UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-K

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(Mark One)



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

For the fiscal year ended December 31, ~~2016~~2017



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

For the transition period from to

Commission file number 000-54673

______________________________________________________

KBS LEGACY PARTNERS APARTMENT REIT, INC.

(Exact Name of Registrant as Specified in Its Charter)

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Maryland		27-0668930
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
800 Newport Center Drive, Suite 700 Newport Beach, California		92660
(Address of Principal Executive Offices)		(Zip Code)

(949) 417-6500

(Registrant’s Telephone Number, Including Area Code)

______________________________________________________________________

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



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

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

Common Stock, $0.01 par value per share

______________________________________________________________________

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

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

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

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

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

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

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

If an emerging growth company, indicate4 by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

There is no established market for the Registrant’s shares of common stock. On December 89, ~~2015~~2016, the board of directors of the Registrant approved an estimated value per share of the Registrant’s common stock of $109.2935 (unaudited) based on the estimated value of the Registrant’s assets less the estimated value of the Registrant’s liabilities, divided by the number of shares outstanding, all as of September 30, ~~2015~~2016. For a full description of the methodologies used to value the Registrant’s assets and liabilities in connection with the calculation of the estimated value per share as of December 89, ~~2015~~2016, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” of the Registrant’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016. On ~~December~~April 95, ~~2016~~2017, the board of directors of the Registrant approved an estimated value per share of the Registrant’s common stock of $98.35 ~~based~~(unaudited), oneffective April 20, 2017. The estimated value per share was equal to the December 2016 estimated value per share of the Registrant’s ~~assets~~common ~~less~~stock of $9.35 (unaudited), reduced for the impact of the $1.00 per share special distribution the Registrant paid to its stockholders on May 1, 2017 in connection with the disposition of Wesley Village. For a full description of the methodologies and assumptions used in the determination of the April 2017 estimated value ofper share, see the Registrant’s ~~liabilities~~Current Report on Form 8-K, ~~divided~~filed bywith the ~~number~~SEC on April 11, 2017. On December 20, 2017, the Registrant’s board of ~~shares~~directors ~~outstanding~~approved an estimated value per share of the Registrant’s common stock of $4.40 (unaudited), ~~all~~effective as of ~~September~~December 3021, ~~2016~~2017. ~~For~~ aThe ~~full~~Registrant’s ~~description~~board of directors determined the ~~methodologies~~estimated ~~used~~value per share by subtracting the initial liquidating distribution of $4.05 per share, paid to ~~value~~the Registrant’s stockholders on or about December 27, 2017 pursuant to the Registrant’s ~~assets~~plan of complete liquidation and ~~liabilities~~distribution, from the Registrant’s estimated net proceeds from liquidation of $8.45 per share, resulting in an estimated value per share of $4.40 (unaudited). For a full description of the methodologies used in connection with the ~~calculation~~determination of, and the limitations of, the estimated value per share as of December 921, ~~2016~~2017, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information” in this Annual Report on Form 10-K.

There were approximately 20,~~607~~917,~~997~~850 shares of common stock held by non-affiliates as of June 30, ~~2016~~2017, the last business day of the Registrant’s most recently completed second fiscal quarter.

As of March 65, ~~2017~~2018, there were 2021,~~860~~026,~~094~~756 outstanding shares of common stock of the Registrant.

Table of Contents

TABLE OF CONTENTS

PART I			4
	ITEM 1.	BUSINESS	4
	ITEM 1A.	RISK FACTORS	118
	ITEM 1B.	UNRESOLVED STAFF COMMENTS	3026
	ITEM 2.	PROPERTIES	3026
	ITEM 3.	LEGAL PROCEEDINGS	3127
	ITEM 4.	MINE SAFETY DISCLOSURES	3127
PART II			3228
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	3228
	ITEM 6.	SELECTED FINANCIAL DATA	4332
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4432
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5842
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	5842
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	5942
	ITEM 9A.	CONTROLS AND PROCEDURES	5942
	ITEM 9B.	OTHER INFORMATION	5942
PART III			6043
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	6043
	ITEM 11.	EXECUTIVE COMPENSATION	6749
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	6850
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	6950
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	7656
PART IV			7758
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	7758
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

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FORWARD-LOOKING STATEMENTS

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

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

• WeAlthough ~~are~~our ~~dependent~~board onof ~~our~~directors ~~advisor~~ and ~~sub-advisor~~our tostockholders ~~manage~~have ~~our~~approved ~~investments~~the ~~and~~sale toof ~~provide~~all ~~certain~~of ~~other~~our ~~services.~~assets Weand ~~are~~our ~~dependent~~dissolution onpursuant ~~Legacy~~to ~~Partners,~~the ~~Inc.,~~terms ~~formerly~~of ~~known~~a asplan ~~Legacy~~of ~~Partners~~complete ~~Residential,~~liquidation ~~Inc.~~and dissolution (the “~~LPI~~Plan of Liquidation”), anwe ~~affiliate~~can give no assurance whether we will be able to successfully implement the Plan of Liquidation and sell our ~~sub-advisor~~remaining real estate properties, topay ~~provide~~our ~~property~~debts ~~management~~and ~~services~~distribute ~~for~~the net proceeds from liquidation to our ~~investments~~stockholders as we expect.

• ~~All~~We ofmay ~~our~~face ~~executive~~unanticipated ~~officers~~difficulties, ~~some~~delays ~~of our directors and other key real estate professionals are also officers, managers, directors, key professionals and/~~or ~~holders~~expenditures ofrelating a controlling interest in our advisor, the sub-advisor, our dealer manager and other sponsor-affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other programs and investors advised by our sponsors. Fees paid to our ~~advisor~~implementation ~~in connection with the management~~ of ~~our properties are based on~~ the ~~cost~~Plan of ~~the property~~Liquidation, ~~not~~which onmay ~~the~~reduce ~~quality~~or ofdelay ~~the~~our ~~services~~payment ~~rendered~~of toliquidating usdistributions. ~~This arrangement could result in unanticipated actions.~~

• We ~~did~~can ~~not~~give ~~raise~~no ~~the~~assurance ~~maximum~~regarding ~~offering~~the ~~amount~~timing inof ~~our public offerings. Because we raised substantially less than~~ the ~~maximum~~sale ~~offering~~of ~~amount,~~our weremaining ~~were not able to invest in as diverse a portfolio of~~ real estate properties asin weconnection ~~otherwise~~with ~~would and~~ the ~~value~~implementation of anthe ~~investment~~Plan inof usLiquidation, ~~will vary more widely with~~ the ~~performance~~sale ofprices ~~specific~~we ~~assets.~~will ~~There~~receive isfor asuch ~~greater~~properties ~~risk~~and ~~that~~the ~~stockholders~~amount ~~will~~and ~~lose~~timing ~~money~~of inany ~~their~~additional ~~investment~~liquidating indistributions ~~us, as~~ we ~~have~~pay ~~less~~to ~~diversity in~~ our ~~portfolio~~stockholders.

• We ~~pay~~may ~~substantial~~face ~~fees~~risks toassociated ~~and~~with ~~expenses~~legal ~~of our advisor and its affiliates and~~proceedings, inincluding ~~connection~~stockholder ~~with our public offerings~~litigation, ~~we paid substantial fees to participating broker-dealers. These payments increase the risk~~ that ~~our~~may ~~stockholders~~be ~~will~~instituted ~~not~~against ~~earn a profit on their investment in~~ us ~~and~~related ~~increase~~to the ~~risk~~Plan of ~~loss to our stockholders~~Liquidation.

• ~~From~~Disruptions ~~time~~in to time during our operational stage, we have used proceeds from financings to fund distributions. Our organizational documents permit us to pay distributions from any source, including offering proceeds, which may constitute a return of capital. We have not established a limit on the ~~amount~~financial ofmarkets ~~distributions~~and ~~that~~uncertain weeconomic ~~may~~conditions ~~fund~~could ~~from~~adversely ~~sources~~affect ~~other than from cash flows from operations. In addition, depending on~~ the ~~number~~implementation of our ~~properties~~Plan ~~we sell in connection with our implementation~~ of ~~our strategic alternatives, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage~~Liquidation.

• We ~~may~~are ~~incur~~dependent ~~debt~~on ~~until~~KBS ~~our~~Capital ~~total~~Advisors ~~liabilities~~LLC ~~would~~(“KBS ~~exceed~~Capital ~~75%~~Advisors”), ofour ~~the~~advisor, ~~cost~~and of our ~~tangible~~sub-advisor, ~~assets~~KBS-Legacy ~~(before~~Apartment ~~deducting~~Community ~~depreciation~~REIT ~~and~~Venture, ~~other~~LLC ~~non-cash~~(the ~~reserves~~“Sub-Advisor”), ~~and~~which weis ~~may~~a ~~exceed~~joint ~~this~~venture ~~limit~~among ~~with~~KBS ~~the~~Capital ~~approval~~Advisors ofand ~~the~~Legacy ~~conflicts~~Partners ~~committee~~Residential ofRealty ~~our~~LLC ~~board~~(“LPRR ofLLC”), ~~directors.~~the Toco-manager of the ~~extent~~Sub-Advisor, ~~financing~~to inmanage ~~excess~~our ofinvestments, ~~this~~to ~~limit~~provide iscertain ~~available~~other onservices ~~attractive~~and ~~terms,~~to ~~our~~carry ~~conflicts~~out ~~committee~~our ~~may~~liquidation ~~approve~~and ~~debt~~dissolution ~~such~~pursuant ~~that~~to ~~our~~the ~~total~~Plan ~~liabilities~~of ~~would~~Liquidation. ~~exceed~~We ~~this~~are ~~limit.~~dependent ~~High~~on ~~debt~~Legacy ~~levels~~Partners, ~~could~~Inc., ~~limit~~formerly ~~the~~known ~~amount~~as ofLegacy ~~cash~~Partners weResidential, ~~have~~Inc. ~~available~~(“LPI”), toan ~~distribute~~affiliate ~~and~~of ~~could~~the ~~result~~Sub-Advisor, into aprovide ~~decline~~property inmanagement ~~the~~services ~~value~~for ofour anremaining ~~investment~~real inestate usproperties.

• ~~Disruptions~~All of our executive officers, some of our directors and other key real estate professionals are also officers, managers, directors, key professionals and/or holders of a controlling interest in our advisor, the ~~financial~~Sub-Advisor, ~~markets~~KBS Capital Markets Group LLC, the entity that acted as our dealer manager, our property manager and ~~uncertain~~other ~~economic~~sponsor-affiliated ~~conditions~~entities. ~~could~~As ~~adversely~~a ~~affect~~result, they face conflicts of interest, including significant conflicts created by our ~~ability~~advisor’s and our property manager’s compensation arrangements with us and other programs and investors advised by our sponsors. Fees paid to ~~implement~~our advisor in connection with the management of our ~~business~~properties ~~strategy~~are ~~and~~based ~~generate~~on ~~returns~~the cost of the property, not on the quality of the services rendered to ~~stockholders~~us. This arrangement could result in unanticipated actions.

• We ~~depend~~pay onsubstantial ~~tenants~~fees ~~for~~to ~~our~~and ~~revenue.~~expenses ~~Revenues~~of ~~from~~ our ~~real~~advisor ~~property~~and ~~investments~~its ~~could~~affiliates ~~decrease~~and ~~due~~our toproperty amanager ~~reduction~~and, in ~~tenants~~connection ~~(caused~~with byour ~~factors~~public ~~including~~offerings, ~~but~~we ~~not~~paid ~~limited~~substantial fees to, ~~tenant~~participating ~~defaults~~broker-dealers. orThese ~~early~~payments ~~termination~~increase orthe ~~non-renewal~~risk ofthat ~~existing~~our ~~tenant~~stockholders ~~leases)~~will ~~and/or~~not ~~lower~~earn ~~rental~~a ~~rates,~~profit ~~limiting~~on ~~our~~their ~~ability~~investment toand ~~pay~~increase ~~distributions~~the risk of loss to our stockholders.

•

We depend on tenants for our revenue. Revenues from our remaining real estate properties could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults or early termination or non-renewal of existing tenant leases) and/or lower rental rates, reducing our stockholder’s overall return on their investment and the amount of any additional liquidating distributions we pay to our stockholders.

Table of Contents

• ~~During~~On ~~any~~December ~~calendar year~~19, ~~once we have redeemed $1.5 million of shares under our share redemption program~~2017, ~~including shares redeemed~~ in connection with athe ~~stockholder’s~~implementation ~~death,~~of ~~“qualifying~~the ~~disability~~Plan of Liquidation,” orour ~~“determination~~board of ~~incompetence”~~directors ~~(both~~approved asthe ~~defined~~termination inof ~~the~~our share redemption program ~~and~~effective ~~together~~as ~~with~~of ~~redemptions~~January ~~in connection with a stockholder’s death~~21, ~~“Special~~2018. ~~Redemptions”)~~Thus, the ~~remaining~~last ~~$0.5~~redemption ~~million~~date ofunder the ~~$2.0~~share ~~million~~redemption ~~annual~~program ~~limit~~would ~~shall~~have bebeen ~~reserved~~December ~~exclusively~~29, ~~for Special Redemptions~~2017. InHowever, ~~January~~because ~~2016,~~of wecertain ~~exhausted~~limitations on the ~~$1.5~~dollar ~~million~~value of ~~funds~~shares ~~available~~that ~~for~~could ~~all~~have ~~redemptions~~been ~~for~~redeemed ~~2016~~under ~~and~~our inshare ~~August~~redemption ~~2016~~program, we exhausted ~~the remaining $0.5 million of~~ funds available for ~~Special~~all ~~Redemptions~~redemptions for ~~2016.~~the Asremainder of ~~December~~2017 ~~31,~~in ~~2016,~~January we2017 ~~had $1.4 million of outstanding~~ and ~~unfulfilled~~funds ~~ordinary~~available ~~redemption~~for ~~requests~~redemptions ~~and~~in ~~$0.3~~connection ~~million~~with ofa ~~outstanding~~stockholder’s ~~and~~death, ~~unfulfilled~~“qualifying ~~Special Redemption requests. The annual limitation was reset on January 1~~disability,” ~~2017,~~or ~~and~~“determination ~~we had an aggregate~~ of ~~$2.0~~incompetence” ~~million~~(each ofas ~~funds~~defined ~~available for all redemptions, subject to the limitations~~ in the share redemption program, ~~including~~document ~~the~~and, ~~requirement~~together ~~that~~with ~~the first $1.5 million of funds is available for all~~ redemptions ~~and~~in ~~the~~connection ~~last~~with ~~$0.5~~a ~~million~~stockholder’s isdeath, ~~available solely for~~ “Special Redemptions.”) ~~We exhausted $1.5 million of funds available~~ for ~~all~~the ~~redemptions~~remainder ~~for 2017 in January 2017 and $0.3 million~~ of ~~funds available for Special Redemptions for~~ 2017 in ~~January~~August ~~and February~~ 2017. As such, we ~~will~~were ~~only~~unable ~~be able~~ to ~~process~~redeem ~~$0.2~~any ~~million~~shares ofon ~~redemption~~December ~~requests~~29, ~~related to Special Redemptions for the remainder of~~ 2017.

• ~~Our~~During ~~Special~~the ~~Committee~~calendar ~~(defined~~year ~~below)~~ended ~~has~~December ~~completed~~31, ~~its analysis of potential strategic alternatives and as a result~~2017, we ~~anticipate~~disposed ~~that we will pursue certain strategic asset sales and hold the majority~~ of ~~our~~seven real estate properties ~~in an effort to create additional stockholder value, while still paying ongoing distributions~~. WeAs ~~intend~~a toresult ~~use some~~ of ~~the~~our ~~net~~disposition ~~proceeds~~activity, ~~after~~our ~~paying~~general ~~sale-related~~and ~~expenses~~administrative ~~including~~expenses, inwhich ~~certain~~are ~~cases,~~not ~~paying~~directly ~~off the notes payable~~ related to ~~such~~the ~~assets,~~size ~~from~~of ~~any~~our ~~strategic asset sales we close to: (i) make renovations at certain remaining~~ real estate ~~properties~~portfolio, ~~which~~have weincreased ~~believe~~significantly ~~could~~as ~~increase~~a ~~property-level~~percentage ~~net~~of ~~operating~~our ~~income~~cash ~~(“NOI”)~~flow ~~and~~from ~~create~~operations ~~additional stockholder value;~~ and ~~(ii)~~will ~~pay~~continue ato ~~special~~increase ~~distribution~~ to ~~our~~the ~~stockholders.~~extent ~~However,~~we ~~there~~sell isadditional noassets ~~assurance~~pursuant ~~that this process will result in stockholder liquidity, or provide a return~~ to ~~stockholders~~the ~~that~~Plan ~~equals~~of ~~or exceeds our estimated value per share~~Liquidation.

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

Table of Contents

PART I


ITEM 1.	BUSINESS

Overview

KBS Legacy Partners Apartment REIT, Inc. (the “Company”) was formed on July 31, 2009 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010 and intends to continue to operate in such a manner. As used herein, the terms “we,” “our” and “us” refer to the Company and as required by context, KBS Legacy Partners Limited Partnership, a Delaware limited partnership formed on August 4, 2009 (the “Operating Partnership”), and its subsidiaries. We conduct our business primarily through our Operating Partnership, of which we are the sole general partner.

WeKBS ~~invested~~Capital inAdvisors is our external advisor. As our advisor, KBS Capital Advisors is responsible for managing our day-to-day operations and ~~manage~~our aremaining ~~portfolio~~real ofestate ~~high~~properties. ~~quality~~Subject ~~apartment~~to ~~communities~~the ~~located~~terms ~~throughout~~of the ~~United~~advisory ~~States~~agreement between KBS Capital Advisors and us, KBS Capital Advisors delegates certain advisory duties to the Sub-Advisor. ~~Our~~ ~~portfolio~~Notwithstanding ~~consists~~such delegation to the Sub-Advisor, KBS Capital Advisors retains ultimate responsibility for the performance of ~~“core”~~all ~~apartment~~the ~~communities~~matters ~~that~~entrusted ~~were~~to ~~already~~it ~~well-positioned~~under ~~and~~the ~~producing~~advisory ~~rental~~agreement. ~~income~~KBS atCapital ~~acquisition~~Advisors made recommendations on all of our investments to our board of directors. As A majority of ~~December 31~~our board of directors, ~~2016~~including a majority of our independent directors acting through the conflicts committee, weapproved ~~owned~~our ~~11 apartment~~investments. ~~complexes~~KBS Capital Advisors, either directly or through the Sub-Advisor, also provides asset management, marketing, investor-relations and other administrative services on our behalf. LPI is the property manager for our remaining real estate properties. We have no paid employees.

~~KBS~~Peter ~~Capital Advisors LLC (“KBS Capital Advisors”) is our external advisor~~M. As ~~our advisor~~Bren, ~~KBS Capital Advisors is responsible for managing~~ our ~~day-to-day~~President ~~operations~~ and ~~our~~one ~~portfolio~~ of ~~real~~our ~~estate~~directors, ~~assets~~Keith D. ~~Subject~~ toHall, ~~the~~Peter ~~terms~~McMillan ofIII, ~~the~~one ~~advisory~~of ~~agreement~~our ~~between~~Executive ~~KBS~~Vice ~~Capital~~Presidents, ~~Advisors~~ and ~~us,~~Charles ~~KBS~~J. ~~Capital~~Schreiber, ~~Advisors~~Jr. ~~delegates~~control ~~certain~~and ~~advisory~~indirectly ~~duties~~own ~~to a sub-advisor,~~ KBS~~-Legacy~~ ~~Apartment~~Holdings ~~Community REIT Venture,~~ LLC ~~(the “Sub-Advisor”)~~, which is athe ~~joint~~sole ~~venture~~owner ~~among~~of ~~KBS~~our ~~Capital~~advisor ~~Advisors~~ and ~~Legacy Partners Residential Realty LLC (“LPRR LLC”). LPRR LLC was formed in~~ the ~~State~~entity ofthat ~~Delaware~~acted onas ~~July~~our ~~10,~~dealer ~~2009 to be the co-~~manager ~~of the Sub-Advisor~~. ~~Notwithstanding~~ ~~such~~We ~~delegation~~refer to ~~the Sub-Advisor,~~ KBS ~~Capital~~Holdings ~~Advisors~~LLC ~~retains~~as ~~ultimate~~our ~~responsibility~~“KBS ~~for~~sponsor.” Indirectly ~~the~~through ~~performance~~their oftrusts, ~~all~~W. ~~the~~Dean ~~matters~~Henry, ~~entrusted~~our toChairman itof ~~under~~ the ~~advisory~~Board, ~~agreement. KBS~~Chief ~~Capital~~Executive ~~Advisors~~Officer ~~made~~and ~~recommendations~~one onof ~~all investments to~~ our ~~board~~directors, ofGuy ~~directors~~K. A ~~majority~~Hays, one of our ~~board~~Executive ofVice ~~directors~~Presidents, ~~including~~and aC. ~~majority~~Preston ofButcher, our ~~independent~~former ~~directors~~Chairman ~~acting~~of ~~through~~ the ~~conflicts committee~~Board, ~~approved~~former ~~our~~Chief ~~investments. KBS~~Executive ~~Capital~~Officer ~~Advisors,~~and ~~either~~a ~~directly~~former ~~or through the Sub-Advisor~~director, ~~also~~own ~~provides~~and ~~asset-management,~~control ~~marketing,~~LPRR ~~investor-relations~~LLC and ~~other administrative services on our behalf.~~ LPI. isTogether ~~the~~with ~~property~~LPRR ~~manager~~LLC, ~~for~~we ~~our~~refer ~~real~~to ~~estate property investments~~Messrs. ~~Our~~ ~~Sub-Advisor~~Butcher, ~~owns~~Henry ~~20,000~~and ~~shares~~Hays ofas our ~~common~~“Legacy ~~stock~~sponsors. ~~We have no paid employees.~~ ”

OnAs ~~March~~of 12December 31, ~~2010~~2017, we ~~commenced~~owned ~~our~~four apartment ~~initial~~communities, ~~public~~all ~~offering~~ of ~~280,000,000 shares~~which ofwere ~~common~~under ~~stock~~contract ~~for~~to ~~sale~~sell to(the “Core-Portfolio Properties” and the ~~public,~~sale of ~~which~~such 80real estate properties,~~000~~ the “Core-Portfolio Sale”). On February 8,~~000 shares~~ ~~were~~2018, ~~offered~~we ~~pursuant~~completed tothe ~~our~~sale ~~dividend~~of ~~reinvestment~~two ~~plan~~of (the ~~“Initial~~Core-Portfolio ~~Offering”)~~Properties. We ~~retained~~See ~~KBS~~Part ~~Capital~~II, ~~Markets~~Item ~~Group~~7 ~~LLC (~~“~~KBS~~Management’s ~~Capital~~Discussion ~~Markets~~and ~~Group”),~~Analysis anof ~~affiliate~~Financial Condition and Results of ~~our~~Operations ~~advisor,~~– toSubsequent ~~serve~~Events as– ~~the~~Dispositions ~~dealer~~Subsequent ~~manager~~to ~~for~~December ~~the~~31, ~~Initial~~2017.” We ~~Offering~~anticipate ~~pursuant~~completing tothe asale ~~dealer~~of ~~manager~~our ~~agreement~~remaining ~~dated~~real ~~March~~estate ~~12,~~properties ~~2010~~by (the ~~“Initial~~end ~~Dealer~~of ~~Manager~~the ~~Agreement”).~~first quarter of 2018.

On March 12, 2010, we commenced our initial public offering of 280,000,000 shares of common stock for sale to the public, of which 80,000,000 shares were offered pursuant to our dividend reinvestment plan (the “Initial Offering”). On May 31, 2012, we filed a registration statement on Form S-11 with the SEC to register a follow-on public offering (the “Follow-on Offering” and together with the Initial Offering, the “Offerings”). Pursuant to the registration statement, as amended, we registered up to an additional $2,000,000,000 of shares of common stock for sale to the public and up to an additional $760,000,000 of shares pursuant to our dividend reinvestment plan. The SEC declared our registration statement for the Follow-on Offering effective on March 8, 2013. On March 12, 2013, we ceased offering shares pursuant to the Initial Offering and on March 13, 2013, we commenced offering shares to the public pursuant to the Follow-on Offering. We ceased offering shares of common stock in the primary Follow-on Offering on March 31, 2014. We terminated our dividend reinvestment plan effective as of August 20, 2017. Through its completion on March 12, 2013, we sold 18,088,084 shares of common stock in the Initial Offering for gross offering proceeds of $179.2 million, including 368,872 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $3.5 million.

WeIn ~~retained~~our ~~KBS~~primary ~~Capital Markets Group to serve as the dealer manager for the~~ Follow-on Offering, ~~pursuant~~we tosold ~~a dealer manager agreement dated March 8~~3,943,266 ~~2013~~shares ~~(the~~of ~~“Follow-on~~common ~~Dealer~~stock ~~Manager~~for ~~Agreement”~~gross ~~and~~offering ~~together~~proceeds ~~with~~of ~~the Initial Dealer Manager Agreement, the “Dealer Manager Agreements”)~~$39. On7 ~~March 12~~million, ~~2013,~~including ~~we ceased offering shares pursuant to the Initial Offering and on March 13~~2, ~~2013~~447,068 ~~we commenced offering~~ shares ~~to the public pursuant to the Follow-on Offering. We ceased offering shares~~ of common stock inunder the ~~primary~~dividend ~~Follow-on~~reinvestment ~~Offering~~plan onfor ~~March~~gross ~~31,~~offering ~~2014~~proceeds ~~and~~of ~~completed subscription processing procedures on April 30, 2014~~$23. We9 ~~continue to offer shares under our dividend reinvestment plan~~million.

~~Through~~We ~~its~~sold ~~completion~~an onaggregate ~~March~~of 1222, ~~2013~~031, ~~we sold 18,088,084~~ 350 shares of common stock in the ~~Initial~~Offerings ~~Offering~~ for gross offering proceeds of $~~179~~218.29 million, including ~~368~~an aggregate of 2,~~872~~815,940 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $327.54 million. We ~~sold~~Also ~~1,496,198~~as ~~shares~~ of ~~common~~December 31, ~~stock~~2017, inwe ~~our~~had ~~primary~~redeemed ~~Follow-on~~1,024,594 ~~Offering~~shares ~~for~~sold ~~gross~~in ~~offering~~the ~~proceeds~~Offerings offor $159.9 million.

As of December 31, 2016, we had sold an aggregate of 21,683,960 shares of common stock in the Offerings for gross offering proceeds of $215.9 million, including an aggregate of 2,468,550 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $24.4 million. Also as of December 31, 2016, we had redeemed 807,692 shares sold in the Offerings for $7.9 million. We have used substantially all of the net proceeds from the primary Offerings to invest in and manage a portfolio of high quality apartment communities located throughout the United States as described above.

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AsPlan ~~described~~of further herein, we have entered into agreements with certain affiliates pursuant to which they provide services to us. Peter M. Bren, Keith D. Hall, Peter McMillan III and Charles J. Schreiber, Jr. control and indirectly own KBS Capital Advisors and KBS Capital Markets Group. We refer to these individuals as our “KBS sponsors.” Through their trusts, C. Preston Butcher, W. Dean Henry and Guy K. Hays own and control LPRR LLC. We refer to these individuals as our “Legacy sponsors.”Liquidation

~~Objectives~~On January 21, 2016, our board of directors formed a special committee (the “Special Committee”) composed of all of our independent directors to explore the availability of strategic alternatives involving our company with the goal of providing liquidity options for our stockholders while preserving and ~~Strategies~~maximizing overall returns on our investment portfolio. As part of the process of exploring strategic alternatives, on April 5, 2016, the Special Committee engaged Robert A. Stanger & Co., Inc. (“Stanger”) to act as our financial advisor and to assist us and the Special Committee with this process. Under the terms of the engagement, Stanger provided various financial advisory services, as requested by the Special Committee as customary for an engagement in connection with exploring strategic alternatives. Subsequently, we engaged Holliday Fenoglio Fowler, L.P., a leading provider of commercial real estate and capital markets services and an unaffiliated independent third party, to market our real estate properties for sale.

~~Our~~On ~~primary~~August ~~investment~~14, ~~objectives~~2017, ~~are:~~in connection with a review of potential strategic alternatives available to us, our board of directors unanimously approved the sale of all of our real estate properties and our dissolution pursuant to the terms of the Plan of Liquidation. The principal purpose of the Plan of Liquidation is to maximize stockholder value by selling our real estate properties, paying our debts and distributing the net proceeds from liquidation to our stockholders. On December 19, 2017, our stockholders approved the Plan of Liquidation. For more information, see the Plan of Liquidation, which is included as an exhibit to this Annual Report on Form 10-K.

•In accordance with the Plan of Liquidation, our objectives for 2018 are to ~~provide~~(i) complete the orderly liquidation of our company pursuant to the Plan of Liquidation; and (ii) maximize stockholder value by selling all of our remaining real estate properties, paying our debts, providing for the payment of unknown or contingent liabilities, distributing the net proceeds from liquidation to our stockholders ~~with~~and ~~attractive~~winding up our operations and ~~stable~~dissolving ~~cash~~our company. We expect to complete these activities within 12 months after the December 19, 2017 stockholder approval of the Plan of Liquidation. While pursuing our liquidation pursuant to the Plan of Liquidation, we intend to continue to manage our remaining real estate properties with the goal of maximizing stockholder value. We expect to pay multiple liquidating distributions;, including the Initial Liquidating Distribution (defined below), to our stockholders during the liquidation process and to pay the final liquidating distribution after we sell our remaining real estate properties, pay all of our known liabilities and provide for unknown liabilities.

•However, we can give no assurance regarding the timing of the sale of our remaining real estate properties in connection with the implementation of the Plan of Liquidation, the sale prices we will receive for such properties, and the amount or timing of any additional liquidating distributions we pay to ~~preserve~~our stockholders. If we cannot sell our remaining real estate properties and ~~return~~pay our debts within 24 months from December 19, 2017, or if the board of directors and the Special Committee determine that it is otherwise advisable to do so, pursuant to the Plan of Liquidation, we may transfer and assign our remaining assets to a liquidating trust. Upon such transfer and assignment, our stockholders’ ~~capital~~will ~~contributions~~receive beneficial interests in the liquidating trust.

~~Our~~Pursuant ~~goals~~to ~~and~~the ~~objectives~~Plan ~~for~~of ~~2017~~Liquidation, ~~include~~on ~~the~~December ~~following:~~20, ~~(i)~~2017, ~~making~~our ~~strategic~~board ~~asset~~of ~~sales~~directors asauthorized ~~described~~an ~~above~~initial ~~and~~liquidating ~~using~~distribution ain ~~portion~~the amount of ~~the~~$4.05 ~~proceeds~~per toshare ~~pay~~of acommon ~~special~~stock ~~distribution~~ to our stockholders; ~~(ii)~~of ~~undertaking~~record ~~renovations~~as atof ~~certain~~the ~~assets~~close toof ~~create~~business ~~additional~~on ~~stockholder~~December ~~value;~~21, ~~(iii)~~2017 ~~maintaining portfolio occupancy;~~ (~~iv)~~the ~~increasing~~“Initial ~~portfolio~~Liquidating ~~net cash flow and modified funds from operations (“MFFO~~Distribution”);. ~~and~~The ~~(v)~~Initial ~~increasing~~Liquidating ~~the~~Distribution ~~net~~was ~~asset~~paid ~~value~~on ofDecember ~~our portfolio. However~~27, we2017 ~~can~~and ~~give~~was nofunded ~~assurances~~from ~~that~~proceeds wefrom ~~will~~real beestate ~~successful~~property insales. ~~implementing~~We ~~any~~do ofnot ~~these~~expect ~~goals~~to orpay ~~objectives~~regular ordistributions ~~that~~during the ~~successful~~liquidation ~~implementation of any or all of such goals or objectives will result in additional stockholder value or the payment of special distributions to our stockholders~~process.

OnReal ~~January~~Estate 21, 2016, our board of directors formed a special committee (the “Special Committee”) composed of all of our independent directors to explore the availability of strategic alternatives involving our company with the goal of providing liquidity options for our stockholders while preserving and maximizing overall returns on our investment portfolio. While we conduct this process, we remain 100% focused on managing our properties.Portfolio

AsWe ~~part~~made ofall ~~the process~~ of ~~exploring~~our ~~strategic~~equity ~~alternatives,~~investments onin ~~April~~core 5,apartment ~~2016,~~communities ~~the~~that ~~Special~~had ~~Committee~~relatively ~~engaged~~low ~~Robert~~investment A.risk ~~Stanger & Co.~~characteristics, ~~Inc. (“Stanger”) to act as our financial advisor and to assist us and the Special Committee~~ with ~~this process. Under~~ the ~~terms~~goal of ~~the~~attaining engagement, Stanger provided various financial advisory services, as requested by the Special Committee as customary for an engagement in connection with exploring strategic alternatives. Subsequently, we engaged Holliday Fenoglio Fowler, L.P., a ~~leading~~portfolio ~~provider~~ of ~~commercial~~income-producing ~~real estate and capital markets services and an unaffiliated independent third party (“HFF”), to market our real estate~~ properties for sale. We are not obligated to enter into any particular transaction or any transaction at all. HFF has completed the initial marketing of our real estate properties and received offers for both our entire portfolio and individual properties. Based on feedback received during the marketing process, we anticipate that weprovide ~~will~~attractive ~~pursue certain strategic asset sales~~ and ~~hold~~stable ~~the~~returns ~~majority of our real estate properties in an effort~~ to ~~create additional stockholder value, while still paying ongoing distributions. We believe that holding the majority of~~ our ~~real estate properties will allow certain debt prepayment obligations to decrease as the loans secured by those properties move closer to maturity, which should create additional stockholder value~~investors. ~~Depending on the number of properties sold, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage.~~

WeAs ~~intend to use some~~ of ~~the net proceeds after paying sale-related expenses including~~December 31, ~~in certain cases~~2017, ~~paying~~we ~~off~~owned the ~~notes~~Core-Portfolio ~~payable related to such assets~~Properties, ~~from~~all ~~any~~of ~~strategic~~which ~~asset~~were ~~sales~~under wecontract ~~close~~ to: ~~(i)~~sell. ~~make~~On ~~renovations~~February 8, ~~at certain remaining real estate properties~~2018, ~~which~~ we ~~believe~~completed ~~could~~the ~~increase~~sale ~~property-level~~of ~~NOI~~two ~~and~~of ~~create~~the ~~additional~~Core-Portfolio ~~stockholder~~Properties. ~~value;~~See ~~and~~Part ~~(ii)~~II, ~~pay~~Item a7 ~~special~~“Management’s ~~distribution~~Discussion toand ~~our~~Analysis ~~stockholders.~~of ~~However,~~Financial ~~there~~Condition isand noResults ~~assurance~~of ~~that~~Operations ~~this~~— ~~process~~Subsequent ~~will~~Events ~~result~~— inDispositions ~~stockholder~~Subsequent ~~liquidity, or provide a return~~ to ~~stockholders~~December 31, ~~that equals or exceeds our estimated value per share~~2017.” We ~~Any~~anticipate ~~future~~completing ~~special distributions we pay from~~ the ~~proceeds~~sale of ~~future dispositions will reduce~~ our ~~estimated~~remaining ~~value~~real ~~per~~estate ~~share~~properties ~~and~~by ~~this~~the ~~reduction~~end ~~will~~of bethe ~~reflected~~first inquarter ~~our~~of ~~updated estimated value per share, which we expect to update no later than December 2017~~2018.

On December 29, 2016, we, through the Owner (defined below in Part I, Item 2), entered into an agreement for purchase and sale (the “Wesley Village Agreement”) for the sale of Wesley Village (defined below in Part I, Item 2) to Bluerock Real Estate, LLC (the “Purchaser”). The Wesley Village Agreement was subsequently terminated, reinstated and amended and on March 9, 2017, we completed the sale of Wesley Village. For information relating to the Wesley Village Agreement, see Part I, Item 2, “Properties - Wesley Village Agreement.” For information relating to the termination and reinstatement of, and the amendments to, the Wesley Village Agreement, and the subsequent sale of Wesley Village, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Subsequent Events - Termination and Reinstatement of, and Amendments to, the Wesley Village Agreement; Disposition of Wesley Village.”

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~~Real~~The ~~Estate~~four Core-Portfolio Properties encompass 1.4 million rentable square feet. The following table illustrates our geographic diversification based on total occupied units and total annualized base rent as of December 31, 2017.

We made all of our equity investments in core apartment communities that have relatively low investment risk characteristics, with the goal of attaining a portfolio of income-producing properties that provide attractive and stable returns to our investors. Core apartment communities are high quality, well positioned, existing properties producing rental income, generally with at least 85% occupancy. Such properties are generally newer properties that are well-located in major urban or suburban submarkets. Core apartment communities generally have fewer near-term capital expenditure requirements (with minor deferred maintenance or cosmetic improvements, if any, required) and have the demonstrated ability to produce high occupancies and stable cash flows. As a result, core apartment communities tend to have a relatively low investment risk profile.



Location (State)	Annualized Base Rent (in thousands) ⁽¹⁾		% of Portfolio Annualized Base Rent		Occupied Units		% of Portfolio Occupied Units
Maryland ⁽²⁾	$	9,450	49	%	$	523	44	%
Texas ⁽³⁾	6,472		34	%	479		40	%
Missouri	3,371		17	%	183		16	%
	$	19,293	100	%	$	1,185	100	%

As of December 31, 2016, we owned 11 apartment communities. The properties we owned as of December 31, 2016 encompass 3.1 million rentable square feet. The following charts illustrate our geographic diversification based on total occupied units and total annualized base rent as of December 31, 2016._____________________

We(1) ~~generally~~Annualized ~~intend~~base torent ~~hold~~represents ~~our~~annualized ~~core~~contractual ~~properties~~rent ~~for~~from ~~five~~tenant toleases ten years, which we believe is a reasonable period to enable us to capitalize on the potential for increased income and capital appreciation of properties. Our Legacy sponsors developed a well-defined exit strategy for each of our investments and periodically perform a hold-sell analysis on each asset in ~~order~~effect toas ~~determine the optimal time to sell the asset and generate a strong return for our stockholders. Periodic reviews~~ of ~~each~~December 31, ~~asset~~2017, ~~focus~~adjusted ~~on the remaining available value enhancement opportunities for the asset and the demand for the asset in the marketplace. Economic and market conditions may influence us~~ to ~~hold~~reflect ~~our~~any ~~investments~~contractual ~~for~~tenant ~~different periods of time~~concessions. We may sell an asset before the end of the expected holding period if we believe that market conditions and asset positioning have maximized its value to us or the sale of the asset would otherwise be in the best interests of our stockholders.

~~Description~~(2) ofOn ~~Our~~February ~~Apartment~~8, ~~Leases. We~~2018, ~~expect~~we ~~that~~sold ~~all~~Crystal ofPark ~~our~~at ~~apartment communities will lease to their tenants under similar lease terms~~Waterford. ~~Consistent~~See ~~with~~Part ~~the multifamily industry~~II, weItem ~~anticipate~~7 ~~that~~“Management’s ~~our~~Discussion ~~lease~~and ~~terms~~Analysis ~~will~~of ~~range~~Financial ~~from~~Condition ~~month-to-month~~and upResults toof ~~fourteen~~Operations ~~months. These~~– ~~terms~~Subsequent ~~provide~~Events ~~maximum~~– ~~flexibility~~Dispositions ~~for~~Subsequent us to ~~implement~~December ~~rental~~31, ~~increases~~2017 ~~when~~– ~~the~~Disposition ~~market~~of ~~will~~Crystal ~~bear~~Park ~~such~~at ~~increases~~Waterford. ”

6(3) On February 8, 2018, we sold Legacy at Valley Ranch. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events – Dispositions Subsequent to December 31, 2017 – Disposition of Legacy at Valley Ranch.”

~~Table~~Description of ~~Contents~~Our Apartment Leases. We expect that our remaining real estate properties will lease to their tenants under similar lease terms. Consistent with the multifamily industry, we anticipate that our lease terms will range from month-to-month up to fourteen months. These terms provide maximum flexibility for us to implement rental increases when the market will bear such increases.

Property Management and Other Services. In connection with certain of our property acquisitions, we, through separate indirect wholly owned subsidiaries, entered into separate Property Management — Account Services Agreements (each, a “Services Agreement”) with Legacy Partners Residential L.P. (“LPR”), an affiliate of the Sub-Advisor, pursuant to which LPR provided certain account maintenance and bookkeeping services related to these properties. Under each Services Agreement, we paid LPR a monthly fee in an amount equal to 1% of each property’s gross monthly collections. Unless otherwise provided for in an approved operating budget for a property, LPR was responsible for all expenses that it incurred in rendering services pursuant to each Services Agreement. Each Services Agreement had an initial term of one year and continued thereafter on a month-to-month basis unless either party gave 30 days’ prior written notice of its desire to terminate the Services Agreement. Notwithstanding the foregoing, we had the right to terminate each Services Agreement at any time without cause upon 30 days’ prior written notice to LPR. As described below, as of June 9, 2015, each of the Services Agreements had been terminated.

During the year ended December 31, 2015, we, through indirect wholly owned subsidiaries (each, a “Property Owner”), entered into property management agreements with LPI (each, a “Property Management Agreement”), pursuant to which LPI provides, among other services, general property management services, including bookkeeping and accounting services, construction management services and budgeting and business plans for our properties, as follows:

Property Name	Effective Date	Management Fee Percentage
Watertower Apartments	04/07/2015	2.75%
Crystal Park at Waterford	04/14/2015	3.00%
The Residence at Waterstone	04/28/2015	3.00%
Lofts at the Highlands	05/05/2015	3.00%
Legacy at Martin’s Point	05/12/2015	3.00%
Poplar Creek	05/14/2015	3.00%
Wesley Village	05/19/2015	3.00%
Legacy Grand at Concord	05/21/2015	3.00%
Millennium Apartment Homes (1)	05/27/2015	3.00%
Legacy Crescent Park (1)	05/29/2015	3.00%
Legacy at Valley Ranch	06/09/2015	3.00%

____________________

(1) Under the Property Management Agreement, the Property Owner will pay LPI the Management Fee Percentage in an amount equal to the greater of (a) 3% of the Gross Monthly Collections (as defined in the Property Management Agreement) or (b) $4,000 per month.

Under the Property Management Agreements, each Property Owner pays LPI: (i) a monthly fee based on a percentage (as described in the table above, the “Management Fee Percentage”) of the Gross Monthly Collections (as defined in each Property Management Agreement), (ii) a construction supervision fee equal to a percentage of construction costs to the extent overseen by LPI and as further detailed in each Property Management Agreement, (iii) a leasing commission at a rate to be agreed upon between the Property Owner and LPI for executed retail leases that were procured or obtained by LPI, (iv) certain reimbursements if included in an approved capital budget and (v) certain reimbursements if included in the approved operating budget, including the reimbursement of the salaries and benefits for on-site personnel. Unless otherwise provided for in an approved operating budget, LPI is responsible for all expenses that it incurs in rendering services pursuant to each Property Management Agreement. Each Property Management Agreement had an initial term of one year and each has continued on a month-to-month basis pursuant to its terms. Either party may terminate a Property Management Agreement provided it gives 30 days’ prior written notice of its desire to terminate such agreement. Notwithstanding the foregoing, the Property Owner may terminate each Property Management Agreement at any time without cause upon 30 days’ prior written notice to LPI. The Property Owner may also terminate the Property Management Agreement with cause immediately upon notice to LPI and the expiration of any applicable cure period. LPI may terminate each Property Management Agreement at any time without cause upon prior written notice to the Property Owner which, depending upon the terms of the particular Property Management Agreement, requires either 30, 60 or 90 days prior written notice. LPI may terminate the Property Management Agreement for cause if a Property Owner commits any material default under the Property Management Agreement and the default continues for a period of 30 days after notice from LPI to a Property Owner for a default or, in the case of Watertower Apartments, Lofts at the Highlands, Wesley Village, Legacy Grand at Concord, Millennium Apartment Homes and Legacy Crescent Park, if a monetary default continues for a period of 10 days after notice of such monetary default.

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The properties were previously managed by third-party property management companies pursuant to the terms of individual property management agreements (together, the “Prior Management Agreements”). The termination of services under the Prior Management Agreements and the Services Agreements (with respect to The Residence at Waterstone, Lofts at the Highlands, Legacy at Martin’s Point, Poplar Creek, Wesley Village, Legacy Grand at Concord, Millennium Apartment Homes and Legacy Crescent Park) were negotiated to coincide with the Effective Date of the respective Property Management Agreements. The Management Fee Percentage and any other fees and reimbursements payable to LPI by the Property Owner under each Property Management Agreement are approximately equal to the applicable percentage and other fees and reimbursements payable to the prior third party management companies and LPR by the Property Owner under the now-terminated Services Agreements and Prior Management Agreements.

Financing Objectives

We financed all of our real estate ~~investments~~properties with a combination of the proceeds we received from the Offerings and debt. We used debt financing to increase the amount available for investment and to increase overall investment yields to us and our stockholders. ~~We may use debt financing to pay for capital improvements or repairs to properties; to refinance existing indebtedness; to pay distributions; or to provide working capital.~~ As of December 31, ~~2016~~2017, we had $~~282~~131.6 million of fixed-rate debt outstanding with a weighted-average interest rate of 3.35%. We limit our total liabilities to 75% of the cost (before deducting depreciation and other noncash reserves) of our tangible assets; however, we may exceed that limit if the majority of the conflicts committee approves each borrowing in excess of such limitation and we disclose such borrowings to our stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. As of December 31, ~~2016~~2017, our borrowings and other liabilities were approximately 6465% of the cost (before deducting depreciation and other noncash reserves) of our tangible assets.

~~Market~~Subsequent ~~Outlook~~to ─December 31, ~~Multifamily~~2017, ~~Real~~in ~~Estate~~connection with the dispositions of Legacy at Valley Ranch and ~~Finance~~Crystal ~~Markets~~Park at Waterford, we entered into defeasance agreements with the respective lenders under the mortgage loans secured by Legacy at Valley Ranch (the “Legacy at Valley Ranch Mortgage Loan”) and Crystal Park at Waterford (the “Crystal Park at Waterford Mortgage Loan”) to defease the entire outstanding principal balance under each of the loans and release Legacy at Valley Ranch and Crystal Park at Waterford as security for the Legacy at Valley Ranch Mortgage Loan and Crystal Park at Waterford Mortgage Loan, respectively. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Subsequent Events — Dispositions Subsequent to December 31, 2017.”

Strong demand and trailing supply have been dominant themes for professionally managed, multifamily rental real estate (“Multifamily”) in the United States since the recession of 2008-2009. Although the U.S. Multifamily outlook remains positive, supply and affordability are becoming concerns in a growing number of urban core markets, most notably, New York City, San Francisco, Los Angeles, Miami and other prominent coastal cities. The beneficiaries of these “urban-core concerns” have increasingly been suburban markets. With more renters opting for the suburbs, vacancy has been declining and rents increasing in suburban markets. This trend is likely to continue, assuming the economy continues to grow and suburban markets remain affordable compared to their urban counterparts. These factors bode well for our portfolio, which is predominantly located in suburban markets.

It is approaching eight years since the recession of 2008-2009. Since that time, the U.S. economy has experienced modest, but sustained, real GDP and job growth. The pace of growth eased in 2016 however, as compared to 2014 and 2015. Real GDP growth in 2014 and 2015 was 2.4% and 2.6%, respectively, versus 1.6% for 2016. Similarly, the United States added 3.0 and 2.7 million jobs in 2014 and 2015, respectively, versus 2.2 million jobs gained in 2016. It is noteworthy that the easing of economic growth in 2016 occurred predominantly in the first half of the year. Following annualized real GDP growth of 0.8% and 1.4% in the first and second quarters of 2016, real GDP growth spiked in the third quarter to 3.5% and again eased to 1.9% in the fourth quarter.

U.S. Multifamily construction of new multifamily units was at historical lows following the recession, as demand was anemic stemming from the loss of approximately 8.6 million jobs. A historical high of prime-age renters (20-34 year olds) were living with their parents waiting for the job market to recover at the time. In anticipation of the economic recovery and a release of this pent-up demand, multifamily developers began increasing the number of new construction units, rebounding from 98,000 in 2009 to over 350,000 units in 2015. By the end of 2016, not only had nearly twice as many jobs been filled than had been lost during the recession, but Multifamily supply outpaced demand for the first time since the recession.

As with many multifamily experts, we see the 2016 supply imbalance as a temporary phenomenon and unrelated to our portfolio. Supply concerns are predominantly focused in a limited number of urban core markets, and our portfolio is suburban weighted. Also, the majority of the new construction pipeline in 2017 is focused in urban core markets. Moreover, Multifamily supply is projected to slow towards historic norms over the next 1-2 years, as banks have been gradually tightening their construction lending standards and equity investors have been becoming more selective about the developments they pursue.

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Multifamily demand remains strong and is projected to sustain its fundamentals for the next few years. Vacancy was 4.8% and 4.6% in 2014 and 2015, respectfully, and is projected to remain in this range through 2019. This compares favorably to the historical equilibrium vacancy rate of 5.6%. With more supply generally, Multifamily rent growth has eased somewhat. In 2016, rent growth was 3.4%, as compared to 4.2% and 5.0% in 2014 and 2015, respectively. Rent growth is expected to ease further in 2017 to 3.1%, but still above the historical norm of 2.9%, as pipeline supply is completed. However, with persistent demand and easing supply as noted, rent growth is projected to resume in 2018.

With Multifamily supply and affordability concerns centered primarily in urban core markets, particularly with regard to large coastal cities, more and more renters are opting for the suburbs. According to CBRE Research, the least affordable Multifamily markets in the U.S. in 2011 have become even more unaffordable in the years since then. Furthermore, according to the latest data available from the U.S. Census Bureau, 1.8 million more people moved to the suburbs than to urban cores. This shift of demand towards the suburbs is projected to continue and well located, relatively affordable (as compared to their urban core counterparts) suburban apartments are likely to continue to perform well in the short-term (2-3 years).

In the medium- and long-term, we believe the prospects for Multifamily real estate investment continue to be promising. We expect several positive demographic trends, as noted below, will drive the demand for multifamily housing for the remainder of this decade and well into the next.

• U.S. population growth - The U.S. Census Bureau projects that the U.S. population will increase by approximately 38 million (12%) between 2015 and 2030. Note that, currently, about 36% of people choose to rent as opposed to own a home.

• Baby Boomers downsizing - The population age 65 and over is increasing, driven by Baby Boomers, from approximately 48 million in 2015 to about 74 million in 2030. Despite generally having enough income to purchase a home, many Baby Boomers are downsizing, opting for the convenience and amenities of Multifamily properties.

• Echo Boom - The children of the Baby Boom generation, dubbed the Echo Boomers, will have increased the prime rental age group, 20 to 34 year olds, by 2 million (69 million total) from 2015 to 2020. This age cohort is expected to remain at this elevated level, up 4 million from 2010, through 2030 according to the U.S. Census Bureau.

Finally, with regard to the Multifamily investment market, although interest rates increased in 2016 and are likely to increase modestly in 2017, Multifamily capitalization rates have not increased and values have remained stable. Increasing interest rates have historically had a negative effect on Multifamily values. However, three key factors are bouying values. First, Multifamily market fundamentals, as described above, are strong and their forecast promising. Secondly, the spread between 10-year U.S. Treasuries and capitalization rates has been atypically wide in recent years and can therefore absorb modest interest rate hikes without increasing capitalization rates. Lastly, U.S. commercial real estate, including Multifamily, is a favored investment for foreign capital due to the lack of attractive risk-adjusted returns in the foreseeable future elsewhere.

Economic Dependency

We are dependent on our advisor and the Sub-Advisor for certain services that are essential to us, including the management of the daily operations of our ~~investment~~remaining ~~portfolio~~real estate properties; the disposition of ~~investments~~our remaining real estate properties and other general and administrative responsibilities. We are also dependent on LPI to provide the property management services under the Property Management Agreements. In the event that these companies are unable to provide any of the respective services, we will be required to obtain such services from other sources.

~~Competitive Market Factors~~6

We will face competition from various entities in relation to our apartment communities, including other REITs, pension funds, insurance companies, investment funds and companies, partnerships, and developers. Many of these entities have substantially greater financial resources than we do and may be willing to accept lower returns on their investment. Competition from these entities may increase the bargaining power of persons or entities seeking to buy apartment communities. Although we believe that we are well-positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively.

For example, we face competition from other apartment communities for tenants. This competition could reduce occupancy levels and revenues at our apartment communities, which would adversely affect our operations. We expect to face competition from many sources. We will face competition from other apartment communities both in the immediate vicinity and in the larger geographic market where our apartment communities will be located. Overbuilding of apartment communities may occur. If so, this will increase the number of apartment units available and may decrease occupancy and apartment rental rates.

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Competitive Market Factors

We face competition from various entities in relation to our apartment communities, including other REITs, pension funds, insurance companies, investment funds and companies, partnerships, and developers. Many of these entities have substantially greater financial resources than we do and may be willing to accept lower returns on their investment. Competition from these entities may increase the bargaining power of persons or entities seeking to buy apartment communities. Although we believe that we are well-positioned to compete effectively in each facet of our business, including the implementation of the Plan of Liquidation, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition that could limit our ability to conduct our business effectively. As a result, our financial condition, results of operations, cash flow and ability to successfully implement our Plan of Liquidation may be adversely affected.

We also face competition from many of the types of entities referenced above regarding the disposition of our remaining real estate properties. These entities may possess properties in similar locations and/or of the same property types as ours and may be attempting to dispose of these properties at the same time we are attempting to dispose of our remaining real estate properties, providing potential purchasers with a larger number of properties from which to choose and potentially decreasing the sales price for such properties. Additionally, these entities may be willing to accept a lower return on their individual investments, which could further reduce the sales price of our remaining real estate properties. This competition could decrease the sales proceeds we receive for our remaining real estate properties, assuming we are able to sell such properties, which could adversely affect our cash flows, the overall return on our stockholders’ investment and the amount and timing of any additional liquidating distributions we pay to our stockholders.

Compliance with Federal, State and Local Environmental Law

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

Each of our real estate properties was subject to a Phase I environmental assessment prior to the time it was acquired. Our real estate properties are subject to potential environmental liabilities arising primarily from historic activities at or in the vicinity of the properties. Based on our environmental diligence and assessments of our real estate properties and our purchase of pollution and remediation legal liability insurance, we do not believe that environmental conditions at our properties are likely to have a material adverse effect on our operations or the implementation of the Plan of Liquidation.

Employees

We have no paid employees. The employees of our advisor and the Sub-Advisor, or their affiliates, provide management, acquisition, advisory and certain administrative services for us.

Principal Executive Office

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

Industry Segments

As of December 31, 2016, we had invested in 11 apartment communities. Substantially all of our revenue and net income (loss) is from real estate, and therefore, we currently operate in one business segment.

Available Information

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

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ITEM 1A.	RISK FACTORS

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

Risks Related to anthe ~~Investment~~Plan inof UsLiquidation

~~Because~~Our weexpectations ~~raised~~about ~~substantially less than~~ the ~~maximum~~amount ~~offering~~of ~~amount~~any inadditional ~~our~~liquidating ~~Offerings,~~distributions we ~~were~~pay ~~not able~~ to ~~invest~~our instockholders asand ~~diverse~~when ~~a portfolio of properties as~~ we ~~otherwise would, which~~ will ~~cause~~pay ~~the~~them ~~value~~are ofbased ~~our~~on ~~stockholders’~~many ~~investment~~estimates inand usassumptions, toone ~~vary~~or more ~~widely with the performance~~ of ~~specific~~which ~~assets,~~may ~~and~~prove ~~cause our general and administrative expenses~~ to ~~constitute a greater percentage of our revenue, potentially increasing the risk that our stockholders will lose money in their investment. These results could~~ be ~~exacerbated to the extent we are able to sell certain of our assets~~incorrect.

~~The~~As ~~proceeds~~of weDecember ~~raised~~20, in2017, ~~our~~based ~~Offerings~~upon ~~were~~(i) ~~lower~~the ~~than~~aggregate ~~our~~of ~~sponsors~~the ~~and~~following ~~dealer~~amounts ~~manager~~(a) ~~originally~~the ~~expected.~~net ~~Therefore,~~proceeds we ~~made~~have ~~fewer~~received ~~investments~~from ~~than~~the ~~originally~~sale ~~intended~~of ~~resulting~~real inestate ~~less~~properties ~~diversification~~through inDecember ~~terms~~20, of2017, (b) the ~~number~~contractual ofaggregate ~~investments~~consideration ~~owned~~to ~~and~~be ~~the~~received ~~geographic~~by ~~regions~~us infrom ~~which~~the ~~our~~Core-Portfolio ~~investments~~Sale, ~~are~~less ~~located.~~applicable ~~Adverse~~closing ~~developments~~credits ~~with~~and ~~respect~~(c) toour aestimate ~~single~~of ~~property,~~cash orflows afrom ~~geographic~~operations ~~region,~~we will ~~have~~receive athrough ~~greater~~the ~~adverse~~projected ~~impact~~sale ondate ~~our~~of ~~operations~~the ~~than~~Core-Portfolio ~~they~~Properties, ~~otherwise~~reduced ~~would.~~by In(ii) ~~addition,~~the ~~our~~aggregate ~~inability~~of tothe ~~raise~~following ~~substantial~~amounts ~~funds~~(a) ~~increased~~ our ~~fixed~~remaining ~~operating~~estimated ~~expenses~~indebtedness, asincluding apre-payment ~~percentage~~penalties, of(b) ~~our~~the ~~revenue~~estimated ~~and~~disposition ~~reduced~~costs ~~our~~and ~~net~~fees ~~income,~~relating ~~increasing~~to the ~~risk~~Core-Portfolio ~~that~~Sale, ~~our~~and ~~stockholders~~(c) ~~will~~the ~~lose~~estimated ~~money~~corporate onand ~~their~~other ~~investment.~~liquidation ~~Because~~and ofdissolution costs through the ~~size~~completion of our ~~portfolio,~~liquidation ~~any~~and ~~disposition~~dissolution, ~~activity~~we ~~will~~estimated ~~cause~~that our ~~general~~net ~~and~~proceeds ~~administrative~~from ~~expenses~~liquidation and, ~~which~~therefore, ~~are~~the ~~not~~amount ~~directly~~of ~~related~~cash tothat ~~the~~our ~~size~~stockholders ofwould ~~our~~receive ~~portfolio,~~for toeach ~~increase~~share ~~significantly~~of asour acommon ~~percentage~~stock ofthat ~~our~~they ~~cash~~then ~~flow~~hold ~~from~~is ~~operations~~$8.45 Toper ~~the~~share. ~~extent~~This weamount ~~are~~would ~~able~~be toin ~~dispose~~addition ofto ~~certain~~the ofprevious ~~our~~$1.00 ~~assets~~per asshare ~~part~~special ofdistribution ~~our~~we ~~implementation~~paid ofto our ~~strategic~~stockholders ~~alternatives,~~on ~~these~~May ~~effects~~1, ~~may~~2017 bein ~~exacerbated~~connection orwith wethe ~~may~~disposition ~~have~~of toWesley ~~adjust~~Village, ~~our~~but ~~ongoing~~includes ~~distribution~~the ~~rate~~$4.05 inper ~~order~~share toInitial ~~maintain~~Liquidating ~~current distribution coverage~~Distribution.

~~Because~~In noaccordance ~~public~~with ~~trading~~the ~~market~~Plan of Liquidation, our objectives for 2018 are to (i) complete the orderly liquidation of our ~~shares~~company ~~currently~~pursuant ~~exists~~to the Plan of Liquidation; and (ii) maximize stockholder value by selling all of our remaining real estate properties, itpaying ~~will~~our bedebts, ~~difficult~~providing for the payment of unknown or contingent liabilities, distributing the net proceeds from liquidation to our stockholders toand ~~sell~~winding ~~their~~up ~~shares~~our operations and dissolving our company. We expect to complete these activities within 12 months after the December 19, if2017 ~~they~~stockholder ~~are~~approval ~~able~~of the Plan of Liquidation. While pursuing our liquidation pursuant to ~~sell~~the ~~their~~Plan ~~shares~~of Liquidation, ~~they~~we ~~will~~intend ~~likely~~to ~~sell~~continue ~~them~~to atmanage aour ~~substantial~~remaining ~~discount~~real estate properties with the goal of maximizing stockholder value. We expect to pay multiple liquidating distributions, including the ~~price~~Initial atLiquidating ~~which~~Distribution, ~~they~~to ~~acquired~~our stockholders during the ~~shares~~liquidation process and to pay the final liquidating distribution after we sell our ~~estimated~~remaining ~~value~~real ~~per~~estate ~~share.~~properties, pay all of our known liabilities and provide for unknown liabilities.

~~Our~~We ~~charter~~can ~~does~~give ~~not~~no ~~require~~assurance ~~our~~regarding ~~directors~~the totiming ~~seek~~of ~~stockholder~~the ~~approval~~sale toof ~~liquidate~~ our ~~assets~~remaining byreal aestate ~~specified~~properties ~~date,~~in ~~nor~~connection ~~does~~with ~~our~~the ~~charter~~implementation ~~require~~of ~~our~~the ~~directors~~Plan toof ~~list~~Liquidation, ~~our~~the ~~shares~~sale ~~for~~prices ~~trading~~we onwill areceive ~~national~~for ~~securities~~such ~~exchange~~properties, byand athe ~~specified~~amount ~~date. There~~or istiming noof ~~public~~any ~~market~~additional ~~for~~liquidating ~~our~~distributions ~~shares and~~ we ~~have~~pay ~~no plans at this time~~ to ~~list~~ our ~~shares~~stockholders. onIf awe ~~national~~cannot ~~securities~~sell ~~exchange. Until~~ our ~~shares~~remaining ~~are~~real ~~listed,~~estate ifproperties ~~ever,~~and pay our ~~stockholders~~debts ~~may~~within ~~not~~24 ~~sell~~months ~~their~~from ~~shares~~December ~~unless~~19, ~~the~~2017, ~~buyer~~or ~~meets~~if the ~~applicable~~board ~~suitability~~of ~~and~~directors ~~minimum purchase standards~~ and ~~such sale complies with state and federal securities laws. In addition, our charter prohibits~~ the ~~ownership~~Special ofCommittee ~~more~~determine ~~than~~that ~~9.8%~~it ofis ~~our~~otherwise ~~stock~~advisable byto ~~any~~do ~~person~~so, ~~unless~~pursuant ~~exempted~~to bythe ~~our~~Plan ~~board~~ of ~~directors~~Liquidation, ~~which~~we may ~~inhibit~~transfer ~~large~~and ~~investors~~assign ~~from~~our ~~desiring~~remaining assets to ~~purchase~~a ~~our~~liquidating ~~shares~~trust. ~~Moreover,~~ ~~our~~Upon ~~share~~such ~~redemption~~transfer ~~program~~and ~~includes~~assignment, ~~numerous restrictions that limit~~ our stockholders’ ~~ability~~will toreceive ~~sell~~beneficial ~~their~~interests ~~shares~~in tothe usliquidating ~~and~~trust. ~~our~~We ~~board~~intend ofto ~~directors~~maintain ~~could~~adequate ~~amend,~~cash ~~suspend~~reserves orfor ~~terminate~~liquidity, ~~our~~capital ~~share~~expenditures, ~~redemption~~debt ~~program~~repayments ~~upon~~and 30other ~~days’~~future ~~notice~~capital needs.

~~Among~~Pursuant ~~other restrictions, during any calendar year, redemptions are limited~~ to the ~~amount~~Plan of ~~net~~Liquidation, ~~proceeds~~on ~~from~~December ~~the~~20, ~~sale~~2017, ~~of shares under~~ our ~~dividend~~board ~~reinvestment~~of ~~plan~~directors ~~during~~authorized the ~~prior~~Initial ~~calendar~~Liquidating ~~year;~~Distribution ~~provided,~~in ~~that~~the weamount ~~may~~of ~~not redeem more than~~ $24.005 ~~million~~per share of ~~shares~~common instock ~~the~~to ~~aggregate~~our ~~during~~stockholders ~~any~~of ~~calendar~~record ~~year.~~as ~~Furthermore, once we have redeemed $1.5 million~~ of ~~shares under~~ the ~~share~~close ~~redemption~~of ~~program,~~business ~~including~~on ~~pursuant~~December ~~to redemptions sought in connection with a Special Redemption~~21, ~~the remaining $0~~2017.5 ~~million~~The ofInitial ~~the~~Liquidating ~~$2.0~~Distribution ~~million~~was ~~annual~~paid ~~limit~~on ~~shall~~December be27, ~~reserved~~2017 ~~exclusively~~and ~~for~~was ~~shares~~funded ~~being~~from ~~redeemed~~proceeds infrom ~~connection~~real ~~with~~estate ~~Special~~property ~~Redemptions~~sales. InWe ~~establishing~~do ~~the~~not ~~$2.0~~expect ~~million~~to ~~limitation,~~pay ~~our~~regular ~~board~~distributions ofduring ~~directors considered~~ the ~~cash~~liquidation ~~requirements necessary to effectively manage our assets~~process.

~~Because~~Our ofexpectations ~~these~~about ~~limitations~~the onamount ~~the~~of ~~dollar~~any ~~value~~additional ofliquidating ~~shares~~distributions that ~~may~~we bepay ~~redeemed~~to ~~under~~ our ~~share~~stockholders ~~redemption~~and ~~program,~~when ~~in January 2016,~~ we ~~exhausted~~will ~~the~~pay ~~$1.5~~them ~~million~~are ofbased ~~funds~~on ~~available~~certain ~~for~~estimates ~~all redemptions for 2016~~ and ~~in August 2016~~assumptions, weone ~~exhausted~~or ~~the~~more ~~remaining $0.5 million~~ of ~~funds~~which ~~available~~may ~~for~~prove ~~Special~~to ~~Redemptions~~be ~~for 2016~~incorrect. As ofa ~~December 31~~result, ~~2016,~~the weactual ~~had~~amount ~~$1.4 million~~ of ~~outstanding~~any ~~and~~additional ~~unfulfilled~~liquidating ~~ordinary~~distributions ~~redemption~~we ~~requests~~pay ~~and~~to ~~$0.3~~our ~~million~~stockholders ofmay ~~outstanding~~be ~~and~~more ~~unfulfilled~~or ~~Special~~less ~~Redemption~~than ~~requests.~~we ~~The~~estimate ~~annual~~and ~~limitation~~the ~~was~~liquidating ~~reset~~distributions onmay ~~January~~be 1,paid ~~2017,~~later ~~and~~than we ~~had~~predict. anThere ~~aggregate~~are ofmany ~~$2.0~~factors ~~million~~that ofmay ~~funds~~affect ~~available~~the ~~for~~ultimate ~~all~~amount ~~redemptions,~~of ~~subject~~liquidating todistributions ~~the~~received ~~limitations~~by inour ~~the~~stockholders ~~share redemption program~~including, ~~including~~among ~~the~~other ~~requirement~~factors: ~~that~~(i) the ~~first~~actual ~~$1.5~~dates ~~million~~ of ~~funds~~the isclosings ~~available~~of, ~~for all redemptions~~ and the ~~last~~ultimate ~~$0.5~~amount ~~million~~of isaggregate ~~available~~consideration ~~solely~~received ~~for~~from, ~~Special~~the ~~Redemptions.~~Core-Portfolio WeSale; ~~exhausted~~(ii) ~~$1.5~~the ~~million~~amount of ~~funds~~taxes, ~~available~~transaction ~~for~~fees ~~all~~and ~~redemptions~~expenses ~~for~~relating ~~2017~~to inthe ~~January~~Plan ~~2017~~of Liquidation; and an(iii) ~~aggregate~~amounts ofneeded ~~$0.3~~to ~~million~~pay ofor ~~funds~~provide ~~available~~ for ~~Special~~our ~~Redemptions~~liabilities ~~for 2017 in January~~ and ~~February 2017. As such~~expenses, weincluding ~~will~~unanticipated ~~only~~or becontingent ~~able~~liabilities tothat ~~process~~could $0arise.~~2 million of redemption requests related to Special Redemptions for the remainder of 2017.~~

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In the event that the Core-Portfolio Sale is not completed, we intend to seek to sell the remaining Core-Portfolio Properties to another buyer or buyers.

In the event that the Core-Portfolio Sale is not completed, we intend to seek to sell the remaining Core-Portfolio Properties to another buyer or buyers. There can be no guarantee that the proceeds from such sale or sales would equal or exceed the consideration contemplated by the Core-Portfolio Sale Agreements (defined below). In addition, in the event that we breach the Core-Portfolio Sale Agreements and fail to sell the Core-Portfolio Properties in accordance with the terms of the Core-Portfolio Sale Agreements, the purchaser may either commence an action for specific performance under the Core-Portfolio Sale Agreement, but not for damages of any kind, and recover its attorney’s fees incurred in connection therewith, or terminate the Core-Portfolio Sale Agreements and receive a refund of its earnest money deposit.

Our liquidating distributions may be delayed or reduced if our remaining real estate properties, each of which is under contract for sale, do not close for the price or on the date expected.

We have entered into agreements to sell each of our remaining properties, each of which is a Core-Portfolio Property (the “Core-Portfolio Sale Agreements”). The Core-Portfolio Sale is subject to satisfaction of closing conditions. If the sale of either of the remaining Core-Portfolio Properties does not close because of a buyer default, failure of a closing condition or for any other reason, we will need to locate a new buyer for such properties, which we may be unable to do promptly or at prices or on terms that are as favorable as the original Core-Portfolio Sale Agreements. We will also incur additional costs involved in locating a new buyer and negotiating a new sale agreement for these properties. These additional costs are not included in our projections. In the event that we incur these additional costs, any additional liquidating disbursements we pay to our stockholders would be delayed or reduced.

No assurance can be given as to the amount of liquidating distributions our stockholders will ultimately receive.

If our liquidation costs or unpaid liabilities are greater than we expect, any additional liquidating distributions we pay to our stockholders may be delayed or reduced.

Before paying the final liquidating distribution, we will need to pay or arrange for the payment of all of our transaction costs in the liquidation, all other costs and all valid claims of our creditors. The board of directors may also decide to acquire one or more insurance policies covering unknown or contingent claims against us, for which we would pay a premium that has not yet been determined. The board of directors may also decide to establish a reserve fund to pay these contingent claims. The amounts of the various transaction costs in the liquidation are not yet final, so we have used estimates of these costs in calculating the amounts of our range of estimated net proceeds from liquidation. To the extent that we have underestimated these costs in calculating our projections, our actual net proceeds from liquidation per share may be lower than our estimated net proceeds from liquidation per share. In addition, if the claims of our creditors are greater than we have anticipated or we decide to acquire one or more insurance policies covering unknown or contingent claims against us, or if we establish a reserve fund, any additional liquidating distributions we pay to our stockholders may be delayed or reduced.

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Pursuing the Plan of Liquidation may cause us to fail to qualify as a REIT, which would dramatically lower any additional liquidating distributions we pay to our stockholders.

For so long as we qualify as a REIT and distribute all of our REIT taxable income, we generally are not subject to federal income tax. Although the board of directors does not presently intend to terminate our REIT status prior to paying the final liquidating distribution to our stockholders and our dissolution, the board of directors may take actions pursuant to the Plan of Liquidation that would result in such a loss of REIT status. Upon payment of the final liquidating distribution and our dissolution, our existence and our REIT status will terminate. However, there is a risk that our actions during the liquidation process may cause us to fail to meet one or more of the requirements that must be met in order to qualify as a REIT prior to completion of the Plan of Liquidation. For example, to qualify as a REIT, generally at least 75% of our gross income in each taxable year must come from real estate sources and generally at least 95% of our gross income in each taxable year must come from real estate sources and certain other sources that are itemized in the REIT tax laws, mainly interest and dividends. We may encounter difficulties satisfying these requirements during the liquidation process. In addition, in connection with that process, we may recognize ordinary income in excess of the cash received. The REIT rules require us to pay out a large portion of our ordinary income in the form of a dividend to our stockholders. However, to the extent that we recognize ordinary income without any cash available for distribution, and if we were unable to borrow to fund the required dividend or find another way to meet the REIT distribution requirements, we may cease to qualify as a REIT. Although we expect to comply with the requirements necessary to qualify as a REIT in any taxable year, if we are unable to do so, we will, among other things (unless entitled to relief under certain statutory provisions):


•	not be allowed a deduction for dividends paid to stockholders in computing our taxable income;


•	be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income, including recognized gains, at regular corporate rates;


•	be subject to increased state and local taxes; and


•	be disqualified from treatment as a REIT for the taxable year in which we lose our qualification and for the four following taxable years.

As a result of these consequences, our failure to qualify as a REIT could substantially reduce the amount of any additional liquidating distributions we pay to our stockholders.

Pursuing the Plan of Liquidation may cause us to be subject to federal income tax, which would reduce the amount of any additional liquidating distribution we pay to our stockholders.

We generally are not subject to federal income tax to the extent that we distribute to our stockholders during each taxable year (or, under certain circumstances, during the subsequent taxable year) dividends equal to our taxable income for the year. However, we are subject to federal income tax to the extent that our taxable income exceeds the amount of dividends paid to our stockholders for the taxable year. In addition, we are subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by us with respect to any calendar year are less than the sum of 85% of our ordinary income for that year, plus 95% of our capital gain net income for that year, plus 100% of our undistributed taxable income from prior years. Although we intend to pay distributions to our stockholders sufficient to avoid the imposition of any federal income tax on our taxable income and the imposition of the excise tax, differences in timing between the actual receipt of income and actual payment of deductible expenses, and the inclusion of such income and deduction of such expenses in arriving at our taxable income, could cause us to have to either borrow funds on a short-term basis to meet the REIT distribution requirements, find another alternative for meeting the REIT distribution requirements, or pay federal income and excise taxes. The cost of borrowing or the payment of federal income and excise taxes would reduce the amount of any additional liquidating distributions we pay to our stockholders.

So long as we continue to qualify as a REIT, any net gain from “prohibited transactions” will be subject to a 100% tax. “Prohibited transactions” are sales of property held primarily for sale to customers in the ordinary course of a trade or business. The prohibited transactions tax is intended to prevent a REIT from retaining any profit from the sales of properties held primarily for sale to customers in the ordinary course of business. The Internal Revenue Code of 1986, as amended (the “Code”) provides for a “safe harbor” which, if all its conditions are met, would protect a REIT’s property sales from being considered prohibited transactions. Whether a property held primarily for sale to customers in the ordinary course of a trade or business is a highly factual determination. We believe that all of our remaining real estate properties are held for investment and the production of rental income, and that none of the prior sales of our real estate properties or contemplated sales of our remaining real estate properties will constitute a prohibited transaction. We do not believe that the sales of our remaining real estate properties pursuant to the Plan of Liquidation should be subject to the prohibited transactions tax. However, due to the anticipated sales volume and other factors, the contemplated sales may not qualify for the protective safe harbor. There can be no assurances that the Internal Revenue Service (the “IRS”) will not successfully challenge the characterization of properties we hold for purposes of applying the prohibited transaction tax.

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Distributing beneficial interests in a liquidating trust may trigger tax consequences to our stockholders.

The REIT provisions of the Code generally require that each year we distribute as a dividend to our stockholders 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gain). Any additional liquidating distributions we pay to our stockholders pursuant to the Plan of Liquidation will qualify for the dividends paid deduction, provided that they are paid within 24 months of December 19, 2017, the date our stockholders approved the Plan of Liquidation. Conditions may arise which cause us not to be able to liquidate within such 24-month period. For instance, it may not be possible to sell our remaining real estate properties at acceptable prices during such period. In such event, rather than retain our remaining real estate properties and risk losing our status as a REIT, we may elect to transfer our remaining assets and liabilities to a liquidating trust in order to meet the 24-month requirement. We may also elect to transfer our remaining assets and liabilities to a liquidating trust within such 24-month period and seek relief from the SEC from certain reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”) to avoid the costs of operating as a public company, or if the board of directors and Special Committee determine that it is otherwise advantageous or appropriate to do so. Such a transfer would be treated as a distribution of our remaining assets to our stockholders, followed by a contribution of the assets to the liquidating trust. As a result, a stockholder would recognize gain to the extent such stockholder’s share of the cash and the fair market value of any assets received by the liquidating trust was greater than the stockholder’s basis in the stock, notwithstanding that the stockholder would not contemporaneously receive a distribution of cash or any other assets with which to satisfy the resulting tax liability. To the extent such stockholder’s share of the cash and the fair market value of any assets received by the liquidating trust is less than the stockholder’s basis in the stock, such loss is expected to be recognizable at the time of the transfer to the liquidating trust, but not before such time. In addition, it is possible that the fair market value of the assets received by the liquidating trust, as estimated for purposes of determining the extent of the stockholder’s gain at the time the beneficial interests in the liquidating trust are distributed to the stockholders, will exceed the cash or fair market value of assets received by the liquidating trust on a sale of the assets. In this case, the stockholder would recognize a loss in a taxable year subsequent to the taxable year in which the gain was recognized, which loss may be limited under the Code.

Our sole and exclusive remedy if the purchaser fails to consummate the purchase of the remaining Core-Portfolio Properties is payment to us of the purchaser’s earnest money.

In the event that the purchaser fails to honor its contractual obligation to consummate the purchase of the remaining Core-Portfolio Properties, our sole and exclusive remedy is the payment to us of the purchaser’s earnest money deposit. We have no right to bring an action for specific performance in order to compel the purchaser to comply with its covenants or consummate the purchase of the remaining Core-Portfolio Properties. In the event that the sale of the remaining Core-Portfolio Properties is not consummated, there is no guarantee that we will be able to sell the remaining Core-Portfolio Properties for an amount equal to or exceeding the applicable consideration for such properties. The foregoing factors may reduce the cash available for any additional liquidating distributions we pay to our stockholders.

There can be no assurance that a planned liquidation pursuant to the Plan of Liquidation will maximize stockholder value to a greater extent at this time than would otherwise occur through other alternatives considered by the board of directors and the Special Committee.

Our stockholders will no longer participate in any future earnings or benefit from any increases in the value of our remaining real estate properties once such properties are sold. Although the board of directors and the Special Committee each believes that a planned liquidation is more likely to maximize stockholder value at this time than otherwise would occur through the other alternatives considered by the board of directors and the Special Committee, it is possible that pursuing one or more of the other alternatives would maximize stockholder value to a greater extent at this time.

In certain circumstances, the board of directors may terminate, amend, modify or delay implementation of the Plan of Liquidation.

In order to dissolve, we will file articles of dissolution (“Articles of Dissolution”) with the State Department of Assessments and Taxation of Maryland (the “SDAT”), our jurisdiction of incorporation, to dissolve our company as a legal entity following the satisfaction of our outstanding liabilities. Prior to the acceptance for record of the Articles of Dissolution by the SDAT, the board of directors may terminate the Plan of Liquidation for any reason, subject to and contingent upon the approval of such termination by our stockholders. The board of directors or, if a liquidating trust is established, the trustees of the liquidating trust, may make certain modifications or amendments to the Plan of Liquidation without further action by or approval of our stockholders to the extent permitted under then-current law.

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~~Therefore,~~Our ~~it will be difficult for our~~ stockholders tocould, ~~sell~~in ~~their~~some ~~shares promptly or at all. If our stockholders are able to sell their shares~~circumstances, they would likely have to sell them at a substantial discount to the price for which the stockholders acquired the shares or to our estimated value per share. It is also likely that our stockholders’ shares would not be ~~accepted~~held asliable ~~the primary collateral~~ for aamounts ~~loan. Because~~they ofreceived ~~the~~from ~~illiquid~~us ~~nature~~in ofconnection ~~the~~with ~~shares, investors should purchase~~ our ~~shares through our dividend reinvestment plan only as a long-term investment and be prepared to hold them for an indefinite period of time~~dissolution.

~~From~~If ~~inception~~we ~~through~~fail ~~December 31,~~to ~~2016~~create an adequate contingency reserve for payment of our expenses and liabilities, or if we ~~have~~transfer ~~experienced~~our assets to a ~~cumulative~~liquidating ~~net~~trust ~~loss~~and ~~which~~the contingency reserve and the assets held by the liquidating trust are less than the amount ultimately found payable in respect of expenses and liabilities, each of our stockholders could ~~adversely~~be ~~impact~~held liable for the payment to our ~~ability~~creditors of such stockholder’s pro rata portion of the excess, limited to ~~conduct~~the ~~operations~~amounts previously received by the stockholder in distributions from us or the liquidating trust, as applicable. If a court holds at any time that we failed to make adequate provision for our expenses and ~~pay~~liabilities or if the amount ultimately required to be paid in respect of such liabilities exceeds the amount available from the contingency reserve and the assets of the liquidating trust, our creditors could seek an injunction to prevent us from paying liquidating distributions under the Plan of Liquidation on the grounds that the amounts to be distributed are needed to provide for the payment of such expenses and liabilities. Any such action could delay or substantially diminish the amount of any additional liquidating distributions we pay to our stockholders or holders of beneficial interests of any liquidating trust.

~~From~~We ~~inception~~will through December 31, 2016, we have had a cumulative net loss of $19.8 million. Included in the cumulative net loss amount was $60.0 million of depreciation of real estate assets and amortization of lease-related costs. In the event that we continue to incur ~~net losses in~~ the ~~future~~expenses ~~or such losses increase, we will have less money available to pay distributions to our stockholders, and our financial condition, results~~ of ~~operations,~~complying ~~cash~~with ~~flow~~public ~~and~~company ~~ability~~reporting ~~to service our indebtedness may be adversely impacted~~requirements.

~~Disruptions~~Until inour liquidation and dissolution is complete, we have an obligation to continue to comply with the applicable reporting requirements of the Exchange Act, even if compliance with these reporting requirements is economically burdensome. Moreover, though our stockholders approved certain amendments to our charter and thus our charter no longer requires us to provide audited financial ~~markets~~statements to our stockholders, any decision we make to cease providing audited financial statements to our stockholders would require that the SEC grant us relief from certain reporting requirements under the Exchange Act. In order to curtail expenses, we intend, after filing our Articles of Dissolution, to seek relief from the SEC from certain reporting requirements under the Exchange Act. We anticipate that, if such relief is granted, we would continue to file current reports on Form 8-K to disclose material events relating to our liquidation and ~~uncertain~~dissolution, ~~economic~~along ~~conditions~~with ~~could~~any ~~adversely~~other ~~affect~~reports that the ~~values~~SEC might require, but would discontinue filing annual and quarterly reports on Forms 10-K and 10-Q. However, the SEC may not grant any such relief. To the extent that we delay filing the Articles of Dissolution or if the SEC does not grant such relief, we would be obligated to continue complying with the applicable reporting requirements of the Exchange Act. The expenses we incur in complying with the applicable reporting requirements would reduce the amount of any additional liquidating distributions we pay to our ~~investments~~stockholders.

~~Disruptions~~The inPlan ~~the~~of ~~financial~~Liquidation ~~markets~~may ~~and~~lead ~~uncertain~~to ~~economic~~stockholder ~~conditions could adversely affect the values of our investments. Furthermore~~litigation, awhich ~~decline in economic conditions~~ could ~~negatively impact real estate fundamentals and~~ result in ~~lower~~substantial ~~occupancy,~~costs ~~lower rental rates~~ and ~~declining~~distract ~~real~~our ~~estate values~~management. ~~These could have the following negative effects on us:~~

•Extraordinary corporate actions by a company, such as the ~~values~~Plan of ~~our~~Liquidation ~~real~~or ~~estate~~the ~~investments~~Core-Portfolio ~~could~~Sale, ~~decrease~~sometimes ~~below~~lead to lawsuits being filed against that company or its management or both. We may become involved in this type of litigation in connection with the ~~amounts~~Plan weof ~~pay~~Liquidation. As ~~for~~of March 1, 2018, no such ~~investments;~~lawsuits relative to the Plan of Liquidation were pending or, to our knowledge, threatened. However, if such a lawsuit is filed against us, the litigation could be expensive and divert management’s attention from implementing the Plan of Liquidation.

• revenues from our properties could decrease due to fewer tenants and/or lower rental rates, making it more difficult for us to pay distributions or meet our debt service obligations on debt financing.

These factors could impair our ability to pay distributions to our stockholders and decrease the value of an investment in us.

We have a limited operating history, which makes our future performance difficult to predict.

We were incorporated in the State of Maryland on July 31, 2009 and have a limited operating history. As of March 6, 2017, we owned 11 apartment communities. We cannot assure our stockholders that we will be able to operate our business successfully or implement our operating policies and strategies described in our prospectus. Our stockholders should not assume that our performance will be similar to the past performance of other real estate investment programs sponsored by affiliates of our sponsors.

Because we are dependent upon our advisor and its affiliates to conduct our operations and LPI to manage our real estate properties, any adverse changes in the financial health of our advisor or its affiliates or LPI or our relationship with them could hinder our operating performance and the return on our stockholders’ investment.

We are dependent on KBS Capital Advisors to conduct our operations and on LPI to manage our real estate properties. Our advisor depends upon the fees and other compensation that it receives from us, KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”), KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”), KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”), KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”), KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”) and other KBS-sponsored programs in connection with the purchase, management and sale of assets to conduct its operations. Any adverse changes in the financial condition of KBS Capital Advisors or LPI or our relationship with KBS Capital Advisors or LPI could hinder their ability to successfully conduct our operations and manage our portfolio of investments.

We have paid distributions from financings and expect that in the future we may not pay distributions solely from our cash flows from operations. To the extent that we pay distributions from sources other than our cash flows from operations, the overall return to our stockholders may be reduced.

Our organizational documents permit us to pay distributions from any source, including offering proceeds or borrowings (both of which may constitute a return of capital). We have paid distributions from financings and expect that in the future we may not pay distributions solely from our cash flows from operations, in which case distributions may be paid in whole or in part from debt financing. We may also fund such distributions from the sale of assets. Depending on the number of properties we sell, we may adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage. To the extent that we pay distributions from sources other than our cash flows from operations, the overall return to our stockholders may be reduced. In addition, to the extent distributions exceed cash flows from operations, a stockholder’s basis in our stock will be reduced and, to the extent distributions exceed a stockholder’s basis, the stockholder may recognize capital gain. There is no limit on the amount of distributions we may fund from sources other than from cash flows from operations.

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~~For~~Our ~~the~~directors ~~year~~and ~~ended December 31~~officers, ~~2016, we paid aggregate distributions of $13.4 million, including $7.7 million of distributions paid in cash and $5.7 million of distributions reinvested through~~ our ~~dividend reinvestment plan. Funds from operations (“FFO”) for the year ended December 31~~advisor, ~~2016 was $17.4 million and cash flows from operations was $13.9 million. We funded our total distributions paid for~~ the ~~year ended December 31~~Sub-Advisor, ~~2016,~~LPI ~~which includes cash distributions~~ and ~~distributions~~their ~~reinvested~~affiliates byhave ~~stockholders,~~conflicts ~~with cash flows from operations. For the year ended December 31, 2016, FFO represented 130%~~ of ~~total~~interest ~~distributions~~that ~~paid. For~~may ~~more~~cause ~~information,~~them ~~see~~to ~~Part~~manage ~~II,~~our ~~Item~~liquidation 7,in ~~“Management’s~~a ~~Discussion~~manner ~~and~~not ~~Analysis~~solely ofin ~~Financial~~the ~~Condition~~best ~~and~~interest ~~Results~~ of ~~Operations~~our ~~— Funds from Operations” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Distributions” in this Annual Report~~stockholders.

~~The~~Our ~~loss~~directors ofand orofficers, ~~the inability of~~ our advisor, ~~and~~the ~~LPRR~~Sub-Advisor, ~~LLC~~LPI and their affiliates tohave ~~engage~~interests ~~and~~in ~~retain~~ the ~~services~~liquidation ofthat ~~key~~are ~~real~~different ~~estate~~from ~~professionals~~a ~~could~~stockholder’s ~~delay~~interest. The orboard ~~hinder~~of ~~implementation~~directors ofand ~~our~~the ~~business~~Special ~~strategies,~~Committee ~~which~~each ~~could~~was ~~limit~~aware ~~our~~of ~~ability~~these toactual ~~pay~~and ~~distributions~~potential conflicts of interest and ~~decrease~~considered them in approving the ~~value~~Plan of anLiquidation ~~investment~~and inrecommending it to our ~~shares~~stockholders. Some of the conflicts of interest presented by the liquidation are summarized below.

~~Our~~• ~~success~~Two ~~depends~~of toour aexecutive ~~significant~~officers, ~~degree upon the contributions of~~ Messrs. Bren, ~~Butcher, Henry~~ and McMillan, ~~each~~are officers of ~~whom would be difficult to replace. Neither we nor~~ our ~~affiliates~~advisor ~~have employment agreements with these individuals~~ and/or ~~they~~one ~~may~~or ~~not~~more ~~remain associated with us. If any~~ of ~~these persons were to cease their association with us,~~ our ~~operating~~advisor’s ~~results~~affiliates ~~could~~and ~~suffer. We~~are docompensated ~~not~~by ~~intend~~those ~~to maintain key person life insurance on any person. We believe that our future success depends~~entities, in ~~large~~ part, ~~upon~~for ~~our advisor’s and LPRR LLC’s and~~ their ~~affiliates’~~service ~~ability~~rendered to ~~attract~~us. ~~and~~Two ~~retain~~of ~~highly~~our ~~skilled~~other ~~managerial~~executive officers, ~~operational and marketing professionals~~Messrs. ~~Competition~~ ~~for~~Henry ~~such~~and ~~professionals is intense~~Hays, ~~and~~are ~~our~~officers ~~advisor~~of ~~and~~LPI ~~LPRR LLC~~ and/or ~~their~~one ~~affiliates~~or ~~may~~more beof ~~unsuccessful~~LPI’s inaffiliates ~~attracting~~ and ~~retaining~~are ~~such~~compensated ~~skilled~~by ~~individuals. Further~~those entities, ~~we have established strategic relationships with firms that have special expertise~~ in ~~certain~~part, ~~services~~for ortheir ~~detailed~~service ~~knowledge~~rendered ~~regarding real properties in certain geographic regions. Maintaining such relationships will be important for us~~ to ~~effectively compete with other investors in such regions~~us. We ~~may~~currently ~~be unsuccessful in maintaining such relationships. If we lose or are unable to obtain the services of highly skilled professionals or~~ do not ~~establish~~pay orany ~~maintain~~direct ~~appropriate~~compensation ~~strategic relationships, our ability~~ to ~~implement~~ our ~~business~~executive ~~strategies~~officers. ~~could~~Messrs. beBren ~~delayed~~and orHenry ~~hindered,~~are ~~and~~also ~~the~~two ~~value~~ of our ~~stockholders’ investment may decline~~directors.

~~Our~~• ~~rights~~Pursuant ~~and~~to the ~~rights~~terms of the advisory agreement, our ~~stockholders~~advisor tois ~~recover~~expected ~~claims~~to ~~against~~be ~~our~~entitled ~~independent~~to, ~~directors~~or ~~are~~has ~~limited~~received, ~~which~~disposition ~~could~~fees ~~reduce~~in ~~our~~connection ~~stockholders’~~with ~~and~~the sale of our ~~recovery~~real ~~against~~estate ~~them~~properties, ifincluding ~~they~~the ~~negligently~~Core-Portfolio ~~cause~~Properties. usThese disposition fees are estimated to ~~incur~~be ~~losses~~approximately $3.1 million, depending upon the prices we receive for the sale of our remaining real estate properties.

~~Maryland~~• ~~law~~LPI ~~provides~~earns ~~that~~property amanagement ~~director~~fees ~~has~~from nous ~~liability~~and inreceives ~~that~~certain ~~capacity~~reimbursements iffrom heus ~~performs~~for ~~his~~its ~~duties~~services. inLPI ~~good~~will ~~faith,~~continue ~~in a manner he reasonably believes~~ to beearn insuch ~~the~~fees ~~company’s best interests~~ and ~~with~~receive ~~the~~reimbursements ~~care~~as ~~that~~long anas ~~ordinarily~~we ~~prudent~~continue ~~person~~to inown aany ~~like~~real ~~position~~estate ~~would use under similar circumstances~~properties. ~~Our~~ ~~charter~~Based ~~provides~~on ~~that~~the noreal ~~independent~~estate ~~director~~properties ~~shall be liable to us or our stockholders for monetary damages and that~~ we ~~will~~owned ~~generally~~as ~~indemnify~~of ~~them~~September ~~for~~22, ~~losses unless they are grossly negligent or engage in willful misconduct. As a result~~2017, ~~our~~the ~~stockholders~~date ~~and~~ we ~~may~~filed ~~have more limited rights against~~ our ~~independent~~definitive ~~directors~~proxy ~~than~~statement ~~might~~relating ~~otherwise~~to, ~~exist~~among ~~under~~other ~~common law~~matters, ~~which~~the ~~could~~Plan ~~reduce~~of ~~our~~Liquidation, ~~stockholders’~~with ~~and~~the ~~our~~SEC ~~recovery~~(the ~~from~~“Proxy ~~these~~Statement”), ~~persons~~including ifthe ~~they~~remaining ~~act~~Core-Portfolio inProperties, awe ~~negligent~~project ~~manner. In~~that ~~addition,~~ we may bepay ~~obligated~~LPI toan ~~fund~~aggregate ~~the~~of ~~defense~~approximately ~~costs~~$0.3 ~~incurred~~million byduring ~~our~~the ~~independent~~liquidation ~~directors (as well as by our other directors~~process, ~~officers,~~although ~~employees~~this ~~(if~~estimate wemay ~~ever~~vary ~~have~~significantly ~~employees)~~based ~~and~~on ~~agents)~~the intiming ~~some~~of ~~cases, which would decrease~~ the ~~cash~~sales ~~otherwise~~of ~~available~~our ~~for~~remaining ~~distribution~~real toestate ~~our stockholders~~properties.


•	Mr. Kachadurian, one of the Company’s independent directors, serves on the board of directors of the buyer of Wesley Village, which we sold on March 9, 2017, and also serves as an officer of the external manager to such buyer. Although not anticipated, such buyer could bid on one of our remaining real estate properties.


•	The Sub-Advisor owns a total of 20,000 shares of our common stock, for which we estimate it will receive aggregate liquidating distributions, including the Initial Liquidating Distribution, of approximately $170,000 in connection with our liquidation.

Because of the above conflicts of interest, our directors, our officers, our advisor, the Sub-Advisor, LPI and their affiliates may be motivated to make decisions or take actions based on factors other than the best interest of our stockholders throughout the liquidation process.

We depend on our sponsors, our officers and our advisor and the real estate professionals assembled by our advisor to conduct our operations and implement the Plan of Liquidation, and on LPI to manage our remaining real estate properties, and our sponsors, our officers and our advisor and the real estate professionals assembled by our advisor and LPI each face competing demands on their time, which could hinder our operating performance and the implementation of the Plan of Liquidation, and reduce the amount of any additional liquidating distributions we pay to our stockholders.

We depend on our sponsors, our officers, KBS Capital Advisors and on our advisor’s real estate professionals for the day-to-day operation of our business and to implement the Plan of Liquidation, and on LPI to manage our remaining real estate properties. KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”), KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”), KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”), KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”), KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”), each of which is a KBS-sponsored non-traded REIT, and other KBS-advised institutional investors are also advised by our advisor or affiliates of our advisor and rely on many of the same real estate professionals as we do. In addition, our advisor depends upon the fees and other compensation that it receives from us, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT, and other KBS-sponsored programs in connection with the purchase, management and sale of assets to conduct its operations. Any adverse changes in the financial condition of KBS Capital Advisors or LPI or our relationship with KBS Capital Advisors or LPI could hinder their ability to successfully conduct our operations and manage our remaining real estate properties and could reduce the amount of any additional liquidating distributions we pay to our stockholders.

Mr. Bren, Jeffrey K. Waldvogel and Ms. Stacie K. Yamane are executive officers of KBS REIT II, KBS REIT III and KBS Growth & Income REIT, Mr. McMillan is an executive officer of KBS REIT II and KBS REIT III and Mr. Bren is a director of KBS Growth & Income REIT and is an executive officer of KBS Realty Advisors and its affiliates, the advisors of the other KBS-sponsored programs and the investment advisors to KBS-advised investors in real estate and real estate-related assets. In addition, Messrs. McMillan and Waldvogel and Ms. Yamane are executive officers of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II.

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Mr. Henry is Chief Executive Officer of LPI, a firm that, through affiliated entities, also manages a residential real estate portfolio in addition to our remaining real estate properties, for which Mr. Hays acts as President. As a result of their interests in other programs, their obligations to other investors and the fact that they engage in and they will continue to engage in other business activities, on behalf of themselves and others, Messrs. Bren, Butcher, Henry, Hays, McMillan and Waldvogel and Ms. Yamane face conflicts of interest in allocating their time among us and other KBS- and Legacy-sponsored programs and other business activities in which they are involved. Should our advisor or LPI breach its fiduciary duty to us by inappropriately devoting insufficient time or resources to our business, the overall value of our stockholders’ investment and the amount of any additional liquidating distributions we pay to our stockholders may decrease.

In addition, KBS REIT II and KBS Strategic Opportunity REIT, have announced that they are exploring strategic alternatives. KBS Strategic Opportunity REIT announced that its board of directors and management believe that pursuing a perpetual life daily NAV REIT strategy provides the best opportunity for it to achieve its objectives of maximizing the return to its stockholders and providing additional liquidity for its stockholders and had filed a definitive proxy statement containing certain measures to be voted on at its annual meeting of stockholders in furtherance of those objectives. KBS Capital Advisors acts as the advisor for KBS REIT II and KBS Strategic Opportunity REIT and thus, the key real estate professionals at our advisor, including Messrs. Bren and McMillan, on whom we will depend to carry out the Plan of Liquidation, will be required to perform the potentially time-demanding duties with respect to the implementation of any strategic alternatives chosen for KBS REIT II and KBS Strategic Opportunity REIT.

All of our executive officers, some of our directors and the key real estate professionals assembled by our advisor and LPI face conflicts of interest related to their positions and/or interests in affiliates of our sponsors, which could hinder our ability to implement our business strategy and the Plan of Liquidation, and decrease the amount of any additional liquidating distributions we pay to our stockholders.

All of our executive officers, some of our directors and key real estate professionals assembled by our advisor and LPI are also executive officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, the Sub-Advisor and other sponsor-affiliated entities. Through sponsor-affiliated entities, some of these persons also serve as the investment advisors to KBS-advised investors in real estate and real estate-related assets. Through KBS Capital Advisors and KBS Realty Advisors, some of these persons work on behalf of KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT and other KBS-sponsored programs and KBS-advised investors. And through LPI, some of these persons serve as managers for other institutional investors. As a result, they owe fiduciary duties to each of these entities, their members and limited partners and these investors, which fiduciary duties may from time to time conflict with the fiduciary duties that they owe to us and our stockholders. Their loyalties to these other entities and investors could result in action or inaction that breaches their fiduciary duties to us and harms the implementation of our business strategy and the Plan of Liquidation. If we do not successfully implement our business strategy and the Plan of Liquidation, the overall value of our stockholders’ investment and the amount of any additional liquidating distributions we pay to our stockholders may decrease.

Risks Related to an Investment in Us

Because no public trading market for our shares currently exists and because we have terminated our share redemption program, our stockholders may not realize the cash value of their shares until we complete our liquidation pursuant to the Plan of Liquidation.

There is no public market for our shares and our stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase standards and such sale complies with applicable state and federal securities laws. In addition, our charter prohibits the ownership of more than 9.8% of our stock by any person, unless exempted by our board of directors. Moreover, we have terminated our share redemption program.

Therefore, it will be difficult for our stockholders to sell their shares promptly or at all. If our stockholders are able to sell their shares, they would likely have to sell them at a substantial discount to the price for which they acquired the shares or to our estimated net proceeds from liquidation of $8.45 per share, less the $4.05 per share Initial Liquidating Distribution. It is also likely that our stockholders’ shares would not be accepted as the primary collateral for a loan.

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Disruptions in the financial markets and uncertain economic conditions could adversely affect the values of our remaining real estate properties and the amount of any additional liquidating distributions we pay to our stockholders.

A volatile and challenging global macro-economic environment may interfere with the implementation of the Plan of Liquidation and reduce the amount of net proceeds from liquidation and therefore, reduce the amount of any additional liquidating distributions we pay to our stockholders. Disruptions in the financial markets and uncertain economic conditions could adversely affect the values of our remaining real estate properties if we are unable to sell them pursuant the applicable Core-Portfolio Sale Agreement. Furthermore, a decline in economic conditions could negatively impact real estate fundamentals and result in lower occupancy, lower rental rates and declining real estate values.

These factors could decrease the overall value of our stockholders’ investment and the amount of any additional liquidating distributions we pay to our stockholders.

The loss of or the inability of our advisor and LPRR LLC and their affiliates to retain the services of key real estate professionals could delay or hinder implementation of our business strategies and the Plan of Liquidation, which could decrease the overall value of our stockholders’ investment and the amount of any additional liquidating distributions we pay to our stockholders.

Our success depends to a significant degree upon the contributions of Messrs. Bren, Butcher, Henry and McMillan, each of whom would be difficult to replace. Neither we nor our affiliates have employment agreements with these individuals and they may not remain associated with us. If any of these persons were to cease their association with us, our operating results and ability to implement the Plan of Liquidation could suffer. We do not maintain key person life insurance on any person. We believe that our future success depends, in large part, upon our advisor’s and LPRR LLC’s and their affiliates’ ability to retain highly skilled managerial and operational professionals. Competition for such professionals is intense, and our advisor and LPRR LLC and their affiliates may be unsuccessful in retaining such skilled individuals. If we lose the services of highly skilled professionals or do not maintain appropriate strategic relationships, our ability to implement our business strategies and the Plan of Liquidation could be delayed or hindered, the overall value of our stockholders’ investment and the amount of any additional liquidating distributions we pay to our stockholders may decline.

Our stockholders may be adversely affected by the Indemnification Amendment.

Although we believe that the changes contained in one of the amendments to our charter approved by our stockholders on December 19, 2017 (the “Indemnification Amendment”) will improve our ability to retain and attract qualified directors and officers and an external advisor, the Indemnification Amendment does increase the risk that we and our stockholders will not be able to recover monetary damages from our directors if they fail to meet the statutory standard of conduct or from our officers if they fail to satisfy their duties under Maryland law or from our advisor if it fails to satisfy its duties under the charter. In addition, the Indemnification Amendment would allow for indemnification of our present and former directors and officers and our advisor and its affiliates in circumstances where indemnification had been conditioned or limited by the charter. The reduced ability to recover from present and former directors and officers and our advisor and its affiliates and the increased right to indemnification is true not only for their future acts or omissions but also for acts or omissions that occurred prior to the date of the amendment to our charter reflected in the Indemnification Amendment. The Indemnification Amendment also increases the risk that we will incur significant defense costs that would otherwise have to be borne by our present and former directors and officers and our advisor or its affiliates.

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

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

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


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


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

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


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


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


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


•	damage our reputation among our stockholders.

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

Although we have begun the implementation of our strategic alternatives, there are no assurances that we will be successful in executing such strategy or in creating additional stockholder value or continuing to pay distributions at the current rates or paying a special distribution to our stockholders.

Although we have begun the implementation of our strategic alternatives, we can give no assurances that this strategy will be successful. There are many factors that may affect our ability to execute such strategy including, among other factors, our ability to dispose of some of our real estate properties at the times and the prices we expect and our ability to fund and execute our plan to renovate certain of our real estate properties. Further, although we have begun to implement our strategic alternatives and intend to pursue strategic asset sales for certain of our real estate properties and to renovate certain others, we can give no assurances that the execution of such strategy will create additional stockholder value or that we will be able to continue to pay distributions at the current rates or pay a special distribution to our stockholders at the time and at the amount we expect. Depending on the number of properties sold, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage. Any future special distributions we pay from the proceeds of future dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2017.

On December 29, 2016, we, through the Owner, entered into the Wesley Village Agreement for the sale of Wesley Village to the Purchaser. The Wesley Village Agreement was subsequently terminated, reinstated and amended and on March 9, 2017, we completed the sale of Wesley Village. For information relating to the Wesley Village Agreement, see Part I, Item 2, “Properties - Wesley Village Agreement.” For information relating to the termination and reinstatement of, and the amendments to, the Wesley Village Agreement, and the subsequent sale of Wesley Village, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Subsequent Events - Termination and Reinstatement of, and Amendments to, the Wesley Village Agreement; Disposition of Wesley Village.”

Risks Related to Conflicts of Interest

Our sponsors and their respective affiliates, including our advisor, LPI, all of our executive officers and some of our directors and other key real estate professionals, face conflicts of interest caused by their compensation arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders.

Our advisor and its affiliates and LPI receive substantial fees from us. These fees could influence our advisor’s and LPI’s advice to us as well as the judgment of their affiliates. Among other matters, these compensation arrangements could affect their judgment with respect to:

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

• ~~various~~sales ~~matters~~of ~~relating~~our remaining real estate properties (including, subject to the ~~management~~approval of our ~~real~~conflicts ~~estate properties~~committee, ~~including~~sales ~~relating~~ to ~~construction~~affiliates), ~~projects~~which atentitle ~~our~~KBS ~~real~~Capital ~~estate~~Advisors ~~properties;~~to disposition fees.

•The ~~sales~~fees ofour ~~properties~~advisor ~~(including,~~receives ~~subject~~in toconnection with the ~~approval~~management of our ~~conflicts~~assets ~~committee,~~are ~~sales~~based toon ~~affiliates)~~the cost of the investment, ~~which~~and ~~entitle~~not ~~KBS~~based ~~Capital~~on ~~Advisors~~the quality of the investment or the quality of the services rendered to ~~disposition~~us. See ~~fees~~also ~~and~~“— ~~possible~~Risks ~~subordinated~~Related ~~incentive~~to ~~fees;~~the Plan of Liquidation.”

• whether and when to terminate our advisory agreement with KBS Capital Advisors, which may entitle KBS Capital Advisors to receive a subordinated performance fee that, under certain circumstances, we may be required to pay even though our stockholders do not ultimately realize a return on their investment in us; and

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

The fees our advisor receives in connection with the management of our assets are based on the cost of the investment, and not based on the quality of the investment or the quality of the services rendered to us.

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Our sponsors, our officers, KBS Capital Advisors and the real estate professionals assembled by our advisor and LPI will face competing demands relating to their time and this may cause our operations and our stockholders’ investment in us to suffer.

We rely on our sponsors, our officers, KBS Capital Advisors and on real estate professionals that our advisor and LPI retain to provide services to us, for the day-to-day operation of our business and management of our real estate properties. Mr. Bren, Jeffrey K. Waldvogel and Ms. Stacie K. Yamane are executive officers of KBS REIT I, KBS REIT II, KBS REIT III and KBS Growth & Income REIT, Mr. McMillan is an executive officer of KBS REIT I, KBS REIT II and KBS REIT III and Mr. Bren is an executive officer of KBS Realty Advisors and its affiliates, the advisors of the other KBS-sponsored programs and the investment advisors to KBS-advised investors in real estate and real estate-related assets. In addition, Messrs. McMillan and Waldvogel and Ms. Yamane are executive officers of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II. In addition, KBS Real Estate Investment Trust II and KBS Strategic Opportunity REIT have announced that they are exploring strategic alternatives, and KBS REIT I has announced the passage by its stockholders of a plan of complete liquidation and dissolution of KBS REIT I, the pursuit of each of which would create further demands on the time of our advisor’s real estate, debt finance, management and accounting professionals.

Mr. Butcher is Chairman of the Board of LPI, a firm that, through affiliated entities, manages a residential real estate portfolio. Mr. Henry is Chief Executive Officer of LPI, for which Mr. Hays acts as President. As a result of their interests in other programs, their obligations to other investors and the fact that they engage in and they will continue to engage in other business activities, on behalf of themselves and others, Messrs. Bren, Butcher, Henry, Hays, McMillan and Waldvogel and Ms. Yamane face conflicts of interest in allocating their time among us and other KBS- and Legacy-sponsored programs and other business activities in which they are involved. Should our advisor breach its fiduciary duty to us by inappropriately devoting insufficient time or resources to our business, the returns on our investments, and the value of our stockholders’ investment in us, may decline.

All of our executive officers, some of our directors and key real estate professionals assembled by our advisor and LPI are also executive officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, the sub-advisor and other sponsor-affiliated entities. Through sponsor-affiliated entities, some of these persons also serve as the investment advisors to KBS-advised investors in real estate and real estate-related assets. Through KBS Capital Advisors and KBS Realty Advisors, some of these persons work on behalf of KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT and other KBS-sponsored programs and KBS-advised investors. And through LPI, some of these persons serve as managers for other institutional investors. As a result, they owe fiduciary duties to each of these entities, their members and limited partners and these investors, which fiduciary duties may from time to time conflict with the fiduciary duties that they owe to us and our stockholders. Their loyalties to these other entities and investors could result in action or inaction that breaches their fiduciary duties to us and is detrimental to our business, which could harm the implementation of our business strategy. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to pay distributions to our stockholders and the value of our assets may decrease.

Risks Related to Our Corporate Structure

Ownership limitations may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.

In order for us to qualify as a REIT for each taxable year, no more than 50% of the value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of any calendar year. “Individuals” for this purpose include natural persons, and some entities such as private foundations. To preserve our REIT qualification, our charter generally prohibits any person from directly or indirectly owning more than 9.8% in value of our capital stock. This ownership limitation could have the effect of delaying, deferring or preventing a takeover or other transaction including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets), in which ~~holders of~~ our ~~common~~stockholders ~~stock~~ might receive a premium for their shares over the ~~then~~amount ~~prevailing~~of ~~market~~any ~~price~~additional liquidating distributions we may pay to our stockholders or which ~~holders~~stockholders might believe to be otherwise in their best interests.

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

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

Our stockholders’ investment return may be reduced if we are required to register as an investment company under the Investment Company Act; if we or our subsidiaries become an unregistered investment company, we could not continue our business.

Neither we nor any of our subsidiaries intend to register as investment companies under the Investment Company Act. If we or any of our subsidiaries were obligated to register as investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

• limitations on capital structure;

• restrictions on specified investments;

• prohibitions on transactions with affiliates; and

• compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, an investment company is any issuer that:

• pursuant to Section 3(a)(1)(A), is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or

• pursuant to Section 3(a)(1)(C), is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the “40% test”). “Investment securities” excludes U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

With respect to the primarily engaged test, we and our Operating Partnership are holding companies. Through the majority-owned subsidiaries of our Operating Partnership, we and our Operating Partnership are primarily engaged in the non-investment company businesses of these subsidiaries, namely the business of purchasing real estate assets.

We believe that neither we nor our Operating Partnership are required to register as an investment company based on the following analyses. With respect to the 40% test, the entities through which we and our Operating Partnership own our assets are majority-owned subsidiaries that will not themselves be investment companies and will not be relying on the exceptions from the definition of investment company under Section 3(c)(1) or Section 3(c)(7).

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IfOur ~~any~~stockholders ofhave ~~the~~limited ~~subsidiaries~~control ofover ~~our~~changes Operating Partnership fail to meet the 40% test, we believe they will usually, if not always, be able to rely on Section 3(c)(5)(C) of the Investment Company Act for an exception from the definition of an investment company. (Otherwise, they should be able to rely on the exceptions for private investment companies pursuant to Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act.) As reflected in ~~no-action~~our ~~letters,~~policies ~~the SEC staff’s position on Section 3(c)(5)(C) generally requires that an issuer maintain at least 55% of its assets in “mortgages~~ and ~~other~~operations ~~liens on~~ and ~~interests in real estate,” or qualifying assets; at least 80% of its assets in qualifying assets plus real estate-related assets; and no more than 20% of~~ the ~~value~~Plan of ~~its assets in other than qualifying assets and real estate-related assets~~Liquidation, which weincreases ~~refer to as miscellaneous assets. To constitute a qualifying asset under this 55% requirement, a real estate interest must meet various criteria based on no-action letters. We expect that each of~~ the ~~subsidiaries~~uncertainty ~~of our Operating Partnership relying on Section 3(c)(5)(C) will invest at least 55% of its assets in qualifying assets,~~ and ~~approximately~~risks ~~an additional 25% of its assets in other types of real estate-related assets. If any subsidiary relies on Section 3(c)(5)(C), we expect to rely on guidance published by the SEC staff or on~~ our ~~analyses~~stockholders ~~of guidance published with respect to types of assets to determine which assets are qualifying real estate assets and real estate-related assets~~face.

~~The~~Our ~~SEC~~board orof ~~its~~directors ~~staff~~determines ~~may~~our ~~issue~~major ~~interpretations~~policies, ~~with~~including ~~respect~~our topolicies ~~various~~regarding ~~types~~financing, ofdebt ~~assets~~capitalization, ~~that~~REIT ~~are~~qualification, ~~contrary~~distributions and liquidation pursuant to ~~our~~the ~~views~~Plan ~~and~~of ~~current~~Liquidation. Our ~~SEC~~board ~~staff~~of ~~interpretations~~directors ~~are~~may ~~subject~~amend toor ~~change,~~revise ~~which~~certain ~~increases~~of ~~the~~these ~~risk~~and other policies without a vote of ~~non-compliance~~the stockholders. Under IfMaryland weGeneral ~~were~~Corporation ~~required~~Law toand ~~register~~our ascharter, anour ~~investment~~stockholders ~~company~~have ~~but~~a ~~failed~~right to dovote ~~so,~~only weon ~~would~~limited bematters. Notwithstanding ~~prohibited~~approval ~~from~~of ~~engaging~~the inPlan of Liquidation by our ~~business~~stockholders, ~~and~~the ~~criminal~~board ~~and~~of ~~civil~~directors ~~actions~~or, ~~could~~if bea ~~brought~~liquidating ~~against~~trust ~~us.~~is Inestablished, ~~addition~~the trustees of the liquidating trust, may make certain modifications or amendments to the Plan of Liquidation without further action by or approval of our ~~contracts~~stockholders ~~would~~to bethe ~~unenforceable~~extent ~~unless~~permitted aunder ~~court~~law. Our ~~required~~board’s ~~enforcement~~broad ~~and~~discretion ain ~~court~~setting ~~could~~policies ~~appoint~~and aour ~~receiver~~stockholders’ inability to ~~take~~exert control ofover usthose policies increases the uncertainty and ~~liquidate~~risks our ~~business~~stockholders face.

~~Our~~We ~~stockholders~~ have ~~limited~~terminated ~~control over changes in~~ our ~~policies~~share ~~and~~redemption ~~operations, which increases the uncertainty and risks our stockholders face~~program.

~~Our~~On December 19, 2017, in connection with the implementation of the Plan of Liquidation, our board of directors ~~determines~~approved the termination of our ~~major~~share ~~policies,~~redemption ~~including~~program ~~our~~effective ~~policies~~as ~~regarding~~of ~~financing,~~January ~~growth~~21, ~~debt~~2018. ~~capitalization~~Thus, ~~REIT~~the ~~qualification~~last ~~and~~redemption ~~distributions. Our~~date ~~board~~under ofthe ~~directors~~share ~~may~~redemption ~~amend~~program orwould ~~revise~~have ~~these~~been ~~and~~December ~~other~~29, ~~policies~~2017. ~~without~~However, abecause ~~vote~~ of certain limitations on the ~~stockholders. Under~~dollar ~~Maryland~~value ~~General~~of ~~Corporation~~shares ~~Law~~that ~~and~~could ~~our~~have ~~charter,~~been redeemed under our ~~stockholders~~share ~~have~~redemption aprogram, ~~right~~we toexhausted ~~vote~~funds ~~only~~available onfor ~~limited~~all ~~matters. Our~~redemptions ~~board’s~~for ~~broad~~the ~~discretion~~remainder of 2017 in ~~setting~~January ~~policies~~2017 and ~~our~~funds ~~stockholders’~~available ~~inability~~for toSpecial ~~exert~~Redemptions ~~control~~for ~~over~~the ~~those~~remainder ~~policies~~of ~~increases~~2017 ~~the~~in ~~uncertainty~~August ~~and~~2017. ~~risks~~As ~~our~~such, ~~stockholders~~we ~~face.~~were unable to redeem any shares on December 29, 2017.

~~Our~~Payment ~~stockholders~~of ~~may~~fees ~~not be able~~ to ~~sell~~KBS ~~their~~Capital ~~shares~~Advisors ~~under~~and ~~our~~its ~~share~~affiliates ~~redemption program~~ and, ifLPI ~~our~~reduces ~~stockholders~~cash ~~are~~available ~~able~~for toany ~~sell~~additional ~~their~~liquidating ~~shares~~distributions ~~under~~we ~~the program, they~~ may ~~not~~pay ~~be able~~ to ~~recover the amount of their investment in~~ our ~~shares~~stockholders.

~~Our~~KBS ~~share~~Capital ~~redemption~~Advisors ~~program~~and ~~includes~~its ~~numerous~~affiliates ~~restrictions~~and ~~that~~LPI ~~limit~~perform services for us in connection with the management, leasing and disposition of our remaining real estate properties. We pay them substantial fees for these services, which results in immediate dilution of the value of our stockholders’ ~~ability~~investment toin ~~sell~~us ~~their~~and ~~shares:~~reduces the amount of cash available for any additional liquidating distributions we may pay to our stockholders.

•Disposition ~~Unless~~fees, ~~the~~asset ~~shares~~management ~~are~~fees ~~being~~and ~~redeemed~~property inmanagement ~~connection~~fees ~~with~~reduce athe ~~Special~~amount ~~Redemption,~~of any additional liquidating distributions we ~~may~~pay ~~not~~to ~~redeem~~our ~~shares~~stockholders ~~until~~and their overall return on investment. For information relating to fees potentially payable to our affiliates in connection with the ~~stockholder~~implementation ~~has~~of ~~held~~the ~~his~~Plan orof ~~her~~Liquidation, ~~shares~~see ~~for~~“ ~~one~~— ~~year~~Risks Relating to the Plan of Liquidation.”

• We may redeem only the number of shares that we could purchase with the amount of the net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year; provided that we may not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once we have redeemed $1.5 million of shares under our share redemption program, including in connection with Special Redemptions, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with a Special Redemption. In establishing the $2.0 million limitation, our board of directors considered the cash requirements necessary to effectively manage our assets. Notwithstanding anything contained in this paragraph to the contrary, our board of directors may amend, suspend or terminate the share redemption program without stockholder approval upon 30 days’ notice, provided we may increase or decrease the funding available for the redemption of shares pursuant to the program upon ten business days’ notice to our stockholders. We may provide this notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to our stockholders.

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

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

These limits may prevent us from accommodating all redemption requests made in any year and may significantly limit our stockholders’ ability to have their shares redeemed pursuant to our share redemption program. In addition, we may not have significant cash flow to pay distributions, which would in turn severely limit redemptions during the next calendar year.

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In January 2016, we exhausted the $1.5 million of funds available for all redemptions for 2016 and in August 2016, we exhausted the remaining $0.5 million of funds available for Special Redemptions for 2016. As of December 31, 2016, we had $1.4 million of outstanding and unfulfilled ordinary redemption requests and $0.3 million of outstanding and unfulfilled Special Redemption requests. The annual limitation was reset on January 1, 2017, and we had an aggregate of $2.0 million of funds available for all redemptions, subject to the limitations in the share redemption program, including the requirement that the first $1.5 million of funds is available for all redemptions and the last $0.5 million is available solely for Special Redemptions. We exhausted $1.5 million of funds available for all redemptions for 2017 in January 2017 and an aggregate of $0.3 million of funds available for Special Redemptions for 2017 in January and February 2017. As such, we will only be able to process $0.2 million of redemption requests related to Special Redemptions for the remainder of 2017.

On December 9, 2016, our board of directors approved an estimated value per share of our common stock of $9.35 based on the estimated value of our assets less the estimated value of our liabilities divided by the number of shares outstanding, all as of September 30, 2016. Pursuant to our share redemption program, redemptions made in connection with a Special Redemption are made at a price per share equal to the most recent estimated value per share of our common stock as of the applicable redemption date. The price at which we redeem all other shares eligible for redemption is as follows:

• For those shares held by the redeeming stockholder for at least one year, 92.5% of our most recent estimated value per share as of the applicable redemption date;

• For those shares held by the redeeming stockholder for at least two years, 95.0% of our most recent estimated value per share as of the applicable redemption date;

• For those shares held by the redeeming stockholder for at least three years, 97.5% of our most recent estimated value per share as of the applicable redemption date; and

• For those shares held by the redeeming stockholder for at least four years, 100% of our most recent estimated value per share as of the applicable redemption date.

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

The value of our shares will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets and due to other factors. As such, the estimated value per share does not take into account developments in our portfolio since December 9, 2016. We currently expect to utilize an independent valuation firm to update the estimated value per share in December 2017. Upon updating our estimated value per share, the redemption price per share will also change. Because of the restrictions of our share redemption program, our stockholders may not be able to sell their shares under the program, and if stockholders are able to sell their shares, depending upon the then current redemption price, they may not recover the amount of their investment in us.

The estimated value per share of our common stock may not reflect the value that stockholders will receive for their investment.

On December 9, 2016, our board of directors approved an estimated value per share of our common stock of $9.35 based on the estimated value of our assets less the estimated value of our liabilities, or net asset value, divided by the number of shares outstanding, all as of September 30, 2016. We provided this estimated value per share to assist broker-dealers that participated in the Offerings in meeting their customer account statement reporting obligations under National Association of Securities Dealers (“NASD”) Conduct Rule 2340 as required by the Financial Industry Regulatory Authority (“FINRA”). The valuation was performed in accordance with the provisions of and also to comply with the Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association (“IPA”) in April 2013 (the “IPA Valuation Guidelines”), using the methodologies and assumptions described in Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.” We engaged CBRE, Inc. (“CBRE”), an independent, third-party valuation firm, to perform appraisals of our 11 real estate properties and, through an affiliate, to provide a range of the estimated value per share of our common stock as of December 9, 2016 (the “EVPS Range”). CBRE utilized its appraisals of our 11 real estate properties and valuations performed by our advisor of our cash, other assets, mortgage debt and other liabilities to determine the EVPS Range.

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As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties using different assumptions and estimates could derive a different estimated value per share of our common stock, and this difference could be significant. In particular, due in part to (i) our relatively small asset base, (ii) the high concentration of our total assets in real estate, and (iii) the number of shares of our common stock outstanding, any changes in key assumptions made in appraising our real estate properties and any changes in the value of individual assets in the portfolio, particularly changes affecting our real estate properties, could have a significant impact on the estimated value of our shares. The estimated value per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to U.S. generally accepted accounting principles (“GAAP”), nor does it represent a liquidation value of our assets and liabilities or the price at which our shares of common stock would trade on a national securities exchange. The estimated value per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated value per share also does not take into account estimated disposition costs and fees for real estate properties, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of debt.

Accordingly, with respect to the estimated value per share, we can give no assurance that:

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

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

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

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

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

We did not make any adjustments to the valuation for the impact of other transactions occurring subsequent to September 30, 2016, including, but not limited to, (i) the issuance of common stock under the dividend reinvestment plan, (ii) net operating income earned and distributions declared and (iii) the redemption of shares. Further, the value of our shares will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets and due to other factors. As such, the estimated value per share does not take into account developments in our portfolio since December 9, 2016. We currently expect to utilize an independent valuation firm to update the estimated value per share in December 2017. For a full description of the methodologies used to value our assets and liabilities in connection with the calculation of the estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information.”

The actual value of shares that we repurchase under our share redemption program may be substantially less than what we pay.

Under our share redemption program, shares currently may be repurchased at varying prices depending on (i) the number of years the shares have been held, (ii) our estimated value per share and (iii) whether the redemptions are sought in connection with a Special Redemption. Effective December 9, 2016 the maximum price that may be paid under the program is $9.35 per share, which is our estimated value per share. This reported value is likely to differ from the price at which a stockholder could resell his or her shares for the reasons discussed in the risk factor above. Thus, if the actual value of the shares we redeem is less than $9.35 per share or less than the price we pay to redeem the shares, then the repurchase will be dilutive to our remaining stockholders.

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

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

Payment of fees to KBS Capital Advisors and its affiliates and LPI will reduce cash available for distribution and increases the risk that our stockholders will not be able to recover the amount of their investment in our shares.

KBS Capital Advisors and its affiliates and LPI perform services for us in connection with the management, leasing and disposition of our properties. We pay them substantial fees for these services, which results in immediate dilution of the value of our stockholders’ investment in us and reduces the amount of cash available for distribution to our stockholders.

Therefore, these fees increase the risk that the cash available for distribution to common stockholders upon a liquidation of our portfolio would be less than stockholders paid for our shares. These substantial fees and other payments also increase the risk that our stockholders will not be able to resell their shares at a profit.

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

Our sponsors have only invested $200,000 in us through the purchase of 20,000 shares of our common stock in our Initial Offering at $10.00 per share. With this limited exposure, our stockholders may be at a greater risk of loss because our sponsors do not have as much to lose from a decrease in the value of our shares as do those sponsors who make more significant equity investments in their companies.

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

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

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If we do not successfully implement our liquidation policy, our stockholders may have to hold their investment for an indefinite period.

Although we presently intend to complete a transaction providing liquidity to stockholders by January 31, 2020, our charter does not require our board of directors to pursue such a liquidity event. Market conditions and other factors could cause us to delay the commencement of our liquidation beyond January 31, 2020. If our board of directors does determine to pursue our liquidation policy, we would be under no obligation to conclude the process within a set time. The timing of the sale of assets will depend on real estate and financial markets, economic conditions in the areas in which properties are located and federal income tax effects on stockholders, that may prevail in the future. We cannot guarantee that we will be able to liquidate all assets. After we adopt a plan of liquidation, we would remain in existence until all properties and assets are liquidated. If we do not pursue a liquidity event, or delay such an event due to market conditions, our stockholders’ shares may continue to be illiquid and they may, for an indefinite period of time, be unable to convert their investment to cash easily and could suffer losses on their investment in us.

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

Our charter provides that any tender offer made by a stockholder, including any “mini-tender” offer, must comply with most provisions of Regulation 14D of the Securities Exchange Act of 1934, as amended. The offering stockholder must provide our company notice of such tender offer at least ten business days before initiating the tender offer. If the offering stockholder does not comply with these requirements, our company will have the right to redeem that stockholder’s shares and any shares acquired in such tender offer. In addition, the noncomplying stockholder shall be responsible for all of our company’s expenses in connection with that stockholder’s noncompliance. This provision of our charter may discourage a stockholder from initiating a tender offer for our shares and prevent him or her from receiving a premium price for his or her shares in such a transaction.

General Risks Related to Investments in Real Estate

~~Economic~~The ~~and~~risk ~~regulatory~~factors ~~changes~~in ~~that~~this ~~impact~~section ~~the~~apply ~~real~~only ~~estate~~if ~~market~~we ~~generally~~are ~~may~~unable ~~weaken~~to sell our ~~operating~~remaining ~~results~~real ~~and~~estate ~~cause~~properties uspursuant to bethe ~~unable~~terms toof ~~realize appreciation in~~ the ~~value~~Core-Portfolio ofSale ~~our properties~~Agreements.

~~The~~Economic, ~~performance~~market ofand ~~our~~regulatory ~~properties~~changes isthat ~~subject~~impact tothe real estate market generally may decrease the ~~risks~~value ~~typically~~of ~~associated~~our ~~with~~remaining real estate properties, ~~including:~~weaken our operating results and reduce the amount of any additional liquidating distributions we pay to our stockholders.

The performance of our remaining real estate properties is subject to the risks typically associated with real estate, including:


•	downturns in national, regional and local economic conditions;


•	competition from other residential buildings;


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

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

• changes or increases in tax, including real and personal property taxes, real estate, environmental and zoning laws; ~~and~~

• ~~periods~~natural ofdisasters ~~high~~such ~~interest~~as ~~rates and tight money supply~~hurricanes, ~~all~~earthquakes ofand ~~which could adversely affect our cash flows from operations.~~floods;

In• ~~addition,~~acts ~~local~~of ~~conditions~~war interrorism, including the ~~markets~~consequences inof ~~which~~terrorist weattacks, ~~own apartment communities may significantly affect occupancy or rental rates at~~ such ~~properties. The~~as ~~risks~~those that ~~may~~occurred ~~adversely~~on ~~affect~~September ~~conditions~~11, ~~in those markets include the following:~~ 2011;


•	the potential for uninsured or underinsured property loss; and


•	periods of high interest rates and tight money supply.

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In addition, local conditions in the markets in which we own our remaining real estate properties may significantly affect occupancy or rental rates at such properties. The risks that may adversely affect conditions in those markets include the following:


•	layoffs and relocations of significant local employers and other events negatively impacting local employment rates and the local economy;


•	an oversupply of, or a lack of demand for, apartments;

• changes in real estate zoning laws that may reduce the desirability of real estate in an area;


•	the inability or unwillingness of residents to pay rent increases; and


•	rent control or rent stabilization laws or other housing laws, which could prevent us from raising rents.

~~These~~Any ~~factors~~of ~~could~~the ~~weaken~~above ~~our~~factors, ~~operating results~~ or ~~cause~~a uscombination tothereof, becould ~~unable~~result toin ~~realize~~a ~~growth~~decrease in the value of our remaining real estate properties., which would have an adverse effect on our operations and reduce the amount of any additional liquidating distributions we pay to our stockholder.

21Our remaining real estate properties are concentrated in the apartment community sector, which will leave our profitability vulnerable to a downturn or slowdown in the sector.

~~Table~~Our remaining real estate properties are concentrated in the apartment community sector and as a result, we are subject to risks inherent in investments in a single type of ~~Contents~~property. Thus, the potential effects on our revenues, and as a result, on cash available for any additional liquidating distributions we pay to our stockholders, resulting from a downturn or slowdown in the apartment community sector will be more pronounced than if we had more fully diversified our investments.

~~Our~~We ~~investments~~depend ~~are~~on ~~concentrated~~tenants infor ~~the~~our ~~apartment~~revenue ~~community~~and, ~~sector~~accordingly, ~~which~~our ~~will~~revenue ~~leave~~and the amount of any additional liquidating distributions we pay to our ~~profitability~~stockholders ~~vulnerable~~is partially dependent upon the ability of the tenants of our remaining real estate properties to pay their rents in a ~~downturn~~timely manner. Non-renewals, terminations or ~~slowdown~~lease indefaults could reduce our net income and the ~~sector~~amount of any additional liquidating distributions we pay to our stockholders.

~~Our~~The ~~investments~~underlying ~~are~~value ~~concentrated~~of inour ~~the~~remaining ~~apartment~~real ~~community~~estate ~~sector~~properties and asthe aamount ~~result,~~of any additional liquidating distributions we ~~are~~pay ~~subject~~to our stockholders depend upon the ability of the tenants of such properties to ~~risks~~pay ~~inherent~~their inrents ~~investments~~to us in a ~~single~~timely ~~type~~manner, and the success of ~~property~~our remaining real estate properties depends upon the occupancy levels, rental income and operating expenses of such properties and our company. ~~Thus,~~Tenants’ ~~the~~ability ~~potential~~to ~~effects~~timely pay their rents may be impacted by employment and other constraints on ~~our~~their ~~revenues~~personal finances, including debts, purchases and asother afactors. These ~~result,~~and onother ~~cash~~changes ~~available~~beyond ~~for~~our ~~distribution~~control tomay adversely affect our ~~stockholders,~~tenants’ ~~resulting~~ability ~~from~~to amake ~~downturn~~lease orpayments ~~slowdown~~and incould reduce the ~~apartment~~amount ~~community~~of ~~sector~~any ~~will~~additional beliquidating ~~more~~distributions ~~pronounced~~we ~~than~~pay ifto weour ~~had~~stockholders ~~more~~and ~~fully~~the ~~diversified~~overall value of our ~~investments~~stockholders’ investment.

WeShort-term ~~depend~~multifamily ~~on tenants for our revenue~~ and, ~~accordingly,~~apartment ~~our~~leases ~~revenue~~expose ~~and~~us ~~our ability~~ to ~~pay distributions to our stockholders is dependent upon~~ the ~~ability~~effects of ~~the~~declining ~~tenants~~market ~~of our properties to pay their rents in a timely manner. Non-renewals~~rent, ~~terminations~~which ~~or lease defaults~~ could ~~reduce~~adversely ~~our~~impact ~~net~~the ~~income~~amount ~~and~~of ~~limit~~any ~~our~~additional ~~ability~~liquidating todistributions we pay ~~distributions~~ to our stockholders.

The underlying value of our properties and our ability to pay distributions to our stockholders depend upon the ability of the tenants of our properties to pay their rents to us in a timely manner, and the success of our investments depends upon the occupancy levels, rental income and operating expenses of our properties and our company. Tenants’ ability to timely pay their rents may be impacted by employment and other constraints on their personal finances, including debts, purchases and other factors. These and other changes beyond our control may adversely affect our tenants’ ability to make lease payments and could cause us to reduce the amount of distributions we pay to stockholders and the value of our stockholders’ investment to decline.

Short-term multifamily and apartment leases expose us to the effects of declining market rent, which could adversely impact our ability to pay distributions to our stockholders.

We expect that substantially all of our apartment leases will be for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues may be impacted by declines in market rents more quickly than if our leases were for longer terms.

~~Properties~~Our ~~that~~inability ~~have~~to ~~significant~~sell ~~vacancies~~a ~~could~~property bewhen ~~difficult~~we want or to ~~sell~~secure funds for future capital improvements, ~~which~~or other factors, could ~~diminish~~reduce the ~~return~~amount onof ~~these~~any ~~properties.~~additional liquidating distributions we pay to our stockholders.

AMany ~~property~~factors ~~may~~that ~~incur~~are ~~vacancies~~beyond ~~either~~our bycontrol ~~the~~affect ~~expiration and non-renewal of tenant leases or~~ the ~~continued~~real ~~default~~estate ofmarket ~~tenants~~and ~~under~~could ~~their~~affect ~~leases. If~~our ~~vacancies~~ability ~~continue for a long period of time, we may suffer reduced revenues resulting in less cash available~~ to ~~distribute~~sell toour ~~stockholders. In~~remaining ~~addition,~~real ~~the~~estate ~~resale~~properties ~~value~~for of the ~~property~~price, ~~could~~on ~~be diminished because~~ the ~~market~~terms ~~value~~or ofwithin ~~a particular property depends principally upon~~ the ~~value~~time offrame ~~the~~that ~~cash~~we ~~flow~~desire. ~~generated~~These byfactors ~~the~~include ~~leases~~general ~~associated~~economic ~~with~~conditions, ~~that property. Such a reduction on~~ the ~~resale~~availability ~~value~~ of afinancing, ~~property~~interest ~~could~~rates ~~also~~and ~~reduce~~other ~~the~~factors, ~~value~~including ofsupply ~~our~~and ~~stockholders’ investment in us~~demand.

~~Our~~Further, ~~inability~~before towe can sell a property ~~when~~on the terms we want, it may be necessary to expend funds to correct defects or to ~~secure~~make improvements. We cannot assure our stockholders that we will have funds available to correct such defects or make such improvements. Additional borrowing for ~~future~~capital needs and capital improvements, orwill ~~other~~increase ~~factors,~~our ~~could~~interest ~~limit~~expense and adversely affect our ~~ability~~financial condition, and our inability to ~~pay~~sell our remaining real estate properties at the time and on the terms we want could reduce our cash flow, thus reducing the overall value of our stockholders’ investment and the amount of any additional liquidating distributions we pay to our stockholders.

Many factors that are beyond our control affect the real estate market and could affect our ability to sell properties for the price, on the terms or within the time frame that we desire. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. Because real estate investments are relatively illiquid, we have a limited ability to vary our portfolio in response to changes in economic or other conditions.18

Further, before we can sell a property on the terms we want, it may be necessary to expend funds to correct defects or to make improvements. When residents do not renew their leases or otherwise vacate their apartment units, in order to attract replacement residents, we may be required to expend funds for capital improvements to the vacated apartment units. In addition, we may require substantial funds to renovate an apartment community in order to sell it, upgrade it or reposition it in the market. If we have insufficient capital reserves, we will have to obtain financing from other sources. We intend to establish capital reserves in an amount we, in our discretion, believe is necessary. If these reserves or any reserves otherwise established are designated for other uses or are insufficient to meet our cash needs, we may have to obtain financing from either affiliated or unaffiliated sources to fund our cash requirements. We cannot assure our stockholders that sufficient financing will be available or, if available, will be available on economically feasible terms or on terms acceptable to us. Additional borrowing for capital needs and capital improvements will increase our interest expense and adversely affect our financial condition, and our inability to sell properties at the time and on the terms we want could reduce our cash flow and limit our ability to pay distributions to our stockholders and could reduce the value of our stockholders’ investment in us.

Additionally, although we intend to use some of the net proceeds after paying sale-related expenses including, in certain cases, paying off the notes payable related to such assets, from any strategic asset sales we close to make renovations at certain remaining real estate properties, there are no guarantees that we will be able to sell any of our properties at the times and the prices we expect, which could limit the funds available from these sales for capital improvements. We may be unable to sell our properties at a profit. Depending on the number of properties sold, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage.

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IfCompetition wefrom ~~sell~~other aapartment ~~property~~communities byfor ~~providing~~tenants ~~financing~~and from other entities related to the ~~purchaser,~~disposition weof ~~will~~our ~~bear~~remaining ~~the~~real ~~risk~~estate ofproperties ~~default~~could byreduce the ~~purchaser,~~overall ~~which~~return ~~could~~on ~~delay~~our orstockholders’ ~~reduce~~investment and the amount of any additional liquidating distributions ~~available~~we pay to our stockholders.

IfThe weapartment ~~decide~~community toindustry ~~sell~~is ~~any~~highly ofcompetitive. This competition could reduce occupancy levels and revenues at our remaining real estate properties, wewhich ~~intend~~would toadversely ~~use~~affect our ~~best~~operations ~~efforts~~and toreduce ~~sell~~the ~~them~~amount ~~for~~of ~~cash;~~any ~~however,~~additional inliquidating ~~some~~distributions ~~instances,~~ we ~~may~~pay ~~sell~~to our ~~properties~~stockholders. We byexpect ~~providing~~to ~~financing~~face tocompetition ~~purchasers~~from many sources. ~~When~~ weWe ~~provide~~will ~~financing~~face tocompetition afrom ~~purchaser,~~other weapartment ~~will~~communities ~~bear~~both in the ~~risk~~immediate ~~that~~vicinity ~~the~~and ~~purchaser~~in ~~may~~the ~~default,~~larger ~~which~~geographic ~~could~~market ~~reduce~~where our ~~cash~~remaining ~~distributions~~real toestate ~~stockholders~~properties are located. ~~Even~~ We will face competition from various entities in ~~the~~relation ~~absence~~to ofour aremaining ~~purchaser~~real ~~default~~estate properties, ~~the~~including ~~distribution~~other ofREITs, pension funds, insurance companies, investment funds and companies, partnerships, and developers. Competition from these entities may increase the ~~proceeds~~bargaining power of ~~the~~persons ~~sale~~or entities seeking to ~~our~~buy ~~stockholders~~apartment ~~will~~communities. beOverbuilding ~~delayed~~of ~~until~~apartment communities may occur. If so, this will increase the ~~promissory~~number ~~notes~~of orapartment ~~other~~units ~~property~~available weand may ~~accept~~decrease ~~upon~~occupancy aand ~~sale~~apartment ~~are~~rental ~~actually~~rates. ~~paid~~In addition, ~~sold,~~increases ~~refinanced~~in oroperating ~~otherwise~~costs ~~disposed.~~due to inflation may not be offset by increased apartment rental rates.

~~Competition~~We also face competition from ~~other~~many ~~apartment~~of ~~communities~~the ~~for~~types ~~tenants~~of ~~could~~entities ~~reduce~~referenced above regarding the disposition of our ~~profitability~~remaining real estate properties. These entities may possess properties in similar locations and/or of the same property types as ours and may be attempting to dispose of these properties at the same time we are attempting to dispose of our remaining real estate properties, providing potential purchasers with a larger number of properties from which to choose and potentially decreasing the sales price for such properties. Additionally, many of these entities have substantially greater financial resources than we do and may be willing to accept a lower return on their individual investments, which could further reduce the sales price of our ~~stockholders’~~remaining ~~investment~~real estate properties.

~~The~~Although ~~apartment~~we ~~community~~believe ~~industry~~that iswe ~~highly~~are ~~competitive.~~well-positioned ~~This~~to ~~competition~~compete ~~could~~effectively ~~reduce~~in ~~occupancy~~each ~~levels~~facet ~~and~~of ~~revenues at~~ our ~~apartment communities~~business, ~~which~~including ~~would~~the ~~adversely~~implementation ~~affect~~of ~~our~~the ~~operations.~~Plan Weof ~~expect~~Liquidation, tothere ~~face~~is ~~competition~~enormous ~~from many sources. We will face~~ competition ~~from other apartment communities both~~ in ~~the~~our ~~immediate~~market ~~vicinity~~sector and inthere ~~the~~can ~~larger~~be ~~geographic~~no ~~market~~assurance ~~where~~that ~~our~~we ~~apartment~~will ~~communities~~compete ~~are~~effectively ~~located.~~or Wethat we will ~~face~~not ~~competition~~encounter ~~from~~increased ~~various~~competition ~~entities~~ in ~~relation~~the tofuture ~~our~~that ~~apartment~~could ~~communities,~~limit ~~including~~our ~~other~~ability ~~REITs,~~to ~~pension~~conduct ~~funds,~~our ~~insurance~~business ~~companies,~~or ~~investment funds and companies, partnerships, and developers. Many of these entities have substantially greater financial resources than we do and may~~ be ~~willing~~able to ~~accept~~implement ~~lower~~the ~~returns~~Plan onof ~~their~~Liquidation ~~investment~~effectively. This ~~Competition~~competition ~~from~~could ~~these~~decrease ~~entities may increase~~ the ~~bargaining~~sales ~~power~~proceeds ofwe ~~persons~~receive orfor ~~entities~~our ~~seeking~~remaining toreal ~~buy~~estate ~~apartment communities. Overbuilding of apartment communities may occur. If so~~properties, ~~this~~which ~~will~~could ~~increase~~adversely affect the ~~number~~overall ofreturn ~~apartment~~on ~~units~~our ~~available~~stockholders’ investment and ~~may~~the ~~decrease~~amount ~~occupancy~~ and ~~apartment~~timing ~~rental~~of ~~rates.~~any ~~In addition,~~additional ~~increases~~liquidating indistributions ~~operating~~we ~~costs~~pay ~~due~~ to ~~inflation~~our ~~may not be offset by increased apartment rental rates~~stockholders.

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

Increased competition and increased affordability of single-family homes could limit our ability to retain residents, lease apartment units or increase or maintain rents.

Our ~~apartment~~remaining ~~communities~~real estate properties compete with numerous housing alternatives in attracting residents, including single-family homes, as well as owner occupied single- and multifamily homes available to rent. Competitive housing in a particular area and the continued affordability of owner occupied single- and multifamily homes available to rent or buy could adversely affect our ability to retain our residents, lease apartment units and increase or maintain rental rates.

Costs imposed pursuant to ~~governmental~~ laws and governmental regulations may reduce our net income and the cash available for any additional liquidating distributions we pay to our stockholders.

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

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

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, or rent our remaining real estate properties or to pledge such ~~property~~properties as collateral for future borrowings. Any material expenditures, fines, penalties, or damages we must pay will reduce ~~our~~the ~~ability~~amount toof ~~pay~~any additional liquidating distributions we pay to our stockholders and may reduce the overall value of our stockholders’ investment ~~in us~~.

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The ~~costs~~cost of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the cash available for ~~distribution~~any additional liquidating distributions we pay to our stockholders.

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

Costs associated with complying with the Americans with Disabilities Act may decrease ~~our~~the ~~cash~~amount ~~available~~of ~~for~~any ~~distribution~~additional liquidating distributions we pay to our stockholders.

Our remaining real estate properties may be subject to the Americans with Disabilities Act of 1990, as amended. Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities. The Disabilities Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. Any funds used for Disabilities Act compliance will reduce our net income and the amount of cash available for ~~distribution~~any additional liquidating distributions we pay to our stockholders.

Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could reduce ~~our~~the ~~cash~~amount ~~flows~~of any additional liquidating distributions we pay to our stockholders and the overall return on our stockholders’ investment ~~in us~~.

There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases have begun to insist that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans. Such insurance policies may not be available at reasonable costs, if at all, which could inhibit our ability to ~~finance or~~ refinance our remaining real estate properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses. If any of our remaining real estate properties incurs a casualty loss that is not fully insured, the value of our assets will be reduced by any such uninsured loss, which ~~may~~would reduce the amount of any additional liquidating distributions we pay to our stockholders and the overall value of our stockholders’ investment ~~in us~~. In addition, other than any working capital reserve or other reserves we may establish, we have very limited sources of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would ~~result~~reduce inthe ~~lower~~amount of any additional liquidating distributions we pay to our stockholders.

Risks Associated with Debt Financing

The risk factors in this section apply only if we are unable to sell our remaining real estate properties pursuant to the terms of the Core-Portfolio Sale Agreements and subsequently pay off in full the loans secured by such properties.

We incurred mortgage indebtedness which increases our risk of loss due to potential foreclosure.

We acquired ~~all~~ our remaining real estate properties by financing a portion of the price of the properties and mortgaging or pledging the properties purchased as security for that debt. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders (computed without regard to the dividends-paid deduction and excluding net capital gain). We, however, can give our stockholders no assurance that we will be able to obtain such borrowings on satisfactory terms.

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If there is a shortfall between the cash flow from a mortgaged property and the cash flow needed to service mortgage debt on that property, then the amount of ~~cash~~any ~~available~~additional ~~for~~liquidating ~~distribution~~distributions we pay to our stockholders may be reduced. In addition, ~~incurring~~ mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, reducing the overall value of our stockholders’ investment ~~in us~~. For tax purposes, a foreclosure of any of our remaining real estate properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though we would not necessarily receive any cash proceeds. We have given and may give full or partial guaranties to lenders of mortgage debt on behalf of the entities that own our ~~properties. When~~remaining wereal ~~give~~estate ~~a guaranty on behalf of an entity that owns one of our~~ properties. Thus, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity.

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

High mortgage rates may make it difficult for us to refinance our remaining real estate properties, which could reduce our cash flows from operations and the amount of ~~cash~~any ~~available~~additional ~~for~~liquidating ~~distribution~~distributions we pay to our stockholders.

We run the risk of being unable to refinance our remaining real estate properties when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance ~~the~~our remaining real estate properties, our income could be reduced. If any of these events occurs, our cash flow would be reduced~~. This~~, inwhich ~~turn,~~ would reduce ~~cash~~the ~~available~~amount ~~for~~of ~~distribution~~any additional liquidating distributions we pay to our stockholders and may hinder our ability to borrow more money.

We have broad authority to incur debt and high debt levels could ~~hinder~~reduce ~~our~~the ~~ability~~amount toof ~~pay~~any additional liquidating distributions we pay to our stockholders and decrease the overall value of our stockholders’ investment ~~in us~~.

We limit our total liabilities to 75% of the cost (before deducting depreciation and other noncash reserves) of our tangible assets; however, we may exceed that limit if the majority of the conflicts committee approves each borrowing in excess of such limitation and we disclose such borrowings to our stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. As of December 31, ~~2016~~2017, our borrowings and other liabilities were approximately 6465% of both the cost (before deducting depreciation and other noncash reserves) and book value (before deducting depreciation) of our tangible assets, respectively. High debt levels would cause us to incur higher interest charges and higher debt service payments and may also be accompanied by restrictive covenants. These factors could limit the amount of ~~cash~~any weadditional ~~have~~liquidating ~~available~~distributions we pay to ~~distribute~~our stockholders and could result in a decline in the overall value of our stockholders’ investment ~~in us~~.

Federal Income Tax Risks

~~Failure~~In addition to ~~qualify~~the asfollowing arisk ~~REIT~~factors, ~~would~~please ~~reduce~~see ~~our~~“ ~~net~~- ~~earnings~~Risks ~~available~~Related to the Plan of Liquidation” for ~~investment~~information orrelating ~~distribution~~to tax risks associated with the Plan of Liquidation.

~~Our~~Failure ~~qualification~~to qualify as a REIT ~~will~~would ~~depend~~reduce ~~upon our ability to meet requirements regarding our organization and ownership, distributions of our income,~~ the ~~nature~~amount ~~and diversification~~ of ~~our~~any ~~income~~additional ~~and~~liquidating ~~assets~~distributions ~~and~~we ~~other~~pay ~~tests imposed by the Internal Revenue Code. Future legislative, judicial or administrative changes~~ to ~~the federal income tax laws could be applied retroactively, which could result in~~ our ~~disqualification as a REIT~~stockholders.

IfOur wequalification ~~fail to qualify~~ as a REIT ~~for~~will ~~any~~depend ~~taxable~~upon ~~year~~our ~~after~~ability ~~electing REIT status, we will be subject~~ to ~~federal~~meet ~~income~~requirements ~~tax~~regarding on our ~~taxable~~organization ~~income~~and ~~at corporate rates. In addition~~ownership, wedistributions ~~would~~of ~~generally be disqualified from treatment as a REIT for the four taxable years following the year in which we lost~~ our ~~REIT status. Losing our REIT status would reduce our net earnings available for distribution to stockholders because of the additional tax liability. In addition~~income, ~~distributions to stockholders would no longer qualify for~~ the ~~dividends~~nature ~~paid deduction~~ and wediversification ~~would~~of noour ~~longer~~income beand ~~required~~assets toand ~~pay~~other ~~distributions.~~tests Ifimposed ~~this~~by ~~occurs, we might be required to borrow funds or liquidate some investments in order to pay~~ the ~~applicable~~Internal ~~tax~~Revenue Code.

25If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates (a maximum rate of 35% applies through 2017 and 21% for subsequent years). In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status. Losing our REIT status would reduce the amount of any additional liquidating distributions we pay to our stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction and we would no longer be required to pay distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

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

We believe that we have operated and will continue to operate in a manner that will allow us to continue to qualify as a REIT for federal income tax purposes commencing with the taxable year ended December 31, 2010. However, the federal income tax laws governing REITs are extremely complex, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Qualifying as a REIT requires us to meet various tests regarding the nature of our assets and our income, the ownership of our outstanding stock, and the amount of our distributions on an ongoing basis. Accordingly, we cannot be certain that we will be successful in operating so we can remain qualified as a REIT. While we intend to continue to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, including the tax treatment of certain investments we may make, and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year. If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, we would be required to pay federal income tax on our taxable income. We might need to borrow money or sell assets to pay that tax. Our payment of income tax would decrease the amount of ~~our~~any ~~income~~additional ~~available~~liquidating ~~for~~distributions ~~distribution~~we topay our stockholders. Furthermore, if we fail to maintain our qualification as a REIT and we do not qualify for certain statutory relief provisions, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders. Unless our failure to qualify as a REIT were excused under federal tax laws, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost.

~~Our~~Even ~~stockholders~~if ~~may~~we ~~have~~qualify ~~current~~as a REIT for federal income tax ~~liability~~purposes, onwe ~~distributions~~may ~~they~~be ~~elect~~subject to ~~reinvest~~federal, instate, local or other tax liabilities that reduce our ~~common~~cash ~~stock~~flow and the amount of any additional liquidating distributions we pay to our stockholders.

If our stockholders participate in our dividend reinvestment plan, they will be deemed to have received, and for income tax purposes will be taxed on, the amount reinvested in shares of our common stock to the extent the amount reinvested was not a tax-free return of capital. In addition, our stockholders will be treated for tax purposes as having received an additional distribution to the extent the shares are purchased at a discount to fair market value, if any. As a result, unless our stockholders are tax-exempt entities, they may have to use funds from other sources to pay their tax liability on the value of the shares of common stock received.

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

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

•

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


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

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


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

We intend to pay distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.

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

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

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

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

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

To maintain our REIT status, we may ~~have~~be forced to ~~borrow~~forego ~~funds~~otherwise onattractive aopportunities, ~~short-term~~which ~~basis~~may ~~during~~delay ~~unfavorable~~or ~~market~~hinder ~~conditions~~our ability to meet our investment objectives and implement the Plan of Liquidation and reduce the amount of any additional liquidating distributions we pay to our stockholders and their overall return on investment.

To qualify as a REIT, we ~~generally~~ must ~~distribute~~satisfy ~~annually~~certain totests ~~our~~on ~~stockholders~~an aongoing ~~minimum~~basis ofconcerning, ~~90%~~among ofother ~~our taxable income~~things, ~~excluding~~the ~~capital~~sources ~~gains. We~~of ~~will~~our ~~be subject to regular corporate~~ income, ~~taxes~~nature onof ~~the~~our ~~undistributed~~assets ~~income~~and to the ~~extent~~amounts ~~that~~ we distribute ~~less~~to ~~than 100% of~~ our ~~REIT taxable income each year~~stockholders. ~~Additionally,~~ weWe ~~will~~may be ~~subject~~required to apay 4%distributions ~~nondeductible~~to ~~excise~~stockholders ~~tax~~at ontimes ~~any~~when ~~amount~~it bywould ~~which~~be ~~distributions~~more ~~paid~~advantageous ~~(or~~to ~~deemed~~reinvest ~~paid)~~cash ~~by us~~ in ~~any calendar year are less than the sum of 85% of~~ our ~~ordinary~~business ~~income,~~or ~~95%~~when ~~of our capital gain net income and 100% of our undistributed income from previous years. Payments~~ we ~~make~~do ~~to redeem our shares generally are~~ not ~~taken~~have ~~into~~funds ~~account~~readily available for ~~purposes of these~~ distribution ~~requirements~~. If weCompliance dowith ~~not~~the ~~have~~REIT ~~sufficient~~requirements ~~cash~~may tohinder ~~pay distributions necessary to preserve~~ our ~~REIT~~ability ~~status for any year or~~ to ~~avoid~~operate ~~taxation,~~solely weon ~~may~~the bebasis ~~forced~~of tomaximizing ~~borrow~~the ~~funds~~amount orof ~~sell~~any ~~assets~~additional ~~even~~liquidating ifdistributions ~~the~~we ~~market~~pay ~~conditions~~to atour ~~that~~stockholders ~~time~~and ~~are~~their ~~not~~overall ~~favorable~~return ~~for~~on ~~these borrowings or sales~~investment.

ToThe ~~maintain~~ability of our ~~REIT~~board ~~status,~~of wedirectors ~~may~~to berevoke ~~unable~~our toREIT ~~invest~~qualification ~~certain~~without ~~funds~~stockholder inapproval ~~our~~may ~~business,~~subject ~~which~~us ~~may~~to ~~delay~~U.S. orfederal ~~hinder~~income ~~our~~tax ~~ability~~and toreduce ~~meet~~the ~~our~~amount ~~investment~~of ~~objectives~~any ~~and~~additional ~~reduce~~liquidating ~~our~~distributions ~~stockholders’~~we ~~overall~~pay ~~return.~~to our stockholders.

ToOur ~~qualify~~charter asprovides athat ~~REIT,~~our weboard ~~must~~of ~~satisfy~~directors ~~certain~~may ~~tests~~revoke onor anotherwise ~~ongoing~~terminate ~~basis~~our ~~concerning,~~REIT ~~among other things~~election, without the ~~sources~~approval of our ~~income~~stockholders, ~~nature~~if ofit ~~our~~determines ~~assets~~that ~~and~~it ~~the~~is ~~amounts~~no welonger ~~distribute~~in our best interest to ~~our~~continue ~~stockholders~~to qualify as a REIT. We ~~may~~While bewe ~~required~~intend to ~~pay~~elect ~~distributions~~and qualify to ~~stockholders~~be attaxed ~~times~~as ~~when~~a itREIT, ~~would~~we bemay ~~more~~not ~~advantageous~~elect to ~~reinvest~~be ~~cash~~treated inas ~~our~~a ~~business~~REIT or ~~when~~may terminate our REIT election if we dodetermine ~~not~~that ~~have~~qualifying ~~funds~~as ~~readily~~a ~~available~~REIT ~~for~~is ~~distribution~~no longer in our best interests. ~~Compliance~~ ~~with~~If ~~the~~we cease to be a REIT, ~~requirements~~we ~~may~~would ~~hinder~~become subject to U.S. federal income tax on our ~~ability~~taxable income and would no longer be required to ~~operate~~distribute ~~solely~~most of our taxable income to our stockholders, which may have adverse consequences on ~~the~~our ~~basis~~stockholders ofoverall ~~maximizing~~return ~~profits~~on investment and on the ~~value~~amount of any additional liquidating distributions we pay to our stockholders~~’ investment~~.

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~~The~~Changes ~~ability~~recently ofmade ~~our board of directors~~ to ~~revoke~~the ~~our REIT qualification without stockholder approval may subject us to~~ U.S. ~~federal~~tax ~~income~~laws ~~tax~~could ~~and~~have ~~reduce~~a ~~distributions~~negative toimpact on our ~~stockholders~~business.

~~Our~~The ~~charter~~President ~~provides~~signed ~~that~~a ~~our~~tax ~~board~~reform ofbill ~~directors~~into ~~may~~law ~~revoke~~on orDecember ~~otherwise terminate our REIT election~~22, ~~without~~2017 (the ~~approval~~“Tax ofCuts ~~our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we intend to elect~~ and ~~qualify~~Jobs ~~to be taxed as a REIT, we may not elect to be treated as a REIT or may terminate our REIT election if we determine that qualifying as a REIT is no longer in our best interests~~Act”). IfAmong weother ~~cease to be a REIT~~things, wethe ~~would~~Tax ~~become~~Cuts ~~subject to U.S. federal income tax on our taxable income~~ and ~~would~~Jobs no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our common stock.Act:

We• ~~may~~Reduces bethe ~~subject~~corporate income tax rate from 35% to ~~adverse~~21% ~~legislative~~(including orwith ~~regulatory~~respect ~~tax~~to ~~changes.~~a taxable REIT subsidiary);

At• ~~any~~Reduces ~~time,~~ the ~~federal~~rate ~~income tax laws or regulations governing REITs or the administrative interpretations~~ of ~~those laws or regulations may be amended~~U.S. ~~We cannot predict when or if any new~~ federal ~~income~~withholding tax ~~law,~~on ~~regulation~~distributions ormade ~~administrative interpretation, or any amendment~~ to any existing federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactivelynon-U.S. ~~We and our~~ stockholders ~~could be adversely affected~~ by ~~any~~a ~~such~~REIT ~~change~~that ~~in, or any new, federal income tax law, regulation or administrative interpretation. You~~ are ~~urged~~attributable to ~~consult~~gains ~~with~~from ~~your tax advisor with respect to~~ the ~~impact~~sale ofor ~~recent~~exchange ~~legislation on your investment in our shares and the status~~ of ~~legislative,~~U.S. ~~regulatory~~real orproperty ~~administrative~~interests ~~developments~~from ~~and~~35% ~~proposals~~to ~~and their potential effect on an investment in our shares.~~ 21%;

~~Although~~• ~~REITs~~Allows ~~generally~~an ~~receive~~immediate ~~better~~100% ~~tax~~deduction ~~treatment~~of ~~than~~the ~~entities~~cost ~~taxed~~of ascertain ~~regular~~capital ~~corporations,~~asset itinvestments is(generally ~~possible~~excluding ~~that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in~~ real estate ~~to elect to be treated for U.S. federal income tax purposes as a corporation. As a result~~assets), ~~our~~subject ~~charter provides our board of directors with the power, under certain circumstances,~~ to ~~revoke or otherwise terminate our REIT election and cause us to be taxed as~~ a ~~regular~~phase-down ~~corporation, without the vote~~ of ~~our stockholders. Our board of directors has fiduciary duties to us and our stockholders and could only cause such changes in our tax treatment if it determines in good faith that such changes are in~~ the ~~best~~deduction ~~interest~~percentage ofover ~~our stockholders.~~time;


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


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


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


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


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


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


•	Eliminates the federal corporate alternative minimum tax;


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

•

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


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

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

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

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

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

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

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

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

Liquidation of assets may jeopardize our REIT qualification.

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

28The taxation of distributions to our stockholders can be complex; however, distributions that we pay to our stockholders generally will be taxable as ordinary income, which may reduce the overall return of our stockholders’ investment.

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

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

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

Retirement Plan Risks

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

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


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


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


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


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


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


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


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

With respect to the annual valuation requirements described above, we will provide an estimated value for our common stock annually. Although this estimate will be based on the estimated value of our assets, less the estimated value of our liabilities in accordance with our valuation procedures, no assurance can be given that such estimated value will satisfy the applicable annual valuation requirements under ERISA and the Internal Revenue Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our common stock. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions. See Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information” of this Annual Report on Form 10-K.25

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

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IfWith ~~our~~respect ~~assets~~to ~~are~~the ~~deemed~~annual tovaluation berequirements ~~plan~~described ~~assets~~above, ~~the~~we ~~Advisor~~will ~~and~~provide wean ~~may~~estimated bevalue ~~exposed~~for toour ~~liabilities~~common ~~under~~stock ~~Title~~annually. We Ican ofmake no claim whether such estimated value will or will not satisfy the applicable annual valuation requirements under ERISA and the Internal Revenue Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our common stock. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions. See Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information” of this Annual Report on Form 10-K.

If our assets are deemed to be plan assets, we and our advisor may be exposed to liabilities under Title I of ERISA and the Internal Revenue Code.

In some circumstances where an ERISA plan holds an interest in an entity, the assets of the entity are deemed to be ERISA plan assets unless an exception applies. This is known as the “look-through rule.” Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA or Section 4975 of the Internal Revenue Code, may be applicable, and there may be liability under these and other provisions of ERISA and the Internal Revenue Code. We believe that our assets should not be treated as plan assets because the shares should qualify as “publicly-offered securities” that are exempt from the look-through rules under applicable Treasury Regulations. We note, however, that because certain limitations are imposed upon the transferability of shares so that we may qualify as a REIT, and perhaps for other reasons, it is possible that this exemption may not apply. If that is the case, and if we or our advisor are exposed to liability under ERISA or the Internal Revenue Code, our performance and results of operations could be adversely affected. Stockholders should consult with their legal and other advisors concerning the impact of ERISA and the Internal Revenue Code on their investment and our performance.

The Department of Labor has issued a final regulation revising the definition of “fiduciary” under ERISA and the Internal Revenue Code, which may affect the marketing of investments in our shares.

On April 8, 2016, the Department of Labor issued a final regulation relating to the definition of a fiduciary under ERISA and Section 4975 of the Internal Revenue Code. The final regulation broadens the definition of fiduciary and is accompanied by new and revised prohibited transaction exemptions relating to investments by IRAs and benefit plans. The final regulation and the related exemptions will become applicable for investment transactions on and after April 10, 2017 (subject to delay in application of the regulation), but generally should not apply to purchases of our shares before that date. The final regulation and the accompanying exemptions are complex, and benefit plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding this development.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

We have no unresolved staff comments.


ITEM 2.	PROPERTIES

As of December 31, ~~2016~~2017, we owned 11four apartment ~~complexes~~communities, the Core-Portfolio Properties, containing an aggregate of 31,~~039~~273 units and encompassing an aggregate of 3.1.4 million rentable square feet, which were 93% occupied. All of the Core-Portfolio Properties were under contract to sell. The following is a summary of our real estate properties as of December 31, ~~2016~~2017:

Property	Location	Date Acquired	Number of Units	Monthly Rent (1)		Occupancy (2)	Average Monthly Rent per Leased Unit (3)
Legacy at Valley Ranch	Irving, TX	10/26/2010	504	$	541,390	98%	$	1,100.39
Legacy at Valley Ranch (4)	Irving, TX	10/26/2010	504	$	539,309	95%	$	1,126
Poplar Creek	Schaumburg, IL	02/09/2012	196	249,524		96%	1,327.26
The Residence at Waterstone	Pikesville, MD	04/06/2012	255	428,599		92%	1,824
The Residence at Waterstone	Pikesville, MD	04/06/2012	255	415,065		89%	1,828.48
Crystal Park at Waterford (5)	Frederick, MD	05/08/2013	314	358,890		92%	1,246
Legacy Crescent Park	Greer, SC	05/03/2012	240	190,956		91%	871.95
Lofts at the Highlands	St. Louis, MO	02/25/2014	200	280,921		92%	1,535
Legacy at Martin’s Point	Lombard, IL	05/31/2012	256	326,058		95%	1,341.80
			1,273	$	1,607,719	93%	$	1,357
Wesley Village	Charlotte, NC	11/06/2012	301	351,267		92%	1,268.11
Watertower Apartments	Eden Prairie, MN	01/15/2013	228	288,332		94%	1,347.35
Crystal Park at Waterford	Frederick, MD	05/08/2013	314	359,605		93%	1,227.32
Millennium Apartment Homes	Greenville, SC	06/07/2013	305	266,800		90%	970.18
Legacy Grand at Concord	Concord, NC	02/18/2014	240	230,622		88%	1,087.84
Lofts at the Highlands	St. Louis, MO	02/25/2014	200	299,253		96%	1,558.61
			3,039	$	3,518,872	93%	$	1,242.54

_____________________

(1) Monthly rent is based on the aggregate contractual rent from tenant leases in effect as of December 31, ~~2016~~2017, adjusted to reflect any contractual tenant concessions.

(2) Occupancy percentage is calculated as the number of occupied units divided by the total number of units of the property as of December 31, ~~2016~~2017.

(3) Average monthly rent per leased unit is calculated as the aggregate contractual rent from leases in effect as of December 31, ~~2016~~2017, adjusted to reflect any contractual tenant concessions, divided by the number of leased units.

30(4) On February 8, 2018, we sold Legacy at Valley Ranch. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events – Dispositions Subsequent to December 31, 2017 – Disposition of Legacy at Valley Ranch.”

⁽⁵⁾ On February 8, 2018, we sold Crystal Park at Waterford. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events – Dispositions Subsequent to December 31, 2017 – Disposition of Crystal Park at Waterford.”

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~~Wesley~~Core-Portfolio ~~Village Agreement~~Properties

On ~~November~~September 61, ~~2012~~2017, we, through ancertain indirect wholly owned ~~subsidiary~~subsidiaries, ~~KBS~~entered ~~Legacy~~into ~~Partners~~the ~~Wesley~~Core-Portfolio LPSale Agreements, ~~formerly~~effective ~~known~~ as ~~KBS~~of ~~Legacy~~September ~~Partners~~5, ~~Wesley~~2017, ~~LLC~~with an unaffiliated third-party, ~~purchased~~to asell ~~301~~the Core-~~unit~~Portfolio ~~apartment~~Properties ~~complex~~for onaggregate ~~approximately~~consideration 11of $218.09 ~~acres~~million. As a result of ~~land~~certain ~~and,~~items ~~through~~noted aby ~~second~~the ~~indirect~~purchaser ~~wholly~~during ~~owned~~the ~~subsidiary,~~due ~~KBS~~diligence ~~Legacy~~period ~~Partners~~stipulated ~~Wesley~~by ~~Land~~the ~~LLC~~Core-Portfolio ~~(and~~Sale Agreements, ~~together~~on ~~with~~December 19, ~~KBS~~2017, ~~Legacy~~we ~~Partners~~and ~~Wesley~~the ~~LP,~~Purchaser agreed to a minor reduction in the ~~“Owner”),~~aggregate ~~purchased~~consideration for the ~~adjacent~~Core-Portfolio 3Properties of $1.4 million, to $217.5 million. On February 8~~-acre~~, ~~parcel~~2018, we completed the sale of ~~undeveloped~~two ~~land~~of ~~located~~the inCore-Portfolio ~~Charlotte~~Properties. See Part II, ~~North~~Item ~~Carolina~~7 (“~~Wesley~~Management’s ~~Village”)~~Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events – Dispositions Subsequent to December 31, 2017.” We anticipate completing the sale of our remaining real estate properties by the end of the first quarter of 2018.

On December 29, 2016, after the completion of the initial marketing of our portfolio and individual properties by HFF, in connection with the implementation of our strategic alternatives, the Owner entered into the Wesley Village Agreement for the sale of Wesley Village to the Purchaser. Pursuant to the Wesley Village Agreement, the purchase price for Wesley Village was $58.0 million. The Wesley Village Agreement was subsequently terminated, reinstated and amended and the purchase price was reduced to $57.2 million. On March 9, 2017, we completed the sale of Wesley Village. For information relating to the termination and reinstatement of, and the amendments to, the Wesley Village Agreement, and the subsequent sale of Wesley Village, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Subsequent Events - Termination and Reinstatement of, and Amendments to, the Wesley Village Agreement; Disposition of Wesley Village.”


ITEM 3.	LEGAL PROCEEDINGS

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


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

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PART II


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

Stockholder Information

As of March 65, ~~2017~~2018, we had 2021.90 million shares of common stock outstanding held by a total of 5,~~731~~722 stockholders. The number of stockholders is based on the records of DST Systems, Inc., who serves as our transfer agent.

Market Information

No public market currently exists for our shares of common stock, and ~~we currently have no plans to list~~ our ~~shares on a national securities exchange. Until our shares are listed, if ever, our~~ stockholders may not sell their shares unless the buyer meets the applicable suitability and minimum purchase requirements and such sale complies with applicable state and federal securities laws. In addition, our charter prohibits the ownership of more than 9.8% of our stock by any person, unless exempted by our board of directors. Consequently, there is the risk that our stockholders may not be able to sell their shares at a time or price acceptable to them.

WeOur ~~provide~~stockholders anapproved ~~estimated~~the ~~value~~Plan ~~per~~of ~~share~~Liquidation toon ~~assist~~December ~~broker-dealers~~19, ~~that~~2017 ~~participated~~and inwe ~~the~~are ~~Offerings~~ in ~~meeting~~the ~~their~~process ~~customer~~of ~~account~~completing ~~statement~~the ~~reporting~~liquidation ~~obligations~~of ~~under~~our ~~NASD~~remaining ~~Conduct~~real ~~Rule~~estate ~~2340~~properties, aseach ~~required~~of bywhich ~~FINRA. This~~is ~~valuation~~subject ~~was~~to ~~performed~~a inCore-Portfolio ~~accordance~~Sale ~~with~~Agreement. ~~the~~On ~~provisions~~December of20, ~~and~~2017, ~~also~~our toboard ~~comply~~of ~~with~~directors ~~the~~approved ~~IPA~~an ~~Valuation Guidelines. For this purpose, we~~ estimated ~~the~~ value ofper ~~the~~share ~~shares~~ of our common stock asof $94.~~35 per~~40 ~~share~~(unaudited), effective as of December 9 21, ~~2016. This~~ ~~estimated~~2017 ~~value~~(the ~~per~~“EVPS”). ~~share~~We isare ~~based~~providing onthe ~~our~~EVPS ~~board~~to ofassist ~~directors’~~broker-dealers ~~approval~~that onparticipated ~~December~~in 9,our ~~2016~~public ofofferings anin ~~estimated~~meeting ~~value~~their ~~per~~customer ~~share~~account ofstatement ~~our~~reporting ~~common~~obligations ~~stock~~under ofNational ~~$9.35~~Association ~~based~~of onSecurities ~~the~~Dealers ~~estimated~~Conduct ~~value~~Rule of2340 ~~our~~as ~~assets~~required ~~less~~by the ~~estimated~~Financial ~~value~~Industry ofRegulatory ~~our~~Authority ~~liabilities,~~(“FINRA”). orWe ~~net~~believe ~~asset~~this ~~value,~~valuation ~~divided~~is byconsistent ~~the~~with ~~number~~Practice ofGuideline ~~shares outstanding~~2013-01, ~~all~~Valuations as of ~~September~~Publicly 30Registered, ~~2016.~~Non-Listed ~~There~~REITs, ~~were~~issued noby ~~material~~the ~~changes~~Investment ~~between~~Program ~~September~~Association ~~30,~~(“IPA”) ~~2016~~in ~~and~~April ~~December~~2013 ~~9, 2016 that impacted~~ (the ~~overall~~“IPA ~~estimated~~Valuation ~~value per share~~Guidelines”).

~~The~~Determination ~~conflicts committee, composed solely~~ of ~~all of our independent directors, is responsible for~~ the oversight of the valuation process used to determine the estimated value per share of our common stock, including the review and approval of the valuation and appraisal process and methodology used to determine our estimated value per share, the consistency of the valuation and appraisal methodologies with real estate industry standards and practices and the reasonableness of the assumptions used in the valuations and appraisals. With the approval of the conflicts committee, we engaged CBRE to perform appraisals of our 11 real estate properties and, through an affiliate, to provide a range of the estimated value per share of our common stock as of December 9, 2016 (the “EVPS Range”). CBRE utilized its appraisals of our 11 real estate properties and valuations performed by our advisor, of our cash, other assets, mortgage debt and other liabilities, which are discussed in our Quarterly Report on Form 10-Q for the period ended September 30, 2016, to determine the EVPS Range. The appraisal reports CBRE prepared summarized the key inputs and assumptions involved in the appraisal of each of our real estate properties. The methodologies CBRE used to determine the EVPS Range were designed to follow the prescribed methodologies of the IPA Valuation Guidelines. The methodologies and assumptions used to determine the estimated value of our assets and the estimated value of our liabilities are described further below.

~~The~~As ~~conflicts~~of ~~committee~~December ~~reviewed~~20, ~~CBRE’s valuation report~~2017, ~~which~~based ~~included~~upon (i) the ~~appraised~~aggregate ~~value~~of ~~for~~the ~~each~~following ofamounts ~~our~~(a) ~~real~~the ~~estate~~net ~~properties~~proceeds aswe ~~incorporated~~received from the ~~appraisal~~sale ~~reports~~of ~~prepared~~real byestate ~~CBRE,~~properties ~~and~~through aDecember ~~summary~~20, of2017, (b) the ~~estimated~~contractual ~~value~~aggregate ofconsideration ~~each~~to ofbe ~~our~~received ~~other~~by ~~assets~~us ~~and~~from ~~our~~the ~~liabilities~~Core-Portfolio asSale, ~~determined~~less byapplicable ~~our~~closing ~~advisor,~~credits and in(c) ~~light~~our estimate of ~~other~~cash ~~factors~~flows ~~considered~~from byoperations ~~our~~we ~~conflicts~~will ~~committee~~receive ~~and~~through the ~~conflicts~~projected ~~committee’s~~sale ~~own~~date ~~extensive knowledge~~ of ~~our~~the ~~assets~~Core-Portfolio ~~and liabilities~~Properties, ~~the~~reduced ~~conflicts~~by ~~committee:~~ (iii) ~~concluded~~the ~~that~~aggregate of the ~~EVPS~~following ~~Range~~amounts of(a) ~~$8.26~~our toremaining ~~$10.48~~estimated indebtedness, ~~with~~including anpre-payment ~~approximate~~penalties, ~~mid-range~~(b) ~~value~~the ofestimated ~~$9.35~~disposition ~~per~~costs ~~share,~~and asfees ~~indicated~~relating into ~~CBRE’s~~the ~~valuation~~Core-Portfolio ~~report~~Sale, and ~~recommended~~(c) bythe ~~our~~estimated ~~advisor,~~corporate ~~which~~and ~~approximate~~other ~~mid-range~~liquidation ~~value~~and ~~was~~dissolution ~~based~~costs onthrough ~~CBRE’s~~the ~~appraisals~~completion of our ~~real~~liquidation ~~estate properties~~ and ~~valuations~~dissolution, ~~performed~~we byestimate that our ~~advisor~~net ofproceeds ~~our~~from ~~cash~~liquidation and, ~~other assets~~therefore, ~~mortgage~~the ~~debt~~amount ~~and~~of ~~other~~cash ~~liabilities,~~that ~~was~~our ~~reasonable;~~stockholders ~~and~~would ~~(ii)~~receive ~~recommended~~for toeach ~~our~~share ~~board~~ of ~~directors~~our common stock that itthey ~~adopt~~then hold is $98.3545 asper share. This amount would be in addition to the ~~estimated~~previous ~~value~~$1.00 per share ofspecial ~~our~~distribution ~~common~~we ~~stock,~~paid ~~which~~to ~~approximates~~our ~~the~~stockholders ~~mid-range~~on ~~value~~May ~~determined~~1, by2017 ~~CBRE~~in ~~and~~connection ~~which~~with isthe ~~based~~disposition onof ~~CBRE’s~~Wesley ~~appraisals~~Village, ofbut ~~our~~includes ~~real~~the ~~estate~~$4.05 ~~properties~~per ~~and~~share ~~valuations~~Initial ~~performed~~Liquidating byDistribution. ~~our~~As ~~advisor~~disclosed ofin ~~our~~the ~~cash~~Proxy Statement, ~~other~~as ~~assets,~~of ~~mortgage~~September ~~debt~~22, ~~and~~2017, ~~other~~we ~~liabilities. Our~~estimated ~~board~~that, ofif ~~directors~~we ~~unanimously~~are ~~agreed~~able to ~~accept~~successfully implement the ~~recommendation~~Plan of Liquidation, the ~~conflicts~~amount ~~committee~~of ~~and~~cash ~~approved~~that ~~$9.35~~our asstockholders ~~the~~would ~~estimated~~receive ~~value~~for ~~per~~each share of our common stock, ~~which~~that ~~determination~~they isthen ~~ultimately~~hold ~~and~~could ~~solely~~range ~~the~~between ~~responsibility~~approximately of$8.27 ~~the~~and ~~board~~$8.70 ofper ~~directors~~share.

32There are many factors that may affect the ultimate amount of liquidating distributions received by our stockholders, including, among other factors: (i) the actual dates of the closings of, and the ultimate amount of aggregate consideration received from, the Core-Portfolio Sale; (ii) the amount of taxes, transaction fees and expenses relating to the Plan of Liquidation; and (iii) amounts needed to pay or provide for our liabilities and expenses, including unanticipated or contingent liabilities that could arise.

Our board of directors determined the EVPS by subtracting the Initial Liquidating Distribution of $4.05 per share from our estimated net proceeds from liquidation of $8.45 per share, resulting in an EVPS of $4.40 (unaudited). Thus, the EVPS reflects the resulting reduction of the stockholders’ remaining investment in us.

Limitations of the EVPS

The EVPS first appeared on the December 2017 month-end customer account statements that were mailed in January 2018. As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated value per share, and this difference could be significant. The EVPS is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to GAAP.

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~~The table below sets forth the calculation of our estimated value per share as of December 9~~Accordingly, ~~2016,~~with asrespect ~~well~~to as the ~~calculation of our prior estimated value per share as of December 8~~EVPS, ~~2015. Neither~~we ~~CBRE~~can ~~nor~~give ~~its~~no ~~affiliates are responsible for the determination of the estimated value per share as of December 9, 2016 or December 8, 2015.~~assurance:

	December 9, 2016Estimated Value per Share			December 8, 2015Estimated Value per Share (4)			Change inEstimated Value per Share
Real estate properties (1)	$	22.57		$	23.56		$	(0.99	)
Cash (2)	0.81			1.02			(0.21		)
Other assets	0.30			0.30			—
Mortgage debt (3)	(13.98		)	(14.25		)	0.27
Other liabilities	(0.35		)	(0.34		)	(0.01		)
Estimated value per share	$	9.35		$	10.29		$	(0.94	)
Estimated enterprise value premium	None assumed			None assumed			None assumed
Total estimated value per share	$	9.35		$	10.29		$	(0.94	)


•	of the amount or timing of any additional liquidating distributions we will ultimately be able to pay our stockholders;

~~_____________________~~• that a stockholder would be able to resell his or her shares at the EVPS;

~~(1)~~• ~~The~~that ~~decrease~~an inindependent ~~the~~third-party ~~value~~appraiser ofor ~~real~~third-party ~~estate~~valuation ~~properties~~firm ~~per~~would ~~share~~agree ~~was~~with ~~due~~the toEVPS; ~~decreases in appraised values of our real estate properties.~~or

~~(2)~~• ~~The~~that ~~decrease~~the inmethodology ~~cash~~used ~~per~~to ~~share~~determine ~~was~~the ~~primarily~~EVPS ~~due~~would be acceptable to ~~principal~~FINRA ~~repayments~~or onfor ~~notes~~compliance ~~payable~~with ~~and~~ERISA ~~capital~~reporting ~~expenditures~~requirements.

~~(3)~~ The ~~decrease~~EVPS inis ~~mortgage~~based ~~debt~~on ~~outstanding~~the aggregate estimated liquidating distributions per share ~~was~~to ~~primarily~~be received by our stockholders pursuant to the Plan of Liquidation, reduced by the amount of the Initial Liquidating Distribution. The value of our shares will fluctuate over time in response to developments related to our remaining real estate properties and the management of those properties, in response to the real estate and finance markets, based on the amount of aggregate consideration we receive from the Core-Portfolio Sale and due to ~~principal~~other ~~repayments~~factors. Because of, among other factors, our small remaining asset base, the high concentration of our total assets in real estate, and the number of shares of our common stock outstanding, any change in the aggregate consideration we receive from the Core-Portfolio Sale could have a significant impact on the value of our ~~notes~~shares. ~~payable~~The EVPS does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values.

(4) The December 8, 2015 estimated value per share was based upon a determination of the range of estimated value per share of our common stock as of September 30, 2015 by CBRE, through an affiliate, and recommended by our advisor. The range of estimated value per share was based upon appraisals of our real estate properties performed by CBRE and valuations of our cash, other assets, mortgage debt and other liabilities performed by our advisor. For more information relating to the December 8, 2015 estimated value per share and the assumptions and methodologies used by CBRE and our advisor, see our Current Report on Form 8-K filed with the SEC on December 11, 2015.

The decrease in our estimated value per share from the previous estimate was primarily due to the items noted in the table below, which reflect the significant contributors to the decrease in the estimated value per share from $10.29 to $9.35. The changes are not equal to the change in values of each asset and liability group presented in the table above due to changes in the amount of shares outstanding and other factors, which caused the value of certain asset or liability groups to change with no impact to our fair value of equity or the overall estimated value per share.

	Calculation ofEstimated Value per Share
December 8, 2015 estimated value per share	$	10.29
Changes to estimated value per share
Real estate
Real estate	(0.57		)
Capital expenditures on real estate	(0.09		)
Total change related to real estate	(0.66		)
Mortgage debt	(0.26		)	(1)
Other changes, net	(0.02		)
Total change in estimated value per share	$	(0.94	)
December 9, 2016 estimated value per share	$	9.35

_____________________

(1) The change in value of the notes payable is primarily due to a decrease in market interest rates assumed in valuing the notes payable as compared to the December 8, 2015 estimated value per share, resulting in the notes payable being valued at a premium compared to a discount in the December 8, 2015 estimated value per share.

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As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties using different assumptions and estimates could derive a different estimated value per share of our common stock, and this difference could be significant. In particular, due in part to (i) our relatively small asset base, (ii) the high concentration of our total assets in real estate, and (iii) the number of shares of our common stock outstanding, even modest changes in key assumptions made in appraising our real estate properties could have a significant impact on the estimated value of our shares. See the discussion under “Real Estate — Real Estate Valuation” below. The estimated value per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to GAAP, nor does it represent a liquidation value of our assets and liabilities or the price at which our shares of common stock would trade on a national securities exchange. The estimated value per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated value per share also does not take into account estimated disposition costs and fees for real estate properties, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of our debt. As of December 9, 2016, we had no potentially dilutive securities outstanding that would impact the estimated value per share of our common stock.

Our estimated value per share takes into consideration any potential liability related to a subordinated participation in cash flows our advisor is entitled to upon meeting certain stockholder return thresholds in accordance with the advisory agreement between us and our advisor. For purposes of determining the estimated value per share, our advisor calculated the potential liability related to this incentive fee based on a hypothetical liquidation of our assets and liabilities at their estimated fair values, after considering the impact of any potential closing costs and fees related to the disposition of real estate properties, and determined that there would be no liability related to the subordinated participation in cash flows.

Methodology

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

Real Estate

Independent Valuation Firm

CBRE was selected by our advisor and approved by the conflicts committee to appraise all of our real estate properties and, through an affiliate, to determine the EVPS Range(1). CBRE took into consideration the appraised values of each of our properties and described the results of such appraisals in its valuation report, which was provided to our conflicts committee and our board of directors. CBRE is engaged in the business of appraising commercial real estate properties and is not affiliated with us or our advisor. The compensation CBRE received for its appraisals of our real estate properties was based on the scope of work and not on the appraised values of our real estate properties. The appraisals were performed in accordance with the Code of Ethics and the Uniform Standards of Professional Appraisal Practice, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation, as well as the requirements of the state where each real property is located. Each appraisal was reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). The use of the reports is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

_____________________

(1) CBRE is actively engaged in the business of appraising commercial real estate properties similar to those owned by us in connection with public securities offerings, private placements, business combinations and similar transactions. We engaged CBRE to deliver appraisal reports relating to our 11 real estate properties and, through an affiliate, to determine the EVPS Range. CBRE received fees upon the delivery of such reports and the determination of the EVPS Range. In addition, we have agreed to indemnify CBRE against certain liabilities arising out of this engagement. CBRE is an affiliate of CBRE Group, Inc., a parent holding company of affiliated companies that are engaged in the ordinary course of business in many areas related to commercial real estate and related services. In the two years prior to December 15, 2016, CBRE and its affiliates had provided a number of commercial real estate, appraisal, valuation and financial advisory services for us and our affiliates and have received fees in connection with such services. CBRE and its affiliates may from time to time in the future perform other commercial real estate, appraisal, valuation and financial advisory services for us and our affiliates in transactions related to the properties that are the subjects of the appraisals, so long as such other services do not adversely affect the independence of the applicable CBRE appraiser as certified in the applicable appraisal report.

In the ordinary course of their business, CBRE and its affiliates, directors and officers may structure and effect transactions for their own accounts or for the accounts of their customers in commercial real estate assets of the same kind and in the same markets as our assets.

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CBRE collected all reasonably available material information that it deemed relevant in appraising our real estate properties. CBRE obtained property-level information from our advisor, including (i) property historical and projected operating revenues and expenses; (ii) property lease agreements; (iii) information regarding recent or planned capital expenditures; and (iv) offers received by Holliday Fenoglio Fowler, L.P. (“HFF”), engaged by us in connection with our exploration of strategic alternatives, as a result of HFF’s efforts to market our real estate properties for sale. CBRE reviewed and relied in part on the property-level information provided by our advisor and considered this information in light of its knowledge of each property’s specific market conditions.

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

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

Although CBRE considered any comments to its appraisal reports received from us or our advisor, the final appraised values of our real estate properties were determined by CBRE. The appraisal reports for our real estate properties are addressed solely to us to assist in CBRE’s determination of the EVPS Range. The appraisal reports are not addressed to the public and may not be relied upon by any other person to establish an estimated value per share of our common stock and do not constitute a recommendation to any person to purchase or sell any shares of our common stock. In preparing its appraisal reports, CBRE did not, and was not requested to, solicit third party indications of interest for our common stock in connection with possible purchases thereof or the acquisition of all or any part of us. In preparing its appraisal reports CBRE did not solicit third-party indications of interest for our real estate properties.

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

Real Estate Valuation

CBRE appraised each of our real estate properties owned as of September 30, 2016, using various methodologies including the direct capitalization approach, discounted cash flow analyses and sales comparison approach and relied primarily on the direct capitalization approach for the final appraisals of each of the real estate properties. The direct capitalization approach applies a current market capitalization rate to the properties’ net operating income. The capitalization rate was based on recent comparable market transactions adjusted for unique property and market-specific factors, and the capped net operating income (NOI) was estimated based on CBRE’s expertise in appraising commercial real estate. Real estate is currently carried in our financial statements at its amortized cost basis. CBRE performed its appraisals as of September 30, 2016.

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The total appraised value of our 11 real estate properties as of September 30, 2016, as provided by CBRE using the appraisal methodologies described above, was $468.4 million. The total cost basis of these properties as of September 30, 2016 was $438.3 million. This amount includes the acquisition cost of $416.7 million, $14.3 million in capital expenditures since inception and $7.3 million of acquisition fees and expenses. The total appraised value of our real estate properties, compared to the total cost basis of the real estate properties, results in an overall increase in the value of our real estate properties of approximately 6.9%. The following table summarizes the range and weighted-average direct capitalization rates used to arrive at the appraised values of our real estate properties:

Range in Direct Capitalization Rate		Weighted-Average Direct Capitalization Rate
5.25% to 6.00%		5.63%

While we believe that CBRE’s assumptions and inputs are reasonable, a change in these assumptions and inputs would significantly impact the appraised value of the real estate properties and thus, our estimated value per share. Furthermore, given (i) our relatively small asset base, (ii) the high concentration of our total assets in real estate, and (iii) the number of shares of our common stock outstanding as of September 30, 2016, any change in the appraised value of the real estate properties would have a significant impact on our estimated value per share. The table below illustrates the impact on the estimated value per share if the direct capitalization rates used by CBRE to appraise our real estate properties were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on the estimated value per share if the direct capitalization rates or net operating income were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:

	Increase (Decrease) on the Estimated Value per Share due to
	Decrease of 25 basis points		Increase of 25 basis points			Decrease of 5%			Increase of 5%
Direct capitalization rate	$	0.99	$	(0.98	)	$	1.13		$	(1.09	)
Net operating income	N/A		N/A			(1.15		)	1.07

Finally, a 1% increase in the appraised value of the real estate properties would result in a $0.23 increase in the estimated value per share and a 1% decrease in the appraised value of our real estate properties would result in a $0.23 decrease in the estimated value per share, assuming all other factors remain unchanged.

Notes Payable

The estimated values of our notes payable are equal to the GAAP fair values disclosed in our Quarterly Report on Form 10-Q for the period ended September 30, 2016, but do not equal the book value of the loans in accordance with GAAP. The GAAP fair values of our notes payable were determined using a discounted cash flow analysis. The discounted cash flow analysis was based on projected cash flow over the remaining loan terms and on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio and type of collateral.

As of September 30, 2016, the GAAP fair value and carrying value of our notes payable were $290.0 million and $280.5 million, respectively. The weighted-average discount rate applied to the future estimated debt payments, which have a weighted-average remaining term of 8.4 years, was approximately 3.3%. The table below illustrates the impact on our estimated value per share if the discount rates were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on the estimated value per share if the discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:

	Increase (Decrease) on the Estimated Value per Share due to
	Decrease of 25 basis points			Increase of 25 basis points		Decrease of 5%			Increase of 5%
Discount rates	$	(0.16	)	$	0.16	$	(0.10	)	$	0.10

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Deferral of Asset Management Fees

The advisory agreement defers our obligation to pay asset management fees, without interest, accruing from February 1, 2013 through July 31, 2013. We will only be obligated to pay our advisor such deferred amounts if and to the extent that our funds from operations, as such term is defined by the National Association of Real Estate Investment Trusts and interpreted by us, as adjusted for the effects of straight-line rents and acquisition costs and expenses (“AFFO”) for the immediately preceding month exceeds the amount of distributions declared for record dates of such prior month (an “AFFO Surplus”). The amount of any AFFO Surplus in a given month shall be applied first to pay to our advisor asset management fees currently due with respect to such month (including any that would otherwise have been deferred for that month in accordance with the advisory agreement) and then to pay asset management fees previously deferred by our advisor in accordance with the advisory agreement that remain unpaid. As of December 31, 2016, we had deferred payment of $1.5 million of asset management fees for February 2013 through July 2013 under the advisory agreement.

For the purposes of determining the estimated value per share, we did not include any liability related to the $1.5 million and $7.2 million of deferred asset management fees referenced above, as we believe the chance of payment of these amounts to our advisor is remote.

However, notwithstanding any of the foregoing, any and all deferred asset management fees shall be immediately due and payable at such time as our stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to our share redemption plan, and (ii) an 8.0% per year cumulative, non-compounded return on such net invested capital (the “Stockholders’ 8% Return”). The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of our stockholders to have received any minimum return in order for our advisor to receive deferred asset management fees. We believe the chance of payment to our advisor of the $1.5 million and $7.2 million of deferred asset management fees referenced above is remote based on the estimated value per share of our common stock as of December 9, 2016 and management’s current projection of cash flow and distributions to our stockholders.

Other Assets and Liabilities

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

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Limitations of the Estimated Value Per Share

As mentioned above, we are providing this estimated value per share to assist broker dealers that participated in our public offerings in meeting their customer account statement reporting obligations. This valuation was performed in accordance with the provisions of and also to comply with the IPA Valuation Guidelines. The estimated value per share set forth above first appeared on the December 31, 2016 customer account statements mailed in January 2017. As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties using different assumptions and estimates could derive a different estimated value per share of our common stock, and this difference could be significant. The estimated value per share is not audited and does not represent the fair value of our assets less the fair value of our liabilities according to GAAP.

Accordingly, with respect to the estimated value per share, we can give no assurance that:

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

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

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

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

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

Further, the estimated value per share as of December 9, 2016 is based on the estimated value of our assets less the estimated value of our liabilities divided by the number of shares outstanding, all as of September 30, 2016. We did not make any adjustments to the valuation for the impact of other transactions occurring subsequent to September 30, 2016, including, but not limited to, (i) the issuance of common stock under the dividend reinvestment plan, (ii) net operating income earned and distributions declared and (iii) the redemption of shares. The value of our shares will fluctuate over time in response to developments related to individual assets in our portfolio and the management of those assets, in response to the real estate and finance markets and due to other factors. Because of, among other factors, our relatively small asset base, the high concentration of our total assets in real estate, and the number of shares of our common stock outstanding, any change in the value of individual assets in the portfolio, particularly changes affecting our real estate properties, could have a significant impact on the value of our shares. See the discussion under “Real Estate — Real Estate Valuation” above. The estimated value per share does not reflect a discount for the fact that we are externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated value per share also does not take into account estimated disposition costs and fees for real estate properties, debt prepayment penalties that could apply upon the prepayment of certain of our debt obligations or the impact of restrictions on the assumption of debt. We currently expect to utilize an independent valuation firm to update the estimated value per share in December 2017.

Historical Estimated Values per Share

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

Estimated Value per Share			Effective Date of Valuation	Filing with the Securities and Exchange Commission
	$8.35	(1)	April 20, 2017	Current Report on Form 8-K, filed April 11, 2017
	$9.35		December 9, 2016	Current Report on Form 8-K, filed December 15, 2016
	$10.29		December 8, 2015	Current Report on Form 8-K, filed December 11, 2015
	$10.14		December 9, 2014	Current Report on Form 8-K, filed December 11, 2014
	$9.48	(12)	March 6, 2014	Current Report on Form 8-K, filed March 10, 2014
	$9.08	(12)	March 4, 2013	Current Report on Form 8-K, filed March 4, 2013

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(1) ~~Determined~~The ~~solely~~estimated tovalue beper ~~used~~share asof a$8.35 ~~component~~resulted, in ~~calculating~~part, from the ~~offering~~payment ~~prices~~of a special distribution of $1.00 per share of common stock in ~~one~~connection with the disposition of ~~our~~Wesley ~~now~~Village ~~terminated~~to ~~primary~~stockholders ~~public~~of ~~offerings~~record as of April 20, 2017. Our board of directors subtracted the Special Distribution of $1.00 per share from the December 9, 2016 estimated value per share of $9.35.

⁽²⁾ Determined solely to be used as a component in calculating the offering prices in one of our now terminated primary public offerings.

Distribution Information

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

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Generally, our policy is to pay distributions from cash flows from operations. Because we may receive income from rents at various times during our fiscal year and because we may need cash flows from operations during a particular period to fund capital expenditures and other expenses, we expect that from time to time during our operational stage, we will declare distributions in anticipation of cash flow that we expect to receive during a later period and we will pay these distributions in advance of our actual receipt of these funds. In these instances, we have funded our distributions in part with debt financing, and we expect to utilize debt financing in the future, if necessary, to fund a portion of our distributions. We may also fund such distributions from advances from our advisor or sponsors, from our advisor’s deferral of its fees under the advisory agreement, or from the sale of assets. Our distribution policy is not to use the proceeds of the Offerings to pay distributions. However, our organizational documents permit us to pay distributions from any source, including offering proceeds or borrowings (which may constitute a return of capital), and our charter does not limit the amount of funds we may use from any source to pay such distributions. To the extent that we pay distributions from sources other than our cash flows from operations, the overall return to our stockholders may be reduced.

As stated above, based on feedback received during the marketing process, we anticipate that we will pursue certain strategic asset sales and hold the majority of our real estate properties in an effort to create additional stockholder value, while still paying attractive distributions. Depending on the number of properties sold, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage. On December 29, 2016, we, through the Owner, entered into the Wesley Village Agreement for the sale of Wesley Village to the Purchaser. The Wesley Village Agreement was subsequently terminated, reinstated and amended and on March 9, 2017, we completed the sale of Wesley Village. For information relating to the Wesley Village Agreement, see Part I, Item 2, “Properties - Wesley Village Agreement.” For information relating to the termination and reinstatement of, and the amendments to, the Wesley Village Agreement, and the subsequent sale of Wesley Village, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Subsequent Events - Termination and Reinstatement of, and Amendments to, the Wesley Village Agreement; Disposition of Wesley Village.”

We elected to be taxed as a REIT under the Internal Revenue Code and have operated as such beginning with our taxable year ended December 31, 2010. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our REIT taxable income (computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

~~During~~As ~~2015~~described ~~and~~in ~~2016~~the Proxy Statement, wesubsequent ~~declared~~to ~~distributions~~our ~~based~~payment onof ~~daily~~the ~~record~~September ~~dates~~2017 ~~for~~monthly ~~each~~distribution, ~~day~~we ~~during~~ceased ~~the~~paying ~~periods~~regular ~~commencing~~monthly ~~January 1, 2015~~distributions. On ~~through~~December ~~February~~20, 282017, ~~2016~~our ~~and~~board ~~March~~of 1,directors ~~2016~~authorized ~~through~~the ~~December 31,~~Initial ~~2016~~Liquidating Distribution in the amount of $4. ~~Distributions~~05 ~~are~~per ~~paid~~share onof orcommon ~~about~~stock ~~the~~to ~~first~~our ~~business~~stockholders ~~day~~of record as of the ~~following~~close ~~month~~of business on December 21, 2017. ~~Distributions~~The ~~declared~~Initial ~~during~~Liquidating ~~2016~~Distribution ~~and~~was ~~2015,~~paid ~~aggregated~~on byDecember ~~quarter~~27, ~~are~~2017 asand ~~follows~~was ~~(dollars~~funded infrom ~~thousands,~~proceeds ~~except~~from ~~per~~sales ~~share~~of ~~amounts):~~our real estate properties. We do not expect to pay regular distributions during the liquidation process.

	2016
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	3,285	$	3,336	$	3,394	$	3,415	$	13,430
Total Per Share Distribution (1)	$	0.160	$	0.162	$	0.164	$	0.164	$	0.650

Distributions declared per share of common stock were based on daily record dates for each day during the period commencing January 1, 2017 through February 28, 2017. For the month of March 2017 and for the period from May 2017 through September 2017, our board of directors declared monthly distributions based on a monthly record date. Additionally, our board of directors declared a special distribution in the amount $1.00 per share of common stock in connection with the disposition of Wesley Village to stockholders of record as of the close of business on April 20, 2017.

	2015
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	3,224	$	3,269	$	3,330	$	3,353	$	13,176
Total Per Share Distribution (1)	$	0.160	$	0.162	$	0.164	$	0.164	$	0.650

_____________________

(1) During the years ended December 31, 2015 and 2016, we declared distributions based on daily record dates for each day during the periods commencing January 1, 2015 through February 28, 2016 and March 1, 2016 through December 31, 2016. Distributions for these periods were calculated based on stockholders of record each day during the period at a rate of $0.00178082 per share per day and equal a daily amount that, if paid each day for a 365-day period, would equal a 6.95% annualized rate based on our December 9, 2016 estimated value per share of $9.35.

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~~The~~During ~~tax~~2016, ~~composition~~we ofdeclared ~~our~~ distributions ~~declared~~based on daily record dates for each day during the ~~years~~periods ~~ended~~commencing January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2016. Distributions ~~and~~are ~~2015~~paid ~~were~~on asor ~~follows:~~about the first business day of the following month.

	2016		2015
Ordinary Income	12	%	17	%
Return of Capital	88	%	83	%
Total	100	%	100	%

Distributions declared during 2017 and 2016, aggregated by quarter, are as follows (dollars in thousands, except per share amounts):

On November 10, 2016, our board of directors declared distributions based on daily record dates for the period from January 1, 2017 through January 31, 2017, which we paid on February 1, 2017. On January 23, 2017, our board of directors declared distributions based on daily record dates for the period from February 1, 2017 through February 28, 2017, which we paid on March 1, 2017. On March 9, 2017, our board of directors declared a March 2017 distribution in the amount of $0.05520548 per share of common stock to stockholders of record as of the close of business on March 20, 2017, which we expect to pay in April 2017. Investors may choose to receive cash distributions or purchase additional shares through our dividend reinvestment plan.



	2017
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	3,346	$	22,807	$	2,875	$	85,158	$	114,186
Total Per Share Distribution ⁽¹⁾	$	0.160	$	1.091	$	0.137	$	4.050	$	5.438



	2016
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Total Distributions Declared	$	3,285	$	3,336	$	3,394	$	3,415	$	13,430
Total Per Share Distribution ⁽²⁾	$	0.160	$	0.162	$	0.164	$	0.164	$	0.650

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⁽¹⁾ Distributions declared per share of common stock were based on daily record dates for each day during the periods commencing January 1, 2017 through February 28, 2017 and were calculated at a rate of $0.00178082 per share per day. Each day during the period commencing January 1, 2017 through February 28, 2017 was a record date for distributions. For the month of March 2017 and for the period from May 2017 through September 2017, our board of directors declared monthly distributions based on a monthly record date. Additionally, in connection with the disposition of Wesley Village, our board of directors declared a special distribution in the amount $1.00 per share of common stock to stockholders of record as of the close of business on April 20, 2017. Pursuant to the Plan of Liquidation, on December 20, 2017, our board of directors authorized the Initial Liquidating Distribution in the amount of $4.05 per share of common stock to our stockholders of record as of the close of business on December 21, 2017. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions during the periods presented.

⁽²⁾ Distributions declared per share of common stock were based on daily record dates for each day during the periods commencing January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2016 and were calculated at a rate of $0.00178082 per share per day. Each day during the periods commencing January 1, 2016 through February 28, 2016 and March 1, 2016 through December 31, 2016 was a record date for distributions. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions the periods presented.

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



	2017		2016
Ordinary Income	—	%	12	%
Capital Gain ⁽¹⁾	100	%	—	%
Return of Capital	—	%	88	%
Total	100	%	100	%

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⁽¹⁾ The tax composition of our distributions declared for the year ended December 31, 2017 excludes the Initial Liquidating Distribution in the amount of $85.2 million that was paid to our stockholders on December 27, 2017. The Initial Liquidating Distribution paid to stockholders was considered to be a liquidating distribution for federal income tax purposes. The liquidating distributions will be applied to reduce a stockholder’s basis but not below zero. The amount of distributions in excess of a stockholder’s basis will be considered a gain which should be recognized in the year the distribution is received.

Unregistered Sales of Equity Securities

During the fiscal year ended December 31, ~~2016~~2017, we did not sell any equity securities that were not registered under the Securities Act of 1933.

Share Redemption Program

WeOn ~~have~~December a19, 2017, in connection with the implementation of the Plan of Liquidation, our board of directors approved the termination of our share redemption program ~~that~~effective ~~may~~as ~~enable~~of ~~stockholders~~January to21, ~~sell~~2018. ~~their~~Thus, the last redemption date under the share redemption program would have been December 29, 2017. However, because of certain limitations on the dollar value of shares tothat uscould have been redeemed under our share redemption program (described below), we exhausted funds available for all redemptions for the remainder of 2017 in ~~limited~~January ~~circumstances~~2017 and funds available for Special Redemptions for the remainder of 2017 in August 2017. As such, we were unable to redeem any shares on December 29, 2017.

~~Pursuant to our share redemption program, there are several limitations on our ability to redeem shares:~~30

• Unless the shares are being redeemed in connection with a Special Redemption, we may not redeem shares until the stockholder has held his or her shares for one year.

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

• We may redeem only the number of shares that we could purchase with the amount of the net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year; provided that we may not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once we have redeemed $1.5 million of shares under our share redemption program, including in connection with Special Redemptions, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with a Special Redemption. Notwithstanding anything contained in this paragraph to the contrary, we may increase or decrease the funding available for the redemption of shares pursuant to our share redemption program upon ten business days’ notice to our stockholders. We may provide this notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to our stockholders.

Because of these limitations on the dollar value of shares that may be redeemed under our share redemption program, in January 2016, we exhausted the $1.5 million of funds available for all redemptions for 2016 and in August 2016, we exhausted the remaining $0.5 million of funds available for Special Redemptions for 2016. As of December 31, 2016, we had $1.4 million of outstanding and unfulfilled ordinary redemption requests and $0.3 million of outstanding and unfulfilled Special Redemption requests. The annual limitation was reset on January 1, 2017, and we had an aggregate of $2.0 million of funds available for all redemptions, subject to the limitations in the share redemption program, including the requirement that the first $1.5 million of funds is available for all redemptions and the last $0.5 million is available solely for Special Redemptions. We exhausted $1.5 million of funds available for all redemptions for 2017 in January 2017 and an aggregate of $0.3 million of funds available for Special Redemptions for 2017 in January and February 2017. As such, we will only be able to process $0.2 million of redemption requests related to Special Redemptions for the remainder of 2017.

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Pursuant to our share redemption program, ~~redemptions~~there ~~made~~were inseveral ~~connection~~limitations ~~with~~on aour ~~Special~~ability ~~Redemption are made at a price per share equal~~ to ~~the most recent estimated value per share of our common stock as of the applicable redemption date. The price at which we~~ redeem ~~all other~~ shares ~~eligible for redemption is as follows~~:


•	Unless the shares were being redeemed in connection with a Special Redemption, we were not able to redeem shares until the stockholder has held his or her shares for one year.


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


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

•

We could redeem only the number of shares that we could purchase with the amount of the net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year; provided that we could not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once we had redeemed $1.5 million of shares under our share redemption program, including in connection with Special Redemptions, the remaining $0.5 million of the $2.0 million annual redemption limit was reserved exclusively for shares being redeemed in connection with a Special Redemption.

Pursuant to our share redemption program, redemptions made in connection with a Special Redemption were made at a price per share equal to the most recent estimated value per share of our common stock as of the applicable redemption date. The price at which we redeemed all other shares eligible for redemption was as follows:


•	For those shares held by the redeeming stockholder for at least one year, 92.5% of our most recent estimated value per share as of the applicable redemption date;


•	For those shares held by the redeeming stockholder for at least two years, 95.0% of our most recent estimated value per share as of the applicable redemption date;


•	For those shares held by the redeeming stockholder for at least three years, 97.5% of our most recent estimated value per share as of the applicable redemption date; and


•	For those shares held by the redeeming stockholder for at least four years, 100% of our most recent estimated value per share as of the applicable redemption date.

IfOn weDecember ~~cannot~~9, ~~redeem~~2016, ~~all~~our ~~shares~~board ~~presented~~of ~~for~~directors ~~redemption~~approved inan ~~any~~estimated ~~month~~value ~~because~~per share of ~~the~~our ~~limitations~~common stock of $9.35 (unaudited) based on ~~redemptions~~the ~~set~~estimated ~~forth~~value inof our ~~share~~assets ~~redemption~~less ~~program~~the estimated value of our liabilities, ~~then~~divided weby ~~will~~the ~~honor~~number ~~redemption~~of ~~requests~~shares onoutstanding, aall ~~pro~~as ~~rata~~of ~~basis~~September 30, ~~except~~2016. This ~~that~~estimated ifvalue aper ~~pro~~share ~~rata~~became effective for the December 2016 redemption ~~would~~date, ~~result~~which inwas aDecember ~~stockholder~~30, ~~owning~~2016. ~~less~~For ~~than~~a full description of the ~~minimum~~assumptions ~~purchase~~and ~~requirement~~methodologies ~~described~~used into value our ~~currently~~assets ~~effective,~~and orliabilities in connection with the ~~most~~calculation ~~recently~~of ~~effective,~~the ~~registration~~December ~~statement~~2016 asestimated ~~such~~value ~~registration~~per ~~statement~~share, ~~has~~see ~~been~~Part ~~amended~~II, orItem ~~supplemented~~5, ~~then~~“Market wefor ~~would~~Registrant’s ~~redeem~~Common ~~all~~Equity, Related Stockholder Matters and Issuer Purchases of ~~such~~Equity ~~stockholder’s~~Securities ~~shares~~— Market Information” of our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 10, 2017.

~~Upon~~On aApril ~~transfer~~5, 2017, our board of ~~shares~~directors approved an estimated value per share of our common stock of $8.35 (unaudited), ~~any~~effective ~~pending~~April ~~redemption~~20, ~~requests~~2017. ~~with~~The ~~respect~~estimated value per share is equal to ~~such~~the ~~transferred~~December ~~shares~~2016 ~~will~~estimated bevalue ~~canceled~~per asshare of ~~the~~our ~~date~~common westock ~~accept~~of $9.35 (unaudited), reduced for the ~~transfer~~impact of the $1.00 ~~Stockholders~~per ~~wishing~~share usspecial todistribution ~~continue~~we paid to ~~consider~~our stockholders on May 1, 2017 in connection with the disposition of Wesley Village. For a ~~redemption~~full ~~request~~description ~~related~~of tothe ~~any~~methodologies ~~transferred~~and ~~shares~~assumptions ~~must~~used ~~resubmit~~in ~~their~~the ~~redemption~~determination ~~request~~of the April 2017 estimated value per share, see our Current Report on Form 8-K, filed with the SEC on April 11, 2017.

OnIf ~~December~~we 8,could ~~2015,~~not ~~our~~redeem ~~board~~all ofshares ~~directors~~presented ~~approved~~for anredemption ~~estimated~~in ~~value~~any ~~per~~month ~~share~~because of ~~our~~the ~~common~~limitations ~~stock of $10.29 (unaudited) based~~ on ~~the~~redemptions ~~estimated~~set ~~value~~forth ofin our ~~assets~~share ~~less~~redemption ~~the estimated value of our liabilities~~program, ~~divided~~then bywe ~~the~~honored ~~number~~redemption ofrequests ~~shares~~on ~~outstanding,~~a ~~all~~pro asrata ~~of September 30~~basis, ~~2015.~~except ~~For~~that if a ~~full~~pro ~~description~~rata ofredemption ~~the~~would ~~assumptions~~have ~~and~~resulted ~~methodologies used to value our assets and liabilities~~ in ~~connection~~a ~~with~~stockholder ~~the~~owning ~~calculation~~less ofthan the ~~December~~minimum ~~2015~~purchase ~~estimated~~requirement ~~value~~described ~~per~~in ~~share, see~~ our ~~Annual Report on Form 10~~then-~~K for the year ended December 31~~effective, ~~2015~~or at Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information.” On December 9, 2016, our board of directors approved an estimated value per share of our common stock of $9.35 (unaudited) based on the ~~estimated~~most ~~value~~recently ~~of our assets less the estimated value of our liabilities~~effective, ~~divided~~registration bystatement ~~the number of shares outstanding, all~~ as ofsuch ~~September~~registration ~~30,~~statement ~~2016. This~~had ~~estimated~~been ~~value~~amended ~~per~~or ~~share became effective for the December 2016 redemption date~~supplemented, ~~which~~then ~~was~~we ~~December~~would ~~30,~~redeem ~~2016.~~all ~~For a full description~~ of ~~the~~such ~~methodologies used to value our assets and liabilities in connection with the calculation of the December 2016 estimated value per share, see Part II, Item 5, “Market for Registrant~~stockholder’s ~~Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information” herein~~shares.

Our board of directors may amend, suspend or terminate the program without stockholder approval upon 30 days’ notice, provided that we may increase or decrease the funding available for the redemption of shares pursuant to our share redemption program upon ten business days’ notice to our stockholders. We may provide this notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC or (b) in a separate mailing to our stockholders.31

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~~During~~Prior to its termination, during the year ended December 31, ~~2016~~2017, we funded redemptions under our share redemption program with the net proceeds from our dividend reinvestment plan, which we terminated effective as of August 20, 2017, and we redeemed shares pursuant to our share redemption program as follows:

Month	Total Numberof Shares Redeemed (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of the Share Redemption Program	Approximate Dollar Value of SharesAvailable That May Yet Be RedeemedUnder the Share Redemption Program
January 2016	149,287	$	10.12	149,287	(3)
January 2017	182,847	$	9.33	182,847	(3)
February 2016	6,000	10.29		6,000	(3)
February 2017	6,738	9.35		6,738	(3)
March 2016 (4)	4,009	10.17		2,097	(3)
March 2017	3,207	9.35		3,207	(3)
April 2016	10,932	10.29		10,932	(3)
April 2017	200	8.35		200	(3)
May 2016	—	—		—	(3)
May 2017	8,198	8.35		8,198	(3)
June 2016	4,235	10.29		4,235	(3)
June 2017	10,357	8.35		10,357	(3)
July 2016	—	—		—	(3)
July 2017	4,016	8.35		4,016	(3)
August 2016	24,251	10.29		24,251	(3)
August 2017	1,339	8.35		1,339	(3)
September 2016	—	—		—	(3)
September 2017	—	—		—	(3)
October 2016	—	—		—	(3)
October 2017	—	—		—	(3)
November 2016	—	—		—	(3)
November 2017	—	—		—	(3)
December 2016	—	—		—	(3)
December 2017	—	—		—	(3)
Total	~~198~~216,~~714~~902			~~196~~216,~~802~~902

_____________________

(1) We announced the adoption and commencement of the program on March 12, 2010. We announced amendments to the program on January 18, 2013 (which amendment became effective on February 17, 2013), on February 26, 2013 (which amendment became effective on March 28, 2013), on January 28, 2014 (which amendment became effective on February 27, 2014) and on October 17, 2014 (which amendment became effective on November 16, 2014). We announced the termination of the program on December 22, 2017 (which became effective on January 21, 2018).

(2) The prices at which we ~~redeem~~redeemed shares under our share redemption program are set forth above.

(3) We ~~limit~~limited the dollar value of shares that ~~may~~could behave been redeemed under our share redemption program as described above. In January ~~2016~~2017, we exhausted ~~$1.5~~ million of funds available for all redemptions for 2016. In August 2016, we exhausted $0.5 million of funds available for Special Redemptions for 2016. As of December 31, 2016, we had a total of $1.7 million of outstanding and unfulfilled redemption requests, representing 176,510 shares, including $0.3 million of redemption requests relating to Special Redemptions representing 28,029 shares, recorded in other liabilities on the ~~accompanying consolidated balance sheets. We exhausted~~ $1.5 million of funds available for all redemptions ~~for 2017~~ in ~~January~~ 2017 and ~~an aggregate of $0.3 million of funds available for Special Redemptions for 2017~~ in ~~January~~August ~~and February~~ 2017~~. As such~~, we ~~will~~exhausted ~~only be able to process~~ $0.25 million of ~~redemption~~funds ~~requests~~available ~~related~~for to Special Redemptions for ~~the remainder of~~ 2017.

(4) In addition to the redemptions under our share redemption program described above, in March 2016, we repurchased 1,912 shares of our common stock at $10.03 per share for an aggregate price of $19,188.

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ITEM 6.	SELECTED FINANCIAL DATA

~~The~~Selected ~~following selected~~ financial data ashas ofbeen ~~December 31,~~omitted ~~2016, 2015,~~as ~~2014,~~permitted ~~2013~~under ~~and~~rules ~~2012,~~applicable ~~for~~to ~~the~~smaller ~~years~~reporting ended December 31, 2016, 2015, 2014, 2013 and 2012 should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below (in thousands, except share and per share amounts):companies.

	As of December 31,
	2016			2015			2014			2013			2012
Balance sheet data
Total real estate, net	$	366,260		$	376,334		$	385,863		$	330,317		$	221,756
Total assets	391,937			406,179			419,589			376,197			260,285
Notes payable, net	279,146			284,488			289,569			240,887			166,376
Total liabilities	288,801			297,914			302,326			250,376			171,707
Redeemable common stock	350			894			1,539			4,761			2,006
Total stockholders’ equity	102,786			107,371			115,724			121,060			86,572
	For the Years Ended December 31,
	2016			2015			2014			2013			2012
Operating data
Total revenues	$	45,301		$	44,613		$	42,200		$	32,825		$	16,105
Net income (loss)	5,121			791			(3,560		)	(7,745		)	(10,233		)
Net income (loss) per common share - basic and diluted	0.25			0.04			(0.18		)	(0.44		)	(1.16		)
Other data
Cash flows provided by (used in) operating activities	$	13,939		$	13,008		$	13,002		$	9,546		$	(372	)
Cash flows used in investing activities	(2,182		)	(1,885		)	(18,172		)	(121,314		)	(196,336		)
Cash flows (used in) provided by financing activities	(15,529		)	(14,702		)	(7,534		)	118,767			206,646
Distributions declared	13,430			13,176			12,905			11,473			5,724
Distributions declared per common share (1)	0.650			0.650			0.650			0.650			0.650
Weighted-average number of common shares outstanding, basic and diluted	20,663,506			20,272,697			19,853,904			17,649,883			8,801,166
Reconciliation of funds from operations (2)
Net income (loss)	$	5,121		$	791		$	(3,560	)	$	(7,745	)	$	(10,233	)
Depreciation of real estate assets	12,299			12,087			11,497			8,284			3,857
Amortization of lease-related costs	3			3			1,080			4,082			4,155
FFO	$	17,423		$	12,881		$	9,017		$	4,621		$	(2,221	)

_____________________

(1) Distributions declared per common share assumes each share was issued and outstanding each day for the periods presented. Distributions for the periods from January 1, 2012 through February 28, 2012, March 1, 2012 through February 28, 2016 and March 1, 2016 through December 31, 2016 are based on daily record dates and calculated at a rate of $0.00178082 per share per day.

(2) We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an apartment REIT. We compute FFO in accordance with the current NAREIT. FFO represents net income, excluding gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

FFO is a non-GAAP financial measure and does not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO includes adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization. Accordingly, FFO should not be considered as an alternative to net income as an indicator of our operating performance.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with ~~the “Selected Financial Data” above and~~ our accompanying consolidated financial statements and the notes thereto. Also, see “Forward-Looking Statements” preceding Part I of this ~~annual~~Annual ~~report~~Report on Form 10-K.

Overview

We were formed on July 31, 2009 as a Maryland corporation that elected to be taxed as a REIT beginning with the taxable year ended December 31, 2010 and intend to continue to operate in such a manner during our liquidation. We conduct our business primarily through our Operating Partnership, of which we are the sole general partner. On January 21, 2016, our board of directors formed the Special Committee to explore the availability of strategic alternatives involving our company with the goal of providing liquidity options for our stockholders while preserving and maximizing overall returns on our investment portfolio. On August 14, 2017, in connection with a review of potential strategic alternatives available to us, our board of directors unanimously approved the sale of all of our real estate properties and our dissolution pursuant to the terms of the Plan of Liquidation. The principal purpose of the Plan of Liquidation is to maximize stockholder value by selling our real estate properties, paying our debts and distributing the net proceeds from liquidation to our stockholders. On December 19, 2017, our stockholders approved the Plan of Liquidation. For more information, see the Plan of Liquidation, which is included as an exhibit to this Annual Report on Form 10-K.

We invested in and manage a portfolio of high quality apartment communities located throughout the United States. Our portfolio consists of “core” apartment buildings that were already well-positioned and producing rental income at acquisition. As of December 31, 2016, we owned 11 apartment complexes.32

As ~~our~~of ~~advisor~~December 31, ~~KBS~~2017, ~~Capital~~we ~~Advisors~~owned isfour apartment ~~responsible~~communities, ~~for~~the ~~managing our day~~Core-~~to-day~~Portfolio ~~operations~~Properties, ~~and~~all ~~our portfolio~~ of ~~real~~which ~~estate~~were ~~assets. Subject~~under tocontract ~~the terms of the advisory agreement between KBS Capital Advisors and us, KBS Capital Advisors delegates certain advisory duties~~ to ~~the Sub-Advisor~~sell. ~~Notwithstanding~~ ~~such~~On ~~delegation~~February to8, ~~the Sub-Advisor~~2018, ~~KBS~~we ~~Capital~~completed ~~Advisors retains ultimate responsibility for~~ the ~~performance~~sale of ~~all~~two ~~the~~of ~~matters entrusted to it under~~ the ~~advisory~~Core-Portfolio ~~agreement~~Properties. ~~KBS~~ ~~Capital~~See ~~Advisors~~Part ~~made~~II, ~~recommendations~~Item on7 ~~all~~“Management’s ~~investments~~Discussion toand ~~our~~Analysis ~~board~~ of ~~directors. A~~Financial ~~majority~~Condition ofand ~~our~~Results ~~board~~ of ~~directors,~~Operations ~~including~~- aSubsequent ~~majority~~Events of- ~~our~~Dispositions ~~independent~~Subsequent ~~directors~~to ~~acting~~December ~~through the conflicts committee~~31, ~~approved our investments~~2017. ~~KBS~~” ~~Capital~~We ~~Advisors,~~anticipate ~~either~~completing ~~directly or through~~ the ~~Sub-Advisor,~~sale ~~also~~of ~~provides asset-management, marketing, investor-relations and other administrative services on~~ our ~~behalf. LPI~~remaining ~~is the property manager for our~~ real estate ~~property~~properties ~~investments. Our~~by ~~Sub-Advisor~~the ~~owns~~end ~~20,000 shares~~ of ~~our~~the ~~common~~first ~~stock. We~~quarter ~~have~~of ~~no paid employees~~2018.

OnAs ~~March 12~~our advisor, ~~2010,~~ weKBS ~~commenced~~Capital ~~the~~Advisors ~~Initial~~is ~~Offering~~responsible offor ~~280,000,000 shares~~managing ofour ~~common~~day-to-day ~~stock~~operations ~~for~~and ~~sale~~our remaining real estate properties. Subject to the ~~public,~~terms of ~~which~~the 80advisory agreement between KBS Capital Advisors and us,~~000,000 shares~~ ~~were~~KBS ~~offered~~Capital ~~pursuant~~Advisors todelegates ~~our~~certain ~~dividend~~advisory ~~reinvestment~~duties ~~plan~~to the Sub-Advisor. WeNotwithstanding ~~retained~~such delegation to the Sub-Advisor, KBS Capital ~~Markets~~Advisors ~~Group~~retains toultimate ~~serve~~responsibility asfor the ~~dealer~~performance ~~manager~~of ~~for~~all the ~~Initial~~matters ~~Offering~~entrusted ~~pursuant~~to it under the advisory agreement. KBS Capital Advisors made recommendations on all of our investments to our board of directors. A majority of our board of directors, including a majority of our independent directors acting through the ~~Initial~~conflicts ~~Dealer~~committee, ~~Manager~~approved ~~Agreement~~our investments. KBS Capital Advisors, ~~dated~~either ~~March~~directly 12or through the Sub-Advisor, ~~2010~~also provides asset management, marketing, investor-relations and other administrative services on our behalf. LPI is the property manager for our remaining real estate properties.

On March 12, 2010, we commenced the Initial Offering of 280,000,000 shares of common stock for sale to the public, of which 80,000,000 shares were offered pursuant to our dividend reinvestment plan.

On May 31, 2012, we filed a registration statement on Form S-11 with the SEC to register the Follow-on Offering. Pursuant to the Follow-on Offering registration statement, as amended, we registered up to an additional $2,000,000,000 of shares of common stock for sale to the public and up to an additional $760,000,000 of shares pursuant to our dividend reinvestment plan. The SEC declared our registration statement for the Follow-on Offering effective on March 8, 2013.

~~We retained KBS Capital Markets Group to serve as the dealer manager for the Follow-on Offering pursuant to the Follow-on Dealer Manager Agreement dated March 8, 2013.~~ On March 12, 2013, we ceased offering shares pursuant to the Initial Offering and on March 13, 2013, we commenced offering shares to the public pursuant to the Follow-on Offering. We ceased offering shares of common stock in the primary Follow-on Offering on March 31, 2014 ~~and completed subscription processing procedures on April 30, 2014~~. We ~~continue~~terminated ~~to offer shares under~~ our dividend reinvestment plan effective as of August 20, 2017.

Through its completion on March 12, 2013, we sold 18,088,084 shares of common stock in the Initial Offering for gross offering proceeds of $179.2 million, including 368,872 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $3.5 million. WeIn our primary Follow-on Offering, we sold 13,~~496~~943,~~198~~266 shares of common stock for ingross ~~our~~offering ~~primary~~proceeds ~~Follow-on~~of ~~Offering~~$39.7 million, including 2,447,068 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $1523.9 million.

AsWe ~~of December 31, 2016, we had~~ sold an aggregate of 2122,~~683~~031,~~960~~350 shares of common stock in the Offerings for gross offering proceeds of $~~215~~218.9 million, including an aggregate of 2,~~468~~815,~~550~~940 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $2427.4 million. Also, as of December 31, ~~2016~~2017, we had redeemed ~~807~~1,~~692~~024,594 shares sold in the Offerings for $79.9 million. We have used substantially all of the net proceeds from the primary Offerings to invest in and manage a portfolio of high quality apartment communities located throughout the United States as described above.

44As a result of the approval of the Plan of Liquidation by our stockholders in December 2017, we adopted the liquidation basis of accounting as of December 1, 2017, as described further in Part IV, Item 15, Note 3, “Summary of Significant Accounting Policies — Principles of Consolidation and Basis of Presentation.”

~~Table~~Plan of ~~Contents~~Liquidation

~~Market~~In ~~Outlook~~accordance ─with ~~Multifamily~~the ~~Real~~Plan ~~Estate~~of Liquidation, our objectives for 2018 are to (i) complete the orderly liquidation of our company pursuant to the Plan of Liquidation; and ~~Finance~~(ii) ~~Markets~~maximize stockholder value by selling all of our remaining real estate properties, paying our debts, providing for the payment of unknown or contingent liabilities, distributing the net proceeds from liquidation to our stockholders and winding up our operations and dissolving our company. We expect to complete these activities within 12 months after the December 19, 2017 stockholder approval of the Plan of Liquidation. While pursuing our liquidation pursuant to the Plan of Liquidation, we intend to continue to manage our remaining real estate properties with the goal of maximizing stockholder value. We expect to pay multiple liquidating distributions, including the Initial Liquidating Distribution, to our stockholders during the liquidation process and to pay the final liquidating distribution after we sell our remaining real estate properties, pay all of our known liabilities and provide for unknown liabilities.

~~Strong~~As ~~demand~~of March 1, 2018, we owned two real estate properties, each of which was a Core-Portfolio Property and ~~trailing~~each ~~supply~~of ~~have~~which ~~been~~was ~~dominant~~under ~~themes~~contract ~~for~~to ~~professionally~~sell. ~~managed,~~We ~~multifamily~~anticipate ~~rental~~completing the sale of our remaining real estate ~~(“Multifamily”)~~properties inby the ~~United~~end ~~States~~of ~~since~~ the ~~recession~~first quarter of ~~2008-2009~~2018. ~~Although~~ ~~the~~However, ~~U.S.~~we ~~Multifamily~~can ~~outlook~~give ~~remains~~no ~~positive,~~assurance ~~supply~~regarding ~~and~~the ~~affordability~~timing ~~are~~of ~~becoming~~the ~~concerns~~sale of our remaining real estate properties in aconnection ~~growing~~with ~~number~~the implementation of ~~urban~~the ~~core~~Plan ~~markets~~of Liquidation, ~~most~~the ~~notably,~~sale ~~New~~prices ~~York~~we ~~City,~~will ~~San~~receive ~~Francisco,~~for ~~Los~~such ~~Angeles~~properties, ~~Miami~~ and ~~other~~the ~~prominent~~amount ~~coastal~~or ~~cities. The~~timing ~~beneficiaries~~ of ~~these~~any ~~“urban-core~~additional ~~concerns,”~~liquidating ~~have~~distributions ~~increasingly~~we ~~been~~pay ~~suburban~~to ~~markets~~our stockholders. ~~With~~ ~~more~~If ~~renters~~we ~~opting~~cannot ~~for~~sell ~~the~~our ~~suburbs,~~remaining ~~vacancy~~real ~~has~~estate ~~been~~properties ~~declining~~ and ~~rents~~pay ~~increasing~~our indebts ~~suburban~~within ~~markets. This~~24 ~~trend~~months isfrom ~~likely~~December to19, ~~continue~~2017, ~~assuming~~or if the ~~economy~~board ~~continues~~of todirectors ~~grow~~ and ~~suburban~~the ~~markets~~Special ~~remain~~Committee ~~affordable~~determine ~~compared~~that toit ~~their~~is ~~urban~~otherwise ~~counterparts. These~~advisable ~~factors~~to ~~bode~~do ~~well~~so, ~~for~~pursuant ~~our~~to ~~portfolio,~~the ~~which~~Plan isof ~~predominantly~~Liquidation, ~~located~~we inmay ~~suburban~~transfer ~~markets. For~~and ~~further~~assign ~~discussion~~our ofremaining ~~current~~assets ~~market~~to ~~conditions,~~a ~~see~~liquidating ~~Part~~trust. I,Upon ~~Item~~such 1,transfer ~~“Business~~and —assignment, ~~Market~~our ~~Outlook~~stockholders —will ~~Multifamily~~receive ~~Real~~beneficial ~~Estate~~interests ~~and~~in ~~Finance~~the ~~Markets~~liquidating trust.”

Pursuant to the Plan of Liquidation, on December 20, 2017, our board of directors authorized the Initial Liquidating Distribution in the amount of $4.05 per share of common stock to our stockholders of record as of the close of business on December 21, 2017. The Initial Liquidating Distribution was paid on December 27, 2017 and was funded from proceeds from real estate property sales.

Liquidity and Capital Resources

~~Our~~As ~~principal~~of ~~demands~~December 31, ~~for~~2017, ~~funds~~we ~~during~~had ~~the~~$17.2 ~~short~~million ~~and~~of ~~long-term~~cash, ~~are~~cash equivalents and ~~will~~restricted becash. Our principal demands for funds during 2017 were for: the payment of operating expenses, capital expenditures, and general and administrative expenses, including expenses in connection with the Plan of Liquidation; ~~payments~~repayment ~~under~~of debt ~~obligations~~; ~~redemptions~~Special Redemptions of common stock pursuant to our now-terminated share redemption program; and ~~payments~~the payment of distributions to our stockholders, including special distributions and liquidating distributions pursuant to the Plan of Liquidation. ToDuring ~~date~~2017, we ~~have~~used ~~had~~cash ~~four~~on ~~primary~~hand, ~~sources~~proceeds from real estate property sales, proceeds from our dividend reinvestment plan (which we terminated effective as of ~~capital~~August ~~for~~20, ~~meeting~~2017), and cash flows generated by our real estate properties to fund our cash requirements:. During 2017, we sold seven real estate properties and used a portion of the net sale proceeds to fund distributions to our stockholders, including the Initial Liquidating Distribution. As of December 31, 2017, we owned four real estate properties.

•As ~~Proceeds~~described in the Proxy Statement, subsequent to our payment of the September 2017 monthly distribution, we ceased paying regular monthly distributions. We do not expect to pay regular distributions during the liquidation process. We paid distributions to our stockholders during the nine months ended September 30, 2017 using a combination of cash flows from operations and net proceeds from the disposition of one real estate property, Wesley Village. In addition, on December 20, 2017, our ~~now~~board ~~terminated~~of ~~primary~~directors ~~Offerings;~~authorized the Initial Liquidating Distribution in the amount of $4.05 per share of common stock to our stockholders of record as of the close of business on December 21, 2017. The Initial Liquidating Distribution was paid on December 27, 2017 and was funded from proceeds from real estate property sales.

•On ~~Proceeds~~December ~~from~~19, 2017, in connection with the implementation of our ~~dividend~~Plan ~~reinvestment~~of ~~plan;~~Liquidation, our board of directors approved the termination of our share redemption program effective as of January 21, 2018. See Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Share Redemption Program.”

•Going ~~Debt~~forward, ~~financings;~~we expect our principal demands for funds during liquidation to be for general and administrative expenses, including expenses in connection with the Plan of Liquidation, repayment of debt and the payment of liquidating distributions to our stockholders pursuant to the Plan of Liquidation. We also use our capital resources to reimburse our advisor and its affiliates for certain costs they incur on our behalf, to pay our advisor fees in connection with the management and disposition of our remaining real estate properties and to make payments to our property manager pursuant to the remaining Property Management Agreements. On February 1, 2018, we renewed our advisory agreement with our advisor, effective as of January 25, 2018. The renewed advisory agreement (i) contains certain changes to the fees and reimbursements we pay to our advisor which become effective on the day after we sell our final real estate property and (ii) provides for the automatic termination of the agreement in certain circumstances. See “— Subsequent Events — Renewal of the Advisory Agreement.”

•We ~~Cash~~intend to use our cash on hand, proceeds from the sale of our remaining real estate properties and cash flow from operations generated by our remaining real estate ~~investments~~properties as our primary sources of liquidity during liquidation. Our remaining real estate properties generate cash flow in the form of rental revenues, which are reduced by operating expenditures, debt service payments, the payment of property management and asset management fees and corporate general and administrative expenses. Cash flows from operations from our remaining real estate properties is primarily dependent upon the occupancy level of the properties, the net effective rental rates on our leases, the collectability of rent and how well we manage our expenditures. As of March 1, 2018, we owned two real estate properties, which were 91% occupied in the aggregate and each of which was under contract to sell. We anticipate completing the sale of these properties during the first quarter of 2018 and distributing the majority of the net proceeds from liquidation shortly thereafter. However, we can give no assurance regarding the timing of the sale of our remaining real estate properties in connection with the implementation of the Plan of Liquidation, the sale prices we will receive for such properties, and the amount or timing of any additional liquidating distributions we pay to our stockholders. As a result of real estate property sales pursuant to the Plan of Liquidation, we have experienced and will experience declines in cash flow from operations. However, we believe that potential net proceeds from the sale of our remaining real estate properties, cash flow from operations and cash on hand will be sufficient to meet our liquidity needs during our liquidation.

We ceased offering shares of common stock in the primary Follow-on Offering on March 31, 2014. We plan to continue to offer shares under our dividend reinvestment plan until we have sold all $760,000,000 of shares of common stock under our dividend reinvestment plan. In some states, we will need to renew the registration statement annually or file a new registration statement to continue the dividend reinvestment plan offering. We may terminate our dividend reinvestment plan offering at any time. 34

As of December 31, 2016 we had sold an aggregate of 21,683,960 shares of common stock in the Offerings for gross offering proceeds of $215.9 million, including an aggregate of 2,468,550 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $24.4 million. Also as of December 31, 2016, we had redeemed 807,692 shares sold in the Offerings for $7.9 million. As of December 31, 2016, we had invested substantially all of the proceeds from our now-terminated primary Offerings in real estate properties and do not anticipate making additional real estate acquisitions. We intend to use our cash on hand, cash flow generated by our real estate operations and proceeds from our dividend reinvestment plan as our primary sources of immediate and long-term liquidity.

As of December 31, 2016, we owned 11 apartment communities. Our real estate investments generate cash flow in the form of rental revenues, which are reduced by operating expenditures, debt service payments, the payment of property management and asset management fees and corporate general and administrative expenses. Cash flows from operations from our real estate investments is primarily dependent upon the occupancy level of our properties, the net effective rental rates on our leases, the collectibility of rent and how well we manage our expenditures. Cash flows from operations from our real estate investments will be reduced to the extent that we sell our properties. As of December 31, 2016, our real estate property investments were 93% occupied.

As of December 31, 2016, our total debt outstanding was $282.6 million. We limit our total liabilities to 75% of the cost (before deducting depreciation and other non-cash reserves) of our tangible assets; however, we may exceed that limit if a majority of the conflicts committee approves each borrowing in excess of this limitation and we disclose such borrowing to our stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. As of December 31, 2016, our borrowings and other liabilities were approximately 64% of the cost (before deducting depreciation and other non-cash reserves) of our tangible assets. As of December 31, 2016, we had a total of $229.5 million of debt obligations scheduled to mature within the next three years.

We paid distributions to our stockholders during the year ended December 31, 2016 using cash flows from operations. We believe that our cash flows from operations, cash on hand, proceeds from our dividend reinvestment plan and possible proceeds from asset sales are sufficient to meet our liquidity needs for the foreseeable future.

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~~Under~~As ~~our~~of ~~charter~~December 31, we2017, ~~are~~our ~~required~~total todebt outstanding was $131.6 million. We limit our total ~~operating~~liabilities ~~expenses~~ to 75% of the ~~greater~~cost of(before 2%deducting depreciation and other non-cash reserves) of our ~~average~~tangible ~~invested~~ assets; orhowever, ~~25%~~we ofmay ~~our~~exceed ~~net~~that ~~income~~limit ~~for~~if a majority of the ~~four~~conflicts ~~most~~committee ~~recently~~approves ~~completed~~each ~~fiscal~~borrowing ~~quarters,~~in asexcess ~~these~~of ~~terms~~this ~~are~~limitation ~~defined~~and we disclose such borrowing to our stockholders in our ~~charter,~~next ~~unless~~quarterly report with an explanation from the conflicts committee ~~has~~of ~~determined~~the ~~that~~justification ~~such~~for the excess ~~expenses~~borrowing. As of December 31, 2017, our borrowings and other liabilities were ~~justified~~approximately ~~based~~65% onof ~~unusual~~the cost (before deducting depreciation and other non-~~recurring~~cash ~~factors~~reserves) of our tangible assets. ~~Operating~~As ~~expense~~of ~~reimbursements~~December 31, ~~for~~2017, we had a total of $101.3 million of debt obligations scheduled to mature within the ~~four~~next ~~fiscal~~two ~~quarters~~years. ~~ended~~On ~~December 31~~February 8, ~~2016~~2018, ~~did~~we ~~not~~defeased ~~exceed~~the aggregate outstanding principal balance of $56.4 million of the ~~charter-imposed~~Legacy ~~limitation~~at Valley Ranch Mortgage Loan and the Crystal Park at Waterford Mortgage Loan in connection with the disposition of Legacy at Valley Ranch and Crystal Park at Waterford. See “— Subsequent Events — Dispositions Subsequent to December 31, 2017.”

On January 21, 2016, our board of directors formed the Special Committee composed of all of our independent directors to explore the availability of strategic alternatives involving our company with the goal of providing liquidity options for our stockholders while preserving and maximizing overall returns on our investment portfolio. While we conduct this process, we remain 100% focused on managing our properties.

As part of the process of exploring strategic alternatives, on April 5, 2016, the Special Committee engaged Stanger to act as our financial advisor and to assist us and the Special Committee with this process. Under the terms of the engagement, Stanger provided various financial advisory services, as requested by the Special Committee as customary for an engagement in connection with exploring strategic alternatives. Subsequently, we engaged HFF to market our real estate properties for sale. We are not obligated to enter into any particular transaction or any transaction at all. HFF has completed the initial marketing of our real estate properties and received offers for both our entire portfolio and individual properties. Based on feedback received during the marketing process, we anticipate that we will pursue certain strategic asset sales and hold the majority of our real estate properties in an effort to create additional stockholder value, while still paying ongoing distributions. We believe that holding the majority of our real estate properties will allow certain debt prepayment obligations to decrease as the loans secured by those properties move closer to maturity, which should create additional stockholder value. Depending on the number of properties sold, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage.

We intend to use some of the net proceeds after paying sale-related expenses including, in certain cases, paying off the notes payable related to such assets, from any strategic asset sales we close to: (i) make renovations at certain remaining real estate properties, which we believe could increase property-level NOI and create additional stockholder value; and (ii) pay a special distribution to our stockholders. However, there is no assurance that this process will result in stockholder liquidity, or provide a return to stockholders that equals or exceeds our estimated value per share. Any future special distributions we pay from the proceeds of future dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2017.

Cash Flows from Operating Activities

~~As of December 31, 2016, we owned 11 apartment complexes.~~ During the ~~year~~11 months ended ~~December~~November 3130, ~~2016~~2017, net cash provided by operating activities was $136.97 million. We ~~expect our cash flows from operating activities to vary over time and do not anticipate making additional real estate acquisitions.~~

Cash Flows from Investing Activities

Net cash ~~used~~provided inby investing activities was $2226.21 million for the ~~year~~11 months ended ~~December~~November 3130, ~~2016~~2017 and consisted primarily of the following:

• $2227.34 million of ~~cash~~net ~~used~~proceeds ~~for~~from ~~improvements~~the tosale ~~real~~of ~~estate~~six apartment complexes; and

• $02.10 million ofused ~~insurance~~for ~~proceeds~~improvements ~~received~~to ~~for~~real ~~property damage~~estate.

Cash Flows from Financing Activities

Net cash used in financing activities was $15162.59 million for the ~~year~~11 months ended ~~December~~November 3130, ~~2016~~2017 and consisted primarily of the following:

• $7131.7 million of ~~net~~principal ~~cash~~payments ~~distributions,~~on ~~after~~our ~~giving~~mortgage ~~effect~~notes ~~to dividends reinvested by stockholders of $5.7 million~~payable;

• $527.82 million of ~~principal~~net ~~payments~~cash ondistributions, ~~our~~after ~~mortgage~~giving ~~notes~~effect ~~payable;~~to ~~and~~dividends reinvested by stockholders of $3.0 million;


•	$2.0 million of cash used for a prepayment premium on the repayment of debt; and


•	$2.0 million of cash used for redemptions of common stock.

46During the period from December 1, 2017 to December 31, 2017, cash and cash equivalents decreased by $73.8 million primarily as a result of the payment of the $85.2 million Initial Liquidating Distribution and the payment of $19.6 million for the defeasance of the outstanding principal balance of the Poplar Creek Mortgage Loan, all offset by the net proceeds received from the sale of Poplar Creek of $30.3 million.

In addition to using our capital resources as described above, we use our capital resources to make certain payments to our advisor. We paid our advisor fees in connection with the management and disposition of our assets and for certain costs incurred by our advisor in providing services to us. Among the fees payable to our advisor is an asset management fee. See Item 13, “Certain Relationships and Related Transactions and Director Independence — Report of the Conflicts Committee — Our Relationship with KBS Capital Advisors.”

Pursuant to our stockholders’ approval of the Plan of Liquidation, we adopted the liquidation basis of accounting as of December 1, 2017 (as the approval of the Plan of Liquidation by our stockholders became imminent within the last week of November 2017 based on the results of our solicitation of proxies from our stockholders for their approval of the Plan of Liquidation) and for the periods subsequent to December 1, 2017 in accordance with GAAP. Accordingly, on December 1, 2017, assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash that we will collect on disposal of assets as we carry out our Plan of Liquidation. The liquidation values of our operating properties are presented on an undiscounted basis. Estimated costs to dispose of assets and estimated capital expenditures through the anticipated disposition date of the properties have been presented separately from the related assets. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

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InSales addition to using our capital resources to meet our debt service obligations, for capital expenditures and for operating costs, we use our capital resources to make certain payments to our advisor. We paid our advisor fees in connection with the management of ~~our~~Real ~~assets and for certain costs incurred by our advisor in providing services to us. Among the fees payable to our advisor is an asset management fee.~~Estate

~~Advisory~~During ~~Agreement~~the -11 ~~Asset~~months ~~Management~~ended ~~Fee~~November 30, 2017 and for the period from December 1, 2017 through December 31, 2017, the Company sold the following seven real estate properties:

Pursuant to the advisory agreement, the asset management fee payable by us to our advisor with respect to investments in 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, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment.



Property Name	Location	Date Sold	Number of Units	Contractual Sales Price ⁽¹⁾ (in thousands)
Wesley Village	Charlotte, NC	03/09/2017	301	$	57,150
Watertower Apartments	Eden Prairie, MN	09/12/2017	228	42,500
Legacy Crescent Park	Greer, SC	09/29/2017	240	24,500
Legacy Grand at Concord	Concord, NC	10/30/2017	240	33,500
Legacy at Martin’s Point	Lombard, IL	10/31/2017	256	38,250
Millennium Apartment Homes	Greenville, SC	10/31/2017	305	36,250
Total for the 11 months ended November 30, 2017			1,570	232,150
Poplar Creek	Schaumburg, IL	12/20/2017	196	31,000
Total			1,766	$	263,150

The advisory agreement defers our obligation to pay asset management fees, without interest, accruing from February 1, 2013 through July 31, 2013. We will only be obligated to pay our advisor such deferred amounts if and to the extent that our funds from operations, as such term is defined by NAREIT and interpreted by us, as adjusted for the effects of straight-line rents and acquisition costs and expenses (“AFFO”) for the immediately preceding month exceeds the amount of distributions declared for record dates of such prior month (an “AFFO Surplus”). The amount of any AFFO Surplus in a given month shall be applied first to pay our advisor’s asset management fees currently due with respect to such month (including any that would otherwise have been deferred for that month in accordance with the advisory agreement) and then to pay asset management fees previously deferred by our advisor in accordance with the advisory agreement that remain unpaid. We had accrued and deferred payment of $1.5 million of asset management fees for February 2013 through July 2013 under the advisory agreement, as we believed the payment of this amount to our advisor was probable at the time it was recorded. During the year ended December 31, 2016, we reversed, as an increase to other income, the liabilities due to affiliates related to the $1.5 million of asset management fees for the period from February 2013 through July 2013 as we believed that the chance of payment of this amount to our advisor is remote. ____________________

In addition, the advisory agreement defers without interest under certain circumstances, our obligation to pay asset management fees accruing from August 1, 2013. Specifically, the advisory agreement defers our obligation to pay an asset management fee for any month in which our modified funds from operations (~~“MFFO”~~1) ~~for~~Contractual ~~such~~sales ~~month,~~price asexcludes ~~such~~closing ~~term is defined in the practice guideline issued by the IPA in November 2010 and interpreted by us~~credits, ~~excluding~~closing ~~asset~~costs management fees, does not exceed the amount of distributions declared by us for record dates of that month. We remain obligated to pay our advisor an asset management fee in any month in which our MFFO, excluding asset management fees, for such month exceeds the amount of distributions declared for the record dates of that month (such excess amount, an “MFFO Surplus”); however, any amount of such asset management fee in excess of the MFFO Surplus is also deferred under the advisory agreement. If the MFFO Surplus for any month exceeds the amount of the asset management fee payable for such month, any remaining MFFO Surplus will not be applied to pay asset management fee amounts previously deferred by our advisor in accordance with the advisory agreement. We had accrued and ~~deferred payment of $3.3 million of asset management~~ fees ~~for August 2013 through December 2014 under the advisory agreement, as we believed the payment of this amount to our advisor was probable at the time it was recorded~~. During the year ended December 31, 2016, we reversed, as an increase to other income, the liabilities due to affiliates related to the $3.3 million of asset management fees for the period from August 2013 through December 2014 as we believed that the chance of payment of this amount to our advisor is remote. During the year ended December 31, 2016, we incurred $3.0 million of asset management fees. However, we only recorded $0.4 million pursuant to the limitations in the advisory agreement as noted above. We did not accrue the remaining $2.6 million of these deferred asset management fees as it is uncertain whether any of these amounts will be paid in the future.

~~However,~~Changes ~~notwithstanding~~in ~~any~~Net ofAssets the foregoing, any and all deferred asset management fees shall be immediately due and payable at such time as our stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to our share redemption plan, and (ii) an 8.0% per year cumulative, non-compounded return on such net invested capital (the “Stockholders’ 8% Return”). The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of our stockholders to have received any minimum return in order for our advisor to receive deferred asset management fees. During the year ended December 31, 2016, we reversed, as described above, an aggregate of $4.8 million of deferred asset management fees that were previously accrued. We believed the the chance of payment of the deferred asset management fees is remote based on the estimated value per share and management’s current projection of cash flow and distributions to our stockholders. Liquidation

47Period from December 1, 2017 through December 31, 2017

~~Table~~Net assets in liquidation decreased by approximately $84.9 million from $178.3 million on December 1, 2017 to $93.3 million on December 31, 2017. The primary reason for the decline in net assets in liquidation was due to a decrease of ~~Contents~~approximately $85.2 million, or $4.05 per share of common stock, for the payment of the Initial Liquidating Distribution to stockholders in December 2017.

Contractual Commitments and Contingencies

The following is a summary of our contractual obligations as of December 31, 2016 (in thousands):

			Payments Due During the Years Ending December 31,
Contractual Obligations	Total		2017		2018-2019		2020-2021		Thereafter
Outstanding debt obligations (1)	$	282,605	$	32,196	$	199,640	$	1,736	$	49,033
Interest payments on outstanding debt obligations (2)	56,117		9,387		11,217		3,670		31,843

(1) Amounts include principal payments only.

(2) Projected interest payments are based on the outstanding principal amounts, maturity dates and interest rates in effect as of December 31, 2016. We incurred interest expense of $9.8 million, excluding amortization of deferred financing costs and discount on notes payable of $0.5 million, for the year ended December 31, 2016.

Results of Operations

AsIn light of ~~December 31,~~the ~~2016,~~adoption weof ~~owned~~liquidation 11basis ~~apartment~~accounting ~~complexes~~as ~~and~~of doDecember ~~not~~1, ~~anticipate~~2017, ~~making~~the ~~additional~~results ~~real~~of ~~estate~~operations ~~investments. The~~for ~~results~~the ofyear ~~operations~~ended ~~presented~~December ~~for~~31, 2017 are not comparable to the ~~years~~year ended December 31, 2016,. Our ~~2015~~remaining ~~and~~real ~~2014~~estate ~~are~~properties ~~not~~continue ~~directly~~to ~~comparable~~perform ~~due~~in toa ~~the~~manner ~~acquisition~~that ofis ~~two~~relatively ~~apartment~~consistent ~~complexes~~with prior reporting periods and we have experienced no significant changes in ~~February~~leased ~~2014~~percentages or rental rates at these properties. AsAdditionally, awe ~~result,~~have sold the ~~results~~majority of ~~operations~~our ~~during~~real estate properties and we anticipate completing the ~~year~~sale ~~ended~~of ~~December 31,~~our ~~2014~~remaining doreal ~~not~~estate ~~reflect~~properties anby ~~entire~~the ~~period~~end of the first quarter of 2018. Such sales have had a significant impact on our operations. Changes ~~related~~in toliquidation ~~these~~values ~~two~~of ~~acquisitions~~our assets are discussed below under “— Changes in Net Assets in Liquidation.”

Due to the adoption of the Plan of Liquidation, we are no longer reporting funds from operations and modified funds from operations as we no longer consider these to be key performance measures.

Comparison of the year ended December 31, 2016 versus the year ended December 31, 2015

The following table provides summary information about our results of operations for the years ended December 31, 2016 and 2015 (dollar amounts in thousands):

	For the Years Ended December 31,				Increase (Decrease)			Percentage Change
	2016		2015
Rental income	$	45,301	$	44,613	$	688		2	%
Operating, maintenance, and management costs	6,389		8,674		(2,285		)	(26	)%
Real estate taxes and insurance	7,088		6,144		944			15	%
Asset management fees to affiliate	399		729		(330		)	(45	)%
Property management fees and expenses to affiliate	5,811		3,523		2,288			65	%
General and administrative expenses	2,663		2,176		487			22	%
Depreciation and amortization expense	12,302		12,090		212			2	%
Interest expense	10,332		10,501		(169		)	(2	)%
Other income	4,752		—		4,752			—100	%

Rental income increased from $44.6 million for the year ended December 31, 2015 to $45.3 million for the year ended December 31, 2016, primarily as a result of an increase in rental rates. Overall, we expect rental income to decrease in future periods due to anticipated dispositions of our real estate investments.36

Operating, maintenance and management costs and real estate taxes and insurance decreased from $14.8 million for the year ended December 31, 2015 to $13.5 million for the year ended December 31, 2016 primarily due to a decrease in reimbursable on-site personnel salary and related benefits expenses and management fees to third-party property management companies as a result of the transition of all property management services to LPI during the second quarter of 2015, partially offset by an increase due to property tax reassessments. Management fees to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the properties, are classified as property management fees and expenses to affiliate on the accompanying consolidated statements of operations. Although operating, maintenance and management costs and real estate taxes and insurance may increase in future periods, as compared to historical periods as a result of inflation, we expect these costs to decrease in future periods due to anticipated dispositions of our real estate investments.

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~~Asset~~Rental ~~management~~income ~~fees~~increased ~~to affiliate with respect to our real estate investments decreased~~ from $044.76 million for the year ended December 31, 2015 to $045.43 million for the year ended December 31, 2016~~. During the year ended December 31~~, ~~2015,~~primarily we incurred $2.8 million of asset management fees, of which $0.7 million was recorded based on certain payment limitations in the advisory agreement. The remaining $2.1 million of deferred asset management fees were not accrued as ita isresult ~~uncertain whether any~~ of ~~these~~an ~~amounts~~increase ~~will be paid~~ in ~~the~~rental ~~future~~rates. ~~During~~ the year ended December 31, 2016, we incurred $3.0 million of asset management fees, of which $0.4 million was recorded based on certain payment limitations in the advisory agreement. The remaining $2.6 million of deferred asset management fees were not accrued as it is uncertain whether any of these amounts will be paid in the future. For a discussion of the asset management fee payable by us to our advisor and the deferrals of the asset management fee, see “Liquidity and Capital Resources — Advisory Agreement — Asset Management Fee” herein.

~~Property~~Operating, maintenance and management ~~fees~~costs and ~~expenses~~real toestate ~~affiliate~~taxes ~~increased~~and insurance decreased from $314.58 million for the year ended December 31, 2015 to $513.85 million for the year ended December 31, 2016~~. The~~ ~~increase was~~ primarily due to a decrease in reimbursable on-site personnel salary and related benefits expenses and management fees to third-party property management companies as a result of the transition of all property management services to LPI during the second quarter of 2015~~. Prior~~, partially offset by an increase due to ~~the~~property ~~transition,~~tax ~~management~~reassessments. Management fees to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the properties, ~~were~~are classified as ~~operating, maintenance, and management costs. Although we expect our~~ property management fees and expenses to affiliate on ~~properties~~the weaccompanying ~~continue~~consolidated tostatements ~~hold to increase in future periods as a result~~ of ~~inflation, we expect property management fees and expenses to affiliate to decrease in future periods due to anticipated dispositions of our real estate investments~~operations.

~~General~~Asset ~~and~~management ~~administrative~~fees ~~expenses~~to ~~increased~~affiliate with respect to our real estate investments decreased from $20.27 million for the year ended December 31, 2015 to $20.74 million for the year ended December 31, 2016. During ~~due~~the toyear ~~legal~~ended ~~fees~~December 31, ~~and~~2015, ~~other~~we ~~professional~~incurred $2.8 million of asset management fees, ~~related~~of towhich $0.7 million was recorded based on certain payment limitations in the ~~Special~~advisory ~~Committee’s~~agreement. The ~~engagement~~remaining $2.1 million of ~~Stanger~~deferred toasset ~~act~~management fees were not accrued as ~~our~~it ~~financial~~is ~~advisor~~uncertain whether any of these amounts will be paid in the future. ~~See~~During “the —year ~~Liquidity~~ended ~~and~~December 31, ~~Capital~~2016, ~~Resources”~~we ~~for~~incurred ~~our~~$3.0 ~~discussion~~million of asset management fees, of which $0.4 million was recorded based on certain payment limitations in the ~~engagement~~advisory agreement. The remaining $2.6 million of ~~Stanger~~deferred asset management fees were not accrued as it is uncertain whether any of these amounts will be paid in the future. For a discussion of the asset management fee payable by us to our advisor and the deferrals of the asset management fee, see Item 13, “Certain Relationships and Related Transactions and Director Independence — Report of the Conflicts Committee — Our Relationship with KBS Capital Advisors.”

~~Other~~Property ~~income~~management ~~for~~fees ~~the~~and ~~year~~expenses ~~ended December 31, 2016 of $4.8 million relates~~ to ~~the~~affiliate ~~reversal~~increased offrom ~~previously deferred and accrued asset management fees of~~ $13.5 million for the ~~period~~year ~~from~~ended ~~February~~December 31, ~~2013~~2015 ~~through~~to ~~July 2013 and~~ $35.38 million for the ~~period~~year ~~from~~ended ~~August 2013 through~~ December 31, ~~2014~~2016. The asincrease wewas ~~believed~~primarily ~~that~~due to the ~~chance~~transition of ~~payment~~all ofproperty ~~these~~management ~~amounts~~services isto ~~remote.~~LPI Weduring ~~did not record any other income for~~ the ~~year~~second ~~ended~~quarter ~~December 31,~~of 2015. ~~For~~Prior ato ~~discussion of~~ the ~~asset~~transition, management ~~fee~~fees, ~~payable~~as bywell usas toreimbursable ~~our~~on-site ~~advisor~~personnel salary and ~~the~~related ~~deferrals~~benefits ofexpenses at the ~~asset~~properties, ~~management~~were ~~fee,~~classified ~~see~~as “—operating, ~~Liquidity~~maintenance, and ~~Capital~~management ~~Resources — Advisory Agreement — Asset Management Fee” herein~~costs.

~~Comparison~~General ofand administrative expenses increased from $2.2 million for the year ended December 31, 2015 ~~versus~~to $2.7 million for the year ended December 31, ~~2014~~2016 due to legal fees and other professional fees related to the Special Committee’s engagement of Stanger to act as our financial advisor.

~~The~~Other ~~following~~income ~~table~~for ~~provides~~the ~~summary~~year ~~information~~ended ~~about~~December 31, ~~our~~2016 ~~results~~of $4.8 million relates to the reversal of ~~operations~~previously deferred and accrued asset management fees of $1.5 million for the ~~years~~period from February 2013 through July 2013 and $3.3 million for the period from August 2013 through December 2014 as we believed that the chance of payment of these amounts is remote. We did not record any other income for the year ended December 31, 2015. For a discussion of the asset management fee payable by us to our advisor and ~~2014~~the ~~(dollar~~deferrals ~~amounts~~of inthe ~~thousands):~~asset management fee, see Item 13, “Certain Relationships and Related Transactions and Director Independence — Report of the Conflicts Committee — Our Relationship with KBS Capital Advisors.”

	For the Years Ended December 31,				Increase (Decrease)			Percentage Change		$ Change Due to Acquisitions (1)			$ Change Due to Properties Held Throughout Both Periods (2)
	2015		2014
Rental income	$	44,613	$	42,200	$	2,413		6	%	$	1,352		$	1,061
Operating, maintenance, and management costs	8,674		10,977		(2,303		)	(21	)%	(174		)	(2,129		)
Real estate taxes and insurance	6,144		5,804		340			6	%	57			283
Asset management fees to affiliate	729		2,598		(1,869		)	(72	)%	(178		)	(1,691		)
Property management fees and expenses to affiliate	3,523		281		3,242			1,154	%	438			2,804
Real estate acquisition fees and expenses to affiliate	—		701		(701		)	(100	)%	(701		)	—
Real estate acquisition fees and expenses	—		264		(264		)	(100	)%	(264		)	—
General and administrative expenses	2,176		2,374		(198		)	(8	)%	n/a			n/a
Depreciation and amortization expense	12,090		12,577		(487		)	(4	)%	(853		)	366
Interest expense	10,501		10,261		240			2	%	383			(143		)

(1) Represents the dollar amount increase (decrease) for the year ended December 31, 2015 compared to the year ended December 31, 2014 related to real estate investments acquired on or after January 1, 2014.

(2) Represents the dollar amount increase (decrease) for the year ended December 31, 2015 compared to the year ended December 31, 2014 with respect to real estate investments owned by us throughout both periods presented.

Rental income increased from $42.2 million for the year ended December 31, 2014 to $44.6 million for the year ended December 31, 2015, primarily due to the acquisition of two real estate properties in February 2014 and an increase in overall rental rates with respect to properties owned throughout both periods.

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Operating, maintenance and management costs and real estate taxes and insurance decreased from $16.8 million for the year ended December 31, 2014 to $14.8 million for the year ended December 31, 2015 primarily due to a decrease in employee expenses and management fees to third-party property management companies as a result of the transition of all property management services to LPI during the second quarter of 2015, partially offset by an increase in utility expenses, general repair and maintenance costs and property tax expenses for properties held throughout both periods. Management fees to LPI, as well as reimbursable on-site personnel salary and related benefits expenses at the properties, are classified as property management fees and expenses to affiliate on the accompanying consolidated statements of operations.

Asset management fees with respect to our real estate investments decreased from $2.6 million for the year ended December 31, 2014 to $0.7 million for the year ended December 31, 2015. During the year ended December 31, 2014, we incurred $2.6 million of asset management fees, all of which was accrued and deferred. During the year ended December 31, 2015, we incurred $2.8 million of asset management fees, of which $0.7 million was recorded based on certain payment limitations in the advisory agreement. The remaining $2.1 million of deferred asset management fees were not accrued as it is uncertain whether any of these amounts will be paid in the future.

Property management fees and expenses to affiliate increased from $0.3 million for the year ended December 31, 2014 to $3.5 million for the year ended December 31, 2015. The increase was primarily due to the transition of all property management services to LPI during the second quarter of 2015. Prior to the transition, management fees, as well as reimbursable on-site personnel salary and related benefits expenses at the properties, were classified as operating maintenance, and management costs.

Real estate acquisition fees and expenses to affiliate and non-affiliate were $1.0 million for the year ended December 31, 2014 and related to the acquisitions of two apartment complexes during the first quarter of 2014. During the year ended December 31, 2015, we did not make any acquisitions.

Depreciation and amortization expense decreased from $12.6 million for the year ended December 31, 2014 to $12.1 million for the year ended December 31, 2015. Depreciation and amortization expenses decreased by $0.5 million due to a $0.9 million decrease in amortization of tenant origination costs related to in-place leases that were fully amortized relating to the properties acquired in the first quarter of 2014 and a $0.4 million increase in depreciation and amortization expense from properties held throughout both periods.

Interest expense increased from $10.3 million for the year ended December 31, 2014 to $10.5 million for the year ended December 31, 2015. The increase in interest expense was primarily due to the acquisition of two real estate properties in February 2014 resulting in an increase in our average debt outstanding during the year ended December 31, 2015 compared to the year ended December 31, 2014. This was offset by a decrease in interest expense for properties held throughout both periods due to lower debt outstanding as a result of monthly amortizing principal payments.

Offering Costs Related to Follow-on Offering and Dividend Reinvestment Plan

Our offering costs related to the Follow-on Offering (other than selling commissions and dealer manager fees) were either paid directly by us or in some instances were paid by our advisor, our dealer manager or their affiliates on our behalf. Offering costs include all expenses in connection with an offering and are charged as incurred as a reduction to stockholders’ equity.

Pursuant to the advisory agreement and the Follow-on Dealer Manager Agreement, we are obligated to reimburse our advisor, the dealer manager or their affiliates, as applicable, for offering costs paid by them on our behalf. However, at the termination of the primary Follow-on Offering and at the termination of the offering under our dividend reinvestment plan, our advisor agreed to reimburse us to the extent that selling commissions, dealer manager fees and other offering expenses incurred by us exceed 15% of the gross offering proceeds. Further we are only liable to reimburse offering costs incurred by our advisor up to an amount that, when combined with selling commissions, dealer manager fees and all other amounts spent by us on offering expenses, does not exceed 15% of the gross proceeds of the primary Follow-on Offering and the offering under our dividend reinvestment plan as of the date of reimbursement. Within 30 days after the end of the month in which our primary Follow-on Offering terminated, our dealer manager was obligated to reimburse us to the extent that our reimbursements to our dealer manager and payment of selling commissions and dealer manager fees caused total underwriting compensation for our primary Follow-on Offering to exceed 10% of the gross offering proceeds from the primary Follow-on Offering.

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We ceased offering shares in the primary Follow-on Offering on March 31, 2014 and completed subscription processing procedures on April 30, 2014. Through April 30, 2014, we sold an aggregate of 2,051,925 shares of common stock in the Follow-on Offering for gross offering proceeds of $21.5 million, including 555,727 shares under our dividend reinvestment plan for proceeds of $5.7 million. Total offering expenses in the Follow-on Offering were $4.2 million, including $1.8 million in underwriting compensation (which includes selling commissions, dealer manager fees and any other items viewed as underwriting compensation by FINRA). After reimbursements from our advisor and the dealer manager, we incurred offering expenses of $3.2 million in the Follow-on Offering (representing 15.0% of gross offering proceeds), which includes underwriting compensation of $1.6 million (representing 9.9% of primary Follow-on Offering proceeds). Including the reimbursements to us, our dealer manager incurred underwriting expenses of $0.2 million in the primary Follow-on Offering. In addition, because of the aggregate underwriting compensation incurred in the primary Follow-on Offering, on August 20, 2014, our dealer manager made an additional payment to us of $55,000.

Funds from Operations and Modified Funds from Operations

We believe that FFO is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current NAREIT definition. FFO represents net income, excluding gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities, and when compared year over year, FFO reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses and interest costs, which may not be immediately apparent from net income or loss.

Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. Items such as acquisition fees and expenses, which had previously been capitalized prior to 2009, are currently expensed and accounted for as operating expenses. As a result, our management also uses modified funds from operations (“MFFO”) as an indicator of our ongoing performance as well as our dividend sustainability. MFFO excludes from FFO: acquisition fees and expenses; adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above and below market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. We compute MFFO in accordance with the definition of MFFO included in the practice guideline issued by the IPA in November 2010 as interpreted by management. Our computation of MFFO may not be comparable to other REITs that do not compute MFFO in accordance with the current IPA definition or that interpret the current IPA definition differently than we do.

In addition, our management uses an adjusted MFFO (“Adjusted MFFO”) as an indicator of our ongoing performance as well as our dividend sustainability. Adjusted MFFO provides an adjustment to MFFO to exclude other income, which management does not believe reflects the current operating performance of our investments and does not provide an indication of future operating performance.

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We believe that MFFO and Adjusted MFFO are helpful measures of ongoing operating performance because they exclude costs that management considers more reflective of investing activities and other non-operating items included in FFO. Management believes that excluding acquisition costs from MFFO provides investors with supplemental performance information that is consistent with management’s analysis of the operating performance of the portfolio over time, including periods after our acquisition stage. We also believe MFFO and Adjusted MFFO are helpful measures of ongoing operating performance because they exclude non-operating items included in FFO. MFFO and Adjusted MFFO exclude non-cash items such as straight-line rental revenue. Additionally, we believe that MFFO and Adjusted MFFO provide investors with supplemental performance information that is consistent with the performance indicators and analysis used by management, in addition to net income and cash flows from operating activities as defined by GAAP, to evaluate the sustainability of our operating performance. MFFO and Adjusted MFFO provide comparability in evaluating the operating performance of our portfolio with other non-traded REITs which typically have limited lives with short and defined acquisition periods and targeted exit strategies. MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes.

FFO, MFFO and Adjusted MFFO are non-GAAP financial measures and do not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO, MFFO and Adjusted MFFO include adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization and the other items described above. Accordingly, FFO, MFFO and Adjusted MFFO should not be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, FFO, MFFO and Adjusted MFFO do not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an indication of our liquidity. We believe FFO, MFFO and Adjusted MFFO, in addition to net income and cash flows from operations as defined by GAAP, are meaningful supplemental performance measures.

For some or all of the prior periods presented, MFFO adjustments consist of the exclusion of straight-line rent, the amortization of a discount on a note payable and the exclusion of acquisition fees and expenses. We have excluded these items based on the following economic considerations:

• Adjustments for straight-line rent. These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease. We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, while also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we expect to receive in a future period or rent that was received in a prior period; and

• Amortization of a discount on a note payable. Discounts on debt are amortized over the term of the loan as an adjustment to interest expense. This application results in interest expense recognition that is different than the underlying contractual terms of the debt. We have excluded the amortization of a discount in our calculation of MFFO to more appropriately reflect the economic impact of our debt as the amortization of a discount has no ongoing economic impact on our operations. We believe excluding this item provides investors with a useful supplemental metric that directly addresses core operating performance.

• Acquisition fees and expenses. Acquisition fees and expenses related to the acquisition of real estate are expensed. Although these amounts reduce net income, we exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis. Additionally, acquisition fees and expenses to date have been funded from the proceeds from our Offerings and debt financings and not from our operations. We believe this exclusion is useful to investors as it allows investors to more accurately evaluate the sustainability of our operating performance.

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Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculation of MFFO and Adjusted MFFO, for the years ended December 31, 2016, 2015 and 2014, respectively (in thousands). No conclusions or comparisons should be made from the presentation of these periods.

	For the Years Ended December 31,
	2016			2015			2014
Net income (loss)	$	5,121		$	791		$	(3,560	)
Depreciation of real estate assets	12,299			12,087			11,497
Amortization of lease-related costs	3			3			1,080
FFO	17,423			12,881			9,017
Straight-line rent	—			(20		)	(4		)
Real estate acquisition fees and expenses to affiliate	—			—			701
Real estate acquisition fees and expenses	—			—			264
Amortization of discount on note payable	87			86			78
MFFO (1)	17,510			12,947			10,056
Reversal of accrued asset management fees (2)	(4,752		)	—			—
Adjusted MFFO	$	12,758		$	12,947		$	10,056

(1) Included in MFFO for the year ended December 31, 2014 was $55,000 in other income related to the primary Follow-on Offering. Our dealer manager paid this amount to us on August 20, 2014. See “— Offering Costs Related to Follow-on Offering and Dividend Reinvestment Plan.”

(2) Relates to reversal of previously deferred and accrued asset management fees of $1.5 million for the periods from February 2013 through July 2013 and $3.3 million for the period from August 2013 through December 2014 as we believed that the chance of payment of these amounts is remote.

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

Distributions

~~From~~As ~~time~~described toin ~~time~~the ~~during~~Proxy ~~our operational stage~~Statement, wesubsequent ~~may not be able~~ to ~~pay~~our ~~distributions~~payment ~~solely~~of ~~from~~the ~~our~~September ~~cash~~2017 ~~flows~~monthly ~~from~~distribution, ~~operations~~we orceased ~~FFO,~~paying inregular ~~which~~monthly ~~case~~ distributions. We ~~may~~do benot ~~paid~~expect into ~~whole~~pay orregular inmonthly ~~part~~distributions ~~from~~during ~~debt financing and/or from proceeds from~~ our ~~Offerings~~liquidation. Distributions declared, distributions paid and cash flows from operations were as follows during ~~2016~~2017 (in thousands, except per share amounts):

	Distributions Declared (1)		Distribution Declared Per Share (1) (2)		Distributions Paid (3)						Cash Flows from Operations
	Distributions Declared		Distribution Declared Per Share		Distributions Paid (3)						Cash Flows from Operations
Period					Cash		Reinvested		Total
First Quarter 2016	$	3,285	$	0.160	$	1,866	$	1,421	$	3,287	$	2,508
First Quarter 2017 (1)	$	3,346	$	0.160	$	1,983	$	1,365	$	3,348	$	1,753
Second Quarter 2016	3,336		0.162		1,910		1,455		3,365		4,594
Second Quarter 2017 (1)	22,807		1.091		22,184		841		23,025		3,995
Third Quarter 2016	3,394		0.164		1,939		1,448		3,387		3,017
Third Quarter 2017 (1)	2,875		0.137		2,124		747		2,871		1,187
Fourth Quarter 2016	3,415		0.164		1,957		1,413		3,370		3,820
Fourth Quarter 2017 (2)	85,158		4.050		86,096		—		86,096		(269		)
	$	13114,~~430~~186	$	05.~~650~~438	$	7112,~~672~~387	$	52,~~737~~953	$	13115,~~409~~340	$	136,~~939~~666

_____________________

(1) Distributions declared per share of common stock were based on daily record dates for each day during the ~~periods~~period ~~from~~commencing January 1, ~~2016~~ 2017 through February 28, ~~2016~~2017. For ~~and~~each ~~March~~day 1,that ~~2016~~was ~~through~~a ~~December 31,~~record ~~2016~~date ~~were~~for ~~based~~distributions onduring ~~daily~~this ~~record~~period, ~~dates~~distributions ~~and~~ were calculated at a rate of $0.00178082 per share per day. For the month of March 2017 and for the period from May 2017 through September 2017, our board of directors declared monthly distributions based on a monthly record date. Additionally, our board of directors declared a special distribution in the amount $1.00 per share of common stock to stockholders of record as of the close of business on April 20, 2017, which was paid on May 1, 2017 and funded from the net proceeds from the sale of Wesley Village. Distributions declared per share of common stock assumes each share was issued and outstanding each day that was a record date for distributions during the period presented.

(2) ~~Assumes~~On December 20, 2017, our board of directors authorized the Initial Liquidating Distribution in the amount of $4.05 per share of common stock to our stockholders of record as of the close of business on December 21, 2017. The Initial Liquidating Distribution was ~~issued~~paid on December 27, 2017 and ~~outstanding~~was ~~each~~funded ~~day~~from ~~during~~proceeds ~~the~~from ~~period~~asset ~~presented~~sales.

(3) ~~Distributions~~Other ~~are~~than special distributions and the Initial Liquidating Distribution, distributions were paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the first business day of the following month.

53For the year ended December 31, 2017, we paid aggregate distributions of $115.3 million, including $112.4 million of distributions paid in cash and $2.9 million of distributions reinvested through our now-terminated dividend reinvestment plan. We funded our total distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with $106.1 million from the net proceeds from the sale of real estate properties and $9.2 million of cash flows from operations and cash on hand. For the purposes of determining the source of our distributions paid, we assumed first that we used cash flows from operations from the relevant periods to fund distribution payments.

~~Table~~From inception through November 30, 2017, we paid aggregate distributions of ~~Contents~~$87.0 million, and our cumulative net income for the same period was $29.3 million.

For the year ended December 31, 2016, we paid aggregate distributions of $13.4 million, including $7.7 million of distributions paid in cash and $5.7 million of distributions reinvested through our dividend reinvestment plan. FFO for the year ended December 31, 2016 was $17.4 million and cash flows from operations was $13.9 million. We funded our total distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with cash flows from operations. For the purposes of determining the source of our distributions paid, we assume first that we use cash flows from operations from the relevant periods to fund distribution payments. All non-operating expenses (including general and administrative expenses to the extent not covered by cash flows from operations), debt service and other obligations are assumed to be paid from our dividend reinvestment plan as permitted by our offering documents and loan agreements. See the reconciliation of FFO to net income (loss) above.

From inception through December 31, 2016, we paid aggregate distributions of $56.8 million, and our cumulative net loss for the same period was $19.8 million. To the extent that we pay distributions from sources other than our cash flows from operations, the overall return to our stockholders may be reduced.

Over the long-term, we expect that a greater percentage of our distributions will be paid from cash flows from operations and FFO (except with respect to distributions related to sales of our assets). Depending on the number of our properties we sell in connection with our implementation of our strategic alternatives, we may have to adjust the ongoing distribution rate subsequent to such sales in order to maintain the current distribution coverage. In addition, any future special distributions we pay from the proceeds of future dispositions will reduce our estimated value per share and this reduction will be reflected in our updated estimated value per share, which we expect to update no later than December 2017.

In addition, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward – Looking Statements,” Part I, Item 1, “Business – Market Outlook – Multifamily Real Estate and Finance Markets” Part I, Item 1A, “Risk Factors” and “– Results of Operations.” Those factors include: the future operating performance of our investments in the existing real estate and financial environment and the level of participation in our dividend reinvestment plan. In the event our FFO and/or cash flows from operations decrease in the future, the level of our distributions may also decrease. In addition, future distributions declared and paid may exceed FFO and/or cash flows from operations.

Critical Accounting Policies

Below is a discussion of the accounting policies that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

Subsequent to the adoption of the liquidation basis of accounting, we are required to estimate all costs and income we expect to incur and earn through the end of liquidation including the estimated amount of cash we expect to collect on the disposal of our assets and the estimated costs to dispose of our assets.

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Principles of Consolidation and Basis of Presentation

Pursuant to our stockholders’ approval of the Plan of Liquidation, we adopted the liquidation basis of accounting as of December 1, 2017 (as the approval of the Plan of Liquidation by our stockholders became imminent within the last week of November 2017 based on the results of our solicitation of proxies from our stockholders for their approval of the Plan of Liquidation) and for the periods subsequent to December 1, 2017 in accordance with GAAP. Accordingly, on December 1, 2017, assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of net cash that we will collect on disposal of assets owned as of December 31, 2017 as we carry out our Plan of Liquidation. The liquidation values of our real estate properties are presented on an undiscounted basis. Estimated costs to dispose of assets and estimated capital expenditures through the anticipated disposition date of the properties have been presented separately from the related assets. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

We accrue costs and income that we expect to incur and earn through the completion of our liquidation, including the estimated amount of cash we expect to collect on the disposal of our assets and the estimated costs to dispose of our assets, to the extent we have a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statement of Net Assets. Actual costs and income may differ from amounts reflected in the financial statements because of the inherent uncertainty in estimating future events. These differences may be material. See Part IV, Item 15, Note 4, “Liabilities for Estimated Costs in Excess of Estimated Receipts During Liquidation” for further discussion. Actual costs incurred but unpaid as of December 31, 2017 are included in accounts payable and accrued liabilities, due to affiliates and other liabilities on the Consolidated Statement of Net Assets.

All financial results and disclosures through November 30, 2017, prior to the adoption of the liquidation basis of accounting, are presented based on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business. As a result, the balance sheet as of December 31, 2016, the statements of operations, the statements of stockholders’ equity and the statements of cash flows for the 11 months ended November 30, 2017 and the comparative years ended December 31, 2016 and 2015 are presented using the going concern basis of accounting. Under the going concern basis of accounting, our consolidated financial statements included our accounts and the accounts of KBS Legacy Partners Holdings LLC, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions were eliminated in consolidation.

Revenue Recognition

WeLiquidation ~~lease~~Basis ~~apartment units under operating leases with terms generally~~ of one year or less. Generally, credit investigations will be performed for prospective residents and security deposits will be obtained. We recognize rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is reasonably assured. Accounting

WeUnder ~~will~~the ~~recognize~~liquidation ~~gains~~basis ~~on sales~~ of ~~real~~accounting, ~~estate~~we ~~either~~have inaccrued ~~total~~all orincome ~~deferred~~that ~~for~~we aexpect ~~period~~to ofearn ~~time,~~through ~~depending on whether a sale has been consummated,~~ the ~~extent~~completion of ~~the buyer’s investment in the property being sold, whether~~ our ~~receivable~~liquidation ~~is subject~~ to ~~future subordination, and~~ the ~~degree~~extent ofwe ~~our~~have ~~continuing~~a ~~involvement~~reasonable ~~with~~basis ~~the~~for ~~property after the sale~~estimation. IfRevenue ~~the~~from ~~criteria~~tenants ~~for~~is ~~profit~~estimated ~~recognition~~based ~~under~~on the ~~full~~contractual in-~~accrual~~place ~~method~~leases ~~are not met, we will defer gain recognition~~ and ~~account~~projected ~~for~~leases through the ~~continued~~anticipated ~~operations~~disposition date of the property. These byamounts ~~applying~~are ~~the~~classified ~~percentage-of-completion,~~in ~~reduced~~liabilities ~~profit,~~for ~~deposit,~~estimated ~~installment~~costs orin ~~cost~~excess ~~recovery~~of ~~method,~~estimated asreceipts ~~appropriate,~~during ~~until~~liquidation on the ~~appropriate~~Consolidated ~~criteria~~Statement ~~are~~of ~~met~~Net Assets.

~~Other~~Going ~~income,~~Concern ~~including interest earned on our cash, is recognized as it is earned.~~ Basis

54We lease apartment units under operating leases with terms generally of one year or less. Generally, credit investigations will be performed for prospective residents and security deposits will be obtained. Prior to the adoption of liquidation basis of accounting, we recognized rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility was reasonably assured.

We recognized gains on sales of real estate either in total or deferred for a period of time, depending on whether a sale had been consummated, the extent of the buyer’s investment in the property being sold, whether our receivable was subject to future subordination, and the degree of our continuing involvement with the property after the sale. If the criteria for profit recognition under the full-accrual method were not met, we would defer gain recognition and account for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery method, as appropriate, until the appropriate criteria were met.

Other income, including interest earned on our cash, was recognized as it was earned.

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Real Estate

Liquidation Basis of Accounting

As of December 1, 2017, our investments in real estate were adjusted to their estimated net realizable value, or liquidation value, to reflect the change to the liquidation basis of accounting. The liquidation value represents the estimated amount of cash that we will collect on disposal of our assets as we carry out the Plan of Liquidation. We estimated the liquidation value of our investments in real estate based on purchase and sale agreements into which we had entered as of December 31, 2017. The liquidation values of our investments in real estate are presented on an undiscounted basis and investments in real estate are no longer depreciated. Estimated costs to dispose of these investments are carried at their contractual amounts due or estimated settlement amounts and are presented separately from the related assets. Subsequent to December 1, 2017, all changes in the estimated liquidation value of the investments in real estate are reflected as a change to our net assets in liquidation.

Going Concern Basis

Depreciation and Amortization

~~Real~~Prior to the adoption of liquidation basis of accounting, real estate properties ~~are~~were carried at cost and depreciated using the straight-line method over the estimated useful lives of 40 years for buildings, 10–20 years for building improvements,10–20 years for land improvements and five to 12 years for computer, furniture, fixtures and equipment. Costs directly associated with the development of land and those incurred during construction ~~are~~were capitalized as part of the investment basis. Acquisition costs ~~are~~were expensed as incurred. Operating expenses incurred that ~~are~~were not related to the development and construction of the real estate investments ~~are~~were expensed as incurred. Repair, maintenance and tenant turnover costs ~~are~~were expensed as incurred and significant replacements and improvements ~~are~~were capitalized. Repair, maintenance and tenant turnover costs ~~include~~included all costs that dodid not extend the useful life of the real estate property. We ~~consider~~considered the period of future benefit of an asset to determine its appropriate useful life.

Intangible assets related to in-place leases ~~are~~were amortized to expense over the average remaining non-cancelable terms of the respective in-place leases.

Real Estate Acquisition Valuation

We record the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. Acquisition costs are expensed as incurred and restructuring costs that do not meet the definition of a liability at the acquisition date are expensed in periods subsequent to the acquisition date.

Intangible assets include the value of in-place leases, which represents the estimated value of the net cash flows of the in-place leases to be realized, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. Acquired in-place lease values are amortized to expense over the average remaining non-cancelable terms of the respective in-place leases.

We assess the acquisition-date fair values of all tangible assets, identifiable intangibles and assumed liabilities using methods similar to those used by independent appraisers, generally utilizing a discounted cash flow analysis that applies appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant.

We record above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in place leases, measured over a period equal to the remaining non-cancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. We amortize any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining non-cancelable terms of the respective lease, including any below-market renewal periods.

We estimate the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. We amortize the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining non-cancelable term of the leases.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require us to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of our acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of our net income.

Impairment of Real Estate and Related Intangible Assets and Liabilities

WePrior to the adoption of liquidation basis of accounting, we continually ~~monitor~~monitored events and changes in circumstances that could indicate that the carrying amounts of our real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment ~~suggest~~suggested that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, we ~~will~~would assess the recoverability by estimating whether we ~~will~~could recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, we dodid not believe that we will be able to recover the carrying value of the real estate and related intangible assets and liabilities, we would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities.

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Insurance Proceeds for Property Damage

We maintain an insurance policy that provides coverage for property damage and business interruption. ~~Losses~~Prior to the adoption of liquidation basis of accounting, losses due to physical damage ~~are~~were recognized during the accounting period in which they ~~occur~~occurred while the amount of monetary assets to be received from the insurance policy iswas recognized when receipt of insurance recoveries iswas probable. Losses, which ~~are~~were reduced by the related probable insurance recoveries, ~~are~~were recorded as operating, maintenance and management expenses on the accompanying consolidated statements of ~~income~~operations. Anticipated proceeds in excess of recognized losses would be considered a gain contingency and recognized when the contingency related to the insurance claim ~~has~~had been resolved. Anticipated recoveries for lost rental revenue due to property damage ~~are~~were also considered to be a gain contingency and recognized when the contingency related to the insurance claim ~~has~~had been resolved.

~~Fair~~Rents ~~Value~~and ~~Measurements~~Other Receivables

~~Under~~In ~~GAAP,~~accordance wewith ~~are~~the ~~required~~liquidation tobasis ~~measure~~of ~~certain~~accounting, ~~financial~~as ~~instruments~~of atDecember ~~fair~~1, ~~value on a recurring basis. In addition~~2017, werents ~~are~~and ~~required to measure~~ other ~~non-financial~~receivables ~~instruments~~were ~~and~~adjusted ~~financial~~to ~~assets~~their atnet ~~fair~~realizable value. onWe aperiodically ~~non-recurring~~evaluate ~~basis~~the ~~(e.g.,~~collectibility ~~carrying value~~ of ~~impaired~~amounts ~~real~~due ~~estate~~from ~~loans receivable and long-lived assets)~~tenants. ~~Fair~~Any ~~value,~~changes asin ~~defined under GAAP, is~~ the ~~price~~collectibility ~~that would be received upon the sale~~ of ~~an asset or paid to transfer a liability in an orderly transaction between market participants at~~ the ~~measurement~~receivables ~~date. The~~are ~~GAAP~~reflected ~~fair~~as ~~value framework uses~~ a ~~three-tiered~~change ~~approach. Fair~~to ~~value~~our ~~measurements~~net ~~are~~assets ~~classified and disclosed~~ in ~~one of the following three categories:~~ liquidation.

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

•In ~~Level~~accordance 2:with ~~quoted~~the ~~prices~~liquidation ~~for~~basis ~~similar~~of ~~instruments~~accounting, inwe ~~active~~accrue ~~markets,~~for ~~quoted~~certain ~~prices~~estimated ~~for~~liquidation ~~identical~~costs orto ~~similar~~the ~~instruments~~extent init ~~markets~~has ~~that~~a ~~are~~reasonable ~~not~~basis ~~active,~~for ~~and~~estimation. ~~model-derived~~These ~~valuations~~consist inof ~~which~~legal ~~significant~~fees, ~~inputs~~dissolution ~~and~~costs, ~~significant~~final ~~value~~audit/tax ~~drivers~~costs, ~~are~~fees ~~observable~~paid into ~~active~~financial ~~markets;~~advisors, insurance, and distribution processing costs.

~~• Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.~~40

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

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

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

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

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Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to our stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, we generally will not be subject to federal income tax on income that we distribute as dividends to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to continue to qualify for treatment as a REIT.

Subsequent Events

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

~~Distributions~~Dispositions ~~Paid~~Subsequent to December 31, 2017

OnDisposition ~~January 3, 2017, we paid distributions~~ of ~~$1.2~~Legacy ~~million,~~at ~~which~~Valley ~~related~~Ranch to distributions declared for daily record dates for each day in the period from December 1, 2016 through December 31, 2016. On February 1, 2017, we paid distributions of $1.2 million, which related to distributions declared for daily record dates for each day in the period from January 1, 2017 through January 31, 2017. On March 1, 2017, we paid distributions of $1.0 million, which related to distributions declared for daily record dates for each day in the period from February 1, 2017 through February 28, 2017.

~~Distributions~~On ~~Declared~~October 26, 2010, we, through an indirect wholly owned subsidiary (the “Legacy at Valley Ranch Owner”), purchased a 504-unit apartment complex (“Legacy at Valley Ranch”) on approximately 20.3 acres of land located in the Valley Ranch community of Irving, Texas. On February 8, 2018, we completed the sale of Legacy at Valley Ranch to an unaffiliated buyer for $67.5 million, net of closing credits. The liquidation value of Legacy at Valley Ranch as of December 1, 2017 was $67.5 million. In connection with the disposition of Legacy at Valley Ranch, we, through the Legacy at Valley Ranch Owner, entered into a defeasance agreement with the lender under the Legacy at Valley Ranch Mortgage Loan to defease the entire outstanding principal balance of $30.2 million and release Legacy at Valley Ranch as security for the Legacy at Valley Ranch Mortgage Loan.

OnDisposition ~~January 23, 2017, our board~~ of ~~directors~~Crystal ~~declared~~Park ~~distributions~~at based on daily record dates for the period March 1, 2017 through March 31, 2017, which we expect to pay in April 2017. On March 9, 2017, our board of directors declared declared a March 2017 distribution in the amount of $0.05520548 per share of common stock to stockholders of record as of the close of business on March 20, 2017, which we expect to pay in April 2017. Investors may choose to receive cash distributions or purchase additional shares through our dividend reinvestment plan.Waterford

~~Termination~~On ~~and~~May ~~Reinstatement~~8, 2013, we, through an indirect wholly owned subsidiary (the “Crystal Park at Waterford Owner”), purchased a 314-unit apartment complex (“Crystal Park at Waterford”) on approximately 16.3 acres of land located in Frederick, ~~and~~Maryland. On ~~Amendments~~February 8, 2018, we completed the sale of Crystal Park at Waterford to to an unaffiliated buyer for $45.7 million, net of closing credits. The liquidation value of Crystal Park at Waterford as of December 1, 2017 was $45.7 million. In connection with the ~~Wesley~~disposition ~~Village~~of ~~Agreement;~~Crystal ~~Disposition~~Park at Waterford, we, through the Crystal Park at Waterford Owner, entered into a defeasance agreement with the lender under the Crystal Park at Waterford Mortgage Loan to defease the entire outstanding principal balance of ~~Wesley~~$26.2 ~~Village~~million and release Crystal Park at Waterford as security for the Crystal Park at Waterford Mortgage Loan.

OnRenewal ~~December 29, 2016, we, through the Owner, entered into the Wesley Village Agreement for the sale~~ of ~~Wesley Village to~~ the ~~Purchaser.~~Advisory ~~On January 27, 2017, the Purchaser provided notice of its election to terminate the~~ Agreement as a result of certain issues related to the survey of Wesley Village upon the expiration of its title review period. The Purchaser also demanded the return of its earnest money deposit pursuant to the Wesley Village Agreement.

On ~~January~~ 30February 1, ~~2017~~2018, ~~the~~we ~~Owner~~renewed ~~and~~our ~~the~~advisory ~~Purchaser~~agreement ~~entered~~with ~~into~~our aadvisor. The ~~reinstatement~~effective date of ~~and~~the ~~first~~renewed ~~amendment~~advisory agreement was January 25, 2018. The renewed advisory agreement (i) removes our responsibility for paying any fees or compensation to our advisor for services rendered commencing with the ~~Agreement~~day (immediately following the ~~“First~~date ~~Amendment”~~on which we sell our final real estate property, (ii). ~~Pursuant~~removes our responsibility for paying directly or reimbursing our advisor for any of the expenses paid or incurred by our advisor on our behalf or in connection with the services provided to us commencing with the ~~First~~day ~~Amendment,~~immediately following the ~~Purchaser~~date ~~rescinded~~on ~~its~~which ~~demand~~we sell our final real estate property, and (iii) provides for the ~~return~~automatic termination of ~~its~~the ~~earnest~~advisory ~~money~~agreement, ~~deposit~~without further action by or on our behalf or our advisor, upon the ~~purchase~~payment ~~price~~by us of ~~Wesley~~the ~~Village~~final ~~was~~liquidating ~~reduced~~distribution pursuant to ~~$57.7~~the ~~million~~Plan ~~from~~of ~~$58.0~~Liquidation ~~million~~ and the ~~due~~completion ~~diligence~~of ~~period~~all ~~was~~of ~~extended~~our byadvisor’s 11duties ~~days~~under tothe ~~February~~renewed 8advisory agreement, ~~2017~~including without limitation, those duties relating to completing tax reporting and providing related information.

~~Subsequently,~~Other onthan ~~February 8, 2017, February 10, 2017, February 15, 2017 and February 17, 2017,~~ the ~~Owner~~changes ~~and~~described ~~Purchaser entered into the second~~above, ~~third,~~there ~~fourth~~were ~~and~~no ~~fifth~~material ~~amendments~~changes to the ~~Wesley~~terms ~~Village~~of ~~Agreement, respectively (together,~~ the ~~“Wesley~~advisory ~~Village~~agreement ~~Amendments”).~~previously ~~Pursuant~~in ~~to the Wesley Village Amendments, the purchase price for Wesley Village was reduced to $57~~effect.2 ~~million from $57.7 million and the closing date was extended to March 9, 2017.~~

On March 9, 2017, we completed the sale of Wesley Village, which had a net book value of $39.9 million as of December 31, 2016, to the Purchaser for $57.2 million. In connection with the disposition of Wesley Village, we repaid the entire $26.7 million principal balance and all other sums due under a mortgage loan secured by Wesley Village, including a prepayment penalty of $0.3 million.41

Gary T. Kachadurian, one of our independent directors, is also a director of a real estate investment trust sponsored by the Purchaser (the “Purchaser REIT”) and is Vice Chairman of the manager of the Purchaser REIT and as such, Mr. Kachadurian (i) recused himself from all of our deliberations relating to the disposition of Wesley Village, and (ii) informed us and our board of directors that he recused himself from all of the Purchaser REIT’s and its manager’s deliberations relating to the acquisition of Wesley Village.

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Amended Dividend Reinvestment Plan

On March 9, 2017, our board of directors adopted a fourth amended and restated dividend reinvestment plan (the “Amended Dividend Reinvestment Plan”). Pursuant to the Amended Dividend Reinvestment Plan, our board of directors may designate certain distributions as ineligible for reinvestment through the plan. In addition, certain other corresponding and ministerial changes were made. There were no other changes to the Amended Dividend Reinvestment Plan. The Amended Dividend Reinvestment Plan will be effective March 20, 2017.

Renewal of Advisory Agreement

On January 25, 2017, we renewed our advisory agreement with our advisor. The renewed advisory agreement is effective through January 25, 2018; however, either party may terminate the renewed advisory agreement without cause or penalty upon providing 60 days’ written notice. The terms of the renewed advisory agreement are identical to those of the advisory agreement that was previously in effect including the March 15, 2016 amendment to the advisory agreement.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The table below summarizes the outstanding principal balance, the weighted-average interest rates and the fair values for our notes payable as of December 31, 2016 based on the maturity dates (dollars in thousands):

	Maturity Date																Total Value
	2017			2018			2019			2020		2021		Thereafter						Fair Value
Notes payable, principal outstanding
Fixed Rate	$	26,862		$	71,146		$	131,451		$	—	$	—	$	53,146		$	282,605		$	279,258
Weighted-average interest rate	2.6		%	2.6		%	3.7		%	—		—		3.7		%	3.3		%

Interest rate fluctuations will generally not affect our future earnings or cash flows related to our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. As of December 31, 2016, the fair value estimate of our fixed rate debt was $279.3 million and the outstanding principal balance of our fixed rate debt was $282.6 million. The fair value estimate of our fixed rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated as of December 31, 2016. With respect to our fixed rate instruments, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our ongoing operations.

Conversely, to the extent we have any variable rate debt, movements in interest rates on variable rate debt would change our future earnings and cash flow, but generally not significantly affect the fair value of those instruments. However, changes in required risk premiums would result in changes in the fair value of variable rate instruments. As of December 31, 2016, we did not have any variable rate debt outstanding.

The weighted-average interest rate of our fixed rate debt as of December 31, 2016 was 3.3%. The weighted-average interest rate represents the actual interest rate in effect as of December 31, 2016.

For a discussion of the interest rate risks related to the current capital and credit markets, see Part I, Item 1A, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Outlook” of this Annual Report on Form 10-K.


ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Index to Financial Statements at page F-1 of this Annual Report on Form 10-K.

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

None.


ITEM 9A.	CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

Management’s Report on Internal Control Over Financial Reporting

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

In connection with the preparation of this Annual Report on Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2016~~2017. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on its assessment, our management believes that, as of December 31, ~~2016~~2017, our internal control over financial reporting was effective based on those criteria. There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Matters

In connection with the adoption of liquidation basis accounting, certain of our internal controls over financial reporting became no longer relevant primarily relating to asset impairments and we adopted additional internal controls over financial reporting primarily with respect to the calculations of our asset values for liquidation basis accounting purposes.


ITEM 9B.	OTHER INFORMATION

~~Amended Dividend Reinvestment Plan~~None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

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

Name	Position(s)	Age *
C. Preston Butcher	Chairman of the Board and Director	78
W. Dean Henry	Chairman of the Board and Director	72
Peter M. Bren	President and Director	8384
W. Dean Henry	Chief Executive Officer	71
Guy K. Hays	Executive Vice President	57
Guy K. Hays	Executive Vice President	56
Peter McMillan III	Executive Vice President	60
Peter McMillan III	Executive Vice President	59
Jeffrey K. Waldvogel	Chief Financial Officer, Treasurer and Secretary	40
Jeffrey K. Waldvogel	Chief Financial Officer, Treasurer and Secretary	39
Stacie K. Yamane	Chief Accounting Officer	53
Stacie K. Yamane	Chief Accounting Officer	52
Gary T. Kachadurian	Independent Director	67
Gary T. Kachadurian	Independent Director	66
Michael L. Meyer	Independent Director	79
Michael L. Meyer	Independent Director	78
Ronald E. Zuzack	Independent Director	75
Ronald E. Zuzack	Independent Director	74

_____________________

* As of March 1, ~~2017~~2018.

CW. ~~Preston~~Dean ~~Butcher~~ Henry is our Chief Executive Officer, Chairman of the Board and ~~one~~a ~~of our directors~~director, positions ~~which~~ he has held since August ~~2009.~~2012, ~~From~~March ~~August~~2017, ~~2009~~and ~~until~~March ~~August 2012~~2017, Mrrespectively. ~~Butcher~~He ~~also~~ served as ~~our~~one ~~Chief~~of our Executive ~~Officer.~~Vice MrPresidents from August 2009 through August 2012. ~~Butcher~~He is also the ~~Chairman~~Chief ofExecutive ~~the~~Officer ~~Board~~ of LPI, a position he has held since August 2012. HeMr. Henry joined Lincoln Property Company in ~~1968~~1973 and was promoted to Senior Vice President in charge of all residential operations of the Western Region ~~until~~in ~~1998~~1995, atand ~~which~~then ~~time he~~ became ~~Chairman of~~ the ~~Board~~President and Chief ~~Executive~~Operating Officer of LPI. ~~Since~~in ~~August~~1998. ~~2012,~~ Mr. ~~Butcher~~Henry ~~has~~ served ~~only~~ as ~~Chairman~~President only of LPI. Infrom ~~1999,~~2001 ~~Mr.~~through ~~Butcher~~August ~~purchased~~2012, ~~the~~when ~~interests~~he ofwas ~~the~~appointed ~~other~~Chief ~~Lincoln~~Executive ~~Property Company stockholders in the Western Region operations and continued these operations under the new “Legacy Partners” name~~Officer. Commencing as of January 1, 2013, Mr. ~~Butcher~~Henry indirectly through a trust owns and controls 6030% of LPI and 6030% of LPRR LLC. As Chairman of LPI, Mr. Butcher oversees the management and operations of the Legacy Residential entities, including setting company strategy and monitoring performance. LPI oversees the management and operations of all of its affiliated Legacy residential-related entities (LPI and LPRR LLC, together with all such affiliated Legacy residential-related entities, are hereinafter collectively referred to as “Legacy Residential”).

As Chief Executive Officer of LPI, Mr. Henry ~~Butcher~~oversees ~~was~~the ~~also~~management ~~the~~and ~~Chairman~~operations of ~~the~~all ~~Board~~ of ~~Legacy~~LPI’s ~~Partners~~affiliated ~~Commercial,~~Legacy ~~LLC~~residential-related entities (~~“Legacy~~LPI ~~Commercial”)~~and LPRR, atogether ~~position~~with heall ~~held~~such ~~from~~affiliated ~~2003~~Legacy ~~through~~residential-related ~~September~~entities, ~~2014,~~are ashereinafter ~~well~~collectively asreferred ato ~~director~~as of“Legacy ~~various~~Residential”), ~~other~~including ofsetting ~~the~~company ~~Legacy~~strategy ~~Commercial~~and ~~entities~~monitoring ~~involved~~performance. inAs ~~the~~a ~~ownership~~member of Legacy ~~Partners~~Residential’s ~~Realty~~Investment ~~Fund~~Acquisition I,and ~~LLC~~Management Committee, ~~Legacy~~he ~~Partners~~reviews ~~Realty~~and ~~Fund~~approves IIthe acquisition, ~~LLC~~financing, and ~~Legacy~~disposition ~~Partners~~of ~~Realty~~multifamily ~~Fund~~real ~~III,~~estate ~~LLC~~investments. Mr. ~~Butcher~~Henry ~~sold~~routinely ~~his~~reviews ~~interest~~significant inasset ~~these~~and ~~Legacy~~property ~~Commercial~~management ~~entities~~issues toand ~~NorthStar~~the ~~Realty~~status ~~Finance~~and ~~Corp~~progress of properties under development. inHe ~~September,~~is ~~2014~~also responsible for investor relationships.

Mr. ~~Butcher~~Henry has been involved exclusively in multifamily real estate acquisitions, development, financing, management, and dispositions for over 4948 years. Over the course of his career, he has overseen the acquisition/development, financing, and management of ~~over~~almost ~~600 real estate assets on behalf of private funds and sub-advisory accounts~~39, ~~encompassing over 74,~~000 residential units at an aggregate cost ~~exceeding $6.8 billion. He also has overseen the acquisition/development, financing, and management~~ of ~~128 million square feet of office and industrial space exceeding an aggregate cost of~~ $105.931 billion. ~~Mr. Butcher has overseen the sale of over 500 assets exceeding an aggregate of $7.7 billion in proceeds.~~

Since 2002, Mr. ~~Butcher,~~Henry ~~through~~has ~~Legacy~~been ~~Residential~~a ~~and~~key ~~Legacy~~figure ~~Commercial~~in ~~affiliated~~Legacy ~~entities,~~Residential’s ~~has~~sponsorship ~~been~~of ~~integral to~~ the ~~sponsorship~~$269 ofmillion ~~four~~Legacy ~~real~~Partners ~~estate~~Affordable ~~funds~~Housing Fund, ~~which~~advising ~~funds~~and ~~raised~~investing anfor ~~aggregate~~the ofState ~~$1.5 billion~~ of ~~equity~~California ~~from~~Public ~~institutional~~Employees’ ~~investors.~~Retirement MrSystem. ~~Butcher~~He has also been a key figure in Legacy Residential’s affiliated entities’ real estate investment, management, and disposition activities as a sub-advisor to institutional clients and high net worth individuals. Mr. ~~Butcher~~Henry has been involved in entities, as a sub-advisor, that ~~have~~ raised ~~over~~and invested nearly $21.0 billion since 1995 from large institutional clients such as the AFL-CIO Building Investment Trust, AIG Global Real Estate Investment Corp., BlackRock Realty Advisors, Inc., Capmark Investments, LP, a subsidiary of Capmark Financial Group Inc. (formerly known as GMAC Commercial Holding Corp.), Donaldson Lufkin & Jenrette, Inc. (now Credit Suisse (USA), Inc.), Equity Residential, and Goldman Sachs.

60Mr. Henry serves on the Executive Committee of the National Multifamily Housing Council. He is a member of the Policy Advisory Board of the Center for Real Estate at the University of California at Berkeley, and is an active member of the Urban Land Institute. Mr. Henry is past Chairman of the San Francisco YMCA and a former Board Member of Mercy Housing, a not for-profit affordable housing organization that has participated in the development, preservation and/or financing of more than 36,900 affordable homes in the United States. Mr. Henry is a past Chairman of the Multifamily Leadership Board of the National Association of Home Builders. Mr. Henry received a Bachelor’s degree in Political Science from University of Puget Sound.

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~~Mr.~~The ~~Butcher~~board ~~is a co-founder and past Chairman~~ of ~~the~~directors ~~Board and~~ has ~~served~~concluded onthat ~~the~~Mr. ~~Executive~~Henry ~~Committee~~is ofqualified ~~the~~to ~~National~~serve ~~Multifamily~~as ~~Housing~~one ~~Council.~~of Heour ~~was~~directors aand ~~co-founder~~as Chairman of the ~~California~~Board ~~Housing~~for ~~Council.~~reasons ~~Mr.~~including ~~Butcher~~his isover ~~also~~48 ayear ~~member~~track ofrecord ~~the Policy Advisory Board~~ of ~~the~~leadership ~~Fisher~~and ~~Center~~success ~~for~~in ~~Real Estate at~~ the ~~University~~real ofestate ~~California at Berkeley~~industry. Mr. ~~Butcher~~Henry’s isfamiliarity awith ~~past~~acquisition, ~~member of the Board of Trustees of the Urban Land Institute~~development, ~~a former director of BRE Properties~~financing, ~~Inc.~~management and adisposition ~~former director~~ of ~~NorthStar~~multi-family ~~Realty~~residential ~~Finance~~properties ~~Corp.~~through Henumerous isbusiness acycles ~~director~~provides ~~and~~him awith ~~member~~unique ofexperience ~~the~~to ~~audit~~guide ~~and~~our ~~nominating~~liquidation and ~~corporate governance committees of the Charles Schwab Corporation~~dissolution. Mr. ~~Butcher~~Henry’s ~~was~~superior aleadership ~~founding~~skills ~~board~~have ~~member~~been ofdemonstrated ~~BRIDGE,~~through ayears ~~non-profit~~overseeing ~~housing~~the ~~corporation~~management ~~created~~and tooperations ~~provide low to moderate income housing. Mr. Butcher is also a past overseer~~ of the ~~Hoover~~Legacy ~~Institution,~~Residential ~~Stanford~~entities ~~University.~~and ~~Mr.~~are ~~Butcher~~expected ~~received~~to be a ~~Bachelor~~critical ofasset ~~Science~~ in ~~Electrical~~leading ~~Engineering from~~ the ~~University~~board of ~~Texas at Austin~~directors.

~~The~~Peter ~~board~~M. Bren is our President and one of our directors, positions he has ~~concluded~~held ~~that~~since MrAugust 2009 and July 2009, respectively. ~~Butcher~~He is ~~qualified~~also toChairman ~~serve~~and asPresident ~~one~~ of our ~~directors~~advisor, ~~and~~President asof ~~Chairman~~KBS ofReal ~~the~~Estate ~~Board~~Investment ~~for~~Trust, ~~reasons~~Inc. ~~including~~(“KBS ~~his~~REIT ~~over~~I”), 49President ~~year~~of ~~track~~KBS ~~record~~REIT II and President of ~~leadership~~KBS ~~and~~REIT ~~success~~III, inpositions ~~the~~he ~~real~~has ~~estate~~held ~~industry~~for these entities since October 2004, June 2005, August 2007 and January 2010, respectively. Mr. Bren ~~Butcher’s~~is ~~familiarity~~President ~~with~~and ~~acquisition~~a director of KBS Growth & Income REIT, ~~development~~positions he has held since January 2015 and July 2017, ~~financing~~respectively, and ~~management~~is President and a director of ~~multifamily~~KBS ~~residential~~Growth ~~properties~~& ~~through~~Income ~~numerous~~Venture ~~business~~Fund, ~~cycles~~Inc. ~~provides~~(“KBS ~~him~~Growth ~~with~~& ~~unique~~Income ~~experience~~Venture toFund”), ~~guide~~positions ~~the~~he ~~strategic~~has ~~direction~~held ofsince ~~our~~July ~~business~~2017. Other than de minimis amounts owned by family members or family trusts, Mr. ~~Butcher’s~~Bren ~~superior~~indirectly ~~leadership~~owns ~~skills~~and ~~have~~controls ~~been~~a ~~demonstrated~~33 ~~through~~1/3% ~~years~~interest ~~overseeing~~in KBS Holdings LLC, which is the ~~management~~sole owner of our advisor and ~~operations~~the entity that acted as our dealer manager. KBS Holdings is a sponsor of ~~Legacy~~our ~~Residential~~company ~~businesses~~and is a sponsor of KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT and ~~are~~KBS ~~expected~~Growth toIncome beVenture aFund, ~~critical~~which ~~asset~~were formed in ~~leading~~2009, ~~the~~2005, ~~board~~2007, of2009, ~~directors~~2008, 2013, 2015 and 2017, respectively.

~~Peter M~~Mr. Bren is ~~our President and one of our directors, positions he has held since August 2009 and July 2009, respectively. He~~ is ~~also~~ Chairman of the Board and President of ~~our~~KBS ~~advisor,~~Realty ~~President~~Advisors ofLLC ~~KBS~~and ~~REIT~~is I,a ~~President~~principal of ~~KBS~~Koll ~~REIT~~Bren ~~II,~~Schreiber ~~President~~Realty ofAdvisors, ~~KBS~~Inc., ~~REIT~~each ~~III~~an active and ~~President~~nationally ofrecognized ~~KBS~~real ~~Growth &~~estate ~~Income~~investment ~~REIT,~~advisor. ~~positions~~These heentities ~~has~~are ~~held~~registered ~~for~~as ~~these~~investment ~~entities~~advisers ~~since~~with ~~October~~the ~~2004, June~~SEC. ~~2005, August~~The ~~2007, January~~first ~~2010~~investment ~~and~~advisor ~~January~~affiliated ~~2015,~~with ~~respectively~~Messrs. ~~In addition, Mr.~~ Bren isand aSchreiber ~~sponsor~~was offormed ~~our~~in ~~company~~1992. ~~and~~As ~~is a sponsor~~ of ~~KBS~~December ~~REIT~~31, I2017, KBS ~~REIT~~Realty IIAdvisors, ~~KBS~~together ~~REIT~~with ~~III,~~ KBS ~~Strategic Opportunity REIT~~affiliates, ~~KBS~~including ~~Strategic Opportunity REIT II and~~ KBS ~~Growth &~~Capital ~~Income REIT~~Advisors, ~~which~~had ~~were~~been ~~formed~~involved in ~~2009,~~the ~~2005,~~investment ~~2007,~~in ~~2009,~~or ~~2008,~~management ~~2013~~of ~~and~~approximately ~~2015,~~$24 ~~respectively.~~billion ~~Other~~of ~~than~~real deestate ~~minimis~~investments ~~amounts~~on ~~owned~~behalf byof ~~family~~institutional ~~members or family trusts~~investors, ~~Mr. Bren~~including ~~indirectly~~public ~~owns~~ and ~~controls~~private apension 33plans, ~~1/3%~~endowments ~~interest~~and ~~in KBS Holdings LLC~~foundations, ~~which~~institutional isand ~~the~~sovereign ~~sole~~wealth ~~owner~~funds, ~~of our advisor~~ and ~~our~~the ~~dealer~~investors ~~manager.~~in ~~All~~us, ~~four~~KBS ofREIT ~~our~~I, KBS ~~sponsors~~REIT II, ~~Messrs.~~KBS ~~Bren,~~REIT ~~Hall~~III, ~~McMillan~~KBS ~~and~~Strategic ~~Schreiber~~Opportunity REIT, ~~actively~~KBS ~~participate~~Strategic inOpportunity ~~the~~REIT ~~management~~II and ~~operations~~KBS ofGrowth & ~~our~~Income ~~advisor~~REIT.

Mr. Bren is Chairman of the Board and President of KBS Realty Advisors LLC and is a principal of Koll Bren Schreiber Realty Advisors, Inc., each an active and nationally recognized real estate investment advisor. These entities are registered as investment advisers with the SEC. The first investment advisor affiliated with Messrs. Bren and Schreiber was formed in 1992. As of December 31, 2016, KBS Realty Advisors, together with KBS affiliates, including KBS Capital Advisors, had been involved in the investment in or management of approximately $21 billion of real estate investments on behalf of institutional investors, including public and private pension plans, endowments and foundations, institutional and sovereign wealth funds, and the investors in us, KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT.

Mr. Bren oversees all aspects of KBS Capital Advisors’ and KBS Realty Advisors’ operations, including the acquisition, management and disposition of individual investments and portfolios of investments for KBS-sponsored programs and KBS-advised investors. He also directs all facets of KBS Capital Advisors’ and KBS Realty Advisors’ business activities and is responsible for investor relationships.

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

The board of directors has concluded that Mr. Bren is qualified to serve as one of our directors for reasons including his extensive industry and leadership experience. With over 40 years of real estate experience, including over 30 years as a senior partner of Lincoln Property Company focused on financing, developing, leasing and managing apartment properties, Mr. Bren has the depth and breadth of experience to implement our ~~business~~liquidation ~~strategy~~and dissolution. As our President and a principal of our advisor, Mr. Bren is well-positioned to provide the board of directors with insights and perspectives on the execution of our ~~business~~liquidation ~~strategy~~and dissolution, our remaining operations and other internal matters. Further, as a principal of KBS-affiliated investment advisors and as President of KBS REIT I, KBS REIT II, KBS REIT III and KBS Growth & Income REIT, Mr. Bren brings to the board demonstrated management and leadership ability.

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W. Dean Henry is our Chief Executive Officer, a position he has held since August 2012. He served as one of our Executive Vice Presidents from August 2009 through August 2012. He is also the Chief Executive Officer of LPI, a position he has held since August 2012. Mr. Henry joined Lincoln Property Company in 1973 and was promoted to Senior Vice President in charge of all residential operations of the Western Region in 1995, and then became the President and Chief Operating Officer of LPI in 1998. Mr. Henry served as President only of LPI from 2001 through August 2012, when he was appointed Chief Executive Officer. Commencing as of January 1, 2013, Mr. Henry indirectly through a trust owns and controls 30% of LPI and 30% of LPRR LLC.

As Chief Executive Officer of LPI, Mr. Henry oversees the management and operations of the Legacy Residential entities, including setting company strategy and monitoring performance. As a member of Legacy Residential’s Investment Acquisition and Management Committee, he reviews and approves the acquisition, financing, and disposition of multifamily real estate investments. Mr. Henry routinely reviews significant asset and property management issues and the status and progress of properties under development. He is also responsible for investor relationships.

Mr. Henry has been involved exclusively in multifamily real estate acquisitions, development, financing, management, and dispositions for over 46 years. Over the course of his career, he has overseen the acquisition/development, financing, and management of almost 39,000 residential units at an aggregate cost of $5.1 billion.

Since 2002, Mr. Henry has been a key figure in Legacy Residential’s sponsorship of the $269 million Legacy Partners Affordable Housing Fund, advising and investing for the State of California Public Employees’ Retirement System. He has also been a key figure in Legacy Residential’s affiliated entities’ real estate investment, management, and disposition activities as a sub-advisor to institutional clients and high net worth individuals. Mr. Henry has been involved in entities, as a sub-advisor, that raised and invested nearly $1 billion since 1995 from large institutional clients such as the AFL-CIO Building Investment Trust, AIG Global Real Estate Investment Corp., BlackRock Realty Advisors, Inc., Capmark Investments, LP, a subsidiary of Capmark Financial Group Inc. (formerly known as GMAC Commercial Holding Corp.), Donaldson Lufkin & Jenrette, Inc. (now Credit Suisse (USA), Inc.), Equity Residential, and Goldman Sachs.

Mr. Henry serves on the Executive Committee of the National Multifamily Housing Council. He is a member of the Policy Advisory Board of the Center for Real Estate at the University of California at Berkeley, and is an active member of the Urban Land Institute. Mr. Henry is past Chairman of the San Francisco YMCA and a former Board Member of Mercy Housing, a not for-profit affordable housing organization which has participated in the development, preservation and/or financing of more than 36,900 affordable homes in the United States. Mr. Henry is a past Chairman of the Multifamily Leadership Board of the National Association of Home Builders. Mr. Henry received a Bachelor’s degree in Political Science from University of Puget Sound.

Guy K. Hays is one of our Executive Vice Presidents, a position he has held since August 2009. Mr. Hays is also President of LPI, a position he has held since August 2012. Mr. Hays joined Lincoln Property Company in 1986, was promoted to Vice President of Finance for all residential operations of the Western Region in 1995, and became Senior Vice President - Finance of LPI in 1998, then Senior Vice President and Chief Financial Officer - Residential in 2001, Senior Managing Director and Chief Financial Officer in January 2008, and Executive Managing Director and Chief Financial Officer in January 2009. Commencing as of January 1, 2013, Mr. Hays indirectly through a trust owns and controls 10% of LPI and 10% of LPRR LLC.

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As President of LPI, Mr. Hays oversees the management, operations and financial affairs of the Legacy Residential entities, including setting company strategy and monitoring financial performance. As a member of Legacy Residential’s Investment Acquisition and Management Committee, he reviews and approves the acquisition, financing, and disposition of multifamily real estate investments. Mr. Hays routinely reviews significant asset and property management related issues, as well as the financing of properties and the firm’s banking, accounting and reporting functions. He is also responsible for investor, lender, and banking relationships.

Over the course of his career, he has overseen the acquisition/development and financing of almost 27,000 residential units at an aggregate cost of approximately $4.7 billion. Since 2002, Mr. Hays has been a key figure in Legacy Residential’s sponsorship of the $269 million Legacy Partners Affordable Housing Fund, advising and investing on behalf of the State of California Public Employees’ Retirement System. He has also been a key figure in Legacy Residential’s affiliated entities’ real estate investment, management, and disposition activities as a sub-advisor to institutional clients. Mr. Hays has been involved in entities, as a sub-advisor, that raised and invested nearly $1 billion from large institutional clients such as the AFL-CIO Building Investment Trust, AIG Global Real Estate Investment Corp., BlackRock Realty Advisors, Inc., Capmark Investments, LP, a subsidiary of Capmark Financial Group Inc. (formerly known as GMAC Commercial Holding Corp.), Donaldson Lufkin & Jenrette, Inc. (now Credit Suisse (USA), Inc.), Equity Residential, and Goldman Sachs.

Prior to joining Lincoln Property Company in 1986, Mr. Hays was with Kenneth Leventhal and Company, a CPA firm specializing in real estate, in Dallas, Texas where he earned his Certified Public Accountant designation. Mr. Hays is an active member of the National Multifamily Housing Council and is a ~~board~~Board member of the San Francisco YMCA. Mr. Hays received a Bachelor of Science in Accounting from Oral Roberts University.

62Peter McMillan III is one of our Executive Vice Presidents, a position he has held since August 2009. He is also an Executive Vice President, the Treasurer and Secretary and a director of KBS REIT I, KBS REIT II and KBS REIT III, positions he has held for these entities since June 2005, August 2007 and January 2010, respectively. From January 2015 through February 2017, Mr McMillan was an Executive Vice President, the Treasurer and Secretary and a director of KBS Growth & Income REIT. He is President, Chairman of the Board and a director of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II, positions he has held for these entities since December 2008 and February 2013, respectively. Mr. McMillan owns and controls a 50% interest in GKP Holding LLC. GKP Holding owns a 33 1/3% interest in KBS Holdings, which is the sole owner of our advisor and the entity that acted as our dealer manager. KBS Holdings is a sponsor of our company and is a sponsor of KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT, which were formed in 2009, 2005, 2007, 2009, 2008, 2013 and 2015, respectively.

Mr. McMillan is a Partner and co-owner of Temescal Canyon Partners LP, an investment advisor formed in 2013 to manage a multi-strategy hedge fund on behalf of investors. Mr. McMillan is also a co-founder and the Managing Partner of Willowbrook Capital Group, LLC, an asset management company. In addition, since November 2017, Mr. McMillan has served as Chairman and a director for Keppel-KBS US REIT Management Pte. Ltd., which is the manager of Keppel-KBS US REIT. Prior to forming Willowbrook in 2000, Mr. McMillan served as an Executive Vice President and Chief Investment Officer of SunAmerica Investments, Inc., which was later acquired by AIG. As Chief Investment Officer, he was responsible for over $75.0 billion in assets, including residential and commercial mortgage-backed securities, public and private investment grade and non-investment grade corporate bonds and commercial mortgage loans and real estate investments. Before joining SunAmerica in 1989, he served as Assistant Vice President for Aetna Life Insurance and Annuity Company with responsibility for the company’s $6.0 billion fixed income portfolios. Mr. McMillan received his Master of Business Administration in Finance from the Wharton Graduate School of Business at the University of Pennsylvania and his Bachelor of Arts Degree with honors in Economics from Clark University. Mr. McMillan is a member of the board of directors of TCW Funds, Inc. and TCW Strategic Income Fund, Inc., is chairman of the board of trustees of TCW Alternative Funds and is a member of the board of trustees of Metropolitan West Funds.

Jeffrey K. Waldvogel is our Chief Financial Officer, Treasurer and Secretary, positions he has held since June 2015. He is also the Chief Financial Officer of our advisor, and Chief Financial Officer and Assistant Secretary of KBS REIT I, KBS REIT II and KBS REIT III, positions he has held for each of these entities since June 2015. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Growth & Income REIT, positions he has held since June 2015, April 2017 and April 2017, respectively. Mr. Waldvogel also is Chief Financial Officer, Treasurer and Secretary of KBS Growth & Income Venture Fund, positions he has held since July 2017. He is also the Chief Financial Officer, Treasurer and Secretary of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II, positions he has held for these entities since June 2015.

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Peter McMillan III is one of our Executive Vice Presidents, a position he has held since August 2009. He is also an Executive Vice President, the Treasurer and Secretary and a director of KBS REIT I, KBS REIT II and KBS REIT III, positions he has held for these entities since June 2005, August 2007 and January 2010, respectively. From January 2015 through February 2017, Mr McMillan was an Executive Vice President, the Treasurer and Secretary of KBS Growth & Income REIT. He is President, Chairman of the Board and a director of KBS Strategic Opportunity REIT and KBS Strategic Opportunity REIT II, positions he has held for these entities since December 2008 and February 2013, respectively. In addition, Mr. McMillan is a sponsor of our company and is a sponsor of KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and KBS Growth & Income REIT, which were formed in 2009, 2005, 2007, 2009, 2008, 2013 and 2015, respectively. Mr. McMillan owns and controls a 50% interest in GKP Holding LLC. GKP Holding owns a 33 1/3% interest in KBS Holdings LLC, which is the sole owner of our advisor and our dealer manager. All four of our KBS sponsors, Messrs. Bren, Hall, McMillan and Schreiber, actively participate in the management and operations of our advisor.

Mr. McMillan is a Partner and co-owner of Temescal Canyon Partners LP, an investment advisor formed in 2013 to manage a multi-strategy hedge fund on behalf of investors. Mr. McMillan is also a co-founder and the Managing Partner of Willowbrook Capital Group, LLC, an asset management company. Prior to forming Willowbrook in 2000, Mr. McMillan served as an Executive Vice President and Chief Investment Officer of SunAmerica Investments, Inc., which was later acquired by AIG. As Chief Investment Officer, he was responsible for over $75.0 billion in assets, including residential and commercial mortgage-backed securities, public and private investment grade and non-investment grade corporate bonds and commercial mortgage loans and real estate investments. Before joining SunAmerica in 1989, he served as Assistant Vice President for Aetna Life Insurance and Annuity Company with responsibility for the company’s $6.0 billion fixed income portfolios. Mr. McMillan received his Master of Business Administration in Finance from the Wharton Graduate School of Business at the University of Pennsylvania and his Bachelor of Arts Degree with honors in Economics from Clark University. Mr. McMillan is a member of the Board of Trustees of Metropolitan West Funds, TCW Mutual Funds and TCW Alternative Funds and is a former director of Steinway Musical Instruments, Inc.

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

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

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

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

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

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

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

Gary T. Kachadurian is one of our independent directors, ~~and~~a isposition ~~the~~he ~~chair~~has ofheld ~~the~~since ~~Special~~January ~~Committee~~2010, ~~positions~~and hewas ~~has~~the ~~held~~chair ~~since~~of ~~January~~the ~~2010~~Special ~~and~~Committee from January 2016, ~~respectively~~to July 2017. Mr. Kachadurian has 36over 35 years of real estate experience specializing in land and asset acquisition, construction, development, financing, and management. Since 2012, Mr. Kachadurian has served as vice chairman of BRG Manager, LLC, the manager of Bluerock Residential Growth REIT, Inc., a REIT focusing on apartment communities. Also, as President of The Kachadurian Group LLC (f/k/a Kach Enterprises, LLC) from October 2006 to the present, he has been retained as consultant on apartment acquisition and development transactions. From August 2007 until its sale in January 2015, Mr. Kachadurian served as Chairman of Apartment Realty Advisors, the nation’s largest privately owned multifamily housing investment advisory company. Mr. Kachadurian is also a partner in Monroe Residential Partners, a Chicago-based developer of small multifamily communities in the Chicago area.

Mr. Kachadurian formerly served as Senior Managing Director for Global Business Development for Deutsche Bank Real Estate. His responsibilities included raising equity in Japan, Germany, and other countries for new real estate products. Until May 2005 he was also a senior member of the Policy Committee of RREEF, a leading pension fund advisor, in addition to being a member of RREEF’s Investment Committee for 14 years. He was in charge of RREEF’s National Acquisitions Group and Value-Added and Development lines of business from 1999 to 2002, and also had oversight in the acquisition and management of RREEF’s 24,000 unit apartment investment portfolio. Prior to joining RREEF, he was the Midwest Regional Operating Partner for Lincoln Property Company, developing and managing apartment communities in Illinois, Indiana, Wisconsin, Kansas and Pennsylvania.

Mr. Kachadurian is a director of Pangea Real Estate and is a director and member of the investment committee of Bluerock Residential Growth REIT. Mr. Kachadurian is a founding Board Member of the Chicago Apartment Association and is former Chairman of the National Multifamily Housing Council. He has been a featured speaker and panelist at many apartment industry events and is a past Chairman of the Village Foundation of Children’s Memorial Hospital. Mr. Kachadurian received his B.S. in Accounting from the University of Illinois. 46

The board of directors has concluded that Mr. Kachadurian is qualified to serve as one of our independent directors for reasons including the depth and breadth of his experience in the rental apartment industry, including longstanding experience as a developer, owner and manager of apartment properties. His extensive understanding of these varied aspects of our industry provide the board with an invaluable resource for assessing and managing risks and planning corporate strategy. In addition, in the course of serving on the boards of several companies and other large organizations involved in the apartment industry, Mr. Kachadurian has developed strong leadership and consensus building skills that are a valuable asset to the board of directors.

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~~Michael L~~Mr. ~~Meyer is~~Kachadurian ~~one of our independent directors and~~ is ~~the~~a ~~chair of the audit committee, positions he has held since January 2010. He is also an independent~~ director and ~~chair~~member of the ~~audit~~investment committee of ~~KBS~~Bluerock ~~Strategic~~Residential ~~Opportunity~~Growth REIT and ~~KBS~~previously ~~Strategic~~served ~~Opportunity~~as ~~REIT~~a ~~II,~~director ~~positions~~of hePangea ~~has~~Real ~~held for these entities since October 2009 and April 2014, respectively~~Estate. Mr. ~~Meyer~~Kachadurian is a ~~private~~founding ~~real~~Board ~~estate~~Member ~~investor and since 1999 has been the Chief Executive Officer~~ of the ~~Michael~~Chicago L.Apartment ~~Meyer~~Association ~~Company.~~and ~~The Michael L. Meyer Company~~ is aformer ~~principal~~Chairman ~~and/or manager~~ of ~~real~~the ~~estate~~National ~~entities~~Multifamily ~~and~~Housing ~~provides those entities with property acquisition, financing and management services and advice~~Council. ~~Since~~He ~~June 2006, Mr. Meyer also~~ has been a ~~principal~~featured ofspeaker ~~TwinRock Partners, LLC (formerly known as AMG Realty Investors, LLC), a commercial~~ and ~~residential~~panelist ~~real~~at ~~estate~~many ~~investment~~apartment ~~company.~~industry ~~From~~events 2000 to 2003, Mr. Meyer was a principal in Advantage 4 LLC, a provider of telecommunications systems for real estate projects. From 1999 to 2003, Mr. Meyer was also a principal of Pacific Capital Investors, which acquired non-performing loans secured by real estate in Japan. From 1974 to 1998, Mr. Meyer was Managing Partner-Orange County and ~~Audit Partner of the E&Y Kenneth Leventhal Real Estate Group of Ernst & Young LLP and its predecessor. Mr. Meyer~~ is a ~~director~~past ~~and~~Chairman ~~member~~ of the ~~audit,~~Village ~~compensation,~~Foundation ~~director~~of Children’s ~~loan,~~Memorial ~~nominating and governance and executive committees of Opus Bank positions he has held since September 2010~~Hospital. ~~Additionally,~~ Mr. ~~Meyer~~Kachadurian ~~previously~~received ~~served~~his ~~as a director and member of the audit committee of City National Bank and City National Corporation, as a director and member of the audit committee of William Lyon Homes, Inc~~B.S. ~~and~~in asAccounting afrom ~~director and chair of~~ the ~~audit~~University ~~committee~~ of ~~Paladin Realty Income Properties, Inc~~Illinois. ~~from 2004 to 2014.~~

The board of directors has concluded that Mr. Kachadurian is qualified to serve as one of our independent directors for reasons including the depth and breadth of his experience in the rental apartment industry, including longstanding experience as a developer, owner and manager of apartment properties. His extensive understanding of these varied aspects of our industry provide the board with an invaluable resource for assessing and managing risks and carrying out our liquidation and dissolution. In addition, in the course of serving on the boards of several companies and other large organizations involved in the apartment industry, Mr. Kachadurian has developed strong leadership and consensus building skills that are a valuable asset to the board of directors.

Michael L. Meyer is one of our independent directors and is the chair of the audit committee, positions he has held since January 2010. Mr. Meyer is a private real estate investor and since 1999 has been the Chief Executive Officer of the Michael L. Meyer Company. The Michael L. Meyer Company is a principal or manager of real estate entities and provides those entities with property acquisition, financing and management services and advice. Since June 2006, Mr. Meyer also has been a principal of TwinRock Partners, LLC (formerly known as AMG Realty Investors, LLC), a commercial and residential real estate investment company. He also served as an independent director and chair of the audit committee of KBS Strategic Opportunity REIT from October 2009 through May 2017 and of KBS Strategic Opportunity REIT II from April 2014 through May 2017. From 2000 to 2003, Mr. Meyer was a principal in Advantage 4 LLC, a provider of telecommunications systems for real estate projects. From 1999 to 2003, Mr. Meyer was also a principal of Pacific Capital Investors, which acquired non-performing loans secured by real estate in Japan. From 1974 to 1998, Mr. Meyer was Managing Partner-Orange County and Audit Partner of the E&Y Kenneth Leventhal Real Estate Group of Ernst & Young LLP and its predecessor. Mr. Meyer is a director and member of the audit, compensation, director’s loan, nominating and governance and executive committees of Opus Bank positions he has held since September 2010. Additionally, Mr. Meyer previously served as a director and member of the audit committee of City National Bank and City National Corporation, as a director and member of the audit committee of William Lyon Homes, Inc. and as a director and chair of the audit committee of Paladin Realty Income Properties, Inc. from 2004 to 2014.

Mr. Meyer was inducted into the California Building Industry Foundation Hall of Fame in June of 1999 for outstanding achievements in the real estate industry and community. Mr. Meyer was also the recipient of the University of California Irvine Graduate School of Management Real Estate Program Lifetime Achievement Award. Mr. Meyer received a Bachelor’s of Business Administration from the University of Iowa. He is a Certified Public Accountant (inactive California).

The board of directors has concluded that Mr. Meyer is qualified to serve as one of our independent directors and the chairman of the audit committee for reasons including his expertise with respect to residential and commercial real estate investments and accounting and financial reporting matters. With over 1415 years of experience investing in residential and commercial real estate and providing residential and commercial real estate acquisition, financing and management services and advice, Mr. Meyer is well-positioned to advise the board with respect to ~~potential~~ investment ~~opportunities~~management and ~~investment~~our ~~management~~liquidation and dissolution. In addition, with over 35 years of experience as an independent Certified Public Accountant or auditor for real estate companies, Mr. Meyer provides the board of directors with substantial expertise regarding real estate accounting and financial reporting matters. Further, Mr. Meyer’s experience as a director and ~~chairman~~member of the audit, ~~committee~~compensation, ofdirector’s ~~KBS~~loan, ~~Strategic~~nominating ~~Opportunity~~and ~~REIT~~governance and ~~KBS~~executive ~~Strategic~~committees ~~Opportunity~~of ~~REIT~~Opus IIBank, and his prior experience as a director and ~~member~~chairman of the audit, ~~compensation,~~committee ~~director’s~~of ~~loan,~~KBS ~~nominating~~Strategic ~~and~~Opportunity ~~governance~~REIT and ~~executive~~KBS ~~committees~~Strategic ofOpportunity ~~Opus~~REIT ~~Bank~~II, ~~and his prior experience~~ as a director and member of the audit committee of City National Bank and City National Corporation, as a director and member of the audit committee of William Lyon Homes, Inc. and as a director and chair of the audit committee of Paladin Realty Income Properties, Inc. provides him with an understanding of the requirements of serving on a public company board.

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Ronald E. Zuzack is one of our independent directors and is the chair of the conflicts committee, positions he has held since January 2010. From August 2010 until September 2011, Mr. Zuzack was a Senior Advisor and Investment Committee Member of WestRock, an apartment investment company. From January 2008 until February 2010, Mr. Zuzack served as Global Chief Operating Officer for BlackRock Realty Advisors, Inc.’s Real Estate Equity Business. Mr. Zuzack also has served as Chairman of Blackrock Realty Advisor’s Operating Committee and a member of the Executive, Investment and Leadership Committees for the firm’s Real Estate Group. BlackRock Realty Advisors is a leading real estate equity investment manager and manages a variety of separate accounts, closed-end funds and open-end funds with a focus on core, value-added and opportunistic investment strategies. BlackRock Realty Advisors is a division of BlackRock, Inc., a premier provider of global investment management, risk management and advisory services. In his capacity as Global COO, Mr. Zuzack was responsible for the day-to-day operations of a platform in the Americas, the UK, Continental Europe, Australia and Asia with total assets under management of approximately $26 billion.

Mr. Zuzack joined BlackRock Realty’s predecessor, SSR Realty Advisors, Inc., in 1981 as a Portfolio Manager, serving as Executive Vice President and Director of Portfolio Services from 1988 to 1997, Chief Investment Officer from 1996 to 1997, Head of Acquisitions, Dispositions and Financing from 1997 to December 2005, and Head of BlackRock Realty Americas from January 2006 to January 2008. Prior to joining SSR Realty Advisors, he held positions as Vice President and Real Estate Manager with Union Bank and as Vice President, Development and Property Manager for Inter-Cal Real Estate Corporation.

Mr. Zuzack earned a BS in Finance and Economics in 1969 and an MBA in 1970 from the University of Missouri. He also was recognized as a Willis Bryant Scholar in Mortgage Banking at Northwestern University in 1972. He has also served as Chairman of the Multi-Family Gold Council of the Urban Land Institute, as a member of the Executive Committee of the National Multifamily Housing Council, as Chairman of the Rent Control Committee of the National Multifamily Housing Council, and as a board member of the Mid-Peninsula Housing Authority.

65The board of directors has concluded that Mr. Zuzack is qualified to serve as one of our independent directors and the chairman of the conflicts committee for reasons including his extensive experience as an investment fiduciary representing the interests of stockholder clients. Mr. Zuzack’s over 30 years as an active investor in apartment properties provide him with specific knowledge of our market segment and related financing activities and position him very well to provide the board of directors with valuable industry-specific insight and experience, including in relation to our liquidation and dissolution. Furthermore, Mr. Zuzack’s experience also prepares him well for service on the audit committee. As Global COO of BlackRock Realty Advisors, Mr. Zuzack had overall responsibility for the financial performance of that company, including supervision of the principal financial officer, regular reviews of financial statements, and frequent consideration of issues related to the conduct of audits, assessment of internal controls and procedures for financial reporting.

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The board of directors has concluded that Mr. Zuzack is qualified to serve as one of our independent directors and the chairman of the conflicts committee for reasons including his extensive experience as an investment fiduciary representing the interests of stockholder clients. Mr. Zuzack’s 30 years as an active investor in apartment properties provide him with specific knowledge of our market segment and related financing activities and position him very well to provide the board of directors with valuable industry-specific insight and experience. Furthermore, Mr. Zuzack’s experience also prepares him well for service on the audit committee. As Global COO of BlackRock Realty Advisors, Mr. Zuzack had overall responsibility for the financial performance of that company, including supervision of the principal financial officer, regular reviews of financial statements, and frequent consideration of issues related to the conduct of audits, assessment of internal controls and procedures for financial reporting.

Corporate Governance

The Audit Committee

The board of directors has established an audit committee. The audit committee’s function is to assist the board of directors in fulfilling its responsibilities by overseeing (i) our accounting and financial reporting processes, (ii) the integrity of our financial statements, (iii) our compliance with legal and regulatory requirements, (iv) our independent auditors’ qualifications, performance and independence, and (v) the performance of our internal audit function. The members of the audit committee are Michael L. Meyer (Chairman), Gary T. Kachadurian and Ronald E. Zuzack. All of the members of the audit committee are “independent” as defined by the New York Stock Exchange. All members of the audit committee have significant financial and/or accounting experience, and the board of directors has determined that Mr. Meyer satisfies the SEC’s requirements for an “audit committee financial expert.” Mr. Meyer serves on the audit committees of three other public companies, in addition to his service on our audit committee. The board of directors has affirmatively determined that such simultaneous service by Mr. Meyer on the audit committees of the three other public companies will not impair his ability to effectively serve on our audit committee.

Code of Conduct and Ethics

We have adopted a Code of Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer, principal financial officer and principal accounting officer. Our Code of Conduct and Ethics can be found at www.kbslegacyreit.com.

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ITEM 11.	EXECUTIVE COMPENSATION

Compensation of Executive Officers

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

Compensation of Directors

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

We have provided below certain information regarding compensation earned by or paid to our directors during fiscal year ~~2016~~2017.

Name	Fees Earned orPaid in Cash in ~~2016~~2017 (1)		All OtherCompensation		Total
Gary T. Kachadurian	$	~~113~~91,333	$	—	$	~~113~~91,333
Michael L. Meyer (2)	121,793		—		121,793
Michael L. Meyer	108,333		—		108,333
Ronald E. Zuzack	~~131~~113,833		—		~~131~~113,833
Peter M. Bren (3)	—		—		—
Peter M. Bren (2)	—		—		—
C. Preston Butcher (3)	—		—		—
W. Dean Henry (2) (3)	—		—		—
C. Preston Butcher (2) (4)	—		—		—

_____________________

(1) Fees Earned or Paid in Cash in ~~2016~~2017 include meeting fees earned in: (i) ~~2015~~2016 but paid or reimbursed in the first quarter of ~~2016~~2017 as follows: Mr. Kachadurian $97,333, Mr. Meyer $1011,333, and Mr. Zuzack $1014,333; and (ii) ~~2016~~2017 but paid in ~~2017~~2018 as follows: Mr. Kachadurian $7,333, Mr. Meyer $118,333, and Mr. Zuzack $148,~~333~~833.

(2) ~~Mr.~~Directors ~~Meyer~~who ~~was~~are ~~paid~~also anour ~~additional~~executive ~~$2,090~~officers ~~($400~~do ~~per~~not ~~hour)~~receive compensation for ~~service~~services rendered as ~~chair of the audit committee in connection with~~ a ~~committee oversight matter~~director. ~~This amount is included in the $121,793 above.~~

(3) ~~Directors~~Mr. ~~who~~Henry ~~are~~was ~~also~~appointed ~~our~~to ~~executive~~serve ~~officers~~as doa ~~not~~member ~~receive~~of ~~compensation~~our ~~for~~board ~~services~~of ~~rendered~~directors and as aChairman ~~director~~of the Board effective March 22, 2017.

⁽⁴⁾Mr. Butcher resigned as a member of our board of directors and as Chairman of the Board effective March 20, 2017.

Cash Compensation

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


•	$2,500 for each board of directors meeting attended;

• $2,500 for each audit committee, conflicts committee or Special Committee meeting attended (except that the committee chairman is paid $3,000 for each audit committee, conflicts committee or Special Committee meeting attended);


•	$2,000 for each teleconference board of directors meeting attended; and


•	$2,000 for each teleconference audit committee, conflicts committee or Special Committee meeting attended (except that the committee chairman is paid $3,000 for each teleconference audit committee, conflicts committee or Special Committee meeting attended).

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

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

Stock Ownership

The following table shows, as of March 61, ~~2017~~2018, the amount of our common stock beneficially owned (unless otherwise indicated) by (1) any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (2) our directors, (3) our executive officers, and (4) all of our directors and executive officers as a group.

Name and Address of Beneficial Owner	Amount and Nature ofBeneficial Ownership (2)	Percent ofAll Shares
C. Preston Butcher, Chairman of the Board and Director (1)	20,000 (3)	*
W. Dean Henry, Chairman of the Board, Director and Chief Executive Officer (1)	20,000 (3)	*
Peter M. Bren, President and Director (1)	20,000 (3)	*
W. Dean Henry, Chief Executive Officer (1)	20,000 (3)	*
Guy K. Hays, Executive Vice President (1)	20,000 (3)	*
Peter McMillan III, Executive Vice President (1)	20,000 (3)	*
Jeffrey K. Waldvogel, Chief Financial Officer, Treasurer and Secretary	—	—
Stacie K. Yamane, Chief Accounting Officer	—	—
Gary T. Kachadurian, Independent Director	—	—
Michael L. Meyer, Independent Director	—	—
Ronald E. Zuzack, Independent Director	—	—
All executive officers and directors as a group	20,000 (3)	*
Trinity Christian Center	1,045,017 (4)	5.01%

_____________________

*Less than 1% of the outstanding common stock

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

⁽²⁾None of the shares is pledged as security.

(3) Includes 20,000 shares owned by KBS-Legacy Apartment Community REIT Venture, LLC, which is indirectly owned and controlled by ~~Messrs. Butcher,~~ Henry, Hays, Bren, Hall, McMillan and Schreiber.

(4) The address of this beneficial owner is 2442 Michelle Drive, Tustin, California 92780.

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ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Director Independence

Although our shares are not listed for trading on any national securities exchange, a majority of the directors, and all of the members of the audit committee, the conflicts committee and the Special Committee, are “independent” as defined by the New York Stock Exchange. The New York Stock Exchange independence standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, the board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). The board of directors has determined that Gary T. Kachadurian, Michael L. Meyer and Ronald E. Zuzack each satisfies the bright-line criteria and that none has a relationship with us that would interfere with such person’s ability to exercise independent judgment as a director. None of these directors has ever served as (or is related to) an employee of ours or of any of our predecessors or acquired companies or received or earned any compensation from us or any such other entities except for compensation directly related to service as a director of us. Therefore, we believe that all of these directors are independent directors.

Report of the Conflicts Committee

Review of Our Policies

The conflicts committee has reviewed our policies and determined that they are in the best interest of our stockholders. Set forth below is a discussion of the basis for that determination.

Offering Policy. We ~~continue~~terminated ~~to offer shares of common stock under~~ our dividend reinvestment plan ~~and~~effective ~~may~~as doof soAugust ~~until~~20, ~~we have sold all $760~~2017,~~000,000~~ ofwhich ~~shares~~termination ~~available~~was ~~for~~related ~~sale. We expect~~ to ~~use substantially all of~~ the ~~net~~August ~~proceeds~~14, ~~from~~2017 ~~the~~approval ~~sale~~ of ~~shares under our dividend reinvestment plan for general corporate purposes, including, but not limited to: (i)~~ the ~~repurchase~~Plan of ~~shares~~Liquidation ~~under our share redemption program; (ii) capital expenditures and leasing costs related to our real estate investments; (iii) reserves required~~ by ~~any~~the ~~financings~~board of ~~our~~directors ~~real~~and ~~estate~~the ~~investments;~~Special ~~and~~Committee (~~iv) the~~as ~~repayment~~described ~~of debt~~below). For the years ended December 31, ~~2016~~2017 and ~~2015~~2016, the costs of raising capital in our dividend reinvestment plan represented less than 1% of the capital raised.

Portfolio Management, Disposition and Distribution Policy. On January 21, 2016, our board of directors formed the Special Committee composed of all of our independent directors to explore the availability of strategic alternatives involving our company with the goal of providing liquidity options for our stockholders while preserving and maximizing overall returns on our investment portfolio. While we conduct this process, we remain 100% focused on managing our properties.50

We generally intend to hold our core properties for five to ten years, which we believe is a reasonable period to enable us to capitalize on the potential for increased income and capital appreciation of properties, although economic and market conditions may influence us to hold our investments for different periods of time. We may sell an asset before the end of the expected holding period if we believe that market conditions and asset positioning have maximized its value to us or the sale of the asset would otherwise be in the best interests of our stockholders.

Our Legacy sponsors developed a well-defined exit strategy for each of our investments and periodically perform a hold-sell analysis on each asset in order to determine the optimal time to sell the asset and generate a strong return for our stockholders. These periodic analyses focus on the remaining available value enhancement opportunities for the asset, the demand for the asset in the marketplace, market conditions and our overall portfolio objectives to determine if the sale of the asset, whether via an individual sale or as part of a portfolio sale or merger, would generate a favorable return to our stockholders.

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Portfolio Management, Disposition and Distribution Policy. On ~~December~~January 2921, 2016, ~~we,~~our ~~through~~board ~~the~~of ~~Owner,~~directors ~~entered~~formed ~~into~~ the ~~Wesley~~Special ~~Village~~Committee ~~Agreement~~to ~~for~~explore the ~~sale~~availability of ~~Wesley~~strategic ~~Village~~alternatives toinvolving our company with the ~~Purchaser.~~goal ~~The~~of ~~Wesley~~providing ~~Village~~liquidity ~~Agreement~~options ~~was~~for ~~subsequently~~our ~~terminated,~~stockholders ~~reinstated~~while preserving and ~~amended~~maximizing ~~and~~overall returns on ~~March~~our 9investment portfolio. On August 14, 2017, wein ~~completed~~connection ~~the~~with ~~sale~~a review of ~~Wesley~~potential ~~Village.~~strategic ~~For~~alternatives ~~information~~available ~~relating~~ to ~~the~~us, ~~Wesley~~our ~~Village~~board ~~Agreement,~~of ~~see~~directors ~~Part~~unanimously I,approved ~~Item~~the 2,sale ~~“Properties~~of -all ~~Wesley~~of ~~Village~~our ~~Agreement.”~~real ~~For~~estate ~~information~~properties ~~relating~~and our dissolution pursuant to the ~~termination~~terms ~~and~~of ~~reinstatement~~the Plan of, ~~and~~Liquidation. ~~the~~The ~~amendments~~principal ~~to,~~purpose of the ~~Wesley~~Plan ~~Village~~of ~~Agreement,~~Liquidation ~~and~~is ~~the~~to ~~subsequent~~maximize ~~sale~~stockholder ofvalue ~~Wesley~~by ~~Village,~~selling ~~see~~our ~~Part~~real ~~II,~~estate ~~Item 7~~properties, ~~“Management’s~~paying ~~Discussion~~our debts and ~~Analysis~~distributing ofthe ~~Financial~~net ~~Condition~~proceeds ~~and~~from ~~Results~~liquidation ofto ~~Operations~~our -stockholders. ~~Subsequent~~On ~~Events~~December -19, ~~Termination~~2017, ~~and~~our ~~Reinstatement~~stockholders approved the Plan of, ~~and~~Liquidation. ~~Amendments~~For tomore information, see the ~~Wesley~~Plan ~~Village~~of ~~Agreement;~~Liquidation, ~~Disposition~~which ofis ~~Wesley~~included ~~Village~~as an exhibit to this Annual Report on Form 10-K.”

WeDuring ~~intend~~the toyear ~~use~~ended ~~some~~December of31, ~~the net~~2017, ~~proceeds~~we ~~after~~sold ~~paying~~seven ~~sale-related~~real ~~expenses~~estate ~~including,~~properties. inAs ~~certain~~of ~~cases~~December 31, ~~paying~~2017, ~~off~~we ~~the~~owned ~~notes~~four ~~payable~~real ~~related~~estate toproperties, ~~such~~the ~~assets~~Core-Portfolio Properties, ~~from~~all ~~any~~of ~~strategic~~which ~~asset~~were ~~sales~~under wecontract ~~close~~ to: ~~(i)~~sell. ~~make~~On ~~renovations~~February at8, ~~certain~~2018, ~~remaining~~we ~~real~~completed ~~estate~~the ~~properties,~~sale ~~which~~of wetwo ~~believe~~of ~~could~~the ~~increase property~~Core-~~level~~Portfolio ~~NOI~~Properties. ~~and~~See ~~create~~Part ~~additional~~II, ~~stockholder~~Item ~~value;~~7 “Management’s Discussion and ~~(ii)~~Analysis ~~pay~~of aFinancial ~~special~~Condition ~~distribution~~and toResults ~~our~~of ~~stockholders.~~Operations ~~However,~~— ~~there~~Subsequent isEvents no— ~~assurance~~Dispositions ~~that~~Subsequent ~~this~~to ~~process~~December ~~will~~31, ~~result~~2017.” inWe ~~stockholder~~anticipate ~~liquidity,~~completing orthe ~~provide~~sale aof ~~return~~our toremaining ~~stockholders~~real ~~that~~estate ~~equals~~properties orby ~~exceeds~~the ~~our~~end ~~estimated~~of ~~value~~the ~~per~~first ~~share~~quarter of 2018.

~~Our~~In ~~goals~~accordance ~~and~~with the Plan of Liquidation, our objectives for ~~2017~~2018 ~~include~~are ~~the~~to ~~following:~~ (i) ~~making~~complete ~~strategic~~the ~~asset~~orderly ~~sales~~liquidation asof ~~described~~our ~~above~~company pursuant to the Plan of Liquidation; and ~~using~~(ii) amaximize ~~portion~~stockholder value by selling all of our remaining real estate properties, paying our debts, providing for the ~~proceeds~~payment toof ~~pay~~unknown aor ~~special~~contingent ~~distribution~~liabilities, distributing the net proceeds from liquidation to our stockholders; ~~(ii)~~and ~~undertaking~~winding ~~renovations~~up atour ~~certain~~operations ~~assets~~and todissolving ~~create~~our ~~additional~~company. ~~stockholder~~We ~~value;~~expect ~~(iii)~~to ~~maintaining~~complete ~~portfolio~~these ~~occupancy;~~activities ~~(iv)~~within ~~increasing~~12 ~~portfolio~~months ~~net~~after ~~cash~~the ~~flow~~December ~~MFFO;~~19, ~~and~~2017 ~~(v)~~stockholder ~~increasing~~approval of the ~~net~~Plan ~~asset~~of ~~value~~Liquidation. ofWhile pursuing our ~~portfolio.~~liquidation ~~However~~pursuant to the Plan of Liquidation, we ~~can~~intend ~~give~~to nocontinue ~~assurances~~to ~~that~~manage weour ~~will~~remaining bereal ~~successful~~estate inproperties ~~implementing~~with ~~any~~the goal of ~~these~~maximizing ~~goals~~stockholder orvalue. ~~objectives~~We orexpect ~~that~~to ~~the~~pay ~~successful~~multiple ~~implementation~~liquidating ofdistributions, ~~any~~including orthe ~~all~~Initial ofLiquidating ~~such~~Distribution, ~~goals~~to orour ~~objectives~~stockholders ~~will~~during ~~result~~the inliquidation ~~additional~~process ~~stockholder~~and ~~value~~to orpay the ~~payment~~final ofliquidating ~~special~~distribution ~~distributions~~after towe sell our ~~stockholders~~remaining real estate properties, pay all of our known liabilities and provide for unknown liabilities.

~~Over~~We ~~the~~can ~~long-term,~~give weno ~~expect~~assurance ~~that~~regarding athe ~~greater~~timing ~~percentage~~of the sale of our ~~distributions~~remaining ~~will~~real beestate ~~paid~~properties ~~from~~in ~~cash~~connection ~~flows~~with ~~from~~the ~~operations~~implementation ~~and~~of ~~FFO~~the ~~(except~~Plan ~~with~~of ~~respect~~Liquidation, tothe ~~distributions~~sale ~~related~~prices towe ~~sales~~will ofreceive ~~our~~for ~~assets).~~such ~~Depending~~properties, onand the ~~number~~amount or timing of ~~properties~~any ~~sold,~~additional weliquidating ~~may~~distributions ~~have~~we pay to ~~adjust~~our ~~the~~stockholders. ~~ongoing~~If ~~distribution~~we ~~rate~~cannot ~~subsequent~~sell toour ~~such~~remaining ~~sales~~real inestate ~~order~~properties toand ~~maintain~~pay ~~the~~our ~~current~~debts ~~distribution~~within ~~coverage.~~24 ~~Any~~months ~~future~~from ~~special~~December ~~distributions~~19, we2017, ~~pay~~or ~~from~~if the ~~proceeds~~board of ~~future~~directors ~~dispositions~~and ~~will~~the ~~reduce~~Special ~~our~~Committee ~~estimated~~determine ~~value~~that ~~per~~it ~~share~~is ~~and~~otherwise ~~this~~advisable ~~reduction~~to ~~will~~do beso, ~~reflected~~pursuant into the Plan of Liquidation, we may transfer and assign our ~~updated~~remaining ~~estimated~~assets ~~value~~to ~~per~~a ~~share~~liquidating trust. Upon such transfer and assignment, ~~which~~our westockholders ~~expect~~will toreceive ~~update~~beneficial nointerests ~~later~~in ~~than~~the ~~December~~liquidating ~~2017~~trust.

~~However,~~Pursuant ~~our~~to ~~operating performance cannot be accurately predicted and may deteriorate in~~ the ~~future~~Plan ~~due~~of ~~to numerous factors~~Liquidation, ~~including~~on ~~those~~December ~~discussed under “Forward - Looking Statements~~20,” ~~Part I~~2017, ~~Item~~our 1,board ~~“Business~~of -directors ~~Market~~authorized ~~Outlook~~the -Initial ~~Multifamily~~Liquidating ~~Real~~Distribution ~~Estate~~in ~~and~~the ~~Finance~~amount ~~Markets” Part I, Item 1A, “Risk Factors” and “- Results~~ of ~~Operations~~$4.~~” Those~~05 ~~factors~~per ~~include:~~share ~~the~~of ~~future~~common ~~operating~~stock ~~performance~~to of our ~~investments~~stockholders inof ~~the~~record ~~existing~~as ~~real~~of ~~estate and financial environment and~~ the ~~level~~close of ~~participation~~business inon ~~our~~December ~~dividend~~21, ~~reinvestment plan~~2017. In ~~the~~The ~~event~~Initial ~~our~~Liquidating ~~FFO~~Distribution ~~and/or~~was ~~cash~~paid ~~flows~~on ~~from~~December ~~operations~~27, ~~decrease~~2017 inand ~~the~~was ~~future,~~funded ~~the~~from ~~level~~proceeds offrom ~~our~~real ~~distributions~~estate ~~may~~property ~~also decrease~~sales. In ~~addition,~~We ~~future~~do ~~distributions~~not ~~declared~~expect ~~and~~to ~~paid~~pay ~~may~~regular ~~exceed~~distributions ~~FFO~~during ~~and/or~~the ~~cash~~liquidation ~~flows from operations~~process.

~~Borrowing~~However, ~~Policies. We financed all of~~ our ~~real~~operating ~~estate~~performance ~~properties with a combination of the proceeds from the primary Offerings~~ and ~~debt. We~~our ~~used~~ability ~~debt financing~~ to ~~increase~~successfully implement the ~~amount~~Plan ~~available~~of ~~for~~Liquidation ~~investment~~cannot ~~and~~be toaccurately ~~increase~~predicted ~~overall investment yields to us~~ and ~~our~~may ~~stockholders.~~deteriorate ~~Our management remains vigilant~~ in ~~monitoring~~ the ~~risks~~future ~~inherent~~due ~~in our portfolio and is taking actions~~ to ~~ensure~~numerous ~~that~~factors, weincluding ~~are~~those ~~positioned~~discussed tounder ~~take~~“Forward - Looking ~~advantage~~Statements” ofand ~~the~~Part ~~current~~I, ~~conditions~~Item in1A, ~~the~~“Risk ~~capital markets~~Factors. We” ~~may~~Those ~~use~~factors ~~debt~~include: ~~financing to pay for capital improvements or repairs to properties; to refinance existing indebtedness; to pay distributions; or to provide working capital. We limit our total liabilities to 75% of~~ the ~~cost~~future ~~(before~~operating ~~deducting~~performance ~~depreciation and other noncash reserves)~~ of our ~~tangible~~remaining ~~assets;~~real ~~however,~~estate weproperties ~~may~~in ~~exceed that limit if~~ the ~~majority~~existing ofreal ~~the~~estate ~~conflicts~~and ~~committee~~financial ~~approves~~environment ~~each borrowing in excess of such limitation~~ and weour ~~disclose~~ability ~~such borrowings~~ to ~~our~~successfully ~~stockholders~~dispose inof our ~~next~~remaining ~~quarterly~~real ~~report~~estate ~~with~~properties anat ~~explanation from~~ the ~~conflicts~~times ~~committee of the justification for the excess borrowing. As of January 31, 2017, our borrowings~~ and ~~other~~at ~~liabilities were approximately 64% of~~ the ~~cost~~total ~~(before~~consideration ~~deducting~~we ~~depreciation and other noncash reserves) of our tangible assets~~expect.

~~Policy~~Borrowing ~~Regarding~~Policies. ~~Working~~We ~~Capital~~financed ~~Reserves~~all of our real estate properties with a combination of the proceeds from the primary Offerings and debt. We ~~establish~~used andebt ~~annual~~financing ~~budget~~to increase the amount available for ~~capital~~investment ~~requirements~~and to increase overall investment yields to us and ~~working~~our stockholders. We have used debt financing to pay for capital ~~reserves~~improvements ~~that~~or werepairs ~~update~~to onproperties; ato ~~periodic~~refinance ~~basis~~existing ~~during~~indebtedness; ~~the~~to ~~year~~pay distributions; or to provide working capital. We ~~may~~limit ~~use~~our ~~proceeds~~total ~~from~~liabilities to 75% of the cost (before deducting depreciation and other noncash reserves) of our ~~dividend~~tangible ~~reinvestment~~assets; ~~plan~~however, ~~debt~~we ~~proceeds,~~may ~~proceeds~~exceed ~~from~~that ~~property~~limit ~~sales~~if the majority of the conflicts committee approves each borrowing in excess of such limitation and ~~cash~~we ~~flow~~disclose ~~from~~such ~~operations~~borrowings to ~~meet~~our stockholders in our ~~needs~~next ~~for~~quarterly ~~working~~report ~~capital~~with an explanation from the conflicts committee of the justification for the ~~upcoming~~excess ~~year~~borrowing. As of January 31, 2018, our borrowings and toother ~~build~~liabilities awere ~~moderate~~approximately ~~level~~64% of ~~cash~~the cost (before deducting depreciation and other noncash reserves) of our tangible assets.

~~Policies~~Policy Regarding ~~Operating~~Working ~~Expenses~~Capital Reserves. ~~Under~~We ~~our~~establish ~~charter,~~an weannual ~~are~~budget ~~required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income~~ for ~~the~~capital ~~four~~requirements ~~most~~and ~~recently~~working ~~completed~~capital ~~fiscal~~reserves ~~quarters,~~that aswe ~~these~~update ~~terms~~on ~~are~~a ~~defined~~periodic inbasis ~~our~~during ~~charter, unless~~ the ~~conflicts~~year. ~~committee~~We ~~has~~may ~~determined~~use ~~that~~proceeds ~~such~~from ~~excess~~real ~~expenses~~estate ~~were~~property ~~justified~~sales ~~based~~and oncash ~~unusual~~flow ~~and~~from ~~non-recurring~~operations ~~factors.~~to ~~Operating~~meet ~~expense~~our ~~reimbursements~~needs for ~~the~~working ~~four~~capital ~~fiscal~~for ~~quarters ended December 31, 2015 did not exceed~~ the ~~charter~~upcoming ~~imposed~~year ~~limitation.~~and ~~For~~to ~~the~~build ~~four~~a ~~consecutive~~moderate ~~quarters~~level ~~ended December 31, 2016, total operating expenses represented approximately 0.7%~~ of ~~our~~cash ~~average invested assets and approximately 17~~reserves.~~1% of net income.~~

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

Certain Transactions with Related Persons. The conflicts committee has reviewed the material transactions between our affiliates and us since the beginning of ~~2015~~2016 as well as any such currently proposed transactions. Set forth below is a description of such transactions and the conflicts committee’s report on their fairness.

As described further below, we have entered into agreements with certain affiliates pursuant to which they provide services to us. Our KBS ~~sponsors~~sponsor ~~control~~controls and indirectly ~~own~~owns KBS Capital Advisors and KBS Capital Markets Group. Messrs. Bren and McMillan are also two of our executive officers. ~~All~~and ~~four~~Mr. ofBren ~~our~~is ~~KBS~~one ~~sponsors actively participate in the management and operations~~ of our ~~advisor~~directors. Our advisor has three managers: an entity owned and controlled by Mr. Bren; an entity owned and controlled by Messrs. Hall and McMillan; and an entity owned and controlled by Mr. Schreiber. Indirectly through their trusts, our Legacy sponsors own and control LPRR LLC, ~~the~~and ~~co-manager~~LPI. Messrs. Hays and Henry are also two of our ~~sub-advisor,~~executive officers and ~~LPI,~~Mr. ~~our~~Henry ~~property~~is ~~manager~~one of our directors.

Our Relationship with KBS Capital Advisors. Since our inception and pursuant to the advisory agreement, KBS Capital Advisors has managed our day-to-day operations, retained the property managers for our property investments (subject to the authority of the board of directors and our officers) and performed other duties. Among the services that are provided or have been provided by our advisor under the terms of the advisory agreement include the following:


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


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


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


•	arranging for financing and refinancing of our properties;


•	entering into leases and service contracts for our properties;


•	supervising and evaluating each property manager’s performance;


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


•	assisting us in obtaining insurance;


•	generating an annual budget for us;

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


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


•	performing investor-relations services;


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


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


•	performing any other services reasonably requested by us.

Our advisor is subject to the supervision of the board of directors and only has such authority as we may delegate to it as our agent. The advisory agreement has a one-year term expiring January 25, ~~2018~~2019 subject to an unlimited number of successive one-year renewals upon the mutual consent of the parties. From January 1, ~~2015~~2016 through December 31, ~~2015~~2016, and from January 1, ~~2016~~2017 through the most recent date practicable, which, unless otherwise noted below, was January 31, ~~2017~~2018, we compensated our advisor as set forth below.

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Our advisor or its affiliates paid, ~~and may pay in the future,~~ some of our organization and offering costs (other than selling commissions and dealer manager fees) incurred in connection with the Follow-on Offering, including our legal, accounting, printing, mailing and filing fees. We reimbursed and will reimburse our advisor for organization and offering costs up to an amount that, when combined with selling commissions, dealer manager fees and all other amounts we spent on organization and offering expenses, does not exceed 15% of the gross proceeds of the primary Follow-on Offering and the offering under our dividend reinvestment plan as of the date of reimbursement. At the termination of the primary Follow-on Offering and at the termination of the offering under our dividend reinvestment plan, our advisor ~~has~~ agreed to reimburse us to the extent that selling commissions, dealer manager fees and other organization and offering expenses incurred by us exceed 15% of the gross offering proceeds of the respective offering. From January 1, ~~2015~~2016 through December 31, ~~2015~~2016, with respect to our now-terminated dividend reinvestment plan, our advisor ~~incurred~~reimbursed us $86,~~100~~000 in organization and offering expenses ~~on our behalf~~ and from January 1, ~~2016~~2017 through January 31, ~~2017~~2018, with respect to our now-terminated dividend reinvestment plan, our advisor incurred $110,~~600~~000 in net organization and offering expenses on our behalf.

For substantial assistance in connection with the sale of real estate properties or other investments, we pay our ~~Advisor~~advisor or its affiliates a disposition fee. The advisory agreement provides that if our advisor or any of its affiliates ~~provided~~provide a substantial amount of services (as determined by the conflicts committee) in connection with the sale of a single ~~asset~~real estate property or the sale of all or a portion of our ~~assets~~real estate properties through a portfolio sale, merger or other business combination transaction, we would pay our advisor or its affiliates a disposition fee of up to 1% of the contract sales price of the ~~asset~~real estate property or ~~assets~~properties sold. We did not dispose of any ~~assets~~real estate properties from January 1, ~~2015~~2016 through ~~January~~December 31, 2016. From January 1, 2017 through January 31, 2018, we incurred $1.7 million of disposition fees, all of which had been paid as of January 31, 2018. In addition, in connection with the February 8, 2018 sale of two of the Core-Portfolio Properties, we incurred $0.7 million of disposition fees, all of which had been paid as of February 9, 2018.

For asset management services, we pay our advisor a monthly fee. The asset management fee 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, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment. Asset management fees from January 1, ~~2015~~2016 through December 31, ~~2015~~2016 totaled approximately $23.80 million, $0.74 million of which had been paid and $2.16 million of which had been deferred pursuant to the deferral procedures described below, as of January 31, ~~2017~~2018.

The advisory agreement defers our obligation to pay asset management fees, without interest, accruing from February 1, 2013 through July 31, 2013. We will only be obligated to pay our advisor such deferred amounts if and to the extent that an AFFO Surplus is generated. The amount of any AFFO Surplus in a given month shall be applied first to pay to our advisor’s asset management fees currently due with respect to such month (including any that would otherwise have been deferred for that month in accordance with the advisory agreement) and then to pay asset management fees previously deferred by our advisor in accordance with the advisory agreement that remain unpaid. WeAs ~~had accrued and deferred payment~~ of ~~$1.5~~November ~~million~~30, ~~of asset management fees for February 2013 through July 2013 under the advisory agreement~~2017, as we ~~believed~~had ~~the~~deferred ~~chance of the~~ payment of this amount to our advisor was probable at the time it was recorded. During the year ended December 31, 2016, we reversed, as an increase to other income, the liabilities due to affiliates related to the $1.5 million of asset management fees for the period from February 2013 through July 2013 as, webut ~~believed~~did ~~that~~not ~~the~~record ~~chance~~an ofaccrual ~~payment~~on ~~of this amount to~~ our ~~advisor~~books isas ~~remote.~~we ~~See~~do ~~below~~not ~~for~~expect ~~information relating~~ to ~~asset~~pay ~~management~~this ~~fees~~amount ~~incurred~~to ~~from~~our ~~January 1, 2017 through January 31, 2017~~advisor.

In addition, the advisory agreement defers without interest under certain circumstances, our obligation to pay asset management fees accruing from August 1, 2013. Specifically, the advisory agreement defers our obligation to pay an asset management fee for any month in which our MFFO for such month, as such term is defined in the practice guideline issued by the ~~Investment~~IPA ~~Program Association~~ in November 2010 and interpreted by us, excluding asset management fees, does not exceed the amount of distributions declared by us for record dates of that month. We remain obligated to pay our advisor an asset management fee in any month in which an MFFO Surplus is generated; however, any amount of such asset management fee in excess of the MFFO Surplus is also deferred under the advisory agreement. If the MFFO Surplus for any month exceeds the amount of the asset management fee payable for such month, any remaining MFFO Surplus will not be applied to pay asset management fee amounts previously deferred by our advisor in accordance with the advisory agreement. WeAs ~~had accrued and deferred payment~~ of ~~$3.3~~November ~~million~~30, ~~of asset management fees for August 2013 through December 2014 under the advisory agreement~~2017, as we ~~believed~~had ~~the~~deferred ~~chance of~~ payment of this amount to our advisor was probable at the time it was recorded. During the year ended December 31, 2016, we reversed, as an increase to other income, the liabilities due to affiliates related to the $39.38 million of asset management fees for the period from August 2013 through ~~December~~November ~~2014~~2017, asbut ~~the~~did wenot ~~believed~~record ~~that~~an ~~the~~accrual ~~chance~~on ofour ~~payment~~books ofas we do not expect to pay this amount to our advisor. isDuring ~~remote.~~the As11 ofmonths ~~January~~ended 31November 30, 2017, we ~~had~~ incurred $62.0 million of asset management fees ~~for January 1, 2015 through January 31, 2017~~. However, we only recorded $10.12 million pursuant to the limitations in the advisory agreement as noted above. We did not accrue the remaining $41.98 million of these deferred asset management fees as itwe isdo ~~uncertain~~not ~~whether~~expect ~~any~~to ofpay ~~these~~this ~~amounts~~amount ~~will~~to beour ~~paid~~advisor. As inwe ~~the~~ceased paying regular monthly distributions after October 2, 2017, our advisor has agreed to waive all future asset management fees.

72As of December 31, 2017, as part of the liquidation basis of accounting, we accrued $0 of asset management fees.

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~~However,~~Under ~~notwithstanding~~the ~~any~~advisory ofagreement our advisor and its affiliates have the ~~foregoing,~~right ~~any~~to ~~and~~seek reimbursement from us for all ~~deferred~~costs ~~asset~~and ~~management~~expenses ~~fees~~they ~~shall~~incur bein ~~immediately~~connection ~~due~~with ~~and~~their ~~payable~~provision atof ~~such~~services ~~time~~to asus, including our ~~stockholders~~allocable ~~have~~share ~~received~~of our advisor’s overhead, ~~together~~such as arent, ~~collective~~employee ~~group~~costs, ~~aggregate~~utilities, ~~distributions~~accounting ~~(including~~software ~~distributions~~and ~~that~~cybersecurity ~~may~~and ~~constitute~~information atechnology ~~return~~costs. ofOur ~~capital~~advisor may seek reimbursement for ~~federal~~employee ~~income~~costs ~~tax~~under ~~purposes)~~the ~~sufficient~~advisory toagreement. ~~provide~~At ~~(i) a~~this ~~return~~time, ofour ~~their~~advisor ~~net~~only ~~invested~~expects ~~capital,~~to orseek ~~the~~reimbursement ~~amount~~for ~~calculated~~our byallocable ~~multiplying~~portion of the ~~total~~salaries, ~~number~~benefits and overhead of ~~shares~~internal ~~purchased~~audit bydepartment ~~stockholders~~personnel byproviding ~~the~~services ~~issue~~to ~~price~~us. In the future, ~~reduced~~if byour ~~any~~advisor ~~amounts~~seeks toreimbursement ~~repurchase~~for ~~shares~~additional ~~pursuant~~employee tocosts, such costs may include our proportionate share ~~redemption~~of ~~plan,~~the ~~and~~salaries ~~(ii) an~~of 8persons involved in the preparation of documents to meet SEC reporting requirements.~~0% per~~ ~~year~~We ~~cumulative,~~do ~~non-compounded~~not ~~return~~reimburse onour ~~such~~advisor ~~net~~or ~~invested~~its ~~capital~~affiliates for employee costs in connection with services for which our advisor earns acquisition or disposition fees (~~the~~other ~~“Stockholders’~~than 8%reimbursement ~~Return”~~of travel and communication expenses). ~~The~~Furthermore, ~~Stockholders’~~we 8%currently ~~Return~~do is not ~~based~~reimburse onour advisor or its affiliates for the ~~return~~salaries ~~provided~~and benefits our advisor or its affiliates may pay to ~~any~~our ~~individual~~executive ~~stockholder~~officers. ~~Accordingly~~From January 1, it2016 isthrough ~~not~~December 31, ~~necessary~~2016, we reimbursed our advisor for ~~each~~approximately $225,000 of ~~our~~operating ~~stockholders~~expenses, including $161,000 of employee costs. The remaining $64,000 of operating expenses relates to ~~have~~operating ~~received~~and ~~any~~general ~~minimum~~and ~~return~~administrative inexpenses ~~order~~incurred ~~for~~by our advisor on our behalf. From January 1, 2017 through January 31, 2018, we reimbursed our advisor for approximately $261,000 of operating expenses, including $186,000 of employee costs. The remaining $75,000 of operating expenses relates to ~~receive~~operating ~~deferred~~and ~~asset~~general ~~management~~and ~~fees~~administrative expenses incurred by our advisor on our behalf.

~~Under~~On ~~the~~February ~~advisory~~1, ~~agreement~~2018, ~~our~~we ~~advisor~~renewed ~~and~~our ~~its~~advisory ~~affiliates~~agreement ~~have the right to seek reimbursement from us for all costs and expenses they incur in connection~~ with ~~their provision of services to us, including~~ our ~~allocable share of our~~ advisor~~’s overhead~~, ~~such~~effective as ~~rent,~~of ~~employee~~January ~~costs~~25, ~~utilities, accounting software and cybersecurity and information technology costs~~2018. ~~Our~~The ~~advisor~~renewed ~~may seek reimbursement for employee costs under the~~ advisory agreement. At(i) ~~this~~contains ~~time,~~certain ~~our~~changes ~~advisor only expects~~ to ~~seek reimbursement for our allocable portion of~~ the ~~salaries,~~fees ~~benefits~~ and ~~overhead~~reimbursements ofwe ~~internal~~pay ~~audit department personnel providing services~~ to ~~us. In the future, if~~ our advisor ~~seeks~~which ~~reimbursement~~become ~~for~~effective ~~additional~~on ~~employee costs, such costs may include our proportionate share of~~ the ~~salaries~~day ofafter ~~persons~~we ~~involved~~sell ~~in the preparation of documents to meet SEC reporting requirements. We do not reimburse~~ our ~~advisor~~final orreal ~~its~~estate ~~affiliates~~property ~~for employee costs in connection with services for which our advisor earns acquisition or disposition fees (other than reimbursement of travel~~ and ~~communication expenses~~(ii). ~~Furthermore,~~provides ~~we currently do not reimburse our advisor or its affiliates~~ for the ~~salaries~~automatic ~~and~~termination ~~benefits~~of ~~our~~the ~~advisor~~agreement orin ~~its~~certain ~~affiliates may pay to our executive officers~~circumstances. ~~From~~See ~~January 1,~~Part ~~2015 through December 31~~II, ~~2015,~~Item ~~we reimbursed our advisor for approximately $0.4 million of operating expenses~~7, ~~including~~“Management’s ~~$0.1~~Discussion ~~million~~and ofAnalysis ~~employee costs. The remaining $0.3 million~~ of ~~operating~~Financial ~~expenses~~Condition ~~relates to operating~~ and ~~general~~Results ~~and administrative expenses incurred by our advisor on our behalf. From January 1, 2016 through January 31, 2017, we reimbursed our advisor for approximately $0.3 million~~ of ~~operating~~Operations ~~expenses,~~— ~~including~~Subsequent ~~$0.2~~Events ~~million~~— ofRenewal ~~employee costs. The remaining $0.1 million~~ of ~~operating~~the ~~expenses~~Advisory ~~relates to operating and general and administrative expenses incurred by our advisor on our behalf~~Agreement.”

In connection with the Offerings, our sponsors agreed to provide additional indemnification to one of the participating broker dealers. We agreed to add supplemental coverage to our directors’ and officers’ insurance coverage to insure our sponsors’ obligations under this indemnification agreement in exchange for reimbursement to us by our sponsors for all costs, expenses and premiums related to this supplemental coverage. From January 1, ~~2015~~2016 through December 31, ~~2015~~2016, our advisor incurred $61,000 for the costs of the supplemental coverage obtained by us and from January 1, ~~2016~~2017 through January 31, ~~2017~~2018, our advisor incurred $61,000 for the costs of the supplemental coverage obtained by us, all of which had been paid to the insurer or reimbursed to us as of January 31, ~~2017~~2018.

~~The~~ ~~conflicts~~From ~~committee~~January ~~considers~~1, ~~our~~2016 ~~relationship~~through ~~with~~December ~~our~~31, ~~advisor~~2016, ~~and~~ our ~~KBS~~advisor ~~sponsors~~reimbursed ~~during~~us ~~2015~~$28,000 ~~and~~for ~~2016~~a toproperty beinsurance ~~fair.~~rebate ~~The~~and ~~conflicts committee believes that the amounts payable to~~ our advisor ~~under~~and/or the ~~advisory~~entity ~~agreement~~that ~~are~~acted ~~similar~~as toour ~~those~~dealer ~~paid~~manager byreimbursed ~~other~~us ~~publicly~~for ~~offered,~~$0.1 ~~unlisted,~~million ~~externally~~for ~~advised~~legal ~~REITs~~ and ~~that~~professional ~~this~~fees ~~compensation~~and istravel ~~necessary~~reimbursements. inFrom ~~order~~January ~~for~~1, ~~our~~2017 ~~advisor~~through toJanuary ~~provide~~31, ~~the~~2018, ~~desired~~our ~~level~~advisor ofreimbursed ~~services~~us to$27,000 usfor ~~and~~a ~~our~~property ~~stockholders~~insurance rebate.

~~From~~The ~~January~~conflicts 1,committee ~~2016~~considers ~~through~~our ~~January~~relationship ~~31,~~with ~~2017,~~ our advisor ~~reimbursed~~and usour ~~$28,000~~KBS ~~for~~sponsor aduring ~~property~~2016 ~~insurance~~and ~~rebate~~2017 ~~and~~to be fair. The conflicts committee believes that the amounts payable to our advisor under the advisory agreement are similar to those paid by other publicly offered, unlisted, externally advised REITs and~~/or~~ ~~our~~that ~~dealer~~this ~~manager~~compensation ~~reimbursed~~is usnecessary in order for ~~$0.1~~our ~~million~~advisor ~~for~~to ~~legal~~provide ~~and~~the ~~professional~~desired ~~fees~~level of services to us and ~~travel~~our ~~reimbursements~~stockholders.

Our Relationship with Certain Affiliates of our Legacy Sponsors. In connection with certain of our property acquisitions, we, through ~~separate~~certain indirect wholly owned subsidiaries, entered into ~~the~~separate Property Management — Account Services Agreements (each a “Services Agreement”) with Legacy Partners Residential L.P. (“LPR”), an affiliate of the Sub-Advisor, pursuant to which LPR provided certain account maintenance and bookkeeping services related to these properties. Under each Services Agreement, we paid LPR a monthly fee in an amount equal to 1% of each property’s gross monthly collections. Unless otherwise provided for in an approved operating budget for a property, LPR was responsible for all expenses that it incurred in rendering services pursuant to each Services Agreement. Each Services Agreement had an initial term of one year and continued thereafter on a month-to-month basis unless either party gave 30 days’ prior written notice of its desire to terminate the Services Agreement. Notwithstanding the foregoing, we had the right to terminate each Services Agreement at any time without cause upon 30 days’ prior written notice to LPR. As described below, as of June 9, 2015, each of the Services Agreements had been terminated. Aggregate fees under the Services Agreements and the Property Management Agreements from January 1, 2015 through December 31, 2015 totaled approximately $3.5 million and aggregate fees under the Property Management Agreements from January 1, 2016 through January 31, 2017 totaled approximately $7.3 million, of which $0.2 million was payable as of January 31, 2017. For more information on the Services Agreements, see Part I, Item 1, “Business - Objectives and Strategies - Investment Strategies - Property Management and Other Services.”

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During the year ended December 31, 2015, we, through ~~the~~our indirect wholly owned subsidiaries that owned each of our real estate properties (each a “Property ~~Owners~~Owner”), entered into property management agreements with LPI (the “Property Management Agreements”), ~~with LPI~~ pursuant to which LPI provides or provided, among other services, general property management services, including bookkeeping and accounting services, construction management services and budgeting and business plans for our real estate properties, as follows:

Property Name	Effective Date	Management Fee Percentage
Watertower Apartments	04/07/2015	2.75%
Watertower Apartments (1)	04/07/2015	2.75%
Crystal Park at Waterford	04/14/2015	3.00%
Crystal Park at Waterford (2)	04/14/2015	3.00%
The Residence at Waterstone	04/28/2015	3.00%
Lofts at the Highlands	05/05/2015	3.00%
Legacy at Martin’s Point	05/12/2015	3.00%
Legacy at Martin’s Point (3)	05/12/2015	3.00%
Poplar Creek	05/14/2015	3.00%
Poplar Creek (4)	05/14/2015	3.00%
Wesley Village	05/19/2015	3.00%
Wesley Village (5)	05/19/2015	3.00%
Legacy Grand at Concord	05/21/2015	3.00%
Legacy Grand at Concord (6)	05/21/2015	3.00%
Millennium Apartment Homes (1)	05/27/2015	3.00%
Millennium Apartment Homes (7)	05/27/2015	3.00%
Legacy Crescent Park (1)	05/29/2015	3.00%
Legacy Crescent Park (8)	05/29/2015	3.00%
Legacy at Valley Ranch	06/09/2015	3.00%
Legacy at Valley Ranch (9)	06/09/2015	3.00%

~~Under the Property Management Agreements, each Property Owner pays LPI:~~ (i1) aOn ~~monthly~~September ~~fee based on a percentage (as described in the table above~~12, ~~the “Management Fee Percentage”) of the Gross Monthly Collections (as defined in each Property Management Agreement)~~2017, ~~(ii)~~we asold ~~construction~~Watertower supervision fee equal to a percentage of construction costs to the extent overseen by LPI and as further detailed in each Property Management Agreement, (iii) a leasing commission at a rate to be agreed upon between the Property Owner and LPI for executed retail leases that were procured or obtained by LPI, (iv) certain reimbursements if included in an approved capital budget and (v) certain reimbursements if included in the approved operating budget, including the reimbursement of the salaries and benefits for on-site personnelApartments. Unless otherwise provided for in an approved operating budget, LPI is responsible for all expenses that it incurs in rendering services pursuant to each Property Management Agreement. Each Property Management Agreement had an initial term of one year and each has continued on a month-to-month basis pursuant to its terms. Either party may terminate a Property Management Agreement provided it gives 30 days’ prior written notice of its desire to terminate such agreement. The Property ~~Owner may also terminate the Property~~ Management Agreement with cause immediately upon notice to LPI and the expiration of any applicable cure period. LPI may terminate each Property Management Agreement at any time without cause upon prior written notice to the Property Owner which, depending upon the terms of the particular Property Management Agreement, requires either 30, 60 or 90 days prior written notice. LPI may terminate the Property Management Agreement for cause if a Property Owner commits any material default under the Property Management Agreement and the default continues for a period of 30 days after notice from LPI to a Property Owner for a default or, in the case of Watertower Apartments, ~~Lofts~~was atterminated ~~the~~effective ~~Highlands,~~as ~~Wesley~~of ~~Village,~~September ~~Legacy Grand at Concord~~12, ~~Millennium Apartment Homes and Legacy Crescent Park, if a monetary default continues for a period of 10 days after notice of such monetary default~~2017.

(2) ~~For~~On ~~more~~February ~~information~~8, on2018, ~~the~~we ~~Property~~sold ~~Management~~Crystal ~~Agreements,~~Park ~~see~~at Waterford. See Part IIV, Item 115, Note 12, “~~Business~~Subsequent -Events ~~Objectives~~— ~~and~~Dispositions ~~Strategies~~Subsequent -to ~~Investment~~December ~~Strategies~~31, -2017 — Disposition of Crystal Park at Waterford.” The Property Management ~~and~~Agreement ~~Other~~for ~~Services~~Crystal Park at Waterford was terminated effective as of February 8, 2018.”

The properties were previously managed by third-party property management companies pursuant to the Prior Management Agreements. The termination of services under the Prior Management Agreements and the Services Agreements (~~with~~3) ~~respect~~On toOctober ~~The~~31, ~~Residence at Waterstone~~2017, ~~Lofts~~we atsold ~~the Highlands,~~ Legacy at Martin’s Point, Poplar Creek, Wesley Village, Legacy Grand at Concord, Millennium Apartment Homes and Legacy Crescent Park) were negotiated to coincide with the Effective Date of the respective Property Management Agreements. The ~~Management Fee Percentage and any other fees and reimbursements payable to LPI by the~~ Property ~~Owner under each Property~~ Management Agreement ~~are~~for ~~approximately~~Legacy ~~equal~~at toMartin’s ~~the~~Point ~~applicable~~was ~~percentage and other fees and reimbursements payable to the prior third party management companies and LPR by the Property Owner under the now-~~terminated ~~Services~~effective Agreements and Prior Management Agreements. Aggregate fees and reimbursable expenses under the Property Management Agreements from January 1, 2015 through December 31, 2015 totaled approximately $3.5 million. Aggregate fees and reimbursable expenses under the Property Management Agreements from January 1, 2016 through January 31, 2017 totaled approximately $7.3 million, of which $0.2 million was payable as of ~~January~~October 31, 2017.

74(4) On December 20, 2017, we sold Poplar Creek. The Property Management Agreement for Poplar Creek was terminated effective as of December 20, 2017.

⁽⁵⁾ On March 9, 2017, we sold Wesley Village. The Property Management Agreement for Wesley Village was terminated effective as of March 9, 2017.

⁽⁶⁾ On October 30, 2017, we sold Legacy Grand at Concord. The Property Management Agreement for Legacy Grand at Concord was terminated effective as of October 30, 2017.

⁽⁷⁾ On October 31, 2017, we sold Millennium Apartment Homes. The Property Management Agreement for Millennium Apartment Homes was terminated effective as of October 31, 2017.

⁽⁸⁾ On September 29, 2017, we sold Legacy Crescent Park. The Property Management Agreement for Legacy Crescent Park was terminated effective as of September 29, 2017.

⁽⁹⁾ On February 8, 2018, we sold Legacy at Valley Ranch. See Part IV, Item 15, Note 12, “Subsequent Events — Dispositions Subsequent to December 31, 2017 — Disposition of Legacy at Valley Ranch.” The Property Management Agreement for Legacy at Valley Ranch was terminated effective as of February 8, 2018.

Under the Property Management Agreements, each Property Owner pays or paid LPI: (i) the applicable Management Fee Percentage of the Gross Monthly Collections (as defined in each Property Management Agreement), (ii) a construction supervision fee equal to a percentage of construction costs to the extent overseen by LPI and as further detailed in each Property Management Agreement, (iii) a leasing commission at a rate to be agreed upon between the Property Owner and LPI for executed retail leases that were procured or obtained by LPI, (iv) certain reimbursements if included in an approved capital budget and (v) certain reimbursements if included in the approved operating budget, including the reimbursement of the salaries and benefits for on-site personnel. Unless otherwise provided for in an approved operating budget, LPI is or was responsible for all expenses that it incurs or incurred in rendering services pursuant to each Property Management Agreement. Each Property Management Agreement had an initial term of one year and each has continued on a month-to-month basis pursuant to its terms. Either party may terminate a Property Management Agreement provided it gives 30 days’ prior written notice of its desire to terminate such agreement. The Property Owner may also terminate the Property Management Agreement with cause immediately upon notice to LPI and the expiration of any applicable cure period. LPI may terminate each Property Management Agreement at any time without cause upon prior written notice to the Property Owner which, depending upon the terms of the particular Property Management Agreement, requires either 30, 60 or 90 days prior written notice. LPI may terminate the Property Management Agreement for cause if a Property Owner commits any material default under the Property Management Agreement and the default continues for a period of 30 days after notice from LPI to a Property Owner for a default or, in the case of Lofts at the Highlands, if a monetary default continues for a period of 10 days after notice of such monetary default. Aggregate fees under the Property Management Agreements from January 1, 2016 through December 31, 2016 totaled approximately $5.8 million and aggregate fees under the Property Management Agreements from January 1, 2017 through January 31, 2018 totaled approximately $5.8 million, of which $64,000 was payable as of January 31, 2018.

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The conflicts committee considers our relationship with these affiliates of our Legacy sponsors during ~~2015~~2016 and ~~2016~~2017 to be fair. The conflicts committee believes that the amounts payable to these affiliates of our Legacy sponsors are similar to those paid by other publicly offered, unlisted, externally advised REITs and that this compensation is necessary in order for these affiliates of our Legacy sponsors to provide the desired level of services to us and our stockholders.

Our Relationship with the ~~Dealer~~Entity ~~Manager.~~that WeActed ~~ceased~~as ~~offering shares in~~ our ~~now-terminated~~Dealer ~~primary Follow-on Offering on March 31, 2014~~Manager. We ~~continue~~terminated ~~to offer shares under~~ our dividend reinvestment plan effective as of August 20, 2017.

We entered into a fee reimbursement agreement (the “AIP Reimbursement Agreement”) with the entity that acted as our dealer manager pursuant to which we agreed to reimburse ~~our~~such ~~dealer~~entity ~~manager~~ for certain fees and expenses it incurs for administering our participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of our stockholders serviced through the platform. From January 1, ~~2015~~2016 through December 31, ~~2015~~2016, we incurred and paid $11,000 of costs and expenses related to the AIP Reimbursement Agreement. From January 1, ~~2016~~2017 through January 31, ~~2017~~2018, we incurred and paid $12,000 of costs and expenses related to the AIP Reimbursement Agreement.

The conflicts committee believes that these arrangements with the entity that acted as our dealer manager are fair.

Our Relationship with other KBS-Sponsored REITs and Affiliates. On January 6, 2014, we, together with KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II, the entity that acted as our dealer manager, our advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by our advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. ~~Our~~The entity that acted as our dealer manager’s and our advisor’s respective portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. In June 2015, KBS Growth & Income REIT, Inc. was added to the insurance program at terms similar to those described above. WeIn ~~have~~June 2017, we renewed our participation in the program, and the program is effective through June 30, 2018. As KBS REIT I was implementing its plan of liquidation, at renewal in June 2017, KBS REIT I elected to cease participation in the program and obtain separate insurance coverage.

During the year ended December 31, 2015 and from January 1, 2016 through January 31, 2017, no other transactions occurred between us and KBS REIT I, KBS REIT II, KBS REIT III, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT and other KBS affiliates.

The conflicts committee has determined that the policies set forth in this Report of the Conflicts Committee are in the best interests of our stockholders because they provide us with the highest likelihood of achieving our investment objectives.

March 98, ~~2017~~2018 The Conflicts Committee of the Board of Directors:Ronald E. Zuzack (Chairman), Gary T. Kachadurian and Michael L. Meyer

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ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Registered Public Accounting Firm

During the year ended December 31, ~~2016~~2017, Ernst & Young LLP served as our independent registered public accounting firm and provided certain tax and other services. Ernst & Young has served as our independent registered public accounting firm since our formation.

Pre-Approval Policies

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

For the years ended December 31, ~~2016~~2017 and ~~2015~~2016, all services rendered by Ernst & Young were pre-approved in accordance with the policies and procedures described above.

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Principal Independent Registered Public Accounting Firm Fees

The audit committee reviewed the audit and non-audit services performed by Ernst & Young, as well as the fees charged by Ernst & Young for such services. In its review of the non-audit service fees, the audit committee considered whether the provision of such services is compatible with maintaining the independence of Ernst & Young. The aggregate fees billed to us for professional accounting services, including the audit of our annual financial statements by Ernst & Young for the years ended December 31, ~~2016~~2017 and ~~2015~~2016, are set forth in the table below.

	2016		2015
	2017		2016
Audit fees	$	~~373~~398,000	$	~~355~~373,000
Audit-related fees	—		—
Tax fees	4557,~~910~~841		5245,~~590~~910
All other fees	285		~~333~~285
Total	$	~~419~~456,~~195~~126	$	~~407~~419,~~923~~195

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

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

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

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


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

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PART IV


ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES


(a)	Financial Statement Schedules

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

The following financial statement schedule is included herein at pages F-30 through F-31 of this report:

Schedule III - Real Estate Assets and Accumulated Depreciation and Amortization


(b)	Exhibits

Ex.		Description
3.1		Articles of Amendment and Restatement as adopted on January 8, 2010, incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11 Commission File No. 333-161449, filed January 12, 2010
2.1		Plan of Complete Liquidation and Dissolution, incorporated by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A, filed September 22, 2017
3.2		Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11, Commission File No. 333-161449, filed January 12, 2010
3.1		Articles of Amendment and Restatement as adopted on January 8, 2010, incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11, Commission File No. 333-161449, filed January 12, 2010
3.2		Articles of Amendment and Restatement as adopted on December 21, 2017, incorporated by reference to Exhibit 99.1 to the Company’s Periodic Report Form 8-K, filed December 22, 2017
3.3		Second Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Company’s Periodic Report on Form 8-K, filed November 17, 2016
4.1		Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-161449, filed October 2, 2009
4.2		~~Third~~Fourth Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.43 to the Company’s ~~Quarterly~~Annual Report on Form 10-QK for the ~~period~~year ended ~~March~~December 31, ~~2013~~2016, filed ~~May~~March 10, ~~2013~~2017
4.3		Fourth Amended and Restated Dividend Reinvestment Plan
10.1		Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of January 25, 2016, incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed March 18, 2016
10.2		Amendment No. 1 to the Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of March 15, 2016, incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed March 18, 2016
10.3		Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of January 25,2017, incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017
10.4		Termination Notice of Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of January 27, 2017, incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 2931, 2016, filed March 10, 2017
10.5		~~Termination~~Reinstatement ~~Notice~~ of and First Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of January 2730, 2017, incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017
10.6		~~Reinstatement~~Second ~~of and First~~ Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of ~~January~~February 308, 2017, incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017
10.7		~~Second~~Third Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of February 10, 2017, incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017
10.8		Third Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of February 10, 2017
10.9		Fourth Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of February 15, 2017
10.10		Fifth Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of February 17, 2017

7758

Table of Contents

Ex.		Description
21.1		Subsidiaries of the Company
10.8		Fourth Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of February 15, 2017, incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017
23.1		Consent of Ernst & Young LLP
10.9		Fifth Amendment to Agreement for Purchase and Sale, Wesley Village Apartments, by and among KBS Legacy Partners Wesley LP (formerly known as KBS Legacy Partners Wesley LLC), KBS Legacy Partners Wesley Land LLC and Bluerock Real Estate LLC, dated as of February 17, 2017, incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed March 10, 2017
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.10		Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of September 5, 2017, incorporated by reference to Exhibit 10.1 to the Company’s Periodic Report on Form 8-K, filed September 8, 2017
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
10.11		Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of September 5, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Periodic Report on Form 8-K, filed September 8, 2017
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
10.12		Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of September 5, 2017, incorporated by reference to Exhibit 10.3 to the Company’s Periodic Report on Form 8-K, filed September 8, 2017
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
10.13		Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of September 5, 2017, incorporated by reference to Exhibit 10.4 to the Company’s Periodic Report on Form 8-K, filed September 8, 2017
99.1		Fifth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to theCompany’s Current Report on Form 8-K, filed October 17, 2014
10.14		First Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of October 2, 2017, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
99.2		Consent of CBRE, Inc.
10.15		First Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of October 2, 2017, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
101.INS		XBRL Instance Document
10.16		First Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of October 2, 2017, incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
101.SCH		XBRL Taxonomy Extension Schema
10.17		First Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of October 2, 2017, incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
10.18		Second Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of November 6, 2017, incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
101.DEF		XBRL Taxonomy Extension Definition Linkbase
10.19		Second Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of November 6, 2017, incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
101.LAB		XBRL Taxonomy Extension Label Linkbase
10.20		Second Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of November 6, 2017, incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017
101.PRE		XBRL Taxonomy Extension Presentation Linkbase
10.21		Second Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of November 6, 2017, incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, filed November 13, 2017

7859

Table of Contents



Ex.		Description

10.22		Third Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of November 17, 2017

10.23		Third Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of November 17, 2017

10.24		Third Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of November 17, 2017

10.25		Third Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of November 17, 2017

10.26		Fourth Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of November 27, 2017

10.27		Fourth Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of November 27, 2017

10.28		Fourth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of November 27, 2017

10.29		Fourth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of November 27, 2017

10.30		Fifth Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of November 29, 2017

10.31		Fifth Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of November 29, 2017

10.32		Fifth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of November 29, 2017

10.33		Fifth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of November 29, 2017

10.34		Sixth Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of December 4, 2017

10.35		Sixth Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of December 4, 2017

10.36		Sixth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of December 4, 2017

10.37		Sixth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of December 4, 2017

10.38		Seventh Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of December 7, 2017

10.39		Seventh Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of December 7, 2017

10.40		Seventh Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of December 7, 2017

10.41		Seventh Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of December 7, 2017

10.42		Eighth Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of December 14, 2017

10.43		Eighth Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of December 14, 2017

10.44		Eighth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of December 14, 2017

Table of Contents



Ex.		Description

10.45		Eighth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of December 14, 2017

10.46		Ninth Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of December 15, 2017

10.47		Ninth Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of December 15, 2017

10.48		Ninth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of December 15, 2017

10.49		Ninth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of December 15, 2017

10.50		Tenth Amendment to Agreement for Purchase and Sale - Legacy at Valley Ranch Apartments, by and between KBS Legacy Partners Dakota Hill LLC and RREF III-P Elite Venture, LLC, dated as of December 19, 2017

10.51		Tenth Amendment to Agreement for Purchase and Sale - Crystal Park at Waterford Apartments, by and between KBS Legacy Partners Crystal LLC and RREF III-P Elite Venture, LLC, dated as of December 19, 2017

10.52		Tenth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and RREF III-P Elite Venture, LLC, dated as of December 19, 2017

10.53		Tenth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and RREF III-P Elite Venture, LLC, dated as of December 19, 2017

10.54		Eleventh Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC, RREF III-P Elite Venture, LLC, and Elite Street Capital Lofts Equity DE, LLC, dated as of December 26, 2017

10.55		Eleventh Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and Elite Street Capital Waterstone Equity DE, LLC, dated as of January 11, 2018

10.56		Twelfth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and Elite Street Capital Lofts Equity DE, LLC, dated as of January 11, 2018

10.57		Advisory Agreement, by and between the Company and KBS Capital Advisors LLC, dated as of January 25, 2018

10.58		Twelfth Amendment to Agreement for Purchase and Sale - Residence at Waterstone Apartments, by and between KBS Legacy Partners Pikesville LLC and Elite Street Capital Waterstone Equity DE, LLC, dated as of March 5, 2018

10.59		Thirteenth Amendment to Agreement for Purchase and Sale - Lofts at the Highlands Apartments, by and between KBS Legacy Partners Lofts LLC and Elite Street Capital Lofts Equity DE, LLC, dated as of March 5, 2018

21.1		Subsidiaries of the Company

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1		Fifth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed October 17, 2014

Table of Contents



Ex.		Description

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2016 and 2015	F-3
Consolidated Statement of Net Assets (Liquidation Basis) as of December 31, 2017	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2016, 2015 and 2014	F-4
Consolidated Balance Sheet (Going Concern Basis) as of December 31, 2016	F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014	F-5
Consolidated Statement of Changes in Net Assets (Liquidation Basis) for the Period from December 1, 2017 through December 31, 2017	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014	F-6
Consolidated Statements of Operations (Going Concern Basis) for the 11 Months Ended November 30, 2017 and Years Ended December 31, 2016 and 2015	F-6
Notes to Consolidated Financial Statements	F-7
Consolidated Statements of Stockholders’ Equity (Going Concern Basis) for the 11 Months Ended November 30, 2017 and Years Ended December 31, 2016 and 2015	F-7
Financial Statement Schedule
Consolidated Statements of Cash Flows (Going Concern Basis) for the 11 Months Ended November 30, 2017 and Years Ended December 31, 2016 and 2015	F-8
Schedule III - Real Estate Assets and Accumulated Depreciation and Amortization	F-30
Notes to Consolidated Financial Statements	F-9

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

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To the Stockholders and the Board of Directors ~~and Stockholders~~ of

KBS Legacy Partners Apartment REIT, Inc.

WeOpinion ~~have~~on ~~audited~~ the ~~accompanying~~Financial ~~consolidated~~Statements balance sheets of KBS Legacy Partners Apartment REIT, Inc. (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule in Item 15(a), Schedule III — Real Estate Assets and Accumulated Depreciation and Amortization. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We ~~conducted~~have ~~our~~audited ~~audits~~the inaccompanying ~~accordance~~consolidated ~~with~~balance ~~the~~sheet ~~standards~~ of ~~the~~KBS ~~Public~~Legacy ~~Company~~Partners ~~Accounting~~Apartment ~~Oversight~~REIT, ~~Board~~Inc. (~~United States~~the Company)~~. Those~~ ~~standards~~as ~~require~~of ~~that~~December we31, ~~plan~~2016, the related consolidated statements of operations, stockholders’ equity and ~~perform~~cash flows for the ~~audit~~period tofrom ~~obtain~~January ~~reasonable~~1, ~~assurance~~2017 ~~about~~to ~~whether~~November ~~the~~30, ~~financial~~2017 ~~statements~~and ~~are~~for ~~free~~the ofyears ~~material~~ended ~~misstatement. We~~December ~~were~~31, ~~not~~2016 ~~engaged~~and to2015, ~~perform~~the anconsolidated ~~audit~~statement of ~~the~~net ~~Company’s~~assets ~~internal~~(liquidation ~~control~~basis) ~~over~~as ~~financial~~of ~~reporting. Our~~December ~~audits~~31, ~~included~~2017, ~~consideration~~the ofrelated ~~internal~~consolidated ~~control~~statement ~~over~~of ~~financial~~changes ~~reporting~~in asnet aassets (liquidation basis) for ~~designing~~the ~~audit~~period ~~procedures~~from ~~that~~December ~~are~~1, ~~appropriate~~2017 into ~~the~~December ~~circumstances~~31, ~~but~~2017, ~~not~~and ~~for~~the related notes (collectively referred to as the ~~purpose~~“consolidated offinancial ~~expressing~~statements”). anIn our opinion, onthe consolidated financial statements present fairly, in all material respects, the ~~effectiveness~~financial position of the Company’s ~~internal~~as ~~control~~of ~~over~~December ~~financial~~31, ~~reporting. Accordingly~~2016, wethe ~~express~~results noof ~~such~~its ~~opinion. An~~operations ~~audit~~and ~~also~~its ~~includes~~cash ~~examining~~flows for the period from January 1, on2017 ato ~~test~~November ~~basis~~30, ~~evidence~~2017 ~~supporting~~and for the ~~amounts~~years ended December 31, 2016 and ~~disclosures~~2015, its net assets in ~~the~~liquidation ~~financial~~as ~~statements~~of December 31, ~~assessing~~2017, and the ~~accounting~~changes ~~principles~~in ~~used~~its ~~and~~net ~~significant~~assets ~~estimates~~in ~~made~~liquidation byfor ~~management~~the period from December 1, ~~and~~2017 ~~evaluating~~to ~~the~~December ~~overall~~31, ~~financial~~2017, ~~statement~~in ~~presentation~~conformity with U. WeS. ~~believe~~generally ~~that~~accepted ~~our~~accounting ~~audits~~principles ~~provide~~applied aon ~~reasonable~~the basis ~~for~~described ~~our opinion~~below.

InAs ~~our~~described ~~opinion,~~in ~~the~~Notes ~~financial~~2 ~~statements~~and ~~referred~~3 to ~~above present fairly, in all material respects,~~ the ~~consolidated~~ financial ~~position of KBS Legacy Partners Apartment REIT~~statements, ~~Inc. at December 31, 2016 and 2015, and~~ the ~~consolidated~~stockholders ~~results~~ of ~~its~~the ~~operations~~Company ~~and~~approved ~~its~~a ~~cash~~plan ~~flows for each~~ of ~~the~~liquidation ~~three~~and ~~years in~~ the ~~period~~Company ~~ended~~has ~~December 31,~~commenced ~~2016, in conformity with U~~liquidation.S. ~~generally~~As ~~accepted~~a ~~accounting principles. Also~~result, ~~in our opinion,~~ the ~~financial~~Company ~~statement~~has ~~schedule~~changed ~~referred~~its tobasis ~~above,~~of ~~when~~accounting ~~considered~~for inperiods

Filing Compare · KBS Legacy Partners Apartment REIT, Inc.