%PDF-1.5 1 0 obj <> endobj 3 0 obj <>] /Rotate 0 /Contents 4 0 R>> endobj 4 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 18.00 Tf ET q 0 0 0 rg BT 235.55 720.65 Td (UNITED ST) Tj ET Q q 0 0 0 rg BT 330.74 720.65 Td (A) Tj ET Q q 0 0 0 rg BT 342.41 720.65 Td (TES) Tj ET Q BT /F2 18.00 Tf ET q 0 0 0 rg BT 112.70 699.05 Td (SECURITIES ) Tj ET Q q 0 0 0 rg BT 225.25 699.05 Td (AND EXCHANGE COMMISSION) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 244.15 684.65 Td (W) Tj ET Q q 0 0 0 rg BT 255.49 684.65 Td (ashington, D.C. 20549) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 171.00 672.65 Td (______________________________________________________) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 660.65 Td ( ) Tj ET Q BT /F2 18.00 Tf ET q 0 0 0 rg BT 257.25 639.05 Td (FORM 10-Q) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 171.00 621.05 Td (______________________________________________________) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 603.05 Td (\(Mark One\)) Tj ET Q /GS0 gs q 12.72 0 0 11.71 53.00 578.34 cm /I1 Do Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 73.00 581.92 Td (QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15\(d\) OF THE SECURITIES) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 73.00 569.92 Td (EXCHANGE ACT OF 1934) Tj ET Q BT /F1 10.00 Tf ET BT /F2 10.00 Tf ET q 0 0 0 rg BT 195.45 553.05 Td ( For) Tj ET Q q 0 0 0 rg BT 213.32 553.05 Td ( the quarterly period ended ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 333.03 553.05 Td (September) Tj ET Q q 0 0 0 rg BT 378.95 553.05 Td ( 30, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 416.45 553.05 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 298.50 541.05 Td (OR) Tj ET Q /GS0 gs q 10.69 0 0 11.71 53.00 516.34 cm /I2 Do Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 73.00 519.92 Td (TRANSITION REPORT PURSUANT TO SECTION 13 OR 15\(d\) OF THE SECURITIES) Tj ET Q BT /F2 12.00 Tf ET q 0 0 0 rg BT 73.00 507.92 Td (EXCHANGE ACT OF 1934) Tj ET Q BT /F1 10.00 Tf ET BT /F2 10.00 Tf ET q 0 0 0 rg BT 219.80 491.05 Td (For) Tj ET Q q 0 0 0 rg BT 235.17 491.05 Td ( the transition period fr) Tj ET Q q 0 0 0 rg BT 335.53 491.05 Td (om ) Tj ET Q BT /F2 10.00 Tf ET 0 0 0 RG /GS0 gs 0.95 w 0 i [] 0 d 1 J 1 j 3 M 351.3625 489.48505859375 m 381.3625 489.48505859375 l s q 0 0 0 rg BT 351.36 491.05 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 381.36 491.05 Td ( to ) Tj ET Q BT /F2 10.00 Tf ET 0 0 0 RG /GS0 gs 0.95 w 0 i [] 0 d 1 J 1 j 3 M 394.692578125 489.48505859375 m 424.692578125 489.48505859375 l s q 0 0 0 rg BT 394.69 491.05 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 230.65 479.05 Td (Commission file number) Tj ET Q q 0 0 0 rg BT 335.47 479.05 Td ( 000-54673) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 170.00 467.05 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 172.00 467.05 Td (______________________________________________________) Tj ET Q BT /F2 18.00 Tf ET q 0 0 0 rg BT 92.35 438.25 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 209.21 438.25 Td ( P) Tj ET Q q 0 0 0 rg BT 223.37 438.25 Td (AR) Tj ET Q q 0 0 0 rg BT 248.73 438.25 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 312.26 438.25 Td (AP) Tj ET Q q 0 0 0 rg BT 334.92 438.25 Td (AR) Tj ET Q q 0 0 0 rg BT 360.28 438.25 Td (TMENT) Tj ET Q q 0 0 0 rg BT 425.97 438.25 Td ( REIT) Tj ET Q q 0 0 0 rg BT 473.14 438.25 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 190.45 426.25 Td (\(Exact Name of Registrant as Specified in Its Charter\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 171.00 414.25 Td (______________________________________________________) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 152.60 394.48 Td (Maryland) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 302.00 395.00 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 410.80 394.48 Td (27-0668930) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 126.20 382.70 Td (\(State or Other Jurisdiction of) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 124.75 374.70 Td (Incorporation or Or) Tj ET Q q 0 0 0 rg BT 187.25 374.70 Td (ganization\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 407.65 382.70 Td (\(I.R.S. Employer) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 405.20 374.70 Td (Identification No.\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 95.45 361.48 Td (800 Newport Center) Tj ET Q q 0 0 0 rg BT 181.91 361.48 Td ( Drive, Suite 700) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 116.60 351.53 Td (Newport Beach, California) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 304.00 354.00 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 422.50 354.43 Td (92660) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 108.75 334.00 Td (\(Address of Principal Executive Offices\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 304.00 334.00 Td ( ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 417.30 334.00 Td (\(Zip Code\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 563.00 330.25 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 274.75 318.25 Td (\(949\) 417-6500) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 211.90 308.65 Td (\(Registrant’) Tj ET Q q 0 0 0 rg BT 252.92 308.65 Td (s ) Tj ET Q q 0 0 0 rg BT 257.89 308.65 Td (T) Tj ET Q q 0 0 0 rg BT 262.49 308.65 Td (elephone Number) Tj ET Q q 0 0 0 rg BT 322.42 308.65 Td (, Including ) Tj ET Q q 0 0 0 rg BT 360.89 308.65 Td (Ar) Tj ET Q q 0 0 0 rg BT 370.07 308.65 Td (ea Code\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 284.65 Td (Indicate by check mark whether the registrant: \(1\) has filed all reports required to be filed by Section 13 or 15\(d\) of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 272.65 Td (Securities Exchange ) Tj ET Q q 0 0 0 rg BT 133.31 272.65 Td (Act of 1934 during the preceding 12 months \(or for such shorter period that the registrant was required to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 260.65 Td (file such reports\), and \(2\) has been subject to such filing requirements for the past 90 days. ) Tj ET Q q 0 0 0 rg BT 422.30 260.65 Td (Y) Tj ET Q q 0 0 0 rg BT 428.53 260.65 Td (es ) Tj ET Q /GS0 gs q 10.60 0 0 10.09 441.86 258.49 cm /I3 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 452.46 260.65 Td ( No ) Tj ET Q /GS0 gs q 8.91 0 0 10.09 479.68 258.49 cm /I4 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 242.65 Td (Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any) Tj ET Q q 0 0 0 rg BT 542.63 242.65 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 230.65 Td (every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T) Tj ET Q q 0 0 0 rg BT 463.05 230.65 Td ( \(§232.405 of this ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 218.65 Td (chapter\) during the preceding 12 months \(or for such shorter period that the registrant was required to submit and post such ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 204.25 Td (files\). ) Tj ET Q q 0 0 0 rg BT 82.68 204.25 Td (Y) Tj ET Q q 0 0 0 rg BT 88.90 204.25 Td (es ) Tj ET Q /GS0 gs q 10.60 0 0 12.71 102.23 201.79 cm /I5 Do Q /GS0 gs q 12.00 0 0 12.71 112.83 201.79 cm /I6 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 124.83 204.25 Td (No ) Tj ET Q /GS0 gs q 8.91 0 0 12.71 142.05 201.79 cm /I7 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 186.25 Td (Indicate by check mark whether the registrant is a lar) Tj ET Q q 0 0 0 rg BT 286.23 186.25 Td (ge accelerated filer) Tj ET Q q 0 0 0 rg BT 361.88 186.25 Td (, an accelerated filer) Tj ET Q q 0 0 0 rg BT 442.53 186.25 Td (, a non-accelerated filer or a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 174.25 Td (smaller reporting company) Tj ET Q q 0 0 0 rg BT 157.09 174.25 Td (. See the definitions of “lar) Tj ET Q q 0 0 0 rg BT 264.66 174.25 Td (ge accelerated filer) Tj ET Q q 0 0 0 rg BT 340.31 174.25 Td (,” “accelerated filer” and “smaller reporting company” ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 162.25 Td (in Rule 12b-2 of the Exchange ) Tj ET Q q 0 0 0 rg BT 174.41 162.25 Td (Act. \(Check one\):) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 53.00 135.42 Td (Lar) Tj ET Q q 0 0 0 rg BT 66.79 135.42 Td (ge ) Tj ET Q q 0 0 0 rg BT 78.36 135.42 Td (Accelerated Filer) Tj ET Q /GS0 gs q 8.91 0 0 10.76 158.00 133.29 cm /I8 Do Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 424.00 135.00 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.00 135.42 Td (Accelerated Filer) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 544.00 135.00 Td ( ) Tj ET Q /GS0 gs q 8.91 0 0 10.76 548.00 133.29 cm /I9 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 53.00 120.42 Td (Non-Accelerated ) Tj ET Q q 0 0 0 rg BT 123.79 120.42 Td (Filer) Tj ET Q /GS0 gs q 8.91 0 0 10.76 158.00 118.29 cm /I10 Do Q /GS0 gs q 10.00 0 0 10.76 166.91 118.29 cm /I11 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.91 120.34 Td (\(Do ) Tj ET Q q 0 0 0 rg BT 194.96 120.34 Td (not ) Tj ET Q q 0 0 0 rg BT 210.24 120.34 Td (check ) Tj ET Q q 0 0 0 rg BT 236.06 120.34 Td (if ) Tj ET Q q 0 0 0 rg BT 244.67 120.34 Td (a ) Tj ET Q q 0 0 0 rg BT 251.60 120.34 Td (smaller ) Tj ET Q q 0 0 0 rg BT 283.54 120.34 Td (reporting ) Tj ET Q q 0 0 0 rg BT 322.69 120.34 Td (company\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 424.00 120.00 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.00 120.42 Td (Smaller reporting company) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 544.00 120.00 Td ( ) Tj ET Q /GS0 gs q 10.60 0 0 10.76 548.00 118.29 cm /I12 Do Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 98.25 Td (Indicate by check mark whether the registrant is a shell company \(as defined in Rule 12b-2 of the Exchange ) Tj ET Q q 0 0 0 rg BT 483.46 98.25 Td (Act\). ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 80.25 Td (Y) Tj ET Q q 0 0 0 rg BT 56.22 80.25 Td (es ) Tj ET Q /GS0 gs q 8.91 0 0 10.09 69.55 78.09 cm /I13 Do Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 78.46 80.25 Td ( No ) Tj ET Q /GS0 gs q 10.60 0 0 10.09 100.68 78.09 cm /I14 Do Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 50.00 62.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.25 62.25 Td (As ) Tj ET Q q 0 0 0 rg BT 65.86 62.25 Td (of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 76.69 62.25 Td (November 4, ) Tj ET Q q 0 0 0 rg BT 131.40 62.25 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 151.40 62.25 Td (, ) Tj ET Q q 0 0 0 rg BT 156.40 62.25 Td (there ) Tj ET Q q 0 0 0 rg BT 178.89 62.25 Td (were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 200.81 62.25 Td (20,848,950) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 245.81 62.25 Td ( ) Tj ET Q q 0 0 0 rg BT 248.31 62.25 Td (outstanding ) Tj ET Q q 0 0 0 rg BT 297.48 62.25 Td (shares ) Tj ET Q q 0 0 0 rg BT 324.97 62.25 Td (of ) Tj ET Q q 0 0 0 rg BT 335.80 62.25 Td (common ) Tj ET Q q 0 0 0 rg BT 373.29 62.25 Td (stock ) Tj ET Q q 0 0 0 rg BT 396.90 62.25 Td (of ) Tj ET Q q 0 0 0 rg BT 407.73 62.25 Td (the ) Tj ET Q q 0 0 0 rg BT 422.45 62.25 Td (registrant.) Tj ET Q endstream endobj 5 0 obj <><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><>] /Rotate 0 /Contents 6 0 R>> endobj 6 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 31.60 Td (1) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 742.25 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 742.25 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 742.25 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 742.25 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 742.25 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 742.25 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 742.25 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 742.25 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 742.25 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 278.90 724.25 Td (FORM 10-Q) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 264.25 706.25 Td (September) Tj ET Q q 0 0 0 rg BT 310.17 706.25 Td ( 30, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 347.67 706.25 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 289.85 688.25 Td (INDEX) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 322.08 688.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 53.00 662.32 Td (PART I.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 95 660.0833984375 m 219.9072265625 660.0833984375 l s q 0 0 1 rg BT 95.00 661.42 Td (FINANCIAL) Tj ET Q q 0 0 1 rg BT 148.52 661.42 Td ( INFORMA) Tj ET Q q 0 0 1 rg BT 196.03 661.42 Td (TION) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 647.32 Td (Item 1.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 645.9833984375 m 220.59375 645.9833984375 l s q 0 0 1 rg BT 137.00 647.32 Td (Financial Statements) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 630.9833984375 m 504.1240234375 630.9833984375 l s q 0 0 1 rg BT 137.00 632.32 Td (Consolidated Balance Sheets as of September 30, 2016 \(unaudited\) and December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 615.9833984375 m 498.953125 615.9833984375 l s q 0 0 1 rg BT 137.00 617.32 Td (Consolidated Statements of Operations \(unaudited\) for the ) Tj ET Q q 0 0 1 rg BT 373.15 617.32 Td (Three and Nine Months Ended ) Tj ET Q BT /F1 10.00 Tf ET 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 605.9833984375 m 256.7021484375 605.9833984375 l s q 0 0 1 rg BT 137.00 607.32 Td (September 30, 2016 and 2015) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 590.9833984375 m 413.435546875 590.9833984375 l s q 0 0 1 rg BT 137.00 592.32 Td (Consolidated Statements of Stockholders’) Tj ET Q q 0 0 1 rg BT 304.29 592.32 Td ( Equity for the ) Tj ET Q q 0 0 1 rg BT 364.46 592.32 Td (Y) Tj ET Q q 0 0 1 rg BT 370.68 592.32 Td (ear Ended ) Tj ET Q BT /F1 10.00 Tf ET 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 580.9833984375 m 461.6435546875 580.9833984375 l s q 0 0 1 rg BT 137.00 582.32 Td (December 31, 2015 and the Nine Months Ended September 30, 2016 \(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 565.9833984375 m 504.7197265625 565.9833984375 l s q 0 0 1 rg BT 137.00 567.32 Td (Consolidated Statements of Cash Flows \(unaudited\) for the Nine Months Ended September ) Tj ET Q BT /F1 10.00 Tf ET 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 555.9833984375 m 211.4384765625 555.9833984375 l s q 0 0 1 rg BT 137.00 557.32 Td (30, 2016 and 2015) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 540.9833984375 m 511.931640625 540.9833984375 l s q 0 0 1 rg BT 137.00 542.32 Td (Condensed Notes to Consolidated Financial Statements as of September 30, 2016 \(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 527.32 Td (Item 2.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 525.9833984375 m 495.291015625 525.9833984375 l s q 0 0 1 rg BT 137.00 527.32 Td (Management’) Tj ET Q q 0 0 1 rg BT 191.98 527.32 Td (s Discussion and ) Tj ET Q q 0 0 1 rg BT 261.15 527.32 Td (Analysis of Financial Condition and Results of Operations) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 512.32 Td (Item 3.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 510.9833984375 m 376.3896484375 510.9833984375 l s q 0 0 1 rg BT 137.00 512.32 Td (Quantitative and Qualitative Disclosures about Market Risk) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 497.32 Td (Item 4.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 495.9833984375 m 235.3154296875 495.9833984375 l s q 0 0 1 rg BT 137.00 497.32 Td (Controls and Procedures) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 53.00 482.32 Td (PART II.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 95 480.9833984375 m 199.7216796875 480.9833984375 l s q 0 0 1 rg BT 95.00 482.32 Td (OTHER INFORMA) Tj ET Q q 0 0 1 rg BT 175.84 482.32 Td (TION) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 467.32 Td (Item 1.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 465.9833984375 m 211.140625 465.9833984375 l s q 0 0 1 rg BT 137.00 467.32 Td (Legal Proceedings) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 452.32 Td (Item 1A.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 450.9833984375 m 187.2783203125 450.9833984375 l s q 0 0 1 rg BT 137.00 452.32 Td (Risk Factors) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 437.32 Td (Item 2.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 435.9833984375 m 378.6015625 435.9833984375 l s q 0 0 1 rg BT 137.00 437.32 Td (Unregistered Sales of Equity Securities and Use of Proceeds) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 422.32 Td (Item 3.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 420.9833984375 m 263.9189453125 420.9833984375 l s q 0 0 1 rg BT 137.00 422.32 Td (Defaults upon Senior Securities) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 407.32 Td (Item 4.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 405.9833984375 m 235.3154296875 405.9833984375 l s q 0 0 1 rg BT 137.00 407.32 Td (Mine Safety Disclosures) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 392.32 Td (Item 5.) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 137 390.9833984375 m 210.0322265625 390.9833984375 l s q 0 0 1 rg BT 137.00 392.32 Td (Other Information) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 377.32 Td (Item 6.) 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J 0 j 3 M 489.5 536.75 m 562.5 536.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 480.75 m 485.5 480.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 467.75 m 485.5 467.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 465.75 m 485.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 480.75 m 562.5 480.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 467.75 m 562.5 467.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 465.75 m 562.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 382.75 m 485.5 382.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 368.75 m 485.5 368.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 382.75 m 562.5 382.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 368.75 m 562.5 368.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 251.75 m 485.5 251.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 251.75 m 562.5 251.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 236.75 m 485.5 236.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 222.75 m 485.5 222.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 412.5 220.75 m 485.5 220.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 236.75 m 562.5 236.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 222.75 m 562.5 222.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 489.5 220.75 m 562.5 220.75 l s BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 639.21 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 415.10 638.98 Td (September 30, 2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 493.25 638.98 Td (December 31, 2015) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 626.01 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 428.45 625.98 Td (\(unaudited\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 612.21 Td (Assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 597.21 Td (Real estate:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 583.21 Td (Land) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 415.00 583.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 457.25 583.21 Td (46,828) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 492.00 583.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 534.25 583.21 Td (46,828) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 569.21 Td (Buildings and improvements) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 569.21 Td (366,490) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 569.21 Td (365,219) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 555.21 Td (Total real estate, cost) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 555.21 Td (413,318) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 555.21 Td (412,047) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 541.21 Td (Less accumulated depreciation and amortization) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 454.25 541.21 Td (\(44,592) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 482.00 541.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.25 541.21 Td (\(35,713) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 541.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 527.21 Td (Total real estate, net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 527.21 Td (368,726) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 527.21 Td (376,334) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 513.21 Td (Cash and cash equivalents) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 457.25 513.21 Td (16,906) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 534.25 513.21 Td (20,193) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 499.21 Td (Restricted cash) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 461.75 499.21 Td (4,384) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 499.21 Td (4,676) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 485.21 Td (Prepaid expenses and other assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 461.75 485.21 Td (4,982) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 485.21 Td (4,976) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 471.21 Td (Total assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 415.00 471.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 471.21 Td (394,998) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 492.00 471.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 471.21 Td (406,179) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 457.21 Td (Liabilities and stockholders’ equity) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 443.21 Td (Notes payable, net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 415.00 443.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 443.21 Td (280,509) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 492.00 443.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 443.21 Td (284,488) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 429.21 Td (Accounts payable and accrued liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 461.75 429.21 Td (5,185) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 429.21 Td (5,236) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 415.21 Td (Due to affiliates) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 468.50 415.21 Td (279) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 415.21 Td (4,894) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 401.21 Td (Distributions payable) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 461.75 401.21 Td (1,109) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 401.21 Td (1,133) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 387.21 Td (Other liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 461.75 387.21 Td (2,735) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 387.21 Td (2,163) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 373.21 Td (Total liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 373.21 Td (289,817) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 373.21 Td (297,914) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 360.01 Td (Commitments and contingencies \(Note 7\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 345.21 Td (Redeemable common stock) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 468.50 345.21 Td (411) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 545.50 345.21 Td (894) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 332.01 Td (Stockholders’ equity:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 318.21 Td (Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 309.21 Td (outstanding) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 473.00 309.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 550.00 309.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 295.21 Td (Common stock, $.01 par value; 1,000,000,000 shares authorized, 20,751,787 and 20,508,397) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 286.21 Td (shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 468.50 286.21 Td (207) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 545.50 286.21 Td (205) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 271.21 Td (Additional paid-in capital) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 271.21 Td (178,786) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 271.21 Td (176,476) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 68.00 256.21 Td (Cumulative distributions and net losses) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 454.25 256.21 Td (\(74,223) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 482.00 256.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.25 256.21 Td (\(69,310) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 256.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 241.21 Td (Total stockholders’ equity) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 241.21 Td (104,770) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 241.21 Td (107,371) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 226.21 Td (Total liabilities and stockholders’ equity) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 415.00 226.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 226.21 Td (394,998) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 492.00 226.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 226.21 Td (406,179) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 159.90 204.25 Td (See accompanying condensed notes to consolidated financial statements.) Tj ET Q endstream endobj 9 0 obj <>] /Rotate 0 /Contents 10 0 R>> endobj 10 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 31.60 Td (3) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 713.25 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 713.25 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 713.25 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 713.25 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 713.25 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 713.25 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 713.25 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 713.25 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 713.25 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 189.15 695.25 Td (CONSOLIDA) Tj ET Q q 0 0 0 rg BT 248.97 695.25 Td (TED ST) Tj ET Q q 0 0 0 rg BT 283.52 695.25 Td (A) Tj ET Q q 0 0 0 rg BT 290.00 695.25 Td (TEMENTS OF) Tj ET Q q 0 0 0 rg BT 354.92 695.25 Td ( OPERA) Tj ET Q q 0 0 0 rg BT 391.68 695.25 Td (TIONS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 677.25 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 204.05 662.25 Td (\(in thousands, except share and per share amounts\)) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 615.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 615.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 615.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 615.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 615.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 615.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 615.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 615.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 585.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 585.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 585.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 585.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 585.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 585.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 585.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 585.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 555.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 555.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 555.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 555.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 555.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 555.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 555.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 555.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 525.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 525.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 525.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 525.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 525.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 525.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 525.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 525.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 495.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 495.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 495.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 495.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 495.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 495.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 495.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 495.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 465.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 465.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 465.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 465.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 465.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 465.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 465.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 465.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 435.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 435.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 435.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 435.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 435.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 435.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 435.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 435.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 405.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 405.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 405.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 405.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 405.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 405.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 405.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 405.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 375.75 219.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 269.50 375.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 339.50 375.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 375.75 70.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.50 375.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 417.50 375.75 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.50 375.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 492.50 375.75 70.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 630.75 m 339.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 339.5 630.75 m 343.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 630.75 m 413.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 630.75 m 488.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 488.5 630.75 m 492.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 630.75 m 562.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 615.75 m 339.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 615.75 m 413.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 630.75 m 488.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 615.75 m 488.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 488.5 630.75 m 492.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 630.75 m 562.5 630.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 615.75 m 562.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 585.75 m 339.5 585.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 585.75 m 413.5 585.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 585.75 m 488.5 585.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 585.75 m 562.5 585.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 570.75 m 339.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 585.75 m 413.5 585.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 570.75 m 413.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 570.75 m 488.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 585.75 m 562.5 585.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 570.75 m 562.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 450.75 m 339.5 450.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 450.75 m 413.5 450.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 450.75 m 488.5 450.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 450.75 m 562.5 450.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 435.75 m 339.5 435.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 435.75 m 413.5 435.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 435.75 m 488.5 435.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 435.75 m 562.5 435.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 390.75 m 339.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 376.75 m 339.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 374.75 m 339.5 374.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 390.75 m 413.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 376.75 m 413.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 374.75 m 413.5 374.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 390.75 m 488.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 376.75 m 488.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 374.75 m 488.5 374.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 390.75 m 562.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 376.75 m 562.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 374.75 m 562.5 374.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 361.75 m 339.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 359.75 m 339.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 361.75 m 413.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 359.75 m 413.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 361.75 m 488.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 359.75 m 488.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 361.75 m 562.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 359.75 m 562.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 359.75 m 339.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 361.75 m 339.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 339.75 m 339.5 339.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 269.5 337.75 m 339.5 337.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 359.75 m 413.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 361.75 m 413.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 339.75 m 413.5 339.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 337.75 m 413.5 337.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 359.75 m 488.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 361.75 m 488.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 339.75 m 488.5 339.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 417.5 337.75 m 488.5 337.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 359.75 m 562.5 359.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 361.75 m 562.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 339.75 m 562.5 339.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 492.5 337.75 m 562.5 337.75 l s BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 635.21 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 279.25 634.98 Td (Three Months Ended September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 429.90 634.98 Td (Nine Months Ended September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 296.00 619.98 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 370.00 619.98 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 444.50 619.98 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 519.00 619.98 Td (2015) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 605.21 Td (Revenues:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 590.21 Td (Rental income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 272.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 311.25 590.21 Td (11,498) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 346.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 385.25 590.21 Td (11,330) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 460.25 590.21 Td (34,019) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 495.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 534.25 590.21 Td (33,570) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 575.21 Td (Total revenues) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 311.25 575.21 Td (11,498) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 385.25 575.21 Td (11,330) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 460.25 575.21 Td (34,019) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 534.25 575.21 Td (33,570) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 560.21 Td (Expenses:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 545.21 Td (Operating, maintenance, and management) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 545.21 Td (1,671) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 389.75 545.21 Td (1,915) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 545.21 Td (4,854) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 545.21 Td (6,914) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 530.21 Td (Real estate taxes and insurance) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 530.21 Td (1,797) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 389.75 530.21 Td (1,487) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 530.21 Td (5,248) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 530.21 Td (4,509) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 515.21 Td (Asset management fees to affiliate) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 322.50 515.21 Td (104) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 396.50 515.21 Td (144) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 471.50 515.21 Td (343) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 545.50 515.21 Td (687) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 500.21 Td (Property management fees and expenses to affiliate) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 500.21 Td (1,506) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 389.75 500.21 Td (1,368) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 500.21 Td (4,359) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 500.21 Td (2,136) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 485.21 Td (General and administrative expenses) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 322.50 485.21 Td (473) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 396.50 485.21 Td (485) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 485.21 Td (1,947) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 485.21 Td (1,697) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 470.21 Td (Depreciation and amortization) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 470.21 Td (3,084) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 389.75 470.21 Td (3,036) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 470.21 Td (9,201) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 470.21 Td (9,056) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 455.21 Td (Interest expense) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 455.21 Td (2,588) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 389.75 455.21 Td (2,636) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 455.21 Td (7,758) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 455.21 Td (7,879) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 440.21 Td (Total expenses) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 311.25 440.21 Td (11,223) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 385.25 440.21 Td (11,071) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 460.25 440.21 Td (33,710) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 534.25 440.21 Td (32,878) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 425.21 Td (Other income:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 410.21 Td (Interest income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 327.00 410.21 Td (13) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 405.50 410.21 Td (4) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 476.00 410.21 Td (41) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 550.00 410.21 Td (13) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 395.21 Td (Other income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 395.21 Td (4,752) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 401.00 395.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 395.21 Td (4,752) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 550.00 395.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 380.21 Td (Net income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 272.00 380.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 315.75 380.21 Td (5,040) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 346.00 380.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 396.50 380.21 Td (263) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.00 380.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 464.75 380.21 Td (5,102) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 495.00 380.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 545.50 380.21 Td (705) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 365.21 Td (Net income per common share, basic and diluted) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 272.00 365.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 320.25 365.21 Td (0.24) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 346.00 365.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 394.25 365.21 Td (0.01) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.00 365.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 469.25 365.21 Td (0.25) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 495.00 365.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 543.25 365.21 Td (0.03) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 352.01 Td (Weighted-average number of common shares outstanding,) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 343.01 Td (basic and diluted) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 295.50 343.21 Td (20,718,265) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 369.50 343.21 Td (20,322,618) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 444.50 343.21 Td (20,601,992) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 518.50 343.21 Td (20,206,023) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 159.90 321.25 Td (See accompanying condensed notes to consolidated financial statements.) Tj ET Q endstream endobj 11 0 obj <>] /Rotate 0 /Contents 12 0 R>> endobj 12 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 31.60 Td (4) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 713.25 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 713.25 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 713.25 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 713.25 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 713.25 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 713.25 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 713.25 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 713.25 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 713.25 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 157.90 695.25 Td (CONSOLIDA) Tj ET Q q 0 0 0 rg BT 217.72 695.25 Td (TED ST) Tj ET Q q 0 0 0 rg BT 252.28 695.25 Td (A) Tj ET Q q 0 0 0 rg BT 258.75 695.25 Td (TEMENTS OF) Tj ET Q q 0 0 0 rg BT 323.67 695.25 Td ( ST) Tj ET Q q 0 0 0 rg BT 338.22 695.25 Td (OCKHOLDERS’) Tj ET Q q 0 0 0 rg BT 412.49 695.25 Td ( EQUITY) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 103.80 677.25 Td (For the ) Tj ET Q q 0 0 0 rg BT 134.54 677.25 Td (Y) Tj ET Q q 0 0 0 rg BT 140.76 677.25 Td (ear Ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 183.51 677.25 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 262.10 677.25 Td ( and the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.25 677.25 Td (Nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 315.69 677.25 Td ( Months Ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 379.30 677.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.56 677.25 Td ( \(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 262.65 662.25 Td (\(dollars in thousands\)) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 600.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 600.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 600.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 600.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 600.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 600.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 600.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 600.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 600.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 600.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 600.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 570.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 570.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 570.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 570.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 570.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 570.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 570.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 570.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 570.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 570.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 570.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 540.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 540.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 540.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 540.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 540.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 540.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 540.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 540.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 540.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 540.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 540.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 510.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 510.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 510.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 510.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 510.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 510.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 510.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 510.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 510.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 510.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 510.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 480.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 480.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 480.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 480.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 480.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 480.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 480.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 480.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 480.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 480.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 480.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 450.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 450.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 450.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 450.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 450.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 450.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 450.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 450.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 450.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 450.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 450.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 420.75 222.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.50 420.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 276.50 420.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 420.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.50 420.75 50.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 380.50 420.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 384.50 420.75 60.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.50 420.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 448.50 420.75 55.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 503.50 420.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 507.50 420.75 55.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 615.75 m 326.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 326.5 615.75 m 330.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 615.75 m 380.5 615.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 600.75 m 326.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 600.75 m 380.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 384.5 600.75 m 444.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 448.5 600.75 m 503.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 507.5 600.75 m 562.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 600.75 m 326.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 600.75 m 380.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 384.5 600.75 m 444.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 448.5 600.75 m 503.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 507.5 600.75 m 562.5 600.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 510.75 m 326.5 510.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 510.75 m 380.5 510.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 384.5 510.75 m 444.5 510.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 448.5 510.75 m 503.5 510.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 507.5 510.75 m 562.5 510.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 420.75 m 326.5 420.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 406.75 m 326.5 406.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 276.5 404.75 m 326.5 404.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 420.75 m 380.5 420.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 406.75 m 380.5 406.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330.5 404.75 m 380.5 404.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 384.5 420.75 m 444.5 420.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 384.5 406.75 m 444.5 406.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 384.5 404.75 m 444.5 404.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 448.5 420.75 m 503.5 420.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 448.5 406.75 m 503.5 406.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 448.5 404.75 m 503.5 404.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 507.5 420.75 m 562.5 420.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 507.5 406.75 m 562.5 406.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 507.5 404.75 m 562.5 404.75 l s BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 635.00 Td ( ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 279.00 635.00 Td ( ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 333.00 635.00 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 395.75 612.98 Td (Additional ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 387.85 604.98 Td (Paid-in Capital) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 455.50 628.98 Td (Cumulative ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 453.05 620.98 Td (Distributions ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 462.05 612.98 Td (and Net ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 451.35 604.98 Td (Income \(Loss\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 525.75 620.98 Td (Total) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 511.20 612.98 Td (Stockholders’) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 522.90 604.98 Td (Equity) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 620.00 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 301.65 619.98 Td (Common Stock) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 605.00 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 289.50 604.98 Td (Shares) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 339.40 604.98 Td (Amounts) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 590.21 Td (Balance, December 31, 2014) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 282.50 590.21 Td (20,084,830) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 333.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 590.21 Td (201) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 387.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 411.75 590.21 Td (172,448) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 451.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 472.25 590.21 Td (\(56,925) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 590.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 510.00 590.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 590.21 Td (115,724) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 575.21 Td (Issuance of common stock) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 293.75 575.21 Td (595,095) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 372.50 575.21 Td (6) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.75 575.21 Td (5,730) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 491.00 575.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 575.21 Td (5,736) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 560.21 Td (Redemptions of common stock) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 290.75 560.21 Td (\(171,528) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 323.00 560.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 369.50 560.21 Td (\(2) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 377.00 560.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 417.75 560.21 Td (\(1,695) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 441.00 560.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 491.00 560.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 535.75 560.21 Td (\(1,697) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 560.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 545.21 Td (Distributions declared) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 314.00 545.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 368.00 545.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 432.00 545.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 472.25 545.21 Td (\(13,176) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 545.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.25 545.21 Td (\(13,176) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 545.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 530.21 Td (Other offering costs) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 314.00 530.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 368.00 530.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 433.50 530.21 Td (\(7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 441.00 530.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 491.00 530.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 551.50 530.21 Td (\(7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 530.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 515.21 Td (Net income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 314.00 515.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 368.00 515.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 432.00 515.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 486.50 515.21 Td (791) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 545.50 515.21 Td (791) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 500.21 Td (Balance, December 31, 2015) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 282.50 500.21 Td (20,508,397) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 500.21 Td (205) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 411.75 500.21 Td (176,476) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 472.25 500.21 Td (\(69,310) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 500.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 500.21 Td (107,371) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 485.21 Td (Issuance of common stock) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 293.75 485.21 Td (442,104) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 372.50 485.21 Td (4) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.75 485.21 Td (4,320) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 491.00 485.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 485.21 Td (4,324) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 470.21 Td (Redemptions of common stock) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 290.75 470.21 Td (\(198,714) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 323.00 470.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 369.50 470.21 Td (\(2) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 377.00 470.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 417.75 470.21 Td (\(2,017) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 441.00 470.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 491.00 470.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 535.75 470.21 Td (\(2,019) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 470.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 455.21 Td (Distributions declared) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 314.00 455.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 368.00 455.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 432.00 455.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 472.25 455.21 Td (\(10,015) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 455.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.25 455.21 Td (\(10,015) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 559.00 455.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 440.21 Td (Other offering costs) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 314.00 440.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 368.00 440.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 436.50 440.21 Td (7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 491.00 440.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 554.50 440.21 Td (7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 425.21 Td (Net income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 314.00 425.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 368.00 425.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 432.00 425.21 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.75 425.21 Td (5,102) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 538.75 425.21 Td (5,102) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 53.00 410.21 Td (Balance, September 30, 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 282.50 410.21 Td (20,751,787) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 333.00 410.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 410.21 Td (207) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 387.00 410.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 411.75 410.21 Td (178,786) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 451.00 410.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 472.25 410.21 Td (\(74,223) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 410.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 510.00 410.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 529.75 410.21 Td (104,770) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 159.90 388.25 Td (See accompanying condensed notes to consolidated financial statements.) Tj ET Q endstream endobj 13 0 obj <>] /Rotate 0 /Contents 14 0 R>> endobj 14 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 31.60 Td (5) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 713.25 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 713.25 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 713.25 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 713.25 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 713.25 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 713.25 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 713.25 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 713.25 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 713.25 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 188.65 695.25 Td (CONSOLIDA) Tj ET Q q 0 0 0 rg BT 248.47 695.25 Td (TED ST) Tj ET Q q 0 0 0 rg BT 283.02 695.25 Td (A) Tj ET Q q 0 0 0 rg BT 289.50 695.25 Td (TEMENTS OF) Tj ET Q q 0 0 0 rg BT 354.42 695.25 Td ( CASH FLOWS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 677.25 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 277.50 662.25 Td (\(in thousands\)) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 619.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 619.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 619.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 619.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 619.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 593.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 593.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 593.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 593.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 593.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 567.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 567.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 567.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 567.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 567.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 541.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 541.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 541.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 541.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 541.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 515.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 515.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 515.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 515.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 515.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 489.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 489.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 489.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 489.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 489.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 463.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 463.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 463.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 463.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 463.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 437.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 437.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 437.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 437.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 437.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 411.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 411.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 411.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 411.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 411.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 385.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 385.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 385.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 385.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 385.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 359.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 359.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 359.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 359.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 359.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 333.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 333.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 333.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 333.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 333.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 307.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 307.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 307.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 307.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 307.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 281.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 281.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 281.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 281.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 281.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 255.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 255.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 255.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 255.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 255.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 229.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 229.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 229.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 229.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 229.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.50 196.75 370.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 420.50 196.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.50 196.75 67.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 491.50 196.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 495.50 196.75 67.00 -13.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 632.75 m 491.5 632.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 491.5 632.75 m 495.5 632.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 632.75 m 562.5 632.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 619.75 m 491.5 619.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 619.75 m 562.5 619.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 437.75 m 491.5 437.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 424.75 m 491.5 424.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 437.75 m 562.5 437.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 424.75 m 562.5 424.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 385.75 m 491.5 385.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 385.75 m 562.5 385.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 385.75 m 491.5 385.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 372.75 m 491.5 372.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 385.75 m 562.5 385.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 372.75 m 562.5 372.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 307.75 m 491.5 307.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 294.75 m 491.5 294.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 307.75 m 562.5 307.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 294.75 m 562.5 294.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 268.75 m 491.5 268.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 256.75 m 491.5 256.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 254.75 m 491.5 254.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 268.75 m 562.5 268.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 256.75 m 562.5 256.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 254.75 m 562.5 254.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 230.75 m 491.5 230.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 228.75 m 491.5 228.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 230.75 m 562.5 230.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 228.75 m 562.5 228.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 197.75 m 491.5 197.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 195.75 m 491.5 195.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 197.75 m 562.5 197.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 195.75 m 562.5 195.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 195.75 m 491.5 195.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 197.75 m 491.5 197.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 184.75 m 491.5 184.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424.5 182.75 m 491.5 182.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 195.75 m 562.5 195.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 197.75 m 562.5 197.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 184.75 m 562.5 184.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 495.5 182.75 m 562.5 182.75 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 433.40 636.98 Td (Nine Months Ended September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 235.00 623.98 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 449.50 623.98 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 520.50 623.98 Td (2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 611.00 Td (Cash Flows from Operating Activities:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 598.00 Td (Net income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 427.00 598.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 470.30 598.00 Td (5,102) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.00 598.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 598.00 Td (705) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 585.00 Td (Adjustments to reconcile net income to net cash provided by operating activities:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 572.00 Td (Depreciation and amortization) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 470.30 572.00 Td (9,201) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.30 572.00 Td (9,056) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 559.00 Td (Bad debt expense) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 559.00 Td (371) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 559.00 Td (351) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 546.00 Td (Loss due to property damages) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 546.00 Td (145) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 551.30 546.00 Td (78) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 533.00 Td (Amortization of discount on notes payable) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.30 533.00 Td (65) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 551.30 533.00 Td (65) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 520.00 Td (Amortization of deferred financing costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 520.00 Td (311) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 520.00 Td (311) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 507.00 Td (Changes in operating assets and liabilities:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 494.00 Td (Restricted cash for operational expenditures) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 494.00 Td (292) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 494.00 Td (310) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 481.00 Td (Prepaid expenses and other assets) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 473.60 481.00 Td (\(709) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 481.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 544.60 481.00 Td (\(949) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 481.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 468.00 Td (Accounts payable and accrued liabilities) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 468.00 Td (159) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 544.60 468.00 Td (\(744) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 468.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 455.00 Td (Due to affiliates) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 455.00 Td (\(4,615) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 455.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 455.00 Td (261) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 101.00 442.00 Td (Other liabilities) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.30 442.00 Td (89) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 548.60 442.00 Td (\(24) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 442.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 113.00 429.00 Td (Net cash provided by operating activities) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.30 429.00 Td (10,411) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.30 429.00 Td (9,420) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 416.00 Td (Cash Flows from Investing Activities:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 403.00 Td (Improvements to real estate) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 403.00 Td (\(1,749) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 403.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 538.60 403.00 Td (\(1,745) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 403.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 390.00 Td (Insurance proceeds received for property damage) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 390.00 Td (133) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 390.00 Td (397) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 113.00 377.00 Td (Net cash used in investing activities) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 377.00 Td (\(1,616) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 377.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 538.60 377.00 Td (\(1,348) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 377.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 364.00 Td (Cash Flows from Financing Activities:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 351.00 Td (Principal payments on mortgage notes payable) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 351.00 Td (\(4,355) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 351.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 538.60 351.00 Td (\(4,141) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 351.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 338.00 Td (Payments to redeem common stock) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 338.00 Td (\(2,019) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 338.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 538.60 338.00 Td (\(1,550) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 338.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 325.00 Td (Other offering costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 484.30 325.00 Td (7) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 552.60 325.00 Td (\(7) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 325.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 312.00 Td (Distributions paid) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 312.00 Td (\(5,715) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 312.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 538.60 312.00 Td (\(5,546) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 312.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 113.00 299.00 Td (Net cash used in financing activities) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 463.60 299.00 Td (\(12,082) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 299.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 534.60 299.00 Td (\(11,244) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 299.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 286.00 Td (Net decrease in cash and cash equivalents) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 467.60 286.00 Td (\(3,287) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 488.30 286.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 538.60 286.00 Td (\(3,172) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.30 286.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 273.00 Td (Cash and cash equivalents, beginning of period) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.30 273.00 Td (20,193) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.30 273.00 Td (23,878) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 260.00 Td (Cash and cash equivalents, end of period) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 427.00 260.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.30 260.00 Td (16,906) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.00 260.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.30 260.00 Td (20,706) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 247.00 Td (Supplemental Disclosure of Cash Flow Information:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 234.00 Td (Interest paid) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 427.00 234.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 470.30 234.00 Td (7,413) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.00 234.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.30 234.00 Td (7,534) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 53.00 221.00 Td (Supplemental Disclosure of Noncash Transactions:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 208.70 Td (Distributions paid to common stockholders through common stock issuances pursuant to the dividend) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 200.70 Td (reinvestment plan) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 427.00 201.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 470.30 201.00 Td (4,324) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.00 201.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.30 201.00 Td (4,298) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 188.00 Td (Increase in redeemable common stock payable) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 427.00 188.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 476.30 188.00 Td (483) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.00 188.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.30 188.00 Td (363) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 159.90 166.25 Td (See accompanying condensed notes to consolidated financial statements.) Tj ET Q endstream endobj 15 0 obj <>] /Rotate 0 /Contents 16 0 R>> endobj 16 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 142.65 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 244.16 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 250.65 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 320.75 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 399.93 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 413.92 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 420.40 694.60 Td (TEMENTS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 33.60 Td (6) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 629.10 Td (1. ) Tj ET Q q 0 0 0 rg BT 72.00 629.10 Td (ORGANIZA) Tj ET Q q 0 0 0 rg BT 126.26 629.10 Td (TION) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 611.10 Td (KBS Legacy Partners ) Tj ET Q q 0 0 0 rg BT 160.59 611.10 Td (Apartment REIT) Tj ET Q q 0 0 0 rg BT 227.33 611.10 Td (, Inc. \(the “Company”\) was formed on July 31, 2009 as a Maryland corporation ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 599.10 Td (that elected to be taxed as a real estate investment trust \(“REIT”\) beginning with the taxable year ended December 31, 2010. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 587.10 Td (Substantially all of the Company’) Tj ET Q q 0 0 0 rg BT 183.93 587.10 Td (s business is conducted through KBS Legacy Partners Limited Partnership \(the “Operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 575.10 Td (Partnership”\), a Delaware limited partnership formed on ) Tj ET Q q 0 0 0 rg BT 277.20 575.10 Td (August 4, 2009. ) Tj ET Q q 0 0 0 rg BT 345.91 575.10 Td (The Company is the sole general partner of and owns ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 563.10 Td (a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 56.44 563.10 Td (0.1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 77.27 563.10 Td ( partnership interest in the Operating Partnership. KBS Legacy Partners Holdings LLC \(“REIT) Tj ET Q q 0 0 0 rg BT 459.22 563.10 Td ( Holdings”\), a Delaware ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 551.10 Td (limited liability company formed on ) Tj ET Q q 0 0 0 rg BT 196.42 551.10 Td (August 4, 2009, owns the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 344.18 551.10 Td (99.9%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 370.01 551.10 Td ( interest in the Operating Partnership and is its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 539.10 Td (sole limited partner) Tj ET Q q 0 0 0 rg BT 126.70 539.10 Td (. ) Tj ET Q q 0 0 0 rg BT 134.02 539.10 Td (The Company is the sole member and manager of REIT) Tj ET Q q 0 0 0 rg BT 357.94 539.10 Td ( Holdings. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 509.10 Td (Advisors LLC \(the “Advisor”\), an af) Tj ET Q q 0 0 0 rg BT 196.50 509.10 Td (filiate of the Company) Tj ET Q q 0 0 0 rg BT 286.11 509.10 Td (, pursuant to an advisory agreement the Company renewed with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 497.10 Td (Advisor on January 25, 2016 and amended on March 15, 2016 \(as amended, the “Advisory ) Tj ET Q q 0 0 0 rg BT 415.53 497.10 Td (Agreement”\). ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 479.10 Td (On ) Tj ET Q q 0 0 0 rg BT 86.17 479.10 Td (August 7, 2009, the Company issued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.17 479.10 Td (20,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 263.67 479.10 Td ( shares of its common stock to KBS-Legacy ) Tj ET Q q 0 0 0 rg BT 441.97 479.10 Td (Apartment Community REIT) Tj ET Q q 0 0 0 rg BT 559.55 479.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 467.10 Td (V) Tj ET Q q 0 0 0 rg BT 55.61 467.10 Td (enture, LLC \(the “Sub-Advisor”\), an af) Tj ET Q q 0 0 0 rg BT 212.88 467.10 Td (filiate of the Company) Tj ET Q q 0 0 0 rg BT 302.48 467.10 Td (, at a purchase price of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 395.49 467.10 Td ($10.00) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.99 467.10 Td ( per share. ) Tj ET Q q 0 0 0 rg BT 468.81 467.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 493.25 467.10 Td (September 30, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 455.10 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.50 455.10 Td (, the Sub-Advisor owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 171.99 455.10 Td (20,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 199.49 455.10 Td ( shares of common stock of the Company) Tj ET Q q 0 0 0 rg BT 365.20 455.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.10 Td (The Company invested in and manages a portfolio of high quality apartment communities located throughout the United ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 425.10 Td (States. ) Tj ET Q q 0 0 0 rg BT 80.71 425.10 Td (The Company’) Tj ET Q q 0 0 0 rg BT 140.42 425.10 Td (s portfolio consists of “core” apartment buildings that were already well-positioned and producing rental ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 413.10 Td (income at acquisition. ) Tj ET Q q 0 0 0 rg BT 141.98 413.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 166.42 413.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.69 413.10 Td (, the Company owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 336.95 413.10 Td (1) Tj ET Q q 0 0 0 rg BT 341.58 413.10 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.58 413.10 Td ( apartment complexes. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 395.10 Td (On ) Tj ET Q q 0 0 0 rg BT 86.17 395.10 Td (August 19, 2009, the Company filed a registration statement on Form S-1) Tj ET Q q 0 0 0 rg BT 380.48 395.10 Td (1 with the Securities and Exchange ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 383.10 Td (Commission \(the “SEC”\) to of) Tj ET Q q 0 0 0 rg BT 172.09 383.10 Td (fer a minimum of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.85 383.10 Td (250,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 277.35 383.10 Td ( shares and a maximum of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.10 383.10 Td (280,000,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 435.10 383.10 Td ( shares of common stock for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 371.10 Td (sale to the public \(the “Initial Of) Tj ET Q q 0 0 0 rg BT 179.28 371.10 Td (fering”\), of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.69 371.10 Td (80,000,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 298.69 371.10 Td ( shares would be of) Tj ET Q q 0 0 0 rg BT 376.27 371.10 Td (fered pursuant to the Company’) Tj ET Q q 0 0 0 rg BT 502.90 371.10 Td (s dividend ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 359.10 Td (reinvestment plan. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.10 Td (The SEC declared the Company’) Tj ET Q q 0 0 0 rg BT 203.63 341.10 Td (s registration statement for the Initial Of) Tj ET Q q 0 0 0 rg BT 364.51 341.10 Td (fering ef) Tj ET Q q 0 0 0 rg BT 398.48 341.10 Td (fective on March 12, 2010, and the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 329.10 Td (Company retained KBS Capital Markets Group LLC \(the “Dealer Manager”\), an af) Tj ET Q q 0 0 0 rg BT 383.09 329.10 Td (filiate of the Company) Tj ET Q q 0 0 0 rg BT 472.70 329.10 Td (, to serve as the dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 317.10 Td (manager for the Initial Of) Tj ET Q q 0 0 0 rg BT 152.05 317.10 Td (fering pursuant to a dealer manager agreement dated March 12, 2010 \(the “Initial Dealer Manager ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 305.10 Td (Agreement”\). Under the Initial Dealer Manager ) Tj ET Q q 0 0 0 rg BT 244.41 305.10 Td (Agreement, the Dealer Manager was responsible for marketing the Company’) Tj ET Q q 0 0 0 rg BT 555.42 305.10 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 293.10 Td (shares being of) Tj ET Q q 0 0 0 rg BT 109.86 293.10 Td (fered pursuant to the Initial Of) Tj ET Q q 0 0 0 rg BT 231.58 293.10 Td (fering. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 275.10 Td (On May 31, 2012, the Company filed a registration statement on Form S-1) Tj ET Q q 0 0 0 rg BT 370.47 275.10 Td (1 with the SEC to register a follow-on public ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 263.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 263.10 Td (fering \(the “Follow-on Of) Tj ET Q q 0 0 0 rg BT 161.05 263.10 Td (fering” and together with the Initial Of) Tj ET Q q 0 0 0 rg BT 315.82 263.10 Td (fering, the “Of) Tj ET Q q 0 0 0 rg BT 374.22 263.10 Td (ferings”\). Pursuant to the registration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 251.10 Td (statement, as amended, the Company registered up to an additional $) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 324.98 251.10 Td (2,000,000,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 382.48 251.10 Td ( of shares of common stock for sale to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 239.10 Td (public and up to an additional $) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.14 239.10 Td (760,000,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 226.14 239.10 Td ( of shares of common stock pursuant to the dividend reinvestment plan. ) Tj ET Q q 0 0 0 rg BT 517.01 239.10 Td (The SEC ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 227.10 Td (declared the Company’) Tj ET Q q 0 0 0 rg BT 142.24 227.10 Td (s registration statement for the Follow-on Of) Tj ET Q q 0 0 0 rg BT 320.92 227.10 Td (fering ef) Tj ET Q q 0 0 0 rg BT 354.88 227.10 Td (fective on March 8, 2013. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 209.10 Td (The Company retained the Dealer Manager to serve as the dealer manager for the Follow-on Of) Tj ET Q q 0 0 0 rg BT 454.72 209.10 Td (fering pursuant to a dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 197.10 Td (manager agreement dated March 8, 2013 \(the “Follow-on Dealer Manager ) Tj ET Q q 0 0 0 rg BT 349.10 197.10 Td (Agreement” and together with the Initial Dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 185.10 Td (Manager ) Tj ET Q q 0 0 0 rg BT 86.99 185.10 Td (Agreement, the “Dealer Manager ) Tj ET Q q 0 0 0 rg BT 222.20 185.10 Td (Agreements”\). On March 12, 2013, the Company ceased of) Tj ET Q q 0 0 0 rg BT 462.50 185.10 Td (fering shares pursuant to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 173.10 Td (the Initial Of) Tj ET Q q 0 0 0 rg BT 100.97 173.10 Td (fering and on March 13, 2013, the Company commenced of) Tj ET Q q 0 0 0 rg BT 340.45 173.10 Td (fering shares to the public pursuant to the Follow-on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 161.10 Td (Of) Tj ET Q q 0 0 0 rg BT 59.87 161.10 Td (fering.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 143.10 Td (In the Initial Of) Tj ET Q q 0 0 0 rg BT 134.30 143.10 Td (fering, the Company sold ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 238.45 143.10 Td (18,088,084) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.45 143.10 Td ( shares of common stock for gross of) Tj ET Q q 0 0 0 rg BT 431.30 143.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.54 143.10 Td ($179.2 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 131.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 78.39 131.10 Td (, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 123.67 131.10 Td (368,872) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.17 131.10 Td ( shares of common stock under the dividend reinvestment plan for gross of) Tj ET Q q 0 0 0 rg BT 455.36 131.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 530.60 131.10 Td ($3.5 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 119.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 78.39 119.10 Td (. ) Tj ET Q q 0 0 0 rg BT 85.71 119.10 Td (The Company ceased of) Tj ET Q q 0 0 0 rg BT 182.44 119.10 Td (fering shares in the primary Follow-on Of) Tj ET Q q 0 0 0 rg BT 350.00 119.10 Td (fering on March 31, 2014 and completed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 107.10 Td (subscription processing procedures on ) Tj ET Q q 0 0 0 rg BT 204.47 107.10 Td (April 30, 2014. ) Tj ET Q q 0 0 0 rg BT 270.40 107.10 Td (The Company sold ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 349.00 107.10 Td (1,496,198) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 389.00 107.10 Td ( shares of common stock in the primary ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 95.10 Td (Follow-on Of) Tj ET Q q 0 0 0 rg BT 104.04 95.10 Td (fering for gross of) Tj ET Q q 0 0 0 rg BT 176.34 95.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 251.58 95.10 Td ($15.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 305.48 95.10 Td (. ) Tj ET Q endstream endobj 17 0 obj <>] /Rotate 0 /Contents 18 0 R>> endobj 18 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 33.60 Td (7) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 632.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 632.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 632.10 Td (, the Company had sold an aggregate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 338.05 632.10 Td (21,539,479) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 383.05 632.10 Td ( shares of common stock in the Of) Tj ET Q q 0 0 0 rg BT 520.34 632.10 Td (ferings for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (gross of) Tj ET Q q 0 0 0 rg BT 81.26 620.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.51 620.10 Td ($214.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 215.40 620.10 Td (, including an aggregate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 324.80 620.10 Td (2,324,069) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 364.80 620.10 Td ( shares of common stock under the dividend ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (reinvestment plan for gross of) Tj ET Q q 0 0 0 rg BT 169.29 608.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.53 608.10 Td ($23.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 298.43 608.10 Td (. ) Tj ET Q q 0 0 0 rg BT 305.37 608.10 Td (Also, as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.93 608.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 431.19 608.10 Td (, the Company had redeemed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (807,692) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 82.00 596.10 Td ( shares sold in the Of) Tj ET Q q 0 0 0 rg BT 166.53 596.10 Td (ferings for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.96 596.10 Td ($7.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 259.85 596.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 578.10 Td (The Company continues to of) Tj ET Q q 0 0 0 rg BT 190.69 578.10 Td (fer shares of common stock under the dividend reinvestment plan.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 554.10 Td (2. ) Tj ET Q q 0 0 0 rg BT 72.00 554.10 Td (SUMMAR) Tj ET Q q 0 0 0 rg BT 117.75 554.10 Td (Y) Tj ET Q q 0 0 0 rg BT 124.60 554.10 Td ( OF) Tj ET Q q 0 0 0 rg BT 140.62 554.10 Td ( SIGNIFICANT) Tj ET Q q 0 0 0 rg BT 209.62 554.10 Td ( ) Tj ET Q q 0 0 0 rg BT 211.57 554.10 Td (ACCOUNTING POLICIES) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 536.10 Td (There have been no significant changes to the Company’) Tj ET Q q 0 0 0 rg BT 299.15 536.10 Td (s accounting policies since it filed its audited financial statements ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 524.10 Td (in its ) Tj ET Q q 0 0 0 rg BT 71.17 524.10 Td (Annual Report on Form 10-K for the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 267.51 524.10 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.10 524.10 Td (. For further information about the Company’) Tj ET Q q 0 0 0 rg BT 530.51 524.10 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 512.10 Td (accounting policies, refer to the Company’) Tj ET Q q 0 0 0 rg BT 220.00 512.10 Td (s consolidated financial statements and notes thereto for the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 500.10 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 128.08 500.10 Td ( included in the Company’) Tj ET Q q 0 0 0 rg BT 234.18 500.10 Td (s ) Tj ET Q q 0 0 0 rg BT 240.02 500.10 Td (Annual Report on Form 10-K filed with the Securities and Exchange ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 488.10 Td (Commission \(the “SEC”\).) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 470.10 Td (Principles of Consolidation and Basis of Pr) Tj ET Q q 0 0 0 rg BT 232.12 470.10 Td (esentation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 452.10 Td (The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 440.10 Td (accordance with U.S. generally accepted accounting principles \(“GAAP”\) for interim financial information as contained within ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 428.10 Td (the Financial ) Tj ET Q q 0 0 0 rg BT 103.38 428.10 Td (Accounting Standards Board \(“F) Tj ET Q q 0 0 0 rg BT 234.00 428.10 Td (ASB”\) ) Tj ET Q q 0 0 0 rg BT 263.17 428.10 Td (Accounting Standards Codification \(“ASC”\) and the rules and regulations ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 416.10 Td (of the SEC, including the instructions to Form 10-Q and ) Tj ET Q q 0 0 0 rg BT 276.43 416.10 Td (Article 10 of Regulation S-X. ) Tj ET Q q 0 0 0 rg BT 399.47 416.10 Td (Accordingly) Tj ET Q q 0 0 0 rg BT 448.80 416.10 Td (, the unaudited consolidated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 404.10 Td (financial statements do not include all of the information and footnotes required by GAAP) Tj ET Q q 0 0 0 rg BT 410.98 404.10 Td ( for audited financial statements. In ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 392.10 Td (the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 380.10 Td (are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 368.10 Td (results for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 106.99 368.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 126.97 368.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 146.41 368.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 163.63 368.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 224.45 368.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.71 368.10 Td ( are not necessarily indicative of the results that may be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 356.10 Td (expected for the year ending ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.83 356.10 Td (December 31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.42 356.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 338.10 Td (The consolidated financial statements include the accounts of the Company) Tj ET Q q 0 0 0 rg BT 373.20 338.10 Td (, REIT) Tj ET Q q 0 0 0 rg BT 400.24 338.10 Td ( Holdings, the Operating Partnership ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 326.10 Td (and their direct and indirect wholly owned subsidiaries. ) Tj ET Q q 0 0 0 rg BT 276.11 326.10 Td (All significant intercompany balances and transactions are eliminated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 314.10 Td (in consolidation. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 296.10 Td (Use of Estimates) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 278.10 Td (The preparation of the unaudited consolidated financial statements and condensed notes thereto in conformity with GAAP) Tj ET Q q 0 0 0 rg BT 560.66 278.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 266.10 Td (requires management to make estimates and assumptions that af) Tj ET Q q 0 0 0 rg BT 305.91 266.10 Td (fect the amounts reported in the unaudited consolidated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 254.10 Td (financial statements and condensed notes. ) Tj ET Q q 0 0 0 rg BT 221.39 254.10 Td (Actual results could materially dif) Tj ET Q q 0 0 0 rg BT 357.84 254.10 Td (fer from those estimates. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 236.10 Td (Reclassifications) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 218.10 Td (Certain amounts in the Company’) Tj ET Q q 0 0 0 rg BT 206.98 218.10 Td (s prior period consolidated financial statements have been reclassified to conform to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 206.10 Td (current period presentation. ) Tj ET Q q 0 0 0 rg BT 164.55 206.10 Td (These reclassifications have not changed the results of operations of prior periods. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 194.10 Td (three months ended June 30, 2015, the Company entered into various Property Management ) Tj ET Q q 0 0 0 rg BT 420.25 194.10 Td (Agreements \(defined below\) with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 182.10 Td (Legacy Partners, Inc., formerly known as Legacy Partners Residential, Inc. \(“LPI”\), an af) Tj ET Q q 0 0 0 rg BT 407.51 182.10 Td (filiate of the Sub-Advisor) Tj ET Q q 0 0 0 rg BT 509.44 182.10 Td (. See Note ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 170.10 Td (6, “Related Party ) Tj ET Q q 0 0 0 rg BT 120.41 170.10 Td (T) Tj ET Q q 0 0 0 rg BT 126.17 170.10 Td (ransactions — Property Management ) Tj ET Q q 0 0 0 rg BT 277.24 170.10 Td (Agreements.” ) Tj ET Q q 0 0 0 rg BT 336.94 170.10 Td (As a result, management fees to LPI, as well as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 158.10 Td (reimbursable on-site personnel salary and related benefits expenses at the Company’) Tj ET Q q 0 0 0 rg BT 387.17 158.10 Td (s real estate properties, have been ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 146.10 Td (reclassified from operating, maintenance and management costs to property management fees and expenses to af) Tj ET Q q 0 0 0 rg BT 500.54 146.10 Td (filiate on the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 134.10 Td (accompanying consolidated statements of operations.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 116.10 Td (Segments) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 98.10 Td (The Company had invested in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 194.48 98.10 Td (1) Tj ET Q q 0 0 0 rg BT 199.10 98.10 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 204.10 98.10 Td ( apartment complexes as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 316.01 98.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.27 98.10 Td (. Substantially all of the Company’) Tj ET Q q 0 0 0 rg BT 538.20 98.10 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 86.10 Td (revenue and net income is from real estate, and therefore, the Company currently operates in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.41 86.10 Td (one) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 436.84 86.10 Td ( reportable segment. ) Tj ET Q endstream endobj 19 0 obj <>] /Rotate 0 /Contents 20 0 R>> endobj 20 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 31.60 Td (8) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 627.25 Td (Squar) Tj ET Q q 0 0 0 rg BT 75.44 627.25 Td (e Footage, Occupancy and Other) Tj ET Q q 0 0 0 rg BT 215.53 627.25 Td ( Measur) Tj ET Q q 0 0 0 rg BT 250.61 627.25 Td (es) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 70.50 609.25 Td (Any references to square footage or occupancy are unaudited and outside the scope of the Company’) Tj ET Q q 0 0 0 rg BT 473.41 609.25 Td (s independent ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 597.25 Td (registered public accounting firm’) Tj ET Q q 0 0 0 rg BT 185.29 597.25 Td (s review of the Company’) Tj ET Q q 0 0 0 rg BT 288.60 597.25 Td (s financial statements in accordance with the standards of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 585.25 Td (United States Public Company ) Tj ET Q q 0 0 0 rg BT 174.50 585.25 Td (Accounting Oversight Board.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 567.25 Td (Per) Tj ET Q q 0 0 0 rg BT 64.30 567.25 Td ( Shar) Tj ET Q q 0 0 0 rg BT 87.19 567.25 Td (e Data) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.25 Td (Basic net income per share of common stock is calculated by dividing net income by the weighted-average number of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 537.25 Td (shares of common stock issued and outstanding during such period. Diluted net income per share of common stock equals ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 525.25 Td (basic net income per share of common stock as there were no potentially dilutive securities outstanding during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.82 525.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 526.03 525.25 Td ( months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 513.25 Td (ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.88 513.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.14 513.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 175.58 513.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 195.58 513.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 248.24 513.25 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 495.25 Td (Distributions declared per common share were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 261.38 495.25 Td ($0.164) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 288.88 495.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 308.32 495.25 Td ($0.486) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 335.82 495.25 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 367.20 495.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 387.18 495.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.62 495.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 423.84 495.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.66 495.25 Td (September 30, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 483.25 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.50 483.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 122.16 483.25 Td (, and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 144.10 483.25 Td ($0.164) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 171.60 483.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 191.04 483.25 Td ($0.486) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 218.54 483.25 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 249.92 483.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 269.90 483.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 289.34 483.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 306.56 483.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 367.38 483.25 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 447.64 483.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 500.31 483.25 Td (. Distributions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 471.25 Td (declared per common share assumes each share was issued and outstanding each day during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 435.20 471.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 455.19 471.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 474.63 471.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 491.84 471.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 459.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 459.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 149.20 459.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 169.20 459.25 Td (. For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.81 459.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 227.80 459.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 247.23 459.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 264.45 459.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 325.28 459.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.54 459.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 424.98 459.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 444.98 459.25 Td (, distributions were based on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 447.25 Td (daily record dates and calculated at a rate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 228.02 447.25 Td ($0.00178082) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 280.52 447.25 Td ( per share per day) Tj ET Q q 0 0 0 rg BT 350.94 447.25 Td (. Each day during the period from January 1, 2016 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 435.25 Td (through February 28, 2016 and March 1, 2016 through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 270.85 435.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 351.12 435.25 Td ( was a record date for distributions. Each day ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 423.25 Td (during the period from January 1, 2015 through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 242.52 423.25 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.78 423.25 Td ( was a record date for distributions. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 405.25 Td (Recently Issued ) Tj ET Q q 0 0 0 rg BT 118.39 405.25 Td (Accounting Standards Update) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 387.25 Td (In May 2014, the F) Tj ET Q q 0 0 0 rg BT 149.70 387.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 198.60 387.25 Td (ASU No. 2014-09, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 276.65 387.25 Td (Revenue fr) Tj ET Q q 0 0 0 rg BT 319.32 387.25 Td (om Contracts with Customers \(T) Tj ET Q q 0 0 0 rg BT 448.97 387.25 Td (opic 606\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 487.02 387.25 Td ( \(“ASU No. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 375.25 Td (2014-09”\). ) Tj ET Q q 0 0 0 rg BT 97.55 375.25 Td (ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 363.25 Td (customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 351.25 Td (services. ) Tj ET Q q 0 0 0 rg BT 88.66 351.25 Td (ASU No. 2014-09 supersedes the revenue requirements in ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 323.88 351.25 Td (Revenue Recognition \(T) Tj ET Q q 0 0 0 rg BT 419.03 351.25 Td (opic 605\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 457.08 351.25 Td ( and most industry-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 339.25 Td (specific guidance throughout the Industry ) Tj ET Q q 0 0 0 rg BT 218.44 339.25 Td (T) Tj ET Q q 0 0 0 rg BT 223.85 339.25 Td (opics of the Codification. ) Tj ET Q q 0 0 0 rg BT 329.94 339.25 Td (ASU No. 2014-09 does not apply to lease contracts ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 327.25 Td (within the scope of) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 125.87 327.25 Td ( Leases \(T) Tj ET Q q 0 0 0 rg BT 166.07 327.25 Td (opic 840\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 204.11 327.25 Td (. ) Tj ET Q q 0 0 0 rg BT 211.06 327.25 Td (ASU No. 2014-09 was to be ef) Tj ET Q q 0 0 0 rg BT 334.48 327.25 Td (fective for fiscal years, and interim periods within those ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 315.25 Td (years, beginning after December 15, 2016, and is to be applied retrospectively) Tj ET Q q 0 0 0 rg BT 361.52 315.25 Td (, with early application not permitted. In ) Tj ET Q q 0 0 0 rg BT 527.59 315.25 Td (August ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 303.25 Td (2015, the F) Tj ET Q q 0 0 0 rg BT 94.04 303.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 142.94 303.25 Td (ASU No. 2015-14, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 220.99 303.25 Td (Revenue fr) Tj ET Q q 0 0 0 rg BT 263.66 303.25 Td (om Contracts with Customers \(T) Tj ET Q q 0 0 0 rg BT 393.31 303.25 Td (opic 606\): Deferral of the Effective Date ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 291.25 Td (\(“ASU No. 2015-14”\), which defers the ef) Tj ET Q q 0 0 0 rg BT 219.27 291.25 Td (fective date of ) Tj ET Q q 0 0 0 rg BT 278.40 291.25 Td (ASU No. 2014-09 by one year) Tj ET Q q 0 0 0 rg BT 400.05 291.25 Td (. Early adoption is permitted but not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 279.25 Td (before the original ef) Tj ET Q q 0 0 0 rg BT 133.45 279.25 Td (fective date. ) Tj ET Q q 0 0 0 rg BT 187.12 279.25 Td (The Company is still evaluating the impact of adopting ) Tj ET Q q 0 0 0 rg BT 409.58 279.25 Td (ASU No. 2014-09 on its financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 267.25 Td (statements. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 249.25 Td (In ) Tj ET Q q 0 0 0 rg BT 83.78 249.25 Td (August 2014, the F) Tj ET Q q 0 0 0 rg BT 159.71 249.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 208.61 249.25 Td (ASU No. 2014-15, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 286.66 249.25 Td (Pr) Tj ET Q q 0 0 0 rg BT 296.29 249.25 Td (esentation of Financial Statements \(Subtopic 205-40\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.87 249.25 Td (, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 514.87 249.25 Td (Disclosur) Tj ET Q q 0 0 0 rg BT 553.39 249.25 Td (e ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 49.50 237.25 Td (of Uncertainties about an Entity’) Tj ET Q q 0 0 0 rg BT 180.41 237.25 Td (s ) Tj ET Q q 0 0 0 rg BT 186.62 237.25 Td (Ability to Continue as a Going Concern ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.56 237.25 Td (\(“ASU No. 2014-15”\). ) Tj ET Q q 0 0 0 rg BT 441.97 237.25 Td (The amendments in ) Tj ET Q q 0 0 0 rg BT 522.79 237.25 Td (ASU No. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 225.25 Td (2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 213.25 Td (considered in the aggregate, that raise substantial doubt about an entity’) Tj ET Q q 0 0 0 rg BT 335.80 213.25 Td (s ability to continue as a going concern within one year ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 201.25 Td (after the date that the financial statements are issued \(or are available to be issued when applicable\) and, if so, provide related ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 189.25 Td (disclosures. ) Tj ET Q q 0 0 0 rg BT 98.39 189.25 Td (ASU No. 2014-15 is ef) Tj ET Q q 0 0 0 rg BT 190.70 189.25 Td (fective for annual periods ending after December 15, 2016, and interim periods within ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 177.25 Td (annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 165.25 Td (which the financial statements have not previously been issued. ) Tj ET Q q 0 0 0 rg BT 305.92 165.25 Td (The Company does not expect the adoption of ) Tj ET Q q 0 0 0 rg BT 492.54 165.25 Td (ASU No. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 153.25 Td (2014-15 to have a significant impact on its financial statements.) Tj ET Q endstream endobj 21 0 obj <>] /Rotate 0 /Contents 22 0 R>> endobj 22 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.50 31.60 Td (9) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 627.10 Td (In January 2016, the F) Tj ET Q q 0 0 0 rg BT 162.46 627.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 211.37 627.10 Td (ASU No. 2016-01, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 289.42 627.10 Td (Financial Instruments - Overall \(Subtopic 825-10\): Recognition ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 49.50 615.10 Td (and Measur) Tj ET Q q 0 0 0 rg BT 97.18 615.10 Td (ement of Financial ) Tj ET Q q 0 0 0 rg BT 175.04 615.10 Td (Assets and Financial Liabilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.98 615.10 Td ( \(“ASU No. 2016-01”\). ) Tj ET Q q 0 0 0 rg BT 400.39 615.10 Td (The amendments in ) Tj ET Q q 0 0 0 rg BT 481.21 615.10 Td (ASU No. 2016-01 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 603.10 Td (address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ) Tj ET Q q 0 0 0 rg BT 476.03 603.10 Td (ASU No. 2016-01 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 591.10 Td (primarily af) Tj ET Q q 0 0 0 rg BT 96.80 591.10 Td (fects accounting for equity investments and financial liabilities where the fair value option has been elected. ) Tj ET Q q 0 0 0 rg BT 533.31 591.10 Td (ASU ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 579.10 Td (No. 2016-01 also requires entities to present financial assets and financial liabilities separately) Tj ET Q q 0 0 0 rg BT 426.23 579.10 Td (, grouped by measurement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 567.10 Td (category and form of financial asset in the balance sheet or in the accompanying notes to the financial statements. ) Tj ET Q q 0 0 0 rg BT 508.50 567.10 Td (ASU No. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 555.10 Td (2016-01 is ef) Tj ET Q q 0 0 0 rg BT 102.09 555.10 Td (fective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 543.10 Td (Early application is permitted for financial statements that have not been previously issued. ) Tj ET Q q 0 0 0 rg BT 419.49 543.10 Td (The Company does not expect the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 531.10 Td (adoption of ) Tj ET Q q 0 0 0 rg BT 97.27 531.10 Td (ASU No. 2016-01 to have a significant impact on its financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 513.10 Td (In February 2016, the F) Tj ET Q q 0 0 0 rg BT 167.46 513.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 216.37 513.10 Td (ASU No. 2016-02, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 294.42 513.10 Td (Leases \(T) Tj ET Q q 0 0 0 rg BT 332.12 513.10 Td (opic 842\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 370.17 513.10 Td ( \(“ASU No. 2016-02”\). ) Tj ET Q q 0 0 0 rg BT 468.58 513.10 Td (The amendments in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 501.10 Td (ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 489.10 Td (leases on their balance sheets and making tar) Tj ET Q q 0 0 0 rg BT 228.97 489.10 Td (geted changes to lessor accounting. ) Tj ET Q q 0 0 0 rg BT 372.26 489.10 Td (ASU No. 2016-02 is ef) Tj ET Q q 0 0 0 rg BT 464.58 489.10 Td (fective for annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 477.10 Td (periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ) Tj ET Q q 0 0 0 rg BT 508.27 477.10 Td (ASU No. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 465.10 Td (2016-02 as of its issuance is permitted. ) Tj ET Q q 0 0 0 rg BT 210.13 465.10 Td (The new leases standard requires a modified retrospective transition approach for all ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 453.10 Td (leases existing at, or entered into after) Tj ET Q q 0 0 0 rg BT 200.98 453.10 Td (, the date of initial application, with an option to use certain transition relief. ) Tj ET Q q 0 0 0 rg BT 510.72 453.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 441.10 Td (Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 423.10 Td (In ) Tj ET Q q 0 0 0 rg BT 83.78 423.10 Td (August 2016, the F) Tj ET Q q 0 0 0 rg BT 159.71 423.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 208.61 423.10 Td (ASU No. 2016-15, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 286.66 423.10 Td (Statement of Cash Flows \(T) Tj ET Q q 0 0 0 rg BT 396.86 423.10 Td (opic 230\), Classification of Certain Cash ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 49.50 411.10 Td (Receipts and Cash Payments) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.31 411.10 Td ( \(“ASU No. 2016-15”\). ) Tj ET Q q 0 0 0 rg BT 263.35 411.10 Td (ASU No. 2016-15 is intended to reduce diversity in practice in how ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 399.10 Td (certain transactions are classified in the statement of cash flows. ) Tj ET Q q 0 0 0 rg BT 310.89 399.10 Td (The amendments in ) Tj ET Q q 0 0 0 rg BT 391.71 399.10 Td (ASU No. 2016-15 provide guidance on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 387.10 Td (eight specific cash flow issues, including the following that are or may be relevant to the Company: \(a\) Cash payments for debt ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 375.10 Td (prepayment or debt extinguishment costs should be classified as cash outflows for financing activities; \(b\) Cash payments ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 363.10 Td (relating to contingent consideration made soon after an acquisition’) Tj ET Q q 0 0 0 rg BT 318.87 363.10 Td (s consummation date \(i.e., approximately three months or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 351.10 Td (less\) should be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 339.10 Td (outflows for financing activities up to the amount of the original contingent consideration liability) Tj ET Q q 0 0 0 rg BT 440.71 339.10 Td (. Payments made in excess of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 327.10 Td (the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; \(c\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 315.10 Td (Cash payments received from the settlement of insurance claims should be classified on the basis of the nature of the loss \(or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 303.10 Td (each component loss, if an entity receives a lump-sum settlement\); \(d\) In the absence of specific guidance, an entity should ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 291.10 Td (classify each separately identifiable cash source and use on the basis of the nature of the underlying cash flows. For cash flows ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 279.10 Td (with aspects of more than one class that cannot be separated, the classification should be based on the activity that is likely to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 267.10 Td (be the predominant source or use of cash flow) Tj ET Q q 0 0 0 rg BT 233.24 267.10 Td (. ) Tj ET Q q 0 0 0 rg BT 240.18 267.10 Td (ASU No. 2016-15 is ef) Tj ET Q q 0 0 0 rg BT 332.50 267.10 Td (fective for fiscal years beginning after December 15, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 255.10 Td (2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. ) Tj ET Q q 0 0 0 rg BT 537.55 255.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 243.10 Td (Company is still evaluating the impact of adopting ) Tj ET Q q 0 0 0 rg BT 253.91 243.10 Td (ASU No. 2016-15 on its financial statements.) Tj ET Q endstream endobj 23 0 obj <>] /Rotate 0 /Contents 24 0 R>> endobj 24 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (10) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 632.25 Td (3. ) Tj ET Q q 0 0 0 rg BT 72.00 632.25 Td (REAL) Tj ET Q q 0 0 0 rg BT 99.23 632.25 Td ( EST) Tj ET Q q 0 0 0 rg BT 119.89 632.25 Td (A) Tj ET Q q 0 0 0 rg BT 126.37 632.25 Td (TE) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 614.25 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 614.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 614.25 Td (, the Company owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.97 614.25 Td (1) Tj ET Q q 0 0 0 rg BT 271.60 614.25 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 276.60 614.25 Td ( apartment complexes, containing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.06 614.25 Td (3,039) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 436.56 614.25 Td ( units and encompassing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 537.10 614.25 Td (3.1 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 602.25 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 78.39 602.25 Td ( rentable square feet, which were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.04 602.25 Td (94%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 231.38 602.25 Td ( occupied. ) Tj ET Q q 0 0 0 rg BT 277.29 602.25 Td (The following table provides summary information regarding the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 590.25 Td (properties owned by the Company as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 211.41 590.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 291.67 590.25 Td ( \(dollars in thousands\):) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 545.75 123.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 173.00 545.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 177.00 545.75 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 242.00 545.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 246.00 545.75 80.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.00 545.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.00 545.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 405.00 545.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 545.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 484.00 545.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.00 545.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 517.75 123.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 173.00 517.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 177.00 517.75 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 242.00 517.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 246.00 517.75 80.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.00 517.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.00 517.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 405.00 517.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 517.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 484.00 517.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.00 517.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 489.75 123.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 173.00 489.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 177.00 489.75 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 242.00 489.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 246.00 489.75 80.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.00 489.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.00 489.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 405.00 489.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 489.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 484.00 489.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.00 489.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 461.75 123.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 173.00 461.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 177.00 461.75 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 242.00 461.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 246.00 461.75 80.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.00 461.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.00 461.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 405.00 461.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 461.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 484.00 461.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.00 461.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 433.75 123.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 173.00 433.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 177.00 433.75 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 242.00 433.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 246.00 433.75 80.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.00 433.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.00 433.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 405.00 433.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 433.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 484.00 433.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.00 433.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 405.75 123.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 173.00 405.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 177.00 405.75 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 242.00 405.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 246.00 405.75 80.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.00 405.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 330.00 405.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 405.00 405.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 405.75 75.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 484.00 405.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 488.00 405.75 75.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 50 545.75 m 173 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 177 545.75 m 242 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 246 545.75 m 326 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330 545.75 m 405 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 409 545.75 m 484 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 488 545.75 m 563 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330 545.75 m 405 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330 391.75 m 405 391.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 409 391.75 m 484 391.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 488 391.75 m 563 391.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330 378.75 m 405 378.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 330 376.75 m 405 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 409 378.75 m 484 378.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 409 376.75 m 484 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 488 378.75 m 563 378.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 488 376.75 m 563 376.75 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 52.50 549.98 Td (Property Name) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 184.25 549.98 Td (Date Acquired) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 270.35 549.98 Td (Location) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 358.25 557.98 Td (T) Tj ET Q q 0 0 0 rg BT 362.85 557.98 Td (otal ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 337.75 549.98 Td (Real Estate, Cost) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 423.30 565.83 Td (Accumulated ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 424.05 557.83 Td (Depr) Tj ET Q q 0 0 0 rg BT 441.23 557.83 Td (eciation) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 415.85 549.83 Td (and ) Tj ET Q q 0 0 0 rg BT 430.31 549.83 Td (Amortization) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 516.25 557.98 Td (T) Tj ET Q q 0 0 0 rg BT 520.85 557.98 Td (otal ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 497.55 549.98 Td (Real Estate, Net) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 536.00 Td (Legacy at Valley Ranch) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 536.00 Td (10/26/2010) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 268.45 536.00 Td (Irving, TX) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.50 536.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 536.00 Td (36,485) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 411.50 536.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 536.00 Td (\(4,995) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 536.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 490.50 536.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 536.00 Td (31,490) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 522.00 Td (Poplar Creek) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 522.00 Td (02/09/2012) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 259.70 522.00 Td (Schaumburg, IL) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 522.00 Td (27,200) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 522.00 Td (\(2,820) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 522.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 522.00 Td (24,380) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 508.00 Td (The Residence at Waterstone) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 508.00 Td (04/06/2012) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 261.25 508.00 Td (Pikesville, MD) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 508.00 Td (65,270) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 508.00 Td (\(7,376) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 508.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 508.00 Td (57,894) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 494.00 Td (Legacy Crescent Park) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 494.00 Td (05/03/2012) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.65 494.00 Td (Greer, SC) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 494.00 Td (20,714) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 494.00 Td (\(2,763) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 494.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 494.00 Td (17,951) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 480.00 Td (Legacy at Martin’s Point) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 480.00 Td (05/31/2012) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 265.20 480.00 Td (Lombard, IL) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 480.00 Td (37,487) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 480.00 Td (\(5,198) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 480.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 480.00 Td (32,289) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 466.00 Td (Wesley Village) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.90 466.00 Td (11/06/2012) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 263.05 466.00 Td (Charlotte, NC) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 466.00 Td (44,433) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 466.00 Td (\(4,659) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 466.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 466.00 Td (39,774) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 452.00 Td (Watertower Apartments) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 452.00 Td (01/15/2013) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 257.15 452.00 Td (Eden Prairie, MN) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 452.00 Td (38,722) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 452.00 Td (\(4,020) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 452.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 452.00 Td (34,702) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 438.00 Td (Crystal Park at Waterford) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 438.00 Td (05/08/2013) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 261.70 438.00 Td (Frederick, MD) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 438.00 Td (46,050) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 438.00 Td (\(4,758) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 438.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 438.00 Td (41,292) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 424.00 Td (Millennium Apartment Homes) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 424.00 Td (06/07/2013) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 261.70 424.00 Td (Greenville, SC) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 424.00 Td (33,276) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 424.00 Td (\(3,376) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 424.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 424.00 Td (29,900) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 410.00 Td (Legacy Grand at Concord) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 410.00 Td (02/18/2014) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 264.15 410.00 Td (Concord, NC) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 410.00 Td (27,855) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 410.00 Td (\(2,143) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 410.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 410.00 Td (25,712) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 396.00 Td (Lofts at the Highlands) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 190.75 396.00 Td (02/25/2014) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 262.60 396.00 Td (St. Louis, MO) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 379.80 396.00 Td (35,826) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 460.10 396.00 Td (\(2,484) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 396.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 396.00 Td (33,342) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.50 382.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 375.80 382.00 Td (413,318) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 411.50 382.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 456.10 382.00 Td (\(44,592) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 480.80 382.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 490.50 382.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 533.80 382.00 Td (368,726) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 354.25 Td (Additionally) Tj ET Q q 0 0 0 rg BT 121.90 354.25 Td (, as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 148.56 354.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 228.83 354.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.26 354.25 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 326.85 354.25 Td (, the Company had recorded unamortized tax abatement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 342.25 Td (intangible assets, which are included in prepaid expenses and other assets in the accompanying balance sheets, of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.18 342.25 Td ($3.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 554.08 342.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 330.25 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 66.44 330.25 Td ($3.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 115.33 330.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 167.99 330.25 Td (. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 221.04 330.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 241.02 330.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 260.46 330.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 277.68 330.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 338.50 330.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 418.77 330.25 Td (, the Company recorded ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 318.25 Td (amortization expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 148.07 318.25 Td ($65,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 180.57 318.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 200.01 318.25 Td ($0.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.90 318.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 301.57 318.25 Td (, related to tax abatement intangible assets. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 523.72 318.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 543.70 318.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 306.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 66.72 306.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 127.54 306.25 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.81 306.25 Td (, the Company recorded amortization expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.96 306.25 Td ($65,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 437.46 306.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.90 306.25 Td ($0.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.79 306.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 558.45 306.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 294.25 Td (related to tax abatement intangible assets.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 276.25 Td (Pr) Tj ET Q q 0 0 0 rg BT 59.87 276.25 Td (operty Damage) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 258.25 Td (During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 117.55 258.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 134.76 258.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 195.59 258.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.85 258.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 280.85 258.25 Td (one) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 295.29 258.25 Td ( of the Company’) Tj ET Q q 0 0 0 rg BT 365.00 258.25 Td (s apartment complexes suf) Tj ET Q q 0 0 0 rg BT 471.18 258.25 Td (fered physical damage ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 246.25 Td (due to frozen water pipes. ) Tj ET Q q 0 0 0 rg BT 157.89 246.25 Td (The Company’) Tj ET Q q 0 0 0 rg BT 217.60 246.25 Td (s insurance policies provide coverage for property damage and business interruption ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 234.25 Td (subject to a deductible of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 175.30 234.25 Td ($12,500) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.80 234.25 Td ( per incident. ) Tj ET Q q 0 0 0 rg BT 265.10 234.25 Td (The Company recognized a loss due to damage of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.54 234.25 Td ($145,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.04 234.25 Td ( during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 222.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 66.72 222.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 127.54 222.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.81 222.25 Td (, which was reduced by a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 311.38 222.25 Td ($132,500) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.88 222.25 Td ( insurance recovery related to such damage. ) Tj ET Q q 0 0 0 rg BT 528.89 222.25 Td (The net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 210.25 Td (loss due to damage of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 139.20 210.25 Td ($12,500) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 171.70 210.25 Td ( during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 217.53 210.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.74 210.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 295.57 210.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 375.83 210.25 Td ( was classified as operating, maintenance and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 198.25 Td (management expenses on the accompanying consolidated statements of operations and relates to the Company’) Tj ET Q q 0 0 0 rg BT 494.65 198.25 Td (s insurance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 186.25 Td (deductible.) Tj ET Q endstream endobj 25 0 obj <>] /Rotate 0 /Contents 26 0 R>> endobj 26 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.15 33.60 Td (1) Tj ET Q q 0 0 0 rg BT 305.78 33.60 Td (1) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 632.25 Td (4. ) Tj ET Q q 0 0 0 rg BT 72.00 632.25 Td (NOTES P) Tj ET Q q 0 0 0 rg BT 113.77 632.25 Td (A) Tj ET Q q 0 0 0 rg BT 120.07 632.25 Td (Y) Tj ET Q q 0 0 0 rg BT 126.38 632.25 Td (ABLE) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 614.25 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 614.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 614.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 196.15 614.25 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 274.73 614.25 Td (, the Company’) Tj ET Q q 0 0 0 rg BT 336.11 614.25 Td (s notes payable consisted of the following \(dollars in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 602.25 Td (thousands\): ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 550.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 550.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 550.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 550.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 550.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 550.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 550.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 550.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 550.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 550.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 550.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 522.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 522.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 522.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 522.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 522.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 522.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 522.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 522.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 522.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 522.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 522.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 494.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 494.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 494.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 494.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 494.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 494.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 494.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 494.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 494.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 494.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 494.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 466.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 466.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 466.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 466.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 466.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 466.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 466.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 466.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 466.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 466.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 466.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 438.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 438.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 438.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 438.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 438.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 438.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 438.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 438.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 438.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 438.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 438.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 410.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 410.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 410.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 410.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 410.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 410.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 410.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 410.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 410.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 410.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 410.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 382.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 382.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 382.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 382.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 382.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 382.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 382.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 382.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 382.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 382.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 382.75 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 354.75 152.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 202.00 354.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 206.00 354.75 69.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 275.00 354.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 279.00 354.75 73.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 352.00 354.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 354.75 77.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 433.00 354.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.00 354.75 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 509.00 354.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 513.00 354.75 50.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 206 550.75 m 275 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 279 550.75 m 352 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 356 550.75 m 433 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 437 550.75 m 509 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 513 550.75 m 563 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 206 396.75 m 275 396.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 279 396.75 m 352 396.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 206 354.75 m 275 354.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 279 354.75 m 352 354.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 206 341.75 m 275 341.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 206 339.75 m 275 339.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 279 341.75 m 352 341.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 279 339.75 m 352 339.75 l s BT /F2 7.50 Tf ET q 0 0 0 rg BT 213.40 562.37 Td (Book ) Tj ET Q q 0 0 0 rg BT 231.81 562.37 Td (V) Tj ET Q q 0 0 0 rg BT 236.54 562.37 Td (alue as of) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 208.70 554.87 Td (September) Tj ET Q q 0 0 0 rg BT 243.14 554.87 Td ( 30, 2016) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 288.40 562.37 Td (Book ) Tj ET Q q 0 0 0 rg BT 306.81 562.37 Td (V) Tj ET Q q 0 0 0 rg BT 311.54 562.37 Td (alue as of ) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 284.75 554.87 Td (December) Tj ET Q q 0 0 0 rg BT 317.10 554.87 Td ( 31, 2015) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 374.60 569.87 Td (Contractual ) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 364.80 562.37 Td (Inter) Tj ET Q q 0 0 0 rg BT 380.91 562.37 Td (est Rate as of ) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 362.70 554.87 Td (September) Tj ET Q q 0 0 0 rg BT 397.14 554.87 Td ( 30, 2016) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 449.60 554.87 Td (Payment Type) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 522.90 562.37 Td (Maturity) Tj ET Q BT /F2 7.50 Tf ET q 0 0 0 rg BT 530.00 554.87 Td (Date) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 540.90 Td (Legacy at Valley Ranch Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 208.50 540.90 Td ($) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 540.90 Td (31,111) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 281.50 540.90 Td ($) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 540.90 Td (31,554) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 540.90 Td (3.9%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 540.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 540.90 Td (04/01/2019) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 526.90 Td (Poplar Creek Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 526.90 Td (19,509) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 526.90 Td (19,785) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 526.90 Td (4.0%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 526.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 526.90 Td (03/01/2019) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 512.90 Td (The Residence at Waterstone Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 512.90 Td (45,883) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 512.90 Td (46,550) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 512.90 Td (3.8%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 512.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 512.90 Td (05/01/2019) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 498.90 Td (Legacy Crescent Park Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 498.90 Td (13,636) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 498.90 Td (13,858) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 498.90 Td (3.5%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 498.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 498.90 Td (06/01/2019) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 484.90 Td (Legacy at Martin’s Point Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 484.90 Td (21,984) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 484.90 Td (22,330) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 484.90 Td (3.3%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 484.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 484.90 Td (06/01/2019) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 470.90 Td (Wesley Village Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 470.90 Td (27,041) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 470.90 Td (27,566) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 470.90 Td (2.6%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 470.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 470.90 Td (12/01/2017) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 456.90 Td (Watertower Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 456.90 Td (24,091) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 456.90 Td (24,525) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 456.90 Td (2.5%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 456.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 456.90 Td (02/10/2018) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 442.90 Td (Crystal Park Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 442.90 Td (27,190) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 442.90 Td (27,709) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 442.90 Td (2.5%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 442.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 442.90 Td (06/01/2018) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 428.90 Td (Millennium Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 428.90 Td (20,317) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 428.90 Td (20,689) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 428.90 Td (2.7%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 428.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 428.90 Td (07/01/2018) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 414.90 Td (Legacy Grand at Concord Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 414.90 Td (22,468) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 414.90 Td (22,693) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 414.90 Td (4.1%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 414.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 414.90 Td (12/01/2050) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 58.50 400.90 Td (Lofts at the Highlands Mortgage Loan) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 251.35 400.90 Td (30,864) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 328.35 400.90 Td (31,190) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 386.15 400.90 Td (3.4%) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 442.90 400.90 Td (Principal & Interest) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 520.40 400.90 Td (08/01/2052) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 70.50 386.90 Td (Total notes payable principal outstanding) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 208.50 386.90 Td ($) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 247.60 386.90 Td (284,094) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 281.50 386.90 Td ($) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 324.60 386.90 Td (288,449) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 82.50 372.90 Td (Discount on note payable, net) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 252.60 372.90 Td (\(2,666) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 272.00 372.90 Td (\)) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 329.60 372.90 Td (\(2,731) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 349.00 372.90 Td (\)) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 82.50 358.90 Td (Deferred financing costs, net) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 258.25 358.90 Td (\(919) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 272.00 358.90 Td (\)) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 329.60 358.90 Td (\(1,230) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 349.00 358.90 Td (\)) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 70.50 344.90 Td (Total notes payable, net) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 208.50 344.90 Td ($) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 247.60 344.90 Td (280,509) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 281.50 344.90 Td ($) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 324.60 344.90 Td (284,488) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 317.25 Td (During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 117.55 317.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 137.53 317.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.97 317.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 174.19 317.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 235.01 317.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 315.28 317.25 Td (, the Company incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 412.20 317.25 Td ($2.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 461.09 317.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 480.53 317.25 Td ($7.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 529.42 317.25 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 305.25 Td (interest expense, respectively) Tj ET Q q 0 0 0 rg BT 166.30 305.25 Td (. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 219.35 305.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 239.33 305.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 258.77 305.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.99 305.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 336.81 305.25 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.08 305.25 Td (, the Company incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.00 305.25 Td ($2.6 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 293.25 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 78.39 293.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 97.83 293.25 Td ($7.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 146.72 293.25 Td ( of interest expense, respectively) Tj ET Q q 0 0 0 rg BT 276.85 293.25 Td (. Included in interest expense for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.63 293.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 447.62 293.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.06 293.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.28 293.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 281.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 281.25 Td ( were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 154.19 281.25 Td ($0.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 203.08 281.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 222.52 281.25 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 271.41 281.25 Td ( of amortization of deferred financing costs, respectively) Tj ET Q q 0 0 0 rg BT 497.34 281.25 Td (. Included in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 269.25 Td (interest expense for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 145.02 269.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.00 269.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 184.44 269.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.66 269.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 262.48 269.25 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.75 269.25 Td ( were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 367.18 269.25 Td ($0.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 416.07 269.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 435.51 269.25 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.40 269.25 Td ( of amortization of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 257.25 Td (deferred financing costs, respectively) Tj ET Q q 0 0 0 rg BT 198.23 257.25 Td (. ) Tj ET Q q 0 0 0 rg BT 205.18 257.25 Td (Also included in interest expense were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 362.35 257.25 Td ($22,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 394.85 257.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.29 257.25 Td ($65,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 446.79 257.25 Td ( of amortization of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 245.25 Td (discount on a note payable for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 187.51 245.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.50 245.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 226.94 245.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.15 245.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.98 245.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.24 245.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 437.90 245.25 Td (, and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.84 245.25 Td ($22,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 492.34 245.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 511.78 245.25 Td ($65,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 544.28 245.25 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 233.25 Td (amortization of the discount on a note payable for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.10 233.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 286.08 233.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 305.52 233.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.74 233.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 383.56 233.25 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 463.83 233.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 516.49 233.25 Td (. ) Tj ET Q q 0 0 0 rg BT 523.44 233.25 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 221.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 221.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 149.20 221.25 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 227.79 221.25 Td (, the Company recorded interest payable of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 402.72 221.25 Td ($0.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 451.61 221.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 471.05 221.25 Td ($0.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 519.94 221.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 209.25 Td (respectively) Tj ET Q q 0 0 0 rg BT 97.16 209.25 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 191.25 Td (The following is a schedule of maturities, including principal amortization payments, for the Company’) Tj ET Q q 0 0 0 rg BT 486.07 191.25 Td (s notes payable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 179.25 Td (outstanding as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 179.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 200.59 179.25 Td ( \(in thousands\): ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 162.75 446.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 496.00 162.75 67.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 134.75 446.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 496.00 134.75 67.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 106.75 446.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 496.00 106.75 67.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 78.75 446.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 496.00 78.75 67.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 496 78.75 m 563 78.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 496 65.75 m 563 65.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 496 63.75 m 563 63.75 l s BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 153.00 Td (October 1, 2016 through December 31, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.50 153.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.80 153.00 Td (1,488) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 139.00 Td (2017) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 139.00 Td (32,196) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 125.00 Td (2018) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 125.00 Td (72,958) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 111.00 Td (2019) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 533.80 111.00 Td (126,682) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 97.00 Td (2020) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.80 97.00 Td (852) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 83.00 Td (Thereafter) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 537.80 83.00 Td (49,918) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 498.50 69.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 533.80 69.00 Td (284,094) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 27 0 obj <>] /Rotate 0 /Contents 28 0 R>> endobj 28 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (12) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 632.25 Td (5. ) Tj ET Q q 0 0 0 rg BT 72.00 632.25 Td (F) Tj ET Q q 0 0 0 rg BT 77.37 632.25 Td (AIR ) Tj ET Q q 0 0 0 rg BT 98.02 632.25 Td (V) Tj ET Q q 0 0 0 rg BT 103.95 632.25 Td (ALUE DISCLOSURES) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 614.25 Td (Under GAAP) Tj ET Q q 0 0 0 rg BT 127.11 614.25 Td (, the Company is required to measure certain financial instruments at fair value on a recurring basis. In ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 602.25 Td (addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 590.25 Td (\(e.g., carrying value of impaired long-lived assets\). Fair value, as defined under GAAP) Tj ET Q q 0 0 0 rg BT 398.84 590.25 Td (, is the price that would be received ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 578.25 Td (upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.25 Td (date. ) Tj ET Q q 0 0 0 rg BT 73.47 566.25 Td (The GAAP) Tj ET Q q 0 0 0 rg BT 118.38 566.25 Td ( fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 554.25 Td (one of the following three categories:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 536.25 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 536.25 Td (Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 524.25 Td (liabilities;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 509.25 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 509.25 Td (Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 497.25 Td (markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 485.25 Td (observable in active markets; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 470.25 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 470.25 Td (Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 458.25 Td (significant to the fair value measurement and unobservable.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.25 Td (The fair value for certain financial instruments is derived using valuation techniques that involve significant management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 425.25 Td (judgment. ) Tj ET Q q 0 0 0 rg BT 94.59 425.25 Td (The price transparency of financial instruments is a key determinant of the degree of judgment involved in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 413.25 Td (determining the fair value of the Company’) Tj ET Q q 0 0 0 rg BT 222.78 413.25 Td (s financial instruments. Financial instruments for which actively quoted prices or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 401.25 Td (pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 389.25 Td (transparency than financial instruments for which markets are inactive or consist of non-orderly trades. ) Tj ET Q q 0 0 0 rg BT 466.40 389.25 Td (The Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 377.25 Td (evaluates several factors when determining if a market is inactive or when market transactions are not orderly) Tj ET Q q 0 0 0 rg BT 487.57 377.25 Td (. ) Tj ET Q q 0 0 0 rg BT 494.89 377.25 Td (The following is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 365.25 Td (a summary of the methods and assumptions used by management in estimating the fair value of each class of financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 353.25 Td (instrument for which it is practicable to estimate the fair value:) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 335.25 Td (Cash and cash equivalents, r) Tj ET Q q 0 0 0 rg BT 187.45 335.25 Td (estricted cash, and accounts payable and accrued liabilities: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 433.24 335.25 Td (These balances approximate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 323.25 Td (their fair values due to the short maturities of these items.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 305.25 Td (Notes payable: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 134.76 305.25 Td (The fair value of the Company’) Tj ET Q q 0 0 0 rg BT 260.55 305.25 Td (s notes payable is estimated using a discounted cash flow analysis based on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 293.25 Td (management’) Tj ET Q q 0 0 0 rg BT 103.37 293.25 Td (s estimates of current market interest rates for instruments with similar characteristics, including remaining loan ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 281.25 Td (term, loan-to-value ratio, type of collateral and other credit enhancements. ) Tj ET Q q 0 0 0 rg BT 351.04 281.25 Td (Additionally) Tj ET Q q 0 0 0 rg BT 400.95 281.25 Td (, when determining the fair value of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 269.25 Td (liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 257.25 Td (measures fair value using \(i\) a valuation technique that uses the quoted price of the identical liability when traded as an asset or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 245.25 Td (quoted prices for similar liabilities or similar liabilities when traded as assets or \(ii\) another valuation technique that is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 233.25 Td (consistent with the principles of fair value measurement, such as the income approach or the market approach. ) Tj ET Q q 0 0 0 rg BT 495.83 233.25 Td (The Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 221.25 Td (classifies these inputs as Level 3 inputs.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 203.25 Td (The following were the face value, carrying amount and fair value of the Company’) Tj ET Q q 0 0 0 rg BT 406.87 203.25 Td (s notes payable as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 492.13 203.25 Td (September 30, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 191.25 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.50 191.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 191.25 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.52 191.25 Td ( \(dollars in thousands\):) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 146.75 117.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 167.00 146.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 171.00 146.75 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 226.00 146.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 230.00 146.75 76.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 306.00 146.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 310.00 146.75 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 365.00 146.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 369.00 146.75 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 424.00 146.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.00 146.75 76.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 504.00 146.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 508.00 146.75 55.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 171 160.75 m 226 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 226 160.75 m 230 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 230 160.75 m 306 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 306 160.75 m 310 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 310 160.75 m 365 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 369 160.75 m 424 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 424 160.75 m 428 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428 160.75 m 504 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 504 160.75 m 508 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 508 160.75 m 563 160.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 171 146.75 m 226 146.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 230 146.75 m 306 146.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 310 146.75 m 365 146.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 369 146.75 m 424 146.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428 146.75 m 504 146.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 508 146.75 m 563 146.75 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 234.10 164.98 Td (September 30, 2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 433.25 164.98 Td (December 31, 2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 179.40 150.98 Td (Face Value) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 236.90 150.98 Td (Carrying Amount) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 319.15 150.98 Td (Fair Value) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 377.40 150.98 Td (Face Value) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 434.90 150.98 Td (Carrying Amount) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 517.15 150.98 Td (Fair Value) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 137.00 Td (Financial liabilities:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 70.50 123.00 Td (Notes payable) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 116.04 126.63 Td ( ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 173.50 123.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 196.75 123.00 Td (284,094) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 232.50 123.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 276.80 123.00 Td (280,509) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 312.50 123.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 335.75 123.00 Td (290,036) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 371.50 123.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 394.75 123.00 Td (288,449) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.50 123.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 474.80 123.00 Td (284,488) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 510.50 123.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 533.75 123.00 Td (284,160) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.25 Td (Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 83.25 Td (period end and requires a significant amount of judgment. Low levels of transaction volume for certain financial instruments ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 71.25 Td (have made the estimation of fair values dif) Tj ET Q q 0 0 0 rg BT 220.09 71.25 Td (ficult and, therefore, both the actual results and the Company’) Tj ET Q q 0 0 0 rg BT 467.51 71.25 Td (s estimate of value at a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 59.25 Td (future date could be materially dif) Tj ET Q q 0 0 0 rg BT 185.65 59.25 Td (ferent. ) Tj ET Q endstream endobj 29 0 obj <>] /Rotate 0 /Contents 30 0 R>> endobj 30 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (13) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 45.00 632.25 Td (6. ) Tj ET Q q 0 0 0 rg BT 67.50 632.25 Td (RELA) Tj ET Q q 0 0 0 rg BT 94.54 632.25 Td (TED P) Tj ET Q q 0 0 0 rg BT 122.97 632.25 Td (AR) Tj ET Q q 0 0 0 rg BT 137.06 632.25 Td (TY) Tj ET Q q 0 0 0 rg BT 150.58 632.25 Td ( ) Tj ET Q q 0 0 0 rg BT 152.90 632.25 Td (TRANSACTIONS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 614.25 Td (The Company has entered into the ) Tj ET Q q 0 0 0 rg BT 206.91 614.25 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 246.08 614.25 Td (Agreement with the ) Tj ET Q q 0 0 0 rg BT 327.45 614.25 Td (Advisor and the Follow-on Dealer Manager ) Tj ET Q q 0 0 0 rg BT 504.62 614.25 Td (Agreement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 602.25 Td (with the Dealer Manager) Tj ET Q q 0 0 0 rg BT 144.13 602.25 Td (. ) Tj ET Q q 0 0 0 rg BT 151.45 602.25 Td (These agreements entitled the ) Tj ET Q q 0 0 0 rg BT 272.51 602.25 Td (Advisor and/or the Dealer Manager to specified fees upon the provision ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 590.25 Td (of certain services with regard to the Follow-on Of) Tj ET Q q 0 0 0 rg BT 248.09 590.25 Td (fering and entitle the ) Tj ET Q q 0 0 0 rg BT 333.06 590.25 Td (Advisor to specified fees upon the provision of certain ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 578.25 Td (services with regard to the management of the Company’) Tj ET Q q 0 0 0 rg BT 273.82 578.25 Td (s real estate properties, among other services, as well as reimbursement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 566.25 Td (of or) Tj ET Q q 0 0 0 rg BT 63.98 566.25 Td (ganization and of) Tj ET Q q 0 0 0 rg BT 133.22 566.25 Td (fering costs incurred by the ) Tj ET Q q 0 0 0 rg BT 244.58 566.25 Td (Advisor and the Dealer Manager on behalf of the Company) Tj ET Q q 0 0 0 rg BT 481.90 566.25 Td (, such as expenses ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 554.25 Td (related to the dividend reinvestment plan, and certain costs incurred by the ) Tj ET Q q 0 0 0 rg BT 345.18 554.25 Td (Advisor in providing services to the Company) Tj ET Q q 0 0 0 rg BT 529.51 554.25 Td (, such as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 542.25 Td (certain operating costs. ) Tj ET Q q 0 0 0 rg BT 139.79 542.25 Td (The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 530.25 Td (which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 518.25 Td (Company’) Tj ET Q q 0 0 0 rg BT 86.67 518.25 Td (s participation in the DTCC ) Tj ET Q q 0 0 0 rg BT 199.71 518.25 Td (Alternative Investment Product Platform with respect to certain accounts of the Company’) Tj ET Q q 0 0 0 rg BT 561.00 518.25 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 506.25 Td (investors serviced through the platform. ) Tj ET Q q 0 0 0 rg BT 209.50 506.25 Td (The ) Tj ET Q q 0 0 0 rg BT 227.00 506.25 Td (Advisor and Dealer Manager also serve as the advisor and dealer manager) Tj ET Q q 0 0 0 rg BT 523.42 506.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 494.25 Td (respectively) Tj ET Q q 0 0 0 rg BT 92.66 494.25 Td (, for KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 228.29 494.25 Td (T) Tj ET Q q 0 0 0 rg BT 234.04 494.25 Td (rust, Inc., KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 390.78 494.25 Td (T) Tj ET Q q 0 0 0 rg BT 396.53 494.25 Td (rust II, Inc., KBS Real Estate Investment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 482.25 Td (T) Tj ET Q q 0 0 0 rg BT 50.76 482.25 Td (rust III, Inc., KBS Strategic Opportunity REIT) Tj ET Q q 0 0 0 rg BT 236.37 482.25 Td (, Inc., KBS Strategic Opportunity REIT) Tj ET Q q 0 0 0 rg BT 395.06 482.25 Td ( II, Inc. and KBS Growth & Income REIT) Tj ET Q q 0 0 0 rg BT 563.17 482.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 470.25 Td (Inc. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 452.25 Td (On January 6, 2014, the Company) Tj ET Q q 0 0 0 rg BT 203.77 452.25 Td (, together with KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 380.78 452.25 Td (T) Tj ET Q q 0 0 0 rg BT 386.54 452.25 Td (rust, Inc., KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 543.27 452.25 Td (T) Tj ET Q q 0 0 0 rg BT 549.03 452.25 Td (rust ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 440.25 Td (II, Inc., KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 193.39 440.25 Td (T) Tj ET Q q 0 0 0 rg BT 199.15 440.25 Td (rust III, Inc., KBS Strategic Opportunity REIT) Tj ET Q q 0 0 0 rg BT 384.77 440.25 Td (, Inc., KBS Strategic Opportunity REIT) Tj ET Q q 0 0 0 rg BT 543.45 440.25 Td ( II, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 428.25 Td (Inc., the Dealer Manager) Tj ET Q q 0 0 0 rg BT 144.27 428.25 Td (, the ) Tj ET Q q 0 0 0 rg BT 163.43 428.25 Td (Advisor and other KBS-af) Tj ET Q q 0 0 0 rg BT 268.51 428.25 Td (filiated entities, entered into an errors and omissions and directors and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 416.25 Td (of) Tj ET Q q 0 0 0 rg BT 53.15 416.25 Td (ficers liability insurance program where the lower tiers of such insurance coverage are shared. ) Tj ET Q q 0 0 0 rg BT 434.47 416.25 Td (The cost of these lower tiers is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 404.25 Td (allocated by the ) Tj ET Q q 0 0 0 rg BT 110.25 404.25 Td (Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 392.25 Td (to each entity) Tj ET Q q 0 0 0 rg BT 98.22 392.25 Td (. ) Tj ET Q q 0 0 0 rg BT 105.54 392.25 Td (The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 380.25 Td (first tiers of directors and of) Tj ET Q q 0 0 0 rg BT 156.73 380.25 Td (ficers liability coverage purchased individually by each REIT) Tj ET Q q 0 0 0 rg BT 402.29 380.25 Td (. ) Tj ET Q q 0 0 0 rg BT 409.60 380.25 Td (The ) Tj ET Q q 0 0 0 rg BT 427.10 380.25 Td (Advisor) Tj ET Q q 0 0 0 rg BT 459.69 380.25 Td (’) Tj ET Q q 0 0 0 rg BT 462.47 380.25 Td (s and the Dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 368.25 Td (Manager) Tj ET Q q 0 0 0 rg BT 80.91 368.25 Td (’) Tj ET Q q 0 0 0 rg BT 83.69 368.25 Td (s portion of the shared lower tiers’) Tj ET Q q 0 0 0 rg BT 220.68 368.25 Td ( cost is proportionate to the respective entities’) Tj ET Q q 0 0 0 rg BT 406.83 368.25 Td ( prior cost for the errors and omissions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 356.25 Td (insurance. In June 2015, KBS Growth & Income REIT) Tj ET Q q 0 0 0 rg BT 266.72 356.25 Td (, Inc. was added to the insurance program at terms similar to those ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 344.25 Td (described above. ) Tj ET Q q 0 0 0 rg BT 114.51 344.25 Td (The insurance program was renewed and is ef) Tj ET Q q 0 0 0 rg BT 297.87 344.25 Td (fective through June 30, 2017.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 326.25 Td (During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 113.05 326.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 133.03 326.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 152.47 326.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 169.69 326.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 230.51 326.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 310.78 326.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 330.21 326.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.21 326.25 Td (, no other business transactions occurred between the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 314.25 Td (Company and KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 219.79 314.25 Td (T) Tj ET Q q 0 0 0 rg BT 225.55 314.25 Td (rust, Inc., KBS Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 382.28 314.25 Td (T) Tj ET Q q 0 0 0 rg BT 388.04 314.25 Td (rust II, Inc., KBS Real Estate Investment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 302.25 Td (T) Tj ET Q q 0 0 0 rg BT 50.76 302.25 Td (rust III, Inc., KBS Strategic Opportunity REIT) Tj ET Q q 0 0 0 rg BT 236.37 302.25 Td (, Inc., KBS Strategic Opportunity REIT) Tj ET Q q 0 0 0 rg BT 395.06 302.25 Td ( II, Inc. and KBS Growth & Income REIT) Tj ET Q q 0 0 0 rg BT 563.17 302.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 290.25 Td (Inc.) Tj ET Q endstream endobj 31 0 obj <>] /Rotate 0 /Contents 32 0 R>> endobj 32 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (14) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 632.10 Td (Pursuant to the terms of these agreements and the property management agreements discussed below) Tj ET Q q 0 0 0 rg BT 470.89 632.10 Td (, summarized below are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 620.10 Td (the related-party costs incurred by the Company for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 269.09 620.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 289.08 620.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 308.52 620.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 325.73 620.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 386.56 620.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 466.82 620.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 486.26 620.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.26 620.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 558.92 620.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 608.10 Td (and any related amounts payable as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 200.22 608.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 280.48 608.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 299.92 608.10 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.51 608.10 Td ( \(in thousands\):) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 543.60 173.00 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1.00 w 0 i [] 0 d 0 J 0 j 3 M 453.5 577.6 m 508.5 577.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 512.5 577.6 m 567.5 577.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 218.5 543.6 m 273.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 277.5 543.6 m 332.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 336.5 543.6 m 391.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 543.6 m 449.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 453.5 543.6 m 508.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 512.5 543.6 m 567.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 218.5 543.6 m 273.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 277.5 543.6 m 332.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 336.5 543.6 m 391.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 543.6 m 449.5 543.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 336.5 487.6 m 391.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 487.6 m 449.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 218.5 487.6 m 273.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 218.5 474.6 m 273.5 474.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 218.5 472.6 m 273.5 472.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 277.5 487.6 m 332.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 277.5 474.6 m 332.5 474.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 277.5 472.6 m 332.5 472.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 336.5 487.6 m 391.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 336.5 474.6 m 391.5 474.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 336.5 472.6 m 391.5 472.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 487.6 m 449.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 474.6 m 449.5 474.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 395.5 472.6 m 449.5 472.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 453.5 487.6 m 508.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 453.5 474.6 m 508.5 474.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 453.5 472.6 m 508.5 472.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 512.5 487.6 m 567.5 487.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 512.5 474.6 m 567.5 474.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 512.5 472.6 m 567.5 472.6 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 318.20 581.83 Td (Incurred) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 487.55 581.83 Td (Payable as of) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 238.60 569.28 Td (Three Months Ended) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 250.60 561.28 Td (September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 358.25 569.28 Td (Nine Months Ended) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 368.10 561.28 Td (September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 456.10 565.28 Td (September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 516.25 565.28 Td (December 31,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 237.50 547.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 296.50 547.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 355.50 547.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 414.00 547.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 472.50 547.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 531.50 547.83 Td (2015) Tj ET Q BT /F4 8.00 Tf ET q 0 0 0 rg BT 48.00 533.83 Td (Expensed) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 519.85 Td (Asset management fees ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 125.53 523.48 Td (\(1\) ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 221.00 519.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 258.30 519.85 Td (104) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 280.00 519.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 317.30 519.85 Td (144) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 339.00 519.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 376.30 519.85 Td (343) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 398.00 519.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 434.30 519.85 Td (687) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 456.00 519.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.30 519.85 Td (49) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 515.00 519.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 546.30 519.85 Td (4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 505.85 Td (Reimbursable operating expenses) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 155.52 509.48 Td ( \(2\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 262.30 505.85 Td (68) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 321.30 505.85 Td (58) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 376.30 505.85 Td (184) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 434.30 505.85 Td (264) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.30 505.85 Td (12) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 556.30 505.85 Td (25) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 491.85 Td (Property management fees and expenses ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 179.73 495.48 Td (\(3\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 252.30 491.85 Td (1,506) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 311.30 491.85 Td (1,368) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 370.30 491.85 Td (4,359) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 428.30 491.85 Td (2,136) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 493.30 491.85 Td (218) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 552.30 491.85 Td (117) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 221.00 477.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 252.30 477.85 Td (1,678) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 280.00 477.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 311.30 477.85 Td (1,570) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 339.00 477.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 370.30 477.85 Td (4,886) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 398.00 477.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 428.30 477.85 Td (3,087) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 456.00 477.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 493.30 477.85 Td (279) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 515.00 477.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 546.30 477.85 Td (4,894) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 462.10 Td (____________________) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 45.00 453.13 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 51.06 449.50 Td ( See “Advisory ) Tj ET Q q 0 0 0 rg BT 101.50 449.50 Td (Agreement – ) Tj ET Q q 0 0 0 rg BT 144.60 449.50 Td (Asset Management Fee” below) Tj ET Q q 0 0 0 rg BT 244.27 449.50 Td (.) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 45.00 440.52 Td (\(2\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 51.06 436.90 Td ( Reimbursable operating expenses primarily consist of marketing research costs and property site visit expenses incurred by the Sub-Advisor and internal audit ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 427.30 Td (personnel costs, accounting software and cybersecurity related expenses incurred by the ) Tj ET Q q 0 0 0 rg BT 328.01 427.30 Td (Advisor under the ) Tj ET Q q 0 0 0 rg BT 387.33 427.30 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 418.67 427.30 Td (Agreement. Beginning July 1, 2010, the ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 417.70 Td (Company has reimbursed the ) Tj ET Q q 0 0 0 rg BT 140.09 417.70 Td (Advisor for the Company’) Tj ET Q q 0 0 0 rg BT 224.30 417.70 Td (s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 408.10 Td (services to the Company) Tj ET Q q 0 0 0 rg BT 123.35 408.10 Td (. ) Tj ET Q q 0 0 0 rg BT 129.21 408.10 Td (These amounts totaled ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 203.19 408.10 Td ($48,000) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 229.19 408.10 Td ( and ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 244.74 408.10 Td ($44,000) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 270.74 408.10 Td ( for the ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 295.84 408.10 Td (three) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 311.83 408.10 Td ( months ended ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 360.49 408.10 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 424.70 408.10 Td ( and ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 440.25 408.10 Td (2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 456.25 408.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 498.38 408.10 Td (, and ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 515.93 408.10 Td ($123,000) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 545.93 408.10 Td ( and ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 398.50 Td ($92,000) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 71.00 398.50 Td ( for the ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 96.10 398.50 Td (nine) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 109.88 398.50 Td ( months ended ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 158.54 398.50 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 222.75 398.50 Td ( and ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 238.30 398.50 Td (2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 254.30 398.50 Td (, respectively) Tj ET Q q 0 0 0 rg BT 296.43 398.50 Td (, and were the only type of employee costs reimbursed under the ) Tj ET Q q 0 0 0 rg BT 504.59 398.50 Td (Advisory ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 388.90 Td (Agreement through ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 109.43 388.90 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 173.64 388.90 Td (. ) Tj ET Q q 0 0 0 rg BT 179.49 388.90 Td (The Company does not reimburse for employee costs in connection with services for which the ) Tj ET Q q 0 0 0 rg BT 485.86 388.90 Td (Advisor earns ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 379.30 Td (acquisition or disposition fees \(other than reimbursement of travel and communication expenses\) or for the salaries or benefits the ) Tj ET Q q 0 0 0 rg BT 462.43 379.30 Td (Advisor or its af) Tj ET Q q 0 0 0 rg BT 514.50 379.30 Td (filiates may pay ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 369.70 Td (to the Company’) Tj ET Q q 0 0 0 rg BT 98.33 369.70 Td (s executive of) Tj ET Q q 0 0 0 rg BT 142.61 369.70 Td (ficers. In addition to the amounts above, the Company reimburses the ) Tj ET Q q 0 0 0 rg BT 368.78 369.70 Td (Advisor and Sub-Advisor for certain of the Company’) Tj ET Q q 0 0 0 rg BT 541.86 369.70 Td (s direct ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 360.10 Td (property operating costs incurred from third parties that were initially paid by the ) Tj ET Q q 0 0 0 rg BT 306.48 360.10 Td (Advisor and Sub-Advisor on behalf of the Company) Tj ET Q q 0 0 0 rg BT 473.71 360.10 Td (. ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 45.00 351.13 Td (\(3\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 51.06 347.50 Td ( Property management fees and expenses consist of property management fees paid to LPI, as well as reimbursable on-site personnel salary and related benefits ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 337.90 Td (expenses at the properties and through March 31, 2015, fees for account maintenance and bookkeeping services paid to Legacy Partners Residential, L.P) Tj ET Q q 0 0 0 rg BT 533.07 337.90 Td (., an ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 328.30 Td (af) Tj ET Q q 0 0 0 rg BT 51.07 328.30 Td (filiate of the Sub-Advisor \(“LPR”\), under the now-terminated account services agreements. See “— Property Management ) Tj ET Q q 0 0 0 rg BT 447.83 328.30 Td (Agreements.”) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 307.30 Td (During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 113.05 307.30 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.26 307.30 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 191.09 307.30 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 271.35 307.30 Td (, the ) Tj ET Q q 0 0 0 rg BT 290.52 307.30 Td (Advisor reimbursed the Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.83 307.30 Td ($28,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 461.33 307.30 Td ( for a property insurance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 295.30 Td (rebate and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.86 295.30 Td ($0.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 137.75 295.30 Td ( for legal and professional fees, respectively) Tj ET Q q 0 0 0 rg BT 313.42 295.30 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 280.30 Td (In connection with the Follow-on Of) Tj ET Q q 0 0 0 rg BT 214.24 280.30 Td (fering, the Company’) Tj ET Q q 0 0 0 rg BT 299.50 280.30 Td (s sponsors agreed to provide additional indemnification to one of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 268.30 Td (the participating broker) Tj ET Q q 0 0 0 rg BT 138.65 268.30 Td (-dealers. ) Tj ET Q q 0 0 0 rg BT 177.62 268.30 Td (The Company agreed to add supplemental coverage to its directors’) Tj ET Q q 0 0 0 rg BT 447.62 268.30 Td ( and of) Tj ET Q q 0 0 0 rg BT 475.21 268.30 Td (ficers’) Tj ET Q q 0 0 0 rg BT 500.00 268.30 Td ( insurance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 256.30 Td (coverage to insure the sponsors’) Tj ET Q q 0 0 0 rg BT 173.11 256.30 Td ( obligations under this indemnification agreement in exchange for reimbursement by the sponsors ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 244.30 Td (to the Company for all costs, expenses and premiums related to this supplemental coverage. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.95 244.30 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 480.17 244.30 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 232.30 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 125.26 232.30 Td (, the ) Tj ET Q q 0 0 0 rg BT 144.43 232.30 Td (Advisor incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 214.97 232.30 Td ($61,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 247.47 232.30 Td ( for the costs of the supplemental coverage obtained by the Company) Tj ET Q q 0 0 0 rg BT 523.68 232.30 Td (.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 45.00 211.30 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 85.84 211.30 Td (Agr) Tj ET Q q 0 0 0 rg BT 102.32 211.30 Td (eement - ) Tj ET Q q 0 0 0 rg BT 140.63 211.30 Td (Asset Management Fee) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 193.30 Td (Pursuant to the ) Tj ET Q q 0 0 0 rg BT 129.44 193.30 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 168.61 193.30 Td (Agreement, the asset management fee payable by the Company to the ) Tj ET Q q 0 0 0 rg BT 449.63 193.30 Td (Advisor with respect to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 181.30 Td (investments in real estate is a monthly fee equal to the lesser of one-twelfth of \(i\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 371.56 181.30 Td (1.0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 392.39 181.30 Td ( of the amount paid or allocated to fund the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 169.30 Td (acquisition, development, construction or improvement of the property \(whether at or subsequent to acquisition\), including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 157.30 Td (acquisition expenses and budgeted capital improvement costs \(regardless of the level of debt used to finance the investment\), and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 145.30 Td (\(ii\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 59.72 145.30 Td (2.0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.55 145.30 Td ( of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 133.30 Td (\(whether at or subsequent to acquisition\), including acquisition expenses and budgeted capital improvement costs, less any debt ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 121.30 Td (used to finance the investment.) Tj ET Q endstream endobj 33 0 obj <>] /Rotate 0 /Contents 34 0 R>> endobj 34 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (15) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 632.10 Td (The ) Tj ET Q q 0 0 0 rg BT 85.00 632.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 124.17 632.10 Td (Agreement defers the Company’) Tj ET Q q 0 0 0 rg BT 254.40 632.10 Td (s obligation to pay asset management fees, without interest, accruing from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 620.10 Td (February 1, 2013 through July 31, 2013. ) Tj ET Q q 0 0 0 rg BT 211.20 620.10 Td (The Company will only be obligated to pay the ) Tj ET Q q 0 0 0 rg BT 402.00 620.10 Td (Advisor such deferred amounts if and to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 608.10 Td (the extent that the Company’) Tj ET Q q 0 0 0 rg BT 160.53 608.10 Td (s funds from operations, as such term is defined by the National ) Tj ET Q q 0 0 0 rg BT 417.97 608.10 Td (Association of Real Estate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 596.10 Td (Investment ) Tj ET Q q 0 0 0 rg BT 91.75 596.10 Td (T) Tj ET Q q 0 0 0 rg BT 97.51 596.10 Td (rusts and interpreted by the Company) Tj ET Q q 0 0 0 rg BT 247.10 596.10 Td (, as adjusted for the ef) Tj ET Q q 0 0 0 rg BT 335.22 596.10 Td (fects of straight-line rents and acquisition costs and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 584.10 Td (expenses \(“AFFO”\) for the immediately preceding month exceeds the amount of distributions declared for record dates of such ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 572.10 Td (prior month \(an “AFFO Surplus”\). ) Tj ET Q q 0 0 0 rg BT 188.42 572.10 Td (The amount of any ) Tj ET Q q 0 0 0 rg BT 266.18 572.10 Td (AFFO Surplus in a given month shall be applied first to pay to the ) Tj ET Q q 0 0 0 rg BT 532.82 572.10 Td (Advisor ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 560.10 Td (asset management fees currently due with respect to such month \(including any that would otherwise have been deferred for that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 548.10 Td (month in accordance with the ) Tj ET Q q 0 0 0 rg BT 165.24 548.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 204.41 548.10 Td (Agreement\) and then to pay asset management fees previously deferred by the ) Tj ET Q q 0 0 0 rg BT 519.85 548.10 Td (Advisor in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 536.10 Td (accordance with the ) Tj ET Q q 0 0 0 rg BT 126.90 536.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 166.07 536.10 Td (Agreement that remain unpaid. ) Tj ET Q q 0 0 0 rg BT 295.29 536.10 Td (The Company had accrued and deferred payment of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.76 536.10 Td ($1.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 554.65 536.10 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 524.10 Td (asset management fees for February 2013 through July 2013 under the ) Tj ET Q q 0 0 0 rg BT 329.10 524.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 368.27 524.10 Td (Agreement, as the Company believed the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 512.10 Td (payment of this amount to the ) Tj ET Q q 0 0 0 rg BT 166.65 512.10 Td (Advisor was probable at the time it was recorded. During the three and nine months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 500.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 125.26 500.10 Td (, the Company reversed, as an increase to other income, the liabilities due to af) Tj ET Q q 0 0 0 rg BT 440.25 500.10 Td (filiates related to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 524.66 500.10 Td ($1.5 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 488.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.89 488.10 Td ( of asset management fees for the period from February 2013 through July 2013 as the Company believes that the payment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 476.10 Td (of this amount to the ) Tj ET Q q 0 0 0 rg BT 129.72 476.10 Td (Advisor is remote. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 458.10 Td (In addition, the ) Tj ET Q q 0 0 0 rg BT 130.27 458.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 169.44 458.10 Td (Agreement defers without interest under certain circumstances, the Company’) Tj ET Q q 0 0 0 rg BT 481.27 458.10 Td (s obligation to pay ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 446.10 Td (asset management fees accruing from ) Tj ET Q q 0 0 0 rg BT 197.44 446.10 Td (August 1, 2013. Specifically) Tj ET Q q 0 0 0 rg BT 313.44 446.10 Td (, the ) Tj ET Q q 0 0 0 rg BT 332.60 446.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 371.77 446.10 Td (Agreement defers the Company’) Tj ET Q q 0 0 0 rg BT 502.01 446.10 Td (s obligation to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 434.10 Td (pay an asset management fee for any month in which the Company’) Tj ET Q q 0 0 0 rg BT 316.87 434.10 Td (s modified funds from operations \(“MFFO”\) for such month, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 422.10 Td (as such term is defined in the practice guideline issued by the Investment Program ) Tj ET Q q 0 0 0 rg BT 376.03 422.10 Td (Association \(“IP) Tj ET Q q 0 0 0 rg BT 441.48 422.10 Td (A”\) in November 2010 and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 410.10 Td (interpreted by the Company) Tj ET Q q 0 0 0 rg BT 156.26 410.10 Td (, excluding asset management fees, does not exceed the amount of distributions declared by the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 398.10 Td (Company for record dates of that month. ) Tj ET Q q 0 0 0 rg BT 210.33 398.10 Td (The Company remains obligated to pay the ) Tj ET Q q 0 0 0 rg BT 385.01 398.10 Td (Advisor an asset management fee in any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 386.10 Td (month in which the Company’) Tj ET Q q 0 0 0 rg BT 166.66 386.10 Td (s MFFO, excluding asset management fees, for such month exceeds the amount of distributions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 374.10 Td (declared for the record dates of that month \(such excess amount, an “MFFO Surplus”\); however) Tj ET Q q 0 0 0 rg BT 429.21 374.10 Td (, any amount of such asset ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 362.10 Td (management fee in excess of the MFFO Surplus is also deferred under the ) Tj ET Q q 0 0 0 rg BT 343.54 362.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 382.71 362.10 Td (Agreement. If the MFFO Surplus for any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 350.10 Td (month exceeds the amount of the asset management fee payable for such month, any remaining MFFO Surplus will not be applied ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 338.10 Td (to pay asset management fee amounts previously deferred by the ) Tj ET Q q 0 0 0 rg BT 306.03 338.10 Td (Advisor in accordance with the ) Tj ET Q q 0 0 0 rg BT 432.93 338.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 472.10 338.10 Td (Agreement. ) Tj ET Q q 0 0 0 rg BT 523.84 338.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 326.10 Td (Company had accrued and deferred payment of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.42 326.10 Td ($3.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 286.31 326.10 Td ( of asset management fees for ) Tj ET Q q 0 0 0 rg BT 407.37 326.10 Td (August 2013 through December 2014 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 314.10 Td (under the ) Tj ET Q q 0 0 0 rg BT 84.43 314.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 123.60 314.10 Td (Agreement, as the Company believed the payment of this amount to the ) Tj ET Q q 0 0 0 rg BT 412.70 314.10 Td (Advisor was probable at the time it ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 302.10 Td (was recorded. During the three and nine months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.04 302.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.30 302.10 Td (, the Company reversed, as an increase to other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 290.10 Td (income, the liabilities due to af) Tj ET Q q 0 0 0 rg BT 168.67 290.10 Td (filiates related to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.08 290.10 Td ($3.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.97 290.10 Td ( of asset management fees for the period from ) Tj ET Q q 0 0 0 rg BT 487.74 290.10 Td (August 2013 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 278.10 Td (through December 2014 as the Company believes that the payment of this amount to the ) Tj ET Q q 0 0 0 rg BT 400.75 278.10 Td (Advisor is remote. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 260.10 Td (During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 113.05 260.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.26 260.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 191.09 260.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 271.35 260.10 Td (, the Company incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.27 260.10 Td ($2.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.16 260.10 Td ( of asset management fees. However) Tj ET Q q 0 0 0 rg BT 563.37 260.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 248.10 Td (the Company only recorded ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 158.86 248.10 Td ($0.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.75 248.10 Td ( pursuant to the limitations in the ) Tj ET Q q 0 0 0 rg BT 341.90 248.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 381.07 248.10 Td (Agreement as noted above. ) Tj ET Q q 0 0 0 rg BT 492.24 248.10 Td (The Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 236.10 Td (deferred but did not accrue the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 212.98 236.10 Td ($1.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 261.88 236.10 Td ( of these asset management fees as it is uncertain whether any of this ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 224.10 Td (amount will be paid in the future. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 229.13 224.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.34 224.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 307.17 224.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 387.43 224.10 Td (, the Company incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.35 224.10 Td ($2.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 533.24 224.10 Td ( of asset ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 212.10 Td (management fees. However) Tj ET Q q 0 0 0 rg BT 158.44 212.10 Td (, the Company only recorded ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 277.29 212.10 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 326.19 212.10 Td ( pursuant to the limitations in the ) Tj ET Q q 0 0 0 rg BT 460.34 212.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 499.51 212.10 Td (Agreement as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 200.10 Td (noted above. ) Tj ET Q q 0 0 0 rg BT 100.91 200.10 Td (The Company deferred but did not accrue the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 328.33 200.10 Td ($1.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 377.22 200.10 Td ( of these asset management fees as it is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 188.10 Td (uncertain whether any of this amount will be paid in the future. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 170.10 Td (However) Tj ET Q q 0 0 0 rg BT 103.75 170.10 Td (, notwithstanding any of the foregoing, any and all deferred asset management fees shall be immediately due and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 158.10 Td (payable at such time as the Company’) Tj ET Q q 0 0 0 rg BT 196.63 158.10 Td (s stockholders have received, together as a collective group, aggregate distributions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 146.10 Td (\(including distributions that may constitute a return of capital for federal income tax purposes\) suf) Tj ET Q q 0 0 0 rg BT 437.49 146.10 Td (ficient to provide \(i\) a return of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 134.10 Td (their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 122.10 Td (issue price, reduced by any amounts to repurchase shares pursuant to the Company’) Tj ET Q q 0 0 0 rg BT 379.63 122.10 Td (s share redemption plan, and \(ii\) an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 523.47 122.10 Td (8.0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 544.30 122.10 Td ( per ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 110.10 Td (year cumulative, non-compounded return on such net invested capital \(the “Stockholders’) Tj ET Q q 0 0 0 rg BT 403.31 110.10 Td ( 8% Return”\). ) Tj ET Q q 0 0 0 rg BT 461.45 110.10 Td (The Stockholders’) Tj ET Q q 0 0 0 rg BT 534.30 110.10 Td ( 8% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 98.10 Td (Return is not based on the return provided to any individual stockholder) Tj ET Q q 0 0 0 rg BT 332.45 98.10 Td (. ) Tj ET Q q 0 0 0 rg BT 336.89 98.10 Td (Accordingly) Tj ET Q q 0 0 0 rg BT 386.23 98.10 Td (, it is not necessary for each of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 86.10 Td (Company’) Tj ET Q q 0 0 0 rg BT 86.67 86.10 Td (s stockholders to have received any minimum return in order for the ) Tj ET Q q 0 0 0 rg BT 361.03 86.10 Td (Advisor to receive deferred asset management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 74.10 Td (fees.) Tj ET Q endstream endobj 35 0 obj <>] /Rotate 0 /Contents 36 0 R>> endobj 36 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (16) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 45.00 632.25 Td (Pr) Tj ET Q q 0 0 0 rg BT 55.37 632.25 Td (operty Management ) Tj ET Q q 0 0 0 rg BT 143.68 632.25 Td (Agr) Tj ET Q q 0 0 0 rg BT 160.16 632.25 Td (eements) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 614.25 Td (The Company) Tj ET Q q 0 0 0 rg BT 123.78 614.25 Td (, through indirect wholly owned subsidiaries \(each, a “Property Owner”\), has entered into property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 602.25 Td (management agreements with LPI \(each, a “Property Management ) Tj ET Q q 0 0 0 rg BT 313.51 602.25 Td (Agreement”\), pursuant to which LPI provides, among other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 590.25 Td (services, general property management services, including bookkeeping and accounting services, construction management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 578.25 Td (services and budgeting and business plans for the Company’) Tj ET Q q 0 0 0 rg BT 286.62 578.25 Td (s properties as follows: ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 547.75 254.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 299.50 547.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 303.50 547.75 140.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 443.50 547.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 447.50 547.75 120.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 519.75 254.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 299.50 519.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 303.50 519.75 140.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 443.50 519.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 447.50 519.75 120.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 491.75 254.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 299.50 491.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 303.50 491.75 140.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 443.50 491.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 447.50 491.75 120.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 463.75 254.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 299.50 463.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 303.50 463.75 140.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 443.50 463.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 447.50 463.75 120.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 435.75 254.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 299.50 435.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 303.50 435.75 140.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 443.50 435.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 447.50 435.75 120.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 45.50 407.75 254.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 299.50 407.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 303.50 407.75 140.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 443.50 407.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 447.50 407.75 120.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 45.5 547.75 m 299.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 303.5 547.75 m 443.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 447.5 547.75 m 567.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 303.5 547.75 m 443.5 547.75 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 48.00 551.98 Td (Property Name) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 348.90 551.98 Td (Effective Date) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 457.75 551.98 Td (Management Fee Percentage) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 538.00 Td (Watertower Apartments) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 538.00 Td (04/07/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 538.00 Td (2.75%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 524.00 Td (Crystal Park at Waterford) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 524.00 Td (04/14/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 524.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 510.00 Td (The Residence at Waterstone) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 510.00 Td (04/28/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 510.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 496.00 Td (Lofts at the Highlands) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 496.00 Td (05/05/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 496.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 482.00 Td (Legacy at Martin’s Point) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 482.00 Td (05/12/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 482.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 468.00 Td (Poplar Creek) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 468.00 Td (05/14/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 468.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 454.00 Td (Wesley Village) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 454.00 Td (05/19/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 454.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 440.00 Td (Legacy Grand at Concord) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 440.00 Td (05/21/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 440.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 426.00 Td (Millennium ) Tj ET Q q 0 0 0 rg BT 87.34 426.00 Td (Apartment Homes ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 148.21 429.63 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 426.00 Td (05/27/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 426.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 412.00 Td (Legacy Crescent Park ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 120.19 415.63 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 412.00 Td (05/29/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 412.00 Td (3.00%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 48.00 398.00 Td (Legacy at Valley Ranch) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 354.75 398.00 Td (06/09/2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 496.65 398.00 Td (3.00%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 382.25 Td (____________________) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 45.00 373.27 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 51.06 369.65 Td ( Under the Property Management ) Tj ET Q q 0 0 0 rg BT 159.70 369.65 Td (Agreement, the Property Owner will pay LPI the Management Fee Percentage in an amount equal to the greater of \(a\) ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 539.34 369.65 Td (3%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 550.00 369.65 Td ( of ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 45.00 360.05 Td (the Gross Monthly Collections \(as defined in the Property Management ) Tj ET Q q 0 0 0 rg BT 275.63 360.05 Td (Agreement\) or \(b\) ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 335.82 360.05 Td ($4,000) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 357.82 360.05 Td ( per month.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 336.05 Td (Under the Property Management ) Tj ET Q q 0 0 0 rg BT 200.80 336.05 Td (Agreements, each Property Owner pays LPI: \(i\) a monthly fee based on a percentage \(as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 324.05 Td (described in the table above, the “Management Fee Percentage”\) of the Gross Monthly Collections \(as defined in each Property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 312.05 Td (Management ) Tj ET Q q 0 0 0 rg BT 99.15 312.05 Td (Agreement\), \(ii\) a construction supervision fee equal to a percentage of construction costs to the extent overseen by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 300.05 Td (LPI and as further detailed in each Property Management ) Tj ET Q q 0 0 0 rg BT 276.31 300.05 Td (Agreement, \(iii\) a leasing commission at a rate to be agreed upon ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 288.05 Td (between the Property Owner and LPI for retail leases executed that were procured or obtained by LPI, \(iv\) certain reimbursements ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 276.05 Td (if included in an approved capital budget and \(v\) certain reimbursements if included in the approved operating budget, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 264.05 Td (the reimbursement of the salaries and benefits for on-site personnel. Unless otherwise provided for in an approved operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 252.05 Td (budget, LPI is responsible for all expenses that it incurs in rendering services pursuant to each Property Management ) Tj ET Q q 0 0 0 rg BT 514.60 252.05 Td (Agreement. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 240.05 Td (Each Property Management ) Tj ET Q q 0 0 0 rg BT 158.57 240.05 Td (Agreement has an initial term of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 290.75 240.05 Td (one) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 305.19 240.05 Td ( year and will continue thereafter on a month-to-month basis ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 228.05 Td (unless either party gives ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 144.42 228.05 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 154.42 228.05 Td ( days’) Tj ET Q q 0 0 0 rg BT 177.84 228.05 Td ( prior written notice of its desire to terminate the Property Management ) Tj ET Q q 0 0 0 rg BT 465.53 228.05 Td (Agreement. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 216.05 Td (Notwithstanding the foregoing, the Property Owner may terminate each Property Management ) Tj ET Q q 0 0 0 rg BT 426.01 216.05 Td (Agreement at any time without ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 204.05 Td (cause upon ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.21 204.05 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 102.21 204.05 Td ( days’) Tj ET Q q 0 0 0 rg BT 125.63 204.05 Td ( prior written notice to LPI. ) Tj ET Q q 0 0 0 rg BT 240.42 204.05 Td (The Property Owner may also terminate the Property Management ) Tj ET Q q 0 0 0 rg BT 509.51 204.05 Td (Agreement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 192.05 Td (with cause immediately upon notice to LPI and the expiration of any applicable cure period. LPI may terminate each Property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 180.05 Td (Management ) Tj ET Q q 0 0 0 rg BT 99.15 180.05 Td (Agreement at any time without cause upon prior written notice to the Property Owner which, depending upon the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 168.05 Td (terms of the particular Property Management ) Tj ET Q q 0 0 0 rg BT 227.16 168.05 Td (Agreement, requires either ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 336.56 168.05 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.56 168.05 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 351.56 168.05 Td (60) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 361.56 168.05 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 374.89 168.05 Td (90) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.89 168.05 Td ( days prior written notice. LPI may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 156.05 Td (terminate the Property Management ) Tj ET Q q 0 0 0 rg BT 191.06 156.05 Td (Agreement for cause if a Property Owner commits any material default under the Property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 144.05 Td (Management ) Tj ET Q q 0 0 0 rg BT 99.15 144.05 Td (Agreement and the default continues for a period of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 308.79 144.05 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 318.79 144.05 Td ( days after notice from LPI to a Property Owner for a default ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 132.05 Td (or) Tj ET Q q 0 0 0 rg BT 52.93 132.05 Td (, in the case of ) Tj ET Q q 0 0 0 rg BT 113.28 132.05 Td (W) Tj ET Q q 0 0 0 rg BT 121.92 132.05 Td (atertower ) Tj ET Q q 0 0 0 rg BT 161.62 132.05 Td (Apartments, Lofts at the Highlands, ) Tj ET Q q 0 0 0 rg BT 307.25 132.05 Td (W) Tj ET Q q 0 0 0 rg BT 315.88 132.05 Td (esley ) Tj ET Q q 0 0 0 rg BT 338.75 132.05 Td (V) Tj ET Q q 0 0 0 rg BT 345.37 132.05 Td (illage, Legacy Grand at Concord, Millennium ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 120.05 Td (Apartment Homes and Legacy Crescent Park, if a monetary default continues for a period of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.65 120.05 Td (10) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.65 120.05 Td ( days after notice of such ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 108.05 Td (monetary default.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 90.05 Td (The Management Fee Percentage and any other fees and reimbursements payable to LPI by the Property Owner under each ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 78.05 Td (Property Management ) Tj ET Q q 0 0 0 rg BT 136.09 78.05 Td (Agreement are approximately equal to the applicable percentage and other fees and reimbursements ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 66.05 Td (payable to LPR by the Property Owner under the now-terminated account services agreements and to the prior third party ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 45.00 54.05 Td (management companies by the Property Owner under the now-terminated prior property management agreements.) Tj ET Q endstream endobj 37 0 obj <>] /Rotate 0 /Contents 38 0 R>> endobj 38 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 1. Financial Statements \(continued\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 187.30 712.60 Td (KBS LEGACY) Tj ET Q q 0 0 0 rg BT 252.22 712.60 Td ( P) Tj ET Q q 0 0 0 rg BT 260.09 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 274.18 712.60 Td (TNERS ) Tj ET Q q 0 0 0 rg BT 309.47 712.60 Td (AP) Tj ET Q q 0 0 0 rg BT 322.06 712.60 Td (AR) Tj ET Q q 0 0 0 rg BT 336.15 712.60 Td (TMENT) Tj ET Q q 0 0 0 rg BT 372.64 712.60 Td ( REIT) Tj ET Q q 0 0 0 rg BT 398.85 712.60 Td (, INC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 107.50 694.60 Td (CONDENSED NOTES ) Tj ET Q q 0 0 0 rg BT 209.01 694.60 Td (T) Tj ET Q q 0 0 0 rg BT 215.50 694.60 Td (O CONSOLIDA) Tj ET Q q 0 0 0 rg BT 285.60 694.60 Td (TED FINANCIAL) Tj ET Q q 0 0 0 rg BT 364.78 694.60 Td ( ST) Tj ET Q q 0 0 0 rg BT 378.77 694.60 Td (A) Tj ET Q q 0 0 0 rg BT 385.25 694.60 Td (TEMENTS \(CONTINUED\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.85 676.60 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.95 661.60 Td (\(unaudited\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (17) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 632.25 Td (7. ) Tj ET Q q 0 0 0 rg BT 72.00 632.25 Td (COMMITMENTS ) Tj ET Q q 0 0 0 rg BT 153.95 632.25 Td (AND CONTINGENCIES) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 614.25 Td (Economic Dependency) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 596.25 Td (The Company is dependent on the ) Tj ET Q q 0 0 0 rg BT 210.86 596.25 Td (Advisor and the Sub-Advisor for certain services that are essential to the Company) Tj ET Q q 0 0 0 rg BT 541.79 596.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 584.25 Td (including the management of the daily operations of the Company’) Tj ET Q q 0 0 0 rg BT 317.49 584.25 Td (s investment portfolio; the disposition of investments; and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 572.25 Td (other general and administrative responsibilities. ) Tj ET Q q 0 0 0 rg BT 248.99 572.25 Td (The Company is also dependent on LPI to provide the property management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 560.25 Td (services under the Property Management ) Tj ET Q q 0 0 0 rg BT 215.28 560.25 Td (Agreements. In the event that these companies are unable to provide any of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 548.25 Td (respective services, the Company will be required to obtain such services from other sources. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 530.25 Td (Envir) Tj ET Q q 0 0 0 rg BT 73.77 530.25 Td (onmental ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 512.25 Td (As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 500.25 Td (Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 488.25 Td (ef) Tj ET Q q 0 0 0 rg BT 57.09 488.25 Td (fect on its financial condition or results of operations. However) Tj ET Q q 0 0 0 rg BT 312.45 488.25 Td (, changes in applicable environmental laws and regulations, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 476.25 Td (the uses and conditions of properties in the vicinity of the Company’) Tj ET Q q 0 0 0 rg BT 323.62 476.25 Td (s property) Tj ET Q q 0 0 0 rg BT 363.24 476.25 Td (, the activities of its tenants and other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 464.25 Td (environmental conditions of which the Company is unaware with respect to the property could result in future environmental ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 452.25 Td (liabilities. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 434.25 Td (Legal Matters) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 416.25 Td (From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 404.25 Td (Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 392.25 Td (adverse ef) Tj ET Q q 0 0 0 rg BT 90.13 392.25 Td (fect on the Company’) Tj ET Q q 0 0 0 rg BT 176.49 392.25 Td (s results of operations or financial condition, which would require accrual or disclosure of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 380.25 Td (contingency and possible range of loss. ) Tj ET Q q 0 0 0 rg BT 211.14 380.25 Td (Additionally) Tj ET Q q 0 0 0 rg BT 261.04 380.25 Td (, the Company has not recorded any loss contingencies related to legal ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 368.25 Td (proceedings in which the potential loss is deemed to be remote. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 344.25 Td (8. ) Tj ET Q q 0 0 0 rg BT 72.00 344.25 Td (SUBSEQUENT) Tj ET Q q 0 0 0 rg BT 139.07 344.25 Td ( EVENTS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 326.25 Td (The Company evaluates subsequent events up until the date the consolidated financial statements are issued. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 308.25 Td (Distributions Paid) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 290.25 Td (On October 3, 2016, the Company paid distributions of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 295.58 290.25 Td ($1.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 344.48 290.25 Td (, which related to distributions declared for daily ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 278.25 Td (record dates for each day in the period from September 1, 2016 through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 338.85 278.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 419.11 278.25 Td (. On November 1, 2016, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 266.25 Td (Company paid distributions of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 173.94 266.25 Td ($1.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 222.83 266.25 Td (, which related to distributions declared for daily record dates for each day in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 254.25 Td (period from October 1, 2016 through October 31, 2016.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 236.25 Td (Distributions Declar) Tj ET Q q 0 0 0 rg BT 136.26 236.25 Td (ed) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 218.25 Td (On October 1) Tj ET Q q 0 0 0 rg BT 126.06 218.25 Td (1, 2016, the Company’) Tj ET Q q 0 0 0 rg BT 217.44 218.25 Td (s board of directors declared distributions based on daily record dates for the period ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 206.25 Td (from November 1, 2016 through November 30, 2016, which the Company expects to pay in December 2016. On November ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 194.25 Td (10, 2016, the Company’) Tj ET Q q 0 0 0 rg BT 145.88 194.25 Td (s board of directors declared distributions based on daily record dates for the period from December 1, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 182.25 Td (2016 through December 31, 2016, which the Company expects to pay in January 2017, and distributions based on daily record ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 170.25 Td (dates for the period from January 1, 2017 through January 31, 2017, which the Company expects to pay in February 2017. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 158.25 Td (Investors may choose to receive cash distributions or purchase additional shares through the Company’) Tj ET Q q 0 0 0 rg BT 461.90 158.25 Td (s dividend reinvestment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 146.25 Td (plan.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 128.25 Td (Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 116.25 Td ($0.00178082) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 102.00 116.25 Td ( per share per day and equal a daily amount that, if paid each day for a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.77 116.25 Td (365) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.77 116.25 Td (-day period, would equal a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.18 116.25 Td (6.32%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.01 116.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 104.25 Td (annualized rate based on the Company’) Tj ET Q q 0 0 0 rg BT 206.95 104.25 Td (s December 8, 2015 estimated value per share of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.09 104.25 Td ($10.29) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 431.59 104.25 Td (.) Tj ET Q endstream endobj 39 0 obj <>] /Rotate 0 /Contents 40 0 R>> endobj 40 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (18) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (The following discussion and analysis should be read in conjunction with the accompanying financial statements of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (KBS Legacy Partners ) Tj ET Q q 0 0 0 rg BT 138.09 692.10 Td (Apartment REIT) Tj ET Q q 0 0 0 rg BT 204.83 692.10 Td (, Inc. and the notes thereto. ) Tj ET Q q 0 0 0 rg BT 317.58 692.10 Td (As used herein, the terms “we,” “our” and “us” refer to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (KBS Legacy Partners ) Tj ET Q q 0 0 0 rg BT 138.09 680.10 Td (Apartment REIT) Tj ET Q q 0 0 0 rg BT 204.83 680.10 Td (, Inc., a Maryland corporation, and, as required by context, KBS Legacy Partners ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (Limited Partnership, a Delaware limited partnership, which we refer to as the “Operating Partnership,” and to their subsidiaries. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 650.10 Td (Forward-Looking Statements) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 632.10 Td (Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. ) Tj ET Q q 0 0 0 rg BT 475.33 632.10 Td (Those statements ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (include statements regarding the intent, belief or current expectations of KBS Legacy Partners ) Tj ET Q q 0 0 0 rg BT 428.26 620.10 Td (Apartment REIT) Tj ET Q q 0 0 0 rg BT 495.00 620.10 Td (, Inc. and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (members of our management team, as well as the assumptions on which such statements are based, and generally are identified ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (by the use of words such as “may) Tj ET Q q 0 0 0 rg BT 182.99 596.10 Td (,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 584.10 Td (“should” or similar expressions. ) Tj ET Q q 0 0 0 rg BT 182.26 584.10 Td (Actual results may dif) Tj ET Q q 0 0 0 rg BT 270.67 584.10 Td (fer materially from those contemplated by such forward-looking ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 572.10 Td (statements. Further) Tj ET Q q 0 0 0 rg BT 128.25 572.10 Td (, forward-looking statements speak only as of the date they are made, and we undertake no obligation to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 560.10 Td (update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 548.10 Td (to future operating results over time, unless required by law) Tj ET Q q 0 0 0 rg BT 287.67 548.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 530.10 Td (The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 518.10 Td (actual results to dif) Tj ET Q q 0 0 0 rg BT 125.69 518.10 Td (fer materially from those presented in our forward-looking statements: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 500.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 500.10 Td (W) Tj ET Q q 0 0 0 rg BT 98.64 500.10 Td (e are dependent on KBS Capital ) Tj ET Q q 0 0 0 rg BT 229.16 500.10 Td (Advisors LLC \(“KBS Capital ) Tj ET Q q 0 0 0 rg BT 349.71 500.10 Td (Advisors”\), our advisor) Tj ET Q q 0 0 0 rg BT 443.46 500.10 Td (, and our sub-advisor to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 488.10 Td (manage our investments and to provide certain other services. ) Tj ET Q q 0 0 0 rg BT 342.24 488.10 Td (W) Tj ET Q q 0 0 0 rg BT 350.87 488.10 Td (e are dependent on Legacy Partners, Inc., formerly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 476.10 Td (known as Legacy Partners Residential, Inc. \(“LPI”\), an af) Tj ET Q q 0 0 0 rg BT 320.57 476.10 Td (filiate of our sub-advisor) Tj ET Q q 0 0 0 rg BT 419.31 476.10 Td (, to provide property management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 464.10 Td (services for our investments.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 449.10 Td (All of our executive of) Tj ET Q q 0 0 0 rg BT 180.90 449.10 Td (ficers, some of our directors and other key real estate professionals are also of) Tj ET Q q 0 0 0 rg BT 492.27 449.10 Td (ficers, managers, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 437.10 Td (directors, key professionals and/or holders of a controlling interest in our advisor) Tj ET Q q 0 0 0 rg BT 413.41 437.10 Td (, the sub-advisor) Tj ET Q q 0 0 0 rg BT 479.38 437.10 Td (, our dealer manager ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 425.10 Td (and other sponsor) Tj ET Q q 0 0 0 rg BT 160.90 425.10 Td (-af) Tj ET Q q 0 0 0 rg BT 171.82 425.10 Td (filiated entities. ) Tj ET Q q 0 0 0 rg BT 238.47 425.10 Td (As a result, they face conflicts of interest, including significant conflicts created ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 413.10 Td (by our advisor) Tj ET Q q 0 0 0 rg BT 148.14 413.10 Td (’) Tj ET Q q 0 0 0 rg BT 150.92 413.10 Td (s compensation arrangements with us and other programs and investors advised by our sponsors. Fees ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 401.10 Td (paid to our advisor in connection with the management of our properties are based on the cost of the property) Tj ET Q q 0 0 0 rg BT 526.72 401.10 Td (, not on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 389.10 Td (the quality of the services rendered to us. ) Tj ET Q q 0 0 0 rg BT 259.21 389.10 Td (This arrangement could result in unanticipated actions. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 374.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 374.10 Td (W) Tj ET Q q 0 0 0 rg BT 98.64 374.10 Td (e did not raise the maximum of) Tj ET Q q 0 0 0 rg BT 223.43 374.10 Td (fering amount in our public of) Tj ET Q q 0 0 0 rg BT 344.05 374.10 Td (ferings. Because we raised substantially less than the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 362.10 Td (maximum of) Tj ET Q q 0 0 0 rg BT 141.20 362.10 Td (fering amount, we were not able to invest in as diverse a portfolio of real estate properties as we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 350.10 Td (otherwise would and the value of an investment in us will vary more widely with the performance of specific assets. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 338.10 Td (There is a greater risk that stockholders will lose money in their investment in us, as we have less diversity in our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 326.10 Td (portfolio. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 311.10 Td (W) Tj ET Q q 0 0 0 rg BT 98.64 311.10 Td (e pay substantial fees to and expenses of our advisor and its af) Tj ET Q q 0 0 0 rg BT 347.28 311.10 Td (filiates and, in connection with our public of) Tj ET Q q 0 0 0 rg BT 524.83 311.10 Td (ferings, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 299.10 Td (we paid substantial fees to participating broker) Tj ET Q q 0 0 0 rg BT 276.96 299.10 Td (-dealers. ) Tj ET Q q 0 0 0 rg BT 313.43 299.10 Td (These payments increase the risk that our stockholders will ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 287.10 Td (not earn a profit on their investment in us and increase the risk of loss to our stockholders. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 272.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 272.10 Td (From time to time during our operational stage, we have used proceeds from financings to fund distributions. Our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 260.10 Td (or) Tj ET Q q 0 0 0 rg BT 98.15 260.10 Td (ganizational documents permit us to pay distributions from any source, including of) Tj ET Q q 0 0 0 rg BT 433.46 260.10 Td (fering proceeds, which may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 248.10 Td (constitute a return of capital. ) Tj ET Q q 0 0 0 rg BT 209.50 248.10 Td (W) Tj ET Q q 0 0 0 rg BT 218.13 248.10 Td (e have not established a limit on the amount of distributions that we may fund from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 236.10 Td (sources other than from cash flows from operations.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 221.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 221.10 Td (W) Tj ET Q q 0 0 0 rg BT 98.64 221.10 Td (e may incur debt until our total liabilities would exceed 75% of the cost of our tangible assets \(before deducting ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 209.10 Td (depreciation or other non-cash reserves\), and we may exceed this limit with the approval of the conflicts committee ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 197.10 Td (of our board of directors. ) Tj ET Q q 0 0 0 rg BT 192.56 197.10 Td (T) Tj ET Q q 0 0 0 rg BT 197.97 197.10 Td (o the extent financing in excess of this limit is available on attractive terms, our conflicts ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 185.10 Td (committee may approve debt such that our total liabilities would exceed this limit. High debt levels could limit the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 173.10 Td (amount of cash we have available to distribute and could result in a decline in the value of an investment in us.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 158.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 158.10 Td (Disruptions in the financial markets and uncertain economic conditions could adversely af) Tj ET Q q 0 0 0 rg BT 451.10 158.10 Td (fect our ability to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 146.10 Td (implement our business strategy and generate returns to stockholders. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 131.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 131.10 Td (W) Tj ET Q q 0 0 0 rg BT 98.64 131.10 Td (e depend on tenants for our revenue. Revenues from our real property investments could decrease due to a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 119.10 Td (reduction in tenants \(caused by factors including, but not limited to, tenant defaults or early termination or non-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 107.10 Td (renewal of existing tenant leases\) and/or lower rental rates, limiting our ability to pay distributions to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 95.10 Td (stockholders. ) Tj ET Q endstream endobj 41 0 obj <>] /Rotate 0 /Contents 42 0 R>> endobj 42 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (19) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 704.10 Td (During any calendar year) Tj ET Q q 0 0 0 rg BT 190.94 704.10 Td (, once we have redeemed $1.5 million of shares under our share redemption program, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 692.10 Td (including shares redeemed in connection with a stockholder) Tj ET Q q 0 0 0 rg BT 330.02 692.10 Td (’) Tj ET Q q 0 0 0 rg BT 332.80 692.10 Td (s death, “qualifying disability) Tj ET Q q 0 0 0 rg BT 450.46 692.10 Td (,” or “determination of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 680.10 Td (incompetence” \(both as defined in the share redemption program and together with redemptions in connection with a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 668.10 Td (stockholder) Tj ET Q q 0 0 0 rg BT 137.03 668.10 Td (’) Tj ET Q q 0 0 0 rg BT 139.80 668.10 Td (s death, “special redemptions”\), the remaining $0.5 million of the $2.0 million annual limit shall be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 656.10 Td (reserved exclusively for special redemptions. In January 2016, we exhausted $1.5 million of funds available for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 644.10 Td (redemptions for 2016 and in ) Tj ET Q q 0 0 0 rg BT 205.26 644.10 Td (August 2016, we exhausted $0.5 million of funds available for special redemptions for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 632.10 Td (2016. ) Tj ET Q q 0 0 0 rg BT 117.32 632.10 Td (Therefore, we have no funds available for redemptions for the remainder of 2016. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 617.10 Td (Although the Special Committee \(defined below\) of our board of directors has engaged a financial advisor to explore ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 605.10 Td (the availability of strategic alternatives involving our company with the goal of providing liquidity options for our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 593.10 Td (stockholders while preserving and maximizing overall returns on our investment portfolio, and although we have ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 581.10 Td (engaged Holliday Fenoglio Fowler) Tj ET Q q 0 0 0 rg BT 229.30 581.10 Td (, L.P) Tj ET Q q 0 0 0 rg BT 247.36 581.10 Td (. \(“HFF”\) to market our real estate properties for sale, we are not obligated to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 569.10 Td (enter into any particular transaction or any transaction at all. Further) Tj ET Q q 0 0 0 rg BT 365.05 569.10 Td (, although we and HFF continue to market the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 557.10 Td (assets in our portfolio for sale, there is no assurance that this process will result in stockholder liquidity) Tj ET Q q 0 0 0 rg BT 502.05 557.10 Td (, or provide a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 545.10 Td (return to stockholders that equals or exceeds our estimated value per share. Neither we nor HFF undertakes any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 533.10 Td (obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 521.10 Td (unanticipated events or changes to future operating results over time, unless required by law) Tj ET Q q 0 0 0 rg BT 458.13 521.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 503.10 Td (All forward-looking statements should be read in light of the risks identified herein, in Part II, Item 1A) Tj ET Q q 0 0 0 rg BT 482.74 503.10 Td ( of our Quarterly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 491.10 Td (Report on Form 10-Q for the quarter ended June 30, 2016 and in Part I, Item 1A) Tj ET Q q 0 0 0 rg BT 369.99 491.10 Td ( of our ) Tj ET Q q 0 0 0 rg BT 398.60 491.10 Td (Annual Report on Form 10-K for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 479.10 Td (year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.58 479.10 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 174.17 479.10 Td (, all filed with the Securities and Exchange Commission \(the “SEC”\). ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 461.10 Td (Overview) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 443.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 443.10 Td (e were formed on July 31, 2009 as a Maryland corporation that elected to be taxed as a real estate investment trust ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 431.10 Td (\(“REIT”\) beginning with the taxable year ended December 31, 2010 and intend to continue to operate in such a manner) Tj ET Q q 0 0 0 rg BT 527.11 431.10 Td (. ) Tj ET Q q 0 0 0 rg BT 534.43 431.10 Td (W) Tj ET Q q 0 0 0 rg BT 543.07 431.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 419.10 Td (conduct our business primarily through our Operating Partnership, of which we are the sole general partner) Tj ET Q q 0 0 0 rg BT 477.71 419.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 401.10 Td (e invested in and manage a portfolio of high quality apartment communities located throughout the United States. Our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 389.10 Td (portfolio consists of “core” apartment buildings that were already well-positioned and producing rental income at acquisition. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 377.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.94 377.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 154.21 377.10 Td (, we owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 202.53 377.10 Td (1) Tj ET Q q 0 0 0 rg BT 207.16 377.10 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 212.16 377.10 Td ( apartment complexes. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 359.10 Td (As our advisor) Tj ET Q q 0 0 0 rg BT 130.48 359.10 Td (, KBS Capital ) Tj ET Q q 0 0 0 rg BT 188.26 359.10 Td (Advisors is responsible for managing our day-to-day operations and our portfolio of real ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 347.10 Td (estate assets. Subject to the terms of the advisory agreement between KBS Capital ) Tj ET Q q 0 0 0 rg BT 383.03 347.10 Td (Advisors and us, KBS Capital ) Tj ET Q q 0 0 0 rg BT 505.25 347.10 Td (Advisors ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 335.10 Td (delegates certain advisory duties to a sub-advisor) Tj ET Q q 0 0 0 rg BT 245.71 335.10 Td (, KBS-Legacy ) Tj ET Q q 0 0 0 rg BT 304.86 335.10 Td (Apartment Community REIT) Tj ET Q q 0 0 0 rg BT 422.44 335.10 Td ( ) Tj ET Q q 0 0 0 rg BT 424.76 335.10 Td (V) Tj ET Q q 0 0 0 rg BT 430.88 335.10 Td (enture, LLC \(the “Sub-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 323.10 Td (Advisor”\), which is a joint venture between KBS Capital ) Tj ET Q q 0 0 0 rg BT 279.46 323.10 Td (Advisors and Legacy Partners Residential Realty LLC \(“LPRR ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 311.10 Td (LLC”\). Notwithstanding such delegation to the Sub-Advisor) Tj ET Q q 0 0 0 rg BT 291.01 311.10 Td (, KBS Capital ) Tj ET Q q 0 0 0 rg BT 348.79 311.10 Td (Advisors retains ultimate responsibility for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 299.10 Td (performance of all the matters entrusted to it under the advisory agreement. KBS Capital ) Tj ET Q q 0 0 0 rg BT 408.84 299.10 Td (Advisors made recommendations on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 287.10 Td (all investments to our board of directors. ) Tj ET Q q 0 0 0 rg BT 216.41 287.10 Td (A) Tj ET Q q 0 0 0 rg BT 223.08 287.10 Td ( majority of our board of directors, including a majority of our independent directors ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 275.10 Td (acting through the conflicts committee, approved our investments. KBS Capital ) Tj ET Q q 0 0 0 rg BT 372.49 275.10 Td (Advisors, either directly or through the Sub-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 263.10 Td (Advisor) Tj ET Q q 0 0 0 rg BT 81.32 263.10 Td (, also provides asset-management, marketing, investor) Tj ET Q q 0 0 0 rg BT 298.28 263.10 Td (-relations and other administrative services on our behalf. LPI is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 251.10 Td (the property manager for our real estate property investments. Our Sub-Advisor owns 20,000 shares of our common stock. ) Tj ET Q q 0 0 0 rg BT 547.26 251.10 Td (W) Tj ET Q q 0 0 0 rg BT 555.90 251.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 239.10 Td (have no paid employees. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 221.10 Td (On March 12, 2010, we commenced our initial public of) Tj ET Q q 0 0 0 rg BT 298.10 221.10 Td (fering of 280,000,000 shares of common stock for sale to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 209.10 Td (public, of which 80,000,000 shares were of) Tj ET Q q 0 0 0 rg BT 222.33 209.10 Td (fered pursuant to our dividend reinvestment plan \(the “Initial Of) Tj ET Q q 0 0 0 rg BT 479.02 209.10 Td (fering”\). ) Tj ET Q q 0 0 0 rg BT 517.98 209.10 Td (W) Tj ET Q q 0 0 0 rg BT 526.62 209.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 197.10 Td (retained KBS Capital Markets Group LLC \(“KBS Capital Markets Group”\), an af) Tj ET Q q 0 0 0 rg BT 376.46 197.10 Td (filiate of our advisor) Tj ET Q q 0 0 0 rg BT 457.98 197.10 Td (, to serve as the dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 185.10 Td (manager for the Initial Of) Tj ET Q q 0 0 0 rg BT 152.05 185.10 Td (fering pursuant to a dealer manager agreement dated March 12, 2010 \(the “Initial Dealer Manager ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 173.10 Td (Agreement”\).) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 155.10 Td (On May 31, 2012, we filed a registration statement on Form S-1) Tj ET Q q 0 0 0 rg BT 329.03 155.10 Td (1 with the SEC to register a follow-on public of) Tj ET Q q 0 0 0 rg BT 519.65 155.10 Td (fering \(the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 143.10 Td (“Follow-on Of) Tj ET Q q 0 0 0 rg BT 108.48 143.10 Td (fering” and together with the Initial Of) Tj ET Q q 0 0 0 rg BT 263.25 143.10 Td (fering, the “Of) Tj ET Q q 0 0 0 rg BT 321.65 143.10 Td (ferings”\). Pursuant to the Follow-on Of) Tj ET Q q 0 0 0 rg BT 481.72 143.10 Td (fering registration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 131.10 Td (statement, as amended, we registered up to an additional $2,000,000,000 of shares of common stock for sale to the public and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 119.10 Td (up to an additional $760,000,000 of shares pursuant to our dividend reinvestment plan. ) Tj ET Q q 0 0 0 rg BT 401.76 119.10 Td (The SEC declared our registration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 107.10 Td (statement for the Follow-on Of) Tj ET Q q 0 0 0 rg BT 173.74 107.10 Td (fering ef) Tj ET Q q 0 0 0 rg BT 207.70 107.10 Td (fective on March 8, 2013.) Tj ET Q endstream endobj 43 0 obj <>] /Rotate 0 /Contents 44 0 R>> endobj 44 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (20) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 704.10 Td (W) Tj ET Q q 0 0 0 rg BT 81.14 704.10 Td (e retained KBS Capital Markets Group to serve as the dealer manager for the Follow-on Of) Tj ET Q q 0 0 0 rg BT 446.12 704.10 Td (fering pursuant to a dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (manager agreement dated March 8, 2013 \(the “Follow-on Dealer Manager ) Tj ET Q q 0 0 0 rg BT 349.10 692.10 Td (Agreement” and together with the Initial Dealer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (Manager ) Tj ET Q q 0 0 0 rg BT 86.99 680.10 Td (Agreement, the “Dealer Manager ) Tj ET Q q 0 0 0 rg BT 222.20 680.10 Td (Agreements”\). On March 12, 2013, we ceased of) Tj ET Q q 0 0 0 rg BT 420.55 680.10 Td (fering shares pursuant to the Initial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (Of) Tj ET Q q 0 0 0 rg BT 59.87 668.10 Td (fering and on March 13, 2013, we commenced of) Tj ET Q q 0 0 0 rg BT 257.41 668.10 Td (fering shares to the public pursuant to the Follow-on Of) Tj ET Q q 0 0 0 rg BT 480.24 668.10 Td (fering. ) Tj ET Q q 0 0 0 rg BT 508.93 668.10 Td (W) Tj ET Q q 0 0 0 rg BT 517.57 668.10 Td (e ceased ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 656.10 Td (fering shares of common stock in the primary Follow-on Of) Tj ET Q q 0 0 0 rg BT 297.14 656.10 Td (fering on March 31, 2014 and completed subscription processing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (procedures on ) Tj ET Q q 0 0 0 rg BT 107.82 644.10 Td (April 30, 2014. ) Tj ET Q q 0 0 0 rg BT 173.74 644.10 Td (W) Tj ET Q q 0 0 0 rg BT 182.38 644.10 Td (e continue to of) Tj ET Q q 0 0 0 rg BT 244.68 644.10 Td (fer shares under our dividend reinvestment plan.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 626.10 Td (Through its completion on March 12, 2013, we sold ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.31 626.10 Td (18,088,084) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 328.31 626.10 Td ( shares of common stock in the Initial Of) Tj ET Q q 0 0 0 rg BT 491.98 626.10 Td (fering for gross ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 614.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 614.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.89 614.10 Td ($179.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 191.79 614.10 Td (, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.06 614.10 Td (368,872) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 269.56 614.10 Td ( shares of common stock under our dividend reinvestment plan for gross ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 602.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 602.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.89 602.10 Td ($3.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.79 602.10 Td (. ) Tj ET Q q 0 0 0 rg BT 189.10 602.10 Td (W) Tj ET Q q 0 0 0 rg BT 197.74 602.10 Td (e sold 1,496,198 shares of common stock in our primary Follow-on Of) Tj ET Q q 0 0 0 rg BT 480.58 602.10 Td (fering for gross ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 590.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 590.10 Td (fering proceeds of $15.9 million.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 572.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 572.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 572.10 Td (, we had sold an aggregate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.11 572.10 Td (21,539,479) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 341.11 572.10 Td ( shares of common stock in the Of) Tj ET Q q 0 0 0 rg BT 478.40 572.10 Td (ferings for gross ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 560.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 560.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.89 560.10 Td ($214.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 191.79 560.10 Td (, including an aggregate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.19 560.10 Td (2,324,069) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 341.19 560.10 Td ( shares of common stock under our dividend ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 548.10 Td (reinvestment plan for gross of) Tj ET Q q 0 0 0 rg BT 169.29 548.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.53 548.10 Td ($23.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 298.43 548.10 Td (. ) Tj ET Q q 0 0 0 rg BT 305.37 548.10 Td (Also, as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.93 548.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 431.19 548.10 Td (, we had redeemed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.65 548.10 Td (807,692) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 541.15 548.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 536.10 Td (shares sold in the Of) Tj ET Q q 0 0 0 rg BT 131.53 536.10 Td (ferings for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 175.96 536.10 Td ($7.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 224.85 536.10 Td (. ) Tj ET Q q 0 0 0 rg BT 232.17 536.10 Td (W) Tj ET Q q 0 0 0 rg BT 240.80 536.10 Td (e have used substantially all of the net proceeds from the primary Of) Tj ET Q q 0 0 0 rg BT 514.98 536.10 Td (ferings to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 524.10 Td (invest in and manage a portfolio of high quality apartment communities located throughout the United States as described ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 512.10 Td (above. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 494.10 Td (Market Outlook - Multi-Family Real Estate and Finance Markets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 476.10 Td (The last recession, occurring from approximately 2008 - 2009, resulted in significant job losses, which had an adverse ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 464.10 Td (ef) Tj ET Q q 0 0 0 rg BT 57.09 464.10 Td (fect on multifamily real estate. ) Tj ET Q q 0 0 0 rg BT 184.36 464.10 Td (V) Tj ET Q q 0 0 0 rg BT 190.47 464.10 Td (acancies increased to record highs and rents decreased as owners sought to retain existing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 452.10 Td (residents and attract new residents. Rising capitalization rates, in addition to declining rents, caused values to decline. In ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 440.10 Td (contrast, 2010 exhibited positive signs that multifamily real estate had begun a solid recovery) Tj ET Q q 0 0 0 rg BT 422.64 440.10 Td (. ) Tj ET Q q 0 0 0 rg BT 429.96 440.10 Td (V) Tj ET Q q 0 0 0 rg BT 436.08 440.10 Td (acancy declined, rents ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 428.10 Td (increased, and capitalization rates decreased. ) Tj ET Q q 0 0 0 rg BT 233.67 428.10 Td (These positive trends continued throughout 201) Tj ET Q q 0 0 0 rg BT 424.09 428.10 Td (1 and into 2012. From the second ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 416.10 Td (quarter of 2012 through the third quarter of 2014, vacancy stabilized at approximately its equilibrium rate and, while rent ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 404.10 Td (growth moderated during 2013, it remained at an above average annual rate through 2014. Since the fourth quarter of 2014, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 392.10 Td (vacancy has declined gradually and there has been renewed rent growth.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 374.10 Td (According to the U.S. Bureau of Labor Statistics \(“BLS”\), approximately 8.7 million jobs were lost in the U.S. from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 362.10 Td (December 2007 through December 2009 as a result of the 2008 - 2009 recession. Since 2009, employment has increased by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 350.10 Td (over 15.0 million jobs \(through September 2016\). ) Tj ET Q q 0 0 0 rg BT 253.18 350.10 Td (The BLS also reported that the unemployment rate peaked in 2009 at 10.0% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 338.10 Td (and was down to 6.7% by the end of 2013. ) Tj ET Q q 0 0 0 rg BT 225.13 338.10 Td (The unemployment rate continued to decline in 2014 and 2015, ending the year at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 326.10 Td (5.6% and 5.0%, respectively) Tj ET Q q 0 0 0 rg BT 163.26 326.10 Td (. Since the end of 2015, the unemployment rate has been relatively stable, fluctuating around ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 314.10 Td (5.0%.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 296.10 Td (W) Tj ET Q q 0 0 0 rg BT 81.04 296.10 Td (itten ) Tj ET Q q 0 0 0 rg BT 100.76 296.10 Td (Advisors reported that apartment vacancies in the U.S. were 7.8% at the end of 2009 \(“U.S. ) Tj ET Q q 0 0 0 rg BT 469.27 296.10 Td (Apartment Markets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 284.10 Td (Forecast,” ) Tj ET Q q 0 0 0 rg BT 92.63 284.10 Td (Third Quarter 2016\). ) Tj ET Q q 0 0 0 rg BT 180.67 284.10 Td (Apartment vacancies declined steadily throughout 2010 and 201) Tj ET Q q 0 0 0 rg BT 437.72 284.10 Td (1, stabilizing at 5%, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 272.10 Td (approximate equilibrium vacancy rate, in the second half of 2012. ) Tj ET Q q 0 0 0 rg BT 317.84 272.10 Td (The vacancy rate remained relatively stable from that time ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 260.10 Td (through the third quarter of 2014. However) Tj ET Q q 0 0 0 rg BT 224.61 260.10 Td (, by the end of 2015, the vacancy rate had declined further to 4.6%. ) Tj ET Q q 0 0 0 rg BT 498.12 260.10 Td (As of the end ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 248.10 Td (of the second quarter of 2016, the vacancy rate was 4.2%. ) Tj ET Q q 0 0 0 rg BT 285.62 248.10 Td (W) Tj ET Q q 0 0 0 rg BT 294.66 248.10 Td (itten ) Tj ET Q q 0 0 0 rg BT 314.38 248.10 Td (Advisors also reported that ef) Tj ET Q q 0 0 0 rg BT 432.50 248.10 Td (fective rents for U.S. apartments ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 236.10 Td (were up by 2.0% and 4.2% in 2010 and 201) Tj ET Q q 0 0 0 rg BT 224.37 236.10 Td (1, respectively) Tj ET Q q 0 0 0 rg BT 282.03 236.10 Td (, in contrast to the decline in ef) Tj ET Q q 0 0 0 rg BT 405.70 236.10 Td (fective rents of 4.4% in 2009. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 224.10 Td (Ef) Tj ET Q q 0 0 0 rg BT 58.76 224.10 Td (fective rents continued to grow in 2012 and 2013 at 3.9% and 3.5%, respectively) Tj ET Q q 0 0 0 rg BT 381.36 224.10 Td (, as compared to the long-term average ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 212.10 Td (growth rate of 2.7%. From the third quarter of 2014 through the first quarter of 2016, ef) Tj ET Q q 0 0 0 rg BT 402.56 212.10 Td (fective rent growth was on the rise, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 200.10 Td (surpassing 4.0% \(annualized\) for six consecutive quarters. Rent growth during for the second quarter of 2016 was 4.2%.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 182.10 Td (Class ) Tj ET Q q 0 0 0 rg BT 95.62 182.10 Td (A) Tj ET Q q 0 0 0 rg BT 102.29 182.10 Td ( multifamily capitalization rates in the U.S. averaged 4.7% in the fourth quarter of 2007 \(W) Tj ET Q q 0 0 0 rg BT 467.88 182.10 Td (itten ) Tj ET Q q 0 0 0 rg BT 487.61 182.10 Td (Advisors: “U.S. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 170.10 Td (Apartment Markets Forecast,” First Quarter 2016\). Capitalization rates increased to 5.8% by the fourth quarter of 2009, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 158.10 Td (reflecting the decline in Class ) Tj ET Q q 0 0 0 rg BT 170.30 158.10 Td (A) Tj ET Q q 0 0 0 rg BT 176.97 158.10 Td ( multifamily property values as a result of the 2008 recession. By the first quarter of 201) Tj ET Q q 0 0 0 rg BT 532.62 158.10 Td (1, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 146.10 Td (average Class ) Tj ET Q q 0 0 0 rg BT 106.70 146.10 Td (A) Tj ET Q q 0 0 0 rg BT 113.37 146.10 Td ( capitalization rate had declined to approximately 5.0%, where it remained through the third quarter of 2013. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 134.10 Td (Class ) Tj ET Q q 0 0 0 rg BT 73.12 134.10 Td (A) Tj ET Q q 0 0 0 rg BT 79.79 134.10 Td ( multifamily capitalization rates declined modestly to 4.8% in the fourth quarter of 2013, and declined further to 4.4% as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 122.10 Td (of the end of the second quarter of 2016.) Tj ET Q endstream endobj 45 0 obj <>] /Rotate 0 /Contents 46 0 R>> endobj 46 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (21) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (In the medium- and long-term, we believe the prospects for multifamily real estate investment are promising. ) Tj ET Q q 0 0 0 rg BT 513.63 704.10 Td (W) Tj ET Q q 0 0 0 rg BT 522.27 704.10 Td (e expect ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (several positive demographic trends, as noted below) Tj ET Q q 0 0 0 rg BT 257.96 692.10 Td (, will drive the demand for multifamily housing throughout this decade.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 674.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 674.10 Td (U.S. population growth - ) Tj ET Q q 0 0 0 rg BT 192.04 674.10 Td (The U.S. Census Bureau projects that the U.S. population will increase by approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 662.10 Td (37 million \(12%\) between 2008 and 2020, predominantly in the ) Tj ET Q q 0 0 0 rg BT 347.27 662.10 Td (W) Tj ET Q q 0 0 0 rg BT 355.91 662.10 Td (est and South.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 647.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 647.10 Td (Immigration - Foreign-born renters represented 18.9% of all renters in 2010 \(U.S. Census Bureau, “2010 ) Tj ET Q q 0 0 0 rg BT 511.29 647.10 Td (American ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 635.10 Td (Community Survey”\). ) Tj ET Q q 0 0 0 rg BT 183.33 635.10 Td (According to the U.S. Census Bureau, immigration is expected to add about 1.4 million ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 623.10 Td (individuals per year to the U.S. population. ) Tj ET Q q 0 0 0 rg BT 267.29 623.10 Td (This immigration-driven increase in population, when combined with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 611.10 Td (natural U.S. population increase, will increase the demand for all types of housing, including apartments, over the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 599.10 Td (next decade.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 584.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 584.10 Td (Echo Boom - ) Tj ET Q q 0 0 0 rg BT 145.64 584.10 Td (The children of the Baby Boom generation, dubbed the Echo Boomers, will increase the prime ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 572.10 Td (rental age group, 20 to 34 year olds, increasing from 64 million in 201) Tj ET Q q 0 0 0 rg BT 370.96 572.10 Td (1 to 68 million through 2020, according to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 560.10 Td (U.S. Census Bureau.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 543.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 543.90 Td (Renter population forecast - ) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 204.40 543.90 Td (Acco) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 227.61 543.90 Td (rding to the U.S. Census Bureau’) Tj ET Q q 0 0 0 rg BT 359.55 543.90 Td (s population projections \(December 2014 release\), ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 531.90 Td (the population of people aged 20 to 34 is expected to increase by 2 million between 2015 and 2020. ) Tj ET Q q 0 0 0 rg BT 493.33 531.90 Td (This “prime ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 519.90 Td (renter age cohort” is growing to a lar) Tj ET Q q 0 0 0 rg BT 237.26 519.90 Td (ge part due to the “Echo Boom,” or children of the Baby Boom generation. In ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 507.90 Td (addition, the population of people aged 55 to 69 is expected to increase by over 4 million between 2015 and 2020, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 495.90 Td (growth driven by the Baby Boomers. ) Tj ET Q q 0 0 0 rg BT 243.13 495.90 Td (These Baby Boomers generally have enough income to purchase a home, but ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 483.90 Td (are increasingly choosing to downsize and rent, preferring the conveniences of apartments, particularly those in urban ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 471.90 Td (infill locations.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 456.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 456.90 Td (Housing Shift - ) Tj ET Q q 0 0 0 rg BT 153.62 456.90 Td (An increasing number of people are choosing to rent, as opposed to own, their home. ) Tj ET Q q 0 0 0 rg BT 498.26 456.90 Td (According to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 444.90 Td (the U.S. Census Bureau, the percentage of people that rent their housing in the United States has increased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 432.90 Td (31.0% in fourth quarter 2005, to 37.1% at the end of the second quarter of 2016. ) Tj ET Q q 0 0 0 rg BT 416.12 432.90 Td (This equates to approximately 6.7 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 420.90 Td (million additional renter households in the United States, according to ) Tj ET Q q 0 0 0 rg BT 372.82 420.90 Td (W) Tj ET Q q 0 0 0 rg BT 381.86 420.90 Td (itten ) Tj ET Q q 0 0 0 rg BT 401.58 420.90 Td (Advisors, over that time period.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 405.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 405.90 Td (Diminished supply - ) Tj ET Q q 0 0 0 rg BT 173.61 405.90 Td (According to ) Tj ET Q q 0 0 0 rg BT 228.42 405.90 Td (W) Tj ET Q q 0 0 0 rg BT 237.46 405.90 Td (itten ) Tj ET Q q 0 0 0 rg BT 257.18 405.90 Td (Advisors \(“U.S. ) Tj ET Q q 0 0 0 rg BT 323.29 405.90 Td (Apartment Markets Forecast,” First Quarter 2016\), ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 393.90 Td (multifamily rental construction starts in the U.S. averaged approximately 300,000 units per year for the decade ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 381.90 Td (December 2005. In comparison, starts were 104,200 units in 2010, a small increase over the 50-year low mark of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 369.90 Td (97,600 units started in 2009. From 201) Tj ET Q q 0 0 0 rg BT 247.68 369.90 Td (1 through 2014, rental construction starts in the United States grew from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 357.90 Td (147,000 to 313,000 units annually) Tj ET Q q 0 0 0 rg BT 226.01 357.90 Td (. Multifamily rental construction starts reached nearly 385,000 units for the twelve ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 345.90 Td (month period ending July 2016. Over the next few years \(second half of 2016-2019\), starts are expected to ease to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 333.90 Td (250,000-300,000 units per year) Tj ET Q q 0 0 0 rg BT 214.70 333.90 Td (.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 312.90 Td (Liquidity and Capital Resour) Tj ET Q q 0 0 0 rg BT 175.18 312.90 Td (ces) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 294.90 Td (Our principal demands for funds during the short and long-term are and will be for the payment of operating expenses, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 282.90 Td (capital expenditures and general and administrative expenses; payments under debt obligations; redemptions of common stock; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 270.90 Td (and payments of distributions to stockholders. ) Tj ET Q q 0 0 0 rg BT 236.24 270.90 Td (T) Tj ET Q q 0 0 0 rg BT 241.65 270.90 Td (o date, we have had four primary sources of capital for meeting our cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 258.90 Td (requirements:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 240.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 240.90 Td (Proceeds from our now terminated primary Of) Tj ET Q q 0 0 0 rg BT 275.87 240.90 Td (ferings; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 225.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 225.90 Td (Proceeds from our dividend reinvestment plan;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 210.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 210.90 Td (Debt financings; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 195.90 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 195.90 Td (Cash flow generated by our real estate investments.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 174.90 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 174.90 Td (e ceased of) Tj ET Q q 0 0 0 rg BT 124.87 174.90 Td (fering shares of common stock in the primary Follow-on Of) Tj ET Q q 0 0 0 rg BT 364.36 174.90 Td (fering on March 31, 2014. ) Tj ET Q q 0 0 0 rg BT 471.66 174.90 Td (W) Tj ET Q q 0 0 0 rg BT 480.30 174.90 Td (e plan to continue to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 162.90 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 162.90 Td (fer shares under our dividend reinvestment plan until we have sold all $760,000,000 of shares of common stock under our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 150.90 Td (dividend reinvestment plan. In some states, we will need to renew the registration statement annually or file a new registration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 138.90 Td (statement to continue the dividend reinvestment plan of) Tj ET Q q 0 0 0 rg BT 271.76 138.90 Td (fering. ) Tj ET Q q 0 0 0 rg BT 300.46 138.90 Td (W) Tj ET Q q 0 0 0 rg BT 309.09 138.90 Td (e may terminate our dividend reinvestment plan of) Tj ET Q q 0 0 0 rg BT 511.35 138.90 Td (fering at any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 126.90 Td (time. ) Tj ET Q endstream endobj 47 0 obj <>] /Rotate 0 /Contents 48 0 R>> endobj 48 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (22) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 704.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 704.10 Td (, we had sold an aggregate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.11 704.10 Td (21,539,479) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 341.11 704.10 Td ( shares of common stock in the Of) Tj ET Q q 0 0 0 rg BT 478.40 704.10 Td (ferings for gross ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (of) Tj ET Q q 0 0 0 rg BT 57.65 692.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.89 692.10 Td ($214.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 191.79 692.10 Td ( including an aggregate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 298.69 692.10 Td (2,324,069) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 338.69 692.10 Td ( shares of common stock under our dividend ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (reinvestment plan for gross of) Tj ET Q q 0 0 0 rg BT 169.29 680.10 Td (fering proceeds of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.53 680.10 Td ($23.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 298.43 680.10 Td (. ) Tj ET Q q 0 0 0 rg BT 305.37 680.10 Td (Also as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.43 680.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.69 680.10 Td (, we had redeemed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.15 680.10 Td (807,692) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 538.65 680.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (shares sold in the Of) Tj ET Q q 0 0 0 rg BT 131.53 668.10 Td (ferings for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 175.96 668.10 Td ($7.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 224.85 668.10 Td (. ) Tj ET Q q 0 0 0 rg BT 231.79 668.10 Td (As of March 31, 2014, we had invested substantially all of the proceeds from our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (now-terminated primary Of) Tj ET Q q 0 0 0 rg BT 159.84 656.10 Td (ferings in real estate properties and do not anticipate making additional real estate acquisitions. ) Tj ET Q q 0 0 0 rg BT 544.53 656.10 Td (W) Tj ET Q q 0 0 0 rg BT 553.17 656.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (intend to use our cash on hand, cash flow generated by our real estate operations and proceeds from our dividend reinvestment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 632.10 Td (plan as our primary sources of immediate and long-term liquidity) Tj ET Q q 0 0 0 rg BT 310.17 632.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 614.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 614.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 614.10 Td (, we owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 225.03 614.10 Td (1) Tj ET Q q 0 0 0 rg BT 229.66 614.10 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.66 614.10 Td ( apartment complexes. Our real estate investments generate cash flow in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 602.10 Td (form of rental revenues, which are reduced by operating expenditures, debt service payments, the payment of asset management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 590.10 Td (and property management fees and corporate general and administrative expenses. Cash flows from operations from our real ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 578.10 Td (estate investments is primarily dependent upon the occupancy level of our properties, the net ef) Tj ET Q q 0 0 0 rg BT 430.58 578.10 Td (fective rental rates on our leases, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (the collectibility of rent and how well we manage our expenditures. ) Tj ET Q q 0 0 0 rg BT 324.14 566.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.58 566.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.85 566.10 Td (, our real estate property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 554.10 Td (investments were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 121.70 554.10 Td (94%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 140.03 554.10 Td ( occupied. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 536.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 536.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 536.10 Td (, our total debt outstanding was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.74 536.10 Td ($284.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 363.64 536.10 Td (. ) Tj ET Q q 0 0 0 rg BT 370.96 536.10 Td (W) Tj ET Q q 0 0 0 rg BT 379.59 536.10 Td (e limit our total liabilities to 75% of the cost ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 524.10 Td (\(before deducting depreciation or other non-cash reserves\) of our tangible assets; however) Tj ET Q q 0 0 0 rg BT 409.79 524.10 Td (, we may exceed that limit if a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 512.10 Td (majority of the conflicts committee approves each borrowing in excess of this limitation and we disclose such borrowing to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 500.10 Td (stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 488.10 Td (borrowing. ) Tj ET Q q 0 0 0 rg BT 98.11 488.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 122.55 488.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 202.82 488.10 Td (, our borrowings and other liabilities were approximately 65% of the cost \(before ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 476.10 Td (deducting depreciation or other non-cash reserves\) of our tangible assets. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 458.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 458.10 Td (e paid distributions to our stockholders during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.28 458.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 299.50 458.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 360.32 458.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.58 458.10 Td ( using cash flows from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 446.10 Td (operations. ) Tj ET Q q 0 0 0 rg BT 95.97 446.10 Td (W) Tj ET Q q 0 0 0 rg BT 104.61 446.10 Td (e believe that our cash flows from operations, cash on hand and proceeds from our dividend reinvestment plan are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 434.10 Td (suf) Tj ET Q q 0 0 0 rg BT 61.54 434.10 Td (ficient to meet our liquidity needs for the foreseeable future.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 416.10 Td (Under our charter) Tj ET Q q 0 0 0 rg BT 142.67 416.10 Td (, we are required to limit our total operating expenses to the greater of 2% of our average invested assets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 404.10 Td (or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter) Tj ET Q q 0 0 0 rg BT 523.92 404.10 Td (, unless ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 392.10 Td (the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 380.10 Td (Operating expense reimbursements for the four fiscal quarters ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 326.34 380.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.60 380.10 Td ( did not exceed the charter) Tj ET Q q 0 0 0 rg BT 512.19 380.10 Td (-imposed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 368.10 Td (limitation.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 71.50 350.10 Td (On January 21, 2016, our board of directors formed a special committee \(the “Special Committee”\) composed of all of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 338.10 Td (independent directors to explore the availability of strategic alternatives involving our company with the goal of providing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 326.10 Td (liquidity options for our stockholders while preserving and maximizing overall returns on our investment portfolio. ) Tj ET Q q 0 0 0 rg BT 515.07 326.10 Td (While we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 314.10 Td (conduct this process, we remain 100% focused on managing our properties.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 71.50 296.10 Td (As part of the process of exploring strategic alternatives, on ) Tj ET Q q 0 0 0 rg BT 312.26 296.10 Td (April 5, 2016, the Special Committee engaged Robert ) Tj ET Q q 0 0 0 rg BT 529.44 296.10 Td (A. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 284.10 Td (Stanger & Co., Inc. \(“Stanger”\) to act as our financial advisor and to assist us and the Special Committee with this process. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 272.10 Td (Under the terms of the engagement, Stanger has provided various financial advisory services, as requested by the Special ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 260.10 Td (Committee as customary for an engagement in connection with exploring strategic alternatives. Subsequently) Tj ET Q q 0 0 0 rg BT 486.79 260.10 Td (, we engaged HFF ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 248.10 Td (to market our real estate properties for sale. ) Tj ET Q q 0 0 0 rg BT 228.13 248.10 Td (W) Tj ET Q q 0 0 0 rg BT 236.77 248.10 Td (e are not obligated to enter into any particular transaction or any transaction at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 236.10 Td (all. Further) Tj ET Q q 0 0 0 rg BT 93.53 236.10 Td (, although we and HFF continue to market the assets in our portfolio for sale, there is no assurance that this process ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 224.10 Td (will result in stockholder liquidity) Tj ET Q q 0 0 0 rg BT 184.95 224.10 Td (, or provide a return to stockholders that equals or exceeds our estimated value per share.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 49.50 206.10 Td (Cash Flows from Operating ) Tj ET Q q 0 0 0 rg BT 166.93 206.10 Td (Activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 191.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 191.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 191.10 Td (, we owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 225.03 191.10 Td (1) Tj ET Q q 0 0 0 rg BT 229.66 191.10 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.66 191.10 Td ( apartment complexes. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 375.45 191.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 392.66 191.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 453.49 191.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 533.75 191.10 Td (, net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 179.10 Td (cash provided by operating activities was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 217.23 179.10 Td ($10.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 271.12 179.10 Td (. ) Tj ET Q q 0 0 0 rg BT 278.44 179.10 Td (W) Tj ET Q q 0 0 0 rg BT 287.08 179.10 Td (e expect our cash flows from operating activities to vary over time ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 167.10 Td (and do not anticipate making additional real estate acquisitions. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 49.50 149.10 Td (Cash Flows from Investing ) Tj ET Q q 0 0 0 rg BT 163.60 149.10 Td (Activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 134.10 Td (Net cash used in investing activities was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.13 134.10 Td ($1.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 285.02 134.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 316.40 134.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 333.62 134.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 394.44 134.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 474.71 134.10 Td ( and consisted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 122.10 Td (primarily of the following:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 104.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 104.10 Td ($1.7 million of cash used for improvements to real estate; and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 89.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 89.10 Td ($0.1 million of insurance proceeds received for property damage. ) Tj ET Q endstream endobj 49 0 obj <>] /Rotate 0 /Contents 50 0 R>> endobj 50 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (23) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 49.50 704.25 Td (Cash Flows from Financing ) Tj ET Q q 0 0 0 rg BT 168.61 704.25 Td (Activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td (Net cash used in financing activities was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.23 689.25 Td ($12.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 291.12 689.25 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.50 689.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 339.71 689.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.54 689.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 480.80 689.25 Td ( and consisted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 677.25 Td (primarily of the following:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 659.25 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 659.25 Td ($5.7 million of net cash distributions, after giving ef) Tj ET Q q 0 0 0 rg BT 298.67 659.25 Td (fect to dividends reinvested by stockholders of $4.3 million; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 644.25 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 644.25 Td ($4.4 million of principal payments on our mortgage notes payable; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.25 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 629.25 Td ($2.0 million of cash used for redemptions of common stock.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 608.25 Td (In addition to using our capital resources to meet our debt service obligations, for capital expenditures and for operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.25 Td (costs, we use our capital resources to make certain payments to our advisor) Tj ET Q q 0 0 0 rg BT 349.69 596.25 Td (. ) Tj ET Q q 0 0 0 rg BT 354.50 596.25 Td (W) Tj ET Q q 0 0 0 rg BT 363.14 596.25 Td (e paid our advisor fees in connection with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 584.25 Td (acquisition of our assets and pay our advisor fees in connection with the management of our assets and for certain costs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 572.25 Td (incurred by our advisor in providing services to us. ) Tj ET Q q 0 0 0 rg BT 255.57 572.25 Td (Among the fees payable to our advisor is an asset management fee.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 49.50 554.25 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 87.74 554.25 Td (Agreement - ) Tj ET Q q 0 0 0 rg BT 140.69 554.25 Td (Asset Management Fee) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 539.25 Td (Pursuant to the advisory agreement, the asset management fee payable by us to our advisor with respect to investments in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 527.25 Td (real estate is a monthly fee equal to the lesser of one-twelfth of \(i\) 1.0% of the amount paid or allocated to fund the acquisition, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 515.25 Td (development, construction or improvement of the property \(whether at or subsequent to acquisition\), including acquisition ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 503.25 Td (expenses and budgeted capital improvement costs \(regardless of the level of debt used to finance the investment\), and \(ii\) 2.0% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 491.25 Td (of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property \(whether at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 479.25 Td (or subsequent to acquisition\), including acquisition expenses and budgeted capital improvement costs, less any debt used to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 467.25 Td (finance the investment.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.25 Td (The advisory agreement defers our obligation to pay asset management fees, without interest, accruing from February 1, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 437.25 Td (2013 through July 31, 2013. ) Tj ET Q q 0 0 0 rg BT 167.10 437.25 Td (W) Tj ET Q q 0 0 0 rg BT 175.74 437.25 Td (e will only be obligated to pay our advisor such deferred amounts if and to the extent that our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 425.25 Td (funds from operations, as such term is defined by the National ) Tj ET Q q 0 0 0 rg BT 300.55 425.25 Td (Association of Real Estate Investment ) Tj ET Q q 0 0 0 rg BT 455.61 425.25 Td (T) Tj ET Q q 0 0 0 rg BT 461.37 425.25 Td (rusts \(“NAREIT”\) and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 413.25 Td (interpreted by us, as adjusted for the ef) Tj ET Q q 0 0 0 rg BT 204.82 413.25 Td (fects of straight-line rents and acquisition costs and expenses \(“AFFO”\) for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 401.25 Td (immediately preceding month exceeds the amount of distributions declared for record dates of such prior month \(an “AFFO ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 389.25 Td (Surplus”\). ) Tj ET Q q 0 0 0 rg BT 95.15 389.25 Td (The amount of any ) Tj ET Q q 0 0 0 rg BT 172.91 389.25 Td (AFFO Surplus in a given month shall be applied first to pay our advisor) Tj ET Q q 0 0 0 rg BT 460.75 389.25 Td (’) Tj ET Q q 0 0 0 rg BT 463.53 389.25 Td (s asset management fees ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 377.25 Td (currently due with respect to such month \(including any that would otherwise have been deferred for that month in accordance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 365.25 Td (with the advisory agreement\) and then to pay asset management fees previously deferred by our advisor in accordance with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 353.25 Td (advisory agreement that remain unpaid. ) Tj ET Q q 0 0 0 rg BT 212.87 353.25 Td (W) Tj ET Q q 0 0 0 rg BT 221.51 353.25 Td (e had accrued and deferred payment of $1.5 million of asset management fees for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 341.25 Td (February 2013 through July 2013 under the advisory agreement, as we believed the payment of this amount to our advisor was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 329.25 Td (probable at the time it was recorded. During the three and nine months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 360.79 329.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 441.05 329.25 Td (, we reversed, as an increase ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 317.25 Td (to other income, the liabilities due to af) Tj ET Q q 0 0 0 rg BT 206.50 317.25 Td (filiates related to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 290.91 317.25 Td ($1.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 339.80 317.25 Td ( of asset management fees for February 2013 through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 305.25 Td (July 2013 as we believe that the payment of this amount to our advisor is remote. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.25 Td (In addition, the advisory agreement defers without interest under certain circumstances, our obligation to pay asset ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 275.25 Td (management fees accruing from ) Tj ET Q q 0 0 0 rg BT 180.00 275.25 Td (August 1, 2013. Specifically) Tj ET Q q 0 0 0 rg BT 296.00 275.25 Td (, the advisory agreement defers our obligation to pay an asset ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 263.25 Td (management fee for any month in which our modified funds from operations \(“MFFO”\) for such month, as such term is defined ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 251.25 Td (in the practice guideline issued by the Investment Program ) Tj ET Q q 0 0 0 rg BT 286.38 251.25 Td (Association \(“IP) Tj ET Q q 0 0 0 rg BT 351.84 251.25 Td (A”\) in November 2010 and interpreted by us, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 239.25 Td (excluding asset management fees, does not exceed the amount of distributions declared by us for record dates of that month. ) Tj ET Q q 0 0 0 rg BT 549.17 239.25 Td (W) Tj ET Q q 0 0 0 rg BT 557.81 239.25 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 227.25 Td (remain obligated to pay our advisor an asset management fee in any month in which our MFFO, excluding asset management ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 215.25 Td (fees, for such month exceeds the amount of distributions declared for the record dates of that month \(such excess amount, an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 203.25 Td (“MFFO Surplus”\); however) Tj ET Q q 0 0 0 rg BT 161.31 203.25 Td (, any amount of such asset management fee in excess of the MFFO Surplus is also deferred under ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 191.25 Td (the advisory agreement. If the MFFO Surplus for any month exceeds the amount of the asset management fee payable for such ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 179.25 Td (month, any remaining MFFO Surplus will not be applied to pay asset management fee amounts previously deferred by our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 167.25 Td (advisor in accordance with the advisory agreement. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 149.25 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 149.25 Td (e had accrued and deferred payment of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 238.61 149.25 Td ($3.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 287.50 149.25 Td ( of asset management fees for ) Tj ET Q q 0 0 0 rg BT 408.56 149.25 Td (August 2013 through December 2014 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 137.25 Td (under the advisory agreement, as we believed the payment of this amount to our advisor was probable at the time it was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 125.25 Td (recorded. During the three and nine months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 254.99 125.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 335.25 125.25 Td (, we reversed, as an increase to other income, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 113.25 Td (liabilities due to af) Tj ET Q q 0 0 0 rg BT 124.02 113.25 Td (filiates related to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 208.43 113.25 Td ($3.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 257.32 113.25 Td ( of asset management fees for ) Tj ET Q q 0 0 0 rg BT 378.39 113.25 Td (August 2013 through December 2014 as we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 101.25 Td (believe that the payment of this amount to our advisor is remote. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 355.82 101.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 373.04 101.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 433.86 101.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.12 101.25 Td (, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 89.25 Td (incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.32 89.25 Td ($2.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 134.21 89.25 Td ( of asset management fees. However) Tj ET Q q 0 0 0 rg BT 282.91 89.25 Td (, we only recorded ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.83 89.25 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 408.72 89.25 Td ( pursuant to the limitations in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 77.25 Td (advisory agreement as noted above. ) Tj ET Q q 0 0 0 rg BT 197.32 77.25 Td (W) Tj ET Q q 0 0 0 rg BT 205.96 77.25 Td (e did not accrue the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 329.80 77.25 Td ($1.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.69 77.25 Td ( of these asset management fees as it is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 65.25 Td (uncertain whether any of this amount will be paid in the future.) Tj ET Q endstream endobj 51 0 obj <>] /Rotate 0 /Contents 52 0 R>> endobj 52 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (24) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (However) Tj ET Q q 0 0 0 rg BT 108.25 704.10 Td (, notwithstanding any of the foregoing, any and all deferred asset management fees shall be immediately due and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (payable at such time as our stockholders have received, together as a collective group, aggregate distributions \(including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (distributions that may constitute a return of capital for federal income tax purposes\) suf) Tj ET Q q 0 0 0 rg BT 398.38 680.10 Td (ficient to provide \(i\) a return of their net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (price, reduced by any amounts to repurchase shares pursuant to our share redemption plan, and \(ii\) an 8.0% per year ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (cumulative, non-compounded return on such net invested capital \(the “Stockholders’) Tj ET Q q 0 0 0 rg BT 388.10 644.10 Td ( 8% Return”\). ) Tj ET Q q 0 0 0 rg BT 446.24 644.10 Td (The Stockholders’) Tj ET Q q 0 0 0 rg BT 519.09 644.10 Td ( 8% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 632.10 Td (Return is not based on the return provided to any individual stockholder) Tj ET Q q 0 0 0 rg BT 336.95 632.10 Td (. ) Tj ET Q q 0 0 0 rg BT 341.39 632.10 Td (Accordingly) Tj ET Q q 0 0 0 rg BT 390.73 632.10 Td (, it is not necessary for each of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (stockholders to have received any minimum return in order for our advisor to receive deferred asset management fees. During ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (the three and nine months ended September 30, 2016, we reversed, as described above, an aggregate of $4.8 million of deferred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (asset management fees that were previously accrued. ) Tj ET Q q 0 0 0 rg BT 266.17 596.10 Td (W) Tj ET Q q 0 0 0 rg BT 274.81 596.10 Td (e believe the payment of the deferred asset management fees is remote ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 584.10 Td (based on the estimated value per share and management’) Tj ET Q q 0 0 0 rg BT 276.63 584.10 Td (s current projection of cash flow and distributions to our stockholders. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (Contractual Commitments and Contingencies) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 548.10 Td (The following is a summary of our contractual obligations as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 324.94 548.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.21 548.10 Td ( \(in thousands\): ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 494.60 200.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 250.00 494.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 254.00 494.60 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 314.00 494.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 318.00 494.60 61.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 379.00 494.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 383.00 494.60 57.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.00 494.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 444.00 494.60 57.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 494.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 494.60 57.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 318 517.6 m 379 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 379 517.6 m 383 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 383 517.6 m 440 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440 517.6 m 444 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 444 517.6 m 501 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 501 517.6 m 505 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 505 517.6 m 562 517.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 50 494.6 m 250 494.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 254 494.6 m 314 494.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 318 494.6 m 379 494.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 383 494.6 m 440 494.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 444 494.6 m 501 494.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 505 494.6 m 562 494.6 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 347.25 521.83 Td (Payments Due During the Years Ending December 31,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 108.05 498.83 Td (Contractual Obligations) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 274.75 498.83 Td (Total) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 324.60 506.83 Td (Remainder of) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 340.00 498.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 393.65 498.83 Td (2017-2018) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 454.65 498.83 Td (2019-2020) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 514.70 498.83 Td (Thereafter) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 484.85 Td (Outstanding debt obligations) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 144.94 488.48 Td ( \(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 256.50 484.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 284.80 484.85 Td (284,094) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 320.50 484.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 357.80 484.85 Td (1,488) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 385.50 484.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 410.75 484.85 Td (105,154) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 446.50 484.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 471.75 484.85 Td (127,534) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 507.50 484.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.80 484.85 Td (49,918) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 470.85 Td (Interest payments on outstanding debt obligations) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 211.81 474.48 Td ( \(2\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 288.80 470.85 Td (58,490) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 357.80 470.85 Td (2,373) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 414.80 470.85 Td (16,877) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.80 470.85 Td (5,578) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.80 470.85 Td (33,662) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 455.10 Td (_____________________) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 49.50 446.13 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 55.56 442.50 Td ( ) Tj ET Q q 0 0 0 rg BT 57.12 442.50 Td (Amounts include principal payments only) Tj ET Q q 0 0 0 rg BT 190.80 442.50 Td (. ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 49.50 433.52 Td (\(2\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 55.56 429.90 Td ( Projected interest payments are based on the outstanding principal amounts, maturity dates and interest rates in ef) Tj ET Q q 0 0 0 rg BT 420.64 429.90 Td (fect as of ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 451.96 429.90 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 516.17 429.90 Td (. ) Tj ET Q q 0 0 0 rg BT 522.03 429.90 Td (W) Tj ET Q q 0 0 0 rg BT 528.94 429.90 Td (e incurred ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 49.50 420.30 Td (interest expense of ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 111.48 420.30 Td ($7.4 million) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 150.59 420.30 Td (, excluding amortization of deferred financing costs and discount on a note payable of ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 427.61 420.30 Td ($0.4 million) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.72 420.30 Td (, for the ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 493.82 420.30 Td (nine) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 507.60 420.30 Td ( months ended ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 49.50 410.70 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 113.71 410.70 Td (.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 386.70 Td (Results of Operations) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 72 367.3669921875 m 148.9482421875 367.3669921875 l s q 0 0 0 rg BT 72.00 368.70 Td (Comparison of the ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 148.9482421875 367.3669921875 m 169.1240234375 367.3669921875 l s q 0 0 0 rg BT 148.95 368.70 Td (thr) Tj ET Q q 0 0 0 rg BT 160.25 368.70 Td (ee) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 169.1240234375 367.3669921875 m 229.392578125 367.3669921875 l s q 0 0 0 rg BT 169.12 368.70 Td ( months ended ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 229.392578125 367.3669921875 m 309.099609375 367.3669921875 l s q 0 0 0 rg BT 229.39 368.70 Td (September 30, 2016) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 309.099609375 367.3669921875 m 354.3681640625 367.3669921875 l s q 0 0 0 rg BT 309.10 368.70 Td ( versus the ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 354.3681640625 367.3669921875 m 374.5439453125 367.3669921875 l s q 0 0 0 rg BT 354.37 368.70 Td (thr) Tj ET Q q 0 0 0 rg BT 365.67 368.70 Td (ee) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 374.5439453125 367.3669921875 m 434.8125 367.3669921875 l s q 0 0 0 rg BT 374.54 368.70 Td ( months ended ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 434.8125 367.3669921875 m 514.51953125 367.3669921875 l s q 0 0 0 rg BT 434.81 368.70 Td (September 30, 2015) Tj ET Q BT /F3 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.70 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.44 353.70 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 176.71 353.70 Td (, we owned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 225.03 353.70 Td (1) Tj ET Q q 0 0 0 rg BT 229.66 353.70 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.66 353.70 Td ( apartment complexes and did not make any acquisitions or dispositions during ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 341.70 Td (the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 145.03 341.70 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 225.29 341.70 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.73 341.70 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 264.73 341.70 Td (. ) Tj ET Q q 0 0 0 rg BT 272.05 341.70 Td (The following table provides summary information about our results of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 329.70 Td (operations for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 122.53 329.70 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 142.52 329.70 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 203.34 329.70 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.61 329.70 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.04 329.70 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.04 329.70 Td ( \(dollar amounts in thousands\):) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 287.20 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 287.20 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 287.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 287.20 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 287.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 287.20 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 287.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 287.20 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 259.20 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 259.20 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 259.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 259.20 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 259.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 259.20 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 259.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 259.20 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 231.20 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 231.20 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 231.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 231.20 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 231.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 231.20 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 231.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 231.20 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 203.20 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 203.20 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 203.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 203.20 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 203.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 203.20 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 203.20 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 203.20 58.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 300.20000000000005 m 359 300.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 359 300.20000000000005 m 363 300.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 300.20000000000005 m 442 300.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 300.20000000000005 m 359 300.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 287.20000000000005 m 359 287.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 300.20000000000005 m 442 300.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 287.20000000000005 m 442 287.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 446 287.20000000000005 m 501 287.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 505 287.20000000000005 m 563 287.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 287.20000000000005 m 359 287.20000000000005 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 287.20000000000005 m 442 287.20000000000005 l s BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 304.45 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 294.75 304.43 Td (Three Months Ended September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 458.60 299.43 Td (Increase) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 455.05 291.43 Td (\(Decrease\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 514.65 299.43 Td (Percentage) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 520.35 291.43 Td (Change) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 291.45 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 307.00 291.43 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 394.00 291.43 Td (2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 277.45 Td (Rental income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 274.50 277.45 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 333.80 277.45 Td (11,498) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 365.50 277.45 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 416.80 277.45 Td (11,330) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 448.50 277.45 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 277.45 Td (168) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 549.15 277.45 Td (1) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 277.45 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 263.45 Td (Operating, maintenance, and management costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 263.45 Td (1,671) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 263.45 Td (1,915) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 483.10 263.45 Td (\(244) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.80 263.45 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 542.45 263.45 Td (\(13) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 553.15 263.45 Td (\)%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 249.45 Td (Real estate taxes and insurance) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 249.45 Td (1,797) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 249.45 Td (1,487) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 249.45 Td (310) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 545.15 249.45 Td (21) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 249.45 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 235.45 Td (Asset management fees to affiliate) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 343.80 235.45 Td (104) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 426.80 235.45 Td (144) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.10 235.45 Td (\(40) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.80 235.45 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 542.45 235.45 Td (\(28) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 553.15 235.45 Td (\)%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 221.45 Td (Property management fees and expenses to affiliate) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 221.45 Td (1,506) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 221.45 Td (1,368) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 221.45 Td (138) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 545.15 221.45 Td (10) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 221.45 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 207.45 Td (Depreciation and amortization expense) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 207.45 Td (3,084) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 207.45 Td (3,036) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 489.80 207.45 Td (48) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 549.15 207.45 Td (2) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 207.45 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 193.45 Td (Interest expense) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 193.45 Td (2,588) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 193.45 Td (2,636) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.10 193.45 Td (\(48) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.80 193.45 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 546.45 193.45 Td (\(2) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 553.15 193.45 Td (\)%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 179.45 Td (Other income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 179.45 Td (4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.80 179.45 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.80 179.45 Td (4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.15 179.45 Td (100) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 179.45 Td (%) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 151.70 Td (Rental income increased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 194.73 151.70 Td ($1) Tj ET Q q 0 0 0 rg BT 204.36 151.70 Td (1.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.25 151.70 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 279.63 151.70 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 299.61 151.70 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 360.44 151.70 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.70 151.70 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 453.48 151.70 Td ($1) Tj ET Q q 0 0 0 rg BT 463.11 151.70 Td (1.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 507.00 151.70 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 538.38 151.70 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 558.36 151.70 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 139.70 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.83 139.70 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 188.09 139.70 Td (, primarily as a result of an increase in rental rates. ) Tj ET Q q 0 0 0 rg BT 395.05 139.70 Td (W) Tj ET Q q 0 0 0 rg BT 403.68 139.70 Td (e expect rental income to vary in future ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 127.70 Td (periods depending on occupancy rates and rental rates of our real estate investments.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 109.70 Td (Operating, maintenance and management costs and real estate taxes and insurance increased from $3.4 million for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 97.70 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.49 97.70 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.31 97.70 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.57 97.70 Td ( to $3.5 million for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.62 97.70 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.61 97.70 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.43 97.70 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 464.70 97.70 Td ( primarily due to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 85.70 Td (property tax reassessments, of) Tj ET Q q 0 0 0 rg BT 169.84 85.70 Td (fset by a decrease in on-site of) Tj ET Q q 0 0 0 rg BT 291.28 85.70 Td (fice expenses and repairs and maintenance costs. Operating, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 73.70 Td (maintenance and management costs and real estate taxes and insurance may increase in future periods, as compared to historical ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 61.70 Td (periods as a result of inflation.) Tj ET Q endstream endobj 53 0 obj <>] /Rotate 0 /Contents 54 0 R>> endobj 54 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (25) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (Asset management fees to af) Tj ET Q q 0 0 0 rg BT 186.78 704.10 Td (filiate with respect to our real estate investments decreased from $144,000 for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 515.55 704.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.54 704.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.83 692.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 188.09 692.10 Td ( to $104,000 for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.55 692.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 430.82 692.10 Td (. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.37 692.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 501.35 692.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 680.10 Td (, we incurred $0.7 million of asset management fees, of which $0.1 million was recorded based on certain ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (payment limitations in the advisory agreement. ) Tj ET Q q 0 0 0 rg BT 242.61 668.10 Td (The remaining $0.6 million of the asset management fees were deferred but not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (accrued as it is uncertain whether any of this amount will be paid in the future. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 411.89 656.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 431.88 656.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 492.70 656.10 Td (September 30, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.50 644.10 Td (, we incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 124.48 644.10 Td ($0.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 173.37 644.10 Td ( of asset management fees, of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 321.09 644.10 Td ($0.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 369.98 644.10 Td ( was recorded based on certain payment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 632.10 Td (limitations in the advisory agreement. ) Tj ET Q q 0 0 0 rg BT 205.67 632.10 Td (The remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.76 632.10 Td ($0.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 315.65 632.10 Td ( of the asset management fees were deferred but not accrued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (as it is uncertain whether any of this amount will be paid in the future. For a discussion of the asset management fee payable by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (us to our advisor and the deferrals of the asset management fee, see “— Liquidity and Capital Resources — ) Tj ET Q q 0 0 0 rg BT 482.15 608.10 Td (Advisory ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (Agreement — ) Tj ET Q q 0 0 0 rg BT 108.37 596.10 Td (Asset Management Fee” herein.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 578.10 Td (Property management fees and expenses to af) Tj ET Q q 0 0 0 rg BT 254.53 578.10 Td (filiate increased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.54 578.10 Td ($1.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 391.43 578.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.81 578.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.80 578.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.62 578.10 Td (September 30, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.50 566.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 82.28 566.10 Td ($1.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 131.17 566.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 162.55 566.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 182.53 566.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 243.36 566.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.62 566.10 Td (. ) Tj ET Q q 0 0 0 rg BT 330.94 566.10 Td (The increase was primarily related to higher reimbursable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 554.10 Td (on-site personnel salary and related benefits expenses. ) Tj ET Q q 0 0 0 rg BT 271.18 554.10 Td (W) Tj ET Q q 0 0 0 rg BT 279.82 554.10 Td (e expect our property management fees and expenses to af) Tj ET Q q 0 0 0 rg BT 513.15 554.10 Td (filiate to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 542.10 Td (increase in future periods as a result of inflation.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 524.10 Td (Other income for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 158.08 524.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 178.06 524.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 238.89 524.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 319.15 524.10 Td ( of $4.8 million relates to the reversal of previously deferred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 512.10 Td (and accrued asset management fees of $1.5 million for the period from February 2013 through July 2013 and $3.3 million for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 500.10 Td (the period from ) Tj ET Q q 0 0 0 rg BT 113.65 500.10 Td (August 2013 through December 2014 as we believe that the payment of these amounts are remote. ) Tj ET Q q 0 0 0 rg BT 510.30 500.10 Td (W) Tj ET Q q 0 0 0 rg BT 518.93 500.10 Td (e did not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 488.10 Td (record any other income for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 178.33 488.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 198.32 488.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 259.14 488.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 339.41 488.10 Td (. For a discussion of the asset management fee payable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 476.10 Td (by us to our advisor and the deferrals of the asset management fee, see “— Liquidity and Capital Resources — ) Tj ET Q q 0 0 0 rg BT 494.65 476.10 Td (Advisory ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 464.10 Td (Agreement — ) Tj ET Q q 0 0 0 rg BT 108.37 464.10 Td (Asset Management Fee” herein.) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 72 444.7669921875 m 148.9482421875 444.7669921875 l s q 0 0 0 rg BT 72.00 446.10 Td (Comparison of the ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 148.9482421875 444.7669921875 m 166.1650390625 444.7669921875 l s q 0 0 0 rg BT 148.95 446.10 Td (nine) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 166.1650390625 444.7669921875 m 226.43359375 444.7669921875 l s q 0 0 0 rg BT 166.17 446.10 Td ( months ended ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 226.43359375 444.7669921875 m 306.140625 444.7669921875 l s q 0 0 0 rg BT 226.43 446.10 Td (September 30, 2016) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 306.140625 444.7669921875 m 351.4091796875 444.7669921875 l s q 0 0 0 rg BT 306.14 446.10 Td ( versus the ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 351.4091796875 444.7669921875 m 368.6259765625 444.7669921875 l s q 0 0 0 rg BT 351.41 446.10 Td (nine) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 368.6259765625 444.7669921875 m 428.89453125 444.7669921875 l s q 0 0 0 rg BT 368.63 446.10 Td ( months ended ) Tj ET Q BT /F3 10.00 Tf ET 0 0 0 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 428.89453125 444.7669921875 m 508.6015625 444.7669921875 l s q 0 0 0 rg BT 428.89 446.10 Td (September 30, 2015) Tj ET Q BT /F3 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.10 Td (The following table provides summary information about our results of operations for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.75 431.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 449.97 431.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 419.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 419.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 149.20 419.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 169.20 419.10 Td ( \(dollar amounts in thousands\):) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 376.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 376.60 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 376.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 376.60 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 376.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 376.60 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 376.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 376.60 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 348.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 348.60 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 348.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 348.60 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 348.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 348.60 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 348.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 348.60 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 320.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 320.60 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 320.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 320.60 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 320.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 320.60 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 320.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 320.60 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 292.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 292.60 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 292.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 292.60 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 292.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 292.60 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 292.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 292.60 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 264.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 272.00 264.60 87.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.00 264.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.00 264.60 79.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 442.00 264.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 446.00 264.60 55.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 501.00 264.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 505.00 264.60 58.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 389.6 m 359 389.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 359 389.6 m 363 389.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 389.6 m 442 389.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 389.6 m 359 389.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 376.6 m 359 376.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 389.6 m 442 389.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 376.6 m 442 376.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 446 376.6 m 501 376.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 505 376.6 m 563 376.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 272 376.6 m 359 376.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363 376.6 m 442 376.6 l s BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 393.85 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 296.90 393.83 Td (Nine Months Ended September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 458.60 388.83 Td (Increase) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 455.05 380.83 Td (\(Decrease\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 514.65 388.83 Td (Percentage) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 520.35 380.83 Td (Change) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 380.85 Td ( ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 307.00 380.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 394.00 380.83 Td (2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 366.85 Td (Rental income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 274.50 366.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 333.80 366.85 Td (34,019) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 365.50 366.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 416.80 366.85 Td (33,570) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 448.50 366.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 366.85 Td (449) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 549.15 366.85 Td (1) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 366.85 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 352.85 Td (Operating, maintenance, and management costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 352.85 Td (4,854) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 352.85 Td (6,914) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 477.10 352.85 Td (\(2,060) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.80 352.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 542.45 352.85 Td (\(30) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 553.15 352.85 Td (\)%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 338.85 Td (Real estate taxes and insurance) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 338.85 Td (5,248) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 338.85 Td (4,509) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 338.85 Td (739) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 545.15 338.85 Td (16) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 338.85 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 324.85 Td (Asset management fees to affiliate) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 343.80 324.85 Td (343) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 426.80 324.85 Td (687) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 483.10 324.85 Td (\(344) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.80 324.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 542.45 324.85 Td (\(50) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 553.15 324.85 Td (\)%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 310.85 Td (Property management fees and expenses to affiliate) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 310.85 Td (4,359) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 310.85 Td (2,136) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.80 310.85 Td (2,223) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.15 310.85 Td (104) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 310.85 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 296.85 Td (General and administrative expenses) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 296.85 Td (1,947) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 296.85 Td (1,697) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 296.85 Td (250) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 545.15 296.85 Td (15) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 296.85 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 282.85 Td (Depreciation and amortization expense) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 282.85 Td (9,201) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 282.85 Td (9,056) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 485.80 282.85 Td (145) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 549.15 282.85 Td (2) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 282.85 Td (%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 268.85 Td (Interest expense) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 268.85 Td (7,758) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.80 268.85 Td (7,879) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 483.10 268.85 Td (\(121) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.80 268.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 546.45 268.85 Td (\(2) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 553.15 268.85 Td (\)%) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 254.85 Td (Other income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 337.80 254.85 Td (4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.80 254.85 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.80 254.85 Td (4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.15 254.85 Td (100) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 254.85 Td (%) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 227.10 Td (Rental income increased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 194.73 227.10 Td ($33.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.62 227.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 280.00 227.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 297.21 227.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 358.04 227.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.30 227.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 451.08 227.10 Td ($34.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.97 227.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.35 227.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 553.57 227.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 215.10 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.83 215.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 188.09 215.10 Td (, primarily as a result of an increase in rental rates. ) Tj ET Q q 0 0 0 rg BT 395.05 215.10 Td (W) Tj ET Q q 0 0 0 rg BT 403.68 215.10 Td (e expect rental income to vary in future ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 203.10 Td (periods depending on occupancy rates and rental rates of our real estate investments.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 185.10 Td (Operating, maintenance and management costs and real estate taxes and insurance decreased from $1) Tj ET Q q 0 0 0 rg BT 477.01 185.10 Td (1.4 million for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 173.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 66.72 173.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 127.54 173.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.81 173.10 Td ( to $10.1 million for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 305.85 173.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.07 173.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 383.89 173.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 464.16 173.10 Td ( primarily due to a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 161.10 Td (decrease in reimbursable on-site personnel salary and related benefits expenses and management fees to third-party property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 149.10 Td (management companies as a result of the transition of all property management services to LPI during the second quarter of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 137.10 Td (2015, partially of) Tj ET Q q 0 0 0 rg BT 118.47 137.10 Td (fset by an increase in general repair and maintenance costs and property tax expenses. Management fees to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 125.10 Td (LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the properties, are classified as property ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 113.10 Td (management fees and expenses to af) Tj ET Q q 0 0 0 rg BT 195.09 113.10 Td (filiate on the accompanying consolidated statements of operations. Operating, maintenance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 101.10 Td (and management costs and real estate taxes and insurance may increase in future periods, as compared to historical periods as a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 89.10 Td (result of inflation.) Tj ET Q endstream endobj 55 0 obj <>] /Rotate 0 /Contents 56 0 R>> endobj 56 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (26) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (Asset management fees to af) Tj ET Q q 0 0 0 rg BT 186.78 704.10 Td (filiate with respect to our real estate investments decreased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 446.67 704.10 Td ($0.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 495.56 704.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 526.94 704.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 544.16 704.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.83 692.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 188.09 692.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 200.87 692.10 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 249.76 692.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 281.14 692.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 298.35 692.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.18 692.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 439.44 692.10 Td (. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 489.99 692.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 507.21 692.10 Td ( months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.88 680.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.14 680.10 Td (, we incurred $2.1 million of asset management fees, of which $0.7 million was recorded based on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (certain payment limitations in the advisory agreement. ) Tj ET Q q 0 0 0 rg BT 272.31 668.10 Td (The remaining $1.4 million of the asset management fees were deferred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (but not accrued as it is uncertain whether any of this amount will be paid in the future. During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.45 656.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.67 656.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 644.10 Td (, we incurred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 184.74 644.10 Td ($2.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.63 644.10 Td ( of asset management fees, of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 381.36 644.10 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 430.25 644.10 Td ( was recorded based on certain ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 632.10 Td (payment limitations in the advisory agreement. ) Tj ET Q q 0 0 0 rg BT 242.61 632.10 Td (The remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.69 632.10 Td ($1.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 352.59 632.10 Td ( of the asset management fees were deferred but not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (accrued as it is uncertain whether any of this amount will be paid in the future. For a discussion of the asset management fee ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (payable by us to our advisor and the deferrals of the asset management fee, see “— Liquidity and Capital Resources — ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (Advisory ) Tj ET Q q 0 0 0 rg BT 88.67 596.10 Td (Agreement — ) Tj ET Q q 0 0 0 rg BT 147.54 596.10 Td (Asset Management Fee” herein.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 578.10 Td (Property management fees and expenses to af) Tj ET Q q 0 0 0 rg BT 254.53 578.10 Td (filiate increased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.54 578.10 Td ($2.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 391.43 578.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.81 578.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.03 578.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 500.85 578.10 Td (September 30, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 69.50 566.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 82.28 566.10 Td ($4.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 131.17 566.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 162.55 566.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 179.76 566.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 240.59 566.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 320.85 566.10 Td (. ) Tj ET Q q 0 0 0 rg BT 328.17 566.10 Td (The increase was primarily due to the transition of all ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 554.10 Td (property management services to LPI during the second quarter of 2015. Prior to the transition, management fees, as well as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 542.10 Td (reimbursable on-site personnel salary and related benefits expenses at the properties, were classified as operating, maintenance, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 530.10 Td (and management costs. ) Tj ET Q q 0 0 0 rg BT 147.35 530.10 Td (W) Tj ET Q q 0 0 0 rg BT 155.98 530.10 Td (e expect our property management fees and expenses to af) Tj ET Q q 0 0 0 rg BT 389.31 530.10 Td (filiate to increase in future periods as a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 518.10 Td (result of inflation.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 500.10 Td (General and administrative expenses increased from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.58 500.10 Td ($1.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 332.47 500.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 363.85 500.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 381.07 500.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 441.89 500.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 522.16 500.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 534.93 500.10 Td ($1.9 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 488.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 78.39 488.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 109.77 488.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 126.99 488.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 187.81 488.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 268.07 488.10 Td ( due to legal fees and other professional fees related to the Special ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 476.10 Td (Committee’) Tj ET Q q 0 0 0 rg BT 96.72 476.10 Td (s engagement of Stanger to act as our financial advisor) Tj ET Q q 0 0 0 rg BT 315.26 476.10 Td (. See “ — Liquidity and Capital Resources” for our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 464.10 Td (discussion on the engagement of Stanger) Tj ET Q q 0 0 0 rg BT 212.52 464.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 446.10 Td (Other income for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 158.08 446.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 175.30 446.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.12 446.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 316.38 446.10 Td ( of $4.8 million relates to the reversal of previously deferred ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 434.10 Td (and accrued asset management fees of $1.5 million for the period from February 2013 through July 2013 and $3.3 million for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 422.10 Td (the period from ) Tj ET Q q 0 0 0 rg BT 113.65 422.10 Td (August 2013 through December 2014 as we believe that the payment of these amounts are remote. ) Tj ET Q q 0 0 0 rg BT 510.30 422.10 Td (W) Tj ET Q q 0 0 0 rg BT 518.93 422.10 Td (e did not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 410.10 Td (record any other income for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 178.33 410.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 195.55 410.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 256.38 410.10 Td (September 30, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 336.64 410.10 Td (. For a discussion of the asset management fee payable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 398.10 Td (by us to our advisor and the deferrals of the asset management fee, see “— Liquidity and Capital Resources — ) Tj ET Q q 0 0 0 rg BT 494.65 398.10 Td (Advisory ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 386.10 Td (Agreement — ) Tj ET Q q 0 0 0 rg BT 108.37 386.10 Td (Asset Management Fee” herein.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 368.10 Td (Funds fr) Tj ET Q q 0 0 0 rg BT 86.27 368.10 Td (om Operations, Modified Funds fr) Tj ET Q q 0 0 0 rg BT 233.04 368.10 Td (om Operations and ) Tj ET Q q 0 0 0 rg BT 317.22 368.10 Td (Adjusted MFFO) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 350.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 350.10 Td (e believe that funds from operations \(“FFO”\) is a beneficial indicator of the performance of an equity REIT) Tj ET Q q 0 0 0 rg BT 510.02 350.10 Td (. ) Tj ET Q q 0 0 0 rg BT 517.34 350.10 Td (W) Tj ET Q q 0 0 0 rg BT 525.97 350.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 338.10 Td (compute FFO in accordance with the current NAREIT) Tj ET Q q 0 0 0 rg BT 267.31 338.10 Td ( definition. FFO represents net income, excluding gains and losses from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 326.10 Td (sales of operating real estate assets \(which can vary among owners of identical assets in similar conditions based on historical ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 314.10 Td (cost accounting and useful-life estimates\), impairment losses on real estate assets, depreciation and amortization of real estate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 302.10 Td (assets, and adjustments for unconsolidated partnerships and joint ventures. ) Tj ET Q q 0 0 0 rg BT 352.59 302.10 Td (W) Tj ET Q q 0 0 0 rg BT 361.23 302.10 Td (e believe FFO facilitates comparisons of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 290.10 Td (operating performance between periods and among other REIT) Tj ET Q q 0 0 0 rg BT 301.76 290.10 Td (s. However) Tj ET Q q 0 0 0 rg BT 349.40 290.10 Td (, our computation of FFO may not be comparable to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 278.10 Td (other REIT) Tj ET Q q 0 0 0 rg BT 94.07 278.10 Td (s that do not define FFO in accordance with the NAREIT) Tj ET Q q 0 0 0 rg BT 323.27 278.10 Td ( definition or that interpret the current NAREIT) Tj ET Q q 0 0 0 rg BT 513.87 278.10 Td ( definition ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 266.10 Td (dif) Tj ET Q q 0 0 0 rg BT 60.43 266.10 Td (ferently than we do. Our management believes that historical cost accounting for real estate assets in accordance with U.S. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 254.10 Td (generally accepted accounting principles \(“GAAP”\) implicitly assumes that the value of real estate assets diminishes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 242.10 Td (predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 230.10 Td (and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 218.10 Td (be insuf) Tj ET Q q 0 0 0 rg BT 81.26 218.10 Td (ficient by themselves. ) Tj ET Q q 0 0 0 rg BT 173.18 218.10 Td (As a result, we believe that the use of FFO, together with the required GAAP) Tj ET Q q 0 0 0 rg BT 481.63 218.10 Td ( presentations, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 206.10 Td (provides a more complete understanding of our performance relative to our competitors and provides a more informed and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 194.10 Td (appropriate basis on which to make decisions involving operating, financing, and investing activities, and when compared year ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 182.10 Td (over year) Tj ET Q q 0 0 0 rg BT 86.58 182.10 Td (, FFO reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 170.10 Td (administrative expenses and interest costs, which may not be immediately apparent from net income or loss.) Tj ET Q endstream endobj 57 0 obj <>] /Rotate 0 /Contents 58 0 R>> endobj 58 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (27) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (included in the calculation of FFO. ) Tj ET Q q 0 0 0 rg BT 193.92 692.10 Td (As a result, our management also uses MFFO as an indicator of our ongoing performance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (as well as our dividend sustainability) Tj ET Q q 0 0 0 rg BT 196.88 680.10 Td (. MFFO excludes from FFO: acquisition fees and expenses; adjustments related to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (contingent purchase price obligations; amounts relating to straight-line rents and amortization of above and below market ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 632.10 Td (in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. ) Tj ET Q q 0 0 0 rg BT 479.22 632.10 Td (W) Tj ET Q q 0 0 0 rg BT 487.85 632.10 Td (e compute MFFO ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (in accordance with the definition of MFFO included in the practice guideline issued by the IP) Tj ET Q q 0 0 0 rg BT 422.65 620.10 Td (A) Tj ET Q q 0 0 0 rg BT 429.32 620.10 Td ( in November 2010 as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (interpreted by management. Our computation of MFFO may not be comparable to other REIT) Tj ET Q q 0 0 0 rg BT 428.43 608.10 Td (s that do not compute MFFO in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (accordance with the current IP) Tj ET Q q 0 0 0 rg BT 170.75 596.10 Td (A) Tj ET Q q 0 0 0 rg BT 177.42 596.10 Td ( definition or that interpret the current IP) Tj ET Q q 0 0 0 rg BT 339.50 596.10 Td (A) Tj ET Q q 0 0 0 rg BT 346.17 596.10 Td ( definition dif) Tj ET Q q 0 0 0 rg BT 400.98 596.10 Td (ferently than we do. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 70.50 578.10 Td (In addition, our management uses an adjusted MFFO \(“Adjusted MFFO”\) as an indicator of our ongoing performance as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (well as our dividend sustainability) Tj ET Q q 0 0 0 rg BT 186.05 566.10 Td (. ) Tj ET Q q 0 0 0 rg BT 190.50 566.10 Td (Adjusted MFFO provides an adjustment to MFFO to exclude other income, which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 554.10 Td (management does not believe reflects the current operating performance of our investments and does not provide an indication ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 542.10 Td (of future operating performance.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 524.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 524.10 Td (e believe that MFFO and ) Tj ET Q q 0 0 0 rg BT 182.57 524.10 Td (Adjusted MFFO are helpful as measures of ongoing operating performance because they ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 512.10 Td (exclude non-operating items included in FFO. MFFO and ) Tj ET Q q 0 0 0 rg BT 285.03 512.10 Td (Adjusted MFFO exclude non-cash items such as straight-line rental ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 500.10 Td (revenue. ) Tj ET Q q 0 0 0 rg BT 88.09 500.10 Td (Additionally) Tj ET Q q 0 0 0 rg BT 138.00 500.10 Td (, we believe that MFFO and ) Tj ET Q q 0 0 0 rg BT 252.15 500.10 Td (Adjusted MFFO provide investors with supplemental performance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 488.10 Td (information that is consistent with the performance indicators and analysis used by management, in addition to net income and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 476.10 Td (cash flows from operating activities as defined by GAAP) Tj ET Q q 0 0 0 rg BT 277.22 476.10 Td (, to evaluate the sustainability of our operating performance. MFFO ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 464.10 Td (and ) Tj ET Q q 0 0 0 rg BT 65.89 464.10 Td (Adjusted MFFO provide comparability in evaluating the operating performance of our portfolio with other non-traded ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 452.10 Td (REIT) Tj ET Q q 0 0 0 rg BT 71.02 452.10 Td (s which typically have limited lives with short and defined acquisition periods and tar) Tj ET Q q 0 0 0 rg BT 413.26 452.10 Td (geted exit strategies. MFFO, or an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 440.10 Td (equivalent measure, is routinely reported by non-traded REIT) Tj ET Q q 0 0 0 rg BT 295.39 440.10 Td (s, and we believe often used by analysts and investors for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 428.10 Td (comparison purposes. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 410.10 Td (FFO, MFFO and ) Tj ET Q q 0 0 0 rg BT 141.47 410.10 Td (Adjusted MFFO are non-GAAP) Tj ET Q q 0 0 0 rg BT 269.71 410.10 Td ( financial measures and do not represent net income as defined by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 398.10 Td (GAAP) Tj ET Q q 0 0 0 rg BT 75.62 398.10 Td (. Net income as defined by GAAP) Tj ET Q q 0 0 0 rg BT 214.66 398.10 Td ( is the most relevant measure in determining our operating performance because FFO, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 386.10 Td (MFFO and ) Tj ET Q q 0 0 0 rg BT 95.62 386.10 Td (Adjusted MFFO include adjustments that investors may deem subjective, such as adding back expenses such as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 374.10 Td (depreciation and amortization and the other items described above. ) Tj ET Q q 0 0 0 rg BT 321.90 374.10 Td (Accordingly) Tj ET Q q 0 0 0 rg BT 371.24 374.10 Td (, FFO, MFFO and ) Tj ET Q q 0 0 0 rg BT 445.71 374.10 Td (Adjusted MFFO should not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 362.10 Td (be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 350.10 Td (FFO, MFFO and ) Tj ET Q q 0 0 0 rg BT 118.97 350.10 Td (Adjusted MFFO do not represent cash flows from operating activities determined in accordance with GAAP) Tj ET Q q 0 0 0 rg BT 552.38 350.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 338.10 Td (and should not be considered an indication of our liquidity) Tj ET Q q 0 0 0 rg BT 282.97 338.10 Td (. ) Tj ET Q q 0 0 0 rg BT 290.29 338.10 Td (W) Tj ET Q q 0 0 0 rg BT 298.93 338.10 Td (e believe FFO, MFFO and ) Tj ET Q q 0 0 0 rg BT 406.71 338.10 Td (Adjusted MFFO, in addition to net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 326.10 Td (income and cash flows from operations as defined by GAAP) Tj ET Q q 0 0 0 rg BT 291.39 326.10 Td (, are meaningful supplemental performance measures.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 308.10 Td (For the prior periods presented, MFFO adjustments consist of the exclusion of straight-line rent and the amortization of a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 296.10 Td (discount on a note payable. ) Tj ET Q q 0 0 0 rg BT 160.96 296.10 Td (W) Tj ET Q q 0 0 0 rg BT 169.59 296.10 Td (e have excluded these items based on the following economic considerations:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 278.10 Td (• ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 90.00 278.10 Td (Adjustments for straight-line r) Tj ET Q q 0 0 0 rg BT 211.02 278.10 Td (ent.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 225.74 278.10 Td ( ) Tj ET Q q 0 0 0 rg BT 230.56 278.10 Td (These are adjustments to rental revenue as required by GAAP) Tj ET Q q 0 0 0 rg BT 477.60 278.10 Td ( to recognize ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 266.10 Td (contractual lease payments on a straight-line basis over the life of the respective lease. ) Tj ET Q q 0 0 0 rg BT 439.68 266.10 Td (W) Tj ET Q q 0 0 0 rg BT 448.32 266.10 Td (e have excluded these ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 254.10 Td (adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 242.10 Td (leases, while also providing investors with a useful supplemental metric that addresses core operating performance by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 230.10 Td (removing rent we expect to receive in a future period or rent that was received in a prior period; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.10 Td (• ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 90.00 215.10 Td (Amortization of a discount on a note payable. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.26 215.10 Td ( Discounts on debt are amortized over the term of the loan as an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 203.10 Td (adjustment to interest expense. ) Tj ET Q q 0 0 0 rg BT 218.12 203.10 Td (This application results in interest expense recognition that is dif) Tj ET Q q 0 0 0 rg BT 476.49 203.10 Td (ferent than the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 191.10 Td (underlying contractual terms of the debt. ) Tj ET Q q 0 0 0 rg BT 257.54 191.10 Td (W) Tj ET Q q 0 0 0 rg BT 266.18 191.10 Td (e have excluded the amortization of a discount in our calculation of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 179.10 Td (MFFO to more appropriately reflect the economic impact of our debt as the amortization of a discount has no ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 167.10 Td (ongoing economic impact on our operations. ) Tj ET Q q 0 0 0 rg BT 273.67 167.10 Td (W) Tj ET Q q 0 0 0 rg BT 282.30 167.10 Td (e believe excluding this item provides investors with a useful ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 155.10 Td (supplemental metric that directly addresses core operating performance.) Tj ET Q endstream endobj 59 0 obj <>] /Rotate 0 /Contents 60 0 R>> endobj 60 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (28) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT) Tj ET Q q 0 0 0 rg BT 499.50 704.10 Td (, is presented in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (the following table, along with our calculation of MFFO and ) Tj ET Q q 0 0 0 rg BT 294.18 692.10 Td (Adjusted MFFO, for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 393.90 692.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 413.89 692.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 433.33 692.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 450.54 692.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 680.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 149.20 680.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 169.20 680.10 Td (, respectively \(in thousands\). No conclusions or comparisons should be made from the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (presentation of these periods. ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 616.60 241.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 291.00 616.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 616.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 360.00 616.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 425.00 616.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 429.00 616.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.00 616.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 498.00 616.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 588.60 241.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 291.00 588.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 588.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 360.00 588.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 425.00 588.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 429.00 588.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.00 588.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 498.00 588.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 560.60 241.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 291.00 560.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 560.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 360.00 560.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 425.00 560.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 429.00 560.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.00 560.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 498.00 560.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 532.60 241.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 291.00 532.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 532.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 360.00 532.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 425.00 532.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 429.00 532.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.00 532.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 498.00 532.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 504.60 241.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 291.00 504.60 65.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 356.00 504.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 360.00 504.60 65.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 425.00 504.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 429.00 504.60 65.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.00 504.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 498.00 504.60 65.00 -13.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 630.6 m 356 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 356 630.6 m 360 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 630.6 m 425 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 630.6 m 494 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494 630.6 m 498 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 630.6 m 563 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 630.6 m 356 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 616.6 m 356 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 356 630.6 m 360 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 630.6 m 425 630.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 616.6 m 425 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 616.6 m 494 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 616.6 m 563 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 616.6 m 356 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 616.6 m 425 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 616.6 m 494 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 616.6 m 563 616.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 574.6 m 356 574.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 574.6 m 425 574.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 574.6 m 356 574.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 574.6 m 425 574.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 574.6 m 494 574.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 574.6 m 563 574.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 532.6 m 356 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 532.6 m 425 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 532.6 m 494 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 532.6 m 563 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 504.6 m 356 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 504.6 m 425 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 504.6 m 494 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 504.6 m 563 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 492.6 m 356 492.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 291 490.6 m 356 490.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 504.6 m 425 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 492.6 m 425 492.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 360 490.6 m 425 490.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 504.6 m 494 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 492.6 m 494 492.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 429 490.6 m 494 490.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 504.6 m 563 504.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 492.6 m 563 492.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 498 490.6 m 563 490.6 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 307.70 642.83 Td (For the Three Months Ended) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 333.10 634.83 Td (September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 447.75 642.83 Td (For the Nine Months Ended) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 471.10 634.83 Td (September 30,) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 315.00 620.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 384.00 620.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 453.00 620.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 522.00 620.83 Td (2015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 606.85 Td (Net income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 293.50 606.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 334.80 606.85 Td (5,040) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 362.50 606.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 409.80 606.85 Td (263) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 431.50 606.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 472.80 606.85 Td (5,102) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 500.50 606.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 547.80 606.85 Td (705) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 58.50 592.85 Td (Depreciation of real estate assets) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 334.80 592.85 Td (3,083) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 403.80 592.85 Td (3,035) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 472.80 592.85 Td (9,199) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.80 592.85 Td (9,053) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 58.50 578.85 Td (Amortization of lease-related costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 348.80 578.85 Td (1) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 417.80 578.85 Td (1) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 486.80 578.85 Td (2) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 555.80 578.85 Td (3) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 564.85 Td (FFO) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 334.80 564.85 Td (8,124) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 403.80 564.85 Td (3,299) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 468.80 564.85 Td (14,303) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.80 564.85 Td (9,761) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 58.50 550.85 Td (Straight-line rent) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 344.80 550.85 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 413.80 550.85 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 482.80 550.85 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 549.10 550.85 Td (\(20) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 559.80 550.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 58.50 536.85 Td (Amortization of discount on note payable) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 344.80 536.85 Td (22) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 413.80 536.85 Td (22) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 482.80 536.85 Td (65) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 551.80 536.85 Td (65) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 522.85 Td (MFFO) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 334.80 522.85 Td (8,146) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 403.80 522.85 Td (3,321) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 468.80 522.85 Td (14,368) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.80 522.85 Td (9,806) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 58.50 508.85 Td (Reversal of accrued asset management fees) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 197.32 512.48 Td ( \(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.10 508.85 Td (\(4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 352.80 508.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 413.80 508.85 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 470.10 508.85 Td (\(4,752) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 490.80 508.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 551.80 508.85 Td (—) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 495.85 Td (Adjusted MFFO) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 293.50 495.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 334.80 495.85 Td (3,394) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 362.50 495.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 403.80 495.85 Td (3,321) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 431.50 495.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 472.80 495.85 Td (9,616) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 500.50 495.85 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 541.80 495.85 Td (9,806) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 480.10 Td (_____________________) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 49.50 471.13 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 55.56 467.50 Td ( Relates to reversal of previously deferred and accrued asset management fees of $1.5 million for the period from February 2013 through July 2013 and $3.3 ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 49.50 457.90 Td (million for the period from ) Tj ET Q q 0 0 0 rg BT 137.26 457.90 Td (August 2013 through December 2014 as we believe that the payment of these amounts is remote. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 433.90 Td (FFO, MFFO and ) Tj ET Q q 0 0 0 rg BT 141.47 433.90 Td (Adjusted MFFO may also be used to fund all or a portion of certain capitalizable items that are excluded ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 421.90 Td (from FFO and MFFO, such as tenant improvements, building improvements and deferred leasing costs. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 403.90 Td (Distributions) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 385.90 Td (From time to time during our operational stage, we may not be able to pay distributions solely from our cash flows from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 373.90 Td (operations or FFO, in which case distributions may be paid in whole or in part from debt financing and/or from proceeds from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 361.90 Td (our Of) Tj ET Q q 0 0 0 rg BT 75.70 361.90 Td (ferings. Distributions declared, distributions paid and cash flows from operations were as follows for the first, second ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 349.90 Td (and third quarters of 2016 \(in thousands, except per share amounts\): ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 305.40 103.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 305.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 305.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 217.00 305.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 305.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 281.00 305.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 285.00 305.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 345.00 305.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 349.00 305.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 305.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.00 305.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 473.00 305.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 477.00 305.40 85.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 50.00 277.40 103.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 277.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 277.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 217.00 277.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 277.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 281.00 277.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 285.00 277.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 345.00 277.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 349.00 277.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 409.00 277.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 413.00 277.40 60.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 473.00 277.40 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 477.00 277.40 85.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 319.4 m 345 319.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 345 319.4 m 349 319.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 319.4 m 409 319.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 409 319.4 m 413 319.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 413 319.4 m 473 319.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 50 305.4 m 153 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 305.4 m 217 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 221 305.4 m 281 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 305.4 m 345 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 305.4 m 409 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 413 305.4 m 473 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 477 305.4 m 562 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 305.4 m 217 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 221 305.4 m 281 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 305.4 m 345 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 305.4 m 409 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 413 305.4 m 473 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 477 305.4 m 562 305.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 263.4 m 217 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 221 263.4 m 281 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 263.4 m 345 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 263.4 m 409 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 477 263.4 m 562 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 263.4 m 217 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 250.39999999999998 m 217 250.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 248.39999999999998 m 217 248.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 221 263.4 m 281 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 221 250.39999999999998 m 281 250.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 221 248.39999999999998 m 281 248.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 263.4 m 345 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 250.39999999999998 m 345 250.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 285 248.39999999999998 m 345 248.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 263.4 m 409 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 250.39999999999998 m 409 250.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 349 248.39999999999998 m 409 248.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 413 263.4 m 473 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 413 250.39999999999998 m 473 250.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 413 248.39999999999998 m 473 248.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 477 263.4 m 562 263.4 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 477 250.39999999999998 m 562 250.39999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 477 248.39999999999998 m 562 248.39999999999998 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 164.05 317.63 Td (Distributions ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 167.55 309.63 Td (Declar) Tj ET Q q 0 0 0 rg BT 190.06 309.63 Td (ed) Tj ET Q BT /F2 8.00 Tf ET BT /F2 5.20 Tf ET q 0 0 0 rg BT 198.06 313.26 Td ( \(1\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 229.60 325.48 Td (Distribution ) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 235.20 317.48 Td (Declar) Tj ET Q q 0 0 0 rg BT 257.71 317.48 Td (ed) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 226.25 309.48 Td (Per) Tj ET Q q 0 0 0 rg BT 238.09 309.48 Td ( Shar) Tj ET Q q 0 0 0 rg BT 256.40 309.48 Td (e) Tj ET Q BT /F2 8.00 Tf ET BT /F2 5.20 Tf ET q 0 0 0 rg BT 259.95 313.11 Td ( \(1\) \(2\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 343.55 323.63 Td (Distributions Paid) Tj ET Q BT /F2 8.00 Tf ET BT /F2 5.20 Tf ET q 0 0 0 rg BT 406.01 327.26 Td ( \(3\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 489.95 317.63 Td (Cash Flows from) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 499.85 309.63 Td (Operations) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 89.65 309.63 Td (Period) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 305.80 309.63 Td (Cash) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 359.80 309.63 Td (Reinvested) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 433.75 309.63 Td (Total) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 295.65 Td (First Quarter 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 159.50 295.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 195.80 295.65 Td (3,285) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 223.50 295.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 259.80 295.65 Td (0.160) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 287.50 295.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 323.80 295.65 Td (1,866) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 351.50 295.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 387.80 295.65 Td (1,421) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 415.50 295.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 451.80 295.65 Td (3,287) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.50 295.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 540.80 295.65 Td (3,451) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 281.65 Td (Second Quarter 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 195.80 281.65 Td (3,336) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 259.80 281.65 Td (0.162) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 323.80 281.65 Td (1,910) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 387.80 281.65 Td (1,455) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 451.80 281.65 Td (3,365) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 540.80 281.65 Td (3,629) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 52.50 267.65 Td (Third Quarter 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 195.80 267.65 Td (3,394) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 259.80 267.65 Td (0.164) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 323.80 267.65 Td (1,939) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 387.80 267.65 Td (1,448) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 451.80 267.65 Td (3,387) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 540.80 267.65 Td (3,331) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 159.50 253.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 191.80 253.65 Td (10,015) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 223.50 253.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 259.80 253.65 Td (0.486) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 287.50 253.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 323.80 253.65 Td (5,715) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 351.50 253.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 387.80 253.65 Td (4,324) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 415.50 253.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 447.80 253.65 Td (10,039) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.50 253.65 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.80 253.65 Td (10,411) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 237.90 Td (_____________________) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 49.50 228.92 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 55.56 225.30 Td ( Distributions for the periods from January 1, 2016 through February 28, 2016 and March 1, 2016 through ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 397.51 225.30 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 461.72 225.30 Td ( were based on daily record ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 49.50 215.70 Td (dates and were calculated at a rate of ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 169.43 215.70 Td ($0.00178082) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 211.43 215.70 Td ( per share per day) Tj ET Q q 0 0 0 rg BT 267.77 215.70 Td (. ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 49.50 206.73 Td (\(2\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 55.56 203.10 Td ( ) Tj ET Q q 0 0 0 rg BT 57.12 203.10 Td (Assumes share was issued and outstanding each day during the period presented. ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 49.50 194.13 Td (\(3\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 55.56 190.50 Td ( 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 ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 49.50 180.90 Td (following month) Tj ET Q BT /F1 7.50 Tf ET q 0 0 0 rg BT 103.05 180.90 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 156.90 Td (For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 103.11 156.90 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 156.90 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.15 156.90 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 261.41 156.90 Td (, we paid aggregate distributions of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.99 156.90 Td ($10.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 458.88 156.90 Td (, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.15 156.90 Td ($5.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 553.04 156.90 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 144.90 Td (of distributions paid in cash and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 180.04 144.90 Td ($4.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 228.93 144.90 Td ( of distributions reinvested through our dividend reinvestment plan. FFO for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 132.90 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 66.72 132.90 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 127.54 132.90 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.81 132.90 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 228.36 132.90 Td ($14.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.25 132.90 Td ( and cash flows from operations was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 430.82 132.90 Td ($10.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.71 132.90 Td (. ) Tj ET Q q 0 0 0 rg BT 492.03 132.90 Td (W) Tj ET Q q 0 0 0 rg BT 500.67 132.90 Td (e funded our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 120.90 Td (total distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with cash flows from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 108.90 Td (operations. For the purposes of determining the source of our distributions paid, we assume first that we use cash flows from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 96.90 Td (operations from the relevant periods to fund distribution payments. ) Tj ET Q q 0 0 0 rg BT 321.95 96.90 Td (All non-operating expenses \(including general and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 84.90 Td (administrative expenses to the extent not covered by cash flows from operations\), debt service and other obligations are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 72.90 Td (assumed to be paid from our dividend reinvestment plan as permitted by our of) Tj ET Q q 0 0 0 rg BT 365.63 72.90 Td (fering documents and loan agreements. See the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 60.90 Td (reconciliation of FFO to net income above. ) Tj ET Q endstream endobj 61 0 obj <>] /Rotate 0 /Contents 62 0 R>> endobj 62 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. Management’) Tj ET Q q 0 0 0 rg BT 144.05 730.60 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 216.03 730.60 Td (Analysis of Financial Condition and Results of Operations \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (29) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (From inception through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 169.49 704.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 249.75 704.10 Td (, we paid aggregate distributions of $53.5 million, and our cumulative net loss ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (for the same period was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 147.52 692.10 Td ($19.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.41 692.10 Td (. ) Tj ET Q q 0 0 0 rg BT 208.73 692.10 Td (T) Tj ET Q q 0 0 0 rg BT 214.14 692.10 Td (o the extent that we pay distributions from sources other than our cash flows from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (operations, the overall return to our stockholders may be reduced.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 662.10 Td (Over the long-term, we expect that a greater percentage of our distributions will be paid from cash flows from operations ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 650.10 Td (and FFO \(except with respect to distributions related to sales of our assets\). However) Tj ET Q q 0 0 0 rg BT 392.07 650.10 Td (, our operating performance cannot be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 638.10 Td (accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward -) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 626.10 Td ( Looking Statements,” “Market Outlook — Multi-Family Real Estate and Finance Markets” and “Results of Operations” ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 614.10 Td (herein, and the risks discussed in Part II, Item 1A) Tj ET Q q 0 0 0 rg BT 246.40 614.10 Td ( “Risk Factors” herein and in Part I, Item 1A) Tj ET Q q 0 0 0 rg BT 424.70 614.10 Td ( of our ) Tj ET Q q 0 0 0 rg BT 453.30 614.10 Td (Annual Report on Form ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 602.10 Td (10-K for the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 147.51 602.10 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 226.10 602.10 Td (, as filed with the SEC. ) Tj ET Q q 0 0 0 rg BT 323.41 602.10 Td (Those factors include: the future operating performance of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 590.10 Td (our investments in the existing real estate and financial environment and the level of participation in our dividend reinvestment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 578.10 Td (plan. In the event our FFO and/or cash flows from operations decrease in the future, the level of our distributions may also ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (decrease. In addition, future distributions declared and paid may exceed FFO and/or cash flows from operations.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 548.10 Td (Critical ) Tj ET Q q 0 0 0 rg BT 84.21 548.10 Td (Accounting Policies) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 530.10 Td (Our consolidated interim financial statements and condensed notes thereto have been prepared in accordance with GAAP) Tj ET Q q 0 0 0 rg BT 557.29 530.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 518.10 Td (and in conjunction with the rules and regulations of the SEC. ) Tj ET Q q 0 0 0 rg BT 298.44 518.10 Td (The preparation of our financial statements requires significant ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 506.10 Td (management judgments, assumptions and estimates about matters that are inherently uncertain. ) Tj ET Q q 0 0 0 rg BT 434.77 506.10 Td (These judgments af) Tj ET Q q 0 0 0 rg BT 512.90 506.10 Td (fect the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 494.10 Td (reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 482.10 Td (statements and the reported amounts of revenue and expenses during the reporting periods. ) Tj ET Q q 0 0 0 rg BT 417.82 482.10 Td (W) Tj ET Q q 0 0 0 rg BT 426.86 482.10 Td (ith dif) Tj ET Q q 0 0 0 rg BT 450.84 482.10 Td (ferent estimates or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 470.10 Td (assumptions, materially dif) Tj ET Q q 0 0 0 rg BT 157.91 470.10 Td (ferent amounts could be reported in our financial statements. ) Tj ET Q q 0 0 0 rg BT 405.33 470.10 Td (Additionally) Tj ET Q q 0 0 0 rg BT 455.24 470.10 Td (, other companies may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 458.10 Td (utilize dif) Tj ET Q q 0 0 0 rg BT 87.92 458.10 Td (ferent estimates that may impact the comparability of our results of operations to those of companies in similar ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 446.10 Td (businesses. ) Tj ET Q q 0 0 0 rg BT 98.67 446.10 Td (A) Tj ET Q q 0 0 0 rg BT 105.34 446.10 Td ( discussion of the accounting policies that management considers critical in that they involve significant ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 434.10 Td (management judgments, assumptions and estimates is included in our ) Tj ET Q q 0 0 0 rg BT 330.01 434.10 Td (Annual Report on Form 10-K for the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 422.10 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 128.08 422.10 Td ( filed with the SEC. ) Tj ET Q q 0 0 0 rg BT 212.06 422.10 Td (There have been no significant changes to our policies during 2016. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 404.10 Td (Subsequent Events) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 386.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 386.10 Td (e evaluate subsequent events up until the date the consolidated financial statements are issued. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 49.50 368.10 Td (Distributions Paid) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.10 Td (On October 3, 2016, we paid distributions of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.64 353.10 Td ($1.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 302.53 353.10 Td (, which related to distributions declared for daily record dates ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 341.10 Td (for each day in the period from September 1, 2016 through ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 287.77 341.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.03 341.10 Td (. On November 1, 2016, we paid distributions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 329.10 Td (of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 60.33 329.10 Td ($1.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 109.22 329.10 Td (, which related to distributions declared for daily record dates for each day in the period from October 1, 2016 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 317.10 Td (through October 31, 2016.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 49.50 299.10 Td (Distributions Declared) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 284.10 Td (On October 1) Tj ET Q q 0 0 0 rg BT 126.06 284.10 Td (1, 2016, our board of directors declared distributions based on daily record dates for the period from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 272.10 Td (November 1, 2016 through November 30, 2016, which we expect to pay in December 2016. On November 10, 2016, our board ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 260.10 Td (of directors declared distributions based on daily record dates for the period from December 1, 2016 through December 31, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 248.10 Td (2016, which we expect to pay in January 2017, and distributions based on daily record dates for the period from January 1, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 236.10 Td (2017 through January 31, 2017, which we expect to pay in February 2017. Investors may choose to receive cash distributions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 224.10 Td (or purchase additional shares through our dividend reinvestment plan.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 206.10 Td ( Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 194.10 Td (of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 60.33 194.10 Td ($0.00178082) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 112.83 194.10 Td ( per share per day and equal a daily amount that, if paid each day for a 365-day period, would equal a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 521.01 194.10 Td (6.32%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 546.84 194.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 182.10 Td (annualized rate based on our December 8, 2015 estimated value per share of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 357.15 182.10 Td ($10.29) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.65 182.10 Td (.) Tj ET Q endstream endobj 63 0 obj <>] /Rotate 0 /Contents 64 0 R>> endobj 64 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( I. FINANCIAL) Tj ET Q q 0 0 0 rg BT 143.46 748.60 Td ( INFORMA) Tj ET Q q 0 0 0 rg BT 194.10 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 3. Quantitative and Qualitative Disclosur) Tj ET Q q 0 0 0 rg BT 250.09 730.60 Td (es about Market Risk) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 704.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 704.10 Td (e are exposed to the ef) Tj ET Q q 0 0 0 rg BT 170.13 704.10 Td (fects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 692.10 Td (renovation and refinancing of our real estate investment portfolio and to fund our operations. Our profitability and the value of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 680.10 Td (our investment portfolio may be adversely af) Tj ET Q q 0 0 0 rg BT 229.27 680.10 Td (fected during any period as a result of interest rate changes. Our interest rate risk ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 668.10 Td (management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 656.10 Td (lower overall borrowing costs. ) Tj ET Q q 0 0 0 rg BT 176.51 656.10 Td (W) Tj ET Q q 0 0 0 rg BT 185.15 656.10 Td (e may manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 644.10 Td (floating rate exposure is kept at an acceptable level. In addition, we may utilize a variety of financial instruments, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 632.10 Td (interest rate caps, floors, and swap agreements, in order to limit the ef) Tj ET Q q 0 0 0 rg BT 328.39 632.10 Td (fects of changes in interest rates on our operations. If we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 620.10 Td (use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 608.10 Td (certain risks, including the risk that losses on a hedge position will reduce the funds available for the payment of distributions to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 596.10 Td (our stockholders and that the losses may exceed the amount we invested in the instruments. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 578.10 Td (Interest rate fluctuations will generally not af) Tj ET Q q 0 0 0 rg BT 252.31 578.10 Td (fect our future earnings or cash flows in relation to our fixed rate debt unless ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 566.10 Td (such instruments mature or are otherwise terminated. However) Tj ET Q q 0 0 0 rg BT 303.18 566.10 Td (, interest rate changes will af) Tj ET Q q 0 0 0 rg BT 417.95 566.10 Td (fect the fair value of our fixed rate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 554.10 Td (instruments. ) Tj ET Q q 0 0 0 rg BT 103.11 554.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 127.56 554.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 207.82 554.10 Td (, the fair value estimate of our fixed rate debt was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 408.85 554.10 Td ($290.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.74 554.10 Td ( and the outstanding ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 542.10 Td (principal balance of our fixed rate debt was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 225.54 542.10 Td ($284.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.43 542.10 Td (. ) Tj ET Q q 0 0 0 rg BT 291.75 542.10 Td (The fair value estimate of our fixed rate debt was estimated using a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 530.10 Td (discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 518.10 Td (loans were originated as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 159.74 518.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 240.00 518.10 Td (. ) Tj ET Q q 0 0 0 rg BT 247.32 518.10 Td (W) Tj ET Q q 0 0 0 rg BT 256.36 518.10 Td (ith respect to our fixed rate instruments, we do not expect that fluctuations ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 506.10 Td (in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 494.10 Td (ongoing operations. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 476.10 Td (Conversely) Tj ET Q q 0 0 0 rg BT 116.90 476.10 Td (, to the extent we have any variable rate debt, movements in interest rates on variable rate debt would change ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 464.10 Td (our future earnings and cash flows but, generally) Tj ET Q q 0 0 0 rg BT 244.34 464.10 Td (, not significantly af) Tj ET Q q 0 0 0 rg BT 324.70 464.10 Td (fect the fair value of those instruments. However) Tj ET Q q 0 0 0 rg BT 522.29 464.10 Td (, changes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 452.10 Td (in required risk premiums would result in changes in the fair value of variable rate instruments. ) Tj ET Q q 0 0 0 rg BT 434.95 452.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.39 452.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 539.66 452.10 Td (, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 440.10 Td (did not have any variable rate debt outstanding.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 422.10 Td (The weighted-average interest rate of our fixed rate debt as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 321.60 422.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.87 422.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.42 422.10 Td (3.3%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.25 422.10 Td (. ) Tj ET Q q 0 0 0 rg BT 450.57 422.10 Td (The weighted-average ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 410.10 Td (interest rate represents the actual interest rate in ef) Tj ET Q q 0 0 0 rg BT 250.33 410.10 Td (fect as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 289.48 410.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 369.74 410.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 392.10 Td (For a discussion of the interest rate risks related to the current capital and credit markets, see the risks discussed in Part I, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 49.50 380.10 Td (Item 1A) Tj ET Q q 0 0 0 rg BT 82.00 380.10 Td ( of our ) Tj ET Q q 0 0 0 rg BT 110.60 380.10 Td (Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 356.10 Td (Item 4. Contr) Tj ET Q q 0 0 0 rg BT 110.36 356.10 Td (ols and Pr) Tj ET Q q 0 0 0 rg BT 153.52 356.10 Td (ocedur) Tj ET Q q 0 0 0 rg BT 182.78 356.10 Td (es) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 338.10 Td (Disclosur) Tj ET Q q 0 0 0 rg BT 89.82 338.10 Td (e Contr) Tj ET Q q 0 0 0 rg BT 122.13 338.10 Td (ols and Pr) Tj ET Q q 0 0 0 rg BT 165.29 338.10 Td (ocedur) Tj ET Q q 0 0 0 rg BT 194.55 338.10 Td (es) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 320.10 Td (As of the end of the period covered by this report, management, including our principal executive of) Tj ET Q q 0 0 0 rg BT 473.86 320.10 Td (ficer and principal ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 308.10 Td (financial of) Tj ET Q q 0 0 0 rg BT 95.63 308.10 Td (ficer) Tj ET Q q 0 0 0 rg BT 113.54 308.10 Td (, evaluated the ef) Tj ET Q q 0 0 0 rg BT 181.66 308.10 Td (fectiveness of the design and operation of our disclosure controls and procedures. Based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 296.10 Td (upon, and as of the date of, the evaluation, our principal executive of) Tj ET Q q 0 0 0 rg BT 325.00 296.10 Td (ficer and principal financial of) Tj ET Q q 0 0 0 rg BT 446.43 296.10 Td (ficer concluded that the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 284.10 Td (disclosure controls and procedures were ef) Tj ET Q q 0 0 0 rg BT 220.59 284.10 Td (fective as of the end of the period covered by this report to ensure that information ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 272.10 Td (required to be disclosed in the reports we file and submit under the Exchange ) Tj ET Q q 0 0 0 rg BT 361.02 272.10 Td (Act is recorded, processed, summarized and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 260.10 Td (reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 248.10 Td (designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange ) Tj ET Q q 0 0 0 rg BT 529.04 248.10 Td (Act is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 236.10 Td (accumulated and communicated to our management, including our principal executive of) Tj ET Q q 0 0 0 rg BT 406.64 236.10 Td (ficer and our principal financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 224.10 Td (of) Tj ET Q q 0 0 0 rg BT 58.15 224.10 Td (ficer) Tj ET Q q 0 0 0 rg BT 76.06 224.10 Td (, as appropriate to allow timely decisions regarding required disclosure.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 206.10 Td (Internal Contr) Tj ET Q q 0 0 0 rg BT 112.87 206.10 Td (ol Over) Tj ET Q q 0 0 0 rg BT 144.62 206.10 Td ( Financial Reporting) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 188.10 Td (There have been no changes in our internal control over financial reporting that occurred during the quarter ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 176.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.26 176.10 Td ( that have materially af) Tj ET Q q 0 0 0 rg BT 222.26 176.10 Td (fected, or are reasonably likely to materially af) Tj ET Q q 0 0 0 rg BT 409.21 176.10 Td (fect, our internal control over ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 164.10 Td (financial reporting.) Tj ET Q endstream endobj 65 0 obj <>] /Rotate 0 /Contents 66 0 R>> endobj 66 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( II. OTHER INFORMA) Tj ET Q q 0 0 0 rg BT 177.99 748.60 Td (TION) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (31) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 719.25 Td (Item 1. ) Tj ET Q q 0 0 0 rg BT 86.00 719.25 Td (Legal Pr) Tj ET Q q 0 0 0 rg BT 122.75 719.25 Td (oceedings) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 701.25 Td (None.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 677.25 Td (Item 1A. ) Tj ET Q q 0 0 0 rg BT 95.00 677.25 Td (Risk Factors) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 659.25 Td (Please see the risks discussed below) Tj ET Q q 0 0 0 rg BT 216.54 659.25 Td (, in Part II, Item 1A) Tj ET Q q 0 0 0 rg BT 294.58 659.25 Td ( of our Quarterly Report on Form 10-Q for the quarter ended June ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 647.25 Td (30, 2016 and in Part I, Item 1A) Tj ET Q q 0 0 0 rg BT 174.15 647.25 Td ( of our ) Tj ET Q q 0 0 0 rg BT 202.76 647.25 Td (Annual Report on Form 10-K for the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 399.10 647.25 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 477.68 647.25 Td (.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 50.00 629.25 Td (W) Tj ET Q q 0 0 0 rg BT 58.15 629.25 Td (e have paid distributions from financings and expect that in the future we may not pay distributions solely from our cash ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 50.00 617.25 Td (flows from operations. T) Tj ET Q q 0 0 0 rg BT 152.70 617.25 Td (o the extent that we pay distributions from sources other than our cash flows from operations, the ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 50.00 605.25 Td (overall return to our stockholders may be reduced.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 590.25 Td (Our or) Tj ET Q q 0 0 0 rg BT 98.70 590.25 Td (ganizational documents permit us to pay distributions from any source, including of) Tj ET Q q 0 0 0 rg BT 434.01 590.25 Td (fering proceeds or borrowings ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 578.25 Td (\(both of which may constitute a return of capital\). ) Tj ET Q q 0 0 0 rg BT 253.92 578.25 Td (W) Tj ET Q q 0 0 0 rg BT 262.56 578.25 Td (e have paid distributions from financings and expect that in the future we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 566.25 Td (may not pay distributions solely from our cash flows from operations, in which case distributions may be paid in whole or in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 554.25 Td (part from debt financing. ) Tj ET Q q 0 0 0 rg BT 154.79 554.25 Td (W) Tj ET Q q 0 0 0 rg BT 163.42 554.25 Td (e may also fund distributions from the sale of assets. ) Tj ET Q q 0 0 0 rg BT 375.70 554.25 Td (T) Tj ET Q q 0 0 0 rg BT 381.11 554.25 Td (o the extent that we pay distributions from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 542.25 Td (sources other than our cash flows from operations, the overall return to our stockholders may be reduced. In addition, to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 530.25 Td (extent distributions exceed cash flows from operations, a stockholder) Tj ET Q q 0 0 0 rg BT 327.24 530.25 Td (’) Tj ET Q q 0 0 0 rg BT 330.02 530.25 Td (s basis in our stock will be reduced and, to the extent ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 518.25 Td (distributions exceed a stockholder) Tj ET Q q 0 0 0 rg BT 186.72 518.25 Td (’) Tj ET Q q 0 0 0 rg BT 189.50 518.25 Td (s basis, the stockholder may recognize capital gain. ) Tj ET Q q 0 0 0 rg BT 399.53 518.25 Td (There is no limit on the amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 506.25 Td (distributions we may fund from sources other than from cash flows from operations.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 488.25 Td (For the year ended December 31, 2015, we paid aggregate distributions of $13.2 million, including $7.4 million of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 476.25 Td (distributions paid in cash and $5.8 million of distributions reinvested through our dividend reinvestment plan. FFO for the year ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 464.25 Td (ended December 31, 2015 was $12.9 million and cash flows from operations was $12.9 million. ) Tj ET Q q 0 0 0 rg BT 436.69 464.25 Td (W) Tj ET Q q 0 0 0 rg BT 445.33 464.25 Td (e funded our total ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 452.25 Td (distributions paid for the year ended December 31, 2015, which includes cash distributions and dividends reinvested by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 440.25 Td (stockholders, with $12.8 million of cash flows from operations \(97%\) and $0.4 million of cash on hand \(3%\). For the year ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 428.25 Td (ended December 31, 2015, FFO represented 98% of total distributions paid.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 410.25 Td (For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 103.61 410.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.83 410.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.65 410.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 261.91 410.25 Td (, we paid aggregate distributions of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.49 410.25 Td ($10.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.38 410.25 Td (, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.65 410.25 Td ($5.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 553.54 410.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 398.25 Td (of distributions paid in cash and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 180.54 398.25 Td ($4.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 229.43 398.25 Td ( of distributions reinvested through our dividend reinvestment plan. FFO for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 386.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.22 386.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 128.04 386.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 208.31 386.25 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 228.86 386.25 Td ($14.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.75 386.25 Td ( and cash flows from operations was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 431.32 386.25 Td ($10.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 485.21 386.25 Td (. ) Tj ET Q q 0 0 0 rg BT 492.53 386.25 Td (W) Tj ET Q q 0 0 0 rg BT 501.17 386.25 Td (e funded our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 374.25 Td (total distributions paid for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 171.37 374.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 188.59 374.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 249.41 374.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 329.68 374.25 Td ( with cash flows from operations. For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.65 374.25 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 516.87 374.25 Td ( months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 362.25 Td (ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 76.38 362.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.64 362.25 Td (, FFO represented 142% of total distributions paid. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 344.25 Td (See Part I, Item II, “Management’) Tj ET Q q 0 0 0 rg BT 208.28 344.25 Td (s Discussion and ) Tj ET Q q 0 0 0 rg BT 277.45 344.25 Td (Analysis of Financial Condition and Results of Operations - Funds ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 332.25 Td (from Operations and Modified Funds from Operations” and “Distributions” herein and in Part II, Item ) Tj ET Q q 0 0 0 rg BT 460.83 332.25 Td (VII, “Management’) Tj ET Q q 0 0 0 rg BT 539.14 332.25 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 320.25 Td (Discussion and ) Tj ET Q q 0 0 0 rg BT 112.78 320.25 Td (Analysis of Financial Condition and Results of Operations - Funds from Operations and Modified Funds from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 308.25 Td (Operations” of our ) Tj ET Q q 0 0 0 rg BT 126.92 308.25 Td (Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 50.00 290.25 Td (W) Tj ET Q q 0 0 0 rg BT 58.15 290.25 Td (e exhausted funds available for redemptions for the remainder of 2016 in ) Tj ET Q q 0 0 0 rg BT 361.67 290.25 Td (August 2016.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.50 275.25 Td (Because of limitations on the dollar value of shares that may be redeemed under our share redemption program as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 263.25 Td (described below) Tj ET Q q 0 0 0 rg BT 114.60 263.25 Td (, we exhausted funds available for ordinary redemptions for the remainder of 2016 in January 2016 and funds ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 251.25 Td (available for special redemptions for the remainder of 2016 in ) Tj ET Q q 0 0 0 rg BT 299.91 251.25 Td (August 2016. ) Tj ET Q q 0 0 0 rg BT 358.25 251.25 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 382.70 251.25 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.96 251.25 Td (, we had a total of $1.6 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 239.25 Td (million of outstanding and unfulfilled redemption requests recorded in other liabilities on the accompanying consolidated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 227.25 Td (balance sheets. ) Tj ET Q endstream endobj 67 0 obj <>] /Rotate 0 /Contents 68 0 R>> endobj 68 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( II. OTHER INFORMA) Tj ET Q q 0 0 0 rg BT 177.99 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. ) Tj ET Q q 0 0 0 rg BT 86.00 730.60 Td (Unr) Tj ET Q q 0 0 0 rg BT 103.04 730.60 Td (egister) Tj ET Q q 0 0 0 rg BT 131.18 730.60 Td (ed Sales of Equity Securities and Use of Pr) Tj ET Q q 0 0 0 rg BT 312.10 730.60 Td (oceeds) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (32) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 704.10 Td (a\) ) Tj ET Q q 0 0 0 rg BT 85.50 704.10 Td (During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 692.10 Td (Securities ) Tj ET Q q 0 0 0 rg BT 126.88 692.10 Td (Act of 1933. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 674.10 Td (b\) ) Tj ET Q q 0 0 0 rg BT 85.50 674.10 Td (Not applicable. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 67.50 656.10 Td (c\) ) Tj ET Q q 0 0 0 rg BT 85.50 656.10 Td (W) Tj ET Q q 0 0 0 rg BT 94.14 656.10 Td (e have a share redemption program that may enable stockholders to sell their shares to us in limited circumstances.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 638.10 Td (Pursuant to our share redemption program, there are several limitations on our ability to redeem shares:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 620.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 620.10 Td (Unless the shares are being redeemed in connection with a special redemption, we may not redeem shares until ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 608.10 Td (the stockholder has held his or her shares for one year) Tj ET Q q 0 0 0 rg BT 322.93 608.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 593.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 593.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 593.10 Td (e may redeem only the number of shares that we could purchase with the amount of the net proceeds from the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 581.10 Td (sale of shares under our dividend reinvestment plan during the prior calendar year; provided that we may not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 569.10 Td (redeem more than $2.0 million of shares in the aggregate during any calendar year) Tj ET Q q 0 0 0 rg BT 437.32 569.10 Td (. Furthermore, during any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 557.10 Td (calendar year) Tj ET Q q 0 0 0 rg BT 161.17 557.10 Td (, once we have redeemed $1.5 million of shares under our share redemption program, including in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 545.10 Td (connection with special redemptions, the remaining $0.5 million of the $2.0 million annual limit shall be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 533.10 Td (reserved exclusively for shares being redeemed in connection with a special redemption. ) Tj ET Q q 0 0 0 rg BT 464.63 533.10 Td (W) Tj ET Q q 0 0 0 rg BT 473.27 533.10 Td (e exhausted the funds ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 521.10 Td (available for ordinary redemptions for the remainder of 2016 in January 2016 and funds available for special ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 509.10 Td (redemptions for the remainder of 2016 in ) Tj ET Q q 0 0 0 rg BT 274.90 509.10 Td (August 2016. Notwithstanding anything contained in this paragraph to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 497.10 Td (the contrary) Tj ET Q q 0 0 0 rg BT 155.38 497.10 Td (, we may increase or decrease the funding available for the redemption of shares pursuant to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 485.10 Td (share redemption program upon ten business days’) Tj ET Q q 0 0 0 rg BT 310.54 485.10 Td ( notice to our stockholders. ) Tj ET Q q 0 0 0 rg BT 421.45 485.10 Td (W) Tj ET Q q 0 0 0 rg BT 430.09 485.10 Td (e may provide this notice by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 473.10 Td (including such information \(a\) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 461.10 Td (filed with the SEC or \(b\) in a separate mailing to our stockholders.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 446.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 446.10 Td (During any calendar year) Tj ET Q q 0 0 0 rg BT 208.94 446.10 Td (, we may redeem no more than 5% of the weighted-average number of shares ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 434.10 Td (outstanding during the prior calendar year) Tj ET Q q 0 0 0 rg BT 275.45 434.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 419.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 419.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 419.10 Td (e have no obligation to redeem shares if the redemption would violate the restrictions on distributions under ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 407.10 Td (Maryland law) Tj ET Q q 0 0 0 rg BT 163.17 407.10 Td (, which prohibits distributions that would cause a corporation to fail to meet statutory tests of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 395.10 Td (solvency) Tj ET Q q 0 0 0 rg BT 142.90 395.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 374.10 Td (Pursuant to our share redemption program, redemptions made in connection with a special redemption are made at a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 362.10 Td (price per share equal to the most recent estimated value per share of our common stock as of the applicable redemption ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 350.10 Td (date. ) Tj ET Q q 0 0 0 rg BT 106.97 350.10 Td (The price at which we redeem all other shares eligible for redemption is as follows: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 332.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 332.10 Td (For those shares held by the redeeming stockholder for at least one year) Tj ET Q q 0 0 0 rg BT 394.73 332.10 Td (, 92.5% of our most recent estimated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 320.10 Td (value per share as of the applicable redemption date; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 305.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 305.10 Td (For those shares held by the redeeming stockholder for at least two years, 95.0% of our most recent estimated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 293.10 Td (value per share as of the applicable redemption date; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 278.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 278.10 Td (For those shares held by the redeeming stockholder for at least three years, 97.5% of our most recent estimated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 266.10 Td (value per share as of the applicable redemption date; and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 251.10 Td (• ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 251.10 Td (For those shares held by the redeeming stockholder for at least four years, 100% of our most recent estimated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 239.10 Td (value per share as of the applicable redemption date.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 218.10 Td (If we cannot redeem all shares presented for redemption in any month because of the limitations on redemptions set ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 206.10 Td (forth in our share redemption program, then we will honor redemption requests on a pro rata basis, except that if a pro ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 194.10 Td (rata redemption would result in a stockholder owning less than the minimum purchase requirement described in our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 182.10 Td (currently ef) Tj ET Q q 0 0 0 rg BT 131.68 182.10 Td (fective, or the most recently ef) Tj ET Q q 0 0 0 rg BT 253.67 182.10 Td (fective, registration statement as such registration statement has been ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 170.10 Td (amended or supplemented, then we would redeem all of such stockholder) Tj ET Q q 0 0 0 rg BT 379.95 170.10 Td (’) Tj ET Q q 0 0 0 rg BT 382.73 170.10 Td (s shares. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 152.10 Td (Upon a transfer of shares, any pending redemption requests with respect to such transferred shares will be canceled as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 140.10 Td (of the date we accept the transfer) Tj ET Q q 0 0 0 rg BT 217.10 140.10 Td (. Stockholders wishing us to continue to consider a redemption request related to any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 128.10 Td (transferred shares must resubmit their redemption request.) Tj ET Q endstream endobj 69 0 obj <>] /Rotate 0 /Contents 70 0 R>> endobj 70 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( II. OTHER INFORMA) Tj ET Q q 0 0 0 rg BT 177.99 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 2. ) Tj ET Q q 0 0 0 rg BT 86.00 730.60 Td (Unr) Tj ET Q q 0 0 0 rg BT 103.04 730.60 Td (egister) Tj ET Q q 0 0 0 rg BT 131.18 730.60 Td (ed Sales of Equity Securities and Use of Pr) Tj ET Q q 0 0 0 rg BT 312.10 730.60 Td (oceeds \(continued\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (33) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 704.10 Td (On December 8, 2015, our board of directors approved an estimated value per share of our common stock of $10.29 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 692.10 Td (based on the estimated value of our assets less the estimated value of our liabilities divided by the number of shares ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 680.10 Td (outstanding, all as of September 30, 2015. ) Tj ET Q q 0 0 0 rg BT 258.90 680.10 Td (W) Tj ET Q q 0 0 0 rg BT 267.54 680.10 Td (e currently expect to utilize an independent valuation firm to update the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 668.10 Td (estimated value per share in December 2016. For a full description of the assumptions and methodologies used to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 656.10 Td (value our assets and liabilities in connection with the calculation of the estimated value per share, see our ) Tj ET Q q 0 0 0 rg BT 508.42 656.10 Td (Annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 644.10 Td (Report on Form 10-K for the year ended December 31, 2015 at Part II, Item 5, “Market for Registrant’) Tj ET Q q 0 0 0 rg BT 495.65 644.10 Td (s Common ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 632.10 Td (Equity) Tj ET Q q 0 0 0 rg BT 111.52 632.10 Td (, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.”) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 614.10 Td (Our board of directors may amend, suspend or terminate the program without stockholder approval upon 30 days’) Tj ET Q q 0 0 0 rg BT 541.03 614.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 602.10 Td (notice, provided that we may increase or decrease the funding available for the redemption of shares pursuant to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 590.10 Td (share redemption program upon ten business days’) Tj ET Q q 0 0 0 rg BT 288.04 590.10 Td ( notice to our stockholders. ) Tj ET Q q 0 0 0 rg BT 398.95 590.10 Td (W) Tj ET Q q 0 0 0 rg BT 407.59 590.10 Td (e may provide this notice by including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 578.10 Td (such information \(a\) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 566.10 Td (SEC or \(b\) in a separate mailing to our stockholders.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 548.10 Td (During the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 131.05 548.10 Td (nine) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 148.26 548.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 209.09 548.10 Td (September 30, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 289.35 548.10 Td (, we funded redemptions under our share redemption program with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 536.10 Td (the net proceeds from our dividend reinvestment plan, and we redeemed shares pursuant to our share redemption ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 524.10 Td (program as follows:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 86.00 477.60 67.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 477.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 477.60 64.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 477.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 225.00 477.60 59.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 284.00 477.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 288.00 477.60 115.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 403.00 477.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 407.00 477.60 156.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 86.00 447.60 67.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 447.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 447.60 64.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 447.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 225.00 447.60 59.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 284.00 447.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 288.00 447.60 115.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 403.00 447.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 407.00 447.60 156.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 86.00 417.60 67.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 417.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 417.60 64.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 417.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 225.00 417.60 59.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 284.00 417.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 288.00 417.60 115.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 403.00 417.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 407.00 417.60 156.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 86.00 387.60 67.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 387.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 387.60 64.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 387.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 225.00 387.60 59.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 284.00 387.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 288.00 387.60 115.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 403.00 387.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 407.00 387.60 156.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 86.00 357.60 67.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 153.00 357.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 157.00 357.60 64.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 221.00 357.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 225.00 357.60 59.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 284.00 357.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 288.00 357.60 115.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 403.00 357.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 407.00 357.60 156.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 86 477.6 m 153 477.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 477.6 m 221 477.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 225 477.6 m 284 477.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 288 477.6 m 403 477.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 407 477.6 m 563 477.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 288 477.6 m 403 477.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 342.6 m 221 342.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 288 342.6 m 403 342.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 328.6 m 221 328.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 157 326.6 m 221 326.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 288 328.6 m 403 328.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 288 326.6 m 403 326.6 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 105.95 482.05 Td (Month) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 161.60 499.00 Td (T) Tj ET Q q 0 0 0 rg BT 166.78 499.00 Td (otal Number) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 170.70 490.00 Td (of Shar) Tj ET Q q 0 0 0 rg BT 198.79 490.00 Td (es) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 163.95 481.00 Td (Redeemed ) Tj ET Q BT /F2 9.00 Tf ET BT /F2 5.85 Tf ET q 0 0 0 rg BT 206.19 485.08 Td (\(1\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 238.30 499.00 Td (A) Tj ET Q q 0 0 0 rg BT 244.13 499.00 Td (verage) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 234.10 490.00 Td (Price Paid) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 230.50 481.00 Td (Per) Tj ET Q q 0 0 0 rg BT 243.82 481.00 Td ( Shar) Tj ET Q q 0 0 0 rg BT 264.42 481.00 Td (e ) Tj ET Q BT /F2 9.00 Tf ET BT /F2 5.85 Tf ET q 0 0 0 rg BT 270.66 485.08 Td (\(2\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 299.20 499.00 Td (Total Number of Shares) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 298.05 490.00 Td (Purchased as Part of the) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 290.90 481.00 Td (Share Redemption Program) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 414.95 499.00 Td (Appr) Tj ET Q q 0 0 0 rg BT 435.29 499.00 Td (oximate Dollar) Tj ET Q q 0 0 0 rg BT 492.36 499.00 Td ( ) Tj ET Q q 0 0 0 rg BT 494.45 499.00 Td (V) Tj ET Q q 0 0 0 rg BT 500.12 499.00 Td (alue of Shar) Tj ET Q q 0 0 0 rg BT 546.47 499.00 Td (es) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 411.95 490.00 Td (A) Tj ET Q q 0 0 0 rg BT 417.78 490.00 Td (vailable ) Tj ET Q q 0 0 0 rg BT 449.87 490.00 Td (That May ) Tj ET Q q 0 0 0 rg BT 490.04 490.00 Td (Y) Tj ET Q q 0 0 0 rg BT 495.54 490.00 Td (et Be Redeemed) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 410.00 481.00 Td (Under) Tj ET Q q 0 0 0 rg BT 434.34 481.00 Td ( the Shar) Tj ET Q q 0 0 0 rg BT 469.18 481.00 Td (e Redemption Pr) Tj ET Q q 0 0 0 rg BT 534.00 481.00 Td (ogram) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 467.06 Td (January 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 188.25 467.06 Td (149,287) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 227.50 467.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 260.25 467.06 Td (10.12) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 370.25 467.06 Td (149,287) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 471.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 452.06 Td (February 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 197.25 452.06 Td (6,000) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 260.25 452.06 Td (10.29) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 379.25 452.06 Td (6,000) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 456.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 437.06 Td (March 2016 ) Tj ET Q BT /F1 9.00 Tf ET BT /F1 5.85 Tf ET q 0 0 0 rg BT 134.49 441.14 Td (\(4\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 197.25 437.06 Td (4,009) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 260.25 437.06 Td (10.17) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 379.25 437.06 Td (2,097) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 441.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 422.06 Td (April 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 192.75 422.06 Td (10,932) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 260.25 422.06 Td (10.29) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 374.75 422.06 Td (10,932) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 426.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 407.06 Td (May 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 208.50 407.06 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 271.50 407.06 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.50 407.06 Td (—) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 411.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 392.06 Td (June 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 197.25 392.06 Td (4,235) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 260.25 392.06 Td (10.29) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 379.25 392.06 Td (4,235) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 396.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 377.06 Td (July 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 208.50 377.06 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 271.50 377.06 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.50 377.06 Td (—) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 381.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 362.06 Td (August 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 192.75 362.06 Td (24,251) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 260.25 362.06 Td (10.29) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 374.75 362.06 Td (24,251) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 366.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 88.50 347.06 Td (September 2016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 208.50 347.06 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 271.50 347.06 Td (—) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.50 347.06 Td (—) Tj ET Q BT /F1 5.85 Tf ET q 0 0 0 rg BT 481.05 351.70 Td (\(3\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 106.50 332.06 Td (Total) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 188.25 332.06 Td (198,714) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 370.25 332.06 Td (196,802) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 85.50 316.10 Td (_____________________) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 85.50 307.13 Td (\(1\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 91.56 303.50 Td ( ) Tj ET Q q 0 0 0 rg BT 93.42 303.50 Td (W) Tj ET Q q 0 0 0 rg BT 100.33 303.50 Td (e announced the adoption and commencement of the program on March 12, 2010. ) Tj ET Q q 0 0 0 rg BT 366.77 303.50 Td (W) Tj ET Q q 0 0 0 rg BT 373.68 303.50 Td (e announced amendments to the program on January 18, ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 293.90 Td (2013 \(which amendment became ef) Tj ET Q q 0 0 0 rg BT 199.53 293.90 Td (fective on February 17, 2013\), on February 26, 2013 \(which amendment became ef) Tj ET Q q 0 0 0 rg BT 465.75 293.90 Td (fective on March 28, 2013\), ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 284.30 Td (on January 28, 2014 \(which amendment became ef) Tj ET Q q 0 0 0 rg BT 248.41 284.30 Td (fective on February 27, 2014\) and on October 17, 2014 \(which amendment became ef) Tj ET Q q 0 0 0 rg BT 523.06 284.30 Td (fective on ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 274.70 Td (November 16, 2014\).) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 85.50 265.73 Td (\(2\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 91.56 262.10 Td ( ) Tj ET Q q 0 0 0 rg BT 93.42 262.10 Td (The prices at which we redeem shares under our share redemption program are set forth above.) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 85.50 253.13 Td (\(3\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 91.56 249.50 Td ( ) Tj ET Q q 0 0 0 rg BT 93.42 249.50 Td (W) Tj ET Q q 0 0 0 rg BT 100.33 249.50 Td (e limit the dollar value of shares that may be redeemed under our share redemption program as described above. In January 2016, we exhausted ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 239.90 Td ($1.5 million of funds available for redemptions for 2016. In ) Tj ET Q q 0 0 0 rg BT 278.35 239.90 Td (August 2016, we exhausted $0.5 million of funds available for special redemptions for ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 230.30 Td (2016. ) Tj ET Q q 0 0 0 rg BT 105.06 230.30 Td (As of ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 124.61 230.30 Td (September 30, 2016) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 188.82 230.30 Td (, we had a total of $1.6 million of outstanding and unfulfilled redemption requests, representing 154,391 shares, ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 220.70 Td (recorded in other liabilities on the accompanying consolidated balance sheets. ) Tj ET Q BT /F1 8.00 Tf ET BT /F1 5.20 Tf ET q 0 0 0 rg BT 85.50 211.73 Td (\(4\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 91.56 208.10 Td ( In addition to the redemptions under our share redemption program described above, in March 2016, we repurchased 1,912 shares of our common ) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 85.50 198.50 Td (stock at $10.03 per share for an aggregate price of $19,188.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 161.90 Td (Item 3. ) Tj ET Q q 0 0 0 rg BT 86.00 161.90 Td (Defaults upon Senior) Tj ET Q q 0 0 0 rg BT 175.83 161.90 Td ( Securities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 143.90 Td (None.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 119.90 Td (Item 4. ) Tj ET Q q 0 0 0 rg BT 85.50 119.90 Td (Mine Safety Disclosur) Tj ET Q q 0 0 0 rg BT 179.20 119.90 Td (es) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 101.90 Td (None.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 49.50 77.90 Td (Item 5. ) Tj ET Q q 0 0 0 rg BT 85.50 77.90 Td (Other) Tj ET Q q 0 0 0 rg BT 110.87 77.90 Td ( Information) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 73.50 59.90 Td (None.) Tj ET Q endstream endobj 71 0 obj <>] /Rotate 0 /Contents 72 0 R>> endobj 72 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 748.60 Td (P) Tj ET Q q 0 0 0 rg BT 55.37 748.60 Td (AR) Tj ET Q q 0 0 0 rg BT 69.46 748.60 Td (T) Tj ET Q q 0 0 0 rg BT 75.95 748.60 Td ( II. OTHER INFORMA) Tj ET Q q 0 0 0 rg BT 177.99 748.60 Td (TION \(CONTINUED\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 50.00 730.60 Td (Item 6. Exhibits ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 33.60 Td (34) Tj ET Q 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 50 697.5 m 105 697.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 109 697.5 m 325 697.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 325 697.5 m 563 697.5 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 52.50 701.23 Td (Ex.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 701.07 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 111.50 701.23 Td (Description) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 684.07 Td (3.1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 684.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 684.07 Td (Articles of Amendment and Restatement as adopted on January 8, 2010, incorporated by reference to Exhibit) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 674.07 Td (3.1 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11, Commission) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 664.07 Td (File No. 333-161449, filed January 12, 2010) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 646.07 Td (3.2) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 646.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 646.07 Td (Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 to Pre-Effective Amendment No. 4 to) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 636.07 Td (the Company’s Registration Statement on Form S-11, Commission File No. 333-161449, filed January 12, 2010) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 617.07 Td (4.1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 617.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 617.07 Td (Statement regarding restrictions on transferability of shares of common stock \(to appear on stock certificate or) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 607.07 Td (to be sent upon request and without charge to stockholders issued shares without certificates\), incorporated by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 597.07 Td (reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 587.07 Td (S-11, Commission File No. 333-161449, filed October 2, 2009) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 568.07 Td (4.2) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 568.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 568.07 Td (Third Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.4 to the) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 558.07 Td (Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013, filed May 10, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 539.07 Td (31.1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 539.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 539.07 Td (Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 520.07 Td (31.2) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 520.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 520.07 Td (Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 501.07 Td (32.1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 501.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 501.07 Td (Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 491.07 Td (Oxley Act of 2002) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 472.07 Td (32.2) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 107.50 472.07 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 472.07 Td (Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 462.07 Td (Oxley Act of 2002) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 443.07 Td (99.1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 443.07 Td (Fifth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 433.07 Td (Company’s Current Report on Form 8-K, filed October 17, 2014) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 414.07 Td (101.INS) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 414.07 Td (XBRL Instance Document) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 395.07 Td (101.SCH) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 395.07 Td (XBRL Taxonomy Extension Schema) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 376.07 Td (101.CAL) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 376.07 Td (XBRL Taxonomy Extension Calculation Linkbase) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 357.07 Td (101.DEF) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 357.07 Td (XBRL Taxonomy Extension Definition Linkbase) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 338.07 Td (101.LAB) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 338.07 Td (XBRL Taxonomy Extension Label Linkbase) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 52.50 319.07 Td (101.PRE) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 111.50 319.07 Td (XBRL Taxonomy Extension Presentation Linkbase) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 73 0 obj <>] /Rotate 0 /Contents 74 0 R>> endobj 74 0 obj <> stream BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL 0 0 1 RG /GS0 gs 0.49 w 0 i [] 0 d 1 J 1 j 3 M 50 771.2669921875 m 120.9521484375 771.2669921875 l s q 0 0 1 rg BT 50.00 772.60 Td (T) Tj ET Q q 0 0 1 rg BT 55.41 772.60 Td (able of Contents) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.00 31.60 Td (35) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 273.85 742.25 Td (SIGNA) Tj ET Q q 0 0 0 rg BT 304.78 742.25 Td (TURES) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 694.25 Td (Pursuant to the requirements of the Securities Exchange ) Tj ET Q q 0 0 0 rg BT 312.05 694.25 Td (Act of 1934, the registrant has duly caused this report to be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 50.00 682.25 Td (signed on its behalf by the undersigned thereunto duly authorized.) Tj ET Q 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 284.5 623.75 m 562.5 623.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 284.5 623.75 m 562.5 623.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 284.5 556.75 m 562.5 556.75 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 81.00 655.42 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 266.00 655.43 Td (KBS LEGACY PARTNERS APARTMENT REIT, INC.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 53.00 628.42 Td (Date: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 81.00 628.42 Td (November 10, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.00 628.42 Td (By: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 287.00 628.42 Td (/s/ ) Tj ET Q q 0 0 0 rg BT 298.77 628.42 Td (W) Tj ET Q q 0 0 0 rg BT 307.29 628.42 Td (. D) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 319.51 628.42 Td (EAN) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 335.95 628.42 Td ( H) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 345.67 628.42 Td (ENR) Tj ET Q q 0 0 0 rg BT 361.23 628.42 Td (Y) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 287.00 614.48 Td (W. Dean Henry) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 287.00 602.36 Td (Chief Executive Officer) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 287.00 590.37 Td (\(principal executive officer\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 53.00 561.42 Td (Date: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 81.00 561.42 Td (November 10, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.00 561.42 Td (By: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 287.00 561.42 Td (/s/ J) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 302.84 561.42 Td (EFFREY) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 332.63 561.42 Td ( K. ) Tj ET Q q 0 0 0 rg BT 347.17 561.42 Td (W) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 356.60 561.42 Td (ALDVOGEL) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 287.00 547.48 Td (Jeffrey K. 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