants. Especially during the early stages of our offering stage, and to the extent financing is available at attractive terms, we may incur debt in excess of our maximum target leverage. These factors could limit the amount of cash we have available to distribute and may decrease the value of our stockholders’ investment.

Hedging against interest rate exposure may adversely affect our earnings, limit our gains or result in losses, which could adversely affect cash available for distribution to our stockholders.

We may seek to manage our exposure to interest rate volatility by pursuing interest rate hedging arrangements, such as interest rate cap or collar transactions and interest rate swap transactions. Our hedging activity will vary in scope based on the level of interest rates, the type of investments we hold, and other changing market conditions. These interest rate hedging arrangements may create additional assets or liabilities from time to time that may be held or liquidated separately from the underlying property or loan for which they were originally established.

Failure to hedge effectively against interest rates or the use of interest rate hedging arrangements generally may reduce the overall returns on our investments or may materially adversely affect our results of operations and financial condition. While we may enter into such transactions to seek to reduce interest rate risks, unanticipated changes in interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the investments being hedged or liabilities being hedged may vary materially. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the interest rate risk sought to be hedged. Any such imperfect correlation may prevent us from achieving the intended accounting treatment and may expose us to risk of loss.

23

We will face risks associated with hedging transactions including the credit risk of our counterparties.

We may enter into derivative contracts for risk management purposes to hedge our exposure to cash flow variability caused by changing interest rates on our future variable rate notes payable. These derivative contracts generally are entered into with bank counterparties and are not traded on an organized exchange or guaranteed by a central clearing organization. We would therefore assume the credit risk that our counterparties will fail to make periodic payments when due under these contracts or become insolvent. We may not receive any collateral from a counterparty, or we may receive collateral that is insufficient to satisfy the counterparty’s obligation to make a termination payment. If a counterparty is the subject of a bankruptcy case, we will be an unsecured creditor in such case unless the counterparty has pledged sufficient collateral to us to satisfy the counterparty’s obligations to us. If we fail to make a required payment or otherwise default under the terms of a derivative contract, the counterparty would have the right to terminate all outstanding derivative transactions between us and that counterparty and settle them based on their net market value or replacement cost. In certain circumstances, the counterparty may have the right to terminate derivative transactions early even if we are not defaulting. If our derivative transactions are terminated early, it may not be possible for us to replace those transactions with another counterparty, on as favorable terms or at all. In addition, the use of derivative transactions will be subject to additional, unique risks associated with such instruments including a lack of sufficient asset correlation, heightened volatility in reference to interest rates or prices of reference instruments and duration/term mismatch, each of which may create additional risk of loss.

There can be no assurance that the direct or indirect effects of the Dodd-Frank Act and other applicable non-U.S. regulations will not have an adverse effect on our interest rate hedging activities.

Title VII of the Dodd‑Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd‑Frank Act”) imposed additional regulations on derivatives markets and transactions. Such regulations and, to the extent we trade with counterparties organized in non‑US jurisdictions, any applicable regulations in those jurisdictions, are still being implemented, and will affect our interest rate hedging activities. While the full impact of the regulation on our interest rate hedging activities cannot be fully assessed until all final rules and regulations are implemented, such regulation may affect our ability to enter into hedging or other risk management transactions, may increase our costs in entering into such transactions, and/or may result in us entering into such transactions on less favorable terms than prior to implementation of such regulation. The imposition of, or the failure to comply with, the requirements under the Dodd‑Frank Act and equivalent non‑U.S. regulations may have an adverse effect on our business and our stockholders’ return.

There may be uncertainty as to the value of the derivative instruments used.

Our investments in derivatives will be recorded at fair value but have limited liquidity and are not publicly traded. The fair value of our derivatives may not be readily determinable. We will estimate the fair value of any such investments. Because such valuations are inherently uncertain, may fluctuate over short periods of time and may be based on numerous estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these investments existed. The value of our common stock could be adversely affected if our determinations regarding the fair value of these investments are materially higher than the values that we ultimately realize upon their disposal or maturity.

Federal Income Tax Risks

Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.

If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends paid deduction and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

24

Failure to qualify as a REIT would subject us to federal income tax, which would reduce the cash available for distribution to our stockholders.

The federal income tax laws governing REITs are extremely complex, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Qualifying as a REIT requires us to meet various tests regarding the nature of our assets and our income, the ownership of our outstanding stock, and the amount of our distributions on an ongoing basis. Accordingly, we cannot be certain that we will be successful in operating so we can qualify or remain qualified as a REIT. Our ability to satisfy the asset tests depends on our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. While we intend to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, including the tax treatment of certain investments we may make, and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year. If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, we would be required to pay federal income tax on our taxable income. We might need to borrow money or sell assets to pay that tax. Our payment of income tax would decrease the amount of our income available for distribution to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT and we do not qualify for certain statutory relief provisions, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders. Unless our failure to qualify as a REIT were excused under federal tax laws, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost.

The taxation of distributions to our stockholders can be complex; however, distributions that we make to our stockholders generally will be taxable as ordinary income, which may reduce our stockholders’ anticipated return from an investment in us.

Distributions that we make to our taxable stockholders to the extent of our current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. However, a portion of our distributions may (i) be designated by us as capital gain dividends generally taxable as long‑term capital gain to the extent that they are attributable to net capital gain recognized by us, (ii) be designated by us as qualified dividend income generally to the extent they are attributable to dividends we receive from non‑REIT corporations, such as our TRSs, if any, or (iii) constitute a return of capital generally to the extent that they exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital distribution is not taxable, but has the effect of reducing the basis of a stockholder’s investment in our common stock.

Even if we qualify as a REIT for U.S. federal income tax purposes, we may be subject to federal, state, local, or other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.

Even if we qualify as a REIT for U.S. federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property. For example:

• In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends‑paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on the undistributed income.

• We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

• If we elect to treat property that we acquire in connection with certain leasehold terminations as “foreclosure property,” we may avoid the 100% tax on the gain from a resale of that property, but the income from the sale or operation of that property may be subject to corporate income tax at the highest applicable rate.

• If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our taxable REIT subsidiaries.

25

REIT distribution requirements could adversely affect our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order for federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax‑exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also will be subject to corporate tax on any undistributed taxable income. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax‑exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also will be subject to corporate tax on any undistributed taxable income. We intend to pay distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.

From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to stockholders (for example, where a borrower defers the payment of interest in cash pursuant to a contractual right or otherwise). If we do not have other funds available in these situations we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

If our operating partnership fails to maintain its status as a partnership for U.S. federal income tax purposes, its income would be subject to taxation and our REIT status would be terminated.

We intend to maintain the status of our operating partnership as a partnership from its formation for U.S. federal income tax purposes. However, if the IRS were to successfully challenge the status of our operating partnership as a partnership, it would be taxable as a corporation. In such event, this would reduce the amount of distributions that our operating partnership could make to us. This would also result in our losing REIT status and becoming subject to a corporate level tax on our own income. This would substantially reduce our cash available to pay distributions and the return on our stockholders’ investment. In addition, if any of the entities through which our operating partnership owns its properties, in whole or in part, loses its characterization as a partnership for federal income tax purposes, the underlying entity would become subject to taxation as a corporation, thereby reducing distributions to our operating partnership and jeopardizing our ability to maintain REIT status.

Early investors may receive tax benefits from our election to accelerate depreciation expense deductions of certain components of our investments, including land improvements and fixtures, from which later investors may not benefit.

For U.S. federal income tax purposes, distributions received by our investors generally will be considered ordinary dividends to the extent that the distributions are paid out of our current and accumulated earnings and profits (excluding distributions of amounts either attributable to income subject to corporate‑level taxation or designated as a capital gain dividend). However, depreciation expenses, among other deductible items, reduce taxable income and earnings and profits but do not reduce cash available for distribution. To the extent that a portion of any distributions to our investors exceed our current and accumulated earnings and profits, that portion will be considered a return of capital (a non‑taxable distribution) for U.S. federal income tax purposes up to the amount of their tax basis in their shares (and any excess over their tax basis in their shares will result in capital gain from the deemed disposition of the investors’ shares). The amount of distributions considered a return of capital for U.S. federal income tax purposes will not be subject to tax immediately but will instead reduce the tax basis of our investors’ investments, generally deferring any tax on that portion of the distribution until they sell their shares or we liquidate. Because we may choose to increase depreciation expense deductions in the earlier years after acquisition of an asset, for U.S. federal income tax purposes, of certain components of our investments, including land improvements and fixtures through the use of cost segregation studies, our early investors may benefit to the extent that increased depreciation causes all or a portion of the distributions they receive to be considered a return of capital for U.S. federal income tax purposes thereby deferring tax on those distributions, while later investors may not benefit to the extent that the depreciation of these components has already been deducted.

26

If we fail to invest a sufficient amount of the net proceeds from our offerings in real estate assets within one year from the receipt of the proceeds, we could fail to qualify as a REIT.

Temporary investment of the net proceeds from our offerings in securities that are not treated as real estate assets for REIT qualification purposes and income from these investments generally will allow us to satisfy various REIT income and asset requirements, but only during the one‑year period beginning on the date we receive the net proceeds. In order to satisfy these requirements, we may invest in one or more assets on terms and conditions that are not otherwise favorable to us, which ultimately could materially and adversely affect our financial condition and operating results. Alternatively, if we are unable to invest a sufficient amount of the net proceeds from sales of our stock in qualifying real estate assets within the one‑year period, we could fail to satisfy one or more of the gross income or asset tests and we could be limited to investing all or a portion of any remaining funds in cash or certain cash equivalents. If we fail to satisfy any such income or asset test, unless we are entitled to relief under certain provisions of the Internal Revenue Code, we could fail to qualify as a REIT.

To maintain our REIT status, we may be forced to forego otherwise attractive business or investment opportunities, which may delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return.

To qualify as a REIT, we must satisfy certain tests on an ongoing basis concerning, among other things, the sources of our income, nature of our assets and the amounts we distribute to our stockholders. We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and reduce the value of our stockholders’ investment.

Liquidation of assets may jeopardize our REIT qualification.

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.

Complying with REIT requirements may limit our ability to hedge effectively.

The REIT provisions of the Internal Revenue Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate, inflation and/or currency risks will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges (i) interest rate risk on liabilities incurred to carry or acquire real estate, (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, or (iii) to manage risk with respect to the termination of certain prior hedging transactions described in (i) and/or (ii) above, and, in each case, such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that do not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

Our ownership of and relationship with our taxable REIT subsidiaries will be limited and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax.

A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. A taxable REIT subsidiary may earn income that would not be qualifying income if earned directly by the parent REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more taxable REIT subsidiaries. A domestic taxable REIT subsidiary will pay federal, state and local income tax at regular corporate rates on any income that it earns. In addition, the taxable REIT subsidiary rules limit the deductibility of interest paid or accrued by a taxable REIT subsidiary to its parent REIT to assure that the taxable REIT subsidiary is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted on an arm’s‑length basis. We cannot assure our stockholders that we will be able to comply with the 20% value limitation on ownership of taxable REIT subsidiary stock and securities on an ongoing basis so as to maintain REIT status or to avoid application of the 100% excise tax imposed on certain non‑arm’s length transactions.

27

We may be required to pay some taxes due to actions of a taxable REIT subsidiary which would reduce our cash available for distribution to our stockholders.

Any net taxable income earned directly by a taxable REIT subsidiary, or through entities that are disregarded for U.S. federal income tax purposes as entities separate from our taxable REIT subsidiaries, will be subject to federal and possibly state corporate income tax. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of federal income taxation. For example, a taxable REIT subsidiary is limited in its ability to deduct certain interest payments made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by a taxable REIT subsidiary if the economic arrangements between the REIT, the REIT’s customers, and the taxable REIT subsidiary are not comparable to similar arrangements between unrelated parties. Finally, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to federal income tax on that income because not all states and localities follow the federal income tax treatment of REITs. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our stockholders.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we intend to elect and qualify to be taxed as a REIT, we may not elect to be treated as a REIT or may terminate our REIT election if we determine that qualifying as a REIT is no longer in our best interests. If we cease to be a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our common stock.

28

Changes recently made to the U.S. tax laws could have a negative impact on our business.

The President signed a tax reform bill into law on December 22, 2017 (the “Tax Cuts and Jobs Act”). Among other things, the Tax Cuts and Jobs Act: 

• Reduces the corporate income tax rate from 35% to 21% (including with respect to our taxable REIT subsidiary);    

• Reduces the rate of U.S. federal withholding tax on distributions made to non-U.S. stockholders by a REIT that are attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;    

• Allows an immediate 100% deduction of the cost of certain capital asset investments (generally excluding real estate assets), subject to a phase-down of the deduction percentage over time;     

• Changes the recovery periods for certain real property and building improvements (for example, to 15 years for qualified improvement property under the modified accelerated cost recovery system, and to 30 years (previously 40 years) for residential real property and 20 years (previously 40 years) for qualified improvement property under the alternative depreciation system);

• Restricts the deductibility of interest expense by businesses (generally, to 30% of the business’ adjusted taxable income) except, among others, real property businesses electing out of such restriction; we have not yet determined whether we and/or our subsidiaries can and/or will make such an election;     

• Requires the use of the less favorable alternative depreciation system to depreciate real property in the event a real property business elects to avoid the interest deduction restriction above;    

• Restricts the benefits of like-kind exchanges that defer capital gains for tax purposes to exchanges of real property;    

• Permanently repeals the “technical termination” rule for partnerships, meaning sales or exchanges of the interests in a partnership will be less likely to, among other things, terminate the taxable year of, and restart the depreciable lives of assets held by, such partnership for tax purposes;     

• Requires accrual method taxpayers to take certain amounts in income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement prepared under GAAP, which, with respect to certain leases, could accelerate the inclusion of rental income;    

• Eliminates the federal corporate alternative minimum tax;    

• Reduces the highest marginal income tax rate for individuals to 37% from 39.6% (excluding, in each case, the 3.8% Medicare tax on net investment income);    

• Generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income), generally resulting in a maximum effective federal income tax rate applicable to such dividends of 29.6% compared to 37% (excluding, in each case, the 3.8% Medicare tax on net investment income); and     

• Limits certain deductions for individuals, including deductions for state and local income taxes, and eliminates deductions for miscellaneous itemized deductions (including certain investment expenses).

Many of the provisions in the Tax Cuts and Jobs Act, in particular those affecting individual taxpayers, expire at the end of 2025.

As a result of the changes to U.S. federal tax laws implemented by the Tax Cuts and Jobs Act, our taxable income and the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, could change. As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders annually.

The Tax Cuts and Jobs Act is a complex revision to the U.S. federal income tax laws with various impacts on different categories of taxpayers and industries, and will require subsequent rulemaking and interpretation in a number of areas. The long-term impact of the Tax Cuts and Jobs Act on the overall economy, government revenues, our tenants, us, and the real estate industry cannot be reliably predicted at this time. Furthermore, the Tax Cuts and Jobs Act may negatively impact certain of our tenants’ operating results, financial condition, and future business plans. The Tax Cuts and Jobs Act may also result in reduced government revenues, and therefore reduced government spending, which may negatively impact some of our tenants that rely on government funding. There can be no assurance that the Tax Cuts and Jobs Act will not negatively impact our operating results, financial condition, and future business operations.

29

Dividends payable by REITs do not qualify for the reduced tax rates.

In general, the maximum tax rate for dividends payable to domestic stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, are generally not eligible for this reduced rate provided individuals may be able to deduct 20% of income received as ordinary REIT dividends, thus reducing the maximum effective federal income tax rate on such dividend. While this tax treatment does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts or estates to perceive investments in REITs to be relatively less attractive than investments in stock of non‑REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common stock.

Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon the disposition of our shares.

Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits. Such dividends ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are treated as “effectively connected” with the conduct by the non‑U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, capital gain distributions attributable to sales or exchanges of “U.S. real property interests,” or USRPIs, generally will be taxed to a non‑U.S. stockholder as if such gain were effectively connected with a U.S. trade or business unless FIRPTA provides an exemption. However, a capital gain dividend will not be treated as effectively connected income if (i) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States and (ii) the non‑U.S. stockholder does not own more than 10% of the class of our stock at any time during the one‑year period ending on the date the distribution is received. We do not anticipate that our shares will be “regularly traded” on an established securities market for the foreseeable future, and therefore, this exception is not expected to apply.

Gain recognized by a non‑U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA (subject to specific FIRPTA exemptions for certain non‑U.S. stockholders). Our common stock will not constitute a USRPI so long as we are a “domestically‑controlled qualified investment entity.” A domestically‑controlled qualified investment entity includes a REIT if at all times during a specified testing period, less than 50% in value of such REIT’s stock is held directly or indirectly by non‑U.S. stockholders. We believe, but cannot assure our stockholders, that we will be a domestically‑controlled qualified investment entity.

Even if we do not qualify as a domestically‑controlled qualified investment entity at the time a non‑U.S. stockholder sells or exchanges our common stock, gain arising from such a sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (a) our common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and (b) such non‑U.S. stockholder owned, actually and constructively, 10% or less of our common stock at any time during the five‑year period ending on the date of the sale. However, it is not anticipated that our common stock will be “regularly traded” on an established market. We encourage our stockholders to consult their tax advisor to determine the tax consequences applicable to our stockholders if they are a non‑U.S. stockholder.

Investments in other REITs and real estate partnerships could subject us to the tax risks associated with the tax status of such entities.

We may invest in the securities of other REITs and real estate partnerships. Such investments are subject to the risk that any such REIT or partnership may fail to satisfy the requirements to qualify as a REIT or a partnership, as the case may be, in any given taxable year. In the case of a REIT, such failure would subject such entity to taxation as a corporation, may require such REIT to incur indebtedness to pay its tax liabilities, may reduce its ability to make distributions to us, and may render it ineligible to elect REIT status prior to the fifth taxable year following the year in which it fails to so qualify. In the case of a partnership, such failure could subject such partnership to an entity level tax and reduce the entity’s ability to make distributions to us. In addition, such failures could, depending on the circumstances, jeopardize our ability to qualify as a REIT.

Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.

Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

30

If we were considered to actually or constructively pay a “preferential dividend” to certain of our stockholders, our status as a REIT could be adversely affected.

In order to qualify as a REIT, we must distribute to our stockholders at least 90% of our annual REIT taxable income (excluding net capital gain), determined without regard to the deduction for dividends paid. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT level tax deduction, the distribution must not constitute a “preferential dividend. A distribution is not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in our organizational documents. There is no de minimis exception with respect to preferential dividends; therefore, if the IRS were to take the position that we paid a preferential dividend, we may be deemed to have failed the 90% distribution test, and our status as a REIT could be terminated for the year in which such determination is made if we were unable to cure such failure. The preferential dividend rules described above do not apply to distributions by publicly offered REITs, which we were as of April 28, 2016. Prior to our status as a publicly offered REIT, the preferential dividend rules did apply to our distributions, thus potentially affecting both our 2015 and 2016 taxable years.

Retirement Plan Risks

If the fiduciary of an employee benefit plan subject to ERISA (such as a profit sharing, Section 401(k) or pension plan) or an owner of a retirement arrangement subject to Section 4975 of the Internal Revenue Code (such as an individual retirement account (“IRA”)) fails to meet the fiduciary and other standards under ERISA or the Internal Revenue Code as a result of an investment in our stock, the fiduciary could be subject to penalties and other sanctions.

There are special considerations that apply to employee benefit plans subject to ERISA (such as profit sharing, Section 401(k) or pension plans) and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code (such as an IRA) that are investing in our shares. Fiduciaries and IRA owners investing the assets of such a plan or account in our common stock should satisfy themselves that:

• the investment is consistent with their fiduciary and other obligations under ERISA and the Internal Revenue Code;

• the investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan’s or account’s investment policy;

• the investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code;

• the investment in our shares, for which no public market currently exists, is consistent with the liquidity needs of the plan or IRA;

• the investment will not produce an unacceptable amount of “unrelated business taxable income” for the plan or IRA;

• our stockholders will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the plan or IRA annually; and

• the investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

With respect to the annual valuation requirements described above, we will provide an estimated value for our shares annually. We can make no claim whether such estimated value will satisfy the applicable annual valuation requirements under ERISA and the Internal Revenue Code. The Department of Labor or the IRS may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our common stock. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions.

On April 8, 2016, the Department of Labor issued a final regulation relating to the definition of a fiduciary under ERISA and Section 4975 of the Internal Revenue Code. The final regulation broadens the definition of fiduciary and is accompanied by new and revised prohibited transaction exemptions relating to investments by IRAs and Benefit Plans.  The final regulation took effect on June 9, 2017, and the Department of Labor has announced that it is proposing to delay the implementation of the various prohibited transaction exemptions and that these exemptions would remain subject to transition rules through July 1, 2019. Plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding this development.

31

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Internal Revenue Code may result in the imposition of civil and criminal penalties and could subject the fiduciary to claims for damages or for equitable remedies, including liability for investment losses. In addition, if an investment in our shares constitutes a prohibited transaction under ERISA or the Internal Revenue Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In addition, the investment transaction must be undone. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified as a tax-exempt account and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

We have no unresolved staff comments.

ITEM 2. PROPERTIES

As of December 31, 2017, we owned four office buildings containing 683,952 rentable square feet, which were collectively 97% occupied with a weighted-average remaining lease term of 4.5 years. The following table provides summary information regarding the properties owned by us as of December 31, 2017:

Property Location of Property	Date Acquired	Property Type	Rentable Square Feet	Total Real Estate at Cost (in thousands) (1)		Annualized Base Rent (2) (in thousands)		Average Annualized Base Rent per Square Foot (3)		Average Remaining Lease Term in Years	% of Total Assets		Occupancy
Von Karman Tech Center Irvine, CA	08/12/2015	Office	101,161	$	20,892	$	2,277	$	22.51	3.9	10.2	%	100.0	%
Commonwealth Building Portland, OR	06/30/2016	Office	224,122	76,413		5,393		25.40		3.1	38.2	%	94.7	%
The Offices at Greenhouse Houston, TX	11/14/2016	Office	203,284	47,241		4,201		20.66		6.4	23.8	%	100.0	%
Institute Property Chicago, IL	11/09/2017	Office	155,385	46,210		3,718		25.28		4.6	24.5	%	94.7	%
			683,952	$	190,756	$	15,589	$	23.48	4.5			97.1	%

_____________________

⁽¹⁾ Total real estate at cost represents the total cost of real estate net of write-offs of fully depreciated/amortized assets.

⁽²⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

⁽³⁾ Average annualized base rent per square foot is calculated as the annualized base rent divided by the leased square feet.

Portfolio Lease Expirations

The following table sets forth a schedule of expiring leases for our real estate portfolio by square footage and by annualized base rent as of December 31, 2017:

Year of Expiration	Number of Leases Expiring	Annualized Base Rent Expiring (1) (in thousands)		% of Portfolio Annualized Base Rent Expiring		Leased Square Feet Expiring	% of Portfolio Leased Square Feet Expiring
Month to Month	1	$	164	1.2	%	22,884	3.4	%
2018	15	1,098		7.0	%	47,091	7.1	%
2019	14	1,282		8.2	%	55,331	8.3	%
2020	12	1,618		10.4	%	58,648	8.8	%
2021	12	2,173		13.9	%	89,293	13.5	%
2022	6	1,089		7.0	%	42,330	6.4	%
2023	11	3,661		23.5	%	146,079	22.0	%
2024	5	3,409		21.9	%	159,054	24.0	%
2025	1	84		0.5	%	4,152	0.6	%
2026	3	526		3.4	%	20,000	3.0	%
2027	1	485		3.0	%	18,962	2.9	%
Total	81	$	15,589	100.0	%	663,824	100.0	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

32

As of December 31, 2017, we had a concentration of credit risk related to AECOM, a tenant in The Offices at Greenhouse in the engineering industry, which represented 19% of our annualized base rent. The tenant individually occupied 140,922 rentable square feet or approximately 21% of the total rentable square feet of our real estate portfolio. Of the 140,922 rentable square feet, 5,195 rentable square feet expires on July 24, 2019, with two three-year extension options, and 135,727 rentable square feet expires on December 31, 2024, with twofive-year extension options. As of December 31, 2017, the annualized base rent for this tenant was approximately $3.0 million or $21.39 per square foot. No other tenant represented more than 10% of our annualized base rent.

As of December 31, 2017, our portfolio’s highest tenant industry concentration (greater than 10% of annualized base rent) was as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Professional, scientific and legal	14	$	5,846	37.5	%
Information	9	2,168		13.9	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

As of December 31, 2017, no other tenant industries accounted for more than 10% of annualized base rent.

For more information about our real estate portfolio, see Part I, Item 1, “Business.”

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government authorities.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

33

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Stockholder Information

As of March 5, 2018, we had 8,931,072 shares of Class A common stock and 294,606 shares of Class T common stock outstanding held by a total of 770 and 71 stockholders, respectively. The number of stockholders is based on the records of DST Systems, Inc., which serves as our transfer agent.

Market Information

No public market currently exists for our shares of common stock, and we currently have no plans to list our shares on a national securities exchange. In addition, shares purchased in our private offering are subject to restrictions on transferability and resale. Further, our charter prohibits the ownership of more than 9.8% of our stock by a single person, unless exempted by our board of directors. Consequently, there is the risk that our stockholders may not be able to sell their shares at a time or price acceptable to them.

We provide an estimated value per share to assist broker-dealers that participated in our initial public offering in meeting their customer account statement reporting obligations under NASD Conduct Rule 2340, as required by FINRA. This valuation was performed in accordance with the provisions of and also to comply with the IPA Valuation Guidelines. For this purpose, we estimated the net asset value (“NAV”) per share of our common stock as $8.79 as of December 31, 2017. This estimated NAV per share is based on our board of directors’ approval on December 8, 2017 of an estimated NAV per share of our common stock of $8.79 based on the estimated value of our assets less the estimated value of our liabilities, or NAV, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. There were no other material changes between September 30, 2017 and December 11, 2017 that impacted the overall estimated NAV per share.

The conflicts committee, composed solely of all of our independent directors, is responsible for the oversight of the valuation process used to determine the estimated NAV per share of our common stock, including the review and approval of the valuation and appraisal process and methodology used to determine our estimated NAV per share, the consistency of the valuation and appraisal methodologies with real estate industry standards and practices, and the reasonableness of the assumptions used in the valuations and appraisals. With the approval of our conflicts committee, we engaged Duff & Phelps, LLC (“Duff & Phelps”), an independent third party real estate valuation firm, to provide a calculation of the range in estimated NAV per share of our common stock as of September 30, 2017. Duff & Phelps based this range in estimated NAV per share upon (i) appraisals of our three real estate properties owned as of September 30, 2017 (the “Appraised Properties”) performed by Duff & Phelps, (ii) valuations performed by our advisor with respect to our cash, other assets, mortgage debt and other liabilities, which are disclosed in our Quarterly Report on Form 10-Q for the period ended September 30, 2017 and (iii) a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. The appraisal reports Duff & Phelps prepared summarized the key inputs and assumptions involved in the appraisal of each of the Appraised Properties. Duff & Phelps’ valuation was designed to follow the prescribed methodologies of the IPA Valuation Guidelines. The methodologies and assumptions used to determine the estimated value of our assets and the estimated value of our liabilities are described further below.

Upon the conflicts committee’s receipt and review of Duff & Phelps’ valuation report, which included the appraised value of each of the Appraised Properties as noted in the appraisal reports prepared by Duff & Phelps and a summary of the estimated value of each of our other assets and liabilities as determined by our advisor and reviewed by Duff & Phelps, and in light of other factors considered by the conflicts committee and the conflicts committee’s own extensive knowledge of our assets and liabilities, the conflicts committee: (i) concluded that the range in estimated NAV per share of $8.06 to $9.58, with a mid-range value of $8.79 per share, as indicated in Duff & Phelps’ valuation report and recommended by our advisor, which mid-range value was based on Duff & Phelps’ appraisals of the Appraised Properties and valuations performed by our advisor of our cash, other assets, mortgage debt and other liabilities, and a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017, was reasonable and (ii) recommended to our board of directors that it adopt $8.79 as the estimated NAV per share of our common stock, which mid-range value was determined by Duff & Phelps and recommended by our advisor and which was based on Duff & Phelps’ appraisals of the Appraised Properties, valuations performed by our advisor of our cash, other assets, mortgage debt and other liabilities, and a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. Our board of directors unanimously agreed to accept the recommendation of the conflicts committee and approved $8.79 as the estimated NAV per share of our common stock, which determination was ultimately and solely the responsibility of our board of directors.

34

The table below sets forth the calculation of our estimated NAV per share as of December 8, 2017 as well as the calculation of our prior estimated value per share as of August 9, 2017. Duff & Phelps was not responsible for establishing the estimated NAV per share as of December 8, 2017 or August 9, 2017, respectively.

	December 8, 2017 Estimated Value per Share			August 9, 2017 Estimated Value per Share (1)			Change in Estimated Value per Share
Real estate properties (2)	$	16.42		$	16.08		$	0.34
Cash	0.59			0.94			(0.35		)
Other assets	0.20			0.04			0.16
Mortgage debt	(7.82		)	(7.86		)	0.04
Other liabilities	(0.51		)	(0.45		)	(0.06		)
Acquisition and financing costs subsequent to September 30, 2017	(0.09		)	—			(0.09		)
Estimated NAV per share	$	8.79		$	8.75		$	0.04
Estimated enterprise value premium	None assumed			None assumed			None assumed
Total estimated NAV per share	$	8.79		$	8.75		$	0.04

_____________________

⁽¹⁾ The August 9, 2017 estimated value per share was based upon a calculation of the range in estimated NAV per share of our common stock as of June 30, 2017 by Duff & Phelps and the recommendation of our advisor. Duff & Phelps based this range in estimated NAV per share upon appraisals of our real estate properties performed by Duff & Phelps and valuations performed by our advisor with respect to our cash, other assets, mortgage debt and other liabilities. For more information relating to the August 9, 2017 estimated value per share and the assumptions and methodologies used by Duff & Phelps and our advisor, see our Current Report on Form 8-K filed with the SEC on August 10, 2017.

⁽²⁾ Subsequent to September 30, 2017, we acquired an office property located in Chicago, Illinois (“213 West Institute Place”) for a purchase price of $43.5 million. The estimated value per share from real estate properties excludes 213 West Institute Place; however, such acquisition would have no impact to our fair value of equity or the overall estimated value per share as acquisition and financing costs related to this acquisition are reflected in the estimated value per share.

The increase in our estimated value per share from the previous estimate was primarily due to the items noted in the table below, which reflect the significant contributors to the increase in the estimated value per share from $8.75 to $8.79. The changes are not equal to the change in values of each asset and liability group presented in the table above due to changes in the amount of shares outstanding, capital expenditures and related financings and other factors, which caused the value of certain asset or liability groups to change with no impact to our fair value of equity or the overall estimated value per share.

	Change in Estimated Value per Share
August 9, 2017 estimated value per share	$	8.75
Changes to estimated value per share
Real estate
Real estate	0.42
Capital expenditures on real estate	(0.25		)
Total change related to real estate	0.17
Operating cash flows in excess of distributions declared (1)	(0.02		)
Acquisition related costs and financing costs (2)	(0.09		)
Notes payable	(0.01		)
Other changes, net	(0.01		)
Total change in estimated value per share	$	0.04
December 8, 2017 estimated value per share	$	8.79

_____________________

⁽¹⁾ Operating cash flow reflects modified funds from operations (“MFFO”) adjusted to add back the amortization of deferred financing costs. We compute MFFO in accordance with the definition included in the practice guideline issued by the IPA in November 2010.

⁽²⁾ Amount includes acquisition and financing costs related to a real estate acquisition that closed subsequent to September 30, 2017.

35

As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties using different assumptions and estimates could derive a different estimated NAV per share of our common stock, and these differences could be significant. In particular, due in part to our relatively small asset base and the number of shares of our common stock outstanding, even modest changes in key assumptions made in appraising our real estate properties could have a very significant impact on the estimated value of our shares. See the discussion under “Real Estate - Real Estate Valuation” below. The estimated NAV per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to U.S. generally accepted accounting principles (“GAAP”), nor does it represent a liquidation value of our assets and liabilities or the price at which our shares of common stock would trade on a national securities exchange. The estimated NAV per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated NAV per share also does not take into account estimated disposition costs and fees for real estate properties, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations and the impact of restrictions on the assumption of debt. The estimated NAV per share does not take into consideration acquisition-related costs and financing costs related to future acquisitions. As of September 30, 2017, we had no potentially dilutive securities outstanding that would impact the estimated NAV per share of our common stock.

The estimated NAV per share takes into consideration any potential liability related to a subordinated participation in cash flows our advisor is entitled to upon meeting certain stockholder return thresholds in accordance with the advisory agreement. For purposes of determining the estimated NAV per share, our advisor calculated the potential liability related to this incentive fee based on a hypothetical liquidation of our 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, and determined that there would be no liability related to the subordinated participation in cash flows.

Methodology

Our goal for the valuation was to arrive at a reasonable and supportable estimated NAV per share, using a process that was designed to be in compliance with the IPA Valuation Guidelines and using what we and our advisor deemed to be appropriate valuation methodologies and assumptions. The following is a summary of the valuation and appraisal methodologies, assumptions and estimates used to value our assets and liabilities:

Real Estate

Independent Valuation Firm: Duff & Phelps⁽¹⁾ was selected by our advisor and approved by our conflicts committee and board of directors to appraise each of the Appraised Properties and to provide a calculation of the range in estimated NAV per share of our common stock as of December 8, 2017. Duff & Phelps is engaged in the business of appraising commercial real estate properties and is not affiliated with us or our advisor. The compensation we paid to Duff & Phelps was based on the scope of work and not on the appraised values of the Appraised Properties. The appraisals were performed in accordance with the Code of Ethics and the Uniform Standards of Professional Appraisal Practice, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation, as well as the requirements of the state where each real property is located. Each appraisal was reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). The use of the reports is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

Duff & Phelps collected all reasonably available material information that it deemed relevant in appraising the Appraised Properties. Duff & Phelps obtained property-level information from our advisor, including (i) property historical and projected operating revenues and expenses; (ii) property lease agreements; and (iii) information regarding recent or planned capital expenditures. Duff & Phelps reviewed and relied in part on the property-level information provided by our advisor and considered this information in light of its knowledge of each property’s specific market conditions.

_____________________

⁽¹⁾ Duff & Phelps is actively engaged in the business of appraising commercial real estate properties similar to those owned by us in connection with public securities offerings, private placements, business combinations and similar transactions. We engaged Duff & Phelps to prepare appraisal reports for each of the Appraised Properties and to provide a calculation of the range in estimated NAV per share of our common stock and Duff & Phelps received fees upon the delivery of such reports and the calculation of the range in estimated NAV per share of our common stock. In addition, we have agreed to indemnify Duff & Phelps against certain liabilities arising out of this engagement. In the two years prior to December 11, 2017, Duff & Phelps and its affiliates have provided a number of commercial real estate, appraisal, valuation and financial advisory services for our affiliates and have received fees in connection with such services. Duff & Phelps and its affiliates may from time to time in the future perform other commercial real estate, appraisal, valuation and financial advisory services for us and our affiliates in transactions related to the properties that are the subjects of the appraisals, so long as such other services do not adversely affect the independence of the applicable Duff & Phelps appraiser as certified in the applicable appraisal report.

36

In conducting its investigation and analyses, Duff & Phelps took into account customary and accepted financial and commercial procedures and considerations as it deemed relevant. Although Duff & Phelps reviewed information supplied or otherwise made available by us or our advisor for reasonableness, it assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party and did not independently verify any such information. With respect to operating or financial forecasts and other information and data provided to or otherwise reviewed by or discussed with Duff & Phelps, Duff & Phelps assumed that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of our management and/or our advisor. Duff & Phelps relied on us to advise it promptly if any information previously provided became inaccurate or was required to be updated during the period of its review.

In performing its analyses, Duff & Phelps made numerous other assumptions as of various points in time with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond its and our control, as well as certain factual matters. For example, unless specifically informed to the contrary, Duff & Phelps assumed that we have clear and marketable title to each of the Appraised Properties, that no title defects existed, that any improvements were made in accordance with law, that no hazardous materials were present or had been present previously, that no deed restrictions existed, and that no changes to zoning ordinances or regulations governing use, density or shape were pending or being considered. Furthermore, Duff & Phelps’ analyses, opinions and conclusions were necessarily based upon market, economic, financial and other circumstances and conditions existing as of or prior to the date of the appraisals, and any material change in such circumstances and conditions may affect Duff & Phelps’ analyses and conclusions. Duff & Phelps’ appraisal reports contain other assumptions, qualifications and limitations that qualify the analyses, opinions and conclusions set forth therein. Furthermore, the prices at which the Appraised Properties may actually be sold could differ from their appraised values.

Although Duff & Phelps considered any comments to its appraisal reports received from us or our advisor, the appraised values of the Appraised Properties were determined by Duff & Phelps. The appraisal reports for the Appraised Properties are addressed solely to us to assist in the calculation of the range in estimated NAV per share of our common stock. The appraisal reports are not addressed to the public and may not be relied upon by any other person to establish an estimated NAV per share of our common stock and do not constitute a recommendation to any person to purchase or sell any shares of our common stock. In preparing its appraisal reports, Duff & Phelps did not solicit third-party indications of interest for the Appraised Properties. In preparing its appraisal reports and in calculating the range in estimated NAV per share of our common stock, Duff & Phelps did not, and was not requested to, solicit third-party indications of interest for our common stock in connection with possible purchases thereof or the acquisition of all or any part of us.

The foregoing is a summary of the standard assumptions, qualifications and limitations that generally apply to Duff & Phelps’ appraisal reports. All of the Duff & Phelps appraisal reports, including the analyses, opinions and conclusions set forth in such reports, are qualified by the assumptions, qualifications and limitations set forth in the respective appraisal reports.

Real Estate Valuation: Duff & Phelps appraised each of the Appraised Properties using various methodologies including the direct capitalization approach, discounted cash flow analyses and sales comparison approach and relied primarily on 10-year discounted cash flow analyses for the final appraisal of each of the Appraised Properties. Duff & Phelps calculated the discounted cash flow value of each of the Appraised Properties using property-level cash flow estimates, terminal capitalization rates and discount rates that fall within ranges it believes would be used by similar investors to value the Appraised Properties, based on recent comparable market transactions adjusted for unique properties and market-specific factors.

As of September 30, 2017, the Appraised Properties consisted of three office buildings, which were acquired for a total purchase price of $136.3 million, exclusive of acquisition fees and acquisition expenses of $3.3 million, in which we had invested $4.0 million in capital and tenant improvements. As of September 30, 2017, the total appraised value of the Appraised Properties as provided by Duff & Phelps using the appraisal methods described above was $154.3 million. The total appraised value of the Appraised Properties as of September 30, 2017, compared to the total acquisition cost of the Appraised Properties plus subsequent capital improvements through September 30, 2017, results in an overall increase in the value of the Appraised Properties of approximately 10.0%.

37

The following table summarizes the key assumptions that were used in the discounted cash flow analyses to arrive at the appraised value of the Appraised Properties:

	Range in Values	Weighted-Average Basis
Terminal capitalization rate	5.50% to 7.50%	6.29%
Discount rate	7.50% to 8.25%	7.75%
Net operating income compounded annual growth rate (1)	3.73% to 6.67%	4.86%

_____________________

⁽¹⁾ The net operating income compounded annual growth rates (“CAGRs”) reflect both the contractual and market rents and reimbursements (in cases where the contractual lease period is less than the hold period of the property) net of expenses over the holding period. The range of CAGRs shown is the constant annual rate at which the net operating income is projected to grow to reach the net operating income in the final year of the hold period for each of the properties.

While we believe that Duff & Phelps’ assumptions and inputs are reasonable, a change in these assumptions and inputs would significantly impact the appraised value of the Appraised Properties and thus, our estimated NAV per share. The table below illustrates the impact on our estimated NAV per share if the terminal capitalization rates or discount rates Duff & Phelps used to appraise the Appraised Properties were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on our estimated NAV per share if these terminal capitalization rates or discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:

	Increase (Decrease) on the Estimated NAV per Share due to
	Decrease of 25 basis points		Increase of 25 basis points			Decrease of 5%		Increase of 5%
Terminal capitalization rate	$	0.46	$	(0.41	)	$	0.55	$	(0.51	)
Discount Rate	0.32		(0.32		)	0.50		(0.50		)

Finally, a 1% increase in the appraised value of the Appraised Properties would result in a $0.16 increase in our estimated NAV per share and a 1% decrease in the appraised value of the Appraised Properties would result in a decrease of $0.16 to our estimated NAV per share, assuming all other factors remain unchanged.

Notes Payable

The estimated values of our notes payable are equal to the GAAP fair values disclosed in our Quarterly Report on Form 10-Q for the period ended September 30, 2017, but do not equal the book value of the loans in accordance with GAAP. Our advisor estimated the values of our notes payable using a discounted cash flow analysis. The discounted cash flow analysis was based on projected cash flow over the remaining loan terms, including extensions we expect to exercise, and management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio and type of collateral.

As of September 30, 2017, the GAAP fair value and carrying value (excluding unamortized deferred financing costs of $1.0 million) of our notes payable were $73.6 million and $73.5 million, respectively. The weighted-average discount rate applied to the future estimated debt payments, which have a weighted-average remaining term of 3.0 years, was approximately 3.93%.

The table below illustrates the impact on our estimated NAV per share if the discount rates our advisor used to value our notes payable were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on our estimated NAV per share if these discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:

	Increase (Decrease) on the Estimated NAV per Share due to
	Decrease of 25 basis points			Increase of 25 basis points		Decrease of 5%			Increase of 5%
Discount Rate	$	(0.06	)	$	0.06	$	(0.04	)	$	0.04

38

Other Assets and Liabilities

The carrying values of a majority of our other assets and liabilities are considered to equal their fair value due to their short maturities or liquid nature. Certain balances, such as straight-line rent receivables, lease intangible assets and liabilities, deferred financing costs, unamortized lease commissions and unamortized lease incentives, have been eliminated for the purpose of the valuation due to the fact that the value of those balances was already considered in the valuation of the related asset or liability. Our advisor has also excluded redeemable common stock as temporary equity does not represent a true liability to us and the shares that this amount represents are included in our total outstanding shares of common stock for purposes of determining our estimated NAV per share.

Limitations of Estimated NAV per Share

As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated NAV per share, and these differences could be significant. The estimated NAV per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to GAAP.

Accordingly, with respect to our estimated NAV per share, we can give no assurance that:

• a stockholder would be able to resell his or her shares at our estimated NAV per share;

• a stockholder would ultimately realize distributions per share equal to our estimated NAV per share upon liquidation of our assets and settlement of our liabilities or a sale of the company;

• our shares of common stock would trade at our estimated NAV per share on a national securities exchange;

• a third party would offer our estimated NAV per share in an arm’s-length transaction to purchase all or substantially all of our shares of common stock;

• another independent third-party appraiser or third-party valuation firm would agree with our estimated NAV per share; or

• the methodology used to determine our estimated NAV per share would be acceptable to FINRA or for compliance with ERISA reporting requirements.

Further, our estimated NAV per share is based on the estimated value of our assets less the estimated value of our liabilities, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. As of September 30, 2017, we had 9,126,625 and 278,439 shares of common stock issued and outstanding of Class A and Class T common stock, respectively. We did not make any other adjustments to our estimated NAV subsequent to September 30, 2017, including, adjustments relating to the following, among others: (i) the issuance of common stock and the payment of related offering costs; (ii) net operating income earned and distributions declared; and (iii) the redemption of shares. The value of our shares will fluctuate over time in response to developments related to future investments, the performance of individual assets in our portfolio and the management of those assets and the real estate and finance markets. Our estimated NAV per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. Our estimated NAV per share does not take into account estimated disposition costs and fees for real estate properties, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or, the impact of restrictions on the assumption of debt. The estimated NAV per share does not take into consideration acquisition-related costs and financing costs related to future acquisitions. We currently expect to utilize our advisor and/or an independent valuation firm to update our estimated NAV per share in December 2018 and annually thereafter. We cannot assure our stockholders that our estimated NAV per share will increase or that it will not decrease.

Historical Estimated Values per Share

The historical reported estimated value per share of our common stock approved by the board of directors is set forth below:

Estimated Value per Share	Effective Date of Valuation	Filing with the Securities and Exchange Commission
$8.75	August 9, 2017	Current Report on Form 8-K, filed August 10, 2017

39

Distribution Information

We have authorized and declared, and expect to continue to authorize and declare, distributions based on daily record dates, and we have paid, and expect to continue to pay, such distributions on a monthly basis. The rate is determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant. Our board of directors has not pre-established a percentage range of return for distributions to stockholders. We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.  

Generally, our policy is to pay distributions from cash flow from operations. However, we expect to have little, if any, cash flow from operations available for distribution until we make substantial investments. During our offering stage, when we may raise capital more quickly than we acquire income producing assets, and for some period after our offering stage, we may not be able to pay distributions solely from our cash flow from operations. Further, because we may receive income from interest or rents at various times during our fiscal year and because we may need cash flow from operations during a particular period to fund capital expenditures and other expenses, we expect that, at least during the early stages of our development and from time to time during our operational stage, we will declare distributions in anticipation of cash flow that we expect to receive during a later period and we will pay these distributions in advance of our actual receipt of these funds. In these instances, we have funded our distributions in part with an advance from our advisor and debt financing and we expect to utilize debt financing in the future, if necessary, to fund at least a portion of our distributions. We may also fund such distributions with proceeds from the sale of assets. We may fund distributions from any source, including, without limitation, offering proceeds or borrowings, and our charter does not limit the amount of funds we may use from any source to pay such distributions. Our distribution policy is generally not to use the proceeds from an offering to pay distributions. If we pay distributions from sources other than our cash flow from operations, we will have less funds available for investment in other assets, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

Over the long-term, we expect that a greater percentage of our distributions will be paid from cash flow from operations and FFO from current or prior periods (except with respect to distributions related to sales of our assets and distributions related to the repayment of principal under real estate-related investments). However, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements” and Part I, Item 1, “Market Outlook - Real Estate and Real Estate Finance Markets” herein, and the risks discussed in Part I, Item 1A, “Risk Factors.” Those factors include: our ability to raise capital to make additional investments; the future operating performance of our current and future real estate investments in the existing real estate and financial environment; our advisor’s ability to identify additional real estate investments that are suitable to execute our investment objectives; 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; and the level of participation in our distribution reinvestment plan. 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.

We have elected to be taxed as a REIT under the Internal Revenue Code and have operated as such beginning with our taxable year ended December 31, 2015. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our REIT taxable income (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). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

40

During 2017 and 2016, we declared distributions based on daily record dates for each day during the periods commencing January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2017. We paid distributions for all record dates of a given month on or about the first business day of the following month. Distributions declared during 2017 and 2016, aggregated by quarter, are as follows (dollars in thousands, except per share amounts):

	2017
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	1,115	$	1,154	$	1,170	$	1,144	$	4,583
Total Per Class A Share Distribution (1)	$	0.123	$	0.125	$	0.124	$	0.121	$	0.493
Total Per Class T Share Distribution (1) (2)	$	0.099	$	0.100	$	0.124	$	0.121	$	0.444
	2016
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	440	$	1,005	$	1,097	$	1,113	$	3,655
Total Per Class A Share Distribution (1)	$	0.123	$	0.125	$	0.126	$	0.126	$	0.500
Total Per Class T Share Distribution (1) (2)	$	—	$	—	$	0.074	$	0.101	$	0.175

_____________________

⁽¹⁾ Distributions for the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through August 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during these periods at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00131849 per day. Total distribution per class of share assumes the share was issued and outstanding each date that was a record date for distributions during the period.

⁽²⁾ We issued our first Class T share on July 26, 2016. Cash distributions on Class T shares were lower than cash distributions on Class A shares because of the stockholder servicing fee, which was a class-specific expense allocated to all of the Class T shares, paid with respect to Class T shares sold in our primary initial public offering. Accrual of the stockholder servicing fee ceased upon termination of our primary initial public offering on June 30, 2017.

The tax composition of our distributions declared for the years ended December 31, 2017 and 2016 was as follows:

	2017		2016
Ordinary Income	—	%	—	%
Capital Gain	—	%	—	%
Return of Capital	100	%	100	%
Total	100	%	100	%

For more information with respect to our distributions paid, including stock dividends issued, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Distributions.”

On December 8, 2017, our board of directors authorized cash distributions based on daily record dates for the period from January 1, 2018 through January 31, 2018, which we paid on February 1, 2018 and cash distributions based on daily record dates for the period from February 1, 2018 through February 28, 2018, which we paid on March 1, 2018. On January 24, 2018, our board of directors declared cash distributions on the outstanding shares of all classes of our common stock based on daily record dates for the period from March 1, 2018 through March 31, 2018, which we expect to pay in April 2018. On March 9, 2018, our board of directors declared distributions based on daily record dates for the period from April 1, 2018 through April 30, 2018, which we expect to pay in May 2018, and distributions based on daily record dates for the period from May 1, 2018 to May 31, 2018, which we expect to pay in June 2018. Investors may choose to receive cash distributions or purchase additional shares through our distribution reinvestment plan.

Distributions for these periods are calculated based on stockholders of record each day during these periods at a rate of $0.00132452 per share per day.

41

Use of Proceeds from Sales of Registered Securities and Unregistered Sales of Equity Securities

(a) During the year ended December 31, 2017, we sold the following equity securities that were not registered under the Securities Act of 1933 (the “Act”).

Pursuant to Rule 506(c) of Regulation D of the Act, we are currently conducting a private offering for the sale of a maximum of $1,000,000,000 of shares of our Class A common stock to accredited investors through a best efforts private placement offering which commenced on October 3, 2017. The exemption is available to us because the shares are being offered and sold solely to accredited investors and we are verifying accredited investor status. Prior to the launch of the private offering, on September 29, 2017, we engaged North Capital Private Securities Corporation (“NCPS”) to act as dealer manager for the offering. For sales executed by NCPS, our advisor pays NCPS, without reimbursement from us, selling commissions of 0.5% of the gross offering proceeds. Through December 11, 2017, shares were sold in the private offering at $8.75 per share. Effective December 12, 2017, we are offering shares in the private offering at $8.79 per share. Through December 31, 2017, we had raised approximately $0.6 million related to the sale of 65,130 shares of our Class A common stock in the private offering. Through December 31, 2017, our advisor had paid underwriting commissions of approximately $5,000 related to this private offering.

(b) On April 28, 2016, our Registration Statement on Form S-11 (File No. 333-207471), covering a public offering of up to $1,500,000,000 in shares of common stock in our primary offering and up to $800,000,000 in shares of common stock in our distribution reinvestment plan offering was declared effective under the Act. Our shares of common stock consist of two classes of shares: Class A shares and Class T shares. We commenced our initial public offering on April 28, 2016 upon retaining KBS Capital Markets Group LLC, an affiliate of our advisor, as the dealer manager of our offering. From commencement of the primary initial public offering through its termination on June 30, 2017, we offered Class A shares at $10.39 per share and Class T shares at $10.00 per share, with discounts available to certain categories of investors. From commencement of the public offering through April 27, 2017, we sold shares in our distribution reinvestment plan offering at $9.88 per Class A Share and $9.50 per Class T Share. From April 28, 2017 through August 19, 2017, we offered shares under our distribution reinvestment plan at $9.40 per share; from August 20, 2017 through December 7, 2017, we offered shares under our distribution reinvestment plan at $8.75 per share.

We are currently offering shares of common stock under our distribution reinvestment plan at a price of $8.79 per share which is our estimated net asset value per share as established by our board of directors on December 8, 2017. In some states, we will need to renew the registration statement annually to continue our distribution reinvestment plan offering. We may terminate our distribution reinvestment plan offering at any time.

We sold 122,721 and 270,415 shares of Class A and Class T common stock in our primary initial public offering for aggregate gross offering proceeds of $3.9 million. Through December 31, 2017, we had sold 355,087 and 9,348 shares of Class A and Class T common stock in our distribution reinvestment plan offering for aggregate gross offering proceeds of $3.5 million.

42

As of December 31, 2017, we had incurred selling commissions, dealer manager fees and organization and other offering costs in connection with our initial public offering in the amounts set forth below. We paid selling commissions and dealer manager fees to KBS Capital Markets Group, and KBS Capital Markets Group reallowed all selling commissions and a portion of the dealer manager fees to participating broker-dealers. In addition, we reimbursed KBS Capital Advisors and KBS Capital Markets Group for certain offering expenses.

Type of Expense Amount	Amount (in thousands)
Selling commissions and dealer manager fees (1)	$	199
Organization and other offering costs (excluding selling commissions, dealer manager fees and stockholder servicing fees) (2)	39
Total expenses for the issuer's account	$	238

_____________________

⁽¹⁾ Except as described in the “Plan of Distribution” section of our prospectus, as amended and supplemented, an annual stockholder servicing fee of 1.0% of the purchase price per share (ignoring any discounts that may be available to certain categories of purchasers) for the Class T shares sold in our primary initial public offering was paid to our dealer manager. This fee for our initial public offering accrued daily and was paid monthly in arrears through the termination of our primary initial public offering on June 30, 2017.  Our dealer manager reallowed all of the stockholder servicing fee paid to it. The stockholder servicing fee was an ongoing fee that was not paid at the time of purchase and was not intended to be a principal use of offering proceeds; it is therefore excluded from the table above. We paid approximately $12,000 in stockholder servicing fees related to all Class T shares sold in the primary portion of our initial public offering.

⁽²⁾  KBS Capital Advisors and its affiliates generally paid our organization and other offering expenses incurred in the primary portion of our initial public offering directly and we reimbursed KBS Capital Advisors and its affiliates for the commercially reasonable organization and other offering expenses they incurred on our behalf in connection with the primary portion of our initial public offering subject to the following limitation.

We reimbursed our advisor, the dealer manager and their affiliates for organization and other offering expenses (which excludes selling commissions, dealer manager fees and stockholder servicing fees) in an amount up to 1.0% of gross proceeds raised in the primary portion of our initial public offering. Our advisor, the dealer manager, and their affiliates are responsible for all organization and other offering expenses related to the primary portion of our initial public offering to the extent they exceed this 1.0% limit. The amount included above represents our maximum liability for organization and other offering costs based on the limits described. As of December 31, 2017, KBS Capital Advisors and its affiliates had incurred an additional $4.3 million in organization and other offering costs on our behalf in connection with our initial public offering.

From the commencement of our initial public offering through the June 30, 2017 primary offering termination, the net offering proceeds to us, after deducting the total expenses incurred as described above, were approximately $6.1 million, including net offering proceeds from our distribution reinvestment plan of $2.4 million.

We expect to use substantially all of the net proceeds from our offering stage to acquire and manage a diverse portfolio of core real estate properties. We expect to use substantially all of the net proceeds from the sale of shares under our distribution reinvestment plan for general corporate purposes, including, but not limited to: the repurchase of shares under our share redemption program; capital expenditures, tenant improvement costs and leasing costs related to our real estate properties; reserves required by any financings of our real estate investments; the acquisition of real estate investments; and the repayment of debt.

As of December 31, 2017, except for a working capital reserve, we had used substantially all the net proceeds from our now-terminated private and primary initial public offering and debt financing to invest $187.4 million in four office properties, including $3.3 million of acquisition fees and expenses and closing costs.

Share Redemption Program

We have adopted a share redemption program that may enable stockholders to sell their shares to us in limited circumstances.

43

Pursuant to the share redemption program, as amended to date, there are several limitations on our ability to redeem shares:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), we may not redeem shares until the stockholder has held his or her shares for one year.

• During any calendar year, we may redeem only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our distribution reinvestment plan during the prior calendar year. However, we may increase or decrease the funding available for the redemption of shares pursuant to the program upon ten business days’ notice to our stockholders.

• During any calendar year, we may redeem no more than 5% of the weighted‑average number of shares outstanding during the prior calendar year.

• We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

Pursuant to the share redemption program, and subject to the above restrictions, we initially redeemed shares submitted as an ordinary redemption at 95.0% of the price paid to acquire the shares from us. Notwithstanding the foregoing, all stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the prospectus, as supplemented, for our initial public offering. For each class of shares, this amount was equal to $9.40 per share for redemptions of shares received as a result of a stock dividend. Effective August 9, 2017, when we first established an estimated NAV per share of our common stock, we redeem shares submitted in connection with an ordinary redemption at 95.0% of our most recent estimated NAV per share as of the applicable redemption date.

For purposes of determining whether a redeeming stockholder has held the share submitted for redemption for at least one year, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to the distribution reinvestment plan or received as a stock dividend will be deemed to have been acquired on the same date as the initial share to which the distribution reinvestment plan shares or stock dividend shares relate.

In several respects we treat redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence differently from other redemptions:

• there is no one-year holding requirement; and

• the redemption price is the estimated NAV per share as of the redemption date (prior to our establishment of an estimated NAV per share of our common stock on August 9, 2017, the redemption price was the price paid to acquire the shares from us).

On August 9, 2017 our board of directors approved an estimated NAV per share of our common stock of $8.75 based on the estimated value of our assets less the estimated value of our liabilities, or NAV, divided by the number of shares outstanding, all as of June 30, 2017. For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of our estimated NAV per share as of June 30, 2017, see the Current Report on Form 8-K filed with the SEC on August 10, 2017.

On December 8, 2017 our board of directors approved an estimated NAV per share of our common stock of $8.79 based on the estimated value of our assets less the estimated value of our liabilities, or NAV, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to our net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the calculation of the estimated value per share, see Part II, Item 5, “Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.”

We may amend, suspend or terminate the program upon 30 days’ notice to our stockholders, provided that we may increase or decrease the funding available for the redemption of shares pursuant to the share redemption program upon 10 business days’ notice. We may provide this notice by including such information in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to our stockholders. The complete share redemption program document is filed as an exhibit to our Registration Statement on Form S-11 filed March 25, 2016 and is available at the SEC’s website at www.sec.gov.

44

During the year ended December 31, 2017, we fulfilled all redemption requests eligible for redemption under our share redemption program and received in good order. We funded redemptions under our share redemption program with the net proceeds from our distribution reinvestment plan, and we redeemed shares pursuant to our share redemption program as follows:

Month	Total Number of Shares Redeemed	Average Price Paid Per Share (1)		Approximate Dollar Value of Shares Available That May Yet Be  Redeemed Under the Program
January 2017	—	$	—	(2)
February 2017	—	$	—	(2)
March 2017	—	$	—	(2)
April 2017	3,047	$	8.50	(2)
May 2017	4,555	$	8.51	(2)
June 2017	—	$	—	(2)
July 2017	2,351	$	8.84	(2)
August 2017	17,621	$	8.31	(2)
September 2017	17,651	$	8.31	(2)
October 2017	90,216	$	8.31	(2)
November 2017	9,773	$	8.31	(2)
December 2017	—	$	—	(2)
Total	145,214

_____________________

⁽¹⁾ The prices at which we redeem shares under the program are as set forth above.

⁽²⁾ We limit the dollar value of shares that may be redeemed under the program as described above. One of these limitations is that during each calendar year, our share redemption program limits the number of shares we may redeem to those that we could purchase with the amount of the net proceeds from the sale of shares under our distribution reinvestment plan during the prior calendar year. However, we may increase or decrease the funding available for the redemption of shares upon ten business days’ notice to our stockholders. During the year ended December 31, 2017, we redeemed $1.2 million of shares of common stock. Based on the amount of net proceeds raised from the sale of shares under our dividend reinvestment plan during 2017, we have $2.3 million available for redemptions of shares eligible for redemption in 2018.

45

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data as of and for the years ended December 31, 2017 and 2016 and should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (in thousands, except share and per share amounts):

	December 31,
	2017			2016			2015
Balance sheet data
Total real estate, net	$	181,129		$	138,580		$	21,080
Total assets	187,140			155,913			34,340
Notes payable, net	112,780			81,375			16,057
Total liabilities	125,407			91,492			18,180
Redeemable common stock	2,314			1,791			54
Total stockholders’ equity	59,419			62,630			16,106
	For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015
	2017			2016
Operating data
Total revenues	$	16,961		$	6,855		$	948
Net loss	(2,199		)	(4,089		)	(776		)
Class A Common Stock:
Net loss	(2,131		)	(4,080		)	(773		)
Net loss per common share - basic and diluted	(0.23		)	(0.55		)	(1.29		)
Class T Common Stock:
Net loss	(68		)	(9		)	(3		)
Net loss per common share - basic and diluted	(0.28		)	(0.68		)	(1.62		)
Other data
Cash flows provided by (used in) operating activities	4,259			(35		)	(114		)
Cash flows used in investing activities	(47,431		)	(115,158		)	(21,277		)
Cash flows provided by financing activities	30,029			117,966			34,084
Distributions declared	(4,583		)	(3,655		)	(195		)
Distributions declared per common share - Class A (1)	0.493			0.500			0.167
Distributions declared per common share - Class T (1)	0.444			0.175			—
Stock dividends declared per common share (2)	0.007			0.010			0.003
Weighted-average number of common shares outstanding, basic and diluted - Class A	9,080,826			7,393,983			598,123
Weighted-average number of common shares outstanding, basic and diluted - Class T	246,737			13,718			1,774

_____________________

⁽¹⁾ For the month of September 2015, our cash distribution was declared for a single record date, September 30, 2015, in the amount of $0.04109589 per share. Distributions for the periods from October 1, 2015 through February 28, 2016 and March 1, 2016 through August 31, 2017 were based on daily record dates. Distributions for these periods were calculated based on stockholders of record each day during these periods at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00131849 per day. Assumes Class A share was issued and outstanding each day that was a record date for distributions during the period presented. Assumes Class T share was issued and outstanding from July 26, 2016 through December 31, 2017.

⁽²⁾ Our board of directors authorized stock dividends on our outstanding shares of common stock for each month from September 2015 through August 31, 2017. Our stock dividends to date have been declared based on monthly record dates in an amount that would equal a 1% annualized stock dividend per share of common stock if paid each month for a year. Assumes share was issued and outstanding each day that was a record date for stock dividends during the period presented. We ceased issuing stock dividends to all stockholders on September 5, 2017. Our board of directors does not expect to authorize any additional stock dividends.

46

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 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 January 12, 2015 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2015 and we intend to continue to operate in such a manner. Substantially all of our business is conducted through our Operating Partnership, of which we are the sole general partner. Subject to certain restrictions and limitations, our business is externally managed by our advisor pursuant to an advisory agreement. KBS Capital Advisors manages our operations and our portfolio of core real estate properties. KBS Capital Advisors also provides asset-management, marketing, investor-relations and other administrative services on our behalf. Our advisor acquired 20,000 shares of our Class A common stock for an initial investment of $200,000. We have no paid employees.

We commenced a private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), on June 11, 2015, pursuant to which we offered a maximum of $105,000,000 of shares of our Class A common stock for sale to accredited investors, of which $5,000,000 of Class A shares were offered pursuant to our distribution reinvestment plan. We ceased offering shares in the primary portion of our private offering on April 27, 2016 and processed subscriptions for the primary portion of the private offering dated on or prior to April 27, 2016 through May 30, 2016. KBS Capital Markets Group LLC, an affiliate of our advisor, served as the dealer manager of the offering pursuant to a dealer manager agreement.

We sold 8,548,972 shares of our Class A common stock for gross offering proceeds of $76.8 million in our initial private offering, including 74,744 shares of our Class A common stock under our distribution reinvestment plan for gross offering proceeds of $0.7 million.

On February 4, 2015, we filed a registration statement on Form S-11 with the SEC to register an initial public offering to offer a maximum of $1,500,000,000 in shares of common stock for sale to the public in the primary offering, consisting of two classes of shares: Class A and Class T and a maximum of $800,000,000 in both classes of shares of our common stock pursuant to our distribution reinvestment plan. The SEC declared our registration statement effective on April 28, 2016 and we retained KBS Capital Markets Group LLC to serve as the dealer manager of the initial public offering. We terminated our primary initial public offering effective June 30, 2017. We are continuing to offer shares of common stock pursuant to our publicly registered distribution reinvestment plan offering.

We sold 122,721 and 270,415 shares of Class A and Class T common stock in the initial public offering, respectively, for aggregate gross offering proceeds of $3.9 million. As of December 31, 2017, we had sold 355,087 and 9,348 shares of Class A and Class T common stock under our distribution reinvestment plan, respectively, for aggregate gross offering proceeds of $3.5 million.

On October 3, 2017, we launched a second private placement offering exempt from registration pursuant to Rule 506(c) of Regulation D of the Securities Act pursuant to which we are currently offering a maximum of $1,000,000,000 in shares of our Class A common stock to accredited investors. Prior to the launch of the second private placement offering, on September 29, 2017, we entered a dealer manager agreement (the “NCPS Dealer Agreement”) with KBS Capital Advisors and North Capital Private Securities Corporation (“NCPS”) in connection with the second private placement offering. As of December 31, 2017, we had sold 65,130 Class A common stock in the second private offering for aggregate gross offering proceeds of $0.6 million.

As of December 31, 2017, we had redeemed 145,214 Class A shares for $1.2 million.

We intend to use substantially all of the net proceeds from our offerings to invest in a diverse portfolio of core real estate properties. We consider core properties to be existing properties with at least 80% occupancy. Based on the current market outlook, we expect our core focus in the U.S. office sector to reflect a value-creating core strategy, which is also known as a core-plus strategy. As of December 31, 2017, we owned four office buildings.

KBS Capital Advisors makes recommendations on all investments to our board of directors. All proposed real estate investments must be approved by at least a majority of our board of directors, including a majority of the conflicts committee. Unless otherwise provided by our charter, the conflicts committee may approve a proposed real estate investment without action by the full board of directors if the approving members of the conflicts committee constitute at least a majority of the board of directors.

47

We elected to be taxed as a REIT under the Internal Revenue Code, beginning with the taxable year ended December 31, 2015. If we meet the REIT qualification requirements, we generally will not be subject to federal income tax on the income that we distribute to our stockholders each year. If we fail to qualify for taxation as a REIT in any year after electing REIT status, our income will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify. Such an event could materially and adversely affect our net income and cash available for distribution to our stockholders. However, we are organized and will operate in a manner that will enable us to qualify for treatment as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 2015, and we will continue to operate so as to remain qualified as a REIT for federal income tax purposes thereafter.

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. Increases in the cost of financing due to higher interest rates  may cause difficulty in refinancing debt obligations prior to or at maturity or at terms as favorable as the terms of existing indebtedness.  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.

Liquidity and Capital Resources

We are dependent upon the net proceeds from our offering stage to conduct our operations. We will obtain the capital required to make real estate investments and conduct our operations from the proceeds of our offering stage, from secured or unsecured financings from banks and other lenders and from any undistributed funds from our operations. As of December 31, 2017, we had raised approximately $84.8 million in gross offering proceeds from the sale of shares of our common stock in our initial private offering, second private offering and initial public offering. We terminated our primary initial public offering effective June 30, 2017 and launched a private offering solely to accredited investors pursuant to Rule 506(c) of Regulation D of the Securities Act on October 3, 2017. We continue to offer shares of common stock under our publicly registered distribution reinvestment plan.

If we are unable to raise substantial funds during our offering stage, we will make fewer investments resulting in less diversification in terms of the number and size of investments we make and the value of an investment in us will fluctuate more significantly with the performance of the specific assets we acquire. Further, we will have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise substantial funds during our offering stage. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and cash flow and limiting our ability to make distributions to our stockholders. We expect to establish a modest working capital reserve from our offering proceeds for maintenance and repairs of real properties, as we expect the vast majority of leases for the properties we acquire will provide for tenant reimbursement of operating expenses. However, to the extent that we have insufficient funds for such purposes, we may establish additional reserves from gross offering proceeds, out of cash flow from operations or net cash proceeds from the sale of properties.

As of December 31, 2017, we owned four office properties that were 97% occupied. We acquired these investments with the proceeds from the sale of our common stock in the private offering and debt financing, including a bridge loan from our advisor that we have since repaid. Operating cash needs during the year ended December 31, 2017 were met through cash flow generated by our real estate investments and with proceeds from our offerings.

Our investments in real estate 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 real estate investments will be primarily dependent upon the occupancy level of our portfolio, the net effective rental rates on our leases, the collectibility of rent and operating recoveries from our tenants and how well we manage our expenditures.

48

Our advisor advanced funds to us, which are non-interest bearing, for distribution record dates through the period ended May 31, 2016. We are only obligated to repay our advisor for its advance if and to the extent that:

(i) Our modified funds from operations (“MFFO”), as such term is defined by the Investment Program Association and interpreted by us, for the immediately preceding month exceeds the amount of distributions declared for record dates of such prior month (an “MFFO Surplus”), and we will pay our advisor the amount of the MFFO Surplus to reduce the principal amount outstanding under the advance, provided that such payments shall only be made if management in its sole discretion expects an MFFO Surplus to be recurring for at least the next two calendar quarters, determined on a quarterly basis; or

(ii) Excess proceeds from third-party financings are available (“Excess Proceeds”), provided that the amount of any such Excess Proceeds that may be used to repay the principal amount outstanding under the advance shall be determined by the conflicts committee in its sole discretion.

In determining whether Excess Proceeds are available to repay the advance, our conflicts committee will consider whether cash on hand could have been used to reduce the amount of third-party financing provided to us. If such cash could have been used instead of third-party financing, the third-party financing proceeds will be available to repay the advance.

We expect that once we have fully invested the proceeds raised during our offering stage, 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). Though this is our target leverage, our charter does not limit us from incurring debt until our aggregate borrowings would exceed 300% of our net assets (before deducting depreciation and other non-cash reserves), though we may exceed this limit under certain circumstances. To the extent financing in excess of this limit is available at attractive terms, the conflicts committee may approve debt in excess of this limit. As of December 31, 2017, our aggregate borrowings were approximately 65% of our net assets before deducting depreciation and other non-cash reserves.

In addition to making investments in accordance with our investment objectives, we have used a portion of our capital resources to make certain payments to our advisor, the affiliated dealer manager of our initial private offering and initial public offering and our affiliated property manager. These payments include payments to our dealer manager for selling commissions, the dealer manager fee and the stockholder servicing fee, and payments to the dealer manager and our advisor for reimbursement of certain organization and other offering expenses. See “—Organization and Offering Costs” below.

We make payments to our advisor in connection with the management of our assets and costs incurred by our advisor in providing certain services to us. Through August 8, 2017, the asset management fee payable to our advisor was a monthly fee equal to one-twelfth of 1.6% of the cost of our investments, less any debt secured by or attributable to our investments. As of August 9, 2017, the asset management fee is a monthly fee payable to our advisor in an amount equal to one-twelfth of 1.0% of the cost of our investments including the portion of the investment that is debt financed. The cost of our real property investments is calculated as the amount paid or allocated to acquire the real property, plus budgeted capital improvement costs for the development, construction or improvements to the property once such funds are disbursed pursuant to a final approved budget and fees and expenses related to the acquisition, but excluding 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. Our advisor waived asset management fees for the second and third quarters of 2017 and deferred payment of the asset management fee for the fourth quarter of 2017.

We also pay fees to KBS Management Group, LLC (the “Co-Manager”), an affiliate of our advisor, pursuant to property management agreements with the Co-Manager, for certain property management services at our properties.

We elected to be taxed as a REIT and to operate as a REIT beginning with our taxable year ended December 31, 2015. To maintain our qualification as a REIT, we will be required to make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (computed without regard to the dividends-paid deduction and excluding net capital gain). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant. Provided we have sufficient available cash flow, we intend to authorize and declare cash distributions based on daily record dates and pay cash distributions on a monthly basis. We have not established a minimum distribution level.

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, 2017 did not exceed the charter-imposed limitation.

49

Cash Flows from Operating Activities

As of December 31, 2017, we owned four office properties. During the year ended December 31, 2017, net cash provided by operating activities was $4.3 million, compared to net cash used in operating activities of $35,000 during the year ended December 31, 2016. We expect that our cash flows from operating activities will increase in future periods to the extent we make additional acquisitions of real estate and real estate-related investments and the related operations of such investments.

Cash Flows from Investing Activities

Net cash used in investing activities was $47.4 million for the year ended December 31, 2017 and consisted primarily of the following:

• $43.7 million of cash for the acquisition of a real estate property; and

• $3.7 million of cash for improvements to real estate.

Cash Flows from Financing Activities

During the year ended December 31, 2017, net cash provided by financing activities was $30.0 million and consisted primarily of the following:

• $30.6 million of net cash provided by debt financing as a result of proceeds from notes payable of $42.3 million, partially offset by principal payments on notes payable of $11.3 million and payments of deferred financing costs of $0.4 million;

• $2.9 million of net cash provided by offering proceeds related to our second private placement offering and public offering, net of payments of commissions, dealer manager fees and other organization and offering costs of $0.2 million;

• $2.3 million of net cash distributions, after giving effect to distributions reinvested by stockholders of $2.3 million; and

• $1.2 million of cash used for redemptions of common stock.

Contractual Commitments and Contingencies

The following is a summary of our contractual obligations as of December 31, 2017 (in thousands).

			Payments Due During the Years Ending December 31,
Contractual Obligations	Total		2018		2019-2020		2021-2022		Thereafter
Outstanding debt obligations (1)	$	113,800	$	—	$	72,800	$	41,000	$	—
Interest payments on outstanding debt obligations (2)	12,070		3,897		7,454		719		—

_____________________

⁽¹⁾ Amounts include principal payments only.

⁽²⁾ Projected interest payments are based on the outstanding principal amount, maturity date and contractual interest rate in effect as of December 31, 2017 (consisting of the contractual interest rate). We incurred interest expense of $2.7 million, excluding amortization of deferred financing costs totaling $0.7 million and unrealized gain on derivatives of $0.2 million during the year ended December 31, 2017.

Results of Operations

Overview

We conducted a primary initial public offering from April 28, 2016 through June 30, 2017 and are continuing to offer shares in our publicly registered distribution reinvestment plan offering. On October 3, 2017 we launched a private placement offering exempt from registration pursuant to Rule 506(c) of Regulation D of the Securities Act. Prior to our initial public offering, we conducted a private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act, that commenced on June 11, 2015. Our results of operations as of December 31, 2017 are not indicative of those expected in future periods as we commenced investment operations on August 12, 2015 in connection with our first investment and have since been raising money in and investing the proceeds from our offerings. As of December 31, 2016, we owned three office properties. We acquired one office property after December 31, 2016 and owned four office properties as of December 31, 2017. The results of operations presented for the years ended December 31, 2017 and 2016 are not directly comparable due to our acquisition activity. In general, we expect that our income and expenses related to our portfolio will increase in future periods to the extent we make additional acquisitions of real estate investments.

50

Comparison of the year ended December 31, 2017 versus the year ended December 31, 2016

	For the Years Ended December 31,					Increase (Decrease)			Percentage Change		$ Change Due to Acquisitions (1)		$ Change Due to Property  Held Throughout Both Periods (2)
	2017			2016
Rental income	$	13,577		$	6,179	$	7,398		120	%	$	7,388	$	10
Tenant reimbursements	3,288			630		2,658			422	%	2,546		112
Other operating income	96			46		50			109	%	49		1
Operating, maintenance and management costs	3,783			1,497		2,286			153	%	2,080		206
Property management fees	124			68		56			82	%	55		1
Real estate taxes and insurance	2,087			619		1,468			237	%	1,473		(5		)
Asset management fees to affiliate	632			399		233			58	%	n/a		n/a
Real estate acquisition fees to affiliate	—			2,316		(2,316		)	(100	)%	n/a		n/a
Real estate acquisition fees and expenses	—			405		(405		)	(100	)%	n/a		n/a
General and administrative expenses	1,471			1,532		(61		)	(4	)%	n/a		n/a
Depreciation and amortization	7,618			3,004		4,614			154	%	4,312		302
Interest expense	3,287			1,224		2,063			169	%	1,912		151
Interest and other income	48			120		(72		)	(60	)%	—		(72		)
Loss from extinguishment of debt	(206		)	—		(206		)	(100	)%	—		(206		)

_____________________

⁽¹⁾ Represents the dollar amount increase for the year ended December 31, 2017 compared to the year ended December 31, 2016 related to real estate investments acquired on or after January 1, 2016.

⁽²⁾ Represents the dollar amount increase (decrease) for the year ended December 31, 2017 compared to the year ended December 31, 2016 with respect to the real estate investment owned by us throughout both periods presented.

Rental income and tenant reimbursements increased from $6.8 million for the year ended December 31, 2016 to $16.9 million for the year ended December 31, 2017, primarily as a result of the growth in our real estate portfolio. We expect rental income and tenant reimbursements to increase in future periods as a result of owning an asset acquired in 2017 for an entire year and to the extent we make additional acquisitions of real estate investments.

Operating, maintenance, and management costs increased from $1.5 million for the year ended December 31, 2016 to $3.8 million for the year ended December 31, 2017, primarily as a result of the growth in our real estate portfolio. We expect operating, maintenance, and management costs to increase in future periods as a result of owning an asset acquired in 2017 for an entire year and to the extent we make additional acquisitions of real estate investments.

Property management fees increased from $68,000 for the year ended December 31, 2016 to $124,000 for the year ended December 31, 2017, primarily as a result of the growth in our real estate portfolio. We expect property management fees to increase in future periods as a result of owning an asset acquired in 2017 for an entire year and to the extent we make additional acquisitions of real estate investments.

Real estate taxes and insurance increased from $0.6 million for the year ended December 31, 2016 to $2.1 million for the year ended December 31, 2017, primarily as a result of the growth in our real estate portfolio. We expect real estate taxes and insurance to increase in future periods as a result of owning an asset acquired in 2017 for an entire year and to the extent we make additional acquisitions of real estate investments.

Asset management fees to affiliate increased from $0.4 million for the year ended December 31, 2016 to $0.6 million for the year ended December 31, 2017. Asset management fees for the year ended December 31, 2017 were $1.1 million. Of this amount, $0.5 million relating to the second and third quarter of 2017 was waived. Asset management fees for the fourth quarter of 2017 were accrued but payment was deferred by our advisor. We amended our advisory agreement on August 9, 2017 to change how asset management fees are calculated. We expect asset management fees to increase in future periods as a result of this change and also as a result of owning an asset acquired in 2017 for an entire year and to the extent we make additional real estate investments.

51

Real estate acquisition fees and expenses to affiliate and non-affiliates decreased by $2.7 million for the year ended December 31, 2017. We amended our advisory agreement on August 9, 2017 to eliminate the payment of an acquisition fee to our advisor and do not expect to incur real estate acquisition fees to affiliates going forward. In addition, we adopted ASU No. 2017-01 for the reporting period beginning January 1, 2017.  As a result of the adoption of ASU No. 2017-01, our acquisitions of real estate properties beginning January 1, 2017 could qualify as asset acquisitions as opposed to business combinations.  Transaction costs associated with asset acquisitions are capitalized, while transaction costs associated with business combinations will continue to be expensed. As a result, we did not record any real estate acquisition fees and expenses to affiliate and non-affiliates for our asset acquisition in November 2017.

Depreciation and amortization increased from $3.0 million for the year ended December 31, 2016 to $7.6 million for the year ended December 31, 2017, primarily as a result of the growth in our real estate portfolio. We expect depreciation and amortization to increase in future periods as a result of owning an asset acquired in 2017 for an entire year and to the extent we make additional acquisitions of real estate investments.

Interest expense increased from $1.2 million for the year ended December 31, 2016 to $3.3 million for the year ended December 31, 2017. Included in interest expense during the year ended December 31, 2016 was $0.2 million of amortization of deferred financing costs. Included in interest expense during the year ended December 31, 2017 was $0.7 million of amortization of deferred financing costs and $0.2 million of unrealized gain on interest rate swap. The increase in interest expense is primarily due to increased borrowings in connection with the acquisition of real estate, resulting in an increase in the average loan balance. We expect interest expense to increase in the future as a result of anticipated borrowings in future periods to the extent we make additional acquisitions of real estate investments.

During the year ended December 31, 2017, we recognized a loss from extinguishment of debt of $0.2 million related to the write-off of unamortized deferred financing costs as a result of the pay-off of the Von Karman Tech Center Mortgage Loan on May 9, 2017.

Comparison of the year ended December 31, 2016 versus the period from January 27, 2015 to December 31, 2015

Rental income, tenant reimbursements and other operating income increased from $0.9 million for the period from January 27, 2015 to December 31, 2015 to $6.9 million for the year ended December 31, 2016. Operating, maintenance, and management expenses increased from $0.2 million for the period from January 27, 2015 to December 31, 2015 to $1.5 million for the year ended December 31, 2016. We incurred property management fees and expenses to affiliate of $0.1 million for the year ended December 31, 2016. Real estate taxes and insurance increased from $0.1 million for the period from January 27, 2015 to December 31, 2015 to $0.6 million for the year ended December 31, 2016. Asset management fees to affiliate increased from $22,000 for the period from January 27, 2015 to December 31, 2015 to $0.4 million for the year ended December 31, 2016. Depreciation and amortization increased from $0.3 million for the period from January 27, 2015 to December 31, 2015 to $3.0 million for the year ended December 31, 2016. Interest expense increased from $0.3 million for the period from January 27, 2015 to December 31, 2015 to $1.2 million for the year ended December 31, 2016.

General and administrative expenses increased from $0.2 million for the period from January 27, 2015 to December 31, 2015 to $1.5 million for the year ended December 31, 2016. These general and administrative costs consisted primarily of portfolio legal fees, board of directors fees, internal audit compensation, external auditor fees, dividend processing fees, and dead deal costs.

As a result of our acquisition of Von Karman Tech Center, we incurred $0.6 million of real estate acquisition fees and expenses to affiliates and non-affiliates during the period from January 27, 2015 to December 31, 2015. As a result of our acquisitions of Commonwealth Building and The Offices at Greenhouse, we incurred $2.7 million of real estate acquisition fees and expenses to affiliates and non-affiliates during the year ended December 31, 2016.

52

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), 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.

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, by excluding acquisition costs (to the extent such costs have been recorded as operating expenses) as well as non-cash items such as straight line rental revenue, 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 which typically have limited lives with short and defined acquisition periods and targeted exit strategies.  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.

53

Although MFFO includes other adjustments, the exclusion of adjustments for straight-line rent, the amortization of above- and below-market leases, loss from extinguishment of debt, unrealized gain on derivative instruments and acquisition fees and expenses 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;

• Loss from extinguishment of debt.  A loss from 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;

• Unrealized (gains) losses on derivative instruments.  These adjustments include unrealized (gains) losses 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; and

• Acquisition fees and expenses. Prior to our early adoption of ASU No. 2017-01 on January 1, 2017, acquisition fees and expenses related to the acquisition of real estate were expensed. Although these amounts reduce net income, we exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis. Additionally, acquisition fees and expenses have been funded from the proceeds from our private and public offerings, net proceeds from our distribution reinvestment plan, and from debt financings, and not from our operations. We believe this exclusion is useful to investors as it allows investors to more accurately evaluate the sustainability of our operating performance.

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, for the years ended December 31, 2017 and 2016 and the period from January 27, 2015 to December 31, 2015, respectively (in thousands). No conclusions or comparisons should be made from the presentation of these periods.

	For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015
	2017			2016
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Depreciation of real estate assets	2,723			1,046			71
Amortization of lease-related costs	4,895			1,958			270
FFO	5,419			(1,085		)	(435		)
Straight-line rent and amortization of above- and below-market leases, net	(2,302		)	(1,208		)	(235		)
Unrealized gain on derivative instrument	(178		)	—			—
Loss from extinguishment of debt	206			—			—
Real estate acquisition fees to affiliate	—			2,316			428
Real estate acquisition fees and expenses	—			405			152
MFFO	$	3,145		$	428		$	(90	)

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.

54

Organization and Offering Costs

Offering costs include all expenses incurred in connection with our offerings of securities. Organization costs include all expenses incurred in connection with our formation, including but not limited to legal fees and other costs to incorporate.

With respect to our public offering, our advisor and dealer manager generally paid our organization and offering expenses incurred in the primary portion of our initial public offering (other than selling commissions, dealer manager fees and stockholder servicing fees) directly.

We reimbursed our advisor, our affiliated dealer manager and their affiliates up to 1.0% of gross primary offering proceeds raised in our initial public offering for commercially reasonable organization and offering expenses. Our advisor, our affiliated dealer manager, and their affiliates were responsible for all organization and other offering expenses (which excludes selling commissions, dealer manager fees and stockholder servicing fees) related to the primary portion of our initial public offering to the extent they exceeded 1.0% of gross proceeds raised in the primary portion of our initial public offering. We did not reimburse our affiliated dealer manager for wholesaling compensation expenses.

During our initial private offering, we were obligated to reimburse our advisor, our affiliated dealer manager or their affiliates, as applicable, for organization and offering costs (excluding wholesaling compensation expenses) paid by them on our behalf. We recorded $1.5 million of offering costs (other than selling commissions and dealer manager fees) related to our initial private offering, all of which have been reimbursed to our advisor or its affiliates.

Our advisor has agreed to pay all offering expenses related to our recently launched second private placement offering directly on our behalf without reimbursement by us.

Through December 31, 2017, our advisor and its affiliates had incurred organization and other offering costs (which exclude selling commissions, dealer manager fees and stockholder servicing fees) on our behalf in connection with the initial public offering of approximately $4.3 million. As of December 31, 2017, we recorded $39,358 of organization and other offering expenses related to the initial public offering, which amounts represent our maximum liability for organization and other offering costs as of the termination of our primary initial public offering based on the limitation described above.

As of December 31, 2017, KBS Capital Advisors had incurred $1.5 million in offering expenses on our behalf related to the second private placement offering. The advisor has agreed to pay these expenses on our behalf without reimbursement by us.

Distributions

During our offering stage, when we may raise capital more quickly than we acquire income producing assets, and from time to time during our operational stage, we may not pay distributions solely from our cash flows from operations, in which case distributions may be paid in whole or in part from debt financing, including advances from our advisor, if necessary. Distributions declared, distributions paid and cash flows from operations were as follows during 2017 (in thousands, except per share amounts):

	Cash Distributions Declared (1)		Cash Distribution Declared Per Class A Share (1) (2)		Cash Distribution Declared Per Class T Share (1) (2)		Cash Distributions Paid (3)						Cash Flows from Operations
Period							Cash		Reinvested		Total
First Quarter 2017	$	1,115	$	0.123	$	0.099	$	516	$	588	$	1,104	$	83
Second Quarter 2017	1,154		0.125		0.100		549		611		1,160		1,521
Third Quarter 2017	1,170		0.124		0.124		592		587		1,179		1,331
Fourth Quarter 2017	1,144		0.121		0.121		604		528		1,132		1,324
	$	4,583	$	0.493	$	0.444	$	2,261	$	2,314	$	4,575	$	4,259

_____________________

⁽¹⁾ Distributions for the periods from January 1, 2017 through August 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00131849 per day.

⁽²⁾ Assumes Class A and Class T shares were issued and outstanding each day that was a record date for distributions during the period presented.

⁽³⁾ Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the first business day of the following month.

55

For the year ended December 31, 2017, we paid aggregate distributions of $4.6 million, including $2.3 million of distributions paid in cash and $2.3 million of distributions reinvested through our distribution reinvestment plan. Our net loss for the year ended December 31, 2017 was $2.2 million. FFO for the year ended December 31, 2017 was $5.4 million and cash flows from operations for the year ended December 31, 2017 was $4.3 million. See the reconciliation of FFO to net loss above. We funded our total distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with $3.6 million of cash flows from operations and $1.0 million of debt financing.

From inception through December 31, 2017, we paid cumulative distributions of $8.1 million and our cumulative net loss during the same period was $7.1 million. To the extent that we pay distributions from sources other than our cash flows from operations, we will have less funds available for the acquisition of real estate investments, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

In addition, through August 31, 2017, our board of directors declared stock dividends for each month based on a single record date at the end of each month in an amount that would equal a 1% annualized stock dividend per share of common stock if paid each month for a year. Stock dividends are issued in the same class of shares as the shares for which such stockholder received the stock dividend.

Going forward we expect our board of directors to continue to authorize and declare cash distributions based on daily record dates and to pay these distributions on a monthly basis. Cash distributions will be determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant. Our board of directors has not pre-established a percentage rate of return for cash distributions to stockholders. We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

Over the long-term, we expect that a greater percentage of our distributions will be paid from cash flow from operations and FFO (except with respect to distributions related to sales of our assets and distributions related to the repayment of principal under real estate-related investments). Our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under Part I, Item 1A, “Risk Factors.” Those factors include: our ability to raise capital to make additional investments; the future operating performance of our current and future real estate investments in the existing real estate and financial environment; our advisor’s ability to identify additional real estate investments that are suitable to execute our investment objectives; 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; and the level of participation in our distribution reinvestment plan. In the event our FFO and/or cash flow from operations 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 operations.

Critical Accounting Policies

Below is a discussion of the accounting policies that management believes are or will be critical to our operations. We consider these policies critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. 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.

56

Revenue Recognition

Real Estate

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 reasonably assured 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 by 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 the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of 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 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 record property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.

We make estimates of the collectibility of our tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. We specifically analyze accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, we will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Real Estate

Depreciation and Amortization

Real estate costs related to the acquisition and improvement of properties are capitalized and amortized 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:

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 early 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 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.

57

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.

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.

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 as interest expense as presented in the accompanying consolidated statements of operations.

We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. We also assess and document, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When we determine that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and reclassify amounts recorded to accumulated other comprehensive income (loss) to earnings.

58

Fair Value Measurements

Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, we utilize quoted market prices from independent third-party sources to determine fair value and classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require us to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When we determine the market for a financial instrument owned by us to be illiquid or when market transactions for similar instruments do not appear orderly, we use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establish a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, we measure fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

We consider the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with our estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market).

We consider the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

59

Subsequent Events

We evaluate subsequent events up until the date the consolidated financial statements are issued.

Cash Distributions Paid

On January 2, 2018, we paid distributions of $0.4 million, which related to cash distributions on our common stock, declared for daily record dates for each day in the period from December 1, 2017 through December 31, 2017. On February 1, 2018, we paid cash distributions of $0.4 million, which related to cash distributions on our common stock, declared for daily record dates for each day in the period from January 1, 2018 through January 31, 2018. On March 1, 2018, we paid distributions of $0.3 million, which related to cash distributions on our common stock, declared for daily record dates for each day in the period from February 1, 2018 through February 28, 2018.

Distributions Authorized

On January 24, 2018, our board of directors authorized cash distributions on the outstanding shares of all classes of our common stock based on daily record dates for the period from March 1, 2018 through March 31, 2018, which we expect to pay in April 2018. On March 9, 2018, our board of directors authorized cash distributions on the outstanding shares of all classes of our common stock based on daily record dates for the period from April 1, 2018 through April 30, 2018 and May 1, 2018 through May 31, 2018, which we expect to pay in May 2018 and June 2018, respectively. Investors may choose to receive cash distributions or purchase additional shares through our distribution reinvestment plan. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00132452 per share per day.

Refinancing of the Commonwealth Building Mortgage Loan

On January 18, 2018, we, through an indirect wholly owned subsidiary (the “Owner”), closed the refinancing of the Commonwealth Building Mortgage Loan with an unaffiliated lender (the “Refinancing”). We repaid $41.0 million of principal in satisfaction of the Commonwealth Building Mortgage Loan. The Refinancing was for a maximum loan amount of up to $51.4 million. At closing, $45.0 million of the loan was funded and the remaining $6.4 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The loan under the Refinancing matures on February 1, 2023, with two one-year extension options, subject to certain terms and conditions contained in the loan documents. Monthly payments are interest-only with the remaining principal balance, all accrued and unpaid interest and all other sums due under the loan documents payable at maturity. The initial interest rate is 3.36% with the interest rate to be reset as set forth in the loan documents to the greater of 2.05% or a floating rate of 180 basis points over one-month LIBOR. If the LIBOR rate is equal to or greater than 2.90% for five consecutive business days, we have 30 days to enter into an interest rate cap agreement with a LIBOR strike rate of 3.90% or less. We have the right to prepay all or a portion of the loan under the Refinancing commencing on February 1, 2019, subject to certain fees and conditions contained in the loan documents.

KBS GI REIT Properties, LLC (“KBS GI REIT Properties”), our wholly owned subsidiary, in connection with the Refinancing, provided a guaranty of the payment of certain potential liabilities, costs, losses, damages, fees and expenses incurred by the Lender relating to the loan under the Refinancing as a result of certain intentional actions or omissions of the Owner in violation of the loan documents, or certain other occurrences in relation to the Commonwealth Building and/or the Owner, including the recovery of certain funds under the loan documents, as further described in the guaranty. KBS GI REIT Properties is also providing a guaranty of the principal balance and any interest or other sums outstanding under the loan of the Refinancing in the event of: certain bankruptcy, insolvency or related proceedings involving the Owner as described in the guaranty; and any transfer of the Owner’s interest in the Commonwealth Building in violation of the loan documents.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the acquisition, expansion and refinancing of our real estate investment portfolio and operations. Our profitability and the value of our real estate investment portfolio may be adversely affected during any period as a result of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We may manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that variable rate exposure is kept at an acceptable level or we may utilize a variety of financial instruments, including interest rate caps, floors, and swap agreements, in order to limit the effects of changes in interest rates on our operations. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for the payment of distributions to our stockholders and that the losses may exceed the amount we invested in the instruments.

60

The table below summarizes the book value, interest rate and fair value of the outstanding principal balance, weighted-average interest rates and fair value for our notes payable for each category, based on maturity dates as of December 31, 2017 (dollars in thousands):

	Maturity Date														Total Value or Amount
	2018		2019		2020			2021			2022		Thereafter					Fair Value
Assets
Derivative Instruments
Interest rate swaps, notional amount	$	—	$	—	$	—		$	48,533		$	—	$	—	$	48,533		$	178
Average pay rate (1)	—		—		—			2.1		%	—		—		2.1		%
Average receive rate (2)	—		—		—			1.6		%	—		—		1.6		%
Liabilities
Notes payable, principal outstanding
Variable Rate	$	—	$	—	$	72,800		$	41,000		$	—	$	—	$	113,800		$	114,327
Weighted-average interest rate (3)	—		—		3.4		%	3.5		%	—		—		3.4		%

_____________________

⁽¹⁾ The average pay rate is based on the interest rate swap fixed rate.

⁽²⁾ The average receive rate is based on the 30‑day LIBOR rate as of December 31, 2017.

⁽³⁾ The weighted-average interest rate represents the actual interest rate in effect as of December 31, 2017 (consisting of the contractual interest rate and the effect of interest rate swaps), if applicable, using interest rate indices as of December 31, 2017, where applicable.

We expect to borrow funds and make investments at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect future earnings or cash flows on fixed rate debt unless such debt mature or is otherwise terminated. However, interest rate changes will affect the fair value of fixed rate instruments. At December 31, 2017, we did not have any fixed rate debt outstanding.

Conversely, movements in interest rates on variable rate debt would change future earnings and cash flows, but not significantly affect the fair value of the debt. However, changes in required risk premiums would result in changes in the fair value of variable rate instruments. At December 31, 2017, we were exposed to market risks related to fluctuations in interest rates on $113.8 million of variable rate debt outstanding. This amount does not take into account the impact of $48.5 million of a forward interest rate swap agreement that was not yet effective as of December 31, 2017. Based on interest rates as of December 31, 2017, if interest rates were 100 basis points higher or lower during the 12 months ending December 31, 2018, interest expense on our variable rate debt would increase or decrease by $1.1 million.

The weighted average interest rate of our variable rate debt at December 31, 2017 was 3.42%.  The interest rate represents the actual interest rate in effect at December 31, 2017 (consisting of the contractual interest rate), using interest rate indices as of December 31, 2017 where applicable.

For a discussion of the interest rate risks related to the current capital and credit markets, see Part I, Item 1A, “Risk Factors.”

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index to Financial Statements at page F-1 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

61

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended.

In connection with the preparation of our Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on its assessment, our management believes that, as of December 31, 2017, our internal control over financial reporting was effective based on those criteria. There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

As of the quarter ended December 31, 2017, all items required to be disclosed under Form 8-K were reported under Form 8-K.

62

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

We have provided below certain information about our executive officers and directors.

Name	Position(s)	Age*
Peter M. Bren	President and Director	84
Charles J. Schreiber, Jr.	Chairman of the Board, Chief Executive Officer and Director	66
Jeffrey K. Waldvogel	Chief Financial Officer	40
Stacie K. Yamane	Chief Accounting Officer	53
George R. Bravante, Jr.	Independent Director	59
Jon D. Kline	Independent Director	51
Keith P. Russell	Independent Director	72

_____________________

* As of March 1, 2018.

Peter M. Bren is our President and a director, positions he has held since January 2015 and July 2017, respectively. He is also Chairman and President of our advisor, and is President of KBS REIT I, KBS REIT II and KBS REIT III, positions he has held for these entities since October 2004, June 2005, August 2007 and January 2010, respectively. Mr. Bren is President and a director of KBS Legacy Partners Apartment REIT, positions he has held since August 2009 and July 2009, respectively. Mr. Bren is President and a director of KBS Growth & Income Venture Fund, Inc. (“KBS Growth & Income Venture Fund”), positions he has held since July 2017. Other than de minimis amounts owned by family members or family trusts, Mr. Bren indirectly owns and controls a 33 1/3% interest in KBS Holdings LLC, which is the sole owner of our advisor and our dealer manager. KBS Holdings is a sponsor of our company and is a sponsor of KBS REIT I, KBS REIT II, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS REIT III and KBS Strategic Opportunity REIT II, which were formed in 2015, 2005, 2007, 2008, 2009, 2009 and 2013, respectively.

Mr. Bren is Chairman and President of KBS Realty Advisors LLC and is a principal of Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities are registered as investment advisers with the SEC. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. As of December 31, 2017, KBS Realty Advisors, together with KBS affiliates, including KBS Capital Advisors, had been involved in the investment in or management of approximately $24 billion of real estate investments on behalf of institutional investors, including public and private pension plans, endowments and foundations, institutional and sovereign wealth funds, and the investors in us, KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT II.

Mr. Bren oversees all aspects of KBS Capital Advisors’ and KBS Realty Advisors’ operations, including the acquisition, management and disposition of individual investments and portfolios of investments for KBS-sponsored programs and KBS-advised investors. He also directs all facets of KBS Capital Advisors’ and KBS Realty Advisors’ business activities and is responsible for investor relationships. Mr. Bren is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Mr. Bren has been involved in real estate development, management, acquisition, disposition and financing for more than 40 years and with the acquisition, origination, management, disposition and financing of real estate-related debt investments for more than 30 years. Prior to taking his current positions as Chairman and President of KBS Capital Advisors and KBS Realty Advisors, he served as the President of The Bren Company, was a Senior Partner of Lincoln Property Company and was President of Lincoln Property Company, Europe. Mr. Bren is a member of the UCLA Anderson School of Management Board of Advisors and is a founding member of the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management.

63

Charles J. Schreiber, Jr. is our Chairman of the Board, our Chief Executive Officer and one of our directors, positions he has held since January 2015. He is also the Chief Executive Officer of our advisor and Chairman of the Board, Chief Executive Officer and a director of KBS REIT I, positions he has held for these entities since October 2004 and June 2005, respectively; Chairman of the Board, Chief Executive Officer and a director of KBS REIT II, positions he has held since August 2007, August 2007 and July 2007, respectively; and Chairman of the Board, Chief Executive Officer and a director of KBS REIT III, positions he has held since January 2010, January 2010 and December 2009, respectively. Mr. Schreiber is Chairman of the Board, Chief Executive Officer and a director of KBS Growth & Income Venture Fund, positions he has held since July 2017. Other than de minimis amounts owned by family members or family trusts, Mr. Schreiber indirectly owns and controls a 33 1/3% interest in KBS Holdings LLC, which is the sole owner of our advisor and our dealer manager. KBS Holdings is a sponsor of our company and is a sponsor of KBS REIT I, KBS REIT II, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS REIT III and KBS Strategic Opportunity REIT II, which were formed in 2015, 2005, 2007, 2008, 2009, 2009 and 2013, respectively.

Mr. Schreiber is the Chief Executive Officer of KBS Realty Advisors LLC and is a principal of Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities are registered as investment advisers with the SEC. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. As of December 31, 2017, KBS Realty Advisors, together with KBS affiliates, including KBS Capital Advisors, had been involved in the investment in or management of approximately $24 billion of real estate investments on behalf of institutional investors, including public and private pension plans, endowments and foundations, institutional and sovereign wealth funds, and the investors in us, KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT II.

Mr. Schreiber oversees all aspects of KBS Capital Advisors’ and KBS Realty Advisors’ operations, including the acquisition and management of individual investments and portfolios of investments for KBS-sponsored programs and KBS-advised investors. He also directs all facets of KBS Capital Advisors’ and KBS Realty Advisors’ business activities and is responsible for investor relationships. Mr. Schreiber is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Mr. Schreiber has been involved in real estate development, management, acquisition, disposition and financing for more than 40 years and with the acquisition, origination, management, disposition and financing of real estate-related debt investments for more than 30 years. Prior to teaming with Mr. Bren in 1992, he served as the Executive Vice President of Koll Investment Management Services and Executive Vice President of Acquisitions/Dispositions for The Koll Company. During the mid-1970s through the 1980s, he was Founder and President of Pacific Development Company and was previously Senior Vice President/Southern California Regional Manager of Ashwill-Burke Commercial Brokerage.

Mr. Schreiber graduated from the University of Southern California with a Bachelor’s Degree in Finance with an emphasis in Real Estate. During his four years at USC, he did graduate work in the then newly-formed Real Estate Department in the USC Graduate School of Business. He is currently an Executive Board Member for the USC Lusk Center for Real Estate at the University of Southern California Marshall School of Business/School of Policy, Planning and Development. Mr. Schreiber also serves as a member of the Executive Committee for the Public Non-Listed REIT Council for the National Association of Real Estate Investment Trusts. He is also a member of the National Council of Real Estate Investment Fiduciaries. Mr. Schreiber has served as a member of the board of directors and executive committee of The Irvine Company since August 2016, and since December 2016, Mr. Schreiber has served on the Board of Trustees of The Irvine Company.

Our board of directors has concluded that Mr. Schreiber is qualified to serve as a director and Chairman of the Board for reasons including his extensive industry and leadership experience. Since the formation of the first investment advisor affiliated with Messrs. Bren and Schreiber in 1992, and through December 31, 2017, Mr. Schreiber had been involved in the investment in or management of over $24 billion of real estate investments through KBS affiliates. With more than 40 years of experience in real estate development, management, acquisition and disposition and more than 30 years of experience with the acquisition, origination, management, disposition and financing of real estate-related debt investments, he has the depth and breadth of experience to implement our business strategy. He gained his understanding of the real estate and real estate-finance markets through hands-on experience with acquisitions, asset and portfolio management, asset repositioning and dispositions. As our Chief Executive Officer and a principal of our external advisor, Mr. Schreiber is best-positioned to provide our board of directors with insights and perspectives on the execution of our business strategy, our operations and other internal matters. Further, as a principal of KBS-affiliated investment advisors and as Chief Executive Officer, Chairman of the Board and a director of KBS REIT I, KBS REIT II and KBS REIT III, and as a director and trustee of the Irvine Company, Mr. Schreiber will bring to our board of directors demonstrated management and leadership ability.

64

Jeffrey K. Waldvogel is our Chief Financial Officer, Treasurer and Secretary, positions he has held since June 2015, April 2017 and April 2017, respectively. He is also the Chief Financial Officer of our advisor, and Chief Financial Officer and Assistant Secretary of KBS REIT I, KBS REIT II and KBS REIT III, positions he has held for each of these entities since June 2015. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT and KBS Strategic Opportunity REIT II, positions he has held for each of these entities since June 2015. Mr. Waldvogel also is Chief Financial Officer, Treasurer and Secretary of KBS Growth & Income Venture Fund, positions he has held since July 2017. Mr. Waldvogel is a member of the investment committee formed by KBS Capital Advisors to evaluate and recommend new investment opportunities for us.

Mr. Waldvogel has been employed by an affiliate of KBS Capital Advisors since November 2010. With respect to the KBS-sponsored REITs advised by KBS Capital Advisors, he served as the Director of Finance and Reporting from July 2012 to June 2015 and as the VP Controller Technical Accounting from November 2010 to July 2012. In these roles Mr. Waldvogel was responsible for overseeing internal and external financial reporting, valuation analysis, financial analysis, REIT compliance, debt compliance and reporting, and technical accounting.

Prior to joining an affiliate of our advisor in 2010, Mr. Waldvogel was an audit senior manager at Ernst & Young LLP. During his eight years at Ernst & Young LLP, where he worked from October 2002 to October 2010, Mr. Waldvogel performed or supervised various auditing engagements, including the audit of financial statements presented in accordance with GAAP, as well as financial statements prepared on a tax basis. These auditing engagements were for clients in a variety of industries, with a significant focus on clients in the real estate industry.

In April 2002, Mr. Waldvogel received a Master of Accountancy Degree and Bachelor of Science from Brigham Young University in Provo, Utah. Mr. Waldvogel is a Certified Public Accountant (California).

Stacie K. Yamane is our Chief Accounting Officer, a position she has held since January 2015. Ms. Yamane is also the Chief Accounting Officer, Portfolio Accounting of our advisor and Chief Accounting Officer of KBS REIT I, KBS REIT II, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS REIT III, KBS Strategic Opportunity REIT II and KBS Growth & Income Venture Fund, positions she has held for these entities since October 2008, October 2008, October 2008, August 2009, August 2009, January 2010, February 2013 and July 2017, respectively. From July 2007 to December 2008, Ms. Yamane served as the Chief Financial Officer of KBS REIT II and from July 2007 to October 2008 she served as Controller of KBS REIT II; from October 2004 to October 2008, Ms. Yamane served as Fund Controller of our advisor; from June 2005 to December 2008, she served as Chief Financial Officer of KBS REIT I and from June 2005 to October 2008, she served as Controller of KBS REIT I.

Ms. Yamane also serves as Senior Vice President/Controller, Portfolio Accounting for KBS Realty Advisors LLC, a position she has held since 2004. She served as a Vice President/Portfolio Accounting with KBS-affiliated investment advisors from 1995 to 2004. At KBS Realty Advisors, from 2004 through 2015, Ms. Yamane was responsible for client accounting/reporting for two real estate portfolios. These portfolios consisted of industrial, office and retail properties as well as land parcels. Ms. Yamane worked closely with portfolio managers, asset managers, property managers and clients to ensure the completion of timely and accurate accounting, budgeting and financial reporting. In addition, she assisted in the supervision and management of KBS Realty Advisors’ accounting department.

Prior to joining an affiliate of KBS Realty Advisors in 1995, Ms. Yamane was an audit manager at Kenneth Leventhal & Company, a CPA firm specializing in real estate. During her eight years at Kenneth Leventhal & Company, Ms. Yamane performed or supervised a variety of auditing, accounting and consulting engagements including the audit of financial statements presented in accordance with GAAP, as well as financial statements presented on a cash and tax basis, the valuation of asset portfolios and the review and analysis of internal control systems. Her experiences with various KBS-affiliated entities and Kenneth Leventhal & Company give her almost 30 years of real estate experience.

Ms. Yamane received a Bachelor of Arts Degree in Business Administration with a dual concentration in Accounting and Management Information Systems from California State University, Fullerton. She is a Certified Public Accountant (inactive California).

George R. Bravante, Jr. is one of our independent directors, a position he has held since March 2016. In 1996, Mr. Bravante founded Biltmore Advisors, LLC, the general partner of Bravante-Curci Investors, L.P., and since 1996, he has served as the Managing Member of Biltmore Advisors, LLC. Bravante-Curci Investors focuses on real estate and agricultural investments in California. Since 2005, Mr. Bravante has been the owner of Bravante Produce, which oversees agricultural land, and since July 2013, he has served as the Chief Executive Officer of Pacific Agriculture Realty, LP, an agricultural real estate fund.

65

Mr. Bravante has been in the real estate industry for over 30 years. Prior to founding Bravante-Curci Investors in 1996, Mr. Bravante served as: President and Chief Operating Officer of Colony Advisors, where he oversaw all aspects of the firm’s operations, including financial and asset management and property management and dispositions; President and Chief Operating Officer of the American Realty Group, where he was responsible for the strategic management, restructuring and disposition of more than $20 billion in real estate-related assets; Chief Financial Officer of RMB Realty, where he was extensively involved with all aspects of numerous commercial real estate transactions; and Manager of Ernst & Whinney (now Ernst & Young LLP), where he advised real estate developers and financial institutions as a member of the real estate consulting group. Since December 2014, Mr. Bravante has served on the board of directors and audit committee of Sabre Corp, and from 2004 through 2010, Mr. Bravante served on the board of directors of ExpressJet Holdings, Inc., serving as non-executive chairman from 2005 to 2010. Mr. Bravante also served on the board of directors of Sunkist Growers, Inc. from January 2011 through January 2014 and of American Real Estate Group from 1990 to 1993. Mr. Bravante received a Bachelor of Arts in Accounting from the University of South Carolina in 1982.

Our board of directors has concluded that Mr. Bravante is qualified to serve as an independent director for reasons including his 30 years of experience in the real estate industry and his financial, strategic business and investment strategy abilities. Mr. Bravante’s broad executive experience provides him with key skills in working with directors, understanding board processes and functions, responding to our business’s financial, strategic and operational challenges and opportunities and overseeing management. Our board of directors believes that these attributes and the depth and breadth of Mr. Bravante’s exposure to complex real estate, financial and strategic issues throughout his career make him a valuable asset to our board of directors. Further, his service as a director and member of the audit committee of Sabre Corp and as a director of ExpressJet Holdings, both public companies, gives him additional perspective and insight into public companies such as ours.

Jon D. Kline is one of our independent directors, a position he has held since March 2016. Mr. Kline is the founder and Chief Executive Officer of Clearview Hotel Capital, LLC, a privately-held hotel investment and advisory company focused on acquiring and providing asset management for hotels in urban and unique locations. Mr. Kline has led Clearview Hotel Capital since its founding in 2007. From 2006 through 2007, he served as President and, from 2003 to 2006, as Chief Financial Officer of Sunstone Hotel Investors, Inc., a public hotel REIT (NYSE:SHO). Prior to joining Sunstone in 2003, Mr. Kline oversaw the U.S. hospitality and leisure investment banking practice at Merrill Lynch & Co., with responsibility for lodging, gaming, restaurants and other leisure industries. Prior to joining Merrill Lynch, Mr. Kline was a real estate investment banker at Smith Barney, focused on lodging and other real estate asset classes, and an attorney with Sullivan & Cromwell LLP. Mr. Kline has served on the board of directors of CareTrust REIT, Inc. (NASDAQ: CTRE), a public REIT, since June 2014, and he is currently the chair of the audit committee and a member of the nominating and corporate governance and compensation committees. Mr. Kline holds a Bachelor of Arts in Economics from Emory University and a J.D. from New York University School of Law.

Our board of directors has concluded that Mr. Kline is qualified to serve as an independent director for reasons including executive leadership experience in a public REIT, his professional and educational background, his network of relationships with real estate professionals and his extensive background and experience in public markets and in real estate and finance transactions. As the founder of Clearview Hotel Capital, Mr. Kline is acutely aware of the operational challenges we will encounter. In addition, his service as a director and chair of the audit committee of CareTrust REIT provide him an understanding of the requirements of serving on the board of, and the issues facing, a public real estate company such as ours.

Keith P. Russell is one of our independent directors, a position he has held since March 2016. Since June 2001, Mr. Russell has been President of Russell Financial, Inc., a strategic and financial consulting firm serving businesses and high net worth individuals. In March 2001, Mr. Russell retired as Chairman of Mellon West and Vice Chairman of Mellon Financial Corporation, in which capacities he had served since 1996. From 1991 through 1996, Mr. Russell served in various positions at Mellon, including Vice Chairman and Chief Risk Officer of Mellon Bank Corporation and Chairman of Mellon Bank Corporation’s Credit Policy Committee. From 1983 to 1991, Mr. Russell served as President and Chief Operating Officer, and a director, of Glenfed/Glendale Federal Bank.

Mr. Russell has served on the board of directors of Sunstone Hotel Investors, Inc. (NYSE: SHO), a public REIT, since 2004, and he is currently the chair of the audit committee and a member of the nominating and corporate governance committee. Mr. Russell has served on the board of directors of Hawaiian Electric Industries, Inc. (NYSE: HEI) since May 2011, and he is currently a member of the audit committee. Since 2010, Mr. Russell has also served on the board of directors of American Savings Bank, a subsidiary of Hawaiian Electric Industries, and he is currently a member of the audit committee and is the chair of the risk committee. In addition, from 2002 to July 2011, Mr. Russell served on the board of directors of Nationwide Health Properties, Inc., where he served as chair of the audit committee and as a member of the corporate governance and nominating committee. Mr. Russell has been a panelist at various conferences and seminars, addressing topics such as corporate governance and the audit committee’s role. Mr. Russell holds a Bachelor of Arts in Economics from the University of Washington and a Master of Arts in Economics from Northwestern University.

66

Our board of directors has concluded that Mr. Russell is qualified to serve as an independent director for reasons including his expertise in the areas of risk management and financial analysis and his general investment experience. As a leading executive with several large financial institutions, Mr. Russell has extensive experience in assessing risks and reserves for companies in a wide range of financial situations, which contributes invaluable expertise to our board of directors. In addition, his service as a director and chair of the audit committee of Sunstone Hotel Investors, as a director and member of the audit committee of Hawaiian Electric Industries, Inc. and as a former director and chair of the audit committee of Nationwide Health Properties provides him an understanding of the requirements of serving on the board of, and the issues facing, a public real estate company such as ours.

The Audit Committee

Our board of directors has established an audit committee. The audit committee’s function is to assist our board of directors in fulfilling its responsibilities by overseeing (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditors’ qualifications and independence, and (iv) the performance of the independent auditors and our internal audit function. The members of the audit committee are Keith P. Russell (chairman), George R. Bravante, Jr. and Jon D. Kline. All of the members of the audit committee are “independent” as defined by the New York Stock Exchange. All members of the audit committee have significant financial and/or accounting experience, and our board of directors has determined that Mr. Russell satisfies the SEC’s requirements for an “audit committee financial expert.”

Code of Conduct and Ethics

We have adopted a Code of Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer, principal financial officer and principal accounting officer. Our Code of Conduct and Ethics can be found at http://www.kbsgireit.com. If, in the future, we amend, modify or waive a provision in the Code of Conduct and Ethics, we may, rather than filing a Current Report on Form 8-K, satisfy the disclosure requirement by promptly posting such information on the website maintained for us as necessary.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Executive Officers

We currently do not have any paid employees and our executive officers do not receive any compensation directly from us. Our executive officers are officers and/or employees of, or hold an indirect ownership interest in, our advisor, and/or its affiliates, and our executive officers are compensated by these entities, in part, for their services to us or our subsidiaries. If, in the future, we were to compensate our executive officers directly, our conflicts committee, which is composed of all of our independent directors, would discharge our board of directors’ responsibilities relating to the compensation of our executives. See Part III, Item 13, “Certain Relationships and Related Transactions, and Director Independence - Certain Transactions with Related Persons” for a discussion of the fees paid to our advisor and its affiliates.

Compensation of Directors

If a director is also one of our executive officers, we do not pay any compensation to that person for services rendered as a director. The amount and form of compensation payable to our independent directors for their service to us is determined by our conflicts committee, based upon recommendations from our advisor. Our executive officers, Messrs. Bren and Schreiber, manage and control our advisor, and through our advisor, they are involved in recommending the compensation to be paid to our independent directors.

We have provided below certain information regarding compensation earned by or paid to our directors during fiscal year 2017.

Name	Fees Earned in 2017 or Paid in Cash (1)		All Other Compensation		Total
George R. Bravante, Jr.	$	104,829	$	—	$	104,829
Jon D. Kline	103,329		—		103,329
Keith P. Russell	109,829		—		109,829
Charles J. Schreiber, Jr. (2)	—		—		—
Peter McMillan III (2) (3)	—		—		—
Peter M. Bren (2)	—		—		—

_____________________

⁽¹⁾ Fees Earned in 2017 or Paid in Cash include meeting fees earned in: (i) 2016 but paid or reimbursed in the first quarter of 2017 as follows: Bravante $3,333, Mr. Kline $3,333, and Mr. Russell $3,333; and (ii) 2017 but paid or to be paid in 2018 as follows: Mr. Bravante $7,333, Mr. Kline $8,333, and Mr. Russell $7,333.

⁽²⁾ Directors who are also our executive officers do not receive compensation for services rendered as a director.

⁽³⁾ Mr. McMillan resigned from our board of directors effective February 10, 2017.

67

Cash Compensation

We compensate each of our independent directors with an annual retainer of $40,000. In addition, we pay independent directors for attending board and committee meetings as follows:

• $2,500 in cash for each board meeting attended.

• $2,500 in cash for each committee meeting attended, except that the chairman of the committee is paid $3,000 for each meeting attended.

• $2,000 in cash for each teleconference meeting of the board.

• $2,000 in cash for each teleconference meeting of any committee, except that the chairman of the committee is paid $3,000 for each teleconference meeting of the committee.

All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Stock Ownership

The following table shows, as of March 1, 2018, the amount of our Class A common stock and Class T common stock beneficially owned (unless otherwise indicated) by (i) any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our Class A common stock or Class T common stock, respectively (ii) our directors, (iii) our executive officers, and (iv) all of our directors and executive officers as a group.

Name and Address of Beneficial Owner of Class A and Class T Shares, as indicated (1)	Amount and Nature of Beneficial Ownership of Class A Shares		Percent of all Class A Shares	Amount and Nature of Beneficial Ownership of Class T Shares	Percent of all Class T Shares
Burns Family Trust	—		—	21,175	7.47%
Burnell D & Shirley Kraft Rev Trust	—		—	16,304	5.75%
Julie W Lorenzen	—		—	15,961	5.63%
Comrit Investments I, Limited Partnership (2)	1,755,752		19.70%	—	—
Peter M. Bren (3)	31,833	(4) (5)	0.23%	—	—
Charles J. Schreiber, Jr. (3)	56,529	(4)	0.51%	—	—
Jeffrey K. Waldvogel	—		—	—	—
Stacie K. Yamane	—		—	—	—
George R. Bravante, Jr.	—		—	—	—
Jon D. Kline	—		—	—	—
Keith P. Russell	—		—	—	—

_____________________

⁽¹⁾ The address of each named beneficial owner is 800 Newport Center Drive, Suite 700, Newport Beach, California 92660.

⁽²⁾ Decisions regarding the voting or disposition of the shares of our common stock held by Comrit Investments I, Limited Partnership are made by the majority vote of the board of directors of Comrit Investments Ltd., the sole general partner of the limited partnership. The current members of the board of directors of Comrit Investments Ltd. are David Lubetzky and Iddo Kook. Comrit Investments I, Limited Partnership owns only shares of the Company’s Class A common stock and does not have an ownership interest in KBS Capital Advisors.

⁽³⁾ None of the shares is pledged as security.

⁽⁴⁾ Includes 20,404.0430 shares of our Class A common stock owned by KBS Capital Advisors, which is indirectly owned and controlled by Messrs. Bren and Schreiber.

⁽⁵⁾ Excludes 21,609.1590 shares of our Class A common stock held by three of Mr. Bren’s children for which Mr. Bren disclaims beneficial ownership.  On August 11, 2015, Mr. Bren purchased 21,181.2390 shares of our Class A common stock on behalf of and for the accounts of three of his children.  The balance of the shares were issued to Mr. Bren’s children as a stock dividend.

68

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Director Independence

Although our shares are not listed for trading on any national securities exchange, a majority of our directors, and all of the members of the audit committee and the conflicts committee, are “independent” as defined by the New York Stock Exchange. The New York Stock Exchange standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, our board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). Our board of directors has affirmatively determined that George R. Bravante, Jr., Jon D. Kline and Keith P. Russell each satisfies the New York Stock Exchange independence standards. None of these directors has ever served as (or is related to) an employee of ours or any of our predecessors or acquired companies or received or earned any compensation from us or any such entities except for compensation directly related to service as a director of us. Therefore, we believe that all of these directors are independent directors.

Our Policy Regarding Transactions with Related Persons

Our charter requires the conflicts committee to review and approve all transactions between us and our advisor, and any of our officers or directors or any of their affiliates. Prior to entering into a transaction with a related party, a majority of the conflicts committee must conclude that the transaction is fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties. In addition, our Code of Conduct and Ethics lists examples of types of transactions with related parties that would create prohibited conflicts of interest and requires our officers and directors to be conscientious of actual and potential conflicts of interest with respect to our interests and to seek to avoid such conflicts or handle such conflicts in an ethical manner at all times consistent with applicable law. Our executive officers and directors are required to report potential and actual conflicts to the Chief Compliance Officer, currently our advisor’s Chief Audit Executive, via the Ethics Hotline, to an internal audit representative or directly to the audit committee chair, as appropriate.

Certain Transactions with Related Persons

As further described below, we have entered into agreements with certain affiliates pursuant to which they provide services to us. KBS Holdings LLC acts as our sponsor. KBS Holdings owns and controls our advisor, KBS Capital Advisors LLC, and the dealer manager for our initial private and public offerings, KBS Capital Markets Group LLC. Messrs. Bren and Schreiber, two of our directors and executive officers, own a controlling interest in our sponsor and indirectly own and control KBS Capital Advisors and KBS Capital Markets Group.

Our Relationship with KBS Capital Advisors. Our advisor provides day-to-day management of our business. Among the services provided by our advisor under the terms of the advisory agreement are the following:

• finding, presenting and recommending to us real estate investment opportunities consistent with our investment policies and objectives;

• structuring the terms and conditions of our investments, sales and joint ventures;

• acquiring properties on our behalf in compliance with our investment objectives and policies;

• arranging for financing and refinancing of our properties;

• entering into leases and service contracts for our properties;

• supervising and evaluating each property manager’s performance;

• reviewing and analyzing the properties’ operating and capital budgets;

• assisting us in obtaining insurance;

• generating an annual budget for us;

• reviewing and analyzing financial information for each of our assets and our overall portfolio;

• formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of our properties;

• performing investor-relations services;

• maintaining our accounting and other records and assisting us in filing all reports required to be filed with the SEC, the IRS and other regulatory agencies;

• engaging in and supervising the performance of our agents, including our registrar and transfer agent; and

• performing any other services reasonably requested by us.

69

Our advisor is subject to the supervision of our board of directors and only has such authority as we may delegate to it as our agent. We initially entered our advisory agreement with our advisor on June 11, 2015 in connection with our initial private offering. On April 28, 2016, we entered an amended and restated advisory agreement in connection with the launch of our initial public offering which has been amended and renewed at various times thereafter. For the period from January 1, 2016 through the most recent date practicable, which was January 31, 2018, we compensated our advisor as set forth below.

Our advisor or its affiliates have paid, and will pay in the future, certain of our organization and offering costs. In our initial private offering we reimbursed our advisor for all organization and offering costs incurred on our behalf. In the public offering, we reimbursed our advisor and dealer manager for commercially reasonable organization and offering expenses they incurred on our behalf in connection with our initial public offering up to an amount that, when combined with selling commissions, dealer manager fees, and the stockholder servicing fee, and all other amounts spent by us on organization and offering expenses, does not exceed 15% of the aggregate gross proceeds of our primary initial public offering and the offering under our distribution reinvestment plan as of the date of reimbursement. In addition, our advisor and its affiliates are responsible for any organization and offering expenses (excluding selling commissions, the dealer manager fee and the stockholder serving fee) related to the primary public offering to the extent they exceed 1.0% of gross primary offering proceeds as of the termination of the primary offering. In the ongoing private offering our advisor has agreed to pay directly all offering expenses related to our second private offering without reimbursement by us.

Our advisor incurred approximately $1.5 million of organization and other offering expenses related to the initial private offering on our behalf, all of which we had reimbursed. From the inception of our public offering through December 31, 2016 and from January 1, 2017 through January 31, 2018, our advisor incurred approximately $3.7 million and $0.6 million, respectively of organization and offering expenses related to the public offering on our behalf, all of which was outstanding as of January 31, 2018. From the inception on October 3, 2017 of our ongoing private offering through January 31, 2018, our advisor incurred approximately $1.5 million of organization and offering expenses related to the second private offering on our behalf.

For acquisitions prior to August 9, 2017, we incurred acquisition fees payable to our advisor equal to 2.0% of the cost of investments acquired by us, including acquisition expenses and any debt attributable to such investments plus significant capital expenditures related to the development, construction or improvement of the investment budgeted as of the date of acquisition. Acquisition fees relate to services provided in connection with the selection and acquisition of real estate investments. Acquisition fees from January 1, 2016 through December 31, 2016 totaled approximately $2.3 million. We amended our advisory agreement on August 9, 2017 to eliminate the payment of an acquisition fee to our advisor and do not expect to incur real estate acquisition fees to affiliates going forward.

We also reimburse our advisor for customary acquisition expenses, whether or not we ultimately acquire the asset. From January 1, 2016 through December 31, 2016, our advisor and its affiliates incurred $0.3 million of dead deal costs. From January 1, 2017 through January 31, 2018, our advisor and its affiliates did not incur any such costs on our behalf.

We pay our advisor a monthly fee for asset management services. Through August 8, 2017, this fee was equal to the lesser of one-twelfth of 1.6% of the cost of our investments, less any debt secured by or attributable to the investments. As of August 9, 2017, the fee is equal to one-twelfth of 1.0% of the cost of our investments, including the portion of the investment that is debt financed. The cost of the real property investments is calculated as the amount paid or allocated to acquire the real property, plus the budgeted capital improvement costs for the development, construction or improvements to the property once such funds are disbursed pursuant to a final approved budget and fees and expenses related to the acquisition, but excluding acquisition fees paid or payable to our advisor. In the case of investments made through joint ventures, the asset management fee will be determined based on our proportionate share of the underlying investment. From January 1, 2016 through December 31, 2016, our asset management fees totaled $0.4 million. From January 1, 2017 through January 31, 2018, our asset management fees totaled $1.3 million. Of this amount, $0.5 million relating to the second and third quarters of 2017 was waived and $0.6 million relating to the period from October 1, 2017 to January 31, 2018 was accrued but payment was deferred by our advisor.

For property management fees, we pay the co-manager a monthly fee equal to a percentage of the rent (to be determined on a property by property basis, consistent with current market rates), payable and actually collected for the month, from certain property acquisitions for which we have entered a property management agreement with the co-manager. From January 1, 2016 through December 31, 2016, our property management fees totaled $68,000. From January 1, 2017 through January 31, 2018, our property management fees totaled $136,000, of which $20,000 was outstanding as of January 31, 2018.

70

Under our advisory agreement, we reimburse our advisor and its affiliates for certain expenses they incur in connection with their provision of services to us, including our allocable share of the salaries, benefits and overhead of internal audit department personnel providing services to us and promotional costs and expenses related to the leasing of properties. We do not reimburse our advisor or its affiliates for the salaries and benefits our advisor or its affiliates may pay to our executive officers. From January 1, 2016 through December 31, 2016, we had reimbursed our advisor for $0.2 million of operating expenses, including $0.1 million of employee costs. From January 1, 2017 through January 31, 2018, we had reimbursed our advisor for $0.2 million of operating expenses, including $176,000 of employee costs. As of January 31, 2018, we had $39,000 of operating expenses outstanding, including $38,000 of employee costs.

We, together with KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, KBS Capital Markets Group, our advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of coverage are shared. The cost of these lower tiers is allocated by our advisor and its insurance broker among each of the various entities covered by the plan, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. Our advisor’s and our dealer manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. We have renewed our participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

Our Relationship with KBS Capital Markets Group. We initially entered into a dealer manager agreement with KBS Capital Markets Group on June 11, 2015 in connection with the launch of our private offering. On April 28, 2016 we launched our initial public offering and entered a new dealer manager agreement with our dealer manager with respect to the public offering.

In both offerings, we paid the dealer manager up to 6.5% of the price per share of Class A common stock sold in the primary portion of the offering as a selling commission. For Class T common stock sold in the primary public offering, we paid selling commissions to the dealer manager in an amount up to 3.0% of the price per share of Class T common stock. The dealer manager reallowed 100% of selling commissions earned to participating broker-dealers. No sales commissions were paid on shares sold through the distribution reinvestment plan.  In both offerings, we paid the dealer manager up to 2.0% of the price per share of common stock sold in the primary portion of the private offering as a dealer manager fee. No dealer manager fee was payable on shares sold under the distribution reinvestment plan. From its dealer manager fee, the dealer manager could reallow to any participating broker-dealer up to 1.0% of the price per share of common stock sold in the offerings attributable to that participating broker-dealer as a marketing fee and in select cases the dealer manager could increase the reallowance.

From January 1, 2016 through December 31, 2016, we incurred selling commissions of $3.0 million of which 100% was reallowed to participating broker-dealers. From January 1, 2017 through January 31, 2018, we incurred selling commissions of $0.1 million of which 100% was reallowed to participating broker dealers. From January 1, 2016 through December 31, 2016, we incurred dealer manager fees of $1.1 million, of which $0.5 million was reallowed by our dealer manager to participating broker-dealers. From January 1, 2017 through January 31, 2018, we incurred dealer manager fees of $51,000, of which $24,000 was reallowed by our dealer manager to participating broker-dealers.

In addition to selling commissions and dealer manager fees, and subject to the limitations on organization and offering expenses described above, we are also obligated to reimburse our dealer manager and its affiliates for certain offering-related expenses that they incur on our behalf. These expenses include, among others, the cost of bona fide training and education meetings held by us (primarily the travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and travel, and meal and lodging costs for registered persons associated with our dealer manager and officers and employees of our affiliates to attend retail seminars conducted by broker-dealers. We reimburse our dealer manager for such underwriting compensation incurred as discussed in our documents. We also directly pay or reimburse our dealer manager for bona fide invoiced due diligence expenses of broker-dealers. From January 1, 2016 through December 31, 2016, we had reimbursed our dealer manager for $1.1 million in expenses related to the initial private offering. From January 1, 2016 through December 31, 2016, we had reimbursed our dealer manager for $28,000 in expenses related to the public offering. From January 1, 2017 through January 31, 2018, our dealer manager had incurred $79,000 of expenses outstanding related to the public offering.

71

Through the termination of our primary public offering on June 30, 2017, we paid the dealer manager an annual stockholder servicing fee of 1.0% of the purchase price per share (ignoring any discounts that may be available to certain categories of purchasers) of Class T common stock sold in the primary offering. The stockholder servicing fee accrued daily and was paid monthly in arrears, and the dealer manager reallowed 100% of the stockholder servicing fee to the broker dealer of record for services provided to Class T stockholders after the initial sale of the Class T share. No stockholder servicing fee was paid with respect to Class T shares purchased through the distribution reinvestment plan or issued pursuant to a stock dividend. From July 26, 2016 through December 31, 2016 and from January 1, 2017 through the termination of our primary public offering June 30, 2017, we incurred stockholder servicing fees of $37,000 and $12,000, respectively, all of which was reallowed to the broker dealer of record.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Registered Public Accounting Firm

During the year ended December 31, 2017, Ernst & Young LLP served as our independent registered public accounting firm and provided certain tax and other services. Ernst & Young has served as our independent registered public accounting firm since our formation.

Pre-Approval Policies

In order to ensure that the provision of such services does not impair the auditors’ independence, the audit committee charter imposes a duty on the audit committee to pre-approve all auditing services performed for us by our independent auditors, as well as all permitted non-audit services. In determining whether or not to pre-approve services, the audit committee considers whether the service is a permissible service under the rules and regulations promulgated by the SEC. The audit committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by our independent auditors, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting.

For the years ended December 31, 2017 and 2016 all services rendered by Ernst & Young were pre-approved in accordance with the policies and procedures described above.

Principal Independent Registered Public Accounting Firm Fees

The audit committee reviewed the audit and non-audit services performed by Ernst & Young, as well as the fees charged by Ernst & Young for such services. In its review of the non-audit service fees, the audit committee considered whether the provision of such services is compatible with maintaining the independence of Ernst & Young. The aggregate fees billed to us for professional accounting services, including the audit of our annual financial statements by Ernst & Young for the years ended December 31, 2017 and 2016, are set forth in the table below.

	2017		2016
Audit fees	$	382,200	$	423,200
Audit-related fees	—		—
Tax fees	36,289		44,025
All other fees	285		285
Total	$	418,774	$	467,510

For purposes of the preceding table, Ernst & Young’s professional fees are classified as follows:

• Audit fees - These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by Ernst & Young in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent auditors in connection with statutory and regulatory filings or engagements.

• Audit-related fees - These are fees for assurance and related services that traditionally are performed by independent auditors that are reasonably related to the performance of the audit or review of our financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, internal control reviews and consultation concerning financial accounting and reporting standards.

• Tax fees - These are fees for all professional services performed by professional staff in our independent auditor’s tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues. Services may also include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state and local tax issues related to due diligence.

• All other fees - These are fees for any services not included in the above-described categories.

72

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)Financial Statement Schedules

See the Index to Financial Statements at page F-1 of this report.

The following financial statement schedule is included herein at pages F-36 through F-37 of this report:

Schedule III - Real Estate Assets and Accumulated Depreciation and Amortization

(b)Exhibits

Ex.	Description
3.1	Second Articles of Amendment and Restatement, incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-11 filed October 16, 2015
3.2	Second Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-11 filed October 16, 2015
3.3	Articles Supplementary for Class T Shares, incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-11 filed April 20, 2016
4.1	Form of Subscription Agreement, incorporated by reference to Appendix A to the Company’s prospectus dated April 28, 2016 and filed May 3, 2016
4.2	Statement regarding restrictions in transferability of shares of common stock issued in a private offering (to be sent upon request and without charge to stockholders), incorporated by reference to Exhibit 4.1 on the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 9, 2017
4.3	Statement regarding restrictions on transferability of shares of common stock issued in a public offering (to be sent upon request and without charge to stockholders), incorporated by reference to Exhibit 4.2 on the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 9, 2017
4.4	Third Amended and Restated Distribution Reinvestment Plan, dated August 9, 2017, incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed August 10, 2017
4.5	Multiple Class Plan, effective as of April 11, 2016, incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-11 filed April 20, 2016
10.1	Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of April 27, 2017, incorporated by reference to Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed August 10, 2017
10.2	Agreement Regarding Payment of Certain Items of Compensation and Expenses Related to the Offering of Class A Shares Through an Online Distribution Channel by and among the Company, KBS Capital Advisors LLC, and KBS Capital Markets Group LLC dated as of April 27, 2017, incorporated by reference to Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed August 10, 2017
10.3	Amended and Restated Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of August 9, 2017, incorporated by reference to Exhibit 10.2 on the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 9, 2017
10.4	Purchase and Sale Agreement, by and among 213 W. Institute Owner LLC, 218-224 W Chicago Owner LLC and KBSGI 213 West Institute Place, LLC, effective as of August 29, 2017, incorporated by reference to Exhibit 10.4 on the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 9, 2017
10.5	Second Amended and Restated Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of September 29, 2017, incorporated by reference to Exhibit 10.3 on the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 9, 2017

73

Ex.	Description
10.6	Dealer Manager Agreement, by and between the Company, KBS Capital Advisors LLC and North Capital Private Securities Corporation, dated as of September 29, 2017, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed October 5, 2017
10.7	Loan Agreement, by and between KBSGI 421 SW 6th Avenue, LLC and Metropolitan Life Insurance Company, dated as of January 18, 2018
10.8	Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by KBSGI 421 SW 6th Avenue, LLC to Chicago Tile Insurance Company for the benefit of Metropolitan Life Insurance Company, dated as of January 18, 2018
10.9	Guaranty of Recourse Obligations, by and between KBSGI REIT Properties, LLC and Metropolitan Life Insurance Company, dated as of January 18, 2018
10.10	Promissory Note, by and between KBSGI 421 SW 6th Avenue, LLC and Metropolitan Life Insurance Company, dated as of January 18, 2018
10.11	Real Estate Property Co-Management Agreement, by and between and KBS Management Group LLC dated as of November 9, 2017
10.12	Amended and Restated Promissory Note with J.P. Morgan Chase Bank, N.A. dated November 9, 2017
10.13	Amended and Restated Term Loan and Security Agreement with J.P. Morgan Chase Bank, N.A. dated November 9, 2017
10.14	Amended and Restated Guaranty in favor of J.P. Morgan Chase Bank, N.A. dated November 9, 2017
21.1	Subsidiaries of the Company
23.1	Consent of Ernst & Young LLP
23.2	Consent of Duff & Phelps
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-11 filed March 25, 2016
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

74

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2017 and 2016	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016 and for the Period from January 27, 2015 to December 31, 2015	F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2017 and 2016 and for the Period from January 27, 2015 to December 31, 2015	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2016 and for the Period from January 27, 2015 to December 31, 2015	F-6
Notes to Consolidated Financial Statements	F-7
Financial Statement Schedule
Schedule III ─ Real Estate Assets and Accumulated Depreciation and Amortization	F-36

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

KBS Growth & Income REIT, Inc.

We have audited the accompanying consolidated balance sheets of KBS Growth & Income REIT, Inc. (the Company) as of December 31, 2017 and 2016, the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2017 and 2016 and the period from January 27, 2015 to December 31, 2015, and the related notes and financial statement schedule listed in the Index at Item 15(a), Schedule III - Real Estate Assets and Accumulated Depreciation and Amortization (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for the years ended December 31, 2017 and 2016 and the period from January 27, 2015 to December 31, 2015, in conformity with U.S. generally accepted accounting principles.

Adoption of ASU No. 2017-01

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses in 2017 due to the adoption of Accounting Standards Update No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2015.

Irvine, California

March 12, 2018

F-2

KBS GROWTH & INCOME REIT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	December 31,
	2017			2016
Assets
Real estate:
Land	$	31,309		$	22,909
Buildings and improvements	142,400			105,435
Tenant origination and absorption costs	17,047			13,528
Total real estate, cost	190,756			141,872
Less accumulated depreciation and amortization	(9,627		)	(3,292		)
Total real estate, net	181,129			138,580
Cash and cash equivalents	2,523			15,666
Rents and other receivables, net	1,920			956
Above-market leases, net	180			210
Prepaid expenses and other assets	1,388			501
Total assets	$	187,140		$	155,913
Liabilities and stockholders’ equity
Notes payable, net	$	112,780		$	81,375
Accounts payable and accrued liabilities	2,717			2,023
Due to affiliates	1,787			1,434
Distributions payable	385			377
Below-market leases, net	5,910			5,029
Other liabilities	1,828			1,254
Total liabilities	125,407			91,492
Commitments and contingencies (Note 11)
Redeemable common stock	2,314			1,791
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	—			—
Class A common stock, $.01 par value per share; 500,000,000 shares authorized, 9,149,100 and 8,846,164 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively	91			88
Class T common stock, $.01 par value per share; 500,000,000 shares authorized, 281,537 and 94,018 shares issued and outstanding as of December 31, 2017 and December 31, 2016, respectively	3			1
Additional paid-in capital	76,265			71,992
Cumulative distributions and net losses	(16,940		)	(9,451		)
Total stockholders’ equity	59,419			62,630
Total liabilities and stockholders’ equity	$	187,140		$	155,913

See accompanying notes to consolidated financial statements.

F-3

KBS GROWTH & INCOME REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

	Year Ended December 31, 2017			Year Ended December 31, 2016			For the Period from January 27, 2015 to December 31, 2015
Revenues:
Rental income	$	13,577		$	6,179		$	879
Tenant reimbursements	3,288			630			69
Other operating income	96			46			—
Total revenues	16,961			6,855			948
Expenses:
Operating, maintenance, and management	3,783			1,497			217
Property management fees and expenses to affiliate	124			68			—
Real estate taxes and insurance	2,087			619			115
Asset management fees to affiliate	632			399			22
Real estate acquisition fees to affiliate	—			2,316			428
Real estate acquisition fees and expenses	—			405			152
General and administrative expenses	1,471			1,532			158
Depreciation and amortization	7,618			3,004			341
Interest expense	3,287			1,224			292
Total expenses	19,002			11,064			1,725
Other income (loss):
Interest and other income	48			120			1
Loss from extinguishment of debt	(206		)	—			—
Total other (loss) income	(158		)	120			1
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Class A Common Stock:
Net loss	$	(2,131	)	$	(4,080	)	$	(773	)
Net loss per common share, basic and diluted	$	(0.23	)	$	(0.55	)	$	(1.29	)
Weighted-average number of common shares outstanding, basic and diluted	9,080,826			7,393,983			598,123
Class T Common Stock:
Net loss	$	(68	)	$	(9	)	$	(3	)
Net loss per common share, basic and diluted	$	(0.28	)	$	(0.68	)	$	(1.62	)
Weighted-average number of common shares outstanding basic and diluted	246,737			13,718			1,774

See accompanying notes to consolidated financial statements.

F-4

KBS GROWTH & INCOME REIT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(dollars in thousands)

	Common Stock							Additional Paid-in Capital			Cumulative Distributions and Net Losses			Total Stockholders’ Equity
	Class A				Class T
	Shares		Amounts		Shares	Amounts
Balance, January 27, 2015	20,000		$	—	—	$	—	$	200		$	—		$	200
Net loss	—		—		—	—		—			(776		)	(776		)
Issuance of common stock	2,194,161		22		—	—		19,083			—			19,105
Transfers to redeemable common stock	—		—		—	—		(54		)	—			(54		)
Stock dividends issued	2,660		—		—	—		24			(24		)	—
Distributions declared	—		—		—	—		—			(195		)	(195		)
Commissions on stock sales and dealer manager fees to affiliate	—		—		—	—		(1,085		)	—			(1,085		)
Other offering costs	—		—		—	—		(1,089		)	—			(1,089		)
Balance, December 31, 2015	2,216,821		22		—	—		17,079			(995		)	16,106
Net loss	—		—		—	—		—			(4,089		)	(4,089		)
Issuance of common stock	6,559,574		65		93,918	1		60,532			—			60,598
Transfers to redeemable common stock	—		—		—	—		(1,738		)	—			(1,738		)
Stock dividends issued	69,769		1		100	—		711			(712		)	—
Distributions declared	—		—		—	—		—			(3,655		)	(3,655		)
Commissions on stock sales, dealer manager fees and stockholder servicing fees to affiliate	—		—		—	—		(4,200		)	—			(4,200		)
Other offering costs	—		—		—	—		(392		)	—			(392		)
Balance, December 31, 2016	8,846,164		88		94,018	1		71,992			(9,451		)	62,630
Net loss	—		—		—	—		—			(2,199		)	(2,199		)
Issuance of common stock	380,538		2		185,845	2		5,417			—			5,421
Transfers to redeemable common stock	—		—		—	—		(523		)	—			(523		)
Redemptions of common stock	(145,214	)	—		—	—		(1,210		)	—			(1,210		)
Stock dividends issued	67,612		1		1,674	—		706			(707		)	—
Distributions declared	—		—		—	—		—			(4,583		)	(4,583		)
Commissions on stock sales, dealer manager fees and stockholder servicing fees to affiliate	—		—		—	—		(103		)	—			(103		)
Other offering costs	—		—		—	—		(14		)	—			(14		)
Balance, December 31, 2017	9,149,100		$	91	281,537	$	3	$	76,265		$	(16,940	)	$	59,419

See accompanying notes to consolidated financial statements.

F-5

KBS GROWTH & INCOME REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31, 2017			Year Ended December 31, 2016			For the Period from January 27, 2015 to December 31, 2015
Cash Flows from Operating Activities:
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	7,618			3,004			341
Property damage loss	—			134			—
Deferred rents	(898		)	(500		)	(226		)
Allowance for doubtful accounts	161			31			—
Amortization of above- and below-market leases, net	(1,484		)	(708		)	(9		)
Amortization of deferred financing costs	725			162			26
Unrealized gain on derivative instrument	(178		)	—			—
Loss from extinguishment of debt	206			—			—
Changes in operating assets and liabilities:
Rents and other receivables	(159		)	(93		)	(79		)
Prepaid expenses and other assets	(812		)	(444		)	(62		)
Accounts payable and accrued liabilities	289			1,641			210
Due to affiliates	416			(172		)	205
Other liabilities	574			999			256
Net cash provided by (used in) operating activities	4,259			(35		)	(114		)
Cash Flows from Investing Activities:
Acquisitions of real estate	(43,659		)	(115,034		)	(21,277		)
Improvements to real estate	(3,772		)	(124		)	—
Net cash used in investing activities	(47,431		)	(115,158		)	(21,277		)
Cash Flows from Financing Activities:
Proceeds from notes payable	42,250			71,589			17,246
Proceeds from note payable to affiliate	—			—			2,630
Principal payments on notes payable	(11,260		)	(5,125		)	(900		)
Principal payments on note payable to affiliate	—			—			(2,630		)
Payments of deferred financing costs	(417		)	(1,308		)	(315		)
Cash distribution advance from affiliate	—			1,139			198
Proceeds from issuance of common stock	3,107			58,805			19,051
Payments to redeem common stock	(1,210		)	—			—
Payments of commissions on stock sales and related dealer manager fees	(103		)	(4,200		)	(1,085		)
Other offering costs paid to affiliates	(63		)	(968		)	—
Payments of other offering costs	(14		)	(392		)	(58		)
Distributions paid to common stockholders	(2,261		)	(1,574		)	(53		)
Net cash provided by financing activities	30,029			117,966			34,084
Net (decrease) increase in cash and cash equivalents	(13,143		)	2,773			12,693
Cash and cash equivalents, beginning of period	15,666			12,893			200
Cash and cash equivalents, end of period	$	2,523		$	15,666		$	12,893
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	2,605		$	1,077		$	214
Supplemental Disclosure of Noncash Investing and Financing Activities:
Stock dividends issued	$	707		$	712		$	24
Increase in other offering costs due to affiliates	$	—		$	—		$	1,031
Increase in cash distributions payable	$	—		$	289		$	88
Dividends paid to common stockholders through common stock issuances pursuant to the distribution reinvestment plan	$	2,314		$	1,792		$	54
Increase in accrued improvements to real estate	$	393		$	61		$	22

See accompanying notes to consolidated financial statements.

F-6

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017

1. ORGANIZATION

KBS Growth & Income REIT, Inc. (the “Company”) was formed on January 12, 2015 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2015. Substantially all of the Company’s business is conducted through KBS Growth & Income Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on January 14, 2015. The Company is the sole general partner of, and owns a 0.1% partnership interest in, the Operating Partnership. KBS Growth & Income REIT Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on January 14, 2015, owns the remaining 99.9% partnership interest in the Operating Partnership and is the sole limited partner. The Company is the sole member and manager of REIT Holdings.

Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement between the Company and the Advisor initially entered into on June 11, 2015, and amended at various times thereafter (the “Advisory Agreement”). The Advisor conducts the Company’s operations and manages its portfolio of core real estate properties. On January 27, 2015, the Company issued 20,000 shares of its common stock to the Advisor at a purchase price of $10.00 per share. On June 11, 2015, these outstanding shares of common stock were designated Class A shares of common stock.

As of December 31, 2017, the Company had invested in four office properties. The Company intends to invest in a diverse portfolio of core real estate properties. The Company considers core properties to be existing properties with at least 80% occupancy. Based on the current market outlook, the Company expects its core focus in the U.S. office sector to reflect a value-creating core strategy, which is also known as a core-plus strategy.

The Company commenced a private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act of 1933, as amended, on June 11, 2015, pursuant to which the Company offered a maximum of $105,000,000 in shares of its Class A common stock for sale to accredited investors (the “Initial Private Offering”), of which $5,000,000 of Class A shares were offered pursuant to the Company’s distribution reinvestment plan. The Company ceased offering shares in the primary portion of the Initial Private Offering on April 27, 2016 and processed subscriptions for the primary Initial Private Offering dated on or prior to April 27, 2016 through May 30, 2016. KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Advisor, served as the dealer manager of the Initial Private Offering pursuant to a dealer manager agreement dated June 11, 2015 (the “Initial Private Offering Dealer Manager Agreement”).

On February 4, 2015, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to register an initial public offering of its common stock to offer a maximum of $1,500,000,000 in shares of common stock for sale to the public in a primary offering, consisting of two classes of shares: Class A and Class T (the “Primary Offering”) and a maximum of  $800,000,000 in both classes of shares of its common stock pursuant to the Company’s distribution reinvestment plan (the “DRP Offering” and, together with the Primary Offering, the “Public Offering”). The SEC declared the Company’s registration statement effective on April 28, 2016 and the Company retained the Dealer Manager to serve as the dealer manager of the Public Offering pursuant to a dealer manager agreement dated April 28, 2016 (the “Public Offering Dealer Manager Agreement”). The Company terminated the Primary Offering effective June 30, 2017.

The Company continues to offer shares of common stock pursuant to the DRP Offering. In some states, the Company will need to renew the registration statement annually to continue the DRP Offering. The Company may terminate the DRP Offering at any time.

On October 3, 2017, the Company launched a private placement offering exempt from registration pursuant to Rule 506(c) of Regulation D of the Securities Act pursuant to which the Company is currently offering a maximum of $1,000,000,000 in shares of its Class A common stock to accredited investors (the “Second Private Offering”). Prior to the launch of the Second Private Offering, on September 29, 2017, the Company entered into a dealer manager agreement (the “NCPS Dealer Agreement”) with the Advisor and North Capital Private Securities Corporation (“NCPS”) in connection with the Second Private Offering.

F-7

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

The Company sold 8,548,972 shares of Class A common stock for gross offering proceeds of $76.8 million in the Initial Private Offering, including 74,744 shares of Class A common stock under its distribution reinvestment plan for gross offering proceeds of $0.7 million.

The Company sold 122,721 and 270,415 shares of Class A and Class T common stock in the Primary Offering, for aggregate gross offering proceeds of $3.9 million. As of December 31, 2017, the Company had sold 355,087 and 9,348 shares of Class A and Class T common stock in the DRP Offering for aggregate gross offering proceeds of $3.5 million.

As of December 31, 2017, the Company had sold 65,130 Class A common stock in the Second Private Offering for aggregate gross offering proceeds of $0.6 million.

As of December 31, 2017, the Company had redeemed 145,214 Class A shares for $1.2 million.

On August 11, 2015, two of the individuals who own and control the Company’s sponsor, Charles J. Schreiber, Jr. (who also acts as chief executive officer, the chairman of the board and a director of the Company) and Peter M. Bren (who also acts as president and director of the Company), purchased 21,181.2380 and 21,181.2390 shares of Class A common stock, respectively, each for an aggregate purchase price of $172,500 or $8.144 per share. The per share purchase price reflects an 8.5% discount to the $8.90 offering price in the Private Offering in effect on the date of their purchase because selling commissions and dealer manager fees were not paid in connection with the sales. Mr. Bren’s investment was made on behalf of and for the account of three of his children, and he has disclaimed beneficial ownership of the shares. The Company issued these shares in private transactions exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933.

As described above, the Company intends to use substantially all of the net proceeds from its private and public offerings to invest in a diverse portfolio of core real estate properties and real estate-related assets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company, REIT Holdings, and the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

The accompanying consolidated financial statements and notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC.

Use of Estimates

The preparation of the consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

F-8

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Revenue Recognition

Real Estate

The Company recognizes 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 reasonably assured and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is 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 the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of 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 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.

The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.

The Company makes estimates of the collectibility of its tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. Management specifically analyzes accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Cash and Cash Equivalents

The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income.

Real Estate

Depreciation and Amortization

Real estate costs related to the acquisition and improvement of properties are capitalized and amortized 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. The Company considers 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. The Company anticipates the estimated useful lives of its assets by class to be generally as follows:

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

F-9

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Real Estate Acquisition Valuation

As a result of the Company’s early 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). The Company records 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.

The Company assesses 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.

The Company records 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. The Company amortizes 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.

The Company estimates 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, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods.

The Company amortizes 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 the Company 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.

Impairment of Real Estate and Related Intangible Assets and Liabilities

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its 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, the Company assesses the recoverability by estimating whether the Company 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, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company 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.

F-10

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2017. The Company intends to mitigate this risk by depositing funds with a major financial institution; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. There were no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2017.

Rents and Other Receivables

The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements.  In addition, the Company maintains an allowance for deferred rent receivable that arises from the straight-lining of rents.  The Company exercises judgment in establishing these allowances and considers payment history and current credit status of its tenants in developing these estimates. 

Derivative Instruments

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate notes payable. The Company records 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 stockholders’ 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 Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded to accumulated other comprehensive income (loss) to earnings.

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close.

F-11

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

F-12

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Redeemable Common Stock

In connection with the Private Offering, the Company adopted a share redemption program that enabled stockholders to sell their shares to the Company in limited circumstances. On March 16, 2016, the Company adopted an Amended and Restated Share Redemption Program in anticipation of the commencement of the Public Offering and related designation of Class T shares of common stock.

There are several limitations on the Company’s ability to redeem shares under the share redemption program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), the Company may not redeem shares unless the stockholder has held the shares for one year.

• During any calendar year, the Company may redeem only the number of shares that it could purchase with the amount of net proceeds from the sale of shares under its distribution reinvestment plan during the prior calendar year. However, the Company may increase or decrease the funding available for the redemption of shares pursuant to the program upon ten business days’ notice to its stockholders.

• During any calendar year, the Company may redeem no more than 5% of the weighted average number of shares outstanding during the prior calendar year.

• The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

The Company initially redeemed shares submitted as an ordinary redemption at 95.0% of the price paid to acquire the shares from the Company. Notwithstanding the foregoing, stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the Company’s prospectus, as supplemented, for the Public Offering. For each class of shares designated, this amount equaled $9.40 per share. In August 2017, the Company established an estimated net asset value (“NAV”) per share of its common stock, and began redeeming all shares submitted in connection with an ordinary redemption at 95.0% of the Company’s most recent estimated NAV per share as of the applicable redemption date.

The Company treats redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence differently from other redemptions:

• There is no one-year holding requirement;

• Before the Company established an estimated NAV per share in August 2017, the redemption price was the amount paid to acquire the shares from the Company. Notwithstanding the foregoing, stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the prospectus, as supplemented, for the Public Offering. For each class of shares, this amount equaled $9.40 per share; and

• Effective starting with the August 2017 redemption cycle, the redemption price will be the estimated NAV per share as of the redemption date.

For purposes of determining whether a redeeming stockholder has held the share submitted for redemption for at least one year, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to the distribution reinvestment plan or received as a stock dividend will be deemed to have been acquired on the same date as the initial share to which the distribution reinvestment plan shares or stock dividend shares relate.

On August 9, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $8.75 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of June 30, 2017. The change in the redemption price was effective for August 2017 through November 2017 redemption dates.

F-13

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

On December 8, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $8.79 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to the Company’s net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and will be effective until the estimated value per share is updated.

The board may amend, suspend or terminate the share redemption program upon 30 days’ notice to stockholders, provided that the Company may increase or decrease the funding available for the redemption of shares pursuant to the share redemption program upon 10 business days’ notice. The Company may provide this notice by (a) including such information in a Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC or (b) a separate mailing to its stockholders.

The Company records amounts that are redeemable under the share redemption program as redeemable common stock liability in its consolidated balance sheets because the shares will be mandatorily redeemable at the option of the holder and therefore their redemption is outside the control of the Company. The maximum amount redeemable under the Company’s share redemption program is limited to the number of shares the Company could redeem with the amount of the net proceeds from the sale of shares under the distribution reinvestment plan during the prior calendar year. However, because the amounts that can be redeemed are determinable and only contingent on an event that is likely to occur (e.g., the passage of time) the Company presents the net proceeds from the current year and prior year distribution reinvestment plan, net of current year redemptions, as redeemable common stock in its consolidated balance sheets.

The Company will classify as liabilities financial instruments that represent a mandatory obligation of the Company to redeem shares. The Company’s redeemable common shares are contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to repurchase shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values.

Related Party Transactions

Pursuant to the Advisory Agreement, the Private Offering Dealer Manager Agreement and the Public Offering Dealer Manager Agreement, the Company is or was obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Private Offering and the Public Offering, the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company is or was also obligated to reimburse the Advisor and Dealer Manager for organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. See Note 9, “Related Party Transactions.”

In addition, in connection with certain property acquisitions, the Company, through indirect wholly owned subsidiaries, has entered into separate property management agreements (each, a “Property Management Agreement”) with KBS Management Group, LLC (the “Co-Manager”), an affiliate of the Advisor.

The Company records all related party fees as incurred, subject to any limitations described in the respective agreements. The Company had not incurred any disposition fees, subordinated participation in net cash flows or subordinated incentive fees payable to the Advisor through December 31, 2017.

F-14

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Selling Commissions and Dealer Manager Fees

In the Initial Private Offering, the Company paid the Dealer Manager up to 6.5% of the price per share of Class A common stock sold in the primary portion of the Private Offering as a selling commission. The Dealer Manager reallowed 100% of selling commissions earned to participating broker-dealers. No sales commissions were paid on shares sold through the distribution reinvestment plan.  In the Private Offering, the Company paid the Dealer Manager up to 2.0% of the price per share of Class A common stock sold in the primary portion of the Private Offering as a dealer manager fee. No dealer manager fee was payable on shares sold under the distribution reinvestment plan. From its dealer manager fee, the Dealer Manager could reallow to any participating broker-dealer up to 1.0% of the price per share of Class A common stock sold in the Private Offering attributable to that participating broker-dealer as a marketing fee and in special cases the dealer manager could increase the reallowance.

In the Public Offering, the Company paid selling commissions to the Dealer Manager in amounts up to 6.5% of the price per share of Class A common stock sold in the primary portion of the Public Offering and up to 3.0% of the price per share of Class T common stock sold in the primary portion of the Public Offering. Additionally, in the Public Offering, the Company paid dealer manager fees to the Dealer Manager in an amount up to 2.0% of the price per share of Class A and Class T common stock sold in the primary portion of the Public Offering. The Dealer Manager reallowed all selling commissions to participating broker dealers and may generally reallow (from its dealer manager fee) to any participating broker dealer up to 1.0% of the gross proceeds from the primary portion of the Public Offering attributable to that participating broker dealer as a marketing fee and in select cases up to 1.5% of the gross proceeds from the primary portion of the Public Offering was reallowed. No selling commissions or dealer manager fees were payable on shares of common stock sold under the distribution reinvestment plan.

The Advisor has agreed to pay selling commissions to NCPS of 0.5% of the price per share of Class A common stock sold in the Second Private Offering on behalf of the Company without reimbursement by the Company.

Acquisition Fees

Through August 8, 2017, the Company paid the Advisor 2.0% of the cost of investments acquired by the Company, including acquisition expenses and any debt attributable to such investments, plus significant capital expenditures budgeted as of the date of acquisition related to the development, construction or improvement of a real estate property. Acquisition fees calculated based on capital expenditures budgeted as of the date of acquisition were paid at the time funds were disbursed pursuant to a final approved budget upon receipt of an invoice by the Company. On August 9, 2017, the Company entered into an amended and restated advisory agreement with the Advisor, which, among other changes, eliminates the payment of acquisition fees to the Advisor.

Acquisition Expenses

The Company reimburses the Advisor for customary acquisition expenses (including expenses relating to potential investments that the Company does not close), such as legal fees and expenses (including fees of independent contractor in-house counsel that are not employees of the Advisor), costs of due diligence (including, as necessary, updated appraisals, surveys and environmental site assessments), travel and communications expenses, accounting fees and expenses and other closing costs and miscellaneous expenses relating to the acquisition of real estate properties.

Stockholder Servicing Fee

During the Public Offering, the Company paid the Dealer Manager an annual stockholder servicing fee of 1.0% of the purchase price per share (ignoring any discounts that may be available to certain categories of purchasers) of Class T common stock sold in the Primary Offering solely to the extent there was a broker dealer of record with respect to such Class T share that had entered into a currently effective selected dealer agreement or servicing agreement that provided for the payment to such broker dealer of the stockholder servicing fee with respect to such Class T share, and such broker dealer of record was in compliance with the applicable terms of such selected dealer agreement or servicing agreement related to such payment. To the extent payable, the stockholder servicing fee accrued daily and was paid monthly in arrears, and the Dealer Manager reallowed 100% of the stockholder servicing fee to such broker dealer of record for services provided to Class T stockholders after the initial sale of the Class T share. No stockholder servicing fee was paid with respect to Class T shares purchased through the distribution reinvestment plan or issued pursuant to a stock dividend.

F-15

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

The Company recorded the stockholder servicing fee as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum stockholder servicing fee payable in relation to the Class T share on the date the share was issued. For each share of Class T common stock in the Primary Offering, the maximum stockholder servicing fee equaled 4% of the purchase price per share (ignoring any discounts in purchase price that may be available to certain categories of purchasers).The Public Offering was terminated effective June 30, 2017. Pursuant to the terms of the Class T shares as set forth in the Articles Supplementary and Multiple Class Plan of the Company, the Company ceased accruing for stockholder servicing fees after June 30, 2017 and reversed the amounts previously accrued.

Asset Management Fee

Through August 8, 2017, the Company paid the Advisor a monthly fee equal to one-twelfth of 1.6% of the cost of its investments, less any debt secured by or attributable to the investments. The cost of the real property investments was calculated as the amount paid or allocated to acquire the real property, plus the budgeted capital improvement costs for the development, construction or improvements to the property once such funds were disbursed pursuant to a final approved budget and fees and expenses related to the acquisition, but excluding acquisition fees paid or payable to the Advisor.

Beginning August 9, 2017, pursuant to an amended and restated advisory agreement with the Advisor, the Company pays the Advisor a monthly fee equal to one‑twelfth of 1.0% of the cost of the real property investments, including any debt financing on the property. Asset management fee will be calculated as the amount paid or allocated to acquire the real property, plus budgeted capital improvement costs for the development, construction or improvements to the property once such funds are disbursed pursuant to a final approved budget and typical third‑party expenses related to the acquisition.

Property Management Fee

The Company pays the Co-Manager a monthly fee equal to a percentage of the rent (determined on a property by property basis, consistent with current market rates), payable and actually collected for the month, from certain property acquisitions for which the Company has entered a Property Management Agreement with the Co-Manager. See Note 9, “Related-Party Transactions — Real Estate Property Co-Management Agreements.”

Disposition Fee

For substantial assistance in connection with the sale of the Company’s assets, which includes the sale of a single asset or the sale of all or a portion of the Company’s assets through a portfolio sale, merger or business combination transaction, the Company will pay the Advisor or its affiliates a percentage of the contract sales price of the assets sold (including residential or commercial mortgage-backed securities issued by a subsidiary of the Company as part of a securitization transaction). The disposition fee will equal 1.5% of the contract sales price. The disposition fee is determined on a per transaction basis and is not cumulative. The Company will not pay a disposition fee upon the maturity, prepayment or workout of a loan or other debt-related investment, provided that (i) if the Company negotiates a discounted payoff with the borrower, the Company will pay a disposition fee and (ii) if the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such property.

Reimbursement of Operating Expenses

Through September 28, 2017, the Company reimbursed the expenses incurred by the Advisor or its affiliates in connection with their provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities and cybersecurity costs. The Company also reimbursed the Advisor for its allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company.

The Company reimbursed the Dealer Manager for certain fees and expenses it incurred for administering the Company’s participation in the DTCC Alternative Investment Product Platform, or the AIP Platform, with respect to certain accounts of the Company’s investors serviced through the AIP Platform.

Effective September 29, 2017, the Company will reimburse the Advisor for the following expenses it incurs in connection with providing services to the Company under the Advisory Agreement: the Company’s allocable portion of the costs of internal audit department personnel and promotional costs and expenses related to the leasing of properties.

F-16

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

The Company has entered, together with KBS Real Estate Investment Trust I, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS affiliated entities, an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2017, the Company renewed its participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To continue to qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s 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, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its 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 the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT.

The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for all open tax years through December 31, 2017. As of December 31, 2017, returns for the calendar years 2015 and 2016 remain subject to examination by major tax jurisdictions.

Segments

The Company had invested in four office buildings as of December 31, 2017. Substantially all of the Company’s revenue and net loss is from real estate, and therefore, the Company currently operates in one reportable segment.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding for the years ended December 31, 2017 and 2016 or the period from January 27, 2015 through December 31, 2015. For the purpose of determining the weighted average number of shares outstanding, stock dividends issued during the period presented are adjusted retroactively and treated as if they were issued and outstanding for all periods presented. 

The Company has declared and issued stock dividends on shares of the Company’s common stock during the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015 as follows:

	Amount Declared per Share Outstanding (1)	Total Shares Issued
For the Period from January 27, 2015 through December 31, 2015	0.00252056 shares	2,660
Year Ended December 31, 2016	0.01000004 shares	69,869
Year Ended December 31, 2017	0.00666664 shares	69,286

_____________________

⁽¹⁾ Stock dividends have been declared on a monthly basis and the amount declared per share outstanding assumes the share was issued and outstanding each date that was a record date for stock dividends during the periods presented. Stock dividends are issued in the same class of shares as the shares for which such stockholder received the stock dividend. The Company ceased issuing stock dividends to all stockholders on September 5, 2017. The Company's board of directors does not expect to authorize any additional stock dividends.

F-17

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

During the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015, aggregate cash distributions declared per share of Class A common stock were $0.49373176, $0.49999890 and $0.16712301 per share of Class A common stock, respectively, assuming the share was issued and outstanding each date that was a record date for distributions during the period. During the years ended December 31, 2017 and 2016, aggregate cash distributions declared per share of Class T common stock were $0.44464258 and $0.17462989, assuming the share was issued and outstanding each date that was a record date for distributions during the period. Distributions for the period from January 27, 2015 through August 31, 2017 were calculated at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were calculated at a rate of $0.00131849 per share per day. Each day during the year ended December 31, 2017 and the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2016 was a record date for distributions.

In accordance with FASB ASC Topic 260-10-45, Earnings Per Share, the Company uses the two-class method to calculate earnings per share. Basic earnings per share is calculated based on dividends declared (“distributed earnings”) and the rights of common shares and participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends declared during the period. The undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. The Company does not have any participating securities outstanding other than Class A Common Stock and Class T Common Stock during the periods presented.

	Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015
	2017			2016
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Less: Class A Common Stock cash distributions declared	4,472			3,649			195
Less: Class T Common Stock cash distributions declared	111			5			—
Undistributed net loss	$	(6,782	)	$	(7,743	)	$	(971	)
Class A Common Stock:
Undistributed net loss	$	(6,603	)	$	(7,729	)	$	(968	)
Class A Common Stock cash distributions declared	4,472			3,649			195
Net loss	$	(2,131	)	$	(4,080	)	$	(773	)
Net loss per common share, basic and diluted	$	(0.23	)	$	(0.55	)	$	(1.29	)
Weighted-average number of common shares outstanding, basic and diluted	9,080,826			7,393,983			598,123
Class T Common Stock:
Undistributed net loss	$	(179	)	$	(14	)	$	(3	)
Class T Common Stock cash distributions declared	111			5			—
Net loss	$	(68	)	$	(9	)	$	(3	)
Net loss per common share, basic and diluted	$	(0.28	)	$	(0.68	)	$	(1.62	)
Weighted-average number of common shares outstanding, basic and diluted	246,737			13,718			1,774

Square Footage, Occupancy and Other Measures

 Square footage, occupancy, number of tenants and other measures, including annualized base rent and annualized base rent per square foot, or amounts derived from such measures, used to describe real estate investments included in these Notes to Consolidated Financial Statements are presented on an unaudited basis.

F-18

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Recently Issued Accounting Standards Update

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.  In addition, the standard provided guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers upon transfer of control. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification.  ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted.  In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which deferred the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company elected to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption, January 1, 2018. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that are not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that are not completed as of January 1, 2018.

The primary source of revenue for the Company is generated through leasing arrangements, which are excluded from this standard. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that may be impacted by the new standard include other operating income and tenant reimbursements for substantial services earned at its properties.

For the year ended December 31, 2017, other operating income including parking revenues and tenant reimbursements for substantial services and other ancillary income in scope of ASC 606 were approximately 1% of consolidated revenue. Under current accounting standards, the Company typically recognizes other operating income when the amounts are fixed or determinable, collectability is reasonably assured, and services have been rendered. Under the new revenue recognition ASU, the recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. These services are normally provided at a point in time or over a specified period of time with respect to monthly parking revenue; therefore, revenue recognition under the new revenue recognition ASU is expected to be substantially similar to the recognition pattern under existing accounting standards.

Based on the Company’s evaluation of its contracts in scope, the adoption of the new revenue recognition standard is not expected to have a material impact to the Company’s financial statements on January 1, 2018.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”).  The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments.  ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected.  ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements.  ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early application of certain provisions of the standard is permitted for financial statements that have not been previously issued.  The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements.

F-19

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires lessors to identify lease and non-lease components under their leasing arrangements and allocate the total consideration in the lease agreement to these lease and non-lease components based on their relative standalone selling prices. Non-lease components will be subject to the new revenue recognition standard upon the Company’s adoption of the new leasing standard on January 1, 2019. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In January 2018, the FASB issued a proposed amendment to the leases ASU, which would add a transition option to the new leases standard that would allow entities to apply the transition provisions of the new standard at its adoption date instead of the earliest comparative periods presented in its financial statements. The FASB also proposed a practical expedient that would permit lessors to not separate lease and non-lease components if certain conditions are met. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements and if adopted by the FASB, applying the transition option and electing the practical expedient of the proposed amendment.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”).  ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income.  The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.  ASU No. 2016-13 also amends the impairment model for available-for-sale securities.  An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.  ASU No. 2016-13 also requires new disclosures.  For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes.  For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available for sale securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.  ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements, but does not expect the adoption of ASU No. 2016-13 to have a material impact on its financial statements.

F-20

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”).  ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows.  The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement);  and (d) Relating to distributions received from equity method investments, ASU No. 2016-15 provides an accounting policy election for classifying distributions received from equity method investments. Such amounts can be classified using a (1) cumulative earnings approach, or (2) nature of distribution approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity method earnings since inception.  Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Alternatively, an investor can choose to classify the distributions based on the nature of activities of the investee that generated the distribution. If the necessary information is subsequently not available for an investee to determine the nature of the activities, the entity should use the cumulative earnings approach for that investee and report a change in accounting principle on a retrospective basis; (e) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow.  ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements, but does not expect the adoption of ASU No. 2016-15 to have a material impact on its financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU No. 2016-18”). ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents.  Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows.  ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  The Company elected to early adopt ASU No. 2016-18 for the reporting period ended December 31, 2016 and it was applied retrospectively. As a result of the adoption of ASU No. 2016-18, there was no impact to the Company’s consolidated statements of cash flows as of December 31, 2017 and 2016, and for the period from January 27, 2015 to December 31, 2015 since the Company did not report any restricted cash for those periods.

F-21

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU No. 2017-01”) to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.  ASU No. 2017-01 provides a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business.  If the screen is not met, ASU No. 2017-01 (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace missing elements.  ASU No. 2017-01 provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs.  Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs.  ASU No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted.  The amendments can be applied to transactions occurring before the guidance was issued (January 5, 2017) as long as the applicable financial statements have not been issued.  The Company elected to early adopt ASU No. 2017-01 for the reporting period beginning January 1, 2017.  As a result of the adoption of ASU No. 2017-01, the Company’s acquisitions of investment properties beginning January 1, 2017 could qualify as asset acquisitions (as opposed to business combinations).  Transaction costs associated with asset acquisitions are capitalized, while transaction costs associated with business combinations will continue to be expensed as incurred.

3. RECENT ACQUISITION OF REAL ESTATE

During the year ended December 31, 2017, the Company acquired the following property (in thousands):

								Intangibles
Property Name	City	State	Acquisition Date	Land		Building and Improvements		Tenant Origination  and Absorption Costs		Above-Market Lease Assets		Below-Market Lease Liabilities			Total Purchase Price
Institute Property	Chicago	IL	11/9/2017	$	8,400	$	33,536	$	4,118	$	—	$	(2,395	)	$	43,659

The intangible assets and liabilities acquired in connection with this acquisition has weighted-average amortization periods as of the date of acquisition as follows (in years):

	Tenant Origination and Absorption Costs	Above-Market Lease Assets	Below-Market Lease Liabilities
Institute Property	5.7	—	5.9

The Company recorded this real estate acquisition as an asset acquisition. Included in the total purchase price was $0.5 million of capitalized acquisition costs. For the year ended December 31, 2017, the Company recognized $0.7 million of total revenues and $0.4 million of operating expenses from this property.

F-22

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

4. REAL ESTATE

As of December 31, 2017, the Company owned four office buildings containing 683,952 rentable square feet, which were collectively 97% occupied. The following table provides summary information regarding the properties owned by the Company as of December 31, 2017 (in thousands):

Property	Date Acquired	City	State	Property Type	Total Real Estate at Cost		Accumulated Depreciation and Amortization			Total Real Estate, Net
Von Karman Tech Center	08/12/2015	Irvine	CA	Office	$	20,892	$	(1,758	)	$	19,134
Commonwealth Building	06/30/2016	Portland	OR	Office	76,413		(4,876		)	71,537
The Offices at Greenhouse	11/14/2016	Houston	TX	Office	47,241		(2,696		)	44,545
Institute Property	11/09/2017	Chicago	IL	Office	46,210		(297		)	45,913
					$	190,756	$	(9,627	)	$	181,129

As of December 31, 2017, the following properties represented more than 10% of the Company’s total assets:

Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) (1)		Average Annualized Base Rent per sq. ft.		Occupancy
Von Karman Tech Center	Irvine, CA	101,161	$	19,134	10.2	%	$	2,277	$	22.51	100.0	%
Commonwealth Building	Portland, OR	224,122	71,537		38.2	%	5,393		25.40		94.7	%
The Offices at Greenhouse	Houston, TX	203,284	44,545		23.8	%	4,201		20.66		100.0	%
Institute Property	Chicago, IL	155,385	45,913		24.5	%	3,718		25.28		94.7	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

Operating Leases

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of December 31, 2017, the leases had remaining terms, excluding options to extend, of up to 9.4 years with a weighted-average remaining term of 4.5 years. Some of the leases have provisions to extend the term of the leases, options for early termination for all or a part of the leased premises after paying a specified penalty, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $1.2 million and $0.6 million as of December 31, 2017 and 2016, respectively.

During the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015, the Company recognized deferred rent from tenants, net of lease incentive amortization, of $0.9 million, $0.5 million, and $0.2 million, respectively. As of December 31, 2017 and 2016, the cumulative deferred rent balance was $1.8 million and $0.9 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $0.2 million and $0.2 million of unamortized lease incentives as of December 31, 2017 and 2016, respectively.

F-23

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

As of December 31, 2017, the future minimum rental income from the Company’s properties under its non-cancelable operating leases was as follows (in thousands):

2018	$	14,410
2019	13,880
2020	13,019
2021	11,323
2022	9,672
Thereafter	12,882
	$	75,186

As of December 31, 2017, the Company had a concentration of credit risk related to AECOM, a tenant in The Offices at Greenhouse in the engineering industry, which represented 19% of the Company’s annualized base rent. The tenant individually occupied 140,922 rentable square feet or approximately 21% of the total rentable square feet of the Company’s real estate portfolio. Of the 140,922 rentable square feet, 5,195 rentable square feet expires on July 24, 2019, with twothree-year extension options, and 135,727 rentable square feet expires on December 31, 2024, with twofive-year extension options. As of December 31, 2017, the annualized base rent for this tenant was approximately $3.0 million or $21.39 per square foot. No other tenant represented more than 10% of the Company’s annualized base rent.

As of December 31, 2017, the Company’s real estate properties were leased to approximately 80 tenants over a diverse range of industries. The Company’s highest tenant industry concentration (greater than 10% of annualized base rent) was as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Professional, scientific and legal	14	$	5,846	37.5	%
Information	9	2,168		13.9	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

As of December 31, 2017, no other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time.

F-24

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

5. TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND         BELOW-MARKET LEASE LIABILITIES

As of December 31, 2017 and 2016, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):

	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	2017			2016			2017			2016			2017			2016
Cost	$	17,047		$	13,528		$	213		$	214		$	(7,838	)	$	(5,727	)
Accumulated Amortization	(3,480		)	(1,253		)	(33		)	(4		)	1,928			698
Net Amount	$	13,567		$	12,275		$	180		$	210		$	(5,910	)	$	(5,029	)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the years ended December 31, 2017 and 2016 and for the period from January 27, 2015 through December 31, 2015 were as follows (in thousands):

	Tenant Origination and Absorption Costs									Above-Market Lease Assets								Below-Market Lease Liabilities
	For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015			For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015		For the Years Ended December 31,				For the Period from January 27, 2015 to December 31, 2015
	2017			2016						2017			2016					2017		2016
Amortization	$	(2,826	)	$	(1,135	)	$	(144	)	$	(30	)	$	(4	)	$	—	$	1,514	$	712	$	9

The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2017 is estimated to be amortized for the years ending December 31 as follows (in thousands):

	Tenant Origination and Absorption Costs			Above-Market Lease Assets			Below-Market Lease Liabilities
2018	$	(3,175	)	$	(30	)	$	1,720
2019	(2,707		)	(30		)	1,369
2020	(2,342		)	(28		)	1,123
2021	(1,885		)	(21		)	687
2022	(1,543		)	(21		)	499
Thereafter	(1,915		)	(50		)	512
	$	(13,567	)	$	(180	)	$	5,910
Weighted-Average Remaining Amortization Period	5.5			6.9			4.6

F-25

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

6. NOTES PAYABLE

As of December 31, 2017 and 2016, the Company’s notes payable consisted of the following (dollars in thousands):

	Book Value as of December 31, 2017			Book Value as of December 31, 2016			Contractual Interest Rate as of December 31, 2017(1)	Effective  Interest Rate as of December 31, 2017 (1)	Payment Type	Maturity Date (2)
Von Karman Tech Center Mortgage Loan (3)	$	—		$	11,260		(3)	(3)	(3)	(3)
Commonwealth Building Mortgage Loan (4)	41,000			41,000			One-month LIBOR + 2.15%	3.52%	Interest Only	07/01/2021
Term Loan (5)	72,800			30,550			One-month LIBOR + 2.00%	3.37%	Interest Only	11/09/2020
Unsecured Revolving Credit Facility (6)	—			—			(6)	(6)	(6)	(6)
Total notes payable principal outstanding	$	113,800		$	82,810
Deferred financing costs, net	(1,020		)	(1,435		)
Total notes payable, net	$	112,780		$	81,375

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2017. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2017 (consisting of the contractual interest rate), using interest rate indices as of December 31, 2017, where applicable.

⁽²⁾ Represents the maturity date as of December 31, 2017; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown.

⁽³⁾ On May 9, 2017, the Company paid off the Von Karman Tech Center Mortgage Loan and Von Karman Tech was added to the Term Loan as a collateral property. See footnote (5) below.

⁽⁴⁾ As of December 31, 2017, $41.0 million of the Commonwealth Building Mortgage Loan was outstanding and $6.4 million remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. On January 18, 2018, the Company refinanced the Commonwealth Building Mortgage Loan. See Note 12, “Subsequent Events - Refinancing of the Commonwealth Building Mortgage Loan.”

⁽⁵⁾ As of December 31, 2017, the outstanding balance under the Term Loan consisted of $48.5 million of term commitment and $24.3 million of revolving commitment, which bears interest at a rate per annum equal to 2.0% over one-month LIBOR. The Term Loan was secured by The Offices at Greenhouse, Von Karman Tech and Institute Property.

⁽⁶⁾ On October 11, 2017, the Unsecured Revolving Credit Facility was cancelled without any funds being disbursed because the Company did not meet the equity raised requirement for the three-month period ending October 1, 2017.

During the years ended December 31, 2017 and 2016, the Company incurred $3.3 million and $1.2 million of interest expense. During the period from January 27, 2015 to December 31, 2015, the Company incurred $0.3 million of interest expense, of which $19,023 relates to a bridge loan from the Advisor. As of December 31, 2017 and 2016, $0.3 million and $0.2 million of interest expense were payable, respectively. Included in interest expense for the years ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, were $0.7 million, $0.2 million and $25,809 of amortization of deferred financing costs, respectively. Interest expense was reduced by $0.2 million as a result of a change in fair value of the Company’s derivative instruments for the year ended December 31, 2017.

The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of December 31, 2017 (in thousands):

2018	$	—
2019	—
2020	72,800
2021	41,000
2022	—
Thereafter	—
	$	113,800

F-26

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

7. DERIVATIVE INSTRUMENT

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.

The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero.

During the year ended December 31, 2017, the Company entered into one interest rate swap with a notional amount of $48.5 million. This interest rate swap effectively fixes one-month LIBOR at a fixed-rate of 2.07% effective November 1, 2018 and maturing November 1, 2021. As of December 31, 2017, the interest rate swap is not designated as a hedging instrument. The Company classified the interest rate swap as prepaid expenses and other assets in the amount of $0.2 million on the accompanying consolidated balance sheet as of December 31, 2017.  For the year ended December 31, 2017, the Company recorded $0.2 million of unrealized gain on interest swap, which is included in interest expense in the accompanying consolidated statement of operations.

8. FAIR VALUE DISCLOSURES

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of long-lived assets). Fair value, as defined under GAAP, is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value:

Cash and cash equivalents, rent and other receivables, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items.

F-27

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Derivative instruments:The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses 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.

Notes payable: The fair value of the Company’s notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.

The following were the face values, carrying amounts and fair values of the Company’s notes payable as of December 31, 2017 and 2016, which carrying amounts generally do not approximate the fair values (in thousands):

	December 31, 2017						December 31, 2016
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	113,800	$	112,780	$	114,327	$	82,810	$	81,375	$	82,443

Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. The actual value could be materially different from the Company’s estimate of value.

As of December 31, 2017, the Company measured the following asset at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets  for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Asset derivative - interest rate swap	$	178	$	—	$	178	$	—

F-28

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

9. RELATED PARTY TRANSACTIONS

Pursuant to the Advisory Agreement, the Initial Private Offering Dealer Manager Agreement and the Public Offering Dealer Manager Agreement, the Company is or was obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Initial Private Offering and the Public Offering, the investment of funds in real estate, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company was also obligated to reimburse the Advisor and Dealer Manager for certain organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. The Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. In addition, the Advisor will pay all offering expenses related to the Second Private Offering without reimbursement by the Company.

In addition, in connection with certain property acquisitions, the Company, through indirect wholly owned subsidiaries, has entered into separate Property Management Agreements (defined below) with KBS Management Group, LLC, an affiliate of the Advisor (the “Co-Manager”).

The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform.

The Advisor also serves as the advisor for KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc. The Dealer Manager also serves as the dealer manager for KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc.

The Company, together with KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2017, the Company renewed its participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

During the year ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, no other business transactions occurred between the Company and KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc.

F-29

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, respectively, and any related amounts payable as of December 31, 2017 and 2016 (in thousands):

	Incurred Years Ended December 31,					Incurred for the Period from January 27, 2015 to December 31, 2015		Payable as of December 31,
	2017			2016				2017		2016
Expensed
Asset management fees (1)	$	632		$	399	$	22	$	418	$	—
Reimbursement of operating expenses (2)	185			151		205		18		17
Property management fees (3)	124			68		—		13		16
Real estate acquisition fees (4)	—			2,316		428		—		—
Related party interest expense (5)	—			—		19		—		—
Other Arrangement
Advisor advance for cash distributions (6)	—			1,139		199		1,338		1,338
Additional Paid-in Capital
Selling commissions	78			3,029		817		—		—
Dealer manager fees	51			1,134		268		—		—
Stockholder servicing fees (7)	(26		)	37		—		—		37
Reimbursable other offering costs (8)	14			392		1,080		—		26
	$	1,058		$	8,665	$	3,038	$	1,787	$	1,434

_____________________

⁽¹⁾ Through August 8, 2017, the asset management fee payable to the Advisor was a monthly fee equal to one-twelfth of 1.6% of the cost of the Company’s investments, less any debt secured by or attributable to the investments. Beginning on August 9, 2017, the asset management fee is a monthly fee payable to the Advisor in an amount equal to one-twelfth of 1.0% of the cost of the Company’s investments including the portion of the investment that is debt financed. During the second and third quarters of 2017, the Company incurred $0.5 million of asset management fees, all of which were waived by the Advisor. The Advisor agreed to defer payment of the asset management fee for the fourth quarter of 2017 of $0.4 million, all of which was accrued by the Company as of December 31, 2017.

⁽²⁾ See “Reimbursable Operating Expenses” below.

⁽³⁾ See “Real Estate Property Co-Management Agreements” below.

⁽⁴⁾ On August 9, 2017, the Company entered into an amended and restated advisory agreement with the Advisor in which the Advisor will no longer be paid an acquisition fee in connection with acquisitions on or after August 9, 2017.

⁽⁵⁾ Relates to interest expense as a result of a bridge loan from the Advisor. On August 12, 2015, in connection with the acquisition of Von Karman Tech Center, the Company borrowed $2.6 million pursuant to a bridge loan from the Advisor (the “Advisor Bridge Loan”). The principal under the promissory note bore simple interest from the date of the advance at the rate of 5% per annum. On September 3, 2015, the Company repaid $1.5 million of the Advisor Bridge Loan. On November 12, 2015, the Company paid off the remaining outstanding principal balance and interest due under the Advisor Bridge Loan of $1.1 million.

⁽⁶⁾ See “Advance from the Advisor” below.

⁽⁷⁾ The Public Offering was terminated effective June 30, 2017. Pursuant to the terms of the Class T shares as set forth in the Articles Supplementary and Multiple Class Plan of the Company, the Company ceased accruing for stockholder servicing fees after June 30, 2017 and reversed the amounts previously accrued.

⁽⁸⁾ See “Organization and Offering Costs” below.

Reimbursable Operating Expenses

Reimbursable operating expenses primarily related to directors and officers liability insurance, legal fees, state and local taxes, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $0.2 million and $0.1 million for the years ended December 31, 2017 and 2016, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2017 and 2016, respectively. The Company does not reimburse for employee costs in connection with services for which the Advisor earned or earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.

F-30

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Effective September 29, 2017, the Company eliminated its obligation to reimburse expenses incurred by the Advisor in connection with providing services pursuant to the Advisory Agreement, other than (i) the allocable portion of the costs of the internal audit department and (ii) promotional costs and expenses related to the leasing of properties.

Commencing with the quarter ended December 31, 2016, the Advisor must reimburse the Company the amount by which the Company’s aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of the Company’s average invested assets or 25% of the Company’s net income, 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, 2017 did not exceed the charter-imposed limitation.

Advance from the Advisor

The Advisor advanced funds to the Company, which are non-interest bearing, for distribution record dates through the period ended May 31, 2016. As of December 31, 2017, the total advanced funds due to the Advisor from the Company was approximately $1.3 million. The Company is only obligated to repay the Advisor for its advance if and to the extent that:

(i) the Company’s modified funds from operations (“MFFO”), as such term is defined by the Investment Program Association and interpreted by the Company, for the immediately preceding month exceeds the amount of cash distributions declared for record dates of such prior month (an “MFFO Surplus”), and the Company will pay the Advisor the amount of the MFFO Surplus to reduce the principal amount outstanding under the advance, provided that such payments shall only be made if management in its sole discretion expects an MFFO Surplus to be recurring for at least the next two calendar quarters, determined on a quarterly basis; or

(ii) Excess proceeds from third-party financings are available (“Excess Proceeds”), provided that the amount of any such Excess Proceeds that may be used to repay the principal amount outstanding under the advance shall be determined by the conflicts committee in its sole discretion.

In determining whether Excess Proceeds are available to repay the advance, the Company’s conflicts committee will consider whether cash on hand could have been used to reduce the amount of third-party financing provided to us. If such cash could have been used instead of third-party financing, the third-party financing proceeds will be available to repay the advance.

Real Estate Property Co-Management Agreements

In connection with its property acquisitions, the Company, through separate, indirect, wholly-owned subsidiaries, entered into separate property management agreements (each, a “Property Management Agreement”) with the Co-Manager for each of its properties. Under each Property Management Agreement, the Co-Manager will provide certain management services related to these properties in addition to those provided by the third-party property managers. In exchange for these services, the Company will pay the Co-Manager a monthly fee equal to a percentage of the rent, payable and actually collected for the month from each of the properties. Each Property Management Agreement has an initial term of one year and will be deemed renewed for successive one-year periods provided it is not terminated. Each party may terminate the Property Management Agreement without cause on 30 days’ written notice to the other party and may terminate each Property Management Agreement for cause on 5 days’ written notice to the other party upon the occurrence of certain events as detailed in each Property Management Agreement.

Property Name	Effective Date	Annual Fee Percentage
Von Karman Tech Center	07/31/2015	1.50%
Commonwealth Building	07/01/2016	1.25%
The Offices at Greenhouse	11/14/2016	0.25%
Institute Property	11/09/2017	1.00%

Organization and Offering Costs

Offering costs include all expenses incurred in connection with the offerings of securities by the Company. Organization costs include all expenses incurred in connection with the formation of the Company, including but not limited to legal fees and other costs to incorporate the Company.

F-31

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

With respect to the Public Offering, the Advisor and the Dealer Manager generally paid the organization and offering expenses of the Company incurred in the Primary Offering (other than selling commissions, dealer manager fees and stockholder servicing fees) directly.

The Company reimbursed the Advisor, the Dealer Manager and its affiliates up to 1% of gross proceeds raised in the Primary Offering for commercially reasonable organization and offering expenses (other than selling commissions, dealer manager fees and stockholder servicing fees). The Advisor, the Dealer Manager and their affiliates were responsible for all organization and other offering expenses (which excludes selling commissions, dealer manager fees and stockholder servicing fees) paid related to the Primary Offering to the extent they exceeded 1% of gross proceeds raised in the Primary Offering. The Company did not reimburse the Dealer Manager for wholesaling compensation expenses.

During the Initial Private Offering, the Company was obligated to reimburse the Advisor and its affiliates for all organization and offering costs (excluding wholesaling compensation expenses) paid by them on behalf of the Company.

The Advisor has agreed to pay directly all offering expenses related to the Second Private Offering without reimbursement by the Company.

Through December 31, 2017, the Advisor and its affiliates had incurred organization and other offering costs (which exclude selling commissions, dealer manager fees and stockholder servicing fees) on the Company’s behalf in connection with the Public Offering of approximately $4.3 million. As of December 31, 2017, the Company had recorded $39,358 of organization and other offering expenses related to the Public Offering, which amounts represent the Company's maximum liability for organization and other offering costs as of December 31, 2017 based on the limitations described above. As of December 31, 2017, the Company had recorded $1.5 million of organization and other offering costs related to the Initial Private Offering. Organization costs were expensed as incurred and offering costs are deferred and charged to stockholders’ equity as such amounts were reimbursed to the Advisor, the Dealer Manager or their affiliates from the gross proceeds of the applicable offering.

As of December 31, 2017, the Advisor had incurred $1.5 million in offering expenses related to the Second Private Offering.

F-32

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

10. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2017 and 2016 (in thousands, except per share amounts):

	2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues	$	4,033		$	4,187		$	4,028		$	4,713
Class A Common Stock:
Net loss	(190		)	(406		)	(760		)	(775		)
Net loss per common share, basic and diluted	(0.02		)	(0.04		)	(0.08		)	(0.08		)
Distributions declared per common share (1)	0.123			0.125			0.124			0.121
Class T Common Stock:
Net loss	(7		)	(18		)	(23		)	(20		)
Net loss per common share, basic and diluted	(0.05		)	(0.07		)	(0.08		)	(0.08		)
Distributions declared per common share (1)	0.099			0.100			0.124			0.121

	2016
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues	$	596		$	641		$	2,441		$	3,177
Class A Common Stock:
Net loss	(255		)	(1,906		)	(303		)	(1,616		)
Net loss per common share, basic and diluted	(0.07		)	(0.23		)	(0.03		)	(0.18		)
Distributions declared per common share (1)	0.123			0.125			0.126			0.126
Class T Common Stock:
Net loss	—			—			(1		)	(8		)
Net loss per common share, basic and diluted	(0.19		)	(0.36		)	(0.07		)	(0.20		)
Distributions declared per common share	—			—			0.074			0.101

__________________

⁽¹⁾ Distributions declared per common share assumes each share was issued and outstanding each day for the periods presented. Distributions for the periods from January 1, 2016 through February 28, 2016 and March 1, 2017 through August 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00131849 per day.

11. COMMITMENTS AND CONTINGENCIES

Economic Dependency

The Company depends on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide such services, the Company will be required to obtain such services from other sources.

Legal Matters

From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

F-33

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s property, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities.

12. SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Cash Distributions Paid

On January 2, 2018, the Company paid distributions of $0.4 million, which related to cash distributions on the Company’s common stock, declared for daily record dates for each day in the period from December 1, 2017 through December 31, 2017. On February 1, 2018, the Company paid cash distributions of $0.4 million, which related to cash distributions on the Company’s common stock, declared for daily record dates for each day in the period from January 1, 2018 through January 31, 2018. On March 1, 2018, the Company paid distributions of $0.3 million, which related to cash distributions on the Company’s common stock, declared for daily record dates for each day in the period from February 1, 2018 through February 28, 2018.

Distributions Authorized

On January 24, 2018, the Company’s board of directors authorized cash distributions on the outstanding shares of all classes of the Company’s common stock based on daily record dates for the period from March 1, 2018 through March 31, 2018, which the Company expects to pay in April 2018. On March 9, 2018, the Company’s board of directors authorized cash distributions on the outstanding shares of all classes of the Company’s common stock based on daily record dates for the period from April 1, 2018 through April 30, 2018 and May 1, 2018 through May 31, 2018, which the Company expects to pay in May 2018 and June 2018, respectively. Investors may choose to receive cash distributions or purchase additional shares through the Company’s distribution reinvestment plan. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00132452 per share per day.

Refinancing of the Commonwealth Building Mortgage Loan

On January 18, 2018, the Company, through an indirect wholly owned subsidiary (the “Owner”), closed the refinancing of the Commonwealth Building Mortgage Loan with an unaffiliated lender (the “Refinancing”). The Company repaid $41.0 million of principal in satisfaction of the Commonwealth Building Mortgage Loan. The Refinancing was comprised of a maximum loan amount of up to $51.4 million. At closing, $45.0 million of the loan was funded and the remaining $6.4 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The loan under the Refinancing matures on February 1, 2023, with twoone-year extension options, subject to certain terms and conditions contained in the loan documents. Monthly payments are interest-only with the remaining principal balance, all accrued and unpaid interest and all other sums due under the loan documents payable at maturity. The initial interest rate is 3.36% with the interest rate to be reset as set forth in the loan documents to the greater of 2.05% or a floating rate of 180 basis points over one-month LIBOR. If the LIBOR rate is equal to or greater than 2.90% for five consecutive business days, the Company has 30 days to enter into an interest rate cap agreement with a LIBOR strike rate of 3.90% or less. The Company has the right to prepay all or a portion of the loan under the Refinancing commencing on February 1, 2019, subject to certain fees and conditions contained in the loan documents.

F-34

KBS GROWTH & INCOME REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2017

KBS GI REIT Properties, LLC (“KBS GI REIT Properties”), the Company’s wholly owned subsidiary, in connection with the Refinancing, is providing a guaranty of the payment of certain potential liabilities, costs, losses, damages, fees and expenses incurred by the lender relating to the loan under the Refinancing as a result of certain intentional actions or omissions of the Owner in violation of the loan documents, or certain other occurrences in relation to the Commonwealth Building and/or the Owner, including the recovery of certain funds under the loan documents, as further described in the guaranty. KBS GI REIT Properties is also providing a guaranty of the principal balance and any interest or other sums outstanding under the loan of the Refinancing in the event of: certain bankruptcy, insolvency or related proceedings involving the Owner as described in the guaranty; and any transfer of the Owner’s interest in the Commonwealth Building in violation of the loan documents.

F-35

KBS GROWTH & INCOME REIT, INC.

SCHEDULE III

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION

December 31, 2017

(dollar amounts in thousands)

					Initial Cost to Company									Gross Amount at which Carried at Close of Period
Description	Location	Ownership Percent	Encumbrances		Land		Building and Improvements(1)		Total		Cost Capitalized Subsequent to Acquisition (2)			Land		Building and Improvements (1)		Total (3)		Accumulated Depreciation and Amortization			Original Date of Construction	Date Acquired
Von Karman Tech Center	Irvine, CA	100%	(4)		$	10,600	$	10,799	$	21,399	$	(507	)	$	10,600	$	10,292	$	20,892	$	(1,758	)	1980	08/12/2015
Commonwealth Building	Portland, OR	100%	$	41,000	7,300		66,544		73,844		2,569			7,300		69,113		76,413		(4,876		)	1948	06/30/2016
The Offices at Greenhouse	Houston, TX	100%	(4)		5,009		41,595		46,604		637			5,009		42,232		47,241		(2,696		)	2014	11/14/2016
Institute Place	Chicago, IL	100%	(4)		8,400		37,654		46,054		156			8,400		37,810		46,210		(297		)	1908	11/09/2017
		TOTAL			$	31,309	$	156,592	$	187,901	$	2,855		$	31,309	$	159,447	$	190,756	$	(9,627	)

____________________

⁽¹⁾ Building and improvements includes tenant origination and absorption costs.

⁽²⁾ Costs capitalized subsequent to acquisition is net of write-offs of fully depreciated/amortized assets.

⁽³⁾ The aggregate cost of real estate for federal income tax purposes was $187.6 million (unaudited) as of December 31, 2017.

⁽⁴⁾ As of December 31, 2017, these properties served as the security for the Term Loan, which had an outstanding principal balance of $72.8 million as of December 31, 2017.

F-36

KBS GROWTH & INCOME REIT, INC.

SCHEDULE III

REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (CONTINUED)

December 31, 2017

(dollar amounts in thousands)

	2017			2016			2015
Real Estate:
Balance at the beginning of the year	$	141,872		$	21,421		$	—
Acquisitions	46,054			120,448			21,399
Improvements	4,096			185			22
Write off of fully depreciated and fully amortized assets	(1,266		)	(48		)	—
Loss due to property damage	—			(134		)	—
Balance at the end of the year	$	190,756		$	141,872		$	21,421
Accumulated depreciation and amortization:
Balance at the beginning of the year	$	3,292		$	341		$	—
Depreciation and amortization expense	7,601			2,999			341
Write off of fully depreciated and fully amortized assets	(1,266		)	(48		)	—
Balance at the end of the year	$	9,627		$	3,292		$	341

F-37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newport Beach, State of California, on March 12, 2018.

KBS GROWTH & INCOME REIT, INC.
By:	/s/ Charles J. Schreiber, Jr.
	Charles J. Schreiber, Jr.
	Chairman of the Board, Chief Executive Officer and Director
	(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Name	Title	Date
/s/ CHARLES J. SCHREIBER, JR.	Chairman of the Board, Chief Executive Officer and Director (principal executive officer)	March 12, 2018
Charles J. Schreiber, Jr.
/s/ JEFFREY K. WALDVOGEL	Chief Financial Officer (principal financial officer)	March 12, 2018
Jeffrey K. Waldvogel
/s/ STACIE K. YAMANE	Chief Accounting Officer (principal accounting officer)	March 12, 2018
Stacie K. Yamane
/s/ GEORGE R. BRAVANTE, JR.	Director	March 12, 2018
George R. Bravante, Jr.
/s/ JON D. KLINE	Director	March 12, 2018
Jon D. Kline
/s/ KEITH P. RUSSELL	Director	March 12, 2018
Keith P. Russell

EX-10.7

Exhibit 10.7

LOAN AGREEMENT

Dated as of January 18, 2018

By and Between

KBSGI 421 SW 6TH AVENUE, LLC,as Borrower,

and

METROPOLITAN LIFE INSURANCE COMPANY,

as Lender

Property:

The Commonwealth Buildinglocated at 401-421 SW 6^th AvenuePortland, Oregon

TABLE OF CONTENTS

			Page
I.		DEFINITIONS; PRINCIPLES OF CONSTRUCTION	1
	Section 1.1	Definitions	1
	Section 1.2	Principles of Construction	12
II.		THE LOAN	13
	Section 2.1	The Loan	13
	Section 2.2	Interest Rate	13
	Section 2.3	Application of Payments	14
	Section 2.4	Security	14
	Section 2.5	Late Charge	14
	Section 2.6	Acceleration Upon Event of Default	14
	Section 2.7	Interest Upon Event of Default	14
	Section 2.8	Limitation on Interest	14
	Section 2.9	Prepayment	15
	Section 2.10	Interest Rate Cap Agreement	15
	Section 2.11	Extension Options	17
	Section 2.12	Conditional Advances	18
III.		TAXES, LIENS AND ENCUMBRANCES AND OTHER CHARGES	19
	Section 3.1	Payment of Impositions	19
IV.		REPRESENTATIONS AND WARRANTIES	19
	Section 4.1	Borrower Representations	19
V.		BORROWER COVENANTS	26
	Section 5.1	Borrower Affirmative Covenants	26
	Section 5.2	Borrower Negative Covenants	32
VI.		INSURANCE, CASUALTY AND CONDEMNATION	34
	Section 6.1	Insurance	34
	Section 6.2	Casualty and Condemnation	39
VII.		PROPERTY MANAGEMENT	43
	Section 7.1	The Management Agreement and Leasing Agreement	43
	Section 7.2	Prohibition Against Termination or Modification	43
	Section 7.3	Replacement of Manger or Leasing Agent	44
VIII.		CHANGE IN OWNERSHIP, PROHIBITION ON ADDITIONAL FINANCING AND ADDITIONAL OBLIGATIONS	44
	Section 8.1	Transfers of Interest in Borrower	44
	Section 8.2	Prohibition on Additional Financing	45
	Section 8.3	Restrictions on Additional Obligations	45

i

	Section 8.4	Statements Regarding Ownership	46
IX.		ENVIRONMENTAL HAZARDS	46
	Section 9.1	Representations and Warranties	46
	Section 9.2	Remedial Work	47
	Section 9.3	Environmental Site Assessment	47
	Section 9.4	Unsecured Obligations	48
X.		PARTICIPATION AND SALE OF LOAN	48
	Section 10.1	Sale of Loan/Participation	48
	Section 10.2	Splitting of the Mortgage	49
	Section 10.3	Cooperation	49
XI.		DEFAULTS	49
	Section 11.1	Event of Default	49
	Section 11.2	Remedies	51
XII.		MISCELLANEOUS	51
	Section 12.1	Successors and Assigns; Terminology	51
	Section 12.2	Lender’s Discretion	51
	Section 12.3	Governing Law	51
	Section 12.4	Modification	52
	Section 12.5	Notices	52
	Section 12.6	Waiver of Jury Trial	53
	Section 12.7	Headings	53
	Section 12.8	Severability	53
	Section 12.9	Preferences	54
	Section 12.10	Waiver of Notice	54
	Section 12.11	Remedies of Borrower	54
	Section 12.12	Expenses; Indemnity	54
	Section 12.13	Schedules and Exhibits Incorporated	55
	Section 12.14	No Joint Venture or Partnership; No Third Party Beneficiaries	55
	Section 12.15	Publicity	55
	Section 12.16	Waiver of Marshalling of Assets	55
	Section 12.17	Waiver of Offsets/Defenses/Counterclaims	55
	Section 12.18	Conflict; Construction of Documents; Reliance	56
	Section 12.19	Brokers and Financial Advisors	56
	Section 12.20	Exculpation	56
	Section 12.21	Prior Agreements	58
	Section 12.22	Liability of Borrower	58
	Section 12.23	Joint and Several Liability	58
	Section 12.24	Counterparts	58
	Section 12.25	Time of The Essence	58
	Section 12.26	No Merger	58
	Section 12.27	ORAL LOAN AGREEMENTS	58

ii

Schedules and Exhibits

Schedule 4.1.15 – Current Construction of Improvements

Schedule 4.1.16(d) – Unilateral Termination Rights of Tenants

Schedule 4.1.16(e) – Payments of Rents or Security Deposits in Excess of One Month’s Rent

Schedule 4.1.21 – Material Agreements

Exhibit A – Legal Description

Exhibit B – Leasing Guidelines

Exhibit C – Rent Roll

Exhibit D – Organizational Chart
Exhibit E – Nondisturbance Agreement
Exhibit F – Form of Collateral Assignment

iii

LOAN AGREEMENT

THIS LOAN AGREEMENT (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), dated as of January 18, 2018 (the “Execution Date”), by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation, having an address at One MetLife Way, Whippany, New Jersey 07981-1449 (together with its successors and assigns, “Lender”), and KBSGI 421 SW 6TH AVENUE, LLC, a Delaware limited liability company, having an address at c/o KBS Capital Advisors LLC, 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (“Borrower”).

All capitalized terms used herein shall have the respective meanings set forth in Article I hereof.

WITNESSETH:

WHEREAS, Borrower desires to obtain the Loan from Lender; and

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the conditions and terms of this Agreement and the other Loan Documents.

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:

I.DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1Definitions.

For all purposes of this Agreement, except as otherwise expressly provided:

“Accelerated Loan Amount” shall mean the Secured Indebtedness, and all other sums evidenced and/or secured by the Loan Documents, including without limitation any applicable prepayment fees.

“Advance Date” shall mean the date on which the Initial Loan Amount is disbursed to Borrower under the Loan.

“Affiliate” shall mean as to any Person, any other Person that, directly or indirectly, (i) owns more than ten percent (10%) of such Person, or (ii) is in Control of, is Controlled by or is under common ownership or Control with such Person.

“Agreement” shall have the meaning set forth in the introductory paragraph hereto.

“ALTA” shall mean American Land Title Association or any successor thereto.

Loan Agreement - Page 1

“Application” shall mean the application submitted for the Loan by Borrower.

“Approved Plans and Specifications” shall have the meaning set forth in Section 6.2.3(a).

“Architect” shall have the meaning set forth in Section 6.2.3(a).

“Assignment of Leases” shall mean that certain first priority Assignment of Leases, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights.

“Borrower” shall have the meaning set forth in the introductory paragraph hereto.

“Borrower’s Constituents” means the direct general partners, direct shareholders or direct members of Borrower, respectively as the case may be.

“Business Day” shall mean any day, Monday through Friday, on which Lender is conducting normal business operations.

“Business Income” shall mean the sum of (i) the total anticipated gross income from occupancy of the Property, (ii) the amount of all charges (such as, but not limited to, operating expenses, insurance premiums, and taxes) that are the obligation of Tenants or occupants to Borrower, (iii) the fair market rental value of any portion of the Property occupied by Borrower, and (iv) any other amounts payable to Borrower or to any affiliate of Borrower pursuant to the Leases.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

“Collateral Assignment” shall have the meaning set forth in Section 2.10.

“Compliance Party” shall have the meaning set forth in Section 4.1.29(b).

“Condemnation” shall mean a temporary or permanent taking by reason of any condemnation or similar eminent domain proceeding or by grant or conveyance in lieu of condemnation or eminent domain.

“Condemnation Proceeds” shall mean any and all compensation, awards, damages, proceeds and payments or relief for the Condemnation paid in connection with a Condemnation in respect of all or any part of the Property.

Loan Agreement - Page 2

“Conditional Advance(s)” shall have the meaning set forth in Section 2.12(a).

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person (subject to the rights of others to approve significant decisions), whether through ownership of voting securities, by contract or otherwise. The definition is to be construed to apply equally to variations of the word “Control” including “Controlled,” “Controlling” or “Controlled by.”

“Counterparty Opinion” shall have the meaning set forth in Section 2.10.

“Debt Yield” shall have the meaning set forth in Section 2.12(a)(v).

“Default Rate” shall mean an annual rate equal to the Interest Rate plus four percent (4%).

“Environmental Assessment” shall mean (i) that certain Phase I Environmental Site Assessment, dated April 2016, prepared by Ramboll Environ US Corporation (Project No. 045242IR) and (ii) that certain Phase I Environmental Site Assessment, dated December 13, 2017, prepared by ATC (Project No. 301MET0053).

“Environmental Indemnity” shall mean that certain Unsecured Indemnity Agreement, dated as of the date hereof, executed by Borrower, in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Environmental Policy” shall have the meaning set forth in Section 6.1.1(a)(xiii).

“EPI” shall have the meaning set forth in Section 6.1.1(a)(iii).

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Event of Default” shall have the meaning set forth in Section 11.1.

“Execution Date” shall have the meaning set forth in the introductory paragraph hereof.

“Existing Leases” shall have the meaning set forth in Section 4.1.16(a).

“Extension Options” shall have the meaning set forth in Section 2.11(a) hereof.

“Extension Rate Reset Date” shall have the meaning set forth in Section 2.11(b).

“Final Lease Draft” shall have the meaning set forth in Section 5.1.9(e).

“Full Replacement Cost” shall have the meaning set forth in Section 6.1.1(a)(i).

Loan Agreement - Page 3

“Future Loan Amount Due To Conditional Advances” shall mean the amount equal to the combined total of Conditional Advances then advanced to Borrower under Section 2.12 hereof.

“GAAP” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.

“General Transfer Requirements” shall have the meaning set forth in Section 8.1(b).

“Governmental Authority” shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.

“Guaranty” shall mean any Guaranty of Recourse Obligations, whether dated as of the date hereof or subsequently, executed by Liable Party in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Hazardous Materials” shall include without limitation:

(i)Those substances designated or defined as “hazardous substances,” “hazardous materials,” “toxic substances,” or “solid waste”, in, or listed or regulated under, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. Sections 9601 etseq.), as amended by Superfund Amendments and Reauthorization Act of l986 (Publ. L. 99-499 100 Stat. 1613), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Sections 6901 etseq.), and the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 etseq., and in the regulations promulgated pursuant to said laws, all as amended;

(ii)Those substances listed in the United States Department of Transportation Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302 and amendments thereto);

(iii)Any material, waste or substance which is (A) petroleum, (B) asbestos, (C) polychlorinated biphenyls, (D) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 etseq. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317); (E) a chemical substance or mixture regulated under the Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 etseq.; (F) flammable explosives; or (G) radioactive materials;

(iv)Any material, waste or substance which is included within any of the following: those substances defined as “hazardous waste,” “hazardous materials,” “hazardous substance,” “toxic substance,” “pollution,” or “wastes” in the Oregon Hazardous Waste Management Law, ORS Ch. 466, the Oregon Hazardous Materials Cleanup Laws, ORS Ch. 465,

Loan Agreement - Page 4

the Oregon Water Pollution Control Law, Ch. 468B and the Oregon Air Pollution Control Law, ORS Ch. 468A and in the regulations promulgated pursuant to such laws; and

(v)Such other substances, materials and wastes which are or become regulated as hazardous or toxic under applicable local, state or federal law, or the United States government, or which are classified as hazardous or toxic under federal, state, or local laws or regulations.

Notwithstanding the foregoing, the term "Hazardous Materials" shall expressly exclude pre-packaged supplies, cleaning materials and other janitorial and maintenance supplies, paint and other hazardous materials of a type and in a quantity readily available for purchase by the general public and normally stored, maintained and used by owners and managers of properties of a type similar to the Property and in compliance with the Requirements of Environmental Laws.

“Impairment of the Security” shall mean any or all of the following: (i) any of the Leases covering more than 22,500 square feet existing immediately prior to the damage, destruction, condemnation or casualty shall have been cancelled, or shall contain any exercisable right to cancel as a result of the damage, destruction or casualty; (ii) the casualty or damage occurs during the last year of the term of the Loan; or (iii) restoration of the Property is estimated to require more than one year to complete from the date of the occurrence.

“Impositions” shall mean real estate and other taxes, assessments, water and sewer charges, and other license or permit fees, liens, fines, penalties, interest and other similar public and private claims which may be payable, assessed, levied, imposed upon or become a lien on or against any portion of the Property.

“Improvements” shall have the meaning set forth in the granting clause of the Security Instrument.

“Initial Loan Amount” shall mean $45,000,000.00, being the initial amount funded by Lender to Borrower on the Advance Date.

“Insolvent Entity” shall have the meaning set forth in Section 11.1(c).

“Insurance Proceeds” shall mean all insurance proceeds payable to Borrower in connection with the Property whether or not such insurance coverage is specifically required under the terms of this Agreement.

“Interest Rate” shall mean a rate per annum equal to the greater of (a) 2.05% or (b) the sum of (i) 180 basis points plus (ii) the LIBOR Rate.

“Interest Rate Cap Agreement” shall mean, as applicable, any interest rate cap agreement (together with the confirmation and schedules relating thereto), in form and substance satisfactory to Lender, between Borrower and the counterparty thereunder or any Replacement Interest Rate Cap Agreement, in each case which also satisfies the requirements set forth in Section 2.10.

“Investor” shall have the meaning set forth in Section 10.1.

Loan Agreement - Page 5

“Land” shall have the meaning set forth in the Security Instrument.

“Late Charge” shall mean an amount equal to four cents ($0.04) for each dollar that is overdue.

“Lease” shall mean all leases and all other agreements for possession of all or any portion of the Property, including all of the same now or hereafter existing, and all extensions, modifications, amendments, expansions and renewals of any of the same and all Lease Guaranties.

“Lease Guaranty” shall mean every guarantee of any obligation under any Lease, including all modifications and amendments to such guaranties.

“Leasing Agent” shall mean CBRE, INC., a Delaware corporation, or any other leasing agent approved in accordance with the terms and conditions of the Loan Documents.

“Leasing Agreement” shall mean the Leasing Services Agreement, dated as of July 7, 2016, together with all amendments thereto prior to the date hereof, entered into by and between Borrower’s representative, KBS CAPITAL ADVISORS LLC, a Delaware limited liability company, and Leasing Agent, and all amendments thereto entered into in accordance with the terms and conditions set forth in this Agreement, pursuant to which the Leasing Agent is to provide leasing services with respect to the Property.

“Leasing Guidelines” shall mean the Leasing Guidelines attached to this Agreement as Exhibit B, as the same may be amended, modified or supplemented in accordance with the provisions of this Agreement by Lender.

“Lender” shall have the meaning set forth in the introductory paragraph hereof.

“Lender’s Address for Insurance Notification” shall mean: Metropolitan Life Insurance Company, its affiliates and/or successors and assigns, One MetLife Way, Whippany, New Jersey 07981-1449, Attention: Real Estate Investors Insurance Manager.

“Liable Party” shall mean KBSGI REIT PROPERTIES, LLC, a Delaware limited liability company, and any other Person hereafter executing the Environmental Indemnity (other than Borrower) and/or any guaranty of any of Borrower’s obligations under the Loan Documents.

“LIBORBusiness Day” shall mean a day both (i) commercial banks in London are open for international business (including dealings in U.S. dollar deposits), and (ii) any day Lender is open for business in New York City.

“LIBOR Rate” shall mean the one month London interbank offered rate for deposits in U.S. dollars rounded upwards, if necessary, to the nearest one one-hundredth (1/100^th) of one percent appearing on the display designated as Reuters Screen LIBOR01 Page, or such other page as may replace LIBOR01 on that service (or such other service as may be nominated as the information vendor by the ICE Benchmark Administration (the “IBA”), or successor administrator to the IBA, for the purpose of displaying the IBA’s, or successor

Loan Agreement - Page 6

administrator’s, interest settlement rates for U.S. dollar deposits as the composite offered rate for London interbank deposits). If the aforementioned sources of the LIBOR Rate are no longer available, then the term “LIBOR Rate” shall mean the one month London interbank offered rate for deposits in U.S. dollars rounded upwards, if necessary, to the nearest one one-hundredth (1/100^th) of one percent as shown on the appropriate Bloomberg Financial Markets Services Screen or any successor index on such service under the heading “USD”. In the event the LIBOR Rate is no longer available, it shall be replaced by the nearest equivalent or replacement benchmark rate as reasonably determined by Lender in its sole discretion. If the applicable rate as described above is below zero, LIBOR Rate will be deemed to be zero.

“Liens and Encumbrances” shall mean any lien or encumbrance on the Property, including deeds of trust, mortgages, security interests, conditional sales, mechanic liens, tax liens or assessment liens (including any tax liens or assessment liens to secure repayment of any loan or other financing including, without limitation, any Property-Assessed Clean Energy Loan) regardless of whether or not they are subordinate to the lien created by the Security Instrument.

“Loan” shall mean, collectively, the indebtedness evidenced by the Note with interest at the rates set forth herein, all additional advances or fundings made by Lender, and any other amounts required to be paid by Borrower under any of the Loan Documents.

“Loan Amount” shall mean an amount equal to the Initial Loan Amount plus the Future Loan Amount Due To Conditional Advances.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Assignment of Leases, the Subordination of Management Agreement, the Subordination of Leasing Agreement, and any and all other documents now or hereafter executed and/or delivered to and accepted by Lender for the purpose of evidencing or securing the Loan (except the Environmental Indemnity and the Guaranty, if any), as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time. The Environmental Indemnity and the Guaranty, if any, are not Loan Documents and shall survive repayment of the Loan or other termination of the Loan Documents to the extent set forth therein.

“Loan Transfer” shall have the meaning set forth in Section 10.1.

“Management Agreement” shall mean the Real Estate Property Management Agreement, dated as of June 14, 2016, together with all amendments thereto prior to the date hereof, entered into by and between Borrower’s representative, KBS CAPITAL ADVISORS LLC, a Delaware limited liability company, and Manager, and all amendments thereto entered into in accordance with the terms and conditions set forth in this Agreement, pursuant to which the Manager is to provide management and other services with respect to the Property.

“Manager” shall mean CBRE, INC., a Delaware corporation or any other manager approved in accordance with the terms and conditions of the Loan Documents.

“Material Adverse Change” shall mean a material adverse change in (i) the condition (financial, physical or otherwise) of the Property and/or (ii) the financial condition of

Loan Agreement - Page 7

Borrower that would reasonably be expected to impair its ability to perform its obligations under the Loan Documents to which it is a party.

“Material Agreements” shall mean each contract and agreement relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Property (other than the Management Agreement, the Leasing Agreement and the Leases), (i) under which there is an obligation of Borrower to pay more than $100,000 per annum, (ii) the termination of which would materially adversely affect the Property or the operation thereof, or (iii) which is not terminable by the owner of the Property upon thirty (30) days’ or less notice without payment of a termination fee.

“Maturity Date” shall have the meaning set forth in Section 2.2.1(b), as the same may be extended in accordance with Section 2.11.

“Maximum Future Loan Amount” shall not exceed $6,400,000.00.

“MetLife” shall have the meaning set forth in Section 4.1.28.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Net Condemnation Proceeds” shall mean all Condemnation Proceeds less the cost, if any, to Lender of recovering the Condemnation Proceeds including, without limitation, reasonable attorneys’ fees and expenses, and adjusters’ fees.

“Net Insurance Proceeds” shall mean Insurance Proceeds less the cost, if any, to Lender of recovering the Insurance Proceeds including, without limitation, reasonable attorneys’ fees and expenses, and adjusters’ fees.

“Nondisturbance Agreement” shall have the meaning set forth in Section 5.1.9(c).

“Note” shall mean that certain Promissory Note in the Loan Amount, dated as of the date hereof, made by Borrower in favor of Lender, as the same may be hereinafter amended, consolidated, split, severed, restated, replaced (whether by one or more replacement notes), supplemented, renewed, extended or otherwise modified from time to time.

“O&M Agreement” shall mean an Operations and Maintenance Agreement with respect to the Property, if any, reviewed and approved by Lender in connection with underwriting the Loan.

“OFAC” shall mean the United States Treasury Department's Office of Foreign Assets Control.

“OFAC Information” shall have the meaning set forth in Section 4.1.29(b).

“Permitted Exceptions” shall mean, collectively, (i) the lien and security interests created by the Loan Documents, (ii) those property specific exceptions to title recorded in the real estate records of the county where the Property is located and contained in Schedule B

Loan Agreement - Page 8

of the title insurance policy or policies which have been approved by Lender, (iii) Liens and Encumbrances, if any, for taxes imposed by any Governmental Authority not yet due or delinquent, (iv) inchoate mechanic’s liens incurred in the ordinary course provided the underlying obligation is not past due and (v) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion. Notwithstanding the foregoing, Permitted Exceptions shall not include any tax liens or assessment liens to secure repayment of any loan or other financing including, without limitation, any Property-Assessed Clean Energy Loan.

“Permitted Indebtedness” shall have the meaning set forth in Section 8.3.

“Person” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

“Personal Property” shall have the meaning set forth in the Security Instrument.

“Plan” shall have the meaning set forth in Section 4.1.5.

“Policies” and “Policy” shall mean all insurance provided for in Section 6.1.1(a) and obtained under valid and enforceable policies.

“Premiums” shall mean all premiums for the insurance policies required under this Agreement.

“Prepayment Commencement Date” shall mean the first day following the twelfth (12^th) month following the month in which the Advance Date occurs.

“Projected NOI” shall have the meaning set forth in Section 2.12(a)(v).

“Property” shall mean the fee estate of Borrower, the Improvements thereon and all personal property owned by Borrower and encumbered by the Security Instrument, together with all rights pertaining to such property and Improvements, all as more particularly described in the granting clauses of the Security Instrument.

“Property-Assessed Clean Energy Loan” shall mean any financing obtained through a federal of state regulated energy-efficiency and clean energy loan program.

“Protection Trigger Event” shall have the meaning set forth in Section 2.10.

“Protection Trigger Rate” shall have the meaning set forth in Section 2.10.

“Rate Protection Party” shall have the meaning set forth in Section 2.10.

“Rate Reset Date” or collectively, “Rate Reset Dates” shall have the meaning set forth in Section 2.2.1(a).

Loan Agreement - Page 9

“Rating Agencies” shall mean any nationally recognized statistical rating agency which has assigned a rating to any Securities.

“Regulated Entity” shall have the meaning set forth in Section 4.1.29(a).

“Remedial Work” shall mean any investigation or monitoring of site conditions or any clean up, containment, abatement, restoration, removal or other investigative or remedial work.

“Rent Roll” shall have the meaning set forth in Section 4.1.16(a).

“Rents and Profits” shall mean collectively all present and future income, rents, revenue, profits, proceeds, accounts receivable and other benefits from the Property and all deposits made with respect to the Property, including, but not limited to, any security given to utility companies by Borrower, any advance payment of real estate taxes or assessments, or insurance premiums made by Borrower and all claims or demands relating to such deposits and other security, including claims for refunds of tax payments or assessments, and all Insurance Proceeds.

“Replacement Interest Rate Cap Agreement” shall mean any interest rate cap agreement (together with the confirmation and schedules relating thereto), in form and substance satisfactory to Lender, between Borrower and the counterparty thereunder which also satisfies the requirements set forth in Section 2.10.

“Request for Payment” shall have the meaning set forth in Section 6.2.3(b)(ii).

“Requirements” shall mean all laws, ordinances, orders, covenants, conditions and restrictions and other requirements relating to land and building design and construction, use and maintenance, that may now or hereafter pertain to or affect the Property or any part of the Property or the Use, including, without limitation, planning, zoning, subdivision, environmental, air quality, flood hazard, fire safety, handicapped facilities, building, health, fire, traffic, safety, wetlands, coastal and other governmental or regulatory rules, laws, ordinances, statutes, codes and requirements applicable to the Property, including permits, licenses and/or certificates that may be necessary from time to time to comply with any of the these requirements.

“Requirements for Restoration” shall have the meaning set forth in Section 6.2.3.

“Requirements of Environmental Laws” means all requirements of environmental, ecological, health, or industrial hygiene laws or regulations or rules of common law related to the Property, including, without limitation, all requirements imposed by any environmental permit, law, rule, order, or regulation of any federal, state, or local executive, legislative, judicial, regulatory, or administrative agency, which relate to (i) exposure to Hazardous Materials; (ii) pollution or protection of the air, surface water, ground water, land; (iii) solid, gaseous, or liquid waste generation, treatment, storage, disposal, or transportation; or (iv) regulation of the manufacture, processing, distribution and commerce, use, or storage of Hazardous Materials.

Loan Agreement - Page 10

“Restoration” shall have the meaning set forth in Section 6.2.1(b).

“Restoration Funds” shall have the meaning set forth in Section 6.2.3(a).

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc.

“Secondary Financing” shall have the meaning set forth in Section 8.2.

“Secondary Loan” shall have the meaning set forth in Section 8.2(b).

“Secured Indebtedness” shall mean, collectively, the indebtedness evidenced by the Note with interest at the rates set forth herein, all additional advances or fundings made by Lender, and any other amounts required to be paid by Borrower under any of the Loan Documents.

“Securities” shall have the meaning set forth in Section 10.1.

“Security Instrument” shall mean that certain first priority Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of the date hereof, executed and delivered by Borrower, as trustor, as security for the Loan and encumbering the Property, as the same may be amended, consolidated, split, spread, severed, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time.

“Servicer” shall mean a servicer, if any, selected by Lender to service the Loan.

“Special Purpose Entity” means a Person, other than a natural person, which, since the date of its formation and at all times prior to, on and after the date thereof, has not and shall not:

(i)    engage in business other than owning and operating the Property and activities incidental thereto;

(ii)    acquire or own a material asset other than the Property and incidental personal property;

(iii)    maintain assets in a way difficult to segregate and identify, or commingle its assets with the assets of any other person or entity;

(iv)    fail to hold itself out to the public as a legal entity separate from any other;

(v)    fail to conduct business solely in its name;

(vi)    fail to maintain records, accounts or bank accounts separate from any other person or entity;

(vii)    file or consent to a petition pursuant to applicable bankruptcy, insolvency, liquidation or reorganization statutes, or make an assignment for the benefit of creditors without the unanimous consent of its shareholders, partners or members, as applicable;

Loan Agreement - Page 11

(viii)    obtain additional loans other than Permitted Indebtedness;

(ix)    dissolve, liquidate, consolidate, merge or sell all or substantially all of its assets; or

(x)    modify, amend or revise its organizational documents without Lender’s prior written consent which consent shall not be unreasonably withheld, conditioned or delayed.

“Standard Lease Form” shall have the meaning set forth in Exhibit B.

“State” shall mean the state where the Property is located.

“Subordination of Leasing Agreement” shall mean that certain Assignment and Subordination of Leasing Agreement dated as of the date hereof between Borrower and Leasing Agent, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Subordination of Management Agreement” shall mean that certain Subordination of Management Agreement dated as of the date hereof between Borrower and Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Tenant” shall mean any Person obligated by contract or otherwise to pay monies (including a percentage of gross income, revenue or profits) under any Lease now or hereafter affecting all or any part of the Property.

“Title Insurance Policy” shall mean a ALTA mortgagee title insurance policy or policies in the form acceptable to Lender issued with respect to the Property and insuring the lien of the Security Instrument, together with such endorsements and affirmative coverage as Lender may require.

“Transfer” shall have the meaning set forth in Section 8.1.

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State.

“Unsecured Obligations” means any obligations evidenced by or arising under the Environmental Indemnity.

“Use” shall have the meaning set forth in Section 5.1.13.

“Work” shall have the meaning set forth in Section 6.2.3(a).

Section 1.2Principles of Construction. All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document, the Guaranty, if any, or the Environmental Indemnity to any Loan Document shall be deemed to mean such Loan Document, Guaranty, if any, or Environmental Indemnity (as applicable) as the same may hereafter be amended,

Loan Agreement - Page 12

modified, supplemented, extended, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor). Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.

II.THE LOAN

Section 2.1The Loan.

2.1.1Agreement to Lend and Borrow. Subject to and upon the terms and conditions set forth herein, Lender shall make the Loan to Borrower and Borrower shall accept the Loan from Lender on the Advance Date.

2.1.2Disbursement to Borrower. Borrower shall receive an initial disbursement of the Initial Loan Amount on the Advance Date and thereafter Borrower may receive Conditional Advance(s) in accordance with Section 2.12 herein, not to exceed the Maximum Future Loan Amount, and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

2.1.3The Note. The Loan shall be evidenced by the Note and shall be repaid in accordance with the terms of this Agreement and the Note.

Section 2.2Interest Rate.

2.2.1Payment of Principal and Interest. Principal and interest under the Loan shall be payable as follows:

(a)The initial Interest Rate is 3.36%. The Interest Rate will be reset by Lender, effective as of the first day of the second month following the month during which the Advance Date occurs, and effective the first day of the first month of each successive one month period thereafter during the term of the Loan (individually a “Rate Reset Date” and collectively “Rate Reset Dates”). The Interest Rate will be reset as aforesaid to the annual rate equal to the greater of (a) 2.05% or (b) the sum of (i) 180 basis points (1.80%) plus (ii) the LIBOR Rate in effect at the close of business in London on the second LIBOR Business Day prior to each of the Rate Reset Dates.

(b)Borrower shall pay interest only for the period from the Advance Date and ending on the last day of the month in which the Advance Date occurs. Borrower shall make such payment of interest only in advance on the Advance Date and shall then pay interest only in arrears, on the first day of the second month following the Advance Date and thereafter Borrower shall make payments of interest only on the first day of each month through and including the month prior to the month in which the Maturity Date occurs. The entire outstanding principal balance of the Loan together with all accrued interest and all other sums due under the Loan Documents shall be paid on February 1, 2023; as such date may be extended pursuant to the terms of Section 2.11 (the “Maturity Date”). Interest shall be calculated on a daily basis of the actual number of days elapsed over a 360-day year.

Loan Agreement - Page 13

(c)On the Maturity Date, a final payment in the aggregate amount of the unpaid principal sum evidenced by the Note, all accrued and unpaid interest, and all other unpaid amounts of the Secured Indebtedness shall become immediately payable in full.

(d)Borrower acknowledges and agrees that a substantial portion of the original Loan Amount shall be outstanding and due on the Maturity Date.

Section 2.3Application of Payments. At the election of Lender, and to the extent permitted by law, all payments shall be applied in the order selected by Lender to any expenses, prepayment fees, late charges, escrow deposits and other sums due and payable under the Loan Documents, and to unpaid interest at the Interest Rate or at the Default Rate, as applicable. The balance of any payments shall be applied to reduce the then unpaid Loan Amount.

Section 2.4Security. The covenants of the Security Instrument are incorporated by reference into this Agreement. The Note shall evidence, and the Security Instrument shall secure, the Secured Indebtedness.

Section 2.5Late Charge. If any payment of interest and/or principal (other than the outstanding principal balance of the Loan on the Maturity Date), or any payment of a required escrow deposit is not paid within seven (7) days after the due date, Lender shall have the option to charge Borrower the Late Charge. The Late Charge is for the purpose of defraying the expenses incurred in connection with handling and processing delinquent payments and is payable in addition to any other remedy Lender may have. Unpaid Late Charges shall become part of the Secured Indebtedness and shall be added to any subsequent payments due under the Loan Documents.

Section 2.6Acceleration Upon Event of Default. At the option of Lender, the Accelerated Loan Amount shall become immediately due and payable if Borrower fails to pay any sum specified in this Agreement or the Note within ten (10) days after the date of written notice of such failure from Lender to Borrower; provided, however, that Lender shall not be required to provide such notice more than one (1) time in any twelve (12) month period or two (2) times in the aggregate during the term of the Loan and in the event that Lender is no longer required to provide Borrower with such notices of such failure, then the failure of Borrower to pay any sum specified in this Agreement or the Note within ten (10) days of the date when such amount is due shall cause the Accelerated Loan Amount to be due and payable.

Section 2.7Interest Upon Event of Default. The Accelerated Loan Amount shall bear interest at the Default Rate which shall never exceed the maximum rate of interest permitted to be contracted for under the laws of the State. The Default Rate shall commence upon the occurrence of an Event of Default and shall continue until all defaults are cured.

Section 2.8Limitation on Interest. The agreements made by Borrower with respect to this Agreement, the Note, and the other Loan Documents are expressly limited so that in no event shall the amount of interest received, charged or contracted for by Lender on the Note, the other Loan Documents or the Secured Indebtedness exceed the highest lawful amount of interest permissible under the laws applicable to the Loan. If at any time performance of any

Loan Agreement - Page 14

provision of this Agreement, the Note, or the other Loan Documents results in the highest lawful rate of interest permissible under applicable laws being exceeded, then the amount of interest received, charged or contracted for by Lender shall automatically and without further action by any party be deemed to have been reduced to the highest lawful amount of interest then permissible under applicable laws. If Lender shall ever receive, charge or contract for, as interest, an amount which is unlawful, at Lender’s election, the amount of unlawful interest shall be refunded to Borrower (if actually paid) or applied to reduce the then unpaid Loan Amount. To the fullest extent permitted by applicable laws, any amounts contracted for, charged or received under the Loan Documents included for the purpose of determining whether the Interest Rate would exceed the highest lawful rate shall be calculated by allocating and spreading such interest to and over the full stated term of the Note.

Section 2.9Prepayment. Borrower shall not have the right to prepay all or any portion of the Loan Amount at any time during the term of this Loan except commencing on the Prepayment Commencement Date, Borrower may prepay the Secured Indebtedness without a prepayment fee on no less than ten (10) days’ prior written notice to Lender. Any tender of payment by Borrower or any other person or entity of the Secured Indebtedness, other than as expressly provided in this Agreement or the other Loan Documents, prior to the Prepayment Commencement Date, shall constitute a prohibited prepayment. If Borrower provides notice of its intention to prepay, the Accelerated Loan Amount shall become due and payable on the date specified in the prepayment notice; provided, however, that, no more than two (2) times in any twelve (12) month period, Borrower shall have the right (at no cost charged by Lender to Borrower) to revoke any notice to Lender of Borrower’s notice to prepay upon not less than five (5) Business Days prior written notice to Lender.

Section 2.10Interest Rate Cap Agreement. If at any time during the initial term of the Loan, the LIBOR Rate is equal to or greater than 2.90% for five (5) consecutive business days (the “Protection Trigger Rate”; the occurrence of the Protection Trigger Rate shall be referred to as a “Protection Trigger Event”), Borrower shall, within thirty (30) days of the occurrence of the Protection Trigger Event, enter into or cause the Liable Party to enter into an Interest Rate Cap Agreement and Borrower, Liable Party or such affiliate as applicable, under the Interest Rate Cap Agreement are referred to herein individually or collectively as the “Rate Protection Party”), with a LIBOR strike rate of 3.90% or less, which shall protect against an increase in interest rates which would cause the Interest Rate to exceed 5.70% per annum ( for example, a LIBOR strike rate of 3.90% + 1.80% spread). The Interest Rate Cap Agreement (i) shall be in form reasonably acceptable to Lender, (ii) shall be with a counterparty reasonably acceptable to Lender and which counterparty shall have a credit rating of “A2” or better by Moody’s and “A” or better by S&P, (iii) shall direct such acceptable counterparty to deposit any and all payments due under the Interest Rate Cap Agreement directly into an account designated by Lender (including with its servicer) so long as any portion of the Loan remains outstanding, provided however, for purposes of this requirement, the Loan shall be deemed to be remaining outstanding if the Property is transferred to Lender (or its nominee or designee) by judicial foreclosure or non-judicial foreclosure or by deed-in-lieu thereof, (iv) shall be for a term equal to the remaining initial term of the Loan (or remaining extension term, as applicable), and (v) shall have an initial notional amount equal to the then principal balance of the Loan. Concurrently with entering into the Interest Rate Cap Agreement, the applicable Rate Protection Party shall execute and deliver to Lender an assignment of Interest Rate Cap Agreement (“Collateral

Loan Agreement - Page 15

Assignment”) in the form substantially identical to the form attached hereto as Exhibit F, to collaterally assign to Lender all of its right, title and interest to receive any and all payments under the Interest Rate Cap Agreement (but such assignment shall exclude any and all obligations thereunder including, without limitation, payments (if any) to the counterparty), and shall deliver to Lender a counterpart of the Interest Rate Cap Agreement executed by the counterparty which shall by its terms authorize such assignment to Lender and require that payments be deposited directly into the non-commingled account as shall be designated by Lender. The Rate Protection Party shall comply with all of its obligations under the Interest Rate Cap Agreement. All amounts paid by the counterparty under the Interest Rate Cap Agreement to Rate Protection Party or Lender shall be deposited immediately into such account as shall be designated by Lender which, so long as there is no Event of Default, such deposited amount may thereafter be used by Borrower to make payments under the Loan Documents. The Interest Rate Cap Agreement and the aforesaid account designated by Lender shall be deemed to be part of the Property for purposes of Section 12.20. The Rate Protection Party shall take all actions reasonably required by Lender to enforce Lender’s rights under the Interest Rate Cap Agreement in the event of a default by the counterparty and shall not waive, amend or otherwise modify any of its rights thereunder. In the event of a downgrade, withdrawal or qualification of the rating of the counterparty to any Interest Rate Cap Agreement below a rating of “A3” by Moody’s or “A-” by S&P, then within fifteen (15) business days after written notice Lender, the Rate Protection Party shall (x) replace the Interest Rate Cap Agreement with a Replacement Interest Rate Cap Agreement with a counterparty reasonably acceptable to Lender (y) cause the counterparty to post cash collateral in an amount and manner reasonably acceptable to Lender securing the counterparty’s obligations under the Interest Rate Cap Agreement, or (z) cause the counterparty to deliver a guaranty reasonably acceptable to Lender guaranteeing the counterparty’s obligations under the Interest Rate Cap Agreement. In the event that the Rate Protection Party fails to purchase, deliver and/or maintain the Interest Rate Cap Agreement or any replacement thereof within thirty (30) days after receipt of notice of such failure, Lender may (in addition to exercising any of its other rights and remedies) purchase such Interest Rate Cap Agreement or any replacement thereof and the costs incurred by Lender in purchasing and maintaining the same shall be paid by Borrower with interest thereon at the Default Rate from the date such cost was incurred by Lender until such cost is paid by Borrower to Lender. In connection with the Interest Rate Cap Agreement, the Rate Protection Party shall obtain and deliver to Lender an opinion of counsel for the counterparty (upon which Lender and its successors and assigns may rely) in form, scope and substance reasonably acceptable to Lender regarding the authorization of the counterparty, the legality, validity, and binding effect of the Interest Rate Cap Agreement, and such other matters as Lender shall reasonably require (“Counterparty Opinion”). In the event of a Protection Trigger Event, Rate Protection Party shall deliver to Lender a copy of the Interest Rate Cap Agreement executed by the counterparty, an executed Collateral Assignment which shall include an executed consent of the counterparty to the assignment to Lender, and the Counterparty Opinion, within thirty (30) days following written notice from Lender to Borrower regarding the occurrence of the Protection Trigger Event, time expressly being of the essence. In each instance prior to purchasing an Interest Rate Cap Agreement, Borrower shall cause Rate Protection Party to provide a copy of its bid package to Lender for Lender’s review and approval for conformity with the requirements set forth herein.

Loan Agreement - Page 16

Section 2.11Extension Options.     

(a)Borrower shall have two (2), one-year options to extend the Maturity Date of the Loan (the “Extension Options”). The Extension Options shall be subject to the following conditions: (i) there shall be no Event of Default under the Loan Documents, the Environmental Indemnity or the Guaranty at the time of the exercise of any Extension Option; (ii) the Debt Yield based on the net operating income derived from the Property shall be no less than 9.5% (net operating income divided the then outstanding principal balance of the Loan); (iii) the loan to value ratio of the Property at the time of the extension shall not be greater than 60% as determined by Lender in its reasonable discretion. In the event the threshold is not met, then Borrower shall have the right to request in writing that Lender engage, at Borrower’s sole cost and expense, an appraiser to determine the value of the Property, and Lender shall engage such appraiser; (iv) Borrower shall comply with all of the requirements of Section 2.10 hereof; (v) Borrower shall pay all costs and expenses incurred by Lender in connection with such extension including title insurance premiums, documentation costs and reasonable attorneys’ fees; (vi) Borrower shall pay an extension fee equal to 0.25% of the then outstanding principal balance of the Loan being extended; and (vii) Borrower and the Liable Parties shall execute extension documents satisfactory to Lender relating to the Loan Documents, Environmental Indemnity and Guaranty (provided that Liable Party shall not be required to execute the Environmental Indemnity or any modification thereof). In the event that the condition in clause (ii) and/or clause (iii) above is not satisfied, Borrower may prepay the outstanding principal balance of the Loan with a prepayment fee, if applicable, in order to satisfy such condition.

The Interest Rate during each of the extensions shall be the sum of (x) the one month LIBOR Rate plus (y) 1.80%.

(b)    In the event Borrower wishes to exercise an Extension Option it shall provide Lender with notice that it shall exercise such Extension Option at least 45 days prior to the applicable Maturity Date of the Loan. Lender shall determine such initial Interest Rate by reference to the Libor Rate as of approximately 11:00am London time on the second Business Day prior to the applicable Maturity Date. Lender shall notify Borrower of the initial Interest Rate and acceptable terms for any required interest rate protection agreement (in accordance with the terms of Section 2.10 with respect to any extension prior to such applicable Maturity Date. With respect to any extension, the Interest Rate will be reset by Lender effective the first day of the second month following the month during which the effective date of the extension occurred and effective the first day of the first month of each successive one month period thereafter during the remaining term of the Loan (the “Extension Rate Reset Dates”) and Borrower shall comply with all of the requirements of Section 2.10. The Interest Rate will be reset as aforesaid to the rate equal to the sum of (x) 1.80% plus (y) the one month LIBOR Rate as of approximately 11:00 a.m. London time on the second Business Day prior to each of the Extension Rate Reset Dates.

Loan Agreement - Page 17

Section 2.12Conditional Advances.

(a) During the initial five (5) years of the term of the Loan and subject to the terms and conditions below, Borrower may request that Lender advance to Borrower additional loan proceeds in an amount up to but not exceeding the Maximum Future Loan Amount solely to pay for or reimburse Borrower for tenant improvements and leasing commissions paid for new Leases, lease expansions or lease renewals for Leases that meet the requirements of the Leasing Guidelines or as otherwise approved in writing by Lender. Each such advance shall be referred to herein as a “Conditional Advance”. All requests for a Conditional Advance shall in all cases be subject to all of the following terms and conditions:

(i)Tenant improvements for Leases shall not exceed $65.00 per rentable square foot for new Leases and renewals;

(ii)Leasing commissions shall not exceed 7.50% of gross rentals under the applicable Lease to which the leasing commission relates;

(iii)Each Conditional Advances shall be funded in an amount of not less than $500,000 per advance, with out of pocket costs incurred by Lender paid to Lender for each advance, with no more than one Conditional Advance per quarter or four (4) Conditional Advances per year (provided that the final Conditional Advance may be less than $500,000 if necessary to complete the total advance of the Maximum Future Loan Amount);

(iv)The loan to value ratio based on the Property at the time of the requested Conditional Advance shall not be greater than 63% as determined by Lender in its reasonable discretion and in the event the threshold is not achieved, Borrower shall have the right to request in writing that Lender engage, at Borrower’s sole cost and expense, an appraiser to determine the value of the Property, and Lender shall engage such appraiser;

(v)The Debt Yield based on the net operating income, in the opinion of Lender, acting reasonably, derived from the Property shall be no less than 9.0% during the first (1st) three (3) years of the Loan at the time of the requested Conditional Advance, and no less than nine and half percent (9.5%) thereafter at the time of the requested Conditional Advance.The term “Debt Yield”shall mean the ratio (expressed as a percentage) of the net operating income derived from the Property projected for the succeeding twelve (12) month period, as determined by Lender in its reasonable discretion (“Projected NOI”), to the then outstanding principal balance of the Loan. The ProjectedNOI shall be determined by Lender in its reasonable discretion based on financial statements, rent rolls and budgets to be provided by Borrower and satisfactory to Lender.

(vi)At the time of the requested Conditional Advance, there shall be no material adverse change in Borrower or the Property and there shall be no Event of Default or facts existing that with the giving of notice or passage of time would constitute an Event of Default;

(vii)The Interest Rate and repayment terms applicable to the Initial Loan Amount shall be applicable to the Future Loan Amount Due to Conditional Advances, and at Lender’s option shall be documented as additional advances to the existing Loan;

Loan Agreement - Page 18

(viii)The documentation required to be submitted to Lender for such Conditional Advance shall include, but not be limited to (but only to the extent applicable): copies of the applicable fully executed Leases or Lease amendments, copies of the applicable commencement date agreements or other documentation reasonably acceptable to Lender that confirms each Tenants’ acceptance of its premises (if available in connection with said draw request), copies of invoices, copies of lien releases (for reimbursements of costs incurred by Borrower for the prior tenant improvements or portion thereof), a signed certification by a corporate officer of Borrower (or equivalent) confirming that the applicable portion of the subject tenant improvements has been completed and has been (or will be) paid for, and any other documentation reasonably requested by Lender;

(ix)Borrower shall be responsible for all reasonable third party costs associated with the inspection or verification of construction as described in this provision. Lender may retain the services of a third party consultant to perform inspections upon completion of construction, and the reasonable cost of such consultant shall be borne by Borrower; and

(x)The funding of a Conditional Advance shall be on such other terms and conditions as Lender may reasonably determine to be consistent with funding the Loan, including obtaining title insurance endorsements (to the extent available) insuring a continued first lien of the Loan at the time of each funding in the amount of such funding, which shall be provided by Borrower.

III.TAXES, LIENS AND ENCUMBRANCES AND OTHER CHARGES.

Section 3.1Payment of Impositions. Unless otherwise paid to Lender as provided in Section 5.1.14, Borrower shall pay all Impositions. The Impositions shall be paid not later than five (5) days before the dates on which the particular Imposition would become delinquent and Borrower shall produce to Lender receipts of the imposing authority, or other evidence reasonably satisfactory to Lender, evidencing the payment of the Imposition in full. If Borrower elects by appropriate legal action to contest the amount or validity of any Imposition, Borrower shall first deposit cash with Lender as a reserve in an amount which Lender reasonably determines is sufficient to pay the Imposition plus all fines, interest, penalties and costs which may become due pending the determination of the contest. If Borrower deposits this sum with Lender, Borrower shall not be required to pay the Imposition provided that the contest operates to prevent enforcement or collection of the Imposition, or the sale and forfeiture of, the Property, and is prosecuted with due diligence and continuity. Upon termination of any proceeding or contest, Borrower shall pay the amount of the Imposition as finally determined in the proceeding or contest. Provided that there is not then an Event of Default, the monies which have been deposited with Lender pursuant to this Section shall be applied toward such payment and the excess, if any, shall be returned to Borrower.

IV.REPRESENTATIONS AND WARRANTIES

Section 4.1Borrower Representations. Borrower represents and warrants as of the date hereof that:

Loan Agreement - Page 19

4.1.1Organization.

(a)The execution of the Loan Documents and the Environmental Indemnity have been duly authorized and there is no provision in the organizational documents of Borrower requiring further consent for such action by any other entity or person.

(b)It is duly organized, validly existing and is in good standing under the laws of the state of its formation and in the State, and it has all necessary licenses, authorizations, registrations, permits and/or approvals to own its properties and to carry on its business as presently conducted.

(c)The execution, delivery and performance of the Loan Documents and the Environmental Indemnity will not result in Borrower’s being in default under any provision of its organizational documents or of any deed of trust, mortgage, lease, credit or other agreement to which it is a party or which affects it or the Property.

(d)The Loan Documents and the Environmental Indemnity have been duly authorized, executed and delivered by Borrower and constitute valid and binding obligations of Borrower which are enforceable in accordance with their terms except as may be limited by (i) bankruptcy, insolvency or other similar laws affecting the rights of creditors generally and (ii) general principals of equity (regardless of whether considered in a proceding in equity or at law).

4.1.2Litigation. Neither Borrower nor any of Borrower’s Constituents is involved in any litigation, arbitration, or other proceeding or governmental investigation pending which if determined adversely would materially adversely affect Borrower’s ability to perform in accordance with the Loan Documents or the Environmental Indemnity.

4.1.3Agreements. Borrower is not in default with respect to any order or decree of any court or any order, regulation or demand of any Governmental Authority, which default would be reasonably likely to materially and adversely affect the condition (financial or other) or operations of the Property or Borrower or Borrower’s ability to perform its obligations hereunder or under the Loan Documents or the Environmental Indemnity. Except as otherwise disclosed to Lender in writing prior to the Advance Date, to the best knowledge of Borrower, Borrower has complied with all requirements of all instruments and agreements affecting the Property, whether or not of record, including without limitation all covenants and agreements by and between Borrower and any governmental or regulatory agency pertaining to the development, use or operation of the Property.

4.1.4Consents. No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, this Agreement or any of the other Loan Documents or the Environmental Indemnity or the consummation of the transactions contemplated hereby or thereby, other than those which have been obtained by Borrower.

4.1.5No Plan Assets. (i) Borrower is acting on its own behalf and that it is not an employee benefit plan as defined in Section 3(3) of ERISA, which is subject to Title 1 of ERISA, nor a plan as defined in Section 4975(e)(1) of the Code (each of the foregoing

Loan Agreement - Page 20

hereinafter referred to collectively as a “Plan”); (ii) Borrower’s assets do not constitute “plan assets” of one or more such Plans within the meaning of Department of Labor Regulation Section 2510.3-101, as modified by Section 3(42) of ERISA.

4.1.6Compliance. Except as otherwise disclosed to Lender in writing prior to the Advance Date, to the best knowledge of Borrower, the Improvements and their Use comply with (and no notices of violation have been received in connection with) all Requirements.

4.1.7Zoning. Except as otherwise disclosed to Lender in writing prior to the Advance Date, to the best knowledge of Borrower, the zoning approval for the Property is not dependent upon the ownership or use of any property which is not encumbered by the Security Instrument.

4.1.8Financial Information. All financial statements of Borrower and Liable Party that have been delivered to Lender in connection with the Loan (i) are true, complete and correct in all material respects as of the date of such statements, and (ii) have been prepared in accordance with GAAP throughout the periods covered. The statements of cash flow and income and operating expenses that have been delivered to Lender in respect of the Property, to Borrower’s best knowledge after due and diligent inquiry, (x) are true, complete and correct in all material respects as of the date of such reports, (y) accurately represent the financial condition of the Property as of the date of such reports, and (z) have been prepared in accordance with GAAP throughout the periods covered. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and which are, individually or in the aggregate, reasonably likely to have a materially adverse effect on the Property or the operation thereof, except as referred to or reflected in the most recent financial statements of Borrower delivered to Lender. Since the date of such financial statements, there has been no material adverse change in the financial condition, operations or business of Borrower or, to Borrower’s best knowledge, after due and diligent inquiry, the Property from that set forth in the financial statements.

4.1.9Casualty and Condemnation. To Borrower’s best knowledge, after due and diligent inquiry, except as expressly approved by Lender in writing, no casualty or damage to any part of the Property that would cost more than $50,000 to restore or replace has occurred which has not been fully restored or replaced. No part of the Property has been taken in Condemnation or other similar proceeding or transferred in lieu of Condemnation, nor has Borrower received notice of any proposed Condemnation or other similar proceeding affecting the Property. To Borrower’s best knowledge, no Condemnation or other proceeding has been commenced, is pending or is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.

4.1.10Enforceability. The Loan Documents and the Environmental Indemnity are not subject to any right of rescission, set off, counterclaim or defense by Borrower, including the defense of usury, nor would the operation of any of the terms of the Loan Documents or the Environmental Indemnity, or the exercise of any right thereunder, render the Loan Documents or the Environmental Indemnity unenforceable, and Borrower has not asserted any right of rescission, set off, counterclaim or defense with respect thereto.

Loan Agreement - Page 21

4.1.11Assignment of Leases. The Assignment of Leases creates a valid assignment of, or a valid security interest in, certain rights under the Leases, subject only rights granted to Borrower in the Assignment of Leases to exercise certain rights and to perform certain obligations of the lessor under the Leases, including the right to operate the Property. No Person other than Lender and Borrower has any interest in or assignment of the Leases or any portion of the Rents and Profits due and payable or to become due and payable thereunder.

4.1.12Insurance. Borrower has obtained and has delivered to Lender evidence of all of the Policies, with all premiums prepaid thereunder, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement.  No claims have been made under any of the Policies with respect to the Property, and no Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any of the Policies.

4.1.13Licenses. Except as otherwise disclosed to Lender in writing prior to the Advance Date, to the best knowledge of Borrower, all authorizations, permits, licenses, including, without limitation liquor licenses, if any, and operating permits, required by any Governmental Authority for the use, occupancy and operation of the Property in the manner in which the Property is currently being used, occupied and operated have been obtained, paid for and are in full force and effect and, to the knowledge of Borrower, all Tenants have such permits and approvals as are required by any Governmental Authority for the use, occupancy and operation of the premises demised under their respective Leases.

4.1.14Flood Zone. None of the Improvements on the Property is located in an area identified by the Federal Emergency Management Agency as a special flood hazard area.

4.1.15Physical Condition. Except as otherwise disclosed to Lender in writing prior to the Advance Date, to the best knowledge of Borrower, the Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair; there exists no structural or other material defects or damages in the Property, whether latent or otherwise, and Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond. To the best knowledge of Borrower, construction of the Improvements on the Property is complete other than those Improvements listed on Schedule 4.1.15 attached hereto.

4.1.16Leases.

(a)To Borrower’s knowledge, the rent roll attached hereto as Exhibit C (the “Rent Roll”) is true, correct and complete and there are no Leases affecting the Property except those Leases identified on the Rent Roll. Except as expressly disclosed in writing to Lender prior to the date hereof, to the best of Borrower’s knowledge, (i) Borrower has delivered to Lender true, correct and complete copies of all existing Leases, including all existing modifications and amendments, and including all existing Lease Guaranties

Loan Agreement - Page 22

(collectively, “Existing Leases”) and (ii) agreements between the landlord and Tenant or between the landlord and any guarantor pertaining to any of such Leases are set forth in writing and are included in such copies that have been so delivered.

(b)Except as expressly disclosed in writing to Lender prior to the date hereof, to the best of Borrower’s knowledge, there are no defaults by Borrower under the Existing Leases and there are no defaults by any Tenants under the Existing Leases nor by any guarantors under the existing Lease Guaranties. To the best of Borrower’s knowledge, the Existing Leases, including the existing Lease Guaranties, are in full force and effect.

(c)To the best knowledge of Borrower, none of the Tenants now occupying 10% or more of the rentable space at the Property (individually or in the aggregate) or having a current Lease affecting 10% or more of such rentable space (individually or in the aggregate) is the subject of any bankruptcy, reorganization or insolvency proceeding or any other debtor-creditor proceeding.

(d)No Existing Lease may be amended, terminated or canceled unilaterally by a Tenant, and no Tenant may be released from its obligations, except in the event of material casualty or Condemnation, except for as otherwise disclosed in Schedule 4.1.16(d) attached hereto.

(e)Except only for rent and additional rent for the current month, and except as disclosed on the Rent Roll, Borrower has not accepted any payment of rent and additional rent more than one month in advance of its due date, nor any security deposit in an amount exceeding one month’s rent, except for as otherwise disclosed in Schedule 4.1.16(e) attached hereto.

4.1.17Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by Borrower under applicable Requirements in connection with the transfer of the Property to Borrower have been paid or are being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Security Instrument, have been paid or are being paid simultaneously herewith. All taxes and governmental assessments due and owing in respect of the Property have been paid prior to delinquency, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the Title Insurance Policy.

4.1.18Special Purpose Entity/Separateness.

(a)Borrower is a Special Purpose Entity.

(b)The Property has “single asset real estate” status as defined by Section 101(51)(B) of the Bankruptcy Code.

Loan Agreement - Page 23

(c)The representations and warranties set forth in this Section 4.1.18 shall survive for so long as any amount remains payable to Lender under this Agreement or any other Loan Document.

4.1.19Solvency. Borrower (a) has not entered into the transaction contemplated by this Agreement or any Loan Document or the Environmental Indemnity with the actual intent to hinder, delay, or defraud any creditor and (b) has received reasonably equivalent value in exchange for its obligations under the Loan Documents and the Environmental Indemnity. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted.

4.1.20Organizational Chart. The organizational chart attached as Exhibit D hereto, relating to Borrower and certain Affiliates and other parties, is true, complete and correct on and as of the date hereof and shows all Persons holding direct or indirect ownership interests in Borrower. Borrower has delivered to Lender true and correct copies of all Borrower’s organizational documents and except as expressly approved by Lender in writing, there have been no changes in Borrower’s Constituents since the date that the Application was executed by Borrower.

4.1.21Material Agreements. Attached hereto as Schedule 4.1.21 is a list of all Material Agreements, true and complete copies of each of which have been delivered to Lender.

4.1.22No Other Debt. Borrower has not borrowed or received debt financing (other than permitted pursuant to this Agreement) that has not been heretofore repaid in full.

4.1.23No Bankruptcy Filing. Neither Borrower, nor any of Borrower’s Constituents, is involved in any bankruptcy, reorganization, insolvency, dissolution or liquidation proceeding, and to the best knowledge of Borrower, no such proceeding is contemplated or threatened.

4.1.24Full and Accurate Disclosure. No information contained in this Agreement, the other Loan Documents or the Environmental Indemnity, or any written statement furnished by or on behalf of Borrower pursuant to the terms of this Agreement contains any untrue statement of a material fact.

4.1.25Foreign Person. (a) neither Borrower nor any Borrower’s Constituent is a “foreign person” within the meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as amended, or the Regulations promulgated thereunder, and (b) Borrower is not a “disregarded entity” within the meaning of such Code or Regulations, and in the event Borrower becomes (whether through transfer, merger, reorganization, restructuring or otherwise) a “disregarded entity,” the one hundred percent (100%) owner of such “disregarded entity” will not be a “foreign person” within the meaning of Sections 1445 and 7701 of the Code.

4.1.26No Change in Facts or Circumstances; Disclosure. There has been no material adverse change from the conditions shown in the Application or in the materials

Loan Agreement - Page 24

submitted in connection with the Application or in the credit rating or financial condition of Borrower or any of Borrower’s Constituents.

4.1.27Management Agreement and Leasing Agreement. Borrower has provided to Lender a true, correct and complete copy of the Management Agreement and the Leasing Agreement. The Management Agreement and the Leasing Agreement are each in full force and effect and, to Borrower’s knowledge, no event of default has occurred thereunder nor has any event under the Management Agreement or Leasing Agreement occurred which, but for the giving of notice, or passage of time, or both would be an event of default thereunder. All fees payable to Manager and Leasing Agent due and owing as of the Advance Date have been paid in full.

4.1.28Non-Relationship. Borrower hereby represents and warrants that neither Borrower nor any general partner, director, principal, member or officer of Borrower nor, to Borrower’s knowledge, any person who is a Borrower’s Constituent) is (a) an officer or director of Metropolitan Life Insurance Company (“MetLife”) or (b) a son, daughter, mother, or father of an officer or director of MetLife or a descendent of any of them or (c) a stepparent, adopted child, stepson or stepdaughter or spouse of a director or officer of MetLife.

4.1.29US Patriot Act.

(a)Either (i) Borrower is regulated by the SEC, FINRA or the Federal Reserve (a "Regulated Entity"), or is a wholly owned subsidiary or affiliate of a Regulated Entity or (ii) neither Borrower nor any Borrower’s Constituents is, and no legal or beneficial interest in a Borrower’s Constituents, that in each case directly or indirectly, controls Borrower or has a direct or indirect ownership interest in Borrower of Twenty-Five percent (25%) or more is or will be held, directly or indirectly by persons or entities appearing on a United States Treasury Office of Foreign Assets Control or any similar list maintained by any other Governmental Authority, with respect to which entering into transactions with such person or entity would violate OFAC, the U.S. Patriot Act or regulations or any Presidential Executive Order or any other similar applicable law, ordinance, order, rule or regulation.

(b)The following items shall be the only items required as evidence of compliance with this Section 4.1.29 (collectively, the “OFAC Information”): (i) Borrower’s or any controlling entity’s organizational chart showing the names and percentage of direct or indirect ownership of an entity or person that controls Borrower or owns, directly or indirectly, more than twenty-five percent (25%) of Borrower (each, a “Compliance Party”); (ii) for any entities, organizational structure charts and organizational documents; (iii) for each Compliance Party, the legal name of applicable Compliance Party, including type of entity and place of organization; (iv) the applicable Compliance Party’s tax identification number; (v) indication of whether the entity is publicly traded and if so, indication of its regulator (SEC, FINRA or Federal Reserve); (vi) a description of the nature of the applicable Compliance Party’s business; (vii) the applicable Compliance Party’s physical business address or individual personal address, as applicable (specifically excluding any P.O. box addresses); (viii) a contact name and telephone number for the applicable Compliance Party; (ix) if the applicable Compliance Party is an individual, such individual’s phone number together with a

Loan Agreement - Page 25

valid identification upon Lender’s request; and (x) a description of the Compliance Party’s source of funds for any equity interest.

4.1.30Criminal Acts. Neither Borrower nor any of Borrower’s Constituents has been convicted of, or been indicted for, a felony criminal offense.

4.1.31No Defaults. Neither Borrower nor any of Borrower’s Constituents is in default under any mortgage, deed of trust, note, loan or credit agreement.

4.1.32Personal Property. To the best knowledge of Borrower, Borrower owns the Personal Property free from any lien, security interest, encumbrance or adverse claim, except as otherwise expressly approved by Lender in writing. To the best knowledge of Borrower, the Personal Property has not been used or bought for personal, family, or household purposes, but has been bought and used solely for the purpose of carrying on Borrower’s business.

4.1.33O&M Agreement. The O&M Agreement, if any, is in full force and effect and, to Borrower’s knowledge after due and diligent inquiry, there is no default thereunder by any party thereto and no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder.

V.BORROWER COVENANTS

Section 5.1Borrower Affirmative Covenants. From the date hereof until payment of the Secured Indebtedness in full, Borrower hereby covenants and agrees with Lender that:

5.1.1Existence; Compliance with Requirements. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises and comply with all present and future Requirements affecting or relating to Borrower, the Property and/or the Use. Borrower shall not use or permit the use of the Property, or any part thereof, for any illegal purpose. Borrower shall furnish to Lender, on request, reasonable proof of compliance with the Requirements.

5.1.2Litigation. Borrower shall give prompt notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower, Liable Party, if any, or the Property which could, if determined adversely to Borrower, Liable Party, if any, or the Property, be reasonably expected to affect the Property, Liable Party, if any, or Borrower’s ability to perform its obligations hereunder or under the other Loan Documents, the Guaranty, if any, or the Environmental Indemnity.

5.1.3Access to Property. Upon prior written notice from Lender (except in the event of an emergency, in which event prior written notice shall not be required), Lender shall have the right, at any time and from time to time during normal business hours subject to the rights, if any, of Tenants under the Leases, to enter the Property in order to ascertain Borrower’s compliance with the Loan Documents, to examine the condition of the Property, to perform an appraisal, to undertake surveying or engineering work, and to inspect premises occupied by Tenants, subject to the rights of Tenants under their Leases. Borrower shall reasonably cooperate with Lender in performing these inspections.

Loan Agreement - Page 26

5.1.4Books and Records; Financial Reporting. Borrower shall keep adequate books and records of account in accordance with GAAP, or in accordance with other methods acceptable to Lender in its sole discretion, consistently applied and furnish to Lender:

(a)quarterly certified rent rolls signed and dated by Borrower, detailing the names of all Tenants of the Improvements, the portion of Improvements occupied by each Tenant, the base rent and any other charges payable under each Lease and the term of each Lease, including the expiration date, and any other information as is reasonably required by Lender, within forty-five (45) days after the end of each fiscal quarter;

(b)a quarterly operating statement of the Property and year to date operating statements detailing the total revenues received, total expenses incurred, total cost of all capital improvements, total debt service and total cash flow, to be prepared and certified by Borrower in a form reasonably acceptable to Lender, and if available, any quarterly operating statement prepared by an independent certified public accountant, within forty-five (45) days after the close of the first, second, and third fiscal quarter of Borrower and within sixty (60) days after the close of the fourth fiscal quarter of Borrower;

(c)unaudited annual financial statements of Borrower in the form required by Lender, prepared and certified by Borrower to be true and correct within ninety (90) days after the close of each fiscal year of Borrower;

(d)an annual operating budget presented on a monthly basis consistent with the annual operating statement described above for the Property including cash flow projections for the upcoming one (1) year period and all proposed capital replacements and improvements at least fifteen (15) days prior to the start of each calendar year;

(e)an annual ARGUS © valuation file, or its equivalent, in electronic form which includes, without limitation, a then current rent roll, all income of the Property and all Property expenses within ninety (90) days after the close of each fiscal year of Borrower;

(f)unaudited financial statements for Liable Party prepared by an authorized representative approved by Lender and certified by Liable Party to be true and correct, delivered within one hundred twenty (120) days after the close of each fiscal year of Liable Party; provided, however, that in the event that audited financial statements for Liable Party are prepared by an independent certified public accountant, Borrower shall promptly deliver Lender a copy of said audited financial statements of Liable Party; and

(g)any financial statements required pursuant to the Guaranty, if any.

5.1.5Property Reports. Upon request from Lender or its representatives and designees, Borrower shall furnish in a timely manner to Lender:

(a)a property management report for the Property, showing the number of inquiries made and/or rental applications received from Tenants or prospective tenants and deposits received from Tenants and any other information reasonably requested by Lender, in reasonable detail and certified by Borrower (or an officer, general partner, member or principal

Loan Agreement - Page 27

of Borrower if Borrower is not an individual) to its best knowledge to be true and complete in all material respects, but no more frequently than quarterly; and

(b)an accounting of all security deposits held in connection with any Lease of any part of the Property, including the name and identification number of the accounts in which such security deposits are held, the name and address of the financial institutions in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to obtain information regarding such accounts directly from such financial institutions.

5.1.6Additional Financial or Management Information; Right to Audit.

(a)Borrower shall furnish Lender with such other additional financial or management information regarding Borrower and Liable Party (including state and federal tax returns) as may, from time to time, be reasonably required by Lender or the Rating Agencies in form and substance reasonably satisfactory to Lender or the Rating Agencies.

(b)Lender and its representatives shall have the right upon prior written notice to examine and audit the records, books, management and other papers of Borrower or Liable Party or of any guarantor or indemnitor which reflect upon their financial condition and/or the income, expenses and operations of the Property, at the Property or at any office regularly maintained by Borrower, its affiliates or any guarantor or indemnitor where the books and records are located. Lender shall have the right upon written notice to make copies and extracts from the foregoing records and other papers. To the extent that Borrower’s or any guarantor's financial statements are consolidated with those of a constituent partner, member or affiliate of Borrower or such guarantor, Lender shall have the right upon prior written notice to examine and audit the records, books, management and other papers of such constituent partner, member or affiliate which reflect upon Borrower’s or any guarantor's financial condition and/or the income, expenses and operations of the Property.

(c)Notwithstanding the foregoing provisions of this Section 5.1.6, except for non-public information relating to the financial condition of Liable Party, such as a balance sheet and/or an income statement, Lender shall not be entitled under this Section 5.1.6, to receive, examine or audit any non-public information relating to Liable Party unless Lender agrees to enter into a commercially reasonable and mutually agreeable confidentiality agreement with respect to such non-public information.

(d)Borrower shall furnish Lender and its agents convenient facilities for the examination and audit of any such books and records.

5.1.7Title to the Property. Borrower will warrant and defend the validity and priority of the lien of the Security Instrument and the Assignment of Leases on the Property against the claims of all Persons whomsoever, subject only to Permitted Exceptions.

5.1.8Estoppel Statements. Within ten (10) days after written request by Lender, Borrower shall furnish an acknowledged written statement in form reasonably satisfactory to Lender (i) setting forth the amount of the Loan and the interest rate, (ii) stating either that no offsets or defenses exist against the Loan, or if any offsets or defenses are alleged

Loan Agreement - Page 28

to exist, their nature and extent, (iii) stating whether any default then exists under the Loan Documents or the Environmental Indemnity or any event has occurred and is continuing that with the lapse of time, the giving of notice, or both, would constitute such a default, (iv) stating any other matters as Lender may reasonably request, and (v) providing any documents therewith that Lender may reasonably request, provided that any such other documents do not obligate Borrower to incur any liability, potential liability or additional cost or expense.

5.1.9Leases and Other Agreements Affecting the Property.

(a)Borrower shall perform all obligations of landlord under any and all Leases. Borrower agrees to furnish Lender true, correct and complete executed copies of all future Leases.

(b)Borrower shall not, without the prior written consent of Lender (which consent shall not be unreasonably withheld, conditioned or delayed) (i)  enter into or extend any Lease unless the Lease complies with the Leasing Guidelines or is otherwise approved by Lender in writing, such approval not to be unreasonably withheld, conditioned or delayed, (ii) cancel, terminate or accept surrender of any Lease covering more than 18,000 square feet of net leasable area, except in the case of a default or if the Tenant has exercised a cancellation, termination or surrender right expressly provided in such Lease, unless Borrower has entered into a new Lease or Leases covering all of the premises of the Lease being terminated or surrendered, (iii) modify or amend any Lease covering more than 18,000 square feet of net leasable area in any material way or reduce any rent under any Lease covering more than 18,000 square feet of net leasable area, (iv)  consent to an assignment of the Tenant’s interest or to a subletting of the demised premises under any Lease covering more than 18,000 square feet of net leasable area, except if (1) Tenant remains liable under the Lease following the assignment or subletting or (2) Borrower is obligated to provide such consent pursuant to the terms of (x) any Existing Leases, (y) a Lease which does not require Lender’s consent for approval, or (z) Leases which are otherwise approved by Lender from time to time, (v) accept any payment of rent more than one month in advance of its due date, or accept any security deposit in an amount exceeding one month’s rent, or (vi) enter into any option to purchase the Property. If any of the acts described in this paragraph are done without the prior written consent of Lender, at the option of Lender, they shall be of no force or effect and shall constitute a default under this Agreement. Borrower shall pay all costs and expenses incurred by Lender, including reasonable attorneys’ fees in connection with any Lease, including in connection with any subordination agreement or nondisturbance agreement.

(c)Each Lease affecting the Property entered into after the Advance Date shall be absolutely subordinate to the lien of the Security Instrument and Borrower shall use commercially reasonable efforts to include in each future Lease a provision or provisions, satisfactory to Lender, to the effect that (i) in the event of the judicial or non-judicial foreclosure of the Property, at the election of Lender or the acquiring foreclosure purchaser, the particular Lease shall not be terminated and the Tenant shall attorn to Lender or to such purchaser and (ii) if requested to do so, the Tenant shall agree to enter into a new Lease for the balance of the term upon the same terms and conditions. Borrower shall notify Lender of any Leases entered into following the Advance Date that do not include the foregoing provisions. If Lender requests, Borrower shall use commercially reasonable efforts to cause a Tenant or

Loan Agreement - Page 29

Tenants to enter into subordination and attornment agreements or nondisturbance agreements with Lender, on forms which have been approved by Lender. Following the Advance Date, upon Borrower’s written request, Lender shall provide a nondisturbance agreement on its standard form attached hereto as Exhibit E (“Nondisturbance Agreement”) with respect to any future Lease approved by Lender (if such approval is required hereunder), provided, however, that (i) if Lender’s approval of such Lease is not required as set forth herein, then Lender shall provide such form Nondisturbance Agreement in connection with such Lease and (ii) Lender shall not be obligated to provide such Nondisturbance Agreement unless such Tenant to whom Lender agrees to provide a Nondisturbance Agreement shall deliver to Lender information and documentation, acceptable to Lender confirming that neither the Tenant, nor any guarantor of the Tenant’s obligations under the Lease, nor any person that directly or indirectly (1) controls the Tenant or any such guarantor, or (2) has an ownership interest in the Tenant or such guarantor of twenty-five percent (25%) or more, appears on Government Lists published by OFAC. Notwithstanding the foregoing, such OFAC requirements shall not apply to any entity that is regulated by the SEC, FINRA, or the Federal Reserve or the members, stockholders or partners of any such entity. For any Lease in accordance with the Leasing Guidelines and which does not require any changes to Lender’s standard form of Nondisturbance Agreement, a fee of $1,000 shall be paid to Lender; and with respect to any Lease requiring Lender’s approval or requiring changes to Lender’s standard form of Nondisturbance Agreement, a fee of $3,000 shall be paid to Lender and, in all instances, if Lender elects to retain special counsel the fees and expenses of special counsel must be paid by Borrower.

(d)Borrower covenants and agrees that all contracts and agreements relating to the Property requiring the payment of leasing commissions or management fees or other similar compensation shall (i) provide that the obligation will not be enforceable against Lender and (ii) be subordinate to the lien of the Security Instrument. Lender will be provided evidence of Borrower’s compliance with this Section 5.1.9(d) upon request.

(e)All requests for consents hereunder shall be in writing and shall be delivered to Lender by certified mail or overnight delivery service. Each request for an approval of a Lease must be accompanied by (i) the proposed final draft of the lease (the “Final Lease Draft”), (ii) a redline of the proposed Final Lease Draft as compared against the form lease delivered to, and approved by, Lender prior to the Advance Date, and (iii) such request shall include the following statement on the first page in all capital letters and boldface type: “YOUR FAILURE TO RESPOND TO BORROWER’S REQUEST FOR FINAL APPROVAL OF THE MATTER DESCRIBED HEREIN RELATING TO A LEASE AT 401 – 421 SW 6^th AVENUE, PORTLAND, OREGON (THE COMMONWEALTH BUILDING), AND #[Insert applicable loan number], AS SET FORTH HEREIN WITHIN FIVE (5) BUSINESS DAYS SHALL BE DEEMED TO CONSTITUTE LENDER’S APPROVAL OF SUCH REQUEST.” If Lender shall not have delivered a notice of approval or disapproval to Borrower within such five (5) business days after receipt by Lender of said request and all other information required herein, Lender shall be deemed to have approved such Lease. In the event substantive changes materially affecting landlord and/or Lender’s position as landlord or potential landlord under the lease are made to the proposed Final Lease Draft after the date such draft was delivered and approved by Lender, Borrower shall deliver, for Lender’s approval a copy of the latest proposed lease draft together

Loan Agreement - Page 30

with a redline of the version last viewed and approved by Lender, and such process for approval outlined in section (iii) of this subsection (e) shall be followed for each such approval. A final signed version of any Lease shall be delivered to Lender within a reasonable time after such execution.

5.1.10Material Agreements. Borrower shall (a) use commercially reasonable efforts to faithfully perform and/or observe all of the material covenants and agreements required to be performed and observed by it under each Material Agreement to which it is a party, and do all things necessary to preserve and to keep unimpaired its rights thereunder, (b) promptly notify Lender in writing of the giving of any notice of any default by any party under any Material Agreement of which it is aware and (c) promptly enforce the performance and observance of all of the material covenants and agreements required to be performed and/or observed by the other party under each Material Agreement to which it is a party in a commercially reasonable manner.

5.1.11Performance by Borrower. Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document and the Environmental Indemnity executed and delivered by Borrower.

5.1.12Maintenance of the Property. Borrower, at its sole cost and expense, shall keep the Property in good order, condition and repair, and make all necessary structural and non-structural, ordinary and extraordinary repairs to the Property and the Improvements. Nothing in this Section 5.1.12 shall preclude Borrower from enforcing a Tenant’s obligation under its Lease to reimburse Borrower, as landlord, for, or contribute to costs for, the maintenance and/or repair of the Property.

5.1.13Use. Borrower shall use, or cause to be used, the Property continuously as a Class-A office building with related parking and ground floor retail and amenity space (the “Use”). Borrower shall not use, or permit the use of, the Property for any other use without the prior written consent of Lender (and in connection with the location of any retail or amenity space, such prior written consent of Lender not to be unreasonably withheld). Borrower shall not without the prior written consent of Lender, (i) file or record a declaration of condominium, master mortgage or deed of trust or any other similar document evidencing the imposition of a so-called “condominium regime” whether superior or subordinate to the Security Instrument, (ii) permit any part of the Property to be converted to, or operated as, a “cooperative apartment house” whereby the tenants or occupants participate in the ownership, management or control of any part of the Property and (iii) initiate or permit the subdivision of the Property or change in the legal description.

5.1.14Escrow Deposits. Without limiting the effect of Section 3.1 and Section 6.1, Borrower will begin making monthly deposits of all Impositions and Premiums upon the occurrence of any of the following: (i) an Event of Default exists under the Loan Documents, the Guaranty, if any, or the Environmental Indemnity; (ii) Borrower no longer owns the Property; (iii) there has been a change in Borrower or, except as may be expressly permitted in Section 8.1, there is a change in the general partners, shareholders or members of Borrower or in the constituent general partners or controlling shareholders or controlling members of any of the entities comprising Borrower, or except as may be expressly permitted in Section 8.1, there has been, directly or indirectly, a change of Control of Borrower; (iv) with respect to Impositions or

Loan Agreement - Page 31

Premiums, or both, as the case may be, such deposits are required in connection with a securitization or participation of the Loan; or (v) with respect to Premiums only, at any time Borrower fails to furnish Lender, not later than five (5) days before the dates on which any Premiums would become delinquent, receipts for the payment of such Premiums or appropriate proof of issuance of a new policy which continues in force the insurance coverage of the expiring policy. In the event deposits of Impositions and/or Premiums are required pursuant to this provision, Borrower will make monthly deposits of all Impositions and/or Premiums, as applicable, in an amount equal to one-twelfth (1/12) of the annual charges for these items as reasonably estimated by Lender until such time as Borrower has deposited an amount equal to the annual charges for these items and on written demand, from time to time, shall pay to Lender any additional amounts necessary to pay the Premiums and Impositions. No amounts paid as Impositions or Premiums shall be deemed to be trust funds and these funds may be commingled with other funds of Lender without any requirement to pay interest to Borrower on account of these funds. During the existence of an Event of Default, Lender shall have the right, at its election, to apply any amounts held under this Section 5.1.14 in reduction of the Secured Indebtedness, or in payment of the Premiums or Impositions for which the amounts were deposited.

5.1.15Personal Property. Borrower will notify Lender of, and will protect, defend and indemnify Lender against, all claims and demands of all persons at any time claiming any rights or interest in the Personal Property. The Personal Property shall not be used or bought for personal, family, or household purposes, but shall be bought and used solely for the purpose of carrying on Borrower’s business.

5.1.16Special Purpose Entity/Separateness.

(a)Borrower shall continue to be a Special Purpose Entity.

(b)The Property shall continue to have “single asset real estate” status as defined by Section 101(51)(B) of the Bankruptcy Code.

(c)The organizational documents of Borrower and its sole member, as in effect on the date hereof, shall not be modified, amended or revised without the prior written consent of Lender.

(d)The covenants set forth in this Section 5.1.16 shall survive for so long as any amount remains payable to Lender under this Agreement or any other Loan Document.

Section 5.2Borrower Negative Covenants. From the date hereof until the Secured Indebtedness is paid in full, Borrower hereby covenants and agrees with Lender that:

5.2.1Liens and Encumbrances. Without the prior written consent of Lender, to be exercised in Lender’s sole and absolute discretion, other than the Permitted Exceptions, Borrower shall not create, place or allow to remain any Liens and Encumbrances on the Property; provided however, if any Liens and Encumbrances are recorded against the Property or any part of the Property, Borrower shall obtain a discharge and release of any Liens and Encumbrances within fifteen (15) business days after receipt of notice of their existence (subject to Borrower’s right to contest the same pursuant to the terms of Section 3.1).

Loan Agreement - Page 32

5.2.2Change in Business. Borrower shall not enter into any line of business other than the ownership and operation of the Property.

5.2.3Affiliate Transactions. Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower or any of the partners of Borrower except in the ordinary course of business and on terms which are fully disclosed to Lender in advance and are no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm’s length transaction with an unrelated third party.

5.2.4Zoning. Without the prior written consent of Lender, Borrower shall not (i) initiate or acquiesce in a change in the zoning classification of and/or restrictive covenants affecting the Property or seek any variance under existing zoning ordinances (which consent shall not be unreasonably withheld, conditioned or delayed), (ii) use or permit the use of the Property in a manner which may result in the Use becoming a non‑conforming use under applicable zoning ordinances, or (iii) subject the Property to restrictive covenants, whether by means of covenants, bylaws or similar restrictions.

5.2.5Assets. Borrower shall not purchase or own any property other than the Property and any property necessary or incidental to the ownership and operation of the Property.

5.2.6No Joint Assessment. Borrower shall not suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a tax lot separate from the Property, and (ii) with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the Property.

5.2.7Principal Place of Business; Chief Executive Office; Books and Records. Borrower shall not (i) change its principal place of business or name from the address and name set forth in the introductory paragraph hereof without, in each instance, (A) giving Lender at least thirty (30) days’ prior written notice thereof and (B) taking all action required by Lender for the purpose of perfecting and/or protecting the Lien and security interest of Lender created pursuant to this Agreement and the other Loan Documents or (ii) except as permitted pursuant to, and in accordance with, Section 8.1 below, change its organizational structure without (A) obtaining the prior written consent of Lender and (B) taking all action reasonably required by Lender for the purpose of perfecting or protecting the Lien and security interest of Lender created pursuant to this Agreement and the other Loan Documents. At the request of Lender, Borrower shall execute a certificate in form reasonably satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

5.2.8ERISA. Borrower will not be reconstituted as a Plan or as an entity whose assets constitute “plan assets.”

5.2.9Material Agreements. Borrower shall not, without Lender’s prior written consent, such consent not to be unreasonably withheld: (a) enter into any Material Agreement (other than the Interest Rate Cap Agreement, which shall be governed by Section 2.10) , (b)

Loan Agreement - Page 33

surrender or terminate any Material Agreement to which it is a party (unless the other party thereto is in material default and the termination of such Material Agreement would be commercially reasonable and then only if Borrower shall have provided to Lender not less than five (5) Business Days’ notice of such termination and such termination would not be reasonably expected to result in a Material Adverse Change), (c) increase or consent to the increase of the amount of any fees or charges payable by Borrower under any Material Agreement, except for such increases as are expressly provided for therein, or (d) modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under any Material Agreement.

5.2.10Improvements. Borrower shall abstain from, and not permit the commission of waste to the Property and shall not remove or alter in any substantial manner, the structure or character of any Improvements without the prior written consent of Lender.

5.2.11Personal Property Borrower will not remove the Personal Property without the prior written consent of Lender (which shall not be unreasonably withheld, conditioned or delayed), except items of Personal Property which are consumed or worn out in ordinary usage which shall be promptly replaced by Borrower with other Personal Property of value equal to or greater than the value of the replaced Personal Property.

VI.INSURANCE, CASUALTY AND CONDEMNATION

Section 6.1Insurance.

6.1.1Insurance Policies.

(a)During the term of the Loan, Borrower at its sole cost and expense must provide insurance policies and certificates of insurance for types of insurance described below all of which must be satisfactory to Lender as to form of policy, amounts, deductibles, sublimits, types of coverage, exclusions and the companies underwriting these coverages. In no event shall such policies be terminated or otherwise allowed to lapse. Borrower shall be responsible for its own deductibles. Borrower shall also pay for any insurance, or any increase of policy limits, not described in this Agreement that Borrower requires for its own protection or for compliance with government statutes. Borrower’s insurance shall be primary and without contribution from any insurance procured by Lender including, without limitation, any insurance obtained by Lender pursuant to Section 6.1.1(d).

Policies of insurance shall be delivered to Lender in accordance with the following requirements:

(i)Property insurance on the Improvements and the Personal Property insuring against any peril now or hereafter included within the classification “All Risk” or “Special Perils,” in each case (1) in an amount equal to 100% of the Full Replacement Cost of the Improvements and Personal Property with a waiver of depreciation and with a Replacement Cost Endorsement; (2) containing an agreed amount endorsement with respect to the Improvements and Personal Property waiving all co-insurance provisions; (3) providing for no deductible in excess of $250,000.00; and (4) containing no margin clause unless approved by Lender and (5) containing Ordinance or Law Coverage, Operation of Building Laws, Demolition Costs and Increased Cost of Construction in an amount reasonably required by Lender or if any

Loan Agreement - Page 34

of the Improvements or the use of the Property constitute non-conforming structures then in the amount of 100% of the Full Replacement Cost. The Full Replacement Cost shall be determined from time to time by an appraiser or contractor designated and paid by Borrower and approved by Lender (which approval shall not be unreasonably withheld, conditioned or delayed) or by an engineer or appraiser in the regular employ of the insurer. The “Full Replacement Cost” for purposes of this Article VI shall mean the estimated total cost of construction required to replace the Improvements with a substitute of like utility, and using modern materials and current standards, design and layout. For purposes of calculating Full Replacement Cost direct (hard) costs shall include, without limitation, labor, materials, supervision and contractor’s profit and overhead and indirect (soft) costs shall include, without limitation, fees for architect’s plans and specifications, construction financing costs, permits, sales taxes, insurance and other costs included in the Marshall Valuation Service published by Marshall & Swifts.

(ii)Commercial General Liability insurance, including Terrorism coverage, against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (1) to be on the so-called “occurrence” form with a combined single limit of not less than Fifty Million Dollars ($50,000,000.00); (2) to continue at not less than this limit until required to be changed by Lender in writing by reason of changed economic conditions making such protection inadequate; and (3) to cover at least the following hazards: (a) premises and operations; (b) products and completed operations on an “if any” basis; (c) independent contractors; (d) blanket contractual liability for all contracts to the extent the same are available; (e) contractual liability covering the indemnities contained in this Agreement and the other Loan Documents to the extent available; and (f) if applicable, liquor liability. The required limit may be satisfied through a combination of Primary and Excess Liability policies.

(iii)Business Income insurance in an amount sufficient to prevent Borrower from becoming a co-insurer within the terms of the applicable policies, and sufficient to recover twenty four (24) months Business Income and with an Extended Period of Indemnity (“EPI”) of 12 months. The amount of such insurance shall be increased from time to time during the term of the Loan as and when new leases and renewal leases are entered into and rents payable increase or the annual estimate of gross income from occupancy of the Property increases to reflect such rental increases.

(iv)If Lender determines at any time that any part of the Property is located in an area identified on a Flood Hazard Boundary Map or Flood Insurance Rate Map issued by the Federal Emergency Management Agency as having special flood hazards and flood insurance has been made available, Borrower will maintain a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration with a generally acceptable insurance carrier, in an amount not less than the maximum amount of insurance which is available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as amended. In addition Borrower will maintain Difference in Conditions (DIC) insurance and/or excess insurance from and against all losses, damages, costs, expenses, claims and liabilities related to or arising from acts of flood, of such types, in such amounts, with such deductibles, issued by such companies, and on such forms of insurance policies as required by Lender, if Lender determines at any time that any part of the Property is located in Flood Zone A or V.

Loan Agreement - Page 35

(v)During the period of any construction or renovation or alteration of the Improvements, and only if the Property insurance (as described in Section 6.1.1(a)(i)) form does not otherwise provide coverage, a so-called “Builder’s All Risk” insurance policy in non-reporting form for any Improvements under construction, renovation or alteration including, without limitation, for demolition and increased cost of construction or renovation, in an amount approved by Lender (which approval shall not be unreasonably withheld or delayed) including an Occupancy endorsement and Worker’s Compensation Insurance covering all persons engaged in the construction, renovation or alteration in an amount at least equal to the minimum required by statutory limits of the State.

(vi)Workers’ Compensation insurance, subject to the statutory limits of the State, and employer’s liability insurance with a limit of at least $1,000,000 per accident and per disease per employee, and $1,000,000 for disease in the aggregate in respect of any work or operations on or about the Property, or in connection with the Property or its operations (if applicable).

(vii)Boiler & Machinery, or Equipment Breakdown Coverage, insurance covering the major components of the central heating, air conditioning and ventilating systems, boilers, other pressure vessels, high pressure piping and machinery, elevators and escalators, if any, and other similar equipment installed in the Improvements, in an amount equal to one hundred percent (100%) of the full replacement cost of all equipment installed in, on or at the Improvements. These policies shall insure against physical damage to and loss of occupancy and use of the Improvements arising out of an accident or breakdown.

(viii)Insurance from and against all losses, damages, costs, expenses, claims and liabilities related to or arising from acts of terrorism, of such types, in such amounts, with such deductibles, issued by such companies, and on such forms of insurance policies as required by Lender.

(ix)Business Automobile Insurance with a combined single limit of not less than $1,000,000 per occurrence for bodily injury and property damage arising out of the use of owned, non-owned, hired and/or leased automotive equipment when such equipment is operated by Borrower, Borrower’s employees or Borrower’s agents in connection with the Property.

(x)Windstorm coverage (including coverage for Named Storms), in an amount equal to the Full Replacement Cost, plus an amount equal to the Business Income insurance and EPI contemplated in Subsection (a)(iii) of this Section 6.1.1 and on terms consistent with the commercial property insurance policy required under Subsection (a)(i) of this Section 6.1.1, provided, however, that the deductible for windstorm coverage shall not exceed the greater of (i) $250,000 or (ii) five percent (5%) of the Full Replacement Cost.

(xi)If the Property is located in UBC zones 3 or 4, and provided such insurance is commercially available, insurance from or against all losses, damages, costs, expenses, claims and liabilities related to or arising from earthquake on such form of insurance policy and in an amount equal to the Scenario Upper Limit percentage loss times the replacement cost for the building or other amount otherwise approved in writing by MetLife plus loss of rents

Loan Agreement - Page 36

and EPI, and provided that the deductible for earthquake coverage shall not exceed the greater of (1) $250,000 or (2) five percent (5%) of the Full Replacement Cost. Borrower may request that earthquake insurance be written on a blanket basis, provided that such blanket policy complies with all of Lender’s requirements for a blanket policy. Borrower shall provide necessary underwriting information, including but not limited to a schedule of locations, property types and replacement costs of all properties in Portland, Oregon which are covered by the blanket policy in order to allow Lender to confirm Borrower’s compliance with the requirements set forth in this subsection.

(xii)If the Property is governed in whole or in part by a condominium association or operated as a “cooperative apartment house”, Fidelity/Crime insurance against all losses as a result of fraudulent acts by anyone who either handles or is responsible for funds that it holds or administers, in such amount as required by Lender, naming the condominium association of co-op as the insured.

(xiii)Environmental Liability Insurance insuring against third party bodily injury and property damage resulting from contamination of the Property by Hazardous Materials, including contamination by Hazardous Materials migrating from adjacent or nearby properties, with a limit of not less than $5,000,000 per occurrence and $25,000,000 in the aggregate (the "Environmental Policy"). The Environmental Policy shall be in form and substance acceptable to Lender in its sole and absolute discretion, including without limitation, with respect to coverages, amounts, term, issuer, deductibles and exclusions, and with respect to which all premiums and costs shall have been fully paid for the current calendar year, and such Environmental Policy shall name Lender as an additional insured. Any replacement, renewal, amendment and/or modification of the Environmental Policy which is not on similar or better terms and conditions than the then current policy shall be subject to Lender’s prior review and written approval, in its sole and absolute discretion. It shall be an Event of Default if at any time the approved Environmental Policy (or approved modified or replacement Environmental Policy) no longer remains in effect. Borrower shall pay all costs incurred by Lender, including reasonable attorneys' fees and costs, in connection with its review and approval of the Environmental Policy. Borrower covenants and agrees to deliver to Lender, within twenty (20) days from the date of Lender’s written request, a loss run report from the insurance company that issued the Environmental Policy disclosing any existing claims under such policy.

(xiv)Such other insurance (x) as may from time to time be required by Lender to replace coverage against any hazard, which as of the date hereof is insured against under any of the insurance policies described in Subsections (a)(i) through (a)(xiii) of this Section 6.1.1, and (y) as may from time to time be reasonably required by Lender against other insurable hazards (provided that any such insurance required by Lender is commercially available), including, but not limited to, vandalism, earthquake, environmental, sinkhole and mine subsidence.

(b)Lender’s interest must be clearly stated by endorsement in the insurance policies described in this Section 6.1.1 as follows:

(i)The policies of insurance referenced in Subsections (a)(i), (a)(iii), (a)(iv), (a)(v), (a)(vii), (a)(viii), (a)(x) and (a)(xi) of this Section 6.1.1 shall identify Lender under

Loan Agreement - Page 37

the New York Standard Mortgagee Clause (non-contributory) endorsement or its equivalent form.

(ii)The insurance policies referenced in Sections 6.1.1(a)(ii) and 6.1.1(a)(ix) and Section 6.1.1(a)(xiii) shall name Lender as an additional insured.

(iii)All of the policies referred to in Section 6.1.1 shall provide for at least thirty (30) days’ written notice to Lender in the event of policy cancellation and/or material change.

(c)All the insurance companies must be authorized to do business in New York State and the State and be approved by Lender (which approval shall not be unreasonably delayed or withheld). The insurance companies must have a general policy rating of A.M. Best “Excellent” or better and a financial class of X or better by A.M. Best. So called “Cut-through” endorsements shall not be permitted. If there are any Securities issued with respect to this Loan which have been assigned a rating by a Rating Agency, the insurance company shall have a claims paying ability rating by such Rating Agency equal to or greater than the rating of the highest class of the Securities. Borrower shall deliver evidence satisfactory to Lender of payment of premiums due under the insurance policies no later than five (5) days before the dates upon which any insurance premiums would become delinquent.

(d)Certified copies of the policies, and any endorsements, shall be made available for inspection by Lender upon request. If Borrower fails to obtain or maintain insurance policies and coverages as required by this Section 6.1.1, then Lender shall have the right but shall not have the obligation immediately to procure any such insurance policies and coverages at Borrower’s cost.

(e)Borrower shall be required during the term of the Loan to continue to provide Lender with original renewal policies or replacements of the insurance policies referenced in Section 6.1.1(a). Lender may accept Certificates of Insurance, if satisfactory to Lender, evidencing insurance policies referenced in this Section 6.1.1 instead of requiring the actual policies. Lender shall be provided with renewal Certificates of Insurance, or Binders, not less than five (5) days prior to each expiration. The failure of Borrower to maintain the insurance required under this Article VI shall not constitute a waiver of Borrower’s obligation to fulfill these requirements.

(f)All binders, policies, endorsements, certificates, and cancellation notices are to be sent to the Lender’s Address for Insurance Notification until changed by notice from Lender.

(g)If any policy referred to in this Section 6.1.1 is written on a blanket basis, a list of locations and their insurable values shall be provided, as required by Lender. If the Property is located in an area for potential catastrophic loss Borrower shall provide Lender with a Natural Hazard Loss Analysis Report on an annual basis. This report is to be completed by a recognized risk modeling company (e.g. RMS, EQE, AIR) approved by Lender. Notwithstanding the foregoing, if locations and values in the same geographic area of the Property which are covered under the same blanket policy as the Property do not significantly

Loan Agreement - Page 38

change (as determined by Lender), then the list of locations and insurable values will be sufficient.

6.1.2INSURANCE WARNING.

(a)WARNING: UNLESS YOU PROVIDE US WITH EVIDENCE OF THE INSURANCE COVERAGE AS REQUIRED BY OUR CONTRACT OR THIS LOAN AGREEMENT, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT YOUR INTEREST. IF THE PROPERTY BECOMES DAMAGED, THE COVERAGE WE PURCHASE MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM MADE AGAINST YOU. YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT YOU HAVE OBTAINED PROPERTY COVERAGE ELSEWHERE.

(b)YOU ARE RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY US. THE COST OF THIS INSURANCE MAY BE ADDED TO YOUR CONTRACT OR LOAN BALANCE. IF THE COST IS ADDED TO YOUR CONTRACT OR LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING CONTRACT OR LOAN WILL APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE YOUR PRIOR COVERAGE LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF COVERAGE.

(c)THE COVERAGE WE PURCHASE MAY BE CONSIDERABLY MORE EXPENSIVE THAN INSURANCE YOU CAN OBTAIN ON YOUR OWN AND MAY NOT SATISFY ANY NEED FOR PROPERTY DAMAGE COVERAGE OR ANY MANDATORY LIABILITY INSURANCE REQUIREMENTS IMPOSED BY APPLICABLE LAW.

(Each reference to “you” and “your” in subsection (a), (b), (c) shall refer to Borrower and each reference to “us” and “we” shall refer to Lender.)

6.1.3Adjustment of Claims. Borrower hereby authorizes and empowers Lender to settle, adjust or compromise any claims for damage to, or loss or destruction of, all or a portion of the Property, to the extent such claims exceed $250,000, regardless of whether there are Insurance Proceeds available or whether any such Insurance Proceeds are sufficient in amount to fully compensate for such damage, loss or destruction.

6.1.4Assignment to Lender. The provisions of Section 3.2 of the Security Instrument are hereby incorporated by reference into this Agreement to the same extent and with the same force as if fully set forth herein.

Section 6.2Casualty and Condemnation.

6.2.1Casualty.

Loan Agreement - Page 39

(a)Borrower shall give prompt written notice to Lender of any casualty to the Property whether or not required to be insured against; provided, however, that Borrower shall not be required to notify Lender of any casualty to the Property for which Borrower reasonably believes the cost of the Restoration will not exceed $100,000. The notice shall describe the nature and cause of the casualty and the extent of the damage to the Property. Borrower covenants and agrees to commence and diligently pursue to completion the Restoration; provided that Lender makes the Net Insurance Proceeds available to Borrower for the Restoration.

(b)Borrower assigns to Lender all Insurance Proceeds which Borrower is entitled to receive in connection with a casualty whether or not such insurance is required under this Agreement. In the event of any damage to or destruction of the Property, and provided (1) an Event of Default does not currently exist, and (2) Lender has determined that (i) there has not been an Impairment of the Security, and (ii) the repair, restoration and rebuilding of any portion of the Property that has been partially damaged or destroyed (the “Restoration”) can be accomplished in full compliance with all Requirements to the same condition, character and general utility as nearly as possible to that existing prior to the casualty and at least equal in value as that existing prior to the casualty, then the Net Insurance Proceeds shall be applied to the cost of Restoration in accordance with the terms of this Article VI. Lender shall hold and disburse the Net Insurance Proceeds to the Restoration. Notwithstanding the foregoing, if the Net Insurance Proceeds do not exceed $100,000, Lender shall disburse the Net Insurance Proceeds to Borrower upon receipt.

(c)If the Net Insurance Proceeds are to be used for the Restoration in accordance with this Article VI, Borrower shall comply with Lender’s Requirements For Restoration as set forth in Section 6.2.3. Upon Borrower’s satisfaction and completion of the Requirements For Restoration and upon confirmation that there is no Event of Default then existing, Lender shall pay any remaining Restoration Funds then held by Lender to Borrower.

(d)In the event that the conditions for Restoration set forth in this Section 6.2.1 have not been met, Lender may, at its option, apply the Net Insurance Proceeds to the reduction of the Secured Indebtedness in such order as Lender may determine and Lender may declare the entire Secured Indebtedness due and payable on a date which is ninety (90) days after Lender’s written demand therefor; provided, however, that unless the applicable casualty or damage occurs during the last year of the term of the Loan, Lender shall not be entitled to declare the entire Secured Indebtedness due and payable if the cost of the Restoration will not exceed $10,000,000, as reasonably determined by Lender. After payment in full of the Secured Indebtedness, any remaining Restoration Funds shall be paid to Borrower. After payment in full of the Secured Indebtedness, any remaining Restoration Funds shall be paid to Borrower.

6.2.2Condemnation.

(a)If the Property or any part of the Property is taken by reason of any Condemnation, Lender shall be entitled to all Condemnation Proceeds in excess of $100,000. At its option, Lender shall be entitled to commence, appear in and prosecute in its own name any action or proceeding and to make any compromise or settlement in connection with such

Loan Agreement - Page 40

Condemnation. Borrower hereby irrevocably constitutes and appoints Lender as its attorney‑in‑fact, which appointment is coupled with an interest, to commence, appear in and prosecute any action or proceeding or to make any compromise or settlement in connection with any such Condemnation.

(b)Borrower assigns to Lender all Condemnation Proceeds which Borrower is entitled to receive. In the event of any Condemnation, and provided (1) an Event of Default does not currently exist, and (2) Lender has determined that (i) there has not been an Impairment of the Security, and (ii) the Restoration of any portion of the Property that has not been taken can be accomplished in full compliance with all Requirements to the same condition, character and general utility as nearly as possible to that existing prior to the taking and at least equal in value as that existing prior to the taking, then (A) Borrower shall commence and diligently pursue to completion the Restoration (provided that Lender makes the Net Condemnation Proceeds available to Borrower for the Restoration) and (B) Lender shall hold and disburse the Net Condemnation Proceeds to the Restoration.

(c)In the event the Net Condemnation Proceeds are to be used for the Restoration, Borrower shall comply with Lender’s Requirements For Restoration as set forth in Section 6.2.3. Upon Borrower’s satisfaction and completion of the Requirements For Restoration and upon confirmation that there is no Event of Default then existing, Lender shall pay any remaining Restoration Funds then held by Lender to Borrower.

(d)In the event that the conditions for Restoration set forth in this Section 6.2.2 have not been met, Lender may, at its option, apply the Net Condemnation Proceeds to the reduction of the Secured Indebtedness in such order as Lender may determine and Lender may declare the entire Secured Indebtedness, payable on a date which is ninety (90) days after Lender’s written demand therefor; provided, however, that unless the applicable casualty or damage occurs during the last year of the term of the Loan, Lender shall not be entitled to declare the entire Secured Indebtedness due and payable if the cost of the Restoration will not exceed $10,000,000, as reasonably determined by Lender. After payment in full of the Secured Indebtedness, any remaining Restoration Funds shall be paid to Borrower. After payment in full of the Secured Indebtedness, any remaining Restoration Funds shall be paid to Borrower.

6.2.3Requirements For Restoration. Unless otherwise expressly agreed in a writing signed by Lender, the following are the “Requirements For Restoration”:

(a)If the Net Insurance Proceeds or Net Condemnation Proceeds are to be used for the Restoration, prior to the commencement of any Restoration work (the “Work”), Borrower shall provide Lender for its review and written approval (which approval will not be unreasonably withheld, conditioned or delayed) (i) complete plans and specifications for the Work which (A) have been approved by all required Governmental Authorities, (B) have been approved by an architect reasonably satisfactory to Lender (the “Architect”) and (C) are accompanied by the Architect’s signed statement of the total estimated cost of the Work (the “Approved Plans and Specifications”); (ii) the amount of money which Lender reasonably determines will be sufficient when added to the Net Insurance Proceeds or Net Condemnation Proceeds to pay the entire cost of the Restoration (such amount, together with the Net

Loan Agreement - Page 41

Insurance Proceeds or Net Condemnation Proceeds, collectively referred to as the “Restoration Funds”); (iii) evidence that the Approved Plans and Specifications and the Work are in compliance with all Requirements; (iv) an executed contract for construction with a contractor reasonably satisfactory to Lender, in a form reasonably approved by Lender in writing; and (v) a surety bond and/or guarantee of payment with respect to the completion of the Work. The bond or guarantee shall be reasonably satisfactory to Lender in form and amount and shall be signed by a surety or other entities that are acceptable to Lender.

(b)Borrower shall not commence the Work, other than temporary work to protect the Property or prevent interference with business, until Borrower shall have complied with the requirements of subsection (a) of this Section 6.2.3. So long as there does not currently exist an Event of Default and the following conditions have been complied with or, in Lender’s discretion, waived, Lender shall disburse the Restoration Funds in increments to Borrower, from time to time as the Work progresses on the following terms and conditions:

(i)Architect shall be in charge of the Work.

(ii)Lender shall disburse the Restoration Funds directly or through escrow with a title company selected by Borrower and reasonably approved by Lender, upon not less than ten (10) days’ prior written notice from Borrower to Lender and Borrower’s delivery to Lender of (A) Borrower’s written request for payment (a “Request for Payment”) accompanied by a certificate by the Architect in a form satisfactory to Lender which states that (a) all of the Work completed to that date has been completed in substantial compliance with the Approved Plans and Specifications and in accordance with all Requirements, (b) the amount requested has been paid or is then due and payable and is properly a part of the cost of the Work, and (c) when added to all sums previously paid by Lender, the requested amount does not exceed the value of the Work completed to the date of such certificate; and (B) evidence reasonably satisfactory to Lender that the balance of the Restoration Funds remaining after making the payments shall be sufficient to pay the balance of the cost of the Work. Each Request for Payment shall be accompanied by (x) waivers of liens covering that part of the Work previously paid for, if any (y) a title search or by other evidence reasonably satisfactory to Lender that no mechanic’s or materialmen’s liens or other similar liens for labor or materials supplied in connection with the Work have been filed against the Property and not discharged of record (subject to Borrower’s right to contest the same pursuant to the terms of Section 3.1), and (z) an endorsement to the Title Insurance Policy (to the extent available) insuring that no encumbrance exists on or affects the Property other than the Permitted Exceptions.

(iii)The final Request for Payment shall be accompanied by (a) a final certificate of occupancy or other evidence of approval of appropriate Governmental Authorities for the use and occupancy of the Improvements, (b) evidence that the Restoration has been completed substantially in accordance with the Approved Plans and Specifications and all Requirements, (c) evidence that the costs of the Restoration have been paid in full, and (d) evidence that no mechanic’s or similar liens for labor or material supplied in connection with the Restoration are outstanding against the Property (subject to Borrower’s right to contest the same pursuant to the terms of Section 3.1), including final waivers of liens covering all of the Work and an endorsement to the Title Insurance Policy (to the extent available) insuring that no encumbrance exists on or affects the Property other than the Permitted Exceptions.

Loan Agreement - Page 42

(c)If (i) within sixty (60) days after the occurrence of any damage, destruction or condemnation requiring Restoration, Borrower fails to submit to Lender and receive Lender’s approval of plans and specifications or fails to deposit with Lender the additional amount necessary to accomplish the Restoration as provided in subparagraph (a) above, or (ii) after such plans and specifications are approved by all such Governmental Authorities and Lender, Borrower fails to commence promptly or diligently and in good faith continue to completion the Restoration, or (iii) Borrower becomes delinquent in payment to mechanics, materialmen or others for the costs incurred in connection with the Restoration (subject to Borrower’s right to contest the same pursuant to the terms of Section 3.1), or (iv) there exists an Event of Default, then, in addition to all of the rights herein set forth and after ten (10) days’ written notice of the non‑fulfillment of one or more of these conditions, Lender may apply the Restoration Funds to reduce the Secured Indebtedness in such order as Lender may reasonably determine, and at Lender’s option and in its sole discretion, Lender may declare the Secured Indebtedness due and payable on a date which is ninety (90) days after Lender’s written demand therefor; provided, however, that unless the applicable damage, destruction or condemnation occurs during the last year of the term of the Loan, Lender shall not be entitled to declare the entire Secured Indebtedness due and payable if the cost of the Restoration will not exceed $10,000,000, as reasonably determined by Lender.

VII.PROPERTY MANAGEMENT

Section 7.1The Management Agreement and Leasing Agreement. Borrower shall cause Manager to manage the Property in accordance with the Management Agreement and Leasing Agent to lease the Property in accordance with the Leasing Agreement. Borrower shall (i) diligently perform and observe all of the terms, covenants and conditions of the Management Agreement and Leasing Agreement on the part of Borrower to be performed and observed, (ii) promptly notify Lender of any notice to Borrower of any default by Borrower in the performance or observance of any of the terms, covenants or conditions of the Management Agreement or the Leasing Agreement on the part of Borrower to be performed and observed, and (iii) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it under the Management Agreement or the Leasing Agreement. If Borrower defaults (following the expiration of any applicable grace or notice and cure period) in the performance or observance of any material term, covenant or condition of the Management Agreement or the Leasing Agreement on the part of Borrower to be performed or observed, then, without limiting Lender’s other rights or remedies under this Agreement or the other Loan Documents, the Environmental Indemnity or the Guaranty, if any, and without waiving or releasing Borrower from any of its obligations hereunder or under the Management Agreement or the Leasing Agreement, Lender shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the material terms, covenants and conditions of the Management Agreement or the Leasing Agreement, as applicable, on the part of Borrower to be performed or observed.

Section 7.2Prohibition Against Termination or Modification. Borrower shall not surrender, terminate, cancel, modify, renew or extend the Management Agreement or the Leasing Agreement, or enter into any other agreement relating to the management or operation of the Property with Manager, Leasing Agent or any other Person, or consent to the assignment by the Manager or Leasing Agent of its interest under the Management Agreement or the

Loan Agreement - Page 43

Leasing Agreement, as applicable, in each case without the express consent of Lender (such consent not to be unreasonably withheld). If at any time Lender consents to the appointment of a new manager or new leasing agent, such manager or leasing agent, as applicable, and Borrower shall, as a condition of Lender’s consent, execute an assignment and subordination of management agreement or leasing agreement, as applicable, in the form then used by Lender.

Section 7.3Replacement of Manager or Leasing Agent. Lender shall have the right, in its sole discretion, to require Borrower to replace the Manager or Leasing Agent upon prior notice with a Person reasonably approved by Lender upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and continuance of an Event of Default and/or (ii) if Manager or Leasing Agent is in default of any material provision under the Management Agreement or Leasing Agreement, as applicable, beyond any applicable notice and cure period or if at any time the Manager or Leasing Agent has engaged in gross negligence, fraud or willful misconduct.

VIII.CHANGE IN OWNERSHIP, PROHIBITION ON ADDITIONAL FINANCING AND ADDITIONAL OBLIGATIONS

Section 8.1Transfers of Interest in Borrower.

(a)Subject to Section 8.1(b), Borrower shall not cause or permit: (i) the Property or any direct or indirect interest in the Property, to be conveyed, transferred, assigned, encumbered, sold or otherwise disposed of; or (ii) any transfer, assignment or conveyance of any direct or indirect interest in Borrower or in any of Borrower’s Constituents or (iii) any merger, reorganization, dissolution or other change in the ownership structure of Borrower or any of Borrower’s Constituents, including, without limitation, any conversion of Borrower or any of Borrower’s Constituents from one form of entity to another (collectively, a “Transfer” or “Transfers”). Transfers shall expressly exclude any Transfers of Personal Property if made in the ordinary course of business and such Personal Property is obsolete or unnecessary for the operation of the Property or if such Personal Property is replaced with personal property of reasonably equivalent function and value. The prohibitions on transfer shall not be applicable to (i) Transfers as a result of the death of a natural person; or (ii) Transfers in connection with estate planning by a natural person to a spouse, son or daughter or descendant of either, a stepson or stepdaughter or descendant of either. Borrower shall pay all costs and expenses, including reasonable attorneys’ fees and disbursements incurred by Lender in connection with any Transfer.

(b)Notwithstanding anything stated to the contrary herein, but subject to the General Transfer Requirements, any transfers (or the pledge or encumbrance) of equity interests or other interests in KBSGI REIT Properties, LLC, or in any of the direct or indirect owners of KBSGI REIT Properties, LLC (including, without limitation, KBS Growth & Income Limited Partnership, KBS Growth & Income REIT Holdings LLC, or KBS Growth & Income REIT, Inc.) shall not be prohibited (and shall be expressly permitted) provided that KBS Growth & Income REIT, Inc. continues to control the Borrower and own, either directly or indirectly, not less than 51% of the ownership interests in Borrower. Each of the Transfers permitted in this Section 8.1(b) shall be subject to the following conditions: (i) there shall be no Event of Default under the Loan Documents, the Guaranty or the Environmental Indemnity

Loan Agreement - Page 44

that remains uncured beyond any applicable grace or notice and cure period, (ii) after giving effect to the Transfer, the entity that comprises Borrower shall continue to be able to make the representations and warranties set forth in Section 4.1.2 (Litigation), Section 4.1.5 (No Plan Assets), Section 4.1.25 (Foreign Person), Section 4.1.28 (Non-Relationship), Section 4.1.29 (US Patriot Act), Section 4.1.30 (Criminal Acts), and Section 4.1.31 (No Defaults) and Borrower shall furnish to Lender such information as Lender reasonably requests in order for Lender to conduct due diligence, satisfactory to Lender, with respect to Section 4.1.29 (US Patriot Act), (iii) Borrower shall pay all costs and expenses incurred by Lender in connection with the Transfer, including title insurance premiums (if applicable), documentation costs and reasonable attorneys’ fees and costs, and (iv) Lender receives written notice thereof not later than thirty (30) days prior to such contemplated transfer, provided, however, that the foregoing requirement in this clause (iv) shall not apply to any transfers of shares in KBS Growth & Income REIT, Inc. (the foregoing conditions in clauses (i) through (iv), inclusive, shall constitute and be referred to collectively as the “General Transfer Requirements”). Any Transfer pursuant to and in accordance with this Section 8.1(b) will not relieve Borrower of its obligations under the Note or any other Loan Documents or the Environmental Indemnity, or Liable Parties of their obligations under the Environmental Indemnity, the Guaranty, or under the Loan Documents, to the extent applicable.

Section 8.2Prohibition on Additional Financing. Subject to the provisions below, Borrower shall not incur or permit the incurring of: (i) any financing in addition to the Loan that is secured by a lien, security interest or other encumbrance of any part of the Property (including any loan or financing which is repaid by assessments or other taxes related to the Property including, without limitation, any Property-Assessed Clean Energy Loan) or (ii) any pledge or encumbrance of any interest in Borrower or any of Borrower’s Constituents (collectively “Secondary Financing”). Notwithstanding the foregoing and so long as no Event of Default exists, the following transactions shall not be prohibited and shall be expressly permitted:

(a)KBSGI REIT Properties, LLC, KBS Growth & Income Limited Partnership and KBS Growth & Income REIT, Inc. shall each be permitted to execute swap agreements, swap guaranties and other guaranties and/or indemnity agreements for their respective subsidiaries, so long as the Property, any other assets of Borrower (including, without limitation, cash flow from the Property), or the direct membership interest in Borrower or Borrower’s sole member are not pledged to secure such agreements; and

(b)KBS Growth & Income Limited Partnership and KBS Growth & Income REIT, Inc. shall be permitted to obtain loans from, or incur indebtedness to any third-party lender (each a “Secondary Loan”) and shall have the right to pledge their respective interests in KBS Growth & Income Limited Partnership and KBSGI REIT Properties, LLC as security for any such Secondary Loan so long as (i) neither Borrower nor Borrower’s sole member’s membership interest are pledged to secure such Secondary Loan, and (ii) any default under a Secondary Loan resulting in a foreclosure of the pledged interests and a transfer of such interest to the lender of the Secondary Loan shall be deemed an Event of Default.

Section 8.3Restrictions on Additional Obligations. During the term of the Loan, Borrower shall not, without the prior written consent of Lender, become liable with

Loan Agreement - Page 45

respect to any indebtedness or other obligation except for (i) the Loan, (ii) Leases entered into in the ordinary course of owning and operating the Property for the Use, (iii) trade payables incurred in the ordinary course of owning and operating the Property for the Use but excluding any loans or borrowings, provided that such trade payables are paid before the same becomes delinquent, (iv) liabilities or indebtedness disclosed in writing to and approved by Lender on or before the Execution Date, and (v) any other single item of indebtedness or liability (but expressly excluding the items listed in clauses (i)-(iv) of this Section 8.3) which does not exceed $100,000 or, when aggregated with other items of indebtedness or liability (but expressly excluding the items listed in clauses (i)-(iv) of this Section 8.3), does not exceed $200,000 (collectively, the “Permitted Indebtedness”).

Section 8.4Statements Regarding Ownership. Borrower agrees to submit or cause to be submitted to Lender within forty-five (45) days after December 31st of each calendar year during the term of the Loan and ten (10) days after any written request by Lender, a sworn, notarized certificate, signed by an authorized (i) individual who is Borrower or one of the individuals comprising Borrower, (ii) member of Borrower, (iii) partner of Borrower or (iv) officer of Borrower or officer of KBS Growth & Income REIT, Inc., Borrower’s indirect 100% owner, in its authorized capacity to act on behalf of Borrower, as the case may be, stating whether (x) any part of the Property, or any interest in the Property, has been conveyed, transferred, assigned, encumbered, or sold, and if so, to whom; (y) any conveyance, transfer, pledge or encumbrance of any interest in Borrower has been made and if so, to whom; or (z) there has been any change in the individual(s) comprising Borrower or in the partners, members, shareholders or beneficiaries of Borrower (but excluding any changes in the shareholders of KBS Growth & Income REIT, Inc.) from those on the Execution Date, and if so, a description of such change or changes.

IX.ENVIRONMENTAL HAZARDS

Section 9.1Representations and Warranties. Borrower hereby represents, warrants, covenants and agrees to and with Lender that (i) based on Borrower’s knowledge and except as otherwise disclosed in the Environmental Assessment and except as otherwise disclosed to Lender on Exhibit B attached to the Environmental Indemnity, neither Borrower nor to the best of Borrower’s knowledge, any Tenant, subtenant or occupant of the Property, has at any time placed, suffered or permitted the presence of any Hazardous Materials at, on, under, within or about the Property except as expressly approved by Lender in writing and (ii) except as otherwise disclosed in the Environmental Assessment and to Borrower’s knowledge, all operations or activities upon the Property, and any use or occupancy of the Property by Borrower are presently and shall in the future be in compliance with all Requirements of Environmental Laws, (iii) Borrower will use best efforts to assure that any Tenant, subtenant or occupant of the Property shall in the future be in compliance with all Requirements of Environmental Laws, (iv) except as otherwise disclosed in the Environmental Assessment and to Borrower’s knowledge, all operations or activities upon the Property are presently and shall in the future be in compliance with all Requirements of Environmental Laws, (v) Borrower does not know of, and has not received, any written or oral notice or other communication from any person or entity (including, without limitation, a governmental entity) relating to Hazardous Materials or Remedial Work pertaining thereto, of possible liability of any person or entity pursuant to any Requirements of Environmental Laws, other environmental conditions in connection with the

Loan Agreement - Page 46

Property, or any actual administrative or judicial proceedings in connection with any of the foregoing, (vi) Borrower shall not do or allow any Tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off the Property), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to the Property, (vii) Borrower has provided to Lender, in writing, any and all information relating to environmental conditions in, on, under or from the Property that is known to Borrower and that is contained in Borrower’s files and records, including, without limitation, any reports relating to Hazardous Materials in, on, under or from the Property and/or to the environmental condition of the Property, and (viii) to Borrower’s knowledge, except as otherwise disclosed by a loss run report (issued by the insurance company that issued the Environmental Policy) delivered to Lender on or prior to the Advance Date, no claims have been made against the Environmental Policy in relation to the Property or any other property insured under the Environmental Policy.

Section 9.2Remedial Work. In the event any Remedial Work is required under any Requirements of Environmental Laws, Borrower shall perform or cause to be performed the Remedial Work in compliance with the applicable law, regulation, order or agreement. All Remedial Work shall be performed by one or more contractors, selected by Borrower and approved in advance in writing by Lender (which approval shall not be unreasonably withheld, conditioned or delayed), and under the supervision of a consulting engineer, selected by Borrower and approved in advance in writing by Lender (which approval shall not be unreasonably withheld, conditioned or delayed). All reasonable costs and expenses of Remedial Work shall be paid by Borrower including, without limitation, the charges of the contractor(s) and/or the consulting engineer, and Lender’s reasonable attorneys’, architects’ and/or consultants’ fees and costs incurred in connection with monitoring or review of the Remedial Work. In the event Borrower shall fail to timely commence, or cause to be commenced, or fail to diligently and in good faith prosecute to completion, the Remedial Work, Lender may, but shall not be required to, cause such Remedial Work to be performed, subject to the provisions of Section 7.5, Section 7.6 and Section 7.7 of the Security Instrument.

Section 9.3Environmental Site Assessment. Lender shall have the right, at any time and from time to time, to undertake, at the expense of Borrower, an environmental site assessment on the Property, including any testing that Lender may determine, in its reasonable discretion, is necessary or desirable to ascertain the environmental condition of the Property and the compliance of the Property with Requirements of Environmental Laws. Borrower shall cooperate fully with Lender and its consultants performing such assessments and tests. If such environmental site assessment and testing confirms the presence or existence of Hazardous Materials on, under or about the Property, or any breach or violation of any Requirements of Environmental Laws pertaining to Borrower or the Property, the cost of such environmental site assessment and testing shall be borne solely by Borrower. If the environmental site assessment and testing affirms that no Hazardous Materials are present or exist on, under or about the Property, and that there are no breaches or violations of any Requirements of Environmental Laws pertaining to Borrower and the Property, the cost of such environmental site assessment and testing shall be borne solely by Lender. Notwithstanding the foregoing, Lender hereby agrees that it shall not undertake or cause to be undertaken any Phase II environmental site

Loan Agreement - Page 47

assessment of the Property unless such Phase II is required or recommended pursuant to a Phase I environmental site assessment of the Property.

Section 9.4Unsecured Obligations.

(a)No amounts which may become owing by Borrower to Lender under this Article IX or under any other provision of this Agreement as a result of a breach of or violation of this Article IX shall be secured by the Security Instrument. The obligations shall continue in full force and effect and any breach of this Article IX, subject to the notice and cure period contained in Section 11.1(b) below, shall constitute an Event of Default.

(b) The lien of the Security Instrument shall not secure (i) any Unsecured Obligations, or (ii) any other obligations to the extent that they are the same or have the same effect as any of the Unsecured Obligations. The Unsecured Obligations shall continue in full force, and any breach or default of any such obligations shall constitute a breach or default under this Agreement but the proceeds of any foreclosure sale shall not be applied against Unsecured Obligations.

(c)Nothing in this Section shall in any way limit or otherwise affect the right of Lender to obtain a judgment in accordance with applicable law for any deficiency in recovery of all obligations that are secured by the Security Instrument following foreclosure, notwithstanding that the deficiency judgment may result from diminution in the value of the Property by reason of any event or occurrence pertaining to Hazardous Materials or any Requirements of Environmental Laws.

(d)Notwithstanding the foregoing but subject to the terms hereof and the Environmental Indemnity (including, without limitation, Section 4(c) and Section 8(b) thereof), the Environmental Indemnity shall survive any other termination of this Agreement pursuant to a foreclosure, deed in lieu of foreclosure, bankruptcy or other termination of this Agreement related to the existence of an Event of Default under the Loan Documents. In the event that the original named Borrower has delivered to Lender prior to the closing of the Loan, and maintains throughout the term of the Loan, the Environmental Policy, Lender shall agree to look first to the Environmental Policy as provided for, and in accordance with, the Environmental Indemnity.

X.PARTICIPATION AND SALE OF LOAN

Section 10.1Sale of Loan/Participation. Lender may (i) sell, transfer or assign all or any portion of its interest or one or more participation interests in the Loan, the Loan Documents, the Guaranty, if any, and the Environmental Indemnity at any time and from time to time, including, without limitation, its rights and obligations as servicer of the Loan; provided that Lender shall notify Borrower in wiring within thirty (30) days after transferring its responsibility as servicer of the Loan and (ii) issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement, including depositing the Loan Documents, the Guaranty, if any, and the Environmental Indemnity with a trust that may issue securities (the “Securities”) (subsections (i) and (ii), collectively or individually, a “Loan Transfer”); provided that Borrower will not in any

Loan Agreement - Page 48

event be required to incur (except to a de minimis extent) (x) any lesser rights or greater obligations than as currently set forth in the Loan Documents and (y) any expense or any liability in connection with Loan Transfer. Lender may forward to each purchaser, transferee, assignee, servicer, participant or investor in the Loan or in the Securities (collectively, the “Investor”) or any prospective Investor or any Rating Agency rating the Securities, on a confidential basis, all documents and information which Lender now has or may hereafter acquire relating to the Loan, Borrower, any Liable Party and the Property, whether furnished by Borrower, any Liable Party or otherwise, as Lender determines necessary or desirable.

Section 10.2Splitting of the Mortgage. The provisions of Section 5.2 of the Security Instrument are hereby incorporated by reference into this Agreement to the same extent and with the same force as if fully set forth herein.

Section 10.3Cooperation. Borrower will reasonably cooperate with Lender, prospective Investors, and the Rating Agencies (at no cost, potential liability or expense) in furnishing such information and providing such other assistance, estoppel certificates, reports and legal opinions as Lender may reasonably request in connection with any such transaction. In addition, Borrower acknowledges that Lender may release or disclose to prospective Investors and the Rating Agencies originals or copies of the Loan Documents, the Guaranty, if any, the Environmental Indemnity, title information, engineering reports, financial statements, operating statements, appraisals, Leases, rent rolls, and all other materials, documents and information in Lender’s possession or which Lender is entitled to receive under the Loan Documents, the Guaranty, if any, and the Environmental Indemnity with respect to the Loan, Borrower, any Liable Party or the Property. Borrower shall also furnish to prospective Investors or the Rating Agencies any and all information concerning the Property, the Leases, the financial condition of Borrower or any Liable Party as may be requested by Lender, any prospective Investor or any Rating Agency in connection with any sale, transfer or participation interest so long as such information delivered does not cause Borrower or Liable Party to incur any liability, potential liability or any costs or expense. Lender shall reimburse Borrower for Borrower’s reasonable and verified third-party attorneys' fees related to Borrower’s cooperation under this Section 10.3.

XI.DEFAULTS

Section 11.1Event of Default.

Any of the following shall be deemed to be a material breach of Borrower’s covenants in this Agreement and shall constitute a default (“Event of Default”):

(a)The failure of Borrower to pay any installment of principal, interest or principal and interest, any required escrow deposit or any other sum required to be paid under any Loan Document, whether to Lender or otherwise, within ten (10) days after receipt of notice of such failure; provided, however, that Lender shall not be required to provide such notice more than one (1) time in any twelve (12) month period or two (2) times in the aggregate during the term of the Loan. In the event that Lender is no longer required to provide Borrower with such notices of such failure as set forth in the immediately preceding sentence, then the failure of Borrower to pay any installment of principal, interest or principal and interest, any required escrow deposit or any other sum required to be paid under any of the

Loan Agreement - Page 49

Loan Documents, whether to Lender or otherwise, within ten (10) days of the date when such amount is due shall constitute an Event of Default.

(b)The failure of Borrower to perform or observe any other term, provision, covenant, condition or agreement under any Loan Document, not specified in the other clauses of this Section 11.1 or not otherwise specified as an Event of Default in this Agreement, within thirty (30) days after Borrower’s receipt of notice of such failure (or such additional time, not to exceed ninety (90) days after receipt of notice of such failure, as may be reasonably required if such failure cannot be cured within thirty (30) days provided Borrower commences to cure such failure within thirty (30) days of its receipt of notice of failure and thereafter diligently works to cure the same);

(c) (i) The filing by Borrower or any Liable Party (an “Insolvent Entity”) of a voluntary petition or application for relief in bankruptcy, (ii) the filing against an Insolvent Entity of an involuntary petition or application for relief in bankruptcy that is not dismissed within one hundred twenty (120) days, (iii) an Insolvent Entity’s adjudication as bankrupt or insolvent, (iv) the filing by an Insolvent Entity of any petition, application for relief or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future federal, state or other statute, law, code or regulation relating to bankruptcy, insolvency or other relief for debtors, (v) an Insolvent Entity’s seeking or consenting to or acquiescing in the appointment of any trustee, custodian, conservator, receiver or liquidator of an Insolvent Entity or of all or any substantial part of the Property or of any or all of the Rents and Profits, (vi) the making by an Insolvent Entity of any general assignment for the benefit of creditors, or (vii) the admission in writing by an Insolvent Entity of its inability to pay its debts generally as they become due;

(d)If any warranty, representation, certification, financial statement or other information made or furnished at any time pursuant to the terms of the Loan Documents, the Guaranty, if any, or the Environmental Indemnity by Borrower, or by any person or entity otherwise liable under any Loan Document, the Guaranty, if any, or the Environmental Indemnity is materially false or materially misleading;

(e)If Borrower suffers or permits the Property, or any part of the Property, to be used in a manner that might (1) impair Borrower’s title to the Property, (2) create rights of adverse use or possession, or (3) constitute an implied dedication of any part of the Property (provided that the foregoing events shall not constitute Events of Default if cured within thirty (30) days after Borrower’s receipt of written notice from Lender or such additional time, not to exceed ninety (90) days after receipt of such notice, as may be reasonably required if such default cannot be cured within thirty (30) days provided Borrower commences to cure such default within thirty (30) days of receipt of notice of default and thereafter diligently works to cure the same);

(f)The failure of Liable Party to comply with any provisions of the Guaranty within any notice and/or cure period provided therein, or if no notice and/or cure period is provided therein, within thirty (30) days after receipt of written notice of such failure from Beneficiary;

Loan Agreement - Page 50

(g)Except as set forth in clause (ii) below, (i) the failure of Borrower to comply with any of the provisions of the Environmental Indemnity within thirty (30) days after Borrower’s receipt of written notice of such failure from Lender (or such additional time, not to exceed ninety (90) days after receipt of notice of such failure, as may be reasonably required if such failure cannot be cured within thirty (30) days provided Borrower or Liable Party, as applicable, commences to cure such failure within thirty (30) days of receipt of notice of failure and thereafter diligently works to cure the same) or (ii) the failure of Borrower to comply with the provisions of the first sentence of Section 4(b) of the Environmental Indemnity, within the respective time periods specified therein; and

(h)if Borrower fails to purchase and deliver to Lender the Interest Rate Cap Agreement or fails to maintain the Interest Rate Cap Agreement (or Replacement Interest Rate Cap Agreement, as the case may be) in accordance with the terms and provisions of Section 2.10 and such failure continues for five (5) Business Days after written notice thereof.

Section 11.2Remedies. The provisions of Article VII of the Security Instrument are hereby incorporated by reference into this Agreement to the same extent and with the same force as if fully set forth herein.

XII.MISCELLANEOUS

Section 12.1Successors and Assigns; Terminology. This Agreement applies to Lender, Liable Parties and Borrower, and their heirs, administrators, executors, successors and permitted assigns. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender. The term “Borrower” shall include both the original Borrower and any subsequent owner or owners of any of the Property. The term “Liable Party” shall include both the original Liable Party, if any, and any subsequent or substituted Liable Party. In this Agreement, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.

Section 12.2Lender’s Discretion. Whenever pursuant to this Agreement Lender exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise expressly herein provided) be in the sole discretion of Lender and shall be final and conclusive. Whenever pursuant to this Agreement Lender exercises any right given to it to calculate or determine any financial ratio, Lender’s calculation or determination shall (except as is otherwise expressly herein provided) be in the sole discretion of Lender and shall be final and conclusive, absent manifest error.

Section 12.3Governing Law. This Agreement, the Note, the other Loan Documents, the Guaranty, if any, and the Environmental Indemnity, their construction, interpretation, and enforcement, and the rights of Borrower and Lender, shall be determined under, governed by, and construed in accordance with the internal laws of the State, without regard to principles of conflicts of law.

Loan Agreement - Page 51

Section 12.4Modification. No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.

Section 12.5Notices. All notices, demands and requests given or required to be given by, pursuant to, or relating to, this Agreement shall be in writing. All notices shall be deemed to have been properly given if mailed by United States registered or certified mail, with return receipt requested, postage prepaid, or by United States Express Mail or other comparable overnight courier service to the parties at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 12.5. Any notice shall be deemed to have been received upon receipt or refusal to accept delivery, in each case as shown on the return receipt or the receipt of United States Express Mail or such overnight commercial courier service.

If to Lender: Metropolitan Life Insurance Company

One MetLife Way

Whippany, New Jersey 07981-1449

Attention: Senior Vice President

Real Estate Investors

With a copy to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Vice President

And to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Associate General Counsel

If to Borrower: KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Clint Copulos, Senior Vice President of Asset Management

With a copy to: KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Loan Agreement - Page 52

Attention: Todd Smith, VP, Controller REIT Corporate Accounting

And to: KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attn: Bryce Lin, Director of Finance and Reporting

And to: KBSGI 421 SW 6th Avenue, LLC
c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: James Chiboucas, Esq., Vice Chairman and Chief Legal Officer

And to: Greenberg Traurig

3161 Michelson Drive, Suite 1000

Irvine, California 92612

Attention: Bruce Fischer, Esq.

Section 12.6Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS OR THE ENVIRONMENTAL INDEMNITY, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

Section 12.7Headings. The Article and/or Section headings and the Table of Contents in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, or describe the scope or intent of any provisions of this Agreement

Section 12.8Severability. If any provision of this Agreement should be held unenforceable or void, then that provision shall be separated from the remaining provisions and shall not affect the validity of this Agreement except that if the unenforceable or void provision relates to the payment of any monetary sum, then, Lender may, at its option, declare the Secured Indebtedness immediately due and payable.

Loan Agreement - Page 53

Section 12.9Preferences. Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

Section 12.10Waiver of Notice. Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Lender to Borrower.

Section 12.11Remedies of Borrower. In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where, by law or under this Agreement, the other Loan Documents or the Environmental Indemnity, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, neither Lender nor its agents shall be liable for any monetary damages, and Borrower’s sole remedy shall be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.

Section 12.12Expenses; Indemnity.

(a)The provisions of Sections 7.6 and 7.7 of the Security Instrument are hereby incorporated by reference into this Agreement to the same extent and with the same force as if fully set forth herein.

(b)IT IS THE EXPRESS INTENTION OF BORROWER AND BORROWER HEREBY AGREES THAT EACH AND EVERY INDEMNITY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE OTHER LOAN DOCUMENTS OR ENVIRONMENTAL INDEMNITY WILL APPLY TO AND FULLY PROTECT EACH INDEMNIFIED PARTY EVEN THOUGH ANY CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS’ FEES) THEN THE SUBJECT OF INDEMNIFICATION MAY HAVE BEEN CAUSED BY, ARISE OUT OF, OR ARE OTHERWISE ATTRIBUTABLE TO, DIRECTLY OR INDIRECTLY, THE NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) IN WHOLE OR IN PART OF SUCH INDEMNIFIED PARTY AND/OR ANY OTHER PARTY.

Loan Agreement - Page 54

Section 12.13Schedules and Exhibits Incorporated. The Schedules and Exhibits annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.

Section 12.14No Joint Venture or Partnership; No Third Party Beneficiaries.

(a)Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy in common, or joint tenancy relationship between Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee, beneficiary or lender.

(b)This Agreement, the other Loan Documents and the Environmental Indemnity are solely for the benefit of Lender and nothing contained in this Agreement, the other Loan Documents or the Environmental Indemnity shall be deemed to confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.

Section 12.15Publicity. All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents or to Lender or any of its Affiliates shall be subject to the prior approval of Lender.

Section 12.16Waiver of Marshalling of Assets. To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Property, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Property for the collection of the Secured Indebtedness without any prior or different resort for collection or of the right of Lender to the payment of the Secured Indebtedness out of the net proceeds of the Property in preference to every other claimant whatsoever.

Section 12.17Waiver of Offsets/Defenses/Counterclaims. Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents or otherwise to offset any obligations to make the payments required by the Loan Documents or the Environmental Indemnity. No failure by Lender to perform any of its obligations hereunder shall be a valid

Loan Agreement - Page 55

defense to, or result in any offset against, any payments which Borrower is obligated to make under any of the Loan Documents or the Environmental Indemnity.

Section 12.18Conflict; Construction of Documents; Reliance. In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents or the Environmental Indemnity, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and the Environmental Indemnity and that such Loan Documents and the Environmental Indemnity shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents, the Environmental Indemnity or any other agreements or instruments that govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender and its Affiliates engage in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

Section 12.19Brokers and Financial Advisors. Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower shall indemnify, defend and hold Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Lender’s reasonable attorneys’ fees and disbursements) in any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower or Lender in connection with the transactions contemplated herein. The provisions of this Section 12.19 shall survive the expiration and termination of this Agreement and the payment of the Secured Indebtedness.

Section 12.20Exculpation. Upon the occurrence of an Event of Default, except as provided in this Section 12.20, Lender will look solely to the Property and the security under the Loan Documents for the repayment of the Secured Indebtedness and will not enforce a deficiency judgment against Borrower. However, nothing contained in this Section shall limit the rights of Lender to proceed against Borrower and/or the Liable Party (but not any of their respective constituent members or partners, direct or indirect), if any, (i) to enforce any Leases entered into by Borrower or its affiliates as a Tenant under any of the Leases; (ii) to recover damages for fraud, material misrepresentation, material breach of warranty (and in order to recover from Liable Party, material, intentional misrepresentation or material, intentional breach of warranty) or intentional material physical waste; (iii) to recover any Condemnation Proceeds or Insurance Proceeds or other similar funds which have been misapplied by Borrower in violation of the Loan Documents or which, under the terms of the Loan Documents, should have been paid to Lender; (iv) to recover any tenant security deposits, tenant letters of credit or other tenant deposits or tenant termination, restoration, or signage fees or other similar fees paid to

Loan Agreement - Page 56

Borrower in connection with the Property and that are not applied as expressly set forth in the Loan Documents or prepaid rents for a period of more than 30 days; after an Event of Default occurs; (v) to recover Rents and Profits received by Borrower after the first day of the month in which an Event of Default occurs and prior to the date Lender acquires title to the Property which have not been applied to the Secured Indebtedness or in accordance with the Loan Documents to operating and maintenance expenses of the Property; (vi) to recover solely from Borrower (and not Liable Party with respect to this Section 12.20(vi)) damages, costs and expenses arising from, or in connection with Article IX of this Agreement pertaining to hazardous materials or the Environmental Indemnity; (vii) with respect to Borrower only (and not Liable Party),to recover all amounts due and payable pursuant to Section 7.6 and Section 7.7 of the Security Instrument, including without limitation any amount expended by Lender in connection with foreclosure of the Security Instrument; and/or (viii) to recover costs and damages arising from Borrower’s failure to pay Premiums or Impositions in the event Borrower is not required to deposit such amounts with Lender pursuant to Article III of this Agreement; and/or (ix) to recover damages arising from Borrower’s failure to comply with Sections 4.1.5 or 5.2.8 pertaining to ERISA.

The limitation of liability set forth in this Section 12.20 shall not apply and the Loan shall be fully recourse to Borrower and to Liable Party (but not their respective constituent members or partners, direct or indirect) in the event that prior to the repayment of the Loan, Borrower commences a voluntary bankruptcy or insolvency proceeding or is involved in a collusive involuntary bankruptcy or insolvency proceeding which is not dismissed within one hundred twenty (120) days of filing. In addition, this agreement shall not waive any rights which Lender would have under any provisions of the Bankruptcy Code to file a claim for the full amount of the Loan or to require that the Property shall continue to secure all of the Loan.

The limitation of liability set forth in this Section 12.20 shall not apply and the Loan shall be fully recourse to Borrower and to Liable Party (but not their respective constituent members or partners, direct or indirect) in the event there is a voluntary Transfer or voluntary Secondary Financing except as permitted in the Loan Documents or as otherwise approved in writing by Lender. For purposes of this paragraph, “Transfers” shall only refer to transfers of ownership of the Property or of the ownership interests in entities directly or indirectly owning the Property and shall expressly exclude any Transfers of Personal Property if (x) such transfer is made in the ordinary course of business and (y) such Personal Property is obsolete or unnecessary for the operation of the Property of if such Personal Property is replaced with personal property of reasonably equivalent value.

The limitation of liability set forth in this Section 12.20 shall not apply and the Loan shall be fully recourse to Borrower and to Liable Party (but not their respective constituent members or partners, direct or indirect) if an Event of Default occurs pursuant to Section 11.1(h) hereof. Notwithstanding the foregoing, in the event that Borrower fails to maintain or replace the Interest Rate Cap Agreement as and when required under this Agreement or the terms of the Interest Cap Agreement, at Lender’s sole option, Borrower and Liable Party (but not any of their respective constituent members, partners, or shareholders, direct or indirect), shall be liable on a recourse basis for all actual damages, costs, expenses, or liabilities (including reasonable attorneys’ fees) that Lender may incur as a result of such failure and the limitation on liability set forth in Section 12.20 shall not be applicable thereto; provided however, that in no event shall

Loan Agreement - Page 57

Borrower be liable for consequential damages arising out of such failure, including, without limitation, incidental damages, punitive damages, lost profits or opportunity costs.

Section 12.21Prior Agreements. This Agreement, the other Loan Documents and the Environmental Indemnity contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, including, without limitation, the Application, are superseded by the terms of this Agreement, the other Loan Documents and the Environmental Indemnity.

Section 12.22Liability of Borrower. The obligations of Borrower under this Agreement, the Security Instrument and the other Loan Documents are subject to the limitations on recourse set forth in Section 12.20.

Section 12.23Joint and Several Liability. If more than one Person has executed this Agreement as “Borrower,” the representations, covenants, warranties and obligations of all such Persons hereunder shall be joint and several.

Section 12.24Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original and all of which together shall constitute a single agreement.

Section 12.25Time Of The Essence. Time shall be of the essence with respect to all of Borrower’s obligations under this Agreement, the other Loan Documents and the Environmental Indemnity.

Section 12.26No Merger. In the event that Lender should become the owner of the Property, there shall be no merger of the estate created by the Security Instrument with the fee estate in the Property.

Section 12.27ORAL LOAN AGREEMENTS.

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BENEFICIARY CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY LENDER TO BE ENFORCEABLE.

[NO FURTHER TEXT ON THIS PAGE]

Loan Agreement - Page 58

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the date of this Agreement.

LENDER:

METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation

By: /s/ Joel R. Redmon

Name: Joel R. Redmon

Title: Managing Director

[Signature Page to Follow]

Loan Agreement - Lender Signature Page

BORROWER:

KBSGI 421 SW 6TH AVENUE, LLC,

a Delaware limited liability company

By: KBSGI REIT ACQUISITION II, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company,

its sole member

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

Loan Agreement – Borrower Signature Page

SCHEDULE 4.1.15

CURRENT CONSTRUCTION OF IMPROVEMENTS

1. punch list items for the ground floor improvements

Loan Agreement – Schedule 4.1.15

SCHEDULE 4.1.16(d)

LEASES CONTAINING UNILATERAL TERMINATION RIGHTS OF TENANTS

1. CNET Networks, Inc., lease dated April 23, 2008, as amended on August 1, 2011

2. Bank of America, National Association, lease dated August 29, 2013

Loan Agreement – Schedule 4.1.16(d)

SCHEDULE 4.1.16(e)

Leases for which Borrower has accepted rent (including additional rent) more than 1 month in advance:

NONE

Leases for which security deposit is in excess of 1 months’ rent:

NONE

Loan Agreement – Schedule 4.1.16(e)

SCHEDULE 4.1.21

MATERIAL AGREEMENTS

NONE

Loan Agreement – Schedule 4.1.21

EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

All that certain real property situated in the County of Multnomah, State of Oregon, described as follows:

Lots 1, 2, 3 and 4, Block 176, CITY OF PORTLAND, in the City of Portland, County of Multnomah and State of Oregon

Loan Agreement – Exhibit A

EXHIBIT B

LEASING GUIDELINES

The following are the initial Leasing Guidelines:

(a)All Leases shall be on the standard form of lease approved by Lender in writing and contain only such changes as are not materially adverse to the landlord or Lender (the “Standard Lease Form”);

(b)All Leases shall have an initial term of at least three (3) years but not more than ten (10) years;

(c)None of the Leases shall be for more than 18,000 square feet of net leasable area;

(d)All Leases for office space shall have an annual minimum full service rent payable of at least $32.00 per square foot of net leasable area; however, all Leases for office space on the ground floor shall have an annual minimum full service rent payable of at least $30.00 per square foot of net leasable area. All retail Leases shall have an annual minimum triple net rent payable of at least $29.00 per square foot;

(e)No Leases shall be entered into without Lender’s approval if an Event of Default exists (beyond any applicable notice and cure periods);

(f)All payments of rent, additional rent or any other amounts due from a Tenant to a landlord under any Lease shall be made in money of the United States of America that at the time of payment shall be legal tender for the payment of all obligations; and

(g)Borrower shall not, without Lender’s prior written consent (not to be unreasonably withheld):

(i)Cancel or terminate any Leases exceeding 18,000 square feet of net leasable area except in the case of a tenant default or if a tenant has exercised a cancellation, termination, or surrender right expressly provided in such Lease, unless Borrower has entered into new Leases covering all of the premises of the Leases being terminated or surrendered;

(ii)Modify or amend any Lease in excess of 18,000 square feet of net leasable area in any material way, or reduce rent for any Lease in excess of 18,000 square feet of net leasable area;

(iii)Unless tenants remain liable under the Leases, consent to any assignment of the tenant’s interest or to a subletting of the demised premises under any Lease exceeding 18,000 square feet of net leasable area, unless, pursuant to the terms of any such Lease, Borrower is obligated to provide such consent based upon terms existing under (1) Leases as of the Closing, (2) Leases which do not require Lender’s consent, or (3) Leases that are otherwise Approved by Lender from time to time; or

Loan Agreement – Exhibit B

(iv)Accept payment of advance rents or security deposits in an amount in excess of one month’s rent; or

(v)Grant any options to purchase the Property; or

(vi)Agree to any lease provision obligating the landlord to indemnify the tenant for any environmental issues.

Loan Agreement – Exhibit B

EXHIBIT C

RENT ROLL

Loan Agreement – Exhibit C

EXHIBIT D

ORGANIZATIONAL CHART

Loan Agreement - Exhibit D

EXHIBIT E

NONDISTURBANCE AGREEMENT

RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO:
	, ESQ

SUBORDINATION,

NONDISTURBANCE

AND ATTORNMENT AGREEMENT

NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

DEFINED TERMS

Execution Date: As of [_________________]

Lender & Address:

Metropolitan Life Insurance Company

[_________________]

[_________________]

[_________________]

and

Metropolitan Life Insurance Company

[_________________]

[_________________]

[_________________]

Tenant & Address:

[_________________]

Landlord & Address:

[_________________]

Loan: A first mortgage loan in the original principal amount of $[_________________] from Lender to Landlord

Note: A Promissory Note executed by Landlord in favor of Lender in the amount of the Loan dated as of [_________________]

Security Instrument: A [Mortgage/Deed of Trust], Security Agreement and Fixture Filing dated as of [_________________], executed by Landlord [to/for the benefit of] Lender securing repayment of the Note. The Security Instrument will be recorded in the records of the County in which the Property is located.

Loan Agreement:  A Loan Agreement dated as of [_________________] by and between Landlord and Lender

Lease and Lease Date:  The lease entered into by Landlord and Tenant dated as of [_____________] covering the Premises.

[Add amendments]

Property:  [Property Name]

           [Street Address]

           [City, State, Zip]

           The Property is more particularly described on Exhibit A.

THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is made by and among Tenant, Landlord, and Lender and affects the Property described in Exhibit A. Certain terms used in this Agreement are defined in the Defined Terms. This Agreement is entered into as of the Execution Date with reference to the following facts:

A.Landlord and Tenant have entered into the Lease covering certain space in the improvements located in and upon the Property (the “Premises”).

B.Lender has made or is making the Loan to Landlord evidenced by the Note. The Note is secured, among other documents, by the Security Instrument.

C.Landlord, Tenant and Lender all wish to subordinate the Lease to the lien of the Security Instrument.

D.Tenant has requested that Lender agree not to disturb Tenant’s rights in the Premises pursuant to the Lease in the event Lender forecloses the Security Instrument, [or acquires the Property pursuant to the power of sale contained in the Security Instrument] or receives a transfer of the Property by a conveyance in lieu of foreclosure of the Property (collectively, a “Foreclosure Sale”) but only if Tenant is not then in default under the Lease and Tenant attorns to Lender or a third party purchaser at the Foreclosure Sale (a “Foreclosure Purchaser”).

2

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows:

Section 1.Subordination. The Lease and the leasehold estate created by the Lease and all of Tenant’s rights under the Lease are and shall remain subordinate to the Security Instrument and the lien of the Security Instrument, to all rights of Lender under the Security Instrument and to all renewals, amendments, modifications and extensions of the Security Instrument.

Section 2.Acknowledgments by Tenant. Tenant agrees that: (a) Tenant has notice that the Lease and the rent and all other sums due under the Lease have been or are to be assigned to Lender as security for the Loan; (b) in the event that Lender notifies Tenant of a default under the Security Instrument and requests Tenant to pay its rent and all other sums due under the Lease to Lender, Tenant shall pay such sums directly to Lender or as Lender may otherwise request; (c) Tenant shall send a copy of any notice or statement under the Lease to Lender at the same time Tenant sends such notice or statement to Landlord and (d) this Agreement satisfies any condition or requirement in the Lease relating to the granting of a nondisturbance agreement.

Section 3.Foreclosure and Sale. In the event of a Foreclosure Sale,

(a)So long as Tenant complies with this Agreement and is not in default under any of the provisions of the Lease, the Lease shall continue in full force and effect as a direct lease between Lender and Tenant, and Lender will not disturb the possession of Tenant, subject to this Agreement. To the extent that the Lease is extinguished as a result of a Foreclosure Sale, a new lease shall automatically go into effect upon the same provisions as contained in the Lease between Landlord and Tenant, except as set forth in this Agreement, for the unexpired term of the Lease. Tenant agrees to attorn to and accept Lender as landlord under the Lease and to be bound by and perform all of the obligations imposed by the Lease, or, as the case may be, under the new lease, in the event that the Lease is extinguished by a Foreclosure Sale. Upon Lender’s acquisition of title to the Property, Lender will perform all of the obligations imposed on the Landlord by the Lease except as set forth in this Agreement; provided, however, that Lender shall not be: (i) liable for any act or omission of a prior landlord (including Landlord); or (ii) subject to any offsets or defenses that Tenant might have against any prior landlord (including Landlord); or (iii) bound by any rent or additional rent which Tenant might have paid in advance to any prior landlord (including Landlord) for a period in excess of one month or by any security deposit, cleaning deposit or other sum that Tenant may have paid in advance to any prior landlord (including Landlord); or (iv) bound by any amendment, modification, assignment or termination of the Lease made without the written consent of Lender; or (v) obligated or liable with respect to any representations, warranties or indemnities contained in the Lease; or (vi) liable to Tenant or any other party for any conflict between the provisions of the Lease and the provisions of any other lease affecting the Property which is not entered into by Lender.

(b)Upon the written request of Lender after a Foreclosure Sale, the parties shall execute a lease of the Premises upon the same provisions as contained in the Lease between Landlord and Tenant, except as set forth in this Agreement, for the unexpired term of the Lease.

(c)Notwithstanding any provisions of the Lease to the contrary, from and after the date that Lender acquires title to the Property as a result of a Foreclosure Sale, (i) Lender will not be obligated to expend any monies to restore casualty damage in excess of available insurance proceeds; (ii) Tenant shall not have the right to make repairs and deduct the cost of such repairs from the rent without a judicial determination that Lender is in default of its obligations under the Lease; (iii) in no event will Lender be obligated to indemnify Tenant, except where Lender is in breach of its obligations under the Lease or where Lender has been actively negligent in the performance of its obligations as landlord; and

3

(iv) other than determination of fair market value, no disputes under the Lease shall be subject to arbitration unless Lender and Tenant agree to submit a particular dispute to arbitration.

Section 4.Subordination and Release of Purchase Options. Tenant represents that it has no right or option of any nature to purchase the Property or any portion of the Property or any interest in the Landlord. To the extent Tenant has or acquires any such right or option, these rights or options are acknowledged to be subject and subordinate to the Security Instrument and are waived and released as to Lender and any Foreclosure Purchaser.

Section 5.Acknowledgment by Landlord. In the event of a default under the Security Instrument, at the election of Lender, Tenant shall and is directed to pay all rent and all other sums due under the Lease to Lender.

Section 6.Construction of Improvements. Lender shall not have any obligation or incur any liability with respect to the completion of tenant improvements for the Premises.

Section 7.Notice. All notices under this Agreement shall be deemed to have been properly given if delivered by overnight courier service or mailed by United States certified mail, with return receipt requested, postage prepaid to the party receiving the notice at its address set forth in the Defined Terms (or at such other address as shall be given in writing by such party to the other parties) and shall be deemed complete upon receipt or refusal of delivery.

Section 8.Miscellaneous. Lender shall not be subject to any provision of the Lease that is inconsistent with this Agreement. Nothing contained in this Agreement shall be construed to derogate from or in any way impair or affect the lien or the provisions of the Security Instrument. This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located.

Section 9.Liability and Successors and Assigns. In the event that Lender acquires title to the Premises or the Property, Lender shall have no obligation nor incur any liability in an amount in excess of $3,000,000 and Tenant’s recourse against Lender shall in no extent exceed the amount of $3,000,000. This Agreement shall run with the land and shall inure to the benefit of the parties and their respective successors and permitted assigns including a Foreclosure Purchaser. If a Foreclosure Purchaser acquires the Property or if Lender assigns or transfers its interest in the Note and Security Instrument or the Property, all obligations and liabilities of Lender under this Agreement shall terminate and be the responsibility of the Foreclosure Purchaser or other party to whom Lender’s interest is assigned or transferred. The interest of Tenant under this Agreement may not be assigned or transferred except in connection with an assignment of its interest in the Lease which has been consented to by Lender.

Section 10.OFAC Provisions. Tenant and Lender hereby represent, warrant and covenant to each other, either that (i) it is regulated by the SEC, FINRA or the Federal Reserve (a “Regulated Entity”), or is a wholly-owned subsidiary or wholly-owned affiliate of a Regulated Entity or (ii) neither it nor any person or entity that directly or indirectly (a) controls it or (b) has an ownership interest in it of twenty-five percent (25%) or more, appears on the list of Specially Designated Nationals and Blocked Persons (“OFAC List”) published by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury.

[Include the following if there is a guarantor of the Lease:]

4

With respect to each guarantor of Tenant’s obligations under this Lease, Tenant further represents, warrants and covenants either that (i) such guarantor is a Regulated Entity or a wholly-owned subsidiary or wholly-owned affiliate of a Regulated Entity or (ii) neither such guarantor nor any person or entity that directly or indirectly (a) controls such guarantor or (b) has an ownership interest in such guarantor of twenty-five percent (25%) or more, appears on the OFAC List.

[NO FURTHER TEXT ON THIS PAGE]

5

IN WITNESS WHEREOF, the parties have executed this Subordination, Nondisturbance and Attornment Agreement as of the Execution Date.

IT IS RECOMMENDED THAT THE PARTIES CONSULT WITH THEIR ATTORNEYS PRIOR TO THE EXECUTION OF THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT.

LENDER: METROPOLITAN LIFE INSURANCE COMPANY,

a New York corporation

By: _______________________________

Name:

Title:

ACKNOWLEDGMENT

[INSERT STATE SPECIFIC ACKNOWLEDGMENT]

TENANT: [TENANT]

By: _______________________________

Name:

Title:

ACKNOWLEDGMENT

[INSERT STATE SPECIFIC ACKNOWLEDGMENT]

LANDLORD: [LANDLORD]

By: _______________________________

Name:

Title:

ACKNOWLEDGMENT

[INSERT STATE SPECIFIC ACKNOWLEDGMENT]

EXHIBIT A

PROPERTY DESCRIPTION

The undersigned guarantor to the Lease hereby consents to the foregoing Subordination, Nondisturbance and Attornment Agreement and reaffirms that the [Guaranty of Lease] dated [_________________________] remains in full force and effect as of the date of the foregoing Subordination, Nondisturbance and Attornment Agreement.

GUARANTOR: [GUARANTOR]

By: _______________________________

Name:

Title:

Loan Agreement - Exhibit E

EXHIBIT F

FORM OF COLLATERAL ASSIGNMENT

COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT

DEFINED TERMS

Execution Date:  ____________, 2018

Loan: A first mortgage loan in the amount of up to $51,400,000 from Lender to Borrower.

Borrower & Address:

KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Clint Copulos, Senior Vice President of Asset Management

With a copy to: KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Todd Smith, VP, Controller REIT Corporate Accounting

And to:KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: James Chiboucas, Esq., Vice Chairman and Chief Legal Officer

And to:Greenberg Traurig

3161 Michelson Drive, Suite 1000

Irvine, California 92612

Attention: Bruce Fischer, Esq.

Rate Protection Party (if not Borrower) & Address:

_____________________________

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Clint Copulos, Senior Vice President of Asset Management

Loan Agreement - Exhibit F

With a copy to: _____________________________

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Todd Smith, VP, Controller REIT Corporate Accounting

Attention: Bryce Lin, Director of Finance and Reporting

And to:_____________________________

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: James Chiboucas, Esq., Vice Chairman and Chief Legal Officer

And to:Greenberg Traurig

3161 Michelson Drive, Suite 1000

Irvine, California 92612

Attention: Bruce Fischer, Esq.

Lender & Address:             Metropolitan Life Insurance Company, a New York corporation

One MetLife Way

Whippany, New Jersey 07981-1449                                              Attention: Senior Vice President, Real Estate Investments

Re: The Commonwealth Building,                                              421 SW 6^th Avenue, Portland, Oregon

With a copy to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Vice President

And to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

                                             Attention: Associate General Counsel

Note: A Promissory Note executed by Borrower in favor of Metropolitan Life Insurance Company in the amount of up to $51,400,000.00, dated as of the Execution Date executed by Borrower in favor of Lender.

Loan Agreement: A Loan Agreement dated as of the Execution Date by and between Borrower and Lender, together with all extensions, renewals, modifications, restatements and amendments thereof.

Deed of Trust: A Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of the Execution Date executed by Borrower, as trustor, to Chicago Title Insurance Company, as trustee, for the benefit of Lender, as beneficiary, securing repayment of the Note to be recorded in the records of the County in which the Property is located.

Loan Documents: The Loan Agreement, Note, the Deed of Trust, the Assignment of Leases, and any

Loan Agreement - Exhibit F

other documents related to the Loan Agreement, Note and/or the Deed of Trust and all renewals, amendments, modifications, restatements and extensions of these documents.

Assignment of Leases: Assignment of Leases dated as of the Execution Date and executed by Borrower for the benefit of Lender, together with all extensions, renewals, modifications, restatements and amendments thereof.

Indemnity Agreement: Unsecured Indemnity Agreement dated as of the Execution Date and executed by Borrower in favor of Lender. The Unsecured Indemnity Agreement is not a Loan Document and shall survive repayment of the Loan or other termination of the Loan Documents.

Guaranty: Guaranty of Recourse Obligations dated as of the Execution Date and executed by Liable Party in favor of Lender.

The Indemnity Agreement and the Guaranty are not Loan Documents and shall survive repayment of the Loan or other termination of the Loan Documents, except as expressly provided therein.

Loan Agreement - Exhibit F

THIS COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT (“this Agreement”) is entered into as of the Execution Date by Borrower [and Rate Protection Party] and Lender, with reference to the following facts:

A.    Lender has made the Loan to Borrower. Payment of the Note is secured by the Deed of Trust. The Deed of Trust encumbers certain real and other property more particularly described therein and referred to in the Deed of Trust and in this Agreement as the “Property.”

B.    When and as required pursuant to the terms of Section 2.10 of the Loan Agreement, Lender requires Borrower to enter into [or to cause the Rate Protection Party] to enter into this Agreement.

C.    Borrower and/or the Rate Protection Party respectively as the case may be (hereinafter, “Rate Protection Party”) acknowledges and understands that this Agreement is a material inducement for Lender’s agreement to make the Loan.

D.    Capitalized terms that are not defined in this Agreement shall have the meanings set forth in the Loan Agreement.

NOW THEREFORE, in consideration of the premises and for other consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Assignment of Interest Rate Cap Agreement.

(a)For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by [Borrower and Rate Protection Party], Rate Protection Party hereby assigns, grants, delivers and transfers to Lender, as collateral, all of its interest, whether now owned or hereafter acquired, now existing or hereafter arising, wherever located, in, to and under that certain [ISDA Master Agreement / Confirmation / Confirmation and Interim Master Agreement] dated as of _____________, 20___, between Rate Protection Party and (the “Counterparty”), [including without limitation that certain Schedule, dated as of ______________, in connection therewith] as such agreement may be amended, modified, supplemented, restated, extended, renewed and/or changed from time to time, together with all other documents executed and/or delivered in connection with and/or secured by the agreement (such other documents and the agreement being collectively referred to as the “Interest Rate Cap Agreement”), a copy of which is attached hereto as Exhibit A, including, but not limited to, any and all rights that Rate Protection Party may now or hereafter have to any and all payments, disbursements, distributions or proceeds (the “Payments”) owing, payable or required to be delivered to Rate Protection Party on account of the Interest Rate Cap Agreement, whether as contractual obligations, damages or otherwise, and all of Rate Protection Party’s claims, rights, powers, privileges, authority, options, security interests, liens and remedies under or arising out of the Interest Rate Cap Agreement, in each case including all accessions and additions to, substitutions for and replacements, products, and proceeds of any or all of the foregoing (collectively, the “Rate Cap Collateral”). In the event that for any reason the Interest Rate Cap Agreement ever expires, or is terminated, rescinded or revoked and, as a result thereof, a termination fee or such similar payment is owing to Rate Protection Party by Counterparty, such sum is and shall be considered a Payment and a part of the Rate Cap Collateral and shall be held and disbursed in accordance with the terms hereof. Rate Protection Party hereby grants to Lender a security interest in and to the Rate Cap Collateral, to have and to hold the same, unto Lender, its successors and assigns. This Agreement constitutes additional security for the obligations of Rate Protection Party secured by the Deed of Trust and secured or evidenced by the other Loan Documents.

Loan Agreement - Exhibit F

(b)Prior to any expiration or termination of the initial Interest Rate Cap Agreement, or any subsequent Interest Rate Cap Agreement, Rate Protection Party shall deliver to Lender a renewal or replacement thereof from a counterparty reasonably acceptable to Lender (which counterparty shall have a credit rating of “A2” or better by Moody’s Investors Service, Inc. and “A” or better by Standard and Poor’s Rating Group) together with the consent of the new Counterparty to this Agreement (which consent shall be substantially in the form of the Consent of the original Counterparty attached hereto) and an opinion of counsel for the new Counterparty (upon which Lender and its successors and assigns may rely) in form, scope and substance reasonably satisfactory to Lender regarding the authorization of the new Counterparty, the legality, validity, and binding effect on the new Counterparty of the new Interest Rate Cap Agreement, and such other matters as Lender shall reasonably require. Notwithstanding any other provision hereof, the notional amount of the Interest Rate Cap Agreement shall never be required to be more than the unpaid principal amount of the Note. Such new Interest Rate Cap Agreement shall contain the same terms and provisions in each and every material respect as the initial Interest Rate Cap Agreement.

(c)If, as and when a new Interest Rate Cap Agreement is obtained by Rate Protection Party pursuant to Sections 1(b) or 6 or by Lender pursuant to Section 2(c), the term “Interest Rate Cap Agreement” as used herein shall be deemed to refer to such new Interest Rate Cap Agreement obtained by Rate Protection Party or Lender (as the case may be), and the term “Counterparty” as used herein shall be deemed to refer to the counterparty under such new Interest Rate Cap Agreement.

2. Default.

(a)If Rate Protection Party shall fail to timely and fully perform any of its obligations under this Agreement following the expiration of any applicable notice and cure periods, if any, as may be set forth in this Agreement, then any such failure shall constitute a default under this Agreement (“Event of Default”) and also shall constitute an automatic “Event of Default” under and as defined in the Loan Agreement, and the occurrence of an “Event of Default” under and as defined in the Loan Agreement or any of the other Loan Documents shall constitute an automatic Event of Default under this Agreement. If no period of grace, notice, and/or cure is set forth herein with respect to any obligation of Rate Protection Party, then (with the specific exception of Rate Protection Party’s obligations to keep an Interest Rate Cap Agreement with the required terms and provisions in effect at all times) Rate Protection Party shall have a period equal to ten (10) business days after written notice from Lender within which to cure any default hereunder.

(b)Lender hereby instructs the Counterparty to immediately deposit all future Payments and other Rate Cap Collateral directly into an account designated by Lender and Lender may apply the proceeds thereof as provided below and/or otherwise exercise all of its rights and remedies under the Uniform Commercial Code and other applicable law. No delay or omission of Lender in exercising any such right shall impair any such right, or shall be construed as a waiver of or acquiescence in any event giving rise to such right. Proceeds of any such Payments may be held by Lender as cash collateral for Rate Protection Party’s obligations under the Loan Documents, and if an Event of Default exists, may be applied by Lender to the payment of the costs of leasing the Improvements and/or to accrued interest, late charges, principal, or any other obligation arising out of the obligations of Rate Protection Party or Liable Parties to Lender under the Loan Agreement, the Note, the Deed of Trust, any of the other Loan Documents and/or the Indemnity Agreement, in such manner as Lender in its sole discretion deems appropriate. If no Event of Default exists, proceeds of any such Payments held by Lender shall be applied by Lender to interest under the Note, then to any other amounts currently due and owing under the Loan Documents and lastly to Borrower. If held as cash collateral, such cash collateral (or what remains thereof) shall be returned to Rate Protection Party upon

Loan Agreement - Exhibit F

the indefeasible payment in full of all amounts owing under the Note, the other Loan Documents, the Guaranty and the Indemnity Agreement or upon Rate Protection Party’s cure of an Event of Default under the Loan Documents, Guaranty or Indemnity Agreement (as applicable), to the extent any such cure right is expressly provided for therein or if such cure is otherwise accepted by Lender.

(c)Without limiting any of the foregoing, in the event that Rate Protection Party fails to maintain or replace the Interest Rate Cap Agreement as and when required under Sections 1 or 6 hereof, then, subject to notice, if any, and cure periods, if any, expressly provided herein or in the Loan Agreement, Lender may (in addition to exercising any of its other rights and remedies) purchase a replacement Interest Rate Cap Agreement on the terms and conditions specified in Section 1, and the costs incurred by Lender shall be paid by Rate Protection Party to Lender with interest thereon at the Default Rate from the date such cost was incurred by Lender until paid by Rate Protection Party.

(d)Without limiting any of the foregoing, in the event that Rate Protection Party fails to maintain or replace the Interest Rate Cap Agreement as and when required under Sections 1 or 6 hereof, at Lender’s sole option, Rate Protection Party and Liable Party shall each be jointly and severally liable on a recourse basis for all damages, costs, expenses, or liabilities (including attorneys’ fees) that Lender may incur as a result of such failure and the limitation on liability set forth in Section 12.20 of the Loan Agreement shall not be applicable thereto.

3. Notification to Counterparty. Rate Protection Party and Lender hereby notify Counterparty of this Agreement and the assignment made hereby and the security interests granted to Lender hereunder. Rate Protection Party and Lender hereby instruct, Counterparty to deposit directly into an account designated by Lender all payments to be made under or pursuant to the terms of the Interest Rate Cap Agreement, without set-off, defense or counterclaim. Counterparty shall be entitled to conclusively rely (without any independent investigation) on any notice or instruction from Lender in respect of this Agreement, (ii) without limitation on the immediately preceding clause, in the event of any inconsistency between any notice or instructions from Lender and any notice or instructions from Rate Protection Party, Counterparty shall be entitled to conclusively rely (without any independent investigation) on those from Lender, and (iii) Counterparty shall be held harmless and shall be fully indemnified by Rate Protection Party from and against any and all claims, other than those ultimately determined to be proximately caused by the gross negligence or willful misconduct of Counterparty, and from and against any damages, penalties, judgments, liabilities, losses or expenses (including reasonable attorneys' fees and disbursements) incurred by Counterparty as a result of the assertion of any claim, by any person or entity, arising out of, or otherwise related to, any actions taken or omitted to be taken by Counterparty in reliance upon any such instructions or notice provided by Lender.

4. Certain Covenants of Rate Protection Party. Rate Protection Party agrees that Rate Protection Party will comply with all terms of the Interest Rate Cap Agreement, and will deliver to Lender a copy of any written or emailed notice received from Counterparty thereunder. Rate Protection Party further agrees that Rate Protection Party will not, without first obtaining the written consent of Lender, (a) convey, assign, sell, mortgage, encumber, pledge, hypothecate, grant a security interest in, grant an option or options with respect to, or otherwise dispose of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration) the Interest Rate Cap Agreement or the Rate Cap Collateral, (b) amend or modify (except as provided for in the last sentence of this Section 4), cancel or terminate the Interest Rate Cap Agreement prior to its stated maturity date, except for a cancellation or termination incident to Rate Protection Party obtaining a renewal or replacement Interest Rate Cap Agreement in accordance with Sections 1(b) or 6 hereof, (c) waive or release any obligation of the Counterparty under the Interest Rate Cap Agreement, (d) consent or agree to any act or omission to act on the part of the Counterparty which, without such consent or

Loan Agreement - Exhibit F

agreement, would constitute a default under the Interest Rate Cap Agreement, (e) fail to use commercially reasonable efforts to exercise promptly and diligently each and every right which it may have under the Interest Rate Cap Agreement, or (f) take or omit to take any action or suffer or permit any action to be omitted or taken, the taking or omission of which would result in any right of offset against sums payable under the Interest Rate Cap Agreement or any defense by the Counterparty to payment. Notwithstanding the foregoing, Rate Protection Party will not be required to obtain Lender’s prior written consent for administrative amendments or modifications to the Interest Rate Cap Agreement if such amendment or modification does not otherwise change the terms of the Interest Rate Cap Agreement, but rather modifies facts contained in the Interest Rate Cap Agreement such as, for illustrative purposes, a change in address.

5. Representations of Rate Protection Party. Rate Protection Party represents and warrants that: (a) it has the full power, right and authority to assign its interest in the Rate Cap Collateral, and that (provided Counterparty executes the Consent attached hereto) all consents and approvals required to be obtained by Rate Protection Party, if any, for the consummation of the transactions contemplated by this Agreement have been obtained, (b) Rate Protection Party owns the Rate Cap Collateral free and clear of all liens and claims of others and Rate Protection Party has not transferred, assigned, granted a security interest in or otherwise encumbered its interest in the Rate Cap Collateral, except in favor of Lender, (c) no security agreement, financing statement or other document is on file or of record in any public office with respect to the Rate Cap Collateral, other than in favor of Lender, (d) to Rate Protection Party’s knowledge, the obligation of the Counterparty under the Interest Rate Cap Agreement to make Payments is not subject to any existing defense or counterclaim, and (e) upon the filing of a UCC Financing Statement naming Rate Protection Party, as debtor, and Lender, as secured party, in the Office of the Delaware Secretary of State, Lender will have a perfected lien on the Rate Cap Collateral, which lien is prior to all creditors of and purchasers from Rate Protection Party to the extent a security interest can be granted and perfected in the Rate Cap Collateral under the UCC as in effect in the applicable jurisdiction.

6. Change of Rating. In the event of any downgrade, withdrawal or qualification of the rating of the Counterparty below “A-” by Standard and Poor’s Rating Group or below “A3” by Moody’s Investor Services, Inc., Rate Protection Party agrees to (or will cause the Counterparty to), in accordance with, and subject to, the terms and conditions contained in Section 2.10 of the Loan Agreement (i) replace the Interest Rate Cap Agreement with a replacement Interest Rate Cap Agreement and a new Counterparty or provide another Interest Rate Cap Agreement issued by a new Counterparty, in either case meeting the terms and conditions set forth in Section 1(b), and (ii) deliver an Assignment of Interest Rate Cap Agreement substantially identical to this form of Agreement or in form and substance otherwise reasonably acceptable to Lender, not later than fifteen (15) business days following receipt of written notice from Lender of such downgrade, withdrawal or qualification.

7. No Assumption of Obligations. This Agreement does not include the delegation to Lender of any of Rate Protection Party’s duties, responsibilities or obligations under the Interest Rate Cap Agreement, Rate Protection Party remaining liable to perform all duties, responsibilities and obligations to be performed by Rate Protection Party thereunder. Lender shall not have any obligation or liability under the Interest Rate Cap Agreement or by reason of or arising out of this Agreement or the receipt by Lender of any Payment, including, without limitation, any obligation to perform or discharge any obligation under the Agreement by reason of this assignment or action or inaction of Lender. Rate Protection Party hereby indemnifies and holds Lender harmless for, from and against any and all losses, liabilities, obligations, charges, claims, damages, penalties, causes of action, costs and expenses (including reasonable attorneys’ fees and disbursements) of any kind or nature (except to the extent of

Loan Agreement - Exhibit F

any claim arising solely from the gross negligence, illegal acts or willful misconduct of Lender) incurred by Lender (a) under or by reason of the Agreement, (b) in enforcing its rights under this Agreement, (c) in defense of any claim arising out of this Agreement or (d) by reason of any alleged obligation or undertaking on the part of Lender to perform or discharge any of the terms of the Agreement. Without limiting the foregoing, nothing contained herein shall operate or be construed to place upon Lender any responsibility for the operation, control, care, management or repair of the Property or any part thereof. The indemnity set forth in this section shall survive the payment in full of the Loan and the termination of this Agreement. The powers conferred on Lender hereunder are solely to protect Lender’s interests in the Rate Cap Collateral and shall not impose any duty upon Lender to exercise any such powers. In no event shall Lender’s acceptance of this assignment cause Lender to be deemed a mortgagee in possession.

8. Costs and Expenses. Rate Protection Party shall be responsible for, and hereby agrees to pay, all costs and expenses (including without limitation reasonable attorneys' fees, if any) incurred by Lender in connection with the execution, administration or enforcement of this Agreement. All such costs and expenses, if not paid by Rate Protection Party within ten (10) days after written request therefor, may be paid by Lender from any cash collateral held by Lender under any of the Loan Documents at any time without the consent of Rate Protection Party.

9. Termination. This Agreement shall terminate upon the indefeasible payment in full of all amounts owing under the Note, the other Loan Documents, the Guaranty and the Indemnity Agreement.

10. Notices. All notices, consents, approvals, elections and other communications (collectively “Notices”) under this Agreement shall be in writing and shall be deemed to have been duly given if mailed by United States registered or certified mail, with return receipt requested, postage prepaid, or by United States Express Mail or reputable overnight courier service to the parties at the addresses set forth in the Defined Terms, or in the case of Counterparty, at the address set forth below its signature (or at such other addresses as shall be given in writing by any party to the others pursuant to this Section) and shall be deemed complete upon receipt or refusal to accept delivery as indicated in the return receipt or in the receipt of such Express Mail or courier service.

11. Rights and Remedies. The rights and remedies granted Lender under this Agreement are supplemental to, and not in limitation of, the rights and remedies of Lender under applicable law, and all such rights and remedies are not exclusive of one another, but rather are cumulative and may be pursued simultaneously. This Agreement is not intended to modify or amend any of the obligations of Rate Protection Party or the rights or remedies of Lender under any of the other Loan Documents.

12. Further Assurances. Rate Protection Party shall at its sole cost and expense do, execute, acknowledge and deliver all further acts, assurances, authorizations, documents or instruments as Lender may reasonably request in order to effect further or confirm the purposes of this Agreement. Rate Protection Party hereby irrevocably and unconditionally appoints Lender its attorney-in-fact, with full power of substitution, to execute, file and/or record on behalf of Rate Protection Party, any such assurances, authorizations, documents and instruments of further assurance to better effect or confirm the rights and powers granted to Lender hereunder. This power, being coupled with an interest, shall be effective until all amounts due in connection with the Loan have been indefeasibly paid in full.

Loan Agreement - Exhibit F

13. Assignment.

(a)It is the intention of the parties hereto that this Agreement is made for the benefit of Lender and its successors and assigns as the holder of the Note and the other Loan Documents, who shall have the sole right to enforce the provisions hereof and/or deal with any collateral deposited under this Agreement. Except for transfers of interests in Rate Protection Party or in the Property as expressly permitted under, and subject to the conditions of, Section 8.1(b) of the Loan Agreement, Rate Protection Party shall have no right to assign its rights and/or obligations under this Agreement and any such attempted assignment shall be null and void and shall constitute an Event of Default.

(b)In the event of the sale or transfer of Lender’s interest in the Loan, Lender shall have the right to assign this Agreement, and Rate Protection Party agrees to fully cooperate with Lender in connection therewith (including the execution of any required documents but excluding payment of any related costs or fees). Provided that any purchaser of the Loan shall assume Lender’s obligations under the Loan Documents (including but not limited to this Agreement), Lender shall have no further obligations hereunder except as a result of any breach of this Agreement by Lender occurring prior to the date of transfer of Lender’s interest in the Loan. Any duties or actions of Lender hereunder may be performed by Lender or its agent(s), including without limitation, any servicer of the Loan.

14. Severability. If for any reason any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

15. No Third-Party Beneficiaries. It is the intention of the parties hereto that this Agreement is made for the benefit of Lender, who shall have the sole right to enforce the provisions hereof. In no event shall Lender be construed to be Rate Protection Party’s agent, and in no event is Lender assuming the responsibility of Rate Protection Party for proper payments to others. It is intended that no party shall be a third-party beneficiary hereunder and that no provision hereof shall operate or inure to the use and benefit of such third party.

16. Attorneys’ Fees. In the event that any party brings any suit or other proceeding with respect to the subject matter or enforcement of this Agreement, including without limitation, in appellate proceedings or in any action or participation in, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11 United States Code Sections 101 etseq., or any successor statutes, the prevailing party (as determined by the court, agency or other authority before which such suit or proceeding is commenced) shall, in addition to such other relief as may be awarded, be entitled to recover reasonable attorneys’ fees, expenses and costs of investigation.

17. Governing Law. This Agreement and the rights and obligations of the parties under this Agreement shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of New York (without regard to conflict of Law principles).

18. Limitation on Constituent Liability. Notwithstanding anything stated to the contrary in this Agreement, although Borrower and Rate Protection Party remain liable hereunder, under no circumstances shall the constituent partners, members, or shareholders in Borrower or Rate Protection Party (direct or indirect) have any liability for the payment or performance of any of Borrower’s or Rate Protection Party’s obligations hereunder.

19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original.

Loan Agreement - Exhibit F

20. ORAL LOAN AGREEMENTS. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BENEFICIARY CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY LENDER TO BE ENFORCEABLE.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

Loan Agreement - Exhibit F

IN WITNESS WHEREOF, the parties hereto have executed this Assignment of Interest Rate Cap Agreement as of the Execution Date.

BORROWER:

KBSGI 421 SW 6TH AVENUE, LLC,

a Delaware limited liability company

By: KBSGI REIT ACQUISITION II, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company,

its sole member

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

By: ______________________

Charles J. Schreiber, Jr.,

Chief Executive Officer

RATE PROTECTION PARTY:

_________________________________________

a ______________________________

Loan Agreement - Exhibit F

LENDER:

METROPOLITAN LIFE INSURANCE

COMPANY,

a New York corporation

By: __________________    

Name:    

Title:    

Loan Agreement - Exhibit F

CONSENT

The undersigned Counterparty hereby consents to the collateral assignment contained in the foregoing Agreement and agrees that that (a) Counterparty shall make all Payments, if any, due or to become due under the Agreement in accordance with the terms of the Agreement; provided, however, that, upon written notice from Lender that an Event of Default has occurred and is continuing under the documents evidencing or securing the Loan, Counterparty will make all such Payments, if any, directly to Lender or as Lender may otherwise direct in writing, (b) upon written notice from Lender that an Event of Default has occurred and is continuing under the documents evidencing or securing the Loan, all rights of Rate Protection Party under the Agreement, including all rights to consent to any termination or modification of same or grant any other consent thereunder, shall be exercisable by Lender.

The undersigned further agrees that all such Payments to Lender shall be made without setoff, defense, or counterclaim.

The undersigned agrees not to amend or modify (except as provided for in the last sentence of this paragraph), cancel or terminate the Interest Rate Cap Agreement at the instruction or request of Rate Protection Party prior to its stated maturity date without the prior written consent of Lender; provided, however nothing in this paragraph shall prevent or prohibit Counterparty from exercising any and all rights (including the right to terminate the Interest Rate Cap Agreement) in the event of an Event or Default or Termination Event, where Rate Protection Party is the sole Defaulting Party or sole Affected Party, as applicable. Notwithstanding the foregoing, Counterparty will not be required to obtain Lender’s prior written consent for administrative amendments or modifications to the Interest Rate Cap Agreement if such amendment or modification does not otherwise change the terms of the Interest Rate Cap Agreement, but rather modifies facts contained in the Interest Rate Cap Agreement such as, for illustrative purposes, a change in address.

Counterparty shall be entitled to conclusively rely (without any independent investigation) on any notice or instructions from Lender in respect of the Agreement. In the event of any inconsistency between any notice or instructions from Rate Protection Party and any notice or instructions from Lender, Counterparty shall be entitled to conclusively rely (without any independent investigation) on the notice or instruction from Lender. Counterparty shall be held harmless and shall be fully indemnified by Rate Protection Party from and against any and all claims, other than those ultimately determined to be proximately caused by the gross negligence or willful misconduct of Counterparty, and from and against any damages, penalties, judgments, liabilities, losses or expenses (including reasonable attorneys' fees and disbursements) incurred by Counterparty as a result of the assertion of any claim, by any person or entity, arising out of, or otherwise related to, any actions taken or omitted to be taken by Counterparty in reliance upon any such instructions or notice provided by Lender. Rate Protection Party releases Counterparty from all liability in connection with Counterparty’s compliance with Lender’s written instructions.

Loan Agreement - Exhibit F

This agreement shall remain in effect until Lender notifies Counterparty in writing that the Loan and all other indebtedness owed by Borrower and Rate Protection Party to Lender, and all other sums due and payable to Lender under the Loan Documents have been repaid in full. This Agreement may not be modified without the written consent of Lender.

Delivery of an executed counterpart of a signature page of this acknowledgment by telecopy or mail shall be effective as delivery of a manually executed original counterpart of this acknowledgment. This acknowledgment may be executed in one or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this acknowledgment to produce or account for more than one such counterpart.

COUNTERPARTY: ____________________________________________

By: _______________________________________

Name: ________________________________

Its: ____________________________________

Address: ___________________________

________________________________

________________________________

Loan Agreement - Exhibit F

EX-10.8

Exhibit 10.8

Multnomah County Official Records	2018-006498
E Murray, Deputy Clerk
	01/18/2018 02:01:38 PM
1R-LOCINST Pgs=24 Stn=36 HENTGESB
$120.00 $11.00 $6.00 $20.00	$	157.00

RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:

Denis C. Braham, Esq.

Winstead PC

600 Travis, Suite 5200

Houston, Texas 77002

LINE OF CREDIT INSTRUMENT

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING

BY

KBSGI 421 SW 6TH AVENUE, LLC,

a Delaware limited liability company,

as Trustor

TO

CHICAGO TITLE INSURANCE COMPANY,

a Nebraska corporation,

as Trustee

for the benefit of

METROPOLITAN LIFE INSURANCE COMPANY,

a New York corporation,

as Beneficiary

January 18, 2018

STATUTORY NOTICES:

A.Maximum principal amount to be advanced: $51,400,000.00.

B.Scheduled Maturity Date, exclusive of any option to renew or extend such     maturity date: February 1, 2023

C. The address of the entity holding a lien or other interest created by this instrument is:

Metropolitan Life Insurance Company, a New York corporation

i

One MetLife Way, Whippany, New Jersey 07981-1449

Attention: Senior Vice President, Real Estate Investors

Page

D. The tax account number(s) of the property subject to the lien or in which the interest is created is:

Account No.:     R246298

E. THIS DOCUMENT CONSTITUTES A FIXTURE FILING IN ACCORDANCE WITH ORS 79.0502.

ii

DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING

DEFINED TERMS

Execution Date: January 18, 2018

Note: The Promissory Note dated as of the Execution Date made by Trustor to the order of Beneficiary in the principal amount of up to $51,400,000.00, together with all extensions, renewals, modifications, restatements and amendments thereof. The stated maturity date of the Note is February 1, 2023, subject to two (2) one (1) year options to extend the maturity date, as more particularly set forth in the Loan Agreement.

Beneficiary & Address: Metropolitan Life Insurance Company, a New York corporation

One MetLife Way,

Whippany, New Jersey 07981-1449

Attention: Senior Vice President, Real Estate Investors

Re: 401-421 SW 6th Avenue, Portland

With a copy to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Vice President

And to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Associate General Counsel

Trustor & Address (Chief Executive Office):

KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Clint Copulos, Senior Vice President of Asset Management

With a copy to: KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Todd Smith, VP, Controller REIT Corporate Accounting

i

DEED OF TRUST

And to: KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attn: Bryce Lin, Director of Finance and Reporting

And to:KBSGI 421 SW 6th Avenue, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: James Chiboucas, Esq., Vice Chairman and Chief Legal Officer

And to:Greenberg Traurig

3161 Michelson Drive, Suite 1000

Irvine, California 92612

Attention: Bruce Fischer, Esq.

Trustee: Chicago Title Insurance Company, a Nebraska corporation

Liable Party & Address: KBSGI REIT Properties, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Clint Copulos, Vice President of Asset Management

With a copy to: KBSGI REIT Properties, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: Todd Smith, VP, Controller REIT Corporate Accounting

And to:                                KBSGI REIT Properties, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attn: Bryce Lin, Director of Finance & Reporting

ii

DEED OF TRUST

And to:                              KBSGI REIT Properties, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: James Chiboucas, Esq., Vice Chairman and Chief Legal Officer

And to:                                Greenberg Traurig

3161 Michelson Drive, Suite 1000

Irvine, California 92612

Attention: Bruce Fischer, Esq.

County (the “County”) and State in which the Property is located: Multnomah County, State of Oregon

Use: A 14-story office building containing approximately 224,122 square feet of rentable area with 11,346 square feet of ground floor retail space on approximately 0.46 acres of land

Insurance: Commercial General Liability: Required Liability Limit: $50,000,000.00

Address for Insurance Notification:

Metropolitan Life Insurance Company,

its affiliates and/or successors and assigns

One MetLife Way

Whippany, New Jersey 07981-1449

Attention: Real Estate Investors Insurance Management

Or such other designee and/or address as may be provided in writing by Beneficiary.

Loan Documents: The Note, this Deed of Trust, the Loan Agreement, the Assignment of Leases and any other documents related to the Note and/or this Deed of Trust and/or the Loan Agreement (except the Unsecured Indemnity Agreement and the Guaranty) and all renewals, amendments, modifications, restatements and extensions of these documents.

Loan Agreement: Loan Agreement dated as of the Execution Date and executed by Trustor and Beneficiary, together with all extensions, renewals, modifications, restatements and amendments thereof.

Assignment of Leases: Assignment of Leases dated as of the Execution Date and executed by Trustor for the benefit of Beneficiary, together with all extensions, renewals, modifications, restatements and amendments thereof.

iii

DEED OF TRUST

Unsecured Indemnity Agreement: Unsecured Indemnity Agreement dated as of the Execution Date and executed by Trustor in favor of Beneficiary, together with all extensions, renewals, modifications, restatements and amendments thereof.

Guaranty: Guaranty of Recourse Obligations dated as of the Execution Date and executed by Liable Party in favor of Beneficiary, together with all extensions, renewals, modifications, restatements and amendments thereof.

The Unsecured Indemnity Agreement and the Guaranty are not Loan Documents and shall survive repayment of the Loan or other termination of the Loan Documents in accordance with their terms (except as expressly set forth therein).

Defined Terms: Capitalized terms not defined herein shall have the meanings ascribed to them in the Loan Agreement.

iv

DEED OF TRUST

THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (together with all extensions, renewals, modifications, restatements and amendments hereof, this “Deed of Trust”) is entered into as of the Execution Date by Trustor, as grantor, to Trustee, as trustee, for the benefit of Beneficiary, as beneficiary, with reference to the following Recitals:

RECITALS

A.    This Deed of Trust secures: (1) the payment of the indebtedness evidenced by the Note with interest at the rates set forth in the Loan Agreement, together with all renewals, modifications, consolidations and extensions of the Note, all additional advances or fundings made by Beneficiary, and any other amounts required to be paid by Trustor under any of the Loan Documents (collectively, the “Secured Indebtedness” and sometimes referred to as the “Loan”) and (2) the full performance by Trustor of all of the terms, covenants and obligations set forth in any of the Loan Documents.

B.    Trustor makes the following covenants and agreements for the benefit of Beneficiary and Beneficiary’s successors and assigns and any party designated by Beneficiary, including any prospective purchaser of the Loan Documents or participant in the Loan, and their respective officers, employees, agents, attorneys, representatives and contractors, and Trustee.

NOW, THEREFORE, in consideration of the Recitals and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Trustor agrees as follows:

ARTICLE 1

GRANT OF SECURITY

1.1REAL PROPERTY GRANT. In order to secure the Secured Indebtedness and the full performance by Trustor of all of the terms, covenants and obligations set forth in any of the Loan Documents, Trustor hereby irrevocably sells, transfers, grants, conveys, assigns and warrants to Trustee, its successors and assigns, in trust, with power of sale and right of entry and possession, for the benefit of Beneficiary, all of Trustor’s present and future estate, right, title and interest in and to the following which are collectively referred to as the “Real Property”:

(a)That certain real property located in the County and State which is more particularly described in Exhibit A attached to this Deed of Trust or any portion of such real property; all easements, rights‑of‑way, gaps, strips and gores of land; streets and alleys; sewers and water rights; privileges, licenses, tenements, and appurtenances appertaining to the real property, and the reversion(s), remainder(s), and claims of Trustor with respect to these items, and the benefits of any existing or future conditions, covenants and restrictions affecting such real property (collectively, the “Land”);

(b)All things now or hereafter affixed to or placed on the Land, including all buildings, structures and improvements, all fixtures and all machinery, elevators, boilers, building

1

DEED OF TRUST

service equipment (including, without limitation, all equipment for the generation or distribution of air, water, heat, electricity, light, fuel or for ventilating or air conditioning purposes or for sanitary or drainage purposes or for the removal of dust, refuse or garbage), partitions, appliances, furniture, furnishings, building materials, supplies, computers and software, window coverings and floor coverings, lobby furnishings, and other property now or in the future attached, or installed in the improvements and all replacements, repairs, additions, or substitutions to these items (collectively, the “Improvements”);

(c)All present and future income, rents, revenue, profits, proceeds, accounts receivables and other benefits from the Land and/or the Improvements and all deposits made with respect to the Land and/or the Improvements, including, but not limited to, any security given to utility companies by Trustor, any advance payment of real estate taxes or assessments, or insurance premiums made by Trustor and all claims or demands relating to such deposits and other security, including claims for refunds of tax payments or assessments, all insurance proceeds payable to Trustor in connection with the Land and/or the Improvements whether or not such insurance coverage is specifically required under the terms of the Loan Agreement and all security deposits in excess of an amount equal to one month’s rent under all Leases (all of the items set forth in this paragraph are referred to collectively as “Rents and Profits”);

(d)All damages, payments and revenue of every kind that Trustor may be entitled to receive, from any person owning or acquiring a right to the oil, gas or mineral rights and reservations of the Land;

(e)All proceeds and claims arising on account of any damage to, or Condemnation of any part of the Land and/or the Improvements, and all causes of action and recoveries for any diminution in the value of the Land and/or the Improvements;

(f)All licenses, contracts, management agreements, guaranties, warranties, franchise agreements, permits, or certificates relating to the ownership, use, operation or maintenance of the Land and/or the Improvements; and

(g)All names by which the Land and/or the Improvements may be operated or known, and all rights to carry on business under those names, and all trademarks, trade names, and goodwill relating to the Land and/or the Improvements.

TO HAVE AND TO HOLD the Real Property, unto Trustee, its successors and assigns, in trust, for the benefit of Beneficiary, its successors and assigns, forever subject to the terms, covenants and conditions of this Deed of Trust.

1.2PERSONAL PROPERTY GRANT. Trustor hereby irrevocably sells, transfers, grants, conveys, assigns and warrants to Beneficiary, its successors and assigns, a security interest in Trustor’s interest in the following personal property which is collectively referred to as the “Personal Property”:

(a)Any portion of the Real Property which may be personal property, and all

2

DEED OF TRUST

other personal property, whether now existing or acquired in the future which is attached to, appurtenant to, or used in the construction or operation of, or in connection with, the Real Property, to the extent owned by Trustor;

(b)All rights to the use of water, including water rights appurtenant to the Real Property, pumping plants, ditches for irrigation, all water stock or other evidence of ownership of any part of the Real Property that is owned by Trustor in common with others and all documents of membership in any owner’s association or similar group;

(c)All plans and specifications prepared for construction of the Improvements; and all contracts and agreements of Trustor relating to the plans and specifications or to the construction of the Improvements;

(d)All equipment, machinery, fixtures, goods, accounts, general intangibles, promissory notes, letter of credit rights, investment property, commercial tort claims, deposit accounts, documents, instruments and chattel paper and all substitutions, replacements of, and additions to, any of these items;

(e)All sales agreements, deposits, escrow agreements, other documents and agreements entered into with respect to the sale of any part of the Real Property, and all proceeds of the sale;

(f)All proceeds from the voluntary or involuntary disposition or claim respecting any of the foregoing items (including judgments, insurance awards, condemnation awards or otherwise,) or to which Trustor otherwise becomes entitled, all “accounts,” “general intangibles,” “instruments,” and “investment property,” in each case as defined in the Oregon Uniform Commercial Code constituting or relating to the foregoing; and

(g)If the Interest Rate Cap Agreement is entered into, all rights of Trustor and the Rate Protection Party under the Interest Rate Cap Agreement and under the Collateral Assignment, including, without limitation, all rights of Trustor and/or the Rate Protection Party in and to any and all of the proceeds of such Interest Rate Cap Agreement which are hereby assigned to Beneficiary.

All of the Real Property and the Personal Property are collectively referred to as the “Property.”

1.3CONDITIONS TO GRANT. If Trustor shall pay to Beneficiary the Secured Indebtedness, at the times and in the manner stipulated in the Loan Documents, and if Trustor shall perform and observe each of the terms, covenants and agreements set forth in the Loan Documents, then this Deed of Trust and all the rights granted by this Deed of Trust shall be released and reconveyed by Trustee and/or Beneficiary in accordance with the laws of the State.

3

DEED OF TRUST

ARTICLE 2

TRUSTOR COVENANTS

Trustor covenants and agrees that:

2.1PERFORMANCE BY TRUSTOR. Trustor shall pay the Secured Indebtedness to Beneficiary and shall keep and perform each and every other obligation, covenant and agreement of the Loan Documents.

2.2INCORPORATION BY REFERENCE. All the covenants, conditions and agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any of the other Loan Documents, are hereby made a part of this Deed of Trust to the same extent and with the same force as if fully set forth herein. In the event of any conflict between the provisions of this Deed of Trust and the provisions of the Loan Agreement, the provisions of the Loan Agreement shall control.

2.3WARRANTY OF TITLE.

(a)Trustor represents and warrants that it holds good and indefeasible fee simple absolute title to the Land, and that it has the right and is lawfully authorized to sell, convey, encumber and grant a security interest in the Property subject only to the Permitted Exceptions. The Property is free from all due and unpaid taxes, assessments and mechanics’ and materialmen’s liens other than real estate taxes for the calendar year 2018 that are not yet due or payable.

(b)Trustor further covenants to warrant and forever defend Beneficiary and Trustee from and against all persons or entities claiming any interest in the Property.

2.4TAXES, LIENS AND OTHER CHARGES.

(a)Trustor shall pay all Impositions in accordance with the Loan Agreement.

(b)In the event of the passage, after the Execution Date, of any law which deducts from the value of the Property, for the purposes of taxation, any lien or security interest encumbering the Property, or changing in any way the existing laws regarding the taxation of mortgages, deeds of trust and/or security agreements or debts secured by these instruments, or changing the manner for the collection of any such taxes, and the law has the effect of imposing payment of any Impositions upon Beneficiary, at Beneficiary’s option, the Secured Indebtedness shall immediately become due and payable. Notwithstanding the preceding sentence, the Beneficiary’s election to accelerate the Loan shall not be effective if (1) Trustor is permitted by law (including, without limitation, applicable interest rate laws) to, and actually does, pay the Imposition or the increased portion of the Imposition and (2) Trustor agrees in writing to pay or reimburse Beneficiary in accordance with Section 7.6 of this Deed of Trust for the payment of any such Imposition which becomes payable at any time when the Loan is outstanding.

4

DEED OF TRUST

2.5SUITS AND OTHER ACTS TO PROTECT THE PROPERTY.

(a)Trustor shall immediately notify Beneficiary of the commencement, or receipt of written notice, of any and all actions or proceedings or other material matter or claim affecting the Property and/or the interest of Beneficiary under the Loan Documents (collectively, “Actions”). Trustor shall appear in and defend any Actions.

(b)Beneficiary shall have the right, at the cost and expense of Trustor, to institute, maintain and participate in Actions and take such other action, as it may deem appropriate in the good faith exercise of its discretion to preserve or protect the Property and/or the interest of Beneficiary under the Loan Documents. Beneficiary shall provide Liable Party with a courtesy copy notifying Liable Party of Beneficiary’s institution, maintenance or participation in such Actions, but such notice to Liable Party shall not be a condition precedent or impediment to Beneficiary’s ability to institute, maintain or participate in such Actions. Upon the written request of Trustor, not more than one time per calendar quarter, Beneficiary shall provide Trustor with an update with respect to such Actions. Any money paid by Beneficiary under this Section shall be reimbursed to Beneficiary in accordance with Section 7.6 hereof.

2.6COLLATERAL SECURITY INSTRUMENTS. Trustor covenants and agrees that if Beneficiary at any time holds additional security for any obligations secured by this Deed of Trust, Beneficiary may enforce Beneficiary’s rights and remedies with respect to the security, at its option, either before, concurrently or after a sale of the Property is made pursuant to the terms of this Deed of Trust. Beneficiary may apply the proceeds of the additional security to the Secured Indebtedness without affecting or waiving any right to any other security, including the security under this Deed of Trust, and without waiving any breach or default of Trustor under this Deed of Trust or any other Loan Document.

2.7PERFORMANCE OF OTHER AGREEMENTS. Trustor shall observe and perform each and every term, covenant and provision to be observed or performed by Trustor pursuant to the Loan Agreement, any other Loan Document and any other agreement or recorded instrument affecting or pertaining to the Property and any amendments, modifications or changes thereto.

ARTICLE 3

INSURANCE

3.1REQUIRED INSURANCE AND TERMS OF INSURANCE POLICIES. During the term of this Deed of Trust, Trustor shall obtain and maintain, or cause to be obtained and maintained, in full force and effect at all times insurance with respect to Trustor and the Property as required pursuant to the Loan Agreement.

3.2ASSIGNMENT TO BENEFICIARY. To the extent the insurance requirements in Section 6.1 of the Loan Agreement are satisfied using a stand-alone policy(ies) covering only the Property, then in the event of the foreclosure of this Deed of Trust or other transfer of the title to the Property in extinguishment of the Secured Indebtedness, all right, title and interest of Trustor

5

DEED OF TRUST

in and to such insurance policy(ies), or premiums or payments in satisfaction of claims or any other rights under these insurance policy(ies) shall pass to the transferee of the Property. Notwithstanding the foregoing to the extent the insurance requirements in Section 6.1 of the Loan Agreement are satisfied using a blanket policy, then in the event of the foreclosure of this Deed of Trust or other transfer of the title to the Property in extinguishment of the Secured Indebtedness, all right, title and interest of Trustor in and to any premiums or payments in satisfaction of claims or any other rights under such insurance policy(ies) relating to the Property shall pass to the transferee of the Property.

ARTICLE 4

LEASES

Pursuant to the Assignment of Leases, Trustor has assigned the Leases and the Rents and Profits to Beneficiary. Trustor acknowledges that it is permitted to collect certain of the Rents and Profits pursuant to Beneficiary’s rights as set forth in the Assignment of Leases.

ARTICLE 5

TRUSTOR AGREEMENT AND FURTHER ASSURANCES

5.1FURTHER ASSURANCES. Trustor shall, without expense to Beneficiary and/or Trustee, execute, acknowledge and deliver all further acts, deeds, conveyances, mortgages, deeds of trust, assignments, security agreements, and financing statements as Beneficiary and/or Trustee shall from time to time reasonably require, to assure, convey, assign, transfer and confirm unto Beneficiary and/or Trustee the Property and rights conveyed or assigned by this Deed of Trust or which Trustor may become bound to convey or assign to Beneficiary and/or Trustee, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust or any of the other Loan Documents, or for filing, refiling, registering, reregistering, recording or rerecording this Deed of Trust. If Trustor fails to comply with the terms of this Section, Beneficiary may, at Trustor’s expense, perform Trustor’s obligations for and in the name of Trustor, and Trustor hereby irrevocably appoints Beneficiary as its attorney‑in‑fact to do so. The appointment of Beneficiary as attorney-in-fact is coupled with an interest.

5.2SPLITTING OF DEED OF TRUST. Beneficiary, without in any way limiting Beneficiary’s other rights hereunder, in its sole and absolute discretion (and at its sole cost and expense), shall have the right to divide the Loan into two or more tranches which may be evidenced by two or more notes, which notes may be pari passu or senior/subordinate, provided that (i) the aggregate principal amount of the notes immediately following such division shall equal the outstanding principal balance of the Loan and (ii) the weighted average interest rate of the Loan immediately following such division shall equal the interest rate which was applicable to the Loan immediately prior to such division. Trustor shall cooperate (at no cost, potential liability or expense to Trustor) with reasonable requests of Beneficiary in order to divide the Loan and shall execute and deliver such documents as shall reasonably be required by Beneficiary in connection therewith, including, without limitation, new notes to replace the original Note, all in form and substance reasonably satisfactory to Beneficiary, provided that such documents shall contain terms, provisions and clauses (x) no less favorable to Trustor (except to a de minimis

6

DEED OF TRUST

extent) than those contained herein and in the Note, and (y) which do not (except to a de minimis extent) increase Trustor’s obligations hereunder or decrease Trustor’s rights under the Loan Documents. If Beneficiary redefines the interest rate, the amount of interest payable under the modified notes, in the aggregate, shall at all times equal the amount of interest which would have been payable under the Note at the Interest Rate. In the event Trustor fails to execute and deliver such documents to Beneficiary within five (5) business days following such request by Beneficiary, Trustor hereby absolutely and irrevocably appoints Beneficiary as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such transactions, Trustor ratifying all that such attorney shall do by virtue thereof. Beneficiary shall reimburse Trustor for Trustor’s reasonable and verified third-party attorneys’ fees related to Trustor’s cooperation under this Section 5.2.

5.3REPLACEMENT OF NOTE. Upon written notice to Trustor of the loss, theft, destruction or mutilation of the Note, Trustor will execute and deliver, in lieu of the original Note, a replacement note, identical in form and substance to the Note and dated as of the Execution Date. Upon the execution and delivery of the replacement note, all references in any of the Loan Documents to the Note shall refer to the replacement note.

5.4SUBROGATION. Beneficiary shall be subrogated to the lien of any and all encumbrances against the Property paid out of the proceeds of the Loan and to all of the rights of the recipient of such payment.

ARTICLE 6

DUE ON SALE/ENCUMBRANCE

6.1BENEFICIARY RELIANCE. Trustor acknowledges that Beneficiary has examined and relied on the experience of Trustor and its general partners, members, principals and (if Trustor is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Trustor’s ownership of the Property as a means of maintaining the value of the Property as security for repayment of the Secured Indebtedness and the performance of the Unsecured Obligations. Trustor acknowledges that Beneficiary has a valid interest in maintaining the value of the Property so as to ensure that, should Trustor default in the repayment of the Secured Indebtedness or the performance of the Unsecured Obligations, Beneficiary can recover the Secured Indebtedness by a sale of the Property.

6.2NO TRANSFER.Trustor shall not permit or suffer any Transfer to occur, unless specifically permitted by Article VIII of the Loan Agreement, the provisions of which are hereby incorporated by reference into this Deed of Trust to the same extent and with the same force as if fully set forth herein.

6.3BENEFICIARY’S RIGHTS.Beneficiary shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Secured Indebtedness immediately due and payable upon a Transfer without Beneficiary’s

7

DEED OF TRUST

consent. This provision shall apply to every Transfer, other than any Transfer permitted pursuant to the Loan Agreement, regardless of whether voluntary or not, or whether or not Beneficiary has consented to any previous Transfer.

ARTICLE 7

DEFAULTS AND REMEDIES

7.1EVENTS OF DEFAULT. The term “Event of Default” as used in this Deed of Trust shall have the meaning assigned to such term in the Loan Agreement.

7.2REMEDIES UPON DEFAULT. Upon the happening and during the continuance of an Event of Default, the Secured Indebtedness shall, at the option of Beneficiary, become immediately due and payable, without further notice or demand, and Beneficiary may undertake any one or more of the following remedies in addition to any other remedies under Oregon law:

(a)Foreclosure. Institute a judicial foreclosure action in accordance with the law of the State, or take any other action as may be allowed, at law or in equity, for the enforcement of the Loan Documents and realization on the Property or any other security afforded by the Loan Documents. In the case of a judicial proceeding, Beneficiary may proceed to final judgment and execution for the amount of the Secured Indebtedness owed as of the date of the judgment, together with all costs of suit, reasonable attorneys’ fees and interest on the judgment at the lesser of (i) the Default Rate or (ii) the maximum rate permitted by law from the date of the judgment until paid. If Beneficiary is the purchaser at the foreclosure sale of the Property, the foreclosure sale price shall be applied against the total amount due Beneficiary; and/or

(b)Power of Sale. Institute a non-judicial foreclosure proceeding in compliance with applicable law in effect on the date foreclosure is commenced for the Trustee to sell the Property either as a whole or in separate parcels as Beneficiary (subject to any laws of the State allowing Trustor to direct the order in which parcels are sold) may determine at public sale or sales to the highest bidder for cash, in order to pay the Secured Indebtedness. If the Property is sold as separate parcels, Beneficiary may direct the order in which the parcels are sold. Trustee shall deliver to the purchaser a trustee’s deed or deeds without covenant or warranty, express or implied. Trustee may postpone the sale of all or any portion of the Property in accordance with applicable law, and from time to time may further postpone the sale in accordance with applicable law; and/or

(c)Entry. Enter into possession of the Property, lease the Improvements, collect all Rents and Profits and, after deducting all costs of collection and administration expenses, apply the remaining Rents and Profits in such order and amounts as Beneficiary, in Beneficiary’s sole discretion, may elect to the payment of Impositions, operating costs, costs of maintenance, restoration and repairs, Premiums and other charges, including, but not limited to, costs of leasing the Property and reasonable fees and costs of counsel and receivers, and in reduction of the Secured Indebtedness; and/or

8

DEED OF TRUST

(d)Receivership. Have a receiver appointed to enter into possession of the Property, lease the Property, collect the Rents and Profits and apply them as the appropriate court may direct. Beneficiary shall be entitled to the appointment of a receiver without the necessity of proving either the inadequacy of the security or the insolvency of Trustor or Liable Party. Trustor and Liable Party shall be deemed to have consented to the appointment of the receiver and hereby agree not to object to such appointment. The collection or receipt of any of the Rents and Profits by Beneficiary or any receiver shall not affect or cure any Event of Default.Beneficiary’s rights hereunder include its rights under Oregon Law.

7.3APPLICATION OF PROCEEDS OF SALE. To the fullest extent permitted by applicable law, Trustee shall apply the proceeds of the sale to payment of:  (a) the costs and expenses of exercising the power of sale and of the sale, including the payment of the Trustee’s and attorneys’ fees; (b) the cost of any evidence of title procured in connection with such sale; (c) all sums expended under the terms of this Deed of Trust not then repaid, with accrued interest at the interest rate provided in the Note from date of expenditure; (d) all other sums then secured by this Deed of Trust; and (e) the remainder, if any, to the person or persons legally entitled thereto.  Subject to the foregoing, in the event of a sale of the Property pursuant to Section 7.2 of this Deed of Trust, to the extent permitted by law, Beneficiary shall determine in its sole discretion the order in which the proceeds from the sale shall be applied to the payment of the Secured Indebtedness, including without limitation, the expenses of the sale and of all proceedings in connection with the sale, including reasonable attorneys’ fees and expenses; Impositions, Premiums, liens, and other charges and expenses; the outstanding principal balance of the Secured Indebtedness; any accrued interest; any Prepayment Fee; and any other amounts owed under any of the Loan Documents.

7.4WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, TRUSTOR AND BENEFICIARY HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING AND/OR HEARING ON ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THE NOTE, THIS DEED OF TRUST OR ANY OF THE LOAN DOCUMENTS, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY LAW, STATUTE, OR REGULATION. Neither party will seek to consolidate any such action in which a jury has been waived, with any other action in which a jury trial cannot or has not been waived. Each party has received the advice of counsel with respect to this waiver.

7.5BENEFICIARY’S RIGHT TO PERFORM TRUSTOR’S OBLIGATIONS. Trustor agrees that, if Trustor fails to perform any act or to pay any money which Trustor is required to perform or pay under the Loan Documents, following the expiration of any applicable notice or grace period provided herein, Beneficiary may make the payment or perform the act at the cost and expense of Trustor and in Trustor’s name or in its own name. Any money paid by Beneficiary under this Section 7.5 shall be reimbursed to Beneficiary in accordance with Section 7.6 hereof.

7.6BENEFICIARY REIMBURSEMENT. All payments made, or funds expended or advanced by Beneficiary pursuant to the provisions of any Loan Document, shall (1) become a

9

DEED OF TRUST

part of the Secured Indebtedness, (2) bear interest at the Interest Rate from the date such payments are made or funds expended or advanced, (3) become due and payable by Trustor upon demand by Beneficiary, and (4) bear interest at the Default Rate from the date of such demand. Trustor shall reimburse Beneficiary within ten (10) days after receipt of written demand for such amounts.

7.7FEES AND EXPENSES. If Beneficiary becomes a party (by intervention or otherwise) to any action or proceeding affecting, directly or indirectly, Trustor, the Property or the title thereto or Beneficiary’s interest under this Deed of Trust, or employs an attorney to collect any of the Secured Indebtedness or to enforce performance of the obligations, covenants and agreements of the Loan Documents, Trustor shall reimburse Beneficiary in accordance with Section 7.6 hereof for all expenses, costs, charges and legal fees incurred by Beneficiary (including, without limitation, the fees and expenses of experts and consultants), whether or not suit is commenced.

7.8WAIVER OF CONSEQUENTIAL DAMAGES. Trustor covenants and agrees that in no event shall Beneficiary be liable for consequential damages, and to the fullest extent permitted by law, Trustor expressly waives all existing and future claims that it may have against Beneficiary for consequential damages.

7.9INDEMNIFICATION OF TRUSTEE. To the extent permitted by applicable law, except for gross negligence and willful misconduct, Trustee shall not be liable for any act or omission or error of judgment. Trustee may rely on any document believed by it in good faith to be genuine. All money received by Trustee shall be held in trust, but need not be segregated (except to the extent required by law), until used or applied as provided in this Deed of Trust. To the extent permitted by applicable law, Trustee shall not be liable for interest on the money. Trustor shall protect, indemnify and hold harmless Trustee against all liability and expenses which Trustee may incur in the performance of its duties.

7.10ACTIONS BY TRUSTEE. At any time, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, and without affecting the personal liability of any entity or the Liable Parties for payment of the Secured Indebtedness or the effect of this Deed of Trust upon the remainder of the Property, Trustee may take such actions as Beneficiary may request which are permitted by this Deed of Trust or by applicable law.

7.11SUBSTITUTION OF TRUSTEE. Beneficiary has the power and shall be entitled, at any time and from time to time, to remove Trustee or any successor trustee and to appoint another trustee in the place of Trustee or any successor trustee, by an instrument recorded in the Official Records of the county or counties where the Property is located. The recorded instrument completed in compliance with applicable law shall be conclusive proof of the proper substitution and appointment of the successor Trustee without the necessity of any conveyance from the predecessor Trustee.

10

DEED OF TRUST

ARTICLE 8

SECURITY AGREEMENT

8.1SECURITY AGREEMENT. THIS DEED OF TRUST CREATES A LIEN ON THE PROPERTY. IN ADDITION, TO THE EXTENT THE PROPERTY IS PERSONAL PROPERTY OR FIXTURES UNDER APPLICABLE LAW, THIS DEED OF TRUST CONSTITUTES A SECURITY AGREEMENT UNDER THE UNIFORM COMMERCIAL CODE AND ANY OTHER APPLICABLE LAW WITH RESPECT TO THE PERSONAL PROPERTY AND IS FILED AS A FIXTURE FILING WITH RESPECT TO GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON THE LAND OR THE IMPROVEMENTS. UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, BENEFICIARY MAY, AT ITS OPTION, PURSUE ANY AND ALL RIGHTS AND REMEDIES AVAILABLE TO A SECURED PARTY WITH RESPECT TO ANY PORTION OF THE PROPERTY, AND/OR BENEFICIARY MAY, AT ITS OPTION, PROCEED AS TO ALL OR ANY PART OF THE PROPERTY IN ACCORDANCE WITH BENEFICIARY’S RIGHTS AND REMEDIES WITH RESPECT TO THE LIEN CREATED BY THIS DEED OF TRUST. THIS FINANCING STATEMENT SHALL REMAIN IN EFFECT AS A FIXTURE FILING UNTIL THIS DEED OF TRUST IS RELEASED OR SATISFIED OF RECORD. WITH RESPECT TO SUCH FIXTURE FILING, THE FOLLOWING INFORMATION IS PROVIDED:

Name of Debtor:	KBSGI 421 SW 6th Avenue, LLC
Address of Debtor:	c/o KBS Capital Advisors LLC 800 Newport Center Drive, Suite 700 Newport Beach, California 92660 Attention: Todd Smith, VP, Controller REIT Corporate Accounting
Name of Secured Party:	Metropolitan Life Insurance Company, a New York corporation
Address of Secured Party:	425 Market Street, Suite 1050 San Francisco, California 94105 Attention: Vice President

8.2CHARACTERIZATION OF PROPERTY. The grant of a security interest to Beneficiary in this Deed of Trust shall not be construed to limit or impair the lien of this Deed of Trust or the rights of Beneficiary with respect to any property which is real property or which the parties have agreed to treat as real property. To the fullest extent permitted by law, everything used in connection with the production of Rents and Profits is, and at all times and for all purposes and in all proceedings, both legal and equitable, shall be regarded as real property, irrespective of whether or not the same is physically attached to the Land and/or the Improvements.

11

DEED OF TRUST

8.3PROTECTION AGAINST PURCHASE MONEY SECURITY INTERESTS. It is understood and agreed that in order to protect Beneficiary from the effect of UCC Section 9-334 (ORS 79.0334), as amended from time to time and as enacted in the State, in the event that Trustor intends to purchase any goods which may become fixtures attached to the Property, or any part of the Property, and such goods will be subject to a purchase money security interest held by a seller or any other party:

(a)Before executing any security agreement or other document evidencing or perfecting the security interest, Trustor shall obtain the prior written approval of Beneficiary. All requests for such written approval shall be in writing and contain the following information: (i) a description of the fixtures; (ii) the address at which the fixtures will be located; and (iii) the name and address of the proposed holder and proposed amount of the security interest.

(b)Trustor shall pay all sums and perform all obligations secured by the security agreement. If Trustor fails to make any payment on an obligation secured by a purchase money security interest in the Personal Property or any fixtures, Beneficiary, at its option, may pay the secured amount and Beneficiary shall be subrogated to the rights of the holder of the purchase money security interest.

(c)Beneficiary shall have the right to acquire by assignment from the holder of the security interest for the Personal Property or fixtures, all contract rights, accounts receivable, negotiable or non‑negotiable instruments, or other evidence of indebtedness and to enforce the security interest as assignee.

(d)The provisions of subparagraphs (b) and (c) of this Section 13.4 shall not apply if the goods which may become fixtures are of at least equivalent value and quality as the Personal Property being replaced and if the rights of the party holding the security interest are expressly subordinated to the lien and security interest of this Deed of Trust in a manner satisfactory to Beneficiary.

8.4REPRESENTATIONS AND WARRANTIES.Trustor warrants, represents and covenants as follows:

(a)    To the best knowledge of Trustor, Trustor owns the Personal Property free from any lien, security interest, encumbrance or adverse claim, except as otherwise expressly approved by Beneficiary in writing. Trustor will notify Beneficiary of, and will protect, defend and indemnify Beneficiary against, all claims and demands of all persons at any time claiming any rights or interest in the Personal Property.

(b)    To the best knowledge of Trustor, the Personal Property has not been used, and shall not be used or bought for personal, family, or household purposes, but shall be bought and used solely for the purpose of carrying on Trustor’s business.

(c)    Trustor will not remove the Personal Property without the prior written consent of Beneficiary (which consent shall not be unreasonably withheld, conditioned or delayed), except

12

DEED OF TRUST

the items of Personal Property which are consumed or worn out in ordinary usage shall be promptly replaced by Trustor with other Personal Property of value equal to or greater than the value of the replaced Personal Property.

(d)    To Trustor’s knowledge, this Deed of Trust, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, first priority, perfected lien on the Real Property, subject only to the Permitted Exceptions and (ii) perfected security interests in and to, and perfected collateral assignments of, all Personal Property (including the Leases).

(e)    None of the Permitted Exceptions, individually or in the aggregate, materially interfere with the benefits of the security intended to be provided by this Deed of Trust, the Assignment of Leases, or any of the other Loan Documents, materially and adversely affect the value of the Property, impair the use or operations of the Property, or impair Trustor’s ability to perform its obligations under the Loan Documents and the Indemnity Agreement in a timely manner.

ARTICLE 9- EXCULPATION

The provisions of Section 12.20 of the Loan Agreement are hereby incorporated by reference into this Deed of Trust to the same extent and with the same force as if fully set forth herein.

ARTICLE 10- NOTICES

All notices or other written communications hereunder shall be delivered in accordance with Section 12.5 of the Loan Agreement.

ARTICLE 11- APPLICABLE LAW

This Deed of Trust shall be construed and enforced in accordance with the laws of the State.

ARTICLE 12

MISCELLANEOUS PROVISIONS

12.1NO WAIVER. No single or partial exercise by Beneficiary and/or Trustee, or delay or omission in the exercise by Beneficiary and/or Trustee, of any right or remedy under the Loan Documents shall preclude, waive or limit the exercise of any other right or remedy. Beneficiary shall at all times have the right to proceed against any portion of, or interest in, the Property without waiving any other rights or remedies with respect to any other portion of the Property. No right or remedy under any of the Loan Documents is intended to be exclusive of any other right or remedy but shall be cumulative and may be exercised concurrently with or independently from any other right and remedy under any of the Loan Documents or under applicable law.

13

DEED OF TRUST

12.2HEIRS AND ASSIGNS; TERMINOLOGY.

(a)This Deed of Trust and all other Loan Documents are binding upon Trustor, Beneficiary, and Trustee, their heirs, representatives, administrators, executors, successors and permitted assigns and inures to the benefit of and is enforceable by Beneficiary, its successors, endorsees and assigns (including, without limitation, any entity to which Beneficiary assigns or sells all or any portion of its interest in the Loan). Unless expressly otherwise provided herein, the term “Trustor” shall include both the original Trustor and any subsequent owner or owners of any of the Property. The term “Beneficiary” shall include both the original Beneficiary and any subsequent holder or holders of the Note. The term “Trustee” shall include both the original Trustee and any subsequent successor or additional trustee(s) acting under this Deed of Trust. The term “Liable Party” shall include both the original Liable Party and any subsequent or substituted Liable Party(ies).

(b)In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural.

12.3SEVERABILITY. If any provision of this Deed of Trust should be held unenforceable or void, then that provision shall be separated from the remaining provisions and shall not affect the validity of this Deed of Trust except that if the unenforceable or void provision relates to the payment of any monetary sum, then, Beneficiary may, at its option, declare the Secured Indebtedness immediately due and payable.

12.4CAPTIONS. The captions are inserted only as a matter of convenience and for reference, and in no way define, limit, or describe the scope or intent of any provisions of this Deed of Trust.

12.5TIME OF THE ESSENCE. Time shall be of the essence with respect to all of Trustor’s obligations under this Deed of Trust and the other Loan Documents.

12.6NO MERGER. In the event that Beneficiary should become the owner of the Property, there shall be no merger of the estate created by this Deed of Trust with the fee estate in the Property.

12.7NO MODIFICATIONS. This Deed of Trust may not be changed, amended or modified, except in a writing expressly intended for such purpose and executed by Trustor and Beneficiary.

12.8ENTIRE AGREEMENT. This Deed of Trust, the Note, the other Loan Documents, the Guaranty and the Unsecured Indemnity Agreement (collectively, the “Written Agreements”) constitute a final expression of the agreement between Trustor and Beneficiary and the Written Agreements may not be contradicted by evidence of any alleged oral agreement or understanding, and all understandings, oral representations and agreements heretofore or simultaneously had among the parties are merged in, and are contained in, such documents and instruments.

14

DEED OF TRUST

12.9NO THIRD PARTY BENEFICIARIES. Nothing contained herein is intended or shall be deemed to create or confer any rights upon any third person not a party hereto, whether as a third‑party beneficiary or otherwise, except as expressly provided herein.

12.10ORAL LOAN AGREEMENTS. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BENEFICIARY CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY LENDER TO BE ENFORCEABLE.

12.11NON-RESIDENTIAL TRUST DEED. Trustor represents that this Deed of Trust is not a “residential trust deed” as defined in ORS 86.705(6).

[Remainder of Page Intentionally Left Blank]

15

DEED OF TRUST

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust, or has caused this Deed of Trust to be executed by its duly authorized representative as of the Execution Date.

KBSGI 421 SW 6TH AVENUE, LLC,

a Delaware limited liability company

By: KBSGI REIT ACQUISITION II, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company,

its sole member

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

DEED OF TRUST

ACKNOWLEDGMENT

A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.

STATE OF CALIFORNIA    )

) ss.

COUNTY OF ORANGE    )

On JANUARY 10, 2018, before me, D. MONTGOMERY, NOTARY PUBLIC, personally appeared CHARLES J. SCHREIBER, JR., who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature /s/ D. Montgomery (Seal)

S-2

DEED OF TRUST

EXHIBIT A

PROPERTY DESCRIPTION

All that certain real property situated in the County of Multnomah, State of Oregon, described as follows:

Lots 1, 2, 3 and 4, Block 176, CITY OF PORTLAND, in the City of Portland, County of Multnomah and State of Oregon.

DEED OF TRUST S-2

EX-10.9

Exhibit 10.9

GUARANTY OF RECOURSE OBLIGATIONS

This GUARANTY OF RECOURSE OBLIGATIONS ("Guaranty") is executed as of January 18, 2018, by KBSGI REIT PROPERTIES, LLC, a Delaware limited liability company ("Guarantor"), in favor of METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation ("Lender"), with reference to the following facts:

A.    Lender has agreed to make a loan (the "Loan") in the principal amount of up to $51,400,000.00 to KBSGI 421 SW 6TH AVENUE, LLC, a Delaware limited liability company ("Borrower"), to be evidenced by that certain Promissory Note of even date herewith (together with all extensions, renewals, modifications, restatements and amendments thereof, the "Note") to be executed by Borrower and payable to Lender. The Note is to be secured by, among other things, a Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture Filing of even date herewith to be executed by Borrower, as trustor, for the benefit of Lender, as beneficiary, which is to be recorded in the Official Records of Multnomah County, Oregon (together with all extensions, renewals, modifications, restatements and amendments thereof, the "Deed of Trust"). The Note will be advanced pursuant to that certain Loan Agreement of even date herewith to be executed by Borrower and Lender ("Loan Agreement"). The Deed of Trust will encumber a fee estate in certain real property located in Portland, County of Multnomah, State of Oregon as described therein.

B.    It is a condition to Lender making the Loan to Borrower that Guarantor execute this Guaranty.

A G R E E M E N T

NOW, THEREFORE, in consideration of the foregoing, and in order to induce Lender to make the Loan to Borrower, Guarantor hereby agrees, in favor of Lender, as follows:

1.Definitions and Construction.

(a)Definitions. The following terms, as used in this Guaranty, shall have the following meanings:

(i)"Bankruptcy Code" means the Bankruptcy Reform Act of 1978 (11 U.S.C.), as amended or supplemented from time to time, and any successor statute, and any and all rules issued or promulgated in connection therewith.

(ii)"Guaranteed Obligations" means (A) indefeasible payment and performance by Borrower of any and all obligations and liabilities of any kind or character owed by Borrower to Lender under Section 12.20 of the Loan Agreement (but subject to the limitations on Guarantor's obligations set forth in Section 12.20 of the Loan Agreement, and expressly excluding (1) Borrower's liability under clauses (vi) and (vii) appearing in Section 12.20 of the Loan Agreement and (2) any

1

GUARANTY OF RECOURSE OBLIGATIONS

liability for representations and warranties made by Borrower in the Loan Documents pertaining to Hazardous Materials (as defined in the Unsecured Indemnity) or in the Unsecured Indemnity Agreement) (such amounts under this clause (A) of Section 1(a)(ii) being herein called the "Performance Sums"), plus (B) interest at the Default Rate (as defined in the Loan Agreement) which accrues on the Performance Sums from the date of written demand for payment under this Guaranty from Lender to Guarantor until the Performance Sums are paid in full, plus (C) all costs, including, without limitation, all reasonable attorneys' fees, including any and all costs expended by Lender in connection with the initiation, prosecution and/or defense of foreclosure on the Property, but only if the Borrower contests such foreclosure in "bad faith", and expenses incurred by Lender in connection with collection of the Guaranteed Obligations. For purposes of the immediate preceding sentence, if there is any reasonable basis for which Borrower can contest such foreclosure, then it shall be deemed not to be in "bad faith".

(iii)"Loan Documents" shall have the same meaning as in the Loan Agreement.

(iv)"Secured Indebtedness" shall have the same meaning as in the Loan Agreement.

(b)Construction. Unless the context of this Guaranty clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, and the term "including" is not limiting. The words "hereof," "herein," "hereby," "hereunder," and other similar terms refer to this Guaranty as a whole and not to any particular provision of this Guaranty. Any reference herein to any of the Loan Documents includes any and all alterations, amendments, extensions, modifications, renewals, or supplements thereto or thereof, as applicable. Neither this Guaranty nor any uncertainty or ambiguity herein shall be construed or resolved against Lender or Guarantor, whether under any rule of construction or otherwise. On the contrary, this Guaranty has been reviewed by Guarantor, Lender, and their respective counsel, and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of Lender and Guarantor.

2.Guaranteed Obligations. Guarantor hereby irrevocably and unconditionally guarantees to Lender, as and for Guarantor's own debt, until full and final performance and indefeasible payment thereof has been made, payment and performance of the Guaranteed Obligations, in each case when and as the same shall become due and/or payable, it being the intent of Guarantor that the guaranty set forth herein shall be a guaranty of payment and performance and not a guaranty of collection.

3.Performance Under This Guaranty. In the event of default by Borrower in payment or performance of the Guaranteed Obligations, or any part thereof, when such Guaranteed Obligations are due to be paid or performed by Borrower, upon written demand by Lender to Guarantor, Guarantor shall promptly pay or perform the Guaranteed Obligations then due in full, and if not paid within ten (10) days after written demand therefor, shall bear interest from the date of such demand until paid at the rate

2

GUARANTY OF RECOURSE OBLIGATIONS

equal to the lesser of (a) the Default Rate (as defined in the Loan Agreement) and (b) the maximum rate then permitted for the parties to contract for under applicable law.

4.Primary Obligations. This Guaranty is a primary and original obligation of Guarantor, is not merely the creation of a surety relationship, and is an absolute, continuing, unconditional, and irrevocable guaranty of payment and performance which shall remain in full force and effect without respect to future changes in conditions, including any change of law or any invalidity or irregularity with respect to the issuance of the Loan Documents. Each person and entity executing this Guaranty as Guarantor agrees that it is directly, jointly and severally with any and all other guarantors of the Guaranteed Obligations, liable to Lender, that the obligations of Guarantor hereunder are independent of the obligations of Borrower or any other guarantor, and that a separate action may be brought against each person or entity signing as Guarantor whether such action is brought against Borrower or any other guarantor or whether Borrower or any such other guarantor is joined in such action. Guarantor agrees that its liability hereunder shall be immediate and shall not be contingent upon the exercise or enforcement by Lender of whatever remedies it may have against Borrower or any other guarantor, or the enforcement of any lien or realization upon any security Lender may at any time possess. Guarantor agrees that any release which may be given by Lender to Borrower or any other guarantor shall not release Guarantor. Guarantor consents and agrees that Lender shall be under no obligation to marshal any assets of Borrower or any other guarantor in favor of Guarantor, or against or in payment of any or all of the Guaranteed Obligations.

5.Waivers.

(a)Guarantor absolutely, unconditionally, knowingly, and expressly waives:

(i)(A) Notice of acceptance hereof; (B) notice of any loans or other financial accommodations made or extended under the Loan Documents or the creation or existence of any Guaranteed Obligations; (C) notice of the amount of the Guaranteed Obligations, subject, however, to Guarantor's right to make inquiry of Lender to ascertain the amount of the Guaranteed Obligations at any reasonable time; (D) notice of any adverse change in the financial condition of Borrower or of any other fact that might increase Guarantor's risk hereunder; (E) notice of presentment for payment, demand, protest, and notice thereof as to any promissory notes or other instruments among the Loan Documents; (F) notice of any event of default under the Loan Documents; and (G) all other notices (except if such notice is specifically required to be given to Guarantor hereunder or under any Loan Document to which Guarantor is a party) and demands to which Guarantor might otherwise be entitled.

(ii)To the extent permitted by applicable law, Guarantor absolutely, unconditionally, irrevocably, knowingly, and expressly waives Guarantor's right by statute or otherwise to require Lender to institute suit against Borrower or to exhaust any rights and remedies which Lender has or may have against Borrower or any collateral for the Guaranteed Obligations provided by Borrower,

3

GUARANTY OF RECOURSE OBLIGATIONS

Guarantor or any third party. In this regard, Guarantor agrees that it is bound to the payment of all Guaranteed Obligations, whether now existing or hereafter accruing, as fully as if such Guaranteed Obligations were directly owing to Lender by Guarantor. Guarantor further waives any defense arising by reason of any disability or other defense (other than the defense that the Guaranteed Obligations shall have been fully and finally performed and indefeasibly paid) of Borrower or by reason of the cessation from any cause whatsoever of the liability of Borrower in respect thereof.

(iii)To the extent permitted by applicable law, Guarantor absolutely, unconditionally, irrevocably, knowingly, and expressly waives (A) any rights to assert against Lender any defense (legal or equitable), set-off, counterclaim, or claim which Guarantor may now or at any time hereafter have against Borrower or any other party liable to Lender; (B) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guaranteed Obligations or any security therefor; (C) any defense Guarantor has to performance hereunder, and any right Guarantor has to be exonerated, arising by reason of: the impairment or suspension of Lender's rights or remedies against Borrower; the alteration by Lender of the Guaranteed Obligations; any discharge of the Guaranteed Obligations by operation of law as a result of Lender's intervention or omission; or the acceptance by Lender of anything in partial satisfaction of the Guaranteed Obligations; (D) the benefit of any statute of limitations affecting Guarantor's liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Guaranteed Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to Guarantor's liability hereunder; and (E) any right by statute or otherwise to terminate or revoke this Guaranty.

(b)Guarantor absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of or deriving from (i)  any claim or defense based upon an election of remedies by Lender, including any claim or defense based upon (i) an election of remedies by Lender; or (ii) any election by Lender under Bankruptcy Code Section 1111(b) to limit the amount of, or any collateral securing, its claim against Borrower. If acceleration of the time for payment by Borrower of all or any portion of the indebtedness is stayed upon the insolvency, bankruptcy or reorganization of Borrower, to the extent permitted by applicable law, the Guaranteed Obligations shall nonetheless be payable by Guarantor hereunder. Guarantor agrees that it shall remain liable for the Guaranteed Obligations in the event that any payment by Borrower to Lender is deemed a preferential payment under bankruptcy or insolvency law.

(c)If any of the Guaranteed Obligations at any time are secured by a mortgage or deed of trust upon real property, Lender may elect, in its sole discretion, upon the occurrence, and during the continuance of, a default with respect to the Guaranteed Obligations, to foreclose such mortgage or deed of trust judicially or nonjudicially in any manner permitted by law, before or after enforcing the Loan Documents, without diminishing or affecting the liability of Guarantor hereunder except to the extent the Guaranteed Obligations are repaid with the proceeds of such foreclosure.

4

GUARANTY OF RECOURSE OBLIGATIONS

Understanding the foregoing, and understanding that Guarantor is hereby relinquishing a defense to the enforceability of the Loan Documents, Guarantor hereby waives any right to assert against Lender any defense to the enforcement of the Loan Documents, whether denominated "estoppel" or otherwise, based on or arising from an election by Lender nonjudicially to foreclose any such mortgage or deed of trust. Guarantor understands that the effect of the foregoing waiver may be that Guarantor might have liability hereunder for amounts with respect to which Guarantor may be left without rights of subrogation, reimbursement, contribution, or indemnity against Borrower or other guarantors or sureties.

(d)FURTHER, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS GUARANTY, GUARANTOR HEREBY IRREVOCABLY AGREES THAT, UNTIL PAYMENT IN FULL TO LENDER OF THE SECURED INDEBTEDNESS AND THE GUARANTEED OBLIGATIONS, GUARANTOR SHALL HAVE NO RIGHT TO RECOVER FROM BORROWER ANY CLAIMS GUARANTOR HAS OR MIGHT HAVE AGAINST BORROWER (AS SUCH TERM "CLAIM" IS DEFINED IN BANKRUPTCY CODE 11 U.S.C. §101[5] AS AMENDED FROM TIME TO TIME) IN CONNECTION WITH PAYMENTS MADE BY OR ON BEHALF OF GUARANTOR TO LENDER UNDER THIS GUARANTY AGREEMENT INCLUDING, WITHOUT IMPLIED LIMITATION, ALL RIGHTS GUARANTOR MAY NOW OR HEREAFTER HAVE UNDER ANY AGREEMENT OR AT LAW OR IN EQUITY (INCLUDING, WITHOUT LIMITATION, ANY LAW SUBROGATING THE GUARANTOR TO THE RIGHTS OF LENDER) TO ASSERT ANY CLAIM AGAINST OR SEEK CONTRIBUTION, INDEMNIFICATION OR ANY OTHER FORM OF REIMBURSEMENT FROM BORROWER OR ANY OTHER PARTY LIABLE FOR PAYMENT OF ANY OR ALL OF THE SECURED INDEBTEDNESS.

6.Releases. Guarantor consents and agrees that, without notice to or by Guarantor and without affecting or impairing the obligations of Guarantor hereunder, Lender may, by action or inaction:

(a)Compromise, settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not enforce this Guaranty, the other Loan Documents, or any part thereof, with respect to Borrower or any other person or entity;

(b)Release Borrower or any other person or entity or grant other indulgences to Borrower or any other person or entity in respect thereof;

(c)Amend or modify in any manner and at any time (or from time to time) any of the Loan Documents; or

(d)Release or substitute any other guarantor, if any, of the Guaranteed Obligations, or enforce, exchange, release, or waive any security for the

5

GUARANTY OF RECOURSE OBLIGATIONS

Guaranteed Obligations or any other guaranty of the Guaranteed Obligations, or any portion thereof.

7.Obligations Unaffected. Guarantor hereby agrees that its obligations under this Guaranty shall not be released, discharged, diminished, impaired, reduced, or affected for any reason or by the occurrence of any event, including, without limitation, one or more of the following events, whether or not with notice to or the consent of Guarantor:

(a)The dissolution, insolvency, or bankruptcy of Borrower, Guarantor, or any other party at any time liable for the payment of any or all of the Secured Indebtedness;

(b)Any payment by Borrower or any other party to Lender is held to constitute a preference under applicable bankruptcy or insolvency law or if for any other reason Lender is required to refund any payment or pay the amount thereof to someone else;

(c)The non‑perfection of any security interest or lien securing any or all of the Secured Indebtedness;

(d)Any impairment of any collateral securing any or all of the Secured Indebtedness;

(e)The failure of Lender to sell any collateral securing any or all of the Secured Indebtedness in a commercially reasonable manner or as otherwise required by law;

(f)Any change in the corporate, limited liability company, or partnership existence, structure, or ownership of Borrower; or

(g)Any other circumstance which might otherwise constitute a defense available to, or discharge of, Borrower or Guarantor, or any other party liable for any or all of the Secured Indebtedness or the Guaranteed Obligations.

8.No Election. Lender shall have all of the rights to seek recourse against Guarantor to the fullest extent provided for herein, and no election by Lender to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender's right to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in writing. Specifically, but without limiting the generality of the foregoing, no action or proceeding by Lender under any document or instrument evidencing the Guaranteed Obligations shall serve to diminish the liability of Guarantor under this Guaranty except to the extent that Lender finally and unconditionally shall have realized indefeasible payment by such action or proceeding.

9.Indefeasible Payment. The Guaranteed Obligations and the Secured Indebtedness shall not be considered indefeasibly paid for purposes of this

6

GUARANTY OF RECOURSE OBLIGATIONS

Guaranty unless and until all payments to Lender are no longer subject to any right on the part of any person or entity, including Borrower, Borrower as a debtor in possession, or any trustee (whether appointed under the Bankruptcy Code or otherwise) of any of Borrower's assets to invalidate or set aside such payments or to seek to recoup the amount of such payments or any portion thereof, or to declare same to be fraudulent or preferential. Until such full and final performance and indefeasible payment of the Guaranteed Obligations whether by Guarantor or Borrower, Lender shall have no obligation whatsoever to transfer or assign its interest in the Loan Documents to Guarantor. In the event that, for any reason, any portion of such payments to Lender is set aside or restored, whether voluntarily or involuntarily, after the making thereof, then the obligation intended to be satisfied thereby shall be revived and continued in full force and effect as if said payment or payments had not been made, and Guarantor shall be liable for the full amount Lender is required to repay plus any and all costs and expenses (including attorneys' fees and expenses incurred pursuant to proceedings arising under the Bankruptcy Code) paid by Lender in connection therewith.

10.Financial Condition of Borrower. Guarantor represents and warrants to Lender that Guarantor is currently informed of the financial condition of Borrower and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations. Guarantor further acknowledges that Guarantor has read and understands the terms and conditions of the Loan Documents. Guarantor hereby acknowledges that it is Guarantor's obligation to keep informed of Borrower's financial condition, the financial condition of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Guaranteed Obligations.

11.Representations, Warranties and Covenants. Guarantor represents and warrants to and agrees with Lender as follows:

(a)Guarantor has the power and authority and legal right to execute, deliver and perform its obligations under this Guaranty. This Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement of creditors' rights.

(b)The execution, delivery, and performance by Guarantor of this Guaranty do not and will not violate or conflict with any law, rule, or regulation or any order, writ, injunction, or decree of any court, governmental authority or agency, or arbitrator and do not and will not conflict with, result in a breach of, or constitute a default under, or result in the imposition of any lien upon any assets of Guarantor pursuant to the provisions of Guarantor's operating agreement or other organizational documents of Guarantor, or any indenture, mortgage, deed of trust, security agreement, franchise, permit, license, or other instrument or agreement to which Guarantor or its properties are bound.

(c)No authorization, approval, or consent of, and no filing or registration with, any court, governmental authority, or third party is necessary for the

7

GUARANTY OF RECOURSE OBLIGATIONS

execution, delivery, or performance by Guarantor of this Guaranty or the validity or enforceability hereof.

(d)The value of the consideration received and to be received by Guarantor as a result of Lender making extensions of credit to Borrower and Guarantor executing and delivering this Guaranty is reasonably worth at least as much as the liability and obligations of Guarantor hereunder, and such liability and obligations and such extensions of credit have benefited and may reasonably be expected to benefit Guarantor directly and indirectly.

(e)Guarantor has, independently and without reliance upon Lender and based upon such documents and information as Guarantor has deemed appropriate, made its own analysis and decision to enter into this Guaranty.

(f)To Guarantor's knowledge, except as may have been previously disclosed in writing to Lender, there is no action, proceeding or investigation pending or, to the knowledge of Guarantor, threatened or affecting Guarantor, which may materially adversely affect Guarantor's ability to fulfill Guarantor's obligations under this Guaranty. There are no judgments or orders for payment of money against Guarantor, which may materially adversely affect Guarantor's ability to fulfill Guarantor's obligations under this Guaranty. Guarantor is not in default under any agreement which default may materially adversely affect Guarantor's ability to fulfill Guarantor's obligations under this Guaranty.

(g)Guarantor covenants and agrees that, as long as the Secured Indebtedness or the Guaranteed Obligations or any part thereof is outstanding:

(i)Guarantor will furnish to Lender as soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year of Guarantor, beginning with the fiscal year ending December 31, 2017 (i) a copy of the certified financial statements of Guarantor for such fiscal year prepared by an authorized representative approved by Lender and certified by Guarantor to its best knowledge, provided, however, that in the event that audited financial statements for Guarantor are prepared by an independent certified public accountant, Guarantor shall promptly deliver Lender a copy of said audited financial statements of Guarantor and (ii) a certificate of Guarantor to Lender stating, to Guarantor's best knowledge, that no default under this Guaranty and no event which with notice or lapse of time or both would be a default under this Guaranty has occurred and is continuing, or if in Guarantor's opinion a default under this Guaranty has occurred and is continuing, a statement as to the nature thereof.

(ii)Guarantor will obtain at any time and from time to time all authorizations, licenses, consents or approvals as shall now or hereafter be necessary or desirable under all applicable laws or regulations or otherwise in connection with the execution, delivery and performance of this Guaranty and will promptly furnish copies thereof to Lender.

8

GUARANTY OF RECOURSE OBLIGATIONS

(iii)Except for transfers permitted under the Loan Agreement and the other Loan Documents, Guarantor will at all times own directly or indirectly and free and clear of all liens and encumbrances whatsoever at least the same percentage interest in Borrower, if any, as its owns directly or indirectly on the date hereof.

12.Subordination.

(a)Guarantor hereby agrees that the Subordinated Indebtedness (as hereinafter defined) is deferred, postponed in favor of and subordinated to, and shall be junior in right of payment to, the prior indefeasible payment in full, in cash, of the Guaranteed Obligations, the Secured Indebtedness and satisfaction of all obligations of Borrower to Lender under the Loan Documents. If any sums shall be paid to Guarantor by Borrower or any other person or entity on account of the Subordinated Indebtedness, such sums shall be held in trust by Guarantor for the benefit of Lender and shall forthwith be paid to Lender without affecting the liability of Guarantor under this Guaranty Agreement and may be applied by Lender against the Indebtedness or the Guaranteed Obligations in such order and manner as Lender may determine in its sole discretion. Upon the request of Lender, Guarantor shall execute, deliver, and endorse to Lender such documents and instruments as Lender may request to perfect, preserve, and enforce its rights hereunder. For purposes of this Guaranty, the term "Subordinated Indebtedness" means all indebtedness, liabilities, and obligations of Borrower to Guarantor, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such indebtedness, liabilities, or obligations are evidenced by a note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor; provided, however, that the term "Subordinated Indebtedness" shall not mean or include any distributions by Borrower to its constituent members or partners, direct or indirect (including Guarantor) pursuant to the formation documents of Borrower at any time when no Event of Default (as defined in the Loan Agreement) exists.

(b)Guarantor agrees that any and all liens, security interests, judgment liens, charges, or other encumbrances upon Borrower's assets securing payment of any Subordinated Indebtedness shall be and remain inferior and subordinate to (i) any and all liens, security interests, judgment liens, charges, or other encumbrances upon Borrower's assets securing payment of the Secured Indebtedness or any part thereof, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attached and (ii) satisfaction of all obligations of Borrower to Lender under the Loan Documents. Without the prior written consent of Lender until the Secured Indebtedness has been paid in full, Guarantor shall not (1) file suit against Borrower or exercise or enforce any other creditor's right it may have against Borrower, or (2) foreclose, repossess, sequester, or otherwise take steps or institute any action or proceedings (judicial or otherwise,

9

GUARANTY OF RECOURSE OBLIGATIONS

including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, security interests, collateral rights, judgments or other encumbrances held by Guarantor on assets of Borrower.

(c)In the event of any receivership, bankruptcy, reorganization, rearrangement, debtor's relief, or other insolvency proceeding involving Borrower as debtor, Lender shall have the right to prove and vote any claim under the Subordinated Indebtedness and to receive directly from the receiver, trustee or other court custodian all dividends, distributions, and payments made in respect of the Subordinated Indebtedness. Lender may apply any such dividends, distributions, and payments against the Guaranteed Obligations in such order and manner as Lender may determine in its sole discretion. Guarantor hereby appoints Lender as Guarantor's attorney‑in‑fact, which appointment is coupled with an interest and is irrevocable, to enable Lender to act in the place of Guarantor with respect to (i) any claim under the Subordinated Indebtedness or (ii) the receipt of any such dividends, distributions and payments.

(d)Guarantor agrees that all promissory notes, accounts receivable, ledgers, records, or any other evidence of Subordinated Indebtedness shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty.

13.Payments; Application. All payments to be made hereunder by Guarantor shall be made in lawful money of the United States of America at the time of payment, shall be made in immediately available funds, and shall be made without deduction (whether for taxes or otherwise) or offset. All payments made by Guarantor hereunder shall be applied as follows: first, to all costs and expenses (including attorneys' fees and expenses and attorneys' fees and expenses incurred pursuant to proceedings arising under the Bankruptcy Code) incurred by Lender in enforcing this Guaranty or in collecting the Guaranteed Obligations; second, to all accrued and unpaid interest, premium, if any, and fees owing to Lender; and third, to the balance of the Guaranteed Obligations.

14.Attorneys' Fees and Costs. Guarantor agrees to pay, on demand, all attorneys' fees (including attorneys' fees incurred pursuant to proceedings arising under the Bankruptcy Code) and all other costs and expenses which may be incurred by Lender in the enforcement of this Guaranty (including those brought relating to proceedings pursuant to 11 U.S.C.) or in any way arising out of, or consequential to the protection, assertion, or enforcement of the Guaranteed Obligations (or any security therefor), whether or not suit is brought.

15.Notices. All notices or demands by Guarantor or Lender to the other relating to this Guaranty shall be in writing and either personally served or sent by registered or certified mail, postage prepaid, return receipt requested, or by recognized courier service which provides return receipts, and shall be deemed delivered on the date of actual delivery or refusal to accept delivery as evidenced by the return receipt. Unless

10

GUARANTY OF RECOURSE OBLIGATIONS

otherwise specified in a notice sent or delivered in accordance with the provisions of this section, such writing shall be sent as follows:

If to Lender: Metropolitan Life Insurance Company

One MetLife Way

Whippany, New Jersey 07981-1449

Attention: Senior Vice President, Real Estate Investments

With a copy to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Vice President

With a copy to: Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Associate General Counsel

If to Guarantor: KBSGI REIT PROPERTIES, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attn: Clint Copulos, Senior Vice President of Asset     

Management

With a copy to: KBSGI REIT PROPERTIES, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attn: Todd Smith, VP, Controller REIT Corporate             

Accounting

And to: KBSGI REIT PROPERTIES, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attn: Bryce Lin, Director of Finance and Reporting

With a copy to:        KBSGI REIT Properties, LLC

c/o KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention: James Chiboucas, Esq., Vice Chairman & Chief

Legal Officer

11

GUARANTY OF RECOURSE OBLIGATIONS

And to: Greenberg Traurig

3161 Michelson Drive, Suite 1000

Irvine, California 92612

Attention: Bruce Fischer, Esq.

16.Cumulative Remedies; Other Liability of Guarantor or Borrower.

(a)No remedy under this Guaranty or under any Loan Document is intended to be exclusive of any other remedy, but each and every remedy shall be cumulative and in addition to any and every other remedy given hereunder or under any Loan Document, and those provided by law or in equity. No delay or omission by Lender to exercise any right, power, or privilege under this Guaranty shall impair any such right nor be construed to be a waiver thereof. No failure on the part of Lender to exercise, and no delay in exercising, any right, power, or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

(b)If Guarantor becomes liable for any indebtedness owing by Borrower to Lender by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby, and the rights of Lender hereunder shall be in addition to any and all other rights that Lender may ever have against Guarantor.

17.Severability of Provisions. If any provision of this Guaranty is for any reason held to be invalid, illegal or unenforceable in any respect, that provision shall not affect the validity, legality or enforceability of any other provision of this Guaranty.

18.Entire Agreement; Amendments. This Guaranty constitutes the entire agreement between Guarantor and Lender pertaining to the subject matter contained herein. This Guaranty may not be altered, amended, or modified, nor may any provision hereof be waived or noncompliance therewith consented to, except by means of a writing executed by both Guarantor and Lender. Any such alteration, amendment, modification, waiver, or consent shall be effective only to the extent specified therein and for the specific purpose for which given. No course of dealing and no delay or waiver of any right or default under this Guaranty shall be deemed a waiver of any other, similar or dissimilar right or default or otherwise prejudice the rights and remedies hereunder.

19.Successors and Assigns. This Guaranty shall be binding upon Guarantor's successors and permitted assigns and shall inure to the benefit of the successors and assigns of Lender; provided, however, Guarantor shall not assign this Guaranty or delegate any of its duties hereunder without Lender's prior written consent. Any assignment without the consent of Lender shall be absolutely void. In the event of any assignment or other transfer of rights by Lender, the rights and benefits herein conferred upon Lender shall automatically extend to and be vested in such assignee or other transferee.

12

GUARANTY OF RECOURSE OBLIGATIONS

20.No Third-Party Beneficiary. This Guaranty is intended solely for the benefit of Lender and its successors and assigns, and no third party shall have any rights or interest in this Guaranty.

21.Choice of Law and Venue. The validity of this Guaranty, its construction, interpretation, and enforcement, and the rights of Guarantor and Lender, shall be determined under, governed by, and construed in accordance with the internal laws of the State of Oregon, without regard to principles of conflicts of law. To the maximum extent permitted by law, Guarantor hereby agrees that all actions or proceedings arising in connection with this Guaranty may be tried and determined in the state and federal courts located in the County of Multnomah, State of Oregon, or, at the sole option of Lender, in any other court in which Lender shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy. To the maximum extent permitted by law, Guarantor hereby expressly waives any right it may have to assert the doctrine of forumnonconveniens or to object to venue to the extent any proceeding is brought in accordance with this Section.

22.Waiver of Jury Trial. To the maximum extent permitted by law, Guarantor hereby absolutely, knowingly, unconditionally, and expressly waives any right to trial by jury of any action, cause of action, claim, demand, or proceeding arising under or with respect to this Guaranty, or in any way connected with, related to, or incidental to the dealings of Guarantor and Lender with respect to this Guaranty, or the transactions related hereto, in each case whether now existing or hereafter arising, and whether sounding in contract, tort, or otherwise. To the maximum extent permitted by law, Guarantor hereby agrees that any such action, cause of action, claim, demand, or proceeding shall be decided by a court trial without a jury and that Lender may file an original counterpart of this section with any court or other tribunal as written evidence of the consent of Guarantor to the waiver of its right to trial by jury.

23.Understandings With Respect to Waivers and Consents. Guarantor warrants and agrees that each of the waivers and consents set forth are made after consultation with legal counsel and with full knowledge of their significance and consequences, with the understanding that events giving rise to a defense or right may diminish, destroy, or otherwise adversely affect rights which Guarantor otherwise may have against the Borrower, or against any collateral, and that, under the circumstances the waivers and consents herein given are reasonable and not contrary to public policy or law. If any of the waivers or consents is determined to be unenforceable under applicable law, such waiver and/or consent shall be effective to the maximum extent permitted by law.

24.Counterparts. This Guaranty may be executed in one or more counterparts by some or all of the parties hereto, each of which counterparts shall be an original and all of which together shall constitute a single agreement of Guaranty. The failure of any party to execute this Guaranty, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

13

GUARANTY OF RECOURSE OBLIGATIONS

25.Statute of Limitations. Any acknowledgment or new promise, whether by payment of principal or interest or otherwise and whether by Borrower or others (including Guarantor), with respect to any of the Secured Indebtedness or Guaranteed Obligations shall, if the statute of limitations in favor of Guarantor against Lender shall have commenced to run, toll the running of such statute of limitations and, if the period of such statute of limitations shall have expired, prevent the operation of such statute of limitations.

26.Material Inducement; No Conditions to Effectiveness. Guarantor recognizes that Lender is relying upon this Guaranty and the undertakings of Guarantor hereunder in making extensions of credit to Borrower and further recognizes that the execution and delivery of this Guaranty is a material inducement to Lender in making extensions of credit to Borrower. Guarantor hereby acknowledges that there are no conditions to the full effectiveness of this Guaranty.

27.Limitation on Constituent Liability. Notwithstanding anything stated to the contrary in this Guaranty, under no circumstances shall the constituent partners, members, or shareholders in Guarantor (direct or indirect) have any liability for the payment or performance of any of Guarantor's obligations hereunder.

28.Defined Terms. Capitalized terms which are not defined in this Guaranty shall have the meanings set forth in the Loan Agreement.

29.ORAL LOAN AGREEMENTS. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY LENDER TO BE ENFORCEABLE.

[Remainder of page intentionally left blank]

14

GUARANTY OF RECOURSE OBLIGATIONS

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty of Recourse Obligations as of the date first set forth above.

KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

GUARANTY OF RECOURSE OBLIGATIONS

EX-10.10

Exhibit 10.10

PROMISSORY NOTE

DEFINED TERMS

Execution Date: January 18, 2018	City and State of Signing: Newport Beach, California
Loan Amount:   The Loan shall be in a maximum aggregate principal amount of up to $51,400,000, which shall consist of an Initial Loan Amount (as defined in the Loan Agreement) of $45,000,000, and the Future Loan Amount Due To Conditional Advances (as defined in the Loan Agreement) in an amount up to, but not exceeding, $6,400,000 (defined in the Loan Agreement as the "Maximum Future Loan Amount"). The Future Loan Amount Due To Conditional Advances shall be funded in installments as provided in the Loan Agreement.
Borrower: KBSGI 421 SW 6TH AVENUE, LLC,a Delaware limited liability company
Borrower’s Address: KBSGI 421 SW 6th Avenue, LLC c/o KBS Capital Advisors LLC 800 Newport Center Drive, Suite 700 Newport Beach, California 92660 Attn: Clint Copulos, Vice President of Asset Management With a copy to: KBSGI 421 SW 6th Avenue, LLC c/o KBS Capital Advisors LLC 800 Newport Center Drive, Suite 700 Newport Beach, California 92660 Attn: Todd Smith, VP, Controller REIT Corporate Accounting And to: KBSGI 421 SW 6th Avenue, LLC c/o KBS Capital Advisors LLC 800 Newport Center Drive, Suite 700 Newport Beach, California 92660 Attn: Bryce Lin, Director of Finance and Reporting And to: Greenberg Traurig 3161 Michelson Drive, Suite 1000 Irvine, California 92612 Attention: Bruce Fischer, Esq.

Promissory Note – Page 1

Holder: METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation

Holder’s Address:

Metropolitan Life Insurance Company

One MetLife Way

Whippany, New Jersey 07981-1449

Attention: Senior Vice President

   Real Estate Investors

   Re: 125 E. John Carpenter Freeway and

   5100 N. O’Connor Blvd.

With a copy to:

Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Vice President

And to:

Metropolitan Life Insurance Company

425 Market Street, Suite 1050

San Francisco, California 94105

Attention: Associate General Counsel

Note: This Promissory Note.

Security Instrument: Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of the Execution Date granted by Borrower to the Trustee named in the Deed of Trust for the benefit of Holderand all renewals, amendments, modifications, restatements and extensions thereof.

Loan Agreement: Loan Agreement dated as of the Execution Date by and between Borrower and Holderand all renewals, amendments, modifications, restatements and extensions thereof.

Loan Documents: This Note, the Loan Agreement, the Security Instrument and any other documents related to this Note, the Loan Agreement and/or the Security Instrument and all renewals, amendments, modifications, restatements and extensions of these documents.  Guaranty: Guaranty of Recourse Obligations dated as of the Execution Date and executed by Liable Parties (as defined in the Loan Agreement) in favor of Holder andall renewals, amendments, modifications, restatements and extensions thereof.

 Indemnity Agreement: Unsecured Indemnity Agreement dated as of the Execution Date and executed by Borrower in favor of Holder and all renewals, amendments, modifications, restatements and extensions thereof.

The Indemnity Agreement and Guaranty are not Loan Documents and shall survive repayment of the Loan or other termination of the Loan Documents.

Promissory Note – Page 2

FOR VALUE RECEIVED, Borrower promises to pay to the order of Holder, at Holder's Address or such other place as Holder may from time to time designate, the Loan Amount with interest payable in the manner described below, in money of the United States of America that at the time of payment shall be legal tender for payment of all obligations.

Capitalized terms which are not defined in this Note shall have the meanings set forth in the Loan Agreement.

1.Payment of Principal and Interest. Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding at the rates and at the times specified in Article II of the Loan Agreement and the outstanding balance of the principal sum of this Note and, all accrued and unpaid interest thereon, and all other sums evidenced by this Note or secured by the Security Instrument and/or any other Loan Documents as well as any future advances under the Security Instrument that may be made to or on behalf of Borrower by Holder following the Advance Date shall be due and payable on the Maturity Date.

2.Security. The covenants of the Security Instrument are incorporated by reference into this Note. This Note shall evidence, and the Security Instrument shall secure, the Secured Indebtedness.

3.Acceleration Upon Default. The provisions of Section 2.6 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

4.Limitation on Interest. The provisions of Section 2.8 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

5.Prepayment. Borrower shall not have the right to prepay all or any portion of the Loan Amount at any time during the term of this Note except as expressly set forth in the Loan Agreement.

6.Exculpation. The provisions of Section 12.20 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

7.Waiver by Borrower. Borrower and others who may become liable for the payment of all or any part of this Note, and each of them, waive diligence, demand, presentment for payment, notice of nonpayment, protest, notice of dishonor and notice of protest, notice of intent to accelerate and notice of acceleration and specifically consent to and waive notice of any amendments, modifications, renewals or extensions of this Note, including the granting of extension of time for payment, whether made to or in favor of Borrower or any other person or persons.

Promissory Note – Page 3

8.Exercise of Rights. No single or partial exercise by Holder, or delay or omission in the exercise by Holder, of any right or remedy under the Loan Documents shall waive or limit the exercise of any such right or remedy. Holder shall at all times have the right to proceed against any portion of or interest in the Property in the manner that Holder may deem appropriate, without waiving any other rights or remedies. The release of any party under this Note shall not operate to release any other party which is liable under this Note and/or under the other Loan Documents or under the Indemnity Agreement.

9.Fees and Expenses. If Borrower defaults under this Note, Borrower shall be personally liable for and shall pay to Holder, in addition to the sums stated above, the reasonable costs and expenses of enforcement and collection, including a reasonable sum as an attorney's fee. This obligation is not limited by Section 12.20 of the Loan Agreement.

10.No Amendments. This Note may not be modified or amended except in a writing executed by Borrower and Holder. No waivers shall be effective unless they are set forth in a writing signed by the party which is waiving a right. This Note and the other Loan Documents are the final expression of the lending relationship between Borrower and Holder.

11.Governing Law. This Note is to be construed and enforced in accordance with the laws of the State.

12.Construction. The words "Borrower" and "Holder" shall be deemed to include their respective heirs, representatives, successors and assigns, and shall denote the singular and/or plural, and the masculine and/or feminine, and natural and/or artificial persons, as appropriate. The provisions of this Note shall remain in full force and effect notwithstanding any changes in the shareholders, partners or members of Borrower. If more than one party is Borrower, the obligations of each party shall be joint and several. The captions in this Note are inserted only for convenience of reference and do not expand, limit or define the scope or intent of any section of this Note.

13.Notices. All notices, demands, requests and consents permitted or required under this Note shall be given in the manner prescribed in the Loan Agreement.

14.Time of the Essence. Time shall be of the essence with respect to all of Borrower's obligations under this Note.

15.Severability. If any provision of this Note should be held unenforceable or void, then that provision shall be deemed separable from the remaining provisions and shall not affect the validity of this Note, except that if that provision relates to the payment of any monetary sum, then Holder may, at its option, declare the Secured Indebtedness (together with the prepayment fee, if any) immediately due and payable.

16.Members and Partners of Borrower. Notwithstanding anything stated to the contrary in this Note, excluding the obligations of Liable Party under the Guaranty Agreement, for which Liable Party shall remain liable, under no circumstances shall the

Promissory Note – Page 4

constituent partners, members or shareholders in Borrower (direct or indirect) have any liability for the payment or performance of any of Borrower’s obligations hereunder.

17.ORAL LOAN AGREEMENTS. UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY HOLDER CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY HOLDER TO BE ENFORCEABLE.

[NO FURTHER TEXT ON THIS PAGE]

Promissory Note – Page 5

IN WITNESS WHEREOF, THIS NOTE has been executed by Borrower as of the Execution Date.

BORROWER:

KBSGI 421 SW 6TH AVENUE, LLC,

a Delaware limited liability company

By: KBSGI REIT ACQUISITION II, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company,

its sole member

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

Promissory Note – Signature Page

EX-10.11

Exhibit 10.11

REAL ESTATE PROPERTY CO-MANAGEMENT AGREEMENT

This Real Estate Property Co-Management Agreement (“Agreement”) is made as of November 9, 2017, between KBSGI 213 West Institute Place, LLC, a Delaware limited liability company (“Owner”) acting through KBS REALTY ADVISORS, LLC, a Delaware limited liability company (“Owner’s Representative”) and KBS MANAGEMENT GROUP, LLC, a Delaware limited liability company (“Co-Manager”) with reference to the following facts:

A.Owner is the owner of, or is contemplating the acquisition of, the land and improvements commonly known as 213 West Institute Place located at 213 West Institute, Chicago, Illinois 60610 (the “Premises”). Owner has retained Cushman & Wakefield U.S., Inc., a Missouri corporation (“Manager”) to provide certain property management and operational services for the Premises, however, for the benefit of the Premises, Owner requires certain additional management services which Manager either does not provide, charges additional fees to provide, or is in conflict with providing.

B.Co-Manager represents that it is in the business of providing the management services described herein to the Premises and possesses the skills and experience necessary for the efficient first class management of the Premises.

Now, Therefore, Owner and Co-Manager agree as follows:

ARTICLE I
BASIC TERMS

1.1Effective Date: Co-Manager’s appointment under Article III shall become effective as of November 9, 2017, the (“Effective Date”), except that if this Agreement is executed by Owner in anticipation of acquiring the Premises, the Effective Date shall be the date of such acquisition, and Owner shall be under no obligation to Co-Manager unless Owner acquires the Premises.

1.2Term: The term of this Agreement (“Term”) is one (1) year from the Effective Date, and shall be deemed renewed for successive periods of one (1) year, subject at all times to the rights of termination set forth in Section 9.1.

1.3Role of Owner’s Representative: Owner’s Representative is the duly authorized representative of Owner for the purpose of this Agreement and all powers and rights of Owner under this Agreement shall be exercised by Owner’s Representative and all communications, remittances and things of any kind required to be delivered to Owner shall be delivered to Owner’s Representative.

1.4Co-Manager’s Bond or Commercial Crime Insurance Policy. Owner has approved the following bond or Commercial Crime Insurance Policy furnished by Co-Manager pursuant to Section 4.9.

1

Insurance Company:    Federal Insurance Company

Term:    2/15/17 – 2/15/18

Amount:    $5,000,000

Form:    Discovery

1.5Address of Owner’s Representative. Unless changed by notice to Co-Manager, the address of Owner’s Representative for notices under Section 11.2 shall be:

KBS Realty Advisors, LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

Attention:    Brett Merz, Senior Vice President

1.6Address of Co-Manager. Unless changed by notice to Owner, the address of Co-Manager for notices under Section 11.2 shall be:

KBS Management Group, LLC,

a Delaware limited liability company

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

1.7Co-Management Fee. Subject to Article IX, the co-management fee payable to Co-Manager for its Services under this Agreement (“Co-Management Fee”) shall be an amount per month equal to one percent (1.0%) of the Gross Revenues, as defined in Section 8.1, payable and actually collected for the month, subject to the limitations contained in Article IX.

1.8ERISA Requirements. If Owner is an employee benefit plan or a trust formed as a part of an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 check the following space: _____. If the space is checked, the provisions of Exhibit B attached to this Agreement are made a part of this Agreement by this reference. If the space is not checked Exhibit B shall not be applicable.

ARTICLE II

INDEX OF DEFINED TERMS AND EXHIBITS

Term	Where Defined
Effective Date	Section 1.1
Term	Section 1.2
Hazardous Wastes	Section 5.17
Co-Management Fee	Sections 1.7 and 9.1
Co-Manager	Introductory paragraph
Owner	Introductory paragraph
Owner’s Representative	Introductory paragraph
Premises	Recital A
Services	Section 4.1

2

Exhibit	Title	Reference
A	Duties of Co-Manager	Section 4.1
B	ERISA Requirements	Section 1.10

ARTICLE III

APPOINTMENT

Owner hereby appoints Co-Manager as the co-manager for the Premises as of the Effective Date, and hereby authorizes Co-Manager to exercise such powers with respect to the Premises as may be necessary for the performance of Co-Manager’s obligations under Article IV. Co-Manager hereby accepts such appointment on the terms and conditions hereinafter set forth for the Term specified in Section 1.2. Co-Manager shall have no right or authority, express or implied, to commit or otherwise obligate Owner in any manner whatsoever, except to the extent expressly provided in this Agreement. Co-Manager agrees to cooperate in good faith with Manager to ensure the efficient delivery of the Services under this Agreement.

ARTICLE IV

DUTIES OF CO-MANAGER

4.1General Duties.

(a)Co-Manager, on behalf of Owner, shall use its best efforts in the co-management of the Premises and shall comply with Owner’s instructions as set forth herein or as may from time to time be provided by Owner to Co-Manager. Co-Manager shall perform its duties in a first-class, professional, diligent, careful and vigilant manner and shall co-manage the Premises as a first-class facility. In connection therewith, Co-Manager shall implement, or cause to be implemented, the Owner’s decisions relating to this Agreement. Co-Manager shall at all times conform to the policies and programs established by Owner and the scope of Co-Manager’s authority shall be limited thereby. Co-Manager shall afford Owner the full benefit of the judgment, experience and advice of Co-Manager and Co-Manager’s organization with respect to the policies to be addressed pursuant to this Agreement, and the execution of its responsibilities in a diligent, careful and vigilant manner. In particular, Co-Manager shall have the duties and obligations set forth hereafter in this Article V and as further described in Exhibit A attached hereto (the “Services”).

4.2Utility and Service Contracts. Co-Manager may negotiate contracts on behalf of Owner for utilities and other services as are currently being furnished to the Premises for terms of not greater than one (1) year, unless otherwise approved by Owner in writing. All such service contracts shall be in the name of Owner, signed by Co-Manager as Owner’s authorized agent, and shall be terminable on thirty (30) days notice or less. Notwithstanding the foregoing, Owner or Owner’s consultants shall have the right to negotiate a master agreement for any and/or all utilities at the Premises.

3

4.3Employment of Personnel. All persons employed by Co-Manager in connection with providing Services under this Agreement shall either be employees of Co-Manager or independent contractors and shall not be employees of Owner. Subject to reimbursement pursuant to Section 8.2, Co-Manager shall select, employ, pay, supervise, direct and discharge all employees necessary for the operation and maintenance of the Premises, and use reasonable care in the selection and supervision of such employees. Co-Manager shall be responsible for complying with all laws, regulations and collective bargaining agreements affecting such employment. Co-Manager will be and will continue throughout the term of this Agreement to be an Equal Opportunity Employer.

(a)Co-Manager shall require that all contractors and consultants engaged by Co-Manager on behalf of Owner and brought onto the Premises have insurance coverage at the contractors’ or consultants’ expense, in the following minimum amounts:

(i)	Worker’s Compensation:	Statutory Amount
(ii)	Employer’s Liability:	$1,000,000 minimum
(iii)	Commercial General Liability:	$1,000,000 per Occurrence and $2,000,000 Aggregate for Bodily Injury and Property Damage.
(iv)	Comprehensive Automobile:	$1,000,000 each occurrence Liability Insurance combined single limit for bodily injury and property damage. Evidence should indicate that liability coverage evidenced extends to both owned and non-owned vehicles.

(b)With respect to items (i) through (iii) noted above in Section 4.3(a), all contractors and subcontractors performing work at/on the Premises shall name Owner as an additional insured to the Commercial General Liability insurance. Further, a waiver of subrogation endorsement to both the Commercial General Liability insurance policy and Workers Compensation insurance policy should be furnished in favor of Owner and Co-Manager. All certificates obtained by Co-Manager and furnished to Owner should evidence these items.

(c)Co-Manager shall obtain all necessary receipts, releases, waivers, discharges and assurances necessary to keep the Premises free of any mechanics’, laborers’, materials suppliers’ or vendors’ liens in connection with the Services related to this Agreement. All such documentation shall be in such form as required by Owner.

4.4Contracts with Third Parties.

(a)Co-Manager shall directly supervise and be responsible for all contractors and consultants hired by Co-Manager for the Premises. Excluding service agreements

4

referenced in an annual budget approved by Owner, all of such contractors shall be subject to Owner’s prior written approval. Co-Manager shall assure that any contractor or consultant performing work on the Premises maintains insurance satisfactory to Owner, including, but not limited to, Workers’ Compensation Insurance (and, when required by law, compulsory Non-Occupational Disability Insurance) and insurance against liability for injury to persons and property arising out of all such contractor’s operations naming Co-Manager, Owner and Owner’s Representative as additional insureds. Co-Manager shall obtain certificates of insurance for all such insurance before the work begins. Co-Manager shall furnish copies of the certificates to Owner if requested by Owner.

4.5Complaints and Notices.

(a)Co-Manager shall notify Owner promptly of: (i) any notice received by Co-Manager or known to Co-Manager of violation of any governmental requirements (and make recommendations regarding compliance therewith); (ii) any defect or unsafe condition in the Premises known to Co-Manager; (iii) any notice received by Co-Manager or known to Co-Manager of violation of covenants, conditions and restrictions affecting the Premises or noncompliance with loan documents affecting the Premises, if any; (iv) any fire, accident or other casualty or damage to the Premises; (v) any condemnation proceedings, rezoning or other governmental order, lawsuit or threat thereof involving the Premises; (vi) any violations relative to the leasing, use, repair and maintenance of the Premises under governmental laws, rules, regulations, ordinances or like provisions; (vii) defaults under any leases or other agreements affecting the Premises; or (viii) any violation of any insurance requirement. Co-Manager shall promptly deliver to Owner copies of any documentation in its possession relating to such matters. Co-Manager shall keep Owner reasonably informed of the status of the particular matter through the final resolution thereof. In the case of any fire or other damage to the Premises or violation or alleged violation of laws respecting Hazardous Wastes, Co-Manager shall immediately give telephonic notice thereof to Owner. Co-Manager shall retain in the records it maintains for the Premises copies of all supporting documentation with reference to such notices.

(b)Co-Manager shall promptly notify Owner and any insurance agent Owner may designate of any personal injury or property damage occurring to or claimed by any tenant or third party on or with respect to the Premises. Co-Manager shall promptly forward to Owner with copies to any insurance agent Owner may designate any summons, subpoena or other legal document served upon Co-Manager relating to the actual or alleged potential liability of Owner, of Co-Manager or of the Premises.

(c)Should any claim, demand, suit or other legal proceeding be made or instituted by any third party against Owner which arises out of any matters relating to the Premises, this Agreement or Co-Manager’s performance hereunder, Co-Manager shall give Owner all pertinent information, and reasonable assistance, in the defense or other disposition thereof.

5

4.6Compliance with Laws and Other Requirements.

(a)To the extent Co-Manager becomes aware of the Premises being in non-compliance (or is suspected to be in non-compliance) with any laws, ordinances, rules or regulations relating to the Premises, then Co-Manager shall promptly notify Owner in writing of such non-compliance or suspected non-compliance.

(b)To the extent Co-Manager becomes aware of the Premises being in non-compliance (or is suspected to be in non-compliance) with any insurance policy or insurance policies insuring Owner in relation to the Premises, then Co-Manager shall promptly notify Owner in writing of such non-compliance or suspected non-compliance.

4.7Property Review, Tax Review and Other Programs.

(a)Co-Manager shall participate in Owner’s property review programs to the extent reasonably requested by Owner. Such review shall include asset, investment, financial and strategy profiles in form and substance satisfactory to Owner and such assistance as Owner may request in connection with appraisals of the Premises. Co-Manager shall respond, within ten (10) days, to Owner’s management evaluation reports concerning actions to be taken by Co-Manager to correct or modify its management standards for the operations or financial services provided for the Premises.

(b)Co-Manager shall participate in Owner’s tax review program. Co-Manager shall check tax assessments and assist Owner, when requested by Owner, in efforts to reduce such taxes. Co-Manager shall promptly furnish Owner with copies of all assessment notices and receipted tax bills.

(c)Co-Manager shall comply with Owner’s energy conservation and Hazardous Materials policies, as communicated by Owner to Co-Manager, and submit energy consumption and Hazardous Materials reports for the Premises in accordance with Owner’s program for energy and Hazardous Materials audits and reviews.

4.8Confidentiality. Subject to applicable law or governmental regulation, Co-Manager and all persons retained or employed by Co-Manager in performing its Services shall hold in confidence and not use or disclose to others any confidential or proprietary information of Owner heretofore or hereafter disclosed to Co-Manager, including, but not limited to, any data, information, plans, programs, processes, costs, operations or tenants which may become known to Co-Manager in the performance of, or as a result of, its Services, except where Owner specifically authorizes Co-Manager to disclose any of the foregoing to others or such disclosure reasonably results from the performance of Co-Manager’s duties hereunder. Notwithstanding anything to the contrary set forth above, the foregoing shall not apply if such information (a) is disclosed upon Owner’s written request, (b) is available to the general public or known within the real estate industry, or (c) is required to be disclosed pursuant to law, court order or subpoena.

6

4.9Co-Manager’s Bond and Insurance.

(a)Co-Manager shall bond all of its employees who may handle or be responsible for monies or other property of Owner or shall obtain a Commercial Crime Insurance Policy covering the activities of such employees. Co-Manager shall maintain the bond or Commercial Crime Insurance Policy in such amount or in an amount equal to three times the monthly rent roll for the Premises, including the projected rent for vacant space, whichever is greater. Such bond or Commercial Crime Insurance Policy shall contain a loss payee endorsement in favor of Owner as it relates to the Premises. Co-Manager shall furnish a copy of an insurance certificate evidencing such bond or Commercial Crime Insurance Policy with loss payee endorsement in favor of Owner to Owner prior to the Effective Date and thereafter immediately upon renewing or replacing such bond or Commercial Crime Insurance Policy.

(b)Co-Manager shall maintain the following insurance in Co-Manager’s name applicable to Co-Manager’s activities under this Agreement:

(i)Commercial General Liability Insurance, in an amount equal to $1,000,000 per occurrence and $2,000,000 aggregate, covering all Premises operations, products and completed operations.

(ii)Automobile Liability Insurance, covering both owned and non-owned vehicles, in an amount equal to $1,000,000, combined single limit.

(iii)Workers Compensation Insurance, as required by law covering all Co-Manager’s employees (and, when required by law, compulsory Non-Occupational Disability Insurance). A waiver of subrogation in favor of Landlord shall be included.

(iv)Excess Liability in an amount of $5,000,000 per occurrence, and $5,000,000 aggregate over general liability and auto liability.

(v)Professional Liability in the amount of $5,000,000 per occurrence in the aggregate.

(vi)Employment Practices Liability in the amount of $2,000,000 per occurrence, and $2,000,000 aggregate. Coverage shall include wrongful termination, sexual harassment and violations of the Americans with Disabilities Act of 1990, as amended (defense costs coverage only). Coverage should also include: (1) third party claims, (2) wage and hour law coverage, and (3) punitive damages where legally allowed and to the extent of coverage under the policy.

With respect to items (i) through (vi) of Section 4.9 above, Co-Manager’s insurance should also provide a waiver of subrogation endorsement to both the Commercial General Liability insurance policy and Workers Compensation insurance policies in favor of Owner. All certificates provided by Co-Manager and furnished to Owner should evidence this. Owner shall be named as an additional insured on the Commercial General Liability and Excess Liability insurance policies. All the above policies will be primary and noncontributing with any other

7

insurance maintained by Co-Manager. Such insurance shall be underwritten by reputable, financially sound companies with a minimum A.M. Best Ratings of A:VIII. Co-Manager shall furnish Owner with certificates of insurance evidencing such insurance prior to the Effective Date and thereafter upon renewing or replacing such insurance.

4.10Hazardous Materials.

(a)Co-Manager shall not place, cause or knowingly permit to be placed on the Premises, other than in the ordinary course of performing its obligations under this Agreement and in compliance with applicable law, any hazardous or toxic materials or substances, as such terms are defined by federal, state or municipal statutes or regulations promulgated thereunder (collectively, “Hazardous Materials”). If Co-Manager discovers the existence of any Hazardous Materials on the Premises, Co-Manager shall immediately notify Owner. If such Hazardous Materials were placed or knowingly permitted to be placed on the Premises by Co-Manager, Co-Manager shall, at its cost, diligently arrange for and complete the immediate removal thereof in accordance with applicable laws and Owner’s directions. Except as expressly provided herein to the contrary, Co-Manager shall not be responsible for any Hazardous Materials present on the Premises prior to the Effective Date hereof, unless deposited thereon by Co-Manager, nor shall Co-Manager be responsible for any Hazardous Materials brought onto the Premises by a person other than Co-Manager, its agents or employees. Co-Manager shall immediately notify Owner of any notice received by Co-Manager from any governmental authority of any actual or threatened violation of any applicable laws, regulations or ordinances governing the use, storage or disposal of any Hazardous Materials and shall cooperate with Owner in responding to such notice and correcting or contesting any alleged violation at Owner’s expense.

(b)Co-Manager shall provide its employees, agents, consultants, governmental entities and the public with any notices or disclosures concerning Hazardous Materials associated with the Premises required to be delivered by Owner or Co-Manager under any applicable laws, including without limitation, any notices or disclosures concerning Hazardous Materials which Co-Manager has received from Owner. Owner shall have the right to review such notices and disclosures before their distribution or submission by Co-Manager and shall have the right, but not the obligation, to prescribe the form and content of any such notices or disclosures as long as the form and content prescribed by Owner comply with all applicable laws relating to such notices or disclosures. Owner shall provide Co-Manager with any notices or disclosures concerning Hazardous Materials associated with the Premises required to be delivered by Owner under any applicable laws.

(c)Without limiting any other indemnification obligations provided by law or specified in this Agreement, Co-Manager shall indemnify, defend (at Co-Manager’s sole cost and expense and with legal counsel approved by Owner which approval shall not be unreasonably withheld) and hold harmless Owner, its members (direct and indirect), officers, agents, employees, lenders and contractors from and against any and all claims, demands, losses, damage, disbursements, liabilities, obligations, fines, penalties, actions, causes of action, suits, costs and expenses, including without limitation, reasonable

8

attorneys’ fees and costs, and all other professionals’ or consultants’ expenses incurred in investigating, preparing for, serving as a witness in, or defending any action or proceeding, whether actually commenced or threatened, or in removing or remediating any Hazardous Materials on, under, from or about the Premises, arising out of or relating to, directly or indirectly, Co-Manager’s breach of any of the terms of this Section 4.10. This indemnity shall survive termination of this Agreement.

4.11Owner’s Insurance Coverage. Owner shall maintain all-risk form of property damage insurance including without limitation coverage against allied perils, vandalism, malicious mischief, sprinkler leakage and plate glass, in the amount of full replacement cost without coinsurance and containing such additional coverages, if any, as are customarily obtained in connection with the ownership and management of property similar to the Premises but in no event in an amount or containing coverages less than or of lesser quality or extent than that required by the terms of any mortgage or trust deed encumbering the Premises. In addition, Owner agrees to carry commercial general liability insurance on an occurrence form with a minimum limit of at least $1,000,000 per occurrence, $2,000,000 per location aggregate and at least $5,000,000 umbrella coverage, including contractual liability, elevator liability, steamboiler and such other insurance as may be necessary or appropriate for the protection of the interests of Owner and Co-Manager. The public liability, elevator liability, and contractual liability insurance must contain a severability of interest clause and coverage for Personal Injury Insurance. Each of Owner’s insurance policies shall be written with an insurance company or companies licensed to do business in the state where the Premises is located and who have a minimum Best Key rating of no less than A-VIII. Owner agrees to designate Co-Manager as an additional insured with Owner on the Commercial General and Umbrella Liability policies. This insurance shall be primary for Owner and Co-Manager with respect to the Premises. A certificate of each policy issued by the carrier shall be delivered by Owner to Co-Manager concurrently with Owner’s execution and delivery of this Agreement. Owner and Co-Manager shall use commercially reasonable efforts to have each policy provide that it will not be canceled or materially modified without at least ten (10) days prior written notice from the insurer to either Owner or Co-Manager in the event of cancellation for non-payment, and at least thirty (30) days prior written notice from the insurer to either Owner or Co-Manager in any other event. Each policy for fire or extended coverage insurance and all other forms of property damage insurance covering the Premises or personal property, fixtures or equipment located thereon shall contain an appropriate clause or endorsement whereby the insurer waives subrogation or consents to a waiver of the right of recovery against Co-Manager, and Owner hereby agrees that it will not make any claim against Co-Manager for any loss or damage to property of the type covered by such insurance.

ARTICLE V

RECORDS

5.1Records. Co-Manager agrees to keep proper records with respect to the Services to be provided under this Agreement relating to the Premises, and to retain those records for periods as specified by Owner.

9

ARTICLE VI

INDEMNIFICATION

6.1Co-Manager’s Indemnification. Without limiting any indemnity provided elsewhere in this Agreement, Co-Manager shall indemnify, defend, protect and hold harmless Owner and Owner’s Representative and their officers, directors, partners, members (direct and indirect) and employees from and against all claims, losses and liabilities (including all expenses and attorneys’ fees and including, but not limited to, damage to the property of Owner) which arise out of the negligence, recklessness, willful misconduct, fraud or criminal acts of Co-Manager, or its employees, officers, agents, or representatives.

6.2Owner’s Indemnification. Owner shall indemnify, defend, protect and hold harmless Co-Manager and its officers, directors and employees from and against all claims, losses and liabilities (including all expenses and attorneys’ fees) which arise out of the performance by Co-Manager of its obligations and duties hereunder unless the claim, loss or liability arises from the negligence, recklessness, willful misconduct, fraud or criminal acts of Co-Manager or its employees, officers, agents, or representatives. Owner shall defend any claim covered by the foregoing indemnity by Owner, and not covered by insurance, through counsel of Owner’s choice, notwithstanding any allegation of negligence by the claimant against Co-Manager or any of its employees, officers, agents or representatives, unless Owner determines, in good faith, that Co-Manager or any of its employees, officers, agents or representatives has been negligent. In no event shall Owner be obligated to provide any defense against any allegation of recklessness, willful misconduct, fraud or criminal acts. Co-Manager shall reimburse Owner for all such reasonable costs of defense if it is determined by a final judgment of a court of competent jurisdiction that Co-Manager or any of its employees, officers, agents or representatives has been negligent or reckless or has engaged in willful misconduct, fraud or criminal acts. If Co-Manager is required to provide its own defense against any allegation of negligence or recklessness, willful misconduct, fraud or criminal acts arising out of the performance by Co-Manager of its obligations and duties hereunder, and if a final judgment of a court of competent jurisdiction, with regard to such defense, determines that neither Co-Manager nor any of its employees, officers, agents or representatives was negligent, reckless or engaged in willful misconduct, fraud or criminal acts, Owner shall reimburse Co-Manager for its reasonable costs of defense.

Nothing in this Article shall be deemed to affect any party’s rights under any insurance policy procured by such party or under which such party is an additional insured.

6.3Survival. All indemnities contained in this Agreement shall survive the expiration or termination of this Agreement.

6.4Business Interruption. Notwithstanding anything to the contrary contained herein, Owner shall not be liable to Co-Manager for any lost or prospective profits or any other indirect, consequential, special, incidental, punitive or other exemplary losses or damages, whether in tort, contract or otherwise, regardless of the foreseeability or the cause thereof.

10

ARTICLE VII

COSTS AND EXPENSES

7.1Costs and Expenses of Co-Manager. Except as otherwise expressly provided herein, all costs and expenses incurred by or on behalf of Co-Manager in performing its obligations hereunder shall be borne solely by Co-Manager, including, without limitation, the following expenses or costs in connection with the operation and management of the Premises:

(a)Cost of gross salary and wages, payroll taxes, insurance, worker’s compensation, pension benefits and any other benefits of Co-Manager’s off-site supervisory and home and regional office personnel;

(b)Cost of forms, stationery, ledgers and other supplies and equipment used in Co-Manager’s home office or regional home office;

(c)Cost or pro rata cost of telephone and general office expenses incurred on the Premises by Co-Manager for the operation and management of properties other than the Premises;

(d)Cost or pro rata cost of data-processing equipment located at Co-Manager’s home or regional office;

(e)Cost or pro rata cost of data processing provided by computer service companies;

(f)Cost of all bonuses, incentive compensation, profit sharing or any pay advances to employees employed by Co-Manager in connection with the operation and management of the Premises, except for payments to individuals specifically approved in writing by Owner;

(g)Cost of automobile purchases and/or rentals, unless the automobile is being provided by Owner;

(h)Costs attributable to claims, losses and liabilities arising from (i) any material breach of this Agreement by Co-Manager, or (ii) the negligence, willful misconduct, fraud or criminal acts of Co-Manager’s employees or agents, only to the extent such costs are (1) not covered by any insurance (including any insurance deductibles) actually in effect (or required on the part of Owner under this Agreement), (2) not covered by the indemnity in Section 6.2 of this Agreement, or (3) not recoverable from leases or licenses of space in the Premises;

(i)Cost of comprehensive crime insurance purchased by Co-Manager for its own account;

(j)Costs for meals, travel and hotel accommodations for Co-Manager’s home or regional office personnel who travel to and from the Premises, unless expressly authorized by Owner; and

11

(k)Cost of obtaining and maintaining such licenses, permits, consents and authorizations as are required by this Agreement.

7.2Reimbursement by Owner. Owner shall reimburse Co-Manager monthly the management fee payable as provided under Section 1.7 and other reasonable costs and expenses being incurred by Co-Manager in connection with providing the Services under this Agreement.

7.3Nonpayment. If Co-Manager fails to make any payment when required or fails to perform any act required under this Agreement, then Owner, after ten (10) days’ written notice to Co-Manager (or, in the case of any emergency, without notice) and without waiving or releasing Co-Manager from any of its obligations hereunder, may (but shall not be required to) make such payment or perform such act. Owner shall have (in addition to any other right or remedy) the right to offset all costs and expenses incurred in exercising its rights under this Section 7.3 against any sums due or to become due to Co-Manager, including, without limitation, the Co-Management Fee and any costs and expenses reimbursable by Owner pursuant to Section 7.2.

ARTICLE VIII

COMPENSATION

8.1Co-Management Fee. Owner shall pay Co-Manager as compensation for the co-management services rendered hereunder a Co-Management Fee at the rate specified in Section 1.7. Such Co-Management Fee shall be payable monthly in arrears, on the 15th day of each calendar month. The Co-Management Fee shall be payable only on rent actually collected. The term rent, as used in this Agreement, shall include minimum rent, percentage rent, rent escalations, common area maintenance reimbursements, and real estate tax and insurance premium reimbursements. For the purpose of determining the Co-Management Fee, unless specifically provided otherwise in Section 1.7, the term “Gross Revenues” means, for any period of reference, the gross revenues of any kind whatsoever actually collected during the period of reference, as applicable, from or in respect of the Premises, including, without limitation, all income and revenue derived from all sources whatsoever as a result of the operation of the Premises, all rents and other moneys due from tenants as billed in accordance with the leases, including percentage and overage rents, operating expense pass throughs, real estate taxes and common area maintenance charges, all refunds, rebates and recoveries of items, if any, previously charged as deductions from gross revenue, but excluding (i) any proceeds of any capital event relating to the Premises or any personal property (other than rent loss insurance under the property, casualty or boiler policies which shall be included), (ii) security deposits except for the portion applied to past due rent, (iii) prepaid rents except for the portion applied to the then current month; (iv) sums collected or paid for sales, excise or use taxes; or (v) any amount paid for, or in connection with, the termination of leases or other agreements with tenants, except for terminations which Owner has requested the property manager to negotiate.

ARTICLE IX

TERMINATION

9.1Termination.

12

(a)Termination by Co-Manager Without Cause. Co-Manager, in Co-Manager’s sole discretion, shall have the power to terminate this Agreement on not less than thirty (30) days’ prior written notice to Owner for any or no reason, and in such event no payment of a Termination Fee shall be due and owing to Co-Manager.

(b)Termination by Owner Without Cause. Owner, in Owner’s sole discretion, shall have the power to terminate this Agreement on not less than thirty (30) days’ prior written notice to Co-Manager for any or no reason.

(c)Sale of the Premises. Owner shall have the power to terminate this Agreement upon the sale of the Premises (but not a pledge or mortgage) to a third party which is unaffiliated with Owner in a bona fide transaction, such termination to be effective as of the date of the sale. Owner shall use reasonable efforts to give Co-Manager not less than thirty (30) days’ written notice of such anticipated event.

(d)Termination by Owner with Cause. Owner shall have the power to terminate this Agreement upon five (5) days’ written notice to Co-Manager if any of the following shall occur:

(i)Co-Manager fails to timely pay any sum owed or due to Owner and such sum remains unpaid for more than ten (10) days after written notice from Owner;

(ii)Co-Manager commits any fraud, makes any material misrepresentation or misappropriates funds in the performance of its obligations under this Agreement;

(iii)Co-Manager files, or there shall be filed against Co-Manager, a petition in bankruptcy;

(iv)Co-Manager makes an assignment for the benefit of creditors;

(v)Substantially all of the Premises are damaged or destroyed, and Owner decides not to rebuild or restore the Premises;

(vi)A substantial portion of the Premises is taken by condemnation or similar proceedings and Owner decides not to continue to operate the Premises; and

(vii)Co-Manager shall be in material breach of any other non-monetary obligations contained in this Agreement, and such material breach shall continue for thirty (30) days after written notice thereof from Owner to Co-Manager specifying the particulars of such breach (plus, with respect to breaches which Co-Manager commences diligent efforts to cure within such period, but which cannot reasonably be cured within thirty (30) days, such additional period as is reasonably necessary to cure such breach).

13

(e)Termination by Co-Manager With Cause. Co-Manager shall have the power to terminate this Agreement upon five (5) days’ written notice to Owner if any of the following events occurs:

(i)Owner fails to timely pay any sum owed to Co-Manager which remains unpaid for more than thirty (30) days after written notice to Owner from Co-Manager; or

(ii)Owner commits a material violation or breach of any other obligation of Owner under this Agreement which remains uncured for more than thirty (30) days after notice from Co-Manager (plus, with respect to breaches which cannot reasonably be cured within thirty (30) days, such additional time as is reasonably necessary to cure such breach).

(f)Effect of Termination. In the event that this Agreement is terminated, Co-Manager shall be entitled to all fees and reimbursements earned or accrued through the date of termination, which obligation shall survive such termination. In addition to or in lieu of terminating this Agreement, if Co-Manager or Owner defaults under this Agreement beyond applicable notice and cure periods, Owner or Co-Manager (as applicable) may pursue such other rights and remedies as may be available under applicable law. This Section 9.1(f) shall survive the expiration or termination of this Agreement.

9.2Obligations Upon Termination.

(a)Upon termination of this Agreement for any reason, Co-Manager shall deliver the following to Owner on or before thirty (30) days following the termination date:

(i)All keys records, contracts, drawings, leases and correspondence, in existence at the time of termination and all other papers or documents pertaining to the Premises. All data, information and documents shall at all times be the property of Owner;

(b)Upon the expiration or earlier termination of this Agreement in its entirety, the Term shall end, neither party shall have any further rights or obligations under the Agreement (other than those obligations which accrued prior to the expiration or termination of this Agreement or which by the terms hereof expressly survive, or expressly provide for obligations to be performed following, such expiration or termination).

ARTICLE X

MISCELLANEOUS

10.1Status of Co-Manager. It is the intention of the parties to create a relationship wherein Co-Manager is an independent contractor in providing the Services and Owner is the beneficiary of such Services. Co-Manager shall afford Owner the full benefit of the judgment, experience

14

and advice of Co-Manager and Co-Manager’s organization with respect to the policies to be pursued in execution of its responsibilities in a diligent, careful and vigilant manner.

10.2Notices. Any statement, notice recommendation, request, demand, consent or approval under this Agreement must be in writing and personally delivered or sent by overnight courier service, such as Federal Express or sent by United States, registered or certified mail, postage prepaid, return receipt requested, and shall be deemed to have been given upon the date of personal delivery or the next business day following deposit with an overnight courier or delivery by the U.S. Postal Service (or refusal to accept delivery) as indicated in the return receipt, provided that in the case of communications sent by overnight courier service or United States registered or certified mail, the communication is addressed as set forth in Section 1.5 if sent to the Owner’s Representative and as set forth in Section 1.6 if sent to Co-Manager. Either party may, by written notice, designate a different address.

10.3Ownership of Fixtures and Personal Property. Co-Manager acknowledges that Owner owns all fixtures and personal property situated on or about the Premises and used in or necessary for the operation, maintenance and occupancy of the Premises.

10.4Assignment. This Agreement shall not be assignable by Co-Manager without the express prior written consent of Owner.

10.5Severability. Each provision of this Agreement is intended to be severable. If any term or provision hereof or the application thereof to any entity or circumstance shall be determined by a court of competent jurisdiction to be illegal or unenforceable for any reason whatsoever, such term, provision or application thereof shall be severed from this Agreement and shall not affect the validity of the remainder of this Agreement or the application of such term or provision to any other entity or circumstance.

10.6Costs of Suit. If Owner or Co-Manager shall institute any action or proceeding against the other relating to this Agreement, the unsuccessful party shall reimburse the successful party for its disbursements incurred in connection therewith and for its reasonable attorneys’ fees, as fixed by the court.

10.7Waiver. No consent or waiver, express or implied, by either party to or of any breach or default by the other party in the performance of its obligations hereunder, shall be valid unless in writing. No such consent or waiver shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other party of any other obligations of such party hereunder. The failure of any party to declare the other party in default shall not constitute a waiver by such party of its rights hereunder, irrespective of how long such failure continues. The granting of any consent or approval in any one instance by or on behalf of Owner shall not be construed to waive or limit the need for such consent in any other or subsequent instance.

10.8Remedies Cumulative. No remedy herein contained or otherwise conferred upon or reserved to Owner shall be considered exclusive of any other remedy, but such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter existing at

15

law, in equity or by statute. Every power and remedy given by this Agreement to Owner may be exercised from time to time and as often as occasion may arise or as may be deemed expedient.

10.9Entire Agreement. This Agreement contains the entire agreement between the parties and supersedes all prior oral or written agreements, understandings, representations and covenants, to the extent that they are inconsistent with this Agreement.

10.10Amendment. This Agreement may not be amended or modified except by an agreement in writing signed by the party against whom enforcement of such change or modification is sought.

10.11Governing Law. This Agreement and the obligations of Owner and Co-Manager shall be governed by, and construed and enforced in accordance with, the laws of the State of California.

10.12OFAC Representations, Warranties and Indemnification. Owner and Co-Manager each represents and warrants that (i) it is not, and none of its partners, members, managers, employees, officers, directors, representatives or agents is, a person or entity with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property any Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or under any other law, rule, order, or regulation that is enforced or administered by OFAC (such persons and entities each being a “Prohibited Person”); (ii) it is not acting directly or indirectly, for or on behalf of any Prohibited Person; (iii) it is not engaged in this transaction, directly or indirectly, on behalf of, or instigating or facilitating this transaction, directly or indirectly, on behalf of any Prohibited Person; and (iv) it will not contract with or otherwise engage in any dealings or transactions or be otherwise associated with any Prohibited Person.

10.13Anti-Discrimination. It is illegal for either the Owner or the Co-Manager to refuse to display or sell to any person because of one’s membership in a protected class, e.g., race, color, religion, national origin, sex, ancestry, age, marital status, physical or mental handicap, familial status, sexual orientation, unfavorable discharge from the military service, order of protection status or any other class protected by Article 3 of the Human Rights Act.

10.14Limitation of Liability of Owner. Notwithstanding anything contained in this Agreement to the contrary, the obligations of Owner or Owner’s Representative under this Agreement (including any actual or alleged breach or default by Owner) do not constitute personal obligations of the individual partners, directors, officers, trustees, members or shareholders of Owner, Owner’s Representative or Owner’s members or partners, and Co-Manager shall not seek recourse against the individual partners, directors, officers, trustees, members or shareholders of Owner, Owner’s Representative or against Owner’s members or partners or against any other persons or entities having any interest in Owner, or against any of their personal assets for satisfaction of any liability with respect to this Agreement. Any liability of Owner for a default by Owner under this Agreement, or a breach by Owner of any of its obligations under this Agreement, shall be limited solely to its interest in the Premises, and in no event shall any personal liability be asserted against Owner and/or Owner’s Representative in connection with this Agreement nor shall any recourse be

16

had to any other property or assets of Owner, Owner’s Representative, or its partners, directors, officers, trustees, members, shareholders or any other persons or entities having any interest in Owner.

10.15Limitation of Liability of Co-Manager. Notwithstanding anything contained in this Agreement to the contrary, the obligations of Co-Manager under this Agreement (including any actual or alleged breach or default by Co-Manager) do not constitute personal obligations of the individual partners, directors, officers, trustees, members or shareholders of Co-Manager or Co-Manager’s members or partners, and Owner and Owner’s Representative shall not seek recourse against the individual partners, directors, officers, trustees, members or shareholders of Co-Manager or against Co-Manager’s members or partners or against any other persons or entities having any interest in Co-Manager, or against any of their personal assets for satisfaction of any liability with respect to this Agreement. In no event shall any personal liability be asserted against Co-Manager in connection with Agreement nor shall any recourse be had to any other property or assets of Co-Manager, or its partners, directors, officers, trustees, members, shareholders or any other persons or entities having any interest in Co-Manager.

10.16Electronic Scanned Signatures. The parties agree that an electronically scanned signed copy of this Agreement transmitted by one party to the other party(ies) by electronic transmission shall be binding upon the sending party to the same extent as if it had delivered a signed original of this Agreement.

10.17Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one agreement.

[Signature Page Follows]

17

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

Owner: KBSGI 213 WEST INSTITUTE PLACE, LLC, a Delaware limited liability company By: KBS Realty Advisors, LLC, a Delaware limited liability company, its authorized agent    By: /s/ Brett Merz    Brett Merz Senior Vice President Co-Manager: KBS MANAGEMENT GROUP, LLC, a Delaware limited liability company By: /s/ Rodney Richerson Name: Rodney Richerson Its: Regional President

Signature Page

EXHIBIT A

DUTIES OF CO-MANAGER

Set property management standards related to service delivery and ensure those standards are being met in the operation of the Premises. Periodically inspect the Premises to assess performance and benchmark tenant satisfaction. Implement national programs and initiatives as requested by Owner which benefit the Premises.

Qualify property manager staffing plans for the Premises; interview, approve personnel and make recommendations to Owner, lead transitions at acquisition or in event of a change in property manager, provide guidance to property manager on Owner’s policy and procedure to manage the Premises.

Consult with and make recommendations to property manager on vendor service agreements to operate the Premises including risk assessment and Owner’s insurance requirements.

Provide project, construction management and engineering services to the Premises as requested by Owner which are not being provided by Manager.

Provide repair vs. replacement analysis as requested by Owner to the extent not provided by Manager.

Assess sustainability opportunities at the Premises including energy benchmarking, LEED certification, compliance with state mandated initiatives, energy efficiencies, etc… Engage energy consultants as needed in accordance with Owner’s national standards.

Maintain a database of competitive operating costs to the Premises.

At Owner’s request, perform such other services from time to time as are customary and usual in the management, operation and maintenance of similar first class properties and not currently provided by Manager.

Exhibit A - 1

EXHIBIT B

ERISA REQUIREMENTS

EX-10.12

Exhibit 10.12

AMENDED AND RESTATED PROMISSORY NOTE

$72,800,000.000 November 9, 2017

KBSGI OFFICES AT GREENHOUSE, LLC, a Delaware limited liability company (“Greenhouse Borrower”), KBSGI VON KARMAN TECH, LLC, a Delaware limited liability company (“Von Karman Borrower”), KBSGI 213 WEST INSTITUTE PLACE, LLC, a Delaware limited liability company (“Institute Borrower,” and, together with Greenhouse Borrower and Von Karman Borrower, individually and collectively “Borrower”), jointly and severally promise to pay to the order of JPMORGAN CHASE BANK, N.A., a national banking association (“Lender”), SEVENTY-TWO MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($72,800,000.00), or if less, the aggregate unpaid principal amount of all Loans made by Lender to Borrower (as defined in the Agreement defined below) pursuant to the Agreement (as hereinafter defined), together with interest on the unpaid principal amount hereof in the manner set forth in the Agreement. Borrower shall pay the principal of and accrued and unpaid interest on the Loan in full on the Maturity Date.

This Note is an amendment, restatement and replacement of that certain Promissory Note dated as of November 14, 2016, in the principal amount of $65,000,000.00 executed by Greenhouse Borrower payable to the order of Lender (the “Original Note”), as joined into and assumed on joint and several basis by Von Karman Borrower pursuant to that certain Assumption and Joinder Agreement dated as of May 8, 2017 by and among Von Karman Borrower, Greenhouse Borrower, Administrative Agent and Lenders. In no event shall this Note be deemed to be or constitute a novation or release of Borrower’s obligations under the Original Note.

This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Amended and Restated Term Loan and Security Agreement of even date herewith (which, as it may be amended or modified and in effect from time to time, is herein called the “Agreement”), among Borrower, the lenders referenced therein, including Lender, and JPMorgan Chase Bank, N.A., as Administrative Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is secured and guaranteed pursuant to the Loan Documents, all as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

Notwithstanding the foregoing or anything to the contrary in this Note, under no circumstances shall Administrative Agent or any Lender have any recourse against, nor shall there by any personal liability to, the members of any Borrower, or to any shareholders, members or partners (direct or indirect, except for the Guarantor under the Guaranty) for any obligations of any Borrower hereunder. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower’s liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty or Administrative Agent or any Lender’s right to exercise any rights or remedies against any collateral securing the Loan.

[Signatures Begin on the Following Page]

1

BORROWER:

KBSGI OFFICES AT GREENHOUSE, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition IV, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

[Signatures Continue on the Following Page]

S-1

BORROWER CONTINUED:

KBSGI VON KARMAN TECH, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition I, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

[Signatures Continue on the Following Page]

S-2

BORROWER CONTINUED:

KBSGI 213 WEST INSTITUTE PLACE, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition V, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-3

EX-10.13

Exhibit 10.13

J.P. Morgan

AMENDED AND RESTATED
TERM LOAN AND SECURITY AGREEMENT

DATED AS OF NOVEMBER 9, 2017

BY AND AMONG

KBSGI OFFICES AT GREENHOUSE, LLC,
KBSGI VON KARMAN TECH, LLC,
and
KBSGI 213 WEST INSTITUTE PLACE, LLC

AS BORROWER,

JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT,

THE LENDERS REFERENCED HEREIN,

AND

JPMORGAN CHASE BANK, N.A.

AS SOLE BOOKRUNNER AND SOLE LEAD ARRANGER

JPMORGAN REAL ESTATE BANKING

TABLE OF CONTENTS

			Page
ARTICLE I		DEFINED TERMS	2
	1.01	Definitions	2
ARTICLE II		CONDITIONS TO DISBURSEMENT	23
	2.01	Rights to Advances, Generally	23
	2.02	Conditions to Closing and Closing Advance	23
	2.03	Conditions for all Subsequent Advances	27
ARTICLE III		LOAN TERMS	28
	3.01	The Loan and Advances	28
	3.02	Requests for Advances	28
	3.03	Funding of Advances	29
	3.04	Interest Elections	29
	3.05	Repayment of Loans; Evidence of Debt	30
	3.06	Prepayment of Loans	31
	3.07	Fees	31
	3.08	Interest	32
	3.09	Alternate Rate of Interest	32
	3.10	Increased Costs	32
	3.11	Break Funding Payments	34
		34
	3.12	Withholding of Taxes; Gross Up	35
	3.13	Payments Generally; Pro Rata Treatment; Sharing of Set-offs	38
	3.14	Mitigation Obligations; Replacement of Lenders	40
	3.15	Extension Options	41
	3.16	Outstanding Principal Balance May not Exceed the Availability Amount; Revolving Portion May Be Repaid And Re-Borrowed	44
	3.17	Voluntary Termination or Reduction of Commitment; Adjustment of Revolving Commitment	45
ARTICLE IV		GENERAL COVENANTS	45
	4.01	Liens, Taxes, and Governmental Claims	45
	4.02	Leases	46
	4.03	Operations of Borrower	48

-i-

TABLE OF CONTENTS

(continued)

			Page
	4.04	Appraisals	51
	4.05	[Reserved]	51
	4.06	Prohibited Distributions	51
	4.07	Borrower’s Right to Contest Legal Requirements	51
	4.08	Government Regulation	52
	4.09	Financial Information and Other Deliveries	52
	4.10	Hazardous Substances	53
	4.11	ERISA	54
	4.12	Compliance with Laws	54
	4.13	Use of Proceeds	54
	4.14	Post-Closing Obligations	55
ARTICLE V		COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT	56
	5.01	Permits	56
	5.02	Project Documents and Swap Agreements	56
	5.03	Satisfaction	58
	5.04	Additional Instruments	58
ARTICLE VI		REPRESENTATIONS AND WARRANTIES	59
	6.01	Representations and Warranties	59
	6.02	Nature of Representations and Warranties	61
ARTICLE VII		INSURANCE AND CONDEMNATION	62
	7.01	Insurance and Casualty	62
	7.02	Condemnation and Other Awards	67
ARTICLE VIII		DEFAULTS	68
	8.01	Defaults	68
ARTICLE IX		ACCELERATION AND REMEDIES	71
	9.01	Acceleration	71
	9.02	Other Remedies	72
	9.03	Curing of Defaults	72
ARTICLE X		MISCELLANEOUS	73
	10.01	Notices	73

-ii-

TABLE OF CONTENTS

(continued)

			Page
	10.02	Waivers; Amendments	75
	10.03	Expenses; Indemnity; Damage Waiver	76
	10.04	Successors and Assigns	78
	10.05	Survival	82
	10.06	Counterparts; Integration; Effectiveness; Electronic Execution	83
	10.07	Severability	83
	10.08	Right of Setoff	83
	10.09	Governing Law; Jurisdiction; Consent to Service of Process	84
	10.10	WAIVER OF JURY TRIAL	84
	10.11	Headings	86
	10.12	Confidentiality	86
	10.13	Interest Rate Limitation	87
	10.14	USA Patriot Act	87
	10.15	Administrative Agent Approvals	87
	10.16	Replacement Documentation	88
	10.17	Swap Agreements	88
	10.18	Statements	88
	10.19	Borrower 2822 Waiver	88
	10.20	Waiver of Special Damages	88
	10.21	Limitation on Liability	89
	10.22	Acknowledgment and Consent to Bail-In of EEA Financial Institutions	89
	10.23	Releases of Properties	89
	10.24	Joint Borrower Provisions	91
ARTICLE XI		ADMINISTRATIVE AGENT	96
	11.01	Appointment	96
	11.02	Capacity as Lender	96
	11.03	Duties and Obligations	96
	11.04	Reliance	97
	11.05	Sub-Agents	97
	11.06	Resignation	97

-iii-

TABLE OF CONTENTS

(continued)

		Page
11.07	Independent Credit Analysis	98
11.08	Lender Actions Against Collateral	98
11.09	Lender Reply Period	98
11.10	Foreclosure	99
11.11	Defaulting Lender	100
11.12	Compliance with Food Laws	102
11.13	Borrower’s Rights	102

-iv-

EXHIBITS

Schedule 1.01 --    Lenders

Exhibit A-1 --    Legal Description – Greenhouse Property

Exhibit A-2 --    Legal Description – Von Karman Property

Exhibit A-3 --    Legal Description – Institute Property

Exhibit B --    Permitted Transfer Provisions

Exhibit C --    Form of Borrowing Base Certificate

Exhibit D --    Promissory Note

Exhibit E --    Assignment and Assumption

Exhibit F --    Form of Reciprocal Release Agreement

Exhibit G-1 --    Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-2 --    Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-3 --    Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Exhibit G-4 --    Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

-v-

AMENDED AND RESTATED
TERM LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED TERM LOAN AND SECURITY AGREEMENT (the “Agreement”) dated as of November 9, 2017, is by and among KBSGI OFFICES AT GREENHOUSE, LLC, a Delaware limited liability company (“Greenhouse Borrower”), KBSGI VON KARMAN TECH, LLC, a Delaware limited liability company (“Von Karman Borrower”), KBSGI 213 WEST INSTITUTE PLACE, LLC, a Delaware limited liability company (“Institute Borrower,” and, together with Greenhouse Borrower and Von Karman Borrower, individually, collectively, jointly and severally, “Borrower”), JPMORGAN CHASE BANK, N.A., a national banking association (“JPMorgan”) in its capacity as Administrative Agent (as hereinafter defined) and Lenders (as hereinafter defined).

RECITALS

A.    Greenhouse Borrower owns that certain real property located in Houston, Texas, more particularly described in Exhibit A-1 attached hereto and incorporated herein by this reference (collectively, the “Greenhouse Property”) along with the improvements located thereon (collectively, the “Greenhouse Improvements”).

B.    Von Karman Borrower owns that certain real property located in Irvine, California, more particularly described in Exhibit A-2 attached hereto and incorporated herein by this reference (collectively, the “Von Karman Property”) along with the improvements located thereon (collectively, the “Von Karman Improvements”).

C.    Institute Borrower owns or is acquiring that certain real property located in Chicago, Illinois, more particularly described in Exhibit A-3 attached hereto and incorporated herein by this reference (collectively, the “Institute Property”) along with the improvements located thereon (collectively, the “Institute Improvements”).

D.    Administrative Agent and Lenders made a loan to Greenhouse Borrower in the maximum amount of Sixty-Five Million and No/100 Dollars ($65,000,000.00) (the “Original Loan”) pursuant to that certain Term Loan and Security Agreement dated as of November 14, 2016 among Greenhouse Borrower, Administrative Agent and Lenders (the “Original Loan Agreement”).

E.    Pursuant to that certain Assumption and Joinder Agreement dated as of May 8, 2017 by and among Von Karman Borrower, Greenhouse Borrower, Administrative Agent and Lenders, Von Karman Borrower joined Greenhouse Borrower as a “Borrower” under the Original Loan Agreement and assumed, on a joint and several basis, all of Greenhouse Borrower’s obligations arising under and in connection with the Original Loan, the Original Loan Agreement and the other “Loan Documents” defined and described in the Original Loan Agreement.

F.    As of the date hereof but prior to disbursement of the Closing Advance (as defined below), the outstanding principal balance of the Original Loan is $32,500,000.00 (which is comprised of $32,500,000.00 of Term Loans, and $0.00 of Revolving Loans).

1

G.    Borrower has requested to join Institute Borrower as a joint and several Borrower under this Agreement and the other Loan Documents (as defined below).

H.    Additionally, Borrower has requested an increase in the maximum principal amount of the Original Loan of Seven Million Eight Hundred Thousand and No/100 Dollars ($7,800,000.00) (the “Additional Advance”), thereby increasing the Original Loan to a maximum principal amount of Seventy-Two Million Eight Hundred Thousand and No/100 Dollars ($72,800,000.00), and certain other modifications to the terms of the Original Loan Agreement.

I.    Administrative Agent and Lenders have agreed to amend and restate the Original Loan Agreement and to modify the existing Loan Documents to join Institute Borrower as a joint and several Borrower, lend the Additional Advance to Borrower, and make certain other modifications to the terms of the Original Loan Agreement on the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE IDEFINED TERMS

1.01Definitions. The following terms shall have the following meanings:

“ABR”, when used in reference to any Loan or Advance, refers to whether such Loan, or the Loans comprising such Advance, bear interest at a rate determined by reference to the Alternate Base Rate.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Advance for the relevant Interest Period, or for any ABR Advance, an interest rate per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” means JPMorgan, in its capacity as administrative agent for Lenders hereunder.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by Administrative Agent.

“Advance” means a borrowing hereunder, (a) made by Lenders on the same Borrowing Date in the full amount of the Commitments on the Closing Date, or (b) converted or continued by Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period.

2

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Aggregate Commitment” means, as of any date of determination, the aggregate of the Commitments of all the Lenders, as such amount may have been reduced pursuant to the terms hereof. As of the date hereof, the Aggregate Commitment is Seventy-Two Million Eight Hundred Thousand and No/100 ($72,800,000.00).

“Agreement” has the meaning assigned to it in the Preamble.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that that for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 3.09 hereof, then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.

“Annual Debt Service” means, as of any date of determination, annual debt service on a loan with a principal amount equal to the Aggregate Commitment on such date of determination, assuming (a) a fixed rate of interest per annum equal to the greater of (i) the annual yield to maturity as of such date of determination of a ten (10) year United States Treasury Note in the amount of such loan plus two and one-quarter percent (2.25%) per annum, or (ii) six and three-quarters percent (6.75%) per annum, and (b) amortization of such loan in equal monthly payments of principal and interest over a period of thirty (30) years.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption.

“Applicable Margin” means (a) with respect to the Eurodollar Rate, 2.00% per annum, and (b) with respect to the Floating Rate, 1.00% per annum.

“Applicable Percentage” means, with respect to any Lender, the percentage of the Aggregate Commitment represented by such Lender’s Commitment; provided that in the case of Section 11.11 when a Defaulting Lender shall exist, “Applicable Percentage” means the percentage of the Aggregate Commitment (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments.

3

“Appraisal” means a written statement setting forth an opinion of the market value of the Properties that (i) has been independently and impartially prepared by a qualified appraiser directly engaged by Administrative Agent, (ii) complies with all applicable federal and state laws and regulations dealing with appraisals or valuations of real property, and (iii) has been reviewed as to form and content and approved by Administrative Agent, in its reasonable discretion.

“Appraised Value” means the “as is” value, as reasonably determined by the Administrative Agent based upon its review of the most current Appraisal.

“Approved Fund” has the meaning assigned to it in Section 10.04.

“Approved Lease” means any Lease which is (a) substantially in the form of the Form Lease, and (b) satisfies the criteria set forth in Section 4.02 hereof (and which shall expressly include Leases effective as of the closing date of the Loan and Leases for which Administrative Agent’s consent is not required pursuant to Section 4.02 below) or as otherwise approved or deemed approved by Administrative Agent in accordance with the Loan Documents.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04 hereof), and accepted by Administrative Agent, in the form of Exhibit E attached hereto or any other form approved by Administrative Agent.

“Availability Amount” means the lesser of (a) the Aggregate Commitment, or (b) the Borrowing Base Amount. Notwithstanding anything to the contrary stated herein or any other Loan Documents, (y) Borrower shall have the right, at any time, to pay down the principal balance of the Loan in order to meet the Availability Amount covenant, without payment of any prepayment fees (other than any applicable swap or LIBO Rate breakage fee), and (z) if, on any date of determination, Administrative Agent has reserved an Institute Repair Holdback pursuant to Section ‎‎4.14(a) below, the Availability Amount shall be reduced by the amount of such Institute Repair Holdback.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementation law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business, appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless

4

such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality), to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” or “Borrowers” means individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, or as the context shall require, each and all of Greenhouse Borrower, Von Karman Borrower and Institute Borrower. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Borrower” shall be deemed to be a reference to all of the Borrowers collectively and each Borrower individually.

“Borrower Financing Statement(s)” means the UCC financing statements covering the security interests in personal property granted by Borrower to Administrative Agent for the benefit of Lenders in the Loan Documents for filing with the Secretary of State of the state in which the applicable Borrower is organized.

“Borrowing Base Amount” means, subject to adjustments as provided in Section 10.23 of this Agreement, an amount equal to the least of (a) 65% of the “as is” Appraised Value of the Properties, (b) 65% of the aggregate purchase price of the Properties, and (c) the maximum amount of the Loan that, had such amount of the Loan been outstanding each day during the prior twelve (12) month testing period immediately preceding and through the date of measurement, would not have caused the Debt Service Coverage Ratio to be less than 1.25 to 1.0.

“Borrowing Base Certificate” shall mean a borrowing base certificate, in substantially the form of Exhibit C attached hereto (or such other form reasonably acceptable to Administrative Agent), executed by Borrower.

“Borrowing Date” means a date on which an Advance is made hereunder.

“Borrowing Request” means a request by Borrower for an Advance in accordance with Section 3.02 hereof.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Advance, the term “Business Day” shall also exclude any day on which banks are not open for general business in London.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

5

“Certification of Non‑Foreign Status” means an affidavit, signed under penalty of perjury by an authorized officer of Borrower, stating (a) that Borrower is not a “foreign corporation,” “foreign partnership,” “foreign trust,” or “foreign estate,” as those terms are defined in the Code and the regulations promulgated thereunder, (b) Borrower’s U.S. employer identification number, and (c) the address of Borrower’s principal place of business. Such affidavit shall be consistent with the requirements of the regulations promulgated under Section 1445 of the Code, and shall otherwise be in form and substance acceptable to Administrative Agent.

“Change in Law” means the occurrence, after the date of this Agreement or, with respect to any Lender, such later date on which such Lender becomes a party to this Agreement, of: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority or (c) compliance by any Lender (or, for purposes of Section 3.10(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

“Charges” has the meaning set forth in Section 10.13 hereof.

“Closing Advance” means an advance of the Loan in the amount of $40,300,000.00, which shall be comprised of a Term Loan advance in the amount of $16,033,333.00 and a Revolving Loan advance in the amount of $24,266,667.00.

“Closing Date” is the earlier of the date of the disbursement of the Loan, or the date all the conditions to the disbursement have been satisfied, including recording the Deeds of Trust.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commitment” means, for each Lender, the obligations of such Lender to make Loans not exceeding the amount set forth on Schedule 1.01 or as set forth in any assignment agreement that has become effective pursuant to Section 10.04 hereof, as such amount may be modified from time to time pursuant to the terms hereof.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

6

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Credit Party” means the Administrative Agent or any other Lender.

“Debt Service Coverage Ratio” means, as of any determination date, the ratio of NOI as of such determination date to Annual Debt Service as of such determination date.

“Debtor Relief Laws” means any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, fraudulent conveyance, reorganization, or similar laws affecting the rights, remedies or recourse of creditors generally, including without limitation, the United States Bankruptcy Code and all amendments thereto, as are in effect from time to time during the term of the Loans.

“Deed of Trust” or “Deeds of Trust” means individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, the Greenhouse Deed of Trust, the Von Karman Deed of Trust, and the Institute Mortgage, in each case, as amended from time to time. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Deed of Trust” shall be deemed to be a reference to all of the Deeds of Trust collectively and each Deed of Trust individually.

“Default” has the meaning assigned to it in Section 8.01 hereof.

“Defaulting Lender “ means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loan, or (ii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular Default, if any) has not been satisfied; (b) has notified Borrower or any Credit Party in writing, or has made a public statement, to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular Default, if any) cannot be satisfied) or generally under other agreements in which it commits to extend credit; (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations to fund under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c), upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent; or (d) has become the subject of (A) a Bankruptcy Event or (B) a Bail-In Action.

“Designated Lessee” means each of (a) CODINGDOJO LLC, a California limited liability company, (b) Downtown Entertainment, L.L.C., an Illinois limited liability company, and (c) Cushing and Company, an Illinois corporation.

7

“Dollars” or “$” refers to lawful money of the United States of America.

“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record.

“Electronic System” means any electronic system, including e-mail, e-fax, Intralinks, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any other Person, providing for access to data protected by passcodes or other security system.

“Employee Benefit Plan” means an employee benefit plan as defined in Section 3(3) of ERISA, maintained, sponsored by or contributed to by Borrower or any ERISA Affiliate.

“Environmental Indemnity Agreement” means the Amended and Restated Environmental Indemnity Agreement of even date herewith executed by Borrower in favor of Administrative Agent with respect to each Property, for the benefit of Lenders, as amended from time to time.

“Environmental Laws” means any local, state or federal law, rule (having the effect of law), regulation or order (having the effect of law) relating to the manufacture, storage, use, handling, discharge, transport, disposal, treatment or clean-up of hazardous or toxic substances or materials, including, without limitation, “CERCLA”, “RCRA”, or state superlien or environmental clean-up statutes.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

8

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Eurodollar Advance” means an Advance which, except as otherwise provided in Section 3.08(c) hereof, bears interest at the applicable Eurodollar Rate.

“Eurodollar Loan” means a Loan which, except as otherwise provided in Section 3.08(c) hereof, bears interest at the applicable Eurodollar Rate.

“Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant Interest Period, a per annum rate of interest equal to the Adjusted LIBO Rate for such Interest Period plus the Applicable Margin.

“Excluded Swap Obligation” means, with respect to Guarantor, any Swap Obligation if, and to the extent that, all or a portion of any Guarantee of Guarantor of, or the grant by Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time any Guarantee of such Guarantor or the grant of such security interest becomes or would become effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by Borrower under Section 3.14(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.12, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.12(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

9

“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depository institutions (as determined in such manner as the NYFRB shall set forth on its public website from time to time) and as published on the next succeeding Business Day by NYFRB as the federal funds effective rate; provided that if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“Fee Letter” means that certain letter agreement of even date herewith by and between JPMorgan Chase Bank, N.A. and Borrower.

“First Extended Maturity Date” has the meaning set forth in Section 3.15(a) hereof.

“Floating Rate Advance” means an Advance which, except as otherwise provided in Section 3.08(c) hereof, bears interest at the Floating Rate.

“Floating Rate Loan” means a Loan which, except as otherwise provided in Section 3.08(c) hereof, bears interest at the Floating Rate.

“Floating Rate” means, for any day, a rate per annum equal to the Alternate Base Rate for such day plus the Applicable Margin for such day.

“Flood Laws” means the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994, the Biggert-Waters Flood Insurance Act of 2012, as such statutes may be amended or re-codified from time to time, any substitution therefor, any regulations promulgated thereunder, and all other Legal Requirements relating to flood insurance.

“Force Majeure Delays” means delays caused by fire, earthquake, unusual weather conditions or other acts of God, acts of public enemies, riot, insurrection, governmental regulation of the sale of materials and supplies or the transportation thereof, strikes directly affecting the work of construction, shortages of material or labor resulting directly from general market shortages, governmental control or diversion and other causes beyond Borrower’s reasonable control other than shortage of funds.

“Foreign Lender “ means (a) if Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which Borrower is resident for tax purposes.

“Form Lease” means the applicable form of lease for the Improvements for a particular Property or any portion thereof to be reviewed and approved by Administrative Agent.

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,

10

legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Greenhouse Borrower” has the meaning set forth in the preamble to this Agreement.

“Greenhouse Deed of Trust” means that certain Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of November 14, 2016, executed by Greenhouse Borrower, as Trustor, to Randy Durant, as Trustee, in favor of Administrative Agent, as Beneficiary, recorded on November 16, 2016 in the records of the County Clerk of Harris County, Texas as Document No. RP-2016-515382, as amended from time to time.

“Greenhouse Improvements” has the meaning set forth in Recital A above.

“Greenhouse Property” has the meaning set forth in Recital A above.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Guarantor” means KBSGI REIT Properties LLC, a Delaware limited liability company.

“Hazardous Substances” means and includes all hazardous and toxic substances, wastes or materials, hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, urea formaldehyde insulation, radioactive materials, biological substances and any other kind and/or type of pollutants or contaminates (including, without limitation, asbestos and raw materials which include hazardous constituents), sewage sludge, industrial slag, solvents and/or any other similar substances, or materials which are included under or regulated by any Environmental Laws; provided,however, that “Hazardous Substances” shall not include (a) materials customarily used in the construction and demolition of buildings, or (b) cleaning materials and office products customarily used in the operation of properties such as the Mortgaged Property, to the extent such materials described in the preceding clauses (a) and (b) are stored, handled, used and disposed of in compliance with all Environmental Laws.

“Impacted Interest Period” has the meaning set forth in the definition of “LIBO Rate”.

11

“Improvements” means individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, or as the context shall require, each and all of the Greenhouse Improvements, the Von Karman Improvements, and the Institute Improvements, to the extent then encumbered by a Deed of Trust. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Improvements” shall be deemed to be a reference to all of the Improvements located on all of the Properties collectively and all of the Improvements located on each Property individually.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, and (k) all Swap Obligations. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.

“Indemnitee” has the meaning set forth in Section 10.03(b) hereof.

“Ineligible Institution” has the meaning assigned to it in Section 10.04.

“Initial Maturity Date” means November 9, 2020.

“Institute Borrower” has the meaning set forth in the preamble to this Agreement.

“Institute Mortgage” means that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing of even date herewith, executed by Institute Borrower, as Mortgagor, to Administrative Agent, as Mortgagee, to be recorded in the records of the Cook County, Illinois Recorder of Deeds, as amended from time to time.

“Institute Improvements” has the meaning set forth in Recital C above.

“Institute Property” has the meaning set forth in Recital C above.

12

“Institute Property Condition Report” means that certain Property Condition Report dated August 24, 2017, prepared by CBRE, Inc. as Project No. PC70836917 with respect to the Institute Property.

“Institute Repair Holdback” has the meaning set forth in Section 4.14(a) hereof.

“Interest Election Request” means a request by Borrower to convert or continue an Advance in accordance with Section 3.04 hereof.

“Interest Payment Date” means the fifth (5^th) day of each month.

“Interest Period” means with respect to any Eurodollar Advance, the period commencing on the date of such Eurodollar Advance and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of an Advance initially shall be the date on which such Advance is made and thereafter shall be the effective date of the most recent conversion or continuation of such Advance.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.

“IRS” means the United States Internal Revenue Service.

“JPMorgan” has the meaning set forth in the preamble.

“Lease” means any lease or other agreement for the use and occupancy of all or any portion of the Improvements, whether now in existence or hereafter arising.

“Legal Requirements” means any and all judicial decisions, statutes, rulings, directions, rules, regulations, permits, certificates or ordinances of any Governmental Authority in any way applicable to Borrower or the Property or Improvements, including, without limitation, the ownership, division, use, occupancy, possession, operation, maintenance, alteration, repair or reconstruction thereof.

“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

13

“Lender Reply Period” has the meaning assigned to it in Section 11.09 hereof.

“Lenders “ means the Persons listed on Schedule 1.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“Lessee” means a tenant under a Lease.

“LIBO Rate” means, with respect to any Eurodollar Advance for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided, that if the LIBO Screen Rate shall not be available at such time for the Interest Period (an “Impacted Interest Period”), then the LIBO Rate shall be the Interpolated Rate.

“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar Advance for any Interest Period, the London interbank offered rate administered by the ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars) for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters Screen or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall be selected by Administrative Agent from time to time in its reasonable discretion, provided, that if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero (the “LIBO Screen Rate Floor”) for purposes of this Agreement except to the extent that any Advances are covered under any Swap Agreement (in which case, the LIBOR Screen Rate Floor shall not apply to such portion of the Advances).

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Loan” or “Loans” means, with respect to any Lender, any loans made by such Lender pursuant to this Agreement (or any conversion or continuation thereof).

“Loan Documents” means this Agreement, including schedules and exhibits hereto, the Notes, the Deeds of Trust, the Repayment Guaranty, the Environmental Indemnity Agreements, the Property Manager Subordination Agreements, the Fee Letter and any and all other documents now or hereafter executed by Borrower, Guarantor or any other guarantor of the Obligations or any portion thereof evidencing, guarantying, securing or otherwise pertaining to the Obligations including any amendments, modifications or supplements thereto or waivers thereof, legal opinions issued in connection with the other Loan Documents, UCC filings, and any other documents prepared in connection with the other Loan Documents, if any; provided, however, that Swap Agreements between Borrower and any Lender or Affiliate of any Lender shall not constitute Loan Documents.

14

“Loan Fee” has the meaning set forth in Section 3.07(a).

“Major Lease” has the meaning set forth in Section 4.02.

“Maturity Date” means the Initial Maturity Date as such date may be extended pursuant to Section 3.15 hereof.

“Maximum Rate” has the meaning set forth in Section 10.13 hereof.

“Mortgaged Property” or “Mortgaged Properties” means individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, the Properties, the Improvements and all other property of Borrower subject to a Lien or security interest granted by any of the Loan Documents. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Mortgaged Property” shall be deemed to be a reference to all of the Mortgaged Properties collectively and to each Mortgaged Property individually.

“Net Casualty Proceeds” shall have the meaning set forth in Section 7.01(g)(ii) hereof.

“Net Condemnation Proceeds” shall have the meaning set forth in Section 7.02 hereof.

“NOI” means, as of any date of determination, an amount equal to (i) Total Revenues, as of such date of determination, minus (ii) Property Operating Expenses as of such date of determination, in each case construed in accordance with GAAP consistently applied on a cash basis. Each time NOI is to be calculated hereunder, the initial calculation shall be performed and provided to Administrative Agent and Lenders by the Borrower for Administrative Agent’s review and reasonable approval. Should Administrative Agent reasonably disapprove any calculation of NOI provided by Borrower, Administrative Agent shall perform and provided its own calculation of NOI to Borrower and to the Lenders, and such Administrative Agent’s calculation of NOI (in its reasonable discretion) shall be conclusive and binding in the absence of manifest error.

“Non-Defaulting Lender “ means any Lender, as determined by Administrative Agent, that is not a Defaulting Lender.

“Notes” means the Promissory Notes executed by Borrower in favor of each of the Lenders, substantially in the form of Exhibit D, as amended from time to time.

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day; provided that if both such rates are not so published for any day that is a Business Day, the term “NYFRB Rate” means the rate quoted for such day, for a federal funds transaction at 11:00 a.m. on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected

15

by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Obligations” means (i) all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other indebtedness, liabilities, or obligations of Borrower to the Lenders or to any Lender, Administrative Agent or any indemnified party arising under the Loan Documents, and (ii) all Swap Obligations under Swap Agreements with one or more Lenders or their respective Affiliates, provided that at or prior to the time that any transaction relating to such Swap Obligation is executed, the Lender counterparty thereto (other than JPMorgan or its Affiliates) shall have delivered written notice to Administrative Agent that such a transaction has been or will be entered into and, subject to Administrative Agent’s prior approval in its reasonable discretion, such Swap Obligation shall constitute an Obligation entitled to the benefits of the liens and guaranties provided by the Loan Documents, provided, however, that the definition of ‘Obligations’ shall exclude any Excluded Swap Obligations of Guarantor for purposes of determining any obligations of Guarantor.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Operating Costs” means the costs and expenses for the operation and maintenance of the Property and the Improvements.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.14).

“Overnight Bank Funding Rate” means for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S. – managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB.

“Participant” has the meaning set forth in Section 10.04(c) hereof.

“Participant Register” has the meaning assigned to such term in Section 10.04(c)(i).

16

“Permits” means all permits, licenses, certificates and approvals now or hereafter issued to Borrower for the operation of the Mortgaged Properties.

“Permitted Encumbrances” means (a) Liens and security interests granted pursuant to the Loan Documents, (b) the items set forth on Schedule B of the Title Policy, (c) customary easements entered into by Borrower in connection with the development and operation of the Mortgaged Properties which Administrative Agent has determined would have no material adverse effect on the use or value of the Mortgaged Properties, (d) documents required to be recorded by applicable law which have no material adverse effect on the use or value of the Mortgaged Properties, (e) Approved Leases, (f) subordination, non-disturbance and attornment agreements executed by Administrative Agent with respect to Approved Leases, and (g) memoranda of Approved Leases.

“Permitted Indebtedness” means (a) the Obligations, (b) unsecured letters of credit or guarantees required by Governmental Authorities in connection with the construction of the Improvements, (c) non-delinquent accrued but unpaid real taxes and insurances premiums, (d) other trade debt incurred in the ordinary course of operation of the Mortgaged Property (which, for clarity, shall specifically include trade payables related to capital expenditures, tenant improvement costs and leasing commissions) in such amounts as are normal and reasonable under the circumstances, provided that such debt described in this clause (d) is not evidenced by a note and is paid prior to delinquency and provided in any event that the outstanding principal balance of such debt shall not exceed at any one time five percent (5%) of the outstanding Obligations, (e) equipment leases entered into in the ordinary course of the operation of the Mortgaged Property, (f) Approved Leases, (g) obligations in connection with posting a bond required by Governmental Authorities in connection with the operation of the Mortgaged Property, and (h) tenant security deposits.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan Assets” means the assets of an employee benefit plan within the meaning of 29 C.F.R. 2510.3-101.

“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan, as its prime rate; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. The Prime Rate is a reference rate and is not necessarily the lowest rate.

“Project” means the acquisition, ownership and operation of the Properties and the Improvements.

“Project Documents” means the Property Management Agreement, and the leasing agreement(s), if any; provided, however, that Project Documents shall not include the Loan Documents, any Swap Agreement or the Leases.

17

“Property” or “Properties” means individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, or as the context shall require, each and all of the Von Karman Property, the Greenhouse Property, and the Institute Property, to the extent then encumbered by a Deed of Trust. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Property” shall be deemed to be a reference to all of the Properties collectively and each Property individually.

“Property Management Agreement” means, individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, or as the context shall require (i) that certain Real Estate Property Management Agreement, dated as of October 23, 2016, by and between Greenhouse Borrower and Stream Realty Partners – Houston, L.P., a Texas limited partnership (“Greenhouse Property Manager”); (ii) that certain Real Estate Property Management Agreement, dated as of July 31, 2015, by and between Von Karman Borrower and Stream Realty Partners – Orange County, L.P., a Texas limited partnership (“Von Karman Property Manager”), and (iii) that certain Real Estate Property Management Agreement, dated as of November 8, 2017, by and between Institute Borrower, acting through its advisor KBS Capital Advisors, LLC, and Cushman & Wakefiled U.S., Inc., a Missouri corporation d/b/a Transwestern (“Institute Property Manager”), and (in each case) any and all extensions, renewals, modifications, amendments, supplements and replacements thereto and therefor. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Property Management Agreement” shall be deemed to be a reference to all of the foregoing Real Estate Property Management Agreements collectively and each individually.

“Property Manager” means, individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, or as the context shall require, Greenhouse Property Manager, Von Karman Property Manager and Institute Property Manager. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Property Manager” shall be deemed to be a reference to all of the foregoing all Property Managers collectively and each Property Manager individually.

“Property Manager Subordination Agreement” means, individually and collectively, using an interpretation most favorable to Administrative Agent and Lenders, or as the context shall require (i) that certain Assignment of Management Agreement and Consent and Subordination of Manager (Offices at Greenhouse), dated as of November 14, 2016, executed Greenhouse Borrower and Greenhouse Property Manager in favor of Administrative Agent and Lenders; (ii) that certain Assignment of Management Agreement and Consent and Subordination of Manager (Von Karman Tech), dated as of May 8, 2017, executed by Von Karman Borrower and Von Karman Property Manager in favor of Administrative Agent and Lenders; and (iii) that certain Assignment of Management Agreement and Consent and Subordination of Manager (Institute), of even date herewith, executed by Institute Borrower and Institute Property Manager in favor of Administrative Agent and Lenders, and (in each case) any and all extensions, renewals, modifications, amendments, supplements and replacements thereto and therefor. Unless otherwise specified in this Agreement, or the context shall otherwise require using an interpretation most favorable to Administrative Agent and Lenders, the term “Property Management Subordination

18

Agreement” shall be deemed to be a reference to all of the foregoing Assignments of Management Agreement and Consents and Subordinations of Manager collectively and each individually.

“Property Operating Expenses” means, as of any date of determination, the greater of (a) the sum of appraised stabilized operating expenses for each Mortgaged Property based on the most recent Appraisal approved by Administrative Agent, or (b) the sum (without duplication) of (i) the following for the most recently completed twelve (12) month period, (A) all expenses incurred in connection with the ownership, maintenance and operation of the Mortgaged Properties, including, without limitation, utilities, license fees, ground rent, ordinary repairs and maintenance, insurance premiums and Taxes (excluding state and federal income taxes), and (B) property management fees for the Mortgaged Properties in an amount equal the actual property management fees incurred for the applicable period; and (ii) replacement reserves with respect to the Mortgaged Properties in the amount of $0.20 per square foot, per annum. Property Operating Expense shall exclude debt service charges, depreciation, amortization, and other non-cash expenses and shall be subject to appropriate seasonal and other adjustments as approved by Administrative Agent.

“Recipient” means (a) the Administrative Agent and (b) any Lender, as applicable.

“Register” has the meaning set forth in Section 10.04(b)(iv) hereof.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Repayment Guaranty” means the Amended and Restated Repayment Guaranty of even date herewith executed by Guarantor in favor of Administrative Agent, for the benefit of the Lenders, as amended from time to time.

“Report” means, individually and collectively, (a) that certain Phase I Environmental Site Assessment of the Greenhouse Property, prepared by Ramboll Environ US Corporation, dated as of August, 2016, (b) that certain Phase I Environmental Site Assessment of the Von Karman Property, prepared by Ramboll Environ US Corporation, dated as of April, 2017, and (c) that certain Phase I Environmental Site Assessment of the Institute Property, prepared by Ramboll Environ US Corporation, dated as of August, 2017.

“Required Institute Repairs” have the meaning set forth in Section 4.14(a) hereof.

“Required Lenders” means Lenders (other than Defaulting Lenders) in the aggregate having at least 66 2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 66 2/3% of the aggregate unpaid principal amount of the outstanding Advance.

“Required Third Party Documents” means the Property Manager Subordination Agreement.

“Requirement of Law” means, as to any Person, any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case

19

applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Revolving Commitment” shall mean Twenty-Four Million Two Hundred Sixty-Six Thousand Six Hundred Sixty-Seven and No/100 Dollars ($24,266,667.00), as such amount may be reduced from time to time pursuant to Section ‎3.17 hereof.

“Revolving Loans” shall mean the aggregate principal amount of the advances outstanding at any one time under the Revolving Commitment.

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Cuba, Iran, North Korea, Sudan, Syria and Crimea).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, or by the United Nations Security Council, the European Union, any European Union member state , Her Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country or (c) an Affiliate of any such Person described in the foregoing clauses (a) or (b).

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union , or any European Union member state, or Her Majesty’s Treasury of the United Kingdom , or other relevant sanctions authority.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency fundings and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subsequent Advance” shall have the meaning set forth in Section 2.03.

“Survey” has the meaning set forth in Section 2.02(b)(v) hereof.

“Swap Agreement” means any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

“Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or

20

acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Tenant Monetary Default” means (i) a default by any Lessee in the payment of scheduled rent under its Lease which continues beyond any applicable grace or cure period, or (ii) the filing of any petition or the commencement of any case or proceeding by or against any Lessee under any provision or chapter of the Federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization.

“Term Commitment” shall mean Forty-Eight Million Five Hundred Thirty-Three Thousand Three Hundred Thirty-Three and No/100 Dollars ($48,533,333.00). The Term Commitment (and, correspondingly, the Aggregate Commitment) shall reduce dollar for dollar with each paydown in the Term Loan.

“Term Loan” shall mean the aggregate principal amount of the advances made by the Lenders under the Term Commitment.

“Title Company” means Commonwealth Land Title Insurance Company.

“Title Policy” means an ALTA Lender’s Policy of Title Insurance for each of the Properties in form and substance satisfactory to Administrative Agent issued by the Title Company in the amount of the Aggregate Commitment insuring each Deed of Trust as a first priority lien on the Property and the Improvements encumbered thereby, containing such endorsements and with such re-insurance as Administrative Agent may request, excepting only such items as shall be acceptable to Administrative Agent.

“Total Revenues” means, as of any date of determination, the sum (without duplication) of the following for the most recently completed twelve (12) month period, (i) the actual gross rental revenue received by Borrower under Approved Leases from lessees as of such date of determination (adjusted upwards for any Approved Leases in a free-rent period based on a calculation using the lesser of (A) a net effective rental rate over the term of the Approved Lease, or (B) an effective rental rate based on the next rental payment to be made under such Approved Lease); (ii) the actual expense reimbursement revenue received by Borrower under Approved Leases from Lessees in occupancy and paying rent as of the date of determination; (iii) any other ordinary actual operating revenue received by Borrower from the Mortgaged Property of a recurring nature, as reasonably determined by Administrative Agent, and (iv) proceeds from loss of rents or business interruption coverage relating to Approved Leases so long as (a) the aggregate amount received with respect thereto does not exceed 5% of Total Revenues derived from a Property and (b) the Leases relating thereto shall remain in full force and effect after the expiration of the applicable insurance payments. Total Revenues as of any date of determination shall exclude (i) revenue received under Approved Leases under which a Tenant Monetary Default has occurred and is continuing as of such date of determination, (ii) revenue from Leases as to which

21

the tenant has vacated the leased space if the remaining term of such lease is less than six (6) months, provided, however, at, from and after any extension of the Maturity Date, Total Revenues will not include any Leases with tenants that have vacated the leased space unless otherwise agreed to in writing by Administrative Agent, (iii) revenue received under Approved Leases that will terminate or expire within 90 days after such date of determination, whether because of the expiration of the Lease term without proper exercise by the Lessee of an available extension option, the exercise by the Lessee of a termination option, or otherwise, (iv) revenue received under Approved Leases where the Lessee has not waived in writing any termination options available to such Lessee during the 90 days after such date of determination, and (v) lease termination fees, straight-line income, security deposits not yet applied in accordance with the underlying applicable Approved Lease, insurance proceeds (except with respect to loss of rents or business interruption coverage as provided above) and condemnation awards and other extraordinary items of income; provided that Total Revenues for any Property owned less than twelve months shall be calculated based on (a) the projected pro forma Total Revenues for such Property until there is a quarter of actual Total Revenues during the applicable testing period, (b) the actual Total Revenues for such Property annualized based on the prior quarterly period once there is a quarter of actual Total Revenues during the applicable testing period, and (c) after there is a year of actual Total Revenues for such Property for the applicable testing period, the actual Total Revenues for the 12 months immediately preceding and through the date of determination. Total Revenues shall also be subject to an economic vacancy allowance and adjustment equal to the greater of actual or 5.0%.

“Transactions” means the execution, delivery and performance by Borrower of this Agreement and the other Loan Documents, the borrowing of Loans and the use of the proceeds thereof.

“Type” means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance and with respect to any Loan, its nature as a Floating Rate Loan or Eurodollar Loan.

“Unmatured Default” means the occurrence of an event which with notice or lapse of time or both would constitute a Default.

“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 3.12(f)(ii)(B)(3).

“Von Karman Borrower” has the meaning set forth in the preamble to this Agreement.

“Von Karman Deed of Trust” means that certain Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of May 8, 2017, executed by Von Karman Borrower, as Trustor, to Commonwealth Land Title Insurance Company, as Trustee, in favor of Administrative Agent, as Beneficiary, recorded on May 10, 2017 in the Official Records of Orange County, California, as Instrument No. 2017000189607, as amended by the Von Karman DOT Amendment, and as further amended from time to time.

22

“Von Karman DOT Amendment” means that certain Amendment to Deed of Trust of even date herewith, executed by Von Karman Borrower and Administrative Agent, pursuant to which the Von Karman Deed of Trust has been amended to secure the Loan as modified by this Agreement and the other Loan Documents.

“Von Karman Improvements” has the meaning set forth in Recital B above.

“Von Karman Property” has the meaning set forth in Recital B above.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

ARTICLE II

CONDITIONS TO DISBURSEMENT

2.01Right to Advances, Generally. Each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Loans to Borrower from time to time in amounts not to exceed in the aggregate the amount of its Commitment. Each Advance hereunder shall consist of Loans made by the several Lenders ratably in proportion to the ratio that their respective Commitments bear to the Aggregate Commitment. No Lender shall be responsible for the failure of any other Lender to perform its obligations to make Loans hereunder, and the Commitment of any Lender shall not be increased or decreased as a result of the failure by any other Lender to perform its obligation to make Loans hereunder. Borrower agrees to cause the proceeds of the Advance to be applied for the costs incurred in connection with the acquisition and refinancing of the Properties, and for any other lawful purpose related to the Properties.

2.02Conditions to Closing and Closing Advance. Borrower agrees that, in addition to all other conditions set forth herein, before this Agreement becomes effective and any party becomes obligated under it, and as express conditions precedent to the making of the Closing Advance, all of the following conditions shall have been satisfied at Borrower’s sole cost and expense in a manner acceptable to Administrative Agent in the exercise of Lender’s sole judgment, subject, however, to the right of Administrative Agent in its sole discretion to waive any one or more of such conditions in whole or in part:

(a)Loan Documents and Certain Third Party Documents. Administrative Agent shall have received on the date hereof the following documents fully executed and in form and substance satisfactory to Administrative Agent:

(i)The Notes;

(ii)The Institute Mortgage;

(iii)The Von Karman DOT Amendment;

(iv)The Repayment Guaranty;

23

(v)The Environmental Indemnity Agreement;

(vi)The Fee Letter;

(vii)The Property Manager Subordination Agreement for the Institute Property (attaching a copy of the Property Management Agreement);

(viii)Borrower Financing Statement for Institute Borrower;

(ix)Administrative Agent’s Disbursement and Rate Management Signature Authorization and Instruction Form.

(b)Additional Closing Deliveries. Administrative Agent shall have received the following on or before the date hereof in form and substance satisfactory to Administrative Agent:

(i)An opinion or opinions from counsel for Borrower and Guarantor covering such items as Administrative Agent and its counsel may require;

(ii)Current UCC, tax and judgment searches made in such places as Administrative Agent may specify, covering Borrower and showing no filings relating to, or which could relate to, the Mortgaged Property other than those made hereunder;

(iii)Evidence of the insurance required under Section 7.01 hereof;

(iv)(A) A commitment to issue the Title Policy for the Institute Property, together with copies of all documentation evidencing exceptions raised therein, and (B) such assurance as Administrative Agent may reasonably require that the validity and priority of the Von Karman Deed of Trust has not been and will not be impaired by this Agreement or the transactions contemplated by it, including the issuance by Title Company of a CLTA Endorsement No. 110.10 or equivalent to be attached to the Title Policy insuring the lien of the Von Karman Deed of Trust;

(v)An ALTA survey of each Property certified in a manner acceptable to Administrative Agent (the “Survey”);

(vi)Copies of organizational documents for Borrower, Guarantor and any other entity reasonably requested by Administrative Agent based on the organizational chart for Borrower, together with good standing certificates, resolutions, incumbency certificates, and such other evidence of authority to enter into the Loan Documents as Administrative Agent may reasonably require.

(vii)A copy of the contracts to purchase the Institute Property and the related closing statement;

(viii)Evidence indicating whether the Improvements or any part thereof for any Property are or will be located within a one hundred year flood plain or other area identified by Administrative Agent as having high or moderate risk of flooding or identified

24

as a special flood hazard area as defined by the Federal Emergency Management Agency, and, if so, a flood notification form signed by Borrower and evidence that the flood insurance required by Article VII of this Agreement is in place for the Improvements and contents, if applicable, all in form, substance and amount satisfactory to Administrative Agent and the Lenders;

(ix)An Appraisal for each Property acceptable to Administrative Agent;

(x)A soils report with respect to each Property prepared by an engineer acceptable to Administrative Agent, and copies of all other inspection and test reports with respect to each Property made by or for Borrower;

(xi)An environmental report with respect to each Property prepared by an environmental consultant acceptable to Administrative Agent;

(xii)Evidence indicating compliance by the Improvements for each Property with applicable zoning requirements (without requirement for a variance);

(xiii)Evidence that all utilities and municipal services required for the operation of the Improvements are available at each Property;

(xiv)The most recent available financial statements of Borrower and Guarantor;

(xv)A current engineering report with respect to the Institute Property, covering, among other matters, inspection of heating and cooling systems, roof and structural details and showing no failure of compliance with building plans and specifications, applicable legal requirements (including requirements of the Americans with Disabilities Act) and fire, safety and health standards. If requested by Administrative Agent, such report shall also include an assessment of the Institute Property’s tolerance for earthquake and seismic activity;

(xvi)(1) A certificate of an authorized representative of Borrower and Guarantor certifying as to the operating agreements for each of Borrower and Guarantor, (2) the authorizing resolutions of Borrower and Guarantor, and (3) incumbency certificate and specimen signatures of signatories for Borrower and Guarantor, together with (x) a copy of the Certificate of Formation for Borrower and Guarantor, each certified by the Delaware Secretary of State as of a recent date, (y) certificates of good standing as of a recent date for Borrower and Guarantor from the Delaware Secretary of State, and (z) a certificate of good standing as of a recent date for each Borrower from the Secretary of State of the state in which the Property owned by such Borrower is located;

(xvii)Copies of all leases for space of 10,000 square feet or more within each Property, together with estoppel letters from tenants occupying in the aggregate at least 75% of the leasable space within the Improvements at each Property (or other amounts acceptable to Administrative Agent), and in the form received by Borrower in connection with its acquisition of each Property, with such changes thereto as Administrative Agent

25

reasonably requests so as to allow Administrative Agent to rely on and enforce any such estoppels;

(xviii)a current rent roll for the Institute Property, together with all leases for the Institute Property not previously delivered to Administrative Agent. Such rent roll shall include the following: (A) tenant names; (B) unit/suite numbers; (C) area of each demised premises and total area of the Institute Property (stated in net rentable square feet); (D) rental rate (including escalations) (stated in gross amount and in amount per net rentable square foot per year); (E) lease term (commencement, expiration and renewal options); (F) expense pass-throughs; and (G) the amounts of security deposits, if any;

(xix)A signed IRS Form W 8 or W 9 as applicable for each Borrower and Guarantor;

(xx)A copy of the environmental insurance policy covering the Property, including all endorsements, amendments, renewals, and certificates, in all respects acceptable to Administrative Agent;

(xxi)All other due diligence items required by Administrative Agent, including without limitation copies of all exceptions listed in the title report, the soils report, copies of licenses, permits and related agreements pertaining to each Property, and any other due diligence items required by Administrative Agent;

(xxii)A legal review of all legal and regulatory matters satisfactory to Administrative Agent;

(xxiii)Borrower shall have paid all fees and costs then owing to Administrative Agent and Lenders;

(xxiv)A Borrowing Base Certificate executed by Borrower;

(xxv)All representations and warranties contained herein and in the other Loan Documents shall be true and correct in all material respects (including, without limitation, representations relating to any material adverse change in the condition of Borrower or Guarantor and any representation relating to litigation impacting Borrower or Guarantor); and

(xxvi)Such other information and documents as Administrative Agent may reasonably require.

Borrower shall have a right to request in writing that Administrative Agent notify Borrower of any conditions specified above in this Section 2.02 that have not been satisfied prior to the proposed date and time of the recordation of the Institute Mortgage, provided that Borrower shall make such request at least 24 hours prior to the scheduled time of such recordation; and Administrative Agent shall make a good faith effort to identify, prior to such recordation, any such outstanding items specified above in Section 2.02 that have not yet been satisfied.

26

2.03Conditions for all Subsequent Advances. Every subsequent Advance (each a “Subsequent Advance”) shall be subject to Administrative Agent’s receipt, review, approval and/or confirmation of the following, each in form and content reasonably satisfactory to Administrative Agent:

(a)There shall exist no Default or Unmatured Default (currently and after giving effect to the requested advance).

(b)The representations and warranties contained in this Agreement and in all other Loan Documents are true and correct in all material respects as of the date of the requested Advance.

(c)Each Borrowing Request for such an Advance shall specify the amount requested, shall be submitted on the form approved by Administrative Agent.

(d)Borrower shall have paid Administrative Agent’s costs and expenses in connection with such Advance (including title charges and costs and expenses of Administrative Agent’s and reasonable attorneys fees).

(e)Such Advance shall be secured by the Loan Documents, subject only to those exceptions to title approved by Administrative Agent at the time of Loan closing, and, if required by Administrative Agent, as evidenced by title insurance endorsements satisfactory to Administrative Agent (to the extent available). For purposes of clarification, Administrative Agent shall have no obligation to make any subsequent Advance if Administrative Agent determines in its reasonable discretion that such subsequent Advance may not have priority over any other Liens encumbering any Property (other than those exceptions to title approved by Administrative Agent at the time of Loan closing or otherwise approved by Administrative Agent in writing, in Administrative Agent’s sole but good faith discretion), including, without limitation, any judgment liens docketed against any Property, unless Borrower is in compliance with Section 4.01(c) of this Agreement and has delivered, or caused to be delivered, acceptable title endorsements covering any such Subsequent Advances.

(f)No (A) condemnation or material adverse, as determined by Administrative Agent, zoning or usage change proceeding shall have occurred or shall have been threatened in writing against any Property, (B) damage to any Property by fire or other casualty has occurred which has not been repaired or is not being restored in accordance with this Agreement, and (C) law, regulation, ordinance, moratorium, injunctive proceeding, restriction, (except as specifically disclosed to Administrative Agent in writing) litigation or action, citation or similar proceeding or matter shall have been enacted or adopted, or threatened in writing by any governmental authority, in each case under the foregoing (A)-(C) which would have, in Administrative Agent’s good faith judgment, a material adverse effect on the Loan, any Property, or Borrower’s or Guarantor’s ability to perform its obligations under the Loan Documents.

(g)Following the requested Advance, the aggregate outstanding principal amount of the Loan would not exceed the Availability Amount (and the outstanding principal amount of the Term Loan would not exceed the Term Commitment, and the outstanding principal amount of the Revolving Loans would not exceed the Revolving Commitment).

27

(h)Borrower shall have delivered to Administrative Agent a Borrowing Base Certificate.

ARTICLE III

LOAN TERMS

3.01The Loan and Advances.

(a)Generally. All Advances of the Loans are subject to satisfaction of the conditions to disbursement contained in Article II of this Agreement, as well as the terms of this Article III.

(b)Type. Subject to Section 3.09 hereof, each Advance shall be comprised entirely of Floating Rate Loans or Eurodollar Loans as Borrower may request in accordance herewith, and shall bear interest at the applicable Floating Rate or Eurodollar Rate, respectively. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of Borrower to repay such Loan in accordance with the terms of this Agreement.

(c)Minimum Advance Amounts. At the commencement of each Interest Period for any Eurodollar Advance, such Advance shall be in an aggregate amount that is not less than $500,000. Advances of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 5 Eurodollar Advances outstanding.

(d)No Interest Period to Expire After Maturity Date. Notwithstanding any other provision of this Agreement, Borrower shall not be entitled to request, or to elect to convert or continue, any Advance if the Interest Period requested with respect thereto would end after the Maturity Date.

3.02Requests for Advances. To request an Advance, Borrower shall notify Administrative Agent of such request by electronic communication as provided in Section 10.01 (a) in the case of a Eurodollar Advance, not later than noon, Dallas, Texas time, three (3) Business Days before the date of the proposed Advance or (b) in the case of a Floating Rate Advance, not later than 2:00 p.m., Dallas, Texas time, one (1) Business Day before the date of the proposed Advance. Each such Borrowing Request shall be irrevocable, shall be in a form approved by Administrative Agent and shall specify the following information in compliance with Section 3.01 hereof:

(i)the aggregate amount of the requested Advance;

(ii)the requested Borrowing Date of such Advance, which shall be a Business Day;

(iii)the Type of Advance requested; i.e., a Floating Rate Advance or a Eurodollar Advance; and

28

(iv)in the case of a Eurodollar Advance, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”.

If no election as to the Type of Advance is specified, then the requested Advance shall be a Floating Rate Advance. If no Interest Period is specified with respect to any requested Eurodollar Advance, then Borrower shall be deemed to have requested a Floating Rate Advance. Promptly following receipt of a Borrowing Request in accordance with this Section, Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Advance.

3.03Funding of Advances.

(a)Generally. Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 11:00 a.m. Dallas, Texas time, to the account of Administrative Agent most recently designated by it for such purpose by notice to the Lenders. Administrative Agent will make such Loans available to Borrower by promptly crediting the amounts so received, in like funds, to an account of Borrower designated by Borrower in Administrative Agent’s Disbursement and Rate Management Signature Authorization and Instruction Form.

(b)Advance Fundings. Unless Administrative Agent shall have received notice from a Lender prior to the proposed date of the Advance that such Lender will not make available to Administrative Agent such Lender’s share of the Advance, Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the Advance available to Administrative Agent, then the applicable Lender and Borrower severally agree to pay to Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of Borrower, the interest rate applicable to Floating Rate Loans. If such Lender pays such amount to Administrative Agent, then such amount shall constitute such Lender’s Loan included in the Advance.

3.04Interest Elections.

(a)Generally. The Advance initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Advance, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, Borrower may elect to convert such Advance to a different Type or to continue such Advance and, in the case of a Eurodollar Advance, may elect Interest Periods therefor, all as provided in this Section. Borrower may elect different options with respect to different portions of the affected Advance, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Advance, and the Loans comprising each such portion shall be considered a separate Advance.

29

(b)Interest Election Request. To make an election pursuant to this Section, Borrower shall notify Administrative Agent of such election by electronic communication as provided in Section 10.01 by the time that a Borrowing Request would be required under Section 3.02 hereof if Borrower were requesting an Advance of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable and shall be in a form approved by Administrative Agent.

(c)Required Information. Each Interest Election Request shall specify the following information in compliance with Section 3.01 hereof:

(i)the Advance to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Advance (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Advance);

(ii)the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)the Type of Advance, i.e., a Floating Rate Advance or a Eurodollar Advance; and

(iv)if the resulting Advance is a Eurodollar Advance, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If no Type of Advance is specified in the Interest Election Request, or if any such Interest Election Request requests a Eurodollar Advance but does not specify an Interest Period, then Borrower shall be deemed to have requested a Floating Rate Advance.

(d)Notice to Lenders. Promptly following receipt of an Interest Election Request, Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Advance.

(e)Failure to Elect; Default. If Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Advance prior to the end of the Interest Period applicable thereto, then, unless such Advance is repaid as provided herein, at the end of such Interest Period such Advance shall be converted to a Floating Rate Advance. Notwithstanding any contrary provision hereof, so long as a Default has occurred and is continuing: (i) no outstanding Advance may be converted to or continued as a Eurodollar Advance and (ii) unless repaid, each Eurodollar Advance shall be converted to a Floating Rate Advance at the end of the Interest Period applicable thereto.

3.05Repayment of Loans; Evidence of Debt.

(a)Repayment at Maturity. Borrower hereby unconditionally promises to pay to Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan and all unpaid accrued interest on the Maturity Date.

30

(b)Lender Accounting. Each Lender shall maintain in accordance with its usual practice an accounting of the indebtedness of Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c)Administrative Agent Accounting. Administrative Agent shall maintain an accounting of (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder and (iii) the amount of any sum received by Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d)Prima Facie Evidence. The entries made in the accounting maintained pursuant to paragraph (b) or (c) of this Section shall be primafacie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or Administrative Agent to maintain such accounting or any error therein shall not in any manner affect the obligation of Borrower to repay the Loans in accordance with the terms of this Agreement.

(e)Notes. The Loan made by each Lender shall be evidenced by the Note executed by Borrower in favor of such Lender.

3.06Prepayment of Loans. Borrower shall have the right at any time and from time to time to prepay any Advance in whole or in part, subject to prior notice in accordance with this Section 3.06. Borrower shall notify Administrative Agent by electronic communication as provided in Section 10.01 of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Advance, not later than 12:00 p.m., Dallas, Texas time, three (3) Business Days before the date of prepayment, or (ii) in the case of prepayment of a Floating Rate Advance, not later than 2:00 p.m., Dallas, Texas time, one (1) Business Day before the date of prepayment. Each such notice shall specify the prepayment date and the principal amount of each Advance or portion thereof to be prepaid. Promptly following receipt of any such notice, Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Advance shall be in an amount that would be permitted in the case of an Advance of the same Type as provided in Section 3.01 hereof. Prepayments shall be accompanied by accrued interest on the amount prepaid, plus any other break funding payments or fees required by Section 3.11 or other amounts required by Section 3.08 hereof.

3.07Fees.

(a)Loan Fee. Borrower agrees to pay to Administrative Agent for the account of each Lender a loan fee in the amount of specified in the Fee Letter.

(b)Fees Non-Refundable. All fees payable hereunder shall be paid on the dates due, in immediately available funds, to Administrative Agent for distribution, in the case of the Loan Fee, to the Lenders. Fees paid shall not be refundable under any circumstances.

31

3.08Interest.

(a)Floating Rate Loans. The Loans comprising each Floating Rate Advance shall bear interest at the Floating Rate.

(b)Eurodollar Loans. The Loans comprising each Eurodollar Advance shall bear interest at the Eurodollar Rate for the Interest Period in effect for such Advance.

(c)Default Rate. Notwithstanding the foregoing, to the extent permitted under applicable law, upon the occurrence of a Default, and during the continuance of a Default, and after maturity, the Loans shall bear interest, after as well as before judgment, at a rate per annum equal to 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section.

(d)Payment of Accrued Interest. Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e)Computation of Interest. All interest hereunder shall be computed on the basis of a year of 360 days, and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by Administrative Agent, and such determination shall be conclusive absent manifest error.

3.09Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Advance, (a) Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining (including by means of an Interpolated Rate) the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period, or (b) Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Advance for such Interest Period, then Administrative Agent shall give notice thereof to Borrower and the Lenders by electronic communication as provided in Section 10.01 as promptly as practicable thereafter and, until Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Advance to, or continuation of any Advance as, a Eurodollar Advance shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Advance, such Advance shall be made as a Floating Rate Advance.

3.10Increased Costs.

(a)Increased Costs of Making or Maintaining Loans. If any Change in Law shall (i) impose, modify or deem applicable any reserve, special deposit or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets

32

of, deposits with or for the account of, or credit extended by any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate), (ii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or the Loans made by such Lender or (iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then Borrower will pay to such Lender or such other Recipient such additional amount or amounts as will compensate such Lender or such other Recipient for such additional costs incurred or reduction suffered.

(b)Capital Adequacy. If any Lender in good faith determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time Borrower will pay to Agent for the benefit of such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c)Certificate of Amounts Due. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to Administrative Agent by Lender and by Administrative Agent (on behalf of such Lender) to Borrower and shall be conclusive absent manifest error. Borrower shall pay to Administrative Agent for the benefit of such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d)Delay in Demand For Compensation. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that Borrower is notified of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

[Remainder of page left intentionally blank]

33

3.11Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of a Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 3.14 hereof, then, in any such event, Borrower shall pay to Administrative Agent an administrative fee of $250.00 and compensate each Lender for the loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Eurodollar Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Eurodollar Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Eurodollar Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market (the “Breakage Fee”). A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to Administrative Agent by such Lender and to Borrower by Administrative Agent (on behalf of such Lender) and shall be conclusive absent manifest error. Borrower shall pay to Administrative Agent for the benefit of such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

Borrower acknowledges that payment or prepayment of any Eurodollar Loan on a date other than the last day of an applicable Interest Period shall result in Administrative Agent and Lenders incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities, and any such payment or prepayment therefore must include the Breakage Fee and other sums set forth above in this Section. Borrower hereby expressly (a) waives any rights it may have under California Civil Code Section 2954.10, and any similar provision of the law of any other state where any Property is located (if any), to prepay any Eurodollar Loan without premium or penalty, upon acceleration of the maturity of this Note, and (b) agrees that if a prepayment of any Eurodollar Loan is made, following any acceleration of the maturity of this Note by the holder hereof on account of any transfer or disposition as prohibited or restricted by this Agreement or by the Deeds of Trust securing the Note, then Borrower shall be obligated to pay, concurrently therewith, as a prepayment premium, the applicable Breakage Fee and other sums specified above in this Section. By initialing this provision in the space provided below, Borrower hereby declares that the Administrative Agent and Lenders’ agreement to make the subject Loan at the interest rate(s) and for the term set forth in this Agreement constitutes adequate consideration, given individual weight by Borrower, for this waiver and agreement.

GREENHOUSE BORROWER’S INITIALS: /CJS
VON KARMAN BORROWER’S INITIALS: /s/CJS
INSTITUTE BORROWER’S INITIALS: /s/CJS

34

3.12Withholding of Taxes; Gross Up.

(a)Payments Free of Taxes. Any and all payments by or on account of any obligation of any Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.12), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b)Payment of Other Taxes by Borrower. Each Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Administrative Agent timely reimburse it for, Other Taxes.

(c)Evidence of Payments. As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 3.12, Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Administrative Agent.

(d)Indemnification by Borrower. Each Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)Indemnification by the Lenders. Each Lender shall severally indemnify Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified Administrative Agent for such Indemnified Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.04(c)(i) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Administrative Agent to set off and apply any and all amounts at any

35

time owing to such Lender under any Loan Document or otherwise payable by Administrative Agent to the Lender from any other source against any amount due to Administrative Agent under this paragraph (e).

(f)Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Administrative Agent, at the time or times reasonably requested by Borrower or Administrative Agent, such properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by Borrower or Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.12(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(i)Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person,

(A)any Lender that is a U.S. Person shall deliver to Borrower and Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;

(B)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), whichever of the following is applicable:

(1)in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

36

(2)in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed IRS Form W-8ECI;

(3)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed IRS Form W-8BEN-E or IRS Form W-8BEN; or

(4)to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner;

(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Administrative Agent to determine the withholding or deduction required to be made; and

(D)if a payment made to a Lender under any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied

37

with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and Administrative Agent in writing of its legal inability to do so.

(g)Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.12 (including by the payment of additional amounts pursuant to this Section 3.12), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.12 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the written request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h)Survival; Defined Terms. Each party’s obligations under this Section 3.12 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. For purposes of this Section 3.12, the term “applicable law” includes FATCA.

3.13Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)Payments Generally. Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees, or of amounts payable under Section 3.10, 3.11 or 3.12, or otherwise) prior to 12:00 p.m., Dallas, Texas time, on the date when due, in immediately available funds, without set‑off or counterclaim. Any amounts received after such time on any date may, in the discretion of Administrative Agent be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to Administrative Agent at its offices at 700 North Pearl Street, Fl. 13, Dallas, Texas 85201-7424 except that payments pursuant to Sections 3.10, 3.11, 3.12 and 10.03 hereof shall be made directly to the Persons entitled thereto; provided, payments payable to any

38

Lender shall be paid to Administrative Agent for the benefit of such Lender. Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in U.S. dollars.

(b)Application of Insufficient Funds. If at any time insufficient funds are received by and available to Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of fees, indemnities and expense reimbursements then due hereunder to the parties entitled thereto; (ii) second, towards payment of interest then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest then due to such parties, and (iii) third, towards payment of principal then due hereunder and Swap Obligations then due on a pari passu basis, ratably among the parties entitled thereto in accordance with the amounts of principal and Swap Obligations then due to such parties. Notwithstanding the foregoing, amounts received from any Guarantor that is not an “eligible contract participant” as defined in the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) shall not be applied to the Obligations.

(c)Allocation of Payments.

(i)If, except as otherwise expressly provided herein, any Lender shall, by exercising any right of set‑off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other similarly situated Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by all such Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to Borrower or any subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of Borrower in the amount of such participation.

(ii)Except as otherwise provided in Section 3.15(d), 3.16 and/or 3.17 below, all payments of principal on the Loan shall be allocated first to the outstanding

39

principal balance of the Revolving Loans until such Revolving Loans are paid in full, and then to the outstanding principal balance of the Term Loans.

(d)Advance Payments. Unless Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to Administrative Agent for the account of the Lenders hereunder that Borrower will not make such payment, Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if Borrower has not in fact made such payment to Administrative Agent , then each of the Lenders severally agrees to repay to Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it but excluding the date of payment to Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation.

3.14Mitigation Obligations; Replacement of Lenders.

(a)Mitigation of Increased Costs. If any Lender requests compensation under Section 3.10 hereof, or if Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.12 hereof, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.10 or 3.12 hereof, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)Replacement of Lenders. If any Lender requests compensation under Section 3.10 hereof, or if Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.12 hereof, or if any Lender defaults in its obligation to fund Loans hereunder, then Borrower may, at its sole expense and effort, upon notice to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.04 hereof), all its interests, rights (other than its existing rights to payments pursuant to Section 3.10 or 3.12) and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) Borrower shall have received the prior written consent of Administrative Agent, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts); provided however, that in the case of Borrower’s replacement of a Defaulting Lender for failure to fund Loans hereunder, the assignee or Borrower, as the case may be, shall holdback from such amounts payable to such Lender and pay directly to Administrative Agent, any payments due to Administrative Agent or the Non-Defaulting Lenders by Defaulting Lender under this Agreement, and (iii) in the case of

40

any such assignment resulting from a claim for compensation under Section 3.10 hereof or payments required to be made pursuant to Section 3.12 hereof, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.

3.15Extension Options.

(a)First Extension Option. At the written request of Borrower made at least thirty (30) but not more than ninety (90) days prior to the Initial Maturity Date, the Maturity Date shall be extended to the one-year anniversary of the Initial Maturity Date (the “First Extended Maturity Date”) provided that the following conditions are satisfied:

(i)Administrative Agent shall have received evidence indicating whether the Improvements on each of the Properties or any part thereof are or will be located within a one hundred year flood plain or other area identified by Administrative Agent has having high or moderate risk of flooding or identified as a special flood hazard area as defined by the Federal Emergency Management Agency, and, if so, a flood notification form signed by Borrower and evidence that the flood insurance required by Article VII of this Agreement is in place for the Improvements and contents, if applicable, all in form, substance and amount satisfactory to Administrative Agent and the Lenders;

(ii)Borrower has delivered to Administrative Agent evidence acceptable to Administrative Agent that, as of the Initial Maturity Date, that the outstanding balance of the Loans will not exceed the Availability Amount based on the then existing applicable metrics (using an updated appraisal if required by Administrative Agent) and Debt Service Coverage Ratio calculations); provided Borrower may pay down the Loan by such amount to ensure compliance with the foregoing;

(iii)On or before the Initial Maturity Date, Administrative Agent shall have received, on behalf of the Lenders, an extension fee in an amount equal to fifteen one hundredths percent (0.15%) of the Aggregate Commitment;

(iv)No Default or Unmatured Default shall have occurred and be continuing on the Initial Maturity Date;

(v)All representations and warranties made hereunder or under any of the other Loan Documents shall be true and correct in all material respects as of the Initial Maturity Date, except (A) to the extent such representation and warranty is made as of a specified date, in which case such representation and warranty shall have been true and correct as of such specified date, or (B) as to any immaterial representations which Administrative Agent in good faith determines would not have a material adverse effect on the Property, Borrower or Guarantor if not true and correct in all material respects (provided the foregoing shall in no event apply to intentional misrepresentations);

(vi)Administrative Agent has received satisfactory documentation evidencing the extension executed by Borrower and consented to by Guarantor, and

41

Borrower shall have paid all of Administrative Agent’s costs and expenses in connection with such extension in accordance with Section 10.03;

(vii)Guarantor shall have executed a reaffirmation of the Repayment Guaranty and a consent to the extension in form and content reasonably acceptable to Administrative Agent and Guarantor (provided, however, that it is the intent and agreement of the parties hereto and of the Guarantor that its Repayment Guaranty shall continue in full force and effect whether or not any such reaffirmation is obtained).

(viii)Borrower shall have paid all costs and expenses of Administrative Agent in connection with the extension of the Loan (including, without limitation, reasonable fees and expenses of counsel);

(ix)Administrative Agent shall have been provided with an updated title report, at Borrower’s sole cost and expense, covering the Properties, and appropriate title endorsements requested by Administrative Agent (if any) shall have been issued, as reasonably requested by Administrative Agent;

(x)Borrower shall have delivered to Administrative Agent a current Borrowing Base Certificate; and

(xi)Borrower and Guarantor shall execute such additional documentation as is reasonably satisfactory to Administrative Agent with respect to such extension.

(b)Second Extension Option. At the written request of Borrower made at least thirty (30) but not more than ninety (90) days prior to the First Extended Maturity Date, the Maturity Date shall be further extended to the first anniversary of the First Extended Maturity Date, provided that the following conditions are satisfied:

(i)The Maturity Date has previously been extended to the First Extended Maturity Date pursuant to the provisions of Section 3.15(a) hereof;

(ii)Administrative Agent shall have received evidence indicating whether the Improvements or any part thereof are or will be located within a one hundred year flood plain or other area identified by Administrative Agent as having high or moderate risk of flooding or identified as a special flood hazard area as defined by the Federal Emergency Management Agency, and, if so, a flood notification form signed by Borrower and evidence that the flood insurance required by Article VII of this Agreement is in place for the Improvements and contents, if applicable, all in form, substance and amount satisfactory to Administrative Agent and the Lenders;

(iii)Borrower has delivered to Administrative Agent evidence acceptable to Administrative Agent that, as of the First Extended Maturity Date, that the outstanding balance of the Loans will not exceed the Availability Amount based on the then existing applicable metrics and Debt Service Coverage Ratio calculations; provided Borrower may pay down the Loan by such amount to ensure compliance with the foregoing;

42

(iv)On or before the First Extended Maturity Date, Administrative Agent shall have received, on behalf of the Lenders, an extension fee in an amount equal to fifteen one-hundredths percent (0.15%) of the Aggregate Commitment;

(v)No Default or Unmatured Default shall have occurred and be continuing on the First Extended Maturity Date;

(vi)All representations and warranties made hereunder or under any of the other Loan Documents shall be true and correct in all material respects as of the First Extended Maturity Date, except (A) to the extent such representation and warranty is made as of a specified date, in which case such representation and warranty shall have been true and correct as of such specified date, or (B) as to any immaterial representations which Administrative Agent in good faith determines would not have a material adverse effect on the Property, Borrower or Guarantor if not true and correct in all material respects (provided the foregoing shall in no event apply to intentional misrepresentations);

(vii)Administrative Agent has received satisfactory documentation evidencing the extension executed by Borrower and consented to by Guarantor, and Borrower shall have paid all of Administrative Agent’s costs and expenses in connection with such extension in accordance with Section 10.03;

(viii)Guarantor shall have executed a reaffirmation of the Repayment Guaranty and a consent to the extension in form and content reasonably acceptable to Administrative Agent and Guarantor (provided, however, that it is the intent and agreement of the parties hereto and of Guarantor that its Repayment Guaranty shall continue in full force and effect whether or not any such reaffirmation is obtained).

(ix)Borrower shall have paid all costs and expenses of Administrative Agent in connection with the extension of the Loan (including, without limitation, reasonable fees and expenses of counsel);

(x)Administrative Agent shall have been provided with an updated title report, at Borrower’s sole cost and expense, covering the Properties, and appropriate title endorsements requested by Administrative Agent (if any) shall have been issued, as reasonably requested by Administrative Agent;

(xi)Borrower shall have delivered to Administrative Agent a current Borrowing Base Certificate; and

(xii)Borrower and Guarantor shall execute such additional documentation as is reasonably satisfactory to Administrative Agent with respect to such extension.

(c)[Reserved.]

(d)Reduction in Term Loan. Borrower shall have the right at any time during the thirty (30) day period prior to the Initial Maturity Date or the First Extended Maturity Date, as applicable, to reduce the Term Loan by the amount necessary to satisfy the applicable Availability

43

Amount conditions to extension set forth in Section 3.15 hereof, as applicable, by furnishing written notice to Administrative Agent of such election and by making payment to Administrative Agent for application to the Term Loan. In the event of any such election to reduce the Term Loan, Administrative Agent shall notify the Lenders, (i) each Lender’s Term Commitment shall automatically be reduced by such Lender’s Applicable Percentage of the total reduction in the Term Loan requested by Borrower, (ii) each Lender’s Revolving Commitment shall automatically be reduced by such Lender’s Applicable Percentage of the total reduction in the Revolving Commitment pursuant to Section 3.17(b) hereof, if applicable, in connection with such reduction of the Term Loan, and (iii) if, as a result of the reduction of the Revolving Commitment pursuant to clause (ii) above, the outstanding principal balance of the Revolving Loans exceed the Revolving Commitment, Borrower shall pay an amount equal to such excess to Administrative Agent (without payment of any prepayment fees other than hedge or LIBOR breakage fees) on or before the earlier of (1) five (5) Business Days of written demand by Administrative Agent, and (2) the Initial Maturity Date or the First Extended Maturity Date, as applicable.

3.16Outstanding Principal Balance May Not Exceed the Availability Amount; Revolving Portion May Be Repaid And Re-Borrowed. Borrower shall not be entitled to request or receive an advance of Loan proceeds unless, following the making of any such advance, the aggregate outstanding principal balance of the Loan would be less than or equal to the Availability Amount, and the outstanding principal balance of the Revolving Loans is less than or equal to the Revolving Commitment. If, for any reason, the aggregate outstanding principal amount of the Revolving Loan and the Term Loan exceed the Availability Amount, Borrower shall, within five (5) Business Days of written demand by Administrative Agent, pay down (without payment of any prepayment fees other than hedge or LIBOR breakage fees) the outstanding principal balance of the Loan so that such outstanding principal balance does not exceed the Availability Amount. Furthermore, should at any time the outstanding principal balance of the Revolving Loans exceed the Revolving Commitment, or should the outstanding principal balance of the Term Loan exceed the Term Commitment, Borrower shall pay to Administrative Agent, within five (5) Business Days of written demand by Administrative Agent, for application to the applicable portion of the Loan (without payment of any prepayment fees other than hedge or LIBOR breakage fees), an amount sufficient so that the outstanding principal balance of the Revolving Loans does not exceed the Revolving Commitment and the outstanding principal balance of the Term Loan does not exceed the Term Commitment; provided, however, that, if the circumstances described in Section 3.15(d) above shall apply and earlier payment of the Revolving Loans is required thereunder, the applicable payment of the Revolving Loans shall be due when required under Section 3.15(d). Subject to the foregoing, and any additional conditions and requirements set forth in this Agreement, the Revolving Loans may be repaid and re-borrowed. The Term Loan once repaid in whole or in part, may not be re-borrowed.

The Availability Amount will be tested by Administrative Agent (a) quarterly (as of the last day of each calendar quarter), (b) any time a Property is released, and (c) in connection with the exercise of each extension option under Section 3.15 hereof.

44

3.17Voluntary Termination or Reduction of Commitment; Adjustment of Revolving Commitment.

(a)Borrower may, upon not less than ten (10) days’ prior written notice to Administrative Agent (and upon receipt of such notice Administrative Agent shall promptly notify Lenders thereof), terminate the Aggregate Commitment or permanently reduce the Revolving Commitment and/or the Term Commitment by a minimum amount of $1,000,000 or any multiple of $1,000,000 in excess thereof, unless, after giving effect thereto and to any prepayments of Loan made on the effective date thereof, (i) the aggregate principal balance of the then outstanding Loans made by any Lender would exceed such Lender’s Commitment, (ii) the outstanding principal balance of the Revolving Loans would exceed the Revolving Commitment, or (iii) the outstanding principal balance of the Term Loans would exceed the Term Commitment. No commitment or extension fees paid prior to the effective date of any reduction of the Revolving Commitment or the Term Commitment or termination of the Aggregate Commitment shall be refunded.

(b)If the Term Commitment is reduced, whether pursuant to Sections 3.13(c)(ii), 3.15(d) and/or 3.17(a) above or otherwise, and, after giving effect to such reduction of the Term Commitment, the Revolving Commitment exceeds one-third (1/3) of the Aggregate Commitment then in effect, then (i) the Revolving Commitment shall be reduced automatically and concurrently with such reduction of the Term Commitment to an amount equal to one-half (1/2) of the Term Commitment then in effect, and (ii) Borrower shall pay to Administrative Agent any and all amounts required pursuant to Section 3.16 above as and when required thereunder; provided, however, that any payment required under Section 3.16 above in connection with any voluntary reduction of the Term Commitment and/or the Revolving Commitment pursuant to Section 3.17(a) above (and, if applicable, any corresponding reduction of the Revolving Commitment pursuant to this Section 3.17(b) in connection with a voluntary reduction of the Term Commitment pursuant to Section 3.17(a) above) shall be due and payable upon the effective date of such reduction of the Term Commitment and/or the Revolving Commitment, as the case may be.

(c)Any reduction of the Revolving Commitment and/or the Term Commitment pursuant to this Section 3.17 shall be applied to each Lender according to its Applicable Percentage. Once reduced pursuant to this Section 3.17, neither the Revolving Commitment nor the Term Commitment may be increased.

ARTICLE IV

GENERAL COVENANTS

4.01Liens, Taxes, and Governmental Claims.

(a)Liens. Borrower shall pay, satisfy and obtain the release of all other claims and Liens affecting or purporting to affect the title to, or which may be or appear to be Liens on, any Mortgaged Property or any part thereof (other than the Permitted Encumbrances), and all costs, charges, interest and penalties on account thereof, including without limitation the claims of all Persons supplying labor or materials to any Mortgaged Property, and to give Administrative Agent, upon demand, evidence satisfactory to Administrative Agent of the payment, satisfaction or release thereof. Notwithstanding the foregoing, nothing herein contained shall require Borrower to pay

45

any claims or Liens which Borrower in good faith disputes and which Borrower, at its own expense, is currently and diligently contesting, provided that Borrower complies with the provisions of Section 4.01(c) hereof.

(b)Taxes. Borrower agrees to pay or cause to be paid, prior to the date they would become delinquent if not paid, any and all taxes, assessments and governmental charges whatsoever levied upon or assessed or charged against any Mortgaged Property, including all water and sewer taxes, assessments and other charges, fines, impositions and rents, if any. If requested by Administrative Agent, Borrower shall give to Administrative Agent a receipt or receipts, or certified copies thereof, evidencing every such payment by Borrower, not later than forty-five (45) days after such payment is made. Notwithstanding the foregoing, nothing herein contained shall require Borrower to pay any taxes, assessments or governmental charges which Borrower in good faith disputes and which Borrower, at its own expense, is currently and diligently contesting, provided that applicable law allows non-payment thereof during the pendency of such contest, and provided further that Borrower complies with the provisions of Section 4.01(c) hereof.

(c)Contest. Borrower shall not be required to pay any taxes, claims or governmental charges, or claims, or Liens being contested in accordance with the provisions of Section 4.01(a) or (b) hereof, as the case may be, so long as (i) Borrower diligently prosecutes such dispute or contest to a prompt determination in a manner not prejudicial to Administrative Agent or the Lenders and promptly pays all amounts ultimately determined to be owing, and (ii) Borrower provides security for the payment of such tax, assessment or governmental charge, or claim, or Lien (together with interest and penalties relating thereto) in an amount and in form and substance satisfactory to Administrative Agent in its good faith discretion. If Borrower shall fail to pay any such amounts ultimately determined to be owing or to proceed diligently to prosecute such dispute or contest as provided herein, then, upon the expiration of ten (10) days after written notice to Borrower by Administrative Agent of Administrative Agent’s good faith determination thereof, in addition to any other right or remedy of Administrative Agent, Administrative Agent may, but shall not be obligated to, discharge the same, and the cost thereof shall be reimbursed by Borrower to Administrative Agent. The payment by Administrative Agent of any delinquent tax, assessment or governmental charge, or any claim, or Lien which Administrative Agent in good faith believes might be prior hereto, shall be conclusive between the parties as to the legality and amount so paid, and Administrative Agent shall be subrogated to all rights, equities and liens discharged by any such expenditure to the fullest extent permitted by law.

4.02Leases.

(a)Absent an outstanding Default, Borrower shall retain the right to execute or renew a Lease without the consent of Administrative Agent, provided the following conditions exist:

(i)Such Lease is on Borrower’s Form Lease reasonably approved by Administrative Agent (and with no material changes thereto, other than customary market terms);

46

(ii)Such Lease, or Leases to the same tenant or its affiliates, comprises not more than 12,500 rentable square feet (lease(s) comprising greater than 12,500 rentable square feet shall constitute a “Major Lease”);

(iii)The lease is consistent with fair market terms (including an effective rental rate based on the results of the Appraisals, and the lease term is at least 3 years) and is entered into pursuant to arms-length negotiations with tenants not affiliated with Borrowers; and

(iv)The lease shall provide for no more than 1.0 months of free rent per each year of the lease term.

Absent a Default, Borrower shall retain the right to amend or otherwise modify any lease that is not a Major Lease without the consent of Administrative Agent, provided that the lease as modified is consistent with fair market terms and is entered into pursuant to arms-length negotiations with tenants not affiliated with Borrower, and otherwise satisfies the foregoing requirements of this Section 4.02(a) (provided, however, that with respect to leases that were entered into prior to the Borrower’s ownership of the Property (the “Preexisting Leases”), any such amendment or modification shall only require Lender’s consent if such lease is a Major Lease, unless the amendment or modification pertains to rent or other economic terms of the Preexisting Lease, in which case Lender’s consent shall be required unless such amendment or modification complies with all of the requirements of Sections 4.02(a) (ii), (iii) and (iv)). Absent a Default, Borrower also retains the right to terminate any lease that is not a Major Lease without the consent of Administrative Agent, provided that the same is in the ordinary course of business and in the best interests of the applicable Property.

In the event Administrative Agent’s consent (not to be withheld, conditioned or delayed unreasonably) is required for a lease or lease modification (as is the case with a Major Lease), the failure of Administrative Agent to disapprove within seven (7) Business Days following delivery by Borrower of a lease approval package containing information available to the Borrower concerning the lessee and its business and financial condition and a draft of the lease or lease modification agreement, as applicable (or, in lieu of such lease or lease modification agreement, a copy of the letter of intent (“LOI”) for such proposed lease or lease modification) shall constitute Administrative Agent’s approval of the lease or lease modification, provided such lease or lease modification is documented pursuant to a lease or modification agreement which is consistent with the LOI or draft lease/lease modification delivered to the Administrative Agent in all material respects. In the event there are material changes to the LOI approved or deemed approved by Administrative Agent, Borrower shall deliver to Administrative Agent the revised LOI (or lease or lease modification agreement, as applicable) reflecting such material changes, and the failure of Administrative Agent to disapprove within five (5) Business Days following delivery thereof by Borrower shall constitute Administrative Agent’s approval of the applicable lease or lease modification.

(b)Affirmative Covenants. Borrower shall (i) duly and punctually observe, perform and discharge in all material respects the obligations, terms, covenants, conditions and warranties of Borrower as landlord under the Leases, (ii) give prompt notice to Administrative Agent of any known failure on the part of Borrower to observe, perform and discharge the same

47

or of any written claim made by any Lessee of any such failure by Borrower, (iii) enforce the performance of each and every material obligation, term, covenant, condition and agreement in the Leases to be performed by any Lessee or any guarantor, (iv) appear in and defend any action or proceeding arising under, occurring out of or in any manner connected with the Leases or the obligations, duties or liabilities of Borrower and any Lessee thereunder, do so in the name and on behalf of Administrative Agent upon request by Administrative Agent, but at the expense of Borrower, and pay all costs and expenses of Administrative Agent, including reasonable attorneys’ fees and disbursements, in any action or proceeding in which Administrative Agent may appear, (v) if requested by Administrative Agent in writing, use commercially reasonable efforts to cause each Lessee under a Major Lease to execute and deliver to Administrative Agent subordination, non-disturbance and attornment agreements substantially in the form attached to the Form Lease promptly upon execution of such Major Lease (with such revisions as shall be acceptable to Administrative Agent) or such other form that is reasonably approved by Administrative Agent, (vi) at the request of Administrative Agent, in confirmation of the assignment and transfer contemplated by any Deed of Trust, execute and deliver to Administrative Agent assignments and transfers of all future Leases upon the same terms and conditions as contained in the Deed of Trust, and (vii) make, execute and deliver to Administrative Agent upon written demand and at any time or times, any and all assignments and other documents and instruments which Administrative Agent may deem reasonably necessary to carry out the true purposes and intent of the assignment set forth in the Deed of Trust.

(c)Negative Covenants. Subject to the terms of this Section 4.02(a), unless Borrower first obtains the written consent of Administrative Agent, Borrower shall not (i) enter into any Lease of any part of any Mortgaged Property unless such Lease constitutes an Approved Lease, (ii) except as required under the terms of a Major Lease, consent to any subletting of the Premises under a Major Lease, to any assignment of any Major Lease by the Lessee thereunder, or to any assignment of or further subletting of any sublease of any Major Lease, (iii) receive or collect any rents from any Lessee for a period of more than one month in advance, or (iv) further pledge, transfer, mortgage or otherwise encumber or assign future payments of rents.

(d)Certain SNDAs. Borrower covenants and agrees that it shall use commercially reasonable efforts to obtain, as expeditiously as is commercially reasonable, subordination, non-disturbance and attornment agreements from tenants leasing 10,000 square feet of space or more for the leases in effect as of the date of this Agreement and, upon Administrative Agent’s written request, entered into thereafter, in form and content reasonably acceptable to Administrative Agent, including without limitations, subordination, non-disturbance and attornment agreements from each of the Designated Lessees.

4.03Operations of Borrower.

(a)Without limitation of any other provisions of this Agreement or any other Loan Document, Borrower hereby represents, warrants, covenants and agrees that it has not and shall not:

(i)engage in any business or activity other than the acquisition, development, construction, ownership, leasing, operation and maintenance of the Mortgaged Property, and activities incidental thereto;

48

(ii)acquire or own any material asset other than the Property, the Improvements, and such incidental personal property as may be necessary for the operation of the Improvements;

(iii)merge into or consolidate with any Person or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure, without in each case the prior written consent of Administrative Agent;

(iv)fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation, or without the prior written consent of Administrative Agent, amend, modify, terminate or fail to comply with the provisions of Borrower’s organizational documents;

(v)own any subsidiary or make any investment in or acquire the obligations or securities of any other Person without the prior written consent of Administrative Agent;

(vi)commingle its assets with the assets of any of its partner(s), members, shareholders, Affiliates, or of any other Person or transfer any assets to any such Person other than distributions on account of equity interests in Borrower permitted hereunder and properly accounted for;

(vii)incur any Indebtedness other than Permitted Indebtedness;

(viii)allow any Person to pay its debts and liabilities or fail to pay its debts and liabilities solely from its own assets;

(ix)fail to maintain its records, books of account and bank accounts separate and apart from those of the shareholders, partners, members, principals and Affiliates of Borrower, the affiliates of a shareholder, partner or member of Borrower, and any other Person or fail to prepare and maintain its own financial statements in accordance with GAAP and susceptible to audit, or if such financial statements are consolidated, fail to cause such financial statements to contain footnotes disclosing that the Mortgaged Property is actually owned by Borrower;

(x)enter into any contract or agreement with any shareholder, partner, member, principal or Affiliate of Borrower, Guarantor or any shareholder, partner, member, principal or Affiliate thereof, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than any shareholder, partner, member, principal or Affiliate of Borrower or Guarantor, or any shareholder, partner, member, principal or Affiliate thereof;

(xi)seek dissolution or winding up, in whole or in part;

49

(xii)fail to correct any known misunderstandings regarding the separate identity of Borrower;

(xiii)hold itself out to be responsible or pledge its assets or credit worthiness for the Indebtedness of another Person or allow any Person to hold itself out to be responsible or pledge its assets or credit worthiness for the Indebtedness of Borrower (except pursuant to the Loan Documents);

(xiv)make any loans or advances to any third party, including any shareholder, partner, member, principal or Affiliate of Borrower, or any shareholder, partner, member, principal or Affiliate thereof;

(xv)if applicable, fail to file its own tax returns;

(xvi)fail either to hold itself out to the public as a legal entity separate and distinct from any Person or to conduct its business solely in its own name in order not (i) to mislead others as to the entity with which such other party is transacting business, or (ii) to suggest that Borrower is responsible for the Indebtedness of any third party (including any shareholder, partner, member, principal or affiliate of Borrower, or any shareholder, partner, member, principal or Affiliate thereof);

(xvii)fail to allocate fairly and reasonably among Borrower and any third party (including, without limitation, Guarantor) any overhead for common employees, shared office space or other overhead and administrative expenses;

(xviii)allow any Person to pay the salaries of its own employees or fail to maintain a sufficient number of employees for its contemplated business operations;

(xix)fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

(xx)file a voluntary petition or otherwise initiate proceedings seeking liquidation, reorganization or other relief under any Federal, state or foreign Debtor Relief Laws, for Borrower or any general partner, manager or managing member of Borrower, or consent to the institution of, or fail to contest in a timely and appropriate manner, and proceeding or petition under Debtor Relief Laws against Borrower or any general partner, manager or managing member of Borrower, or file a petition seeking or consenting to reorganization or relief of Borrower or seek or consent to the appointment of any trustee, receiver, conservator, assignee, sequestrator, custodian, liquidator (or other similar official) of Borrower or any general partner, manager or managing member of Borrower or of all or any substantial part of the properties and assets of Borrower or any general partner, manager or managing member of Borrower, or make any general assignment for the benefit of creditors of Borrower or any general partner, manager or managing member of Borrower, or admit in writing the inability of Borrower or any general partner, manager or managing member of Borrower to pay its debts generally as they become due;

50

(xxi)hold itself out as a department or division of (x) any shareholder, partner, principal, member or Affiliate of Borrower, (y) any Affiliate of a shareholder, partner, principal, member or Affiliate of Borrower, or (z) any other Person, or allow any Person to identify Borrower as a department or division of that Person; or

(xxii)conceal assets from any creditor, or enter into any transaction with the intent to hinder, delay or defraud creditors of Borrower or the creditors of any other Person.

The foregoing provisions of this Section 4.03 shall not operate to prohibit Borrower from entering into Swap Agreements otherwise permitted under this Agreement.

4.04Appraisals. Subject to this Section 4.04, Administrative Agent and Borrower shall have the right to order new Appraisals of the Mortgaged Properties from time to time. Each Appraisal is subject to review and approval by Administrative Agent. Borrower agrees upon written demand to pay to Administrative Agent the cost and expense for such Appraisals and a fee for Administrative Agent’s review of each Appraisal. Borrower’s obligation to pay such cost and expense shall be limited to one Appraisal per year, unless (a) the Appraisal is ordered during the occurrence of a Default, (b) is required by Legal Requirement, (c) is required in connection with Borrower’s exercise of the first extension option pursuant to Section 3.15, (d) after any Property addition (as to the new Property being added), or (e) is required in connection with any request for the release of less than all of a Property from the lien of the applicable Deed of Trust pursuant to Section 10.23 below (as to the portion of such Property which shall remain encumbered by such Deed of Trust after giving effect to the requested partial release).

4.05[Reserved].

4.06Prohibited Distributions. Borrower shall not make any distributions if a Default or Unmatured Default exists.

4.07Borrower’s Right to Contest Legal Requirements. Notwithstanding any provision of this Agreement or any of the other Loan Documents to the contrary, no Default shall occur hereunder as a result of the failure of Borrower or the Property or Improvements to comply with any Legal Requirement, including, without limitation, Environmental Laws, so long as the following conditions are satisfied:

(a)Borrower is contesting the applicability of such Legal Requirement to Borrower or the Property or Improvements in good faith by appropriate proceedings and has so notified Administrative Agent;

(b)Borrower has properly commenced and is diligently pursuing such contest;

(c)the contest will not materially impair the ability to ultimately comply with the contested Legal Requirement should the contest not be successful;

(d)Borrower demonstrates to Administrative Agent’s reasonable satisfaction that Borrower has the financial capability to undertake and pay for such contest and any corrective or remedial action then or thereafter likely to be necessary;

51

(e)Neither Administrative Agent nor any Lender is at risk for any material liability due to Borrower’s non-compliance with such Legal Requirement; and

(f)Borrower’s non-compliance with such Legal Requirement will not result in a Lien or charge on the Property or the Improvements, the enforcement of which is not stayed by such contest or insured over to the satisfaction of Administrative Agent.

4.08Government Regulation. Borrower shall not (a) be or become subject at any time to any law, regulation, or list of any Governmental Authority (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits the Lenders from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower, or (b) fail to provide documentary and other reasonable evidence of Borrower’s identity as may be requested by any Lender at any time to enable such Lender to verify Borrower’s identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

4.09Financial Information and Other Deliveries.

(a)Borrower.

(i)Within forty-five (45) days after the end of each Borrower’s fiscal quarters (except for the fourth fiscal quarter), each Borrower shall deliver to Administrative Agent (i) an operating statement (showing actual to budgeted results) and a lease status report (including a rent roll) for each Property and Improvements, each dated as of the last day of such fiscal quarter, (ii) a balance sheet, statement of operations for each Borrower, each dated as of the last day of such fiscal quarter, in form and substance satisfactory to Administrative Agent and certified by an authorized representative of each Borrower, and (iii) a Borrowing Base Certificate;

(ii)Within ninety (90) days after the end of each of each Borrower’s fiscal years, each Borrower shall deliver to Administrative Agent (i) an operating statement (showing actual to budgeted results) and a lease status report (including a rent roll) for each Property and Improvements, each dated as of the last day of the fiscal year, and (ii) a balance sheet, statement of operations for Borrower, each dated as of the last day of such fiscal year, in form and substance reasonably satisfactory to Administrative Agent and certified by an authorized representative of each Borrower;

(iii)Within sixty (60) days after the end of each of each Borrower’s fiscal years, a Borrowing Base Certificate;

(iv)Borrower shall promptly deliver to Administrative Agent written notice of the occurrence of any Default or the occurrence of an event which would make representation or warranty contained herein untrue or misleading in any material respect as of the date of such event.

(v)Borrower shall deliver to Administrative Agent such other information and materials with respect to Borrowers, the Mortgaged Properties, the

52

Projects, Guarantor, or compliance with the terms of this Agreement, as Administrative Agent or any Lender may reasonably request.

(b)Guarantor.

(i)Within forty-five (45) days after the end of each of Guarantor’s fiscal quarters (except for the fourth fiscal quarter), Borrower shall deliver to Administrative Agent a balance sheet, statement of operations for Guarantor, each dated as of the last day of such fiscal quarter, in form and substance reasonably satisfactory to Administrative Agent and certified by an authorized representative of Guarantor;

(ii)Within ninety (90) days after the end of each of Guarantor’s fiscal years, Borrower shall deliver to Administrative Agent a balance sheet, a statement of operations for Guarantor, each dated as of the last day of such fiscal year, in form and substance reasonably satisfactory to Administrative Agent and certified by an authorized representative of Guarantor.

(iii)Borrower shall deliver to Administrative Agent such other information and materials with respect to Guarantor as Administrative Agent shall reasonably request in writing.

4.10Hazardous Substances. Borrower warrants, represents and covenants as follows:

(a)Report; Compliance with Environmental Laws. Except as disclosed in the Report, to the actual knowledge of Borrower, Borrower and the Property are in full compliance with all Environmental Laws.

(b)No Liens, Notices or Actions. Except as disclosed in the Report, to Borrower’s actual knowledge, neither any Borrower nor any Property are subject to any private or governmental Lien or judicial or administrative notice or action pending, threatened, relating to Hazardous Substances or the environmental condition of any Property.

(c)No Hazardous Substances; Compliance with Environmental Laws. Except as disclosed in the Report, to Borrower’s actual knowledge, no Hazardous Substances are located on or have been stored, processed or disposed of on or released or discharged from (including ground water contamination) any Property, and no above or underground storage tanks exist on any Property. Borrower shall not knowingly allow any Hazardous Substances to be stored, located, discharged, possessed, managed, processed or otherwise handled on any Property and shall comply with all Environmental Laws affecting any Property.

(d)Notice. Borrower shall immediately notify Administrative Agent should Borrower become aware of (i) any Hazardous Substance or other environmental problem or liability with respect to the Property or (ii) any Lien, action, or notice of the nature described in Section 4.15(b) above.

53

4.11ERISA.

(a)Plan Assets; Compliance; No Material Liability. Borrower hereby covenants and agrees that (i) Borrower shall not use any Plan Assets to repay or secure the Obligations, (ii) no assets of Borrower or Guarantor are or will be Plan Assets, (iii) each Employee Benefit Plan will be in material compliance with all applicable requirements of ERISA and the Code except to the extent any defects can be remedied without material liability to Borrower under Revenue Procedure 2013-12 or any similar procedure, and (iv) Borrower will not have any material liability under Title IV of ERISA or Section 412 of the Code with respect to any Employee Benefit Plan.

(b)Transfer of Interests. In addition to the prohibitions set forth in this Agreement and the other Loan Documents, and not in limitation thereof, Borrower hereby covenants and agrees that Borrower shall not assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of its interests or rights (direct or indirect) in any Loan Document or any portion of any Mortgaged Property or attempt to do any of the foregoing or suffer any of the foregoing, or permit any party with a direct or indirect interest or right in any Loan Document or any portion of any Mortgaged Property to do any of the foregoing, if such action would cause this Agreement, any of the other Loan Documents, or the Obligations or the exercise of any of Administrative Agent’s or any Lender’s rights in connection therewith, to constitute a prohibited transaction under ERISA or the Code (unless Borrower furnishes to Administrative Agent a legal opinion reasonably satisfactory to Administrative Agent that the transaction is exempt from the prohibited transaction provisions of ERISA and the Code) or would otherwise result in any Mortgaged Property, or assets of Borrower or Guarantor being Plan Assets.

(c)Indemnity. Borrower hereby agrees to indemnify Administrative Agent, each Lender, their respective Affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor whether or not Administrative Agent, any Lender or any Affiliate is a party thereto) which any of them may actually pay or incur by reason of the investigation, defense and settlement of claims and in obtaining any prohibited transaction exemption under ERISA or the Code necessary in Administrative Agent’s or any Lender’s judgment by reason of the inaccuracy of the representations and warranties set forth in Section 6.01(i) hereof or a breach of the provisions set forth in this Section 4.11. The obligations of Borrower under this Section 4.11 shall survive the termination of this Agreement.

4.12Compliance with Laws. Borrower shall, and shall cause Guarantor to, comply with all Legal Requirements applicable to it or its property (including, without limitation, the Mortgaged Property), except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a material adverse effect.

4.13Use of Proceeds. Borrower shall not request any Transaction and Borrower shall not use, and shall ensure that its Affiliates and its or their respective directors, officers and employees shall not use, the proceeds of the Transactions, (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or

54

facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transactions would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

4.14Post-Closing Obligations.

(a)Institute Borrower shall provide to Administrative Agent evidence reasonably satisfactory to Administrative Agent that all immediate repairs with a repair cost of $5,000 or more specified in Section 1.1 of the Institute Property Condition Report (the “Required Institute Repairs”) have been completed (if and to the extent required, as set forth hereinbelow) (i) in the case of Items I-21 and I-22 specified in Section 1.1 of the Institute Property Condition Report, within six (6) months after the date hereof, as such date shall be extended (A) on a day-by-basis, for Force Majeure Delays, if applicable, or (B) with the prior approval of Administrative Agent, which approval shall not be unreasonably withheld, and (ii) with respect to all other Required Institute Repairs, within twelve (12) months after the date hereof, as such date shall be extended, on a day-by-basis, for Force Majeure Delays, if applicable. In the event that Institute Borrower fails to satisfy the requirements of this Section 4.14(a) with respect to any Required Institute Repair(s), such failure shall not constitute a Default under this Agreement but, until Institute Borrower satisfies the requirements of this Section 4.14(a) with respect to all Required Institute Repairs, Administrative Agent shall require a holdback (the “Institute Repair Holdback”) against the Availability Amount in an amount equal to the aggregate estimated repair costs set forth in Section 1.1 of the Institute Property Condition Report applicable to each Required Institute Repair with respect to which Institute Borrower has not then satisfied its obligations under this Section 4.14(a). Notwithstanding the foregoing, in the event that Borrower delivers to Administrative Agent an updated property condition report with respect to the Institute Property (or other evidence reasonably acceptable to Administrative Agent) asserting that that any Required Institute Repair is not necessary in order to satisfy the requirements of Section 4.3 of the Institute Mortgage (which report (or other evidence reasonably acceptable to Administrative Agent) must be received by Agent at least thirty (30) days prior to the date on which the applicable Required Institute Repair is required to be completed pursuant this Section 4.14(a)), then, upon written confirmation in form and detail reasonably acceptable to Administrative Agent by a construction consultant engaged by Administrative Agent, at Borrower’s sole expense, after such construction consultant’s inspection of the Institute Property, that such Required Institute Repair is not necessary to satisfy the requirements of Section 4.3 of the Institute Mortgage, then, without limitation of Borrower’s obligations under Section 4.3 of the Institute Mortgage, Borrower’s obligation under this Section 4.14(a) to complete such Required Institute Repair shall be, notwithstanding anything stated to the contrary in Section 10.02 below, deemed waived.

(b)Within ninety (90) days after the date hereof or such longer period of time as Administrative Agent may approve (which approval shall not be unreasonably withheld, conditioned or delayed), Institute Borrower shall implement an asbestos operations and maintenance plan (an “O&M Plan”) by engaging Institute Borrower’s own asbestos consultant at Institute Borrower’s expense to develop an appropriate site-specific O&M Plan. Any such consultant retained by Institute Borrower must be reasonably satisfactory to Administrative Agent. Administrative Agent acknowledges that Ramboll Environ US Corporation is a satisfactory

55

consultant. Institute Borrower shall implement and follow the requirements of the O&M Plan, provide Administrative Agent with records of such compliance once achieved and maintain those records at the Institute Property.

ARTICLE V

COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT

5.01Permits.

(a)Collateral Assignment and Security Agreement. As additional security for the Obligations, Borrower hereby sells, assigns, transfers, sets over and grants to Administrative Agent, for the benefit of the Lenders, a security interest in, all of Borrower’s right, title and interest in and to all Permits.

(b)Remedies Upon Default. Upon the occurrence and during the continuance of a Default, Administrative Agent shall have the right but not the obligation, and Borrower hereby authorizes Administrative Agent, to enforce Borrower’s rights with respect to the Permits.

(c)Power of Attorney. Effective upon the occurrence and during the continuance of a Default, Borrower hereby irrevocably constitutes and appoints Administrative Agent as its attorney‑in‑fact, coupled with an interest, to demand, receive and enforce Borrower’s rights with respect to the Permits, to give appropriate receipts, releases and satisfactions for and on behalf of Borrower and to do any and all acts in the name of Borrower or in the name of Administrative Agent with the same force and effect as if Borrower had performed such acts.

(d)License. Provided no Default has occurred and is continuing, Borrower shall have the right under a license granted hereby to exercise its rights with respect to the Permits. The license granted hereby shall be revoked at Administrative Agent’s option upon written notice from Administrative Agent to Borrower after the occurrence and during the continuance of a Default.

(e)No Assumption of Liabilities. Administrative Agent does not hereby assume any of Borrower’s obligations or duties with respect to the Permits, including, without limitation, the obligation to pay for the preparation or issuance thereof.

(f)No Prior Conveyance or Limiting Action. Borrower represents and warrants that it has not previously conveyed, transferred or assigned the Permits or any right, title or interest therein and has not executed any other instrument which might prevent or limit Administrative Agent from operating under the terms and provisions of the assignment contemplated hereby, and Borrower covenants and agrees not to do any of the foregoing.

5.02Project Documents and Swap Agreements.

(a)Collateral Assignment and Security Agreement. As additional security for the Obligations, Borrower hereby sells, assigns, transfers, sets over and grants to Administrative Agent, for the benefit of the Lenders, a security interest in, all of its right, title and interest in and to the Project Documents and any Swap Agreements.

56

(b)Performance; Enforcement. Borrower shall perform and observe in a timely manner all material covenants, conditions, obligations and agreements on the part of Borrower to be performed or observed under the Project Documents and any Swap Agreements. Borrower shall not waive, excuse, condone or in any manner release or discharge any party to a Project Document or any Swap Agreement from any material covenants, conditions, obligations or agreements to be performed or observed by such party under such Project Document or Swap Agreement, as applicable, but shall, at its sole cost and expense, use its commercially reasonable efforts to enforce and secure the performance of all material covenants, conditions, obligations and agreements to be observed by all parties under the Project Documents and any Swap Agreements.

(c)Remedies Upon Default. Upon the occurrence and during the continuance of a Default, Administrative Agent shall have the right but not the obligation, and Borrower hereby authorizes Administrative Agent to enforce Borrower’s rights under the Project Documents and any Swap Agreements and to receive the performance of any other Person that is a party to the Project Documents and any Swap Agreements.

(d)Notices of Default. Borrower shall send to Administrative Agent any written notice of default under any Project Documents or any Swap Agreements that Borrower sends to (such notice to Administrative Agent to be sent simultaneously therewith) or receives from (such notice to Administrative Agent to be sent immediately upon receipt by Borrower thereof) any Person that is a party to any Project Document or Swap Agreement.

(e)Power of Attorney. Effective upon the occurrence and during the continuance of a Default, Borrower hereby irrevocably constitutes and appoints Administrative Agent as its attorney‑in‑fact, coupled with an interest, to demand, receive and enforce Borrower’s rights with respect to the Project Documents and any Swap Agreements, to give appropriate receipts, releases and satisfactions for and on behalf of Borrower and to do any and all acts in the name of Borrower or in the name of Administrative Agent with the same force and effect as if Borrower had performed such acts.

(f)License. Provided no Default has occurred and is continuing, Borrower shall have the right under a license granted hereby to exercise its rights under the Project Documents and any Swap Agreements. The license granted hereby shall be revoked at Administrative Agent’s option upon written notice from Administrative Agent to Borrower after the occurrence and during the continuance of a Default.

(g)No Assumption of Liability. Administrative Agent does not hereby assume any of Borrower’s obligations or duties under the Project Documents or any Swap Agreements, including, without limitation, the obligation to pay for services rendered thereunder.

(h)Validity and Enforceability of Project Documents and Swap Agreements. Borrower represents and warrants that, to Borrower’s actual knowledge, all Project Documents and any Swap Agreements are valid, binding and enforceable (subject to Debtor Relief Laws and general equitable principles), are in full force and effect, and there are no material breaches or defaults thereunder and no events have occurred which with notice and/or lapse of time will constitute a material breach or default thereunder by Borrower or any Affiliate of Borrower.

57

Borrower represents and warrants that it has full power, right and authority to execute and enter into the Project Documents and any Swap Agreements.

(i)No Prior Conveyance or Limiting Actions. Borrower represents and warrants that it has not previously conveyed, transferred or assigned the Project Documents or any Swap Agreements or any right, title or interest therein and has not executed any other instrument which might prevent or limit Administrative Agent from operating under the terms and provisions of the assignment contemplated hereby, and Borrower covenants and agrees not to do any of the foregoing.

(j)Execution and Amendment of Project Documents. Except as expressly permitted in this Agreement or any other Loan Documents (and provided that the second sentence of Section 4.20 of the Greenhouse Deed of Trust is no longer valid and is no longer in effect), no Borrower shall enter into any new Project Document or Swap Agreement, or alter, amend or change in any material respect, or terminate or cancel, any Project Document or Swap Agreement, in each case without obtaining Administrative Agent’s prior written consent (not to be withheld, conditioned or delayed unreasonably). Administrative Agent may require, as a condition to its approval of such Project Document or Swap Agreement, the execution by the contracting party of an agreement, in form and substance reasonably acceptable to Administrative Agent, whereby said contracting party (i) acknowledges the provisions of this Section 5.02, (ii) subordinates its claims against Borrower to payment in full of the Obligations and to the rights of Administrative Agent under the Loan Documents and (iii) agrees that upon the occurrence and during the continuance of a Default, Administrative Agent has the right (but not the obligation) to terminate the subject Project Document. Notwithstanding anything to the contrary herein or any other Loan Documents (including, without limitation, Section 4.20 of the Greenhouse Deed of Trust), the Borrowers shall have the right to terminate any existing Property Manager, and Administrative Agent approves of any of the following, as a replacement Property Manager: (i) CB Richard Ellis, Inc., a Delaware corporation; (ii) PM Realty Group, L.P.; (iii) Transwestern; (iv) Jones Lang LaSalle; (v) Cassidy Turley; (vi) Cushman and Wakefield; and (vii) Hines.

5.03Satisfaction. Upon the indefeasible payment by Borrowers in full of all of the Obligations and termination of the Commitment, all of Administrative Agent’s and Lenders’ interest in the Permits and the Project Documents shall be satisfied and Administrative Agent and Lenders shall have no further interest therein. Upon written request from Borrower, Administrative Agent shall, at Borrowers’ expense, execute such documentation as is reasonably necessary to evidence the satisfaction of such interest without recourse to Administrative Agent or Lenders.

5.04Additional Instruments. At Administrative Agent’s written request, Borrower shall execute and deliver to Administrative Agent any and all assignments and other documents and instruments reasonably necessary to confirm the collateral assignments contemplated by this Article V.

58

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

6.01Representations and Warranties. As a material inducement to Administrative Agent and the Lenders to enter into this Agreement, and as an express condition to each Advance made hereunder (including any Subsequent Advances), Borrowers hereby represent and warrant, as follows:

(a)Existence; Power and Authority. Each Borrower is a limited liability company duly formed and validly existing in the State of Delaware, and is in good standing under the laws of the States of (1) Delaware and (2) California, Texas or Illinois (as applicable, based on the location of the Property owned by such Borrower), with requisite power and authority to (i) incur the Obligations, and (ii) execute, deliver and perform this Agreement and the other Loan Documents to which it is a party. Guarantor and KBS Growth & Income Limited Partnership (the “Guarantor Sole Member”) are duly formed and validly existing, and the Guarantor Sole Member has full power and authority to execute and deliver the Guaranty on behalf of Guarantor, and upon such execution the Guaranty shall be in full force and effect, and constitute the legal and binding obligations of Guarantor, enforceable by Administrative Agent against Guarantor in accordance with the terms thereof (subject only to such qualifications on enforcement as may be set forth in the legal opinion of Borrower’s counsel delivered in connection with this Agreement and except to the extent that enforcement may be limited by applicable bankruptcy, insolvency or other similar laws affecting creditors’ rights generally).

(b)Authorization; No Conflict. Each Borrower’s execution and delivery to Administrative Agent of this Agreement and the other Loan Documents and the full and complete performance of the provisions thereof (i) are authorized by each Borrower’s operating agreement; (ii) have been duly authorized by all requisite member actions; (iii) do not require the approval or consent of any Governmental Authority having jurisdiction over each Borrower or any of the Mortgaged Properties except for consents or approvals that have been obtained; and (iv) will not result in any breach of, or constitute a default under, or result in the creation of any Lien, (other than those contained in any of the Loan Documents) upon any property or assets of Borrower under any indenture, mortgage, deed of trust, bank loan or credit agreement or other instrument or agreement to which any Borrower is a party or by which any Borrower or any of the Mortgaged Property is bound.

(c)Title. Each Borrower is the sole legal and beneficial owner of the respective Mortgaged Property purported to be owned by it free and clear (to Borrower’s knowledge) of all Liens other than the Permitted Encumbrances and except as specifically identified in writing to, and approved in writing by, Administrative Agent.

(d)Financial Statements. Any and all balance sheets, statements of income or loss, and financial statements heretofore furnished to Administrative Agent with respect to Borrower and Guarantor are true and correct in all material respects as of the dates thereof, and fully and accurately (in all material respects) present the financial condition of the subjects thereof as of the dates thereof, and no material adverse change has occurred in the financial condition reflected therein since the dates of the most recent thereof. To Borrower’s knowledge, neither Borrower nor Guarantor has any contingent liabilities, liabilities for taxes, unusual forward or

59

long-term commitments or unrealized or anticipated losses from any unfavorable commitments which are reasonably likely to result in a material adverse effect on the Mortgaged Property or the development, construction or operation of the Improvements as contemplated by the Loan Documents or on the financial condition of Borrower or Guarantor or their respective abilities to perform their obligations under the Loan Documents.

(e)Litigation. To Borrowers’ knowledge, there are no actions, suits or other legal proceedings pending, or threatened, against or affecting Borrower, the Mortgaged Property, or the Guarantor which (i) if adversely determined would materially and adversely affect the ability of Borrower or Guarantor to perform its respective obligations under the Loan Documents or would have a material adverse effect on the use or value of the Mortgaged Property, or (ii) challenge the validity or enforceability of the Loan Documents or the priority of the Lien and security interest created thereby.

(f)Legal Compliance. Except as may be disclosed in any zoning report for each Property delivered to Administrative Agent (“Zoning Report”), the Improvements and the use and occupancy thereof are in compliance in all material respects with all applicable Legal Requirements. To Borrowers’ knowledge, and except as disclosed in any title report prepared by the Title Company for each Mortgaged Property and delivered to Administrative Agent, and except as otherwise disclosed to Administrative Agent in writing, neither the zoning nor any other right to use or operate the Improvements for any Property is to any extent dependent upon or related to any real estate other than the subject Property.

(g)Services and Utilities. All utilities and related services necessary for the operation of the Improvements for their intended purpose are available to each Mortgaged Property.

(h)Enforceability. Each Loan Document executed by Borrower constitutes a legal and binding obligation of, and is valid and enforceable against, Borrower in accordance with the terms thereof (subject to Debtor Relief Laws and general equitable principles) and is not subject to any right of rescission, set-off, counterclaim or defense.

(i)ERISA. Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA or a “plan” as defined in Section 4975(e)(1) of the Code. Each Employee Benefit Plan is in material compliance with all applicable requirements under ERISA and the Code, and, to the extent that such Employee Benefit Plan is also intended to be “qualified” within the meaning of Section 401(a) of the Code, it is in material compliance with the applicable requirements under the Code, except to the extent that any defects can be remedied without material liability to Borrower under Revenue Procedure 2013-12 or any similar procedure. None of the Employee Benefit Plans is subject to the requirements of Section 412 of the Code, Part 3 of Title I of ERISA or Title IV of ERISA or is a “multiemployer plan” as defined in Section 3(37) of ERISA. Borrower has no material liability under Title IV of ERISA or Section 412 of the Code with respect to any Employee Benefit Plan.

(j)Legal Parcel; Separate Tax Parcel. The Mortgaged Property is taxed separately and does not include any other property, and for all purposes the Property may be mortgaged, conveyed and otherwise dealt with as a separate legal parcel.

60

(k)Leases and Rents. To Borrower’s knowledge, Borrower has good and marketable title to the Leases and rents free and clear of all claims, and Liens other than, to Borrower’s knowledge, the Permitted Encumbrances. To the knowledge of Borrower and except as otherwise disclosed to Administrative Agent in writing, the Leases are valid and unmodified and are in full force and effect and Borrower is not in default of any of the material terms or provisions of the Leases. The rents now due or to become due for any periods subsequent to the date hereof have not been collected and payment thereof has not been anticipated for a period of more than one month in advance, waived or released, discounted, set off or otherwise discharged or compromised. Borrower has not received any funds or deposits from any Lessee for which credit has not already been made on account of accrued rents other than security deposits required by the Leases.

(l)Compliance with Laws and Agreements. Except where the failure to do so, individually or in the aggregate could not reasonably be expected to result in a material adverse effect, each Borrower is in compliance in all material respects with (i) its charter, by-laws or other organizational documents, (ii) except as may be disclosed in the Zoning Report, all Requirements of Law applicable to it or the Mortgaged Property owned by it and (iii) all indentures, agreements and other instruments binding upon it or the Mortgaged Property owned by it. To Borrower’s knowledge, no Default or Unmatured Default has occurred and is continuing.

(m)Anti-Corruption Laws and Sanctions. Each Borrower, its Affiliates and their respective directors and officers and, to the knowledge of each Borrower, their respective employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in any Borrower being designated as a Sanctioned Person. None of (i) any Borrower, any Affiliate, or to the knowledge of any Borrower or such Affiliate, any of their respective directors, officers or employees, or (ii) to the knowledge of any Borrower, any agent of any Borrower or any Affiliate that will act in any capacity in connection with or benefit from the Transactions or any other transactions contemplated hereby, is a Sanctioned Person. No Transactions will violate Anti-Corruption Laws or applicable Sanctions.

(n)EEA Financial Institutions. Neither Guarantor nor any Borrower is an EEA Financial Institution.

6.02Nature of Representations and Warranties. All representations and warranties made in this Agreement or any other Loan Document or in any certificate or other document delivered to Administrative Agent pursuant to or in connection with this Agreement shall be deemed to have been relied upon by Administrative Agent and the Lenders notwithstanding any investigation heretofore or hereafter made by Administrative Agent or on its behalf.

61

ARTICLE VII

INSURANCE AND CONDEMNATION

7.01Insurance and Casualty.

(a)Required Insurance Coverage. Borrower, at its expense, shall maintain and provide to Administrative Agent copies of policies or other satisfactory evidence of insurance providing the following:

(i)Commercial General Liability Insurance with limits of not less than $1,000,000 per occurrence combined single limit and $2,000,000 in the aggregate for the policy period, or in whatever higher amounts as may be required by Administrative Agent from time to time by notice to Borrower (with deductibles acceptable to Administrative Agent), and extended to cover: (a) Contractual Liability assumed by Borrower with defense provided in addition to policy limits for indemnities of the named insured, (b) if any of the work is subcontracted, Independent Contractors Liability providing coverage in connection with such portion of the work which may be subcontracted, (c) Broad Form Property Damage Liability, (d) Products & Completed Operations for coverage, such coverage to apply for two years following completion of construction, (e) waiver of subrogation against all parties named additional insured, (f) severability of interest provision, and (g) Personal Injury & Advertisers Liability.

(ii)Automobile Liability including coverage on owned, hired and non-owned automobiles and other vehicles, if used in connection with the performance of the work, with Bodily Injury and Property Damage limits of not less than $1,000,000.00 per occurrence combined single limit, with a waiver of subrogation against all parties named as additional insured.

(iii)Umbrella/Excess Liability in excess of Commercial General Liability, Automobile Liability and Employers’ Liability coverages which is at least as broad as these underlying policies with a limit of liability of $10,000,000.00.

(iv)All-Risk Property (Special Cause of Loss) Insurance including, without limitation, coverage for loss or damage to the Property and Improvements by fire and other perils including windstorm, earthquake/earth movement (if Administrative Agent reasonably determines such coverage is necessary based on Administrative Agent’s insurance underwriting guidelines and the location of any Property) and malicious mischief, building ordinance extension endorsement (including cost of demolition, increased costs of construction and the value of the undamaged portion of the building and soft costs coverage), and boiler and machinery coverage (if separate policy, that policy must include loss of rents or business interruption coverage), as specified by Administrative Agent. The policy shall be in an amount not less than the full insurable value on a replacement cost basis of the insured Property and Improvements and personal property related thereto (without deduction for depreciation). If the policy is a blanket policy covering the Property and Improvements and one or more other properties, the policy must specify the dollar amount of the total blanket limit of the policy that is allocated to each property, and the amount so allocated to the Property and Improvements must not

62

be less than the full insurable value on a replacement cost basis. During any construction period, such policy shall be written in the so-called “Builder’s Risk Completed Value Non-Reporting Form” with no coinsurance requirement and shall contain a provision granting the insured permission to occupy prior to completion. Such policy shall not contain an exclusion for terrorist losses. However, if such an exclusion exists in the All-Risk policy, a separate Terrorism policy covering Certified Acts of Terrorism must be evidenced to Administrative Agent in an amount equal to the full replacement cost of the Property and Improvements, or the amount of the Loan, whichever is less. This policy must also list Administrative Agent as mortgagee and loss payee.

(v)Workers’ Compensation and Employer’s Liability Insurance in accordance with the applicable laws of the state in which the work is to be performed or of the state in which Borrower is obligated to pay compensation to employees engaged in the performance of the work. The policy limit under the Employer’s Liability Insurance section shall not be less than $1,000,000.00 for any one accident. Such insurance is required only if Borrower is or becomes subject to the applicable workers’ compensation laws of the State where any Property is located.

(vi)If at any time, the Improvements or any part thereof, lies within a “special flood hazard area” as designated on maps prepared by the Federal Emergency Management Agency (FEMA), a one hundred year flood plain or other area identified by Administrative Agent as having a high or moderate risk of flooding, a flood insurance policy or policies (whether or not coverage is available from the National Flood Insurance Program and whether or not required by the Flood Laws), in form and substance acceptable to Administrative Agent and the Lenders covering the Improvements and contents (to the extent the contents secure the Obligations), for the duration of the Loans in an amount at least equal to the full insurable value on a replacement cost basis (without deduction for depreciation) of the Improvements and contents, if applicable, or the amount of the Obligations, whichever is less.

(vii)[Reserved.]

(viii)Rent loss or business interruption insurance against loss of income (including, but not limited to, rent, cost reimbursements and all other amounts payable by tenants under Leases or otherwise derived by Borrower from the operation of the Project) arising out of damage to or destruction of the Property and Improvements by fire or other peril (including earthquake if required) insured against under each policy. The amount of the policy shall be in the amount equal to one year’s projected rentals or gross revenue.

(ix)Without limiting any of the other insurance required above, Borrower shall maintain environmental and liability insurance from an insurance company reasonably satisfactory to Administrative Agent, with Administrative Agent named as an additional named insured (the “Environmental Insurance”), and such Environmental Insurance shall be in form and content and contain provisions and coverages in all respects acceptable to Administrative Agent in its reasonable discretion, including without limitation a requirement that it provide coverage for all environmental events occurring prior to or during Borrower’s period of ownership of each Property and that it has coverage

63

under an extended reporting period of no less than two (2) years following the repayment of all Obligations in full.

(x)Such other insurance coverages in such amounts as Administrative Agent may reasonably require, which may include, without limitation, errors and omissions insurance with respect to the contractors, architects and engineers.

(b)Policy Requirements; Insurance Consultant. All insurance policies shall (i) be issued by an insurance company licensed to do business in the state where the Project is located having a rating of “A-” VIII or better by A.M. Best Co., in Best’s Rating Guide, (ii) name “JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for itself and each Lender “ as additional insured on all liability insurance and as mortgagee and loss payee on all All-Risk Property, flood insurance, earthquake insurance and rent loss or business interruption insurance (whether or not required hereunder), (iii) be endorsed to show that Borrower’s insurance shall be primary and all insurance carried by Administrative Agent is strictly excess and secondary and shall not contribute with Borrower’s insurance, (iv) provide that Administrative Agent is to receive thirty (30) days written notice prior to non-renewal or cancellation, (v) be evidenced by a certificate of insurance to be provided to Administrative Agent along with a copy of the policy for All-Risk Property coverage or such other evidence of insurance acceptable to Administrative Agent in its reasonable discretion, (vi) include either policy or binder numbers on the ACORD form, and (vii) be in form and amounts acceptable to Administrative Agent; provided, however, that with respect to any flood insurance required hereunder, acceptable proof of coverage shall consist of a copy of the insurance policy, the declaration page of the insurance policy or an application plus proof of premium payment (with a copy of the policy or declaration page provided to Administrative Agent within 30 days thereafter) and shall not include ACORD or other forms of certificates of insurance. Administrative Agent, at its option and upon notice to Borrower, may retain, at Borrower’s expense, an insurance consultant to review the insurance for the Property and Improvements to confirm that it complies with the terms and conditions set forth herein.

(c)Evidence of Insurance; Payment of Premiums. Borrower shall deliver to Administrative Agent, at least five (5) days before the expiration of an existing policy, evidence reasonably acceptable to Administrative Agent of the continuation of the coverage of the expiring policy. If Administrative Agent has not received reasonably satisfactory evidence of such continuation of coverage in the time frame herein specified, Administrative Agent shall have the right, but not the obligation, to purchase, upon five (5) business days’ prior written notice to Borrower, such insurance for Administrative Agent’s and Lenders’ interests only. Any amounts so disbursed by Administrative Agent pursuant to this Section shall be repaid by Borrower within 10 days after written demand therefor. Nothing contained in this Section shall require Administrative Agent to incur any expense or take any action hereunder, and inaction by Administrative Agent shall never be considered a waiver of any right accruing to Administrative Agent on account on this Section. The payment by Administrative Agent of any insurance premium for insurance which Borrower is obligated to provide hereunder but which Administrative Agent believes has not been paid, shall be conclusive between the parties as to the legality and amounts so paid. Borrower agrees to pay all premiums on such insurance as they become due, and will not permit any condition to exist on or with respect to the Mortgaged Property which would wholly or partially invalidate any insurance thereon.

64

(d)Collateral Protection. Unless Borrower provides Administrative Agent with evidence reasonably satisfactory to Administrative Agent of the insurance coverage required by this Agreement, Administrative Agent may purchase insurance at Borrower’s expense and upon five (5) business days’ prior written notice to Borrower to protect Administrative Agent’s and the Lenders’ interests in the Mortgaged Property. This insurance may, but need not, protect Borrower’s interest in the Mortgaged Property. The coverages that Administrative Agent purchases may not pay any claim that Borrower makes or any claim that is made against Borrower in connection with the Mortgaged Property. Borrower or Administrative Agent (as appropriate) may later cancel any insurance purchased by Administrative Agent, but only after Administrative Agent receives reasonably satisfactory evidence that Borrower has obtained insurance as required by this Agreement. If Administrative Agent purchases insurance for the Mortgaged Property, Borrower will be responsible for the costs of that insurance, including any charges imposed by Administrative Agent in connection with the placement of insurance, until the effective date of the cancellation or expiration of such insurance. The costs of the insurance may, at Administrative Agent’s discretion, be added to Borrower’s total principal obligation owing to Administrative Agent and the Lenders, and in any event shall be secured by the liens on the Mortgaged Properties created by the Loan Documents. It is understood and agreed that (i) the costs of insurance obtained by Administrative Agent may be more than the costs of insurance Borrower may be able to obtain on its own, and (ii) the amount of coverage may be more than required by applicable Legal Requirements, if any.

(e)No Liability; Assignment. Administrative Agent shall not by the fact of approving, disapproving, accepting, preventing, obtaining or failing to obtain any such insurance, incur any liability for the form or legal sufficiency of insurance contracts, solvency of insurers, or payment of losses, and Borrower hereby expressly assumes full responsibility therefor and all liability, if any, thereunder. Borrower hereby absolutely assigns and transfers to Administrative Agent, for the benefit of the Lenders, all of Borrower’s right, title and interest in and to any unearned premiums paid on policies and any claims thereunder and Administrative Agent and/or the Lenders shall have the right, but not the obligation, to assign any then existing claims under the same to any purchaser of the Mortgaged Property at any foreclosure sale; provided, however, that so long as no Default exists and is continuing hereunder, Borrower shall have the right under a license granted hereby, and Administrative Agent hereby grants to Borrower a license, to exercise rights under said policies and in and to said premiums subject to the provisions of this Agreement. Said license shall be revoked automatically upon the occurrence and during the continuance of a Default hereunder. In the event of a foreclosure of any Deed of Trust, or other transfer of title to any Mortgaged Property in extinguishment in whole or in part of the Loans, all right, title and interest of any Borrower relating to such Property, including all insurance proceeds payable with respect to such Property, shall thereupon vest in the purchaser at such foreclosure or Administrative Agent or other transferee in the event of such other transfer of title (but the foregoing shall not be deemed to be an outright assignment to Administrative Agent or any Lender or any other third party of any “blanket” insurance policies themselves that relate to this Property and other unrelated properties, but rather only the payments and proceeds thereunder which relate to such Property).

(f)No Separate Insurance. Borrower shall not carry any separate insurance on the Mortgaged Property concurrent in kind or form with any insurance required hereunder or contributing in the event of loss without Administrative Agent’s prior written consent, and any

65

such policy shall have attached a standard non-contributing mortgagee clause, with loss payable to Administrative Agent, for the benefit of the Lenders, and shall otherwise meet all other requirements set forth herein.

(g)Casualty Loss.

(i)If all or any part of any Mortgaged Property shall be damaged or destroyed by fire or other casualty, Borrower shall give immediate written notice and make a claim to the insurance carrier and Administrative Agent. With respect to any such casualty loss for which Borrower has an insurance claim that exceeds Five Hundred Thousand Dollars ($500,000) in aggregate per Property, Borrower hereby authorizes and empowers Administrative Agent, at Administrative Agent’s option and in Administrative Agent’s sole discretion as attorney-in-fact for Borrower, to make proof of loss, to adjust and compromise any claim under insurance policies, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Administrative Agent’s expenses incurred in the collection of such proceeds; provided, however, that the foregoing authorization and empowerment of Administrative Agent to act as attorney-in-fact for Borrower shall not become effective until the occurrence and during the continuance of a Default or until such time as Borrower fails to diligently pursue the collection of such insurance proceeds in Administrative Agent’s opinion. The foregoing appointment is irrevocable, coupled with an interest, and continuing so long as the Commitment or Obligations remain outstanding, and such rights, powers and privileges shall be exclusive in Administrative Agent (for the benefit of its Lenders), its successors and assigns. With respect to any casualty loss for which Borrower has an insurance claim that is less than or equal to $500,000in aggregate per Property, so long as no Default or Unmatured Default (as to which Borrower has been notified or otherwise has actual knowledge) shall have occurred and be continuing, such proceeds shall be remitted to Borrower to be used for the repair and rehabilitation of the affected Property and Improvements.

(ii)As sole loss payee on all policies of casualty insurance, Administrative Agent shall receive all insurance proceeds from any casualty loss, and shall hold the same in an interest-bearing account pending disposition in accordance with this Section. Borrower authorizes Administrative Agent to deduct from such insurance proceeds received by Administrative Agent all of Administrative Agent’s costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in connection with the collection thereof (the remainder of such insurance proceeds being referred to herein as “Net Casualty Proceeds”).

(iii)Intentionally omitted.

(iv)Administrative Agent shall cause the Net Casualty Proceeds from any casualty loss affecting any Mortgaged Property to be disbursed for the cost of reconstruction of such Mortgaged Property if all of the following conditions are satisfied within one hundred twenty (120) days after the applicable casualty loss: (A) Borrower satisfies Administrative Agent that the reconstruction can be completed within a reasonable period of time after such casualty loss (but in no event later than the Maturity Date) and

66

that after giving effect to such reconstruction the Mortgaged Property will be restored to its condition immediately prior to the casualty loss; (B) Borrower satisfies Administrative Agent that the Net Casualty Proceeds are sufficient to pay all costs of reconstruction, and if insufficient, Borrower deposits with Administrative Agent additional funds to make up such insufficiency; (C) Borrower delivers to Administrative Agent all plans and specifications and construction contracts for the work of reconstruction and such plans and specifications and construction contracts are in form and content reasonably acceptable to Administrative Agent and with a contractor reasonably acceptable to Administrative Agent; and (D) Borrower delivers to Administrative Agent reasonably satisfactory evidence that upon completion of the reconstruction, Approved Leases demising in the aggregate no less than seventy-five percent (75%) of the square feet in the Improvements leased at the time of the applicable casualty will remain in full force and effect. The disbursement of Net Casualty Proceeds pursuant to this clause (iv) shall be in accordance with customary disbursement procedures and shall not be available after the occurrence and during the continuance of a Default. Any Net Casualty Proceeds not required to reconstruct the Mortgaged Property shall be delivered to Borrower after expiration of the lien period for the work of reconstruction (or, at Borrower’s option, after delivery of title insurance to Administrative Agent, for the benefit of the Lenders, over such liens where the lien period has not so expired). Upon the occurrence and during the continuance of a Default or in the event Borrower is unable to satisfy the conditions set forth in subclauses (A) through (D) hereof by the required date, Administrative Agent, on behalf of the Lenders, shall have the right (but not the obligation) to apply all Net Casualty Proceeds held by it to the payment of the Obligations. Borrower shall have the obligation to promptly and diligently complete the work of reconstruction necessitated by any casualty loss and restore the Mortgaged Property to the equivalent of its condition immediately prior to such casualty provided the applicable Net Casualty Proceeds are made available to Borrower for such purpose.

(h)Hazard Insurance Disclosure. This Section is being furnished by Administrative Agent in compliance with Section 2955.5(b) of the California Civil Code. California Civil Code Section 2955(a) reads as follows: “No Lender shall require a Grantor, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property.” Borrower acknowledges and agrees that the above disclosure was made by Administrative Agent to Borrower prior to execution of this Agreement and the other Loan Documents.

7.02Condemnation and Other Awards. Immediately upon receiving written notice of the institution or threatened institution of any proceeding for any condemnation of any Mortgaged Property or any part thereof, Borrower shall notify Administrative Agent of such fact. Borrower shall then file or defend its rights thereunder and prosecute the same with due diligence to its final disposition; provided, however, that Borrower shall not enter into any settlement of such proceeding without the prior approval of Administrative Agent. Administrative Agent shall be entitled, at its option, to appear in any such proceeding in its own name, on behalf of the Lenders, and upon the occurrence and during the continuation of a Default or if Borrower fails to diligently prosecute such proceeding, (a) Administrative Agent shall be entitled, at its option, to appear in and prosecute any such proceeding or to make any compromise or settlement in connection with

67

such condemnation on behalf of Borrower, and (b) Borrower hereby irrevocably constitutes and appoints Administrative Agent as its attorney-in-fact, and such appointment is coupled with an interest, to commence, appear in and prosecute such action or proceeding or to make such compromise or settlement in connection with any such condemnation on its behalf. The foregoing appointment is irrevocable and continuing so long as the Commitments or Obligations remain outstanding, and such rights, powers and privileges shall be exclusive in Administrative Agent (for the benefit of the Lenders), its successors and assigns. If the Mortgaged Property or any material part thereof is taken or materially diminished in value in connection with such condemnation, or if a consent settlement is entered, by or under threat of such proceeding, the award or settlement payable to Borrower by virtue of its interest in the Mortgaged Property, shall be, and by these presents is, assigned, transferred and set over unto Administrative Agent, for the benefit of the Lenders. Any such award or settlement shall be first applied to reimburse Administrative Agent and the Lenders for all costs and expenses, including reasonable attorneys’ fees, incurred in connection with the collection of such award or settlement. The balance of such award or settlement (the “Net Condemnation Proceeds”) shall be paid to Administrative Agent, for the benefit of the Lenders for application in the manner set forth in Section 7.01(g) as if such award or settlement constituted insurance proceeds from a casualty loss; provided, however, that Administrative Agent shall have no obligation to make Net Condemnation Proceeds available for construction or reconstruction of any Mortgaged Property unless Administrative Agent has in good faith determined that such Mortgaged Property as so constructed or reconstructed after giving effect to the condemnation would have a value that is materially no less than its value would have been had there been no such condemnation. Borrower shall have the obligation to promptly and diligently complete the work of reconstruction necessitated by any condemnation and restore the Mortgaged Property to the equivalent of its condition immediately prior to such condemnation (or if the initial construction of the Improvements is not substantially complete at the time of such condemnation, continue the construction of the Improvements in accordance with the terms hereof) provided the applicable Net Condemnation Proceeds are made available to Borrower for such purpose. With respect to any condemnation proceeds of less than or equal to $500,000 in the aggregate per Property, such condemnation proceeds shall, so long as no Default or Unmatured Default (as to which Borrower has been notified or otherwise has actual knowledge) shall have occurred and be continuing, be released to Borrower to be used for the repair and reconfiguration of the Property and Improvements.

ARTICLE VIII

DEFAULTS

8.01Defaults. Any of the following events, after passage of the applicable cure period set forth below, shall constitute a “Default” hereunder:

(a)Failure to Make Payment. The failure by Borrower to pay in full any principal of the Loans when due; the failure by Borrower to pay in full any interest on the Loans or any fees or any other amounts due under the Loan Documents (other than principal) when due and such failure continues unremedied for a period of five (5) days after the due date thereof; or the failure by Borrower to make any other payment or deposit required hereunder or under any of the other Loan Documents within the period set forth in Loan Documents, or if no period is set forth in the Loan Documents, then within five (5) Business Days after written demand therefor;

68

(b)Involuntary Proceeding. An involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of Borrower or Guarantor or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Borrower or Guarantor or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 90 days or an order or decree approving or ordering any of the foregoing shall be entered;

(c)Voluntary Proceedings. Borrower or Guarantor shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of any proceeding or petition described in clause (b) of this Section, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Borrower or Guarantor or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(d)Assignment for Benefit of Creditors. The execution by any Borrower or Guarantor of an assignment for the benefit of creditors;

(e)Unable to Pay Debts. The admission in writing by any Borrower or Guarantor that it is unable to pay its debts as they mature;

(f)Liquidation of Borrower or Guarantor. The liquidation, termination or dissolution of any Borrower or Guarantor;

(g)Transfer or Encumbrance of Interest in Mortgaged Property or Borrower.

(i)Mortgaged Property. A Transfer (defined in any Deed of Trust) of any right, title or interest of Borrower in and to any Mortgaged Property or any portion thereof, other than leasing to tenants or a transfer of personal property permitted by the terms of the Deeds of Trust or this Agreement, which occurrence is not rendered ineffective within ten (10) days after written notice from Administrative Agent; provided,however, that Borrower shall be permitted to replace defective, obsolete or worn out personal property, and Borrower shall be permitted to grant and/or record Permitted Encumbrances;

(ii)Borrower. The sale, exchange, conveyance, transfer, mortgage, assignment, pledge or encumbrance, either voluntarily or involuntarily, or the agreement to do so, or the agreement to do so (other than a sale or refinance agreement that will pay the Loan in full), of any direct or indirect ownership interest in any Borrower or any portion thereof; or any change (whether voluntary or involuntary) in the management or control of any Borrower, otherthan as permitted in Exhibit B hereto (provided that, as to involuntary liens or encumbrances, Borrower may cure such Default as specified in subparagraph (j) below, within the time period specified therein).

69

(h)Levy; Attachment; Seizure. The levy, attachment or seizure pursuant to court order of (i) any right, title or interest of Borrower in and to the Mortgaged Property or any portion thereof (other than any non-material personal property), or (ii) any direct or indirect ownership interests in Borrower, if such order is not vacated and the proceeding in which it was entered is not dismissed within thirty (30) days of the entry of such order;

(i)Failure of Representations. Any representation or warranty contained herein or in any of the other Loan Documents, or in any certificate or other document executed by Borrower or Guarantor and delivered to Administrative Agent pursuant to or in connection with this Agreement, is not true and correct in all material respects, or omits to state a material fact necessary to make such representation not misleading, in each case, as of the date made or deemed made, provided, to the extent curable and to the extent Administrative Agent determines a breach was not intentional and neither Administrative Agent nor any Lender has suffered any detriment by reason thereof, Borrowers or Guarantor shall have thirty (30) days to remedy the untrue or incomplete representation, warranty, document or other material (so that it is true and complete in all material respects), before such event constitutes a Default hereunder;

(j)Claims; Liens; Encumbrances; Stop Notices. Unless Borrower is contesting the same in accordance with the provisions of Section 4.01(c) hereof, the filing of any claim of lien or encumbrance against the Mortgaged Property or any part thereof that is not released or insured over with a title insurance endorsement (obtained at Borrower’s cost and expense) within forty-five (45) days after written notice thereof from Administrative Agent to Borrower; or the service on Administrative Agent or any Lender of a written notice or demand to withhold funds, which is not nullified within forty-five (45) days after the date of such service;

(k)Permits; Utilities; Insurance. (i) The failure of any Borrower to keep in full force and effect any material permit, license, consent or approval required for the construction or operation of any Improvements that is not fully reinstated within thirty (30) days after Administrative Agent gives Borrower written notice of the lapse of effectiveness of such material permit, license, consent or approval; unless (1) the failure to maintain any such permit, license, consent or approval, by its nature, is not capable of being cured within such period, (2) within such period, Borrower commence to cure such failure and thereafter diligently prosecutes the cure thereof, and (3) Borrower causes such failure to be cured no later than ninety (90) days after the date of such notice from Administrative Agent; or (ii) the curtailment in availability to any Mortgaged Property of utilities or other public services necessary for the full occupancy and utilization of the Improvements that is not restored to full availability within thirty (30) days after Administrative Agent gives Borrower notice of such curtailment of availability; or (iii) the failure by Borrower to maintain any insurance required under Section 7.01 hereof that is not cured within five (5) business days after Administrative Agent gives Borrower written notice of such lapse;

(l)Cessation of Loan Documents to be Effective. The cessation, for any reason, of any Loan Document to be in full force and effect in all material respects; the failure of any Lien intended to be created by the Loan Documents to exist or to be valid and perfected; the cessation of any such Lien, for any reason, to have the priority contemplated by this Agreement or the other Loan Documents, subject to Borrower’s right to contest liens in accordance with the terms of this Agreement; or the revocation by Guarantor of the Repayment Guaranty or any other Loan Document executed by Guarantor;

70

(m)ERISA. Any breach of the provisions of Section 4.11 hereof;

(n)Prohibited Distributions. Any breach of the provisions of Section 4.06 hereof shall occur which is not cured by Borrower within five (5) business days after Administrative Agent gives Borrower notice of such breach;

(o)Operations of Borrower. Any breach of the provisions of Section 4.03 hereof shall occur which is not cured by Borrower within twenty (20) days after Administrative Agent gives Borrower notice thereof;

(p)Judgments. Any final non-appealable judgment for the payment of money in excess of $500,000 is rendered against any Borrower or in excess of (i) until such time as Guarantor has a stated net worth of $250,000,000, $5,000,000 or (ii) on and after such time as Guarantor has a stated net worth of $250,000,000 or more, $10,000,000, is rendered against Guarantor, and Borrower or Guarantor (as applicable) fails to discharge the same, or fails to cause it to be discharged or bonded off to Administrative Agent’s satisfaction, within thirty (30) days from the date of the entry of such judgment;

(q)Swap Agreements. The occurrence or existence of any default, event of default or other similar condition or event (however described) with respect to any Swap Agreement, whether or not any Lender or Affiliate of any Lender is a party thereto, that is not cured within any applicable cure period set forth in the Swap Agreement (or 5 business days’ notice and cure, if no notice/cure period is provided under the Swap Agreement).

(r)Anti-Corruption Laws and Sanctions. Any breach of the covenants set forth in Section 4.12 hereof that is not cured within ten (10) days of Borrower becoming aware thereof;

(s)Failure to Perform Covenants. The failure of Borrower to fully perform any and all covenants and agreements hereunder or under any of the other Loan Documents, and, with respect to covenants and agreements other than those specifically referenced in this Section 8.01, or for which another cure period is provided, such failure is not cured by Borrower within thirty (30) days after Administrative Agent gives notice to Borrower thereof; provided that, if cure of such failure cannot reasonably be effected within such 30-day period, such failure shall not be a Default hereunder so long as Borrower promptly commences cure, and thereafter diligently prosecutes such cure to completion within a period of not more than ninety (90) days.

ARTICLE IX

ACCELERATION AND REMEDIES

9.01Acceleration. If any Default described in Section 8.01(b) or (c) hereof occurs with respect to Borrower and is continuing, the obligations of the Lenders to make the Loans hereunder shall automatically terminate and is continuing and the Obligations (other than Swap Obligations included therein) shall immediately become due and payable without any election or action on the part of Administrative Agent or any Lender. If any other Default occurs, Required Lenders (or Administrative Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make the Loans hereunder, or declare the Obligations (other than Swap Obligations included therein) to be due and payable, or both, whereupon the Obligations (other than Swap Obligations included therein) shall become immediately due and payable,

71

without presentment, demand, protest or notice of any kind, all of which Borrower hereby expressly waives. If the Required Lenders (in their sole discretion) shall so direct, Administrative Agent shall, by notice to Borrower, rescind and annul such acceleration and/or termination. Rights and remedies with respect to the Swap Obligations are set forth in the Swap Agreements.

9.02Other Remedies. In addition to any other rights and remedies granted to Administrative Agent and the Lenders in the Loan Documents, the Administrative Agent on behalf of the Lenders may exercise all rights and remedies of a secured party under the laws of the states where the Properties are located or any other applicable law. Without limiting the generality of the foregoing, Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon Borrower or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Mortgaged Property, or any part thereof, or consent to the use by Borrower of any cash collateral arising in respect of the Mortgaged Property on such terms as Administrative Agent deems reasonable, and/or may forthwith sell, lease, assign give an option or options to purchase or otherwise dispose of and deliver, or acquire by credit bid on behalf of the Lenders, the Mortgaged Property or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of Administrative Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Administrative Agent or any Lender shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Mortgaged Property so sold, free of any right or equity of redemption in Borrower, which right or equity is hereby waived and released. Borrower further agrees, at Administrative Agent’s request, to assemble the Mortgaged Property and make it available to Administrative Agent at places which Administrative Agent shall reasonably select, whether at Borrower’s premises or elsewhere. Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Article IX, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Mortgaged Property or in any other way relating to the Mortgaged Property or the rights of Administrative Agent and the Lenders hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the obligations of Borrower under the Loan Documents, in such order as Administrative Agent may elect, and only after such application and after the payment by Administrative Agent of any other amount required by any provision of law, including, without limitation, the California UCC, need Administrative Agent account for the surplus, if any, to Borrower. To the extent permitted by applicable law, Borrower waives all claims, damages and demands it may acquire against Administrative Agent or any Lender arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Mortgaged Property shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

9.03Curing of Defaults. Upon the occurrence and during the continuance, of a Default hereunder, Administrative Agent without waiving any right of acceleration or foreclosure under the Loan Documents which Administrative Agent or the Lenders may have by reason of such Default or any other right Administrative Agent or the Lenders may have against Borrower

72

because of said Default, Administrative Agent shall have the right (but not the obligation) to take such actions and make such payments as shall be necessary to cure such Default, including, without limitation, the making of Advances. All amounts so expended shall constitute Obligations and shall be payable by Borrower on written demand by Administrative Agent.

ARTICLE X

MISCELLANEOUS

10.01Notices.

(a)Generally. Except in the case of notices and other communications expressly permitted to be given by electronic communication (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

(i)if to Borrower, to it at c/o KBS Capital Advisors LLC, 800 Newport Center Drive, #700, Newport Beach, CA 92660, Attention of Tim Helgeson, Senior Vice President, Asset Management (Phone No. (949) 797-0356) (Email Address: thelgeson@kbs.com), Giovanni Cordoves, Senior Vice President, Asset Management (Phone No. (949) 797-0324) (Email Address: gcordoves@kbs.com), and Brett Merz, Senior Vice President, Asset Management (Phone No. (949) 417-6545) (Email Address: bmerz@kbs.com);

With a copy to: Greenberg Traurig, 3161 Michelson Drive, Suite 1000, Irvine, CA 92612, Attention of Bruce Fischer, Esq. (Phone No. (949) 732-6670) (Email Address: fischerb@gtlaw.com);

With a copy to: Todd Smith, 800 Newport Center Drive, #700, Newport Beach, CA 92660 (Phone No. (949) 797-0338) (Email Address: tsmith@kbs.com);

(ii)if to Administrative Agent, to it at 201 North Central Avenue, Floor 20, Phoenix, AZ 85004-0073, Attention of Ryan Dempsey (Email Address:  ryan.m.dempsey@jpmorgan.com).

(iii)if to any other Lender, to it at its address (or telecopy number or email address) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through Electronic Systems, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)Electronic Notices. Notices and other communications to the Lenders hereunder may be delivered or furnished by using Electronic Systems pursuant to procedures approved by Administrative Agent; provided that the foregoing shall not apply to notices for

73

interest rate elections and advances unless otherwise agreed by Administrative Agent and the applicable Lender. Either Administrative Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor, provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice for both clauses (i) and (ii), or communication shall be deemed to have been sent at the opening of business on the next business day of the recipient.

(c)Changes in Address. Any party hereto may change its address or telecopy number or email address for notices and other communications hereunder by notice to the other parties hereto (provided Borrower shall only be required to notice Administrative Agent for such notice to be effective). All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

(d)Electronic Systems.

(i)Borrower agrees that Administrative Agent may, but shall not be obligated to, make Communications (as defined below) available to the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.

(ii)Any Electronic System used by Administrative Agent is provided “as is” and “as available”. Administrative Agent does not warrant the adequacy of such Electronic Systems and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by Administrative Agent in connection with the Communications or any Electronic System. In no event shall Administrative Agent have any liability to Borrower, any Lender, or any other Person or entity for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of Borrower’s or Administrative Agent’s transmission of communications through an Electronic System. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan Document or the transactions contemplated therein which

74

is distributed by Administrative Agent or any Lender by means of electronic communications pursuant to this Section, including through an Electronic System.

10.02Waivers; Amendments.

(a)No Deemed Waivers; Remedies Cumulative. No failure or delay by Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 10.02(b) hereof, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default or Unmatured Default, regardless of whether Administrative Agent or any Lender may have had notice or knowledge of such Default or Unmatured Default at the time.

(b)Waivers and Amendments. Subject to Section 10.02(c) below, no provision of this Agreement or any other Loan Agreement or any Required Third Party Document may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by Borrower and the Required Lenders or by Borrower and Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender (including any such Lender that is a Defaulting Lender), (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby (including any such Lender that is a Defaulting Lender), (iii) postpone the scheduled date of payment of the principal amount of any Loan or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, without the written consent of each Lender (including any such Lender that is a Defaulting Lender) affected thereby, (iv) change Section 3.13(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender (including any such Lender that is a Defaulting Lender), (v) change any of the provisions of this Section or the definition of “Required Lenders “ or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender (including any such Lender that is a Defaulting Lender) directly affected thereby, (vi) release Guarantor from any of its obligations under the Loan Documents or release all or substantially all of any Mortgaged Property from the lien of the Loan Documents, without the written consent of each Lender (other than any Defaulting Lender), or (vii) permit an assignment by Borrower of any rights or obligations under the Loan Documents, without the written consent of each Lender (other than a Defaulting Lender); provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of Administrative Agent hereunder without the prior written consent of Administrative Agent.

(c)Actions by Administrative Agent; Required Consents. Each Lender authorizes Administrative Agent to enter into the Loan Documents (other than this Agreement)

75

and the Required Third Party Documents on behalf of, and for the benefit of, the Lenders and to take all actions left to the discretion of the Administrative Agent herein and therein on behalf of, and for the benefit of, the Lenders. If the Administrative Agent and Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or any other Loan Document, then Administrative Agent and Borrower shall be permitted to amend, modify or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other parties to this Agreement. Each Lender agrees that any action taken by Administrative Agent at the direction of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in this Agreement), and any action taken by Administrative Agent not requiring consent by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in this Agreement) shall be authorized by and binding upon all Lenders. Notwithstanding the foregoing provisions of this Section 10.02(c), Administrative Agent shall not have the authority to bind the Lenders with respect to any of the following matters without Administrative Agent obtaining the prior written consent of the Required Lenders:

(i)the approval of any action described in Section 4.03(a)(iii) hereof;

(ii)the exercise of any rights and remedies against Borrower, Guarantor or the Mortgaged Property; provided, however, that Administrative Agent may, in its discretion but without obligation, in the absence of direction from the Required Lenders, take such interim action as it believes necessary to preserve the rights of the Lenders hereunder in and to any Mortgaged Property, including, without limitation, (A) the delivery of default notices to Borrower or any other Person, (B) petitioning a court for injunctive relief, the appointment of a receiver or preservation of the proceeds of any collateral, (C) the making of Advances for the payment of interest, and (D) the exercise of the cure rights of Administrative Agent under this Agreement, the other Loan Documents and the Required Third Party Documents; and

(iii)the expenditure of funds by Administrative Agent for which the Lenders are responsible under Section 10.03 hereof to cure Defaults in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate; provided, however, that expenditures to pay any of the following items shall not be subject to the foregoing limitation in amount: (A) real estate taxes, assessments, charges and levies owing with respect to the Mortgaged Property, (B) insurance premiums owing with respect to insurance coverage required by the Loan Documents, (C) claims of lienholders with priority over the lien of any Deed of Trust, (D) expenditures necessary to respond to emergency conditions with respect to any Mortgaged Property, (E) expenditures necessary to preserve the validity and priority of the lien of any Deed of Trust; and (F) amounts of less than $500,000 (which shall not require such consent).

10.03Expenses; Indemnity; Damage Waiver.

(a)Expenses. Borrowers shall pay (i) all reasonable out‑of‑pocket expenses incurred by Administrative Agent and its Affiliates, including appraisal fees, inspection fees and charges, title and escrow charges, the cost of Intralinks or a similar electronic workspace, and the

76

reasonable fees, charges and disbursements of counsel for Administrative Agent in connection with the syndication of the credit facilities provided for herein (to the extent Borrower approves such syndication costs in writing or the syndication costs arise during the existence of a Default) the preparation and administration of this Agreement, the other Loan Documents and any extensions, amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by Administrative Agent or any Lender, including the reasonable fees, charges and disbursements of any counsel for Administrative Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of‑pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

(b)Borrower Indemnity. Borrowers shall indemnify Administrative Agent, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, judgments, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee (collectively, “Losses”), incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such Losses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. The foregoing indemnity set forth in this Section 10.03(b) shall not apply (i) with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim and (ii) to any Losses, which are the subject of the Environmental Indemnity Agreement, it being the intention of the parties hereto that Borrower’s liability for environmental matters be governed exclusively by the Environmental Indemnity Agreement and not by this Agreement.

(c)Reimbursement by Lenders. To the extent that Borrower fails to pay any amount required to be paid by it to Administrative Agent under Section 10.03(a) or (b) hereof, each Lender severally agrees to pay to Administrative Agent such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Administrative Agent in its capacity as such.

(d)Damage Waiver. To the extent permitted by applicable law, no party hereto shall assert, and each such party hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the

77

proceeds thereof; provided that, nothing in this clause (d) shall relieve Borrower of any obligation it may have to indemnify an Indemnitee against special, indirect, consequential or punitive damages asserted against such Indemnitee by a third party.

(e)Payment of Amounts Due. Unless expressly provided in this Agreement to the contrary, all amounts due under this Section shall be payable not later than five (5) business days after written demand therefor.

10.04Successors and Assigns.

(a)Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 10.04. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in Section 10.04(c) hereof) and, to the extent expressly contemplated hereby, the Related Parties of each of Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)Assignments by Lenders.

(i)Subject to the conditions set forth in Section 10.04(b)(ii) below, and subject to the provisions of Section 10.12 below, any Lender may, at de minimus cost to Borrower or Guarantor (but in no event shall either bear Administrative Agent’s or Lenders’ costs except such costs incurred during the existence of a Default or they otherwise agree in writing), assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, provided that it would be reasonable for Borrower to withhold consent to assignment if such assignment could cause a termination of any Swap Agreement pertaining to the Loan or could result in additional taxes payable by Borrower or Guarantor) of:

(A)Borrower, provided that Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to Administrative Agent within 10 Business Days after having received notice thereof, and provided further that no consent of Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund (unless such assignment to an Affiliate of a Lender or an Approved Fund would result in additional taxes payable by Borrower or Guarantor or if such assignment could cause a termination of any Swap Agreement), or, if a Default has occurred and is continuing, any other assignee; and

78

(B)Administrative Agent, provided that no consent of Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender (other than a Lender that is a Defaulting Lender) with a Commitment immediately prior to giving effect to such assignment.

(ii)Assignments shall be subject to the following additional conditions:

(A)except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Administrative Agent) shall not be less than $5,000,000 unless each of Borrower and Administrative Agent otherwise consent, provided that no such consent of Borrower shall be required if a Default has occurred and is continuing;

(B)each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

(C)the parties to each assignment shall execute and deliver to Administrative Agent, (x) an Assignment and Assumption, or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to a Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, together with a processing and recordation fee of $3,500; and

(D)the assignee, if it shall not be a Lender, shall deliver to Administrative Agent an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about Borrower, the Guarantor, and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

For the purposes of this Section 10.04(b), the terms “Approved Fund” and “Ineligible Institution” have the following meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) Borrower, Guarantor or any of their Affiliates, or (d) a holding company, investment vehicle or trust for, or owned and operated for

79

the primary benefit of, a natural person or relative(s) thereof; provided that, such holding company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Loans or Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business.

(iii)Subject to acceptance and recording thereof pursuant to Section 10.04(b)(iv), from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.10, 3.11, 3.12, and 10.03 hereof). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.04(c) hereof. Borrower hereby agrees to execute any amendment and/or any other document that may be necessary to effectuate such an assignment, including an amendment to this Agreement to provide for multiple lenders and an administrative agent to act on behalf of such lenders. In the event of assignment, Administrative Agent will appoint an administrative agent reasonably satisfactory to Borrower, and Borrower shall be required to rely only on communications from, and communicate only with, such administrative agent.

(iv)Administrative Agent, acting for this purpose as a non-fiduciary agent of Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and Borrower, Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.

(v)Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to a Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 10.04 (b) hereof and any written consent to such

80

assignment required by Section 10.04(b) hereof, Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 3.03(b), 3.13(d) or 11.03(c), Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section.

(c)Participations.

(i)Subject to the provisions of Section 10.12 below, any Lender may, without the consent of or notice to Borrower (but such Lender will use commercially reasonable efforts to notify Borrower re the participation to the extent occurring prior to the occurrence of a Default, and upon Borrower’s request, provide names of the participants), and at no cost to Borrower or Guarantor, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) Borrower, Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that affects such Participant, to the extent any such amendment, modification or waiver shall (i) increase the Commitment of the applicable Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, (iii) postpone the scheduled date of payment of the principal amount of any Loan or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment. Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.10, 3.11 and 3.12 (subject to the requirements and limitations therein, including the requirements under Section 3.12(f) (it being understood that the documentation required under Section 3.12(f) shall be delivered to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.04(b) hereof; provided that such Participant (A) agrees to be subject to the provisions of Section 3.14 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 3.10 or 3.12, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at Borrower’s request and expense, to use reasonable efforts to cooperate with Borrower to effectuate the provisions of Section 3.14(b) with respect to any Participant.

81

To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 hereof as though it were a Lender; provided that such Participant agrees to be subject to Sections 3.13(c) and 10.08 hereof as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under any Loan Document (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(ii)In no event may a Participant be an Affiliate of Borrower or Guarantor.

(d)Pledges by Lender. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

10.05Survival. All covenants, agreements, representations and warranties made by Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Administrative Agent or any Lender may have had notice or knowledge of any Default or Unmatured Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 3.10, 3.11, 3.12, 4.16(c) and 10.03 and Article XI hereof shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination the Commitments or the termination of this Agreement or any provision hereof.

82

10.06Counterparts; Integration; Effectiveness; Electronic Execution.

(a)This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents and any separate letter agreements with respect to fees paid to Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it shall have been executed by Administrative Agent and when Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

(b)Delivery of an executed counterpart of a signature page of this Agreement by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement. The words “execution,”“signed,”“signature,”“delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

10.07Severability. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

10.08Right of Setoff. If a Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, and to the extent permitted under Section 11.08 hereof, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of Borrower against any of and all the obligations of Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section 10.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Notwithstanding the foregoing, each Lender agrees to obtain approval of the Required Lenders (other than any Defaulting Lender) before exercising such rights.

83

10.09Governing Law; Jurisdiction; Consent to Service of Process.

(a)Governing Law. This Agreement shall be construed in accordance with and governed by the internal laws (and not the law of conflicts) of the State of California, but giving effect to federal laws applicable to national banks.

(b)Consent to Jurisdiction. Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any United States Federal court or any state court sitting in any county where any Property is located, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such state court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against Borrower or its properties in the courts of any jurisdiction.

(c)Waiver of Objection to Venue. Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in Section 10.09(b) hereof. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)Service of Process. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

10.10WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CONTROVERSY, DISPUTE OR CLAIM DIRECTLY OR

84

INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) (EACH, A “CLAIM”) AND THE WAIVER SET FORTH IN THE PRECEDING PARAGRAPH IS NOT ENFORCEABLE IN SUCH ACTION OR PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

1. WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN PARAGRAPH 2 BELOW, ANY CLAIM WILL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN DOCUMENTS, VENUE FOR THE REFERENCE PROCEEDING WILL BE IN THE STATE OR FEDERAL COURT IN THE COUNTY OR DISTRICT WHERE VENUE IS OTHERWISE APPROPRIATE UNDER APPLICABLE LAW.

2. THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING, WITHOUT LIMITATION, SET-OFF), (C) APPOINTMENT OF A RECEIVER AND (D) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING, WITHOUT LIMITATION, WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT.

3. UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY MAY REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).

4. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS, A COURT REPORTER WILL BE USED AND THE REFEREE WILL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.

5. THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND

85

THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA. THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING, WITHOUT LIMITATION, MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.

6. THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.

10.11Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

10.12Confidentiality. Administrative Agent agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to the Obligations or the enforcement of rights under the Loan Documents or any Swap Agreement, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Swap Agreement relating to Borrower and its obligations, (g) with the prior written consent of Borrower (which consent can be withheld, conditioned or delayed in Borrower’s sole and absolute discretion), (h) to holders of equity interests in Borrower, or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Administrative Agent on a non-confidential basis from a source other than Borrower. For the purposes of this Section, “Information” means all information received from Borrower or Guarantor relating to Borrower or Guarantor, other than any such information that is available to Administrative Agent on a non-confidential basis prior to disclosure by Borrower; provided that, in the case of information received from Borrower (but not Guarantor, and this requirement shall not apply to Guarantor) after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same

86

degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THIS SECTION) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING BORROWER, THE GUARANTOR, AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY BORROWER OR ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT BORROWER, GUARANTOR, AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO BORROWER AND ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

10.13Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

10.14USA Patriot Act. Administrative Agent and each Lender hereby notify Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Administrative Agent or such Lender to identify Borrower in accordance with the Act.

10.15Administrative Agent Approvals. With respect to matter under this Agreement requiring the approval or consent of Administrative Agent or any other exercise of discretion by

87

Administrative Agent, Administrative Agent shall exercise its judgment reasonably and in good faith without unreasonable delay after receipt of the necessary information to make a fully informed decision.

10.16Replacement Documentation. Upon receipt of an affidavit of an officer of Administrative Agent or any of the Lenders as to the loss, theft, destruction or mutilation of a Note or any other security document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, Borrower will issue, in lieu thereof, a replacement Note or other security document in the same principal amount thereof and otherwise of like tenor. In the event that Borrower issues such replacement Note or other security document, the Lender who is the payee on the lost, destroyed, mutilated or stolen Note or security document shall indemnify and hold harmless Borrower from any liability incurred by Borrower in connection with the lost, stolen, destroyed or mutilated Note or security document.

10.17Swap Agreements. All Swap Agreements, if any, between Borrower and any Lender or Affiliate of any Lender are independent agreements governed by the written provisions of said Swap Agreements, which will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of the Loan Documents, except as otherwise expressly provided in said written Swap Agreements, and any payoff statement from Administrative Agent relating to the Loans shall not apply to said Swap Agreements.

10.18Statements. Administrative Agent shall from time to time provide Borrower with account statements or invoices with respect to the payment of interest and principal then owing (and, at the request of Borrower, any other obligations then owing) (the “Statements”). However, the failure of Administrative Agent to provide any such Statements shall not diminish or waive any rights of Administrative Agent, or obligations of Borrower, under this Agreement or the other Loan Documents. Statements may contain estimates of the amounts owed during the relevant billing period, whether of principal, interest, fees or other Obligations. If Borrower pays the full amount indicated on a Statement on or before the due date indicated on such Statement, Borrower shall not be in default of payment with respect to the billing period indicated on such Statement; provided, that acceptance by Administrative Agent of any payment that is less than the total amount actually due at that time (including but not limited to any past due amounts) shall not constitute a waiver of Administrative Agent’s right to receive payment in full at another time.

10.19Borrower 2822 Waiver. In the event that, at any time, any surety or guarantor exists that is liable upon only a portion of Borrowers’ obligations under the Loan Documents and Borrower provides partial satisfaction of any such obligation(s), Borrowers hereby waive any right they would otherwise have under Section 2822 of the California Civil Code, or other similar law or otherwise, to designate the portion of the obligation to be satisfied. The designation of the portion of the obligation to be satisfied shall, to the extent not expressly made by the terms of the Loan Documents, be made by Administrative Agent rather than by Borrowers.

10.20Waiver of Special Damages. Borrowers agree that neither Administrative Agent nor any Lender shall have any liability to any Borrower or Guarantor (whether sounding in tort, contract or otherwise) for losses suffered by any Borrower or Guarantor in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents and any applicable Swap Agreement, or any act, omission or event occurring

88

in connection therewith, unless such losses result from the gross negligence or willful misconduct of the party from which recovery is sought or from a breach of any Loan Document or any applicable Swap Agreement by such party. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWERS SHALL NOT ASSERT, AND HEREBY WAIVE, ANY CLAIM AGAINST ADMINISTRATIVE AGENT AND LENDERS ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS OR THE USE OF THE PROCEEDS THEREOF.

10.21Limitation on Liability Notwithstanding the foregoing or anything to the contrary in this Agreement, under no circumstances shall Administrative Agent or any Lender have any recourse against, nor shall there by any personal liability to, the members of any Borrower, or to any shareholders, members or partners (direct or indirect, except for the Guarantor under the Guaranty) for any obligations of any Borrower hereunder. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower’s liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty or Administrative Agent or any Lender’s right to exercise any rights or remedies against any collateral securing the Loan.

10.22Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)the effects of any Bail-In Action on any such liability, including, if applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

10.23Releases of Properties. Except as expressly set forth below in this Section 10.23, Administrative Agent shall have no obligation to release any of the Properties (or portions thereof) until the Loan and all other Obligations have been paid in full and all obligations of Administrative Agent and Lenders under this Agreement and the other Loan Documents have terminated.

89

Borrower shall be entitled to obtain the release of a Property (or portions thereof) (each, a “Release Property”) from the lien of the Loan Documents, provided that all of the following conditions are satisfied:

(a)Borrower shall have submitted to Administrative Agent a written request for such release at least twenty (20) days prior to the proposed release date, together with copies of any documents which Borrower requests Administrative Agent to execute in connection with such proposed release.

(b)No Default or Unmatured Default shall have occurred and be continuing.

(c)After giving effect to the proposed release, at least two (2) Properties remain as security for the Loan, unless otherwise agreed to by Administrative Agent and Lenders.

(d)The Release Property and the portion of the Property that shall remain subject to a Deed of Trust upon the reconveyance of the Release Property shall each constitute one or more legally separable and transferable lots or parcels under all applicable laws, ordinances, rules and regulations relating to the subdivision or parceling of real property and the transfer thereof.

(e)The release of the Release Property will not result in the loss by any other portion of the Property which remains subject to the applicable Deed of Trust of reasonable access to a public street, the use of reasonably necessary easements or utilities, or any parking availability which is reasonably necessary for the use and operation of such remaining Property for its intended purpose (provided, however, that the foregoing requirements in this clause (e) shall be deemed satisfied if the requirements in clause (f) below are satisfied by the applicable Borrower).

(f)The Release Property shall be subject to such reciprocal easement agreements and other agreements as Administrative Agent may reasonably require to ensure that the Property which remains subject to the applicable Deed of Trust enjoys adequate ingress and egress, access to a public street, utility access, parking, and such other rights and benefits as Administrative Agent may reasonably require.

(g)Borrowers’ rights under any reciprocal easement agreement or other agreement that may be required pursuant to Section 10.23(f) above shall be subject to the lien of the applicable Deed of Trust.

(h)Borrower shall have paid to Administrative Agent, for application to the outstanding balance of the Loans, an amount equal to the amount, if any, by which the outstanding balance exceeds the then current Availability Amount. In calculating the Availability Amount, the Borrowing Base Amount shall be determined based only on the Properties remaining after the proposed release (i.e., without regard to the Release Property) and shall be adjusted as provided below in this Section 10.23.

(i)Borrower shall have delivered to Administrative Agent (1) a Borrowing Base Certificate adjusted to reflect the proposed release of a Property (or a portion thereof) and (2) such certifications from Guarantor that, after giving effect to the proposed release, Guarantor shall be in compliance with its financial covenants under the Guaranty.

90

(j)Borrower shall provide to Administrative Agent at Borrower’s sole cost and expense such title insurance endorsements to the Title Policies for the remaining Deeds of Trust as Administrative Agent shall reasonably request (including, without limitation, CLTA Form 111 Endorsements (or its equivalent), to the extent available and in form and substance reasonably satisfactory to Administrative Agent, which shall insure that after such release, each remaining Deed of Trust shall continue as a valid first position lien against the Property encumbered thereby, subject only to such new title exceptions as Administrative Agent shall approve in writing.

(k)Borrower shall pay, or caused to be paid, to Administrative Agent all reasonable costs and expenses incurred in connection with such release, including without limitation all breakage fees, recording fees, transfer and other taxes, trustee’s fees, reasonable attorneys’ fees, appraisal fees, escrow fees, and fees for title insurance and similar charges.

Following the release of any Property (or portion thereof), such Release Property (or portion thereof) shall no longer be included in the definition of “Property” except with respect to any indemnities and other provisions of the Loan Documents that expressly survive repayment of the Loan.

Additionally, in connection with any release, the “Borrowing Base Amount” under this Agreement shall be reduced to mean the least of (a) fifty-five percent (55%) of the “as is” Appraised Value of the Properties then remaining as collateral for the Loan (which Appraised Value shall be determined, in the case of any release of less than all of any Property pursuant this Section 10.23, based on a new Appraisal of the portion of such Property that remains encumbered by the applicable Deed of Trust after giving effect to the requested partial release), (b) fifty-five percent (55%) of the cost basis of each Property then remaining as collateral for the Loan; and (c) the maximum amount of the Loan that, had such amount of the Loan been outstanding each day during the prior twelve (12) month testing period immediately preceding and through the date of measurement, would not have caused the Debt Service Coverage Ratio to be less than 1.35 to 1.0.

Upon the release of the Deed of Trust encumbering the Property owned by a Borrower in accordance with the Loan Documents, and the payment to Administrative Agent in full of the amount, if any, required pursuant to Section 10.23(h) above with respect to the release of such Property, so long as no Default or Unmatured Default shall have occurred and be continuing, such Borrower shall be deemed to no longer be a Borrower under the Loan Documents and shall be released therefrom upon the execution (which shall be delivered concurrently with the release of the applicable Deed of Trust) by such Borrower, each other Borrower and Guarantor, and Administrative Agent of a reciprocal release agreement in the form attached hereto as Exhibit F or any other form reasonably satisfactory to Administrative Agent, the applicable Borrower, each other Borrower and Guarantor.

10.24Joint Borrower Provisions. Each Borrower acknowledges and agrees that it shall be jointly and severally liable for the Loan and all other Obligations arising under this Agreement and/or any of the other Loan Documents and Swap Contracts. In furtherance thereof, each Borrower acknowledges and agrees as follows:

91

(a)For the purpose of implementing the joint borrower provisions of the Loan Documents, each Borrower hereby irrevocably appoints each other Borrower as its agent and attorney-in-fact for all purposes of the Loan Documents and any Swap Contracts, including the giving and receiving of notices and other communications.

(b)To induce the Administrative Agent and Lenders to make the Loan, and in consideration thereof, each Borrower hereby agrees to indemnify Administrative Agent and Lenders against, and hold Administrative Agent and Lenders harmless from, any and all liabilities, expenses, losses, damages and/or claims of damage or injury asserted against Administrative Agent and Lenders by any Borrower or by any other Person arising from or incurred by reason of (i) reliance by Administrative Agent and Lenders on any requests or instructions from any Borrower, or (ii) any other action taken by Administrative Agent and Lenders in good faith with respect to this Agreement or the other Loan Documents and any Swap Contracts.

(c)Each Borrower acknowledges that the liens and security interests created or granted herein and by the other Loan Documents will secure Obligations of all Borrowers under the Loan Documents and Swap Contracts and, in full recognition of that fact, each Borrower consents and agrees that Administrative Agent and Lenders may, at any time and from time to time, without notice or demand, and without affecting the enforceability or security hereof or of any other Loan Document or any Swap Contract:

(i)agree with any Borrower to supplement, modify, amend, extend, renew, accelerate, or otherwise change the time for payment or the terms of the Obligations or any part thereof, including any increase or decrease of the rate(s) of interest thereon;

(ii)agree with any Borrower to supplement, modify, amend or waive, or enter into or give any agreement, approval or consent with respect to, the Obligations or any part thereof or any of the Loan Documents or Swap Contracts or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder;

(iii)accept new or additional instruments, documents or agreements in exchange for or relative to any of the Loan Documents or Swap Contracts or the Obligations or any part thereof;

(iv)accept partial payments on the Obligations;

(v)receive and hold additional security or guaranties for the Obligations or any part thereof;

(vi)release, reconvey, terminate, waive, abandon, subordinate, exchange, substitute, transfer and enforce any security for or guaranties of the Obligations, and apply any security and direct the order or manner of sale thereof as Administrative Agent and Lender, in its sole and absolute discretion may determine;

(vii)release any Person or any guarantor from any personal liability with respect to the Obligations or any part thereof;

92

(viii)settle, release on terms satisfactory to Administrative Agent and Lenders or by operation of applicable laws or otherwise liquidate or enforce any Obligations and any security therefor or guaranty thereof in any manner, consent to the transfer of any such security and bid and purchase at any sale; and consent to the merger, change or any other restructuring or termination of the corporate existence of any Borrower or any other Person, and correspondingly restructure the obligations of such Borrower or other Person, and any such merger, change, restructuring or termination shall not affect the liability of any Borrower or the continuing existence of any lien or security interest hereunder, under any other Loan Document or Swap Contracts to which any Borrower is a party or the enforceability hereof or thereof with respect to all or any part of the Obligations.

(d)Upon the occurrence of and during the continuance of any event of default, Administrative Agent and Lenders may enforce this Agreement and the other Loan Documents or Swap Contracts independently as to each Borrower and independently of any other remedy or security Administrative Agent and Lenders at any time may have or hold in connection with the Obligations, and in collecting on the Loan it shall not be necessary for Administrative Agent and Lenders to marshal assets in favor of any Borrower or any other Person or to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce this Agreement and the other Loan Documents or Swap Contracts. Each Borrower expressly waives any right to require Administrative Agent and Lenders, in connection with Administrative Agent and Lender’s efforts to obtain repayment of the Loan and other Obligations, to marshal assets in favor of any Borrower or any other Person or to proceed against any other Person or any collateral provided by any other Person, and agrees that Administrative Agent and Lenders may proceed against any Persons and/or collateral in such order as it shall determine in its sole and absolute discretion in connection with Administrative Agent and Lender’s efforts to obtain repayment of the Loan and other Obligations. Administrative Agent and Lenders may file a separate action or actions against each Borrower to enforce the Obligations, whether action is brought or prosecuted with respect to any other security or against any other Person, or whether any other Person is joined in any such action or actions. Each Borrower agrees that Administrative Agent and Lenders, each Borrower and/or any other Person may deal with each other in connection with the Obligations or otherwise, or alter any contracts or agreements now or hereafter existing between any of them, in any manner whatsoever, all without in any way altering or affecting the security of this Agreement or the other Loan Documents or any Swap Contracts. The rights of Administrative Agents and Lenders hereunder and under the other Loan Documents shall be reinstated and revived, and the enforceability of this Agreement and the other Loan Documents and Swap Contracts shall continue, with respect to any amount at any time paid on account of the Obligations which thereafter shall be required to be restored or returned by Administrative Agent and Lenders as a result of the bankruptcy, insolvency or reorganization of any Borrower or any other Person, or otherwise, all as though such amount had not been paid. The enforceability of this Agreement and the other Loan Documents and Swap Contracts at all times shall remain effective even though the any or all Obligations, or any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against any Borrower or any other Person and whether or not any Borrower or any other Person shall have any personal liability with respect thereto. Each Borrower expressly waives any and all defenses to the enforcement of its obligations under the Loan Documents and Swap Contracts now or hereafter arising or asserted by reason of (i) any disability or other defense of any Borrower or any other Person with respect to the Obligations,

93

(ii) the unenforceability or invalidity of any security or guaranty for the Obligations or the lack of perfection or continuing perfection or failure of priority of any security for the Obligations, (iii) the cessation for any cause whatsoever of the liability of any Borrower or any other Person (other than by reason of the full and final payment and performance of all Obligations), (iv) any failure of Administrative Agent and Lenders to marshal assets in favor of any of the Borrowers or any other Person, (v) any failure of Administrative Agent and Lenders to give notice of sale or other disposition of any collateral for the Obligations to any Borrower or to any other Person or any defect in any notice that may be given in connection with any such sale or disposition, (vi) any failure of Administrative Agent and Lenders to comply in any non material respect with applicable laws in connection with the sale or other disposition of any collateral or other security for any Obligation, (vii) any act or omission of Administrative Agent and Lenders or others that directly or indirectly results in or aids the discharge or release of any Borrower or of any other Person or of any of the Obligations or any other security or guaranty therefor by operation of law or otherwise, (viii) any law which provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation, (ix) any failure of Administrative Agent and Lenders to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person, (x) the election by Administrative Agent and Lenders, in any bankruptcy proceeding of any Person, of the application or non application of Section 1111(b)(2) of the United States Bankruptcy Code, (xi) any extension of credit or the grant of any lien under Section 364 of the United States Bankruptcy Code except to extent otherwise provided in this Agreement, (xii) any use of cash collateral under Section 363 of the United States Bankruptcy Code, (xiii) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person, (xiv) the avoidance of any lien or security interest in favor of Administrative Agent and Lenders securing the Obligations for any reason, or (xv) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any Person, including any discharge of, or bar or stay against collecting, all or any of the Obligations (or any interest thereon) in or as a result of any such proceeding. Without in any way limiting the foregoing, with respect to the Loan Documents, the Swap Contracts and the Obligations, each Borrower: (A) waives all rights and defenses arising out of an election of remedies by Administrative Agent and Lenders, even though that election of remedies, such as non-judicial foreclosure with respect to security for Borrowers’ obligations, has destroyed each of their rights of subrogation and reimbursement against the other by the operation of applicable law or otherwise; and (B) waives any right to an action to determine fair value or similar proceeding following a nonjudicial foreclosure of the Obligations.

(e)The Borrowers represent and warrant to Administrative Agent and Lenders that they have established adequate means of obtaining from each other, on a continuing basis, financial and other information pertaining to their respective businesses, operations and condition (financial and otherwise) and their respective properties, and each now is and hereafter will be completely familiar with the businesses, operations and condition (financial and otherwise) of the other and their respective properties. Each Borrower hereby expressly waives and relinquishes any duty on the part of Administrative Agent and Lenders to disclose to such Borrower any matter, fact or thing related to the businesses, operations or condition (financial or otherwise) of the other Borrowers or the other Borrowers’ properties, whether now known or hereafter known by Administrative Agent and Lenders during the life of this Agreement. With respect to any of the

94

Obligations, Administrative Agent and Lenders need not inquire into the powers of any Borrower or the officers, employees or other Persons acting or purporting to act on such Borrower’s behalf.

(f)Without limiting the foregoing, or anything else contained in this Agreement, each Borrower waives all rights and defenses that it may have because the Obligations are secured by real property. This means, among other things:

(i)Administrative Agent and Lenders may collect on the Obligations from any Borrower without first foreclosing on any real or personal property collateral pledged by the other Borrowers; and

(ii)If Administrative Agent or Lenders foreclose on any real property collateral pledged by any Borrower for the Obligations: (A) the amount of the indebtedness owed by the other Borrowers may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) Administrative Agent and Lenders may collect from any Borrower even if Administrative Agent and Lenders, by foreclosing on the real property collateral, has destroyed any right any Borrower may have to collect from the other Borrowers.

(g)This is an unconditional and irrevocable waiver of any rights and defenses each Borrower may have because the Obligations are secured by real property (including, as and to the extent that such rights or defenses may be asserted to be applicable, any rights or defenses based upon Sections 580a, 580b, 580d or 726 of the California Code of Civil Procedure). Each Borrower expressly waives any right to receive notice of any judicial or nonjudicial foreclosure or sale of any real property collateral provided by the other Borrower to secure the Obligations and failure to receive any such notice shall not impair or affect such Borrower’s obligations hereunder or the enforceability of this Agreement or the other Loan Documents or any liens created or granted hereby or thereby.

(h)Notwithstanding anything to the contrary elsewhere contained herein or in any other Loan Document to which any Borrower is a party, with respect to the Loan and all other Obligations, each Borrower hereby waives with respect to the other Borrowers and their successors and assigns (including any surety) and any other Person any and all rights at law or in equity, to subrogation, to reimbursement, to exoneration, to contribution, to setoff, to any other rights and defenses available to it by reason of applicable law, and all rights and defenses available to any Borrower under California law, or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated, or to a holder or transferee against a maker and which each of them may have or hereafter acquire against the other or any other Person in connection with or as a result of such Borrower’s execution, delivery and/or performance of this Agreement or any other Loan Document to which it is a party until the Obligations are paid and performed in full. Each Borrower agrees that it shall not have or assert any such rights against any other Borrower or any other Borrower’s successors and assigns or any other Person (including any surety), either directly or as an attempted setoff to any action commenced against such Borrower by any other Borrower (as borrower or in any other capacity) or any other Person until the all Obligations are paid and performed in full. Each Borrower hereby acknowledges and agrees that this waiver is intended to benefit Administrative Agent and Lenders and shall not limit or otherwise affect any Borrower’s

95

liability under this Agreement or any other Loan Document or Swap Contract to which it is a party, or the enforceability hereof or thereof.

(i)Each Borrower warrants and agrees that each of the waivers and consents set forth herein is made with full knowledge of its significance and consequences, with the understanding that events giving rise to any defense waived may diminish, destroy or otherwise adversely affect rights which each otherwise may have against the other, against Administrative Agent and Lenders or others, or against any collateral. If any of the waivers or consents herein are determined to be contrary to any applicable law or public policy, such waivers and consents shall be effective to the maximum extent permitted by law.

ARTICLE XI

ADMINISTRATIVE AGENT

11.01Appointment. Each Lender hereby irrevocably appoints Administrative Agent as its agent and authorizes Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.

11.02Capacity as Lender. The bank serving as Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Borrower or any Affiliate of Borrower as if it were not Administrative Agent hereunder.

11.03Duties and Obligations. Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Unmatured Default has occurred and is continuing, (b) Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in this Agreement), and (c) except as expressly set forth herein, Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its subsidiaries or Affiliates that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. Administrative Agent shall not be liable for any action taken or not taken by it as to the Lenders, with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in this Agreement) or in all other cases in the absence of its own gross negligence or willful misconduct. Administrative Agent shall be deemed not to have knowledge of any Default or Unmatured Default unless and until written notice thereof is given to Administrative Agent by Borrower or a Lender, and Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants,

96

agreements or other terms or conditions set forth in any Loan Document or Required Third Party Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document, any Required Third Party Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in this Agreement, other than to confirm receipt of items expressly required to be delivered to Administrative Agent, (vi) the value, sufficiency, creation, perfection or priority of any lien on any Mortgaged Property, or (vii) the financial condition of Borrower or Guarantor.

11.04Reliance. Administrative Agent shall be entitled to rely upon, and shall not incur any liability (in the absence of its own gross negligence or willful misconduct) for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including electronic communications) believed by it to be genuine and to have been signed or sent by the proper Person. Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon in the absence of its own gross negligence or willful misconduct. Administrative Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

11.05Sub-Agents. Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

11.06Resignation. Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, Administrative Agent may resign at any time by notifying the Lenders and Borrower. Upon any such resignation, the Required Lenders shall have the right, in consultation with Borrower, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent shall use commercially reasonable efforts to, on behalf of the Lenders, appoint a successor Administrative Agent. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After Administrative Agent’s resignation hereunder, the provisions of this Article and Section 11.03 hereof shall continue in effect for the benefit of such retiring Administrative Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

97

11.07Independent Credit Analysis. Each Lender acknowledges and agrees that the extensions of credit made hereunder are commercial loans and letters of credit and not investments in a business enterprise or securities. Each Lender further represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and has, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender shall, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder and in deciding whether or to the extent to which it will continue as a Lender or assign or otherwise transfer its rights, interests and obligations hereunder.

11.08Lender Actions Against Collateral. Each Lender agrees that it will not take any action, nor institute any actions or proceedings, with respect to the Obligations, against Borrower, Guarantor, or any other obligor under this Agreement, the other Loan Documents or the Required Third Party Documents or against any portion of any Mortgaged Property (including, without limitation, set-off rights) without the consent of the Required Lenders. With respect to any action by Administrative Agent to enforce the rights and remedies of Administrative Agent and the Lenders under this Agreement and the other Loan Documents, each Lender hereby consents to the jurisdiction of the court in which such action is maintained, and agrees to deliver its Note to Administrative Agent to the extent necessary to enforce the rights and remedies of Administrative Agent for the benefit of the Lenders under the Deeds of Trust in accordance with the provisions hereof. Each Lender agrees to indemnify each of the other Lenders for any loss or damage suffered or cost incurred by such other Lender (including without limitation, attorneys’ fees and expenses and other costs of defense) as a result of the breach of this Section 11.08 by such Lender.

11.09Lender Reply Period. All communications from Administrative Agent to Lenders requesting Lenders’ determination, consent or approval (i) shall be given in the form of a written notice to each Lender, (ii) shall be accompanied by a description of the matter as to which such determination, consent or approval is requested, (iii) shall include a legend substantially as follows, printed in capital letters or boldface type:

“THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN TEN (10) BUSINESS DAYS AFTER THE DELIVERY OF THIS COMMUNICATION SHALL CONSTITUTE A DEEMED APPROVAL BY THE ADDRESSEE OF THE MATTER DESCRIBED ABOVE.”

and (iv) shall include Administrative Agent’s recommended course of action or determination in respect thereof. Each Lender shall reply promptly to any such request, but in any event within ten (10) Business Days after the delivery of such request by Administrative Agent (the “Lender Reply Period”). Unless a Lender shall give written notice to Administrative Agent that it objects to the recommendation or determination of Administrative Agent (together with a written explanation of the reasons behind such objection) within the Lender Reply Period, such Lender shall be deemed to have approved of or consented to such recommendation or determination. With respect to

98

decisions requiring the approval of the Required Lenders or all Lenders, Administrative Agent shall timely submit any required written notices to all Lenders and upon receiving the required approval or consent shall follow the course of action or determination recommended by Administrative Agent or such other course of action recommended by the Required Lenders or all of the Lenders, as the case may be, and each non-responding Lender shall be deemed to have concurred with such recommended course of action.

11.10Foreclosure. In the event that all or any portion of any Mortgaged Property is acquired by Administrative Agent as the result of a foreclosure or acceptance of a deed or assignment in lieu of foreclosure, or is retained in satisfaction of all or any part of the Obligations, title to any such Mortgaged Property or any portion thereof shall be held in the name of Administrative Agent or a nominee or subsidiary of Administrative Agent, as agent, for the benefit of the Lenders, or in an entity co-owned by the Lenders as determined by Administrative Agent. Administrative Agent shall prepare a recommended course of action for such Mortgaged Property (the “Post-Foreclosure Plan”) and submit it to the Lenders for approval by the Required Lenders. In the event that Administrative Agent does not obtain the approval of the Required Lenders to such Post-Foreclosure Plan, any Lender shall be permitted to submit an alternative Post-Foreclosure Plan to Administrative Agent, and Administrative Agent shall submit any and all such additional Post-Foreclosure Plan(s) to the Lenders for evaluation and the approval by the Required Lenders. In accordance with the approved Post-Foreclosure Plan, Administrative Agent shall manage, operate, repair, administer, complete, construct, restore or otherwise deal with the Mortgaged Property acquired and administer all transactions relating thereto, including, without limitation, employing a management agent, leasing agent and other agents, contractors and employees, including agents for the sale of such Mortgaged Property, and the collecting of rents and other sums from such Mortgaged Property and paying the expenses of such Mortgaged Property. Upon demand therefor from time to time, each Lender will contribute its ratable share (based on their respective Commitments immediately prior to the termination thereof) of all reasonable costs and expenses incurred by Administrative Agent pursuant to the Post-Foreclosure Plan in connection with the construction, operation, management, maintenance, leasing and sale of the Mortgaged Property. In addition, Administrative Agent shall render or cause to be rendered by the managing agent, to each of the Lenders, monthly, an income and expense statement for such Mortgaged Property, and each of the Lenders shall promptly contribute its ratable share (based on their respective Commitments immediately prior to the termination thereof) of any operating loss for the Mortgaged Property, and such other expenses and operating reserves as Administrative Agent shall deem reasonably necessary pursuant to and in accordance with the Post-Foreclosure Plan. To the extent there is net operating income from such Mortgaged Property, Administrative Agent shall, in accordance with the Post-Foreclosure Plan, determine the amount and timing of distributions to the Lenders. All such distributions shall be made to the Lenders in proportion to their respective Commitments immediately prior to the termination thereof. The Lenders acknowledge that if title to any Mortgaged Property is obtained by Administrative Agent or its nominee, or an entity co-owned by the Lenders, such Mortgaged Property will not be held as a permanent investment but will be disposed of as soon as practicable and within a time period consistent with the regulations applicable to national banks for owning real estate. Administrative Agent shall undertake to sell such Mortgaged Property at such price and upon such terms and conditions as the Required Lenders shall reasonably determine to be most advantageous. Any purchase money mortgage or deed of trust taken in connection with the disposition of such Mortgaged Property in accordance with the immediately preceding sentence shall name

99

Administrative Agent, as agent for the Lenders, as the beneficiary or mortgagee. In such case, Administrative Agent and the Lenders shall enter into an agreement with respect to such purchase money mortgage defining the rights of the Lenders in the same, which agreement shall be in all material respects similar to the rights of the Lenders with respect to the Mortgaged Property. Lenders agree not to unreasonably withhold or delay their approval of a Post-Foreclosure Plan or any third party offer to purchase the Mortgaged Property. An offer to purchase the Mortgaged Property at a gross purchase price of 95% of the fair market value of the property as set forth in a current appraisal shall be deemed to be a reasonable offer.

11.11Defaulting Lender. Notwithstanding any provision of this Agreement to the contrary, if a Lender becomes a Defaulting Lender, the following provisions shall apply for so long as such Lender is a Defaulting Lender;

(a)Suspension of Voting Rights. Such Defaulting Lender shall not have the right to vote on any issue on which voting is required (other than to the extent expressly provided in Section 10.02(b)) and the Commitment of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder.

(b)Turn Over of Payments. All amounts payable hereunder to the Defaulting Lender in respect of the Obligations (whether on account of principal, interest, fees or otherwise, including, without limitation, interest payments from interest reserve allocations to the Defaulting Lender and any amounts that would otherwise be payable to the Defaulting Lender pursuant to Section 3.13, but excluding Section 3.14(b)), shall be paid to Administrative Agent, retained in a segregated account and, subject to any applicable Legal Requirements, be applied at such time or times as may be determined by Administrative Agent as follows: (i) first, to the payment of any amounts owing by the Defaulting Lender to Administrative Agent hereunder, (ii) second, to the funding of any Advance in respect of which the Defaulting Lender has failed to fund its portion as required by this Agreement, as determined by Administrative Agent, (iii) third, to the payment of any amounts owing by the Defaulting Lender to the Non-Defaulting Lenders hereunder, including without limitation for any Special Advance under paragraph (c) of this Section 11.11, (iv) fourth, if so determined by Administrative Agent and Borrower, held in such account as cash collateral for future funding obligations of the Defaulting Lender under this Agreement, and (v) fifth, to the Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is (x) a prepayment of the principal amount of any Loans and (y) made at a time when the conditions set forth in Section 2.03 are satisfied, such payment shall be applied solely to repay the Loans of all Non-Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans owed to the Defaulting Lender.

(c)Special Advances. If a Lender fails to fund its portion of any Advance, in whole or part, within three (3) Business Days after the date required hereunder and Administrative Agent shall not have funded the Defaulting Lender’s portion of the Advance under Section 3.03(b), Administrative Agent shall so notify the Lenders, and within three (3) Business Days after delivery of such notice, the Non-Defaulting Lenders shall have the right, but not the obligation, in their respective, sole and absolute discretion, to fund all or a portion of such deficiency (the amount so funded by any such Non-Defaulting Lenders being referred to herein as a “Special Advance”) to Borrower. In such event, the Defaulting Lender and Borrower severally agree to pay to Administrative Agent for payment to the Non-Defaulting Lenders making the Special Advance,

100

forthwith on demand such amount with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Administrative Agent, at (i) in the case of the Defaulting Lender, the greater of the Federal Funds Effective Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of Borrower, the interest rate applicable to Floating Rate Loans.

(d)Intentionally Omitted.

(e)Replacement of Defaulting Lender.

(i)By Required Lenders. Required Lenders may, upon notice to the Defaulting Lender and Administrative Agent, require the Defaulting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04) all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Defaulting Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts); and (ii) Administrative Agent shall have received payment of any amounts owing by such Lender to Administrative Agent or the other Lenders under this Agreement. The Defaulting Lender shall not be required to make any such assignment and delegation if, prior thereto, such Lender shall cease to be a Defaulting Lender.

(ii)By Borrower. If a Lender has become a Defaulting Lender due to a failure to fund its Loans hereunder, Borrower may, at its option, replace such Defaulting Lender under Section 3.14(b).

(f)Indemnification. Each Defaulting Lender shall indemnify Administrative Agent, each Non-Defaulting Lender and Borrower from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatever which may be imposed on, incurred by or asserted against Administrative Agent, any Non-Defaulting Lender or Borrower with respect to the Loan Documents or the Required Third Party Documents in any way relating to or arising out of such Lender’s status as a Defaulting Lender. The obligations of the Defaulting Lender under this clause (f) shall survive the payment of the Obligations, the termination of this Agreement and the Defaulting Lender’s reversion to a Non-Defaulting Lender under Paragraph (g) of this Section 11.11.

(g)Ceasing to be a Defaulting Lender. A Lender shall cease to be Defaulting Lender only upon (i) the payment of all amounts due and payable by Defaulting Lender to Administrative Agent or any other Lender under this Agreement; (ii) the payment of any damages suffered by Borrower as a result of such Defaulting Lender’s default hereunder; (iii) the confirmation by the applicable Lender to Administrative Agent and Borrower in writing that the applicable Lender will comply with all of its funding obligations under this Agreement; and (iv) the circumstances described in clause (d) of the definition of “Defaulting Lender “ do not exist.

101

An assignment by a Lender of its rights and obligations under this Agreement shall not in and of itself cause the Lender to cease to be a Defaulting Lender.

11.12Compliance with Flood Laws. Administrative Agent has adopted internal policies and procedures that address requirements placed on federally regulated lenders under the Flood Laws and will post on the applicable Platform (or otherwise distribute to each Lender documents that it receives in connection with the Flood Laws (“Flood Documents”); provided, however that Administrative Agent makes no representation or warranty with respect to the adequacy of the Flood Documents or their compliance with the Flood Laws. Each Lender acknowledges and agrees that it is individually responsible for its own compliance with the Flood Laws and that it shall, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, including the Flood Documents posted or distributed by Administrative Agent, continue to do its own due diligence to ensure its compliance with the Flood Laws.

11.13Borrower’s Rights. The provisions of this Article XI are solely for the benefit of Administrative Agent and the Lenders, and, except as expressly set forth herein, Borrower shall not have any rights to rely on, enforce or consent to any waiver, modification or amendment of, any of the provisions hereof; provided, however, that Borrower (a) acknowledges and agrees to the limitations set forth in Section 11.02(c) hereof on Administrative Agent’s ability to act unilaterally with respect to this Agreement, the other Loan Documents and the Required Third Party Documents, and (b) agrees that Administrative Agent’s inability to deliver any consent to, or approval of, an action requested by Borrower due solely to the lack of appropriate Lender consent in accordance with the provisions of Section 11.02(c) hereof shall not constitute an unreasonable withholding or delay by Administrative Agent in the giving of such consent or approval. Notwithstanding the foregoing, Borrower shall be entitled to rely on consents and approvals executed by Administrative Agent without investigation as to the existence of proper authorization by the Lenders.

[SIGNATURE PAGES FOLLOW]

102

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective authorized officers as of the day and year first above written.

BORROWER:

KBSGI OFFICES AT GREENHOUSE, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition IV, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

1

BORROWER CONTINUED:

KBSGI VON KARMAN TECH, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition I, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

2

BORROWER:

KBSGI 213 WEST INSTITUTE PLACE, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition V, LLC,

a Delaware limited liability company,

its sole member

By:    KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

3

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as a Lender

By: /s/ Ryan Dempsey

Name: Ryan Dempsey

Title: Authorized Officer

4

SCHEDULE 1.01

LENDERS

Name:	Address	Commitment
JP MORGAN CHASE BANK	201 North Central Avenue, Floor 20 Phoenix, AZ 85004-0073	$72,800,000

SCHEDULE 1.01

EXHIBIT A-1

Greenhouse Property

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HARRIS, STATE OF TEXAS AND IS DESCRIBED AS FOLLOWS:

TRACT 1:

BEING A 4.6196 ACRE (201,229 SQUARE FOOT) TRACT OF LAND SITUATED IN THE WASHINGTON COUNTY RAILROAD COMPANY (SECTION 3) SURVEY, ABSTRACT NUMBER 901 IN HARRIS COUNTY, TEXAS, AND BEING ALL OF UNRESTRICTED RESERVE “C”, BLOCK 2 OF KATY GREEN REPLAT NO. 1, SUBDIVISION ACCORDING TO THE PLAT THEREOF RECORDED UNDER FILM CODE NUMBER 661274 OF THE HARRIS COUNTY MAP RECORDS.

TRACT 2:

EASEMENTS, INCLUDING, WITHOUT LIMITATION, NON-EXCLUSIVE EASEMENTS FOR PEDESTRIAN AND VEHICULAR INGRESS AND EGRESS ON, OVER, AND ACROSS ACCESS DRIVES (AS SUCH TERM IS DEFINED IN THE DECLARATION, AS HEREINAFTER DEFINED) AS SET FORTH IN THAT CERTAIN DECLARATION OF EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY KT GREENHOUSE, LTD., A TEXAS LIMITED PARTNERSHIP, AND GREENHOUSE RETAIL A, LTD., A TEXAS LIMITED PARTNERSHIP, DATED MAY 23, 2013, FILED FOR RECORD UNDER CLERK’S FILE NO. 20130256729 OF THE OFFICIAL PUBLIC RECORDS OF REAL PROPERTY OF HARRIS COUNTY, TEXAS (THE “DECLARATION”).

EXHIBIT A-1

EXHIBIT A-2

Von Karman Property

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:

PARCEL 4, IN THE CITY OF IRVINE, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 51, PAGE 45 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT ALL OIL, OIL RIGHTS, MINERAL RIGHTS, NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREIN ABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR, AND REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, AS RESERVED BY THE IRVINE COMPANY, A MICHIGAN CORPORATION, IN DEED RECORDED OCTOBER 14, 1977 IN BOOK 12415, PAGE 997 OF OFFICIAL RECORDS.

EXHIBIT A-2

EXHIBIT A-3

Institute Property

REAL PROPERTY IN THE CITY OF CHICAGO, COUNTY OF COOK, STATE OF ILLINOIS, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL 1:

LOTS 6 TO 13, INCLUSIVE, IN BLOCK 34 IN JOHNSTON, ROBERTS AND STORR'S ADDITION TO CHICAGO, BEING A SUBDIVISION IN THE WEST 1/2 OF THE SOUTHEAST 1/4 OF SECTION 4, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS, ACCORDING TO THE PLAT THEREOF RECORDED JANUARY 17, 1852 AS DOCUMENT NO. 32883.

PARCEL 2:

LOTS 18, 19, 20 AND 21 IN SANFORD'S SUBDIVISION OF BLOCK 34 OF JOHNSTON, ROBERTS AND STORR'S ADDITION TO CHICAGO, BEING A SUBDIVISION IN THE WEST 1/2 OF THE SOUTHEAST 1/4 OF SECTION 4, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS, ACCORDING TO THE PLAT OF SAID SANFORD’S SUBDIVISION RECORDED MAY 9, 1856 AS DOCUMENT NO. 70596.

FOR INFORMATIONAL PURPOSES ONLY:

PROPERTY IDENTIFICATION NUMBERS:

17-04-446-001; 17-04-446-010; AND 17-04-446-011

EXHIBIT A-3

EXHIBIT B

Permitted Transfer Provisions

1.    Notwithstanding anything stated to the contrary herein or in any of the other Loan Documents, any transfers (or the pledge or encumbrance ) of equity interests or other interests in KBSGI REIT Acquisition I, LLC, KBSGI REIT Acquisition IV, LLC, and/or KBSGI REIT Acquisition V, LLC, or in any of the direct or indirect owners of KBSGI REIT Acquisition I, LLC, KBSGI REIT Acquisition V, LLC and/or KBSGI REIT Acquisition IV, LLC (including, without limitation, KBSGI REIT Properties, LLC, KBS Growth & Income Limited Partnership or KBS Growth & Income REIT, Inc.) shall not be prohibited, subject to the provisions of Paragraph 2 below (and shall be expressly permitted) so long as (i) KBS Growth & Income REIT, Inc., continues to (a) exercise day to day management and control (directly or indirectly) of Borrower and (b) own, either directly or indirectly, 51% of the ownership interests in Borrower (conditions (a) and (b) set forth above collectively referred to herein as, the “Ownership and Management Requirements”), and (ii) the Know Your Customer Requirements (defined below) shall have been satisfied. Any such transfer shall hereinafter be referred to as a “Permitted Transfer”).

2.    To the extent that any Permitted Transfer results in a Person acquiring a direct or indirect (through one or more other persons) interest of ten percent (10%) or more of Borrower or Control of Borrower, (i) Borrower shall provide written notice of any such Transfer to Administrative Agent at least thirty (30) days prior to such Transfer, and (ii) Administrative Agent shall have determined in its reasonable judgment that such Person is not a Sanctioned Person and such Person otherwise satisfies all similar Requirements of Law, including the USA Patriot Act and all regulations and directives of the OFAC, and Administrative Agent’s “know your customer” regulations. Promptly following Administrative Agent’s request, Borrower shall furnish or cause to be furnished to Administrative Agent such information as Administrative Agent may reasonably request to verify compliance of the requirements of this paragraph. (The foregoing requirements of this paragraph 2 are referred to herein as the “Know Your Customer Requirements”). Notwithstanding the foregoing provisions of this paragraph 2 or the provisions of paragraph 1 above, the foregoing requirements in clauses (i) and (ii) of this paragraph 2 shall not apply to any transfers among or by the shareholders of KBS Growth & Income REIT, Inc.

1

EXHIBIT C

Borrowing Base Certificate

FORM OF

BORROWING BASE COMPLIANCE CERTIFICATE

To:    JPMorgan Chase Bank, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Term Loan and Security Agreement dated as of November 9, 2017 (as amended, restated, extended, refinanced, supplemented or otherwise modified in writing from time to time, the “Loan Agreement”), among KBSGI OFFICES AT GREENHOUSE, LLC, KBSGI VON KARMAN TECH, LLC, and KBSGI 213 WEST INSTITUTE PLACE, LLC, each a Delaware limited liability company (individually and collectively, “Borrower”), the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used without definition herein shall have the meanings ascribed such terms in the Loan Agreement.

Borrower certifies as of the date hereof that:

1.    Borrower has delivered the financial statements required by Section 4.09(a) of the Loan Agreement for the fiscal quarter of Borrower ended as of ______, 20__. Such financial statements fairly and accurately (in all material respects) present the financial condition, results of operations and cash flows of the applicable Borrower at such date and for such period. The operating statement (showing actual to budgeted results) and a lease status report (including a rent roll) for each Property and Improvements, each dated as of ____, 20__ are attached hereto as Exhibit A.

2.    Borrower has reviewed and is familiar with the terms of the Loan Agreement and has made, or has caused to be made under Borrower’s supervision, a reasonable review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by such financial statements.

3.    Pursuant to such review, the Borrowing Base Amount in effect as of the date hereof is $__________ (as determined in accordance with the true and accurate calculations and information set forth on Schedule 1 attached hereto).

4.    The property or properties listed on the attached Schedule 1 (the “Assets”) satisfy the criteria set forth in the Loan Agreement to be a Property or Properties thereunder.

5.    The owner and property address of all of the Assets are listed on Schedule 1.

The undersigned hereby certifies as of the date hereof that Jeffrey Waldvogel is the Chief Financial Officer of KBS Capital Advisors LLC, a Delaware limited liability company, which is

1

the authorized agent of Borrower, and that, as such, he is authorized to execute and deliver this Certificate to the Administrative Agent on the behalf of KBS Capital Advisors LLC, a Delaware limited liability company, as authorized agent on behalf of Borrower.

Dated: ________, 20___

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; EXECUTION PAGES FOLLOW]

2

IN WITNESS WHEREOF, the undersigned have executed this Certificate as of the day and year first written above.

BORROWER:

KBSGI OFFICES AT GREENHOUSE, LLC,

a Delaware limited liability company

By: KBS Capital Advisors LLC,

a Delaware limited liability company,

its authorized agent

By: _____________________

Name:    Jeffrey Waldvogel

Its:    Chief Financial Officer

KBSGI VON KARMAN TECH, LLC,

a Delaware limited liability company

By: KBS Capital Advisors LLC,

a Delaware limited liability company,

its authorized agent

By: _____________________

Name:    Jeffrey Waldvogel

Its:    Chief Financial Officer

KBSGI 213 WEST INSTITUTE PLACE, LLC,

a Delaware limited liability company

By: KBS Capital Advisors LLC,

a Delaware limited liability company,

its authorized agent

By: _____________________

Name:    Jeffrey Waldvogel

Its:    Chief Financial Officer

3

EXHIBIT D

PROMISSORY NOTE

$____________    __________, _____________

KBSGI OFFICES AT GREENHOUSE, LLC, KBSGI VON KARMAN TECH, LLC, and KBSGI 213 WEST INSTITUTE PLACE, LLC, each a Delaware limited liability company (individually and collectively, “Borrower”), jointly and severally promise to pay to the order of JPMORGAN CHASE BANK, N.A., a national banking association (“Lender”) _____________________________________________ AND NO/100 DOLLARS ($___________________), or if less, the aggregate unpaid principal amount of all Loans made by Lender to Borrower (as defined in the Agreement defined below) pursuant to the Agreement (as hereinafter defined), together with interest on the unpaid principal amount hereof in the manner set forth in the Agreement. Borrower shall pay the principal of and accrued and unpaid interest on the Loan in full on the Maturity Date.

This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Amended and Restated Term Loan and Security Agreement dated as of November 9, 2017 (which, as it may be amended or modified and in effect from time to time, is herein called the “Agreement”), among Borrower, the lenders referenced therein, including Lender, and JPMorgan Chase Bank, N.A., as Administrative Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is secured and guaranteed pursuant to the Loan Documents, all as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

Notwithstanding the foregoing or anything to the contrary in this Note, under no circumstances shall Administrative Agent or any Lender have any recourse against, nor shall there by any personal liability to, the members of any Borrower, or to any shareholders, members or partners (direct or indirect, except for the Guarantor under the Guaranty) for any obligations of any Borrower hereunder. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Borrower’s liability or obligations under the Loan Documents, Guarantor’s liability or obligations under the Guaranty or Administrative Agent or any Lender’s right to exercise any rights or remedies against any collateral securing the Loan.

[Signature Page Follows]

1

BORROWER:

KBSGI OFFICES AT GREENHOUSE, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition IV, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By:    ________________________________

Charles J. Schreiber, Jr.,

Chief Executive Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

2

BORROWER CONTINUED:

KBSGI VON KARMAN TECH, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition I, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: ________________________________

Charles J. Schreiber, Jr.,

Chief Executive Officer

[SIGNATURES CONTINUE ON NEXT PAGE]

3

BORROWER:

KBSGI 213 WEST INSTITUTE PLACE, LLC,

a Delaware limited liability company

By: KBSGI REIT Acquisition V, LLC,

a Delaware limited liability company,

its sole member

By: KBSGI REIT Properties, LLC,

a Delaware limited liability company,

its sole member

By: KBS Growth & Income Limited Partnership,

a Delaware limited partnership,

its sole member

By: KBS Growth & Income REIT, Inc.,

a Maryland corporation,

its general partner

By: ________________________________

Charles J. Schreiber, Jr.,

Chief Executive Officer

4

EXHIBIT E

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement identified below (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Loan Agreement, as of the Effective Date inserted by Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Loan Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and other rights of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Loan Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	Assignor:	___________________________
2.	Assignee:	___________________________   [and is an Affiliate/Approved Fund of [identify Lender] ]
3.	Borrower(s):	___________________________
4.	Administrative Agent:	_____________________, as Administrative Agent under the Loan Agreement
5.	Credit Agreement:	[The [amount] Amended and Restated Term Loan and Security Agreement dated as of _______ among [name of Borrower(s)], Lenders parties thereto, [name of Administrative Agent], as Administrative Agent, and the other agents parties thereto]
6.	Assigned Interest:

1

Aggregate Amount of Commitment/Loans for all Lenders		Amount of Commitment/Loans Assigned		Percentage Assigned of Commitment/Loans
Original Commitment:	Current Commitment:	Original Commitment:	Current Commitment:
$	$	$	$	%
$	$	$	$	%
$	$	$	$	%

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The Assignee agrees to deliver to Administrative Agent a completed Administrative Questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about Borrower, the Guarantor, and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the Assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:_____________________________
Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:______________________________
Title:

2

[Consented to and] Accepted:

[NAME OF ADMINISTRATIVE AGENT],

as
Administrative Agent

By:_______________________________
Title:

[Consented to:]:

[NAME OF RELEVANT PARTY]

By:_______________________________
Title:

3

ANNEX 1

To Term Loan and Security Agreement
[____________]

STANDARD TERMS AND CONDITIONS FORASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Loan Agreement, (ii) it satisfies the requirements, if any, specified in the Loan Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Loan Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Loan Agreement, together with copies of the most recent financial statements delivered pursuant to Section ___ thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Administrative Agent or any other Lender, and (v) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Loan Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

4

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Acceptance and adoption of the terms of this Assignment and Assumption by the Assignee and Assignor by Electronic Signature or delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

5

EXHIBIT F

Form of Reciprocal Release Agreement

RECIPROCAL RELEASE AGREEMENT

This Reciprocal Release Agreement (this “Agreement”) is dated as of _____________, by and among (i) [Name of to be released Borrower] (the “Released Borrower”), (ii) [Name of continuing Borrowers] (individually and collectively, “Remaining Borrowers”), (iii) JPMorgan Chase Bank, N.A., as Administrative Agent (“Administrative Agent”), (iv) each lender (each a “Lender” and collectively “Lenders”) from time to time party to that certain Amended and Restated Term Loan and Security Agreement, dated as of November 9, 2017, by and among Released Borrower, Remaining Borrowers, [list any previously released Borrowers] (collectively,“Previously Released Borrowers”), Administrative Agent, and Lenders (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Loan Agreement”), and (v) KBSGI REIT Properties, LLC, a Delaware limited liability company (“Guarantor”). Released Borrower, Remaining Borrowers, and Previously Released Borrowers are sometimes referred to herein as “Original Borrowers.”

RECITALS

A.Pursuant to the Loan Agreement, Lenders agreed to make a loan (the “Loan”) to Original Borrowers.

B.Pursuant to that certain Amended and Restated Guaranty Agreement dated as of November 9, 2017 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Guaranty”), Guarantor guaranteed to Administrative Agent and Lenders certain obligations of Original Borrowers in connection with the Loan on the terms and conditions set forth therein.

C.Pursuant to certain previously executed Reciprocal Release Agreements, each Previously Released Borrower has been released from all of its obligations under the Loan Documents.

D.Pursuant to Section 10.23 of the Loan Agreement, each Deed of Trust covering Property owned by Released Borrower has been reconveyed, and Released Borrower owns no real or personal property covered by the lien or encumbrance of any Loan Document.

E.Administrative Agent and Lenders, on the one hand, and Released Borrower, on the other hand, desire to release each other from any and all claims, liabilities and obligations arising under or in connection with the Loan upon the terms and conditions set forth below.

F.All capitalized terms used herein without definition shall have the meaning ascribed to such terms in the Loan Agreement.

AGREEMENT:

1.Recitals. The recitals set forth above are true, accurate and correct.

1

2.Release.

2.1Release of Administrative Agent and each Lender. In consideration of Administrative Agent’s and each Lender’s agreement to enter into this Agreement (which Released Borrower agrees and acknowledges constitutes sufficient and adequate consideration), Released Borrower irrevocably and unconditionally releases, remises, acquits and forever discharges Administrative Agent, each Lender, and their respective affiliates, successors and assigns, and their respective past, present and future directors, officers, partners, principals, managers, members, shareholders, employees, agents, representatives, insurers and attorneys (collectively, the “Released Lender Parties”), from any and all obligations, claims, rights, remedies, demands, collections, controversies, actions, causes of action, injunctions, suits, complaints, arbitrations, indebtedness, liens, encumbrances, obligations, liabilities, contracts and agreements, promises, damages, costs, fees and expenses (including attorneys’ costs, fees and expenses), penalties, losses or relief of any nature, amount or kind, in law or in equity, past or present, known or unknown, suspected or unsuspected, matured or unmatured, in respect of any action, omission or event occurring from the beginning of time to the date of this Agreement (collectively, the “Claims”), against any of the Released Lender Parties, which Released Borrower has had, now has or may in the future have, against or with respect to any of the Released Lender Parties arising out of or relating to the Loan, the Loan Documents or any enforcement by Administrative Agent or any Lender of its rights and remedies in connection therewith (collectively, the “Released Borrower Claims”). Released Borrower agrees and acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true regarding the Released Borrower Claims and agrees that the foregoing releases shall remain in full force and effect, notwithstanding the existence or nature of any such different or additional facts. This release of the Released Lender Parties is not to be construed as and does not constitute an admission of liability on the part of any such Released Lender Party. The release of the Released Lender Parties shall constitute an absolute bar to any Released Borrower Claims of any kind, whether such claim is based on contract, tort, warranty, mistake, or any other theory, whether legal, statutory or equitable. Released Borrower specifically agrees that any attempt to assert a claim barred hereby shall subject them to the provisions of applicable law setting forth remedies for the bringing of groundless, frivolous or baseless claims or causes of action.

2.2Release of Released Borrower. Administrative Agent and each Lender hereby agrees that Released Borrower is hereby released, and forever discharged from any and all Claims arising out of or relating to the Loan and the Loan Documents (collectively, the “Released Lender Claims”); provided, however, that the Released Lender Claims shall not include:

(a)claims, rights, remedies, demands, collections, controversies, actions, causes of action, injunctions, suits, complaints, arbitrations, indebtedness, liens, encumbrances, obligations, liabilities, contracts and agreements, promises, damages, costs, fees and expenses (including attorneys’ costs, fees and expenses), penalties, losses or relief of any nature, amount or kind, in law or in equity, which Administrative Agent or any Lender may have against Released Borrower arising solely as a result of any breach by Released Borrower of Released Borrowers’ obligations under this Agreement;

2

(b)any claims, rights, remedies, demands, collections, controversies, actions, causes of action, injunctions, suits, complaints, arbitrations, indebtedness, liens, encumbrances, obligations, liabilities, contracts and agreements, promises, damages, costs, fees and expenses (including attorneys’ costs, fees and expenses), penalties, losses or relief of any nature, amount or kind, in law or in equity, whether sounding in contract or tort, which Administrative Agent or any Lender may have against any Released Borrower arising out of or in connection with any credit card, promissory note, loan, guarantee, security agreement or other obligation other than those arising solely and expressly in connection with the Loan and the Loan Documents; or

(c)any claims, rights, remedies, demands, collections, controversies, actions, causes of action, injunctions, suits, complaints, arbitrations, indebtedness, liens, encumbrances, obligations, liabilities, contracts and agreements, promises, damages, costs, fees and expenses (including attorneys’ costs, fees and expenses), penalties, losses or relief of any nature, amount or kind, in law or in equity, which Administrative Agent or any Lender may have against (i) any Borrower other than Released Borrower, or (ii) Guarantor, arising under or in connection with the Loan and the Guaranty.

Administrative Agent and each Lender agrees and acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true regarding the Released Lender Claims and agrees that the foregoing releases shall remain in full force and effect, notwithstanding the existence or nature of any such different or additional facts. This release of Released Borrower is not to be construed as and does not constitute an admission of liability on the part of Released Borrower. The release of Released Borrower shall constitute an absolute bar to any Released Lender Claims of any kind, whether such claim is based on contract, tort, warranty, mistake, or any other theory, whether legal, statutory or equitable. Administrative Agent and each Lender specifically agrees that any attempt to assert a claim barred hereby shall subject it to the provisions of applicable law setting forth remedies for the bringing of groundless, frivolous or baseless claims or causes of action.

2.3Waiver of Civil Code Section 1542. With respect to the releases made by Administrative Agent, each Lender and Released Borrower under this Agreement, Administrative Agent, each Lender and Released Borrower each hereby fully and forever waives the application and benefits of California Civil Code §1542 and hereby verifies that it has read and understands, with advice of legal counsel of its own choosing, the following provision of California Civil Code §1542:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

To the extent that the provisions of California Civil Code §1542, as well as the provisions of any and all comparable or similar statutes or principles of law of California or any other state or federal

3

jurisdiction, might be deemed applicable, they are hereby expressly and with the advice of counsel waived by Administrative Agent, each Lender and Released Borrower with the full knowledge and understanding of the consequences and effects of this waiver.

3.Reaffirmation and Consent. Each of [specify continuing Borrowers]and Guarantor (a) acknowledge that none of their respective liabilities or obligations under the Loan Documents have been or are hereby released by Administrative Agent or any Lender, (b) reaffirms all of their respective obligations under the Loan Documents, (c) acknowledges that, to its knowledge, it has no claims, offsets or defenses with respect to the payment of sums due under the Note or any other Loan Document, and (d) hereby consents to the release of the Released Borrower Claims by Released Borrower and the release of the Released Lender Claims by Administrative Agent and Lenders.

4.Entire Agreement. This Agreement contains the entire understanding and agreement of the parties in respect of the subject matter hereof and supersedes all prior representations, warranties, agreements, and understandings, if any, with respect thereto.

5.Binding Effect. This Agreement shall be binding upon, and inure to the benefit of, Administrative Agent, Lenders, Released Borrower, and their respective successors, assigns, heirs and personal representatives.

6.Counterpart Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Signature pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document.

7.Governing Law. This Agreement shall be governed by and construed in accordance with California law.

8.Limitation on Liability. Under no circumstances shall any of the members, partners, directors or any other constituent owners (direct or indirect) of Released Borrower (excluding, if applicable, any such member, partner or constituent owner that is, itself, Guarantor or a Borrower) be liable for any of the Released Borrower’s covenants or obligations hereunder.

[Signatures Begin on the Following Page]

4

Executed and effective as of the date first set forth above.

“RELEASED BORROWER”

[Insert Signature Block for Released Borrower

“REMAINING BORROWERS”

[Insert Signature Block for Remaining Borrowers]

“GUARANTOR”

KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

   By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

      By:_________________________________

      Name: ______________________________

      Title: _______________________________

[Signatures Continue on the Following Page]

5

“ADMINISTRATIVE AGENT”

JPMORGAN CHASE BANK, N.A.,
a national banking association

By: _____________________________
Name:___________________________
Title:____________________________

“LENDER”

JPMORGAN CHASE BANK, N.A.,
a national banking association

By: _____________________________

 Name:___________________________

 Title:____________________________

6

EXHIBIT G-1

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Amended and Restated Term Loan and Security Agreement dated as of [____________] (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among [____________], and each lender from time to time party thereto.

Pursuant to the provisions of Section 3.12 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of Borrower within the meaning of Section 881(c)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E or IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:______________________________
Name:
Title:

Date: _______________ ___, 20[  ]

EXHIBIT G-1

EXHIBIT G-2

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Amended and Restated Term Loan and Security Agreement dated as of [____________] (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among [____________], and each lender from time to time party thereto.

Pursuant to the provisions of Section 3.12 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of Borrower within the meaning of Section 881(c)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E or IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:_______________________________
Name:
Title:

Date: _______________ ___, 20[  ]

EXHIBIT G-2

EXHIBIT G-3

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Amended and Restated Term Loan and Security Agreement dated as of [____________] (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among [____________], and each lender from time to time party thereto.

Pursuant to the provisions of Section 3.12 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E or IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF PARTICIPANT]

By:
Name:
Title:

Date: _______________ ___, 20[  ]

EXHIBIT G-3

EXHIBIT G-3

EXHIBIT G-4

[FORM OF]

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Amended and Restated Term Loan and Security Agreement dated as of [____________] (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among [____________], and each lender from time to time party thereto.

Pursuant to the provisions of Section 3.12 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of Borrower within the meaning of Section 881(c)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E or IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

[NAME OF LENDER]

By:
Name:
Title:

Date: _______________ ___, 20[  ]

EXHIBIT G-4

EX-10.14

Exhibit 10.14

AMENDED AND RESTATED GUARANTY

THIS AMENDED AND RESTATED GUARANTY (“Guaranty”) is executed as of November 9, 2017, by KBSGI REIT PROPERTIES, LLC, a Delaware limited liability company (“Guarantor”), for the benefit of JPMORGAN CHASE BANK, N.A., in its capacity as administrative agent for the “Lenders” pursuant to the Loan Agreement described below (in such capacity, “Administrative Agent”) and in favor of each party that now or hereafter is bound under the Loan Agreement as a “Lender” (referred to herein individually as a “Lender” and collectively as the “Lenders”).

RECITALS

A.Pursuant to that Term Loan and Security Agreement dated as of November 14, 2016, by and among KBSGI OFFICES AT GREENHOUSE, LLC, a Delaware limited liability company (“Greenhouse Borrower”), Lenders and Administrative Agent (the “Original Loan Agreement”), Lenders agreed to make a loan to Greenhouse Borrower in the maximum principal amount of Sixty-Five Million and No/100 Dollars ($65,000,000.00) (the “Original Loan”).

B.The Original Loan is evidenced by one or more Promissory Notes dated as of November 14, 2016, made payable to each Lender in the aggregate maximum principal amount of Sixty-Five Million and No/100 Dollars ($65,000,000.00) (the “Original Note”).

C.Guarantor guaranteed Greenhouse Borrower’s obligations to Administrative Agent and Lenders in accordance with that certain Guaranty dated November 14, 2016 (the “Original Guaranty”).

D.Pursuant to that certain Assumption and Joinder Agreement dated as of May 8, 2017 by and among KBSGI VON KARMAN TECH, LLC, a Delaware limited liability company (“Von Karman Borrower”), Greenhouse Borrower, Administrative Agent and Lenders, Von Karman Borrower joined into and assumed on joint and several basis all of Greenhouse Borrower’s obligations under and in connection with the Original Loan.

E.Greenhouse Borrower, Von Karman Borrower and KBSGI 213 WEST INSTITUTE PLACE, LLC, a Delaware limited liability company (“Institute Borrower,” and, together with Greenhouse Borrower and Von Karman Borrower, individually a “Borrower” and collectively the “Borrowers”), have requested that Administrative Agent and Lenders enter into that certain Amended and Restated Term Loan and Security Agreement of even date herewith by and among Lenders, Administrative Agent and Borrowers (as further amended, restated or otherwise modified, the “Loan Agreement”) to accept Institute Borrower as a joint and several co-borrower with Greenhouse Borrower and Von Karman Borrower, increase the maximum principal amount of the Original Loan from Sixty-Five Million and No/100 Dollars ($65,000,000.00) to Seventy-Two Million Eight Hundred Thousand and No/100 Dollars ($72,800,000.00), extend the term of the Original Loan and make certain other changes to the Original Loan on the terms and conditions set forth in the Loan Agreement.

F.In connection with the modification of the Original Loan pursuant to the Loan Agreement, the Original Note is being amended and restated in its entirety by one or more

Amended and Restated Promissory Notes of even date herewith executed by Borrowers payable to the order of Lender in the aggregate maximum principal amount of Seventy-Two Million Eight Hundred Thousand and No/100 Dollars ($72,800,000.00) (as further amended, restated or otherwise modified from time to time, the “Note”).

G.The Original Loan, as modified and increased pursuant to the Loan Agreement, is referred to herein as the “Loan.”

H.As a condition to Administrative Agent’s and Lenders’ willingness to enter into the Loan Agreement, Administrative Agent and Lenders have required that Guarantor execute and deliver this Guaranty for the benefit of Administrative Agent and Lenders, which Guaranty amends and restates in its entirety the Original Guaranty.

I.Guarantor is the owner of a direct or indirect interest in Borrowers, and Guarantor will directly benefit from Administrative Agent and Lenders modifying the Loan.

J.Any capitalized term used and not defined in this Guaranty shall have the meaning given to such term in the Loan Agreement. This Guaranty is one of the Loan Documents described in the Loan Agreement.

AGREEMENT

NOW, THEREFORE, as an inducement to Administrative Agent and Lenders to modify the Loan to Borrowers and enter into the Loan Agreement, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Guarantor agrees with Administrative Agent and the Lenders, as follows:

Section 1. Guaranty of Obligations.

(a)Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Administrative Agent and Lenders, the payment of the Obligations (but expressly excluding any amounts owing under the Environmental Indemnity Agreement, except as expressly provided in Sections 1(d)(7) and 1(d)(8) herein below), subject to the limitations set forth in subsection (b) below, whether now or hereafter arising, as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. This Guaranty is a guaranty of payment and not of collection only. Administrative Agent and Lenders shall not be required to exhaust any right or remedy or take any action against Borrowers or any other person or entity or any collateral. Guarantor agrees that, as between Guarantor and Administrative Agent and Lenders, the Obligations may be declared to be due and payable for the purposes of this Guaranty (provided Guarantor’s liability with respect thereto shall at all times remain subject to the limitations set forth in this Section 1(b)) notwithstanding any stay, injunction or other prohibition which may prevent, delay or vitiate any declaration as regards Borrowers (or any of them) and that in the event of a declaration or attempted declaration, the Obligations shall immediately become due and payable by Guarantor (but expressly excluding any amounts owing under the Environmental Indemnity Agreement, except as expressly provided in Sections 1(d)(7) and 1(d)(8) herein below) for the purposes of this Guaranty.

-2-

(b)Notwithstanding anything herein to the contrary, the liability of Guarantor hereunder shall not exceed the Base Guaranteed Amount (defined below as the same shall be determined from time to time), plus the amounts (if any) due under paragraphs (c) and (d) and Section 15 below (if and to the extent applicable).

For the purposes of this Guaranty, “Base Guaranteed Amount” shall mean an amount equal to twenty-five percent (25.0%) of all amounts owing under the Loan (not to exceed $18,200,000.00, or, if the Aggregate Commitment amount is permanently reduced as set forth in the Loan Agreement, 25% percent of the then-existing Aggregate Commitment amount), such amount calculated based on the outstanding amounts owing as of the date the Note becomes due and payable in full (whether at maturity or by acceleration or otherwise) (the “Due Date”). In addition to the Base Guaranteed Amount, Guarantor shall continue to be liable for, and shall have at all times under this Guaranty a continuing obligation to pay Lender 100% of the amounts specified in paragraphs (c) and (d) and Section 15 below, if and to the extent applicable.

In determining the Base Guaranteed Amount, no payments or recoveries from any source whatsoever (including without limitation payments received from Borrowers and proceeds from the foreclosure sale or other liquidation of collateral for the Loan, or any credit bids made by Administrative Agent at any foreclosure sale) received by Administrative Agent or Lenders shall be applied to reduce the Base Guaranteed Amount. Guarantor’s maximum liability under this Guaranty shall be reduced only by payments received from Guarantor under this Guaranty following the Due Date from its own funds (and not, as noted above, from liquidation of collateral). Additional advances (such as protective advances) made after the Due Date shall increase the Base Guaranteed Amount by an amount equal to twenty-five percent (25.0%) of the amount advanced (subject to the maximum capped amount specified above).

(c)Notwithstanding anything herein to the contrary, at all times until the Obligations have been paid in full and the Loan Documents and any applicable Swap Agreement are no longer in effect, Guarantor shall (in addition to those specified in Section 1(b) above) have full, complete, and unlimited liability for the payment and performance of all of the Obligations if any of the foregoing shall occur:

1. a Borrower or Guarantor (i) voluntarily files bankruptcy (or through collusion, causes to be filed) or (ii) voluntarily takes (or by collusion, causes to be taken) any of the actions described in Sections 8.01(c)(i), (iii) and (v) (Voluntary Proceedings) of the Loan Agreement; or

2. any involuntary bankruptcy proceeding or other action described in Section 8.01(b) (Involuntary Proceeding) of the Loan Agreement that is not dismissed within 90 days of the filing thereof is taken against a Borrower or Guarantor:

i. by Guarantor or a Borrower, as the case may be, or by any member or other constituent entity or affiliate of a Borrower or Guarantor (each a “Restricted Entity”), or

-3-

ii. by any Person acting in collusion with, a Borrower, Guarantor or any Restricted Entity of any of them.

3. there is (i) a voluntary transfer of all or any portion of a Property, Improvements, or fixtures (exclusive of fixtures which constitute immaterial personal property items) on such Property (not including leases) unless expressly permitted by the Loan Documents, (ii) a voluntary placement of or voluntary imposition of a mortgage, deed of trust or other Lien for borrowed money on all or any portion of a Mortgaged Property, or (iii) a voluntary transfer or pledge of equity interests or ownership interests in a Borrower in violation of the Loan Documents or other voluntary transfers prohibited by the terms of the Loan Documents in the ownership or equity interests of the entities owning, directly or indirectly, a Borrower (but expressly excluding transfers that occur by reason of condemnation, eminent domain, contested judgment liens, or other purely involuntary transfers).

(d)In addition, notwithstanding anything herein to the contrary, at all times until the Obligations have been paid in full and the Loan Documents and any applicable Swap Agreement are no longer in effect, Guarantor guarantees to Administrative Agent and the Lenders, the full and prompt payment of, and agrees to pay protect, guarantee, indemnify, defend and hold harmless Administrative Agent and Lenders from and against, any actual liability, loss, damage, costs and expenses (including legal fees) suffered by Administrative Agent or the Lenders, and caused by or related to or as a result of the following:

1. intentional physical waste by a Borrower, Guarantor, or any Affiliate of a Borrower or Guarantor controlled by a Borrower or Guarantor with respect to any portion of a Mortgaged Property;

2. any fraud or intentional misrepresentation in any of the Loan Documents or any applicable Swap Agreement by a Borrower, Guarantor, or any Affiliate of a Borrower or Guarantor controlled by a Borrower or Guarantor;

3. the intentional misapplication of cash from any Mortgaged Property in violation of the Loan Documents or any Swap Agreement;

4. the removal or disposal by a Borrower, Guarantor or any Affiliate of a Borrower or Guarantor controlled by a Borrower or Guarantor, of any material personal property or fixtures in which Administrative Agent or a Lender has a Lien, in violation of the terms of the Loan Documents or any applicable Swap Agreement, to the extent such personal property or fixtures are not replaced by like personal property or fixtures of similar value and utility;

5. the failure of a Borrower to maintain the insurance coverages (other than the environmental policy which shall be governed by clauses (7) and (8) below) required under the Loan Documents or any applicable Swap

-4-

Agreement at any time prior to a transfer (that is not in violation of the Loan Documents) of ownership of a Mortgaged Property from a Borrower to a new owner, except to the extent (i) any such failure occurred by reason of the failure to pay the insurance premiums pertaining thereto, and (ii) the failure to pay such premiums occurred because there was insufficient cash flow from the Mortgaged Properties to pay such premiums, with a payment of each such premium to be the top priority in the application of any such cash flow, and such cash flow was available to a Borrower and not seized by a receiver or other third party creditor); or the application or misapplication of any insurance proceeds or condemnation awards by a Borrower in violation of the terms of the Loan Documents or any applicable Swap Agreement;

6. the existence of any Tax Liens in violation of Section 4.01 of the Loan Agreement that arose by reason of a Borrower’s failure to pay taxes during its ownership of a Mortgaged Property (provided that there was sufficient cash flow from the Mortgaged Properties available to Borrower to pay such Tax Liens, with a payment of Tax Liens having top priority after the payment of insurance policy premiums);

7. all amounts owing under the Environmental Indemnity Agreement if, for any reason, (1) an environmental insurance policy which is the same in all material respects as the environmental insurance policy that was approved by Administrative Agent and delivered in connection with the closing of the Loan as required under Section 2.02(b)(xx) of the Loan Agreement (“Approved Environmental Insurance Policy”) is not maintained in full force and effect (including, without limitation, by reason of Borrowers’ failure to pay the premiums with respect thereto), or (2) Borrowers (x) fail, after written request by Administrative Agent, to direct payment of all amounts owing under such Approved Environmental Insurance Policy relating to the Mortgaged Properties to Administrative Agent or (y) disputes in writing the payment of such sums under the Approved Environmental Insurance Policy to Administrative Agent. For avoidance of doubt, Guarantor shall have no liability under clause 7(1) above so long as an environmental insurance policy, which is the same in all material respects as the Approved Environmental Insurance Policy, is in full force and effect providing effective coverage for claims relating to environmental matters that occurred prior to or during a Borrower’s period of ownership of a Mortgaged Property, to the same extent as under the Approved Environmental Insurance Policy, when and if demand is made by Administrative Agent under the Environmental Indemnity Agreement, whether or not the claim relating to any such environmental matter is a covered claim under such environmental insurance policy (unless such claim was a covered claim under the Approved Environmental Insurance Policy); and

-5-

8. all losses (which shall include, without limitation, attorneys’ fees and costs of defense) sustained or incurred by Administrative Agent and/or Lenders by reason of any failure to maintain in full force and effect (which Guarantor hereby covenants to so do) an environmental insurance policy which is the same in all material respects as the Approved Environmental Insurance Policy for a period of two years following the repayment of the Obligations in full. As used in this subsection 8, “full force and effect” shall include reference to an environmental insurance policy for events occurring prior to or during a Borrower’s period of ownership of a Mortgaged Property and that has coverage under an extended reporting period of no less than two (2) years following the repayment of the Obligations in full. For avoidance of doubt, Guarantor shall have no liability under this clause 8 so long as an environmental insurance policy, which is the same in all material respects as the Approved Environmental Insurance Policy, is in full force and effect providing coverage under an extended reporting period for claims relating to environmental matters that occurred prior to or during a Borrower’s period of ownership of the Mortgaged Property, to the same extent as under the Approved Environmental Insurance Policy, when and if demand is made by Administrative Agent under the Guaranty, whether or not the claim relating to any such environmental matter is a covered claim under such environmental insurance policy (unless such claim was a covered claim under the Approved Environmental Insurance Policy). For purposes of clarification (but subject to Section 26 below), Guarantor’s liability under clause 8 shall not be terminated or otherwise affected even if a Borrower’s obligations under the Environmental Indemnity Agreement are terminated in accordance with Section 10 of the Environmental Indemnity; and

9.    amounts (if any) owing to Administrative Agent and Lenders under Section 15 below.

It is understood that the obligations of Borrowers to Administrative Agent and the Lenders may at any time and from time to time exceed the liability of Guarantor hereunder without impairing this Guaranty and Guarantor, Administrative Agent and Lenders agree, as between themselves, that regardless of the manner of application of payments made by Borrowers to Administrative Agent and the Lenders, all such payments shall be deemed to be applied first to the portion of the obligations of Borrowers which are not guaranteed hereunder and last to the portion of the such obligations which are guaranteed hereunder.

Section 2. Guaranty Absolute. Guarantor guarantees that the Obligations shall be paid strictly in accordance with the terms of the Loan Documents and any applicable Swap Agreement. The liability of Guarantor under this Guaranty is absolute and unconditional irrespective of: (a) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from any of the terms of any Loan Document or any applicable Swap Agreement, including any increase or decrease in the rate of interest thereon; (b) any release or amendment or waiver of, or consent to departure from, or failure to act by Administrative Agent or the Lenders with respect to, any other guaranty or support document, or any exchange, release or non‑perfection of, or failure to act by

-6-

Administrative Agent or the Lenders, with respect to, any collateral, for all or any of the Obligations; (c) any present or future law, regulation or order of any jurisdiction (whether of right or in fact) or of any agency thereof purporting to reduce, amend, restructure or otherwise affect any term of the Obligations or any Loan Document or any applicable Swap Agreement; (d) any change in the existence, structure, or ownership of any Borrower; (e) without being limited by the foregoing, any lack of validity or enforceability of any Loan Document or any applicable Swap Agreement; and (f) any other setoff, recoupment, defense or counterclaim whatsoever (in any case, whether based on contract, tort or any other theory) with respect to the Loan Documents and any applicable Swap Agreement or the transactions contemplated thereby which might constitute a legal or equitable defense available to, or discharge of, a Borrower or a guarantor.

Section 3. Guaranty Irrevocable. This Guaranty is a continuing guaranty of the payment of all Obligations now or hereafter existing and shall remain in full force and effect until payment in full of all Obligations and other amounts payable under this Guaranty and until the Loan Documents and any applicable Swap Agreement are no longer in effect.

Section 4. Waiver of Certain Rights and Notices. To the fullest extent not prohibited by applicable law, except as specifically provided herein, Guarantor hereby waives and agrees not to assert or take advantage of (a) any right to require Administrative Agent, for the benefit of the Lenders, to proceed against or exhaust its recourse against Borrowers, any other guarantor or endorser, or any security or collateral held by Administrative Agent or Lenders at any time or to pursue any other remedy in its power before proceeding against Guarantor hereunder; (b) the defense of the statute of limitations in any action hereunder; (c) any defense that may arise by reason of (i) the incapacity, lack of authority, death or disability of a Borrower, Guarantor or any other or others, (ii) the revocation or repudiation hereof by Guarantor or the revocation or repudiation of any of the Loan Documents by a Borrower or any other or others, (iii) the failure of Administrative Agent, on behalf of the Lenders, to file or enforce a claim against the estate (either in administration, bankruptcy or any other proceeding) of a Borrower or any other or others, (iv) the unenforceability in whole or in part of any Loan Document or any applicable Swap Agreement, (v) Administrative Agent’s or a Lender’s election in any proceeding instituted under the federal Bankruptcy Code, of the application of Section 1111(b)(2) of the federal Bankruptcy Code, or (vi) any borrowing or grant of a security interest under Section 364 of the federal Bankruptcy Code; (d) presentment, demand for payment, protest, notice of discharge, notice of acceptance of this Guaranty, and indulgences and notices of any other kind whatsoever; (e) any defense based upon an election of remedies by Administrative Agent, on behalf of the Lenders, which destroys or otherwise impairs the subrogation rights of Guarantor or the right of Guarantor to proceed against Borrowers for reimbursement, or both; (f) any defense based upon any taking, modification or release of any collateral, or any failure to perfect any security interest in, or the taking of or failure to take any other action with respect to any collateral securing payment or performance of the Obligations; (g) any right to require marshaling of assets and liabilities, sale in inverse order of alienation, notice of acceptance of this Guaranty and of any obligations to which it applies or may apply; and (h) any rights or defenses based upon an offset by Guarantor against any obligation now or hereafter owed to Guarantor by Borrowers; it being the intention hereof that Guarantor shall remain liable hereunder to the extent set forth herein, notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of Guarantor, until the termination of this Guaranty under Section 3. Guarantor waives presentment, demand, notice of

-7-

dishonor, protest, notice of acceptance of this Guaranty or incurrence of any of the Obligations and any other formality with respect to any of the Obligations or this Guaranty.

Guarantor hereby waives: (a) any defense based upon the application by Borrowers of any proceeds relating to the Loan Agreement for purposes other than the purposes represented by Borrowers to Administrative Agent and Lenders, or intended or understood by Administrative Agent and Lenders or Guarantor; (b) any defense based upon Administrative Agent’s or any Lender’s failure to disclose to Guarantor any information concerning a Borrower’s financial condition or any other circumstances bearing on a Borrower’s ability to pay all sums payable under the Loan Agreement; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (d) any rights of subrogation, reimbursement, indemnification and contribution, and any other rights and defenses that are or may become available to Guarantor by reason of Sections 2787 to 2855, inclusive, of the California Civil Code, any right to enforce any remedy which Administrative Agent and Lenders may have against a Borrower and any right to participate in, or benefit from, any security for the Loan Agreement now or hereafter held by Administrative Agent or Lenders; (e) presentment, demand, protest and notice of any kind (other than when expressly required under the Loan Documents); (f) the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof; (g) any right to require Administrative Agent, on behalf of the Lenders, to institute suit or exhaust remedies against a Borrower or others liable for any Obligations, to enforce Administrative Agent’s and Lenders’ rights against any collateral which shall have been given to secure the Obligations to enforce Administrative Agent’s and Lenders’ rights against any other guarantors of such indebtedness, to join Borrowers or any others liable on such Obligations in any action seeking to enforce this Guaranty, to resort to any other means of obtaining payment of such Obligations; (h) notices of disbursement of proceeds, acceptance hereof, proof of non-payment, default under any document, notices and demands of any kind; and (i) the invalidity illegality or unenforceability of all or any portion of the indebtedness guaranteed hereby or any of the Loan Documents for any reason whatsoever, including that interest on such indebtedness violates applicable usury laws, that the Borrowers or others liable for all or a portion thereof have valid defenses, claims or offsets to all or a portion of such indebtedness, or that the Loan Documents have been forged or otherwise are irregular or not genuine or authentic (it being agreed that Guarantor shall remain liable under this Guaranty regardless of whether Borrowers or any other person shall be found not liable for repayment of all or a portion of such indebtedness). Guarantor further waives any and all rights and defenses that Guarantor may have because Borrowers’ debt is secured by real property; this means, among other things, that (1) Administrative Agent and Lenders may collect or receive performance from Guarantor without first foreclosing on any real or personal property collateral pledged by any Borrower; (2) if Administrative Agent forecloses on any real property collateral pledged by a Borrower, then (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Administrative Agent and Lenders may collect or receive performance from Guarantor even if Administrative Agent, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from a Borrower. The foregoing is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because Borrowers’ debt is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure. Without limiting the generality of the foregoing or any other provision hereof,

-8-

Guarantor further expressly waives (i) all rights and defenses arising out of an election of remedies by the Administrative Agent or Lenders, even though that election of remedies, such as non-judicial foreclosure with respect to security for Borrowers’ obligations, has destroyed Guarantor’s rights of subrogation and reimbursement against the principal by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise and (ii) any and all other rights and defenses to the extent permitted by law. Guarantor hereby waives any right it might otherwise have under Section 2822 of the California Civil Code or similar law or otherwise to have Borrowers designate the portion of any such obligation to be satisfied in the event that a Borrower provides partial satisfaction of such obligation. Guarantor acknowledges and agrees that Borrowers may already have agreed with Administrative Agent and Lenders, or may hereafter agree, that in any such event the designation of the portion of the obligation to be satisfied shall, to the extent not expressly made by the terms of the Loan Documents, be made by Administrative Agent and Lenders rather than by Borrowers. Finally, Guarantor agrees that the performance of any act or any payment which tolls any statute of limitations applicable to the Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor’s liability hereunder.

Section 5. Reinstatement. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by Administrative Agent or Lenders on the insolvency, bankruptcy or reorganization of a Borrower or otherwise, all as though the payment had not been made, whether or not Administrative Agent is in possession of this Guaranty.

Section 6. Subrogation. Guarantor shall not exercise any rights which it may acquire by way of subrogation, reimbursement or contribution, as a result of any payment made under this Guaranty or otherwise, until all the Obligations have been paid in full and the Loan Documents and any Swap Agreement are no longer in effect. If any amount is paid to Guarantor by a Borrower on account of such rights prior to such time, the amount shall be held in trust for the benefit of the Administrative Agent and Lenders and shall be promptly paid to Administrative Agent, for the benefit of the Lenders, to be credited and applied to the Obligations, whether matured or unmatured or absolute or contingent, in accordance with the terms of the Loan Documents and any applicable Swap Agreement. If Guarantor makes payment to Administrative Agent, for the benefit of the Lenders, of all or any part of the Obligations and all the Obligations are paid in full and the Loan Documents and any applicable Swap Agreement are no longer in effect, Administrative Agent shall, at Guarantor’s request, execute and deliver to Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to Guarantor of the interest in the Obligations resulting from the payment.

Section 7. Subordination. Without limiting Administrative Agent’s or Lenders’ rights under any other agreement, any liabilities owed by Borrowers to Guarantor in connection with any extension of credit or financial accommodation by Guarantor to or for the account of a Borrower, including but not limited to interest accruing at the agreed contract rate after the commencement of a bankruptcy or similar proceeding, are hereby subordinated to the Obligations, and such liabilities of Borrowers to Guarantor, if Administrative Agent so requests, shall be collected, enforced and received by Guarantor as trustee for the Lenders and shall be paid over to Administrative Agent, for the benefit of the Lenders, on account of the Obligations but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.

-9-

Section 8. Certain Taxes. Guarantor further agrees that all payments to be made hereunder shall be made without setoff or counterclaim and free and clear of, and without deduction for, any taxes, levies, imposts, duties, charges, fees, deductions, withholdings or restrictions or conditions of any nature whatsoever now or hereafter imposed, levied, collected, withheld or assessed by any country or by any political subdivision or taxing authority thereof or therein (“Taxes”). If any Taxes are required to be withheld from any amounts payable to Administrative Agent on behalf of Lenders, hereunder, the amounts so payable to Administrative Agent on behalf of Lenders, shall be increased to the extent necessary to yield to Administrative Agent on behalf of Lenders, (after payment of all Taxes) the amounts payable hereunder in the full amounts so to be paid. Whenever any Tax is paid by Guarantor, as promptly as possible thereafter, Guarantor shall send Administrative Agent an official receipt showing payment thereof, together with such additional documentary evidence as may be required from time to time by Administrative Agent.

Section 9. Representations and Warranties. Guarantor represents and warrants that: (a) this Guaranty (i) has been authorized by all necessary action; (ii) to Guarantor’s knowledge, does not violate any agreement, instrument, law, regulation or order applicable to Guarantor; (iii) to Guarantor’s knowledge, does not require the consent or approval of any person or entity, including but not limited to any governmental authority, or any filing or registration of any kind; and (iv) is the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors’ rights generally; and (b) in executing and delivering this Guaranty, Guarantor has (i) without reliance on Administrative Agent or any Lender or any information received from Administrative Agent or any Lender and based upon such documents and information it deems appropriate, made an independent investigation of the transactions contemplated hereby and each Borrower, each Borrower’s business, assets, operations, prospects and condition, financial or otherwise, and any circumstances which may bear upon such transactions, Borrowers or the obligations and risks undertaken herein with respect to the Obligations; (ii) adequate means to obtain from Borrowers on a continuing basis information concerning Borrowers; (iii) full and complete access to the Loan Documents, any applicable Swap Agreement and any other documents executed in connection with the Loan Documents; and (iv) not relied and will not rely upon any representations or warranties of Administrative Agent or any Lender not embodied herein or any acts heretofore or hereafter taken by Administrative Agent or any Lender (including but not limited to any review by Administrative Agent or any Lender of the affairs of Borrowers).

Section 10. Financial Reports and Covenants.

(a)Guarantor shall keep adequate books and records of account in accordance with methods acceptable to Administrative Agent, consistently applied and shall furnish to Administrative Agent the financial statements, certificates and other information described in Section 4.09(b) of the Loan Agreement as and when required by said Section 4.09(b).

(b)Administrative Agent and its accountants shall have the right to examine, upon at least 24 hours’ prior written notice to Guarantor (provided no advance notice is required during the existence of a Default), the records, books, management and other papers of Guarantor which reflect upon its financial condition, at any Mortgaged Property or at any office regularly maintained by Guarantor where the books and records are located. Such examination shall be at

-10-

Administrative Agent’s and Lenders’ costs unless (i) a Default exists, (ii) Administrative Agent or any Lender has reason to believe any information provided to Administrative Agent or Lenders, by Guarantor may be incorrect or misleading in any material respect, or (iii) Administrative Agent, on behalf of the Lenders, is conducting such examination pursuant to its obligations under any applicable laws or regulations (provided, with respect to subsection (iii), in no event shall Guarantor be obligated to reimburse Administrative Agent or Lenders for such costs and expenses for more than one examination per year). Administrative Agent and its accountants shall have the right to make copies and extracts from the foregoing records and other papers. In addition, Administrative Agent and its accountants shall have the right to examine and audit the books and records of Guarantor pertaining to the income, expenses and operation of the Mortgaged Properties during reasonable business hours at any office of Guarantor where the books and records are located.

Section 11. Remedies Generally. The remedies provided in this Guaranty are cumulative and not exclusive of any remedies provided by law.

Section 12. Setoff. If a Default shall have occurred and be continuing, Administrative Agent and each Lender and each of their respective Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such party to or for the credit or the account of Guarantor against any of and all the obligations of Guarantor under this Guaranty, irrespective of whether or not Administrative Agent or such Lender shall have made any demand under this Guaranty and although such obligations may be unmatured. The rights of Administrative Agent and each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such parties may have.

Section 13. Formalities. Guarantor waives presentment, demand, notice of dishonor, protest, notice of acceptance of this Guaranty or incurrence of any of the Obligations and any other formality with respect to any of the Obligations or this Guaranty.

Section 14. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty, nor consent to any departure by Guarantor therefrom, shall be effective unless it is in writing and signed by Administrative Agent, and then the waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of Administrative Agent to exercise, and no delay in exercising, any right under this Guaranty shall operate as a waiver or preclude any other or further exercise thereof or the exercise of any other right.

Section 15. Expenses. Guarantor shall reimburse Administrative Agent and the Lenders on demand for all costs, expenses and charges (including without limitation reasonable fees and charges of external legal counsel for Administrative Agent and the Lenders) incurred by Administrative Agent and the Lenders in connection with the performance or enforcement of this Guaranty. The obligations of Guarantor under this Section shall survive the termination of this Guaranty.

-11-

Section 16. Assignment. This Guaranty shall be binding on, and shall inure to the benefit of Guarantor, Administrative Agent, the Lenders and their respective successors, assigns, estates and personal representatives; provided that Guarantor may not assign or transfer its rights or obligations under this Guaranty. Without limiting the generality of the foregoing: (a) the obligations of Guarantor under this Guaranty shall continue in full force and effect and shall be binding on any successor partnership and on previous partners and their respective estates if Guarantor is a partnership, regardless of any change in the partnership as a result of death, retirement or otherwise; and (b) Administrative Agent and each Lender may assign, sell participations in or otherwise transfer their respective rights under the Loan Documents and any applicable Swap Agreement to any other person or entity in accordance with the terms of the Loan Agreement and any applicable Swap Agreement, and the other person or entity shall then become vested with all the rights granted to Administrative Agent or such Lender in this Guaranty or otherwise.

Section 17. Captions. The headings and captions in this Guaranty are for convenience only and shall not affect the interpretation or construction of this Guaranty.

Section 18. Notices. All notices or other written communications hereunder shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or email, as follows:

(a)if to Guarantor, to it at c/o KBS Capital Advisors LLC, 800 Newport Center Drive, #700, Newport Beach, CA 92660, Attention of Bryce Lin, Director of Finance and Reporting (Phone No. (949) 797-0312 (Email Address: blin@kbs.com);

With a copy to: Greenberg Traurig, 3161 Michelson Drive, Suite 1000, Irvine, CA 92612, Attention of Bruce Fischer, Esq. (Phone No. (949) 732-6670 (Email Address fischerb@gtlaw.com); and

With a copy to: Todd Smith, 800 Newport Center Drive, #700, Newport Beach, CA 92660 (Phone No. (949) 797-0338) (Email Address tsmith@kbs.com).

(b)if to Administrative Agent, to it at 201 North Central Avenue, Floor 20, Phoenix, AZ 85004-0073, Attention of Ryan Dempsey (Email Address:  ryan.m.dempsey@jpmorgan.com).

Guarantor and Administrative Agent may change their address or telecopy number or email address for notices and other communications hereunder by notice to the other party. All notices and other communications given to Guarantor or Administrative Agent in accordance with the provisions of this Guaranty shall be deemed to have been given on the date of receipt, in the case of email notices, as evidenced by sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt function”).

Section 19. Governing Law; Jurisdiction; Consent to Service of Process.

(a)This Guaranty shall be construed in accordance with and governed by the law of the State of California.

-12-

(b)Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any United States Federal or State court sitting in Orange County, California, and any appellate court therein, in any action or proceeding arising out of or relating to this Guaranty, or for recognition or enforcement of any judgment, and Guarantor hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such State court(s) or, to the extent permitted by law, in such Federal court(s). Guarantor hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that Administrative Agent and Lenders may otherwise have to bring any action or proceeding relating to this Guaranty against Guarantor or its properties in the courts of any jurisdiction.

(c)Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty in any court referred to in subsection (b) above. Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)Guarantor irrevocably consents to service of process in the manner provided for notices herein. Nothing in this Guaranty will affect the right of Administrative Agent and Lenders to serve process in any other manner permitted by law.

Section 20. ECP RULES. No Guarantor hereunder shall be deemed to be a guarantor of any Swap Obligations if such Guarantor is not an “Eligible Contract Participant” as defined in §1(a)(18) of the Commodity Exchange Act and the applicable rules issued by the Commodity Futures Trading Commission and/or the Securities and Exchange Commission (collectively, and as now or hereafter in effect, the “ECP Rules”) to the extent that the providing of such guaranty by such Guarantor would violate the ECP Rules or any other applicable law or regulation. This paragraph shall not affect any obligations of Guarantor other than Swap Obligations, nor shall it affect the obligations of any Guarantor who qualifies as an “Eligible Contract Participant”.

Section 21. Invalid Provisions. If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 22. ENTIRETY. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS EXECUTED BY GUARANTOR EMBODY THE FINAL, ENTIRE AGREEMENT OF GUARANTOR, ADMINISTRATIVE AGENT AND THE LENDERS WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND

-13-

THEREOF. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS EXECUTED BY GUARANTOR ARE INTENDED BY GUARANTOR, ADMINISTRATIVE AGENT AND THE LENDERS AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS HEREOF AND THEREOF, AND NO COURSE OF DEALING AMONG GUARANTOR, ADMINISTRATIVE AGENT AND THE LENDERS, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT EXECUTED BY GUARANTOR. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR, ADMINISTRATIVE AGENT AND THE LENDERS.

Section 23. WAIVER OF JURY TRIAL AND JUDICIAL REFERENCE PROVISION.

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND REFERENCE AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CONTROVERSY, DISPUTE OR CLAIM DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) (EACH, A “CLAIM”) AND THE WAIVER SET FORTH IN THE PRECEDING PARAGRAPH IS NOT ENFORCEABLE IN SUCH ACTION OR PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

1. WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN PARAGRAPH 2 BELOW, ANY CLAIM WILL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN DOCUMENTS, VENUE FOR THE REFERENCE PROCEEDING WILL BE IN

-14-

THE STATE OR FEDERAL COURT IN THE COUNTY OR DISTRICT WHERE VENUE IS OTHERWISE APPROPRIATE UNDER APPLICABLE LAW.

2. THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING, WITHOUT LIMITATION, SET-OFF), (C) APPOINTMENT OF A RECEIVER AND (D) TEMPORARY, PROVISIONAL OR ANCILLARY REMEDIES (INCLUDING, WITHOUT LIMITATION, WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT.

3. UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY MAY REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).

4. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS, A COURT REPORTER WILL BE USED AND THE REFEREE WILL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY COSTS OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.

5. THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA. THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH APPLICABLE STATE AND FEDERAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING, WITHOUT LIMITATION, MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.

-15-

6. THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.

ADMINISTRATIVE AGENT AND LENDERS WILL BE DEEMED TO HAVE AGREED TO THE PROVISIONS OF THIS SECTION BY ACCEPTING THIS GUARANTY.

Section 24. WAIVER OF SPECIAL DAMAGES.Guarantor agrees that neither Administrative Agent nor any Lender shall have any liability to Guarantor (whether sounding in tort, contract or otherwise) for losses suffered by Guarantor in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents and any applicable Swap Agreement, or any act, omission or event occurring in connection therewith, unless such losses result from the gross negligence or willful misconduct of the party from which recovery is sought or from a breach of any Loan Document or any applicable Swap Agreement by such party. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST ADMINISTRATIVE AGENT AND EACH OF THE LENDERS ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY, ANY OTHER LOAN DOCUMENT OR ANY SWAP AGREEMENT, THE OBLIGATIONS OR THE USE OF THE PROCEEDS THEREOF.

Section 25. Limitation on Liability. Notwithstanding the foregoing or anything to the contrary in this Guaranty, under no circumstances shall Administrative Agent or the Lenders have any recourse against, nor shall there be any personal liability to, the members of Guarantor, or to any shareholders, members or partners (direct or indirect) for any obligations of Guarantor hereunder. For purposes of clarification, in no event shall the above language limit, reduce or otherwise affect any Guarantor’s liability or obligations under the Guaranty or Administrative Agent’s and Lenders’ right to exercise any rights or remedies against any collateral securing the Loan.

Section 26. Termination of Environmental Liability. Notwithstanding anything to the contrary stated in this Guaranty, if the conditions set forth in Sections 10.1 through 10.5 of the Environmental Indemnity Agreement are satisfied (i.e., all conditions for Borrowers’ release of their liability under the Environmental Indemnity Agreement other than the expiration of the two year period have been satisfied), Guarantor’s liability under Sections 1(d)7 and 1(d)8 of this Guaranty with respect to environmental liability shall automatically terminate.

[SIGNATURE PAGE FOLLOWS]

-16-

IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer as of the date first above written.

KBSGI REIT PROPERTIES, LLC,

a Delaware limited liability company

By: KBS GROWTH & INCOME LIMITED PARTNERSHIP,

a Delaware limited partnership,

its sole member

By: KBS GROWTH & INCOME REIT, INC.,

a Maryland corporation,

its general partner

By: /s/ Charles J. Schreiber, Jr.

Charles J. Schreiber, Jr.,

Chief Executive Officer

S-1

EX-21.1

Exhibit 21.1

KBS Growth & Income REIT, Inc.

Subsidiaries as of January 9, 2018

KBS Growth & Income Limited Partnership

KBS Growth & Income REIT Holdings LLC

KBS Growth & Income Venture Fund, Inc.

KBS Growth & Income Venture Fund Limited Partnership

KBS Growth & Income Venture Fund Holdings LLC

KBSGI 213 West Institute Place, LLC

KBSGI 421 SW 6^th Avenue, LLC

KBSGI Offices At Greenhouse, LLC

KBSGI REIT Acquisition I, LLC

KBSGI REIT Acquisition II, LLC

KBSGI REIT Acquisition IV, LLC

KBSGI REIT Acquisition V,LLC

KBSGI REIT Properties, LLC

KBSGI Von Karman Tech, LLC

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Post-Effective Amendment No.9 to Form S-11 on Form S-3 No. 333-207471) of KBS Growth & Income REIT, Inc. and in the related Prospectus of our report dated March 12, 2018, with respect to the consolidated financial statements and schedule of KBS Growth & Income REIT, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2017.

/s/ Ernst & Young LLP

Irvine, California

March 12, 2018

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT VALUATION EXPERT

We hereby consent: (a) to the reference to our name and description of our role in the (i) valuation process of certain of the real estate properties (the “Appraised Properties”) of KBS Growth & Income REIT, Inc. (the “Company”) and (ii) valuation process of the Company being included or incorporated by reference into the Company’s Registration Statement on Form S-3 (File No. 333-207471), and the related prospectus, included therein, by being filed on this Annual Report on Form 10-K for the fiscal year ended December 31, 2017, to be filed on the date hereof (the “Form 10-K”); and (b) the inclusion in the Form 10-K that the total appraised value of the Appraised Properties of $154.3 million represents the sum of the appraised values of each of the Appraised Properties contained in the individual property appraisal reports provided by us to the Company as of the date of each such report. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended.

March 12, 2018

/s/ Duff & Phelps, LLC

Duff & Phelps, LLC

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles J. Schreiber, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of KBS Growth & Income REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 12, 2018	By:	/S/ CHARLES J. SCHREIBER, JR.
			Charles J. Schreiber, Jr.
			Chairman of the Board, Chief Executive Officer and Director
			(principal executive officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffrey K. Waldvogel, certify that:

1. I have reviewed this annual report on Form 10-K of KBS Growth & Income REIT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March 12, 2018	By:	/S/ JEFFREY K. WALDVOGEL
			Jeffrey K. Waldvogel
			Chief Financial Officer
			(principal financial officer)

EX-32.1

Exhibit 32.1

Certification pursuant to 18 U.S.C. Section 1350,

as Adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of KBS Growth & Income REIT, Inc. (the “Registrant”) for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Charles J. Schreiber, Jr., Chief Executive Officer and Director of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	March 12, 2018	By:	/S/ CHARLES J. SCHREIBER, JR.
			Charles J. Schreiber, Jr.
			Chairman of the Board, Chief Executive Officer and Director
			(principal executive officer)

EX-32.2

Exhibit 32.2

Certification pursuant to 18 U.S.C. Section 1350,

as Adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of KBS Growth & Income REIT, Inc. (the “Registrant”) for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jeffrey K. Waldvogel, the Chief Financial Officer of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	March 12, 2018	By:	/S/ JEFFREY K. WALDVOGEL
			Jeffrey K. Waldvogel
			Chief Financial Officer
			(principal financial officer)

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 05, 2018	Jun. 30, 2017
Document and Entity Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Entity Registrant Name	KBS Growth & Income REIT, Inc.
Entity Central Index Key	0001631256
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 0
Class A
Document and Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		8,931,071
Class T
Document and Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		284,606

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Real estate:
Land	$ 31,309	$ 22,909
Buildings and improvements	142,400	105,435
Tenant origination and absorption costs	17,047	13,528
Total real estate, cost	190,756	141,872
Less accumulated depreciation and amortization	(9,627)	(3,292)
Total real estate, net	181,129	138,580
Cash and cash equivalents	2,523	15,666
Rents and other receivables, net	1,920	956
Above-market leases, net	180	210
Prepaid expenses and other assets	1,388	501
Total assets	187,140	155,913
Liabilities and stockholders’ equity
Notes payable, net	112,780	81,375
Accounts payable and accrued liabilities	2,717	2,023
Due to affiliates	1,787	1,434
Distributions payable	385	377
Below-market leases, net	5,910	5,029
Other liabilities	1,828	1,254
Total liabilities	125,407	91,492
Commitments and contingencies (Note 11)
Redeemable common stock	2,314	1,791
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	0	0
Additional paid-in capital	76,265	71,992
Cumulative distributions and net losses	(16,940)	(9,451)
Total stockholders’ equity	59,419	62,630
Total liabilities and stockholders’ equity	187,140	155,913
Class A
Stockholders’ equity:
Common stock	91	88
Class T
Stockholders’ equity:
Common stock	$ 3	$ 1

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	9,149,100	8,846,164
Common stock, shares outstanding (in shares)	9,149,100	8,846,164
Class T
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	281,537	94,018
Common stock, shares outstanding (in shares)	281,537	94,018

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	11 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Revenues:
Rental income	$ 879	$ 13,577	$ 6,179
Tenant reimbursements	69	3,288	630
Other operating income	0	96	46
Total revenues	948	16,961	6,855
Expenses:
Operating, maintenance, and management	217	3,783	1,497
Property management fees and expenses to affiliate	0	124	68
Real estate taxes and insurance	115	2,087	619
Asset management fees to affiliate	22	632	399
Real estate acquisition fees to affiliate	428	0	2,316
Real estate acquisition fees and expenses	152	0	405
General and administrative expenses	158	1,471	1,532
Depreciation and amortization	341	7,618	3,004
Interest expense	292	3,287	1,224
Total expenses	1,725	19,002	11,064
Other income (loss):
Interest and other income	1	48	120
Loss from extinguishment of debt	0	(206)	0
Total other (loss) income	1	(158)	120
Net loss	(776)	(2,199)	(4,089)
Class A
Other income (loss):
Net loss	$ (773)	$ (2,131)	$ (4,080)
Net loss per common share, basic and diluted (in dollars per share)	$ (1.29)	$ (0.23)	$ (0.55)
Weighted-average number of common shares outstanding, basic and diluted (in shares)	598,123	9,080,826	7,393,983
Class T
Other income (loss):
Net loss	$ (3)	$ (68)	$ (9)
Net loss per common share, basic and diluted (in dollars per share)	$ (1.62)	$ (0.28)	$ (0.68)
Weighted-average number of common shares outstanding, basic and diluted (in shares)	1,774	246,737	13,718

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands	Total	Additional Paid-in Capital	Cumulative Distributions and Net Losses	Class A	Class A Common Stock	Class T	Class T Common Stock
Balance (in shares) at Jan. 26, 2015					20,000		0
Balance at Jan. 26, 2015	$ 200	$ 200	$ 0		$ 0		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(776)		(776)	$ (773)		$ (3)
Issuance of common stock (in shares)					2,194,161
Issuance of common stock	19,105	19,083			$ 22
Transfers to redeemable common stock	$ (54)	(54)
Stock dividends issued (in shares)	2,660				2,660
Stock dividends issued	$ 0	24	(24)
Distributions declared	(195)		(195)
Commissions on stock sales, dealer manager fees and stockholder servicing fees to affiliate	(1,085)	(1,085)
Other offering costs	(1,089)	(1,089)
Balance (in shares) at Dec. 31, 2015					2,216,821		0
Balance at Dec. 31, 2015	16,106	17,079	(995)		$ 22		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(4,089)		(4,089)	$ (4,080)		$ (9)
Issuance of common stock (in shares)					6,559,574		93,918
Issuance of common stock	60,598	60,532			$ 65		$ 1
Transfers to redeemable common stock	$ (1,738)	(1,738)
Stock dividends issued (in shares)	69,869				69,769		100
Stock dividends issued	$ 0	711	(712)		$ 1
Distributions declared	(3,655)		(3,655)
Commissions on stock sales, dealer manager fees and stockholder servicing fees to affiliate	(4,200)	(4,200)
Other offering costs	(392)	(392)
Balance (in shares) at Dec. 31, 2016				8,846,164	8,846,164	94,018	94,018
Balance at Dec. 31, 2016	62,630	71,992	(9,451)		$ 88		$ 1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(2,199)		(2,199)	$ (2,131)		$ (68)
Issuance of common stock (in shares)					380,538		185,845
Issuance of common stock	5,421	5,417			$ 2		$ 2
Transfers to redeemable common stock	(523)	(523)
Redemptions of common stock (in shares)					(145,214)
Redemptions of common stock	$ (1,210)	(1,210)
Stock dividends issued (in shares)	69,286				67,612		1,674
Stock dividends issued	$ 0	706	(707)		$ 1
Distributions declared	(4,583)		(4,583)
Commissions on stock sales, dealer manager fees and stockholder servicing fees to affiliate	(103)	(103)
Other offering costs	(14)	(14)
Balance (in shares) at Dec. 31, 2017				9,149,100	9,149,100	281,537	281,537
Balance at Dec. 31, 2017	$ 59,419	$ 76,265	$ (16,940)		$ 91		$ 3

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	11 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Cash Flows from Operating Activities:
Net loss	$ (776)	$ (2,199)	$ (4,089)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	341	7,618	3,004
Property damage loss	0	0	134
Deferred rents	(226)	(898)	(500)
Allowance for doubtful accounts	0	161	31
Amortization of above- and below-market leases, net	(9)	(1,484)	(708)
Amortization of deferred financing costs	26	725	162
Unrealized gain on derivative instrument	0	(178)	0
Loss from extinguishment of debt	0	206	0
Changes in operating assets and liabilities:
Rents and other receivables	(79)	(159)	(93)
Prepaid expenses and other assets	(62)	(812)	(444)
Accounts payable and accrued liabilities	210	289	1,641
Due to affiliates	205	416	(172)
Other liabilities	256	574	999
Net cash provided by (used in) operating activities	(114)	4,259	(35)
Cash Flows from Investing Activities:
Acquisitions of real estate	(21,277)	(43,659)	(115,034)
Improvements to real estate	0	(3,772)	(124)
Net cash used in investing activities	(21,277)	(47,431)	(115,158)
Cash Flows from Financing Activities:
Proceeds from notes payable	17,246	42,250	71,589
Proceeds from note payable to affiliate	2,630	0	0
Principal payments on notes payable	(900)	(11,260)	(5,125)
Principal payments on note payable to affiliate	(2,630)	0	0
Payments of deferred financing costs	(315)	(417)	(1,308)
Cash distribution advance from affiliate	198	0	1,139
Proceeds from issuance of common stock	19,051	3,107	58,805
Payments to redeem common stock	0	(1,210)	0
Payments of commissions on stock sales and related dealer manager fees	(1,085)	(103)	(4,200)
Other offering costs paid to affiliates	0	(63)	(968)
Payments of other offering costs	(58)	(14)	(392)
Distributions paid to common stockholders	(53)	(2,261)	(1,574)
Net cash provided by financing activities	34,084	30,029	117,966
Net (decrease) increase in cash and cash equivalents	12,693	(13,143)	2,773
Cash and cash equivalents, beginning of period	200	15,666	12,893
Cash and cash equivalents, end of period	12,893	2,523	15,666
Supplemental Disclosure of Cash Flow Information:
Interest paid	214	2,605	1,077
Supplemental Disclosure of Noncash Investing and Financing Activities:
Stock dividends issued	24	707	712
Increase in other offering costs due to affiliates	1,031	0	0
Increase in cash distributions payable	88	0	289
Dividends paid to common stockholders through common stock issuances pursuant to the distribution reinvestment plan	54	2,314	1,792
Increase in accrued improvements to real estate	$ 22	$ 393	$ 61

XML

ORGANIZATION

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

KBS Growth & Income REIT, Inc. (the “Company”) was formed on January 12, 2015 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2015. Substantially all of the Company’s business is conducted through KBS Growth & Income Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on January 14, 2015. The Company is the sole general partner of, and owns a 0.1% partnership interest in, the Operating Partnership. KBS Growth & Income REIT Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on January 14, 2015, owns the remaining 99.9% partnership interest in the Operating Partnership and is the sole limited partner. The Company is the sole member and manager of REIT Holdings.

Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement between the Company and the Advisor initially entered into on June 11, 2015, and amended at various times thereafter (the “Advisory Agreement”). The Advisor conducts the Company’s operations and manages its portfolio of core real estate properties. On January 27, 2015, the Company issued 20,000 shares of its common stock to the Advisor at a purchase price of $10.00 per share. On June 11, 2015, these outstanding shares of common stock were designated Class A shares of common stock.

As of December 31, 2017, the Company had invested in four office properties. The Company intends to invest in a diverse portfolio of core real estate properties. The Company considers core properties to be existing properties with at least 80% occupancy. Based on the current market outlook, the Company expects its core focus in the U.S. office sector to reflect a value-creating core strategy, which is also known as a core-plus strategy.

The Company commenced a private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act of 1933, as amended, on June 11, 2015, pursuant to which the Company offered a maximum of $105,000,000 in shares of its Class A common stock for sale to accredited investors (the “Initial Private Offering”), of which $5,000,000 of Class A shares were offered pursuant to the Company’s distribution reinvestment plan. The Company ceased offering shares in the primary portion of the Initial Private Offering on April 27, 2016 and processed subscriptions for the primary Initial Private Offering dated on or prior to April 27, 2016 through May 30, 2016. KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Advisor, served as the dealer manager of the Initial Private Offering pursuant to a dealer manager agreement dated June 11, 2015 (the “Initial Private Offering Dealer Manager Agreement”).

On February 4, 2015, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to register an initial public offering of its common stock to offer a maximum of $1,500,000,000 in shares of common stock for sale to the public in a primary offering, consisting of two classes of shares: Class A and Class T (the “Primary Offering”) and a maximum of  $800,000,000 in both classes of shares of its common stock pursuant to the Company’s distribution reinvestment plan (the “DRP Offering” and, together with the Primary Offering, the “Public Offering”). The SEC declared the Company’s registration statement effective on April 28, 2016 and the Company retained the Dealer Manager to serve as the dealer manager of the Public Offering pursuant to a dealer manager agreement dated April 28, 2016 (the “Public Offering Dealer Manager Agreement”). The Company terminated the Primary Offering effective June 30, 2017.

The Company continues to offer shares of common stock pursuant to the DRP Offering. In some states, the Company will need to renew the registration statement annually to continue the DRP Offering. The Company may terminate the DRP Offering at any time.

On October 3, 2017, the Company launched a private placement offering exempt from registration pursuant to Rule 506(c) of Regulation D of the Securities Act pursuant to which the Company is currently offering a maximum of $1,000,000,000 in shares of its Class A common stock to accredited investors (the “Second Private Offering”). Prior to the launch of the Second Private Offering, on September 29, 2017, the Company entered into a dealer manager agreement (the “NCPS Dealer Agreement”) with the Advisor and North Capital Private Securities Corporation (“NCPS”) in connection with the Second Private Offering.

The Company sold 8,548,972 shares of Class A common stock for gross offering proceeds of $76.8 million in the Initial Private Offering, including 74,744 shares of Class A common stock under its distribution reinvestment plan for gross offering proceeds of $0.7 million.

The Company sold 122,721 and 270,415 shares of Class A and Class T common stock in the Primary Offering, for aggregate gross offering proceeds of $3.9 million. As of December 31, 2017, the Company had sold 355,087 and 9,348 shares of Class A and Class T common stock in the DRP Offering for aggregate gross offering proceeds of $3.5 million.

As of December 31, 2017, the Company had sold 65,130 Class A common stock in the Second Private Offering for aggregate gross offering proceeds of $0.6 million.

As of December 31, 2017, the Company had redeemed 145,214 Class A shares for $1.2 million.

On August 11, 2015, two of the individuals who own and control the Company’s sponsor, Charles J. Schreiber, Jr. (who also acts as chief executive officer, the chairman of the board and a director of the Company) and Peter M. Bren (who also acts as president and director of the Company), purchased 21,181.2380 and 21,181.2390 shares of Class A common stock, respectively, each for an aggregate purchase price of $172,500 or $8.144 per share. The per share purchase price reflects an 8.5% discount to the $8.90 offering price in the Private Offering in effect on the date of their purchase because selling commissions and dealer manager fees were not paid in connection with the sales. Mr. Bren’s investment was made on behalf of and for the account of three of his children, and he has disclaimed beneficial ownership of the shares. The Company issued these shares in private transactions exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933.

As described above, the Company intends to use substantially all of the net proceeds from its private and public offerings to invest in a diverse portfolio of core real estate properties and real estate-related assets.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company, REIT Holdings, and the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

The accompanying consolidated financial statements and notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC.

Use of Estimates

The preparation of the consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Revenue Recognition

Real Estate

The Company recognizes 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 reasonably assured and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is 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 the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of 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 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.

The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.

The Company makes estimates of the collectibility of its tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. Management specifically analyzes accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Cash and Cash Equivalents

The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income.

Real Estate

Depreciation and Amortization

Real estate costs related to the acquisition and improvement of properties are capitalized and amortized 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. The Company considers 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. The Company anticipates the estimated useful lives of its assets by class to be generally as follows:

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 the Company’s early 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). The Company records 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.

The Company assesses 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.

The Company records 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. The Company amortizes 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.

The Company estimates 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, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods.

The Company amortizes 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 the Company 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.

Impairment of Real Estate and Related Intangible Assets and Liabilities

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its 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, the Company assesses the recoverability by estimating whether the Company 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, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2017. The Company intends to mitigate this risk by depositing funds with a major financial institution; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. There were no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2017.

Rents and Other Receivables

The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements.  In addition, the Company maintains an allowance for deferred rent receivable that arises from the straight-lining of rents.  The Company exercises judgment in establishing these allowances and considers payment history and current credit status of its tenants in developing these estimates. 

Derivative Instruments

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate notes payable. The Company records 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 stockholders’ 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 Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded to accumulated other comprehensive income (loss) to earnings.

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close.

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

Redeemable Common Stock

In connection with the Private Offering, the Company adopted a share redemption program that enabled stockholders to sell their shares to the Company in limited circumstances. On March 16, 2016, the Company adopted an Amended and Restated Share Redemption Program in anticipation of the commencement of the Public Offering and related designation of Class T shares of common stock.

There are several limitations on the Company’s ability to redeem shares under the share redemption program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), the Company may not redeem shares unless the stockholder has held the shares for one year.

• During any calendar year, the Company may redeem only the number of shares that it could purchase with the amount of net proceeds from the sale of shares under its distribution reinvestment plan during the prior calendar year. However, the Company may increase or decrease the funding available for the redemption of shares pursuant to the program upon ten business days’ notice to its stockholders.

• During any calendar year, the Company may redeem no more than 5% of the weighted average number of shares outstanding during the prior calendar year.

• The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

The Company initially redeemed shares submitted as an ordinary redemption at 95.0% of the price paid to acquire the shares from the Company. Notwithstanding the foregoing, stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the Company’s prospectus, as supplemented, for the Public Offering. For each class of shares designated, this amount equaled $9.40 per share. In August 2017, the Company established an estimated net asset value (“NAV”) per share of its common stock, and began redeeming all shares submitted in connection with an ordinary redemption at 95.0% of the Company’s most recent estimated NAV per share as of the applicable redemption date.

The Company treats redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence differently from other redemptions:

• There is no one-year holding requirement;

• Before the Company established an estimated NAV per share in August 2017, the redemption price was the amount paid to acquire the shares from the Company. Notwithstanding the foregoing, stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the prospectus, as supplemented, for the Public Offering. For each class of shares, this amount equaled $9.40 per share; and

• Effective starting with the August 2017 redemption cycle, the redemption price will be the estimated NAV per share as of the redemption date.

For purposes of determining whether a redeeming stockholder has held the share submitted for redemption for at least one year, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to the distribution reinvestment plan or received as a stock dividend will be deemed to have been acquired on the same date as the initial share to which the distribution reinvestment plan shares or stock dividend shares relate.

On August 9, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $8.75 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of June 30, 2017. The change in the redemption price was effective for August 2017 through November 2017 redemption dates.

On December 8, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $8.79 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to the Company’s net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and will be effective until the estimated value per share is updated.

The board may amend, suspend or terminate the share redemption program upon 30 days’ notice to stockholders, provided that the Company may increase or decrease the funding available for the redemption of shares pursuant to the share redemption program upon 10 business days’ notice. The Company may provide this notice by (a) including such information in a Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC or (b) a separate mailing to its stockholders.

The Company records amounts that are redeemable under the share redemption program as redeemable common stock liability in its consolidated balance sheets because the shares will be mandatorily redeemable at the option of the holder and therefore their redemption is outside the control of the Company. The maximum amount redeemable under the Company’s share redemption program is limited to the number of shares the Company could redeem with the amount of the net proceeds from the sale of shares under the distribution reinvestment plan during the prior calendar year. However, because the amounts that can be redeemed are determinable and only contingent on an event that is likely to occur (e.g., the passage of time) the Company presents the net proceeds from the current year and prior year distribution reinvestment plan, net of current year redemptions, as redeemable common stock in its consolidated balance sheets.

The Company will classify as liabilities financial instruments that represent a mandatory obligation of the Company to redeem shares. The Company’s redeemable common shares are contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to repurchase shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values.

Related Party Transactions

Pursuant to the Advisory Agreement, the Private Offering Dealer Manager Agreement and the Public Offering Dealer Manager Agreement, the Company is or was obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Private Offering and the Public Offering, the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company is or was also obligated to reimburse the Advisor and Dealer Manager for organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. See Note 9, “Related Party Transactions.”

In addition, in connection with certain property acquisitions, the Company, through indirect wholly owned subsidiaries, has entered into separate property management agreements (each, a “Property Management Agreement”) with KBS Management Group, LLC (the “Co-Manager”), an affiliate of the Advisor.

The Company records all related party fees as incurred, subject to any limitations described in the respective agreements. The Company had not incurred any disposition fees, subordinated participation in net cash flows or subordinated incentive fees payable to the Advisor through December 31, 2017.

Selling Commissions and Dealer Manager Fees

In the Initial Private Offering, the Company paid the Dealer Manager up to 6.5% of the price per share of Class A common stock sold in the primary portion of the Private Offering as a selling commission. The Dealer Manager reallowed 100% of selling commissions earned to participating broker-dealers. No sales commissions were paid on shares sold through the distribution reinvestment plan.  In the Private Offering, the Company paid the Dealer Manager up to 2.0% of the price per share of Class A common stock sold in the primary portion of the Private Offering as a dealer manager fee. No dealer manager fee was payable on shares sold under the distribution reinvestment plan. From its dealer manager fee, the Dealer Manager could reallow to any participating broker-dealer up to 1.0% of the price per share of Class A common stock sold in the Private Offering attributable to that participating broker-dealer as a marketing fee and in special cases the dealer manager could increase the reallowance.

In the Public Offering, the Company paid selling commissions to the Dealer Manager in amounts up to 6.5% of the price per share of Class A common stock sold in the primary portion of the Public Offering and up to 3.0% of the price per share of Class T common stock sold in the primary portion of the Public Offering. Additionally, in the Public Offering, the Company paid dealer manager fees to the Dealer Manager in an amount up to 2.0% of the price per share of Class A and Class T common stock sold in the primary portion of the Public Offering. The Dealer Manager reallowed all selling commissions to participating broker dealers and may generally reallow (from its dealer manager fee) to any participating broker dealer up to 1.0% of the gross proceeds from the primary portion of the Public Offering attributable to that participating broker dealer as a marketing fee and in select cases up to 1.5% of the gross proceeds from the primary portion of the Public Offering was reallowed. No selling commissions or dealer manager fees were payable on shares of common stock sold under the distribution reinvestment plan.

The Advisor has agreed to pay selling commissions to NCPS of 0.5% of the price per share of Class A common stock sold in the Second Private Offering on behalf of the Company without reimbursement by the Company.

Acquisition Fees

Through August 8, 2017, the Company paid the Advisor 2.0% of the cost of investments acquired by the Company, including acquisition expenses and any debt attributable to such investments, plus significant capital expenditures budgeted as of the date of acquisition related to the development, construction or improvement of a real estate property. Acquisition fees calculated based on capital expenditures budgeted as of the date of acquisition were paid at the time funds were disbursed pursuant to a final approved budget upon receipt of an invoice by the Company. On August 9, 2017, the Company entered into an amended and restated advisory agreement with the Advisor, which, among other changes, eliminates the payment of acquisition fees to the Advisor.

Acquisition Expenses

The Company reimburses the Advisor for customary acquisition expenses (including expenses relating to potential investments that the Company does not close), such as legal fees and expenses (including fees of independent contractor in-house counsel that are not employees of the Advisor), costs of due diligence (including, as necessary, updated appraisals, surveys and environmental site assessments), travel and communications expenses, accounting fees and expenses and other closing costs and miscellaneous expenses relating to the acquisition of real estate properties.

Stockholder Servicing Fee

During the Public Offering, the Company paid the Dealer Manager an annual stockholder servicing fee of 1.0% of the purchase price per share (ignoring any discounts that may be available to certain categories of purchasers) of Class T common stock sold in the Primary Offering solely to the extent there was a broker dealer of record with respect to such Class T share that had entered into a currently effective selected dealer agreement or servicing agreement that provided for the payment to such broker dealer of the stockholder servicing fee with respect to such Class T share, and such broker dealer of record was in compliance with the applicable terms of such selected dealer agreement or servicing agreement related to such payment. To the extent payable, the stockholder servicing fee accrued daily and was paid monthly in arrears, and the Dealer Manager reallowed 100% of the stockholder servicing fee to such broker dealer of record for services provided to Class T stockholders after the initial sale of the Class T share. No stockholder servicing fee was paid with respect to Class T shares purchased through the distribution reinvestment plan or issued pursuant to a stock dividend.

The Company recorded the stockholder servicing fee as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum stockholder servicing fee payable in relation to the Class T share on the date the share was issued. For each share of Class T common stock in the Primary Offering, the maximum stockholder servicing fee equaled 4% of the purchase price per share (ignoring any discounts in purchase price that may be available to certain categories of purchasers).The Public Offering was terminated effective June 30, 2017. Pursuant to the terms of the Class T shares as set forth in the Articles Supplementary and Multiple Class Plan of the Company, the Company ceased accruing for stockholder servicing fees after June 30, 2017 and reversed the amounts previously accrued.

Asset Management Fee

Through August 8, 2017, the Company paid the Advisor a monthly fee equal to one-twelfth of 1.6% of the cost of its investments, less any debt secured by or attributable to the investments. The cost of the real property investments was calculated as the amount paid or allocated to acquire the real property, plus the budgeted capital improvement costs for the development, construction or improvements to the property once such funds were disbursed pursuant to a final approved budget and fees and expenses related to the acquisition, but excluding acquisition fees paid or payable to the Advisor.

Beginning August 9, 2017, pursuant to an amended and restated advisory agreement with the Advisor, the Company pays the Advisor a monthly fee equal to one‑twelfth of 1.0% of the cost of the real property investments, including any debt financing on the property. Asset management fee will be calculated as the amount paid or allocated to acquire the real property, plus budgeted capital improvement costs for the development, construction or improvements to the property once such funds are disbursed pursuant to a final approved budget and typical third‑party expenses related to the acquisition.

Property Management Fee

The Company pays the Co-Manager a monthly fee equal to a percentage of the rent (determined on a property by property basis, consistent with current market rates), payable and actually collected for the month, from certain property acquisitions for which the Company has entered a Property Management Agreement with the Co-Manager. See Note 9, “Related-Party Transactions — Real Estate Property Co-Management Agreements.”

Disposition Fee

For substantial assistance in connection with the sale of the Company’s assets, which includes the sale of a single asset or the sale of all or a portion of the Company’s assets through a portfolio sale, merger or business combination transaction, the Company will pay the Advisor or its affiliates a percentage of the contract sales price of the assets sold (including residential or commercial mortgage-backed securities issued by a subsidiary of the Company as part of a securitization transaction). The disposition fee will equal 1.5% of the contract sales price. The disposition fee is determined on a per transaction basis and is not cumulative. The Company will not pay a disposition fee upon the maturity, prepayment or workout of a loan or other debt-related investment, provided that (i) if the Company negotiates a discounted payoff with the borrower, the Company will pay a disposition fee and (ii) if the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such property.

Reimbursement of Operating Expenses

Through September 28, 2017, the Company reimbursed the expenses incurred by the Advisor or its affiliates in connection with their provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities and cybersecurity costs. The Company also reimbursed the Advisor for its allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company.

The Company reimbursed the Dealer Manager for certain fees and expenses it incurred for administering the Company’s participation in the DTCC Alternative Investment Product Platform, or the AIP Platform, with respect to certain accounts of the Company’s investors serviced through the AIP Platform.

Effective September 29, 2017, the Company will reimburse the Advisor for the following expenses it incurs in connection with providing services to the Company under the Advisory Agreement: the Company’s allocable portion of the costs of internal audit department personnel and promotional costs and expenses related to the leasing of properties.

The Company has entered, together with KBS Real Estate Investment Trust I, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS affiliated entities, an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2017, the Company renewed its participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To continue to qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s 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, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its 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 the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT.

The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for all open tax years through December 31, 2017. As of December 31, 2017, returns for the calendar years 2015 and 2016 remain subject to examination by major tax jurisdictions.

Segments

The Company had invested in four office buildings as of December 31, 2017. Substantially all of the Company’s revenue and net loss is from real estate, and therefore, the Company currently operates in one reportable segment.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding for the years ended December 31, 2017 and 2016 or the period from January 27, 2015 through December 31, 2015. For the purpose of determining the weighted average number of shares outstanding, stock dividends issued during the period presented are adjusted retroactively and treated as if they were issued and outstanding for all periods presented. 

The Company has declared and issued stock dividends on shares of the Company’s common stock during the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015 as follows:

	Amount Declared per Share Outstanding (1)	Total Shares Issued
For the Period from January 27, 2015 through December 31, 2015	0.00252056 shares	2,660
Year Ended December 31, 2016	0.01000004 shares	69,869
Year Ended December 31, 2017	0.00666664 shares	69,286

_____________________

⁽¹⁾ Stock dividends have been declared on a monthly basis and the amount declared per share outstanding assumes the share was issued and outstanding each date that was a record date for stock dividends during the periods presented. Stock dividends are issued in the same class of shares as the shares for which such stockholder received the stock dividend. The Company ceased issuing stock dividends to all stockholders on September 5, 2017. The Company's board of directors does not expect to authorize any additional stock dividends.

During the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015, aggregate cash distributions declared per share of Class A common stock were $0.49373176, $0.49999890 and $0.16712301 per share of Class A common stock, respectively, assuming the share was issued and outstanding each date that was a record date for distributions during the period. During the years ended December 31, 2017 and 2016, aggregate cash distributions declared per share of Class T common stock were $0.44464258 and $0.17462989, assuming the share was issued and outstanding each date that was a record date for distributions during the period. Distributions for the period from January 27, 2015 through August 31, 2017 were calculated at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were calculated at a rate of $0.00131849 per share per day. Each day during the year ended December 31, 2017 and the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2016 was a record date for distributions.

In accordance with FASB ASC Topic 260-10-45, Earnings Per Share, the Company uses the two-class method to calculate earnings per share. Basic earnings per share is calculated based on dividends declared (“distributed earnings”) and the rights of common shares and participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends declared during the period. The undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. The Company does not have any participating securities outstanding other than Class A Common Stock and Class T Common Stock during the periods presented.

	Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015
	2017			2016
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Less: Class A Common Stock cash distributions declared	4,472			3,649			195
Less: Class T Common Stock cash distributions declared	111			5			—
Undistributed net loss	$	(6,782	)	$	(7,743	)	$	(971	)
Class A Common Stock:
Undistributed net loss	$	(6,603	)	$	(7,729	)	$	(968	)
Class A Common Stock cash distributions declared	4,472			3,649			195
Net loss	$	(2,131	)	$	(4,080	)	$	(773	)
Net loss per common share, basic and diluted	$	(0.23	)	$	(0.55	)	$	(1.29	)
Weighted-average number of common shares outstanding, basic and diluted	9,080,826			7,393,983			598,123
Class T Common Stock:
Undistributed net loss	$	(179	)	$	(14	)	$	(3	)
Class T Common Stock cash distributions declared	111			5			—
Net loss	$	(68	)	$	(9	)	$	(3	)
Net loss per common share, basic and diluted	$	(0.28	)	$	(0.68	)	$	(1.62	)
Weighted-average number of common shares outstanding, basic and diluted	246,737			13,718			1,774

Square Footage, Occupancy and Other Measures

 Square footage, occupancy, number of tenants and other measures, including annualized base rent and annualized base rent per square foot, or amounts derived from such measures, used to describe real estate investments included in these Notes to Consolidated Financial Statements are presented on an unaudited basis.

Recently Issued Accounting Standards Update

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.  In addition, the standard provided guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers upon transfer of control. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification.  ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted.  In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which deferred the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company elected to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption, January 1, 2018. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that are not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that are not completed as of January 1, 2018.

The primary source of revenue for the Company is generated through leasing arrangements, which are excluded from this standard. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that may be impacted by the new standard include other operating income and tenant reimbursements for substantial services earned at its properties.

For the year ended December 31, 2017, other operating income including parking revenues and tenant reimbursements for substantial services and other ancillary income in scope of ASC 606 were approximately 1% of consolidated revenue. Under current accounting standards, the Company typically recognizes other operating income when the amounts are fixed or determinable, collectability is reasonably assured, and services have been rendered. Under the new revenue recognition ASU, the recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. These services are normally provided at a point in time or over a specified period of time with respect to monthly parking revenue; therefore, revenue recognition under the new revenue recognition ASU is expected to be substantially similar to the recognition pattern under existing accounting standards.

Based on the Company’s evaluation of its contracts in scope, the adoption of the new revenue recognition standard is not expected to have a material impact to the Company’s financial statements on January 1, 2018.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”).  The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments.  ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected.  ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements.  ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early application of certain provisions of the standard is permitted for financial statements that have not been previously issued.  The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires lessors to identify lease and non-lease components under their leasing arrangements and allocate the total consideration in the lease agreement to these lease and non-lease components based on their relative standalone selling prices. Non-lease components will be subject to the new revenue recognition standard upon the Company’s adoption of the new leasing standard on January 1, 2019. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In January 2018, the FASB issued a proposed amendment to the leases ASU, which would add a transition option to the new leases standard that would allow entities to apply the transition provisions of the new standard at its adoption date instead of the earliest comparative periods presented in its financial statements. The FASB also proposed a practical expedient that would permit lessors to not separate lease and non-lease components if certain conditions are met. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements and if adopted by the FASB, applying the transition option and electing the practical expedient of the proposed amendment.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”).  ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income.  The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.  ASU No. 2016-13 also amends the impairment model for available-for-sale securities.  An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.  ASU No. 2016-13 also requires new disclosures.  For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes.  For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available for sale securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.  ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements, but does not expect the adoption of ASU No. 2016-13 to have a material impact on its financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”).  ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows.  The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement);  and (d) Relating to distributions received from equity method investments, ASU No. 2016-15 provides an accounting policy election for classifying distributions received from equity method investments. Such amounts can be classified using a (1) cumulative earnings approach, or (2) nature of distribution approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity method earnings since inception.  Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Alternatively, an investor can choose to classify the distributions based on the nature of activities of the investee that generated the distribution. If the necessary information is subsequently not available for an investee to determine the nature of the activities, the entity should use the cumulative earnings approach for that investee and report a change in accounting principle on a retrospective basis; (e) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow.  ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements, but does not expect the adoption of ASU No. 2016-15 to have a material impact on its financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU No. 2016-18”). ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents.  Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows.  ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  The Company elected to early adopt ASU No. 2016-18 for the reporting period ended December 31, 2016 and it was applied retrospectively. As a result of the adoption of ASU No. 2016-18, there was no impact to the Company’s consolidated statements of cash flows as of December 31, 2017 and 2016, and for the period from January 27, 2015 to December 31, 2015 since the Company did not report any restricted cash for those periods.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU No. 2017-01”) to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.  ASU No. 2017-01 provides a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business.  If the screen is not met, ASU No. 2017-01 (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace missing elements.  ASU No. 2017-01 provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs.  Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs.  ASU No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted.  The amendments can be applied to transactions occurring before the guidance was issued (January 5, 2017) as long as the applicable financial statements have not been issued.  The Company elected to early adopt ASU No. 2017-01 for the reporting period beginning January 1, 2017.  As a result of the adoption of ASU No. 2017-01, the Company’s acquisitions of investment properties beginning January 1, 2017 could qualify as asset acquisitions (as opposed to business combinations).  Transaction costs associated with asset acquisitions are capitalized, while transaction costs associated with business combinations will continue to be expensed as incurred.

XML

RECENT ACQUISITION OF REAL ESTATE

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

RECENT ACQUISITION OF REAL ESTATE

RECENT ACQUISITION OF REAL ESTATE

During the year ended December 31, 2017, the Company acquired the following property (in thousands):

								Intangibles
Property Name	City	State	Acquisition Date	Land		Building and Improvements		Tenant Origination  and Absorption Costs		Above-Market Lease Assets		Below-Market Lease Liabilities			Total Purchase Price
Institute Property	Chicago	IL	11/9/2017	$	8,400	$	33,536	$	4,118	$	—	$	(2,395	)	$	43,659

The intangible assets and liabilities acquired in connection with this acquisition has weighted-average amortization periods as of the date of acquisition as follows (in years):

	Tenant Origination and Absorption Costs	Above-Market Lease Assets	Below-Market Lease Liabilities
Institute Property	5.7	—	5.9

The Company recorded this real estate acquisition as an asset acquisition. Included in the total purchase price was $0.5 million of capitalized acquisition costs. For the year ended December 31, 2017, the Company recognized $0.7 million of total revenues and $0.4 million of operating expenses from this property.

XML

REAL ESTATE

12 Months Ended

Dec. 31, 2017

Real Estate [Abstract]

REAL ESTATE

REAL ESTATE

As of December 31, 2017, the Company owned four office buildings containing 683,952 rentable square feet, which were collectively 97% occupied. The following table provides summary information regarding the properties owned by the Company as of December 31, 2017 (in thousands):

Property	Date Acquired	City	State	Property Type	Total Real Estate at Cost		Accumulated Depreciation and Amortization			Total Real Estate, Net
Von Karman Tech Center	08/12/2015	Irvine	CA	Office	$	20,892	$	(1,758	)	$	19,134
Commonwealth Building	06/30/2016	Portland	OR	Office	76,413		(4,876		)	71,537
The Offices at Greenhouse	11/14/2016	Houston	TX	Office	47,241		(2,696		)	44,545
Institute Property	11/09/2017	Chicago	IL	Office	46,210		(297		)	45,913
					$	190,756	$	(9,627	)	$	181,129

As of December 31, 2017, the following properties represented more than 10% of the Company’s total assets:

Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) (1)		Average Annualized Base Rent per sq. ft.		Occupancy
Von Karman Tech Center	Irvine, CA	101,161	$	19,134	10.2	%	$	2,277	$	22.51	100.0	%
Commonwealth Building	Portland, OR	224,122	71,537		38.2	%	5,393		25.40		94.7	%
The Offices at Greenhouse	Houston, TX	203,284	44,545		23.8	%	4,201		20.66		100.0	%
Institute Property	Chicago, IL	155,385	45,913		24.5	%	3,718		25.28		94.7	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

Operating Leases

The Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of December 31, 2017, the leases had remaining terms, excluding options to extend, of up to 9.4 years with a weighted-average remaining term of 4.5 years. Some of the leases have provisions to extend the term of the leases, options for early termination for all or a part of the leased premises after paying a specified penalty, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $1.2 million and $0.6 million as of December 31, 2017 and 2016, respectively.

During the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015, the Company recognized deferred rent from tenants, net of lease incentive amortization, of $0.9 million, $0.5 million, and $0.2 million, respectively. As of December 31, 2017 and 2016, the cumulative deferred rent balance was $1.8 million and $0.9 million, respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $0.2 million and $0.2 million of unamortized lease incentives as of December 31, 2017 and 2016, respectively.

As of December 31, 2017, the future minimum rental income from the Company’s properties under its non-cancelable operating leases was as follows (in thousands):

2018	$	14,410
2019	13,880
2020	13,019
2021	11,323
2022	9,672
Thereafter	12,882
	$	75,186

As of December 31, 2017, the Company had a concentration of credit risk related to AECOM, a tenant in The Offices at Greenhouse in the engineering industry, which represented 19% of the Company’s annualized base rent. The tenant individually occupied 140,922 rentable square feet or approximately 21% of the total rentable square feet of the Company’s real estate portfolio. Of the 140,922 rentable square feet, 5,195 rentable square feet expires on July 24, 2019, with twothree-year extension options, and 135,727 rentable square feet expires on December 31, 2024, with twofive-year extension options. As of December 31, 2017, the annualized base rent for this tenant was approximately $3.0 million or $21.39 per square foot. No other tenant represented more than 10% of the Company’s annualized base rent.

As of December 31, 2017, the Company’s real estate properties were leased to approximately 80 tenants over a diverse range of industries. The Company’s highest tenant industry concentration (greater than 10% of annualized base rent) was as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Professional, scientific and legal	14	$	5,846	37.5	%
Information	9	2,168		13.9	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

As of December 31, 2017, no other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time.

XML

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

12 Months Ended

Dec. 31, 2017

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND         BELOW-MARKET LEASE LIABILITIES

As of December 31, 2017 and 2016, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):

	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	2017			2016			2017			2016			2017			2016
Cost	$	17,047		$	13,528		$	213		$	214		$	(7,838	)	$	(5,727	)
Accumulated Amortization	(3,480		)	(1,253		)	(33		)	(4		)	1,928			698
Net Amount	$	13,567		$	12,275		$	180		$	210		$	(5,910	)	$	(5,029	)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the years ended December 31, 2017 and 2016 and for the period from January 27, 2015 through December 31, 2015 were as follows (in thousands):

	Tenant Origination and Absorption Costs									Above-Market Lease Assets								Below-Market Lease Liabilities
	For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015			For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015		For the Years Ended December 31,				For the Period from January 27, 2015 to December 31, 2015
	2017			2016						2017			2016					2017		2016
Amortization	$	(2,826	)	$	(1,135	)	$	(144	)	$	(30	)	$	(4	)	$	—	$	1,514	$	712	$	9

The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2017 is estimated to be amortized for the years ending December 31 as follows (in thousands):

	Tenant Origination and Absorption Costs			Above-Market Lease Assets			Below-Market Lease Liabilities
2018	$	(3,175	)	$	(30	)	$	1,720
2019	(2,707		)	(30		)	1,369
2020	(2,342		)	(28		)	1,123
2021	(1,885		)	(21		)	687
2022	(1,543		)	(21		)	499
Thereafter	(1,915		)	(50		)	512
	$	(13,567	)	$	(180	)	$	5,910
Weighted-Average Remaining Amortization Period	5.5			6.9			4.6

XML

NOTES PAYABLE

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTES PAYABLE

As of December 31, 2017 and 2016, the Company’s notes payable consisted of the following (dollars in thousands):

	Book Value as of December 31, 2017			Book Value as of December 31, 2016			Contractual Interest Rate as of December 31, 2017(1)	Effective  Interest Rate as of December 31, 2017 (1)	Payment Type	Maturity Date (2)
Von Karman Tech Center Mortgage Loan (3)	$	—		$	11,260		(3)	(3)	(3)	(3)
Commonwealth Building Mortgage Loan (4)	41,000			41,000			One-month LIBOR + 2.15%	3.52%	Interest Only	07/01/2021
Term Loan (5)	72,800			30,550			One-month LIBOR + 2.00%	3.37%	Interest Only	11/09/2020
Unsecured Revolving Credit Facility (6)	—			—			(6)	(6)	(6)	(6)
Total notes payable principal outstanding	$	113,800		$	82,810
Deferred financing costs, net	(1,020		)	(1,435		)
Total notes payable, net	$	112,780		$	81,375

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2017. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2017 (consisting of the contractual interest rate), using interest rate indices as of December 31, 2017, where applicable.

⁽²⁾ Represents the maturity date as of December 31, 2017; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown.

⁽³⁾ On May 9, 2017, the Company paid off the Von Karman Tech Center Mortgage Loan and Von Karman Tech was added to the Term Loan as a collateral property. See footnote (5) below.

⁽⁴⁾ As of December 31, 2017, $41.0 million of the Commonwealth Building Mortgage Loan was outstanding and $6.4 million remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. On January 18, 2018, the Company refinanced the Commonwealth Building Mortgage Loan. See Note 12, “Subsequent Events - Refinancing of the Commonwealth Building Mortgage Loan.”

⁽⁵⁾ As of December 31, 2017, the outstanding balance under the Term Loan consisted of $48.5 million of term commitment and $24.3 million of revolving commitment, which bears interest at a rate per annum equal to 2.0% over one-month LIBOR. The Term Loan was secured by The Offices at Greenhouse, Von Karman Tech and Institute Property.

⁽⁶⁾ On October 11, 2017, the Unsecured Revolving Credit Facility was cancelled without any funds being disbursed because the Company did not meet the equity raised requirement for the three-month period ending October 1, 2017.

During the years ended December 31, 2017 and 2016, the Company incurred $3.3 million and $1.2 million of interest expense. During the period from January 27, 2015 to December 31, 2015, the Company incurred $0.3 million of interest expense, of which $19,023 relates to a bridge loan from the Advisor. As of December 31, 2017 and 2016, $0.3 million and $0.2 million of interest expense were payable, respectively. Included in interest expense for the years ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, were $0.7 million, $0.2 million and $25,809 of amortization of deferred financing costs, respectively. Interest expense was reduced by $0.2 million as a result of a change in fair value of the Company’s derivative instruments for the year ended December 31, 2017.

The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of December 31, 2017 (in thousands):

2018	$	—
2019	—
2020	72,800
2021	41,000
2022	—
Thereafter	—
	$	113,800

XML

DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENT

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.

The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero.

During the year ended December 31, 2017, the Company entered into one interest rate swap with a notional amount of $48.5 million. This interest rate swap effectively fixes one-month LIBOR at a fixed-rate of 2.07% effective November 1, 2018 and maturing November 1, 2021. As of December 31, 2017, the interest rate swap is not designated as a hedging instrument. The Company classified the interest rate swap as prepaid expenses and other assets in the amount of $0.2 million on the accompanying consolidated balance sheet as of December 31, 2017.  For the year ended December 31, 2017, the Company recorded $0.2 million of unrealized gain on interest swap, which is included in interest expense in the accompanying consolidated statement of operations.

XML

FAIR VALUE DISCLOSURES

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of long-lived assets). Fair value, as defined under GAAP, is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value:

Cash and cash equivalents, rent and other receivables, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items.

Derivative instruments:The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses 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.

Notes payable: The fair value of the Company’s notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.

The following were the face values, carrying amounts and fair values of the Company’s notes payable as of December 31, 2017 and 2016, which carrying amounts generally do not approximate the fair values (in thousands):

	December 31, 2017						December 31, 2016
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	113,800	$	112,780	$	114,327	$	82,810	$	81,375	$	82,443

Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. The actual value could be materially different from the Company’s estimate of value.

As of December 31, 2017, the Company measured the following asset at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets  for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Asset derivative - interest rate swap	$	178	$	—	$	178	$	—

XML

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Pursuant to the Advisory Agreement, the Initial Private Offering Dealer Manager Agreement and the Public Offering Dealer Manager Agreement, the Company is or was obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Initial Private Offering and the Public Offering, the investment of funds in real estate, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company was also obligated to reimburse the Advisor and Dealer Manager for certain organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. The Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. In addition, the Advisor will pay all offering expenses related to the Second Private Offering without reimbursement by the Company.

In addition, in connection with certain property acquisitions, the Company, through indirect wholly owned subsidiaries, has entered into separate Property Management Agreements (defined below) with KBS Management Group, LLC, an affiliate of the Advisor (the “Co-Manager”).

The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform.

The Advisor also serves as the advisor for KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc. The Dealer Manager also serves as the dealer manager for KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc.

The Company, together with KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2017, the Company renewed its participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

During the year ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, no other business transactions occurred between the Company and KBS REIT I, KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc. and KBS Strategic Opportunity REIT II, Inc.

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, respectively, and any related amounts payable as of December 31, 2017 and 2016 (in thousands):

	Incurred Years Ended December 31,					Incurred for the Period from January 27, 2015 to December 31, 2015		Payable as of December 31,
	2017			2016				2017		2016
Expensed
Asset management fees (1)	$	632		$	399	$	22	$	418	$	—
Reimbursement of operating expenses (2)	185			151		205		18		17
Property management fees (3)	124			68		—		13		16
Real estate acquisition fees (4)	—			2,316		428		—		—
Related party interest expense (5)	—			—		19		—		—
Other Arrangement
Advisor advance for cash distributions (6)	—			1,139		199		1,338		1,338
Additional Paid-in Capital
Selling commissions	78			3,029		817		—		—
Dealer manager fees	51			1,134		268		—		—
Stockholder servicing fees (7)	(26		)	37		—		—		37
Reimbursable other offering costs (8)	14			392		1,080		—		26
	$	1,058		$	8,665	$	3,038	$	1,787	$	1,434

_____________________

⁽¹⁾ Through August 8, 2017, the asset management fee payable to the Advisor was a monthly fee equal to one-twelfth of 1.6% of the cost of the Company’s investments, less any debt secured by or attributable to the investments. Beginning on August 9, 2017, the asset management fee is a monthly fee payable to the Advisor in an amount equal to one-twelfth of 1.0% of the cost of the Company’s investments including the portion of the investment that is debt financed. During the second and third quarters of 2017, the Company incurred $0.5 million of asset management fees, all of which were waived by the Advisor. The Advisor agreed to defer payment of the asset management fee for the fourth quarter of 2017 of $0.4 million, all of which was accrued by the Company as of December 31, 2017.

⁽²⁾ See “Reimbursable Operating Expenses” below.

⁽³⁾ See “Real Estate Property Co-Management Agreements” below.

⁽⁴⁾ On August 9, 2017, the Company entered into an amended and restated advisory agreement with the Advisor in which the Advisor will no longer be paid an acquisition fee in connection with acquisitions on or after August 9, 2017.

⁽⁵⁾ Relates to interest expense as a result of a bridge loan from the Advisor. On August 12, 2015, in connection with the acquisition of Von Karman Tech Center, the Company borrowed $2.6 million pursuant to a bridge loan from the Advisor (the “Advisor Bridge Loan”). The principal under the promissory note bore simple interest from the date of the advance at the rate of 5% per annum. On September 3, 2015, the Company repaid $1.5 million of the Advisor Bridge Loan. On November 12, 2015, the Company paid off the remaining outstanding principal balance and interest due under the Advisor Bridge Loan of $1.1 million.

⁽⁶⁾ See “Advance from the Advisor” below.

⁽⁷⁾ The Public Offering was terminated effective June 30, 2017. Pursuant to the terms of the Class T shares as set forth in the Articles Supplementary and Multiple Class Plan of the Company, the Company ceased accruing for stockholder servicing fees after June 30, 2017 and reversed the amounts previously accrued.

⁽⁸⁾ See “Organization and Offering Costs” below.

Reimbursable Operating Expenses

Reimbursable operating expenses primarily related to directors and officers liability insurance, legal fees, state and local taxes, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $0.2 million and $0.1 million for the years ended December 31, 2017 and 2016, respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the years ended December 31, 2017 and 2016, respectively. The Company does not reimburse for employee costs in connection with services for which the Advisor earned or earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.

Effective September 29, 2017, the Company eliminated its obligation to reimburse expenses incurred by the Advisor in connection with providing services pursuant to the Advisory Agreement, other than (i) the allocable portion of the costs of the internal audit department and (ii) promotional costs and expenses related to the leasing of properties.

Commencing with the quarter ended December 31, 2016, the Advisor must reimburse the Company the amount by which the Company’s aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of the Company’s average invested assets or 25% of the Company’s net income, 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, 2017 did not exceed the charter-imposed limitation.

Advance from the Advisor

The Advisor advanced funds to the Company, which are non-interest bearing, for distribution record dates through the period ended May 31, 2016. As of December 31, 2017, the total advanced funds due to the Advisor from the Company was approximately $1.3 million. The Company is only obligated to repay the Advisor for its advance if and to the extent that:

(i) the Company’s modified funds from operations (“MFFO”), as such term is defined by the Investment Program Association and interpreted by the Company, for the immediately preceding month exceeds the amount of cash distributions declared for record dates of such prior month (an “MFFO Surplus”), and the Company will pay the Advisor the amount of the MFFO Surplus to reduce the principal amount outstanding under the advance, provided that such payments shall only be made if management in its sole discretion expects an MFFO Surplus to be recurring for at least the next two calendar quarters, determined on a quarterly basis; or

(ii) Excess proceeds from third-party financings are available (“Excess Proceeds”), provided that the amount of any such Excess Proceeds that may be used to repay the principal amount outstanding under the advance shall be determined by the conflicts committee in its sole discretion.

In determining whether Excess Proceeds are available to repay the advance, the Company’s conflicts committee will consider whether cash on hand could have been used to reduce the amount of third-party financing provided to us. If such cash could have been used instead of third-party financing, the third-party financing proceeds will be available to repay the advance.

Real Estate Property Co-Management Agreements

In connection with its property acquisitions, the Company, through separate, indirect, wholly-owned subsidiaries, entered into separate property management agreements (each, a “Property Management Agreement”) with the Co-Manager for each of its properties. Under each Property Management Agreement, the Co-Manager will provide certain management services related to these properties in addition to those provided by the third-party property managers. In exchange for these services, the Company will pay the Co-Manager a monthly fee equal to a percentage of the rent, payable and actually collected for the month from each of the properties. Each Property Management Agreement has an initial term of one year and will be deemed renewed for successive one-year periods provided it is not terminated. Each party may terminate the Property Management Agreement without cause on 30 days’ written notice to the other party and may terminate each Property Management Agreement for cause on 5 days’ written notice to the other party upon the occurrence of certain events as detailed in each Property Management Agreement.

Property Name	Effective Date	Annual Fee Percentage
Von Karman Tech Center	07/31/2015	1.50%
Commonwealth Building	07/01/2016	1.25%
The Offices at Greenhouse	11/14/2016	0.25%
Institute Property	11/09/2017	1.00%

Organization and Offering Costs

Offering costs include all expenses incurred in connection with the offerings of securities by the Company. Organization costs include all expenses incurred in connection with the formation of the Company, including but not limited to legal fees and other costs to incorporate the Company.

With respect to the Public Offering, the Advisor and the Dealer Manager generally paid the organization and offering expenses of the Company incurred in the Primary Offering (other than selling commissions, dealer manager fees and stockholder servicing fees) directly.

The Company reimbursed the Advisor, the Dealer Manager and its affiliates up to 1% of gross proceeds raised in the Primary Offering for commercially reasonable organization and offering expenses (other than selling commissions, dealer manager fees and stockholder servicing fees). The Advisor, the Dealer Manager and their affiliates were responsible for all organization and other offering expenses (which excludes selling commissions, dealer manager fees and stockholder servicing fees) paid related to the Primary Offering to the extent they exceeded 1% of gross proceeds raised in the Primary Offering. The Company did not reimburse the Dealer Manager for wholesaling compensation expenses.

During the Initial Private Offering, the Company was obligated to reimburse the Advisor and its affiliates for all organization and offering costs (excluding wholesaling compensation expenses) paid by them on behalf of the Company.

The Advisor has agreed to pay directly all offering expenses related to the Second Private Offering without reimbursement by the Company.

Through December 31, 2017, the Advisor and its affiliates had incurred organization and other offering costs (which exclude selling commissions, dealer manager fees and stockholder servicing fees) on the Company’s behalf in connection with the Public Offering of approximately $4.3 million. As of December 31, 2017, the Company had recorded $39,358 of organization and other offering expenses related to the Public Offering, which amounts represent the Company's maximum liability for organization and other offering costs as of December 31, 2017 based on the limitations described above. As of December 31, 2017, the Company had recorded $1.5 million of organization and other offering costs related to the Initial Private Offering. Organization costs were expensed as incurred and offering costs are deferred and charged to stockholders’ equity as such amounts were reimbursed to the Advisor, the Dealer Manager or their affiliates from the gross proceeds of the applicable offering.

As of December 31, 2017, the Advisor had incurred $1.5 million in offering expenses related to the Second Private Offering.

XML

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2017 and 2016 (in thousands, except per share amounts):

	2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues	$	4,033		$	4,187		$	4,028		$	4,713
Class A Common Stock:
Net loss	(190		)	(406		)	(760		)	(775		)
Net loss per common share, basic and diluted	(0.02		)	(0.04		)	(0.08		)	(0.08		)
Distributions declared per common share (1)	0.123			0.125			0.124			0.121
Class T Common Stock:
Net loss	(7		)	(18		)	(23		)	(20		)
Net loss per common share, basic and diluted	(0.05		)	(0.07		)	(0.08		)	(0.08		)
Distributions declared per common share (1)	0.099			0.100			0.124			0.121

	2016
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues	$	596		$	641		$	2,441		$	3,177
Class A Common Stock:
Net loss	(255		)	(1,906		)	(303		)	(1,616		)
Net loss per common share, basic and diluted	(0.07		)	(0.23		)	(0.03		)	(0.18		)
Distributions declared per common share (1)	0.123			0.125			0.126			0.126
Class T Common Stock:
Net loss	—			—			(1		)	(8		)
Net loss per common share, basic and diluted	(0.19		)	(0.36		)	(0.07		)	(0.20		)
Distributions declared per common share	—			—			0.074			0.101

__________________

⁽¹⁾ Distributions declared per common share assumes each share was issued and outstanding each day for the periods presented. Distributions for the periods from January 1, 2016 through February 28, 2016 and March 1, 2017 through August 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00131849 per day.

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Economic Dependency

The Company depends on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide such services, the Company will be required to obtain such services from other sources.

Legal Matters

From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s property, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities.

XML

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2017

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Cash Distributions Paid

On January 2, 2018, the Company paid distributions of $0.4 million, which related to cash distributions on the Company’s common stock, declared for daily record dates for each day in the period from December 1, 2017 through December 31, 2017. On February 1, 2018, the Company paid cash distributions of $0.4 million, which related to cash distributions on the Company’s common stock, declared for daily record dates for each day in the period from January 1, 2018 through January 31, 2018. On March 1, 2018, the Company paid distributions of $0.3 million, which related to cash distributions on the Company’s common stock, declared for daily record dates for each day in the period from February 1, 2018 through February 28, 2018.

Distributions Authorized

On January 24, 2018, the Company’s board of directors authorized cash distributions on the outstanding shares of all classes of the Company’s common stock based on daily record dates for the period from March 1, 2018 through March 31, 2018, which the Company expects to pay in April 2018. On March 9, 2018, the Company’s board of directors authorized cash distributions on the outstanding shares of all classes of the Company’s common stock based on daily record dates for the period from April 1, 2018 through April 30, 2018 and May 1, 2018 through May 31, 2018, which the Company expects to pay in May 2018 and June 2018, respectively. Investors may choose to receive cash distributions or purchase additional shares through the Company’s distribution reinvestment plan. Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00132452 per share per day.

Refinancing of the Commonwealth Building Mortgage Loan

On January 18, 2018, the Company, through an indirect wholly owned subsidiary (the “Owner”), closed the refinancing of the Commonwealth Building Mortgage Loan with an unaffiliated lender (the “Refinancing”). The Company repaid $41.0 million of principal in satisfaction of the Commonwealth Building Mortgage Loan. The Refinancing was comprised of a maximum loan amount of up to $51.4 million. At closing, $45.0 million of the loan was funded and the remaining $6.4 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The loan under the Refinancing matures on February 1, 2023, with twoone-year extension options, subject to certain terms and conditions contained in the loan documents. Monthly payments are interest-only with the remaining principal balance, all accrued and unpaid interest and all other sums due under the loan documents payable at maturity. The initial interest rate is 3.36% with the interest rate to be reset as set forth in the loan documents to the greater of 2.05% or a floating rate of 180 basis points over one-month LIBOR. If the LIBOR rate is equal to or greater than 2.90% for five consecutive business days, the Company has 30 days to enter into an interest rate cap agreement with a LIBOR strike rate of 3.90% or less. The Company has the right to prepay all or a portion of the loan under the Refinancing commencing on February 1, 2019, subject to certain fees and conditions contained in the loan documents.

KBS GI REIT Properties, LLC (“KBS GI REIT Properties”), the Company’s wholly owned subsidiary, in connection with the Refinancing, is providing a guaranty of the payment of certain potential liabilities, costs, losses, damages, fees and expenses incurred by the lender relating to the loan under the Refinancing as a result of certain intentional actions or omissions of the Owner in violation of the loan documents, or certain other occurrences in relation to the Commonwealth Building and/or the Owner, including the recovery of certain funds under the loan documents, as further described in the guaranty. KBS GI REIT Properties is also providing a guaranty of the principal balance and any interest or other sums outstanding under the loan of the Refinancing in the event of: certain bankruptcy, insolvency or related proceedings involving the Owner as described in the guaranty; and any transfer of the Owner’s interest in the Commonwealth Building in violation of the loan documents.

XML

SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION

12 Months Ended

Dec. 31, 2017

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION

					Initial Cost to Company									Gross Amount at which Carried at Close of Period
Description	Location	Ownership Percent	Encumbrances		Land		Building and Improvements(1)		Total		Cost Capitalized Subsequent to Acquisition (2)			Land		Building and Improvements (1)		Total (3)		Accumulated Depreciation and Amortization			Original Date of Construction	Date Acquired
Von Karman Tech Center	Irvine, CA	100%	(4)		$	10,600	$	10,799	$	21,399	$	(507	)	$	10,600	$	10,292	$	20,892	$	(1,758	)	1980	08/12/2015
Commonwealth Building	Portland, OR	100%	$	41,000	7,300		66,544		73,844		2,569			7,300		69,113		76,413		(4,876		)	1948	06/30/2016
The Offices at Greenhouse	Houston, TX	100%	(4)		5,009		41,595		46,604		637			5,009		42,232		47,241		(2,696		)	2014	11/14/2016
Institute Place	Chicago, IL	100%	(4)		8,400		37,654		46,054		156			8,400		37,810		46,210		(297		)	1908	11/09/2017
		TOTAL			$	31,309	$	156,592	$	187,901	$	2,855		$	31,309	$	159,447	$	190,756	$	(9,627	)

____________________

⁽¹⁾ Building and improvements includes tenant origination and absorption costs.

⁽²⁾ Costs capitalized subsequent to acquisition is net of write-offs of fully depreciated/amortized assets.

⁽³⁾ The aggregate cost of real estate for federal income tax purposes was $187.6 million (unaudited) as of December 31, 2017.

⁽⁴⁾ As of December 31, 2017, these properties served as the security for the Term Loan, which had an outstanding principal balance of $72.8 million as of December 31, 2017.

	2017			2016			2015
Real Estate:
Balance at the beginning of the year	$	141,872		$	21,421		$	—
Acquisitions	46,054			120,448			21,399
Improvements	4,096			185			22
Write off of fully depreciated and fully amortized assets	(1,266		)	(48		)	—
Loss due to property damage	—			(134		)	—
Balance at the end of the year	$	190,756		$	141,872		$	21,421
Accumulated depreciation and amortization:
Balance at the beginning of the year	$	3,292		$	341		$	—
Depreciation and amortization expense	7,601			2,999			341
Write off of fully depreciated and fully amortized assets	(1,266		)	(48		)	—
Balance at the end of the year	$	9,627		$	3,292		$	341

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

The consolidated financial statements include the accounts of the Company, REIT Holdings, and the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation.

Principles of Consolidation

The accompanying consolidated financial statements and notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC.

Use of Estimates

The preparation of the consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Revenue Recognition, Real Estate

The Company recognizes 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 reasonably assured and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is 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 the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of 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 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.

The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.

The Company makes estimates of the collectibility of its tenant receivables related to base rents, including deferred rent receivable, expense reimbursements and other revenue or income. Management specifically analyzes accounts receivable, deferred rent receivable, historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In addition, with respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectibility of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt reserve for the tenant’s receivable balance and generally will not recognize subsequent rental revenue until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Revenue Recognition, Cash and Cash Equivalents

The Company recognizes interest income on its cash and cash equivalents as it is earned and classifies such amounts as other interest income.

Real Estate, Depreciation and Amortization

Real estate costs related to the acquisition and improvement of properties are capitalized and amortized 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. The Company considers 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.

Real Estate, Real Estate Acquisition Valuation

As a result of the Company’s early 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). The Company records 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.

The Company assesses 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.

The Company records 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. The Company amortizes 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.

The Company estimates 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, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease up periods.

The Company amortizes 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 the Company 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.

Real Estate, Impairments of Real Estate and Related Intangible Assets and Liabilities

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of its 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, the Company assesses the recoverability by estimating whether the Company 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, the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Cash and cash equivalents are stated at cost, which approximates fair value. The Company’s cash and cash equivalents balance exceeds federally insurable limits as of December 31, 2017. The Company intends to mitigate this risk by depositing funds with a major financial institution; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. There were no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2017.

Rents and Other Receivables

The Company periodically evaluates the collectibility of amounts due from tenants and maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements.  In addition, the Company maintains an allowance for deferred rent receivable that arises from the straight-lining of rents.  The Company exercises judgment in establishing these allowances and considers payment history and current credit status of its tenants in developing these estimates. 

Derivative Instruments

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates on its variable rate notes payable. The Company records 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 stockholders’ 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 Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivative instruments that are part of a hedging relationship to specific forecasted transactions or recognized obligations on the consolidated balance sheets. The Company also assesses and documents, both at the hedging instrument’s inception and on a quarterly basis thereafter, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the respective hedged items. When the Company determines that a derivative instrument ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, the Company discontinues hedge accounting prospectively and reclassifies amounts recorded to accumulated other comprehensive income (loss) to earnings.

Deferred Financing Costs

Deferred financing costs represent commitment fees, loan fees, legal fees and other third-party costs associated with obtaining financing and are presented on the balance sheet as a direct deduction from the carrying value of the associated debt liability. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs incurred before an associated debt liability is recognized are included in prepaid and other assets on the balance sheet. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close.

Fair Value Measurements

Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

When available, the Company utilizes quoted market prices from independent third-party sources to determine fair value and classifies such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and establishes a fair value by assigning weights to the various valuation sources. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach.

Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.

The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market).

The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities.

Redeemable Common Stock

In connection with the Private Offering, the Company adopted a share redemption program that enabled stockholders to sell their shares to the Company in limited circumstances. On March 16, 2016, the Company adopted an Amended and Restated Share Redemption Program in anticipation of the commencement of the Public Offering and related designation of Class T shares of common stock.

There are several limitations on the Company’s ability to redeem shares under the share redemption program:

• Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), the Company may not redeem shares unless the stockholder has held the shares for one year.

• During any calendar year, the Company may redeem only the number of shares that it could purchase with the amount of net proceeds from the sale of shares under its distribution reinvestment plan during the prior calendar year. However, the Company may increase or decrease the funding available for the redemption of shares pursuant to the program upon ten business days’ notice to its stockholders.

• During any calendar year, the Company may redeem no more than 5% of the weighted average number of shares outstanding during the prior calendar year.

• The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

The Company initially redeemed shares submitted as an ordinary redemption at 95.0% of the price paid to acquire the shares from the Company. Notwithstanding the foregoing, stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the Company’s prospectus, as supplemented, for the Public Offering. For each class of shares designated, this amount equaled $9.40 per share. In August 2017, the Company established an estimated net asset value (“NAV”) per share of its common stock, and began redeeming all shares submitted in connection with an ordinary redemption at 95.0% of the Company’s most recent estimated NAV per share as of the applicable redemption date.

The Company treats redemptions sought upon a stockholder’s death, qualifying disability or determination of incompetence differently from other redemptions:

• There is no one-year holding requirement;

• Before the Company established an estimated NAV per share in August 2017, the redemption price was the amount paid to acquire the shares from the Company. Notwithstanding the foregoing, stock dividends were redeemed at the “net investment amount” per share, which was based on the “amount available for investment/net investment amount” percentage shown in the estimated use of proceeds table in the prospectus, as supplemented, for the Public Offering. For each class of shares, this amount equaled $9.40 per share; and

• Effective starting with the August 2017 redemption cycle, the redemption price will be the estimated NAV per share as of the redemption date.

For purposes of determining whether a redeeming stockholder has held the share submitted for redemption for at least one year, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to the distribution reinvestment plan or received as a stock dividend will be deemed to have been acquired on the same date as the initial share to which the distribution reinvestment plan shares or stock dividend shares relate.

On August 9, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $8.75 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of June 30, 2017. The change in the redemption price was effective for August 2017 through November 2017 redemption dates.

On December 8, 2017, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $8.79 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2017, with the exception of a reduction to the Company’s net asset value for acquisition and financing costs related to a real estate acquisition subsequent to September 30, 2017. The change in the redemption price became effective for the December 2017 redemption date, which was December 29, 2017, and will be effective until the estimated value per share is updated.

The board may amend, suspend or terminate the share redemption program upon 30 days’ notice to stockholders, provided that the Company may increase or decrease the funding available for the redemption of shares pursuant to the share redemption program upon 10 business days’ notice. The Company may provide this notice by (a) including such information in a Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC or (b) a separate mailing to its stockholders.

The Company records amounts that are redeemable under the share redemption program as redeemable common stock liability in its consolidated balance sheets because the shares will be mandatorily redeemable at the option of the holder and therefore their redemption is outside the control of the Company. The maximum amount redeemable under the Company’s share redemption program is limited to the number of shares the Company could redeem with the amount of the net proceeds from the sale of shares under the distribution reinvestment plan during the prior calendar year. However, because the amounts that can be redeemed are determinable and only contingent on an event that is likely to occur (e.g., the passage of time) the Company presents the net proceeds from the current year and prior year distribution reinvestment plan, net of current year redemptions, as redeemable common stock in its consolidated balance sheets.

The Company will classify as liabilities financial instruments that represent a mandatory obligation of the Company to redeem shares. The Company’s redeemable common shares are contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to repurchase shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values.

Related Party Transactions

Pursuant to the Advisory Agreement, the Private Offering Dealer Manager Agreement and the Public Offering Dealer Manager Agreement, the Company is or was obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Private Offering and the Public Offering, the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company is or was also obligated to reimburse the Advisor and Dealer Manager for organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. See Note 9, “Related Party Transactions.”

In addition, in connection with certain property acquisitions, the Company, through indirect wholly owned subsidiaries, has entered into separate property management agreements (each, a “Property Management Agreement”) with KBS Management Group, LLC (the “Co-Manager”), an affiliate of the Advisor.

The Company records all related party fees as incurred, subject to any limitations described in the respective agreements. The Company had not incurred any disposition fees, subordinated participation in net cash flows or subordinated incentive fees payable to the Advisor through December 31, 2017.

Related Party Transactions, Selling Commissions and Dealer Manager Fees

In the Initial Private Offering, the Company paid the Dealer Manager up to 6.5% of the price per share of Class A common stock sold in the primary portion of the Private Offering as a selling commission. The Dealer Manager reallowed 100% of selling commissions earned to participating broker-dealers. No sales commissions were paid on shares sold through the distribution reinvestment plan.  In the Private Offering, the Company paid the Dealer Manager up to 2.0% of the price per share of Class A common stock sold in the primary portion of the Private Offering as a dealer manager fee. No dealer manager fee was payable on shares sold under the distribution reinvestment plan. From its dealer manager fee, the Dealer Manager could reallow to any participating broker-dealer up to 1.0% of the price per share of Class A common stock sold in the Private Offering attributable to that participating broker-dealer as a marketing fee and in special cases the dealer manager could increase the reallowance.

In the Public Offering, the Company paid selling commissions to the Dealer Manager in amounts up to 6.5% of the price per share of Class A common stock sold in the primary portion of the Public Offering and up to 3.0% of the price per share of Class T common stock sold in the primary portion of the Public Offering. Additionally, in the Public Offering, the Company paid dealer manager fees to the Dealer Manager in an amount up to 2.0% of the price per share of Class A and Class T common stock sold in the primary portion of the Public Offering. The Dealer Manager reallowed all selling commissions to participating broker dealers and may generally reallow (from its dealer manager fee) to any participating broker dealer up to 1.0% of the gross proceeds from the primary portion of the Public Offering attributable to that participating broker dealer as a marketing fee and in select cases up to 1.5% of the gross proceeds from the primary portion of the Public Offering was reallowed. No selling commissions or dealer manager fees were payable on shares of common stock sold under the distribution reinvestment plan.

The Advisor has agreed to pay selling commissions to NCPS of 0.5% of the price per share of Class A common stock sold in the Second Private Offering on behalf of the Company without reimbursement by the Company.

Related Party Transactions, Acquisition Fees

Through August 8, 2017, the Company paid the Advisor 2.0% of the cost of investments acquired by the Company, including acquisition expenses and any debt attributable to such investments, plus significant capital expenditures budgeted as of the date of acquisition related to the development, construction or improvement of a real estate property. Acquisition fees calculated based on capital expenditures budgeted as of the date of acquisition were paid at the time funds were disbursed pursuant to a final approved budget upon receipt of an invoice by the Company. On August 9, 2017, the Company entered into an amended and restated advisory agreement with the Advisor, which, among other changes, eliminates the payment of acquisition fees to the Advisor.

Related Party Transactions, Acquisition Expenses

The Company reimburses the Advisor for customary acquisition expenses (including expenses relating to potential investments that the Company does not close), such as legal fees and expenses (including fees of independent contractor in-house counsel that are not employees of the Advisor), costs of due diligence (including, as necessary, updated appraisals, surveys and environmental site assessments), travel and communications expenses, accounting fees and expenses and other closing costs and miscellaneous expenses relating to the acquisition of real estate properties.

Related Party Transactions, Stockholder Servicing Fee

During the Public Offering, the Company paid the Dealer Manager an annual stockholder servicing fee of 1.0% of the purchase price per share (ignoring any discounts that may be available to certain categories of purchasers) of Class T common stock sold in the Primary Offering solely to the extent there was a broker dealer of record with respect to such Class T share that had entered into a currently effective selected dealer agreement or servicing agreement that provided for the payment to such broker dealer of the stockholder servicing fee with respect to such Class T share, and such broker dealer of record was in compliance with the applicable terms of such selected dealer agreement or servicing agreement related to such payment. To the extent payable, the stockholder servicing fee accrued daily and was paid monthly in arrears, and the Dealer Manager reallowed 100% of the stockholder servicing fee to such broker dealer of record for services provided to Class T stockholders after the initial sale of the Class T share. No stockholder servicing fee was paid with respect to Class T shares purchased through the distribution reinvestment plan or issued pursuant to a stock dividend.

The Company recorded the stockholder servicing fee as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum stockholder servicing fee payable in relation to the Class T share on the date the share was issued. For each share of Class T common stock in the Primary Offering, the maximum stockholder servicing fee equaled 4% of the purchase price per share (ignoring any discounts in purchase price that may be available to certain categories of purchasers).The Public Offering was terminated effective June 30, 2017. Pursuant to the terms of the Class T shares as set forth in the Articles Supplementary and Multiple Class Plan of the Company, the Company ceased accruing for stockholder servicing fees after June 30, 2017 and reversed the amounts previously accrued.

Related Party Transactions, Asset Management Fee

Through August 8, 2017, the Company paid the Advisor a monthly fee equal to one-twelfth of 1.6% of the cost of its investments, less any debt secured by or attributable to the investments. The cost of the real property investments was calculated as the amount paid or allocated to acquire the real property, plus the budgeted capital improvement costs for the development, construction or improvements to the property once such funds were disbursed pursuant to a final approved budget and fees and expenses related to the acquisition, but excluding acquisition fees paid or payable to the Advisor.

Beginning August 9, 2017, pursuant to an amended and restated advisory agreement with the Advisor, the Company pays the Advisor a monthly fee equal to one‑twelfth of 1.0% of the cost of the real property investments, including any debt financing on the property. Asset management fee will be calculated as the amount paid or allocated to acquire the real property, plus budgeted capital improvement costs for the development, construction or improvements to the property once such funds are disbursed pursuant to a final approved budget and typical third‑party expenses related to the acquisition.

Related Party Transactions, Property Management Fee

The Company pays the Co-Manager a monthly fee equal to a percentage of the rent (determined on a property by property basis, consistent with current market rates), payable and actually collected for the month, from certain property acquisitions for which the Company has entered a Property Management Agreement with the Co-Manager. See Note 9, “Related-Party Transactions — Real Estate Property Co-Management Agreements.”

Related Party Transactions, Disposition Fee

For substantial assistance in connection with the sale of the Company’s assets, which includes the sale of a single asset or the sale of all or a portion of the Company’s assets through a portfolio sale, merger or business combination transaction, the Company will pay the Advisor or its affiliates a percentage of the contract sales price of the assets sold (including residential or commercial mortgage-backed securities issued by a subsidiary of the Company as part of a securitization transaction). The disposition fee will equal 1.5% of the contract sales price. The disposition fee is determined on a per transaction basis and is not cumulative. The Company will not pay a disposition fee upon the maturity, prepayment or workout of a loan or other debt-related investment, provided that (i) if the Company negotiates a discounted payoff with the borrower, the Company will pay a disposition fee and (ii) if the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such property.

Related Party Transactions, Reimbursement of Operating Expenses

Through September 28, 2017, the Company reimbursed the expenses incurred by the Advisor or its affiliates in connection with their provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities and cybersecurity costs. The Company also reimbursed the Advisor for its allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company.

The Company reimbursed the Dealer Manager for certain fees and expenses it incurred for administering the Company’s participation in the DTCC Alternative Investment Product Platform, or the AIP Platform, with respect to certain accounts of the Company’s investors serviced through the AIP Platform.

Effective September 29, 2017, the Company will reimburse the Advisor for the following expenses it incurs in connection with providing services to the Company under the Advisory Agreement: the Company’s allocable portion of the costs of internal audit department personnel and promotional costs and expenses related to the leasing of properties.

The Company has entered, together with KBS Real Estate Investment Trust I, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc., KBS Strategic Opportunity REIT, Inc., KBS Legacy Partners Apartment REIT, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS affiliated entities, an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2017, the Company renewed its participation in the program, and the program is effective through June 30, 2018. As KBS REIT I is implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To continue to qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s 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, the Company generally will not be subject to federal income tax on income that it distributes as dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its 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 the Company relief under certain statutory provisions. Such an event could materially and adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes that it is organized and operates in such a manner as to qualify for treatment as a REIT.

The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for all open tax years through December 31, 2017. As of December 31, 2017, returns for the calendar years 2015 and 2016 remain subject to examination by major tax jurisdictions.

Segments

The Company had invested in four office buildings as of December 31, 2017. Substantially all of the Company’s revenue and net loss is from real estate, and therefore, the Company currently operates in one reportable segment.

Per Share Data

Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding for the years ended December 31, 2017 and 2016 or the period from January 27, 2015 through December 31, 2015. For the purpose of determining the weighted average number of shares outstanding, stock dividends issued during the period presented are adjusted retroactively and treated as if they were issued and outstanding for all periods presented. 

During the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015, aggregate cash distributions declared per share of Class A common stock were $0.49373176, $0.49999890 and $0.16712301 per share of Class A common stock, respectively, assuming the share was issued and outstanding each date that was a record date for distributions during the period. During the years ended December 31, 2017 and 2016, aggregate cash distributions declared per share of Class T common stock were $0.44464258 and $0.17462989, assuming the share was issued and outstanding each date that was a record date for distributions during the period. Distributions for the period from January 27, 2015 through August 31, 2017 were calculated at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were calculated at a rate of $0.00131849 per share per day. Each day during the year ended December 31, 2017 and the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2016 was a record date for distributions.

In accordance with FASB ASC Topic 260-10-45, Earnings Per Share, the Company uses the two-class method to calculate earnings per share. Basic earnings per share is calculated based on dividends declared (“distributed earnings”) and the rights of common shares and participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends declared during the period. The undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. The Company does not have any participating securities outstanding other than Class A Common Stock and Class T Common Stock during the periods presented.

	Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015
	2017			2016
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Less: Class A Common Stock cash distributions declared	4,472			3,649			195
Less: Class T Common Stock cash distributions declared	111			5			—
Undistributed net loss	$	(6,782	)	$	(7,743	)	$	(971	)
Class A Common Stock:
Undistributed net loss	$	(6,603	)	$	(7,729	)	$	(968	)
Class A Common Stock cash distributions declared	4,472			3,649			195
Net loss	$	(2,131	)	$	(4,080	)	$	(773	)
Net loss per common share, basic and diluted	$	(0.23	)	$	(0.55	)	$	(1.29	)
Weighted-average number of common shares outstanding, basic and diluted	9,080,826			7,393,983			598,123
Class T Common Stock:
Undistributed net loss	$	(179	)	$	(14	)	$	(3	)
Class T Common Stock cash distributions declared	111			5			—
Net loss	$	(68	)	$	(9	)	$	(3	)
Net loss per common share, basic and diluted	$	(0.28	)	$	(0.68	)	$	(1.62	)
Weighted-average number of common shares outstanding, basic and diluted	246,737			13,718			1,774

Square Footage, Occupancy and Other Measures

 Square footage, occupancy, number of tenants and other measures, including annualized base rent and annualized base rent per square foot, or amounts derived from such measures, used to describe real estate investments included in these Notes to Consolidated Financial Statements are presented on an unaudited basis.

Recently Issued Accounting Standards Updates

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.  In addition, the standard provided guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers upon transfer of control. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification.  ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 was to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted.  In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU No. 2015-14”), which deferred the effective date of ASU No. 2014-09 by one year. Early adoption is permitted but not before the original effective date. The Company elected to adopt the standard using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption, January 1, 2018. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that are not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that are not completed as of January 1, 2018.

The primary source of revenue for the Company is generated through leasing arrangements, which are excluded from this standard. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, revenue that may be impacted by the new standard include other operating income and tenant reimbursements for substantial services earned at its properties.

For the year ended December 31, 2017, other operating income including parking revenues and tenant reimbursements for substantial services and other ancillary income in scope of ASC 606 were approximately 1% of consolidated revenue. Under current accounting standards, the Company typically recognizes other operating income when the amounts are fixed or determinable, collectability is reasonably assured, and services have been rendered. Under the new revenue recognition ASU, the recognition of such revenue will occur when the services are provided and the performance obligations are satisfied. These services are normally provided at a point in time or over a specified period of time with respect to monthly parking revenue; therefore, revenue recognition under the new revenue recognition ASU is expected to be substantially similar to the recognition pattern under existing accounting standards.

Based on the Company’s evaluation of its contracts in scope, the adoption of the new revenue recognition standard is not expected to have a material impact to the Company’s financial statements on January 1, 2018.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU No. 2016-01”).  The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments.  ASU No. 2016-01 primarily affects accounting for equity investments and financial liabilities where the fair value option has been elected.  ASU No. 2016-01 also requires entities to present financial assets and financial liabilities separately, grouped by measurement category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements.  ASU No. 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early application of certain provisions of the standard is permitted for financial statements that have not been previously issued.  The Company does not expect the adoption of ASU No. 2016-01 to have a significant impact on its financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The standard requires lessors to identify lease and non-lease components under their leasing arrangements and allocate the total consideration in the lease agreement to these lease and non-lease components based on their relative standalone selling prices. Non-lease components will be subject to the new revenue recognition standard upon the Company’s adoption of the new leasing standard on January 1, 2019. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. In January 2018, the FASB issued a proposed amendment to the leases ASU, which would add a transition option to the new leases standard that would allow entities to apply the transition provisions of the new standard at its adoption date instead of the earliest comparative periods presented in its financial statements. The FASB also proposed a practical expedient that would permit lessors to not separate lease and non-lease components if certain conditions are met. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements and if adopted by the FASB, applying the transition option and electing the practical expedient of the proposed amendment.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”).  ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income.  The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.  ASU No. 2016-13 also amends the impairment model for available-for-sale securities.  An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.  ASU No. 2016-13 also requires new disclosures.  For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes.  For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available for sale securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.  ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements, but does not expect the adoption of ASU No. 2016-13 to have a material impact on its financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”).  ASU No. 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows.  The amendments in ASU No. 2016-15 provide guidance on eight specific cash flow issues, including the following that are or may be relevant to the Company: (a) Cash payments for debt prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; (b) Cash payments relating to contingent consideration made soon after an acquisition’s consummation date (i.e., approximately three months or less) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (c) Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement);  and (d) Relating to distributions received from equity method investments, ASU No. 2016-15 provides an accounting policy election for classifying distributions received from equity method investments. Such amounts can be classified using a (1) cumulative earnings approach, or (2) nature of distribution approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity method earnings since inception.  Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Alternatively, an investor can choose to classify the distributions based on the nature of activities of the investee that generated the distribution. If the necessary information is subsequently not available for an investee to determine the nature of the activities, the entity should use the cumulative earnings approach for that investee and report a change in accounting principle on a retrospective basis; (e) In the absence of specific guidance, an entity should classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to be the predominant source or use of cash flow.  ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  Early adoption is permitted, including adoption in an interim period.  The Company is still evaluating the impact of adopting ASU No. 2016-15 on its financial statements, but does not expect the adoption of ASU No. 2016-15 to have a material impact on its financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU No. 2016-18”). ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents.  Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows.  ASU No. 2016-18 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  The Company elected to early adopt ASU No. 2016-18 for the reporting period ended December 31, 2016 and it was applied retrospectively. As a result of the adoption of ASU No. 2016-18, there was no impact to the Company’s consolidated statements of cash flows as of December 31, 2017 and 2016, and for the period from January 27, 2015 to December 31, 2015 since the Company did not report any restricted cash for those periods.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU No. 2017-01”) to add guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.  ASU No. 2017-01 provides a screen to determine when an integrated set of assets and activities (collectively referred to as a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business.  If the screen is not met, ASU No. 2017-01 (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace missing elements.  ASU No. 2017-01 provides a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs.  Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the FASB has developed more stringent criteria for sets without outputs.  ASU No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted.  The amendments can be applied to transactions occurring before the guidance was issued (January 5, 2017) as long as the applicable financial statements have not been issued.  The Company elected to early adopt ASU No. 2017-01 for the reporting period beginning January 1, 2017.  As a result of the adoption of ASU No. 2017-01, the Company’s acquisitions of investment properties beginning January 1, 2017 could qualify as asset acquisitions (as opposed to business combinations).  Transaction costs associated with asset acquisitions are capitalized, while transaction costs associated with business combinations will continue to be expensed as incurred.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Schedule of Estimated Useful Life

The Company anticipates the estimated useful lives of its assets by class to be generally as follows:

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

Schedule of Dividends Declared

The Company has declared and issued stock dividends on shares of the Company’s common stock during the years ended December 31, 2017 and 2016 and the period from January 27, 2015 through December 31, 2015 as follows:

	Amount Declared per Share Outstanding (1)	Total Shares Issued
For the Period from January 27, 2015 through December 31, 2015	0.00252056 shares	2,660
Year Ended December 31, 2016	0.01000004 shares	69,869
Year Ended December 31, 2017	0.00666664 shares	69,286

_____________________

⁽¹⁾ Stock dividends have been declared on a monthly basis and the amount declared per share outstanding assumes the share was issued and outstanding each date that was a record date for stock dividends during the periods presented. Stock dividends are issued in the same class of shares as the shares for which such stockholder received the stock dividend. The Company ceased issuing stock dividends to all stockholders on September 5, 2017. The Company's board of directors does not expect to authorize any additional stock dividends.

Schedule of Earnings Per Share, Including Two Class Method

	Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015
	2017			2016
Net loss	$	(2,199	)	$	(4,089	)	$	(776	)
Less: Class A Common Stock cash distributions declared	4,472			3,649			195
Less: Class T Common Stock cash distributions declared	111			5			—
Undistributed net loss	$	(6,782	)	$	(7,743	)	$	(971	)
Class A Common Stock:
Undistributed net loss	$	(6,603	)	$	(7,729	)	$	(968	)
Class A Common Stock cash distributions declared	4,472			3,649			195
Net loss	$	(2,131	)	$	(4,080	)	$	(773	)
Net loss per common share, basic and diluted	$	(0.23	)	$	(0.55	)	$	(1.29	)
Weighted-average number of common shares outstanding, basic and diluted	9,080,826			7,393,983			598,123
Class T Common Stock:
Undistributed net loss	$	(179	)	$	(14	)	$	(3	)
Class T Common Stock cash distributions declared	111			5			—
Net loss	$	(68	)	$	(9	)	$	(3	)
Net loss per common share, basic and diluted	$	(0.28	)	$	(0.68	)	$	(1.62	)
Weighted-average number of common shares outstanding, basic and diluted	246,737			13,718			1,774

XML

RECENT ACQUISITION OF REAL ESTATE (Tables)

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Schedule of Business Acquisitions, Properties Acquired

During the year ended December 31, 2017, the Company acquired the following property (in thousands):

								Intangibles
Property Name	City	State	Acquisition Date	Land		Building and Improvements		Tenant Origination  and Absorption Costs		Above-Market Lease Assets		Below-Market Lease Liabilities			Total Purchase Price
Institute Property	Chicago	IL	11/9/2017	$	8,400	$	33,536	$	4,118	$	—	$	(2,395	)	$	43,659

Schedule of Intangible Assets and Liabilities Acquired, Weighted-Average Amortization Periods

The intangible assets and liabilities acquired in connection with this acquisition has weighted-average amortization periods as of the date of acquisition as follows (in years):

	Tenant Origination and Absorption Costs	Above-Market Lease Assets	Below-Market Lease Liabilities
Institute Property	5.7	—	5.9

XML

REAL ESTATE (Tables)

12 Months Ended

Dec. 31, 2017

Real Estate [Abstract]

Schedule of Real Estate Investments

The following table provides summary information regarding the properties owned by the Company as of December 31, 2017 (in thousands):

Property	Date Acquired	City	State	Property Type	Total Real Estate at Cost		Accumulated Depreciation and Amortization			Total Real Estate, Net
Von Karman Tech Center	08/12/2015	Irvine	CA	Office	$	20,892	$	(1,758	)	$	19,134
Commonwealth Building	06/30/2016	Portland	OR	Office	76,413		(4,876		)	71,537
The Offices at Greenhouse	11/14/2016	Houston	TX	Office	47,241		(2,696		)	44,545
Institute Property	11/09/2017	Chicago	IL	Office	46,210		(297		)	45,913
					$	190,756	$	(9,627	)	$	181,129

Schedules of Concentration of Risk, by Risk Factor

As of December 31, 2017, the following properties represented more than 10% of the Company’s total assets:

Property	Location	Rentable Square Feet	Total Real Estate, Net (in thousands)		Percentage of Total Assets		Annualized Base Rent (in thousands) (1)		Average Annualized Base Rent per sq. ft.		Occupancy
Von Karman Tech Center	Irvine, CA	101,161	$	19,134	10.2	%	$	2,277	$	22.51	100.0	%
Commonwealth Building	Portland, OR	224,122	71,537		38.2	%	5,393		25.40		94.7	%
The Offices at Greenhouse	Houston, TX	203,284	44,545		23.8	%	4,201		20.66		100.0	%
Institute Property	Chicago, IL	155,385	45,913		24.5	%	3,718		25.28		94.7	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

The Company’s highest tenant industry concentration (greater than 10% of annualized base rent) was as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Professional, scientific and legal	14	$	5,846	37.5	%
Information	9	2,168		13.9	%

_____________________

⁽¹⁾ Annualized base rent represents annualized contractual base rental income as of December 31, 2017, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

Schedule of Future Minimum Rental Income for Company's Properties

As of December 31, 2017, the future minimum rental income from the Company’s properties under its non-cancelable operating leases was as follows (in thousands):

2018	$	14,410
2019	13,880
2020	13,019
2021	11,323
2022	9,672
Thereafter	12,882
	$	75,186

XML

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2017

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities

As of December 31, 2017 and 2016, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):

	Tenant Origination and Absorption Costs						Above-Market Lease Assets						Below-Market Lease Liabilities
	2017			2016			2017			2016			2017			2016
Cost	$	17,047		$	13,528		$	213		$	214		$	(7,838	)	$	(5,727	)
Accumulated Amortization	(3,480		)	(1,253		)	(33		)	(4		)	1,928			698
Net Amount	$	13,567		$	12,275		$	180		$	210		$	(5,910	)	$	(5,029	)

Amortization of Tenant Origination and Absorption Costs, Above-Market Leases and Below-Market Lease Liabilities

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the years ended December 31, 2017 and 2016 and for the period from January 27, 2015 through December 31, 2015 were as follows (in thousands):

	Tenant Origination and Absorption Costs									Above-Market Lease Assets								Below-Market Lease Liabilities
	For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015			For the Years Ended December 31,						For the Period from January 27, 2015 to December 31, 2015		For the Years Ended December 31,				For the Period from January 27, 2015 to December 31, 2015
	2017			2016						2017			2016					2017		2016
Amortization	$	(2,826	)	$	(1,135	)	$	(144	)	$	(30	)	$	(4	)	$	—	$	1,514	$	712	$	9

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The remaining unamortized balance for these outstanding intangible assets and liabilities as of December 31, 2017 is estimated to be amortized for the years ending December 31 as follows (in thousands):

	Tenant Origination and Absorption Costs			Above-Market Lease Assets			Below-Market Lease Liabilities
2018	$	(3,175	)	$	(30	)	$	1,720
2019	(2,707		)	(30		)	1,369
2020	(2,342		)	(28		)	1,123
2021	(1,885		)	(21		)	687
2022	(1,543		)	(21		)	499
Thereafter	(1,915		)	(50		)	512
	$	(13,567	)	$	(180	)	$	5,910
Weighted-Average Remaining Amortization Period	5.5			6.9			4.6

XML

NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

As of December 31, 2017 and 2016, the Company’s notes payable consisted of the following (dollars in thousands):

	Book Value as of December 31, 2017			Book Value as of December 31, 2016			Contractual Interest Rate as of December 31, 2017(1)	Effective  Interest Rate as of December 31, 2017 (1)	Payment Type	Maturity Date (2)
Von Karman Tech Center Mortgage Loan (3)	$	—		$	11,260		(3)	(3)	(3)	(3)
Commonwealth Building Mortgage Loan (4)	41,000			41,000			One-month LIBOR + 2.15%	3.52%	Interest Only	07/01/2021
Term Loan (5)	72,800			30,550			One-month LIBOR + 2.00%	3.37%	Interest Only	11/09/2020
Unsecured Revolving Credit Facility (6)	—			—			(6)	(6)	(6)	(6)
Total notes payable principal outstanding	$	113,800		$	82,810
Deferred financing costs, net	(1,020		)	(1,435		)
Total notes payable, net	$	112,780		$	81,375

_____________________

⁽¹⁾ Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2017. Effective interest rate is calculated as the actual interest rate in effect as of December 31, 2017 (consisting of the contractual interest rate), using interest rate indices as of December 31, 2017, where applicable.

⁽²⁾ Represents the maturity date as of December 31, 2017; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown.

⁽³⁾ On May 9, 2017, the Company paid off the Von Karman Tech Center Mortgage Loan and Von Karman Tech was added to the Term Loan as a collateral property. See footnote (5) below.

⁽⁴⁾ As of December 31, 2017, $41.0 million of the Commonwealth Building Mortgage Loan was outstanding and $6.4 million remained available for future disbursements, subject to certain terms and conditions set forth in the loan documents. On January 18, 2018, the Company refinanced the Commonwealth Building Mortgage Loan. See Note 12, “Subsequent Events - Refinancing of the Commonwealth Building Mortgage Loan.”

⁽⁵⁾ As of December 31, 2017, the outstanding balance under the Term Loan consisted of $48.5 million of term commitment and $24.3 million of revolving commitment, which bears interest at a rate per annum equal to 2.0% over one-month LIBOR. The Term Loan was secured by The Offices at Greenhouse, Von Karman Tech and Institute Property.

⁽⁶⁾ On October 11, 2017, the Unsecured Revolving Credit Facility was cancelled without any funds being disbursed because the Company did not meet the equity raised requirement for the three-month period ending October 1, 2017.

Schedule of Maturities of Long-term Debt

The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of December 31, 2017 (in thousands):

2018	$	—
2019	—
2020	72,800
2021	41,000
2022	—
Thereafter	—
	$	113,800

XML

FAIR VALUE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Schedule of Face Value, Carrying Amounts and Fair Value

The following were the face values, carrying amounts and fair values of the Company’s notes payable as of December 31, 2017 and 2016, which carrying amounts generally do not approximate the fair values (in thousands):

	December 31, 2017						December 31, 2016
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities:
Notes payable	$	113,800	$	112,780	$	114,327	$	82,810	$	81,375	$	82,443

Schedule of Asset at Fair Value

As of December 31, 2017, the Company measured the following asset at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets  for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Asset derivative - interest rate swap	$	178	$	—	$	178	$	—

XML

RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Schedule of Related Party Costs

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2017, 2016 and the period from January 27, 2015 to December 31, 2015, respectively, and any related amounts payable as of December 31, 2017 and 2016 (in thousands):

	Incurred Years Ended December 31,					Incurred for the Period from January 27, 2015 to December 31, 2015		Payable as of December 31,
	2017			2016				2017		2016
Expensed
Asset management fees (1)	$	632		$	399	$	22	$	418	$	—
Reimbursement of operating expenses (2)	185			151		205		18		17
Property management fees (3)	124			68		—		13		16
Real estate acquisition fees (4)	—			2,316		428		—		—
Related party interest expense (5)	—			—		19		—		—
Other Arrangement
Advisor advance for cash distributions (6)	—			1,139		199		1,338		1,338
Additional Paid-in Capital
Selling commissions	78			3,029		817		—		—
Dealer manager fees	51			1,134		268		—		—
Stockholder servicing fees (7)	(26		)	37		—		—		37
Reimbursable other offering costs (8)	14			392		1,080		—		26
	$	1,058		$	8,665	$	3,038	$	1,787	$	1,434

_____________________

⁽¹⁾ Through August 8, 2017, the asset management fee payable to the Advisor was a monthly fee equal to one-twelfth of 1.6% of the cost of the Company’s investments, less any debt secured by or attributable to the investments. Beginning on August 9, 2017, the asset management fee is a monthly fee payable to the Advisor in an amount equal to one-twelfth of 1.0% of the cost of the Company’s investments including the portion of the investment that is debt financed. During the second and third quarters of 2017, the Company incurred $0.5 million of asset management fees, all of which were waived by the Advisor. The Advisor agreed to defer payment of the asset management fee for the fourth quarter of 2017 of $0.4 million, all of which was accrued by the Company as of December 31, 2017.

⁽²⁾ See “Reimbursable Operating Expenses” below.

⁽³⁾ See “Real Estate Property Co-Management Agreements” below.

⁽⁴⁾ On August 9, 2017, the Company entered into an amended and restated advisory agreement with the Advisor in which the Advisor will no longer be paid an acquisition fee in connection with acquisitions on or after August 9, 2017.

⁽⁵⁾ Relates to interest expense as a result of a bridge loan from the Advisor. On August 12, 2015, in connection with the acquisition of Von Karman Tech Center, the Company borrowed $2.6 million pursuant to a bridge loan from the Advisor (the “Advisor Bridge Loan”). The principal under the promissory note bore simple interest from the date of the advance at the rate of 5% per annum. On September 3, 2015, the Company repaid $1.5 million of the Advisor Bridge Loan. On November 12, 2015, the Company paid off the remaining outstanding principal balance and interest due under the Advisor Bridge Loan of $1.1 million.

⁽⁶⁾ See “Advance from the Advisor” below.

⁽⁷⁾ The Public Offering was terminated effective June 30, 2017. Pursuant to the terms of the Class T shares as set forth in the Articles Supplementary and Multiple Class Plan of the Company, the Company ceased accruing for stockholder servicing fees after June 30, 2017 and reversed the amounts previously accrued.

⁽⁸⁾ See “Organization and Offering Costs” below.

Schedule of Annual Fee Percentage

Property Name	Effective Date	Annual Fee Percentage
Von Karman Tech Center	07/31/2015	1.50%
Commonwealth Building	07/01/2016	1.25%
The Offices at Greenhouse	11/14/2016	0.25%
Institute Property	11/09/2017	1.00%

XML

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Schedule of Unaudited Quarterly Financial Information

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2017 and 2016 (in thousands, except per share amounts):

	2017
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues	$	4,033		$	4,187		$	4,028		$	4,713
Class A Common Stock:
Net loss	(190		)	(406		)	(760		)	(775		)
Net loss per common share, basic and diluted	(0.02		)	(0.04		)	(0.08		)	(0.08		)
Distributions declared per common share (1)	0.123			0.125			0.124			0.121
Class T Common Stock:
Net loss	(7		)	(18		)	(23		)	(20		)
Net loss per common share, basic and diluted	(0.05		)	(0.07		)	(0.08		)	(0.08		)
Distributions declared per common share (1)	0.099			0.100			0.124			0.121

	2016
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenues	$	596		$	641		$	2,441		$	3,177
Class A Common Stock:
Net loss	(255		)	(1,906		)	(303		)	(1,616		)
Net loss per common share, basic and diluted	(0.07		)	(0.23		)	(0.03		)	(0.18		)
Distributions declared per common share (1)	0.123			0.125			0.126			0.126
Class T Common Stock:
Net loss	—			—			(1		)	(8		)
Net loss per common share, basic and diluted	(0.19		)	(0.36		)	(0.07		)	(0.20		)
Distributions declared per common share	—			—			0.074			0.101

__________________

⁽¹⁾ Distributions declared per common share assumes each share was issued and outstanding each day for the periods presented. Distributions for the periods from January 1, 2016 through February 28, 2016 and March 1, 2017 through August 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of (i) $0.00136986 per share per day, less (ii) the applicable daily class-specific stockholder servicing fees accrued for and allocable to any class of common stock, divided by the number of shares of common stock of such class outstanding as of the close of business on each respective record date. Distributions for the period from September 1, 2017 through December 31, 2017 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00131849 per day.

XML

ORGANIZATION (Details)		11 Months Ended	12 Months Ended		20 Months Ended	35 Months Ended
	Aug. 11, 2015 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2017 USD ($) property shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2017 USD ($) property shares	Dec. 31, 2017 USD ($) property shares	Oct. 03, 2017 shares	Jun. 11, 2015 shares	Feb. 04, 2015 USD ($)	Jan. 27, 2015 $ / shares shares
Organizational Structure [Line Items]
Managing member or general partner, ownership interest			0.10%
Members or limited partners, ownership interest			99.90%
Core property, minimum percent of occupancy			80.00%		80.00%	80.00%
Issuance of common stock | $		$ 19,105,000	$ 5,421,000	$ 60,598,000
Stock redeemed | $			$ 1,210,000
Class A
Organizational Structure [Line Items]
Common stock, shares issued (in shares)			9,149,100	8,846,164	9,149,100	9,149,100
Class T
Organizational Structure [Line Items]
Common stock, shares issued (in shares)			281,537	94,018	281,537	281,537
Private Placement | Class A
Organizational Structure [Line Items]
Issuance of common stock | $						$ 76,800,000
Stock issued during period, value, dividend reinvestment plan | $						$ 700,000
Maximum | Second Private Placement | Class A
Organizational Structure [Line Items]
Shares authorized for issuance (in shares)							1,000,000,000
Common Stock
Organizational Structure [Line Items]
Shares authorized for dividend reinvestment plan (in shares)								5,000,000
Primary offering, purchase price per share, discount	8.50%
Primary offering, purchase price per share (in dollars per share) | $ / shares	$ 8.90
Common Stock | Chief Executive Officer
Organizational Structure [Line Items]
Issuance of common stock (in shares)	21,181.2380
Common Stock | President
Organizational Structure [Line Items]
Issuance of common stock (in shares)	21,181.2390
Common Stock | Chief Executive Officer and President
Organizational Structure [Line Items]
Issuance of common stock | $	$ 172,500
Shares issued, price per share (in dollars per share) | $ / shares	$ 8.144
Common Stock | Class A
Organizational Structure [Line Items]
Issuance of common stock (in shares)		2,194,161	380,538	6,559,574
Issuance of common stock | $		$ 22,000	$ 2,000	$ 65,000
Stock redeemed (in shares)			145,214			145,214
Stock redeemed | $						$ 1,200,000
Common Stock | Class T
Organizational Structure [Line Items]
Issuance of common stock (in shares)			185,845	93,918
Issuance of common stock | $			$ 2,000	$ 1,000
Common Stock | Private Placement | Class A
Organizational Structure [Line Items]
Issuance of common stock (in shares)						8,548,972
Stock issued during period, shares, dividend reinvestment plan (in shares)						74,744
Common Stock | Public Offering
Organizational Structure [Line Items]
Issuance of common stock | $					$ 3,900,000
Stock issued during period, value, dividend reinvestment plan | $					$ 3,500,000
Common Stock | Public Offering | Class A
Organizational Structure [Line Items]
Issuance of common stock (in shares)					122,721
Stock issued during period, shares, dividend reinvestment plan (in shares)					355,087
Common Stock | Public Offering | Class T
Organizational Structure [Line Items]
Issuance of common stock (in shares)					270,415
Stock issued during period, shares, dividend reinvestment plan (in shares)					9,348
Common Stock | Second Public Offering | Class A
Organizational Structure [Line Items]
Issuance of common stock (in shares)					65,130
Issuance of common stock | $					$ 600,000
Common Stock | Maximum
Organizational Structure [Line Items]
Shares authorized for issuance (in shares)								105,000,000
Shares authorized for issuance | $									$ 1,500,000,000
Shares authorized for dividend reinvestment plan | $									$ 800,000,000
KBS Capital Advisors LLC
Organizational Structure [Line Items]
Common stock, shares issued (in shares)										20,000
Purchase price per share (in usd per share) | $ / shares										$ 10.00
Office Properties
Organizational Structure [Line Items]
Number of real estate properties | property			4		4	4

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Useful Life) (Details)	12 Months Ended
	Dec. 31, 2017
Building | Minimum
Property, Plant and Equipment [Line Items]
Useful lives	25 years
Building | Maximum
Property, Plant and Equipment [Line Items]
Useful lives	40 years
Building Improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful lives	10 years
Building Improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful lives	25 years
Tenant Improvements
Property, Plant and Equipment [Line Items]
Useful lives	Shorter of lease term or expected useful life
Tenant Origination and Absorption Costs
Property, Plant and Equipment [Line Items]
Useful lives	Remaining term of related leases, including below-market renewal periods

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Redeemable Common Stock) (Details) - $ / shares	Mar. 16, 2016	Dec. 08, 2017	Aug. 09, 2017
Summary of Significant Accounting Policies [Line Items]
Estimated value per share of company's common stock (in dollars per share)		$ 8.79	$ 8.75
Amendment of Share Redemption Program
Summary of Significant Accounting Policies [Line Items]
Holding requirement	1 year
Period of funding available for redemption of shares	10 days
Redemption price percentage of most recent estimated value per share	95.00%
Estimated value per share of company's common stock (in dollars per share)	$ 9.40
Share redemption program, termination period	30 days
Period of increase or decrease of funding available for redemption	10 days
Amendment of Share Redemption Program | Maximum
Summary of Significant Accounting Policies [Line Items]
Percentage of weighted-average shares outstanding available for redemption during any calendar year	5.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Selling Commissions and Dealer Manager Fees) (Details)	Dec. 31, 2017	Apr. 28, 2016
Second Private Offering | Common Stock | Class A
Summary of Significant Accounting Policies [Line Items]
Selling commissions fees paid percent of sales price	0.50%
Dealer Manager | Class T
Summary of Significant Accounting Policies [Line Items]
Percent of dealer manager reallows of sales commissions earned to participating broker-dealer		100.00%
Dealer Manager | Initial Private Offering
Summary of Significant Accounting Policies [Line Items]
Percent of dealer manager reallows of sales commissions earned to participating broker-dealer	100.00%
Dealer Manager | Initial Private Offering | Maximum | Common Stock | Class A
Summary of Significant Accounting Policies [Line Items]
Selling commissions fees paid, percent of gross offering proceeds	6.50%
Dealer managers fees paid, percent of gross offering proceeds	2.00%
Sales commissions, broker dealer, percentage	1.00%
Dealer Manager | Public Offering | Maximum
Summary of Significant Accounting Policies [Line Items]
Dealer managers fees paid, percent of gross offering proceeds	2.00%
Sales commissions, broker dealer, percentage	1.00%
Marketing fee, percentage	1.50%
Dealer Manager | Public Offering | Maximum | Common Stock | Class A
Summary of Significant Accounting Policies [Line Items]
Selling commissions fees paid, percent of gross offering proceeds	6.50%
Dealer Manager | Public Offering | Maximum | Common Stock | Class T
Summary of Significant Accounting Policies [Line Items]
Selling commissions fees paid, percent of gross offering proceeds	3.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Acquisition Fees) (Details)	Aug. 08, 2017
KBS Capital Advisors LLC
Summary of Significant Accounting Policies [Line Items]
Acquisition advisory fee, percent	2.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Stockholder Servicing Fee) (Details) - Dealer Manager - Class T	Jun. 30, 2017	Apr. 28, 2016
Summary of Significant Accounting Policies [Line Items]
Annual stockholder servicing fee as percent of purchase price per share paid to dealer manager		1.00%
Percent of dealer manager reallows of sales commissions earned to participating broker-dealer		100.00%
Stockholder servicing fee, percent of total purchase price	4.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Asset Management Fee) (Details) - KBS Capital Advisors LLC - Cost of Investments	Aug. 09, 2017	Aug. 08, 2017
Summary of Significant Accounting Policies [Line Items]
Property management fee, percent fee	1.00%	1.60%
Monthly management fee, percent of cost of investment less debt secured by investments		0.13%
Monthly management fee, percent of cost and real estate property investment, including any debt financing on property	0.083%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Disposition Fee) (Details)	Dec. 31, 2017
KBS Capital Advisors LLC or Affiliates
Summary of Significant Accounting Policies [Line Items]
Disposition fee as percent of contract sales price	1.50%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Segments) (Details)	12 Months Ended
	Dec. 31, 2017 segment property
Accounting Policies [Abstract]
Number of reportable segments | segment	1
Office Properties
Real Estate Properties [Line Items]
Number of real estate properties | property	4

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Stock Dividends) (Details)	11 Months Ended	12 Months Ended
	Dec. 31, 2015 shares	Dec. 31, 2017 shares	Dec. 31, 2016 shares
Accounting Policies [Abstract]
Common stock dividends declared, shares, ratio	0.00252056	0.00666664	0.01000004
Stock dividends issued (in shares)	2,660	69,286	69,869

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Per Share Data) (Details) - $ / shares	3 Months Ended								4 Months Ended	11 Months Ended	12 Months Ended		20 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Aug. 31, 2017
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Distribution rate per share per day, declared (in dollars per share)									$ 0.00131849				$ 0.00136986
Class A
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Distributions declared per share (in dollars per share)	$ 0.121	$ 0.124	$ 0.125	$ 0.123	$ 0.126	$ 0.126	$ 0.125	$ 0.123		$ 0.16712301	$ 0.49373176	$ 0.49999890
Class T
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Distributions declared per share (in dollars per share)	$ 0.121	$ 0.124	$ 0.1	$ 0.099	$ 0.101	$ 0.074	$ 0	$ 0			$ 0.44464258	$ 0.17462989

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (EPS Two-class Method) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								11 Months Ended	12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net loss									$ (776)	$ (2,199)	$ (4,089)
Undistributed net loss									(971)	(6,782)	(7,743)
Class A
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net loss	$ (775)	$ (760)	$ (406)	$ (190)	$ (1,616)	$ (303)	$ (1,906)	$ (255)	(773)	(2,131)	(4,080)
Less: Common Stock cash distributions declared									195	4,472	3,649
Undistributed net loss									$ (968)	$ (6,603)	$ (7,729)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.08)	$ (0.08)	$ (0.04)	$ (0.02)	$ (0.18)	$ (0.03)	$ (0.23)	$ (0.07)	$ (1.29)	$ (0.23)	$ (0.55)
Weighted-average number of common shares outstanding, basic and diluted (in shares)									598,123	9,080,826	7,393,983
Class T
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net loss	$ (20)	$ (23)	$ (18)	$ (7)	$ (8)	$ (1)	$ 0	$ 0	$ (3)	$ (68)	$ (9)
Less: Common Stock cash distributions declared									0	111	5
Undistributed net loss									$ (3)	$ (179)	$ (14)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.08)	$ (0.08)	$ (0.07)	$ (0.05)	$ (0.20)	$ (0.07)	$ (0.36)	$ (0.19)	$ (1.62)	$ (0.28)	$ (0.68)
Weighted-average number of common shares outstanding, basic and diluted (in shares)									1,774	246,737	13,718

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accounting Standards) (Details)	12 Months Ended
	Dec. 31, 2017
Accounting Standards Update 2014-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other Operating Income and Other Ancillary Income as Percent of Consolidated Revenue	1.00%

XML

RECENT ACQUISITION OF REAL ESTATE (Narrative) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)
Business Combinations [Abstract]
Capitalized acquisition costs	$ 0.5
Total revenues recognized from business combination	0.7
Operating expense recognized from business combination	$ 0.4

XML

RECENT ACQUISITION OF REAL ESTATE (Schedule of Asset Acquisitions, Properties Acquired) (Details) - Institute Property - Office Properties $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($)
Business Acquisition [Line Items]
Date Acquired	Nov. 09, 2017
Land	$ 8,400
Building and Improvements	33,536
Tenant Origination and Absorption Costs	4,118
Above-Market Lease Assets	0
Below-Market Lease Liabilities	(2,395)
Total Purchase Price	$ 43,659

XML

RECENT ACQUISITION OF REAL ESTATE (Schedule of Intangible Assets and Liabilities Acquired, Weighted-Average Amortization Periods) (Details) - Institute Property	12 Months Ended
	Dec. 31, 2017
Tenant Origination and Absorption Costs
Business Acquisition [Line Items]
Weighted-average amortization periods	5 years 8 months 12 days
Below-Market Lease Liabilities
Business Acquisition [Line Items]
Weighted-average amortization periods	5 years 10 months 24 days

XML

REAL ESTATE (Narrative) (Details) - Office Properties	Dec. 31, 2017 ft² property
Real Estate Properties [Line Items]
Number of real estate properties | property	4
Rentable square feet | ft²	683,952
Percentage of portfolio occupied	97.00%

XML

REAL ESTATE (Summary of Investments) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Real Estate Properties [Line Items]
Total Real Estate at Cost	$ 190,756	$ 141,872
Accumulated Depreciation and Amortization	(9,627)	(3,292)
Total real estate, net	$ 181,129	$ 138,580
Von Karman Tech Center | Office Properties
Real Estate Properties [Line Items]
Date Acquired	Aug. 12, 2015
Total Real Estate at Cost	$ 20,892
Accumulated Depreciation and Amortization	(1,758)
Total real estate, net	$ 19,134
Commonwealth Building | Office Properties
Real Estate Properties [Line Items]
Date Acquired	Jun. 30, 2016
Total Real Estate at Cost	$ 76,413
Accumulated Depreciation and Amortization	(4,876)
Total real estate, net	$ 71,537
The Offices at Greenhouse | Office Properties
Real Estate Properties [Line Items]
Date Acquired	Nov. 14, 2016
Total Real Estate at Cost	$ 47,241
Accumulated Depreciation and Amortization	(2,696)
Total real estate, net	$ 44,545
Institute Property | Office Properties
Real Estate Properties [Line Items]
Date Acquired	Nov. 09, 2017
Total Real Estate at Cost	$ 46,210
Accumulated Depreciation and Amortization	(297)
Total real estate, net	$ 45,913

XML

REAL ESTATE (Concentration of Credit Risk, Tenant Lease that Represents More than 10% of Annualized Base Rent) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) ft² $ / ft²	Dec. 31, 2016 USD ($)
Concentration Risk [Line Items]
Total Real Estate, Net	$ 181,129	$ 138,580
Von Karman Tech Center | Assets, Total
Concentration Risk [Line Items]
Rentable Square Feet | ft²	101,161
Total Real Estate, Net	$ 19,134
Percentage of Total Assets	10.20%
Annualized Base Rent	$ 2,277
Average Annualized Base Rent per sq. ft. | $ / ft²	22.51
Occupancy	100.00%
Commonwealth Building | Assets, Total
Concentration Risk [Line Items]
Rentable Square Feet | ft²	224,122
Total Real Estate, Net	$ 71,537
Percentage of Total Assets	38.20%
Annualized Base Rent	$ 5,393
Average Annualized Base Rent per sq. ft. | $ / ft²	25.40
Occupancy	94.70%
The Offices at Greenhouse | Assets, Total
Concentration Risk [Line Items]
Rentable Square Feet | ft²	203,284
Total Real Estate, Net	$ 44,545
Percentage of Total Assets	23.80%
Annualized Base Rent	$ 4,201
Average Annualized Base Rent per sq. ft. | $ / ft²	20.66
Occupancy	100.00%
Institute Property | Assets, Total
Concentration Risk [Line Items]
Rentable Square Feet | ft²	155,385
Total Real Estate, Net	$ 45,913
Percentage of Total Assets	24.50%
Annualized Base Rent	$ 3,718
Average Annualized Base Rent per sq. ft. | $ / ft²	25.28
Occupancy	94.70%

XML

REAL ESTATE (Operating Leases) (Narrative) (Details) - USD ($) $ in Thousands	11 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Operating Leased Assets [Line Items]
Deferred rent recognized	$ 226	$ 898	$ 500
Deferred rent receivables		1,800	900
Unamortized lease incentives		200	200
Other Liabilities
Operating Leased Assets [Line Items]
Security deposit liability		$ 1,200	$ 600
Maximum
Operating Leased Assets [Line Items]
Operating leases, term of contract		9 years 4 months 24 days
Weighted Average
Operating Leased Assets [Line Items]
Operating leases, term of contract		4 years 6 months

XML

REAL ESTATE (Future Minimum Rental Income) (Details) $ in Thousands	Dec. 31, 2017 USD ($)
Real Estate [Abstract]
2018	$ 14,410
2019	13,880
2020	13,019
2021	11,323
2022	9,672
Thereafter	12,882
Future minimum rental income	$ 75,186

XML

REAL ESTATE (Geographic Concentration Risk) (Narrative) (Details) - Customer Concentration Risk $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) ft² extension $ / ft²
Concentration Risk [Line Items]
Annualized base rent | $	$ 3.0
Average annualized base rent per square foot | $ / ft²	21.39
Annualized Rent
Concentration Risk [Line Items]
Percentage of total assets	19.00%
Rentable Square Feet
Concentration Risk [Line Items]
Percentage of total assets	21.00%
Net rentable area	140,922
Expires on July 24, 2019
Concentration Risk [Line Items]
Tenant lease, extension option | extension	2
Tenant lease, extension period	3 years
Expires on July 24, 2019 | Rentable Square Feet
Concentration Risk [Line Items]
Net rentable area	5,195
Expires on December 31, 2024
Concentration Risk [Line Items]
Tenant lease, extension option | extension	2
Tenant lease, extension period	5 years
Expires on December 31, 2024 | Rentable Square Feet
Concentration Risk [Line Items]
Net rentable area	135,727

XML

REAL ESTATE (Highes Tenant Industry Concentrations- Grater than 10% of Annual Base Rent) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) tenant
Concentration Risk [Line Items]
Number of Tenants	80
Professional, scientific and legal
Concentration Risk [Line Items]
Number of Tenants	14
Annualized Base Rent | $	$ 5,846
Percentage of Annualized Base Rent	37.50%
Information
Concentration Risk [Line Items]
Number of Tenants	9
Annualized Base Rent | $	$ 2,168
Percentage of Annualized Base Rent	13.90%

XML

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Details) - USD ($) $ in Thousands	11 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]
Tenant Origination And Absorption Costs, Cost		$ 17,047	$ 13,528
Tenant Origination and Absorption Costs, Accumulated Amortization		(3,480)	(1,253)
Tenant Origination and Absorption Costs, Net Amount		13,567	12,275
Above-Market Lease Assets, Cost		213	214
Above-Market Lease Assets, Accumulated Amortization		(33)	(4)
Above-Market Lease Assets, Net Amount		180	210
Below-Market Lease Liabilities, Cost		(7,838)	(5,727)
Below-Market Lease Liabilities, Accumulated Amortization		1,928	698
Below-Market Lease Liabilities, Net Amount		(5,910)	(5,029)
Tenant Origination and Absorption Costs, Amortization	$ (144)	(2,826)	(1,135)
Above-Market Lease Assets, Amortization	0	(30)	(4)
Below-Market Lease Liabilities, Amortization	$ 9	$ 1,514	$ 712

XML

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Remaining Unamortized Balance) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($)
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract]
2018	$ 1,720
2019	1,369
2020	1,123
2021	687
2022	499
Thereafter	512
Net Amount	5,910
Tenant Origination and Absorption Costs
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2018	(3,175)
2019	(2,707)
2020	(2,342)
2021	(1,885)
2022	(1,543)
Thereafter	(1,915)
Net Amount	$ (13,567)
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract]
Weighted-Average Remaining Amortization Period	5 years 6 months
Above-Market Lease Assets
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2018	$ (30)
2019	(30)
2020	(28)
2021	(21)
2022	(21)
Thereafter	(50)
Net Amount	$ (180)
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract]
Weighted-Average Remaining Amortization Period	6 years 10 months 24 days
Below-Market Lease Liabilities
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract]
Weighted-Average Remaining Amortization Period	4 years 7 months 6 days

XML

NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Total notes payable principal outstanding	$ 113,800	$ 82,810
Deferred financing costs, net	(1,020)	(1,435)
Long-term debt	112,780	81,375
Term Loan
Debt Instrument [Line Items]
Total notes payable principal outstanding	$ 72,800	30,550
Effective Interest Rate	3.37%
Maturity Date	Nov. 09, 2020
Term Loan | Secured Debt | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.00%
Mortgages | Von Karman Tech Center Mortgage Loan
Debt Instrument [Line Items]
Total notes payable principal outstanding	$ 0	11,260
Mortgages | Commonwealth Building Mortgage Loan
Debt Instrument [Line Items]
Total notes payable principal outstanding	$ 41,000	41,000
Effective Interest Rate	3.52%
Maturity Date	Jul. 01, 2021
Loan, amount outstanding	$ 41,000
Unused borrowing capacity, amount	$ 6,400
Mortgages | Commonwealth Building Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.15%
Unsecured Debt | Revolving Credit Facility
Debt Instrument [Line Items]
Total notes payable principal outstanding	$ 0	$ 0
Secured Debt | Term Loan
Debt Instrument [Line Items]
Loan, amount outstanding	48,500
Secured Debt | Term Loan | Revolving Credit Facility
Debt Instrument [Line Items]
Loan, amount outstanding	$ 24,300

XML

NOTES PAYABLE (Narrative) (Details) - USD ($)	11 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Interest expense	$ 292,000	$ 3,287,000	$ 1,224,000
Interest payable, current		300,000	200,000
Amortization of deferred financing costs	26,000	725,000	162,000
Not Designated as Hedging Instrument | Interest Rate Swap
Debt Instrument [Line Items]
Unrealized gain on derivatives		200,000
Interest Expense
Debt Instrument [Line Items]
Amortization of deferred financing costs	25,809	$ 700,000	$ 200,000
Advisor Bridge Loan
Debt Instrument [Line Items]
Interest expense	$ 19,023

XML

NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
2018	$ 0
2019	0
2020	72,800
2021	41,000
2022	0
Thereafter	0
Total notes payable principal outstanding	$ 113,800	$ 82,810

XML

DERIVATIVE INSTRUMENTS (Details) - Interest Rate Swap - Not Designated as Hedging Instrument	12 Months Ended
	Dec. 31, 2017 USD ($) instrument
Derivative [Line Items]
Number of Instruments | instrument	1
Notional amount	$ 48,500,000.0
Unrealized gain on derivatives	200,000
Prepaid Expenses and Other Current Assets
Derivative [Line Items]
Notional amount	$ 200,000.0
One-month LIBOR
Derivative [Line Items]
Derivative rate	2.07%

XML

FAIR VALUE DISCLOSURES (Values) (Details) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable, Face Value	$ 113,800,000	$ 82,810,000
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable, Value	112,780,000	81,375,000
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes payable, Value	$ 114,327,000	$ 82,443,000

XML

FAIR VALUE DISCLOSURES (Schedule of Assets at Fair Value) (Details) - Recurring Basis - Interest Rate Swap $ in Thousands	Dec. 31, 2017 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative - interest rate swap	$ 178
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative - interest rate swap	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative - interest rate swap	178
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative - interest rate swap	$ 0

XML

RELATED PARTY TRANSACTIONS (Related-party Costs) (Details) - USD ($) $ in Thousands	6 Months Ended	11 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Payable as of			$ 1,787	$ 1,434
Advisor and Dealer Manager
Related Party Transaction [Line Items]
Incurred		$ 3,038	1,058	8,665
Payable as of			1,787	1,434
Advisor and Dealer Manager | Asset Management Fees
Related Party Transaction [Line Items]
Expenses		22	632	399
Incurred	$ 500
Payable as of			418	0
Advisor and Dealer Manager | Reimbursable Operating Expenses
Related Party Transaction [Line Items]
Expenses		205	185	151
Payable as of			18	17
Advisor and Dealer Manager | Property Management Fees
Related Party Transaction [Line Items]
Expenses		0	124	68
Payable as of			13	16
Advisor and Dealer Manager | Real Estate Acquisition Fee
Related Party Transaction [Line Items]
Expenses		428	0	2,316
Payable as of			0	0
Advisor and Dealer Manager | Related Party Interest Expense
Related Party Transaction [Line Items]
Expenses		19	0	0
Payable as of			0	0
Advisor and Dealer Manager | Advisor Advance for Cash Distributions
Related Party Transaction [Line Items]
Incurred		199	0	1,139
Payable as of			1,338	1,338
Advisor and Dealer Manager | Selling Commissions
Related Party Transaction [Line Items]
Incurred		817	78	3,029
Payable as of			0	0
Advisor and Dealer Manager | Dealer Manager Fees
Related Party Transaction [Line Items]
Incurred		268	51	1,134
Payable as of			0	0
Advisor and Dealer Manager | Stockholder Servicing Fees
Related Party Transaction [Line Items]
Incurred		0	(26)	37
Payable as of			0	37
Advisor and Dealer Manager | Reimbursable Other Offering Costs
Related Party Transaction [Line Items]
Incurred		$ 1,080	14	392
Payable as of			$ 0	$ 26

XML

RELATED PARTY TRANSACTIONS (Related-party Costs - Narrative) (Details) - USD ($)					3 Months Ended	6 Months Ended	11 Months Ended	12 Months Ended
	Aug. 09, 2017	Aug. 08, 2017	Nov. 12, 2015	Sep. 03, 2015	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Aug. 12, 2015
Related Party Transaction [Line Items]
Face amount of debt					$ 113,800,000			$ 113,800,000	$ 82,810,000
Payment for administrative fees								200,000	$ 100,000
Limit of total operating expenses as a percent of net income for the four most recently completed fiscal quarters									2.00%
Advisor and Dealer Manager
Related Party Transaction [Line Items]
Incurred							$ 3,038,000	$ 1,058,000	$ 8,665,000
Advisor and Dealer Manager | Asset Management Fees
Related Party Transaction [Line Items]
Incurred						$ 500,000
KBS Capital Advisors LLC
Related Party Transaction [Line Items]
Deferred fees					$ 400,000
KBS Capital Advisors LLC | Notes Payable | Advisor Bridge Loan
Related Party Transaction [Line Items]
Face amount of debt										$ 2,600,000.0
Interest rate										5.00%
Extinguishment of debt, amount			$ 1,100,000	$ 1,500,000
Cost of Investments | KBS Capital Advisors LLC
Related Party Transaction [Line Items]
Property management fee, percent fee	1.00%	1.60%
Monthly management fee, percent of cost of investment less debt secured by investments		0.13%
Monthly management fee, percent of cost and real estate property investment, including any debt financing on property	0.083%

XML

RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Payment for administrative fees	$ 200	$ 100
Limit of total operating expenses as a percent of net income for the four most recently completed fiscal quarters		2.00%
Limit of total operating expenses as a percent of average invested assets		25.00%
Due to affiliates	1,787	$ 1,434
KBS Capital Advisors LLC
Related Party Transaction [Line Items]
Due to affiliates	$ 1,300

XML

RELATED PARTY TRANSACTIONS (Real Estate Property Co-Management Agreement) (Details) - KBS Management Group, LLC [Member]	12 Months Ended
	Dec. 31, 2017
Related Party Transaction [Line Items]
Initial term of management agreements	1 year
Successive periods, renewal	1 year
Period of termination notice	30 days
Period of termination notice with cause	5 days
Von Karman Tech Center
Related Party Transaction [Line Items]
Annual Fee Percentage	1.50%
Commonwealth Building
Related Party Transaction [Line Items]
Annual Fee Percentage	1.25%
The Offices at Greenhouse
Related Party Transaction [Line Items]
Annual Fee Percentage	0.25%
Institute Property
Related Party Transaction [Line Items]
Annual Fee Percentage	1.00%

XML

RELATED PARTY TRANSACTIONS (Organization and Offering Costs) (Details)	12 Months Ended
	Dec. 31, 2017 USD ($)
Public Offering
Related Party Transaction [Line Items]
Organization and offering costs recorded by the company	$ 39,358
Second Private Offering
Related Party Transaction [Line Items]
Other organization and offering costs	$ 1,500,000
KBS Capital Advisors LLC, Dealer Manager and their Affiliates | Maximum
Related Party Transaction [Line Items]
Reimbursable offering costs determination, gross offering costs, percentage	1.00%
KBS Capital Advisors LLC | Public Offering
Related Party Transaction [Line Items]
Offering costs, other than selling commissions and dealer manager fees, incurred by advisor	$ 4,300,000
KBS Capital Advisors LLC | Initial Private Offering
Related Party Transaction [Line Items]
Incurred	$ 1,500,000

XML

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								4 Months Ended	11 Months Ended	12 Months Ended		20 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Aug. 31, 2017
Class of Stock [Line Items]
Revenues	$ 4,713	$ 4,028	$ 4,187	$ 4,033	$ 3,177	$ 2,441	$ 641	$ 596		$ 948	$ 16,961	$ 6,855
Net loss										(776)	(2,199)	(4,089)
Distribution rate per share per day, declared (in dollars per share)									$ 0.00131849				$ 0.00136986
Class A
Class of Stock [Line Items]
Net loss	$ (775)	$ (760)	$ (406)	$ (190)	$ (1,616)	$ (303)	$ (1,906)	$ (255)		$ (773)	$ (2,131)	$ (4,080)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.08)	$ (0.08)	$ (0.04)	$ (0.02)	$ (0.18)	$ (0.03)	$ (0.23)	$ (0.07)		$ (1.29)	$ (0.23)	$ (0.55)
Distributions declared per common share (in dollars per share)	$ 0.121	$ 0.124	$ 0.125	$ 0.123	$ 0.126	$ 0.126	$ 0.125	$ 0.123		$ 0.16712301	$ 0.49373176	$ 0.49999890
Class T
Class of Stock [Line Items]
Net loss	$ (20)	$ (23)	$ (18)	$ (7)	$ (8)	$ (1)	$ 0	$ 0		$ (3)	$ (68)	$ (9)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.08)	$ (0.08)	$ (0.07)	$ (0.05)	$ (0.20)	$ (0.07)	$ (0.36)	$ (0.19)		$ (1.62)	$ (0.28)	$ (0.68)
Distributions declared per common share (in dollars per share)	$ 0.121	$ 0.124	$ 0.1	$ 0.099	$ 0.101	$ 0.074	$ 0	$ 0			$ 0.44464258	$ 0.17462989

XML

SUBSEQUENT EVENTS (Distributions and Stock Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands					4 Months Ended	11 Months Ended	12 Months Ended		20 Months Ended
	Mar. 09, 2018	Mar. 01, 2018	Feb. 01, 2018	Jan. 02, 2018	Dec. 31, 2017	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Aug. 31, 2017
Subsequent Event [Line Items]
Distributions declared						$ 195	$ 4,583	$ 3,655
Distribution rate per share per day, declared (in dollars per share)					$ 0.00131849				$ 0.00136986
Subsequent Event | Dividend Paid
Subsequent Event [Line Items]
Distributions declared		$ 300	$ 400	$ 400
Subsequent Event | Dividend Declared
Subsequent Event [Line Items]
Distribution rate per share per day, declared (in dollars per share)	$ 0.00132452

XML

SUBSEQUENT EVENTS (Refinancing of the Commonwealth Building Mortgage Loan) (Details)		12 Months Ended
	Jan. 18, 2018 USD ($) extension	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Subsequent Event [Line Items]
Face amount of debt		$ 113,800,000	$ 82,810,000
Mortgages | Commonwealth Building Mortgage Loan
Subsequent Event [Line Items]
Loan, amount outstanding		41,000,000
Unused borrowing capacity, amount		$ 6,400,000
Interest rate		3.36%
Mortgages | Commonwealth Building Mortgage Loan | One-month LIBOR
Subsequent Event [Line Items]
Basis spread on variable rate		2.15%
Subsequent Event | Mortgages | Commonwealth Building Mortgage Loan
Subsequent Event [Line Items]
Extinguishment of debt, amount	$ 41,000,000
Face amount of debt	51,400,000
Loan, amount outstanding	45,000,000
Unused borrowing capacity, amount	$ 6,400,000
Number of extensions | extension	2
Extension period	1 year
Interest rate	2.05%
LIBOR Benchmark to Enter into Derivative Contract	2.90%
Period to Enter into Derivative Contract	30 days
LIBOR Strike Rate for Derivative Contract	3.90%
Subsequent Event | Mortgages | Commonwealth Building Mortgage Loan | One-month LIBOR
Subsequent Event [Line Items]
Basis spread on variable rate	1.80%

XML

SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Jan. 26, 2015
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost to Company, Land	$ 31,309
Initial Cost to Company, Building and Improvements	156,592
Initial Cost to Company, Total	187,901
Cost Capitalized Subsequent to Acquisition	2,855
Gross Amount at which Carried at Close of Period, Land	31,309
Gross Amount at which Carried at Close of Period, Building and Improvements	159,447
Gross Amount at which Carried at Close of Period, Total	190,756	$ 141,872	$ 21,421	$ 0
Accumulated Depreciation and Amortization	(9,627)	(3,292)	$ (341)	$ 0
Aggregate cost of real estate for federal income tax purposes	187,600
Total notes payable principal outstanding	113,800	82,810
Term Loan
Real Estate and Accumulated Depreciation [Line Items]
Total notes payable principal outstanding	$ 72,800	$ 30,550
Von Karman Tech Center
Real Estate and Accumulated Depreciation [Line Items]
Ownership Percent	100.00%
Encumbrances	$ 0
Initial Cost to Company, Land	10,600
Initial Cost to Company, Building and Improvements	10,799
Initial Cost to Company, Total	21,399
Cost Capitalized Subsequent to Acquisition	(507)
Gross Amount at which Carried at Close of Period, Land	10,600
Gross Amount at which Carried at Close of Period, Building and Improvements	10,292
Gross Amount at which Carried at Close of Period, Total	20,892
Accumulated Depreciation and Amortization	$ (1,758)
Original Date of Construction	1980
Date Acquired	Aug. 12, 2015
Commonwealth Building
Real Estate and Accumulated Depreciation [Line Items]
Ownership Percent	100.00%
Encumbrances	$ 41,000
Initial Cost to Company, Land	7,300
Initial Cost to Company, Building and Improvements	66,544
Initial Cost to Company, Total	73,844
Cost Capitalized Subsequent to Acquisition	2,569
Gross Amount at which Carried at Close of Period, Land	7,300
Gross Amount at which Carried at Close of Period, Building and Improvements	69,113
Gross Amount at which Carried at Close of Period, Total	76,413
Accumulated Depreciation and Amortization	$ (4,876)
Original Date of Construction	1948
Date Acquired	Jun. 30, 2016
The Offices at Greenhouse
Real Estate and Accumulated Depreciation [Line Items]
Ownership Percent	100.00%
Initial Cost to Company, Land	$ 5,009
Initial Cost to Company, Building and Improvements	41,595
Initial Cost to Company, Total	46,604
Cost Capitalized Subsequent to Acquisition	637
Gross Amount at which Carried at Close of Period, Land	5,009
Gross Amount at which Carried at Close of Period, Building and Improvements	42,232
Gross Amount at which Carried at Close of Period, Total	47,241
Accumulated Depreciation and Amortization	$ (2,696)
Original Date of Construction	2014
Date Acquired	Nov. 14, 2016
Institute Place
Real Estate and Accumulated Depreciation [Line Items]
Ownership Percent	100.00%
Initial Cost to Company, Land	$ 8,400
Initial Cost to Company, Building and Improvements	37,654
Initial Cost to Company, Total	46,054
Cost Capitalized Subsequent to Acquisition	156
Gross Amount at which Carried at Close of Period, Land	8,400
Gross Amount at which Carried at Close of Period, Building and Improvements	37,810
Gross Amount at which Carried at Close of Period, Total	46,210
Accumulated Depreciation and Amortization	$ (297)
Original Date of Construction	1908
Date Acquired	Nov. 09, 2017

XML

SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (Reconciliation) (Details) - USD ($) $ in Thousands	11 Months Ended	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2016
Real Estate:
Balance at the beginning of the year	$ 0	$ 141,872	$ 21,421
Acquisitions	21,399	46,054	120,448
Improvements	22	4,096	185
Write off of fully depreciated and fully amortized assets	0	(1,266)	(48)
Loss due to property damage	0	0	(134)
Balance at the end of the year	21,421	190,756	141,872
Accumulated depreciation and amortization:
Balance at the beginning of the year	0	3,292	341
Depreciation and amortization expense	341	7,601	2,999
Write off of fully depreciated and fully amortized assets	0	(1,266)	(48)
Balance at the end of the year	$ 341	$ 9,627	$ 3,292