Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________
 
FORM 10-Q
______________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 000-54687
______________________________________________________
 
KBS REAL ESTATE INVESTMENT TRUST III, INC.
(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________
 
Maryland
 
27-1627696
(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)
______________________________________________________________________ 
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 every Interactive Data File required to be submitted 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 such files).    Yes   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
 
¨

 
Accelerated Filer
 
¨

Non-Accelerated Filer
 
x  
 
Smaller reporting company
 
¨

 
 
 
 
Emerging growth company
 
¨

If an emerging growth company, indicate 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   ¨   No   x
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
N/A
N/A

As of August 5, 2019 , there were 175,679,897 outstanding shares of common stock of KBS Real Estate Investment Trust III, Inc.

Table of Contents

KBS REAL ESTATE INVESTMENT TRUST III, INC.
FORM 10-Q
June 30, 2019
INDEX  
PART I.
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
Item 3.
 
Item 4.
PART II.
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 5.
 
Item 6.

1
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements


KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
 
June 30, 2019
 
December 31, 2018
 
 
(unaudited)
 
 
Assets
 
 
 
 
Real estate:
 
 
 
 
Land
 
$
401,150

 
$
402,008

Buildings and improvements
 
2,936,372

 
2,911,995

Construction in progress
 
50,595

 
35,785

Tenant origination and absorption costs
 
202,342

 
223,723

Total real estate held for investment, cost
 
3,590,459

 
3,573,511

Less accumulated depreciation and amortization
 
(579,249
)
 
(536,990
)
Total real estate held for investment, net
 
3,011,210

 
3,036,521

Cash and cash equivalents
 
66,080

 
75,023

Restricted cash
 
5,970

 
1,015

Rents and other receivables, net
 
104,441

 
98,411

Above-market leases, net
 
3,452

 
4,176

Prepaid expenses and other assets
 
84,356

 
85,645

Total assets
 
$
3,275,509

 
$
3,300,791

Liabilities and equity
 
 
 
 
Notes payable, net
 
$
2,275,768

 
$
2,184,538

Accounts payable and accrued liabilities
 
74,588

 
67,265

Due to affiliate
 
4,741

 
4,209

Distributions payable
 
9,485

 
9,801

Below-market leases, net
 
14,729

 
17,553

Redeemable common stock payable
 
16,476

 
31,647

Other liabilities
 
49,987

 
30,396

Total liabilities
 
2,445,774

 
2,345,409

Commitments and contingencies (Note 9)
 


 


Redeemable common stock
 
15,631

 
24,487

Equity
 
 
 
 
KBS Real Estate Investment Trust III, Inc. stockholders’ equity
 
 
 
 
Preferred stock, $.01 par value per share; 10,000,000 shares authorized, no shares issued and outstanding
 
—

 
—

Common stock, $.01 par value per share; 1,000,000,000 shares authorized, 175,001,561 and 177,523,853 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
 
1,750

 
1,775

Additional paid-in capital
 
1,550,351

 
1,555,380

Cumulative distributions and net losses
 
(738,263
)
 
(626,543
)
Total KBS Real Estate Investment Trust III, Inc. stockholders’ equity
 
813,838

 
930,612

Noncontrolling interest
 
266

 
283

Total equity
 
814,104

 
930,895

Total liabilities and equity
 
$
3,275,509

 
$
3,300,791

See accompanying condensed notes to consolidated financial statements.
 

2
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Rental income
$
105,843

 
$
98,794

 
$
208,850

 
$
195,416

Other operating income
8,666

 
8,782

 
17,037

 
16,339

Total revenues
114,509

 
107,576

 
225,887

 
211,755

Expenses:
 
 
 
 
 
 
 
Operating, maintenance and management
26,279

 
24,301

 
50,013

 
47,455

Real estate taxes and insurance
18,418

 
18,487

 
35,865

 
35,261

Asset management fees to affiliate
6,999

 
6,738

 
13,871

 
13,358

General and administrative expenses
1,907

 
2,012

 
3,942

 
3,535

Depreciation and amortization
41,632

 
39,025

 
83,040

 
78,006

Interest expense
47,403

 
12,517

 
85,350

 
13,327

Impairment charges on real estate
—

 
—

 
8,706

 
—

Total expenses
142,638

 
103,080

 
280,787

 
190,942

Other income (loss):
 
 
 
 
 
 
 
Other income
9

 
1,575

 
22

 
1,876

Other interest income
192

 
84

 
264

 
96

Equity in income (loss) of unconsolidated joint venture
—

 
(348
)
 
—

 
(348
)
Loss from extinguishment of debt
(196
)
 
—

 
(196
)
 
—

Gain on sale of real estate, net
—

 
11,942

 
—

 
11,942

Total other income, net
5

 
13,253

 
90

 
13,566

Net (loss) income
(28,124
)
 
17,749

 
(54,810
)
 
34,379

Net loss attributable to noncontrolling interest
9

 
—

 
17

 
—

Net (loss) income attributable to common stockholders
$
(28,115
)
 
$
17,749

 
$
(54,793
)
 
$
34,379

Net (loss) income per common share attributable to common stockholders, basic and diluted
$
(0.16
)
 
$
0.10

 
$
(0.31
)
 
$
0.19

Weighted-average number of common shares outstanding, basic and diluted
174,783,611

 
177,649,492

 
175,154,320

 
178,588,342

See accompanying condensed notes to consolidated financial statements.

3
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
(in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net (loss) income
$
(28,124
)
 
$
17,749

 
$
(54,810
)
 
$
34,379

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Unrealized (loss) income on derivative instruments designated as cash flow hedges
—

 
(1
)
 
—

 
83

Reclassification adjustment realized in net income
(effective portion)
—

 
(96
)
 
—

 
(108
)
Total other comprehensive loss
—

 
(97
)
 
—

 
(25
)
Total comprehensive (loss) income
(28,124
)
 
17,652

 
(54,810
)
 
34,354

Total comprehensive loss attributable to noncontrolling interest
9

 
—

 
17

 
—

Total comprehensive (loss) income attributable to common stockholders
$
(28,115
)
 
$
17,652

 
$
(54,793
)
 
$
34,354

See accompanying condensed notes to consolidated financial statements.


4
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended June 30, 2019 and 2018 (unaudited)
(dollars in thousands)
 
 
 
Common Stock
 
Additional Paid-in Capital
 
Cumulative Distributions in Excess of Net Income (Loss)
 
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders’ Equity
 
Noncontrolling Interest
 
Total Equity
 
 
Shares
 
Amounts
 
 
 
 
 
Balance, March 31, 2019
 
174,110,694

 
$
1,741

 
$
1,550,411

 
$
(681,744
)
 
$
—

 
$
870,408

 
$
275

 
$
870,683

Net loss
 
—

 
—

 
—

 
(28,115
)
 
—

 
(28,115
)
 
(9
)
 
(28,124
)
Issuance of common stock
 
1,136,045

 
11

 
12,963

 
—

 
—

 
12,974

 
—

 
12,974

Transfers to redeemable common stock
 
—

 
—

 
(10,080
)
 
—

 
—

 
(10,080
)
 
—

 
(10,080
)
Redemptions of common stock
 
(245,178
)
 
(2
)
 
(2,942
)
 
—

 
—

 
(2,944
)
 
—

 
(2,944
)
Distributions declared
 
—

 
—

 
—

 
(28,404
)
 
—

 
(28,404
)
 
—

 
(28,404
)
Other offering costs
 
—

 
—

 
(1
)
 
—

 
—

 
(1
)
 
—

 
(1
)
Balance, June 30, 2019
 
175,001,561

 
$
1,750

 
$
1,550,351

 
$
(738,263
)
 
$
—

 
$
813,838

 
$
266

 
$
814,104

 
 
 
Common Stock
 
Additional Paid-in Capital
 
Cumulative Distributions in Excess of Net Income (Loss)
 
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders’ Equity
 
Noncontrolling Interest
 
Total Equity
 
 
Shares
 
Amounts
 
 
 
 
 
Balance, March 31, 2018
 
176,993,282

 
$
1,770

 
$
1,591,679

 
$
(526,594
)
 
$
182

 
$
1,067,037

 
$
300

 
$
1,067,337

Net income
 
—

 
—

 
—

 
17,749

 
—

 
17,749

 
—

 
17,749

Other comprehensive loss
 
—

 
—

 
—

 
—

 
(97
)
 
(97
)
 
—

 
(97
)
Issuance of common stock
 
1,276,061

 
12

 
14,216

 
—

 
—

 
14,228

 
—

 
14,228

Transfers to redeemable common stock
 
—

 
—

 
(23,954
)
 
—

 
—

 
(23,954
)
 
—

 
(23,954
)
Redemptions of common stock
 
(2,995,169
)
 
(29
)
 
(33,558
)
 
—

 
—

 
(33,587
)
 
—

 
(33,587
)
Distributions declared
 
—

 
—

 
—

 
(28,778
)
 
—

 
(28,778
)
 
—

 
(28,778
)
Balance, June 30, 2018
 
175,274,174

 
$
1,753

 
$
1,548,383

 
$
(537,623
)
 
$
85

 
$
1,012,598

 
$
300

 
$
1,012,898









5
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
For the Six Months Ended June 30, 2019 and 2018 (unaudited)
(dollars in thousands)
 
 
 
Common Stock
 
Additional Paid-in Capital
 
Cumulative Distributions in Excess of Net Income (Loss)
 
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders’ Equity
 
Noncontrolling Interest
 
Total Equity
 
 
Shares
 
Amounts
 
 
 
 
 
Balance, December 31, 2018
 
177,523,853

 
$
1,775

 
$
1,555,380

 
$
(626,543
)
 
$
—

 
$
930,612

 
$
283

 
$
930,895

Net loss
 
—

 
—

 
—

 
(54,793
)
 
—

 
(54,793
)
 
(17
)
 
(54,810
)
Issuance of common stock
 
2,317,868

 
23

 
26,448

 
—

 
—

 
26,471

 
—

 
26,471

Transfers from redeemable common stock
 
—

 
—

 
24,028

 
—

 
—

 
24,028

 
—

 
24,028

Redemptions of common stock
 
(4,840,160
)
 
(48
)
 
(55,502
)
 
—

 
—

 
(55,550
)
 
—

 
(55,550
)
Distributions declared
 
—

 
—

 
—

 
(56,927
)
 
—

 
(56,927
)
 
—

 
(56,927
)
Other offering costs
 
—

 
—

 
(3
)
 
—

 
—

 
(3
)
 
—

 
(3
)
Balance, June 30, 2019
 
175,001,561

 
$
1,750

 
$
1,550,351

 
$
(738,263
)
 
$
—

 
$
813,838

 
$
266

 
$
814,104

 
 
 
Common Stock
 
Additional Paid-in Capital
 
Cumulative Distributions in Excess of Net Income (Loss)
 
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders’ Equity
 
Noncontrolling Interest
 
Total Equity
 
 
Shares
 
Amounts
 
 
 
 
 
Balance, December 31, 2017
 
180,864,707

 
$
1,809

 
$
1,591,640

 
$
(514,451
)
 
$
110

 
$
1,079,108

 
$
300

 
$
1,079,408

Net income
 
—

 
—

 
—

 
34,379

 
—

 
34,379

 
—

 
34,379

Other comprehensive loss
 
—

 
—

 
—

 
—

 
(25
)
 
(25
)
 
—

 
(25
)
Issuance of common stock
 
2,556,146

 
25

 
28,476

 
—

 
—

 
28,501

 
—

 
28,501

Transfers from redeemable common stock
 
—

 
—

 
21,557

 
—

 
—

 
21,557

 
—

 
21,557

Redemptions of common stock
 
(8,146,679
)
 
(81
)
 
(93,290
)
 
—

 
—

 
(93,371
)
 
—

 
(93,371
)
Distributions declared
 
—

 
—

 
—

 
(57,551
)
 
—

 
(57,551
)
 
—

 
(57,551
)
Balance, June 30, 2018
 
175,274,174

 
$
1,753

 
$
1,548,383

 
$
(537,623
)
 
$
85

 
$
1,012,598

 
$
300

 
$
1,012,898

See accompanying condensed notes to consolidated financial statements.

6
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)

KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 
Six Months Ended June 30,
 
 
2019
 
2018
Cash Flows from Operating Activities:
 
 
 
 
Net (loss) income
 
$
(54,810
)
 
$
34,379

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
83,040

 
78,006

Impairment charges on real estate
 
8,706

 
—

Equity in loss of unconsolidated joint venture
 
—

 
348

Deferred rents
 
(3,026
)
 
(4,947
)
Loss due to property damage
 
90

 
—

Bad debt expense
 
—

 
110

Amortization of above- and below-market leases, net
 
(2,100
)
 
(2,587
)
Amortization of deferred financing costs
 
3,185

 
3,091

Loss from extinguishment of debt
 
196

 
—

Unrealized losses (gains) on derivative instruments
 
37,899

 
(25,326
)
Gain on sale of real estate
 
—

 
(11,942
)
Changes in operating assets and liabilities:
 
 
 
 
Rents and other receivables
 
(3,149
)
 
(3,067
)
Prepaid expenses and other assets
 
(19,213
)
 
(7,918
)
Accounts payable and accrued liabilities
 
(3,438
)
 
(5,113
)
Other liabilities
 
(2,853
)
 
(2,586
)
Due to affiliates
 
399

 
695

Net cash provided by operating activities
 
44,926

 
53,143

Cash Flows from Investing Activities:
 
 
 
 
Improvements to real estate
 
(35,199
)
 
(45,931
)
Proceeds from sale of real estate, net
 
—

 
41,649

Payments for construction in progress
 
(14,017
)
 
(19,092
)
Investment in unconsolidated joint venture
 
—

 
(428
)
Payments of post-closing acquisition costs
 
(338
)
 
—

Escrow deposits for tenant improvements
 
972

 
1,111

Insurance proceeds received for property damage
 
519

 
3,928

Net cash used in investing activities
 
(48,063
)
 
(18,763
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from notes payable
 
283,830

 
126,168

Principal payments on notes payable
 
(193,664
)
 
(39,266
)
Payments of deferred financing costs
 
(4,692
)
 
(108
)
Payments to redeem common stock
 
(55,550
)
 
(93,296
)
Payments of other offering costs
 
(3
)
 
—

Distributions paid to common stockholders
 
(30,772
)
 
(29,533
)
Net cash used in financing activities
 
(851
)
 
(36,035
)
Net decrease in cash, cash equivalents and restricted cash
 
(3,988
)
 
(1,655
)
Cash, cash equivalents and restricted cash, beginning of period
 
76,038

 
65,486

Cash, cash equivalents and restricted cash, end of period
 
$
72,050

 
$
63,831

Supplemental Disclosure of Cash Flow Information:
 
 
 
 
Interest paid, net of capitalized interest of $1,067 and $2,150 for the six months ended June 30, 2019 and 2018, respectively
 
$
43,659

 
$
35,001

Supplemental Disclosure of Noncash Investing and Financing Activities:
 
 
 
 
Distributions payable
 
$
9,485

 
$
9,499

Redeemable common stock payable
 
$
16,476

 
$
6,257

Accrued improvements to real estate
 
$
27,061

 
$
20,730

Construction in progress payable
 
$
6,616

 
$
8,158

Acquisition fee related to construction in progress due to affiliate
 
$
1,049

 
$
745

Acquisition fee on unconsolidated joint venture due to affiliate
 
$
—

 
$
451

Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan
 
$
26,471

 
$
28,501

See accompanying condensed notes to consolidated financial statements.

7
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2019
(unaudited)



1.
ORGANIZATION
KBS Real Estate Investment Trust III, Inc. (the “Company”) was formed on December 22, 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, 2011 and it intends to continue to operate in such manner. Substantially all of the Company’s business is conducted through KBS Limited Partnership III (the “Operating Partnership”), a Delaware limited partnership. The Company is the sole general partner of and owns a 0.1% partnership interest in the Operating Partnership. KBS REIT Holdings III LLC (“REIT Holdings III”), the limited partner of the Operating Partnership, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings III.
Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company entered into with the Advisor (the “Advisory Agreement”). On January 26, 2010, the Company issued 20,000  shares of its common stock to the Advisor at a purchase price of $10.00  per share. As of June 30, 2019 , the Advisor owned 20,000 shares of the Company’s common stock.
The Company owns a diverse portfolio of real estate investments. As of June 30, 2019 , the Company owned 28 office properties and one mixed-use office/retail property and had entered into a consolidated joint venture to develop and subsequently operate a multifamily apartment project, which is currently under construction.
The Company commenced its initial public offering (the “Offering”) on October 26, 2010. Upon commencing the Offering, the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Company, to serve as the dealer manager of the Offering pursuant to a dealer manager agreement, as amended and restated (the “Dealer Manager Agreement”). The Company ceased offering shares of common stock in the primary Offering on May 29, 2015 and terminated the primary Offering on July 28, 2015.
The Company sold 169,006,162 shares of common stock in the primary Offering for gross proceeds of $1.7 billion . As of June 30, 2019 , the Company had also sold 30,244,405 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $307.3 million . Also as of June 30, 2019 , the Company had redeemed or repurchased 24,527,469 shares sold in the Offering for $266.0 million .
Additionally, on October 3, 2014, the Company issued 258,462 shares of common stock for $2.4 million in private transactions exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933.
The Company continues to offer shares of common stock under its dividend reinvestment plan. In some states, the Company will need to renew the registration statement annually or file a new registration statement to continue its dividend reinvestment plan offering. The Company may terminate its dividend reinvestment plan offering at any time.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018 , except for the Company’s adoption of the lease accounting standards issued by the Financial Accounting Standards Board (“FASB”) effective on January 1, 2019. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”).

8
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

Principles of Consolidation and Basis of Presentation
The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the FASB Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31,  2019 .
The consolidated financial statements include the accounts of the Company, REIT Holdings III, the Operating Partnership, their direct and indirect wholly owned subsidiaries, and a joint venture in which the Company has a controlling interest. All significant intercompany balances and transactions are eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements and condensed notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and condensed notes. Actual results could materially differ from those estimates.
Reclassifications
Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. Upon adoption of the lease accounting standards of Topic 842 on January 1, 2019 (described below), the Company accounted for tenant reimbursements for property taxes, insurance and common area maintenance as variable lease payments and recorded these amounts as rental income on the statement of operations. For the three and six months ended June 30, 2018 , the Company reclassified $19.4 million and $37.1 million , respectively, of tenant reimbursement revenue for property taxes, insurance, and common area maintenance to rental income for comparability purposes.
Revenue Recognition - Operating Leases
Real Estate
On January 1, 2019, the Company adopted the lease accounting standards under Topic 842 including the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) did not reassess the lease classification for any expired or existing lease, and (iii) did not reassess initial direct costs for any existing leases. The Company did not elect the practical expedient related to using hindsight to reevaluate the lease term. In addition, the Company adopted the practical expedient for land easements and did not assess whether existing or expired land easements that were not previously accounted for as leases under the lease accounting standards of Topic 840 are or contain a lease under Topic 842.
In addition, Topic 842 provides an optional transition method to allow entities to apply the new lease accounting standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted this transition method upon its adoption of the lease accounting standards of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019. The Company’s comparative periods presented in the financial statements will continue to be reported under the lease accounting standards of Topic 840.

9
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

In accordance with Topic 842, tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s statement of operations beginning January 1, 2019. In addition, the Company adopted the practical expedient available under Topic 842 to not separate nonlease components from the associated lease component and instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met, specifically related to tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements for common area maintenance as (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations beginning January 1, 2019.
The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:
•
whether the lease stipulates how a tenant improvement allowance may be spent;
•
whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
•
whether the amount of a tenant improvement allowance is in excess of market rates;
•
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
•
whether the tenant improvements are unique to the tenant or general purpose in nature; and
•
whether the tenant improvements are expected to have any residual value at the end of the lease.
The Company leases 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. The Company recognizes rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is determined to be probable.
In accordance with Topic 842, the Company makes a determination of whether the collectibility of the lease payments in an operating lease is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any contractual lease payments, deferred rent receivable, and tenant reimbursements and would recognize rental income only if cash is received. Beginning January 1, 2019, these changes to the Company’s collectibility assessment are reflected as an adjustment to rental income. Prior to January 1, 2019, bad debt expense related to uncollectible accounts receivable and deferred rent receivable was included in operating, maintenance, and management expense in the statement of operations.  Any subsequent changes to the collectibility of the allowance for doubtful accounts as of December 31, 2018, which was recorded prior to the adoption of Topic 842, are recorded in operating, maintenance, and management expense in the statement of operations.    

10
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

Beginning January 1, 2019, the Company, as a lessor, records costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease, as an expense and classifies such costs as operating, maintenance, and management expense on the Company’s consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842.
Per Share Data
Basic net income (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three and six months ended June 30, 2019 and 2018 , respectively.
Distributions declared per common share were $0.164 and $ 0.322 for the three and six months ended June 30, 2018 , respectively. Distributions declared per common share assumes each share was issued and outstanding each day from January 1, 2018 through June 30, 2018 . For each day that was a record date for distributions during the period from January 1, 2018 through June 30, 2018 , distributions were calculated at a rate of $0.00178082 per share per day. Distributions declared per common share were $0.1625 and $0.3250 in the aggregate for the three and six months ended June 30, 2019 .  Distributions declared per common share assumes each share was issued and outstanding each day that was a record date for distributions and were based on a monthly record date for each month during the periods commencing January 2019 through June 2019. For each monthly record date for distributions during the period from January 1, 2019 through June 30, 2019, distributions were calculated at a rate of $0.0541667 per share.
Segments
The Company has invested in core real estate properties and real estate-related investments with the goal of acquiring a portfolio of income-producing investments.  The Company’s real estate properties exhibit similar long-term financial performance and have similar economic characteristics to each other.  As of June 30, 2019 , the Company aggregated its investments in real estate properties into one reportable business segment. 
Square Footage, Occupancy and Other Measures
 Square footage, occupancy, number of tenants and other measures, including annualized base rent and annualized base rent per square foot, used to describe real estate investments included in these condensed notes to the consolidated financial statements are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

11
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

Recently Issued Accounting Standards Update
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”).  ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income.  The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.  ASU No. 2016-13 also amends the impairment model for available-for-sale securities.  An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required.   ASU No. 2016-13 also requires new disclosures.  For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes.  For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available-for-sale securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.  ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements, but does not expect the adoption of ASU No. 2016-13 to have a material impact on its financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820):   Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”).  The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurement.  In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU No. 2018-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.  Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its financial statements.




12
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

3.
REAL ESTATE
Real Estate Held for Investment
As of June 30, 2019 , the Company’s real estate portfolio held for investment was composed of 28 office properties and one mixed-use office/retail property encompassing in the aggregate approximately 11.2 million rentable square feet. In addition, the Company had entered into a consolidated joint venture to develop and subsequently operate a multifamily apartment project, which is currently under construction. As of June 30, 2019 , the Company’s real estate portfolio was collectively 90% occupied. The following table summarizes the Company’s investments in real estate as of June 30, 2019 (in thousands):
Property
 
Date Acquired
 
City
 
State
 
Property Type
 
Total Real Estate,
at Cost  (1)
 
Accumulated Depreciation and Amortization  (1)
 
Total Real Estate, Net  (1)
Domain Gateway
 
09/29/2011
 
Austin
 
TX
 
Office
 
$
49,574

 
$
(15,014
)
 
$
34,560

Town Center
 
03/27/2012
 
Plano
 
TX
 
Office
 
114,355

 
(28,443
)
 
85,912

McEwen Building
 
04/30/2012
 
Franklin
 
TN
 
Office
 
36,316

 
(8,213
)
 
28,103

Gateway Tech Center
 
05/09/2012
 
Salt Lake City
 
UT
 
Office
 
27,466

 
(7,281
)
 
20,185

Tower on Lake Carolyn (2)
 
12/21/2012
 
Irving
 
TX
 
Office
 
53,253

 
(13,509
)
 
39,744

RBC Plaza
 
01/31/2013
 
Minneapolis
 
MN
 
Office
 
153,078

 
(41,459
)
 
111,619

One Washingtonian Center (2)
 
06/19/2013
 
Gaithersburg
 
MD
 
Office
 
93,273

 
(20,763
)
 
72,510

Preston Commons
 
06/19/2013
 
Dallas
 
TX
 
Office
 
119,772

 
(25,623
)
 
94,149

Sterling Plaza
 
06/19/2013
 
Dallas
 
TX
 
Office
 
79,452

 
(15,099
)
 
64,353

201 Spear Street
 
12/03/2013
 
San Francisco
 
CA
 
Office
 
145,279

 
(17,364
)
 
127,915

Accenture Tower (3)
 
12/16/2013
 
Chicago
 
IL
 
Office
 
444,835

 
(78,048
)
 
366,787

222 Main (2)
 
02/27/2014
 
Salt Lake City
 
UT
 
Office
 
165,839

 
(33,968
)
 
131,871

Anchor Centre
 
05/22/2014
 
Phoenix
 
AZ
 
Office
 
96,005

 
(16,874
)
 
79,131

171 17th Street (2)
 
08/25/2014
 
Atlanta
 
GA
 
Office
 
135,156

 
(30,975
)
 
104,181

Reston Square (2)
 
12/03/2014
 
Reston
 
VA
 
Office
 
46,785

 
(9,781
)
 
37,004

Ten Almaden
 
12/05/2014
 
San Jose
 
CA
 
Office
 
126,187

 
(20,658
)
 
105,529

Towers at Emeryville (4)
 
12/23/2014
 
Emeryville
 
CA
 
Office
 
285,882

 
(37,940
)
 
247,942

101 South Hanley (2)
 
12/24/2014
 
St. Louis
 
MO
 
Office
 
72,730

 
(13,460
)
 
59,270

3003 Washington Boulevard
 
12/30/2014
 
Arlington
 
VA
 
Office
 
151,059

 
(22,884
)
 
128,175

Village Center Station (2)
 
05/20/2015
 
Greenwood Village
 
CO
 
Office
 
76,240

 
(11,756
)
 
64,484

Park Place Village
 
06/18/2015
 
Leawood
 
KS
 
Office/Retail
 
100,493

 
(1,182
)
 
99,311

201 17th Street
 
06/23/2015
 
Atlanta
 
GA
 
Office
 
102,090

 
(16,597
)
 
85,493

Promenade I & II at Eilan (2)
 
07/14/2015
 
San Antonio
 
TX
 
Office
 
62,720

 
(11,051
)
 
51,669

CrossPoint at Valley Forge (2)
 
08/18/2015
 
Wayne
 
PA
 
Office
 
90,412

 
(13,739
)
 
76,673

515 Congress
 
08/31/2015
 
Austin
 
TX
 
Office
 
120,875

 
(14,889
)
 
105,986

The Almaden
 
09/23/2015
 
San Jose
 
CA
 
Office
 
174,118

 
(19,587
)
 
154,531

3001 Washington Boulevard
 
11/06/2015
 
Arlington
 
VA
 
Office
 
60,717

 
(5,994
)
 
54,723

Carillon
 
01/15/2016
 
Charlotte
 
NC
 
Office
 
152,949

 
(19,875
)
 
133,074

Hardware Village (5)
 
08/26/2016
 
Salt Lake City
 
UT
 
Development/Apartment
 
121,437

 
(3,014
)
 
118,423

Village Center Station II (2)
 
10/11/2018
 
Greenwood Village
 
CO
 
Office
 
132,112

 
(4,209
)
 
127,903

 
 
 
 
 
 
 
 
 
 
$
3,590,459

 
$
(579,249
)
 
$
3,011,210


13
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

___________________
(1) Amounts presented are net of impairment charges.
(2) On July 18, 2019 , the Company sold this property. See Note 8, “Related Party Transactions - Purchase and Sale Agreement for Portfolio Sale” and Note 10, “Subsequent Events - Portfolio Sale and Related Transactions” for more information.
(3) This property was formerly known as 500 West Madison and was re-named Accenture Tower in connection with the Company’s re-branding strategy for this property.
(4) On July 18, 2019 , the Company sold one of the three buildings at this property. See Note 8, “Related Party Transactions - Purchase and Sale Agreement for Portfolio Sale” and Note 10, “Subsequent Events - Portfolio Sale and Related Transactions” for more information.
(5) On August 26, 2016, the Company, through an indirect wholly-owned subsidiary, entered into a joint venture (the “Hardware Village Joint Venture”) to develop and subsequently operate a multifamily apartment complex, located on the developable land at Gateway Tech Center. The Company owns a 99.24% equity interest in the joint venture. In July 2018, one of the two buildings consisting of 267 units was placed into service. The total real estate, at cost, for the building that was placed into service was $69.9 million as of June 30, 2019 .
As of June 30, 2019 , the following property represented more than 10% of the Company’s total assets:
Property
 
Location
 
Rentable
Square Feet
 
Total Real Estate, Net
(in thousands)
 
Percentage
of Total Assets
 
Annualized Base Rent
(in thousands) (1)
 
Average Annualized Base Rent per sq. ft.
 
Occupancy
Accenture Tower
 
Chicago, IL
 
1,457,724

 
$
366,787

 
11.2
%
 
$
30,001

 
$
27.73

 
74.2
%
_____________________
(1) Annualized base rent represents annualized contractual base rental income as of June 30, 2019 , adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.
Operating Leases
The Company’s office and office/retail properties are leased to tenants under operating leases for which the terms and expirations vary. As of June 30, 2019 , the leases had remaining terms, excluding options to extend, of up to 14.9 years with a weighted-average remaining term of 4.5 years . Some of the leases have provisions to extend the term of the leases, options for early termination for all or a part of the leased premises after paying a specified penalty, and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from the tenant in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective lease and the creditworthiness of the tenant, but generally is not a significant amount. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $11.0 million and $11.8 million as of June 30, 2019 and December 31, 2018 , respectively. No material tenant credit issues have been identified at this time. During the six months ended June 30, 2019 , the Company recorded an adjustment to rental income of $1.4 million for lease payments that were deemed not probable of collection. During the six months ended June 30, 2019 and 2018 , the Company recorded bad debt (recovery) expense of $(0.3) million and $0.1 million , respectively, which was included in operating, maintenance and management expense in the accompanying consolidated statements of operations.
During the six months ended June 30, 2019 and 2018 , the Company recognized deferred rent from tenants of $3.0 million and $4.9 million , respectively. As of June 30, 2019 and December 31, 2018 , the cumulative deferred rent balance was $97.8 million and $92.8 million , respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $17.8 million and $17.2 million of unamortized lease incentives as of June 30, 2019 and December 31, 2018 , respectively.

14
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

As of June 30, 2019 , the future minimum rental income from the Company’s properties, excluding apartment leases, under its non-cancelable operating leases was as follows (in thousands):
July 1, 2019 through December 31, 2019
$
153,750

2020
306,971

2021
286,489

2022
255,234

2023
217,821

Thereafter
725,031

 
$
1,945,296

As of June 30, 2019 , the Company’s office and office/retail properties were leased to 834 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:
Industry
 
Number of Tenants
 
Annualized Base Rent (1)
(in thousands)
 
Percentage of Annualized Base Rent
Finance
 
156
 
$
60,059

 
18.8
%
Real Estate
 
80
 
33,325

 
10.4
%
_____________________
(1) Annualized base rent represents annualized contractual base rental income as of June 30, 2019 , adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.
As of June 30, 2019 , no other tenant industries accounted for more than 10% of annualized base rent and no tenant accounted for more than 10% of annualized base rent.
Geographic Concentration Risk
As of June 30, 2019 , the Company’s net investments in real estate in California, Texas and Illinois represented 19% , 15% and 11% of the Company’s total assets, respectively.  As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California, Texas and Illinois real estate markets.  Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to pay distributions to stockholders.
Real Estate Sales
During the six months ended June 30, 2019 , the Company did no t dispose of any real estate properties. In addition, no real estate properties were held for sale as of June 30, 2019 . During the year ended December 31, 2018 , the Company disposed of one office property.
On November 6, 2014, the Company, through an indirect wholly owned subsidiary, acquired an office property containing 220,020 rentable square feet located on approximately 13.9 acres of land in Rocklin, California (“Rocklin Corporate Center”). On May 25, 2018, the Company sold Rocklin Corporate Center to a purchaser unaffiliated with the Company or the Advisor for $42.9 million before closing costs and credits. The carrying value of Rocklin Corporate Center as of the disposition date was $29.7 million , which was net of $6.0 million of accumulated depreciation and amortization. The Company recognized a gain on sale of $11.9 million related to the disposition of Rocklin Corporate Center.

15
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

The results of operations for Rocklin Corporate Center during the six months ended June 30, 2018 are included in continuing operations on the Company’s consolidated statements of operations. The following table summarizes certain revenues and expenses related to this property for the three and six months ended June 30, 2018 (in thousands):
 
 
For the Three Months Ended June 30, 2018
 
For the Six Months Ended June 30, 2018
Revenues
 
 
 
 
Rental income
 
$
699

 
$
1,886

Other operating income
 
1

 
26

Total revenues
 
$
700

 
$
1,912

Expenses
 
 
 
 
Operating, maintenance, and management
 
$
142

 
$
462

Real estate taxes and insurance
 
71

 
213

Asset management fees to affiliate
 
62

 
127

Depreciation and amortization
 
—

 
—

Interest expense
 
127

 
320

Total expenses
 
$
402

 
$
1,122

Impairment of Real Estate
During the six months ended June 30, 2019 , the Company recorded impairment charges of $8.7 million to write down the carrying value of an office/retail property to its estimated fair value as a result of changes in cash flow estimates, including a change to the anticipated hold period of the property, which triggered the future estimated undiscounted cash flows to be lower than the net carrying value of the property. The decrease in cash flow projections was primarily due to the continued lack of demand for the property’s retail component resulting in longer than estimated lease-up periods and lower projected rental rates.


16
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

4.
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES
As of June 30, 2019 and December 31, 2018 , the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):
 
Tenant Origination and
Absorption Costs
 
Above-Market
Lease Assets
 
Below-Market
Lease Liabilities
 
June 30, 2019
 
December 31, 2018
 
June 30, 2019
 
December 31, 2018
 
June 30, 2019
 
December 31, 2018
Cost
$
202,342

 
$
223,723

 
$
9,883

 
$
11,118

 
$
(36,682
)
 
$
(40,601
)
Accumulated Amortization
(111,484
)
 
(117,955
)
 
(6,431
)
 
(6,942
)
 
21,953

 
23,048

Net Amount
$
90,858

 
$
105,768

 
$
3,452

 
$
4,176

 
$
(14,729
)
 
$
(17,553
)
Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and six months ended June 30, 2019 and 2018 were as follows (in thousands):
 
Tenant Origination and
Absorption Costs
 
Above-Market
Lease Assets
 
Below-Market
Lease Liabilities
 
For the Three Months Ended June 30,
 
For the Three Months Ended June 30,
 
For the Three Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Amortization
$
(7,209
)
 
$
(7,856
)
 
$
(347
)
 
$
(439
)
 
$
1,499

 
$
1,655

 
Tenant Origination and
Absorption Costs
 
Above-Market
Lease Assets
 
Below-Market
Lease Liabilities
 
For the Six Months Ended June 30,
 
For the Six Months Ended June 30,
 
For the Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Amortization
$
(14,419
)
 
$
(15,998
)
 
$
(724
)
 
$
(895
)
 
$
2,824

 
$
3,482


17
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

5.
NOTES PAYABLE
As of June 30, 2019 and December 31, 2018 , the Company’s notes payable consisted of the following (dollars in thousands):
 
 
Book Value as of
June 30, 2019
 
Book Value as of
December 31, 2018
 
Contractual Interest Rate as of
June 30, 2019 (1)
 
Effective Interest Rate as of
June 30, 2019 (1)
 
Payment Type
 
Maturity Date (2)
Portfolio Loan (3)   (4)
 
$
84,484

 
$
84,484

 
One-month LIBOR + 1.90%
 
4.34%
 
Interest Only
 
06/01/2020
222 Main Mortgage Loan (3)
 
96,518

 
97,522

 
3.97%
 
3.97%
 
Principal & Interest
 
03/01/2021
Anchor Centre Mortgage Loan
 
49,345

 
49,647

 
One-month LIBOR + 1.50%
 
3.94%
 
Principal & Interest
 
06/01/2020
171 17th Street Mortgage Loan (3)
 
84,045

 
84,460

 
One-month LIBOR + 1.45%
 
3.89%
 
Principal & Interest
 
09/01/2019
Reston Square Mortgage Loan (3)
 
29,304

 
29,479

 
One-month LIBOR + 1.50%
 
3.87%
 
Principal & Interest
 
02/01/2020
101 South Hanley Mortgage Loan (3)
 
43,651

 
43,090

 
One-month LIBOR + 1.55%
 
3.94%
 
Principal & Interest
 
01/01/2020
3003 Washington Boulevard Mortgage Loan (5)
 
—

 
90,378

 
(5)  
 
(5)  
 
(5)  
 
(5)  
201 17th Street Mortgage Loan (6)
 
64,428

 
64,428

 
One-month LIBOR + 1.40%
 
3.62%
 
Interest Only
 
08/01/2019
CrossPoint at Valley Forge Mortgage Loan (3) (7)
 
51,000

 
51,000

 
One-month LIBOR + 1.50%
 
3.33%
 
Interest Only (7)
 
09/01/2022
The Almaden Mortgage Loan
 
93,000

 
93,000

 
4.20%
 
4.20%
 
Interest Only
 
01/01/2022
Promenade I & II at Eilan Mortgage Loan (3)
 
37,300

 
37,300

 
One-month LIBOR + 1.75%
 
3.57%
 
Interest Only
 
10/01/2022
201 Spear Street Mortgage Loan
 
125,000

 
125,000

 
One-month LIBOR + 1.45%
 
3.88%
 
Interest Only
 
01/05/2024
Carillon Mortgage Loan (8)
 
111,000

 
92,197

 
One-month LIBOR + 1.40%
 
3.31%
 
Interest Only
 
04/11/2024
3001 Washington Boulevard Mortgage Loan  (9)
 
—

 
32,662

 
(9)  
 
(9)  
 
(9)  
 
(9)  
Hardware Village Loan Facility (10)
 
63,626

 
49,664

 
One-month LIBOR + 3.25%
 
5.67%
 
Interest Only
 
02/23/2020
Portfolio Loan Facility (11)
 
932,500

 
893,500

 
One-month LIBOR + 1.80%
 
3.84%
 
Interest Only
 
11/03/2020
Village Center Station II Loan (3)
 
77,875

 
78,343

 
One-month LIBOR + 1.70%
 
4.14%
 
Principal & Interest
 
03/01/2022
Portfolio Revolving Loan Facility (12)
 
200,000

 
200,000

 
One-month LIBOR + 1.50%
 
3.77%
 
Interest Only
 
11/01/2021
3001 & 3003 Washington Mortgage Loan (7) (13)
 
143,245

 
—

 
One-month LIBOR + 1.45%
 
3.89%
 
Interest Only (7)
 
06/01/2024
Total notes payable principal outstanding
 
2,286,321

 
2,196,154

 
 
 
 
 
 
 
 
Deferred financing costs, net
 
(10,553
)
 
(11,616
)
 
 
 
 
 
 
 
 
Total notes payable, net
 
$
2,275,768

 
$
2,184,538

 
 
 
 
 
 
 
 

18
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

_____________________
(1) Contractual interest rate represents the interest rate in effect under the loan as of June 30, 2019 . Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2019 (consisting of the contractual interest rate and the effect of interest rate swaps and caps, if applicable), using interest rate indices as of June 30, 2019 , where applicable. For further information regarding the Company's derivative instruments, see Note 6, “Derivative Instruments.”
(2) Represents the maturity date as of June 30, 2019 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the dates shown.
(3) In connection with the Portfolio Sale on July 18, 2019 , the Company repaid the entire principal balance and all other sums due under this loan. See Note 10, “Subsequent Events - Portfolio Sale and Related Transactions” for more information.
(4) As of June 30, 2019 , the Portfolio Loan was secured by Tower on Lake Carolyn, Park Place Village and Village Center Station. The face amount of the Portfolio Loan is $169.0 million , of which $84.5 million is term debt and $84.5 million is revolving debt. As of June 30, 2019 , the outstanding balance under the loan consisted of $84.5 million , all of which was term debt.
(5) On May 21, 2019 , the 3003 Washington Boulevard Mortgage Loan was paid off when the Company entered into the 3001 & 3003 Washington Mortgage Loan. See below, “Recent Financing Transactions - 3001 & 3003 Washington Mortgage Loan.”
(6) Subsequent to June 30, 2019 , the 201 17th Street Mortgage Loan maturity date was extended to August 1, 2020.
(7) Represents the payment type required as of June 30, 2019 . Certain future monthly payments due under the loan also include amortizing principal payments. For more information on the Company’s contractual obligations under its notes payable, see the five-year maturity table below.
(8) See below, “Recent Financing Transactions - Carillon Mortgage Loan Refinancing.”
(9) On February 1, 2019 , the 3001 Washington Boulevard Mortgage Loan was paid off.
(10) As of June 30, 2019 , $63.6 million had been disbursed under the Hardware Village Loan Facility and $10.4 million remained available for future disbursements, subject to certain conditions contained in the loan documents.
(11) As of June 30, 2019 , the Portfolio Loan Facility was secured by RBC Plaza, Preston Commons, Sterling Plaza, One Washingtonian Center, Towers at Emeryville, Ten Almaden, Town Center and Accenture Tower. The face amount of the Portfolio Loan Facility was $1.01 billion , of which $757.5 million was term debt and $252.5 million was revolving debt. As of June 30, 2019 , the outstanding balance under the loan consisted of $757.5 million of term debt and $175.0 million of revolving debt. As of June 30, 2019 , an additional $77.5 million of revolving debt remained available for immediate future disbursements, subject to certain conditions set forth in the loan agreement. During the remaining term of the Portfolio Loan Facility, the Company has an option to increase the loan amount by up to an additional $400.0 million in increments of $25.0 million , to a maximum of $1.41 billion , of which 75% would be term debt and 25% would be revolving debt, subject to certain conditions contained in the loan documents. In connection with the sale of One Washingtonian Center and a building at Towers at Emeryville on July 18, 2019 , the Company repaid a portion of the principal balance under this loan. As a result, the revised face amount of the Portfolio Loan Facility is $912.3 million , of which $684.2 million is term debt and $228.1 million is revolving debt. Subsequent to the repayment, the outstanding balance under the loan consisted of $684.2 million of term debt and the additional $228.1 million of revolving debt remained available for immediate future disbursements, subject to certain conditions set forth in the loan agreement. See Note 10, “Subsequent Events - Portfolio Sale and Related Transactions” for more information.
(12) As of June 30, 2019 , the Portfolio Revolving Loan Facility was secured by 515 Congress, Domain Gateway, the McEwen Building, and Gateway Tech Center. The face amount of the Portfolio Loan Facility is $215.0 million , of which $107.5 million is term debt and $107.5 million is revolving debt. As of June 30, 2019 , the outstanding balance under the loan consisted of $107.5 million of term debt and $92.5 million of revolving debt. As of June 30, 2019 , the remaining $15.0 million of revolving debt remained available for future disbursements upon the Company meeting certain conditions set forth in the loan agreement. During the remaining term of the Portfolio Revolving Loan Facility, the Company has an option to increase the committed amount of the Portfolio Revolving Loan Facility up to four times with each increase of the committed amount to be at least $15.0 million but no greater than, in the aggregate, an additional $170.0 million so that the committed amount will not exceed $385.0 million , of which 50% would be non-revolving debt and 50% would be revolving debt, with the addition of one or more properties to secure the loan, subject to certain terms and conditions contained in the loan documents.
(13) See below, “Recent Financing Transactions - 3001 & 3003 Washington Mortgage Loan.”
As of June 30, 2019 , the Company’s deferred financing costs were $13.0 million , net of amortization, of which $10.6 million was included in notes payable, net and $2.4 million was included in prepaid expenses and other assets on the accompanying consolidated balance sheets. As of December 31, 2018 , the Company’s deferred financing costs were $11.7 million , net of amortization, of which $11.6 million was included in notes payable, net and $0.1 million was included in prepaid expenses and other assets on the accompanying consolidated balance sheets.

19
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

During the three and six months ended June 30, 2019 , the Company incurred $47.4 million and $85.4 million of interest expense, respectively. During the three and six months ended June 30, 2018 , the Company incurred $12.5 million and $13.3 million of interest expense, respectively. Included in interest expense was: (i) the amortization of deferred financing costs of $1.6 million and $3.2 million for the three and six months ended June 30, 2019 , respectively, and $1.6 million and $3.3 million for the three and six months ended June 30, 2018 , respectively, and (ii) interest expense (including gains and losses) incurred as a result of the Company’s derivative instruments, which increased interest expense by $22.0 million and $35.3 million for the three and six months ended June 30, 2019 , respectively, and reduced interest expense by $7.2 million and $24.1 million for the three and six months ended June 30, 2018 , respectively. Additionally, the Company capitalized $0.6 million and $1.1 million of interest related to construction in progress during the three and six months ended June 30, 2019 , respectively, and $1.1 million and $2.1 million of interest related to construction in progress during the three and six months ended June 30, 2018 , respectively. As of June 30, 2019 and December 31, 2018 , $7.4 million and $6.8 million of interest expense were payable, respectively.
The following is a schedule of maturities, including principal amortization payments, for all notes payable outstanding as of June 30, 2019 (in thousands):
July 1, 2019 through December 31, 2019
 
$
150,723

2020
 
1,205,338

2021
 
294,894

2022
 
256,121

2023
 
—

Thereafter
 
379,245

 
 
$
2,286,321

The Company’s notes payable contain financial debt covenants. As of June 30, 2019 , the Company was in compliance with these debt covenants.
Recent Financing Transactions
Carillon Mortgage Loan Refinancing
On April 11, 2019, the Company, through an indirect wholly owned subsidiary, entered into an amended and restated term loan agreement with the lender of the Carillon Mortgage Loan to increase the aggregate borrowing commitment amount to up to $111.0 million (the “Carillon Mortgage Loan Refinancing”), of which $88.8 million is term debt and $22.2 million is revolving debt. At closing, $111.0 million was funded. The Carillon Mortgage Loan Refinancing matures on April 11, 2024, with one 24 -month extension option, subject to certain terms, conditions and fees as described in the loan documents. The Company will have the right to prepay all or a portion of the Carillon Mortgage Loan Refinancing, subject to certain conditions contained in the loan documents.
3001 & 3003 Washington Mortgage Loan
On May 21, 2019, the Company, through an indirect wholly owned subsidiary (the “3001 & 3003 Washington Borrower”), entered into a five -year mortgage loan with an unaffiliated lender, for a committed amount of up to $145.2 million (the “3001 & 3003 Washington Mortgage Loan”). At closing, $143.2 million was funded under the 3001 & 3003 Washington Mortgage Loan with an additional $2.0 million available through two $1.0 million earn-out advances upon satisfaction of certain conditions set forth in the loan documents.

20
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

The 3001 & 3003 Washington Mortgage Loan matures on June 1, 2024. The 3001 & 3003 Washington Mortgage Loan bears interest at a floating rate of 145 basis points over one-month LIBOR during the term of the loan. Monthly payments are initially interest only, with monthly payments commencing on June 1, 2022 to include principal and interest with principal payments calculated using an amortization schedule of 30 years at an interest rate of 6.00% per annum. The 3001 & 3003 Washington Borrower has the right to repay the loan in part and in whole without fee, premium or penalty subject to certain conditions as described in the loan documents.
Under the guaranty agreement related to 3001 & 3003 Washington Mortgage Loan (the “Guaranty”), KBS REIT Properties III, LLC (“REIT Properties III”) (i) provides a guaranty of, among other sums described in the Guaranty, all principal and interest outstanding under the 3001 & 3003 Washington Mortgage Loan in the event of certain bankruptcy or insolvency proceedings involving REIT Properties III, any 3001 & 3003 Washington Borrower or any of their affiliates and (ii) guarantees payment of, and agrees to protect, defend, indemnify and hold harmless each lender for, from and against, any deficiency, loss or damage suffered by any lender because of (a) certain intentional acts committed by any 3001 & 3003 Washington Borrower or (b) certain bankruptcy or insolvency proceedings involving REIT Properties III, any 3001 & 3003 Washington Borrower or any of their affiliates, as such acts are described in the Guaranty.
6.
DERIVATIVE INSTRUMENTS
The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.
The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero.
The Company enters into interest rate caps to mitigate its exposure to rising interest rates on its variable rate notes payable. The values of interest rate caps are primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of interest rate caps. As the remaining life of an interest rate cap decreases, the value of the instrument will generally decrease towards zero.

21
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

The following table summarizes the notional amount and other information related to the Company’s interest rate swaps and cap as of June 30, 2019 and December 31, 2018 . The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
 
 
Weighted-Average
 Fix Pay Rate
 
Weighted-Average Remaining
Term in Years
Derivative Instruments
 
Number of Instruments
 
Notional Amount
 
Number of Instruments
 
Notional Amount
 
Reference Rate as of
June 30, 2019
 
 
Derivative instruments not designated as hedging instruments
 
 
 
 
 
 
 
 
Interest rate swaps
 
12
 
$
1,375,574

 
14
 
$
1,208,957

 
One-month LIBOR/
Fixed at 1.67% - 2.51%
 
2.14%
 
3.1
Interest rate cap
 
—
 
$
—

 
1
 
$
100,000

 
—
 
—%
 
—

The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of June 30, 2019 and December 31, 2018 (dollars in thousands):
 
 
 
 
June 30, 2019
 
December 31, 2018
Derivative Instruments
 
Balance Sheet Location
 
Number of
Instruments
 
Fair Value
 
Number of
Instruments
 
Fair Value
Derivative instruments not designated as hedging instruments
 
 
 
 
Interest rate swaps (1)
 
Prepaid expenses and other assets, at fair value
 
—
 
$
—

 
14
 
$
15,909

Interest rate swaps (1)
 
Other liabilities, at fair value
 
12
 
$
(22,445
)
 
—
 
$
—

Interest rate cap
 
Prepaid expenses and other assets, at fair value
 
—
 
$
—

 
1
 
$
—

_____________________
(1) During the six months ended June 30, 2019 , the Company terminated two interest rate swaps and realized a gain of $0.5 million , which was recorded as an offset to interest expense.

22
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

The change in fair value of the effective portion of a derivative instrument that is designated as a cash flow hedge is recorded as other comprehensive income (loss) on the accompanying consolidated statements of comprehensive income (loss) and as other comprehensive income on the accompanying consolidated statements of equity. Amounts in other comprehensive income (loss) will be reclassified into earnings in the periods in which earnings are affected by the hedged cash flows.  The change in fair value of the ineffective portion is recognized directly in earnings. With respect to swap agreements that are terminated for which it remains probable that the original hedged forecasted transactions (i.e., LIBOR-based debt service payments) will occur, the loss related to the termination of these swap agreements is included in accumulated other comprehensive income (loss) and is reclassified into earnings over the period of the original forecasted hedged transaction. The change in fair value of a derivative instrument that is not designated as a cash flow hedge is recorded as interest expense in the accompanying consolidated statements of operations. The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Income statement related
 
 
 
 
 
 
 
Derivatives designated as hedging instruments
 
 
 
 
 
 
 
Amount of (income) expense recognized on interest rate swaps (effective portion)
$
—

 
$
(96
)
 
$
—

 
$
(108
)
 
—

 
(96
)
 
—

 
(108
)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
Realized (gain) loss recognized on interest rate swaps
(1,238
)
 
201

 
(2,627
)
 
1,309

Unrealized loss (gain) on interest rate swaps
23,280

 
(7,289
)
 
37,899

 
(25,326
)
 
22,042

 
(7,088
)
 
35,272

 
(24,017
)
Increase (decrease) in interest expense as a result of derivatives
$
22,042

 
$
(7,184
)
 
$
35,272

 
$
(24,125
)
 
 
 
 
 
 
 
 
Other comprehensive income related
 
 
 
 
 
 
 
Unrealized (losses) income on derivative instruments
$
—

 
$
(1
)
 
$
—

 
$
83

During the three and six months ended June 30, 2019 and 2018 , there was no ineffective portion related to the change in fair value of the derivative instruments designated as cash flow hedges.
7.
FAIR VALUE DISCLOSURES
Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:
•
Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
•
Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
•
Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.

23
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value:
Cash and cash equivalents, restricted cash, rent and other receivables, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items.
Derivative instruments: The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk. The fair value of interest rate caps (floors) are determined using the market standard methodology of discounting the future expected cash payments (receipts) which would occur if variable interest rates rise above (below) the strike rate of the caps (floors). The variable interest rates used in the calculation of projected payments (receipts) on the cap (floors) are based on an expectation of future interest rates derived from observed market interest rate curves and volatilities.
Notes payable: The fair values of the Company’s notes payable are estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of a liability in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.
The following were the face values, carrying amounts and fair values of the Company’s notes payable as of June 30, 2019 and December 31, 2018 , which carrying amounts generally do not approximate the fair values (in thousands):
 
 
June 30, 2019
 
December 31, 2018
 
 
Face Value
 
Carrying Amount
 
Fair Value
 
Face Value
 
Carrying Amount
 
Fair Value
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Notes payable
 
$
2,286,321

 
$
2,275,768

 
$
2,295,347

 
$
2,196,154

 
$
2,184,538

 
$
2,202,587

Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Low levels of transaction volume for certain financial instruments have made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different.

24
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

As of June 30, 2019 , the Company measured the following assets at fair value (in thousands):
 
 
 
 
Fair Value Measurements Using
 
 
Total        
 
Quoted Prices in Active Markets 
for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)        
 
Significant Unobservable Inputs
(Level 3)         
Recurring Basis:
 
 
 
 
 
 
 
 
Liability derivatives - interest rate swaps
 
$
22,445

 
$
—

 
$
22,445

 
$
—

As of March 31, 2019 , the Company measured the following asset at fair value on a nonrecurring basis (in thousands):
 
 
 
 
Fair Value Measurements Using
 
 
Total        
 
Quoted Prices in Active Markets 
for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)        
 
Significant Unobservable Inputs
(Level 3)         
Nonrecurring Basis:
 
 
 
 
 
 
 
 
Impaired real estate (1)
 
$
103,000

 
$
—

 
$
—

 
$
103,000

_____________________
(1) Amount represents the fair value for a real estate asset impacted by an impairment charge during the year, as of the date that the fair value measurement was made. The carrying value for the real estate asset may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. See Note 3, “Real Estate – Impairment of Real Estate” for a further discussion on the impaired real estate property.
During the six months ended June 30, 2019 , one of the Company’s real estate properties was measured at its estimated fair value based on a discounted cash flow approach. See Note 3, “Real Estate – Impairment of Real Estate” for a further discussion on the impaired real estate property.
8.
RELATED PARTY TRANSACTIONS
The Company has entered into the Advisory Agreement with the Advisor and the Dealer Manager Agreement with the Dealer Manager. These agreements entitled the Advisor and/or the Dealer Manager to specified fees upon the provision of certain services with regard to the Offering and reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company and entitle the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate investments, the management of those investments, among other services, and the disposition of investments, as well as entitle the Advisor and/or the Dealer Manager to reimbursement of offering costs related to the dividend reinvestment plan incurred by the Advisor and the Dealer Manager on behalf of the Company and certain costs incurred by the Advisor in providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve or served as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc. (“KBS REIT I”) (which liquidated in December 2018), KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”), KBS Strategic Opportunity REIT, Inc. (“KBS Strategic Opportunity REIT”), KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”) (which liquidated in December 2018), KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”) and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”).

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

As of January 1, 2018, the Company, together with KBS REIT II, KBS Growth & Income REIT, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, the Dealer Manager, the Advisor and other KBS-affiliated entities, had entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage were shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. At the June 2018 renewal, KBS Strategic Opportunity REIT, KBS Strategic Opportunity REIT II and Legacy Partners Apartment REIT elected to cease participation in the program and obtained separate insurance coverage. In June 2019, the Company renewed its participation in the program. The program is effective through June 30, 2020.
Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and six months ended June 30, 2019 and 2018 , respectively, and any related amounts payable as of June 30, 2019 and December 31, 2018 (in thousands):
 
Incurred
 
Payable as of
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
June 30,
 
December 31,
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Expensed
 
 
 
 
 
 
 
 
 
 
 
Asset management fees (1)
$
6,999

 
$
6,738

 
$
13,871

 
$
13,358

 
$
2,314

 
$
2,559

Reimbursement of operating expenses (2) (3)
636

 
956

 
1,163

 
1,102

 
1,378

 
734

Disposition fees (4)
—

 
429

 
—

 
429

 
—

 
—

Capitalized
 
 
 
 
 
 
 
 
 
 
 
Acquisition fee on development project
88

 
110

 
133

 
179

 
1,049

 
916

Acquisition fee on unconsolidated joint venture
—

 
69

 
—

 
162

 
—

 
—

 
$
7,723

 
$
8,302

 
$
15,167

 
$
15,230

 
$
4,741

 
$
4,209

_____________________
(1) See “Deferral of Asset Management Fees” below.
(2) Reimbursable operating expenses primarily consists of internal audit personnel costs, accounting software and cybersecurity related expenses incurred by the Advisor under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $78,000 and $148,000 for the three and six months ended June 30, 2019 , respectively, and $85,000 and $173,000 for the three and six months ended June 30, 2018 , respectively, and were the only type of employee costs reimbursed under the Advisory Agreement for the three and six months ended June 30, 2019 and 2018 , respectively. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition or origination fees or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company's direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.
(3) Reimbursement of operating expenses includes $0.6 million and $1.0 million of costs incurred related to the Portfolio Sale for the three and six months ended June 30, 2019 , respectively. The Company and the Advisor had agreed to evenly divide certain costs and expenses related to the Portfolio Sale. These costs include legal, audit, tax, printing and other out of pocket costs that the Company incurred related to the Portfolio Sale, which were reimbursable by the Purchaser upon the closing of the Portfolio Sale on July 18, 2019. 
(4) Disposition fees with respect to real estate sold are included in the gain on sale of real estate, net, in the accompanying consolidated statements of operations.
In connection with the Offering, Messrs. Bren, Hall, McMillan and Schreiber agreed to provide additional indemnification to one of the participating broker-dealers.  The Company agreed to add supplemental coverage to its directors’ and officers’ insurance coverage to insure Messrs. Bren, Hall, McMillan and Schreiber’s obligations under this indemnification agreement in exchange for reimbursement by Messrs. Bren, Hall, McMillan and Schreiber to the Company for all costs, expenses and premiums related to this supplemental coverage.
During the six months ended June 30, 2018 , the Advisor reimbursed the Company for a $0.2 million property insurance rebate.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

Deferral of Asset Management Fees
Pursuant to the Advisory Agreement, with respect to asset management fees accruing from March 1, 2014, the Advisor has agreed to defer, without interest, the Company’s obligation to pay asset management fees for any month in which the Company’s modified funds from operations (“MFFO”) for such month, as such term is defined in the practice guideline issued by the Institute for Portfolio Alternatives (formerly known as the Investment Program Association) in November 2010 and interpreted by the Company, excluding asset management fees, does not exceed the amount of distributions declared by the Company for record dates of that month. The Company remains obligated to pay the Advisor an asset management fee in any month in which the Company’s 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 will also be 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 be applied to pay any asset management fee amounts previously deferred in accordance with the Advisory Agreement.
However, notwithstanding the foregoing, any and all deferred asset management fees that are unpaid will become immediately due and payable at such time as the Company’s 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) an 8.0% per year cumulative, noncompounded return on such net invested capital (the “Stockholders’ 8% Return”) and (ii) 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 the Company’s share redemption program. The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the Company’s stockholders to have received any minimum return in order for the Advisor to receive deferred asset management fees.
As of  December 31, 2018 , the Company had accrued and deferred payment of  $2.6 million  of asset management fees under the Advisory Agreement, which were subsequently paid in February 2019. As of June 30, 2019 , the Company had $2.3 million of asset management fees payable related to asset management fees incurred for the month of June 2019, which were subsequently paid in July 2019 .
Lease to Affiliate
On May 29, 2015, the indirect wholly owned subsidiary (the “Lessor”) of the Company that owns 3003 Washington Boulevard entered into a lease with an affiliate of the Advisor (the “Lessee”) for 5,046 rentable square feet, or approximately 2.4% of the total rentable square feet, at 3003 Washington Boulevard. The lease commenced on October 1, 2015 and terminates on August 31, 2019. The annualized base rent, which represents annualized contractual base rental income as of June 30, 2019 , adjusted to straight-line any contractual tenant concessions (including free rent) and rent increases from the lease’s inception through the balance of the initial lease term, for this lease is approximately $0.2 million , and the average annual rental rate (net of rental abatements) over the lease term is $46.38 per square foot.
On March 14, 2019, the Lessor entered into a First Amendment to Deed of Lease with the Lessee to extend the lease period commencing on September 1, 2019 and terminating on August 31, 2024 (the “Amended Lease”) and set the annual base rent during the extension period. The annualized base rent from the commencement of the Amended Lease is approximately $0.3 million , and the average annual rental rate (net of rental abatements) over the term of the Amended Lease through its termination is $62.55 per square foot.
During the three and six months ended June 30, 2019 , the Company recognized $60,000 and $120,000 of revenue related to this lease, respectively. During the three and six months ended June 30, 2018 , the Company recognized $60,000 and $120,000 of revenue related to this lease, respectively.
Prior to their approval of the lease and the Amended Lease, the Company’s conflicts committee and board of directors determined the lease to be fair and reasonable to the Company.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

Purchase and Sale Agreement for Portfolio Sale
On June 27, 2019, the Company, through 12 wholly owned subsidiaries, entered into a Portfolio Purchase and Sale Agreement and Escrow Instructions (the “Purchase Agreement”) pursuant to which the Company agreed to sell the Portfolio (as defined below in Note 10 “Subsequent Events - Portfolio Sale and Related Transactions”) to various subsidiaries of a newly formed real estate investment trust (the “Purchaser”) (the “Portfolio Sale”). The Purchaser is affiliated with Charles J. Schreiber, Jr., the Company’s Chief Executive Officer, Chairman of the Board and one of the Company’s directors.
As part of the Portfolio Sale, on June 27, 2019, REIT Properties III entered into a Subscription Agreement (the “Subscription Agreement”) with the Purchaser’s Manager (defined below) to subscribe for $201.0 million of the units to be issued by the Purchaser. Subsequent to June 30, 2019, an additional $70 million of units was subscribed for by REIT III Properties under the placement tranche of the Purchaser’s offering. Pursuant to a set-off agreement entered on June 27, 2019, the Company agreed that the Purchaser may deduct from the aggregate purchase price due from the Purchaser under the Purchase Agreement the subscription amount to be paid by REIT Properties III for the units under the Subscription Agreement.
The Purchaser is externally managed by a joint venture (the “Manager”) among KBS Asia Partners Pte. Ltd., an entity in which Charles J. Schreiber, Jr. currently holds an indirect 50% ownership interest, and other entities unaffiliated with the Company. The Purchaser is expected to pay the Manager an annual base fee of 10% of annual distributable income and an annual performance fee of 25% of the increase in distributions per unit of the Purchaser from the preceding year; however, there would not be any performance fee for 2019 and in 2020 such fee will be based on an increase over projected distributions per unit. In addition, for future acquisitions, the Purchaser will pay the Manager an acquisition fee of 1% of the acquisition price of any real estate acquired. No acquisition fee will be paid with respect to the Purchaser’s acquisition of the Portfolio. The Purchaser will also pay the Manager a divestment fee of 0.5% of the sale price of any real estate sold or divested and a development management fee of 3% of the total project costs incurred for development projects, to the extent the Purchaser acquires a development project. A small portion of these fees paid to the Manager will be paid to KBS Realty Advisors LLC, an affiliate of the Advisor and an entity controlled by Mr. Schreiber, for sub-advisory services. The Schreiber Trust, a trust whose beneficiaries are Charles J. Schreiber, Jr. and his family members, and the Linda Bren 2017 Trust will subscribe for units to be issued by the Purchaser. In addition, Barbara R. Cambon, one of the Company’s former directors, accepted the positions of Chief Executive Officer and Chief Investment Officer of the Manager and will receive compensation for her services. In connection with her acceptance of these positions, Ms. Cambon resigned from the Company’s board of directors effective June 26, 2019.
See Note 10, “Subsequent Events - Portfolio Sale and Related Transactions”
During the six months ended June 30, 2019 and 2018 , no other business transactions occurred between the Company and KBS REIT I, KBS REIT II, KBS Strategic Opportunity REIT, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, KBS Growth & Income REIT, the Advisor, the Dealer Manager or other KBS-affiliated entities.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

9.
COMMITMENTS AND CONTINGENCIES
Economic Dependency
The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide the respective services, the Company will be required to obtain such services from other sources.
Legal Matters
From time to time, the Company may be party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.
Environmental
As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Compliance with existing environmental laws is not expected to have a material adverse effect on the Company’s financial condition and results of operations as of June 30, 2019 .
10.
SUBSEQUENT EVENTS
The Company evaluates subsequent events up until the date the consolidated financial statements are issued.
Distributions Paid
On July 1, 2019, the Company paid distributions of $9.5 million , which related to distributions in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on June 18, 2019. On August 1, 2019, the Company paid distributions of $9.5 million , which related to distributions in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on July 19, 2019.
Distributions Authorized
On August 8, 2019, the Company’s board of directors authorized an August 2019 distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on August 19, 2019, which the Company expects to pay in September 2019, and a September 2019 distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on September 20, 2019, which the Company expects to pay in October 2019.
Investors may choose to receive cash distributions or purchase additional shares through the Company’s dividend reinvestment plan.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 1. Financial Statements (continued)
KBS REAL ESTATE INVESTMENT TRUST III, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
June 30, 2019
(unaudited)

Portfolio Sale and Related Transactions
On July 18, 2019, the Company, through 12 wholly owned subsidiaries, sold 11 of its properties (the “Portfolio”) to various subsidiaries of the Purchaser. The sale price of the Portfolio was $1.2 billion , before third-party closing costs and credits of approximately $16.1 million and excluding any disposition fees payable to the Advisor. The Portfolio consists of the following properties: Tower I at Emeryville, Emeryville, California; 222 Main, Salt Lake City, Utah; Village Center Station, Greenwood Village, Colorado; Village Center Station II, Greenwood Village, Colorado; 101 South Hanley, St. Louis, Missouri; Tower on Lake Carolyn, Irving, Texas; Promenade I & II at Eilan, San Antonio, Texas; CrossPoint at Valley Forge, Wayne, Pennsylvania; One Washingtonian Center, Gaithersburg, Maryland; Reston Square, Reston, Virginia; and 171 17th Street, Atlanta, Georgia.
In connection with the Portfolio Sale, the Company repaid $613.1 million of outstanding debt secured by the properties in the Portfolio. Pursuant to a set-off agreement, as amended, $271.0 million of the consideration payable by the Purchaser under the Purchase Agreement was set-off against REIT Properties III’s payment obligations for its two subscriptions for units in the Purchaser: (i) the $201 million of units subscribed for by REIT Properties III pursuant to the Subscription Agreement, as amended, and (ii) $70 million of units subscribed for by REIT Properties III under the placement tranche of the Purchaser’s offering. As such, on July 19, 2019, REIT Properties III acquired 307,953,999 units in the Purchaser at an aggregate price of $271 million representing a 33.3% ownership interest in the Purchaser. Currently, the Purchaser does not own any properties other than the Portfolio.
    Also on July 15, 2019, REIT Properties III entered into a placement agreement (the “Placement Agreement”) and unit lending agreement (the “Unit Lending Agreement”) with respect to an offering of units of the Purchaser. REIT Properties III is a party to the Placement Agreement as unit lender, and pursuant to the Placement Agreement, REIT Properties III has granted the underwriters in the offering an over-allotment option (the “Over-Allotment Option”) in which REIT Properties III agreed to sell to the underwriters up to 22,727,000 of REIT Properties III’s units in the Purchaser at the offering price. The Over-Allotment Option is exercisable for up to 30 days after the listing of the units of the Purchaser. Any units purchased pursuant to the Over-Allotment Option would reduce REIT Properties III’s ownership interest in the Purchaser. Pursuant to the Unit Lending Agreement, REIT Properties III agreed to lend the 22,727,000 units subject to the Over-Allotment Option to the stabilizing manager of the offering for the purpose of facilitating the settlement of the over-allotment of units in connection with the Purchaser’s offering. The stabilizing manager will re-deliver to REIT Properties III such number of units that are not purchased pursuant to the exercise of the Over-Allotment Option.
On July 8, 2019, the Company, the Operating Partnership, REIT Holdings III and REIT Properties III (collectively, the “REIT III Entities”) entered into lock-up letter agreements with the underwriters whereby each of the REIT III Entities agreed to hold 100% of REIT Properties III’s units in the Purchaser for six months following the listing of the Purchaser and to hold 50% of REIT Properties III’s units in the Purchaser for 12 months following the listing of the Purchaser. During the respective lock-up periods, without the prior written consent of the underwriters and other than pursuant to the Over-Allotment Option or lending for stabilizing transactions pursuant to the Unit Lending Agreement (described above), the REIT III Entities may not offer, sell, pledge, option, grant any rights or warrants, or enter into any swap, hedge or other similar arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the units held by REIT Properties III.
The units in the Purchaser have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, with the exception of the units sold to REIT Properties III, The Schreiber Trust and the Linda Bren 2017 Trust, the units of the Purchaser are being offered and sold only outside the United States in an offshore transaction pursuant to Regulation S under the Securities Act.
Share Redemption Program
See Part II, Item 5 “Other Information,” for updated information about the Company’s share redemption program.


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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of KBS Real Estate Investment Trust III, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to KBS Real Estate Investment Trust III, Inc., a Maryland corporation, and, as required by context, KBS Limited Partnership III, a Delaware limited partnership, which we refer to as the “Operating Partnership,” and to their subsidiaries.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of KBS Real Estate Investment Trust III, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
•
We are dependent on KBS Capital Advisors LLC (“KBS Capital Advisors”), our advisor, to identify investments, to manage our investments and for the disposition of our investments.
•
All of our executive officers, our affiliated director and other key real estate and debt finance professionals are also officers, affiliated directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and/or other KBS-affiliated entities. As a result, our executive officers, our affiliated director, some of our key real estate and debt finance professionals, our advisor and its affiliates face conflicts of interest, including significant conflicts created by our advisor’s and its affiliates’ compensation arrangements with us and other KBS-sponsored programs and KBS-advised investors and conflicts in allocating time among us and these other programs and investors. Furthermore, these individuals may become employees of another KBS-sponsored program in an internalization transaction or, if we internalize our advisor, may not become our employees as a result of their relationship with other KBS-sponsored programs. These conflicts could result in action or inaction that is not in the best interests of our stockholders.
•
Our advisor and its affiliates receive fees in connection with transactions involving the purchase or origination, management and disposition of our investments. Acquisition and asset management fees 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. This may influence our advisor to recommend riskier transactions to us. We may also pay significant fees during our listing/liquidation stage. Although most of the fees payable during our listing/liquidation stage are contingent on our stockholders first enjoying agreed-upon investment returns, the investment return thresholds may be reduced subject to approval by our conflicts committee and to other limitations in our charter. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase the risk of loss to our stockholders.
•
Our charter permits 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. From time to time during our operational stage, we may use proceeds from third party financings to fund at least a portion of distributions in anticipation of cash flow to be received in later periods. We may also fund such distributions from the sale of assets or from the maturity, payoff or settlement of any real estate-related investments, to the extent we make any such additional investments. If we pay distributions from sources other than our cash flow from operations, the overall return to our stockholders may be reduced.
•
We may incur debt until our total liabilities would exceed 75% of the cost of our tangible assets (before deducting depreciation and other non-cash reserves), and we may exceed this limit with the approval of the conflicts committee of our board of directors. To the extent financing in excess of this limit is available on attractive terms, our conflicts committee may approve debt such that our total liabilities would exceed this limit. High debt levels could limit the amount of cash we have available to distribute and could result in a decline in the value of an investment in us.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

•
We depend on tenants for the revenue generated by our real estate investments and, accordingly, the revenue generated by our real estate investments is dependent upon the success and economic viability of our tenants. Revenues from our properties could decrease due to a reduction in occupancy (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, making it more difficult for us to meet our debt service obligations and limiting our ability to pay distributions to our stockholders.
•
Because investment opportunities that are suitable for us may also be suitable for other KBS-sponsored programs or KBS-advised investors, our advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.
•
We cannot predict with any certainty how much, if any, of our dividend reinvestment plan proceeds will be available for general corporate purposes including, but not limited to: the repurchase of shares under our share redemption program; capital expenditures, tenant improvement costs and leasing costs related to our real estate properties; reserves required by any financings of our real estate investments; the acquisition or origination of real estate investments, which include payment of acquisition or origination fees to our advisor; and the repayment of debt. If such funds are not available from our dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet these cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.
•
Disruptions in the financial markets and uncertain economic conditions could adversely affect our ability to implement our business strategy and generate returns to stockholders. In addition, our real estate investments may be affected by unfavorable real estate market and general economic conditions, which could decrease the value of those assets and reduce the investment return to our stockholders.
•
Our charter does not require us to liquidate our assets and dissolve by a specified date, nor does our charter require our directors to list our shares for trading by a specified date. No public market currently exists for our shares of common stock, and we have no plans at this time 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 standards. Any sale must comply with applicable state and federal securities laws. In addition, our charter prohibits the ownership of more than 9.8% of our stock, unless exempted by our board of directors, which may inhibit large investors from purchasing our shares. Our shares cannot be readily sold and, if our stockholders are able to sell their shares, they would likely have to sell them at a substantial discount from the price our stockholders paid to acquire the shares and from our estimated value per share.
•
During any calendar year, we may redeem (i) only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year unless our board of directors authorizes additional funds for redemption and (ii) no more than 5% of the weighted average number of shares outstanding during the prior calendar year. As of July 31, 2019, we had $5.1 million available for Special Redemptions (defined herein) for the remainder of 2019. As of July 31, 2019, we had a total $40.9 million of outstanding and unfulfilled Ordinary Redemption (defined herein) requests, representing 3,583,572 shares. On August 8, 2019, our board of directors approved an increase of the funding available for Ordinary Redemptions for calendar year 2019 by up to an additional $40.0 million, which including redemptions fulfilled to date and the remaining amount reserved for Special Redemptions, increases the share redemption program to the maximum amount for 2019. Given the volume of redemption requests in 2019, and because of the limitations on the dollar amount of shares that may be redeemed under our share redemption program and the number of shares that may be redeemed during a calendar year, it is not likely that we will be able to redeem shares submitted as Ordinary Redemptions after the August 2019 redemption date and shares submitted as Ordinary Redemptions for the August 2019 redemption date will likely be honored on a pro rata basis pursuant to the terms of the share redemption program.
•
Although our board of directors has approved management’s recommendation to explore strategic alternatives for us, we are not obligated to pursue any particular transaction or any transaction at all. We can provide no assurance that we will be able to provide additional liquidity to stockholders. Stockholders may have to hold their shares for an indefinite period of time. Further, although we are exploring strategic alternatives, there is no assurance that this process will provide a return to stockholders that equals or exceeds our estimated value per share.
All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the Securities and Exchange Commission (the “SEC”), and in Part II, Item 1A herein.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview
We were formed on December 22, 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, 2011 and we intend to continue to operate in such a manner. We conduct our business primarily through our Operating Partnership, of which we are the sole general partner. Subject to certain restrictions and limitations, our business is managed by our advisor pursuant to an advisory agreement and our advisor conducts our operations and manages our portfolio of real estate investments. Our advisor owns 20,000 shares of our common stock. We have no paid employees.
We have invested in a diverse portfolio of real estate investments. As of June 30, 2019 , we owned 28 office properties and one mixed-use office/retail property and had entered into a consolidated joint venture to develop and subsequently operate a multifamily apartment project, which is currently under construction.
On June 27, 2019, we, through 12 wholly owned subsidiaries, entered into a Portfolio Purchase and Sale Agreement and Escrow Instructions (the “Purchase Agreement”) pursuant to which we agreed to sell 11 of our properties (the “Portfolio”) to various subsidiaries of a newly formed real estate investment trust (the “Purchaser”) (the “Portfolio Sale”). The Purchaser is affiliated with Charles J. Schreiber, Jr., our Chief Executive Officer, Chairman of the Board and one of our directors. The Portfolio consists of the following properties: Tower I at Emeryville, Emeryville, California; 222 Main, Salt Lake City, Utah; Village Center Station, Greenwood Village, Colorado; Village Center Station II, Greenwood Village, Colorado; 101 South Hanley, St. Louis, Missouri; Tower on Lake Carolyn, Irving, Texas; Promenade I & II at Eilan, San Antonio, Texas; CrossPoint at Valley Forge, Wayne, Pennsylvania; One Washingtonian Center, Gaithersburg, Maryland; Reston Square, Reston, Virginia; and 171 17th Street, Atlanta, Georgia. On July 18, 2019, we, through 12 wholly owned subsidiaries, sold the Portfolio to various subsidiaries of the Purchaser. The sale price of the Portfolio was $1.2 billion, before third-party closing costs and credits of approximately $16.1 million and excluding any disposition fees payable to our advisor. In connection with the Portfolio Sale, we repaid $613.1 million of outstanding debt secured by the properties in the Portfolio. Pursuant to a set-off agreement, as amended, $271.0 million of the consideration payable by the Purchaser under the Purchase Agreement was set-off against KBS REIT Properties III LLC’s, our indirect wholly owned subsidiary (“REIT Properties III”), payment obligations for its two subscriptions for units in the Purchaser: (i) the $201 million of units subscribed for by REIT Properties III pursuant to a subscription agreement, as amended, and (ii) $70 million of units subscribed for by REIT Properties III under the placement tranche of the Purchaser’s offering. As such, on July 19, 2019, REIT Properties III acquired 307,953,999 units in the Purchaser at an aggregate price of $271 million representing a 33.3% ownership interest in the Purchaser. Currently, the Purchaser does not own any properties other than the Portfolio. See “Subsequent Events - Portfolio Sale and Related Transactions.”
On February 4, 2010, we filed a registration statement on Form S-11 with the SEC to offer a minimum of 250,000 shares and a maximum of up to 280,000,000 shares, or up to $2,760,000,000 of shares, of common stock for sale to the public, of which up to 200,000,000 shares, or up to $2,000,000,000 of shares, were registered in our primary offering and up to 80,000,000 shares, or up to $760,000,000 of shares, were registered under our dividend reinvestment plan. We ceased offering shares of common stock in our primary offering on May 29, 2015 and terminated the primary offering on July 28, 2015.
We sold 169,006,162 shares of common stock in our now-terminated primary initial public offering for gross offering proceeds of $1.7 billion . As of June 30, 2019 , we had also sold 30,244,405 shares of common stock under our dividend reinvestment plan for gross offering proceeds of $307.3 million . Additionally, on October 3, 2014, we issued 258,462 shares of common stock, for $2.4 million, in private transactions exempt from the registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933.
We continue to offer shares 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.
Also as of June 30, 2019 , we had redeemed or repurchased 24,527,469 shares sold in our initial public offering for $266.0 million .
On July 22, 2019, we announced that our board of directors has approved management’s recommendation to explore strategic alternatives in an effort to provide enhanced liquidity to our stockholders. These strategic alternatives include our potential conversion into an “NAV REIT” or strategic asset sales. An NAV REIT is a term generally used to describe a REIT that values its shares as often as daily but at least quarterly on a net asset value (“NAV”) basis and provides increased capacity to repurchase shares through its share redemption program. Although our board of directors has approved management’s recommendation to explore strategic alternatives for us, we are not obligated to pursue any particular transaction or any transaction at all.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Market Outlook – Real Estate and Real Estate Finance Markets
Volatility in global financial markets and changing political environments can cause fluctuations in the performance of the U.S. commercial real estate markets.  Possible future declines in rental rates, slower or potentially negative net absorption of leased space and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, may result in decreases in cash flows from investment properties. To the extent there are increases in the cost of financing due to higher interest rates, this may cause difficulty in refinancing debt obligations at terms as favorable as the terms of existing indebtedness.  Further, increases in interest rates would increase the amount of our debt payments on our variable rate debt to the extent the interest rates on such debt are not fixed through interest rate swap agreements or limited by interest rate caps. Market conditions can change quickly, potentially negatively impacting the value of real estate investments. Management continuously reviews our investment and debt financing strategies to optimize our portfolio and the cost of our debt exposure.
Liquidity and Capital Resources
Our principal demands for funds during the short and long-term are and will be for operating expenses, capital expenditures and general and administrative expenses; payments under debt obligations; redemptions of common stock; capital commitments and development expenses under our joint venture agreement; and payments of distributions to stockholders. Our primary sources of capital for meeting our cash requirements are as follows:
•
Cash flow generated by our real estate investments;
•
Debt financings (including amounts currently available under existing loan facilities);
•
Proceeds from the sale of our real estate properties; and
•
Proceeds from common stock issued under our dividend reinvestment plan.
Our real estate properties generate cash flow in the form of rental revenues and tenant reimbursements, which are reduced by operating expenditures, capital expenditures, debt service payments, the payment of asset management fees and corporate general and administrative expenses. Cash flow from operations from our real estate properties is primarily dependent upon the occupancy level of our portfolio, the net effective rental rates on our leases, the collectability of rent and operating recoveries from our tenants and how well we manage our expenditures.
As of June 30, 2019 , we had mortgage debt obligations in the aggregate principal amount of $2.3 billion , with a weighted-average remaining term of 2.0 years. The maturity dates of certain loans may be extended beyond their current maturity date, subject to certain terms and conditions contained in the loan documents. Assuming our notes payable are fully extended under the terms of the respective loan agreements and other loan documents, we have $49.3 million of notes payables maturing and amortization payments due during the 12 months ending June 30, 2020. We plan to exercise our extension options available under our loan agreements or pay down or refinance the related notes payable prior to their maturity dates. As of June 30, 2019 , our debt obligations consisted of $189.5 million of fixed rate notes payable and $2.1 billion of variable rate notes payable. As of June 30, 2019 , the interest rates on $1.4 billion of our variable rate notes payable were effectively fixed through interest rate swap agreements. As discussed above, in connection with the Portfolio Sale on July 18, 2019, we repaid $613.1 million of outstanding debt secured by the properties in the Portfolio and made an additional $259.6 million of voluntary paydowns in July 2019 on four loans. As a result, as of July 31, 2019, we had $349.0 million of revolving debt available for immediate future disbursement under various loans, subject to certain conditions set forth in the loan agreements.
We paid distributions to our stockholders during the six months ended June 30, 2019 using cash flow from operations from current and prior periods and debt financing. We believe that our cash flow from operations, cash on hand, proceeds from our dividend reinvestment plan, proceeds from the sale of real estate and current and anticipated financing activities are sufficient to meet our liquidity needs for the foreseeable future.
Under our charter, we are required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. Operating expenses for the four fiscal quarters ended June 30, 2019 did not exceed the charter-imposed limitation.
Cash Flows from Operating Activities
During the six months ended June 30, 2019 , net cash provided by operating activities was $44.9 million , compared to net cash provided by operating activities of $53.1 million during the six months ended June 30, 2018 . Net cash provided by operating activities was higher in 2018 primarily as a result of the timing of payments of operating expenses and leasing commissions.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Cash Flows from Investing Activities
Net cash used in investing activities was $48.1 million for the six months ended June 30, 2019 and primarily consisted of the following:
•
$35.2 million used for improvements to real estate;
•
$14.0 million used for construction in progress related to Hardware Village;
•
$0.5 million of insurance proceeds received for property damage;
•
$0.9 million of escrow proceeds received for tenant improvements; and
•
$0.3 million used for post-closing acquisition costs related to the purchase of a joint venture partner’s equity interest in 2018.
Cash Flows from Financing Activities
During the six months ended June 30, 2019 , net cash used in financing activities was $0.9 million and primarily consisted of the following:
•
$85.5 million of net cash provided by debt financing as a result of proceeds from notes payable of $283.8 million, partially offset by principal payments on notes payable of $193.6 million and payments of deferred financing costs of $4.7 million;
•
$55.6 million of cash used for redemptions and repurchases of common stock; and
•
$30.8 million of net cash distributions, after giving effect to distributions reinvested by stockholders of $26.5 million.
We expect that our debt financing and other liabilities will be between 45% and 65% of the cost of our tangible assets (before deducting depreciation and other non-cash reserves). There is no limitation on the amount we may borrow for the purchase of any single asset. We limit our total liabilities to 75% of the cost of our tangible assets (before deducting depreciation and other non-cash reserves), meaning that our borrowings and other liabilities may exceed our maximum target leverage of 65% of the cost of our tangible assets without violating these borrowing restrictions. We may exceed the 75% limit only if a majority of the conflicts committee approves each borrowing in excess of this 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. To the extent financing in excess of this limit is available on attractive terms, our conflicts committee may approve debt in excess of this limit. From time to time, our total liabilities could also be below 45% of the cost of our tangible assets due to the lack of availability of debt financing. As of June 30, 2019 , our borrowings and other liabilities were approximately 63% of both the cost (before deducting depreciation and other noncash reserves) and book value (before deducting depreciation) of our tangible assets.
We also expect to use our capital resources to make certain payments to our advisor. During our operational stage, we expect to make payments to our advisor in connection with the acquisition of investments, the management of our investments and costs incurred by our advisor in providing services to us. We also pay fees to our advisor in connection with the disposition of investments. We reimburse our advisor and dealer manager for certain stockholder services.
Among the fees payable to our advisor is an asset management fee. With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property. This amount includes any portion of the investment that was debt financed and is inclusive of acquisition expenses related thereto (but excludes acquisition fees paid or payable to our advisor). In the case of investments made through joint ventures, the asset management fee is determined based on our proportionate share of the underlying investment (but excluding acquisition fees paid to our advisor). With respect to investments in loans and any investments other than real property, the asset management fee is a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount actually paid or allocated to acquire or fund the loan or other investment (which amount includes any portion of the investment that was debt financed and is inclusive of acquisition or origination expenses related thereto but is exclusive of acquisition or origination fees paid or payable to our advisor) and (ii) the outstanding principal amount of such loan or other investment, plus the acquisition or origination expenses related to the acquisition or funding of such investment (excluding acquisition or origination fees paid or payable to our advisor), as of the time of calculation.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Pursuant to the advisory agreement, with respect to asset management fees accruing from March 1, 2014, our advisor agreed to defer, without interest, our obligation to pay asset management fees for any month in which our modified funds from operations (“MFFO”) for such month, as such term is defined in the practice guideline issued by the Institute for Portfolio Alternatives (“IPA”) 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 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 will also be 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 be applied to pay any asset management fee amounts previously deferred in accordance with the advisory agreement.
However, notwithstanding the foregoing, any and all deferred asset management fees that are unpaid will become 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) an 8% per year cumulative, noncompounded return on net invested capital (the “Stockholders’ 8% Return”) and (ii) 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 program. 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.
As of June 30, 2019 , we had reimbursed our advisor for all accrued and deferred asset management fees in accordance with the terms noted above. The amount of asset management fees deferred, if any, will vary on a month-to-month basis and the total amount of asset management fees deferred as well as the timing of the deferrals and repayments are difficult to predict as they will depend on the amount of and terms of the debt we use to acquire assets, the level of operating cash flow generated by our real estate investments and other factors. In addition, deferrals and repayments may occur in the same period, and it is possible that there could be additional deferrals in the future. As of June 30, 2019 , we had $2.3 million of asset management fees payable related to asset management fees incurred for the month of June 2019, which was subsequently paid in July 2019 .
On September 27, 2018, we and our advisor renewed the advisory agreement. The advisory agreement has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of our advisor and our conflicts committee.
Contractual Commitments and Contingencies
The following is a summary of our contractual obligations as of June 30, 2019 (in thousands):
 
 
 
 
Payments Due During the Years Ended December 31,
Contractual Obligations
 
Total
 
Remainder of 2019
 
2020-2021
 
2022-2023
 
Thereafter
Outstanding debt obligations (1)
 
$
2,286,321

 
$
150,723

 
$
1,500,232

 
$
256,121

 
$
379,245

Interest payments on outstanding debt obligations (2)
 
176,893

 
42,822

 
99,793

 
30,859

 
3,419

Development obligations (3)
 
5,668

 
5,668

 
—

 
—

 
—

_____________________
(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 June 30, 2019 (consisting of the contractual interest rate and the effect of interest rate swaps, if applicable). We incurred interest expense of $45.3 million, excluding amortization of deferred financing costs totaling $3.2 million and unrealized losses on derivative instruments of $37.9 million and including interest capitalized of $1.1 million during the six months ended June 30, 2019 .
(3) We have entered into the Hardware Village joint venture to develop a two-building multifamily apartment complex consisting of 453 units and expect to incur approximately $5.7 million in additional development obligations through 2019. In July 2018, one of the two buildings consisting of 267 units was substantially completed. As of June 30, 2019 , $63.6 million had been disbursed under the Hardware Village Loan Facility and $10.4 million remained available for future disbursements, subject to certain conditions contained in the Hardware Village Loan Facility documents.
As discussed above, in connection with the Portfolio Sale, we repaid $613.1 million of outstanding debt secured by the properties in the Portfolio on July 18, 2019.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Results of Operations
Overview
As of June 30, 2018 , we owned 27 office properties and one mixed-use office/retail property and had made an investment in an unconsolidated joint venture to develop and operate an office/retail property (“Village Center Station II”). In addition, we had entered into a consolidated joint venture to develop and subsequently operate a multifamily apartment project (“Hardware Village”). The construction of Village Center Station II was substantially completed in May 2018, and in October 2018, we purchased the unaffiliated developer's 25% equity interest and consolidated Village Center Station II. In addition, one of the two apartment buildings consisting of 267 units at Hardware Village was completed and placed in service in July 2018. As a result, as of June 30, 2019 , we owned 28 office properties and one mixed-use office/retail property and had entered into the Hardware Village joint venture. As a result, the results of operations presented for the six months ended June 30, 2019 and 2018 are not directly comparable.
Comparison of the three months ended June 30, 2019 versus the three months ended June 30, 2018
The following table provides summary information about our results of operations for the three months ended June 30, 2019 and 2018 (dollar amounts in thousands):
 
 
Three Months Ended June 30,
 
Increase (Decrease)
 
Percentage Change
 
$ Changes Due to Properties Completed and Disposed (1)
 
$ Change Due to Properties Held
Throughout Both Periods (2)
 
 
2019
 
2018
 
 
 
 
Rental income
 
$
105,843

 
$
98,794

 
$
7,049

 
7
 %
 
$
1,793

 
$
5,256

Other operating income
 
8,666

 
8,782

 
(116
)
 
(1
)%
 
204

 
(320
)
Operating, maintenance and management costs
 
26,279

 
24,301

 
1,978

 
8
 %
 
347

 
1,631

Real estate taxes and insurance
 
18,418

 
18,487

 
(69
)
 
—
 %
 
145

 
(214
)
Asset management fees to affiliate
 
6,999

 
6,738

 
261

 
4
 %
 
189

 
72

General and administrative expenses
 
1,907

 
2,012

 
(105
)
 
(5
)%
 
n/a

 
n/a

Depreciation and amortization
 
41,632

 
39,025

 
2,607

 
7
 %
 
2,269

 
338

Interest expense
 
47,403

 
12,517

 
34,886

 
279
 %
 
n/a

 
n/a

Other income
 
9

 
1,575

 
(1,566
)
 
(100
)%
 
—

 
(1,566
)
Other interest income
 
192

 
84

 
108

 
129
 %
 
n/a

 
n/a

Loss from extinguishment of debt
 
(196
)
 
—

 
(196
)
 
(100
)%
 
—

 
(196
)
Equity in income of unconsolidated joint venture
 
—

 
(348
)
 
348

 
(100
)%
 
348

 
—

Gain on sale of real estate, net
 
—

 
11,942

 
(11,942
)
 
(100
)%
 
(11,942
)
 
—

_____________________
(1) Represents the dollar amount increase (decrease) for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 related to real estate developments completed and real estate investments disposed of on or after April 1, 2018.
(2) Represents the dollar amount increase (decrease) for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 related to real estate investments owned by us throughout both periods presented.
Rental income from our real estate properties increased from $98.8 million for the three months ended June 30, 2018 to $105.8 million for the three months ended June 30, 2019 . The increase in rental income was primarily due to an increase in rental rates, lease termination fees, property tax recoveries as a result of property tax reassessments and operating expense recoveries in properties held throughout both periods, as well as the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II and Hardware Village West, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect rental income to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, rental income would vary in future periods based on occupancy rates and rental rates of our real estate investments and increase based on the completion of development and the subsequent full operation of Hardware Village.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Other operating income decreased from $8.8 million during the three months ended June 30, 2018 to $8.7 million for the three months ended June 30, 2019 . The decrease in other operating income was primarily due to a decrease in parking revenues for properties held throughout both periods, partially offset by the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II. We expect other operating income to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, other operating income would vary in future periods based on occupancy rates and parking rates at our real estate properties.
Operating, maintenance and management costs increased from $24.3 million for the three months ended June 30, 2018 to $26.3 million for the three months ended June 30, 2019 . The increase in operating, maintenance and management costs was primarily a result of the operation of Hardware Village West, which was completed in July 2018, and an increase in repair and maintenance costs, an increase in property management fees and an increase in legal fees related to leasing for properties held throughout both periods, partially offset by the sale of Rocklin Corporate Center in May 2018.  Upon adoption of the lease accounting standards of Topic 842, beginning January 1, 2019, as a lessor, we record legal costs incurred to negotiate an operating lease as an expense, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842.  Prior to January 1, 2019, these legal costs were capitalized and included in real estate, cost. We expect operating, maintenance and management costs to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, operating, maintenance and management costs would increase in future periods as a result of the completion of development and the subsequent full operation of Hardware Village and general inflation.
Real estate taxes and insurance decreased from $18.5 million for the three months ended June 30, 2018 to $18.4 million for the three months ended June 30, 2019 . The decrease in real estate taxes and insurance was primarily due to lower property taxes as a result of property tax reassessments for properties held throughout both periods, partially offset by higher real estate taxes for Hardware Village West which was placed into service in July 2018. We expect real estate taxes and insurance to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, real estate taxes and insurance would increase in future periods as a result of the development and subsequent full operation of Hardware Village, general inflation and general increases due to future property tax reassessments.
Asset management fees with respect to our real estate investments increased from $6.7 million for the three months ended June 30, 2018 to $7.0 million for the three months ended June 30, 2019 due to the increase in capital improvements for properties held throughout both periods, the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II and the operation of Hardware Village West, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect asset management fees to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, we expect asset management fees to increase in future periods as a result of the development and subsequent full operation of Hardware Village and as a result of any improvements we make to our properties. As of June 30, 2019 , we had $2.3 million of asset management fees payable related to asset management fees incurred for the month of June 2019, which was subsequently paid in July 2019 .
General and administrative expenses decreased from $2.0 million for the three months ended June 30, 2018 to $1.9 million for the three months ended June 30, 2019 . The decrease in general and administrative expenses was primarily due to professional fees incurred in 2018 related to the Portfolio Sale. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. We have agreed with our advisor to evenly divide certain costs and expenses related to the Portfolio Sale. We expect general and administrative expenses to vary in future periods.
Depreciation and amortization increased from $39.0 million for the three months ended June 30, 2018 to $41.6 million for the three months ended June 30, 2019 , primarily due to the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II, the operation of Hardware Village West and accelerated depreciation and amortization due to early lease terminations for properties held throughout both periods. We expect depreciation and amortization to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, depreciation and amortization would vary in future periods as a result of a decrease in amortization related to fully amortized tenant origination and absorption costs, offset by an increase as a result of the development and subsequent full operation of Hardware Village.

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PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Interest expense increased from $12.5 million for the three months ended June 30, 2018 to $47.4 million for the three months ended June 30, 2019 . Included in interest expense was (i) $19.0 million and $24.1 million of interest expense payments for the three months ended June 30, 2018 and 2019 , respectively, (ii) the amortization of deferred financing costs of $1.6 million and $1.6 million for the three months ended June 30, 2018 and 2019 , respectively, and (iii) interest expense (including gains and losses) incurred as a result of our derivative instruments, which reduced interest expense by $7.2 million for the three months ended June 30, 2018 and increased interest expense by $22.0 million for the three months ended June 30, 2019 . Additionally, during the three months ended June 30, 2018 and 2019 , we capitalized $1.1 million and $0.6 million of interest related to construction in progress, respectively. The increase in interest expense was primarily due to changes in fair values with respect to our interest rate swaps that are not accounted for as cash flow hedges, a higher 30-day LIBOR rate and an increased level of borrowing. We expect interest expense to decrease in future periods due to the repayment of debt related to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, interest expense would increase in future periods as a result of additional borrowings for capital expenditures and development activity. Our interest expense in future periods will also vary based on fair value changes with respect to our interest rate swaps that are not accounted for as cash flow hedges and fluctuations in one-month LIBOR (for our variable rate debt). 
During the three months ended June 30, 2018 , we recognized $1.6 million of other income as a result of a reduction in contingent liability during the second quarter of 2018.
During the three months ended June 30, 2019 , we recognized a loss from extinguishment of debt of $0.2 million related to the write-off of unamortized deferred financing costs as a result of the early pay-off of the 3003 Washington Boulevard Mortgage Loan.
During the three months ended June 30, 2018 , we recognized $0.3 million in equity in income of unconsolidated joint venture related to operations of Village Center Station II. On October 11, 2018, we purchased the developer’s 25% equity interest and accounted for Village Center Station II on a consolidated basis.
During the three months ended June 30, 2018 , we sold one office property that resulted in a gain on sale of $11.9 million . We did not dispose of any properties during the three months ended June 30, 2019 .
Comparison of the six months ended June 30, 2019 versus the six months ended June 30, 2018
The following table provides summary information about our results of operations for the six months ended June 30, 2019 and 2018 (dollar amounts in thousands):
 
 
Six Months Ended June 30,
 
Increase (Decrease)
 
Percentage Change
 
$ Changes Due to Properties Completed and Disposed (1)
 
$ Change Due to Properties Held
Throughout Both Periods (2)
 
 
2019
 
2018
 
 
 
 
Rental income
 
$
208,850

 
$
195,416

 
$
13,434

 
7
 %
 
$
2,920

 
$
10,514

Other operating income
 
17,037

 
16,339

 
698

 
4
 %
 
386

 
312

Operating, maintenance and management costs
 
50,013

 
47,455

 
2,558

 
5
 %
 
589

 
1,969

Real estate taxes and insurance
 
35,865

 
35,261

 
604

 
2
 %
 
69

 
535

Asset management fees to affiliate
 
13,871

 
13,358

 
513

 
4
 %
 
363

 
150

General and administrative expenses
 
3,942

 
3,535

 
407

 
12
 %
 
n/a

 
n/a

Depreciation and amortization
 
83,040

 
78,006

 
5,034

 
6
 %
 
4,579

 
455

Interest expense
 
85,350

 
13,327

 
72,023

 
540
 %
 
n/a

 
n/a

Impairment charges on real estate
 
8,706

 
—

 
8,706

 
100
 %
 
—

 
8,706

Other income
 
22

 
1,876

 
(1,854
)
 
(99
)%
 
—

 
(1,854
)
Other interest income
 
264

 
96

 
168

 
175
 %
 
n/a

 
n/a

Loss from extinguishment of debt
 
(196
)
 
—

 
(196
)
 
(100
)%
 
—

 
(196
)
Equity in income (loss) of unconsolidated joint venture
 
—

 
(348
)
 
348

 
(100
)%
 
348

 
—

Gain on sale of real estate, net
 
—

 
11,942

 
(11,942
)
 
(100
)%
 
(11,942
)
 
—

_____________________
(1) Represents the dollar amount increase (decrease) for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 related to real estate developments completed and real estate investments disposed of on or after January 1, 2018.
(2) Represents the dollar amount increase (decrease) for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 related to real estate investments owned by us throughout both periods presented.

39
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Rental income from our real estate properties increased from $195.4 million for the six months ended June 30, 2018 to $208.9 million for the six months ended June 30, 2019 . The increase in rental income was primarily due to an increase in rental rates, lease termination fees, property tax recoveries as a result of property tax reassessments and operating expense recoveries in properties held throughout both periods, as well as the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect rental income to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, rental income would vary in future periods based on occupancy rates and rental rates of our real estate investments and to increase based on the development and subsequent full operation of Hardware Village.
Other operating income increased from $16.3 million during the six months ended June 30, 2018 to $17.0 million for the six months ended June 30, 2019 . The increase in other operating income was primarily due to an increase in parking revenues for properties held throughout both periods, as well as the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect other operating income to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, other operating income would vary in future periods based on occupancy rates and parking rates at our real estate properties.
Operating, maintenance and management costs increased from $47.5 million for the six months ended June 30, 2018 to $50.0 million for the six months ended June 30, 2019 . The increase in operating, maintenance and management costs was primarily a result of the operation of Hardware Village West, which was completed in July 2018, and an increase in repair and maintenance costs, an increase in property management fees and an increase in legal fees related to leasing for properties held throughout both periods, partially offset by the sale of Rocklin Corporate Center in May 2018.  Upon adoption of the lease accounting standards of Topic 842, beginning January 1, 2019, as a lessor, we record legal costs incurred to negotiate an operating lease as an expense, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842.  Prior to January 1, 2019, these legal costs were capitalized and included in real estate, cost. We expect operating, maintenance and management costs to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, operating, maintenance and management costs would increase in future periods as a result of the development and subsequent full operation of Hardware Village and general inflation.
Real estate taxes and insurance increased from $35.3 million for the six months ended June 30, 2018 to $35.9 million for the six months ended June 30, 2019 . The increase in real estate taxes and insurance was primarily due to higher property taxes as a result of property tax reassessments for properties held throughout both periods and the operation of Hardware Village West, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect real estate taxes and insurance to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, real estate taxes and insurance would increase in future periods as a result of the development and subsequent full operation of Hardware Village, general inflation and general increases due to future property tax reassessments.
Asset management fees with respect to our real estate investments increased from $13.4 million for the six months ended June 30, 2018 to $13.9 million for the six months ended June 30, 2019 due to the increase in capital improvements for properties held throughout both periods, the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II and the operation of Hardware Village West, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect asset management fees to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, asset management fees would increase in future periods as a result of the development and subsequent full operation of Hardware Village and as a result of any improvements we make to our properties. As of June 30, 2019 , we had $2.3 million of asset management fees payable related to asset management fees incurred for the month of June 2019, which was subsequently paid in July 2019 .
General and administrative expenses increased from $3.5 million for the six months ended June 30, 2018 to $3.9 million for the six months ended June 30, 2019 . The increase in general and administrative expenses was primarily due to professional fees incurred related to the Portfolio Sale. We have agreed with our advisor to evenly divide certain costs and expenses related to the Portfolio Sale. We expect general and administrative expenses to vary in future periods.

40
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Depreciation and amortization increased from $78.0 million for the six months ended June 30, 2018 to $83.0 million for the six months ended June 30, 2019 , primarily due to the acquisition of the developer’s 25% equity interest in Village Center Station II in October 2018 and the operation of Village Center Station II, the operation of Hardware Village West, and accelerated depreciation and amortization due to early lease terminations for properties held throughout both periods, partially offset by the sale of Rocklin Corporate Center in May 2018. We expect depreciation and amortization to decrease in future periods due to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, depreciation and amortization would vary in future periods as a result of a decrease in amortization related to fully amortized tenant origination and absorption costs, offset by an increase as a result of the development and subsequent full operation of Hardware Village.
Interest expense increased from $13.3 million for the six months ended June 30, 2018 to $85.4 million for the six months ended June 30, 2019 . Included in interest expense was (i) $36.1 million and $47.5 million of interest expense payments for the six months ended June 30, 2018 and 2019 , respectively, (ii) the amortization of deferred financing costs of $3.3 million and $3.2 million for the six months ended June 30, 2018 and 2019 , respectively, and (iii) interest expense (including gains and losses) incurred as a result of our derivative instruments, which reduced interest expense by $24.1 million for the six months ended June 30, 2018 and increased interest expense by $35.3 million for the six months ended June 30, 2019 . Additionally, during the six months ended June 30, 2018 and 2019 , we capitalized $2.1 million and $1.1 million of interest related to construction in progress, respectively. The increase in interest expense was primarily due to changes in fair values with respect to our interest rate swaps that are not accounted for as cash flow hedges, a higher 30-day LIBOR rate and an increased level of borrowing. We expect interest expense to decrease in future periods due to the repayment of debt related to the Portfolio Sale in July 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Additionally, interest expense would increase in future periods as a result of additional borrowings for capital expenditures and development activity. Our interest expense in future periods will also vary based on fair value changes with respect to our interest rate swaps that are not accounted for as cash flow hedges and fluctuations in one-month LIBOR (for our variable rate debt). 
During the six months ended June 30, 2019 , we recorded non-cash impairment charges of $8.7 million to write down the carrying value of an office/retail property to its estimated fair value as a result of changes in cash flow estimates including a change to the anticipated hold period of the property, which triggered the future estimated undiscounted cash flows to be lower than the net carrying value of the property. The decrease in cash flow projections was primarily due to the continued lack of demand for the property’s retail component resulting in longer than estimated lease-up periods and lower projected rental rates.
During the six months ended June 30, 2018 , we incurred $1.9 million of other income primarily as a result of a reduction in contingent liability of $1.6 million during the second quarter of 2018.
During the six months ended June 30, 2019 , we recognized a loss from extinguishment of debt of $0.2 million related to the write-off of unamortized deferred financing costs as a result of the early pay-off of the 3003 Washington Boulevard Mortgage Loan.
During the six months ended June 30, 2018 , we recognized $0.3 million in equity loss of unconsolidated joint venture related to the operations of Village Center Station II.
During the six months ended June 30, 2018 , we sold one office property that resulted in a gain on sale of $11.9 million . During the six months ended June 30, 2019 , we did not dispose of any properties.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Funds from Operations and Modified Funds from Operations
We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. FFO represents net income, excluding gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), gains and losses from change in control, impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with U.S. generally accepted accounting principles (“GAAP”) implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.
Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. As a result, our management also uses MFFO as an indicator of our ongoing performance as well as our dividend sustainability. MFFO excludes from FFO: acquisition fees and expenses (to the extent that such fees and expenses have been recorded as operating expenses); adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above and below market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. We compute MFFO in accordance with the definition of MFFO included in the practice guideline issued by the IPA in November 2010 as interpreted by management. Our computation of MFFO may not be comparable to other REITs that do not compute MFFO in accordance with the current IPA definition or that interpret the current IPA definition differently than we do.
We believe that MFFO is helpful as a measure of ongoing operating performance because it excludes costs that management considers more reflective of investing activities and other non-operating items included in FFO.  Management believes that excluding acquisition fees and expenses (to the extent that such fees and expenses have been recorded as operating expenses) from MFFO provides investors with supplemental performance information that is consistent with management’s analysis of the operating performance of the portfolio over time.  MFFO also excludes non-cash items such as straight-line rental revenue.  Additionally, we believe that MFFO provides investors with supplemental performance information that is consistent with the performance indicators and analysis used by management, in addition to net income and cash flows from operating activities as defined by GAAP, to evaluate the sustainability of our operating performance.  MFFO provides comparability in evaluating the operating performance of our portfolio with other non-traded REITs which typically have limited lives with short and defined acquisition periods and targeted exit strategies.  MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes.
FFO and MFFO are non-GAAP financial measures and do not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO and MFFO include adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization and the other items described above. Accordingly, FFO and MFFO should not be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, FFO and MFFO do not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an indication of our liquidity. We believe FFO and MFFO, in addition to net income and cash flows from operating activities as defined by GAAP, are meaningful supplemental performance measures; however, neither FFO nor MFFO reflects adjustments for the operations of properties sold or under contract to sale during the periods presented. During periods of significant disposition activity, FFO and MFFO are much more limited measures of future performance and dividend sustainability. In connection with our presentation of FFO and MFFO, we are providing information related to the proportion of MFFO related to properties sold or under contract to sale as of June 30, 2019.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Although MFFO includes other adjustments, the exclusion of adjustments for straight-line rent, the amortization of above- and below-market leases, unrealized (gains) losses on derivative instruments, adjustments related to contingent purchase price obligations and loss from extinguishment of debt are the most significant adjustments for the periods presented.  We have excluded these items based on the following economic considerations:
•
Adjustments for straight-line rent.  These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease.  We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, while also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we expect to receive in a future period or rent that was received in a prior period;
•
Amortization of above- and below-market leases.   Similar to depreciation and amortization of real estate assets and lease related costs that are excluded from FFO, GAAP implicitly assumes that the value of intangible lease assets and liabilities diminishes predictably over time and requires that these charges be recognized currently in revenue.  Since market lease rates in the aggregate have historically risen or fallen with local market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the realized economics of the real estate;
•
Unrealized (gains) losses on derivative instruments.   These adjustments include unrealized (gains) losses from mark-to-market adjustments on interest rate swaps. The change in fair value of interest rate swaps not designated as a hedge are non-cash adjustments recognized directly in earnings and are included in interest expense.  We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the economic impact of our interest rate swap agreements;
•
Adjustments relating to contingent purchase price obligations. These are adjustments relating to contingent purchase price obligations where such adjustments have been included in the derivation of GAAP net income. We believe that the elimination of the contingent purchase price consideration adjustment, included in other income for GAAP purposes, is appropriate because the adjustment is a non-cash adjustment that is not reflective of our ongoing operating performance; and
•
Loss from extinguishment of debt . A loss from extinguishment of debt, which includes prepayment fees related to the extinguishment of debt, represents the difference between the carrying value of any consideration transferred to the lender in return for the extinguishment of a debt and the net carrying value of the debt at the time of settlement. We have excluded the loss from extinguishment of debt in our calculation of MFFO because these losses do not impact the current operating performance of our investments and do not provide an indication of future operating performance.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculation of MFFO, for the three and six months ended June 30, 2019 and 2018 , respectively (in thousands). No conclusions or comparisons should be made from the presentation of these periods.
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2019
 
2018
 
2019
 
2018
Net (loss) income attributable to common stockholders
 
$
(28,115
)
 
$
17,749

 
$
(54,793
)
 
$
34,379

 Depreciation of real estate assets
 
26,109

 
23,448

 
52,605

 
46,603

 Amortization of lease-related costs
 
15,523

 
15,577

 
30,435

 
31,403

 Impairment charges on real estate
 
—

 
—

 
8,706

 
—

 Gain on sale of real estate, net
 
—

 
(11,942
)
 
—

 
(11,942
)
FFO attributable to common stockholders (1)
 
13,517

 
44,832

 
36,953

 
100,443

Straight-line rent and amortization of above- and below-market leases, net
 
(2,304
)
 
(2,539
)
 
(5,126
)
 
(7,534
)
Loss from extinguishment of debt
 
196

 
—

 
196

 
—

Unrealized losses (gains) on derivative instruments
 
23,280

 
(7,289
)
 
37,899

 
(25,326
)
Adjustment relating to contingent purchase price obligation
 
—

 
(1,575
)
 
—

 
(1,575
)
MFFO attributable to common stockholders (1)
 
$
34,689

 
$
33,429

 
$
69,922

 
$
66,008

_____________________
(1) FFO and MFFO includes $4.2 million and $6.8 million of lease termination income for the three and six months ended June 30, 2019 , respectively. FFO and MFFO includes $0.4 million and $0.7 million of lease termination income for the three and six months ended June 30, 2018 , respectively.
Our calculation of MFFO above includes amounts related to the operations of the Portfolio sold on July 18, 2019. See “Overview” above and “Subsequent Events - Portfolio Sale and Related Transactions” below. Please refer to the table below with respect to the proportion of MFFO related to the real estate property sold and related to the Portfolio which was under contract for sale as of June 30, 2019 (in thousands).
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
MFFO by component:
 
 
 
 
 
 
 
Assets held for investment
$
22,996

 
$
21,591

 
$
43,733

 
$
41,951

Real estate properties sold
—

 
379

 
—

 
872

Real estate properties under contract for sale
11,693

 
11,459

 
26,189

 
23,185

MFFO
$
34,689

 
$
33,429

 
$
69,922

 
$
66,008

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
Distributions declared, distributions paid and cash flow from operating activities were as follows for the first and second quarters of 2019 (in thousands, except per share amounts):
 
 
Distributions Declared
 
Distributions Declared
Per Share (1)
 
Distributions Paid  (2)
 
Cash Flow from
Operating Activities
Period
 
 
 
Cash
 
Reinvested
 
Total
 
First Quarter 2019
 
$
28,523

 
$
0.1625

 
$
15,390

 
$
13,497

 
$
28,887

 
$
15,008

Second Quarter 2019
 
28,404

 
0.1625

 
15,382

 
12,974

 
28,356

 
29,918

 
 
$
56,927

 
$
0.3250

 
$
30,772

 
$
26,471

 
$
57,243

 
$
44,926

_____________________
(1)  
Assumes share was issued and outstanding each day that was a record date for distributions during the period presented.
(2)  
Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid on or about the first business day of the following month.

44
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

For the six months ended June 30, 2019 , we paid aggregate distributions of $57.2 million , including $30.8 million of distributions paid in cash and $26.4 million of distributions reinvested through our dividend reinvestment plan. Our net loss attributable to common stockholders for the six months ended June 30, 2019 was $54.8 million . FFO for the six months ended June 30, 2019 was $37.0 million and cash flow from operating activities was $44.9 million . See the reconciliation of FFO to net (loss) income attributable to common stockholders above. We funded our total distributions paid, which includes net cash distributions and dividends reinvested by stockholders, with $43.3 million of cash flow from current operating activities, $11.1 million of cash flow from operating activities in excess of distributions paid during prior periods and $2.8 million from debt financing. For purposes of determining the source of our distributions paid, we assume first that we use cash flow from operating activities from the relevant or prior periods to fund distribution payments.
Over the long-term, we generally expect our distributions will be paid from cash flow from operating activities from current periods or prior periods (except with respect to distributions related to sales of our assets and distributions related to the repayment of principal under any real estate-related investments we make). From time to time during our operational stage, we may not pay distributions solely from our cash flow from operating activities, in which case distributions may be paid in whole or in part from debt financing. To the extent that we pay distributions from sources other than our cash flow from operating activities, the overall return to our stockholders may be reduced. Further, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements”, “-Market Outlook - Real Estate and Real Estate Finance Markets,” “-Liquidity and Capital Resources,” and “-Results of Operations” herein, and the risks discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the SEC, and those discussed in Part II, Item 1A herein. Those factors include: the future operating performance of our real estate investments in the existing real estate and financial environment; the success and economic viability of our tenants; our ability to refinance existing indebtedness at comparable terms; changes in interest rates on any variable rate debt obligations we incur; and the level of participation in our dividend reinvestment plan. In the event our FFO and/or cash flow from operating activities decrease in the future, the level of our distributions may also decrease.  In addition, future distributions declared and paid may exceed FFO and/or cash flow from operating activities.
Critical Accounting Policies
Our consolidated interim financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. There have been no significant changes to our policies during 2019 , except for our adoption of the lease accounting standards issued by the Financial Accounting Standards Board effective on January 1, 2019 .
Revenue Recognition - Operating Leases
Real Estate
On January 1, 2019, we adopted the lease accounting standards under Topic 842 including the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, we (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) did not reassess the lease classification for any expired or existing lease, and (iii) did not reassess initial direct costs for any existing leases. We did not elect the practical expedient related to using hindsight to reevaluate the lease term. In addition, we adopted the practical expedient for land easements and did not assess whether existing or expired land easements that were not previously accounted for as leases under the lease accounting standards of Topic 840 are or contain a lease under Topic 842.
In addition, Topic 842 provides an optional transition method to allow entities to apply the new lease accounting standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. We adopted this transition method upon its adoption of the lease accounting standards of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019. Our comparative periods presented in the financial statements will continue to be reported under the lease accounting standards of Topic 840.

45
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

In accordance with Topic 842, tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on our statement of operations beginning January 1, 2019. In addition, we adopted the practical expedient available under Topic 842, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met, specifically related to tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. We believe the two conditions have been met for tenant reimbursements for common area maintenance as (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on our statement of operations beginning January 1, 2019.
We recognize minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and record amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:
•
whether the lease stipulates how a tenant improvement allowance may be spent;
•
whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
•
whether the amount of a tenant improvement allowance is in excess of market rates;
•
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
•
whether the tenant improvements are unique to the tenant or general purpose in nature; and
•
whether the tenant improvements are expected to have any residual value at the end of the lease.
We 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. We recognize rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is determined to be probable.
In accordance with Topic 842, we make a determination of whether the collectibility of the lease payments in an operating lease is probable. If we determine the lease payments are not probable of collection, we would fully reserve for any contractual lease payments, deferred rent receivable, and tenant reimbursements and would recognize rental income only if cash is received. Beginning January 1, 2019, these changes to our collectibility assessment are reflected as an adjustment to rental income. Prior to January 1, 2019, bad debt expense related to uncollectible accounts receivable and deferred rent receivable was included in operating, maintenance, and management expense in the statement of operations.  Any subsequent changes to the collectibility of the allowance for doubtful accounts as of December 31, 2018, which was recorded prior to the adoption of Topic 842, are recorded in operating, maintenance, and management expense in the statement of operations.    
Beginning January 1, 2019, we, as a lessor, record costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease, as an expense and classify such costs as operating, maintenance, and management expense on our consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842.

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Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Subsequent Events
We evaluate subsequent events up until the date the consolidated financial statements are issued.
Distributions Paid
On July 1, 2019, we paid distributions of $9.5 million , which related to distributions in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on June 18, 2019. On August 1, 2019, we paid distributions of $9.5 million , which related to distributions in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on July 19, 2019.
Distributions Authorized
On August 8, 2019, our board of directors authorized an August 2019 distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on August 19, 2019, which we expect to pay in September 2019, and a September 2019 distribution in the amount of $0.05416667 per share of common stock to stockholders of record as of the close of business on September 20, 2019, which we expect to pay in October 2019.
Investors may choose to receive cash distributions or purchase additional shares through the our dividend reinvestment plan.
Portfolio Sale and Related Transactions
On July 18, 2019, we, through 12 wholly owned subsidiaries, sold the Portfolio to various subsidiaries of the Purchaser. The sale price of the Portfolio was $1.2 billion, before third-party closing costs and credits of approximately $16.1 million and excluding any disposition fees payable to our advisor. In connection with the Portfolio Sale, we repaid $613.1 million of outstanding debt secured by the properties in the Portfolio. Pursuant to a set-off agreement, as amended, $271.0 million of the consideration payable by the Purchaser under the Purchase Agreement was set-off against REIT Properties III’s payment obligations for its two subscriptions for units in the Purchaser: (i) the $201 million of units subscribed for by REIT Properties III pursuant to a subscription agreement, as amended, and (ii) $70 million of units subscribed for by REIT Properties III under the placement tranche of the Purchaser’s offering. As such, on July 19, 2019, REIT Properties III acquired 307,953,999 units in the Purchaser at an aggregate price of $271 million representing a 33.3% ownership interest in the Purchaser. Currently, the Purchaser does not own any properties other than the Portfolio.
    Also, on July 15, 2019, REIT Properties III entered into a placement agreement (the “Placement Agreement”) and unit lending agreement (the “Unit Lending Agreement”) with respect to an offering of units of the Purchaser. REIT Properties III is a party to the Placement Agreement as unit lender, and pursuant to the Placement Agreement, REIT Properties III has granted the underwriters in the offering an over-allotment option (the “Over-Allotment Option”) in which REIT Properties III agreed to sell to the underwriters up to 22,727,000 of REIT Properties III’s units in the Purchaser at the offering price. The Over-Allotment Option is exercisable for up to 30 days after the listing of the units of the Purchaser. Any units purchased pursuant to the Over-Allotment Option would reduce REIT Properties III’s ownership interest in the Purchaser. Pursuant to the Unit Lending Agreement, REIT Properties III agreed to lend the 22,727,000 units subject to the Over-Allotment Option to the stabilizing manager of the offering for the purpose of facilitating the settlement of the over-allotment of units in connection with the Purchaser’s offering. The stabilizing manager will re-deliver to REIT Properties III such number of units that are not purchased pursuant to the exercise of the Over-Allotment Option.
On July 8, 2019, we, our Operating Partnership, KBS REIT Holdings III LLC and REIT Properties III (collectively, the “REIT III Entities”) entered into lock-up letter agreements with the underwriters whereby each of the REIT III Entities agreed to hold 100% of REIT Properties III’s units in the Purchaser for six months following the listing of the Purchaser and to hold 50% of REIT Properties III’s units in the Purchaser for 12 months following the listing of the Purchaser. During the respective lock-up periods, without the prior written consent of the underwriters and other than pursuant to the Over-Allotment Option or lending for stabilizing transactions pursuant to the Unit Lending Agreement (described above), the REIT III Entities may not offer, sell, pledge, option, grant any rights or warrants, or enter into any swap, hedge or other similar arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the units held by REIT Properties III.
The units in the Purchaser have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, with the exception of the units sold to REIT Properties III, The Schreiber Trust and the Linda Bren 2017 Trust, the units of the Purchaser are being offered and sold only outside the United States in an offshore transaction pursuant to Regulation S under the Securities Act.

47
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The Purchaser is externally managed by a joint venture (the “Manager”) among KBS Asia Partners Pte. Ltd., an entity in which Charles J. Schreiber, Jr. currently holds an indirect 50% ownership interest, and other entities unaffiliated with us. The Purchaser is expected to pay the Manager an annual base fee of 10% of annual distributable income and an annual performance fee of 25% of the increase in distributions per unit of the Purchaser from the preceding year; however, there would not be any performance fee for 2019 and in 2020 such fee will be based on an increase over projected distributions per unit. In addition, for future acquisitions, the Purchaser will pay the Manager an acquisition fee of 1% of the acquisition price of any real estate acquired. No acquisition fee will be paid with respect to the Purchaser’s acquisition of the Portfolio. The Purchaser will also pay the Manager a divestment fee of 0.5% of the sale price of any real estate sold or divested and a development management fee of 3% of the total project costs incurred for development projects, to the extent the Purchaser acquires a development project. A small portion of these fees paid to the Manager will be paid to KBS Realty Advisors LLC, an affiliate of KBS Capital Advisors and an entity controlled by Mr. Schreiber, for sub-advisory services. The Schreiber Trust, a trust whose beneficiaries are Charles J. Schreiber, Jr. and his family members, and the Linda Bren 2017 Trust will subscribe for units to be issued by the Purchaser. In addition, Barbara R. Cambon, one of our former directors, accepted the positions of Chief Executive Officer and Chief Investment Officer of the Manager and will receive compensation for her services. In connection with her acceptance of these positions, Ms. Cambon resigned from the Company’s board of directors effective June 26, 2019.
Share Redemption Program
See Part II, Item 5 “Other Information,” for updated information about our share redemption program.



48
Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the acquisition, expansion and refinancing of our real estate investment portfolio and operations. We may also be exposed to the effects of changes in interest rates as a result of the acquisition and origination of mortgage and other loans. Our profitability and the value of our real estate investment portfolio may be adversely affected during any period as a result of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We may manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that variable rate exposure is kept at an acceptable level or by utilizing a variety of financial instruments, including interest rate caps, floors, and swap agreements, in order to limit the effects of changes in interest rates on our operations. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for the payment of distributions to our stockholders and that the losses may exceed the amount we invested in the instruments.
We borrow funds at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future earnings or cash flows on 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 June 30, 2019 , the fair value of our fixed rate debt was $193.1 million and the outstanding principal balance of our fixed rate debt was $189.5 million .  The fair value estimate of our fixed rate debt is calculated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loan was originated as of June 30, 2019 .  As we expect to hold our fixed rate instruments to maturity (unless the property securing the debt is sold and the loan is repaid) and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, 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 operations. 
Conversely, movements in interest rates on our variable rate debt would change our future earnings and cash flows, but 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 June 30, 2019 , we were exposed to market risks related to fluctuations in interest rates on $721.2 million of variable rate debt outstanding after giving consideration to the impact of interest rate swap agreements on approximately $1.4 billion of our variable rate debt. Based on interest rates as of June 30, 2019 , if interest rates were 100 basis points higher or lower during the 12 months ending June 30, 2020, interest expense on our variable rate debt would increase or decrease by $7.2 million .
The weighted-average interest rates of our fixed rate debt and variable rate debt as of June 30, 2019 were 4.1% and 3.9%, respectively.  The weighted-average interest rates represent the actual interest rate in effect as of June 30, 2019 (consisting of the contractual interest rate and the effect of interest rate swaps, if applicable), using interest rate indices as of June 30, 2019 where applicable.
For a discussion of the interest rate risks related to the current capital and credit markets, see Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Outlook - Real Estate and Real Estate Finance Markets” herein and the risks discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the SEC.
Item 4. 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.
Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

49
Table of Contents
PART II. OTHER INFORMATION


Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
In addition to the risk discussed below, please see the risks discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the SEC.
Because of the limitations on the dollar amount of shares that may be redeemed under our share redemption program and the number of shares that may be redeemed during a calendar year, it is not likely that we will be able to redeem shares submitted as Ordinary Redemptions after the August 2019 redemption date and shares submitted as Ordinary Redemptions for the August 2019 redemption date will likely be honored on a pro rata basis pursuant to the terms of the share redemption program.
During any calendar year, we may redeem (i) only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year unless our board of directors authorizes additional funds for redemption, provided that once we have received requests for redemptions, whether in connection with Special Redemptions (defined below) or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $10.0 million or less, the last $10.0 million of available funds shall be reserved exclusively for Special Redemptions and (ii) no more than 5% of the weighted average number of shares outstanding during the prior calendar year.
Based on the amount of net proceeds raised from the sale of shares under our dividend reinvestment plan during 2018, we had an aggregate of $56.1 million available for redemptions in 2019, including the reserve for redemptions sought in connection with a stockholder’s death, “Qualifying Disability” or “Determination of Incompetence” (each as defined in the share redemption program and together with redemptions sought in connection with a stockholder’s death, “Special Redemptions”; all redemptions that do not meet the requirements for a Special Redemption are “Ordinary Redemptions”). As a result of the above-referenced limitations on the number of shares we can purchase pursuant to the share redemption program, as of March 1, 2019, we had exhausted all funds available for Ordinary Redemptions in 2019. As of July 31, 2019 , we had $5.1 million available for Special Redemptions for the remainder of 2019. As of July 31, 2019 , we had a total $40.9 million of outstanding and unfulfilled Ordinary Redemption requests, representing 3,583,572 shares. On August 8, 2019, our board of directors approved an increase of the funding available for Ordinary Redemptions for calendar year 2019 by up to an additional $40.0 million, which including redemptions fulfilled to date and the remaining amount reserved for Special Redemptions, increases the share redemption program to the maximum amount for 2019.
Given the volume of redemption requests in 2019, and because of the limitations on the dollar amount of shares that may be redeemed under our share redemption program and the number of shares that may be redeemed during a calendar year, it is not likely that we will be able to redeem shares submitted as Ordinary Redemptions after the August 2019 redemption date and shares submitted as Ordinary Redemptions for the August 2019 redemption date will likely be honored on a pro rata basis pursuant to the terms of the share redemption program.
Our board of directors may amend, suspend or terminate our share redemption program upon 10 business days’ notice to our stockholders. We describe the restrictions of our share redemption program in detail below under Part II, Item 2(c).

50
Table of Contents
PART II. OTHER INFORMATION (CONTINUED)
Item 1A. Risk Factors (continued)


Our advisor and its affiliates face conflicts of interest relating to the acquisition of assets due to their relationship with other KBS-sponsored programs and/or KBS-advised investors, which could result in decisions that are not in our best interest or the best interests of our stockholders.
We rely on our sponsor, KBS Holdings LLC, our advisor, KBS Capital Advisors, and other key real estate and debt finance professionals at our advisor, including Mr. Schreiber, to identify suitable investment opportunities for us. KBS Capital Advisors and KBS Realty Advisors advise other KBS-sponsored programs and funds. As such, KBS-sponsored programs that have funds available for investment and KBS-advised investors that have funds available for investment rely on many of the same real estate and debt finance professionals, as will future KBS-sponsored programs and KBS-advised investors. Many investment opportunities that are suitable for us may also be suitable for other KBS-sponsored programs and KBS-advised investors. In connection with the Portfolio Sale, KBS Capital Advisors and KBS Realty Advisors proposed that the Company’s conflicts committee and board of directors adopt an asset allocation policy (the “Allocation Process”) among us, KBS Real Estate Investment Trust II, Inc. and KBS Growth & Income REIT, Inc. (collectively, the “Core Strategy REITs”) and the Purchaser. The board of directors and conflicts committee adopted the Allocation Process as proposed. The Allocation Process provides that, in order to mitigate potential conflicts of interest that may arise among the Core REITs and the Purchaser, upon the listing of the Purchaser (which occurred on July 19, 2019), potential asset acquisitions that meet all of the following criteria would be offered first to the Purchaser:
(i)
Class A office building;
(ii)
Purchase price of at least $125.0 million;
(iii)
Average occupancy of at least 90% for the first two years based on contractual in-place leases; and
(iv)
Stabilized property investment yield that is generally supportive of the distributions per unit of the Purchaser.
To the extent the Purchaser does not have the funds to acquire the asset or to the extent the Manager of the Purchaser decides to forego the acquisition opportunity, such asset may then be offered to the Core Strategy REITs at the discretion of KBS Capital Advisors.
For so long as we are externally advised, our charter provides that it shall not be a proper purpose of the company for us to make any significant investment unless our advisor has recommended the investment to us. Thus, the real estate and debt finance professionals of our advisor could direct attractive investment opportunities to other KBS-sponsored programs or KBS-advised investors. Such events could result in us investing in properties that provide less attractive returns, which would reduce the level of distributions we may be able to pay our stockholders.
A significant percentage of our assets is invested in Accenture Tower (formerly 500 West Madison) and the value of our stockholders’ investment in us will fluctuate with the performance of this investment.
As of July 18, 2019, Accenture Tower (formerly 500 West Madison) represented approximately 17.3% of our total assets and represented approximately 13.7% of our total annualized base rent. Further, as a result of this acquisition, the geographic concentration of our portfolio makes us particularly susceptible to adverse economic developments in the Chicago real estate market. Any adverse economic or real estate developments in this market, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect our operating results and our ability to pay distributions to our stockholders.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
a)
During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933.
b)
Not applicable.
c)
We have a share redemption program that may enable stockholders to sell their shares to us in limited circumstances. The restrictions of our share redemption program will severely limit our stockholders’ ability to sell their shares should they require liquidity and will limit our stockholders’ ability to recover an amount equal to our estimated value per share. The following is a description of our share redemption program.

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Table of Contents
PART II. OTHER INFORMATION (CONTINUED)
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds (continued)

There are several limitations on our ability to redeem shares under our share redemption program:
•
Unless the shares are being redeemed in connection with a stockholder’s death, “Qualifying Disability” or “Determination of Incompetence” (each as defined in the share redemption program, and together with redemptions sought in connection with a stockholder’s death, “Special Redemptions;” all redemptions that do not meet the requirements for a Special Redemption are “Ordinary Redemptions”), we may not redeem shares unless the stockholder has held the shares for one year.
•
During any calendar year, we may redeem only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year, provided that once we have received requests for redemptions, whether in connection with Special Redemptions or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $10.0 million or less, the last $10.0 million of available funds shall be reserved exclusively for Special Redemptions. Notwithstanding anything contained in our share redemption program to the contrary, we may increase or decrease the funding available for the redemption of shares pursuant to the program upon ten business days’ notice to our stockholders.
•
During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.
•
We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland General Corporation Law, as amended from time to time, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.
For a stockholder’s shares to be eligible for redemption in a given month, the administrator must receive a written redemption request from the stockholder or from an authorized representative of the stockholder setting forth the number of shares requested to be redeemed at least five business days before the redemption date. If we cannot redeem all shares presented for redemption in any month because of the limitations on redemptions set forth in our share redemption program, then we will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in our currently effective, or the most recently effective, registration statement, as such registration statement has been amended or supplemented, then we would redeem all of such stockholder’s shares.
If we do not completely satisfy a redemption request on a redemption date because the program administrator did not receive the request in time, because of the limitations on redemptions set forth in our share redemption program or because of a suspension of our share redemption program, then we will treat the unsatisfied portion of the redemption request as a request for redemption at the next redemption date funds are available for redemption, unless the redemption request is withdrawn. Any stockholder can withdraw a redemption request by sending written notice to the program administrator, provided such notice is received at least five business days before the redemption date.
Upon a transfer of shares, any pending redemption requests with respect to such transferred shares will be canceled as of the date we accept the transfer. Stockholders wishing us to continue to consider a redemption request related to any transferred shares must resubmit their redemption request.
Pursuant to our share redemption program, redemptions made in connection with Special Redemptions 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. Ordinary Redemptions are made at a price per share equal to 95% of our most recent estimated value per share as of the applicable redemption date.
On December 3, 2018, our board of directors approved an estimated value per share of our common stock of $12.02 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, 2018, with the exception of an adjustment to our net asset value for the acquisition and assumed loan costs related to our buyout of a joint venture partner’s equity interest in a joint venture that closed subsequent to September 30, 2018 and a reduction to our net asset value for deferred financing costs related to a portfolio revolving loan facility that closed subsequent to September 30, 2018. This estimated value per share became effective for the December 2018 redemption date, which was December 31, 2018.
For purposes of determining the time period a redeeming stockholder has held each share, the time period begins as of the date the stockholder acquired the share; provided, that shares purchased by the redeeming stockholder pursuant to our dividend reinvestment plan will be deemed to have been acquired on the same date as the initial share to which the dividend reinvestment plan shares relate. The date of the share’s original issuance by us is not determinative.

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Table of Contents
PART II. OTHER INFORMATION (CONTINUED)
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds (continued)

We currently expect to utilize an independent valuation firm to update our estimated value per share no later than December 2019. We will report the estimated value per share of our common stock in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC. We will also provide information about our estimated value per share on our website, www.kbsreitiii.com (such information may be provided by means of a link to our public filings on the SEC’s website, www.sec.gov ).
Our board of directors may amend, suspend or terminate our share redemption program upon 10 business days’ notice to stockholders. We may provide 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.
The complete share redemption program document is filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended March 31, 2018 and is available at the SEC’s website at www.sec.gov .
During the six months ended June 30, 2019 , we funded redemptions under our share redemption program with the net proceeds from our dividend reinvestment plan and we redeemed shares pursuant to our share redemption program as follows:
Month
 
Total Number
of Shares Redeemed  (1)
 
Average Price Paid
Per Share  (2)
 
Approximate Dollar Value of Shares Available That May Yet Be  Redeemed Under the Program
January 2019
 
3,863,019

 
$
11.43

 
(3)  
February 2019
 
204,861

 
$
11.59

 
(3)  
March 2019
 
89,190

 
$
12.02

 
(3)  
April 2019
 
72,512

 
$
12.02

 
(3)  
May 2019
 
67,724

 
$
12.02

 
(3)  
June 2019
 
100,579

 
$
12.02

 
(3)  
Total
 
4,397,885

 
 
 
 
_____________________
(1) We announced the adoption and commencement of the program on October 14, 2010. We announced amendments to the program on March 8, 2013 (which amendment became effective on April 7, 2013), on March 7, 2014 (which amendment became effective on April 6, 2014) and on May 9, 2018 (which amendment became effective on June 8, 2018).
(2) The prices at which we redeem shares under the program are as set forth above.
(3) We limit the dollar value of shares that may be redeemed under the program as described above. Based on the amount of net proceeds raised from the sale of shares under our dividend reinvestment plan during 2018, we had an aggregate of $56.1 million available for redemptions in 2019, including the reserve for Special Redemptions. Based on this limitation, as of March 1, 2019, we exhausted all funds available for Ordinary Redemptions in 2019. As of July 31, 2019 we had $5.1 million available for Special Redemptions for the remainder of 2019. As of July 31, 2019 , we had a total of $40.9 million of outstanding and unfulfilled Ordinary Redemption requests, representing 3,583,572 shares, recorded as redemptions payable in other liabilities on the accompanying consolidated balance sheets. On August 8, 2019, our board of directors approved an increase of the funding available for Ordinary Redemptions for calendar year 2019 by up to an additional $40.0 million, which including redemptions fulfilled to date and the remaining amount reserved for Special Redemptions, increases the share redemption program to the maximum amount for 2019. Given the volume of redemption requests in 2019, and because of the limitations on the dollar amount of shares that may be redeemed under our share redemption program and the number of shares that may be redeemed during a calendar year, it is not likely that we will be able to redeem shares submitted as Ordinary Redemptions after the August 2019 redemption date and shares submitted as Ordinary Redemptions for the August 2019 redemption date will likely be honored on a pro rata basis pursuant to the terms of the share redemption program.
In addition to the redemptions under the share redemption program described above, during the six months ended June 30, 2019 , we repurchased an additional 442,275 shares of our common stock at a weighted-average price of $11.42 per share for an aggregate price of $5.1 million .
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.

53
Table of Contents
PART II. OTHER INFORMATION (CONTINUED)
Item 5.    Other Information

Increase in Funding for Ordinary Redemptions
Based on the amount of net proceeds raised from the sale of shares under our dividend reinvestment plan during 2018, we initially had an aggregate of $56.1 million available for redemptions in 2019, including the $10.0 million reserve for redemptions sought in connection with a Special Redemption. As of March 1, 2019, we had exhausted all funds available for Ordinary Redemptions in 2019. As of July 31, 2019 , we had $5.1 million available for Special Redemptions for the remainder of 2019. As of July 31, 2019 , we had a total $40.9 million of outstanding and unfulfilled Ordinary Redemption requests, representing 3,583,572 shares. On August 8, 2019, our board of directors approved an increase of the funding available for Ordinary Redemptions for calendar year 2019 by up to an additional $40.0 million, which including redemptions fulfilled to date and the remaining amount reserved for Special Redemptions, increases the share redemption program to the maximum amount for 2019.
Given the volume of redemption requests in 2019, and because of the limitations on the dollar amount of shares that may be redeemed under our share redemption program and the number of shares that may be redeemed during a calendar year, it is not likely that we will be able to redeem shares submitted as Ordinary Redemptions after the August 2019 redemption date and shares submitted as Ordinary Redemptions for the August 2019 redemption date will likely be honored on a pro rata basis pursuant to the terms of the share redemption program.
Item 6. Exhibits
Ex.
 
Description
 
 
 
3.1
 
 
 
 
3.2
 
 
 
 
4.1
 
 
 
 
4.2
 
 
 
 
10.1
 
 
 
 
10.2
 
 
 
 
10.3
 
 
 
 
10.4
 
 
 
 
10.5
 
 
 
 
10.6
 
 
 
 
10.7
 
 
 
 
10.8
 
 
 
 
10.9
 
 
 
 
10.10
 
 
 
 
10.11
 
 
 
 
10.12
 

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Table of Contents
PART II. OTHER INFORMATION (CONTINUED)

Item 6. Exhibits (continued)

Ex.
 
Description
 
 
 
31.1
 
 
 
 
31.2
 
 
 
 
32.1
 
 
 
 
32.2
 
 
 
 
99.1
 
 
 
 
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


55
Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 
KBS REAL ESTATE INVESTMENT TRUST III, INC.
 
 
 
 
Date:
August 9, 2019
By:
/S/  C HARLES  J. S CHREIBER , J R.         
 
 
 
Charles J. Schreiber, Jr.
 
 
 
Chairman of the Board,
Chief Executive Officer and Director
 
 
 
(principal executive officer)
 
 
 
 
Date:
August 9, 2019
By:
/S/  J EFFREY  K. W ALDVOGEL         
 
 
 
Jeffrey K. Waldvogel
 
 
 
Chief Financial Officer, Treasurer and Secretary
 
 
 
(principal financial officer)

56

Exhibit 10.1

[EXECUTION VERSION]





_____________________________________________________________________________
PORTFOLIO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
BY AND BETWEEN
Those Seller Parties listed on Exhibit A attached hereto
(collectively, “Seller”)
AND
Those Buyer Parties listed on Exhibit A attached hereto
(collectively, “Buyer”)
_____________________________________________________________________________





TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
Page

 
 
 
 
 
1.
BASIC TERMS AND DEFINITIONS; REFERENCES
1

 
 
 
 
 
1.1
Basic Terms and Definitions
1

 
1.2
References
2

 
 
 
 
 
2.
PURCHASE AND SALE
2

 
 
 
 
 
3.
PURCHASE PRICE
3

 
 
 
 
 
 
3.1
Purchase Price; Allocation
3

 
3.2
Payment of Purchase Price
3

 
3.3
Independent Contract Consideration
4

 
 
 
 
 
4.
PROPERTY INFORMATION; TITLE POLICES; INSPECTIONS; CONFIDENTIALITY
4

 
 
 
 
 
 
4.1
Property Information
4

 
4.2
Title Reports; Title Policy
5

 
 
 
 
 
 
 
4.2.1
Delivery of Title Policy at Closing
5

 
 
 
 
 
 
4.3
Inspections
6

 
 
 
 
 
 
 
4.3.1
Inspections in General6
 
 
 
4.3.2
Environmental Inspections
7

 
 
 
 
 
 
4.4
Contracts
7

 
4.5
Confidentiality
7

 
4.6
Tenant Estoppel Certificates
8

 
 
 
 
 
5.
OPERATIONS AND RISK OF LOSS
8

 
 
 
 
 
 
5.1
Ongoing Operations
8

 
5.2
New Contracts
8

 
5.3
Leasing Arrangements
8

 
5.4
Damage or Condemnation
9

 
5.5
Association Notices
9

 
 
 
 
 
6.
SELLER'S AND BUYER'S DELIVERIES
10

 
 
 
 
 
 
6.1
Seller's Deliveries into Escrow
10

 
6.2
Buyer's Deliveries into Escrow
10

 
6.3
Closing Statements/Escrow Fees; Tenant Notices
11

 
6.4
Post-Closing Deliveries
11


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7.
CONDITIONS TO BUYER'S AND SELLER'S OBLIGATIONS
11

 
 
 
 
 
7.1
Conditions to Buyer's Obligations
11

 
7.2
Conditions to Seller's Obligations
12

 
7.3
Additional Conditions Precedent to Closing
13

 
7.4
Failure to List on SGX
14

 
 
 
 
 
8.
CLOSE OF ESCROW; POSSESSION
14

 
 
 
 
 
 
8.1
"Close of Escrow"
14

 
 
 
 
 
9.
ESCROW
14

 
 
 
 
 
 
9.1
Closing
14

 
9.2
Escrow and Title Changes
15

 
9.3
Procedures Upon Failure of Condition
16

 
 
 
 
 
10.
PRORATIONS
16

 
 
 
 
 
 
10.1
Collected Rent
16

 
10.2
Operating Costs and Additional Rent Reconciliation
17

 
10.3
Taxes and Assessments
17

 
10.4
Leasing Commissions, Tenant Improvements and Contracts
18

 
10.5
Tenant Deposits
18

 
10.6
Utilities and Utility Deposits
19

 
10.7
Owner Deposits
19

 
10.8
Percentage Rents
19

 
10.9
Final Adjustment After Closing
20

 
 
 
 
11.
SELLER'S REPRESENTATIONS AND WARRANTIES; AS-IS
20

 
 
 
 
 
11.1
Seller's Representations and Warranties
20

 
11.2
As-Is
22

 
 
 
 
 
12.
BUYER'S COVENANTS, REPRESENTATIONS AND WARRANTIES:
RELEASE: ERISA: INDEMNIFICATION
24

 
 
 
 
 
 
12.1
Buyer's Representations and Warranties
25

 
12.2
Release
25

 
12.3
ERISA
27

 
 
 
 
13.
DEFAULT AND DAMAGES
27

 
 
 
 
 
 
13.1
DEFAULT BY BUYER
27

 
13.2
Default by Seller
28

 
 
 
 
 
14.
NO BROKER
29


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15.
MISCELLANEOUS PROVISIONS
29

 
 
 
 
 
15.1
Notices
29

 
15.2
Assignment; Binding on Successors and Assigns
29

 
15.3
Work Product
29

 
15.4
Further Product
30

 
15.5
Attorneys' Fees
30

 
15.6
Survival of Representations, Warranties, Covenants, Obligations and Agreements
30

 
15.7
Entire Agreement
31

 
15.8
Governing Law
32

 
15.9
Counterparts
32

 
15.10
Headings; Construction
32

 
15.11
Time of Essence
32

 
15.12
Partial Validity; Severability
32

 
15.13
No Third Party Beneficiaries
32

 
15.14
Several Liability and Obligation of Buyer
33

 
15.15
Joint Product of Parties
33

 
15.16
Calculation of Time Periods
33

 
15.17
Procedure for Indemnity
33

 
15.18
Waiver of Jury Trial
33

 
15.19
No Personal Liability
33

 
15.20
Several Liability of Seller
34

 
15.21
State-Specific Provisions
34

 
15.22
Exhibits
40

 
15.23
Termination Rights
40


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List of Exhibits Omitted Pursuant to Item 601(a)(5) of Regulation S-K (17 CFR § 229.601(a)(5))
1.
Exhibit E: a list of state-specific documents that must be sent by owners of certain real estate properties to state authorities
2.
Exhibit H: a form of notice to each tenant regarding the sale of the applicable real estate property
3.
Schedule 1: the preliminary title reports or title commitments covering each real estate property
4.
Schedule 5: the addresses of the parties for notices to be sent under the Agreement


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PORTFOLIO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PORTFOLIO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this “ Agreement ”) is made and entered into as of June 27, 2019, among those parties identified as the “ Seller Parties ” on Exhibit A attached hereto and made a part hereof (collectively, “ Seller ” and individually “ a Seller ” or “ each Seller ”), and those parties identified as the “ Buyer Parties ” on Exhibit A attached hereto and made a part hereof (collectively, “ Buyer ” and individually “ a Buyer ” or “ each Buyer ”; Buyer and Seller are sometimes hereinafter collectively referred to as the “ Parties ” and each as a “ Party ”), (throughout this Agreement, all references to “Seller” and/or “Buyer” shall be interpreted to apply to a single “Seller” or all of the “Sellers” as the context requires, and a single “Buyer” or all of the “Buyers” as the context requires) with reference to the following:
A.    Each Seller is the owner of the improved real property (each, a “ Real Property ” and collectively, the “ Real Properties ”) set forth next to such Seller’s name on Exhibit A attached hereto together with certain personal property located upon or used in connection with such improved real property and certain other assets relating thereto, all as more particularly described in Section 2 hereof.
B.    Each Seller desires to sell to each applicable Buyer, and each Buyer desires to purchase from each applicable Seller, the applicable Real Property set forth next to each Seller’s and each Buyer’s names on Exhibit A attached hereto and made a part hereof, together with certain personal property and related assets on the terms and subject to the conditions contained in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
BASIC TERMS AND DEFINITIONS; REFERENCES
1.1     Basic Terms and Definitions.
(a)     Effective Date . The effective date of this Agreement shall be the date set forth above (“ Effective Date ”).
(b)     Closing Date . The Close of Escrow (as defined in Section 8.1 hereof) shall occur on July 18, 2019, at 10:59 p.m. (Pacific Standard Time) (the “ Closing Date ”), or at such other time and date as may be agreed between Buyer and Seller.
(c)     Escrow Holder . The escrow holder shall be Commonwealth Land Title Insurance Company (“ Escrow Holder ”), whose address is 4100 Newport Place Drive, Suite 120, Newport Beach, California 92660, Escrow Officer: Joy Eaton; Telephone: (949) 724-3145; Telecopier: (949) 271-5762.
(d)     Title Company . The title company shall be Commonwealth Land Title Insurance Company (“ Title Company ”), whose address is 888 S. Figueroa Street, Suite 2100, Los Angeles, California 90017, Title Coordinator: Amy Musselman; Telephone: (213) 330

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-3041; Telecopier (213) 330-3085, with a copy to Anthony A. Behrstock; Telephone: (213) 330-2333; Telecopier: (213) 330-3113.
1.2     References . All references to Exhibits and Schedules refer to Exhibits and Schedules attached to this Agreement and all such Exhibits and Schedules are incorporated herein by reference. The words “herein,” “hereof,” “hereinafter” and words of similar import refer to this Agreement as a whole and not to any particular Section hereof.
2.
PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, each Seller agrees to sell, assign and transfer to the applicable Buyer and each Buyer agrees to purchase from the applicable Seller, for the purchase price set forth in Section 3 hereof, all of such Seller’s right, title and interest in and to the following (collectively, the “ Property ” and individually, “ a Property ” or “ each Property ”; all of the Property are sometimes hereinafter collectively referred to herein as the “ Portfolio ”):
2.1    The Real Property set forth next to each Seller’s and each Buyer’s names on Exhibit A attached hereto, together with the buildings located thereon, and all associated parking areas, and all other improvements located thereon (the buildings and such other improvements are referred to herein collectively as the “ Improvements ”); all references hereinafter made to a Real Property shall be deemed to include all rights, privileges, easements and appurtenances benefiting such Real Property and/or the Improvements situated thereon, including, without limitation, all mineral and water rights and all easements, rights-of-way and other appurtenances used or connected with the beneficial use or enjoyment of such Real Property;
2.2    All personal property, equipment, supplies and fixtures (collectively, the “ Personal Property ”) left on each Real Property at the Close of Escrow to the extent owned by Seller;
2.3    All of each Seller’s interest in any intangible property used exclusively in connection with the Real Properties and Improvements, including, without limitation (a) the intangible property rights described in Schedule 7 attached hereto, and (b) all contract rights, warranties, guaranties, licenses, permits, entitlements, governmental approvals and certificates of occupancy;
2.4    All of each Seller’s interest in all leases, tenancy agreements and other similar occupancy agreements currently affecting each Seller’s Real Property and all leases and lease amendments hereafter entered into by Seller to the extent permitted by the provisions of this Agreement (the “ Leases ”); and
2.5    All of each Seller’s interest in the service agreements set forth under each Seller’s name on Exhibit C attached hereto and all service agreements hereafter entered into by such Seller to the extent permitted by the provisions of this Agreement and affecting such Seller’s Real Property as of the Close of Escrow (the “ Contracts ”).
Notwithstanding anything to the contrary contained herein, the term “Property” shall expressly exclude any Rents (as such term is defined in Section 10.1 hereof) or any other amounts payable

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by tenants under the Leases for periods prior to the Close of Escrow, any Rent or other amounts payable by any former tenants of such Property, and any judgments, stipulations, orders, or settlements with any tenants under the Leases or former tenants of such Property (hereinafter collectively referred to as the “ Excluded Property ”).
3.
PURCHASE PRICE
3.1     Purchase Price; Allocation . The purchase price for the Portfolio shall be One Billion Two Hundred Twenty-Two Million Three Hundred Thousand Dollars ($1,222,300,000) (the “ Purchase Price ”). The Purchase Price shall be allocated to each Property as follows:
(a)
Village Center Station II (Charter Communications) : One hundred Forty-Four Million Six Hundred Thousand Dollars ($144,600,000);
(b)
Tower At Lake Carolyn (Tower 909) : Seventy-Six Million Three Hundred Thousand Dollars ($76,300,000);
(c)
One Washingtonian : One Hundred Two Million One Hundred Thousand Dollars ($102,100,000);
(d)
222 Main : Two Hundred Eleven Million Three Hundred Thousand Dollars ($211,300,000);
(e)
171 17th Street : One Hundred Seventy-Six Million Five Hundred Thousand Dollars ($176,500,000);
(f)
Reston Square : Fifty-One Million Dollars ($51,000,000);
(g)
101 South Hanley : Seventy-Nine Million Seven Hundred Thousand Dollars ($79,700,000);
(h)
Village Center Station : Eighty-Nine Million One Hundred Thousand Dollars ($89,200,000);
(i)
Promenade I & II At Eilan : Seventy-Two Million Eight Hundred Thousand Dollars ($72,800,000);
(j)
CrossPoint : Ninety-Seven Million Seven Hundred Thousand Dollars ($97,700,000); and
(k)
Towers At Emeryville (Tower I) : One Hundred Twenty One Million One Hundred Thousand Dollars ($121,100,000).
3.2     Payment of Purchase Price . Provided all the conditions in Section 7.1 hereof have been satisfied or waived by Buyer, Buyer shall deposit in cash or current funds with Escrow Holder no later than 1:00 p.m. (Pacific Standard Time) on the Closing Date (as defined in Section 1.1(b) hereof) an amount equal to the Purchase Price plus or minus applicable prorations pursuant to Section 10 hereof, less the “Relevant Amount” to be “Set-Off” and credited towards

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the Purchase Price pursuant to the terms and conditions of that certain Set-Off Agreement entered into by and between, among other parties, Seller and Buyer.
3.3     Independent Contract Consideration . Within three (3) business days after the Effective Date, Buyer shall deliver to Seller in cash the sum of One Hundred and No/100 Dollars ($100.00) (the “ Independent Contract Consideration ”) which amount has been bargained for and agreed to as consideration for Buyer’s exclusive option to purchase the Real Properties and the right to inspect the Real Properties as provided herein, and for Seller’s execution and delivery of this Agreement. The Independent Contract Consideration is in addition to and independent of all other consideration provided in this Agreement, and is nonrefundable in all events.
4.
PROPERTY INFORMATION; TITLE POLICIES; INSPECTIONS; CONFIDENTIALITY
4.1     Property Information . Prior to the Effective Date, Seller has made available to Buyer, and will continue to make available to Buyer through the Close of Escrow (as defined in Section 8.1 ), to the extent in Seller’s possession, the following, in an electronic data room, at the applicable Real Property, or at the applicable Seller’s local property manager’s office (collectively, the “ Property Information ”):
(a)    the Leases;
(b)    a current rent roll for each Real Property, indicating rents collected, scheduled rents and concessions, delinquencies, and security deposits held (collectively, the “ Rent Rolls ”);
(c)    the most current operating statements for each Real Property, if available (collectively, the “ Operating Statements ”);
(d)    copies of the Contracts;
(e)    existing land title surveys, if any, for each Real Property (each, an “ Existing Survey ” and collectively, the “ Existing Surveys ”); and
(f)    any environmental, soils and/or engineering reports prepared for Seller or Seller’s predecessors (the “ Existing Reports ”).
At the Close of Escrow, Buyer shall reimburse Seller for the reasonable actual out-of-pocket costs and expenses incurred by Seller to obtain or update any third-party study, report or survey that is specifically identified and/or referenced in this Agreement (which, for avoidance of doubt, includes the costs of updating the Existing Surveys, obtaining/ordering the current zoning reports, and procuring certificates of good standing and litigation and UCC searches for the Seller and the parties holding direct and indirect interests in Seller) (“ Reimbursable Expense ”) or that the Parties otherwise agree are Reimbursable Expenses, including any updates or modifications to any Existing Reports that Buyer requests that Seller update for Buyer; provided, however, notwithstanding the foregoing, in no event shall attorneys’ fees and/or accountants’ fees be included as a Reimbursable Expense. The parties agree that the payment of the Reimbursable Expenses is fair and reasonable under the circumstances given that Seller is

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advancing the costs of such studies, reports and surveys for Buyer. For avoidance of doubt, Seller shall not seek reimbursement for the cost of any existing reports or studies that were in Seller’s possession and were merely delivered to Buyer as part of Buyer's due diligence and that were not updated, recertified or otherwise modified for, or in connection with the purchase and sale of the Portfolio as contemplated by this Agreement. Except as expressly provided in Section 13.1 below, Seller shall not be entitled to receive a reimbursement for the Reimbursable Expenses if the Close of Escrow fails to occur.
4.2     Title Reports; Title Policy . Prior to the Effective Date, Seller has made available to Buyer the preliminary title reports or title commitments covering each Real Property (each, a “ Title Report ” and collectively, the “ Title Reports ”) as listed on Schedule 1 attached hereto, together with copies of all documents (collectively, the “ Title Documents ”) referenced in such Title Report. Prior to the Effective Date, Buyer requested that Seller, as a Reimbursable Expense, order the Existing Surveys. Seller covenants and agrees to remove (or cause to be removed) from the Real Properties concurrently with the Close of Escrow (a) all deeds of trust, mortgages and/or other debt instruments to the extent executed by any Seller or expressly assumed by any Seller in writing (collectively, the “ Monetary Encumbrances ”) (which obligation shall be deemed satisfied if Seller or Escrow Holder has received a payoff letter from the applicable lender and Seller has authorized Escrow Holder to use a portion of the Purchase Price to satisfy the applicable obligation in full in accordance with such pay off letter as part of the Close of Escrow), and (b) any other monetary liens (other than mechanic’s liens that are considered Permitted Exceptions) which are of an ascertainable amount, and, as to a Real Property, does not exceed $100,000 in the aggregate for such Real Property, and which are capable of being removed upon the payment of no more than $100,000 in the aggregate for a Real Property (which obligation shall be deemed satisfied if the same is insured over and the amount secured by any of such instruments have been paid and the holders of the same are obligated to cause the same to be released from the applicable Real Property).
4.2.1     Delivery of Title Policy at Closing . As a condition precedent to the Close of Escrow, the Title Company shall have issued and delivered to Buyer, or shall have committed to issue and deliver to Buyer, with respect to each Real Property, a Standard Coverage Owner’s Policy of Title Insurance (2006 Form) or, with respect to the Real Properties located in Texas, a TLTA T-1 Owner’s Policy of Title Insurance, as applicable (each, a “ Title Policy ” and collectively, the “ Title Policies ”) in the form of the applicable Title Report, issued by the Title Company as of the date and time of the recording of the applicable Deed (as such term is defined in Section 6.1 hereof) for such Real Property, in the amount of the portion of the Purchase Price allocated to such Real Property, insuring the applicable Buyer as owner of good, marketable and indefeasible fee simple legal title to such Real Property, subject only to the Permitted Exceptions (as hereinafter defined). For purposes of this Agreement, “ Permitted Exceptions ” shall mean and include (a) any lien to secure payment of real estate taxes, including special assessments, not delinquent, (b) all matters which could be revealed or disclosed by a physical inspection or a survey of the applicable Real Property and matters affecting the applicable Real Property which (i) are created by or with the written consent of Buyer or (ii) which do not adversely affect Buyer’s contemplated use of such Real Property, (c) the rights of the tenants under the Leases affecting such Real Property with no rights to purchase all or any portion of such Real Property, (d) all exceptions disclosed in writing by the Title Report relating to such Real Property, (e) any exception for liens (or potential liens) for services, labor or

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materials heretofore or hereafter furnished to the applicable Property for which a Buyer is entitled to a credit at Closing pursuant to this Agreement, for which a Buyer is expressly responsible for payment under the terms of this Agreement, and/or which arises from any services, labor or materials contracted for by any tenant at such Property and with respect to which any such tenant is responsible for payment under the terms of its Lease, and (f) all applicable laws, ordinances, rules and governmental regulations (including, without limitation, those relating to building, zoning and land use) affecting the development, use, occupancy or enjoyment of such Real Property.
4.3     Inspections.
4.3.1     Inspections in General . During the term of this Agreement, each Buyer, its agents, and employees shall have a limited license (the “ License ”) to enter upon the Real Property it is acquiring for the purpose of making non-invasive inspections at Buyer’s sole risk, cost and expense. Before any such entry, Buyer shall provide Seller with a certificate of insurance naming Seller as an additional insured and with an insurer and insurance limits and coverage reasonably satisfactory to Seller. All of such entries upon any Real Property shall be at reasonable times during normal business hours and after at least twenty-four (24) hours prior notice to Seller or Seller’s agent, and Seller or Seller’s agent shall have the right to accompany Buyer during any activities performed by Buyer on such Real Property. Notwithstanding anything stated to the contrary herein, Buyer shall have no right to inspect any of the occupied space in any Real Property, and Buyer shall not contact or speak to any of the tenants under the Leases, unless Buyer provides Seller with no less than twenty-four (24) hours prior written notice of such intention and Seller or Seller’s representative is present during such inspections and/or discussions with tenants; any discussions with tenants shall immediately cease at the tenant’s request and any discussions with tenants must be limited to their existing tenancy and premises and may not involve any lease renegotiations. Seller agrees to make itself or its representatives reasonably available to be present during Buyer’s inspections and/or discussions with tenants. Inspections by Buyer shall not interfere with the rights of tenants . To the extent a consultant is engaged by Buyer to perform any tests or inspections, at Seller’s request, Buyer shall provide Seller (without any representation or warranty by Buyer as to such tests or inspections and at no cost to Seller) with a copy of the results of any such tests and inspections, excluding only market and economic feasibility studies. If any inspection or test disturbs any Real Property, Buyer will restore such Real Property to substantially the same condition as existed before the inspection or test. Buyer shall defend, indemnify Seller and hold Seller, Seller’s trustees, officers, tenants, agents, contractors and employees and the Real Properties harmless from and against any and all losses, costs, damages, claims, or liabilities, including but not limited to, mechanics’ and materialmens’ liens and Seller’s attorneys’ fees, arising out of or in connection with Buyer’s, or its agents’, contractors’, employees’, or invitees’ entry upon or inspection of any Real Property, but expressly excluding any such losses, costs, damages, claims or liabilities arising from Buyer’s discovery of an existing condition on any Real Property so long as Buyer’s actions do not exacerbate such condition (and then only to the extent, if any, Buyer’s tests or inspections actually exacerbate such condition) or arising from Seller’s negligence or willful misconduct. The License may be revoked by Seller in the event any Buyer breaches any of the restrictions and limitations set forth in this Section 4.3.1 , and shall in any event be deemed revoked upon termination of this Agreement. The provisions of this Section 4.3.1 shall survive the Close of Escrow or the earlier termination of this Agreement.

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4.3.2     Environmental Inspections . The inspections under Section 4.3.1 may include non-invasive Phase I environmental inspections of the Real Properties, but no Phase II environmental inspections or other invasive inspections or sampling of soil or materials, including without limitation construction materials, either as part of the Phase I inspections or any other inspections, shall be performed without the prior written consent of Seller, which may be withheld in its sole and absolute discretion.
4.4     Contracts . Each Buyer shall assume the obligations arising from and after the Closing Date under the Contracts applicable to the Real Property being purchased by such Buyer; provided, however, that notwithstanding Seller’s termination of any such property management agreement or leasing agreement listed in Exhibit C attached hereto, and in consideration of Seller’s terminating the same and Seller’s continued leasing of the Portfolio after the Effective Date, each Buyer shall be responsible for, and each Buyer shall assume pursuant to the terms and provisions of the applicable Assignment of Leases and Contracts and Bill of Sale, as hereinafter defined, all leasing commissions payable (notwithstanding the termination of any such agreement) under such property management agreements and leasing agreements after the Close of Escrow arising out of the lease of space in the applicable Real Property after the Close of Escrow.
4.5     Confidentiality.
4.5.1    Each Party agrees not to disclose or permit the disclosure of any of the terms of this Agreement or any other confidential, non-public or proprietary information relating to the Portfolio, any Seller Party, or the business of Seller (collectively, “ Confidential Information ”); provided that such disclosure may be made (a) to any person who is a member, partner, manager, officer, investor, director or employee, directly or indirectly, of such Party or counsel to, or accountants of, such Party solely for their use and on a need-to-know basis; provided that such person or entity is notified of the Party’s confidentiality obligations hereunder, (b) with the prior consent of the other Party, (c) subject to Section 4.5.2 below, pursuant to a subpoena, order issued or examination by a court, arbitrator or governmental body, agency or official, (d) to any lender providing financing to one or more of the entities constituting Seller and/or Buyer, (e) to any governmental or regulatory authority, body or agency or stock exchange pursuant to applicable laws, rules, guidelines or regulations as reasonably determined by such Party, or (f) pursuant to any regulatory requirement. Notwithstanding the foregoing and anything to the contrary in this Agreement, (i) any Party may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided relating to such tax treatment and tax structure, and (ii) nothing contained herein shall impair any Party’s (or any Party’s affiliate’s) right to disclose information relating to this Agreement or to the Portfolio (x) to any due diligence representatives and/or consultants that are engaged by, work for or are acting on behalf of, any securities dealers and/or broker dealers evaluating such Party or its affiliates, (y) in connection with any filings (including any amendment or supplement to any S-11 filing) with governmental or regulatory agencies or stock exchanges (including the United States Securities and Exchange Commission or any regulatory agency or body in Singapore such as the Singapore Exchange Securities Trading Limited (“ SGX ”)) by any Party or other person or entity holding an interest (direct or indirect) in

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any Party, and (z) to any broker/dealers in such Party’s or its affiliates’ broker/dealer network and any of the Party’s or its affiliates’ investors.
4.5.2    In the event that a Party receives a request to disclose any Confidential Information under a subpoena or order or examination by a court, arbitrator or governmental body, agency or official, such Party shall to the extent legally practicable (i) promptly notify the other Party, (ii) consult with the other Party on the advisability of taking steps to resist or narrow such request, and (iii) if disclosure is required or deemed advisable, reasonably cooperate with the other Party in any attempt such other Party may make to obtain an order or other assurance that confidential treatment will be accorded the Confidential Information that is disclosed.
4.5.3    Without limiting the rights of the Parties in Section 4.5.1 above and save for the prospectus in respect of the IPO for Buyer S-REIT, no Party shall issue or publish any press release, tombstone or any other similar public communication advertising the sale of the Portfolio or any Property to Buyer that would disclose the financial aspects of this Agreement or the financial aspects of the business of the Portfolio or such Property without the written prior approval of all of the Parties.
4.6     Tenant Estoppel Certificates . Seller shall endeavor to secure and deliver to Buyer by the Closing Date estoppel certificates for the Leases consistent with the information in the Rent Rolls and in the form approved by the Parties prior to the Effective Date; provided, however, receipt of signed estoppel certificates from the tenants under the Leases shall not be a condition precedent to the Close of Escrow.
5.
OPERATIONS AND RISK OF LOSS
5.1     Ongoing Operations . During the term of this Agreement, but subject to the limitations set forth below, Seller shall carry on its businesses and activities relating to the Portfolio substantially in the same manner as Seller did before the date of this Agreement.
5.2     New Contracts . No Seller will enter into any contract that will be an obligation affecting any Real Property subsequent to the Close of Escrow (except contracts entered into in the ordinary course of business that are terminable without cause on 30‑days’ notice), without the prior consent of the applicable Buyer, which approval shall not be unreasonably withheld or delayed.
5.3     Leasing Arrangements . Each Seller shall obtain the applicable Buyer’s consent, which consent shall not unreasonably withheld or delayed, before entering into any new lease of space in any Real Property and before entering into a Lease amendment, expansion, or renewal.  Buyer shall be deemed to have consented to any new lease or any Lease amendment, expansion, or renewal if it has not notified the applicable Seller specifying with particularity the matters to which Buyer reasonably objects, within five (5) days after its receipt of Seller’s written request for consent, together with a copy of the Lease amendment, expansion, or renewal or the new lease. At the Close of Escrow, Buyer shall reimburse Seller for commissions, legal fees, the cost of tenant improvements, and all other leasing costs and expenses paid by Seller with respect to all new leases and all other Lease amendments, expansions or renewals or new leases that were entered into after the Effective Date and, at Close of Escrow, shall assume in writing (pursuant to the applicable Assignment of Leases and Contracts and Bill of Sale) Seller’s

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obligations (whether arising before or after the Closing Date) under such new leases and Lease amendments, expansions or renewals. Each Seller hereby agrees not to terminate any Lease except in the event of a tenant default thereunder.
5.4     Damage or Condemnation . Risk of loss shall remain with Seller. If prior to the Close of Escrow, any Real Property shall be Materially Damaged (defined below), or if any Material Portion (defined below) of any Real Property shall be subjected to a bona fide written threat of condemnation or shall become the subject of any proceedings, judicial, administrative or otherwise, with respect to the taking by eminent domain or condemnation by a governmental authority (a “ Material Taking ”), then Seller shall promptly notify Buyer in writing that such Material Damage or Material Taking has occurred after Seller obtains actual knowledge of such occurrence, and Buyer may elect not to acquire the Real Property affected by such Material Damage or Material Taking, as applicable, by delivering written notice of such election to Seller within five (5) days after Buyer learns of the Material Damage or Material Taking, in which event Buyer shall no longer be obligated to purchase, and Seller shall no longer be obligated to sell, such Real Property and this Agreement shall no longer apply to such Real Property and the Purchase Price shall be reduced by the dollar amount allocated to such Real Property in Section 3.1 of this Agreement, and all references hereafter made to a Real Property or Real Properties shall specifically exclude any reference to the Real Property that the Buyer has elected not to acquire under the provisions of this Section 5.4 , except that all of Buyer’s indemnity obligations under this Agreement shall continue to apply to such Real Property. If the Closing Date is within the aforesaid 5 ‑ day period, then Buyer shall have the right to elect in writing to extend the Close of Escrow to no later than the next business day following the end of said 5 ‑ day period so that Buyer may receive the benefit of such 5-day period (or so much so as Buyer may elect). If no such election is made, and in any event if the damage does not constitute Material Damage, or an eminent domain or condemnation proceeding or bona fide written threat does not affect a Material Portion of the applicable Real Property, then this Agreement shall remain in full force and effect, and the purchase contemplated herein (less any interest taken by eminent domain or condemnation) shall be consummated pursuant to the terms of this Agreement (after deducting all reasonable costs incurred by Seller in defending such eminent domain or condemnation proceeding prior to the Close of Escrow); provided, however, that Buyer shall be entitled to receive any condemnation award or payment, and upon the Close of Escrow, Seller shall assign, transfer and set over to Buyer all of the right, title and interest of Seller in and to any awards that have been or that may thereafter be made for such taking, and Seller shall assign, transfer and set over to Buyer any insurance proceeds that may thereafter be made for such damage or destruction giving Buyer a credit at the Close of Escrow for any deductible under such policies. For purposes of this Section 5.4 , the phrase(s) (i) “ Material Damage ” or “ Materially Damaged ” means damage exceeding ten percent (10%) of the Purchase Price allocated to the applicable Real Property as reasonably determined by Seller, and (ii) “ Material Portion ” means any portion of a Real Property that has a “fair market value” exceeding ten percent (10%) of the Purchase Price allocated to the applicable Real Property as reasonably determined by Seller.
5.5     Association Notices . From and after the Effective Date, each Seller hereby agrees to promptly provide the applicable Buyer with copies of any written notices of default received by such Seller from any association or declarant under any declaration of covenants, conditions and restrictions recorded against the Property owned by such Seller.

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6.
SELLER’S AND BUYER’S DELIVERIES
6.1     Seller’s Deliveries into Escrow . In accordance with the provisions of the Closing Escrow Agreement (as such term is defined in Section 9 hereof), each Seller shall deliver into Escrow (as such term is defined in Section 9 hereof) to the Escrow Holder the following:
(a)     Deed . A deed (the “ Deed ”) with respect to the Real Property it owns, in the form required by the jurisdiction in which the applicable Real Property is located, executed and acknowledged by the applicable Seller, conveying to the applicable Buyer such Seller’s title to the applicable Real Property.
(b)     Assignment of Leases and Contracts and Bill of Sale . An Assignment of Leases and Contracts and Bill of Sale (each, an “ Assignment of Leases and Contracts and Bill of Sale ”) with respect to the Real Property it owns, in the form of Exhibit F attached hereto, executed by the applicable Seller.
(c)     State Law Disclosures . Such disclosures and reports as are required with respect to each Real Property by applicable state and local law in connection with the conveyance of such Real Property.
(d)     FIRPTA . A Foreign Investment in Real Property Tax Act affidavit executed by each Seller substantially in the form of Exhibit G attached hereto.
(e)     Closing Escrow Agreement . The Closing Escrow Agreement, executed by Seller.
(f)     Owner’s Affidavit . An Owner’s Affidavit with respect to each Real Property (“ Owner’s Affidavit ”), in the form of Exhibit I attached hereto, executed by the applicable Seller, except that Buyer shall have no right to receive a copy of such Owner’s Affidavit.
(g)     Seller’s Reaffirmation . A certificate of each Seller confirming whether the representations and warranties made by such Seller in Section 11.1 hereof continue to be true and correct in all material respects.
(h)     State-Specific Deliveries . If applicable, the state-specific deliveries (each, a “ State-Specific Delivery ” and collectively, the “ State-Specific Deliveries ”) listed under each Seller’s name on Exhibit E attached hereto.
(i)     Additional Documents . Any additional documents that Escrow Holder or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Agreement.
6.2     Buyer’s Deliveries into Escrow . In accordance with the provisions of the Closing Escrow Agreement, Buyer shall deliver into Escrow to the Escrow Holder the following:

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(a)     Purchase Price . The Purchase Price, plus or minus applicable prorations, less the Relevant Amount referenced in Section 3.2 above, deposited by Buyer with the Escrow Holder in immediate, same day federal funds wired for credit into the Escrow Holder’s escrow account and deposited in Escrow Holder’s escrow account.
(b)     Assignment of Leases and Contracts and Bill of Sale . An Assignment of Leases and Contracts and Bill of Sale with respect to each Property, executed by the applicable Buyer.
(c)     Closing Escrow Agreement . The Closing Escrow Agreement, executed by the Buyer.
(d)     State-Specific Deliveries . If applicable, the State-Specific Deliveries listed under each Buyer’s name on Exhibit E attached hereto.
(e)     State Law Disclosures . Such disclosures and reports as are required by applicable state and local law in connection with the conveyance of the Real Property.
(f)     Additional Documents . Any additional documents that Escrow Holder or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Agreement.
6.3     Closing Statements/Escrow Fees; Tenant Notices . Prior to 10:00 a.m. (Pacific Standard Time) on the Closing Date and as further provided in the Closing Escrow Agreement, Seller and Buyer shall deposit with the Escrow Holder executed closing statements consistent with this Agreement in the form required by the Escrow Holder and, the applicable Seller and Buyer shall execute at the Close of Escrow, and deliver to each tenant immediately after the Close of Escrow, tenant notices regarding the sale of the applicable Real Property in substantially the form of Exhibit H attached hereto, or such other form as may be required by applicable state law.
6.4     Post-Closing Deliveries . Immediately after the Close of Escrow, to the extent in Seller’s possession, each Seller shall deliver to the offices of the applicable Buyer’s property manager: the original Leases; copies or originals of all contracts, receipts for deposits, and unpaid bills; all keys, if any, used in the operation of such Real Property; and, if in such Seller’s possession or control, any “as ‑ built” plans and specifications of the Improvements.
7.
CONDITIONS TO BUYER’S AND SELLER’S OBLIGATIONS
7.1     Conditions to Buyer’s Obligations . The Close of Escrow and Buyer’s obligation to consummate the transaction contemplated by this Agreement are subject to the satisfaction of the following conditions for Buyer’s benefit (or Buyer’s waiver thereof, it being agreed that Buyer may waive any or all of such conditions) on or prior to the Closing Date or on the dates designated below for the satisfaction of such conditions:
(a)    All of Seller’s representations and warranties contained herein shall be true and correct in all material respects as of the date of this Agreement and as of the Closing

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Date, subject to any qualifications hereafter made to any of Seller’s representations as provided for in Section 11.1 hereof;
(b)    As of the Closing Date, Seller shall have performed its respective obligations hereunder and all deliveries to be made at Close of Escrow by Seller shall have been tendered;
(c)    There shall exist no actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, pending or threatened against Seller that would materially and adversely affect Seller’s ability to perform its respective obligations under this Agreement;
(d)    There shall exist no pending or threatened action, suit or proceeding with respect to Seller before or by any court or administrative agency which seeks to restrain or prohibit, or to obtain damages or a discovery order with respect to, this Agreement or the consummation of the transaction contemplated hereby;
(e)    The Title Company shall have executed the Closing Escrow Agreement and shall be irrevocably committed to issue, the Title Policy for each Real Property in accordance with the provisions of Section 4.2.1 herein and the Closing Escrow Agreement;
(f)    Funds available to Buyer from the initial public offering (the “ Offering ”) of units (the “ Units ”) representing undivided interests in Prime US REIT (“ Buyer S- REIT ”), together with funds received by Buyer pursuant to any Bridge Financing (as defined below), are sufficient to pay the Purchase Price (less the Relevant Amount referenced in Section 3.2 above) and all closing costs that are the responsibility of Buyer pursuant to Section 9.2 below; and
(g)    Buyer S-REIT or one (1) of its subsidiaries (direct or indirect) shall have obtained commitments from one or more commercial lenders in an aggregate amount equal to no less than the amount needed (collectively, the “ Bridge Financing ”) to cover that portion of the Purchase Price (less the Relevant Amount referenced in Section 3.2 above) that will not be funded from proceeds of the Offering, which Bridge Financing shall close prior to or concurrently with the Close of Escrow.
If, notwithstanding the nonsatisfaction of any such condition, Buyer elects to waive such condition pursuant to Section 9.3 below and the Close of Escrow occurs, there shall be no liability on the part of Seller for breaches of representations and warranties of which Buyer had actual knowledge as of the Close of Escrow.
7.2     Conditions to Seller’s Obligations . The Close of Escrow and Seller’s obligations to consummate the transaction contemplated by this Agreement are subject to the satisfaction of the following conditions for Seller’s benefit (or Seller’s waiver thereof, it being agreed that Seller may waive any or all of such conditions) on or prior to the Closing Date or the dates designated below for the satisfaction of such conditions:
(a)    All of Buyer’s representations and warranties contained herein shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date;

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(b)    As of the Closing Date, Buyer has performed its obligations hereunder and all deliveries to be made at Close of Escrow by Buyer shall have been tendered including, without limitation, the deposit with Escrow Holder of the amounts set forth in Section 6.2(a) hereof;
(c)    There shall exist no actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, pending or threatened against Buyer that would materially and adversely affect Buyer’s ability to perform its obligations under this Agreement;
(d)    There shall exist no pending or threatened action, suit or proceeding with respect to Buyer before or by any court or administrative agency which seeks to restrain or prohibit, or to obtain damages or a discovery order with respect to, this Agreement or the consummation of the transaction contemplated hereby;
(e)    Seller shall have received all consents and approvals from all parties from whom such consents or approvals are needed, including all consents, if any, required, under all contracts, covenants and other agreements relating to the Portfolio;
(f)    The Title Company shall have executed the Closing Escrow Agreement;
(g)    KBS Real Estate Investment Trust III, Inc. (“ KBS REIT III ”) (the indirect one hundred percent (100%) owner of each Seller) shall have received board approval authorizing it to consummate the transactions contemplated hereby; and
(h)    Funds available to Buyer from the Offering, together with the funds received by Buyer pursuant to the Bridge Financing, are sufficient to pay the Purchase Price (less the Relevant Amount referenced in Section 3.2 above) and all closing costs that are the responsibility of Buyer pursuant to Section 9.2 below.
7.3     Additional Conditions Precedent to Closing . Between the Effective Date and the Close of Escrow, as an additional condition precedent to Buyer’s and Seller’s obligation to consummate the transaction contemplated under this Agreement, no fact or circumstance shall have arisen (regardless of whether or not permitted under this Agreement) which would materially adversely affect the initial public offering (“ IPO ”) of the Units and/or Buyer S-REIT’s ability to obtain a listing on the Singapore Exchange Securities Trading Limited. In addition, as a condition to Buyer's and Seller’s obligation to consummate the transaction contemplated by this Agreement, Buyer S-REIT shall have received the eligibility-to-list letter from the SGX approving, among other things, the listing of, and quotation for Units on the SGX, the final prospectus shall have been registered in connection with the IPO, the underwriting agreement required to be entered into in connection with the IPO shall have been entered into and shall not have been terminated pursuant to its terms. For avoidance of doubt, the failure of either of the conditions precedent set forth above in this Section 7.3 shall not be a default by Seller or Buyer under the terms of this Agreement. In addition, Seller and Buyer acknowledge that Seller and its affiliates will at no time own Units in Buyer S-REIT in excess of twenty-six (26%) of the outstanding Units.

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7.4     Failure to List on SGX .
(a)     Efforts to List . The Buyer shall use its commercially reasonable efforts to ensure that the Units will be listed, and the trading of such Units will commence, on the SGX.
(b)     Failure to List . In the event that the listing described in Section 7.4(a) is not or cannot be fulfilled prior to the Close of Escrow, Buyer and Seller shall each be entitled to terminate this Agreement by delivering written notice to the other and Escrow Holder, in which event this Agreement shall terminate, except for any provisions in this Agreement that expressly survive a termination of this Agreement.
(c)     Return of Documents and Funds . If this Agreement is terminated under Section 7.3 or Section 7.4 and any closing documents or funds were delivered into Escrow with Escrow Holder in anticipation of the Close of Escrow, each of such documents and funds shall be returned to the party that delivered same, or as such party may direct.
8.
CLOSE OF ESCROW; POSSESSION
8.1     “Close of Escrow” shall mean and refer to the point in time where the Escrow Holder is irrevocably authorized by Seller and Buyer to release to Seller the Purchase Price (less the Relevant Amount referenced in Section 3.2 above) and other amounts due to Seller, to direct the Title Company to record the Deeds, and to release the other closing documents to the parties. The Close of Escrow will automatically occur as of 10:59 p.m. (Pacific Standard Time) on the Closing Date unless this Agreement and the Escrow is terminated pursuant to an express termination right hereunder or under the Closing Escrow Agreement. Sole exclusive possession of the Real Properties, subject only to the Permitted Exceptions, shall be delivered to Buyer as of the Close of Escrow on the Closing Date.
9.
ESCROW
9.1     Closing . The escrow (the “ Escrow ”) for the consummation of this transaction shall be established with Escrow Holder at the address indicated in Section 15.1 hereof by the deposit of an original signed copy of this Agreement with Escrow Holder contemporaneously with the execution hereof. This Agreement shall constitute both an agreement among Buyer and Seller and escrow instructions for Escrow Holder. In addition, in connection with the Closing, each Seller, each Buyer, Escrow Holder and the Title Company shall execute a Closing Escrow Agreement in the form of Exhibit B attached hereto (the “ Closing Escrow Agreement ”), attached to which Closing Escrow Agreement shall be a list of all final pro forma Title Policies with respect to the Properties (each, a “ Pro Forma Title Policy ” and collectively, the “ Pro Forma Title Policies ”) in the form of each applicable Title Report. The Closing Escrow Agreement shall provide that, subject to the satisfaction of each condition set forth in the applicable Title Report and payment of the title premium and other fees applicable thereto, the Title Company shall be obligated to issue each Title Policy to the applicable Buyer in the form of the applicable Pro Forma Title Policy as soon as practicable after the recording of the applicable Deed. If Escrow Holder requires separate or additional escrow instructions which it deems necessary for its protection, Seller and Buyer hereby agree promptly upon request by Escrow Holder to execute and deliver to Escrow Holder such separate or additional escrow instructions (the “ Additional Instructions ”). In the event of any conflict or inconsistency (i) between this

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Agreement, the Closing Escrow Agreement, and the Additional Instructions, this Agreement and the Closing Escrow Agreement shall prevail and govern, and the Additional Instructions shall so provide, and (ii) between this Agreement and the Closing Escrow Agreement, the Closing Escrow Agreement shall prevail and govern, and the Closing Escrow Agreement shall so provide. The Additional Instructions shall not modify or amend the provisions of this Agreement or the Closing Escrow Agreement unless otherwise agreed to in writing by Seller and Buyer.
On the Closing Date, provided that the conditions set forth in Sections 7.1 and 7.2 hereof have been satisfied or waived in writing by the Party for whose benefit the condition exists, Escrow Holder shall take the following actions in the order indicated below, in each case as more particularly set forth in the Closing Escrow Agreement:
(a)    With respect to all closing documents delivered to Escrow Holder hereunder, and to the extent necessary, Escrow Holder is authorized to insert into all blanks requiring the insertion of dates the date of the recordation of the applicable Deed or such other date as Escrow Holder may be instructed in writing by Seller and Buyer;
(b)    Deliver to Seller, in cash or current funds, the Purchase Price (less the Relevant Amount referenced in Section 3.2 above), plus or minus, as the case may be, the amounts determined in accordance with the provisions of Section 10 hereof, each Buyer’s signed counterparts of the applicable Assignment of Leases and Contracts and Bill of Sale and conformed copies of the recorded Deeds;
(c)    Record each Deed in the official records of the County in which the applicable Real Property is located;
(d)    Deliver to Buyer those items referred to in Section 6.1 hereof and a conformed copy of each recorded Deed;
(e)    Cause the Title Company to issue each Title Policy for each Real Property in accordance with the provisions of this Agreement and the Closing Escrow Agreement; and
(f)    Deliver to Seller and Buyer a final closing statement which has been certified by Escrow Holder to be true and correct.
9.2     Escrow and Title Charges.
(a)    Subject to the provisions of Section 4.1 above, upon the Close of Escrow, escrow, title charges and other closing costs shall be allocated between Seller and Buyer in accordance with local custom in the applicable jurisdiction. If Buyer desires ALTA extended coverage for any Title Policy, Buyer shall pay the premiums and any additional costs for such coverage (additional to the premiums for standard coverage) and the cost of any endorsements to such Title Policy, if required by Buyer. In addition, Buyer shall pay all costs incurred in connection with Buyer’s updating or recertifying any Existing Surveys or obtaining any surveys for any Real Property. Except to the extent otherwise specifically provided herein, all other expenses incurred by Seller and Buyer with respect to the negotiation, documentation and closing of this transaction shall be borne and paid by the party incurring same. If the Close of

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Escrow does not occur by reason of Buyer’s or Seller’s default under this Agreement, then all escrow and title charges (including cancellation fees) shall be borne by the party in default.
9.3     Procedures Upon Failure of Condition . Except as otherwise expressly provided herein or in the Closing Escrow Agreement, if any condition set forth in Sections 7.1 or 7.2 hereof is not timely satisfied or waived for a reason other than the default of Buyer or Seller in the performance of its respective obligations under this Agreement:
(a)    This Agreement, the Escrow and the respective rights and obligations of Seller and Buyer hereunder shall terminate (other than the indemnity and insurance obligations of Buyer set forth in Sections 4.3.1 and 14 hereof and the confidentiality provisions of Section 4.6 hereof, which shall survive such termination) at the written election of the party for whose benefit such condition was imposed, which written election must be made (i) within two (2) business days after the date such condition was to be satisfied, or (ii) on the date the Close of Escrow occurs, whichever occurs first;
(b)    Escrow Holder shall promptly return to Buyer all funds of Buyer in its possession, and to Seller and Buyer all documents deposited by them respectively, which are then held by Escrow Holder;
(c)    Buyer shall destroy or return to Seller the Property Information and Buyer shall deliver to Seller all Work Product (as such term is defined in Section 15.3 hereof) in accordance with the terms and provisions of Section 15.3 below; and
(d)    Any escrow cancellation and title charges shall be borne equally by Seller and Buyer.
10.
PRORATIONS
If the Purchase Price (less the Relevant Amount referenced in Section 3.2 above) is received by Seller’s depository bank in time to credit to Seller’s account on the Closing Date, the day the Close of Escrow occurs shall belong to Buyer and all prorations hereinafter provided to be made as of the Close of Escrow shall each be made as of the end of the day before the Closing Date. If the cash portion of the Purchase Price (less the Relevant Amount referenced in Section 3.2 above) is not so received by Seller’s depository bank on the Closing Date, then the day the Close of Escrow occurs shall belong to Seller and such proration shall be made as of the end of the day that is the Closing Date. In each such proration set forth below, the portion thereof applicable to periods beginning as of Close of Escrow shall be credited to Buyer or charged to Buyer as applicable and the portion thereof applicable to periods ending as of Close of Escrow shall be credited to Seller or charged to Seller as applicable.
10.1     Collected Rent . All rent (including, without limitation, all base rents, additional rents and retroactive rents, and expressly excluding tenant reimbursements for Operating Costs, as hereinafter defined) and all other income (and any applicable state or local tax on rent) (hereinafter collectively referred to as “ Rents ”) collected under Leases in effect on the Closing Date shall be prorated as of the Close of Escrow. Uncollected Rent shall not be prorated and, to the extent payable for the period prior to the Close of Escrow, shall remain the property of Seller. Buyer shall apply Rent from tenants that are collected after the Close of Escrow first to Rents

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which were applicable to the month of Closing, second to Rents which are due to Buyer after the Close of Escrow, and third to Rents which were due to Seller on or before the Close of Escrow. Any prepaid Rents for the period following the Closing Date shall be paid over by Seller to Buyer. Buyer will make reasonable efforts, without suit, to collect any Rents applicable to the period before the Close of Escrow including, without limitation, sending to tenants bills for the payment of past due Rents during the first six (6) month period following the Closing Date. Seller may pursue collection of any Rents that were past due as of the Closing Date, provided that Seller shall have no right to terminate any Lease or any tenant’s occupancy under any Lease in connection therewith.
10.2     Operating Costs and Additional Rent Reconciliation . Seller, as landlord under the Leases, is currently collecting from tenants under the Leases additional rent to cover taxes, insurance, utilities (to the extent not paid directly by tenants), common area maintenance and other operating costs and expenses (collectively, “ Operating Costs ”) in connection with the ownership, operation, maintenance and management of the Real Properties. To the extent that any additional rent (including, without limitation, estimated payments for Operating Costs) is paid by tenants to the landlord under the Leases based on an estimated payment basis (monthly, quarterly, or otherwise) for which a future reconciliation of actual Operating Costs to estimated payments is required to be performed at the end of a reconciliation period, Buyer and Seller shall make an adjustment at the Close of Escrow for the applicable reconciliation period (or periods, if the Leases do not have a common reconciliation period) based on a comparison of the actual Operating Costs to the estimated payments at the Close of Escrow. If, as of the Close of Escrow, Seller has received additional rent payments in excess of the amount that tenants will be required to pay, based on the actual Operating Costs as of the Close of Escrow, Buyer shall receive a credit in the amount of such excess. If, as of the Close of Escrow, Seller has received additional rent payments that are less than the amount that tenants would be required to pay based on the actual Operating Costs as of the Close of Escrow, Seller shall receive a credit in the amount of such deficiency; provided, however, Seller shall not be entitled to the portion, if any, of such deficiency for which Seller received a credit at the Close of Escrow under clause (b) of Section 10.3 hereof. Operating Costs that are not payable by tenants either directly or reimbursable under the Leases shall be prorated between Seller and Buyer and shall be reasonably estimated by the parties if final bills are not available. The provisions of this section shall pertain to Operating Costs incurred for the current calendar year in which the Closing occurs as well as the calendar year immediately preceding the calendar year in which the Closing occurs.
10.3     Taxes and Assessments . Real estate taxes and assessments imposed by any governmental authority (“ Taxes ”) with respect to the Real Properties for the relevant tax year in which such Real Property is being sold and that are not yet due and payable or that have not yet been paid and that are not (and will not be) reimbursable by tenants under the Leases (or under leases entered into after the Close of Escrow for vacant space existing at the Close of Escrow) as Operating Costs shall be prorated as of the Close of Escrow based upon the most recent ascertainable assessed values and tax rates and based upon the number of days Buyer and Seller will have owned the applicable Real Property during such relevant tax year. Seller shall receive a credit for any Taxes paid by Seller and applicable to (a) any period after the Close of Escrow, and (b) any period before the Close of Escrow to the extent reimbursable as Operating Costs by (i) existing tenants under the Leases and not yet received from such tenants, or (ii) future tenants

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that may execute leases covering space in such Real Property that is vacant as of the Close of Escrow. If, as of the Closing Date, Seller is protesting or has notified Buyer, in writing, that it has elected to protest any Taxes for any Real Property, then Buyer agrees that Seller shall have the right (but not the obligation), after the Closing Date, to continue such protest. In such case, any Taxes paid by Buyer after the Closing Date with respect to such Real Property shall be paid under protest and Buyer shall promptly notify Seller of any payments of Taxes made by Buyer with respect to such Real Property. Buyer further agrees to cooperate with Seller and execute any documents requested by Seller in connection with such protest. As to each Real Property, any tax savings received (“ Tax Refunds ”) for the relevant tax year under any protest, whether filed by Seller or Buyer, shall be prorated between the parties based upon the number of days, if any, Seller and Buyer respectively owned the Real Property during such relevant tax year; if such protest was filed by a Seller, any payment of Tax Refunds to Buyer shall be net of any fees and expenses payable to any third party for processing such protest, including attorneys’ fees. Seller shall have the obligation to refund to any tenants in good standing as of the date of such Tax Refund, any portion of such Tax Refund paid to Seller which may be owing to such tenants, which payment shall be paid to Buyer within fifteen (15) business days of delivery to Seller by Buyer of written confirmation of such tenants’ entitlement to such Tax Refunds. Buyer shall have the obligation to refund to tenants in good standing as of the date of such Tax Refund, any portion of such Tax Refund paid to it which may be owing to such tenants. Seller and Buyer agree to notify the other in writing of any receipt of a Tax Refund within fifteen (15) business days of receipt of such Tax Refund. To the extent either party obtains a Tax Refund, a portion of which is owed to the other party, the receiving party shall deliver the Tax Refund to the other party within fifteen (15) business days of its receipt. If Buyer or Seller fail to pay such amount(s) to the other as and when due, such amount(s) shall bear interest from the date any such amount is due to Seller or Buyer, as applicable, until paid at the lesser of (a) twelve percent (12%) per annum and (b) the maximum amount permitted by law. The obligations set forth herein shall survive the Close of Escrow and Buyer agrees that, as a condition to the transfer of the any Property by Buyer, Buyer will cause any transferee to assume the obligations set forth herein.
10.4     Leasing Commissions, Tenant Improvements and Contracts . At Close of Escrow, the applicable Buyer shall assume (pursuant to the Assignment of Leases and Contracts and Bill of Sale for the applicable Property) the obligation to pay all (a) leasing costs that are due or become due prior to the Closing Date to the extent that the same arise from a new lease or any Lease amendment, extension or expansion hereafter entered into by Seller in accordance with the terms and conditions of this Agreement, and (b) leasing costs that are due after the Closing Date. Buyer will assume the obligations arising from and after the Closing Date under the Contracts.
10.5     Tenant Deposits . All tenant security deposits actually received by Seller (and interest thereon if required by law or contract to be earned thereon) and not theretofore applied to tenant obligations under the Leases shall be transferred or credited to Buyer at the Close of Escrow or placed in escrow if required by law. As of the Close of Escrow, Buyer shall assume Seller’s obligations related to tenant security deposits that are actually transferred or credited to Buyer at the Close of Escrow. Solely with respect to tenant security deposits that are actually transferred or credited to Buyer at the Close of Escrow, Buyer will indemnify, defend, and hold Seller harmless from and against all demands and claims made by tenants arising out of the transfer or disposition of any such security deposits and will reimburse Seller for all attorneys’

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fees incurred or that may be incurred as a result of any such claims or demands as well as for all loss, expenses, verdicts, judgments, settlements, interest, costs and other expenses incurred or that may be incurred by Seller as a result of any such claims or demands by tenants. If any security deposits are in the form of a letter or credit, Seller’s obligation to deliver or credit such deposit shall be satisfied by the delivery by Seller of the original letter of credit to Buyer. Seller shall cooperate with Buyer to transfer any such letters of credit, including signing any assignment document requested by the issuer and presented to Seller prior to or after Closing, but expressly excluding any obligation to draw on any letter of credit for the benefit of Buyer. All costs of the assignment of any letter of credit shall be paid by Seller without prejudice to Seller’s right to seek reimbursement from a tenant for such costs post-closing if permitted under the respective lease. Seller agrees that it shall not hereafter apply any tenant security deposits to tenant obligations from and after the Effective Date until the Close of Escrow.
10.6     Utilities and Utility Deposits . Utilities for each Real Property (excluding utilities for which payment is made directly by tenants), including water, sewer, electric, and gas, based upon the last reading of meters prior to the Close of Escrow, shall be prorated. Seller shall be entitled to a credit for all security deposits held by any of the utility companies providing service to a Real Property. Seller shall endeavor to obtain meter readings on the day before the Closing Date, and if such readings are obtained, there shall be no proration of such items and Seller shall pay at Close of Escrow the bills therefor for the period to the day preceding the Close of Escrow, and Buyer shall pay the bills therefor for the period subsequent thereto. If the utility company will not issue separate bills, Buyer will receive a credit against the Purchase Price for Seller’s portion and will pay the entire bill prior to delinquency after Close of Escrow. If Seller has paid utilities in advance in the ordinary course of business, then Buyer shall be charged its portion of such payment at Close of Escrow. Buyer shall be responsible for making any security deposits required by utility companies providing service to a Real Property.
10.7     Owner Deposits . Seller shall receive a credit at the Close of Escrow for the bonds, deposits, letters of credit, set aside letters or other similar items that are outstanding with respect to any Real Property that have been provided by Seller or any of its affiliates to any governmental agency, public utility, or similar entity as set forth on Schedule 6 attached hereto (collectively, “ Owner Deposits ”) to the extent assignable to Buyer. To the extent any Owner Deposits are not assignable to Buyer, Buyer shall replace such Owner Deposits and obtain the release of Seller (or its affiliates) from any obligations under such Owner Deposits. To the extent that any funds are released as a result of the termination of any Owner Deposits for which Seller did not get a credit, such funds shall be delivered to Seller immediately upon their receipt.
10.8     Percentage Rents . Percentage rents (“ Percentage Rents ”) actually collected for the month in which the Close of Escrow occurs shall be prorated as of the Closing Date.  Percentage Rents due after the Close of Escrow shall not be prorated; provided, however, after any Buyer has completed any reconciliation of actual Percentage Rents payable and estimated Percentage Rents paid by the subject tenants, and all reconciled amounts have been paid, a reconciliation shall be made between Seller and Buyer with regard to such Percentage Rents.  Pursuant to such reconciliation, Seller and Buyer shall be entitled to their proportionate share of all Percentage Rents paid for the subject fiscal Lease year used to calculate each tenant’s Percentage Rents (less any out-of-pocket costs incurred in collecting said amounts, which shall belong to Buyer) based on the number of days of such fiscal year Seller and Buyer owned the

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Property (and adjusted for any amount of Percentage Rent prorated at Closing or received by Seller or Buyer).  As used in this paragraph, the term “Percentage Rents” shall not include and shall have deducted from such Percentage Rent amount any “base” or “minimum” rent component which is payable each month (regardless of actual sales), which “base” or “minimum” rent component shall be prorated or otherwise handled in the manner provided in this Agreement.  Buyer will make reasonable efforts, without suit, to collect all Percentage Rents payable after the Close of Escrow and relating to the period prior to the Close of Escrow, and all Percentage Rents which are delinquent as of the Close of Escrow, including, without limitation, sending to tenants bills for the payment of the same.  Seller may pursue collection of all Percentage Rents payable after the Close of Escrow and relating to the period prior to the Close of Escrow and all Percentage Rents which are delinquent as of the Close of Escrow, provided that Seller shall have no right to terminate any Lease or any tenant’s occupancy under any Lease in connection therewith.
10.9     Final Adjustment After Closing . If final prorations cannot be made at the Close of Escrow for any item being prorated under this Section 10 , then, provided either Buyer or Seller identify any such proration (“ Post Closing Proration ”) in writing before the Close of Escrow, Buyer and Seller agree to allocate such items on a fair and equitable basis as soon as invoices or bills are available and applicable reconciliation with tenants have been completed, with final adjustment to be made as soon as reasonably possible after the Close of Escrow (but in no event later than May 1, 2020, except that adjustments arising from any tax protest under Section 10.3 or arising from Percentage Rents under Section 10.8 shall not be subject to such limitation, but shall be made as soon as reasonably possible), to the effect that income and expenses are received and paid by the parties on an accrual basis with respect to their period of ownership. Payments in connection with the final adjustment shall be due no later than May 1, 2020, except that adjustments arising from any tax protest under Section 10.3 or arising from Percentage Rents under Section 10.8 shall not be subject to such limitation, but shall be made as soon as reasonably possible. Seller shall have reasonable access to, and the right to inspect and audit, Buyer’s books to confirm the final prorations for a period of one (1) year after the Close of Escrow. Notwithstanding anything to the contrary stated in this Section 10 , except for any reconciliation arising out of a tax protest under Section 10.3 hereof or arising from Percentage Rents under Section 10.8 , and except for any Post Closing Prorations (which must be determined and paid by no later than May 1, 2020), all prorations made under this Section 10 shall be final as of the Close of Escrow and shall not be subject to further adjustment (whether due to an error or for any other reason) after the Close of Escrow.
11.
SELLER’S REPRESENTATIONS AND WARRANTIES; AS‑IS
11.1     Seller’s Representations and Warranties . In consideration of Buyer’s entering into this Agreement and as an inducement to Buyer to purchase the Portfolio from Seller, each Seller makes the following representations and warranties to Buyer (it being expressly understood and agreed that each of the representations and warranties set forth below are being made by each Seller, as to itself and the Property it owns, and no representations and warranties of any Seller below shall relate to any other Seller or any Property owned by any other Seller).
(a)    Except for KBS CrossPoint at Valley Forge Trust, which is a Delaware Statutory Trust, each Seller Party is a limited liability company duly organized, validly existing,

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and in good standing under the laws of the State of Delaware. Subject to KBS REIT III’s obtaining board approval pursuant to Section 7.2(i) above, each Seller Party has the legal right, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, and subject to KBS REIT III’s obtaining board approval pursuant to Section 7.2(g) above, the execution, delivery and performance of this Agreement have been duly authorized and no other action by Seller is requisite to the valid and binding execution, delivery and performance of this Agreement, except as otherwise expressly set forth herein.
(b)    The obligations of each Seller Party under this Agreement constitute its legal, valid and binding obligations enforceable against it in accordance with its terms.
(c)    To each Seller’s Actual Knowledge, except as disclosed on Schedule 2 attached hereto, no Seller has received written notice from any governmental agency in the last twelve (12) months that the Property owned by such Seller or the current use and operation thereof violate any applicable federal, state or municipal law, statute, code, ordinance, rule or regulation (including those relating to environmental matters), except with respect to such violations as have been fully cured.
(d)    To each Seller's Actual Knowledge, except as disclosed on Schedule 2 attached hereto, it has not received written notice from any governmental agency of any currently pending condemnation proceedings relating to its Property.
(e)    To each Seller's Actual Knowledge, except as disclosed on Schedule 2 attached hereto, except with respect to slip and fall and similar claims or matters covered by such Seller’s commercial liability insurance, no such Seller has received service of process with respect to any litigation that has been filed and is continuing against such Seller that arises out of the ownership of the Property and would materially affect its Property or such Seller.
(f)    To each Seller’s Actual Knowledge, except as disclosed on Schedule 2 attached hereto, no Seller has received written notice in the last twelve (12) months of a violation under any declaration of covenants, conditions and restrictions, reciprocal easement agreements, or similar instrument recorded against the Property owned by such Seller, except with respect to such violations as have been fully cured.
(g)    To each Seller’s Actual Knowledge, such Seller, nor any of its respective affiliates or constituents (but expressly excluding the shareholders of KBS REIT III), nor any of their respective brokers or other agents acting in any capacity in connection with the transactions contemplated by this Agreement is or will be (i) conducting any business or engaging in any transaction or dealing with any person appearing on the U.S. Treasury Department’s Office of Foreign Assets Control (“ OFAC ”) list of restrictions and prohibited persons (“ Prohibited Person ”) (which lists can be accessed at the following web address: http://www.ustreas.gov/offices/enforcement/ofac/), including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person; or (ii) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”; or (iii) engaging in or conspiring to engage in any transaction

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that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in any U.S. anti-money laundering law.
(h)    To each Seller’s Actual Knowledge, such Seller has not received written notice of the existence of any attachments, executions, assignments for the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or under other debtor relief laws contemplated by, pending, or threatened against such Seller.
For purposes of this Section 11.1 , the phrase “ To Seller’s Actual Knowledge ” shall mean the actual (and not implied, imputed, or constructive) knowledge of, as to each Seller, the asset manager for the Real Property owned by such Seller as reflected in Schedule 4 attached hereto, without any inquiry or investigation.
The representations and warranties made by each Seller in this Agreement shall survive the recordation of their respective Deeds for a period of nine (9) months and any action for a breach of any Seller’s representations or warranties must be made and filed within said nine (9) month period. If, after the Effective Date, but before the Close of Escrow, any Seller becomes aware of any facts or changes in circumstances that would cause any of its representations and warranties in this Agreement to be untrue at Close of Escrow, such Seller may notify Buyer in writing of such fact. In such case, or in the event Buyer obtains information which would cause any of Seller’s representations and warranties to be untrue at Close of Escrow, Buyer, as its sole and exclusive remedy, shall have the right to either (i) terminate this Agreement to the extent that the failure of any such representation or warranty to be true would have a material adverse impact on the Portfolio, in which case neither Party shall have any rights or obligations under this Agreement (except for Sections 4.3.1 , 15.3 and 15.5 which survive termination of this Agreement); or (ii) to the extent Buyer is not permitted to terminate this Agreement pursuant to clause (i) above, accept a qualification to Seller’s representations and warranties as of the Close of Escrow and complete the purchase and sale of the Portfolio without any rights to recovery for breach of the unqualified representation and warranty. Other than as set forth in the immediately preceding sentence, if Buyer proceeds with the Close of Escrow, Buyer shall be deemed to have expressly waived any and all remedies for the breach of any representation or warranty of which Buyer had actual knowledge prior to the Close of Escrow.
11.2     As-Is . As of the Closing Date, Buyer will have:
(a)    examined and inspected the Portfolio and will know and be satisfied with the physical condition, quality, quantity and state of repair of the Portfolio in all respects (including, without limitation, the compliance of the Real Properties with the Americans With Disabilities Act of 1990 Pub.L. 101-336, 104 Stat. 327 (1990), and any comparable local or state laws (collectively, the “ ADA ”)) and by consummating this transaction at the Close of Escrow, shall be deemed to have determined that the same is satisfactory to Buyer;
(b)    reviewed the Property Information and all instruments, records and documents which Buyer deems appropriate or advisable to review in connection with this transaction, including, but not by way of limitation, any and all architectural drawings, plans, specifications, surveys, building and occupancy permits, and any licenses, leases, contracts, warranties and guarantees relating to the Real Properties or the business conducted thereon, and Buyer, by consummating this transaction at the Close of Escrow, shall be deemed to have

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determined that the same and the information and data contained therein and evidenced thereby are satisfactory to Buyer;
(c)    reviewed all applicable laws, ordinances, rules and governmental regulations (including, but not limited to, those relating to building, zoning and land use) affecting the development, use, occupancy or enjoyment of the Real Properties, and Buyer, by consummating this transaction at the Close of Escrow, shall be deemed to have determined that the same are satisfactory to Buyer; and
(d)    at its own cost and expense, made its own independent investigation respecting the Portfolio and all other aspects of this transaction, and shall have relied thereon and on the advice of its consultants in entering into this Agreement, and Buyer, by consummating this transaction at the Close of Escrow, shall be deemed to have determined that the same are satisfactory to Buyer.
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT FOR SELLER’S REPRESENTATIONS AND WARRANTIES IN SECTION 11.1 OF THIS AGREEMENT AND ANY WARRANTIES OF TITLE CONTAINED IN THE DEEDS DELIVERED AT THE CLOSE OF ESCROW (“ SELLER’S WARRANTIES ”), THIS SALE IS MADE AND WILL BE MADE WITHOUT REPRESENTATION, COVENANT, OR WARRANTY OF ANY KIND (WHETHER EXPRESS, IMPLIED, OR, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, STATUTORY) BY SELLER. AS A MATERIAL PART OF THE CONSIDERATION FOR THIS AGREEMENT, BUYER AGREES TO ACCEPT THE PORTFOLIO ON AN “AS IS” AND “WHERE IS” BASIS, WITH ALL FAULTS, AND WITHOUT ANY REPRESENTATION OR WARRANTY, ALL OF WHICH SELLER HEREBY DISCLAIMS, EXCEPT FOR SELLER’S WARRANTIES. EXCEPT FOR SELLER’S WARRANTIES, NO WARRANTY OR REPRESENTATION IS MADE BY SELLER AS TO FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, DESIGN, QUALITY, CONDITION, OPERATION OR INCOME, COMPLIANCE WITH DRAWINGS OR SPECIFICATIONS, ABSENCE OF DEFECTS, ABSENCE OF HAZARDOUS OR TOXIC SUBSTANCES, ABSENCE OF FAULTS, FLOODING, OR COMPLIANCE WITH LAWS AND REGULATIONS INCLUDING, WITHOUT LIMITATION, THOSE RELATING TO HEALTH, SAFETY, AND THE ENVIRONMENT (INCLUDING, WITHOUT LIMITATION, THE ADA (AS DEFINED ABOVE)). BUYER ACKNOWLEDGES THAT, EXCEPT FOR SELLER’S WARRANTIES, BUYER HAS ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN INVESTIGATION OF THE PHYSICAL, ENVIRONMENTAL, ECONOMIC USE, COMPLIANCE, AND LEGAL CONDITION OF THE PORTFOLIO AND THAT, EXCEPT FOR SELLER’S WARRANTIES, BUYER IS NOT NOW RELYING, AND WILL NOT LATER RELY, UPON ANY REPRESENTATIONS AND WARRANTIES MADE BY SELLER OR ANYONE ACTING OR CLAIMING TO ACT, BY, THROUGH OR UNDER OR ON SELLER’S BEHALF CONCERNING THE PORTFOLIO. ADDITIONALLY, BUYER AND SELLER HEREBY AGREE THAT (A) EXCEPT FOR SELLER’S WARRANTIES, BUYER IS TAKING THE PORTFOLIO “AS IS” WITH ALL LATENT AND PATENT DEFECTS AND THAT EXCEPT FOR SELLER’S WARRANTIES, THERE IS NO WARRANTY BY SELLER THAT THE PORTFOLIO IS FIT FOR A PARTICULAR PURPOSE, (B) EXCEPT FOR SELLER’S WARRANTIES, BUYER IS

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SOLELY RELYING UPON ITS EXAMINATION OF THE PORTFOLIO, AND (C) BUYER TAKES THE PORTFOLIO UNDER THIS AGREEMENT UNDER THE EXPRESS UNDERSTANDING THAT THERE ARE NO EXPRESS OR IMPLIED WARRANTIES (EXCEPT FOR THE LIMITED WARRANTIES OF TITLE SET FORTH IN THE DEEDS AND SELLER’S WARRANTIES).
WITH RESPECT TO THE FOLLOWING, BUYER FURTHER ACKNOWLEDGES AND AGREES THAT SELLER SHALL NOT HAVE ANY LIABILITY, OBLIGATION OR RESPONSIBILITY OF ANY KIND AND THAT SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND:
1.
THE CONTENT OR ACCURACY OF ANY REPORT, STUDY, OPINION OR CONCLUSION OF ANY SOILS, TOXIC, ENVIRONMENTAL OR OTHER ENGINEER OR OTHER PERSON OR ENTITY WHO HAS EXAMINED THE PORTFOLIO OR ANY ASPECT THEREOF;
2.
THE CONTENT OR ACCURACY OF ANY OF THE ITEMS (INCLUDING, WITHOUT LIMITATION, THE PROPERTY INFORMATION) DELIVERED TO BUYER PURSUANT TO BUYER’S REVIEW OF THE CONDITION OF THE PORTFOLIO;
3.
THE CONTENT OR ACCURACY OF ANY PROJECTION, FINANCIAL OR MARKETING ANALYSIS OR OTHER INFORMATION GIVEN TO BUYER BY SELLER OR REVIEWED BY BUYER WITH RESPECT TO THE PORTFOLIO.
BUYER ALSO ACKNOWLEDGES THAT THE REAL PROPERTIES MAY OR MAY NOT CONTAIN ASBESTOS AND, IF A REAL PROPERTY CONTAINS ASBESTOS, THAT BUYER MAY OR MAY NOT BE REQUIRED TO REMEDIATE ANY ASBESTOS CONDITION IN ACCORDANCE WITH APPLICABLE LAW.
BUYER IS A SOPHISTICATED REAL ESTATE INVESTOR AND IS, OR WILL BE AS OF THE CLOSE OF ESCROW, FAMILIAR WITH THE REAL PROPERTIES AND THEIR SUITABILITY FOR BUYER’S INTENDED USE. THE PROVISIONS OF THIS SECTION 11.2 SHALL SURVIVE INDEFINITELY ANY CLOSING OR TERMINATION OF THIS AGREEMENT AND SHALL NOT BE MERGED INTO THE DOCUMENTS EXECUTED AT CLOSE OF ESCROW.
NOTWITHSTANDING ANYTHING STATED TO THE CONTRARY CONTAINED HEREIN, THE PROVISIONS OF THIS SECTION 11.2 SHALL NOT APPLY TO (a) SELLER’S WARRANTIES, AND (b) ANY SELLER’S FRAUD.
/s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS BUYER’S INITIALS
ON BEHALF OF
ALL BUYER PARTIES
12.
BUYER’S COVENANTS, REPRESENTATIONS AND WARRANTIES; RELEASE; ERISA; INDEMNIFICATION

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In consideration of Seller entering into this Agreement and as an inducement to Seller to sell the Portfolio to Buyer, Buyer makes the following covenants, representations and warranties:
12.1     Buyer’s Representations and Warranties.
(a)     Authority . Each Buyer is a limited liability company organized, validly existing and in good standing under the laws of the State of Delaware. Each Buyer has the legal right, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance of this Agreement have been duly authorized and no other action by such Buyer is requisite to the valid and binding execution, delivery and performance of this Agreement, except as otherwise expressly set forth herein. There is no agreement to which any Buyer is a party or to each Buyer’s knowledge binding on such Buyer which is in conflict with this Agreement.
(b)     Executive Order 13224 . To the best of each Buyer’s knowledge, neither such Buyer nor any of its respective affiliates or indirect owners of any Buyer, nor any of their respective brokers or other agents acting in any capacity in connection with the transactions contemplated by this Agreement is or will be (a) conducting any business or engaging in any transaction or dealing with any person appearing on the OFAC list of restrictions Prohibited Person (which lists can be accessed at the following web address: http://www.ustreas.gov/offices/enforcement/ofac/), including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person; (b) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”; or (c) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in any U.S. anti-money laundering law.
(c)     Bankruptcy . To the best of each Buyer’s knowledge, such Buyer has not received written notice of the existence of any attachments, executions, assignments for the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or under other debtor relief laws contemplated by, pending, or threatened against such Buyer.
12.2     Release . By consummating the transaction contemplated by this Agreement at the Close of Escrow, each Buyer shall be deemed to have made its own independent investigation of the Portfolio, the Property Information and the presence of Hazardous Materials on the Real Properties as each Buyer deems appropriate. Accordingly, subject to the representations and warranties of Seller expressly set forth in Section 11.1 hereof, each Buyer, on behalf of itself and all of its officers, directors, shareholders, employees, representatives and affiliated entities (collectively, the “ Releasors ”) hereby expressly waives and relinquishes any and all rights and remedies Releasors may now or hereafter have against each Seller, its successors and assigns, partners, shareholders, officers and/or directors (the “ Seller Released Parties ”), whether known or unknown, which may arise from or be related to (a) the physical condition, quality, quantity and state of repair of any Real Property and the prior management and operation of the Real Properties, (b) the Property Information, (c) the Real Properties compliance or lack of compliance with any federal, state or local laws or regulations, and (d) any

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past, present or future presence or existence of Hazardous Materials on, under or about the Real Properties or with respect to any past, present or future violation of any rules, regulations or laws, now or hereafter enacted, regulating or governing the use, handling, storage or disposal of Hazardous Materials, including, without limitation, (i) any and all rights and remedies Releasors may now or hereafter have under the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“ CERCLA ”), the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, and the Toxic Substance Control Act, all as amended, and any similar state, local or federal environmental law, rule or regulation, and (ii) any and all claims, whether known or unknown, now or hereafter existing, with respect to any Real Property under Section 107 of CERCLA (42 U.S.C.A. §9607). As used herein, the term “ Hazardous Material(s) ” includes, without limitation, any hazardous or toxic materials, substances or wastes, such as (1) any materials, substances or wastes which are toxic, ignitable, corrosive or reactive and which are regulated by any local governmental authority, or any agency of the United States government, (2) any other material, substance, or waste which is defined or regulated as a hazardous material, extremely hazardous material, hazardous waste or toxic substance pursuant to any laws, rules, regulations or orders of the United States government, or any local governmental body, (3) asbestos, (4) petroleum and petroleum based products, (5) formaldehyde, (6) polychlorinated biphenyls (PCBs), and (7) freon and other chlorofluorocarbons.
/s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS Buyer’s Initials
on Behalf of
each Buyer:
/s/CJS
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH BUYER, ON BEHALF OF ITSELF AND THE OTHER RELEASORS, HEREBY ACKNOWLEDGES IT WILL BE ACQUIRING ITS RESPECTIVE PROPERTY SUBJECT TO ALL RISK AND LIABILITY RESULTING OR ARISING FROM, OR RELATING TO THE OWNERSHIP, USE, CONDITION, LOCATION, MAINTENANCE, REPAIR, OR OPERATION OF, THE PORTFOLIO.
THE FOREGOING WAIVERS, RELEASES AND AGREEMENTS BY EACH BUYER, ON BEHALF OF ITSELF AND THE RELEASORS, SHALL SURVIVE THE CLOSE OF ESCROW AND THE RECORDATION OF THE DEEDS AND SHALL NOT BE DEEMED MERGED INTO THE DEED UPON ITS RECORDATION.
NOTWITHSTANDING ANYTHING STATED TO THE CONTRARY CONTAINED HEREIN, THE PROVISIONS OF THIS SECTION 12.2 SHALL NOT APPLY TO, AND EACH BUYER DOES NOT RELEASE EACH SELLER FROM (a) SELLER’S WARRANTIES, AND (b) ANY SELLER’S FRAUD.
EACH BUYER, ON BEHALF OF ITSELF AND THE OTHER RELEASORS, HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 (“ SECTION 1542 ”), WHICH IS SET FORTH BELOW:

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“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
BY INITIALING BELOW, EACH BUYER, ON BEHALF OF ITSELF AND THE OTHER RELEASORS, HEREBY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVERS AND RELEASES.
Buyer's Initials /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS
On behalf of each Buyer
12.3     ERISA . Buyer is not purchasing any of the Portfolio with “plan assets” of an Employee Benefit Plan subject to Title I of the Employee Retirement Income Security Act of 1974 (as amended from time to time, the “ Act ,” and together with any regulation, rule or judicial or administrative case, order, or pronouncement arising under or connected with the Act, “ ERISA ”) or of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “ Code ”). Buyer shall take all actions reasonably requested by Seller for the purpose of ensuring, to Seller’s satisfaction, that the transactions contemplated herein will comply with ERISA and not result in an imposition of an excise tax under Section 4975 of the Code; such actions shall include, without limitation, the making of such further representations and warranties as Seller’s counsel reasonably deems necessary to ensure that neither this Agreement nor any of the transactions contemplated herein will violate ERISA or result in an imposition of an excise tax under Section 4975 of the Code. In the event that this Agreement, or any transaction or other action by Seller in connection herewith, shall be deemed to violate ERISA or result in an imposition of an excise tax under Section 4975 of the Code, Seller may immediately terminate this Agreement (without any liability to Seller) in accordance with, and subject to the terms and conditions of, Section 9.3 hereof as if such termination arose from a failed condition under Section 9.3 hereof.
13.
DEFAULT AND DAMAGES
13.1     DEFAULT BY BUYER . BUYER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT, IN THE EVENT THE CLOSE OF ESCROW FAILS TO OCCUR DUE TO A BUYER DEFAULT (ALL OF THE CONDITIONS TO BUYER’S OBLIGATIONS TO CLOSE HAVING BEEN SATISFIED OR WAIVED), SELLER WILL SUFFER DAMAGES IN AN AMOUNT WHICH WILL, DUE TO THE SPECIAL NATURE OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THE SPECIAL NATURE OF THE NEGOTIATIONS WHICH PRECEDED THIS AGREEMENT, BE IMPRACTICAL OR EXTREMELY DIFFICULT TO ASCERTAIN.  IN ADDITION, BUYER WISHES TO HAVE A LIMITATION PLACED UPON THE POTENTIAL LIABILITY OF BUYER TO SELLER IN THE EVENT THE CLOSE OF ESCROW FAILS TO OCCUR DUE TO A BUYER DEFAULT, AND WISHES TO INDUCE SELLER TO WAIVE OTHER REMEDIES WHICH SELLER MAY HAVE IN THE EVENT OF A BUYER DEFAULT.  BUYER AND SELLER, AFTER DUE NEGOTIATION, HEREBY

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ACKNOWLEDGE AND AGREE THAT THE AMOUNT OF THE REIMBURSABLE EXPENSES REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER WILL SUSTAIN IN THE EVENT OF SUCH BUYER DEFAULT.  BUYER AND SELLER HEREBY AGREE THAT, IN THE EVENT THE CLOSE OF ESCROW FAILS TO OCCUR DUE TO A BUYER DEFAULT (ALL OF THE CONDITIONS TO BUYER’S OBLIGATIONS TO CLOSE HAVING BEEN SATISFIED OR WAIVED), SELLER MAY TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO BUYER AND ESCROW HOLDER AND CANCEL THE ESCROW, IN WHICH EVENT BUYER SHALL PAY SELLER THE REIMBURSABLE EXPENSES AS LIQUIDATED DAMAGES.  SUCH RECEIPT OF THE REIMBURSABLE EXPENSES BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE, AND SHALL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY WITHIN THE MEANING OF SECTION 3275 OR SECTION 3369 OF THE CALIFORNIA CIVIL CODE, OR ANY SIMILAR PROVISION. 
NOTHING IN THIS SECTION 13.1 SHALL (A) PREVENT OR PRECLUDE ANY RECOVERY OF ATTORNEYS’ FEES OR OTHER COSTS INCURRED BY SELLER PURSUANT TO SECTION 15.5 OR (B) IMPAIR OR LIMIT THE EFFECTIVENESS OR ENFORCEABILITY OF THE INDEMNIFICATION OBLIGATIONS OF BUYER CONTAINED IN SECTION 4.3.1 AND SECTION 14 HEREOF. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13.1 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
Seller's Initials on Behalf of
All Seller Parties /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS
Buyer's Initials on Behalf of
All Buyer Parties /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS
13.2     Default by Seller . If Seller defaults in its obligations to sell and convey the Portfolio to Buyer pursuant to this Agreement, Buyer’s sole and exclusive remedy shall be to elect one of the following: (a) to terminate this Agreement, or (b) to bring a suit for specific performance provided that any suit for specific performance must be brought as to the Portfolio within 30 days of Seller’s default, Buyer’s waiving the right to bring suit at any later date to the extent permitted by law. This Agreement confers no present right, title or interest in the Portfolio to Buyer and Buyer agrees not to file a lis pendens or other similar notice against any Real Property except in connection with, and after, the proper filing of a suit for specific performance.

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14.
NO BROKER
Neither party hereto has had any contact, dealings, negotiations or consultations regarding the Portfolio, or any communication in connection with the subject matter of this transaction, through any licensed real estate broker, representative, employee, agent or other intermediary or other person who can claim a right to a commission or finder’s fee as a procuring cause of the sale contemplated herein. In the event that any broker or finder perfects a claim for a commission or finder’s fee, the Party responsible for the contact or communication on which the broker or finder perfected such claim shall indemnify, save harmless and defend the other Party from said claim and all costs and expenses (including reasonable attorneys’ fees) incurred by the other party in defending against the same. This section shall survive the termination of this Agreement and the Close of Escrow without limitation.
15.
MISCELLANEOUS PROVISIONS
15.1     Notices . All written notices or demands of any kind which either party hereto may be required or may desire to serve on the other in connection with this Agreement shall be served by personal service, by registered or certified mail, recognized overnight courier service or facsimile transmission. Any such notice or demand so to be served by registered or certified mail, recognized overnight courier service or facsimile transmission shall be delivered with all applicable delivery charges thereon fully prepaid and addressed to the applicable party at the address set forth on Schedule 5 attached hereto. Service of any such notice or demand so made by personal delivery, registered or certified mail, recognized overnight courier or facsimile transmission shall be deemed complete on the date of actual delivery as shown by the addressee’s registry or certification receipt or, as to facsimile transmissions, by “answer back confirmation” (provided that a copy of such notice or demand is delivered by any of the other methods provided above within one (1) business day following receipt of such facsimile transmission), as applicable, or at the expiration of the third (3rd) business day after the date of dispatch, whichever is earlier in time. Either party hereto may from time to time, by notice in writing served upon the other as aforesaid, designate a different mailing address to which or a different person to whose attention all such notices or demands are thereafter to be addressed. Counsel for a party may give notice or demand on behalf of such party, and such notice or demand shall be treated as being sent by such party.
15.2     Assignment; Binding on Successors and Assigns . No Buyer shall assign, transfer or convey its rights or obligations under this Agreement or with respect to the Portfolio without the prior written consent of Seller, which consent Seller may withhold in its sole, absolute and subjective discretion. Any attempted assignment without the prior written consent of Seller shall be void and Buyer shall be deemed in default hereunder. Any permitted assignments shall not relieve the assigning party from its liability under this Agreement. Subject to the foregoing, and except as provided to the contrary herein, the terms, covenants, conditions and warranties contained herein and the powers granted hereby shall inure to the benefit of and bind all parties hereto and their respective heirs, executors, administrators, successors and assigns, and all subsequent owners of each Property.
15.3     Work Product . Effective upon and in the event of a termination of this Agreement for any reason, if requested by Seller in writing, Buyer shall deliver to Seller copies

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of all reports, plans, studies, documents, written information and the like that were generated by Buyer’s third party consultants (without any representation or warranty by Buyer as to such documents and at no cost to the Seller), whether prior to the effective date of this Agreement, or during the period of Escrow in connection with Buyer’s proposed acquisition, development, use or sale of the Real Property (collectively, the “ Work Product ”); provided, however, Buyer shall not be required to deliver any proprietary or attorney-client privileged Work Product; provided further, however, all third-party reports relating to the physical condition of the Property shall specifically be included in the definition of Work Product and shall not be considered proprietary or subject to attorney-client, work product or similar privilege. Buyer shall also destroy, or return in the same condition as delivered to Buyer, all materials and information (including, without limitation, the Property Information) given to it by Seller or its consultants during Escrow. Notwithstanding anything stated to the contrary in this Agreement, Buyer may retain any Work Product or Property Information (in accordance with the confidentiality obligations provided for under this Agreement) to the extent required by law, regulation or Buyer’s internal document retention policies.
15.4     Further Assurances . In addition to the acts and deeds recited herein and contemplated to be performed, executed or delivered by Seller or Buyer, Seller and Buyer hereby agree to perform, execute and deliver, or cause to be performed, executed and delivered, on the Closing Date or thereafter any and all such further acts, deeds and assurances as Buyer or Seller, as the case may be, may reasonably require in order to consummate fully the transactions contemplated hereunder.
15.5     Attorneys’ Fees . If any legal action or any arbitration or other proceeding is brought or if an attorney is retained for the enforcement of this Agreement or any portion thereof, or because of any alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the prevailing party shall be entitled to recover from the other reimbursement for the reasonable fees of attorneys and other costs (including court costs and witness fees) incurred by it, in addition to any other relief to which it may be entitled. The term “prevailing party” means the party obtaining substantially the relief sought, whether by compromise, settlement or judgment.
15.6     Survival of Representations, Warranties, Covenants, Obligations and Agreements . Except as otherwise expressly provided below in this Section 15.6 , none of the representations, warranties, covenants, obligations or agreements contained in this Agreement shall survive the Close of Escrow or the earlier termination of this Agreement.
(a)    Notwithstanding the provisions of Section 15.6(a) , the indemnification provisions of each Buyer under Sections 4.3.1 (which shall only survive the termination of this Agreement for a period of nine (9) months) and 14 (which shall only survive the termination of this Agreement for a period of nine (9) months) hereof and the provisions of Sections 4.6 , 11.2 , 13.2 , 15.3 , 15.5 , 15.17 , 15.19 , 15.20 and Sections 15.21(a), (b), (d), (e), (f), (k)(i), (k)(ii), and (k)(iii) hereof (collectively, the “ Surviving Termination Obligations ”) shall survive the termination of this Agreement without limitation, and any claim based upon any breach of a representation or warranty, or a breach of a covenant, obligation or agreement included in any of the Surviving Termination Obligations shall be actionable and enforceable at any time after the

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date of the termination of this Agreement (or with respect to Sections 4.3.1 and 14 , within nine (9) months after the date of the termination of this Agreement).
(b)    Notwithstanding the provisions of Section 15.6(a) , the indemnification provisions of each Buyer under Sections 4.3.1 (which shall only survive the Close of Escrow for a period of nine (9) months), 14 (which shall only survive the Close of Escrow for a period of nine (9) months) and 10.5 (which shall only survive the Close of Escrow for a period of nine (9) months) hereof, the provisions of Sections 4.6 , 10.1 , 10.3 , 10.4 , 10.8 , 11.2 , 12.1 , 12.2 , and 12.3 that relate to Buyer and the provisions of Sections 15.5 , 15.17 , 15.19, 15.20 and Sections 15.21(a), (b), (d), (e), (f), (k)(i), (k)(ii), and (k)(iii) hereof (collectively, the “ Surviving Closing Obligations ”) shall survive the Close of Escrow without limitation, and shall not be merged with the recording of the Deed, and any claim based upon any breach of a representation or warranty, or a breach of a covenant, obligation or agreement included in any of the Surviving Closing Obligations shall be actionable and enforceable at any time after the Closing (or with respect to Sections 4.3.1 , 14 and 10.5 , within nine (9) months after the Closing); provided, however, in no event shall each Buyer’s liability, if any, with respect to any Surviving Closing Obligations exceed, in the aggregate, an amount equal to one percent (1%) of the Purchase Price allocated to such Buyer’s Property, as more particularly set forth in Section 3.1 . For example, the liability of Prime US-Village Center Station II, LLC with respect to any Surviving Closing Obligation and any Limited Surviving Closing Obligation for which it has responsibility is limited to one percent (1%) of the amount set forth in Section 3.1(a) hereof.
(c)    Notwithstanding the provisions of Section 15.6(a) , the indemnification provisions of each Seller under Section 14 hereof and the provisions of Sections 11.1 , 15.21(a)(v) , 15.21(k)(v) , and 15.21(k)(vi) hereof (collectively, the “ Limited Surviving Closing Obligations ”) shall survive the Close of Escrow and the execution and delivery of the Deed only for a period of nine (9) months immediately following the Closing (except for Sections 15.21(k)(v) and 15.21(k)(vi) , which provisions shall survive the Close of Escrow for the time periods set forth in such sections, respectively), and any claim based upon any breach of a representation or warranty, or a breach of a covenant, obligation or agreement included in any of the Limited Surviving Closing Obligations shall be actionable and enforceable if and only if notice of such claim is given to the party which allegedly breached such representation or warranty, or breached such covenant, obligation or agreement, within nine (9) months after the Closing (or, with respect to Sections 15.21(k)(v) and 15.21(k)(vi) , within the time periods set forth in such sections); provided, however, in no event shall each Seller’s liability, if any, with respect to any Limited Surviving Closing Obligations and any Surviving Closing Obligations exceed, in the aggregate, an amount equal to one percent (1%) of the Purchase Price allocated to such Seller’s Property, as more particularly set forth in Section 3.1 . For example, the liability of Village Center Station II Owner, LLC with respect to any Limiting Surviving Closing Obligations and any Surviving Closing Obligations for which it has responsibility is limited to one percent (1%) of the amount set forth in Section 3.1(a) hereof.
15.7     Entire Agreement . This Agreement contains the entire agreement and understanding of the Parties in respect to the subject matter hereof, and the Parties intend for the literal words of this Agreement to govern and for all prior negotiations, drafts, and other extrinsic communications, whether oral or written, to have no significance or evidentiary effect. The parties further intend that neither this Agreement nor any of its provisions may be changed,

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amended, discharged, waived or otherwise modified orally except only by an instrument in writing duly executed by the Party to be bound thereby. The Parties hereto fully understand and acknowledge the importance of the foregoing sentence and are aware that the law may permit subsequent oral modification of a contract notwithstanding contract language which requires that any such modification be in writing, but Buyer and Seller fully and expressly intend that the foregoing requirements as to a writing be strictly adhered to and strictly interpreted and enforced by any court which may be asked to decide the question. Each Party hereto acknowledges that this Agreement accurately reflects the agreements and understandings of the Parties hereto with respect to the subject matter hereof and hereby waive any claim against the other Party which such party may now have or may hereafter acquire to the effect that the actual agreements and understandings of the Parties hereto with respect to the subject matter hereof may not be accurately set forth in this Agreement.
15.8     Governing Law . This Agreement shall be governed by the laws of the State of California.
15.9     Counterparts . This Agreement may be executed simultaneously in one or more counterparts and delivered via facsimile and/or by electronic mail in "PDF" format, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
15.10     Headings; Construction . The various headings of this Agreement are included for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and the masculine shall include the feminine and the neuter and vice versa. The use in this Agreement of the term “including” and related terms such as “include” shall in all cases mean “without limitation.” All references to “days” in this Agreement shall be construed to mean calendar days unless otherwise expressly provided and all references to “business days” shall be construed to mean days on which national banks are open for business.
15.11     Time of Essence . Seller and Buyer hereby acknowledge and agree that time is strictly of the essence with respect to each and every term, condition, obligation and provision hereof and failure to perform timely any of the terms, conditions, obligations or provisions hereof by either party shall constitute a material breach of, and non-curable (but waivable) default under this Agreement by the parties so failing to perform.
15.12     Partial Validity; Severability . If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.
15.13     No Third Party Beneficiaries . This Agreement is for the sole and exclusive benefit of the parties hereto and their respective permitted successors and assigns, and no third party is intended to, or shall have, any rights hereunder.

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15.14     Several Liability and Obligation of Buyer . Notwithstanding anything stated to the contrary in this Agreement, all obligations and liabilities of each Buyer under this Agreement shall be several, and not joint, as to Buyer. For avoidance of doubt, if any Buyer fails to meet its obligations under this Agreement the recourse of Seller for such failure shall be limited to pursuing the individual Buyer that failed to meet its obligations and no other Buyer shall have any liability whatsoever regarding the same.
15.15     Joint Product of Parties . This Agreement is the result of arms-length negotiations between Seller and Buyer and their respective attorneys. Accordingly, neither party shall be deemed to be the author of this Agreement and this Agreement shall not be construed against either party.
15.16     Calculation of Time Periods . Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included at, unless such last day is a Saturday, Sunday or legal holiday for national banks in California, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday. Unless otherwise expressly provided herein, the last day of any period of time described herein shall be deemed to end at 11:59 p.m. (Pacific Standard Time).
15.17     Procedure for Indemnity . The following provisions govern actions for indemnity under this Agreement. Promptly after receipt by an indemnitee of notice of any claim, such indemnitee will, if a claim in respect thereof is to be made against the indemnitor, deliver to the indemnitor written notice thereof and the indemnitor shall have the right to participate in and, if the indemnitor agrees in writing that it will be responsible for any costs, expenses, judgments, damages, and losses incurred by the indemnitee with respect to such claim, to assume the defense thereof, with counsel mutually satisfactory to the parties; provided, however, that an indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnitor, if the indemnitee reasonably believes that representation of such indemnitee by the counsel retained by the indemnitor would be inappropriate due to actual or potential differing interests between such indemnitee and any other party represented by such counsel in such proceeding. The failure of indemnitee to deliver written notice to the indemnitor within a reasonable time after indemnitee receives notice of any such claim shall relieve such indemnitor of any liability to the indemnitee under this indemnity only if and to the extent that such failure is prejudicial to its ability to defend such action, and the omission so to deliver written notice to the indemnitor will not relieve it of any liability that it may have to any indemnitee other than under this indemnity. If an indemnitee settles a claim without the prior written consent of the indemnitor, then the indemnitor shall be released from liability with respect to such claim unless the indemnitor has unreasonably withheld such consent.
15.18     Waiver of Jury Trial . To the extent permitted by applicable law, the Parties hereby waive any right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
15.19     No Personal Liability . Notwithstanding anything stated to the contrary herein, prior to the Close of Escrow each Seller’s liability under this Agreement shall be limited to such

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Seller’s interest in the Property it owns and no Seller’s constituent partners and/or members (direct or indirect), no Seller’s asset manager, nor any Seller’s directors, trustees, employees or agents (direct or indirect) shall have any personal liability hereunder.
15.20     Several Liability of Seller . All obligations and liabilities of each Seller under this Agreement shall be several, and not joint, as to Seller. For avoidance of doubt, if any Seller fails to meet its obligations under this Agreement the recourse of Buyer for such failure shall be limited to pursuing the individual Seller that failed to meet its obligations and no other Seller shall have any liability whatsoever regarding the same.
15.21     State-Specific Provisions.
(a)     California Provisions.
(i)     Natural Hazard Disclosure . Buyer acknowledges that Seller has commissioned Escrow Holder or its affiliate to prepare a natural hazard disclosure statement for each Property located in California (the “ Natural Hazard Disclosure ”), including the matters required by Article 1.7 of the California Civil Code (currently Section 1103 through 1103.15).  Buyer acknowledges that this transaction is not subject to such Article 1.7, but that, nevertheless, the Natural Hazard Disclosure shall serve to satisfy any and all disclosure requirements relating to the matters referenced in the Natural Hazard Disclosure.  Seller does not warrant or represent either the accuracy or completeness of the information in the Natural Hazard Disclosure, and Buyer shall use same merely as a part in its overall investigation of the Portfolio.
(ii)     Waiver of CC Section 1662 . Seller and Buyer each expressly waive the provisions of California Civil Code Section 1662 and hereby agree that the provisions of Section 5.4 hereof shall govern their obligations in the event of damage or destruction to any Real Property located in California or condemnation of all or any part of any Real Property located in California.
(iii)     Environmental Disclosure . Each Buyer acknowledges and agrees that Seller has indicated that the sole inquiry and investigation that Seller has conducted in connection with the environmental condition of each Real Property located in California is to obtain the environmental report(s) made available to Buyer as part of the Property Information, and that, for all purposes, including California Health and Safety Code Section 25359.7, each Seller has acted reasonably in solely relying upon said inquiry and investigation. Buyer further acknowledges and agrees that Seller’s making available to Buyer any environmental report(s) as part of the Property Information shall constitute notice to Buyer of any environmental condition disclosed therein, which shall be deemed to satisfy the notice requirements under California Health and Safety Code Section 25359.7.
(iv)     Permitted Exceptions . With respect to any Property located in California, the Permitted Exceptions shall also mean and include the lien of supplemental taxes assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code.
(v)     Contracts . It is acknowledged and agreed that Seller has no authority to award the Contracts with respect to the Property located in California on or after the

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Closing. At least fifteen (15) days before the Closing Date, Buyer shall notify the Seller of the Property located in California in writing whether a “successor service contract” (as that term is defined in Section 1060 of the California Labor Code (the “ Labor Code ”)) for janitorial and/or building maintenance services has been or will be awarded in place of the Contacts for the Property located in California, and, if so, shall identify the name and address of the applicable successor contractors, and Seller shall promptly furnish such information to each of the vendors to such Contracts. If Buyer fails to provide written notice in accordance with the immediately preceding sentence, Seller shall use commercially reasonable efforts to cause its applicable vendors to such Contracts to provide to Buyer at least five (5) days prior to the Closing a list of all “employees” (as that term is defined in Section 1060 of the Labor Code), which includes the name, date of hire, and job classification for each such employee covered by such Contracts at the time of its termination with respect to such Property, and Buyer hereby assumes responsibility for providing such list to its successor contractor(s). The provisions of this Section 15.21(a)(v) shall survive the Closing.
(vi)     Disclosure of California Civil Code Section 1101.5 . In accordance with the requirements of California Civil Code Section 1101.5(e), Seller hereby discloses the following: (1) California Civil Code Section 1101.5(a) provides as follows: “On or before January 1, 2019, all noncompliant plumbing fixtures in any multifamily residential real property and in any commercial real property shall be replaced with water-conserving plumbing fixtures”; and (2) to Seller’s Actual Knowledge, the Property located in California does not have any such noncompliant plumbing fixtures.
(b)     Colorado Provisions .
(i)     Special Taxing District Disclosure – CRS 38-35.7-101 . SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK FOR INCREASED MILL LEVIES AND TAX TO SUPPORT THE SERVICING OF SUCH DEBT WHERE CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A DISTRICT TO DISCHARGE SUCH INDEBTEDNESS WITHOUT SUCH AN INCREASE IN MILL LEVIES. BUYER SHOULD INVESTIGATE THE SPECIAL TAXING DISTRICTS IN WHICH ANY PROPERTY LOCATED IN COLORADO IS LOCATED BY CONTACTING THE COUNTY TREASURER, BY REVIEWING THE CERTIFICATE OF TAXES DUE FOR SUCH PROPERTY, AND BY OBTAINING FURTHER INFORMATION FROM THE BOARD OF COUNTY COMMISSIONERS, THE COUNTY CLERK AND RECORDER, OR THE COUNTY ASSESSOR.
(ii)     Community Interest Community – CRS 38-35.7-102 . IF ANY PROPERTY LOCATED IN COLORADO IS LOCATED WITHIN A COMMON INTEREST COMMUNITY AND IS SUBJECT TO THE DECLARATION FOR SUCH COMMUNITY, THE OWNER OF THE PROPERTY WILL BE REQUIRED TO BE A MEMBER OF THE OWNER’S ASSOCIATION FOR THE COMMUNITY AND WILL BE SUBJECT TO THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION. THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS WILL IMPOSE

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FINANCIAL OBLIGATIONS UPON THE OWNER OF SUCH PROPERTY, INCLUDING AN OBLIGATION TO PAY ASSESSMENTS OF THE ASSOCIATION. IF THE OWNER DOES NOT PAY THESE ASSESSMENTS, THE ASSOCIATION COULD PLACE A LIEN ON SUCH PROPERTY AND POSSIBLY SELL IT TO PAY THE DEBT. THE DECLARATION, BYLAWS, AND RULES AND REGULATIONS OF THE COMMUNITY MAY PROHIBIT THE OWNER FROM MAKING CHANGES TO SUCH PROPERTY WITHOUT AN ARCHITECTURAL REVIEW BY THE ASSOCIATION (OR A COMMITTEE OF THE ASSOCIATION) AND THE APPROVAL OF THE ASSOCIATION. BUYERS OF PROPERTY LOCATED WITHIN THE COMMON INTEREST COMMUNITY SHOULD INVESTIGATE THE FINANCIAL OBLIGATIONS OF MEMBERS OF THE ASSOCIATION. BUYERS SHOULD CAREFULLY READ THE DECLARATION FOR THE COMMUNITY AND THE BYLAWS AND RULES AND REGULATIONS OF THE ASSOCIATION.
(c)     Georgia Provisions .
(i)     Attorneys’ Fees . Any attorneys’ fees and costs paid by either the Seller of any Property located in Georgia, or the Buyer that is acquiring any Property in Georgia in accordance with Section 15.5 of this Agreement, shall be paid without regard to the provisions of O.C.G.A. Section 13-1-11.
(d)     Texas Provisions .
(i)     Waiver of Texas Deceptive Trade Practices . To the extent applicable and permitted by law (and without admitting such applicability), each Buyer that owns a Property in Texas, as a material inducement to Seller to enter into this Agreement and the transactions contemplated herein, hereby waives the provisions of the Texas Deceptive Trade Practices-Consumer Protection Act, Chapter 17, Subchapter E, Sections 17.41 through 17.63, inclusive, as well as the right to assert a claim under Chapter 27 of the Texas Business and Commerce Code or under any other similar statute or enactment. As a further material inducement to Seller to enter into this Agreement and the transactions contemplated herein, each Buyer that owns a Property in Texas represents and warrants to Seller that such Buyer is acquiring its Property for commercial or business use, has knowledge and experience in financial and business matters that enable such Buyer to evaluate the merits and risks of the transaction herein contemplated, has bargained for and obtained a purchase price and other terms under this Agreement which make the acceptance of a contract which substantially limits its recourse against such Seller acceptable, and has been and will continue to be represented by counsel in connection with the transaction contemplated herein.
(ii)     Deed Restriction Notice . If there are any deed restrictions or other covenants that affect any Property located in Texas, then Seller shall prepare and give to Buyer written notice of such deed restrictions in a form reasonably acceptable to Seller and the Title Company.
(iii)     Water Code Notice . In the event that any Property located in Texas is located in a district created under Title 4 of the Texas Water Code (General Law Districts) or by a special Act of the legislature that is providing or proposing to provide, as the district's principal function, water, sanitary sewer, drainage, and flood control or protection facilities or services, or any of these facilities or services that have been financed or are proposed to be financed with bonds of the district payable in whole or part from taxes of the district, or by

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imposition of a standby fee, if any, to household or commercial users, other than agricultural, irrigation, or industrial users, and which district includes less than all the territory in at least one county and which, if located within the corporate area of a city, includes less than 75 percent of the incorporated area of the city or which is located outside the corporate area of a city in whole or in substantial part, and is subject to the requirements of Section 49.452 of the Texas Water Code, then Seller shall prepare and give to Buyer the written notice that is required by Section 49.452 of the Texas Water Code.
(iv)     Notice to Buyer . The Texas Real Estate License Act requires that Seller notify each Buyer that will be acquiring Property located in Texas that such Buyer should either (i) have an attorney examine an abstract of title to each Property located in Texas, or (ii) obtain a title insurance policy covering each Property located in Texas. Notice to that effect is, therefore, hereby given to and acknowledged by such Buyer.
(e)     Maryland Provisions . The Buyer that will own Property in Montgomery County, Maryland, acknowledges that the following disclosures are hereby made with respect to the Property located in Montgomery County, Maryland (the “ Montgomery County Project ”) pursuant to applicable law in Montgomery County, Maryland:
(i)     Master Plan . Pursuant to Chapter 40 of the Montgomery County Code, Seller hereby apprises such Buyer of such Buyer’s right to review the applicable master plan and the municipal land use plan and any adopted amendments and any approved official maps showing planned land uses, roads and highways, and parks and other public facilities affecting the Montgomery County Project contained in any such plan prior to the execution of this Agreement. Seller hereby informs such Buyer that the applicable plan or general plan for Montgomery County, Maryland, is available at the Maryland National Capital Park and Planning Commission.
By initialing below, such Buyer acknowledges that (a) Seller has offered such Buyer the opportunity to review the applicable master plan and municipal land use plan and any adopted amendments to such plans, (b) Seller has informed such Buyer that amendments affecting the plan may be pending before the planning board or the county council or a municipal planning body, (c) such Buyer has reviewed said applicable plans and adopted amendments prior to executing this Agreement or does hereby waive such Buyer’s right to do so and (d) such Buyer understands that to stay informed of future changes in county and municipal land use plans, such Buyer should consult the planning board and the appropriate municipal planning body.
Buyer Initials: /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS
(ii)     Water and Sewer Service . By initialing below, such Buyer acknowledges that Seller has informed such Buyer that Seller does not know (a) whether the Montgomery County Project is connected to, or has been approved for connection to, a public water and sewer system, (b) if the Montgomery County Project is not connected to a public water and sewer system, (i) the source, if any, of potable water for any Montgomery County Project, and (ii) whether an individual sewage disposal system has been constructed on the Montgomery

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County Project or approved or disapproved for construction, and (c)(i) the water and sewer service area category or categories that currently apply to the Montgomery County Project, and a brief explanation of how each category affects the availability of water and sewer service, (ii) any recommendations in the applicable master plan regarding water and sewer service for the Montgomery County Project, and (iii) the status of any pending water and sewer comprehensive plan amendments or service area category changes that would apply to each Montgomery County Project.
Buyer Initials: /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS /s/CJS
(f)     Utah Provisions . None.
(g)     Virginia Provisions . None.
(h)     Missouri Provisions . None.
(i)     Kansas Provisions . None.
(j)     Pennsylvania Provisions .
(i)    The Buyer that is acquiring Property in Pennsylvania hereby acknowledges and understands that access to a public road or street for its Property in Pennsylvania may require issuance of a highway occupancy permit from the Pennsylvania Department of Transportation.
(ii)    A “Real Estate Recovery Fund” exists to reimburse any person who has obtained a final civil judgment against a Pennsylvania real estate licensee owing to fraud, misrepresentation, or deceit in a real estate transaction and who has been unable to collect the judgment after exhausting all legal and equitable remedies. For complete details about said Real Estate Recovery Fund, call 717-783-3568.
(iii)    By signing this Agreement, the parties acknowledge receipt of the agency disclosure located at http://mlhdocs.com/legal/agencydisclosures/Ten-X/Pennsylvania.pdf.
(iv)     Section 11.1 of this Agreement is hereby supplemented by adding the representations set forth below, which representations are hereby made by only the Seller of the Property located in Pennsylvania:
(a)
Bulk Sales/Taxes . All Pennsylvania state tax returns required to have been filed by such Seller have been filed or will be filed by the Closing Date, and all Pennsylvania state taxes for the Property located in Pennsylvania shown as due on such returns, including without limitation, income taxes, sales and use taxes, unemployment compensation contributions and employer withholding taxes, if any, payable by such Seller, and interest and penalties thereon accrued on or before the Closing Date, have been paid, or will be paid by the Closing Date.

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(b)
Sewage Facilities Notice . Under the terms of the Pennsylvania Sewage Facilities Act of January 24, 1966, No. 537, P.L. 1535 as amended, the Seller of the Property located in Pennsylvania represents that a community sewage system currently exists and is available to the Property located in Pennsylvania.
(v)    No less than ten (10) days prior to the Closing Date, the Seller of the Property located in Pennsylvania hereby agrees to file an Application for Tax Clearance Certificate (Form Rev-181) (the “ Tax Clearance Certificate ”) with the Pennsylvania Department of Revenue and to provide evidence of such filing to the Buyer that is acquiring the Property located in Pennsylvania. Such Seller hereby agrees to provide a copy of the Tax Clearance Certificate to such Buyer as soon as it is obtained. The provisions of this Paragraph 15.21(k)(v) shall survive the Closing until the earlier to occur of (a) one (1) year or for such longer period to the extent that there remains a claim asserted by such Buyer against such Seller for a breach of such Seller’s representation referenced in Section 15.21(k)(iv)(a) above, and (b) such Seller’s delivery to such Buyer of a clearance certificate issued by the Pennsylvania Department of Revenue.
(vi)    The Seller of the Property located in Pennsylvania agrees to indemnify, defend and hold harmless the Buyer that is acquiring the Property located in Pennsylvania from and against any and all actual losses, liabilities, damages, demands, claims, actions, judgments, causes of action, assessments, penalties (including, without limitation, any failure of the Bulk Sales Payments (as hereinafter defined), if any, to be timely made), payments and reasonable costs and expenses incurred by such Buyer (including reasonable attorneys’ fees and court costs) arising out of or in connection with any Bulk Sales Payments, including, without limitation, actual losses, liabilities and damages, arising out such Seller’s failure to timely obtain the Tax Clearance Certificate (collectively, the “ Bulk Sale Indemnified Losses ”). For purposes hereof, “ Bulk Sales Payments ” shall mean all amounts, if any, which may be payable by such Buyer to the Commonwealth of Pennsylvania and/or the Pennsylvania Department of Revenue pursuant to 43 P.S. Section 788.3 and 72 P.S. Sections 1403, 7240 and/or 7321.1 of the Pennsylvania Statutes, or any underlying Pennsylvania tax statutes or regulations, that accrued on or before the Closing Date, arising from the failure by such Seller to file tax returns and/or to pay all of the taxes assessed or claimed against such Seller by the Commonwealth of Pennsylvania, including without limitation franchise taxes, income taxes, sales and use taxes, unemployment compensation contributions and withholding taxes payable in respect of employees, and interest and penalties thereon, through and until the Closing Date in connection with such Seller’s sale of the Property located in Pennsylvania. Notwithstanding anything stated to the contrary in this Section 15.21(k)(vi) , such Buyer shall have no right to enforce the indemnity provided for in this Section 15.21(k)(vi) and pursue any Bulk Sale Indemnified Losses until, and unless, as to any such Bulk Sale Indemnified Losses, any appeal period has expired with respect to such Seller’s right to appeal the imposition of any Bulk Sale Payments payable to the Commonwealth of Pennsylvania and/or the Pennsylvania Department of Revenue; provided, however, notwithstanding the foregoing, such Buyer shall have the right to enforce this indemnity to pursue Bulk Sale Indemnified Losses notwithstanding that any such appeal period may not have expired (and notwithstanding that such Seller may be appealing the payment of any Bulk Sale Payments) to the extent demand has been made (and has not been legally stayed) on such Buyer to pay all or any portion of the Bulk Sale Payments. The provisions of this Section 15.21(k)(vi) shall survive the Closing for the period of the earlier to occur of (a) one (1)
 

ACTIVE 31157768v21
‑ 39 ‑
 



year, or for such longer period as their remains an unresolved claim that was asserted by such Buyer against such Seller during such one-year period for any Bulk Sale Indemnified Losses, and (b) such Seller’s delivery to such Buyer of a clearance certificate issued by the Pennsylvania Departments of Revenue and Labor confirming that there are no Bulk Sale Payments due.
15.22     Exhibits . If, as of the Effective Date, any Exhibits or Schedules said to be attached hereto are missing, Buyer and Seller agree that each party shall work in good faith with the other to attach such missing Exhibits or Schedules to a fully executed version of this Agreement within ten (10) days after the Effective Date, and such attached Exhibits and Schedules shall be deemed to have been attached hereto as of the Effective Date. If, after the Effective Date, any Exhibits or Schedules attached hereto are discovered to contain any errors, Buyer and Seller agree that each party shall work in good faith with the other to replace such Exhibits or Schedules to correct any such errors, and such replacement Exhibits or Schedules shall be deemed to have been attached hereto as of the Effective Date.
15.23     Termination Rights . Notwithstanding anything stated to the contrary in this Agreement, and except as otherwise provided for in Section 5.4 of this Agreement for damage and destruction or condemnation/eminent domain, any termination right provided for in this Agreement, or any remedy provided for under this Agreement arising from a default under this Agreement, in favor of either Seller or Buyer, may only be exercised by such party for the entire Portfolio and not for a Real Property or certain Real Properties less than the entire Portfolio. For avoidance of doubt, except as otherwise provided for in Section 5.4 of this Agreement for damage and/or destruction or condemnation/eminent domain, the Seller shall only be obligated to sell, and the Buyer shall only be obligated to purchase, the entire Portfolio upon the Close of Escrow.
15.24    Concurrently with the Close of Escrow Seller shall cause KBS REIT Properties III, LLC, a Delaware limited liability company (“KBS REIT Properties”),  to assign to Prime US – Lower Tier, LLC, a Delaware limited liability company (“Prime US Lower Tier”), and Buyer shall cause Prime US Lower Tier to assume, all of KBS REIT Properties’ obligations under that certain ISDA 2002 Master Agreement dated December 8, 2014 (the “Swap Agreement”), entered into by and between KBS REIT Properties and Bank of America, N.A. (“BofA”), which shall be accomplished through the execution and delivery by KBS REIT Properties, Prime US Lower Tier and BofA of such documents as may be reasonably  required by BofA, and, in connection with the same, any amounts paid, or payable, under the Swap Agreement for the calendar month in which the Close of Escrow occurs shall be pro-rated between Buyer and Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
[Signatures on following pages]


ACTIVE 31157768v21
‑ 40 ‑
 



"SELLER" :
VILLAGE CENTER STATION II OWNER, LLC,
a Delaware limited liability company
By:
KBSIII VILLAGE CENTER STATION II MEMBER, LLC,
a Delaware limited liability company,
its sole member and manager
By:
KBSIII REIT ACQUISITION XXXII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-1


KBSIII TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION VI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-2


KBSIII ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION X, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-3


KBSIII 222 MAIN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-4


KBSIII 171 17TH STREET, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XV, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-5


KBSIII RESTON SQUARE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XVIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-6


KBSIII 101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XX, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-7


KBSIII VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-8


KBSIII PROMENDAGE ONE, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE ONE MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENAGE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-9


KBSIII PROMENADE TWO, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE TWO MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENADE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III,
INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-10


KBSIII CROSSPOINT AT VALLEY FORGE TRUST,
a Delaware Statutory Trust
By:
KBSIII CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company,
as Administrative Trustee
By:
KBSIII REIT ACQUISITION XXVI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

S-11


KBSIII TOWERS AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer


S-12


"BUYER" :
PRIME US-VILLAGE CENTER STATION II, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-1


PRIME US-TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-2


PRIME US-ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-3


PRIME US-222 MAIN, LLC,
a Delaware limited liability company
By:
PRIME US-ACQUISITION I, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-4


PRIME US-171 17TH STREET, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-5


PRIME US-RESTON SQUARE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-6


PRIME US-101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-7


PRIME US-VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-8


PRIME US-PROMENADE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-9


PRIME US-CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

B-10


PRIME US-TOWER AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President


B-11


AGREED TO THIS 27TH
DAY OFR JUNE, 2019,
AS TO PROVISIONS RELATING TO ESCROW HOLDER:

COMMONWEALTH LAND TITLE INSURANCE COMPANY

By /s/Authorized Signatory
Its V.P.



E-1
ACTIVE31157768v21


LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A
—
List of Seller Parties, Buyer Parties and Real Properties
EXHIBIT B
—
Form of Closing Escrow Agreement
EXHIBIT C
—
List of Contracts
EXHIBIT D
—
Intentionally Deleted
EXHIBIT E
—
State-Specific Deliverables
EXHIBIT F
—
Form of Assignment of Leases and Contracts and Bill of Sale
EXHIBIT G
—
Form of FIRPTA Affidavit
EXHIBIT H
—
Form of Tenant Notice
EXHIBIT I
—
Form of Owners Affidavit
SCHEDULE 1
—
List of Title Reports
SCHEDULE 2
—
Disclosures
SCHEDULE 3
—
Form of California Natural Hazard Disclosure Statement
SCHEDULE 4
—
Schedule of Asset Managers
SCHEDULE 5
—
Notice Address of the Parties
SCHEDULE 6
—
Owner Deposits
SCHEDULE 7
—
Intangible Property


ACTIVE 31157768v21
 
 



EXHIBIT A
List of Seller Parties, Buyer Parties and Real Properties
 
SELLER PARTY
REAL PROPERTY NAME AND ADDRESS
BUYER PARTY
1.    
Village Center Station II Owner, LLC, a Delaware limited liability company



Village Center Station II (Charter Communications)
6350 and 6360 South Fiddlers Green Circle
Greenwood Village, CO 80111
Prime US-Village Center Station II, LLC, a Delaware limited liability company
2.    
KBSIII Tower at Lake Carolyn, LLC, a Delaware limited liability company


Tower At Lake Carolyn (Tower 909)
909 E. Lake Carolyn Parkway,
Irving, TX 75039
Prime US-Tower At Lake Carolyn, LLC, a Delaware limited liability company
3.    
KBSIII One Washingtonian, LLC, a Delaware limited liability company

One Washingtonian
9801 Washingtonian Boulevard
Gaithersburg, MD 20878
Prime US-One Washingtonian, LLC, a Delaware limited liability company
4.    
KBSIII 222 Main, LLC, a Delaware limited liability company

222 Main
222 South Main Street,
Salt Lake City, UT 84101
Prime US-222 Main, LLC, a Delaware limited liability company
5.    
KBSIII 171 17th Street, LLC, a Delaware limited liability company

171 17th Street
171 17th Street NW
Atlanta, GA 30363
Prime US-171 17th Street, LLC, a Delaware limited liability company
6.    
KBSIII Reston Square, LLC, a Delaware limited liability company

Reston Square
11790 Sunrise Valley Drive
Reston, VA 20191
Prime US-Reston Square, LLC, a Delaware limited liability company
7.    
KBSIII 101 South Hanley, LLC, a Delaware limited liability company

101 South Hanley
101 South Hanley
Clayton, MO 63105
Prime US-101 South Hanley, LLC, a Delaware limited liability company
8.    
KBSIII Village Center Station, LLC, a Delaware limited liability company

Village Center Station
6380 South Fiddlers Green Circle
Greenwood Village, CO 80111

Prime US-Village Center Station, LLC, a Delaware limited liability company

 
EXHIBIT A
 
ACTIVE 31157768v21
 
 



9.    
Promenade One
KBSIII Promenade One, LLC, a Delaware limited liability company


Promenade Two
KBSIII Promenade Two, LLC, a Delaware limited liability company

Promenade I & II At Eilan

Promenade One
17806 IH-10 W
San Antonio, Texas 78257

Promenade Two
17802 IH-10 W
San Antonio, Texas 78257

Prime US-Promenade, LLC, a Delaware limited liability company




10.    
KBSIII CrossPoint At Valley Forge Trust, a Delaware Statutory Trust

Crosspoint
550 East Swedesford Road
Wayne, PA 19087

Prime US-CrossPoint At Valley Forge, LLC, a Delaware limited liability company
11.    
KBSIII Towers At Emeryville, LLC, a Delaware limited liability company

Towers At Emeryville – Tower I
1900 Powell Street
Emeryville, CA 94608


Prime US-Tower At Emeryville, LLC, a Delaware limited liability company



 
EXHIBIT A
 
ACTIVE 31157768v21
 
 



EXHIBIT B
Form of Closing Escrow Agreement
(Attached)


 
EXHIBIT B
 
ACTIVE 31157768v21
Page 1
 



CLOSING ESCROW AGREEMENT

THIS CLOSING ESCROW AGREEMENT (this “ Agreement ”) is made and entered into as of this __ day of ______________, 2019, by and among those parties identified as the “Seller Parties” on Exhibit A attached hereto (collectively, “ Seller ”), those parties identified as the “Buyer Parties” on Exhibit A attached hereto (collectively, “ Buyer ”), COMMONWEALTH LAND TITLE INSURANCE COMPANY, in its capacity as the "Escrow Holder" under the Purchase Agreement (defined below) (“ Escrow Holder ”), and COMMONWEALTH LAND TITLE INSURANCE COMPANY, in its capacity as "Title Company" under the Purchase Agreement (" Title Company ").

RECITALS

A.     Seller and Buyer entered into that certain Portfolio Purchase and Sale Agreement and Escrow Instructions dated as of ________________, 2019 (the “ Purchase Agreement ”) for the purchase and sale of certain properties located throughout the United States, and more particularly described in the Purchase Agreement (each a “ Real Property ” and collectively, the “ Real Properties ”) and as set forth next to each applicable Seller Party’s name on Exhibit A attached hereto. Escrow Holder is the “Escrow Holder” named in the Purchase Agreement. Title Company is the "Title Company" named in the Purchase Agreement. Any capitalized terms not otherwise defined herein shall have the meanings assigned thereto in the Purchase Agreement.

B.     The Purchase Agreement was executed in connection with the offering of units (“ Units ”) in Prime US REIT and listing of the Units on the Singapore Exchange Securities Trading Limited (“ SGX ”) (the offering and the listing of the Units are referred to as the “ IPO ”). The IPO is scheduled to occur at [2:00] p.m. (Singapore Time) on ___________, __2019 (which is 11:00 p.m. (Pacific Standard Time) on ___________, 2019) (the “ IPO Commencement Time ”).

C.    Buyer has advised Seller and Escrow Holder that the Close of Escrow must occur prior to the IPO Commencement Time. As a result, Seller and Buyer need to coordinate the Close of Escrow with the IPO and the requirements and timing thereof, and therefore, desire to establish the specific procedures by which Buyer and Seller will authorize and complete the Close of Escrow pursuant to the Purchase Agreement so that the Close of Escrow will occur prior to the IPO Commencement Time.

D.     Seller and Buyer desire to set forth the terms and conditions upon which Escrow Holder, as the Escrow Holder under the Purchase Agreement, will be authorized to proceed with the Close of Escrow, and Title Company, as the Title Company under the Purchase Agreement, will issue the Title Policies to Buyer, all as more particularly set forth in the Agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:


 
EXHIBIT B
 
ACTIVE 31157768v21
Page 2
 



Recitals . The Recitals above are hereby incorporated as a material part of this Agreement. This is the Closing Escrow Agreement referred to in the Purchase Agreement.
2.     Procedure for Delivery and Confirmation of Closing Deliverables.
2.1     Delivery of Closing Documents . Prior to 12:00 p.m. Pacific Standard Time on ________________, 2019 [The day before the IP Commencement Time] (the “ Closing Document Delivery Deadline ”), Seller and Buyer, as applicable, shall cause to be delivered to Escrow Holder all of the documents listed in Exhibit B attached hereto (collectively, the “ Closing Documents ”) to be held in trust by Escrow Holder pending the Close of Escrow, including without limitation, a deed (each, a “ Deed ” and collectively the “ Deeds ”) with respect to each Real Property executed and acknowledged by the applicable Seller, which upon the Close of Escrow will convey to the applicable Buyer good and marketable fee simple title to the applicable Real Property. Buyer and Seller agree that the Closing Documents are documents required to be delivered by Seller and/or Buyer, as applicable, pursuant to Section 6 of the Purchase Agreement.

2.2     Confirmation of Closing Documents . Upon Escrow Holder’s receipt of all of the fully-executed original Closing Documents, Escrow Holder shall immediately notify Seller and Buyer in writing by electronic mail (the “ Closing Document Confirmation Notice ”). If not all Closing Documents are fully-executed and delivered prior to the Closing Document Delivery Deadline, Escrow Holder shall deliver written notice by electronic mail which Closing Documents, if any, are missing or incomplete (the “ Closing Document Deficiency Notice ”), which electronic mail shall itemize what is missing or incomplete. In each case, Escrow Holder shall deliver a Closing Document Confirmation Notice or a Closing Document Deficiency Notice, as applicable, by 2:00 p.m. Pacific Standard Time on _________, 2019. [Insert date of IPO Commencement Time] If Escrow Holder delivers a Closing Document Deficiency Notice, but subsequently receives all the Closing Documents, Escrow Holder shall immediately deliver a Closing Document Confirmation Notice. Escrow Holder’s delivery of the Closing Document Confirmation Notice shall constitute Escrow Holder’s confirmation that it has received all Closing Documents, each Closing Document has been executed by the applicable party(ies) thereto, and all exhibits and schedules to each such Closing Document, as applicable, have been attached thereof (or that Escrow Holder has the exhibits and schedules to be attached and has authorization to attach such exhibits or schedules).
2.3     Execution of Closing Statement . Prior to 10:00 a.m. Pacific Standard Time on ____________, 2019 [Insert date of IPO Commencement Time] (the “ Closing Statement Delivery Deadline ”), Buyer and Seller shall approve and execute a closing settlement statement (the “ Closing Statement ”) prepared by Escrow Holder. Escrow Holder shall also execute the approved Closing Statement. If Buyer, Seller and Escrow Holder agree to have a closing settlement statement for each Real Property or a master closing settlement statement with separate or attached property specific closing settlement statements, each such closing settlement statement shall constitute one Closing Statement for purposes of this Agreement.

 
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2.4     Confirmation of Closing Statement . Upon Escrow Holder’s receipt of a fully-executed Closing Statement, Escrow Holder shall immediately notify Seller and Buyer in writing by electronic mail (the “ Closing Statement Confirmation Notice ”), which electronic mail shall attach a copy of the fully-executed Closing Statement. If Escrow Holder has not received a fully-executed Closing Statement prior to the Closing Statement Delivery Deadline, Escrow Holder shall deliver written notice by electronic mail (the “ Closing Statement Deficiency Notice ”). In either case, Escrow Holder shall deliver a Closing Statement Confirmation Notice or a Closing Statement Deficiency Notice, as applicable, by 11:00 a.m. Pacific Standard Time on ____________, 2019 [Insert date of IPO Commencement Time] . If Escrow Holder delivers a Closing Statement Deficiency Notice, but subsequently receives the fully-executed Closing Statement, Escrow Holder shall immediately deliver a Closing Statement Confirmation Notice.
2.5     Delivery of Closing Funds . Upon receipt of the Closing Statement Confirmation Notice, Buyer shall initiate one or more wire transfers, or cause such wire transfer to be initiated, so that the full amount of the closing funds due from Buyer that are necessary for the Close of Escrow (the “ Closing Funds ”) as set forth on the Closing Statement are deposited into a [segregated account] of Escrow Holder (the “ Escrow Account ”). Escrow Holder acknowledges that a portion of the Closing Funds are being advanced on behalf of Buyer by the lenders listed on the Closing Statement (the " Lenders "). All Closing Funds shall be delivered by wire transfer in current and immediately available funds. Buyer and Seller hereby advise Escrow Holder that a portion of the Purchase Price will not be funded into the Escrow Account because KBS Real Estate Investment Trust III, Inc. will instead be receiving ___ percent (__%) of the Units (the “ KBS Units ”) as of the Close of Escrow in lieu of cash, which will be reflected in the Closing Statement. As of the date hereof, the estimated amount of the portion of Purchase Price that will not be funded in cash is approximately $ ______________ .
2.6     Confirmation of Closing Funds . Upon Escrow Holder’s receipt of all Closing Funds from or on behalf of Buyer as required for the Close of Escrow pursuant to Closing Statement, Escrow Holder shall immediately notify Seller and Buyer in writing by electronic mail (the “ Closing Funds Confirmation Notice ”). If Escrow Holder has not received all Closing Funds from or on behalf of Buyer as required for the Close of Escrow pursuant to Closing Statement by 2:30 Pacific Standard Time on ____________, 2019, [Insert same date inserted in Section 2.4 above] Escrow Holder shall deliver written notice by electronic mail (the “ Closing Funds Deficiency Notice ”). If Escrow Holder delivers a Closing Funds Deficiency Notice, but subsequently receives all Closing Funds from or on behalf of Buyer as required for the Close of Escrow pursuant to Closing Statement, Escrow Holder shall immediately deliver a Closing Statement Confirmation Notice. Escrow Holder’s delivery of the Closing Funds Confirmation Notice shall constitute Escrow Holder’s irrevocable confirmation and agreement that:
2.6.1    Escrow Holder has received all of the Closing Documents, the Closing Statement, and all Closing Funds as required by this Agreement; and
2.6.2    Escrow Holder is in a position to satisfy all of the conditions and requirements set forth in this Agreement and any supplemental instruction letter sent to Escrow Holder by Seller, Buyer, or either party’s counsel.

 
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2.7     Additional Parties May be Copied on Notices . In light of the need to coordinate the process the Close of Escrow with the IPO, each of Buyer and Seller shall have the right to request that certain members of their working teams, including without limitation, representatives of the Lenders and other parties managing and coordinating the IPO be copied on the notices described in this Section 2 and Section 3 below; provided that the requesting party made such request in writing prior to the Closing Document Delivery Deadline and clearly provides the electronic mail addresses of the parties to be copied in an electronic format.
2.8     No Release of Closing Deliverables . Escrow Holder shall hold, and shall not release, any Closing Documents (including specifically the Deeds) and any Closing Funds (sometimes collectively referred to as the “ Closing Deliverables ”) prior to the Close of Escrow or the termination of this Agreement.
3.     Procedure to Authorize the Close of Escrow.
3.1     Seller’s Irrevocable and Unconditional Authorization to Close . Within two (2) hours of Seller’s receipt of the Closing Fund Confirmation Notice, Seller shall, provided that all conditions precedent to Seller’s obligation to close under the Purchase Agreement have been satisfied and/or waived by Seller, deliver to Escrow Holder and Buyer by electronic mail an irrevocable and unconditional authorization to proceed with the Close of Escrow as of 1:59 p.m. (Singapore Time) on __________, 2019 (10:59 p.m. (Pacific Standard Time) on ______________, 2019) [Insert date of IPO Commencement Time] (the “ Automatic Time for the Close of Escrow ”) pursuant to the terms of the Purchase Agreement and this Agreement (“ Seller’s Irrevocable Authorization to Close ”). The parties agree that upon delivery of the Seller’s Irrevocable Authorization to Close, no further action is required from Seller for the Close of Escrow and that Seller’s authorization to consummate the Close of Escrow is irrevocable and unconditional.
3.2     Buyer’s Revocable and Conditional Authorization to Close . Within two (2) hours of Buyer’s receipt of the Closing Fund Confirmation Notice, Buyer shall, provided all conditions precedent to Buyer’s obligations to close under the Purchase Agreement have been satisfied and/or waived by Buyer, deliver to Escrow Holder and Seller by electronic mail an authorization to proceed with the Close of Escrow as of the Automatic Time for the Close of Escrow pursuant to the terms of the Purchase Agreement and this Agreement (“ Buyer’s Authorization to Close ”). Buyer’s Authorization to Close shall be irrevocable unless:
(1)     Buyer notifies Escrow Holder and Seller by electronic mail prior to 10:30 a.m. (Singapore Time) on ___________, 2019 (7:30 p.m. (Pacific Standard Time) on __________, 2019 [Insert date of IPO Commencement Time] ) that Buyer does not believe the IPO will be successful (the “Buyer’s Closing Termination Notice”); or
(2)    Buyer notifies Escrow Holder and Seller by electronic mail prior to Automatic Time for the Close of Escrow that written notice has been received from SGX or MAS that the IPO will not be permitted to proceed (the “ Regulator’s Closing Termination Notice ”), which electronic mail shall include a copy of the applicable notice from SGX or MAS.

 
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3.3     Confirmation of Receipt of Closing Authorizations by Escrow Holder . Within two (2) hours of Escrow Holder’s receipt of the Seller’s Irrevocable Authorization to Close and the Buyer’s Authorization to Close, Escrow Holder shall notify Buyer and Seller of same by electronic mail. Thereafter, Escrow Holder shall be irrevocably authorized by Seller and Buyer to consummate the Close of Escrow as of the Automatic Time for the Close of Escrow unless Buyer timely delivers (1) a Buyer’s Closing Termination Notice pursuant to Section 3.2(1) above or (2) a Regulator’s Closing Termination Notice pursuant to Section 3.2(2) above.
3.4     Confirmation of Close of Escrow . If Buyer does not timely deliver (1) a Buyer’s Closing Termination Notice pursuant to Section 3.2(1) above or (2) a Regulator’s Closing Termination Notice pursuant to Section 3.2(2) above, then the Close of Escrow shall automatically and irrevocably occur as of Automatic Time for the Close of Escrow without the need for any further authorization or approval of Seller and Buyer (oral or written) at which time (1) the Deeds shall be deemed to have been delivered to Buyer, (2) the KBS Units shall be deemed to have been delivered to Seller pursuant to the KBS Unit Transfer Documents (as defined in Exhibit B attached hereto), (3) and as soon as practicable thereafter (but not more than fifteen (15) minutes thereafter), Escrow Holder shall notify Buyer and Seller by electronic mail that the Close of Escrow has occurred.
3.5     Confirmation of Closing Termination . If Buyer timely delivers (1) a Buyer’s Closing Termination Notice by electronic mail pursuant to Section 3.2(1) above or (2) a Regulator’s Closing Termination Notice by electronic mail pursuant to Section 3.2(2) above, then Close of Escrow shall not occur and on the next business day Escrow Holder shall (i) send by overnight delivery each original counterpart of the Closing Documents and the Closing Statement to the parties who delivered (or as such parties may direct in writing, which may include the direction that Escrow Holder destroy as opposed to return its original counterparts) and (ii) return the Closing Funds by wire transfer to Buyer and each of the Lenders in the respective amounts received from each such entity; provided, however, that Escrow Holder shall have the right to deduct the portion of Closing Funds contributed by Buyer (but not from Closing Funds from the Lenders) Escrow Holder’s costs, expenses and fees (but not premiums for Title Policies) incurred in connection with this escrow. Escrow Holder shall return the Closing Funds to Buyer and the Lenders pursuant to the wire instructions set forth on Exhibit D attached hereto.
4.     Release of Deeds and Closing Documents; Delivery of Closing Funds . As soon as practicable following the Close of Escrow, but no later than 10:00 a.m. (Pacific Standard Time) on ___________, 2019 [Insert the date that is one (1) business day after the IPO Commencement Time] , Escrow Holder and Title Company shall take the following actions in the following order:
4.1    With respect to all Closing Documents delivered to Escrow Holder, and to the extent necessary, Escrow Holder shall insert into all blanks requiring the insertion of the Close of Escrow the date “___________, 2019” [Insert date that is the IPO Commencement Time] ;

 
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4.2    Escrow Holder shall deliver to Seller, by wire transfer in immediately available funds, the amounts due to Seller in accordance with the Closing Statement;
4.3    Escrow Holder shall deliver to itself the sums indicated on the Closing Statement as being due to Escrow Holder for title insurance and escrow costs;
4.4    Escrow Holder shall deliver to other third parties reflected on the Closing Statement, the amounts reflected as being due such parties on the Closing Statement pursuant to the instructions provided to you by such parties;
4.5    Title Company shall record each Deed in the official records of the County in which the applicable Real Property is located;
4.6    Escrow Holder shall deliver the KBS Unit Transfer Documents to Seller;
4.7    Escrow Holder shall deliver to Buyer and Seller each a copy of all of the Closing Documents and Title Company shall deliver a conformed copy of each recorded Deed;
4.8    Title Company shall issue the Title Policies for the Real Properties within five (5) business days after the Close of Escrow.
5.     Irrevocable Agreement to Issue Title Policies . By its execution of this Agreement, Title Company hereby confirms and agrees it is irrevocably committed to issue to each Buyer an owner’s policy of title insurance (each a “ Title Insurance Policy ” and collectively, the “ Title Insurance Policies ”) in the form of the pro forma title policies previously delivered by Title Company to Buyer and listed in Exhibit C showing only those exceptions and including those endorsements shown in the pro forma title policies. Each Title Policy shall insure that each Buyer is the owner of good and marketable fee simple title to the Real Property that it is acquiring pursuant to the Purchase Agreement, subject only to the exceptions shown in the applicable pro forma policy.
6.     Nature of Escrow Holder’s Obligations . Escrow Holder shall have no duties or responsibilities except for those specifically set forth in this Agreement and the Purchase Agreement, which are ministerial in nature. If in doubt as to its duties and responsibilities under this Agreement, Escrow Holder may consult with counsel of its choice (at Escrow Holder's sole expense) and shall be protected in any action taken or omitted in accordance with the advice of such counsel.
7.     Conflict with Purchase Agreement . If there is any conflict or inconsistency between the terms of this Agreement and the Purchase Agreement, this Agreement shall prevail.
8.     Notices . Except for the notices required to be sent by electronic mail in Sections 2 and 3 above, all other notices shall be in writing and shall be sent by electronic mail or nationally recognized overnight courier to the address set forth below (or such other address as a party may hereafter designate for itself by notice to the other parties) of the party for whom such notice or communication is intended:

 
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If to Seller :

c/o KBS Capital Advisors, LLC
800 Newport Center Drive, Suite 700
Newport Beach, CA 92660
Attn: __________________
Phone: (___) _____________
Electronic mail: ___________________

with a copy to: _____________

 
 
If to Buyer :

c/o KBS US Prime Property Management Pte. Ltd.
_______________________________________
_______________________________________
Attn: _________________
Phone: (___) _________________
Electronic mail: __________________
with a copy to:
______________________
______________________


 
 
If to Escrow Holder :
Commonwealth Land Title Insurance Company
4100 Newport Place Drive, Suite 120
Newport Beach, California 92660
Attention: Joy Eaton
Phone: (949) 724-3145
Electronic mail: joyeaton@ltic.com



Any electronic notice shall be deemed given on the day sent. Any notice sent by nationally recognized overnight courier shall be deemed given one business day following delivery to the overnight courier. For avoidance of doubt, the notices required to be given by Escrow Holder, Seller and Buyer pursuant to Sections 2 and 3 above may only be given by electronic mail and any other form of delivery of any such notices shall not be effective. Specifically, a Buyer’s Closing Termination Notice and a Regulator’s Closing Termination Notice may only be delivered by electronic mail and if either of such termination notices are sent to Escrow Holder in an alternative manner (such as by facsimile or overnight delivery) and not electronic mail, Escrow Holder shall not be authorized to accept or follow such termination notice and shall have no liability for consummating the Close of Escrow notwithstanding such improperly delivered termination notice.

9.     Attorneys’ Fees . Each party shall be responsible for its own legal fees in preparing and reviewing this Agreement. If there is any legal action or proceeding between the parties arising from or based upon this Agreement, the unsuccessful party to such action or proceeding shall pay to the prevailing party all costs and expenses, including reasonable attorneys' fees and disbursements incurred by the prevailing party in such action or proceeding

 
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and in any appeal in connection therewith, and such costs, expenses, attorneys' fees and disbursements shall be included in and as part of such judgment.
10.     Further Assurances . The parties shall execute and deliver such further documents or instruments and take such additional actions as may be reasonably necessary or appropriate to accomplish or further the purposes of this Agreement, provided, however, that no such documents or instruments shall increase either party’s obligations or liabilities under this Agreement. Such documents or instruments shall be on customary forms and contain customary and reasonable terms and conditions.
11.     Miscellaneous.
11.1    This Agreement shall be binding upon the parties and their respective successors and assigns.
11.2    If any provision of this Agreement shall be determined by a court to be invalid or unenforceable for any reason, such invalid or unenforceable provision shall be deleted from this Agreement, and the remaining provisions of this Agreement shall be interpreted and enforced to give effect to the intent of this Agreement as if such invalid or unenforceable provisions had never been contained herein.
11.3    This Agreement may be not be altered, amended, modified, or waived in any respect unless same shall be in writing and executed by the parties.
11.4    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF CALIFORNIA.
11.5    To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. Delivery of an executed counterpart of this Agreement by facsimile, electronic mail or other electronic means shall be binding upon the party so delivering it.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed as of the day and year first above written.

[Signature Pages Follow]

 
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“ SELLER ” :



 
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“ BUYER ”:


 
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“ESCROW HOLDER”

COMMONWEALTH LAND TITLE INSURANCE COMPANY


By__________________________________
Name:_______________________________
Title: ________________________________



“TITLE COMPANY”

COMMONWEALTH LAND TITLE INSURANCE COMPANY


By__________________________________
Name:_______________________________
Title:________________________________



 
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EXHIBIT D
Intentionally Deleted


 
EXHIBIT D
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EXHIBIT F
Form of Assignment of Leases and
Contracts and
Bill of Sale
(Attached)


 
EXHIBIT F
 
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ASSIGNMENT OF LEASES AND CONTRACTS AND BILL OF SALE
This Assignment of Leases and Contracts and Bill of Sale (this “ Assignment ”) is executed and delivered as of the ____ day of _________, 20__ (the “ Closing Date ”) pursuant to that certain Portfolio Purchase and Sale Agreement and Escrow Instructions (“ Agreement ”) dated ________, 20__, by and between, among other parties,____________________________, a _____ ___________________ (“ Seller ”), and _______________________, a _____________________ (“ Buyer ”), covering the real property described in Exhibit A attached hereto (“ Property ”).
1.     Sale of Personalty . For good and valuable consideration, Seller hereby sells, transfers, sets over and conveys to Buyer the following (the “ Personal Property ”):
(a)     Tangible Personalty . All of Seller’s right, title and interest, if any, in and to all the furniture, fixtures, equipment, and other tangible personal property listed on Exhibit B attached hereto or otherwise located in or on the Property to the extent owned by Seller; and
(b)     Intangible Personalty . All the right, title and interest of Seller, if any, in and to assignable licenses and permits relating to the operation of the Property, assignable guaranties and warranties from any contractor, manufacturer or other person in connection with the construction or operation of the Property, and all other intangible property used exclusively in connection with the Property.
2.     Assignment of Leases and Contracts . For good and valuable consideration, Seller hereby assigns, transfers, sets over and conveys to Buyer, and Buyer hereby accepts the following:
(a)     Leases . All of the Seller’s right, title and interest in and to all tenant leases relating to the Property, including, without limitation, the tenant leases listed in Exhibit C‑1 and Exhibit C‑2 attached hereto (“ Leases ”);
(b)     Contracts and Agreements . Seller’s right, title and interest in and to the contracts and agreements described in Exhibit D‑1 and Exhibit D‑2 attached hereto (the “ Contracts ”).
3.     Assumption . Buyer hereby assumes the obligations of Seller under (a) the Leases listed on Exhibit C‑1 attached hereto arising from and after the Closing Date, (b) the Leases listed on Exhibit C‑2 attached hereto whether arising before or after the Closing Date, (c) the Contracts listed on Exhibit D‑1 attached hereto arising from and after the Closing Date, (d) the Contracts listed on Exhibit D‑2 attached hereto arising before or after the Closing Date, and (e) that certain leasing agreement dated ______________, entered into by and between Seller and ____________, but only to the extent of any leasing commissions hereafter payable thereunder arising out of the lease of space in the Property by Buyer after the date of this Assignment, and shall defend, indemnify and hold harmless Seller from and against any liability, damages, causes of action, expenses, and attorneys’ fees incurred by Seller by reason of the failure of Buyer to fulfill, perform, discharge, and observe its obligations with respect to the Leases or the Contracts to the extent Buyer received a credit at closing with respect to any of such obligations under the Leases and/or Contracts.

 
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4.     Agreement Applies . Except as may otherwise be provided in the Agreement, the Contracts and Leases are being assigned and transferred, and the Personal Property is being transferred, to Buyer on an “as is,” and “where is” basis, with all faults, and without any representation or warranty, all of which Seller hereby disclaims, all as more particularly set forth in Section 11.1 of the Agreement, which Section shall be, and hereby is, incorporated herein by reference.
5.     Counterparts . This Assignment may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, with the same effect as if all parties had signed the same signature page.
6.     Attorneys’ Fees . In any action between the parties to enforce any of the terms or provisions of this Assignment, the prevailing party in the action shall be entitled to recover from the non-prevailing party, in addition to damages, injunctive relief or other relief, and its reasonable costs and expenses, including, without limitation, costs and reasonable attorneys’ fees (including on appeal).
7.     Merger . This Assignment and the Agreement contain the entire understanding between the parties relating to their subject matter. All prior and contemporaneous agreements and understandings, whether oral or written, are superseded by this Assignment and the Agreement. This Assignment may only be modified in writing executed by both Buyer and Seller. Nothing contained in this Assignment is intended to terminate or affect the validity of any of the representations or warranties contained in the Agreement.
8.     Miscellaneous . This Assignment shall be binding upon and shall inure to the benefit of the parties hereto, their heirs, executors, administrators, successor-in-interest and assigns. If any term or provision of this Assignment shall be held invalid or unenforceable, the remainder of this Assignment shall not be affected. This Assignment shall be construed in accordance with and governed by the laws of the State of [_________]. Nothing in this Assignment shall impair, limit or lessen any of the rights of the parties with respect to the provisions of the Agreement which were intended to survive the Closing Date. Nothing in this Assignment, express or implied, is intended to confer upon any person or entity, other than the parties hereto and their respective successors and assigns, any rights or remedies.

 
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IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed as of the date written above.
[Signature Pages to Follow]

 
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SELLER:

______________________________________
a_____________________________________


BUYER:

______________________________________
a_____________________________________


 
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EXHIBIT G
Form of FIRPTA Affidavit
(Attached)

SMRH:483356584.8
EXHIBIT G
 
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FIRPTA CERTIFICATE
__________________ (“ Member ”) is the sole owner of ________________ (“ Seller ”). Seller, a disregarded entity for U.S. tax purposes, is the transferor of certain real property more particularly described on Exhibit A attached hereto (the “ Property ”).
Section 1445 of the Internal Revenue Code of 1986, as amended (the “ Code ”) provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including Section 1445 of the Code), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform the transferee that withholding of tax will not be required in connection with the disposition of the Property pursuant to that certain Purchase and Sale Agreement and Escrow Instructions dated as of ______________, 20__, by and between ___________________, a __________ (“ Buyer ”) and Seller, the undersigned certifies the following on behalf of Member:
1.    Member is not a foreign corporation, foreign Company, foreign trust or foreign estate, as those terms are defined in the Code and the regulations promulgated thereunder;
2.    Member is not a disregarded entity as defined in Treasury Regulations §1.1445-2(b)(2)(iii),
3.    Member’s U.S. employer identification number is __________, and
4.    Member’s address is: 800 Newport Center Drive, Suite 700, Newport Beach, California 92660.
It is understood that this certificate may be disclosed to the Internal Revenue Service and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined the foregoing certification and, to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Member.
Date: ________________, 20___



SMRH:483356584.8
EXHIBIT G
 
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Exhibit A
Legal Description
(Attached)


SMRH:483356584.8
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EXHIBIT I
Form of Owners Affidavit
TITLE ORDER:
ESCROW ORDER:    
PROPERTY:
COUNTY:
STATE:
______________________________, a ___________________ (“Seller”), as seller, and _______________________________, a ____________________________ (“Buyer”), as buyer, are parties to that certain Portfolio Purchase and Sale Agreement and Escrow Instructions (the “Purchase Agreement”) dated _________________, 20__, as the same has been amended and modified, relating to the improved real property (the “Real Property”) referred to in Exhibit “A” attached hereto and made a part hereof.
In connection with the consummation of the transactions contemplated by the Purchase Agreement, Seller hereby represents and warrants to Commonwealth Land Title Insurance Company the following:
1.
Seller is a limited liability company organized and validly existing under the laws of the State of ________________________.
2.
To Seller’s actual knowledge, (i) Seller’s operating agreement is in full force and effect, and (ii) no proceedings are pending for the dissolution of the Seller.
3.
To Seller’s actual knowledge, the leases described on Exhibit “B” attached hereto constitute all of the written leases affecting the Real Property with the current tenants of the Real Property.
4.
To Seller’s actual knowledge, except as disclosed in Exhibit ”C” attached hereto and made a part hereof, (a) there is no capital improvement work currently being constructed (or that was constructed during the last 3 months) on the Real Property that is the subject of a written contract with Seller which could give rise to a mechanic’s or materialman’s lien on the Real Property, and (b) Seller has not entered into any contracts for the furnishing of labor, materials, or services for construction purposes with respect to the Real Property to be furnished subsequent to the date of this affidavit.
5.
Seller shall not hereafter cause any encumbrances or other instruments to be recorded against the Property (other than the recording of a deed (the “Deed”) transferring fee title to the Real Property to ___________) through the date the Deed is recorded in _________ County, __________.
For purposes hereof, the “actual knowledge” of Seller shall be limited to the actual knowledge (and not implied, imputed, or constructive) of ______________________ (whom the Seller represents is the asset manager for the Real Property), with no duty of inquiry. Notwithstanding anything contained herein to the contrary, the representations and warranties set forth in this

SMRH:483356584.8
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Owner’s Affidavit shall only survive the closing of the transactions contemplated by the Purchase Agreement for six (6) months, after which date this Owner’s Affidavit shall be of no further force or effect and Commonwealth Land Title Insurance Company shall have no further rights hereunder (notwithstanding that one or more of the representations and/or warranties set forth herein may prove to be incorrect). This Owner’s Affidavit is being executed for the sole and exclusive benefit of Commonwealth Land Title Insurance Company and no other party or person shall have any rights hereunder.
Executed as of __________, 20__
[SIGNATURES ON NEXT PAGE]





SMRH:483356584.8
EXHIBIT I
 
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SELLER:

______________________________________
a_____________________________________






SMRH:483356584.8
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SCHEDULE 2
Disclosures
1. None.



 
Schedule 2
 
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SCHEDULE 4

Schedule of Asset Managers

NO.
SELLER NAME
ASSET MANAGER
1.     
Village Center Station II Owner, LLC,
a Delaware limited liability company

Clint Copulos
2.     
KBSIII Tower at Lake Carolyn, LLC,
a Delaware limited liability company

Brett Merz
3.     
KBSIII One Washingtonian, LLC,
a Delaware limited liability company

Stephen Close
4.     
KBSIII 222 Main, LLC,
a Delaware limited liability company

Tim Helgeson
5.     
KBSIII 171 17th Street, LLC,
a Delaware limited liability company

Allen Aldridge
6.     
KBSIII Reston Square, LLC, a Delaware limited liability company

Stephen Close
7.     
KBSIII 101 South Hanley, LLC,
a Delaware limited liability company

Dan Park
8.     
KBSIII Village Center Station, LLC,
a Delaware limited liability company

Clint Copulos
9.     
Promenade One
KBSIII Promenade One, LLC,
a Delaware limited liability company

Promenade Two
KBSIII Promenade Two, LLC,
a Delaware limited liability company

Gio Cordoves



Gio Cordoves
10.     
KBSIII CrossPoint At Valley Forge Trust,
a Delaware Statutory Trust

Shannon Hill
11.     
KBSIII Towers At Emeryville, LLC,
a Delaware limited liability company

Brent Carroll



 
Schedule 4
 
ACTIVE 31157768v21
Page 1
 



Exhibit 10.2
FIRST AMENDMENT TO PORTFOLIO PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO PORTFOLIO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this “First Amendment” ) is made as of the 16 th day of July, 2019, by and between the Seller Parties (collectively, “ Seller ” and individually “ a Seller ” or “ each Seller ”), and Buyer Parties (collectively, “ Buyer ” and individually “ a Buyer ” or “ each Buyer ”) identified on Exhibit A attached to the Purchase Agreement (as hereinafter defined). In consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows:
RECITALS
A.    Seller and Buyer are parties to that certain Portfolio Purchase and Sale Agreement and Escrow Instructions dated as of June 27, 2019 (the “Purchase Agreement” ). All initially-capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement unless the context clearly indicates otherwise.
B.    Seller and Buyer have agreed to modify the terms of the Purchase Agreement as set forth in this First Amendment in order to correct scrivener’s errors appearing in Section 3.1 of the Purchase Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intended to be legally bound, Seller and Buyer agree as follows:
1. Recitals . The Recitals set forth above are hereby incorporated herein by reference as if the same were fully set forth herein.
2. Purchase Price; Allocation . Section 3.1 of the Purchase Agreement is hereby amended as follows:
(a) The reference to “One Billion Two Hundred Twenty-Two Million Three Hundred Thousand Dollars ($1,222,300,000)” appearing in the first paragraph of Section 3.1 shall be, and hereby is, deleted in its entirety and “One Billion Two Hundred Twenty-Two Million One Hundred Fifty Thousand Dollars ($1,222,150,000)” shall be substituted in its place.
(b) Clause (a) appearing in Section 3.1 of the Purchase Agreement shall be, and hereby is, deleted in its entirety and the following clause shall be substituted in its place: “ Village Center Station II (Charter Communications) : “One Hundred Forty-Four Million Five Hundred Fifty Thousand Dollars ($144,550,000).”
(c) Clause (d) appearing in Section 3.1 of the Purchase Agreement shall be, and hereby is, deleted in its entirety and the following clause shall be substituted in its place: “ 222 Main : “Two Hundred Eleven Million Two Hundred Fifty Thousand Dollars ($211,250,000).”

ADMIN 35541588v2


(d) Clause (h) appearing in Section 3.1 of the Purchase Agreement shall be, and hereby is, deleted in its entirety and the following clause shall be substituted in its place: “ Village Center Station : “Eighty-Nine Million One Hundred Fifty Thousand Dollars ($89,150,000).”
3. Effectiveness of Agreement . Except as modified by this First Amendment, all the terms of the Purchase Agreement shall remain unchanged and in full force and effect.
4. Counterparts . This First Amendment may be executed in counterparts, and all counterparts together shall be construed as one document.
5. Telecopied/Emailed Signatures . A counterpart of this First Amendment that is signed by one party to this First Amendment and telecopied/emailed to the other party to this First Amendment or its counsel (i) shall have the same effect as an original signed counterpart of this First Amendment, and (ii) shall be conclusive proof, admissible in judicial proceedings, of such party’s execution of this First Amendment.
6. Successors and Assigns . All of the terms and conditions of this First Amendment shall apply to benefit and bind the successors and assigns of the respective parties.
IN WITNESS WHEREOF, Seller and Buyer have entered into this First Amendment to Purchase and Sale Agreement and Escrow Instructions as of the date first above stated.
[SIGNATURES ON NEXT PAGE]


ADMIN 35541588v2


"SELLOR" :
VILLAGE CENTER STATION II OWNER, LLC,
a Delaware limited liability company
By:
KBSIII VILLAGE CENTER STATION II MEMBER, LLC,
a Delaware limited liability company,
its sole member and manager
By:
KBSIII REIT ACQUISITION XXXII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION VI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION X, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII 222 MAIN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII 171 17TH STREET, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XV, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII RESTON SQUARE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XVIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII 101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XX, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII PROMENDAGE ONE, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE ONE MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENAGE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII PROMENDAGE TWO, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE TWO MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENAGE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III,
INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII CROSSPOINT AT VALLEY FORGE TRUST,
a Delaware Statutory Trust
By:
KBSIII CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company,
as Administrative Trustee
By:
KBSIII REIT ACQUISITION XXVI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


KBSIII TOWERS AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

ADMIN 35541588v2


"BUYER" :
PRIME US-VILLAGE CENTER STATION II, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-222 MAIN, LLC,
a Delaware limited liability company
By:
PRIME US-ACQUISITION I, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-171 17TH STREET, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-RESTON SQUARE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-PROMENADE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

ADMIN 35541588v2


PRIME US-TOWER AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President


ADMIN 35541588v2


Exhibit 10.3

ALLEN & GLEDHILL









Dated 27 June 2019

KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
(in its capacity as the manager of Prime US REIT)
(Company Registration No. 201825461R)

and

KBS REIT PROPERTIES III LLC




SUBSCRIPTION AGREEMENT













Allen & Gledhill LLP
One Marina Boulevard #28-00 Singapore 018989
Tel: +65 6890 7188 | Fax +65 6327 3800

allenandgledhill.com



TABLE OF CONTENTS

Contents
Page

1.
Definitions and Interpretation
1

2.
Investment
4

3.
Conditions
5

4.
Payment
5

5.
Delivery
6

6.
Investor's Representations, Warranties, Acknowledgments and
Undertakings
6

7.
The Manager's Representations and Warranties
11

8.
Disclosures
12

9.
US Securities Act Exemption
13

10.
General
15



i


This Agreement is made on 27 June 2019 between:
(1)
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD. , a company established and validly existing under the laws of Singapore and having its principal place of business at 1 Raffles Place, #40-01 One Raffles Place, Singapore 048616, in its capacity as the manager (the “ Manager ”) of Prime US REIT; and
(2)
KBS REIT Properties III LLC , a company organised and validly existing under the laws of the State of Delaware and having its principal place of business at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (the “ Investor ”).
Whereas:
(A)
The Manager is proposing to offer for subscription units in Prime US REIT (“ Units ”) by way of (i) an international placement to investors, including institutional and other investors in Singapore (the “ Placement ") and (ii) an offering to the public in Singapore (the “ Public Offer ” and together with the Placement, the “ IPO ”), subject to an over-allotment option in connection with the IPO. In connection with the IPO, the Manager is expected to enter into a placement agreement in relation to the Placement and a Singapore offer agreement in relation to the Public Offer (the “ Singapore Offer Agreement ” and collectively, the “ Underwriting Agreements ”) with DBS Bank Ltd., Merrill Lynch (Singapore) Pte. Ltd., China International Capital Corporation (Singapore) Pte. Limited, Credit Suisse (Singapore) Limited, Maybank Kim Eng Securities Pte. Ltd., and Oversea-Chinese Banking Corporation Limited (collectively, the “ Underwriters ”) pursuant to which, the Underwriters will, severally but not jointly, agree to procure the subscription and payment for, or failing which, will subscribe and pay for, the Units offered under the IPO (“ IPO Units ”), subject to and on the terms of the Underwriting Agreements.
(B)
Separate from but concurrently with the IPO, the Manager has agreed to issue, and the Investor has agreed to subscribe and pay for, 228,408,999 Units (the “ Subscription Units ”) for a total consideration of US$200,999,919 (the “ Subscription Amount ”) on the terms and subject to the conditions set out in this Agreement.
(C)
The Manager and the Investor wish to record the arrangements agreed between them for the subscription and payment of the Subscription Units.
It is agreed as follows:
1.
Definitions and Interpretation
1.1
In this Agreement, except to the extent that the context requires otherwise:
“ Advisory Group ” has the meaning ascribed to it in Clause 6.1.7(i);
“ affiliate ” has the meaning specified in Regulation D under the US Securities Act;
“ associate ” means:
(i)
in relation to any director, chief executive officer, or controlling shareholder of the Manager, or controlling unitholder of Prime US REIT (being an individual), means:
(a)
his immediate family ( i.e. his spouse, child, adopted child, step-child, sibling or parent);

1


(b)
the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of discretionary trust, is a discretionary object; and
(c)
any company in which he and his immediate family together (directly or indirectly) have an interest of 30.0% or more; and
(ii)
in relation to the controlling shareholder of the Manager, or the Manager, the Trustee or controlling unitholder of Prime US REIT (being a company) means any other company which is its subsidiary or holding company, or is a subsidiary of such holding company, or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30.0% or more;
“ Back-Stop Date ” has the meaning ascribed to it in Clause 4.3;
“ Business Day ” means any day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are generally open for business in Singapore and the SGX-ST is open for trading;
“ Contracts (Rights of Third Parties) Act ” means the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore;
“ controlling shareholder ” means a person who:
(i)
holds directly or indirectly 15% or more of the total number of issued shares excluding treasury shares in the Manager, unless determined otherwise by the SGX-ST ; or
(ii)
in fact exercises control over the Manager;
“ controlling unitholder ” means a person who:
(i)
holds directly or indirectly 15% or more of the nominal amount of all voting units in Prime US REIT, unless determined otherwise by MAS ; or
(ii)
in fact exercises control over Prime US REIT;
“ Final Prospectus ” means the prospectus to be issued by the Manager and registered by MAS in connection with the IPO;
“ Investment Company Act ” means the United States Investment Company Act of 1940, as amended;
“ Investor Group ” means the Investor, its subsidiaries, its holding companies, subsidiaries of such holding companies and companies in the equity of which the Investor and/or such other company or companies taken together (directly or indirectly) have an interest of 30.0% or more;
“ IPO ” has the meaning ascribed to it in Recital (A);
“ IPO Price ” means the issue price per IPO Unit to be paid by the investors under the IPO;
“ IPO Settlement Date ” means the date and time on which the IPO Units are issued under the IPO;

2


“ IPO Units ” has the meaning ascribed to it in Recital (A);
“ IRC ” means the United States Internal Revenue Code of 1986, as amended;
“ Listing ” means the listing of, and quotation for, the Units (including among others, the IPO Units and the Subscription Units) on the SGX-ST;
“ MAS ” means Monetary Authority of Singapore;
“ Notice ” has the meaning ascribed to it in Clause 10.2;
“ Parties ” means the parties to this Agreement, being the Manager and the Investor, and
“ Party ” means either of them;
“ Placement” has the meaning ascribed to it in Recital (A);
“ Prospectus ” means the preliminary prospectus and the Final Prospectus to be issued by the Manager in connection with the IPO, including any amendments or supplements thereto, lodged with or (as the case may be) registered by MAS;
“ Public Offer ” has the meaning ascribed to it in Recital (A);
“ Regulation D ” means Regulation D under the US Securities Act;
“ Regulation S ” means Regulation S under the US Securities Act;
“ Relevant Group ” has the meaning ascribed to it in Clause 6.1.7(i);
“ Set-Off Agreement ” has the meaning ascribed to it in Clause 4.1;
“ SFA ” means the Securities and Futures Act (Chapter 289 of Singapore);
“ SGX-ST ” means Singapore Exchange Securities Trading Limited;
“ SIBOR ” means Singapore Interbank Offered Rate;
“ Sponsor ” means KBS Asia Partners Pte. Ltd.;
“ Subscription Amount ” means the amount payable by the Investor for the Subscription Units;
“ Subscription Units ” has the meaning ascribed to it in Recital (B);
“ this Agreement ” means this subscription agreement made between the Manager and the Investor on the date hereof as may be amended, modified or supplemented from time to time and any document which is supplemental hereto;
“ Termination Event ” has the meaning ascribed to it in Clause 4.3;
“ Trust Deed ” means the trust deed constituting Prime US REIT and any amendments, restatements and supplements thereto;
“ Trustee ” means DBS Trustee Limited, as trustee of Prime US REIT;
“ Underwriters ” has the meaning ascribed to it in Recital (A);
“ Underwriting Agreements ” has the meaning ascribed to it in Recital (A); “ Units ” has the meaning ascribed to it in Recital (A);

3


“ US$ ” or “ US dollars ” means the legal currency of the United States; and
“ US Securities Act ” means the United States Securities Act of 1933, as amended.

1.2
Headings, Clauses etc.
The headings of this Agreement are inserted for reference only and shall be ignored in construing this Agreement. Unless the context otherwise requires, words (including words defined in this Agreement) denoting the singular shall include the plural and vice versa. References to a statute shall be deemed to be references to that statute as from time to time amended or re-enacted. The words “ written ” and “ in writing ” include any means of visible reproduction. References to this Agreement include any recitals and references to “ Clauses ” are to clauses of this Agreement. Any reference to a sub-clause is a reference to a sub-clause of the clause in which such reference appears. References to dates and times are to Singapore dates and times.
2.
Investment
2.1
The Manager hereby agrees to issue, on the IPO Settlement Date, and the Investor, relying on the Manager’s representations, warranties and undertakings set out in Clause 7, hereby agrees to subscribe and pay for all, and not some only, of the Subscription Units at a price per Subscription Unit equal to the IPO Price, on the terms and subject to the conditions of this Agreement. The Manager will notify the Investor of the IPO Price as soon as reasonably practicable upon its determination. For the avoidance of doubt, the Manager and the Underwriters shall have absolute discretion to change or adjust (i) the number of IPO Units, and (ii) the allocation of IPO Units between the Placement and the Public Offer.
2.2
It is a condition of this Agreement that the Investor shall pay the aggregate IPO Price for the Subscription Units in full in accordance with Clause 4.1, failing which the Investor shall be deemed to have committed a material breach of this Agreement.
2.3
The total consideration payable by the Investor for the Subscription Units will be an amount in US dollars calculated by multiplying the number of Subscription Units by the IPO Price.
2.4
The Investor agrees to provide, immediately at the request of the Manager and/or the Underwriters, evidence satisfactory to the Manager and the Underwriters that the Investor has sufficient funds for the purpose of meeting its obligation described in Clause 4.1.
2.5
The Subscription Units will, when delivered, be fully paid and free from all options, liens, charges, mortgages, pledges, claims, equities, encumbrances and other third party rights and shall rank pari passu with the other Units then in issue and to be listed on the SGX- ST.
2.6
The Investor agrees that the Underwriters shall have the unconditional right under the Contracts (Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 2.

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3.
Conditions
The rights and obligations of each Party are conditional upon:
(i)
the receipt of the eligibility-to-list letter from the SGX-ST approving, among others, the listing of, and quotation for, the Units (including among others, the IPO Units and the Subscription Units) on the SGX-ST;
(ii)
the registration of the Final Prospectus by MAS;
(iii)
the entry into each of the Underwriting Agreements by the parties thereto; and
(iv)
each of the Underwriting Agreements not having been terminated pursuant to its terms on or prior to the IPO Settlement Date.
4.
Payment
4.1
The total consideration payable by the Investor for the Subscription Units referred to in Clause 2.3 shall be deemed to have been received by the Trustee upon the terms set forth in Clause 2.2 of the Set-Off Agreement by and among the Investor, the Trustee, the Manager and the parties named therein dated as 27 June 2019 (the “ Set-Off Agreement ”). The Investor will not be entitled to any interest which may accrue in relation to such deemed payment.
4.2
[Deleted ]
4.3
If, for any reason, (i) the IPO Units and the Subscription Units are not listed on the SGX- ST on or before 2.00 p.m. on the date falling 120 calendar days after the date of this Agreement (or such other time and date as is agreed between the Manager and the Underwriters) (the “ Back-Stop Date ”) or (ii) any of the Underwriting Agreements is terminated pursuant to its terms on or before such time on or prior to the Back-Stop Date (each, a “ Termination Event ”), the obligations of the Investor to subscribe for and the Manager’s obligation to allot or procure the allotment of the Subscription Units shall cease and if at the time of the Termination Event, the deemed payment for the Subscription Units has been made pursuant to Clause 4.1 and:
4.3.1
if the Subscription Units have not been validly allotted and issued to the Investor, the Manager will procure the Trustee to return to the Investor the amount deemed received from the Investor pursuant to Clause 4.1 without any interest thereon and without deduction for any fees and/or expenses; or
4.3.2
if the Subscription Units have been validly allotted and issued to the Investor pursuant to Clause 5 of this Agreement, the Manager will procure that such Subscription Units be redeemed at a price equal to the IPO Price and without deduction for any fees and/or expenses, and the Investor shall do all things to assist to cancel and/or return or procure the cancellation and/or return of the Subscription Units to the Manager,
in each case within seven Business Days from the date of the Termination Event.
4.4
All payments under this Agreement will be made without deduction or withholding for or on account of any taxes, duties or levies (including but not limited to any taxes, duties or levies on the supply of goods and services). If either Party is required by law to deduct or

5


withhold any such taxes, duties or levies, such Party will pay such additional amounts as will be necessary in order that the net amounts received by the other Party after such deduction or withholding will equal the amounts which would have been receivable by the other Party (as the case may be) had no such deduction or withholding been required to be made.
5.
Delivery
5.1
Subject to Clause 5.2 and on the condition that the Investor has complied fully with, and is not in breach of, its obligations referred to in Clause 4.1 and its representations, warranties, acknowledgments and undertakings in this Agreement, the Manager will, on the IPO Settlement Date, credit or procure to be credited, the Subscription Units to such account opened by the Investor with The Central Depository (Pte) Limited (or to a sub- account opened by the Investor with its depository agent (as defined under the Securities and Futures Act, Chapter 289 of Singapore)), the account details of which the Investor will furnish in writing to the Manager or the Underwriters (as the Manager may direct) no later than 5.00 p.m. on the day falling five Business Days immediately prior to the IPO Settlement Date.
5.2
If the Investor fails to comply with its representations, warranties and undertakings in this Agreement other than Clause 4.1, the Manager reserves the right to terminate this Agreement (in consultation with the Underwriters) without any liability on the part of the Manager or the Underwriters to the Investor. In such event, all obligations and liabilities of the Manager under this Agreement shall cease and terminate (but without prejudice to any claim which the Manager or the Underwriters may have against the Investor arising out of its failure to comply with its representations, warranties and obligations under this Agreement).
5.3
The Investor agrees that the Underwriters shall have the unconditional right under the Contracts (Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 5.
6.
Investor’s Representations, Warranties, Acknowledgements and Undertakings
6.1
As a condition of the agreement by the Manager to issue the Subscription Units to the Investor, and in consideration thereof, the Investor represents and warrants to and undertakes to the Manager and acknowledges and agrees that:
6.1.1
the Investor is duly organised and is validly existing as a limited liability company under the laws of the State of Delaware;
6.1.2
the Investor has the legal right and full power and authority to enter into and perform its obligations under this Agreement and all transactions contemplated under this Agreement;
6.1.3
it has obtained all approvals and consents necessary for its entry into and the discharge of its duties and obligations under this Agreement, the ownership by the Investor of the Subscription Units agreed to be subscribed and paid for by the Investor and the performance and consummation of all transactions contemplated under this Agreement;

6


6.1.4
the execution and delivery of, and the performance by the Investor of its obligations under, this Agreement, the ownership by the Investor of the Subscription Units agreed to be subscribed and paid for by the Investor, and all transactions contemplated under this Agreement:
(i)
have been duly authorised by all action required by any applicable laws and regulations;
(ii)
will not result in a breach of any provision of its certificate of formation, limited liability company agreement or any other constitutive documents;
(iii)
will not violate any order, judgment, award or decree of any court, arbitrator or governmental authority binding on or applicable to it or its assets;
(iv)
will not contravene any existing law, rule or regulation of any governmental agency or regulatory body or which is binding on or applicable to it or its assets; and
(v)
will not infringe in any material respect or result in any breach in any material respect of, any of the terms of, or constitute a default in any material respect under, any agreement, instrument or other obligation to which it is a party or it or its assets are subject;
6.1.5
there are no:
(i)
outstanding judgments, orders, injunctions or decrees of any governmental or regulatory body or court or arbitration tribunal against or affecting the business operations of the Investor or its subsidiaries;
(ii)
lawsuits, actions or proceedings pending or threatened against or affecting the Investor or its subsidiaries; or
(iii)
investigations by any governmental or regulatory body which are pending or threatened against the Investor or its subsidiaries;
and which, in each case, has or which could reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations under this Agreement and/or any agreement entered into pursuant to the terms of this Agreement;
6.1.6
this Agreement, when executed, will constitute valid and legally binding obligations of the Investor enforceable in accordance with its terms;
6.1.7
in making the decision to subscribe for the Subscription Units, the Investor acknowledges and confirms to each of the Manager and the Underwriters that:
(i)
it has not relied on any investigation that the Manager, the Sponsor or any of their respective affiliates or shareholders (together, the “ Relevant Group ”), representatives or advisors (including, without limitation, legal advisers, financial advisers, the Underwriters and each of their respective directors, employees, affiliates or representatives) of any member of the Relevant Group and such advisors' respective affiliates, partners, directors, agents, employees, controlling persons and representatives

7


(together, the “ Advisory Group ”) as well as any person acting on behalf of any member of the Relevant Group and/or the Advisory Group may have conducted with respect to Prime US REIT, its subsidiaries and their respective assets;
(ii)
it has made its own independent investment decision regarding the Subscription Units based on its own knowledge (including information it may have as a result of the Investor’s own independent investigations or which is publicly available) and it has not received or relied on any advice or recommendation from the Relevant Group, the Advisory Group or any person acting on behalf of Prime US REIT, the Manager and/or the Sponsor;
(iii)
it has conducted its own independent investigation with respect to Prime US REIT, its subsidiaries, their respective assets and the Subscription Units and obtained its own independent advice (legal, tax, accounting or otherwise) to the extent it considers necessary or appropriate or otherwise has satisfied itself concerning, without limitation, the tax, legal, currency and other economic considerations related to the investment in the Subscription Units;
(iv)
the information contained in this Agreement, the draft Prospectus provided to it on a confidential basis and any other materials delivered to it are subject to change at any time and from time to time and, further, notwithstanding that any information concerning the Relevant Group may have been furnished to the Investor by or on behalf of the Relevant Group on or before the date hereof, in making its own independent investment decision regarding the Subscription Units, the Investor has relied and will rely only on information provided in the Final Prospectus to be dated and issued by the Manager on or around the day the Singapore Offer Agreement is signed and not any other information (including any draft or preliminary Prospectus, and any amendments or supplements thereto, whether or not the same is publicly available or lodged with the MAS), and each member of the Relevant Group and the Advisory Group makes no representation and gives no warranty or undertaking as to the accuracy or completeness of any such information not contained in the Final Prospectus (including any matters set out in the draft or preliminary Prospectus or any other materials provided to it) and none of the members of the Relevant Group or the Advisory Group has or will have any liability to the Investor or its affiliates or advisors resulting from their use of such information or for any opinions, errors, omissions made by any of them. For the avoidance of doubt, it shall be the responsibility of the Investor to obtain a copy of the Final Prospectus whether from the Manager or otherwise. Further, the Investor acknowledges and confirms that each member of the Relevant Group (excluding the Manager) and the Advisory Group (including the Underwriters) has no responsibility and undertakes no liability to the Investor, or any of its affiliates for the information contained in the Prospectus, makes no representation, warranty or covenant as to the accuracy or completeness of the Final

8


Prospectus and nothing in the Prospectus is to be considered or relied on as a promise, representation or covenant by any of the Relevant Group (excluding the Manager) or the Advisory Group (including the Underwriters);
(v)
the Relevant Group and the Advisory Group make no representation and give no warranty or undertaking that the IPO or the Listing will proceed or be completed (within any time period or at all). The Investor further agrees that none of the Relevant Group, or the advisors (including, without limitation, legal advisers, financial advisers or the Underwriters) to the Relevant Group or the Advisory Group, will have any liability whatsoever to the Investor or any person asserting any claims on the Investor’s behalf in connection with the offering and sale of the Subscription Units or in the event the IPO or the Listing does not proceed or is not completed for any reason;
(vi)
its participation in any investment of the Subscription Units has been arranged without the Underwriters’ undertaking any due diligence procedures on its behalf and that it may not rely on any investigation (if any) that may have been conducted or any legal opinion, due diligence reviews or other advice provided with respect to or in connection with the IPO, the Listing, Prime US REIT or the Relevant Group. The Investor also confirms that it has such knowledge and experience in financial and business matters as enables it to evaluate the merits and risks of a decision to participate in an investment of and to hold the Subscription Units and has the ability to bear the economic risk associated with its purchase of, and is able to sustain a complete loss of its investment in, the Subscription Units, and that it will conduct or has conducted its own investigation of any investment in the Subscription Units or Prime US REIT and received all the information it considers necessary and appropriate for deciding whether to purchase the Subscription Units, and none of the members of the Relevant Group and the Advisory Group has made any warranty, representation or recommendation to the Investor as to the merits of the Subscription Units, the purchase or offer thereof, or as to the condition, financial or otherwise, of Prime US REIT, its subsidiaries or their respective assets or as to any other matter relating thereto or in connection therewith;
(vii)
at or around the time of entering into this Agreement or at any time hereafter but before the closing of the IPO, the Manager and the Underwriters have entered into, or may enter into, agreements similar to this Agreement with one or more other investors as part of the IPO;
(viii)
no public market now exists for the Units, and the Manager and Underwriters have made no representation or warranty that a liquid or active market will ever exist for the Units; and
(ix)
the Investor agrees that each member of the Relevant Group and the Advisory Group will have the unconditional right under the Contracts

9


(Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 6.1.7;
6.1.8
the Investor will not assign or transfer its rights or obligations arising under this Agreement without the prior written agreement of the Manager and the Underwriters;
6.1.9
the Investor will comply with any requirements imposed or which may be imposed by the SGX-ST and/or by applicable laws or regulations in connection with the IPO (including any lock-ups or transfer of Units) and shall comply with any notice in respect of the same from the Manager, the SGX-ST and/or the Underwriters. The Investor has also complied and will comply with all applicable laws and regulations in all jurisdictions relevant to its acquisition of the Subscription Units;
6.1.10
if and to the extent the Investor has received (and may in future receive) information that may constitute non-public information in connection with its investment in (and holding of) the Subscription Units, it will not, and will cause its affiliates, associates, directors, officers, employees, advisers and representatives not to purchase, sell or otherwise trade, directly or indirectly, in the Subscription Units, the Units or any other securities in a manner that could result in any violation of the securities laws of the United States, Singapore or any other applicable jurisdiction relevant to such dealing;
6.1.11
the Investor has obtained all necessary legal, governmental and regulatory consents and any third party consents and approvals required in order to enable it to lawfully enter into, exercise its rights and comply with its obligations under this Agreement, own the Subscription Units and to ensure that such obligations are legally binding and enforceable obligations of the Investor;
6.1.12
this Agreement and the relationship and arrangements between both Parties contemplated by this Agreement may be required to be described in the Prospectus and other marketing materials for the IPO and, specifically, this Agreement may be a material contract required to be filed with regulatory authorities and/or made available for public inspection in connection with the IPO;
6.1.13
the Investor will accept the Subscription Units on and subject to the terms and conditions of the Trust Deed;
6.1.14
other than the subscription of the Subscription Units under this Agreement, the Investor will not, and will procure that no member of the Investor Group will, subscribe and/or purchase any other Units under the IPO, unless such subscription and/or purchase has been disclosed to the Underwriters in writing prior to the IPO Settlement Date in accordance with Clause 6.4;
6.1.15
it is subscribing for the Subscription Units for its own account and not with a view to any distribution thereof; and
6.1.16
the Investor acknowledges that the Units are subject to restrictions on beneficial and constructive ownership and on transfer for the purpose of enabling certain subsidiaries of Prime US REIT to meet the requirements for qualification and taxation as real estate investment trusts under the IRC, all as described in the Trust Deed. Subject to further restrictions and exceptions outlined in the Trust

10


Deed, unitholders of Prime US REIT and all other persons are prohibited from directly or indirectly owning in excess of 9.8% of the outstanding Units, subject to any increase or waiver pursuant to the terms of the Trust Deed and on the recommendation of the Manager. The Investor has been granted a waiver by the Trustee (on the recommendation of the Manager) allowing it to own up to a 26% interest in Prime US REIT on the basis of the representations provided by the Investor in the ownership limit waiver letter addressed to the Trustee, subject to any increase in the waiver limit pursuant to the terms of the Trust Deed and on the recommendation of the Manager.
6.2
The representations and warranties of the Investor in Clause 6.1 will be deemed to be repeated at all times from the date hereof up to and including the IPO Settlement Date.
6.3
The Investor acknowledges that the Manager and its affiliates and the Underwriters have relied and will rely on the truth and accuracy of the representations, warranties, acknowledgements and agreements set out in this Agreement by the Investor and agrees to notify the Manager and the Underwriters promptly in writing if any of the representations, warranties, acknowledgements and agreements herein cease to be accurate and complete in any material respect.
6.4
The Investor further consents and undertakes to:
6.4.1
The Manager and the Underwriters and their respective affiliates to disclose to the Manager and the Underwriters at least three Business Days prior to the IPO Settlement Date, to the best of the Investor’s knowledge and belief, having taken all reasonable steps and made all reasonable enquiries, the number of Units applied for by any entity in the Investor Group (if any); and
6.4.2
provide such other information which may be required by the Manager and the Underwriters for the purpose of (i) satisfying their disclosure obligations under applicable laws, regulations and the listing rules of the SGX-ST in connection with the IPO or the Listing, and (ii) ensuring their compliance with applicable laws, regulations and the listing rules of the SGX-ST.
7.
The Manager’s Representations and Warranties
7.1
As a condition of the agreement by the Investor to subscribe and pay for the Subscription Units, and in consideration thereof, the Manager hereby represents, warrants and undertakes to the Investor that:
7.1.1
the Manager has been duly organised and is validly existing as a corporation under the laws of Singapore;
7.1.2
the Manager has the legal right and full power and authority to enter into and perform its obligations under this Agreement and all transactions contemplated under this Agreement;
7.1.3
the Manager has obtained all approvals and consents necessary for its entry into and the discharge of its duties and obligations under this Agreement and all transactions contemplated under this Agreement;

11


7.1.4
the execution and delivery of, and the performance by the Manager of its obligations under, this Agreement and all transactions contemplated under this Agreement:
(i)
will not result in a breach of any provision of its memorandum or articles of association or equivalent constitutive documents;
(ii)
will not violate any order, judgment, award or decree of any court, arbitrator or governmental authority binding on it or its assets;
(iii)
will not contravene any existing law, rule or regulation of any governmental agency or regulatory body which is binding on it or its assets; and
(iv)
will not infringe in any material respect or result in any breach in any material respect of, any of the terms of, or constitute a default in any material respect under, any agreement, instrument or other obligation to which it is a party or is subject;
7.1.5
this Agreement, when executed, will constitute valid and binding obligations of the Manager enforceable in accordance with its terms; and
7.1.6
the Subscription Units, when paid up and issued, will be free from all liens, charges, encumbrances and other third party rights, freely transferable in Singapore and there are no legal restrictions on the voting or transfer or disposal of the Subscription Units under the laws of Singapore, save for the restriction on transfer of the Subscription Units referred to in Clauses 6.1.8, 6.1.9, 6.1.16 and 9.
7.2
The representations and warranties of the Manager in Clause 7.1 will be deemed to be repeated at all times from the date hereof up to and including the IPO Settlement Date.
7.3
The Investor acknowledges and agrees that neither the Manager nor any member of the Advisory Group makes any representations and warranties regarding the matters set out in the Prospectus or any other materials delivered to the Investor, and neither the Manager nor any member of the Advisory Group shall have any liability to the Investor in respect of such matters except in the case of the Manager, due to negligence, fraud, wilful default, misrepresentation or dishonesty, and the Investor acknowledges and agrees that such matters may change at any time and from time to time.
8.
Disclosures
8.1
The Investor irrevocably consents and undertakes (to provide, to the extent possible by law, a description of its organisation and business activities which shall be true and accurate in all respects and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and such other information and supporting documentation in respect thereof as may be reasonably required by the Manager and the Underwriters which shall be true and accurate in all respects and not misleading for the purpose of satisfying the Manager’s and the Underwriters’ disclosure obligations in connection with the Prospectus under applicable laws, regulations and the listing rules of the SGX-ST, and to the inclusion of such description, the Investor’s name as well as the matters relating to the Investor’s

12


subscription of the Subscription Units in the Prospectus and other marketing materials for the IPO. The Investor agrees it will also provide the foregoing information with respect to its direct and indirect holding companies and any person that is deemed to be interested in such Subscription Units under Section 4 of the Securities and Futures Act, Chapter 289 of Singapore. If the Investor is acquiring the Subscription Units as a fiduciary or agent for one or more accounts, it consents and undertakes to provide the foregoing information with respect to such accounts.
8.2
The Investor further consents and undertakes to the Manager and its respective affiliates as soon as practicable and to the extent legally possible, to provide such information (including information relating to an entity within the Investor’s group of companies applying for the IPO Units, other than the Subscription Units) and supporting documents as may be required by MAS, the SGX-ST and other governmental, public, monetary or regulatory authorities or bodies or securities exchanges, or which otherwise relates to any matter which may be required by the Manager and the Underwriters for the purposes of (i) satisfying their disclosure obligations under applicable laws, regulations and the listing rules of the SGX-ST in connection with the IPO or the Listing and (ii) ensuring their compliance with applicable laws and regulations and the listing rules of the SGX-ST (including without limitation, applicable companies and securities laws and regulations and the US Securities Act) and/or the requests of competent regulatory authorities or bodies (including without limitation, the SGX-ST and MAS).
8.3
The Investor agrees that the Underwriters will have the unconditional right under the Contracts (Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 8.
8.4
Each of the Manager and the Investor acknowledges that the Underwriters and their affiliates will rely upon the truth and accuracy of the acknowledgements, representations and warranties made by it in Clause 7 and Clauses 6, 8 and 9, respectively.
8.5
Without prejudice to the foregoing provisions of this Agreement, the Investor acknowledges and agrees that it will not have any rights to claim against the Underwriters and their affiliates for any breach of representations, warranties and undertakings given by the Manager and that the Underwriters and their affiliates shall not have any liability to the Investor or any person asserting claims on the Investor’s behalf in connection with the IPO and the offering and sale of the Subscription Units.
8.6
The Investor further acknowledges and agrees that this Agreement constitutes a material contract for the purposes of the Prospectus, and accordingly, a copy of this Agreement shall be made available by the Manager for public inspection for a period of six months after the date of the Final Prospectus or such other period as required under the relevant laws and regulations.
9.
US Securities Act Exemption
9.1
The Investor expressly acknowledges and understands that the Subscription Units have not been and will not be registered under the US Securities Act or under any state securities laws of the United States, and that no registration has been or will be undertaken by Prime US REIT under the Investment Company Act. The Investor understands and acknowledges that the Subscription Units are being offered and sold to it

13


pursuant to Section 4(a)(2) under the US Securities Act. The Investor hereby represents, agrees and acknowledges that:
9.1.1
it is authorised to consummate the purchase of the Subscription Units in compliance with all applicable laws and regulations, including those of Singapore;
9.1.2
it is an “accredited investor” as that term is defined in Regulation D promulgated under the US Securities Act;
9.1.3
it was not organised for the purpose of acquiring the Subscription Units;
9.1.4
it has not acquired the Subscription Units as a result of, and will not itself engage in, (i) any “directed selling efforts” (as defined in Regulation S) in the United States in respect of the Subscription Units, which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Subscription Units, or (ii) any form of general solicitation or general advertising (as defined in Rule 502(c) of Regulation D under the US Securities Act);
9.1.5
upon a proposed sale, transfer, assignment, pledge or other disposition of the Subscription Units, the Investor will notify any purchaser of such Subscription Units, the executing broker and any other agent of the transferor involved in selling the securities, as applicable, of the transfer restrictions set out in this Agreement that are applicable to the Subscription Units being sold and will require the broker and such other agent, as applicable, to abide by such restrictions;
9.1.6
it will comply with the securities laws of the United States and other jurisdictions in connection with the disposal of any Subscription Units and it acknowledges the Subscription Units are “restricted securities” under Rule 144 of the US Securities Act and such Subscription Units may only be sold upon subsequent registration under the US Securities Act or an exemption from registration under the US Securities Act;
9.1.7
it is purchasing the Subscription Units for its own account and not with a view to any distribution thereof; and
9.1.8
it acknowledges that the Manager and its affiliates, and the Advisory Group will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements set forth in this Agreement, including but not limited to Clause 6, Clause 8 and this Clause 9.1 and in Clauses 9.2 and 9.3 below (as appropriate). and agrees that, if any of such acknowledgments, representations or agreements are no longer accurate, it will promptly notify the Manager and the Underwriters, and if it is acquiring any Subscription Units as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account.
9.2
The Investor understands that none of the Manager or any of the Underwriters has made any representation as to the availability of any exemption under the US Securities Act for any subsequent reoffer, resale, pledge or transfer of the Subscription Units.

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9.3
The representations and warranties of the Investor in Clause 9.1 will be deemed to be repeated at all times from the date hereof up to and including the IPO Settlement Date.
10.
General
10.1
Assignability
This Agreement will be binding on and enure to the benefit of the Parties and their respective successors and assigns except that neither Party may, without the prior written consent of the other Party, assign any of their rights or obligations under this Agreement.
10.2
Notices
Any notice or other communication in connection with this Agreement will be in writing in English (a “ Notice ”) and will be sufficiently given or served if delivered or sent by courier to the following addresses and fax numbers of the Parties or to such other address or fax number as the relevant Party may have notified to the other Party in accordance with this Clause 10.2:
Manager
:
KBS US Prime Property Management Pte. Ltd.
 
 
1 Raffles Place,
40-01 One Raffles Place,
Singapore 048616
Attention
:
Chief Executive Officer / Chief Financial Officer
Tel Number
:
+1 (949) 417-6517 / +65 9826 3537
Fax Number
:
+65 6491 5251
Investor
:
KBS REIT Properties III LLC
 
 
800 Newport Center Drive, Suite 700, Newport
Beach, California 92660
Attention
:
Jeff Waldvogel
Tel Number
:
+1 (949) 797-0327
Fax Number
:
+1 (949) 417-6501

Any Notice may be delivered by hand or, sent by fax or registered courier mail. Without prejudice to the foregoing, any Notice will conclusively be deemed to have been received on the next Business Day in the place to which it is sent, if sent by fax, or 96 hours from the time of posting by registered courier, or at the time of delivery, if delivered by hand.
10.3
Waiver
10.3.1
Save in the case of fraud, each Party undertakes to the other Party not to make or pursue any claim against the officers, employees or agents of the other Party in connection with assisting the other Party in giving the warranties and/or entering

15


into this Agreement and the documents entered into pursuant to or in connection with this Agreement.
10.3.2
Either Party may at any time waive in whole or in part and conditionally or unconditionally any of the obligations of the other Party set out in this Agreement. No acquiescence, waiver or other indulgence granted by either Party to the other Party will in any way discharge or relieve that other Party from any of its other obligations under this Agreement. Any waiver of any breach of this Agreement shall be made expressly in writing and shall not be deemed a waiver of any subsequent breach of this Agreement.
10.4
Variation
No variation of this Agreement shall be effective unless in writing and signed by duly authorised representatives of the Parties.
10.5
Time of the Essence
Time shall be of the essence of this Agreement, both as regards the dates and periods mentioned and as regards any dates and periods which may be substituted for them in accordance with this Agreement or by agreement in writing and signed by and on behalf of each Party.
10.6
Rights and Remedies
No remedy conferred to a Party, the Underwriters or any member of the Advisory Group is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy will be cumulative and will be in addition to every other remedy given under this Agreement or now or hereafter existing at law, in equity, by statute or otherwise.
The failure by a Party, any of the Underwriters or any member of the Relevant Group or the Advisory Group to exercise or any delay in exercising a right or remedy under this Agreement, shall not constitute a waiver thereof or a waiver of any other right or remedy. The election of any single or partial exercise of any one or more of such rights or remedies by a Party, any of the Underwriters or any member of the Relevant Group or the Advisory Group (as available) will not constitute a waiver by such Party, such Underwriter or such member of the Relevant Group or the Advisory Group of the right to pursue any other available rights or remedies. The Investor and the Manager agree that the Underwriters and each member of the Relevant Group and the Advisory Group shall have the unconditional right under the Contracts (Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 10.6.
10.7
Contracts (Rights of Third Parties) Act
Save in respect of Clauses 2, 4.1, 5, 6, 7, 8, 9, 10.6, 10.7 , 10.9 and 10.15 of this Agreement which may be enforced by the Underwriters and/or the members of the Advisory Group and Clause 6.1.7(v) which may be enforced by a member of the Relevant Group, a person who is not a party to this Agreement (other than the Trustee, the Underwriters or such members of the Relevant Group or the Advisory Group, as the case may be) has no right under the Contracts (Rights of Third Parties) Act to enforce any term of this Agreement.

16


10.8
Severability
If any term in this Agreement will be held to be illegal, invalid or unenforceable, in whole or in part, under any applicable law, such term or part will to that extent be deemed not to form part of this Agreement but the legality, validity and enforceability of the remainder of this Agreement will not be affected.
10.9
Entire Agreement
This Agreement and the Set-Off Agreement constitute the entire agreement between the Parties as to the issue and subscription for the Subscription Units to the exclusion of all prior representations, understandings and agreements between the Parties. No amendments, variation or modification of the terms of this Agreement shall be effective unless in writing and signed by or on behalf of each of the Parties provided that Clauses 2, 4.1, 5, 6, 7, 8, 9, 10.6, 10.7, 10.9 and 10.15 may not be varied, amended or modified without the prior written consent of the Underwriters. The Investor and the Manager agree that the Underwriters shall have the unconditional right under the Contracts (Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 10.9. The Manager and the Investor may not terminate this Agreement without prior consultation with the Underwriters.
10.10
Governing Law and Jurisdiction
This Agreement will be governed by, and construed in accordance with, the laws of Singapore, and each Party irrevocably submits to the non-exclusive jurisdiction of the courts of Singapore.
10.11
Appointment of Process Agent
10.11.1
The Investor has appointed or will appoint an agent to accept service of process in Singapore in any legal action or proceedings arising out of this Agreement, service upon whom will be deemed completed whether or not forwarded to or received by the Investor. The Investor will inform the Manager (or its representatives) of the name and address of the appointed process agent within two days of the date of this Agreement.
10.11.2
The Investor will inform the Manager, in writing, of any change in the address of the process agent of the Investor within 28 days and such change in address will not be effective until such notice is received or deemed to be received by the Manager pursuant to Clause 10.2.
10.11.3
Such service will be deemed to be completed on delivery to the process agent (whether or not it is forwarded to and received by the Investor). If such process agent ceases to be able to act as such or to have an address in Singapore, the Investor irrevocably agrees to immediately appoint a new process agent in Singapore acceptable to the Manager and to deliver to the Manager within 14 days a copy of a written acceptance of appointment by the process agent.
10.11.4
Nothing in this Agreement will affect the right to serve process in any other manner permitted by law or the right to bring proceedings in any other jurisdiction for the purposes of the enforcement or execution of any judgment or other settlement in any other courts.

17


10.12
Counterparts
This Agreement may be executed in any number of counterparts, each of which, when executed and delivered (whether in original or fax copy), will be an original, but all the counterparts together will constitute one and the same document.
10.13
Further Assurance
Each Party undertakes with the other Party that it will execute such documents and do such acts and things as the other Party may reasonably require for the purpose of giving to such Party the full benefit of the terms of this Agreement.
10.14
Costs and Expenses
Each Party will bear its own legal, professional and other costs and expenses incurred by it in connection with the negotiation, preparation or completion of this Agreement.
10.15
Interest
If the Investor defaults in the payment when due of any sum payable under this Agreement (howsoever determined), the liability of the Investor will be increased to include the interest accrued on such sum from and including the date when such payment is due to but excluding the date of actual payment at a rate per annum of 5.0% above SIBOR from time to time. Such interest will accrue from day to day. The Investor agrees that the Underwriters shall have the unconditional right under the Contracts (Rights of Third Parties) Act to enforce the provisions of and rely on this Clause 10.15.
10.16
United States Tax Documentation
10.16.1
Investors that are not “United States persons” are required to provide information for withholding tax purposes on an applicable Internal Revenue Service Form W- 8, which forms include:
(a)
Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding),
(b)
Form W-8BEN-E (Certificate of Entities Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)),
(c)
Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding),
(d)
Form W-8EXP (Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding), and
(e)
Form W-8ECI (Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States).
Investors that are “United States persons” are required to provide Internal Revenue Service Form W-9.
The relevant forms and instructions may be found on the United States Internal Revenue Service website at http://www.irs.gov.

18


Each Investor should review the instructions to the Forms W-8 or Form W-9, as the case may be, to determine which form is applicable. If an Investor provides a Form W-8IMY as a nonqualified intermediary, it should include withholding certificates and other documentation from each beneficial owner (and if such Investor is acting on behalf of another nonqualified intermediary or on behalf of a non-United States partnership or non-United States trust that is not a withholding foreign partnership or a withholding foreign trust, such Investor should attach to its Form W-8IMY the Form W-8IMY of the other nonqualified intermediary, non- United States partnership, or non-United States trust, as applicable, together with the withholding certificates and other documentation attached to that Form W- 8IMY), all as described in the instructions to the Form W-8IMY.
The completed forms should be returned as instructed by the Manager, with such instructions to generally occur prior to a distribution payment. The Investor acknowledges that failure to provide the form referred in this Clause 10.16 prior to a distribution payment date will result in U.S. federal income tax withholding. Do not send the forms to the Internal Revenue Service.
For the purposes of this Section 11.16, each Investor is urged to consult their own tax adviser to determine their status as a “United States person.”
10.16.2
Investors that are not “United States persons” are also required to establish their eligibility for the United States portfolio interest exemption by providing a U.S. Tax Compliance Certificate, as set out in Appendix I of the Prospectus, which requires each Investor to make certain representations with respect to (i) sole beneficial of the Units; (ii) the Investor is not a bank within the meaning of Section 881(c)(3)(A) of the IRC; (iii) the Investor is not a 10% shareholder of an Issuer within the meaning of Section 871(h)(3)(B) of the IRC; and (iv) it is not a controlled foreign corporation related to the Issuer as described in Section 881(c)(3)(C) of the IRC.


19


In witness whereof this Agreement has been entered into on the date stated at the beginning.
The Manager
 
 
 
We hereby confirm our agreement to the foregoing.

 
 
 
SIGNED by Sandip Talukdar
 
 
/s/ Sandip Talukdar
for and on behalf of
 
 
 
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
 
(as manager of Prime US REIT)
 

Project Endeavour – Investor Subscription Agreement (KBS)


The Investor
SIGNED by
for and on behalf of
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

In the presence of:
/s/ Deborah Montgomery
Name:
Deborah Montgomery
Address:
61 Exeter
Irvine, CA 92612


Project Endeavour – Investor Subscription Agreement (KBS)


Exhibit 10.4
15 July 2019
KBS US Prime Property Management Pte. Ltd.
1 Raffles Place
#40-01 One Raffles Place
Singapore 048616
KBS REIT Properties Ill LLC
800 Newport Center Drive
Suite 700, Newport Beach
California 92660

Dear Sirs
PRIME US REIT - SIDE LETTER TO KBS SUBSCRIPTION AGREEMENT
1.
We refer to the subscription agreement (the "Subscription Agreement") dated 27 June 2019 entered into between KBS US Prime Property Management Pte. Ltd., as manager of Prime US REIT (the "Manager") and KBS REIT Properties Ill LLC (the "Investor") in relation to the subscription of 228,408,999 units in Prime US REIT ("Subscription Units") by the Investor.
2.
We refer to clause 6.1.16 of the Subscription Agreement and acknowledge and agree that the Investor has or will be granted a waiver by the trustee of Prime US REIT (on the recommendation of the Manager) allowing the Investor to own up to a 33.3% (instead of up to 26.0%) interest in Prime US REIT.
3.
We refer to the initial public offering of Units (as defined in the Subscription Agreement) in Prime US REIT, which includes an international placement of 318,442,200 Units (the "Placement Tranche"). Separate from the subscription of the Subscription Units by the Investor pursuant to the Subscription Agreement, the Investor has applied to subscribe for Units as part of the Placement Tranche. As a condition to the Manager's acceptance of such application, the Investor hereby agrees that each of the provisions of clauses 6.1.7 and 9 of the Subscription Agreement shall also apply in respect of any and all Units in Prime US REIT subscribed for by the Investor in the Placement Tranche (the "Placement Units"). Accordingly, the Investor hereby represents, acknowledges and agrees to each of the provisions of clauses 6.1.7 and 9 of the Subscription Agreement, substituting the term "Subscription Units" each time it appears in such clause for the term "Placement Units". The Investor acknowledges that the Underwriters and/or the members of the Advisory Group, as such terms are defined in the Subscription Agreement, shall have the unconditional right under the Contracts (Rights of Third Parties) Act to rely on this provision.
4.
The Investor understands that neither the US Securities and Exchange Commission nor any state securities commission nor any other US regulatory authority has approved or disapproved of the Placement Units or the Prospectus (as defined in the Subscription Agreement), passed upon or endorsed the merits of the initial public offering or confirmed the accuracy or determined the adequacy of the Prospectus. Moreover, the Investor understands that the Prospectus has not been drafted to comply with the form and disclosure requirements that would apply were the Placement Units being registered pursuant to the US Securities Act, including without limitation those pursuant to Form 20-F, Regulation S-K and Regulation S-X.




The Investor acknowledges that the Underwriters and/or the members of the Advisory Group, as such terms are defined in the Subscription Agreement, shall have the unconditional right under the Contracts (Rights of Third Parties) Act to rely on this provision.
5.
This letter is governed by, and shall be construed in accordance with, the laws of Singapore, and each party to this letter irrevocably submits to the non-exclusive jurisdiction of the courts of Singapore.
6.
This letter may be executed in any number of counterparts, each of which, when executed and delivered (whether in original or fax copy), will be an original, but all the counterparts together will constitute one and the same document.
7.
This letter may only be amended or supplemented in writing signed by or on behalf of each of the parties hereto.





We hereby confirm our agreement to the foregoing.
SIGNED by
For and on behalf of
KBS US Prime Property Management Pte. Ltd.
(as manager of Prime US REIT)
/s/ Sandip Talukdar
Name: Sandip Talukdar
Designation: Chief Financial Officer




We hereby confirm our agreement to the foregoing.
SIGNED by
for and on behalf of
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




Exhibit 10.5
ALLEN & GLEDHILL

Dated ( 27 June 2019)
THE SELLER PARTIES LISTED IN EXHIBIT A ATTACHED HERETO
and
THE BUYER PARTIES LISTED IN EXHIBIT A ATTACHED HERETO
and
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
(as manager of Prime US REIT)
and
DBS TRUSTEE LIMITED
(as trustee of Prime US REIT)
and
KBS REIT PROPERTIES III LLC
and
PRIME US REIT S1 PTE. LTD.
and
PRIME US-SUB REIT, INC.
and
PRIME US-UPPER TIER, LLC
and
PRIME US-MIDDLE TIER, LLC
and
PRIME US PROPERTIES, LLC
and
PRIME US-LOWER TIER, LLC
and
PRIME US-ACQUISITION I, LLC

SET-OFF AGREEMENT

Allen & Gledhill LLP
One Marina Boulevard #28-00 Singapore 018989
Tel: +65 6890 7188 | Fax +65 6327 3800

allenandgledhill.com


TABLE OF CONTENTS
Contents
Page
 
1.
Definitions and Interpretation
2
 
2.
Settlement
4
 
3.
General
6
 


 
i


This Agreement is made on 27 June 2019 between:
(1)
THE SELLER PARTIES , each a Delaware limited liability company or Delaware statutory trust and as identified in Exhibit A attached hereto (collectively, “ Vendor ”);
(2)
THE BUYER PARTIES , each a Delaware limited liability company and as identified in Exhibit A attached hereto (each a “ Property Holding LLC ” and collectively, “ Purchaser ”);
(3)
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD. , a company established and validly existing under the laws of Singapore and having its registered office at 1 Raffles Place, #40-01 One Raffles Place, Singapore 048616, in its capacity as manager of Prime US REIT (the “ Manager ”);
(4)
DBS TRUSTEE LIMITED , a company established and validly existing under the laws of Singapore and having its registered office at 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982, in its capacity as trustee of Prime US REIT (the “ Trustee ”);
(5)
KBS REIT PROPERTIES III LLC , a Delaware limited liability company and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (the “ Investor ”);
(6)
PRIME US REIT S1 PTE. LTD. , a company established and validly existing under the laws of Singapore and having its registered office at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 (“ SSUB1 ”);
(7)
PRIME US-SUB REIT, INC. , a Delaware corporation and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (“ Parent US REIT ”);
(8)
PRIME US-UPPER TIER, LLC , a Delaware limited liability company and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (“ Upper-Tier U.S. LLC ”).
(9)
PRIME US-MIDDLE TIER, LLC , a Delaware limited liability company and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (“ Middle-Tier U.S. LLC ”);
(10)
PRIME US PROPERTIES, LLC , a Delaware limited liability company and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660;
(11)
PRIME US-LOWER TIER, LLC , a Delaware limited liability company and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660 (“ Lower-Tier U.S. LLC ”); and
(12)
PRIME US-ACQUISITION I, LLC , a Delaware limited liability company and having its principal office at 800 Newport Center Drive, Suite 700, Newport Beach, California 92660;
Whereas:
(A)
The Trustee and SSUB1 have entered into a subscription agreement (“ RPS Subscription Agreement ”) under which SSUB1 proposes to allot and issue to the Trustee, and the Trustee agrees to subscribe for redeemable preference shares in the capital of SSUB1, subject to the terms and conditions of the RPS Subscription Agreement.


1


(B)
The board of directors of the Parent US REIT has authorised the allotment and issuance of 1,000,000 shares of its common stock to SSUB 1 (representing a 100% interest in the Parent US REIT).
(C)
The board of directors of the Parent US REIT has authorised the formation and capitalisation of Upper-Tier U.S. LLC with the Parent US REIT as the sole member of Upper-Tier U.S. LLC.
(D)
The board of directors of the Parent US REIT has authorised the formation and capitalisation of Middle-Tier U.S. LLC with Upper-Tier U.S. LLC as the sole member of Middle-Tier U.S. LLC.
(E)
The board of directors of the Parent US REIT has authorised the formation and capitalisation of Lower-Tier U.S. LLC with Middle-Tier U.S. LLC as the sole member of Lower-Tier U.S. LLC.
(F)
The board of directors of the Parent US REIT has authorised the formation and capitalisation of Prime US Properties LLC with Middle-Tier U.S. LLC as the sole member of Prime US Properties LLC.
(G)
The board of directors of the Parent US REIT has authorised the formation and capitalisation of Prime US-Acquisition I, LLC with Prime US Properties LLC as the sole member of Prime US-Acquisition I, LLC.
(H)
The board of directors of the Parent US REIT has authorised the formation and capitalisation of each Property Holding LLC with Lower-Tier U.S. LLC or Prime US-Acquisition I, LLC as the sole member and manager, as the case may be.
(I)
The applicable Vendor has agreed to sell to the applicable Purchaser, and the applicable Purchaser has agreed to purchase from the applicable Vendor, 11 properties, as identified in Exhibit A attached hereto, and have in connection thereto, entered into the Portfolio Purchase and Sale Agreement and Escrow Instructions by and between the Vendor and Purchaser (the “ Sale and Purchase Agreement ”).
(J)
The Manager is proposing to offer for subscription units in Prime US REIT (“ New Units ”) to the Investor, and has in connection thereto, entered into a subscription agreement with the Investor (the “ Subscription Agreement ”).
(K)
The parties acknowledge that at no time will the Investor and its affiliates own more than 16% of the units of Prime US REIT, and in addition, that the New Units will not be issued prior to the issuance of other units of Prime US REIT to the cornerstone investors.
(L)
The parties to this agreement (“ Parties ”) are desirous to enter into this Agreement for the settlement of certain of their payment rights and obligations under the Transactions (as defined herein).
It is agreed as follows:
1.
Definitions and Interpretation
1.1
In this Agreement, except to the extent that the context requires otherwise:


2


“ this Agreement ” means this set-off agreement made between the Parties on the date hereof as time to time amended, modified or supplemented and any document which is supplemental hereto;
“ Business Day ” means any day (other than a Saturday, Sunday or gazetted public holiday) on which commercial banks are generally open for business in Singapore and the SGX-ST is open for trading;
“ Investor ” means KBS REIT Properties III LLC;
“ Lower-Tier U.S. LLC ” means Prime US-Lower Tier, LLC;
“ Manager ” means KBS US Prime Property Management Pte. Ltd., as manager of Prime US REIT;
“ Middle-Tier U.S. LLC ” means Prime US-Middle Tier, LLC;
“ New Units ” means the Subscription Units (as defined in the Subscription Agreement) in Prime US REIT for which the Investor is subscribing for under the Subscription Agreement;
“ Notice ” has the meaning given to it in Clause 3.2;
“ Parent US REIT ” means Prime US-Sub REIT, Inc.;
“ Parties ” means the parties to this Agreement;
“ Prime US REIT ” means Prime US REIT, a collective investment scheme authorised by the Monetary Authority of Singapore and constituted pursuant to a deed of trust dated 7 September 2018, as amended, varied or supplemented from time to time;
“ Purchaser ” or “ Property Holding LLCs ” means the buyer parties identified in Exhibit A attached hereto;
“ Relevant Amount ” has the meaning given to it in Clause 2;
“ RPS Subscription Agreement ” has the meaning given to it in Recital (A);
“ Sale and Purchase Agreement ” has the meaning given to it in Recital (I);
“ Set-Off ” has the meaning given to it in Clause 2;
“ SGX-ST ” means Singapore Exchange Securities Trading Limited;
“ SSUB1 ” means Prime US REIT S1 Pte. Ltd.;
“ Subscription Agreement ” has the meaning given to it in Recital (J);
“ Transactions ” means the various transactions described in Recitals (A) to (J);
“ Trustee ” means DBS Trustee Limited (in its capacity as trustee of Prime US REIT);
“ Upper-Tier U.S. LLC ” means Prime US-Upper Tier, LLC; and
“ Vendor ” means the seller parties identified in Exhibit A attached hereto.
1.2
Headings, Clauses etc.


3


The headings of this Agreement are inserted for reference only and shall be ignored in construing this Agreement. Unless the context otherwise requires, words (including words defined in this Agreement) denoting the singular shall include the plural and vice versa. The words “ written ” and “ in writing ” include any means of visible reproduction. References to this Agreement include any recitals and references to “ Clauses ” are to clauses of this Agreement. Any reference to a sub-clause is a reference to a sub-clause of the clause in which such reference appears. References to dates and times are to Singapore dates and times.
2.
Settlement
In consideration of the mutual promises and obligations contained herein, the receipt and adequacy of which is hereby acknowledged, each of the Parties agree to the following.
2.1
The Investor has requested for a set-off of the payment of the Subscription Amount (as defined in the Subscription Agreement) (the “ Relevant Amount ”) which is due from the Investor pursuant to the Subscription Agreement for the subscription of the New Units against a portion (equivalent to the Relevant Amount) of the purchase consideration payable by the Purchaser to the Vendor under the Sale and Purchase Agreement, and the Parties agree to the aforesaid set-off subject to the terms of this Agreement.
2.2
Upon receipt by the Vendor of the purchase price (as stated in the Sale and Purchase Agreement) less the Relevant Amount:
2.2.1
the Vendor shall discharge the Purchaser from and have no further claim against, the Purchaser in respect of the amount set-off as set out in Clause 2.1 above under the Sale and Purchase Agreement; and
2.2.2
the Manager shall discharge the Investor from, and have no further claim against, the Investor in respect of the payment of the subscription amounts due from the Investor for the subscription of the New Units under the Subscription Agreement.
2.3
In connection with the set-off as agreed in Clauses 2.1 and 2.2 above (the “ Set-Off ”), the Trustee, SSUB1, Parent US REIT, Upper-Tier U.S. LLC, Middle-Tier U.S. LLC, Prime US Properties, LLC, Lower-Tier U.S. LLC, Prime US-Acquisition I, LLC and the Purchaser agree that for purposes of the set-off, the Relevant Amount shall not be transferred in cash to each of SSUB1, Parent US REIT, Upper-Tier U.S. LLC, Middle-Tier U.S. LLC, Prime US Properties, LLC, Lower-Tier U.S. LLC, Prime US-Acquisition I, LLC and Property Holding LLC, but instead, the Relevant Amount shall be deemed to have been received by each of SSUB1, Parent US REIT, Upper-Tier U.S. LLC, Middle-Tier U.S. LLC, Prime US Properties, LLC, Lower-Tier U.S. LLC, Prime US-Acquisition I, LLC and each of the Property Holding LLC in the following manner:
2.3.1
SSUB1 agrees that following the Set-Off, notwithstanding that the actual subscription amount received by SSUB1 in cash from the Trustee under the RPS Subscription Agreement is minus the Relevant Amount, the full amount due from the Trustee under the RPS Subscription Agreement (i.e. inclusive of the Relevant Amount which has been Set-Off) shall be deemed to have been received by SSUB1 and shall be recorded as such by SSUB1.


4


2.3.2
Parent US REIT agrees that following the Set-Off, notwithstanding that the actual capital contribution amount received by Parent US REIT in cash from SSUB1 is minus the Relevant Amount, the full amount due from SSUB1 (i.e. inclusive of the Relevant Amount which has been Set-Off) shall be deemed to have been received by Parent US REIT and shall be recorded as such by Parent US REIT.
2.3.3
Upper-Tier U.S. LLC agrees that following the Set-Off, notwithstanding that the actual capital contribution amount received by Upper-Tier U.S. LLC in cash from Parent US REIT is minus the Relevant Amount, the full amount due from Parent US REIT (i.e. inclusive of the Relevant Amount which has been Set-Off) shall be deemed to have been received by Upper-Tier U.S. LLC and shall be recorded as such by Upper-Tier U.S. LLC.
2.3.4
Middle-Tier U.S. LLC agrees that following the Set-Off, notwithstanding that the actual capital contribution amount received by Middle-Tier U.S. LLC in cash from Upper-Tier U.S. LLC is minus the Relevant Amount, the full amount due from Upper-Tier U.S. LLC (i.e. inclusive of the Relevant Amount which has been Set-Off) shall be deemed to have been received by Middle-Tier U.S. LLC and shall be recorded as such by Middle-Tier U.S. LLC.
2.3.5
Each of Prime US Properties, LLC and Lower-Tier U.S. LLC agrees that following the Set-Off, notwithstanding that the actual capital contribution amount received by Prime US Properties, LLC and/or Lower-Tier U.S. LLC in cash from Middle-Tier U.S. LLC is minus the portion of the Relevant Amount receivable by Prime US Properties, LLC and Lower-Tier U.S. LLC, respectively, the full amount due from Middle-Tier U.S. LLC (i.e. inclusive of the portion of the Relevant Amount receivable by Prime US Properties, LLC and Lower-Tier U.S. LLC which has been Set-Off) shall be deemed to have been received by Prime US Properties, LLC and/or Lower-Tier U.S. LLC and shall be recorded as such by Prime US Properties, LLC and/or Lower-Tier U.S. LLC .
2.3.6
Prime US-Acquisition I, LLC agrees that following the Set-Off, notwithstanding that the actual capital contribution amount received by Prime US-Acquisition I, LLC in cash from Prime US Properties, LLC is minus the portion of the Relevant Amount receivable by Prime US-Acquisition I, LLC, the full amount due from Prime US Properties, LLC (i.e. inclusive of the portion of the Relevant Amount receivable by Prime US-Acquisition I, LLC which has been Set-Off) shall be deemed to have been received by Prime US-Acquisition I, LLC and shall be recorded as such by Prime US-Acquisition I, LLC .
2.3.7
Each Property Holding LLC agrees that following the Set-Off, notwithstanding that the actual capital contribution amount received by the Property Holding LLC in cash from the Lower-Tier U.S. LLC or Prime US-Acquisition I, LLC, as the case may be, is minus the portion of the Relevant Amount receivable by that Property Holding LLC, the full amount due from the Lower-Tier U.S. LLC or Prime US-Acquisition I, LLC, as the case may be, (i.e. inclusive of the portion of the Relevant Amount receivable by that Property Holding LLC which has been Set-Off) shall be deemed to have been received by that Property Holding LLC and shall be recorded as such by that Property Holding LLC.


5


3.
General
3.1
Assignability
This Agreement will be binding on and ensure to the benefit of the Parties and their respective successors and assigns except that no Party may, without the prior written consent of the other Parties, assign any of their rights or obligations under this Agreement.
3.2
Notices
Any notice or other communication in connection with this Agreement will be in writing in English (a “ Notice ”) and will be sufficiently given or served if delivered or sent to the following addresses or electronic mail addresses of the Parties or to such other address or fax number as the relevant Party may have notified to the other Parties in accordance with this Clause 3.2:
Purchaser
:
c/o KBS US Prime Property Management Pte. Ltd.
 
 
1 Raffles Place,
#40-01 One Raffles Place,
Singapore 048616
Attention
:
Chief Executive Officer / Chief Financial Officer
Telephone Number
:
+1 (949) 417-6517 / +65 9826 3537
Email Address
:
bcambon@primeusreit.com / stalukdar@primeusreit.com
With a copy to:
 
 
Address:
 
c/o KBS Realty Advisors, LLC, 800 Newport Center Drive, Suite 700, Newport Beach, CA 92660
Attention:
 
Charles J. Schreiber, Jr., and Jeffrey Waldvogel
Vendor
:
c/o KBS Capital Advisors LLC
 
 
800 Newport Center Drive
Suite 700, Newport Beach
CA 92660
Attention
:
Jeffrey Waldvogel / Rodney Richerson
Telephone Number
:
+1 (949) 797-0327 / +1 (949) 417-6515
Email Address
:
jwaldvogel@kbs.com / rricherson@kbs.com
Manager
:
KBS US Prime Property Management Pte. Ltd.
 
 
1 Raffles Place,


6


 
 
#40-01 One Raffles Place,
Singapore 048616
Attention
:
Chief Executive Officer / Chief Financial Officer
Telephone Number
:
+1 (949) 417-6517 / +65 9826 3537
With a copy to:
 
 
Address:
 
c/o KBS Realty Advisors, LLC, 800 Newport Center Drive, Suite 700, Newport Beach, CA 92660
Attention:
 
Charles J. Schreiber, Jr., Jeffrey Waldvogel, and Mark Krotine
Email Address
:
bcambon@primeusreit.com / stalukdar@primeusreit.com
Investor
 
KBS REIT Properties III LLC
 
 
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Attention
:
Jeffrey Waldvogel / Rodney Richerson
Telephone Number
:
+1 (949) 797-0327 / +1 (949) 417-6515
Email Address
:
jwaldvogel@kbs.com / rricherson@kbs.com
SSUB1
:
c/o KBS US Prime Property Management Pte. Ltd.
 
 
1 Raffles Place,
#40-01 One Raffles Place,
Singapore 048616
Attention
:
Chief Executive Officer / Chief Financial Officer
Telephone Number
:
+1 (949) 417-6517 / +65 9826 3537
Email Address
:
bcambon@primeusreit.com / stalukdar@primeusreit.com
Parent US REIT
:
c/o KBS US Prime Property Management Pte. Ltd.
 
 
1 Raffles Place,
#40-01 One Raffles Place,
Singapore 048616


7


Attention
:
Chief Executive Officer / Chief Financial Officer
Telephone Number
:
+1 (949) 417-6517 / +65 9826 3537
Email Address
:
bcambon@primeusreit.com / stalukdar@primeusreit.com
Upper-Tier Sub-US REIT
:
c/o KBS US Prime Property Management Pte. Ltd.
 
 
1 Raffles Place,
#40-01 One Raffles Place,
Singapore 048616
Attention
:
Chief Executive Officer / Chief Financial Officer
Telephone Number
:
+1 (949) 417-6517 / +65 9826 3537
Email Address
:
bcambon@primeusreit.com / stalukdar@primeusreit.com
Any Notice may be delivered by hand or, sent by electronic mail or prepaid post (airmail in the case of international service). Without prejudice to the foregoing, any Notice will conclusively be deemed to have been received on the next Business Day in the place to which it is sent, if sent by electronic mail, or 72 hours from the time of posting, if sent by post, or at the time of delivery, if delivered by hand.
3.3
Variation
No variation of this Agreement will be effective unless in writing and signed by or on behalf of all Parties.
3.4
Rights and Remedies
No remedy conferred to a Party is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy will be cumulative and will be in addition to every other remedy given under this Agreement or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by a Party will not constitute a waiver by such Party of the right to pursue any other available remedies.
3.5
Contracts (Rights of Third Parties) Act
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore to enforce any term of this Agreement.
3.6
Severability
If any term in this Agreement will be held to be illegal, invalid or unenforceable, in whole or in part, under any applicable law, such term or part will to that extent be deemed not to form part of this Agreement but the legality, validity or enforceability of the remainder of this Agreement will not be affected.


8


3.7
Entire Agreement
This Agreement constitutes the entire agreement between the Parties in respect of the set-off arrangement to the exclusion of all prior representations, understandings and agreements between the Parties. Any variation of the terms of this Agreement must be in writing and signed by the Parties.
3.8
Governing Law and Jurisdiction
This Agreement will be governed by, and construed in accordance with, the laws of Singapore, and each Party irrevocably submits to the non-exclusive jurisdiction of the courts of Singapore.
3.9
Counterparts
This Agreement may be executed in any number of counterparts, each of which, when executed and delivered (whether in original or electronic mail copy), will be an original, but all the counterparts together will constitute one and the same document.
3.10
Further Assurance
Each Party undertakes with the other Parties that it will execute such documents and do such acts and things as the other Parties may reasonably require for the purpose of giving to such other Parties the full benefit of the terms of this Agreement.
3.11
Costs and Expenses
Save as otherwise expressly provided in this Agreement, each Party will bear its own legal, professional and other costs and expenses incurred by it in connection with the negotiation, preparation or completion of this Agreement.
3.12
Limitation of Liability
Notwithstanding any contrary provision in this Agreement, the Parties agree and acknowledge that DBS Trustee Limited (“ DBST ”) is entering into this Agreement only in its capacity as trustee of Prime US REIT and not in its personal capacity and all references to the Trustee in this Agreement shall be construed accordingly.
As such, notwithstanding any contrary provision in this Agreement, DBST has assumed all obligations under this Agreement in its capacity as trustee of Prime US REIT and not in its personal capacity and any liability of or indemnity, covenant, undertaking, representation and/or warranty given or to be given by the Trustee under this Agreement is given by DBST in its capacity as trustee of Prime US REIT and not in its personal capacity and any power and right conferred on any receiver, attorney, agent and/or delegate shall be limited to the assets of Prime US REIT over which DBST in its capacity as trustee of Prime US REIT has recourse and shall not extend to any personal or other assets of DBST or any assets held by DBST as trustee for any trust (other than Prime US REIT). Any obligation, matter, act, action or thing required to be done, performed or undertaken or any covenant, representation, warranty or undertaking given by the Trustee under this Agreement shall only be in connection with the matters relating to Prime US REIT and shall not extend to DBST’s obligations in respect of any other trust or real estate investment trust of which DBST is trustee. Notwithstanding any contrary provision in this Agreement, it is hereby agreed and acknowledged that the Trustee’s obligations under this Agreement will be


9


solely the corporate obligations of the Trustee and there shall be no recourse against the shareholders, directors, officers or employees of the Trustee for any claims, losses, damages, liabilities or other obligations whatsoever in connection with any of the transactions contemplated by this Agreement. For the avoidance of doubt, any legal action or proceedings commenced against the Trustee whether in Singapore or elsewhere pursuant to this Agreement shall be brought against DBST in its capacity as trustee of Prime US REIT and not in its personal capacity. This Clause 3.12 shall survive the termination or rescission of this Agreement. This Clause 3.12 shall apply, mutatis mutandis, to any notice, certificate or other document which the Trustee issues under or pursuant to this Agreement, as if expressly set out in such notice, certificate or document.




10


EXHIBIT A
List of Seller Parties and Buyer Parties
 
SELLER PARTY (“VENDOR”)
BUYER PARTY (“PURCHASER”)
1.    
Village Center Station II Owner, LLC, a Delaware limited liability company
Prime US-Village Center Station II, LLC, a Delaware limited liability company
2.    
KBSIII Tower at Lake Carolyn, LLC, a Delaware limited liability company
Prime US-Tower At Lake Carolyn, LLC, a Delaware limited liability company
3.    
KBSIII One Washingtonian, LLC, a Delaware limited liability company
Prime US-One Washingtonian, LLC, a Delaware limited liability company
4.    
KBSIII 222 Main, LLC, a Delaware limited liability company
Prime US-222 Main, LLC, a Delaware limited liability company
5.    
KBSIII 171 17th Street, LLC, a Delaware limited liability company
Prime US-171 17th Street, LLC, a Delaware limited liability company
6.    
KBSIII Reston Square, LLC, a Delaware limited liability company
Prime US-Reston Square, LLC, a Delaware limited liability company
7.    
KBSIII 101 South Hanley, LLC, a Delaware limited liability company
Prime US-101 South Hanley, LLC, a Delaware limited liability company
8.    
KBSIII Village Center Station, LLC, a Delaware limited liability company
Prime US-Village Center Station, LLC, a Delaware limited liability company
9.    
Promenade One
KBSIII Promenade One, LLC, a Delaware limited liability company

Promenade Two
KBSIII Promenade Two, LLC, a Delaware limited liability company
Prime US-Promenade, LLC, a Delaware limited liability company



10.    
KBSIII CrossPoint At Valley Forge Trust, a Delaware Statutory Trust
Prime US-CrossPoint At Valley Forge, LLC, a Delaware limited liability company
11.    
KBSIII Towers At Emeryville, LLC, a Delaware limited liability company
Prime US-Tower At Emeryville, LLC, a Delaware limited liability company



11


In witness whereof this Agreement has been entered into on the date stated at the beginning.
"VENDOR" :
VILLAGE CENTER STATION II OWNER, LLC,
a Delaware limited liability company
By:
KBSIII VILLAGE CENTER STATION II MEMBER, LLC,
a Delaware limited liability company,
its sole member and manager
By:
KBSIII REIT ACQUISITION XXXII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION VI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION X, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII 222 MAIN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII 171 17TH STREET, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XV, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII RESTON SQUARE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XVIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII 101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XX, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII PROMENDADE ONE, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE ONE MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENADE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII PROMENADE TWO, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE TWO MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENADE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III,
INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII CROSSPOINT AT VALLEY FORGE TRUST,
a Delaware Statutory Trust
By:
KBSIII CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company,
as Administrative Trustee
By:
KBSIII REIT ACQUISITION XXVI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


KBSIII TOWERS AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


"PURCHASER" :
PRIME US-VILLAGE CENTER STATION II, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-222 MAIN, LLC,
a Delaware limited liability company
By:
PRIME US-ACQUISITION I, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-171 17TH STREET, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-RESTON SQUARE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-PROMENADE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


PRIME US-TOWER AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


The Manager
 
 
 
 
 
SIGNED by Sandip Talukdar
 
 
/s/ Sandip Talukdar
for and on behalf of
 
 
 
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
 
(as manager of Prime US REIT)
 

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


The Trustee
 
 
 
 
 
 
 
 
SIGNED by
 
 
 
/s/ Kwek Yi Lin
/s/ Authorized Signatory
for and on behalf of
Kwek Yi Lin
Authorized Signatory
 
 
 
DBS TRUSTEE LIMITED
 
 
(as trustee of Prime US REIT)
 
 
 
 
 
in the presence of:
 
 
/s/ Lee Zhi Kang
 
 
Witness' signature
 
 
Name: Lee Zhi Kang
 
 
Address: 12 Marina Boulevard, Marina Bay
Financial Centre Tower 3, Singapore 018982
 
 
 
 
 
 
 
 

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


The Investor
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


SSUB1
 
 
 
We hereby confirm our agreement to the foregoing.

 
 
 
SIGNED by Sandip Talukdar
 
 
/s/ Sandip Talukdar
for and on behalf of
 
 
 
PRIME US REIT S1 PTE. LTD.
 

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


Parent US REIT
PRIME US-SUB REIT, INC.,
a Delaware corporation
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


Upper-Tier U.S. LLC
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


Middle-Tier U.S. LLC
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


Prime US Properties, LLC
PRIME US PROPERTIES, LLC,
a Delaware limited liability company
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


Lower-Tier U.S. LLC
PRIME US-LOWER TIER, LLC,
a Delaware limited liability company
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President

__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 


Prime US-Acquisition I, LLC
PRIME US-ACQUISITION I, LLC,
a Delaware limited liability company
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President


__________________________________________________________________________________________________________________________________
Endeavour – Set-Off Agreement
 



Exhibit 10.6
17 July 2019
The Seller Parties Listed in Exhibit A attached hereto
The Buyer Parties Listed in Exhibit A attached hereto
KBS US Prime Property Management Pte. Ltd.
1 Raffles Place
#40-01 One Raffles Place
Singapore 048616
DBS Trustee Limited
(as trustee of Prime US REIT)
12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
KBS REIT Properties III LLC
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Prime US REIT S1 Pte. Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Prime US-Sub REIT, Inc.
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Prime US-Upper Tier, LLC
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Prime US-Middle Tier, LLC
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Prime US Properties, LLC
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Prime US-Lower Tier, LLC
800 Newport Center Drive
Suite 700, Newport Beach




California 92660
Prime US-Acquisition I, LLC
800 Newport Center Drive
Suite 700, Newport Beach
California 92660
Dear Sirs
PRIME US REIT - SIDE LETTER TO SET-OFF AGREEMENT
1.
We refer to the set-off agreement (the "Set-Off Agreement") dated 27 June 2019 entered into between the parties to this letter. Capitalised terms in this letter which are not otherwise defined herein shall bear the meanings ascribed to them in the Set-Off Agreement.
2.
We acknowledge and agree that:
(a)
in relation to recital (K) of the Set-Off Agreement, KBS REIT Properties Ill LLC and its affiliates shall, at no time, own more than 33.3% (instead of 26.0%) of the units in Prime US REIT;
(b)
in relation to clauses 2.1 and 2.2 of the Set-Off Agreement, the "Relevant Amount", which is the subject of set-off against the purchase consideration under the Sale and Purchase Agreement, shall be US$270,999,519, which is the aggregate amount due from KBS REIT Properties Ill LLC pursuant to the Subscription Agreement and for its subscription of 79,545,000 units in Prime US REIT via the placement tranche; and
(c)
in relation to clause 2.2 of the Set-Off Agreement, upon receipt by the Vendor of the purchase price (as stated in the Sale and Purchase Agreement) less the Relevant Amount, the Manager (i) shall discharge KBS REIT Properties Ill LLC from, and have no further claim against, KBS REIT Properties Ill LLC in respect of the payment of the subscription amounts due from KBS REIT Properties Ill LLC for the subscription of the units in Prime US REIT under the Subscription Agreement; and (ii) acknowledges and agrees that the payment of the subscription amounts due from KBS REIT Properties Ill LLC for the subscription of the units in Prime US REIT under the placement tranche shall be fully satisfied.
3.
This letter is governed by, and shall be construed in accordance with, the laws of Singapore, and each party to this letter irrevocably submits to the non-exclusive jurisdiction of the courts of Singapore.
4.
This letter may be executed in any number of counterparts, each of which, when executed and delivered (whether in original or fax copy), will be an original, but all the counterparts together will constitute one and the same document.
5.
This letter may only be amended or supplemented in writing signed by or on behalf of each of the parties hereto.
6.
The provisions of Clause 3.12 of the Set-Off Agreement shall apply, mutatis mutandis, as if expressly incorporated herein.




EXHIBIT A
List of Seller Parties and Buyer Parties
 
SELLER PARTY ("VENDOR")
BUYER PARTY ("PURCHASER")
1.
Village Center Station II Owner, LLC, a
Delaware limited liability company
Prime US-Village Center Station II, LLC,
a Delaware limited liability company
2.
KBSIII Tower at Lake Carolyn, LLC, a
Delaware limited liability company
Prime US-Tower At Lake Carolyn, LLC,
a Delaware limited liability company
3.
KBSIII One Washingtonian, LLC, a
Delaware limited liability company
Prime US-One Washingtonian, LLC, a
Delaware limited liability company
4.
KBSIII 222 Main, LLC, a Delaware
limited liability company
Prime US-222 Main, LLC, a Delaware
limited liability company
5.
KBSIII 171 17th Street, LLC, a Delaware
limited liability company
Prime US-17117th Street, LLC, a
Delaware limited liability company
6.
KBSIII Reston Square, LLC, a
Delaware limited liability company
Prime US-Reston Square, LLC, a
Delaware limited liability company
7.
KBSIII 101 South Hanley, LLC, a
Delaware limited liability company
Prime US-101 South Hanley, LLC, a
Delaware limited liability company
8.
KBSIII Village Center Station, LLC, a
Delaware limited liability company
Prime US-Village Center Station, LLC, a
Delaware limited liability company
9.
Promenade One
KBSIII Promenade One, LLC, a
Delaware limited liability company

Promenade Two
KBSIII Promenade Two, LLC, a
Delaware limited liability company
Prime US-Promenade, LLC, a Delaware
limited liability company
10.
KBSIII CrossPoint At Valley Forge Trust,
a Delaware Statutory Trust
Prime US-CrossPoint At Valley Forge,
LLC, a Delaware limited liability company
11.
KBSIII Towers At Emeryville, LLC, a
Delaware limited liability company
Prime US-Tower At Emeryville, LLC, a
Delaware limited liability company





"VENDOR" :
We hereby confirm our agreement to the foregoing.
VILLAGE CENTER STATION II OWNER, LLC,
a Delaware limited liability company
By:
KBSIII VILLAGE CENTER STATION II MEMBER, LLC,
a Delaware limited liability company,
its sole member and manager
By:
KBSIII REIT ACQUISITION XXXII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION VI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION X, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII 222 MAIN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII 171 17TH STREET, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XV, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII RESTON SQUARE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XVIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII 101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XX, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII PROMENDADE ONE, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE ONE MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENADE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII PROMENADE TWO, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE TWO MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENADE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III,
INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII CROSSPOINT AT VALLEY FORGE TRUST,
a Delaware Statutory Trust
By:
KBSIII CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company,
as Administrative Trustee
By:
KBSIII REIT ACQUISITION XXVI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




KBSIII TOWERS AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




"PURCHASER" :
We hereby confirm our agreement to the foregoing.
PRIME US-VILLAGE CENTER STATION II, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-222 MAIN, LLC,
a Delaware limited liability company
By:
PRIME US-ACQUISITION I, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-171 17TH STREET, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-RESTON SQUARE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-PROMENADE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




PRIME US-TOWER AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




The Manager
 
 
 
We hereby confirm our agreement to the foregoing.

 
 
 
SIGNED by Sandip Talukdar
 
 
/s/ Sandip Talukdar
for and on behalf of
 
 
 
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
 
(as manager of Prime US REIT)
 




The Trustee
 
 
 
 
 
We hereby confirm our agreement to the foregoing.

 
 
 
 
 
SIGNED by
 
 
 
/s/ Kwek Yi Lin
/s/ Celine Koh
for and on behalf of
Kwek Yi Lin
Celine Koh
 
Assistant Manager, Corporate Trust
Manager, Corporate Trust
DBS TRUSTEE LIMITED
DBS Trustee Limited
DBS Trustee Limited
(as trustee of Prime US REIT)
 
 




The Investor
We hereby confirm our agreement to the foregoing.
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer




SSUB1
 
 
 
We hereby confirm our agreement to the foregoing.

 
 
 
SIGNED by Sandip Talukdar
 
 
/s/ Sandip Talukdar
for and on behalf of
 
 
 
PRIME US REIT S1 PTE. LTD.
 




Parent US REIT
We hereby confirm our agreement to the foregoing.
PRIME US-SUB REIT, INC.,
a Delaware corporation
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




Upper-Tier U.S. LLC
We hereby confirm our agreement to the foregoing.
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




Middle-Tier U.S. LLC
We hereby confirm our agreement to the foregoing.
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




Prime US Properties, LLC
We hereby confirm our agreement to the foregoing.
PRIME US PROPERTIES, LLC,
a Delaware limited liability company
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




Lower-Tier U.S. LLC
We hereby confirm our agreement to the foregoing.
PRIME US-LOWER TIER, LLC,
a Delaware limited liability company
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President




Prime US-Acquisition I, LLC
We hereby confirm our agreement to the foregoing.
PRIME US-ACQUISITION I, LLC,
a Delaware limited liability company
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
President





Exhibit 10.7
CLIFFORD
CHANCE
 
CLIFFORD CHANCE PTE LTD
 
 
EXECUTION VERSION

KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
as Manager of
PRIME US REIT
KBS ASIA PARTNERS PTE. LTD.
as the Sponsor
KBS REIT PROPERTIES III, LLC
as the Unit Lender
KBS REALTY ADVISORS LLC
as the Guarantor
PBREN INVESTMENTS L.P.
as the Guarantor
DBS BANK LTD.
as the Sole Financial Adviser and Issue Manager, Joint Global Coordinator,
Joint Bookrunner and Underwriter
CHINA INTERNATIONAL CAPITAL CORPORATION (SINGAPORE) PTE. LIMITED
as the Joint Bookrunner and Underwriter
CREDIT SUISSE (SINGAPORE) LIMITED
as the Joint Bookrunner and Underwriter
and
OVERSEA-CHINESE BANKING CORPORATION LIMITED
as the Joint Bookrunner and Underwriter

______________________________________________
PLACEMENT AGREEMENT
relating to
initial public offering of units in PRIME US REIT
______________________________________________



537518-4-8594-v8.0
 
17-40684037

CONTENTS
Clause
Page
1.
Interpretation
4
 
2.
Subscription, Purchase and Stablisation
18
 
3.
Representations and Warranties
25
 
4.
Undertakings by the Manager, the Sponsor and the Unit Lender
60
 
5.
Representations, Warranties and Undertakings by the Joint Bookrunners and
Underwriters
68
 
6.
Commissions, Costs and Expenses
69
 
7.
Closing and Conditions
74
 
8.
Termination
84
 
9.
Indemnification and Contribution
86
 
10.
General
92
 
11.
Notices
95
 
12.
Law and Jurisdiction
98
 
13.
Counterparts
99
 
14.
Guarantee
99
 
15.
Amendments and Variations
102
 
Schedule 1 The Joint Bookrunners and Underwriters
103
 
Schedule 2 Lock-Up Letters
104
 
Schedule 3 Form of Manager Certificate
121
 
Schedule 4 Form of Sponsor Certificate
123
 
Schedule 5 Form of Unit Lender Certificate
125
 
Schedule 6 Form of Stabilising Manager Appointment Letter
127
 
Schedule 7 Notice of Exercise of Over-allotment Option
128
 
Schedule 8 Form of Title Insurance Policies
130
 
Schedule 9 Form of Confirmation on Marketing Materials
131
 


537518-4-8594-v8.0
 
17-40684037

THIS AGREEMENT is made on 15 July 2019
BETWEEN :
(1)
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD. (Company Registration Number: 201825461R), a company incorporated under the laws of Singapore, whose principal place of business is situated at 1 Raffles Place, #40-01 One Raffles Place, Singapore 048616, in its capacity as manager of Prime US REIT (the " Manager ");
(2)
KBS ASIA PARTNERS PTE. LTD. (Company Registration Number: 201813452D), a company incorporated under the laws of Singapore, whose registered office is at 9 Raffles Place, #26-01 Republic Plaza, Singapore 048619 (the " Sponsor ");
(3)
KBS REALTY ADVISORS LLC , a limited liability company organised under the laws of the State of Delaware, whose registered office is at Registered Agent Solutions, Inc., 9 E Loockerman Street, Suite 311 Dover, DE, Kent County 19901, USA (" KBS RA " or the " US Asset Manager ");
(4)
PBREN INVESTMENTS, L.P. , a limited partnership organised under the laws of the State of Delaware, whose registered office is at Registered Agent Solutions, Inc., 9 E Loockerman Street, Suite 311 Dover, DE, Kent County 19901, USA;
(5)
SCHREIBER REAL ESTATE INVESTMENTS L.P. , a limited partnership organised under the laws of the State of Delaware, whose registered office is at Registered Agent Solutions, Inc., 9 E Loockerman Street, Suite 311 Dover, DE, Kent County 19901, USA (together with KBS RA and PBren Investments, L.P., the " Guarantors ", and each a " Guarantor ");
(6)
KBS REIT PROPERTIES III, LLC , a limited liability company organised under the laws of the State of Delaware, whose registered office is at Registered Agent Solutions, Inc., 9 E Loockerman Street, Suite 311 Dover, DE, Kent County 19901, USA (the " Unit Lender ");
(7)
DBS BANK LTD. (Company Registration Number: 196800306E), a company incorporated under the laws of Singapore, whose registered office is at 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982 (" DBS ");
(8)
MERRILL LYNCH (SINGAPORE) PTE. LTD. (Company Registration Number: 198602883D), a company incorporated under the laws of Singapore, whose registered office is at 50 Collyer Quay #14-01, OUE Bayfront, Singapore 049321 (" BAML ", and together with DBS, the " Joint Global Coordinators ");
(9)
CHINA INTERNATIONAL CAPITAL CORPORATION (SINGAPORE) PTE. LIMITED (Company Registration Number: 200814424W), a company incorporated under the laws of Singapore, whose registered office is at 6 Battery Road #33-01, Singapore 049909 (" CICC ");
(10)
CREDIT SUISSE (SINGAPORE) LIMITED (Company Registration Number: 197702363D), a company incorporated under the laws of Singapore, whose registered office is at One Raffles Link #03/#04-01, South Lobby Singapore 039393 (" CS ");

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(11)
MAYBANK KIM ENG SECURITIES PTE. LTD. (Company Registration Number: 197201256N), a company incorporated under the laws of Singapore, whose registered office is at 50 North Canal Road #03-01, Singapore 059304 (" Maybank "); and
(12)
OVERSEA-CHINESE BANKING CORPORATION LIMITED (Company Registration Number: 193200032W), a company incorporated under the laws of Singapore, whose registered office is at 63 Chulia Street #10-00, Singapore 049514 (" OCBC ").
(the Joint Global Coordinators, together with CICC, CS, Maybank and OCBC, collectively the " Joint Bookrunners and Underwriters ").
WHEREAS :
(A)
The Manager is the manager of Prime US REIT, a trust constituted pursuant to a trust deed dated 7 September 2018, as amended (the " Trust Deed "), made between the Manager and DBS Trustee Limited, as trustee of Prime US REIT (the " Trustee "), and authorised as a collective investment scheme under Section 286 of the Securities and Futures Act, Chapter 289 of Singapore (the " SFA ").
(B)
The Manager has the exclusive right to effect, for the account of Prime US REIT, the issue of Units (as defined below) and the Manager proposes to effect, for the account of Prime US REIT, the issue to the Joint Bookrunners and Underwriters or such parties as they may direct, of 335,203,200 Units. The Manager proposes to undertake the Offering (as defined below) in respect of the offering of Units as follows:
(i)
an international placement of 294,294,200 Units to investors, including institutional and other investors in Singapore (the " Placement Tranche "); and
(ii)
an offering of 40,909,000 Units to the public in Singapore (the " Public Offer ").
(C)
In connection with the Offering, the Joint Bookrunners have been granted an over-allotment option (the " Over-Allotment Option ") by the Unit Lender, exercisable by Merrill Lynch (Singapore) Pte. Ltd. (the " Stabilising Manager ") (or any of its Affiliates (as defined below) or any persons acting on behalf of the Stabilising Manager) in consultation with the Joint Global Coordinators, in full or in part, on one or more occasions, to acquire from the Unit Lender, up to an aggregate of 22,727,000 Units at the Offering Price, representing not more than 6.8% of the total number of Units in the Offering solely to cover the over-allotment of Units (if any) made in connection with the Offering. The Over-Allotment Option is exercisable from the Listing Date but no later than the earliest of: (i) the date falling 30 days from the Listing Date and (ii) the date when the Stabilising Manager (or any persons acting on behalf of the Stabilising Manager) has bought, on the SGX-ST, an aggregate of 22,727,000 Units (representing not more than 6.8% of the total number of Units in the Offering) to undertake stabilising actions, to acquire from the Unit Lender up to an aggregate of 22,727,000 Units (representing not more than 6.8% of the total number of Units in the Offering), at the Offering Price.
(D)
In connection with the Over-Allotment Option, the Stabilising Manager and the Unit Lender have entered into a unit lending agreement dated 15 July 2019 (the " Unit Lending Agreement ") pursuant to which the Stabilising Manager (or any of its

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Affiliates) may borrow from the Unit Lender an aggregate of 22,727,000 Units (the " Over-Allotment Units ") for the purpose of facilitating settlement of the over-allotment of Units (if any) in connection with the Offering.
(E)
Concurrently with, but separate from the Offering, each of the Cornerstone Investors (as defined herein) has entered into a separate subscription agreement (collectively, the " Cornerstone Subscription Agreements ") to subscribe for an aggregate of 360,251,800 Units (the " Cornerstone Units ") at the Offering Price, conditional upon the Singapore Offer Agreement and the Placement Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Listing Date.
(F)
Concurrently with, but separate from the Offering, KBS REIT Properties III, LLC, (" KBS REIT Properties III ") which is an indirect wholly-owned subsidiary of KBS Real Estate Investment Trust III, Inc., has entered into a subscription agreement dated 27 June 2019, which was amended and supplemented by a side letter dated 15 July 2019 (the " KBS Subscription Agreement ") to subscribe for an aggregate of 228,408,999 Units (the " KBS Units ") at the Offering Price, conditional upon the Singapore Offer Agreement and the Placement Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Listing Date.
(G)
The Units will be offered and sold without being registered under the Securities Act (as defined below), in reliance upon an exemption from the registration requirements of the Securities Act. Accordingly, the Units will be offered and sold only outside the United States in an offshore transaction in reliance on Regulation S (as defined below) of the Securities Act, provided that the Units offered and sold to KBS REIT Properties III and the US Trusts (including any Units offered and sold to them as part of the Placement Tranche) will be offered and sold pursuant to Section 4(a)(2) of the Securities Act.
(H)
In connection with the offering and sale of Units pursuant to the Public Offer (as defined above) and the Placement Tranche, the Manager has prepared a preliminary prospectus dated 28 June 2019 (as further amended or supplemented at the date hereof, including any and all appendices and exhibits thereto, the " Preliminary Prospectus "), and a final prospectus dated 8 July 2019 (including the Application Forms (as defined below) to be issued therewith, any and all appendices and exhibits thereto, the " Prospectus "). The Preliminary Prospectus has been lodged with the MAS (as defined herein) on 28 June 2019, and the Prospectus was registered by the MAS on 8 July 2019.
(I)
A conditional letter of eligibility has been issued by Singapore Exchange Securities Trading Limited (the " SGX-ST ") on 11 February 2019, the validity of which was extended by a letter from the SGX-ST dated 7 May 2019 (the " ETL Letter ") for the listing and quotation of the Units on the Main Board of the SGX-ST and the admission of the Units to the Official List of the SGX-ST (the " Listing ") and the Units to be issued to the Manager in full or part payment of the Manager's fees.
(J)
The Manager wishes to appoint DBS Bank Ltd. as receiving bank in connection with the Offering on the terms and conditions set out in this Agreement.
(K)
In consideration of the entry by the Joint Bookrunners and Underwriters into this Agreement, the sufficiency of which is acknowledged, each of the Guarantors agrees to irrevocably and unconditionally guarantee to each of the Joint Bookrunners and

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Underwriters as principal obliger, the due and punctual performance and observance by the Sponsor of all of its obligations under this Agreement.
IT IS AGREED as follows:
1.
INTERPRETATION
1.1
Definitions
In this Agreement (including the Recitals and Schedules), unless the context otherwise requires, the following terms shall have the following respective meanings:
" 101 South Hanley " means the properties and improvements located at 101 South Hanley, St. Louis, Missouri, as further described in the Preliminary Prospectus and Prospectus.
" 171 17 th Street " means the properties and improvements located at 171 17 th Street, Atlanta, Georgia, as further described in the Preliminary Prospectus and Prospectus.
" 222 Main " means the properties and improvements located at 222 South Main Street, Salt Lake City, Utah, as further described in the Preliminary Prospectus and Prospectus.
" Acquisitions " means the acquisitions of the Properties by the Property-Tier US LLCs from the Vendors pursuant to the Portfolio Purchase and Sale Agreement.
" Adviser " means any accountant, valuer, property consultant, market consultant, market research consultant, legal adviser, tax advisers or other professional adviser acting in connection with Prime US REIT, the Properties, or the Offering.
" Affiliate " has the meaning specified in Rule 501(b) of Regulation D under the Securities Act.
" AIFMD " means the Alternative Investment Fund Managers Directive 2011/61/EU of the European Union;
" Application " means application for Offering Units pursuant to the Offering.
" Application Forms " means the printed application forms to be used for the purpose of the Offering and which form part of the Prospectus.
" BAML " means Merrill Lynch (Singapore) Pte. Ltd.
" Business Day " means any day other than a Saturday, a Sunday or a legal or gazetted holiday or a day on which the SGX-ST is, or banking institutions or trust companies are, authorised or obligated by law to close in Singapore.
" CDP " means The Central Depository (Pte) Limited.
" CICC " means China International Capital Corporation (Singapore) Pte. Limited.
" CIS Regulations " means the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005.

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" Claims " has the meaning given in Clause 9.1.
" Closing Date " shall mean the First Closing Date and/or any Option Closing Date.
" CMS Licence " means the capital markets services licence for real estate investment trust management dated 4 July 2019, issued by the MAS to the Manager.
" Code " means the Code on Collective Investment Schemes issued by the MAS, as amended from time to time.
" Commission " means the United States Securities and Exchange Commission.
" Companies Act " means the Companies Act, Chapter 50 of Singapore, and includes any subsidiary legislation promulgated with respect thereto.
" Completion Date " means the date on which the Acquisitions are completed, which is expected to be on the Listing Date (or such other date as may be agreed by the parties).
" Cornerstone Investors " means AT Investments Limited, KCIH, Times Properties Private Limited, the US Trusts, Credit Suisse AG, Singapore Branch and Credit Suisse AG, Hong Kong Branch (on behalf of certain of their private banking clients), DBS Bank Ltd. (on behalf of certain wealth management clients), DBS Bank Ltd. and Hiap Hoe Investment Pte. Ltd..
" Cornerstone Subscription Agreements " has the meaning given in Recital (E).
" Cornerstone Units " has the meaning given in Recital (E).
" CrossPoint " means the properties and improvements located at 550 E Swedesford Road in Philadelphia, Pennsylvania, as further described in the Preliminary Prospectus and Prospectus.
" CS " means Credit Suisse (Singapore) Limited.
" Date of Registration " means the date of registration of the Prospectus by the MAS.
" DBS " means DBS Bank Ltd.
" Depository " has the meaning given in Section 81SF of the SFA.
" Depository Register " has the meaning given in Section 81SF of the SFA.
" Depository Services Terms and Conditions " means the CDP's depository services terms and conditions in relation to the deposit of the Units in CDP.
" Document " means any indenture, contract, lease mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation condition, covenant or instrument.
" Encumbrances " means any and all claims, charges, mortgages, liens, encumbrances, restrictions, covenants, restrictive covenants, liabilities (including contingent liabilities), assignments of receivables, debentures, pledges, options (of any kind or nature),

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equities, powers of sale, hypothecations, voting trusts, agreements concerning or relating to voting, proxies, retention of title, transfer restrictions, right to acquire, right of pre-emption, right of first refusal, right of first offer, drag-along rights, tag-along rights, or other third party right or security interest of any kind or an agreement, understanding, arrangement or obligation to create any of the foregoing.
" Environment " means:
(a)
land, including, without limitation, surface land, sub-surface strata, sea bed and river bed under water (as defined in paragraph (b)) and natural and man-made structures;
(b)
water, including, without limitation, coastal and inland waters, surface waters, ground waters and water in drains and sewers; and
(c)
air, including, without limitation, air inside buildings and other natural and man- made structures above or below ground.
" Environmental Law " means applicable law (whether civil, criminal or administrative), common law, statute, subordinate legislation, treaty, regulation, directive, decision, by­ law, circular, code, order, notice, demand, decree, injunction, resolution, judgment or resolution of a government, quasi-government, supranational, federal, state or local government, statutory, administrative or regulatory body, court, agency or association in any part of the world with regard to the pollution or protection of the Environment, harm to or the protection of the health of humans, animals or plants including, without limitation, laws relating to:
(a)
public and worker's health and safety;
(b)
noise, vibration or radiation;
(c)
the release or discharge of industrial, radioactive, dangerous, toxic or hazardous substances, waste (whether in solid, semi-solid or liquid form or in the form of a gas or vapour) and genetically modified organisms into the Environment; or
(d)
the generation, manufacture, processing, use, treatment, storage, distribution, disposal, transport or handling of any of the substances, waste and organisms referred to in paragraph (c).
" Exchange Act " means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
" Execution Time " means the date and time that this Agreement is executed and delivered by the last party executing and delivering this Agreement.
" Experts " means Allen & Gledhill LLP, as the independent Singapore tax adviser, DLA Piper LLP (US), as independent U.S. tax adviser, Cushman & Wakefield of Illinois, Inc. and JLL Valuation & Advisory Services, LLC, as the independent valuers of the Properties, and Cushman & Wakefield of Illinois, Inc., as the independent market research consultant.

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" Facilities " means the debt facilities which Prime US REIT will have in place as at the Listing Date amounting to an aggregate of US$485.0 million as described in the Prospectus.
" First Closing Date " shall mean, subject to Clause 7.1.2, 19 July 2019.
" Forward-Looking Statement " includes:
(a)
a statement containing a projection of revenues, income (including income loss), earnings (including earnings loss) per unit, capital expenditures, distributions, capital structure, or other financial items, in each case, of Prime US REIT, the Trust Group Entities or the Properties;
(b)
a statement of the plans and objectives of management for future operations, including plans or objectives relating to the business of Prime US REIT, the Trust Group Entities or the Properties;
(c)
a statement of future economic performance of Prime US REIT, the Trust Group Entities or the Properties, including any such statement contained in a discussion and analysis of financial condition by the management or in the results of operations; or
(d)
any statement of the assumptions underlying or relating to any statement described in paragraphs (a), (b) or (c).
" Guarantors " means KBS RA, PBren Investments, L.P. and Schreiber Real Estate Investments L.P. and " Guarantor " shall mean any one of them.
" GST " means the goods and services tax levied under the Goods and Services Tax Act, Chapter 117A of Singapore.
" Indemnified Person " shall have the meaning specified in 9.1.
" Initial Unit " means the one Unit held by the Manager as at the date of this Agreement.
" IRAS " means Inland Revenue Authority of Singapore.
" IRS " means Internal Revenue Service of the U.S.
" Joint Bookrunners and Underwriters " means DBS, BAML, CICC, CS, Maybank and OCBC and " Joint Bookrunner and Underwriter " means any one of them.
" KBS Group " means KAP, KBS REIT Properties III, KBS Real Estate Investment Trust III, Inc., KBS RA and each of their subsidiaries, including funds and real estate investment trusts managed by them.
" KBS LP III " means KBS Limited Partnership III.
" KBS Management Agreement " means the outsourcing agreement to be entered into prior to the Listing Date between the Manager, the Manager US Sub, the US Asset Manager, the Parent US REIT, and the Property Tier U.S. LLCs.

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" KBS RA " means KBS Realty Advisors, LLC.
" KBS REIT HOLDINGS III " means KBS REIT Holdings III LLC.
" KBS REIT III " means KBS Real Estate Investment Trust III, Inc.
" KBS REIT PROPERTIES III " means KBS REIT Properties III, LLC, an indirect wholly-owned subsidiary of KBS REIT III.
" KBS Subscription Agreement " has the meaning given in Recital (F).
" KBS Units " has the meaning given in Recital (F).
" KCIH " means Keppel Capital Investment Holdings Pte. Ltd..
" KCIH Cornerstone Subscription Agreement " means the subscription agreement entered into by KCIH to subscribe for the KCIH Units at the Offering Price, conditional upon this Agreement and the Placement Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Listing Date.
" KCIH Units " means an aggregate of 62,500,000 Units which KCIH has agreed to subscribe for at the Offering Price, conditional upon this Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Listing Date.
" Leasing Agents " means the leasing agents of each Property appointed pursuant to the respective Leasing Services Agreement.
" Leasing Services Agreements " means the following leasing services agreements:
(a)
in relation to Tower I at Emeryville, a leasing services agreement will be entered into between Cushman & Wakefield of California, Inc., a California corporation, and Prime US-Tower at Emeryville, LLC, a Delaware limited liability company;
(b)
in relation to 222 Main, a leasing services agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-222 Main, LLC, a Delaware limited liability company;
(c)
in relation to Village Center Station I, a leasing services agreement for retail transactions will be entered into between David, Hicks & Lampert Brokerage, LLC, a Colorado limited liability company, and Prime US-Village Center Station, LLC, a Delaware limited liability company;
(d)
in relation to Village Center Station I, a leasing services agreement for office transactions will be entered into between Cushman & Wakefield of Colorado, Inc., a Colorado corporation, and Prime US-Village Center Station, LLC, a Delaware limited liability company;
(e)
in relation to Village Center Station II, there is no leasing services agreement;

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(f)
in relation to 101 South Hanley, a leasing services agreement will be entered into between CBRE, Inc., a Delaware corporation and Prime US-101 South Hanley, LLC, a Delaware limited liability company;
(g)
in relation to Tower 909, a leasing services agreement will be entered into between TSC Central Region, GP, LLC, a Delaware limited liability company, dba Transwestern, and Prime US-Tower at Lake Carolyn, LLC, a Delaware limited liability company;
(h)
in relation to Promenade I, a leasing services agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-Promenade, LLC, a Delaware limited liability company;
(i)
in relation to Promenade II, a leasing services agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-Promenade, LLC, a Delaware limited liability company;
(j)
in relation to CrossPoint, a leasing services agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-CrossPoint at Valley Forge, LLC, a Delaware limited liability company;
(k)
in relation to One Washingtonian Center, a leasing services agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-One Washingtonian, LLC, a Delaware limited liability company;
(l)
in relation to Reston Square, a leasing services agreement will be entered into between Avison Young – Washington, D.C. LLC, a Maryland limited liability company, and Prime US-Reston Square, LLC, a Delaware limited liability company; and
(m)
in relation to 171 17th Street, a leasing services agreement will be entered into between Cushman & Wakefield U.S., Inc., a Missouri corporation, and Prime US-171 17 th Street, LLC, a Delaware limited liability company.
" Listing " has the meaning given in Recital (I).
" Listing Date " means the date on which the Units are first admitted to the Official List of the SGX-ST.
" Listing Rules " means the listing rules of the SGX-ST for the time being in force.
" Lock-Up Letters " means the undertakings from each of KBS REIT III, KBS REIT Holdings III, KBS LP III and KBS REIT Properties III and the Manager substantially in the form set forth in Schedule 2.
" Lower-Tier US LLC " means Prime US-Lower Tier LLC.
" Losses " has the meaning given in Clause 9.1.
" Manager " means KBS US Prime Property Management Pte. Ltd., in its capacity as manager of Prime US REIT.
" Manager US Sub " means KBS US Prime Property Management Sub, LLC, which has elected to be taxable as a corporation for U.S. federal income purposes.

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" Marketing Materials " means:
(a)
the roadshow presentation materials (including without limitation, slides, scripts and corporate videos) for any roadshow or other investor presentations, whether in relation to the Offering or otherwise and approved by the Manager;
(b)
the script for any call centres established in connection with the offering and sale of Offering Units pursuant to the Public Offer and the Placement Tranche (if any);
(c)
the advertising and publicity materials in relation to the offering and sale of Offering Units pursuant to the Public Offer and the Placement Tranche, such as signboards, posters, press, brochures, radio or television materials;
(d)
the contents of any website set up by the Manager relating to the offering and sale of Offering Units pursuant to the Public Offer and the Placement Tranche (if any);
(e)
any press release relating to the Offering;
(f)
the product highlights sheets accompanying each of the Preliminary Prospectus and Prospectus;
(g)
all alterations or amendments, in the case of materials referred to in paragraphs (a) to (f) above, as approved by the Manager on or before the date hereof; and
(h)
any other marketing materials (including any alterations or amendments to any of the materials referred to in paragraphs (a) to (g) above) as may be, approved by the Manager after the date hereof, distributed or communicated by or on behalf of the Manager to third parties in relation to the offering and sale of Offering Units pursuant to the Public Offer and the Placement Tranche, and which for the avoidance of doubt does not include pre-deal research reports produced by the Joint Bookrunners and Underwriters.
" MAS " means the Monetary Authority of Singapore.
" MAS Waiver " means the waiver granted by the MAS as set out in the letter dated 18 October 2018 issued by the MAS.
" Material Adverse Effect " means a material adverse effect on the financial condition, prospects, earnings, business, results of operations, assets or undertakings of Prime US REIT, its subsidiaries or on the Properties, in each case taken as a whole whether or not arising in the ordinary course of business.
" Maybank " means Maybank Kim Eng Securities Pte. Ltd.
" Mid-Tier US LLC " means Prime US-Middle Tier, LLC.
" OCBC " means Oversea-Chinese Banking Corporation Limited.

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" Offering " means the offering of 335,203,200 Units by the Manager for subscription at the Offering Price under the Placement Tranche and the Public Offer, subject to the Over­ Allotment Option.
" Offering Price " means US$0.88 being the price for each Unit.
" Offering Proceeds " means the proceeds of the subscription for Units offered under the Placement Tranche and the Public Offer.
" Offering Units " mean the 335,203,200 Units to be offered under the Offering, comprising (a) 294,294,200 Units to be offered under the Placement Tranche and (b) 40,909,000 Units to be offered under the Public Offer, subject to the Over-Allotment Option.
" Officers' Certificate " means any certificate delivered pursuant to Clauses 7.3.1(g), 7.3.1(h), 7.4.1(d), 7.4.1(e) and 7.4.1(f) in the form of Schedule 3, Schedule 4 and Schedule 5 as applicable.
" Option Closing Date " means, in relation to any exercise of the Over-Allotment Option (whether on the first occasion or otherwise on which the Over-Allotment Option is exercised), the Closing Date designated in the notice of exercise of such option where such Closing Date is not the First Closing Date.
" One Washingtonian Center " means the properties and improvements located at 9801 Washingtonian Boulevard in Washington D.C., Maryland, as further described in the Preliminary Prospectus and Prospectus.
" Over-Allotment Option " means the option granted by the Unit Lender to the Joint Bookrunners and Underwriters as set out in Recital (C), exercisable by the Stabilising Manager pursuant to 2.3.
" Over-Allotment Units " means the aggregate of 22,727,000 Units which are the subject of the Over-Allotment Option.
" Parent US REIT " means Prime US-Sub REIT, Inc., an indirect subsidiary of Prime US REIT.
" Placement Tranche " has the meaning given to it in Recital (B).
" Placement Units " means 294,294,200 Offering Units to be issued by the Manager under the international placement of Units to investors outside the United States, including institutional and other investors in Singapore, pursuant to the Offering, and the Over-Allotment Units, and provided that any Placement Units offered or sold to KBS REIT Properties III and the US Trusts will be offered and sold pursuant to Section 4(a)(2) of the Securities Act.
" Portfolio Purchase and Sale Agreement " means the portfolio purchase and sale agreement dated 27 June 2019 executed by the Property-Tier US LLCs as purchasers, and the Vendors, in relation to the sale and purchase of the Properties.
" Preliminary Prospectus " has the meaning given to it in Recital (H).

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" Prime US REIT " means Prime US REIT, a trust constituted on 7 September 2018. Prime US REIT does not have a separate legal personality and, accordingly, in this Agreement, references to Prime US REIT shall include the Manager, in its capacity as manager of Prime US REIT, and the Trustee, in its capacity as trustee of Prime US REIT, as appropriate.
" Proforma Title Insurance Policies " means the proforma title insurance policies set out in Schedule 8.
" Projections " has the meaning given in Clause 3.1.32.
" Promenade I & II " means the properties and improvements located at 17802 and 17806 1H-10 W, San Antonio, Texas, as further described in the Preliminary Prospectus and Prospectus.
" Properties " means the following: (i) Tower I at Emeryville, (ii) 222 Main, (iii) Village Center Station I, (iv) Village Center Station II, (v) 101 South Hanley, (vi) Tower 909, (vii) Promenade I, and II, (viii) CrossPoint, (ix) One Washingtonian Center, (x) Reston Square, and (xi) 171 17 th Street, and each a " Property ".
" Property Funds Appendix " means the guidelines for real estate investment trusts issued by the MAS as Appendix 6 to the CIS Code.
" Property Management Agreements " means the following Property Management Agreements:
(a)
in relation to Tower I at Emeryville, a property management agreement will be entered into between Cushman & Wakefield U.S., Inc., a Missouri corporation, and Prime US-Tower at Emeryville, LLC, a Delaware limited liability company;
(b)
in relation to 222 Main, a property management agreement will be entered into between HP Utah Management LLC, a Delaware limited liability company, and Prime US-222 Main, LLC, a Delaware limited liability company;
(c)
in relation to Village Center Station I, a property management agreement will be entered into between Jones Lang LaSalle Americas, Inc., a Maryland corporation, and Prime US-Village Center Station, LLC, a Delaware limited liability company;
(d)
in relation to Village Center Station II, a property management agreement will be entered into between Shea Properties Management Company, Inc., a Delaware corporation, and Prime US-Village Center Station II, LLC, a Delaware limited liability company;
(e)
in relation to 101 South Hanley, a property management agreement will be entered into between CBRE, Inc., a Delaware corporation and Prime US-101 South Hanley, LLC, a Delaware limited liability company;
(f)
in relation to Tower 909, a property management agreement will be entered into between

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Transwestern Commercial Services Central Region, L.P., dba Transwestern, and Prime US-Tower at Lake Carolyn, LLC, a Delaware limited liability company;
(g)
in relation to Promenade I, a property management agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-Promenade, LLC, a Delaware limited liability company;
(h)
in relation to Promenade II, a property management agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-Promenade, LLC, a Delaware limited liability company;
(i)
in relation to CrossPoint, a property management agreement will be entered into between CBRE, Inc., a Delaware corporation, and Prime US-CrossPoint at Valley Forge, LLC, a Delaware limited liability company;
(j)
in relation to One Washingtonian Center, a property management agreement will be entered into between Transwestern Carey Winston, L.L.C., a Delaware limited liability company, dba Transwestern, and Prime US-One Washingtonian, LLC, a Delaware limited liability company;
(k)
in relation to Reston Square, a property management agreement will be entered into between Transwestern Carey Winston, L.L.C., a Delaware limited liability company, dba Transwestern, and Prime US-Reston Square, LLC, a Delaware limited liability company; and
(l)
in relation to 171 17 th Street, a property management agreement will be entered into between Cushman & Wakefield U.S., Inc., a Missouri corporation, and Prime US-171 17 th Street, LLC, a Delaware limited liability company; and
" Property Managers " means the property managers of each Property, appointed pursuant to the respective Property Management Agreement.
" Property-Tier US LLCs " means Prime US-Tower at Emeryville, LLC, Prime US-222 Main, LLC, Prime US-Village Center Station, LLC, Prime US-Village Center Station II, LLC, Prime US-101 South Hanley, LLC, Prime US-Tower at Lake Carolyn, LLC, Prime US-Promenade, LLC, Prime US-CrossPoint at Valley Forge, LLC, Prime US-One Washingtonian, LLC, Prime US-Reston Square, LLC and Prime US-171 17 th Street, LLC;
" Prospectus " has the meaning given in Recital (H).
" Public Offer " has the meaning given to it in Recital (B).
" Public Offer Units " means the 40,909,000 Offering Units to be issued to the public in Singapore by the Manager pursuant to the Singapore Offer Agreement.
" Receiving Bank " means DBS Bank Ltd..
" Receiving Bank Agreement " means the receiving bank agreement dated 5 July 2019 between the Manager and the Receiving Bank.
" Regulation S " means Regulation S under the Securities Act.

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" Repayment Side Letter " means the side letter dated 15 July 2019 entered into between the Trustee, the Manager and the Joint Bookrunners and Underwriters in relation to the advancement to Prime US REIT of part of the net proceeds to be received by the Manager from the Offering on the First Closing Date for the purpose of capitalising the subsidiaries of Prime US REIT in order for the Property-Tier US LLCs to complete the Acquisitions on the Completion Date.
" Reporting Auditors " means Ernst & Young LLP.
" Reston Square " means the properties and improvements located at 11790 Sunrise Valley Drive in Washington D.C., Virginia, as further described in the Preliminary Prospectus and Prospectus.
" Securities Act " means the United States Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
" SFA " means the Securities and Futures Act, Chapter 289 of Singapore, and includes any subsidiary legislation promulgated with respect thereto.
" SGX-ST " has the meaning given in Recital (I).
" SGX-ST Waiver " means the waivers and rulings granted by SGX-ST in respect of, among others, Listing Rules 404(3)(a), 404(3)(c), 404(5), 407(4), 705(1), 707(1) and 707(2), as set out in the letter dated 21 August 2018 and the ETL Letter issued by SGX-ST.
" Singapore Offer Agreement " means the agreement dated 8 July 2019 entered into among the Manager, the Sponsor, the Guarantors and the Joint Bookrunners and Underwriters in connection with the Public Offer.
" Singapore Sub 1 " means Prime US REIT S1 Pte. Ltd, a wholly-owned subsidiary of Prime US REIT.
" Singapore Sub 2 " means Prime US REIT S2 Pte. Ltd, a wholly-owned subsidiary of Prime US REIT.
" Singapore Subsidiaries " means Singapore Sub 1 and Singapore Sub 2.
" Sponsor " means KAP.
" Stabilisation Agent Appointment Letter " means the letter of appointment by the Manager of the stabilising agent in connection with the Offering, in the form attached hereto as Schedule 6.
" Stabilisation Period " shall have the meaning specified in Clause 2.4. Stabilisation Regulations shall have the meaning specified in Clause 2.4.
" Stabilising Manager " means Merrill Lynch (Singapore) Pte. Ltd..
" Tax Rulings " means the advanced tax rulings set out in IRAS' letter dated 26 February 2019 in relation to the taxation of Prime US REIT and its holders of Units.

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" Title Insurance Exceptions " means the exceptions from coverage set out in the Proforma Title Insurance Policies.
" Title Insurance Company " means Commonwealth Land Title Insurance Company.
" Tower I at Emeryville " means the properties and improvements located at 1900 Powell Street, Emeryville, in San Francisco, California, as further described in the Preliminary Prospectus and Prospectus.
" Tower 909 " means the properties and improvements located at 909 Lake Carolyn Parkway, in Dallas, Texas, as further described in the Preliminary Prospectus and Prospectus.
" Transaction Documents " means this Agreement, the Singapore Offer Agreement, the Cornerstone Subscription Agreements, the Repayment Side Letter, the Lock-Up Letters, the Depository Services Terms and Conditions, the Escrow Agreement, the Keppel Management Agreement, the KBS Management Agreement, the Property Management Agreements, the Leasing Services Agreement, the Portfolio Sale and Purchase Agreement, the Receiving Bank Agreement, the KBS Subscription Agreement, the Trust Deed and the Unit Lending Agreement.
" Trust Deed " has the meaning given in Recital (A).
" Trustee " means DBS Trustee Limited, as trustee of Prime US REIT.
" Trust Group Entities " means Singapore Sub 1, Singapore Sub 2, Parent US REIT, Upper-Tier US LLC, Mid-Tier US LLC, Lower-Tier US LLC, Prime US Properties, LLC, Prime US-Acquisition I, LLC and the Property-Tier U.S. LLCs.
" US REIT " means an entity qualified as a real estate investment trust for U.S. federal income tax purposes.
" U.S. " means the United States of America.
" US Asset Manager " means KBS RA.
" US Trusts " means Linda Bren 2017 Trust and The Schreiber Trust.
" US Trusts Cornerstone Subscription Agreement " means the subscription agreement entered into by Linda Bren 2017 Trust, as amended and supplemented by a side letter dated 15 July 2019 and subscription agreement entered into by The Schreiber Trust, to subscribe for the US Trusts Units at the Offering Price, conditional upon this Agreement and the Placement Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Listing Date.
" US Trusts Units " means the Units which each of the US Trusts has agreed to subscribe for at the Offering Price pursuant to the US Trusts Cornerstone Subscription Agreement, conditional upon this Agreement and the Placement Agreement having been entered into, and not having been terminated, pursuant to its terms on or prior to the Listing Date.

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" Underwritten Units " means the Offering Units and the Cornerstone Units (excluding the KCIH Units and the US Trusts Units).
" Unit " means an undivided interest in Prime US REIT as provided for in the Trust Deed.
" Unit Lender " means KBS REIT Properties III.
" Unit Lender Information " means all information in the Preliminary Prospectus and the Prospectus relating to (i) KBS REIT Properties III, (ii) the Over-Allotment Option as it relates to KBS REIT Properties III, and (iii) the Unit Lending Agreement as it relates to KBS REIT Properties III.
" Unit Lending Agreement " has the meaning given in Recital (D).
" Upper Tier US LLC " means Prime US-Upper Tier LLC, which is wholly­ owned by the Parent US REIT.
" US Tax Code " means the US Internal Revenue Code of 1986, as amended.
" Vendors " means the following entities:
(a)
Village Center Station II Owner, LLC;
(b)
KBSIII Tower at Lake Carolyn, LLC;
(c)
KBSIII One Washingtonian, LLC;
(d)
KBSIII 222 Main, LLC;
(e)
KBSIII 171 17 th Street, LLC;
(f)
KBSIII Reston Square, LLC;
(g)
KBSIII 101 South Hanley, LLC;
(h)
KBSIII Village Center Station, LLC;
(i)
KBSIII Promenade One, LLC;
(j)
KBSIII Promenade Two, LLC;
(k)
KBSIII CrossPoint At Valley Forge Trust, LLC; and
(l)
KBSIII Towers at Emeryville, LLC.
" Verification Notes " means the verification notes of the verification meetings of the Manager held on 16 May 2019.
" Village Center Station I " means the properties and improvements located at 6380 South Fiddlers' Green Circle, in Denver, Colorado, as further described in the Preliminary Prospectus and Prospectus.

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" Village Center Station II " means the properties and improvements located at 6360 South Fiddlers' Green Circle, in Denver, Colorado, as further described in the Preliminary Prospectus and Prospectus.
1.2
Interpretation
In this Agreement, references to:
1.1.1
A " person " refers to any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;
1.1.2
" S$ " and " Singapore dollars " denote the lawful currency for the time being of Singapore;
1.1.3
" US$ " and " United States dollars " denote the lawful currency for the time being of the United States; and
1.1.4
times of day and dates are to Singapore times and dates unless otherwise stated.
1.3
Modification etc. of Statutes
References to a statute or statutory provision include:
1.1.5
that statute or provision as from time to time modified, re-enacted or consolidated whether before or after the date of this Agreement;
1.1.6
any past statute or statutory provision (as from time to time modified, re-enacted or consolidated) which that statute or provision has directly or indirectly replaced; and
1.1.7
any subordinate legislation made from time to time under that statute or statutory provision.
1.4
Clauses, recitals and schedules
Any reference in this Agreement to a Clause, a subclause, a Recital or a Schedule is, unless otherwise stated, a reference to a clause or subclause hereof or a recital or schedule hereto.
1.5
Singular, plural, gender
References to one gender include all genders and references to the singular include the plural and vice versa.
1.6
Rounding
Amounts being determined in proportion to other amounts will be subject to rounding to the nearest unit or cent either upwards or downwards, as determined by the Joint Bookrunners and Underwriters finally and conclusively, to avoid fractional units or cents.

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1.7
Headings
Headings and sub-headings are for ease of reference only and shall not affect the construction of this Agreement.
1.8
Legislation
Any reference in this Agreement to any legislation (whether primary legislation or regulations or other subsidiary legislation made pursuant to primary legislation) shall be construed as a reference to such legislation as the same may have been, or may from time to time be, amended or re-enacted.
1.9
Several liabilities and rights
Any provision of this Agreement which is expressed to bind more than one Joint Bookrunner and Underwriter shall, save where expressly stated to be otherwise, bind each of them severally (and not jointly or jointly and severally). For the avoidance of doubt, each Joint Bookrunner and Underwriter will be responsible under this Agreement on a several (and not joint or joint and several) basis only for its own actions and omissions and will not be responsible in any manner for any actions or omissions of the other Joint Bookrunners and Underwriters. Any provision of this Agreement which is expressed in favour of more than one Joint Bookrunner and Underwriter shall, save where expressly stated to be otherwise, be exercisable by each of them severally and shall not be required to be exercised by them jointly or jointly and severally. For the avoidance of doubt, where the right of one Joint Bookrunner and Underwriter under this Agreement is unavailable to such Joint Bookrunner and Underwriter due to the wilful default, fraud or gross negligence of that Joint Bookrunner and Underwriter, then the corresponding rights of the other Joint Bookrunners and Underwriters will not be affected.
1.10
Capacity of the Manager
The Manager hereby confirms and undertakes that it has, and the parties hereto agree that the Manager has, entered into this Agreement solely in its capacity as the manager of Prime US REIT, and that it has (unless otherwise specified) made the representations, warranties and undertakings, and has assumed the obligations set forth in this Agreement, on behalf of Prime US REIT.
1.11
Agreed Form
Any reference herein to a document being in " agreed form " means that the document in question has been agreed between the proposed parties thereto, subject to any amendments that the parties may agree upon prior to (i) the Date of Registration in respect of Clause 3.1.38 in all other cases, the First Closing Date.
2.
SUBSCRIPTION, PURCHASE AND STABILISATION
2.1
Subscription for Units
Subject to, and otherwise in accordance with, the terms and conditions of this Agreement, each of the Joint Bookrunners and Underwriters agrees, severally (but not jointly or jointly and severally), to use reasonable endeavours, for and on behalf of the

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Manager, to procure subscribers for, and failing which to subscribe at the Offering Price for the total number of Underwritten Units set forth opposite each such Joint Bookrunner and Underwriter's name under "Number of Underwritten Units" in Schedule 1, and the Manager undertakes to procure the issuance of the Units to such subscribers or, as the case may be, to such Joint Bookrunner and Underwriter or to such entities as such Joint Bookrunner and Underwriter may direct.
2.1.1
If a Joint Bookrunner and Underwriter defaults in the performance of its obligations on the First Closing Date to procure subscribers or subscribe for, the Underwritten Units which it has agreed to procure subscribers or subscribe for under this Agreement (such Underwritten Units in respect of which the Joint Bookrunner and Underwriter has defaulted in the performance of its obligations being called the " Defaulted Underwritten Units "), the non-defaulting Joint Bookrunners and Underwriter shall have the right, but not the obligation, within 24 hours thereafter, to make arrangements to subscribe, or to procure subscribers for, all, but not less than all, of the Defaulted Underwritten Units. If, however, the non-defaulting Joint Bookrunners and Underwriters shall not have completed such arrangements within such 24-hour period, then this Agreement shall terminate without liability to the non-defaulting Joint Bookrunners and Underwriters. Nothing herein shall relieve a defaulting Joint Bookrunner and Underwriter from liability for its default. For the avoidance of doubt, the underwriting and selling commissions payable to the non-defaulting Joint Bookrunners and Underwriters which have subscribed for, or have procured to subscribe for the Defaulted Underwritten Units shall be correspondingly increased to include the underwriting and selling commission originally payable to the defaulting Joint Bookrunner and Underwriter for the sale and placement of the Defaulted Units in accordance with the proportion of the Defaulted Underwritten Units subscribed, or subscription of which is procured, by the relevant non-defaulting Joint Bookrunners and Underwriters.
2.1.2
Payment of the Offering Price for, and delivery of, the Underwritten Units shall take place in accordance with Clause 7.
2.1.3
The parties agree that if after the First Closing Date the Units are not listed on the SGX-ST by 2.00 p.m. (Singapore time) on 19 July 2019 for any reason, including by reason of a stop order being issued by the MAS, any of the Joint Bookrunners and Underwriters shall be entitled to require the Manager and the Trustee to return the Offering Proceeds and proceeds of the Cornerstone Units to investors subscribing for Units in the Offering or, as the case may be, the Cornerstone Investors, as soon as practicably possible (for subscriptions made via automated teller machines, within 24 hours) following the Joint Bookrunners and Underwriters becoming aware that the Listing and/or trading in the Units will not proceed, and otherwise in accordance with all applicable laws, rules or directives of any governmental or regulatory agency. The parties further agree that to the extent that upon such failure to list and/or trade the Units on the SGX­ ST, any Units are not deemed to have been cancelled by operation of law, that they will reasonably cooperate, including by taking actions as may be necessary with CDP, to return such Units to the Manager and the Trustee for cancellation.
2.2
Offering Price

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The Offering Price shall be US$0.88 per Unit.
2.3
Over-Allotment Option
2.3.1
Subject to and in accordance with the provisions of this Agreement, the Joint Bookrunners and Underwriters are hereby granted an Over-Allotment Option by the Unit Lender, exercisable by the Stabilising Manager (or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) in consultation with the Joint Bookrunners and Underwriters, in full or in part, on one or more occasions, to acquire from the Unit Lender up to an aggregate of 22,727,000 Units at the Offering Price, representing not more than 6.8% of the total number of Units in the Offering solely to cover the over­ allotment of Units (if any) made in connection with the Offering.
The Over-Allotment Option is exercisable from the Listing Date but no later than the earliest of (i) the date falling 30 days from the Listing Date or (ii) the date when the Stabilising Manager (or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) has bought, on the SGX-ST, an aggregate of 22,727,000 Units (representing not more than 6.8% of the total number of Units in the Offering), to undertake stabilising actions to purchase up to an aggregate of 22,727,000 Units (representing not more than 6.8% of the total number of Units in the Offering), at the Offering Price solely to cover the over-allotment of Units (if any), subject to any applicable laws and regulations.
Such notice of exercise shall be substantially in the form of Schedule 7 of this Agreement, shall state the number of Over-Allotment Units from the Unit Lender in respect of which the Over-Allotment Option is being exercised and shall designate the Option Closing Date for the exercise of the Over-Allotment Option which shall be no earlier than the First Closing Date and no earlier than the date falling three Business Days after the date of such notice.
2.3.2
If a Joint Bookrunner and Underwriter defaults in the performance of its obligations on an Option Closing Date to purchase, or procure purchasers for, the Over-Allotment Units which it has agreed to purchase, or procure purchasers for, under this Agreement (such Over-Allotment Units in respect of which the Joint Bookrunner and Underwriter has defaulted in the performance of its obligations being called the " Defaulted Over-Allotment Units "), the non-defaulting Joint Bookrunners and Underwriters shall have the right, but not the obligation, within 24 hours thereafter, to make arrangements to purchase, or to procure purchasers for, all, but not less than all, of the Defaulted Over-Allotment Units. If, however, the non-defaulting Joint Bookrunners and Underwriters shall not have completed such arrangements within such 24-hour period, then the non-defaulting Joint Bookrunner and Underwriter may terminate their obligations to purchase the Defaulted Over-Allotment Units without liability to the non-defaulting Joint Bookrunners and Underwriters. Nothing herein shall relieve a defaulting Joint Bookrunner and Underwriter from liability for its default.
2.3.3
In the event and to the extent that the Over-Allotment Option is exercised, the Unit Lender agrees to sell to the Stabilising Manager, as agent of the Joint Bookrunners and

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Underwriters, and each of the Joint Bookrunners and Underwriters severally agrees to purchase from the Unit Lender, through the Stabilising Manager, in the proportion set out opposite such Joint Bookrunner and Underwriter's name under "Proportion of Over-Allotment Units" in Schedule 1, subject to and in accordance with the provisions of this Agreement, the Over-Allotment Units, at a price per Over-Allotment Unit equal to the Offering Price.
2.3.4
The Unit Lender shall on each Option Closing Date, deliver such number of Over-Allotment Units equal to the number of Over-Allotment Units specified in the notice of exercise of the Over-Allotment Option against the payment for the Over-Allotment Units in accordance with Clause 7.2 of this Agreement. The obligation of the Stabilising Manager to re-deliver the Over-Allotment Units under the Unit Lending Agreement shall be deemed to have been discharged to the extent of the number of Over-Allotment Units in respect of which the Over-allotment Option has been exercised by the Stabilisation Manager and payment of which has been made to the Unit Lender.
2.3.5
Any notice of exercise may only be given on a Business Day and if given later than 5:00 p.m. on any Business Day shall be deemed to have been given on the immediately following Business Day.
2.4
Price Stabilisation
2.4.1
In connection with the Offering, the Stabilising Manager (or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) may, in consultation with the Joint Bookrunners and Underwriters and at its discretion, to the extent permissible by applicable laws and regulations and in compliance therewith, as principal and not as agent of the Manager, over-allot or effect transactions which stabilise or maintain the market price of the Units at levels that might not otherwise prevail in the open market. However, there is no assurance that the Stabilising Manager (or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) will undertake stabilising action.
2.4.2
Such transactions may commence on or after the date of commencement of trading in the Units on the SGX-ST and, if commenced, may be discontinued at any time and shall not be effected after the earlier of (i) the date falling 30 days from the Listing Date and (ii) the date when the Stabilising Manager (or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) has bought on the SGX-ST an aggregate of 22,727,000 Units (representing not more than 6.8% of the total number of Units in the Offering) to undertake stabilising actions (the " Stabilisation Period "). The Stabilising Manager undertakes that stabilisation will be conducted in compliance with the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006 (the " Stabilisation Regulations "), provided that each of the Manager, the Sponsor and the Unit Lender complies with the undertaking in 4.11.2 below. Each of the Manager, the Sponsor and the Unit Lender undertakes that it will not directly or indirectly, effect or cause to be effected any sell orders during the Stabilisation Period as may be prohibited under the Stabilisation Regulations.
2.4.3
Subject to compliance with the Stabilisation Regulations, the Stabilising Manager may appoint an agent to carry out stabilisation on its behalf. Any loss

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or profit sustained as a consequence of any stabilisation actions undertaken by the Stabilising Manager shall be for the account of the Joint Bookrunners and Underwriters.
2.5
Appointment
Each of the Manager and the Sponsor hereby confirms the appointment, to the exclusion of all others, of DBS as the Sole Financial Adviser and Issue Manager of the Offering, DBS and BAML as the Joint Global Coordinators and DBS, BAML, CICC, CS, Maybank and OCBC as the Joint Bookrunners and Underwriters of the Offering.
Such appointment is made on the basis, and on terms, that each Joint Bookrunner and Underwriter is irrevocably authorised to delegate all or any of its relevant rights, duties, powers and discretions (which rights, duties, powers and discretions shall at all times be exercised in accordance with the provisions of this Agreement) in such manner and on such terms as it reasonably thinks fit (with or without formality and without prior notice of any such delegation being required to be given to the Manager or the Sponsor), and, subject to applicable laws, to provide information gained by such Joint Bookrunner and Underwriter in the course of or for the purpose of the Offering or any of the other transactions contemplated by this Agreement, to any one or more of its Affiliates, provided that each Joint Bookrunner and Underwriter shall continue to be bound, severally (but not jointly or jointly and severally), by the terms of this Agreement and shall remain liable under this Agreement for all acts and omissions of any person in breach of this Agreement to which it delegates any such rights, duties, powers or discretions.
2.6
Authorisation
Each of the Manager and the Sponsor has authorised and directed the Joint Bookrunners and Underwriters to do all such acts and things as the Joint Bookrunners and Underwriters may reasonably deem necessary, advisable or desirable for the purposes of or in connection with the Listing and the Offering, subject in all cases to compliance with all applicable laws and regulations and the Joint Bookrunners and Underwriters' obligations pursuant to this Agreement and agrees to ratify and approve all documents, acts and things which the Joint Bookrunners and Underwriters may lawfully do in the exercise of such authorities.
2.7
Sub-underwriters
The Joint Bookrunners and Underwriters shall be at liberty and may at their discretion procure sub-underwriters and/or sub-placement agents in respect of their obligations under this Agreement upon such terms and conditions as they deem fit. For the avoidance of doubt, (a) a Joint Bookrunner and Underwriter may appoint an Affiliate as a sub-underwriter and/or sub-placement agents, and (b) the sub-underwriting, or placing out to a sub-placement agent, of the underwriting obligations of any of the Joint Bookrunners and Underwriters under this Agreement shall not release such Joint Bookrunner and Underwriter from its underwriting obligations and the Joint Bookrunner and Underwriter shall bear all commission and expenses payable in respect of such sub-underwriting and/or sub-placement.
2.8
Allocation to subscribers

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The Joint Global Coordinators shall have the absolute discretion (in consultation with the Manager and the other Joint Bookrunners and Underwriters) with respect to the allocation of Offering Units to subscribers. Without limiting the generality of the foregoing, the Manager hereby authorises the Joint Global Coordinators to accept or reject any Application as the Joint Global Coordinators may decide, and to allocate any of the Offering Units to any applicant in such number as the Joint Global Coordinators may decide, in the manner set forth in the Prospectus and in compliance with the requirements of the SGX-ST.
2.9
Allocation between Public Offer and Placement Tranche
The Joint Global Coordinators shall have the discretion (in consultation with the Manager and the other Joint Bookrunners and Underwriters): (a) in the allocation of Offering Units between the Public Offer and the Placement Tranche, and (b) in the re-allocation of Offering Units between the Public Offer and Placement Tranche, in each case, in accordance with the provisions of this Agreement (provided that the minimum unitholding and distribution requirements of the SGX-ST are met).
Notwithstanding anything herein to the contrary but subject to any applicable law and the requirements of the SGX-ST, the parties hereto hereby agree that:
2.9.1
any Offering Units offered under the Public Offer not applied for shall be allocated to satisfy applications for Offering Units offered under the Placement Tranche, to the extent there is an over-subscription for the Placement Tranche at the Offering Price, subject to and on the terms and conditions of the Prospectus applicable to applications for Offering Units under the Placement Tranche; and
2.9.2
any Offering Units offered under the Placement Tranche not applied for shall be allocated to satisfy excess applications for Offering Units offered under the Public Offer, subject to and on the terms and conditions of the Prospectus applicable to applications for Offering Units under the Public Offer.
For the avoidance of doubt, the application of this Clause 2.9 shall not vary the commissions payable under Clause 6.1 and in determining the commissions payable under Clause 6.1, no account shall be taken of the reallocation of the Offering Units under the Public Offer to satisfy applications for Offering Units offered under the Placement Tranche or the reallocation of Offering Units under the Placement Tranche to satisfy applications for the Offering Units under the Public Offer, pursuant to this Clause 2.9.
2.10
Balloting
In the event that valid applications have been received for more than the number of Units allocated under the Public Offer, the Manager authorises the Joint Global Coordinators (in consultation with the Joint Bookrunners and Underwriters) to arrange for balloting or scaling back of such applications in such manner and on the basis of such allocations as the Manager may determine in consultation with the Joint Global Coordinators and the SGX-ST.
2.11
Distribution of Prospectus and Announcements

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The Manager confirms (i) that it has authorised the Joint Bookrunners and Underwriters to distribute copies of the Preliminary Prospectus and the Prospectus, and (ii) the arrangements made on its behalf by the Joint Bookrunners and Underwriters for announcements in respect of the Units which will be published on such dates and in such newspapers or other publications as it has agreed or will agree with the Joint Bookrunners and Underwriters.
2.12
Appointment and Duties of Receiving Bank
2.12.1
The Manager hereby confirms the appointment of DBS Bank Ltd. as receiving bank in connection with the Offering.
2.12.2
The proceeds of the Offering (including any excess application monies) pursuant to the offer of the Offering Units shall, after payments of all amounts due to the Joint Bookrunners and Underwriters under the Repayment Side Letter, be deposited with DBS Bank Ltd. as the Receiving Bank and be held in a separate non-interest bearing account opened by the Manager and operated by the Receiving Bank and designated as the "PRIME USD Unit Issue Account" solely for the purpose of depositing such proceeds. The Receiving Bank is hereby authorised to operate such account in accordance with the provisions of this Agreement, the terms of the Receiving Bank Agreement, the rules and directives of the SGX-ST for the time being applicable relating to the operation of such account and all other applicable laws, regulations and directives (including without limitation, the SFA).
2.12.3
The Manager hereby irrevocably authorises the Receiving Bank to return the application monies for the Units on its behalf to the applicants free of interest, share of profits or other benefit arising therefrom in the following situations:
(a)
in the event that a supplementary prospectus or replacement prospectus is registered pursuant to Section 298 of the SFA and the applicant exercises its right to a refund of the application monies;
(b)
in the event that a stop order is issued by the MAS in accordance with Section 297 of the SFA; or
(c)
if for any reason whatsoever, the Units are not admitted to the Official List of the SGX-ST.
2.12.4
Payment of the proceeds to the Manager shall be made in United States Dollars.
2.12.5
The Joint Bookrunners and Underwriters shall not be in any way responsible for the obligations of the Trustee and the Manager under Sections 258, 297 and 301 of the SFA.
It is hereby agreed and declared by the Manager that subject to the terms of the Receiving Bank Agreement, the Receiving Bank shall not be obliged to account to Prime US REIT, the Manager, the Trustee or any person for any interest or any share of revenue or other benefits that may accrue or otherwise derive from such proceeds.

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3.
REPRESENTATIONS AND WARRANTIES
3.1
Representations and warranties of the Manager
The Manager represents and warrants to and agrees with each Joint Bookrunner and Underwriter as set forth in this Clause 3.1 and accepts that the Joint Bookrunners and Underwriters are entering into this Agreement and the Repayment Side Letter in reliance upon each such representation, warranty and undertaking:
3.1.1
Organisation of the Manager, the Manager US Sub and Prime US REIT
(a)
The Manager has been duly organised and is validly existing as a limited liability company under the laws of Singapore with full power and authority to conduct its business as described in the Preliminary Prospectus and the Prospectus and is duly qualified to do business in, and is in good standing (if applicable) under the laws of each jurisdiction that its business is currently operated in, or is contemplated;
(b)
The Manager US Sub is wholly-owned by the Manager and has been duly organised and is validly existing as a limited liability company under the laws of the State of Delaware, with full power and authority to conduct its business as described in the Preliminary Prospectus and the Prospectus and own or lease, as the case may be, and to operate its assets and properties and has obtained all approvals, licenses, authorisations and consents required to conduct the activities as delegated to it by the Manager in respect of those activities that are required to be performed in the U.S., and has elected to be treated as an association taxable as a corporation under the U.S Tax Code and is duly qualified to do business in, and is in good standing (if applicable) under the laws of each jurisdiction that its business is currently operated in, or is contemplated;
(c)
The Manager has been granted the CMS Licence, which is in full force and effect and which has not been amended or revoked, there has been no breach of the terms and conditions applicable to the CMS Licence, and all such terms and conditions to the extent that they are required to be complied with prior to the date hereof, have been complied with;
(d)
Prime US REIT has been duly constituted and is validly existing as a unit trust under the laws of Singapore (including the Property Funds Appendix) with full power and authority to own or lease, as the case may be, and to operate its assets and properties (including, without limitation, the Trust Group Entities and upon completion of the Acquisitions, the Properties) and to conduct its business as described in the Preliminary Prospectus and the Prospectus, and does not have any assets or conduct any business apart from what is described in the Preliminary Prospectus and the Prospectus; and
(e)
Save for the Manager US Sub, the Trust Group Entities and the dormant Barbados entities, neither the Manager nor Prime US REIT respectively have any subsidiaries, associated companies, and/or interest in any joint

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venture companies, and the Manager and Prime US REIT do not own, directly or indirectly, any shares of stock or other equity interests or long-term debt securities of, or otherwise own or control any interest in any corporation, firm, partnership, joint venture, association, enterprise, trust, undertaking or other entity;
3.1.2
Organisation of Trust Group Entities
Each of the Trust Group Entities has been incorporated or organised and is validly existing as a corporation or limited liability company under the laws of its jurisdiction of incorporation or organisation, as applicable, with the requisite power and authority to own, use or lease, as the case may be, and to operate its assets and properties (including without limitation, the Properties), to execute and perform its obligations under the Transaction Documents to which it is a party, and conduct its business as described in the Preliminary Prospectus and Prospectus, and is duly qualified to conduct its business in, and is in good standing (if applicable) under the laws of each jurisdiction that its business is currently or is contemplated to be operated in, and does not have any material assets or conduct any business apart from those described in each of the Preliminary Prospectus and the Prospectus;
3.1.3
Ownership structure of Prime US REIT
In relation to the Trust Group Entities:
(a)
all outstanding voting shares of each of the Singapore Subsidiaries have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by the Trustee (on behalf of Prime US REIT);
(b)
all outstanding shares of voting common stock of the Parent US REIT have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by Singapore Sub 1;
(c)
all outstanding voting units of ownership interest of the Upper-Tier US LLC have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by the Parent US REIT;
(d)
all outstanding voting units of ownership interest of the Mid-Tier US LLC have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by the Upper-Tier US LLC;
(e)
all outstanding voting units of ownership interest of the Lower-Tier US LLC have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by the Mid-Tier US LLC; and

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(f)
all outstanding voting units of ownership interest of each of the Property-Tier US LLCs (except for Prime US-222 Main, LLC) have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by the Lower-Tier US LLC;
(g)
all outstanding voting units of ownership interest of Prime US Properties, LLC have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by the Mid-Tier US LLC;
(h)
all outstanding voting units of ownership interest of Prime US-Acquisition I, LLC have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by Prime US Properties, LLC; and
(i)
all outstanding voting units of ownership interest of Prime US-222 Main, LLC have been or, as the case may be, will be when issued on the First Closing Date, duly authorised and validly issued and fully paid, and owned directly by Prime US-Acquisition I, LLC,
in each case, free and clear of any Encumbrances other than as disclosed in the Preliminary Prospectus and the Prospectus;
3.1.4
Trust Deed
The Trust Deed has been duly authorised, executed and delivered by the Manager, and is in full force and effect and has not been amended or supplemented, and constitutes its valid and legally binding agreement, enforceable in accordance with its terms;
3.1.5
Transaction Documents
Each of the Transaction Documents to which the Manager, the Manager US Sub or any of the Trust Group Entities is a party, has been duly authorised, executed and delivered by the Manager, the Manager US Sub or the relevant Trust Group Entity, as the case may be, and when executed and delivered by the Manager, the Manager US Sub or the relevant Trust Group Entity, as the case may be, constitutes each parties' valid and legally binding agreement, enforceable in accordance with their respective terms (subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity) and each of the Transaction Documents has not been amended or supplemented without the prior consent of the Joint Bookrunners and Underwriters and other than as disclosed in the Preliminary Prospectus and the Prospectus. Each of the Transaction Documents which has been entered into by the Manager, the Manager US Sub or the relevant Trust Group Entity, as the case may be, is in full force and effect and there are no breaches or defaults of these agreements, to the knowledge of the Manager, on the part of the counterparties to these agreements. To the knowledge of the Manager, there is no reason why the transactions described in the Transaction Documents (as applicable) would not be consummated;

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3.1.6
The Property Managers and Leasing Agents
The appointment of the Property Managers and Leasing Agents by the Manager, the Manager US Sub and the Property-Tier US LLCs, as the case may be, have been duly authorised;
3.1.7
No conflicts
None of the allotment, issue and sale of the Units (including the Offering Units, the Cornerstone Units, the KBS Units (which includes the Over-Allotment Units) and the Initial Unit), the execution, delivery and performance of any of the Transaction Documents, the issue, distribution and availability of the Preliminary Prospectus and the Prospectus and any amendment or supplement thereto, the consummation of any of the transactions contemplated herein or therein, the fulfilment of the terms hereof or thereof or any other event, constitutes or will constitute an event which entitles any person to require the redemption, repurchase or repayment of any indebtedness of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities, or will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any asset or property belonging to the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities (including without limitation, the Properties), whether with the passage of time or giving of notice or otherwise, in each case pursuant to:
(a)
the Constitution, bylaws, trust deeds or other constitutive documents of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities;
(b)
the terms of any Document to which the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities is a party or bound or to which their assets or properties are subject (including, without limitation, the Trust Deed); or
(c)
any statute, law, rule, regulation, judgment, order or decree (including, without limitation, the Listing Rules, the SFA, the CIS Regulations and the Code (including the Property Funds Appendix)) applicable to the Manager, the Manager US Sub, Prime US REIT and/or any of the Trust Group Entities of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Manager, the Manager US Sub, Prime US REIT and/or any of the Trust Group Entities, or any of their respective assets and properties (including without limitation, the Properties), as applicable,
except in the case of paragraphs (b) and (c) only, where such conflict, breach, violation or imposition would not, individually or in the aggregate, have a Material Adverse Effect.
No event has occurred and is subsisting or to the Manager's knowledge is about to occur which constitutes or would constitute a default or result in a default, or would reasonably be expected to result in, the acceleration by reason of default of any obligation under any agreement, undertaking, instrument or arrangement

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to which the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities is a party or by which their or any of their interests, properties, revenues and assets are bound, except where such default would not, individually or in the aggregate have a Material Adverse Effect;
3.1.8
No consents required
No consent, approval, authorisation, licence, filing with or order of any court or governmental agency or body (including, but not limited to, any consent, approval or authorisation of the shareholders of the Manager) is required by the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities in connection with (1) the transactions contemplated by the Transaction Documents (including the execution, delivery and performance thereof), the appointment of the Manager as manager of Prime US REIT, the outsourcing to KCI by the Manager of certain functions pursuant to the Keppel Management Agreement, the outsourcing of certain asset management functions to KBS RA, as U.S. asset manager of Prime US REIT pursuant to the KBS Management Agreement, the appointment of the various Property Managers pursuant to the Property Management Agreements and the appointment of the various Leasing Agents pursuant to the Leasing Services Agreements, or (2) for the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities to own their assets (including the Properties) and to conduct their businesses as contemplated by the Preliminary Prospectus and the Prospectus, except for:
(a)
such as have been obtained and disclosed in the Preliminary Prospectus and the Prospectus; and
(b)
the registration of the Prospectus with the MAS,
and all such consents, approvals, authorisations, licences, filings with or orders of court or governmental agency of body, as the case may be, are in full force and effect and to the extent that the same is subject to any conditions that are required to be complied with or fulfilled on or before the First Closing Date, that such conditions have been complied with and fulfilled, except for such consent, approval, authorisation, licence, filing with or order of any court or governmental agency or body, the lack of which, or failure to comply or fulfil would not, individually or in the aggregate have a Material Adverse Effect;
3.1.9
Capitalisation of Prime US REIT
(a)
The structure of Prime US REIT (including the holding structure of each of the Trust Group Entities and the holding structure of the Properties), and Prime US REIT's authorised and outstanding Units, in each case as of the Listing Date, are as set forth in the Preliminary Prospectus and the Prospectus (and each of such Units is or will be fully paid at such time);
(b)
The Offering Units, the Cornerstone Units, the Initial Unit and the KBS Units (which includes the Over-Allotment Units) have been duly and validly authorised and, when issued and delivered to and paid for by the Joint Bookrunners and Underwriters pursuant to this Agreement, the Singapore Offer Agreement, the Cornerstone Subscription Agreements,

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the Unit Lending Agreement or the KBS Subscription Agreement, or by subscribers or purchasers thereof in the Offering in accordance with the Preliminary Prospectus and the Prospectus, will be duly and validly issued and fully paid and the persons in whose name the Units are registered will be entitled to the rights specified therein and in the Trust Deed;
(c)
The Units (including the Cornerstone Units, the Offering Units, the Initial Unit and the KBS Units (which includes the Over-Allotment Units)) will be validly issued fully paid and free from all Encumbrances, and will be freely transferable (subject to the Lock-Up Letters and save as provided in the Trust Deed and/or as disclosed in the Preliminary Prospectus and the Prospectus). All such Units will, upon issue, rank pari passu in all respects with each other and with the existing Units in issue. The holders of Units already in issue at the time of issue of such Units will not be entitled to, or will have duly and irrevocably waived, any pre-emptive or any other rights with respect to the acquisition, issuance and sale of those Units;
(d)
Other than pursuant to this Agreement, the Singapore Offer Agreement, the Cornerstone Subscription Agreements, the Unit Lending Agreement and the KBS Subscription Agreement, or as described in the Preliminary Prospectus and the Prospectus, no options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities for Units or other ownership interests in Prime US REIT or any of the Trust Group Entities to which the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities is a party are outstanding;
(e)
The statements set forth in the Preliminary Prospectus and the Prospectus under the section titled "The Formation and Structure of Prime US REIT", insofar as they purport to constitute a summary of the terms of the Trust Deed and the Units, fairly and accurately summarise the matters therein described; and
(f)
other than pursuant to lock-up undertakings which are or will be given in favour of the Joint Bookrunners and Underwriters (including the Lock-Up Letters) and save as provided in the Trust Deed and/or as disclosed in the Preliminary Prospectus and the Prospectus, there are no restrictions (whether under the laws of Singapore or otherwise) on subsequent transfers of Units subscribed for or purchased under the Offering;
3.1.10
No Violation
None of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities is in, nor is any one of them aware of any fact or circumstances that may give rise to, a violation or default of the terms of:

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(a)
any provision of its Constitution, memorandum and articles of association or trust deeds or other constitutive documents, as the case may be;
(b)
any Document to which it is a party or bound or to which its assets or properties (including, without limitation, the Properties) is subject (including, without limitation, the Trust Deed); or
(c)
any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over it or any of their assets or properties (including, without limitation, the Properties), as applicable,
except in the case of paragraphs (b) and (c) only, where such event, violation or default would not, individually or in the aggregate, have a Material Adverse Effect;
3.1.11
No proceedings
No action, suit or litigation, arbitration, investigation or administrative proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Manager, the Trustee (in its capacity as trustee of Prime US REIT), the Manager US Sub, Prime US REIT, any of the Trust Group Entities and each of their respective assets and properties (including, without limitation, the Properties), and the directors, officers, employees of the Manager and/or the Manager US Sub is pending or, as far as the Manager is aware, threatened and to the Manager's knowledge, no event has occurred which could reasonably be expected to give rise to any such proceedings that could, individually or in the aggregate, to have a Material Adverse Effect, and no order has been made or resolution passed and no petition has been presented for the winding-up of any of the Manager, the Manager US Sub, Prime US REIT, or any of the Trust Group Entities or for the appointment of an administrator, provisional supervisor, provisional liquidator or analogous officer;
3.1.12
No cessation or insolvency
None of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities is in liquidation in any jurisdiction, nor, to the best of the Manager's knowledge, has any step or action been taken or threatened, nor any resolution passed, nor legal proceedings started or threatened, nor orders made in any jurisdiction, nor any petitions presented, for the winding up or dissolution of any of the Manager, the Manager US Sub, Prime US REIT or the Trust Group Entities, or for any of them to enter into any compromise, arrangement, scheme of arrangement or composition for the benefit of creditors, or for the appointment of a receiver, administrator, receiver and manager, judicial manager, trustee, provisional supervisor, provisional liquidator, liquidator or similar or analogous officer or equivalent person of any of them or their respective interests, properties, revenues or assets (including, without limitation, the Properties);
3.1.13
No immunity

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None of the Manager, the Manager US Sub, Prime US REIT, any of the Trust Group Entities nor any of their respective properties, assets or revenues (including, without limitation, the Properties) are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from other legal process or proceeding for the giving of any relief or for the enforcement of any judgment in any such court;
3.1.14
No Stabilisation
Neither the Manager nor any person acting on its behalf (other than the Stabilising Manager or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) has taken, directly or indirectly, any action designed to cause or which has constituted or which might reasonably be expected to cause or result, under any applicable law or regulation or otherwise, in the stabilisation or manipulation of the price of any security of Prime US REIT (including options in respect of the Units and other securities which are convertible into or exchangeable for those Units and any associated securities) to facilitate the sale or resale of the Units, or which would or might otherwise be reasonably expected to constitute stabilising action or the purpose of which is to create actual, or apparent, active trading in, false or misleading impression as to the market in or value of the Units or to stabilise, manipulate or raise the price of the Units;
3.1.15
Ownership of Properties
(a)
Upon completion of the Acquisitions on the Completion Date, each of the Property-Tier US LLCs will have marketable fee simple title to the relevant Properties as described in the Preliminary Prospectus and the Prospectus as set forth in the Proforma Title Insurance Policies. Except for the Title Insurance Exceptions, the Manager is not aware of any Encumbrances or other title matters relating to the Properties which will adversely affect the relevant Property-Tier US LLCs' title to the relevant Properties upon such completion of the Acquisitions.
(b)
Upon completion of the Acquisitions on the Completion Date, except for the Title Insurance Exceptions or as otherwise described in the Preliminary Prospectus and the Prospectus or as otherwise would not individually or in the aggregate have a Material Adverse Effect, the Property-Tier US LLCs:
(i)
will have marketable title to all other assets and properties to be owned by them in connection with the ownership and operation of the Properties, in each case, free and clear of all Encumbrances of any kind;
(ii)
will have obtained all necessary governmental, regulatory and other approvals and/or consents which may be required in connection with the acquisition, lease, sub-lease, licence,

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occupation and use of the Properties and such approvals and/or consents have not been amended or revoked; and
(iii)
will be entitled as legal and beneficial owners of the Properties to all rights and benefits as landlord, lessor or licensor under the tenancies, leases or licences to which it will be a party as landlord or licensor in respect of the Properties, and such tenancies, leases or licences are in full force and effect.
(c)
Upon completion of the Acquisitions on the Completion Date, except as described in the Preliminary Prospectus and the Prospectus or as otherwise would not individually or in the aggregate have a Material Adverse Effect, none of the Property-Tier US LLCs:
(i)
is or will be, and as far as the Manager is aware, none of the Vendors or any other person are or will be, in breach under any of such leases, tenancies or licences at the Properties (and the Manager does not know of any event which, but for the passage of time or the giving of notice, or both, would constitute a breach under any of such leases, tenancies or licences);
(ii)
have received notice of any cause of action that has been asserted by anyone adverse to the rights of the Property-Tier US LLCs under any of the leases, tenancies or licences mentioned above, or affecting or challenging their respective rights to the continued possession of the leased, tenanted or licensed premises under any such lease, tenancies or licences; and
(iii)
have received notice of any cause of action that has been asserted by any governmental entity that the Property-Tier US LLCs or the Properties are subject to any threatened or pending real property tax assessment or condemnation or eminent domain proceeding;
(d)
Save for the Properties, none of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities will, on the Listing Date, directly or indirectly, own or have any interest in any real property (whether freehold or leasehold) or any land use rights;
3.1.16
Real Property Regulations
Except for Environmental Laws, which are addressed below, each Property complies with all applicable codes, laws and regulations in the U.S. (including, without limitation, planning, construction planning, construction, building and zoning codes and the relevant laws and regulations relating access to such Properties), except as disclosed in the Preliminary Prospectus and the Prospectus or where the failure to so comply would not individually or in the aggregate reasonably have a Material Adverse Effect. No Property is the subject of any pending condemnation proceedings, land acquisition proceedings, zoning change or proceeding (and to the Manager's knowledge no such proceedings have been threatened) that would affect the operation of the

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business at such Property as described in both the Preliminary Prospectus and the Prospectus, size or use of, or access to such Property except for such non-compliance, actions, proceedings or changes that would not, individually or in the aggregate, have a Material Adverse Effect;
3.1.17
Environmental Laws
Save for matters which would not individually or in the aggregate have a Material Adverse Effect, the Trustee, the Manager, the Manager US Sub, Prime US REIT, each of the Trust Group Entities and the Properties:
(a)
are in compliance with all applicable Environmental Laws, have no actual or contingent liability to make good, repair, re-instate or clean up any of the Properties and have no knowledge of any imminent requirement for any of the foregoing;
(b)
have not received any notice of any actual or potential liability under applicable Environmental Laws; and
(c)
have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws which may result in the revocation or loss of such permits, licenses or other approvals, or otherwise result, individually or in the aggregate, in a Material Adverse Effect;
3.1.18
No Dispute
To the Manager's knowledge, there is no outstanding dispute, notice, or complaint affecting, or which might in the future affect, the use of any part of the Properties for the purposes for which it is now used (including pursuant to leases at the Properties), save for any dispute, notice or complaint that would not individually or in the aggregate have a Material Adverse Effect. There are no existing circumstances which would entitle or require the U.S. federal, state and local governments or any landlord or other person to exercise any powers of entry and taking possession or which would otherwise restrict or terminate the current use of any of the Properties or terminate the continued possession or occupation of any of the Properties, except for such event which will not, individually or in the aggregate, have a Material Adverse Effect;
3.1.19
Tenants and Licensees of Properties
No tenant (including sub-tenant), lessee (including sub-lessee) or licensee (including sub-licensee) of any of the Properties is subject to a bankruptcy proceeding which is known to the Manager or is in default under or in breach of any of the tenancies, leases or licences pursuant to which parts of the Properties are currently tenanted, leased or licensed (and there is no event, but for the passage of time or the giving of notice, or both, which would constitute a default under any of such tenancies, leases or licences) and to which the Trustee, Prime US REIT or any of the Trust Group Entities will be a party as landlord, lessor and/or licensor, such tenancies, leases or licences are in full force and effect, and none of the terms, covenants, stipulations or restrictions

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contained in any tenancy relating to the Properties will be breached or give rise to a right of lease termination by reason of the implementation of the Acquisitions and the Offering, except for such default or breach which will not, individually or in the aggregate, have a Material Adverse Effect;
3.1.20
Properties
Except for the Title Insurance Exceptions or as otherwise disclosed in the Preliminary Prospectus and the Prospectus or as otherwise would not individually or in the aggregate have a Material Adverse Effect, to the Manager's knowledge, there are no encroachments affecting any of the Properties which are located on, below or above ground level and each of the Properties:
(a)
has legal access, either directly or indirectly, to public roads or rights of way and each of the Properties is served by appropriate drainage, water, electricity and gas services all of which are connected to the public mains with no imminent or likely interruption of such passage or provision; and
(b)
has no structural or other material defects affecting or likely to affect the buildings and structures on or comprising such Properties or any parts of such Properties and such buildings and structures, are in good and substantial repair and condition and are fit for the purposes for which they are presently used or proposed to be used.
Except as disclosed in the Preliminary Prospectus and the Prospectus or as would not individually or in the aggregate have a Material Adverse Effect, no developments, alterations or improvements have been carried out in relation to any of the Properties which would require any consent and for which consent has not been properly obtained and complied with nor have any conditions or restrictions imposed thereon not been fully observed and performed;
3.1.21
Use of Properties
Having duly considered the Title Insurance Exceptions, there are no covenants, restrictions, burdens, stipulations, conditions, terms or outgoings affecting any of the Properties which are of an unusual or onerous nature or which materially and adversely affect the use or intended use of any of the Properties;
3.1.22
Insurance
(a)
Effective as of the Completion Date, title to the Properties will be insured by the Title Insurance Company, in the name or for the benefit of Prime US-Tower At Emeryville, LLC in respect of Tower I at Emeryville, Prime US-222 Main, LLC in respect of 222 Main, Prime US-Village Center Station, LLC in respect of Village Center Station, Prime US-Village Center Station II, LLC in respect of Village Center Station II, Prime US-101 South Hanley, LLC in respect of 101 South Hanley, Prime US-Tower at Lake Carolyn, LLC in respect of Lake Carolyn, Prime US-Promenade, LLC in respect of Promenade, Prime

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US-CrossPoint at Valley Forge, LLC in respect of CrossPoint, Prime US-One Washingtonian, LLC in respect of One Washingtonian Center, Prime US-Reston Square, LLC in respect of Reston Square and Prime US-171 17 th Street, LLC in respect of 171 17 th Street (collectively, the " Insured Parties "), for so long as the Insured Party shall continue to own its Property, in each case:
(i)
in such amounts representing the respective purchase consideration at which each of the Insured Parties will purchase the relevant Property from the relevant Vendor;
(ii)
subject only to the Title Insurance Exceptions set forth in the applicable Proforma Title Policy for each Property; and
(iii)
the final title insurance policies shall be substantially in the form of the Proforma Title Policies and shall be in effect on the Listing Date.
(b)
On and from the Completion Date, for as long as the Property-Tier US LLCs are the owners of the Properties, the Properties will be insured in the name or for the relevant Insured Party by insurers of recognised financial responsibility against such losses and risks and in such amounts as are prudent and customary for properties of a similar nature as the relevant Property;
(c)
All such policies of insurance in (i) and (ii) above will be in full force and effect and from the closing of the transactions contemplated by the Portfolio Purchase and Sale Agreement and the Insured Parties will be in compliance with the terms of such policies and instruments, except where the failure to so comply would not individually or in the aggregate, result in the increase of premiums payable, the reduction of insured amounts or the termination of such policies;
(d)
None of the Trustee, the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities have been refused any insurance coverage sought or applied for with respect to each of the Properties; and
(e)
So far as the Manager is aware, no circumstances have arisen which would vitiate or permit the insurers to void any of the policies of insurance in effect relating to any of the Properties;
Permits and Licences
The Manager, the Trustee, the Manager US Sub, the US Asset Manager, Prime US REIT and the Trust Group Entities (in respect of activities they undertakes in relation to Prime US REIT and its assets and properties (including the Trust Group Entities and the Properties), or the performance of their obligations under the KBS Management Agreement) possess (or will obtain in the ordinary course without breach of any applicable laws or regulations) all licences, certificates, permits and other authorisations issued by the appropriate regulatory authorities

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or required under the provisions of all applicable laws (including but not limited to the Property Funds Appendix) necessary to conduct the business and to own the assets as contemplated to be conducted or owned by it in the Preliminary Prospectus and the Prospectus and the Manager has not and, as far as the Manager is aware, none of the KBS Group and/or any of the Vendors has, with respect to the Properties, received any notice of proceedings relating to the revocation or modification of any such licence, certificate, authorisation or permit and the Manager has no reason to believe that any such licence, certificate, authorisation or permit will not be renewed in the ordinary course, except for such licences, certificates, permits and other authorisations, the lack of which will not, individually or in the aggregate, if the subject of an unfavourable decision, ruling or finding, have a Material Adverse Effect;
3.1.23
Internal Accounting Controls
The Manager will by the Listing Date establish and will maintain, in compliance with applicable rules and regulations, a system of internal accounting and financial reporting controls with respect to Prime US REIT and its subsidiaries sufficient to provide reasonable assurance that:
(a)
transactions are executed in accordance with management's general and specific authorisations;
(b)
transactions are recorded as necessary to (1) permit preparation of financial statements in accordance with International Financial Reporting Standards, (2) maintain books, records and accounts in relation to the performance of the assets of Prime US REIT and its subsidiaries which are accurate and fair and provide sufficient basis for the preparation of financial statements; and
(c)
all necessary announcements can and will be made as and when required by the Code and the Listing Rules.
3.1.24
Accounting Policies
From the date of constitution of Prime US REIT, Prime US REIT and the Trust Group Entities have adopted accounting policies which are in conformity with International Financial Reporting Standards, and such accounting policies have been applied on a consistent basis and have not been amended or modified since their adoption;
3.1.25
Intellectual Property
Neither Prime US REIT nor any of the Trust Group Entities owns or possesses any trademarks, service marks or trade names, or licensing rights for the use of any trademarks, service marks and trade names (together, " Intellectual Property ") (if any). The Manager, the Trustee, the Manager US Sub, Prime US REIT and the Trust Group Entities have obtained all permissions and consents for the use of any Intellectual Property being used, have complied with all obligations and requirements in the use of such Intellectual Property, have not received any notice and are not aware of any infringement of or conflict with

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asserted rights of others with respect to any Intellectual Property and which non-compliance or infringement would individually or in the aggregate result in a Material Adverse Effect;
3.1.26
Information Provided
All information provided by or on behalf of the Manager and its directors, employees and officers to the Joint Bookrunners and Underwriters or their legal advisers, or to any of the Advisers, Experts or the Reporting Auditors for the purposes of the Offering (including the Verification Notes) or any of their respective reports or letters contained or referred to in the Preliminary Prospectus and the Prospectus or any management representations or documents or other information requested by the Reporting Auditors or Allen & Gledhill LLP or DLA Piper LLP (US) or Greenberg Traurig, LLP in connection with the provision of any comfort letters and with the legal due diligence reports on the Properties or for the purposes of or in the course of preparation of any application, request or response to the SGX-ST and the MAS or other regulatory authorities or set out in or accompanying the applications to the SGX-ST for the listing and quotation of the Units, or any other purpose related to the Offering, in each case, as amended, modified or supplemented by any additional material information provided by or on behalf of the Manager to the Joint Bookrunners and Underwriters, their legal advisers or any of the Advisers prior to the date of this Agreement or otherwise superseded by information in the Preliminary Prospectus and the Prospectus, are:
(a)
true and accurate in all material respects, and not misleading in any material respect, whether by omission or misstatement in light of the circumstances under which such statement was made, and no information in connection with the Offering or otherwise has been withheld by the Manager from the Joint Bookrunners and Underwriters and their legal or other professional advisers, or any of the Advisers, the SGX-ST or the MAS; and
(b)
as regards forecasts or estimates, and statements of opinion, belief, intention or expectation, truly, honestly and reasonably held and given in good faith after due and careful enquiry;
3.1.27
Marketing Materials
The information, opinions, projections and intentions contained in any Marketing Material approved by the Manager and distributed or communicated in connection with the Offering are consistent in all material respects with the information, opinions, projections and intentions contained in the Preliminary Prospectus and the Prospectus, are true and accurate and not misleading in any material respect, and all reasonable enquiries have been made to ascertain or verify the foregoing, and will comply with all applicable statutory, regulatory and stock exchanges rules; in particular, the product highlights sheets accompanying each of the Preliminary Prospectus and Prospectus are prepared in accordance with applicable laws, regulations and guidelines, including the Guideline No. SFA 13-G13 titled "Guidelines on the Product Highlights Sheet for Offers of Debt Securities, Hybrid Instruments and Equity Securities" issued

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by the MAS on 5 February 2016 and the Marketing Materials are prepared in accordance with Paragraph 19A of the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005;
3.1.28
Preliminary Prospectus and Prospectus
(a)
The Preliminary Prospectus (as at its date of publication) and the Prospectus (as of its date of publication and as at each Closing Date) contains and any amendment or supplement thereto will at their date of publication and each Closing Date contain, all information that investors and their professional advisers would reasonably require and reasonably expect to find there, or that is necessary to enable investors and their investment advisers to make an informed assessment of the merits and risks of an investment in Prime US REIT, including without limitation the assets and liabilities, financial position, performance, profits and losses and prospects of Prime US REIT and its subsidiaries, and the rights attaching to the Units;
(b)
the Preliminary Prospectus (as at its date of publication) and the Prospectus (as at its date of publication and each Closing Date) do not, and in the case of any amendment or supplement to the Prospectus as at the date of its publication and the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(c)
the statements of intention, opinion, belief or expectation contained in the Preliminary Prospectus (as at its date of publication) and the Prospectus (as at its date of publication and the Closing Date) were, and in the case of any amendment or supplement to the Prospectus at the date of its publication and the Closing Date will be, honestly and reasonably made or held; and
(d)
all reasonable enquiries have been made to ascertain such facts and to verify the accuracy of all such statements;
3.1.29
Independent Valuers
The valuers who prepared the valuations in respect of the Properties, as described in the Preliminary Prospectus and the Prospectus, are independent valuers with respect to the Sponsor, the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities;
3.1.30
Reporting Auditors
The Reporting Auditors who have certified certain financial information of Prime US REIT and its subsidiaries and delivered their report with respect to the financial information of Prime US REIT and its subsidiaries (including the related notes and schedules) included in the Preliminary Prospectus and the Prospectus, are independent registered public accountants/independent auditors

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with respect to Prime US REIT and its subsidiaries pursuant to the SFA and duly licensed under applicable regulatory requirements of Singapore;
3.1.31
Financial and Statistical Information
(a)
The unaudited pro forma financial information of Prime US REIT and its subsidiaries (including any related notes and schedules) included in both the Preliminary Prospectus and the Prospectus:
(i)
presents accurately in all material respects the financial condition of Prime US REIT and its subsidiaries as of the dates indicated and has been prepared in conformity with International Financial Reporting Standards. The financial data set forth under the caption "Unaudited Pro Forma Financial Information" in both the Preliminary Prospectus and the Prospectus fairly and accurately presents in all material respects, on the basis stated in both the Preliminary Prospectus and the Prospectus, respectively, the information included therein;
(ii)
has been properly prepared on the basis of the assumptions set out in both the Preliminary Prospectus and the Prospectus after making the adjustments set out in the Preliminary Prospectus and the Prospectus (and that such adjustments are appropriate for the purpose of such preparation); and
(iii)
has been reviewed by the Reporting Auditors; and
(b)
Nothing has come to the attention of the Manager that has caused the Manager to believe that the statistical and market-related data included in the Preliminary Prospectus and the Prospectus is not based on or derived from sources that are reliable and accurate and the Manager has obtained the written consent to the use of such data from such sources to the extent required;
3.1.32
Forward-Looking Statements
No Forward-Looking Statement contained in the Preliminary Prospectus and the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith. All Forward-Looking Statements and all forecasts, estimates, expressions of opinion, intention and expectation contained in the Preliminary Prospectus and the Prospectus are made on reasonable grounds, are honestly held by the Manager and have been made after reasonable enquiry and consideration, and all expressions of opinion, intention and expectation attributed to any person or persons in the Preliminary Prospectus and the Prospectus are considered by the Manager and its directors to be fair and not misleading in any material respect. The statements and financial information (including the assumptions) included in the Preliminary Prospectus and the Prospectus under the heading "Profit Forecast and Profit Projection" (together, the " Projections ") have been properly compiled, have taken into account such receivables (including all rental income from the Properties), payables (including capital expenditures, operating expenses,

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property taxes and such other payments required to be made in respect of the Properties as noted in the Title Insurance Exceptions) and other contingent liabilities (other than those which Prime US REIT and/or the Trust Group Entities have been indemnified under legally enforceable indemnities provided by parties other than the Manager, the Manager US Sub, the Trustee, Prime US REIT or any of the Trust Group Entities) of Prime US REIT for the period from 1 January 2019 to 31 December 2020, and have been prepared in accordance with the accounting policies set out in the Preliminary Prospectus and the Prospectus and are presented in accordance with the relevant presentation principles of International Financial Reporting Standards applied on a consistent basis throughout the periods involved. All assumptions material to the Projections are fairly and accurately described in the Preliminary Prospectus and the Prospectus, the assumptions used in the preparation of the Projections are appropriate and reasonable, there are no facts or any assumptions known to the Manager and its directors which have not been taken into account in preparing the Projections and which could reasonably be expected to have, individually or in aggregate, a material adverse effect on the Projections, and the Manager and its directors are not aware of any business, economic or industry developments inconsistent in any material respect with the assumptions underlying the Projections. Without prejudice to the generality of the foregoing, the Manager discussed the Projections with the Reporting Auditors and the Manager does not disagree with the opinion of the Reporting Auditors expressed in their reports contained in the Preliminary Prospectus and the Prospectus;
3.1.33
Working capital
(i) Prime US REIT and the Trust Group Entities do not have any capital commitment which is sufficiently material to merit disclosure in the Preliminary Prospectus and the Prospectus but is not so disclosed; and (ii) taking into account the net proceeds to be received by Prime US REIT from the Offering and the application of such proceeds in the manner stated in the section of the Preliminary Prospectus and the Prospectus under the heading "Use of Proceeds", the available cash balance of Prime US REIT and the cash flow expected to be generated from operations after the Listing Date, the Manager believes that the working capital available to Prime US REIT and its subsidiaries is and will be sufficient for the present working capital requirements of the Prime US REIT and its subsidiaries and in any event for at least 12 months from the close of the Offering;
3.1.34
No indebtedness
Save as disclosed in the Preliminary Prospectus and the Prospectus, none of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities has any capital commitment, guarantees or other contingent liabilities and is, or has been party to any unusual, long term or onerous commitments, contracts or arrangements not in the ordinary and usual course of business;
3.1.35
Collective Investment Scheme

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Prime US REIT has been duly authorised by the MAS as a collective investment scheme which is a real estate investment trust pursuant to Section 286 of the SFA and in accordance with the Code and the Property Funds Appendix;
3.1.36
Announcements
All statements of fact contained in any public announcements required for the purposes of the Offering in relation to the Offering made by or on behalf of entities within the KBS Group or by the Manager or the Sponsor or their respective Affiliates are true and accurate in all material respects and not misleading in any material respect;
3.1.37
Eligibility-to-list letter
Prime US REIT has received the ETL Letter from the SGX-ST for the Listing and all necessary copies of the Prospectus will be delivered to the SGX-ST pursuant to such letter;
3.1.38
Registration of Prospectus
A copy of the Prospectus in agreed form (duly signed by or on behalf of the directors of the Manager) will be registered as a prospectus with the MAS in accordance with Section 296 of the SFA on the date hereof together with all other documents required by law or the MAS to be filed or accompanying the Prospectus at the time of registration;
3.1.39
No Broker's Fees
Neither the Manager nor any of its Affiliates or any person acting on their behalf has paid or agreed to pay to any person any compensation for soliciting another to subscribe or purchase any securities of Prime US REIT (except as contemplated by this Agreement, the Singapore Offer Agreement or as disclosed in the Preliminary Prospectus and the Prospectus);
3.1.40
Taxes
Other than real property transfer taxes and nominal stamp duty, there are no stamp duties or other issuance or transfer, capital gains, income and withholding taxes or duties or other similar taxes, fees or charges required to be paid in connection with the execution, delivery and performance of any of the Transaction Documents or the issuance or the sale of the Offering Units under this Agreement and the Singapore Offer Agreement; save as disclosed above and in the Preliminary Prospectus and the Prospectus, none of the Properties or properties and assets of the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities will be subject to any taxes or duties or similar fees or charges in connection with the transactions to be performed under the Transaction Documents. Each of the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities has complied with all applicable laws and regulations in respect of the payment of taxes;
3.1.41
Distributions

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Save as disclosed in the Preliminary Prospectus or the Prospectus, none of Prime US REIT or any of the Trust Group Entities is prohibited by applicable law or by any contractual obligation or contractual restriction, directly or indirectly, from paying any dividends or from making any other distribution on its income or its capital, or from repaying any loans or advances to it and the Manager is not prohibited by applicable law or by any contractual obligation or contractual restriction from declaring any distributions on Prime US REIT's income in accordance with the Trust Deed. No authorisation, approval or consent of any governmental authority or agency of such jurisdiction is required to effect distributions by Prime US REIT or any of the Trust Group Entities and such distributions may be converted into foreign currency and freely transferred out of such jurisdiction;
3.1.42
No Undisclosed Relationships
Other than as disclosed in both the Preliminary Prospectus and the Prospectus:
(a)
none of the Manager (as manager of Prime US REIT), the Manager US Sub, the Trustee (as trustee of Prime US REIT), Prime US REIT, any of the Trust Group Entities is a party to any transaction entered into other than on normal commercial terms; and
(b)
no transaction exists between (1) the Manager (as manager of Prime US REIT), the Manager US Sub, Prime US REIT, the Trustee (as trustee of Prime US REIT), any of the Trust Group Entities and (2) any of the entities within the Keppel Group and/or the KBS Group and any interested party (as such term is defined in the Code) with regard to the business, undertakings, assets or properties (including the Properties) of Prime US REIT or any of the Trust Group Entities or otherwise,
which is required to be described in the Preliminary Prospectus and the Prospectus pursuant to the SFA;
3.1.43
Material Contracts
Neither the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities is party to, or affected by, any agreement, arrangement or obligation entered into not in the ordinary course of business that is material in the context of the Offering, or of the financial condition, prospects, earnings, business, undertakings, assets or properties of Prime US REIT and its subsidiaries, taken as a whole (including for the avoidance of doubt, the Properties) which is not disclosed in the Preliminary Prospectus and the Prospectus;
3.1.44
No Material Adverse Change
Except as disclosed in both the Preliminary Prospectus and the Prospectus, since the date of constitution of Prime US REIT:
(a)
there has not been any change or a development involving a prospective change in the capital or long-term debt of Prime US REIT and/or any of

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the Trust Group Entities, or any distribution of any kind declared, set aside for payment, paid or made by Prime US REIT and/or any of the Trust Group Entities on any class of capital, or any change having a Material Adverse Effect, or any development involving a prospective change which will have a Material Adverse Effect (including without limitation, having sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labour disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority); and
(b)
neither Prime US REIT nor any of the Trust Group Entities have entered into any transaction that is material in the context of the Offering or incurred any liability or obligation, direct or contingent, that is material in the context of the Offering;
3.1.45
No Registration
None of the Manager or any of its Affiliates (which for the avoidance of doubt, includes the Unit Lender), or any person acting on its or their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter) has, directly or indirectly, made or will make offers or sales of any security, or has solicited or will solicit offers to buy, any security under circumstances that would require registration of the Units under the Securities Act. No registration under the Securities Act is required for the offer and sale of the Units to or by the Joint Bookrunners and Underwriters in the manner contemplated herein and in the Preliminary Prospectus and the Prospectus;
3.1.46
AIFMD Compliance
The Manager has complied with all necessary requirements and formalities in the United Kingdom as required for purposes of the Offering pursuant to the AIFMD, as transposed into the laws of the United Kingdom, for the offering of Offering Units to eligible investors in the United Kingdom;
3.1.47
No Directed Selling Efforts and No General Solicitation
Prime US REIT is a "foreign issuer" (as defined in Regulation S), and none of the Manager, Prime US REIT nor any of their respective Affiliates (which for the avoidance of doubt, includes the Unit Lender) nor any person acting on its or their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter, concerning whom no representation is made) has engaged or will engage in any "directed selling efforts" (within the meaning of Regulation S) with respect to the Units and there will be no general solicitation or advertising (as defined in Regulation D) in the United States;
3.1.48
No SUSMI
The Manager reasonably believes that there is "no substantial U.S. market interest" (as defined in Regulation S) in the Units or any security in the same class or series as the Units;

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3.1.49
Accredited Investor
The Manager reasonably believes that the US Trusts are each an "accredited investor" as defined in Rule 501 of Regulation D under the Securities Act. Accordingly, the Manager reasonably believes:
(a)
each US Trust is a trust, which total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the Units offered; and
(b)
the purchase by each US Trust has been directed by a sophisticated person with such knowledge and experience in financial business matters that he is capable of evaluating the merits and risks of the prospective investment.
3.1.50
No Integration.
Within the preceding six months, none of the Manager, Prime US REIT nor any of their respective Affiliates (which for the avoidance of doubt, includes the Unit Lender) nor any person acting on its or their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter, concerning whom no representation is made) has offered or sold to any person any Units or any securities of the same or a similar class as the Units in a manner that is or would be integrated with the sale of the Offering Units and would require the Offering Units to be registered under the Securities Act;
3.1.51
Investment Company Act
Prime US REIT is not, and as a result of the Offering or the receipt or application of the proceeds thereof will not be, an "investment company" as defined in the U.S. Investment Company Act of 1940, as amended;
3.1.52
Compliance with the US Tax Code
(a)
The Parent US REIT's current organization and its current and anticipated investments and plan of operations as disclosed in the Preliminary Prospectus and the Prospectus will enable it to meet the requirements for qualification and taxation as a "real estate investment trust" pursuant to sections 856 through 860 of the US Tax Code;
(b)
each of the Property-Tier US LLCs' current organization and its current and anticipated investments and plan of operations as disclosed in the Preliminary Prospectus and the Prospectus will enable each of them to elect to be a U.S. REIT if such election is desirable in the opinion of the Parent US REIT's board of directors, and upon such election, will meet the requirements for qualification and taxation as a "real estate investment trust" pursuant to sections 856 through 860 of the US Tax Code;
3.1.53
All tax rulings obtained
Save for the Tax Rulings and confirmations sought from IRAS on the continued validity of such Tax Rulings, the Manager has not (through its tax advisers or

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otherwise) and is not required to obtain any material tax rulings from the IRAS or the IRS for the taxation structure of Prime US REIT as described in the Preliminary Prospectus and the Prospectus, and the Tax Rulings have not been withdrawn or materially and adversely amended;
3.1.54
Compliance with Laws
Each of the Preliminary Prospectus and the Prospectus contains all particulars and information required by, and is in compliance with, and each of Prime US REIT, the Trust Group Entities, the Manager and the Manager US Sub are in compliance with all applicable provisions of the SFA, the Code, the CIS Regulations, the Listing Rules and all other requirements of the SGX-ST, the MAS and, except as would not individually or in the aggregate have a Material Adverse Effect, all other applicable statutes, governmental regulations and laws;
3.1.55
Use of proceeds
The statements in the section of the Preliminary Prospectus and the Prospectus titled "Use of Proceeds" fairly and accurately describe the intended use of proceeds of the Offering and the Manager will apply such proceeds in the manner stated therein;
3.1.56
Section 309B of the SFA
The Manager has notified the SGX-ST and the Joint Bookrunners and Underwriters, in compliance with Section 309B of the SFA, that the Offering Units, the Cornerstone Units, the KBS Units and the Over-Allotment Units to be issued pursuant to the Offering shall be prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products);
3.1.57
No unlawful payments
Neither the Manager, the Manager US Sub, Prime US REIT, any of the Trust Group Entities, nor any director or officer of the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities, nor, to the knowledge of the Manager, any of their respective employees, agents, Affiliates or other persons associated with or acting on behalf of any of the foregoing has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made, offered to make, agreed, requested, received, authorized, or taken an act in furtherance of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including officials and employees of any government-owned or controlled entity or of a public international organisation, any political party or party official or candidate for political office, any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or any other person; or (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, any applicable law or regulation implementing the OECD Convention

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on Combating Bribery of Foreign Public Officials in International Business Transactions, the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption law (collectively, the " Anti­ Bribery Laws "). Except as otherwise disclosed, no action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such investigations), or other written inquiry by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Manager, the Manager US Sub, Prime US REIT, any of the Trust Group Entities with respect to Anti-Bribery Laws is pending or, to the knowledge of the Manager, threatened. The Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities have instituted, and maintain and enforce, policies, procedures and controls designed to promote and ensure compliance with all applicable Anti-Bribery Laws;
3.1.58
No conflicts with Sanctions Laws
Neither the Manager, the Manager US Sub, Prime US REIT, the Trust Group Entities nor any of their respective directors or officers, nor, to the knowledge of the Manager, any of their respective employees, agents, Affiliates or other persons acting on behalf of the foregoing is currently the subject or the target of any sanctions administered or enforced by the U.S. Government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (" OFAC ") or the U.S. Department of State and including, without limitation, the designation as a "specially designated national" or "blocked person"), the United Nations Security Council (" UNSC "), the European Union or any of its Member States, Her Majesty's Treasury (" HMT ") or other relevant sanctions authority (collectively, " Sanctions "), nor is the Manager, the Manager US Sub, Prime US REIT or any of the Trust Group Entities located, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Crimea region of Ukraine and Syria (each, a " Sanctioned Country "); and the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities will not directly or indirectly use, or authorize any other person to use, the proceeds of the offering of the Offering Units hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that causes any of the Joint Bookrunners and Underwriters to violate the Sanctions. The Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities have not, and to the knowledge of the Manager, none of the directors, officers, employees, agents and Affiliates of the foregoing have engaged in, directly or indirectly, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country, or that otherwise violates Sanctions; and
3.1.59
Compliance with Money Laundering Laws
The operations of the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities are and have been conducted at all times in compliance

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with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering and terrorism financing statutes of all jurisdictions where the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities conducts business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental or regulatory agency (collectively, the " Anti­Money Laundering and Anti-Terrorism Financing Laws ") and no action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such investigations), or other written inquiry by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Manager, the Manager US Sub, Prime US REIT and the Trust Group Entities with respect to the Anti-Money Laundering and Anti-Terrorism Financing Laws is pending or, to the knowledge of the Manager, threatened.
3.2
Representations and warranties of the Sponsor
The Sponsor severally represents and warrants to and agrees with each Joint Bookrunner and Underwriter as set forth in this Clause 3.2, and accepts that the Joint Bookrunners and Underwriters are entering into this Agreement and the Repayment Side Letter in reliance upon each such representation, warranty and undertaking:
3.2.1
Organisation of Sponsor and its respective subsidiaries
(a)
The Sponsor has been duly organised and is validly existing as a corporation under the laws of Singapore with full power and authority to enter into and perform any of the Transaction Documents to which it is a party and to own or lease, as the case may be, and to operate its assets and properties and conduct its business as described in the Preliminary Prospectus and the Prospectus;
(b)
KBS REIT Properties III has been duly organised and is validly existing as a limited liability company under the laws of the State of Delaware with full power and authority and has obtained all approvals, licenses, authorisations and consents to enter into and perform any of the Transaction Documents to which it is a party;
(c)
To the best of the Sponsor's knowledge after due and careful inquiries, the US Asset Manager has been duly organised and is validly existing as a limited liability company under the laws of the State of Delaware with full power and authority and has obtained all approvals, licenses, authorisations and consents to enter into and perform any of the Transaction Documents to which it is a party;
(d)
The Sponsor and KBS REIT Properties III have not taken any action, nor to the knowledge of the Sponsor have any other steps been taken or legal proceedings started or threatened against the Sponsor and/or KBS REIT Properties III for their winding up or dissolution, or for either of them to enter into any arrangement or composition for the benefit of creditors, or for the appointment of a receiver,

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administrative receiver, provisional liquidator, trustee or similar officer for any of them, or any of their interests, properties, revenues or assets;
(e)
To the best of the Sponsor's knowledge after due and careful inquiries, the US Asset Manager has not taken any action, nor have any other steps been taken or legal proceedings started or threatened against the US Asset Manager for its winding up or dissolution, or for it to enter into any arrangement or composition for the benefit of creditors, or for the appointment of a receiver, administrative receiver, provisional liquidator, trustee or similar officer for it, or any of its interests, properties, revenues or assets;
3.2.2
Transaction Documents
Each of the Transaction Documents to which the Sponsor or entities within the KBS Group are a party to has been duly authorised, executed and delivered by the Sponsor and the respective entity within the KBS Group, and each of those Transaction Documents to be entered into by the Sponsor or entities within the KBS Group on the Listing Date will, when executed and delivered by such party, constitute such parties' valid and legally binding agreements, enforceable in accordance with their terms (subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity) and each of such Transaction Documents has not been amended or supplemented other than as disclosed in the Preliminary Prospectus and the Prospectus. Each of the Transaction Documents which has been entered into by the Sponsor or entities within the KBS Group are in full force and effect and there are no material breaches or defaults of these agreements on the part of the Sponsor, and to the Sponsor's knowledge, the counterparties to these agreements. To the knowledge of the Sponsor, there is no reason why the transactions described in the Transaction Documents (as applicable) would not be consummated;
3.2.3
No conflicts
None of the execution and delivery of any of the Transaction Documents to which the Sponsor or entities within the KBS Group are a party to, the consummation of any of the transactions contemplated herein or therein or the fulfilment of the terms hereof or thereof or any other event, constitutes or will constitute an event which entitles any person to require the redemption, repurchase or repayment of any indebtedness of the Sponsor, or will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any asset or property belonging to the Sponsor, whether with the passage of time or giving of notice or otherwise, in each case pursuant to:
(a)
its Constitution, bylaws or other constitutive documents;
(b)
the terms of any Document to which the Sponsor is a party or bound or to which its assets or properties are subject; or
(c)
any statute, law, rule, regulation, judgment, order or decree applicable to the Sponsor of any court, regulatory body, administrative agency,

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governmental body, arbitrator or other authority having jurisdiction over the Sponsor or any of its assets and properties, as applicable,
except in the case of paragraphs (b) and (c) only, where such conflict, breach, violation or imposition would not, individually or in the aggregate, have a Material Adverse Effect or a material adverse effect on the Sponsor's performance of this Agreement;
3.2.4
No Consents
No consent, approval, authorisation, licence, filing with or order of any court or governmental agency or body (including any consent, approval or authorisation of shareholders of the Sponsor) is required by the Sponsor in connection with the transactions contemplated by this Agreement or any of the Transaction Documents to which the Sponsor is a party (including, without limitation, the execution, delivery and performance thereof), except such as have been obtained and disclosed in the Preliminary Prospectus and the Prospectus and all such consents, approvals, authorisations, licences, filings with or orders of any court or governmental agency or body, as the case may be, are in full force and effect and to the extent that the same is subject to any conditions that are required to be complied with or fulfilled on or before the First Closing Date, that such conditions have been or will be complied with and fulfilled, save for such consents, approvals, authorisations, licences, filings or orders, the lack of which, or failure to comply or fulfil do not, individually or in the aggregate, give rise to a Material Adverse Effect or a material adverse effect on the Sponsor's performance of this Agreement;
3.2.5
No Violation
Neither the Sponsor is in, nor is the Sponsor aware of any fact or circumstance that may give rise to a, violation or default of the terms of:
(a)
any provision of its Constitution, bylaws or other constitutive documents;
(b)
any Document to which it is a party or bound or to which its assets or properties is subject; or
(c)
any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over it or any of its assets or properties, as applicable,
except in the case of paragraphs (b) and (c) only, where such event, violation or default would not, individually or in the aggregate, have a Material Adverse Effect or a material adverse effect on the Sponsor's performance of this Agreement;
3.2.6
No Proceedings
No action, suit or litigation, arbitration, investigation or administrative proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Sponsor and its assets and properties is pending

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or, as far as the Sponsor is aware, threatened and to its knowledge, no event has occurred which could reasonably be expected to give rise to any such proceedings that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect or a material adverse effect on the Sponsor's performance of this Agreement, and no order has been made or resolution passed and no petition has been presented for the winding-up of the Sponsor or for the appointment of an administrator, provisional supervisor, provisional liquidator or analogous officer;
3.2.7
No immunity
None of the Sponsor, the entities within the KBS Group, their properties, assets or revenues (including, without limitation, the Properties) are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment;
3.2.8
No Stabilisation
Neither the Sponsor nor any person acting on its behalf (other than the Stabilising Manager or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) has taken, directly or indirectly, any action designed to cause or which has constituted or which might reasonably be expected to cause or result, under any applicable law or regulation or otherwise, in the stabilisation or manipulation of the price of any security of Prime US REIT (including options in respect of the Units and other securities which are convertible into or exchangeable for those Units and any associated securities) to facilitate the sale or resale of the Units, or which would or might otherwise be reasonably expected to constitute stabilising action or the purpose of which is to create actual, or apparent, active trading in, false or misleading impression as to the market in or value of the Units or to stabilise, manipulate or raise the price of the Units;
3.2.9
Information Provided on the KBS Group
All information provided, or documents provided, disclosed or made available from time to time by the Sponsor, the entities within the KBS Group, and their directors, officers and employees in relation to the KBS Group only to the Joint Bookrunners and Underwriters or their legal advisers, or to any of the Advisers, Experts or the Reporting Auditors for the purposes of the Offering (including the Verification Notes) or any of their respective reports or letters contained or referred to in the Preliminary Prospectus and the Prospectus or any management representations or documents or other information requested by the Reporting Auditors or Allen & Gledhill LLP or DLA Piper LLP (US) or Greenberg Traurig, LLP in connection with the provision of any comfort letters and in connection with the legal due diligence reports on the Properties or for the purposes of or in the course of preparation of any application, request or response to the SGX-ST and the MAS or other regulatory authorities or set out in or accompanying the applications to the SGX-ST for the listing and quotation of the Units, or any other purpose related to the Offering, in each case, as

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amended, modified or supplemented by any additional material information provided by or on behalf of either Sponsor to the Joint Bookrunners and Underwriters, their legal advisers or any of the Advisers prior to the date of this Agreement or otherwise superseded by information in the Preliminary Prospectus and the Prospectus, are:
(a)
true and accurate in all material respects, and not misleading in any material respect, whether by omission or misstatement in light of the circumstances under which such statement was made; and
(b)
as regards forecasts or estimates, and statements of opinion, belief, intention or expectation, truly, honestly and reasonably held and given in good faith after due and careful enquiry;
3.2.10
Preliminary Prospectus and Prospectus
In relation to information relating to the Sponsor, the Preliminary Prospectus (as at its date of publication) and the Prospectus (as at its date of publication and each Closing Date) are true and accurate in all material respects, and not misleading in any material respect, whether by omission or misstatement in light of the circumstances under which such statement was made, and in the case of any amendment or supplement to the Prospectus as at the date of its publication and the Closing Date will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
3.2.11
No Registration
Neither the Sponsor nor any of its Affiliates (which for the avoidance of doubt, includes the Unit Lender) nor any person acting on any of their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter) has, directly or indirectly, made or will make offers or sales of any security, or has solicited or will solicit offers to buy, any security under circumstances that would require registration of the Units under the Securities Act;
3.2.12
No Directed Selling Efforts
Neither the Sponsor nor any of its Affiliates (which for the avoidance of doubt, includes the Unit Lender) nor any person acting on any of their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter, concerning whom no representation is made) has engaged or will engage in any "directed selling efforts" (within the meaning of Regulation S) with respect to the Units;
3.2.13
No SUSMI
The Sponsor reasonably believes that there is no "substantial US market interest" (as defined in Regulation S) in the Units or any security in the same class or series of the Units;

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3.2.14
No unlawful payments
None of the Sponsor or any of the entities within the KBS Group nor any of their directors or officers nor, to the knowledge of the Sponsor, any employee of the Sponsor or the entities within the KBS Group or any agent, Affiliate or other person acting on behalf of any of the foregoing has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made, offered to make, agreed, requested, received, authorized, or taken an act in furtherance of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including officials and employees of any government-owned or controlled entity or of a public international organisation, any political party or party official or candidate for political office, any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or any other person; or (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, any applicable Anti-Bribery Laws. Except as otherwise disclosed, no action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such investigations), or other written inquiry by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Sponsor or the entities within the KBS Group with respect to Anti-Bribery Laws is pending or, to the knowledge of the Manager, threatened. The Sponsor and the entities within the KBS Group have instituted, and maintain and enforce, policies and procedures designed to promote and ensure compliance with all applicable Anti-Bribery Laws;
3.2.15
No conflicts with Sanctions Laws
None of the Sponsor or any of the entities within the KBS Group nor any of their directors or officers nor, to the knowledge of the Sponsor, any employee of the Sponsor or the entities within the KBS Group or any agent, or Affiliate or other person associated with or acting on behalf of any of the entities within the KBS Group is currently the subject or the target of any Sanctions, nor is the Sponsor or any of the entities within the KBS Group located, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, the Sanction Country; and the Sponsor will not cause the proceeds of the offering of the Offering Units hereunder to be used, directly or indirectly or to be lent, contributed or otherwise made available to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that causes any of the Joint Bookrunners and Underwriters to violate the Sanctions. The Sponsor and the entities within the KBS Group have not, and to the knowledge of the Sponsor, none of the directors, officers, employees, agents, and Affiliates acting on behalf of any of the entities within the KBS Group have engaged in, directly or indirectly, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country, or that otherwise violates Sanctions, and no action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such

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investigations), or other written inquiry by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Sponsor or the entities within the KBS Group with respect to Sanctions is pending or, to the knowledge of the Sponsor, threatened. The Sponsor and the entities within the KBS Group have instituted, and maintain and enforce, policies, procedures and controls designed to promote and ensure compliance with Sanctions;
3.2.16
Compliance with Money Laundering Laws
The operations of the Sponsor and the entities within the KBS Group are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Anti­Money Laundering and Anti-Terrorism Financing Laws and no action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such investigations), or other written inquiry by or before any court involving any of the entities within the KBS Group with respect to the Anti-Money Laundering and Anti-Terrorism Financing Laws is pending or, to the knowledge of the Sponsor, threatened.
3.3
Representations and warranties of the Unit Lender
The Unit Lender represents and warrants to and agrees with each Joint Bookrunner and Underwriter, as follows:
3.3.1
Organisation of the Unit Lender
(a)
The Unit Lender has been duly organised and is validly existing as a limited liability company under the laws of the State of Delaware and has full legal right, power and authority and has obtained all approvals, licenses, authorisations and consents to enter into and perform its obligations under this Agreement, Unit Lending Agreement and the Lock-up Letter executed by it, and to carry out the transactions contemplated by them;
(b)
The Unit Lender has not taken any action, nor to the knowledge of the Unit Lender have any other steps been taken or legal proceedings started or threatened against the Unit Lender for its winding up or dissolution, or for it to enter into any arrangement or composition for the benefit of creditors, or for the appointment of a receiver, administrative receiver, provisional liquidator, trustee or similar officer for it, or any of its interests, properties, revenues or assets; and
3.3.2
Execution of Agreements
Each of the Transaction Documents to which the Unit Lender is a party has been duly authorised, executed and delivered by the Unit Lender, is in full force and effect and has not been amended or supplemented and each constitute the Unit Lender's valid and legally binding agreements, enforceable in accordance with their respective terms (subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors’ rights and to general principles of equity); there shall not have occurred any breach, default or non-

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compliance by the Unit Lender, and, to the knowledge of the Unit Lender, any of the parties thereto, of any of their obligations and agreements under such Transaction Documents to which the Unit Lender is a party. To the knowledge of the Unit Lender, there is no reason why the transactions as described in the relevant Transaction Documents to which the Unit Lender is a party would not be consummated;
3.3.3
No conflicts
None of the execution, delivery and performance of any of the Transaction Documents to which the Unit Lender is a party to, the consummation of any of the transactions contemplated herein or therein, the fulfilment of the terms hereof or thereof or any other event, constitutes or will constitute an event which entitles any person to require the redemption, repurchase or repayment of any indebtedness of the Unit Lender, or will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any asset or property belonging to the Unit Lender, whether with the passage of time or giving of notice or otherwise, in each case pursuant to:
(a)
its Constitution, bylaws or other constitutive documents;
(b)
the terms of any Document to which the Unit Lender is a party or bound or to which its assets or properties is subject; or
(c)
any statute, law, rule, regulation, judgment, order or decree (including, without limitation, the Listing Rules) of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority applicable to the Unit Lender or any of its assets and properties,
except in the case of paragraphs (b) and (c) only, where such conflict, breach, violation or imposition would not, individually or in the aggregate, have a Material Adverse Effect or a material adverse effect on the Unit Lender's performance of this Agreement and the Unit Lending Agreement;
3.3.4
Preliminary Prospectus and Prospectus
The Unit Lender Information contained in the Preliminary Prospectus (as at the date of its publication) and the Prospectus (as at the date of publication and the Closing Date) were, and in the case of any amendment or supplement to the Prospectus at the date of its publication and the Closing Date will be, true and accurate in all material respects and not misleading in any material respect and there are no other material facts in relation to the Unit Lender the omission of which would in the context of the offering and sale of Offering Units pursuant to the Public Offer and the Placement Tranche, make any statement relating to the Unit Lender in the Prospectus (and any amendment or supplement to it) or the Preliminary Prospectus (as at their respective dates) misleading in any material respect;

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3.3.5
No consents
No consent, approval, authorisation, licence, filing with or order of any court or governmental agency or body (including any consent, approval or authorisation of the member of the Unit Lender) is required by the Unit Lender in connection with the transactions contemplated by any of the Transaction Documents to which the Unit Lender is a party (including the execution, delivery and performance thereof), except such as have been obtained and disclosed in the Preliminary Prospectus and the Prospectus, and all such consents, approvals, authorisations, licences, filings with or orders of court or governmental agency of body, as the case may be, are in full force and effect and to the extent that the same is subject to any conditions that are required to be complied with or fulfilled on or before the First Closing Date, that such conditions have been complied with and fulfilled, except for such consent, approval, authorisation, licence, filing with or order of any court or governmental agency or body, the lack of which would not, individually or in the aggregate have a Material Adverse Effect or a material adverse effect on the Unit Lender's performance of this Agreement and the Unit Lending Agreement;
3.3.6
No violation
Neither the Unit Lender is in, nor is the Unit Lender aware of any fact or circumstance that may give rise to, a violation or default of the terms of:
(a)
any provision of its constitutive documents;
(b)
any Document to which it is a party or bound or to which its assets or properties is subject; or
(c)
any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over its or any of its assets or properties, as applicable,
except (with respect to paragraphs (b) and (c) only) for such violation or default which would not, individually or in the aggregate, have a Material Adverse Effect and a material adverse effect on the Unit Lender's performance of this Agreement and the Unit Lending Agreement;
3.3.7
No proceedings
No action, suit or litigation, arbitration, investigation or administrative proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Unit Lender and its assets and properties is pending or, as far as the Unit Lender is aware, threatened and no event has occurred which could reasonably be expected to give rise to any such proceedings that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect or a material adverse effect on the Unit Lender's performance of this Agreement and the Unit Lending Agreement, and no order has been made or resolution passed and no petition has been presented for the winding-up of the Unit Lender or for the appointment of an

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administrator, provisional supervisor, provisional liquidator or analogous officer;
3.3.8
No immunity
None of the Unit Lender or its subsidiaries, properties, assets or revenues (including, without limitation, the Properties) are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment;.
3.3.9
Over-Allotment Units
As at each Option Closing Date, the Unit Lender will have full legal ownership of the Over­Allotment Units as described in the Preliminary Prospectus and the Prospectus and the Unit Lender will be entitled to deliver such Over-Allotment Units to the Stabilising Manager, as agent of the Joint Bookrunners, in accordance with this Agreement, and the Over-Allotment Units, when (and to the extent) delivered to the Stabilising Manager, will be fully paid and will be delivered free from all Encumbrances, and will be freely transferable save as provided in the Trust Deed and/or as disclosed in the Preliminary Prospectus and the Prospectus;
3.3.10
No stabilisation
None of the Unit Lender nor any person acting on its behalf (other than the Stabilising Manager or any of its Affiliates or other persons acting on behalf of the Stabilising Manager) has taken, directly or indirectly, any action designed to cause or which has constituted or which might reasonably be expected to cause or result, under any applicable law or regulation or otherwise, in the stabilisation or manipulation of the price of any security of Prime US REIT (including options in respect of the Units and other securities which are convertible into or exchangeable for those Units and any associated securities) to facilitate the sale or resale of the Units, or which would or might reasonably be expected to otherwise constitute stabilising action or the purpose of which is to create actual, or apparent, active trading in, false or misleading impression as to the market in or value of the Units or to stabilise, manipulate or raise the price of the Units;
3.3.11
Unit Lending Agreement
The representations and warranties made by the Unit Lender in the Unit Lending Agreement are true and correct;
3.3.12
No Registration
None of the Unit Lender nor any person acting on any of its behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter) has, directly or indirectly, made or will make offers or sales of any security, or has solicited or will solicit offers to buy, any security under

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circumstances that would require registration of the Units under the Securities Act. No registration under the Securities Act of the Units is required for the offer and sale of the Units to the Unit Lender in the manner contemplated herein and in the Preliminary Prospectus and the Prospectus;
3.3.13
No Directed Selling Efforts
None of the Unit Lender nor any of its Affiliates nor any person acting on any of their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter, concerning whom no representation is made) has engaged or will engage in any "directed selling efforts" (within the meaning of Regulation S) with respect to the Units;
3.3.14
No SUSMI
The Unit Lender reasonably believes that there is no "substantial US market interest" (as defined in Regulation S) in the Units or any security in the same class or series of the Units;
3.3.15
No unlawful payments
None of the Unit Lender, its subsidiaries nor any member of the Unit Lender or its subsidiaries nor, to the knowledge of the Unit Lender, or any agent, Affiliate, or other person associated with or acting on behalf of the Unit Lender or its subsidiaries has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made, offered to make, agreed, requested, received, authorized, or taken an act in furtherance any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including officials and employees of any government-owned or controlled entity or of a public international organisation, any political party or party official or candidate for political office, any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or any other person; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, any applicable Anti-Bribery Laws. No action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such investigations), or other written inquiry by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Unit Lender or its subsidiaries or, to the knowledge of the Unit Lender, its Affiliates with respect to Anti-Bribery Laws is pending or, to the knowledge of the Unit Lender, threatened. The Unit Lender has instituted, and maintains and enforces, policies and procedures designed to promote and ensure compliance with all applicable Anti-Bribery Laws;
3.3.16
No conflicts with Sanctions Laws
None of the Unit Lender, its subsidiaries nor any member of any of the Unit Lender or its subsidiaries nor, to the knowledge of the Unit Lender, any agent, Affiliate, or other person associated with or acting on behalf of the Unit Lender or its subsidiaries is currently the subject or the target of any Sanctions, nor is the Unit Lender or its subsidiaries located, organized or resident in a country or

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territory that is the subject or the target of Sanctions, including, without limitation, the Sanction Countries; and the Unit Lender will not directly or indirectly use, or authorize any other person to use, the proceeds of the offering of the Over-Allotment Units hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity: (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that causes any of the Joint Bookrunners and Underwriters to violate the Sanctions. None of the Unit Lender or its subsidiaries has, and to the knowledge of the Unit Lender, none of its members and Affiliates of the foregoing have engaged in, directly or indirectly, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country, or that otherwise violates Sanctions;
3.3.17
Compliance with Money Laundering Laws
The operations of the Unit Lender and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements, including those of the Anti-Money Laundering and Anti-Terrorism Financing Laws and no action, suit, proceeding, investigation (where the subject of the investigation has knowledge or reason to know of such investigations), or other written inquiry by or before any court or governmental or regulatory agency, authority or body or any arbitrator involving the Unit Lender or its subsidiaries with respect to the Anti-Money Laundering and Anti-Terrorism Financing Laws is pending or, to the knowledge of the Unit Lender, threatened.
3.4
Repetition of representations and warranties
The representations and warranties of the Manager in Clause 3.1, the Sponsor in Clause 3.2 and the Unit Lender in Clause 3.3 shall be deemed to be repeated by the relevant parties as of the Execution Time and at all times up to and including each Closing Date (including without limitation, the date of the Repayment Side Letter, the Completion Date and at the time immediately prior to closing on each Closing Date). As of the date of any amendments or supplements to the Prospectus prepared by the Manager in accordance with the terms of this Agreement, the representations and warranties of the Manager in Clause 3.1, of the Sponsor in Clause 3.2 and of the Unit Lender in Clause 3.3, will be true and accurate with respect to the Prospectus as so amended or supplemented as if repeated as at such date.
3.5
Reliance on representations and warranties
Each of the Manager, the Sponsor and the Unit Lender acknowledges, in respect of itself (and in the case of the Manager, in respect of Prime US REIT), that the Joint Bookrunners and Underwriters are entering into this Agreement in reliance on each representation and warranty given by it in this Clause 3.
3.6
Representations and warranties independent

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Each representation or warranty is to be construed independently and (except where this Agreement provides otherwise) is not limited by any provision of this Agreement or any other representation or warranty.
3.7
Officers' Certificates
Any Officers' Certificate signed by any officer of the Manager, the Sponsor and/or the Unit Lender delivered to the Joint Bookrunners and Underwriters or their counsel shall be deemed a representation and warranty by the Manager, the relevant Sponsor and the Unit Lender, as the case may be, to each Joint Bookrunner and Underwriter as to the matters covered thereby.
4.
UNDERTAKINGS BY THE MANAGER, THE SPONSOR AND THE UNIT LENDER
4.1
Copies of Prospectus
The Manager will furnish to each Joint Bookrunner and Underwriter and counsels for the Joint Bookrunners and Underwriters, without charge, during the period referred to in 4.3, such number of copies of the Preliminary Prospectus and the Prospectus and any amendments and supplements thereto as they may reasonably request from time to time.
4.2
No amendments
The Manager and the Sponsor undertakes that they will not amend or supplement the Preliminary Prospectus or Prospectus without the prior written consent of the Joint Global Coordinators (such consent not to be unreasonably withheld or delayed) except as required by applicable law or regulation, rule or directive (including without limitation, the SFA or the Listing Rules) (and in such case, without prejudice to Clauses 3.1.28, 3.2.10 and 3.3.4 and subject to the prior agreement of the Joint Bookrunners and Underwriters) as to the contents of the amendments or supplements. Neither the consent of the Joint Global Coordinators, nor the delivery by any Joint Bookrunner and Underwriter of any such amendment or supplement to offerees or investors, shall constitute a waiver of any of the conditions set forth in Section 4 hereof or waiver of any rights under this Agreement, including termination rights under Clause 8.
4.3
Notice
If at any time prior to the Closing Date, the Manager, the Sponsor or the Unit Lender becomes aware that any event has occurred as a result of which:
4.3.1
Representations and Warranties
Any of the representations and warranties given pursuant to Clause 3.1 or Clause 3.2 or Clause 3.3 would be untrue or incorrect as if such representations and warranties had been made or given at such time; or
4.3.2
Prospectus
(a)
any statement of fact contained in the Preliminary Prospectus or the Prospectus (as then amended or supplemented) would not be true and accurate in all material respects or is misleading in any material respect;

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(b)
the Preliminary Prospectus or the Prospectus (as then amended or supplemented) would not contain all information investors and their professional advisers would reasonably require and reasonably expect to find there, or that is necessary to enable investors and their professional advisers to make an informed assessment of the merits and risks of an investment in Prime US REIT, including without limitation the assets and liabilities, financial position, profits and losses and prospects of Prime US REIT and the Trust Group Entities and of the rights attached to the Units;
(c)
any information would be omitted from the Preliminary Prospectus or the Prospectus (as then amended or supplemented) which might be necessary in order to make the statements in the Preliminary Prospectus or the Prospectus (as then amended or supplemented and as the case may be) not misleading in any material respect or which, in the context of the offering and sale of Units pursuant to the Offering, would be material for disclosure in the Preliminary Prospectus or the Prospectus (as the case may be); or
(d)
if it shall be necessary to amend or supplement the Prospectus, to comply with applicable law or regulation, rule or directive (including without limitation, the SFA, the CIS Regulations, the Code and the Listing Rules) by any governmental, supervisory or administrative bodies or agencies (including without limitation the SGX-ST and MAS); or
4.3.3
Breach
Any of the Manager, the Sponsor or the Unit Lender has failed to comply with any of its undertakings under this Agreement or breached in any material respect an obligation it has under a Transaction Document, or if any of the conditions set out in Clauses 7.3 and 7.4 are not, or will not be fulfilled by the First Closing Date and the relevant Option Closing Date (as the case may be),
then the Manager (on behalf of the Trustee and itself), the Sponsor or the Unit Lender, as the case may be, will promptly upon becoming aware of such failure:
(i)
notify the Joint Bookrunners and Underwriters of any such event or circumstance in writing;
(ii)
in the case of the Manager only, subject to the requirements of Clause 4.2, with respect to Clause 4.3.2 prepare an amendment or supplement that will correct such statement or omission or effect such compliance;
(iii)
in the case of the Manager only, supply any supplemented or amended Prospectus to the Joint Bookrunners and Underwriters, and the counsel for the Joint Bookrunners and Underwriters without charge in such quantities as they may reasonably request; and
(iv)
take such other steps as may be reasonably requested by the Joint Bookrunners and Underwriters to publicise the same.

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Without prejudice to the generality of this Clause 4.3, each of the Manager, the Sponsor and the Unit Lender undertakes to the Joint Bookrunners and Underwriters that they will not knowingly do or omit to do any act or thing which would render any of the warranties, agreements, or undertakings given pursuant to Clause 3 of this Agreement to be untrue or incorrect, or breached.
4.4
Qualifications
The Manager (on behalf of Prime US REIT) will arrange, if necessary, for the qualification of the Units for sale by the Joint Bookrunners and Underwriters under the laws of such jurisdictions as the Manager (on behalf of Prime US REIT) and the Joint Bookrunners and Underwriters may agree and will maintain such qualifications in effect so long as required for the sale of the Units. However, in no event shall the Manager be obliged to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering or sale of the Units, in any jurisdiction where it is not now so subject. The Manager (on behalf of Prime US REIT) will promptly advise the Joint Bookrunners and Underwriters of the receipt by the Manager of any notification with respect to the suspension or withdrawal of the qualification of the Units for subscription or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.
4.5
No actions which would require registration of Units
None of the Manager, the Sponsor, the Unit Lender, any of their respective Affiliates, nor any person acting on its or their behalf (which, for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter) will, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration or (subject to Clause 4.4) qualification of the Units in any jurisdiction outside Singapore, including registration under the Securities Act.
4.6
No directed selling efforts
None of the Trustee, the Manager, the Sponsor, the Unit Lender or any of their Affiliates, nor any person acting on its or their behalf (which for the avoidance of doubt, shall not include any Joint Bookrunner and Underwriter) will engage in any "directed selling efforts" (within the meaning of Regulation S) with respect to the Units.
4.7
Listing, clearance and settlement
The Manager will:
4.7.1
Cause Listing
Use its best endeavours to cause the Listing of the Units from 2 p.m. on the First Closing Date, and will procure that any conditions in the ETL Letter that are required to be complied with and fulfilled before the First Closing Date, are so complied with and fulfilled;
4.7.2
Maintain Listing

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Use its best endeavours to maintain such Listing and if it is unable to do so, having used such endeavours, the Manager shall use all reasonable endeavours to obtain and maintain a listing for the Units on one or more other alternative stock exchanges as the Manager (on behalf of Prime US REIT), with the approval of the Joint Bookrunners and Underwriters may decide; and
4.7.3
Clearance and Settlement
Co-operate with the Joint Bookrunners and Underwriters and use its best endeavours to cause the Units to become eligible for clearance and settlement through CDP from the First Closing Date.
4.8
Lock-ups
4.8.1
Each of the Manager, KBS REIT III, KBS REIT Holdings III, KBS LP III and KBS REIT Properties III, severally agrees to execute and deliver, to the Joint Bookrunners and Underwriters their respective Lock-up Letters and to comply with and procure the compliance with the same.
4.8.2
Each of the Manager and the Sponsor severally agrees to procure the execution and delivery to the Joint Bookrunners and Underwriters of the Lock-up Letter by KBS REIT III, KBS REIT Holdings III, KBS LP III and KBS REIT Properties III.
4.9
Further undertakings
Each of the Manager, the Sponsor and the Unit Lender undertakes and covenants as follows:
4.9.1
to not amend any of the terms of the KBS Subscription Agreement without the written consent of all the Joint Global Coordinators (such consent not to be unreasonably withheld or delayed);
4.9.2
(in the case of the Manager only) to not waive any breach by KBS REIT Properties III of the terms of the KBS Subscription Agreement without the written consent of all the Joint Global Coordinators (such consent not to be unreasonably withheld or delayed);
4.9.3
to not terminate the KBS Subscription Agreement or take any action which might jeopardise the existence, or enforceability of any of the terms, of the KBS Subscription Agreement without the written consent of all the Joint Global Coordinators (such consent not to be unreasonably withheld or delayed);
4.9.4
that it shall not breach any of its obligations and it shall duly and promptly perform its obligations under this Agreement and each of the Transaction Documents to which it is a party, and (in the case of the Manager only) to procure the performance of the relevant entities' obligations under the Portfolio Sale and Purchase Agreement;
4.9.5
(in the case of the Manager only) to procure that non-voting, fixed coupon preferred stock shall be issued by the Parent US REIT to more than 100 individuals who shall not be related to the Manager, the Sponsor or their

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respective Affiliates no later than 30 January 2020, and to procure that as of the First Closing Date:
(a)
all units of ownership interest of each of the Property-Tier US LLCs (except for Prime US-222 Main, LLC) shall be held by the Lower-Tier US LLC;
(b)
all units of ownership interest of Prime US-222 Main, LLC shall be held by Prime US-Acquisition I, LLC;
(c)
all units of ownership interest of Prime US-Acquisition I, LLC shall be held by Prime US Properties, LLC;
(d)
all units of ownership interest of each of Prime US Properties, LLC and the Lower-Tier US LLC shall each be held by the Mid-Tier US LLC;
(e)
all units of ownership interest of the Mid-Tier US LLC shall be held by the Upper-Tier US LLC;
(f)
all units of ownership interest of the Upper-Tier US LLC shall be held by the Parent US REIT; and
(g)
100% of the voting shares of common stock in the Parent US REIT shall be held by Singapore Sub 1,
as described in the Preliminary Prospectus and the Prospectus;
4.9.6
(in the case of the Manager only) to procure the issue of the title insurance policies in the form of the Proforma Title Insurance Policies (which shall provide coverage for a Property up to the amount of consideration paid or payable to the applicable Vendor and which shall only be subject the Title Insurance Exceptions) by the Title Insurance Company;
4.9.7
to promptly notify the Joint Bookrunners and Underwriters of all communications (written or oral) between the Manager (or any person acting on its behalf, including any legal counsel) and/or the Sponsor (or any person acting on its behalf, including any legal counsel) in respect of or relating to Clauses 4.9.1, 4.9.2 and 4.9.3; and
4.9.8
(in the case of the Manager only) to diligently pursue and enforce its rights under the KBS Subscription Agreement, including without limitation, if requested by any Joint Bookrunner and Underwriter, claiming for specific performance under the KBS Subscription Agreement. In pursuing or enforcing its rights under the KBS Subscription Agreement, the Manager shall act in accordance with the reasonable instructions of the Joint Bookrunners and Underwriters.

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4.10
Cornerstone Subscription Agreements
The Manager undertakes and covenants that it:
4.10.1
shall not amend any of the terms of the Cornerstone Subscription Agreements without the written consent of all the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed);
4.10.2
shall not waive any breach by any Cornerstone Investor of the terms of the Cornerstone Subscription Agreement without the written consent of all the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed);
4.10.3
shall not terminate the Cornerstone Subscription Agreements or take any action which might jeopardise the existence, or enforceability of any of the terms, of the Cornerstone Subscription Agreements without the written consent of all the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed;
4.10.4
shall not breach any of its obligations and it shall duly and promptly perform its obligations under the Cornerstone Subscription Agreements;
4.10.5
shall promptly notify the Joint Bookrunners and Underwriters of all written communications between the Manager (or any person acting on its behalf, including any legal counsel) and any Cornerstone Investor (or any person acting on its behalf, including any legal counsel) in respect of or relating to amendment or waiver of any terms of the Cornerstone Subscription Agreements or termination of the Cornerstone Subscription Agreements; and
4.10.6
shall diligently pursue and enforce its rights under the Cornerstone Subscription Agreements, including without limitation, if requested by any Joint Bookrunner and Underwriter, claiming for specific performance under the Cornerstone Subscription Agreements. In pursuing or enforcing its rights under the Cornerstone Subscription Agreements, the Manager shall act in accordance with the reasonable instructions of the Joint Bookrunners and Underwriters. The Manager shall, at the request of the Joint Bookrunners and Underwriters, to the extent permitted under law, assign its rights under the Cornerstone Subscription Agreements to the Joint Bookrunners and Underwriters.
4.11
No stabilisation
4.11.1
None of the Manager, the Sponsor and the Unit Lender or any of their respective Affiliates or any person acting on their behalf (other than the Stabilising Manager or any of its Affiliates or other persons acting on behalf of the Stabilising Manager), will take, directly or indirectly, any action designed to or which has constituted or which might be expected to cause or result, under any applicable law or regulation or otherwise, in stabilisation or manipulation of the price of any security of Prime US REIT (including the Units, options in respect of the Units and other securities which are convertible into or exchangeable for Units) to facilitate the sale or resale of the Units, or which would or might otherwise constitute stabilising action or the purpose of which is to create actual,

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or apparent, active trading in or to raise the price of the Units. For the avoidance of doubt, the Stabilising Manager may, on behalf of the Joint Bookrunners and Underwriters, engage in transactions which stabilise the market price of the Units.
4.11.2
The Manager:
(a)
will, on the date of this Agreement, execute and deliver the Stabilising Manager Appointment Letter (such letter to be in form and substance compliant with applicable law as set out in Schedule 6) to the Stabilising Manager, for the Stabilising Manager to deliver to the SGX-ST;
(b)
and the Unit Lender will, (i) as soon as practicable before the First Closing Date, deliver to the Stabilising Manager a list in writing of all its associates (as defined in Section 4(6) of the SFA and for the purpose of Regulation 3A(8) of the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006 of Singapore) as of the date of its notice to the Stabilising Manager (being a date after the date of this Agreement), and (ii) thereafter, and from time to time up to the last day on which the Over-Allotment Option may be exercised, deliver to the Stabilising Manager an updated list of any other persons who become its associates after the date of the earlier notice to the Stabilising Manager; and
(c)
and the Unit Lender will not, and will procure that its respective associates (as defined for the purposes of Regulation 3A(8) of the Securities and Futures (Market Conduct) (Exemptions) Regulations 2006) will not, directly or indirectly, effect any sell order of the Units through the Stabilising Manager for the period commencing the date of the commencement of dealing in the Units on the SGX-ST and expiring on the Option Closing Date.
4.12
Use of Proceeds
The Manager and Prime US REIT will apply the net proceeds from the sale of the Units as described in the Preliminary Prospectus and the Prospectus and will not directly or indirectly use such proceeds, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity:
4.12.1
to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of the Sanctions,
4.12.2
to fund or facilitate any activities of or business in any Sanctioned Country,
4.12.3
in any other manner that causes any person, including the Joint Bookrunners and Underwriters, to violate the Sanctions, or
4.12.4
in any manner that violates Anti-Money Laundering and Anti-Terrorism Financing Laws or Anti-Bribery Laws,
and the Manager further covenants not to engage, directly or indirectly, in any other activities that would cause any of the Joint Bookrunners and Underwriters to violate the Sanctions.

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4.13
Assistance
The Manager and the Sponsor will co-operate to give all such assistance and provide all such information as the Joint Bookrunners and Underwriters may reasonably require in connection with the making and implementation of the Offering in accordance with the arrangements contemplated by this Agreement.
4.14
No announcements
None of the Manager, the Sponsor and the Unit Lender or any of their respective affiliates shall make any announcement in relation to the Offering from the Execution Time up to (and including) the later of the First Closing Date or the Option Closing Date, if the Over-Allotment Option is exercised, without the prior approval of the Joint Global Coordinators (such approval not to be unreasonably withheld or delayed), except where such announcement is required by applicable law or regulations or the Listing Rules, and in such event, such announcement shall be made with the prior consultation of the Joint Global Coordinators. None of the Manager, the Sponsor or their respective Affiliates shall make any announcement in relation to the Offering for the period from the date following the First Closing Date or the Option Closing Date, if the Over-Allotment Option is exercised until the date falling 90 days from the First Closing Date or the Option Closing Date, if the Over-Allotment Option is exercised without consulting the Joint Global Coordinators prior to publicising such announcement. Notwithstanding the foregoing and anything to the contrary in this Agreement, KBS REIT III may make such disclosures and filings on behalf of itself and its subsidiaries (including the Unit Lender) as required (upon the advice of counsel) by U.S. laws and rules and regulations promulgated thereunder (including the Securities Act and the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder).
4.15
Compliance with Laws
The Manager, the Sponsor and the Unit Lender each undertake to comply, in all material respects, with all the applicable provisions of the SFA, the Code, the CIS Regulations, the on-going requirements of the relevant laws of the United Kingdom implementing the AIFMD, the Listing Rules and all other requirements of the SGX-ST and all other applicable statutes, governmental regulations and laws.
4.16
Selling restrictions
Each of the Manager, the Sponsor and the Unit Lender or their respective Affiliates has complied and will comply with the restrictions in connection with the Offering as set forth in the section titled "Plan of Distribution - Distribution and Selling Restrictions" in the Preliminary Prospectus and the Prospectus.
4.17
No public offering
None of the Manager, the Sponsor and the Unit Lender or their respective affiliates will take any action to permit a public offering of the Offering Units or distribute the Preliminary Prospectus or the Prospectus or any relevant application forms for the Offering Units or other material relating to the Offering in any country or jurisdiction

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except in Singapore or any other country or jurisdiction where such offering or distribution is permitted.
4.18
Compliance with US Tax Code
The Manager shall act in good faith to cause (i) the Parent US REIT to qualify as a "real estate investment trust" pursuant to sections 856 through 860 of the US Tax Code and (ii) in the event that elections are made for any of the Property-Tier US LLCs to be a U.S. REIT for such entities to qualify as a "real estate investment trust" pursuant to sections 856 through 860 of the US Tax Code.
4.19
No competition
None of the Manager, the Sponsor or their respective Affiliates will, from the date of this Agreement until the earliest of:
4.19.1
90 days from the last Option Closing Date; and
4.19.2
the date this Agreement is terminated in accordance with Clause 8.1,
launch any other real estate-related equity offerings listed on the SGX-ST (except those which relate to entities or real estate investment trusts or business trusts which are already listed on the SGX-ST and of which the constitution of the board of directors are in compliance with the listing rules of the SGX-ST) which might, in the reasonable opinion of the Joint Bookrunners, have a material adverse effect on the Offering, and Underwriters, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed). For the avoidance of doubt, with respect only to the Sponsor, this provision shall exclude entities which are not subsidiaries, direct or indirect, of the Sponsor.
5.
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS BY THE JOINT BOOKRUNNERS AND UNDERWRITERS
5.1
Selling Restrictions
Each Joint Bookrunner and Underwriter, severally (and not jointly or jointly and severally), represents and warrants to and agrees with the Manager that subject to the compliance by the Manager and the Sponsor of their respective representations and warranties in this Agreement, it has complied and will comply with the restrictions set forth in the section titled "Plan of Distribution-Distribution and Selling Restrictions" in the Preliminary Prospectus and the Prospectus in connection with the Offering and sale of Offering Units pursuant to the Public Offer and the Placement Tranche.
5.2
Representations and warranties
Each Joint Bookrunner and Underwriter severally (and not jointly or jointly and severally), represents and warrants to and agrees with the Manager and the Sponsor that:
5.2.1
it has the requisite power and authority to enter into and perform this Agreement;

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5.2.2
this Agreement constitutes its valid and legally binding obligations in accordance with its terms (subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity); and
neither it, its Affiliates nor any persons acting on its or their behalf have engaged or will engage in any "directed selling efforts" (as defined in Regulation S) with respect to the Units.
6.
COMMISSIONS, COSTS AND EXPENSES
6.1
Fees payable by the Manager and the Sponsor
6.1.1
Financial Adviser Fee
The Manager (failing whom, the Sponsor) shall pay, or direct the Trustee to pay, to DBS in its role as the Sole Financial Adviser and Issue Manager in connection with the Offering related structuring services (excluding, for the avoidance of doubt, the sale and purchase of the securities under this Agreement), a financial adviser's fee as separately agreed between the DBS, the Manager and the Sponsor in writing;
6.1.2
Underwriting, Selling and Management Commission on the Placement Units and Cornerstone Units
The Manager (failing whom, the Sponsor) shall pay, or direct the Trustee to pay to the Joint Bookrunners and Underwriters an underwriting, selling and management fee of 2.0% of the Offering Price multiplied by the aggregate number of Placement Units (excluding the Over-Allotment Units) and Cornerstone Units (excluding the KBS Units, the KCIH Units, the US Trusts Units and any Units being subscribed by KBS REIT Properties III, LLC, KAP and Linda Bren 2017 Trust under the Placement Tranche) (and together with any GST payable thereon), in the proportion represented by the number of Units set forth opposite each such Joint Bookrunner and Underwriter's name in Column 1 of Schedule 1.
6.1.3
Underwriting, Selling and Management Commission on the Over-Allotment Units
The Manager (failing whom, the Sponsor) shall pay, or direct the Trustee to pay, to the Joint Bookrunners and Underwriters an underwriting, selling and management fee of 2.0% of the Offering Price multiplied by the aggregate number of Over-Allotment Units (for which such Over-Allotment Option has been exercised) (and together with any GST payable thereon), in the proportion represented by the number of Units set forth opposite each such Joint Bookrunner and Underwriter's name in Column 1 of Schedule 1;
6.1.4
Incentive Fee on the Placement Units and Cornerstone Units
The Manager may at its sole discretion pay, or direct the Trustee to pay, to the Joint Bookrunners and Underwriters an incentive fee of up to 0.45% of the Offering Price multiplied by the aggregate number of Placement Units

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(excluding the Over-Allotment Units) and Cornerstone Units (excluding the KBS Units, the KCIH Units, the US Trusts Units and any Units being subscribed by KBS REIT Properties III, LLC, KAP and Linda Bren 2017 Trust under the Placement Tranche) (and together with any GST payable thereon), in such amounts and in such proportion among the Joint Bookrunners and Underwriters as may be determined by the Manager in its sole discretion; and
6.1.5
Incentive Fee on the Over-Allotment Units
The Manager may at its sole discretion pay, or direct the Trustee to pay, to the Joint Bookrunners and Underwriters an incentive fee of up to 0.45% of the Offering Price multiplied by the aggregate number of Over-Allotment Units (for which such Over-Allotment Option has been exercised) (and together with any GST payable thereon), in such proportion among the Joint Bookrunners and Underwriters as may be determined by the Manager in its sole discretion.
Without prejudice to the obligations of the Manager and the Sponsor (as the case may be) under this Clause 6, unless previously paid by the Manager or the Sponsor, the equivalent in United States dollars (as determined by the Joint Bookrunners and Underwriters) of any amount due under Clauses 6.1.1 and 6.1.2 may be deducted from the Offering Proceeds to be paid to the Trustee for Prime US REIT on the First Closing Date in accordance with Clauses 7.2.1. The amount due under Clause 6.1.3 and incentive fees under Clauses 6.1.4 and 6.1.5 shall be paid to the Joint Bookrunners and Underwriters within 45 days of the First Closing Date or such other date as may be agreed between the Joint Bookrunners and Underwriters, the Manager and the Sponsor.
6.2
Prime US REIT's costs and expenses
Regardless whether closing occurs on the First Closing Date, the Manager will pay or cause the Trustee to pay and/or reimburse (as the case may be) (failing such payment and/or reimbursement, the Sponsor shall pay and/or reimburse) all the costs, charges and expenses whether incurred directly or indirectly (plus any applicable GST or value added tax):
6.2.1
Professional Advisers
Of the legal, accountancy and other professional advisers instructed by the Manager, the Trustee and/or the KBS Group in connection with the Offering, including those of Allen & Gledhill LLP, DLA Piper LLP (US), Greenberg Traurig, LLP, Anderson Mori & Tomotsune, Dentons Delany, the Reporting Auditor, Cushman & Wakefield of Illinois, Inc. and JLL Valuation & Advisory Services, LLC incurred in connection with the Offering;
6.2.2
Trustee
Of the preparation of the Trust Deed, the issuance thereunder of the Units and the fees and expenses of the Trustee;
6.2.3
Transaction Documents
In connection with the preparation and execution of the other Transaction Documents;

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6.2.4
Offering Documents
Of the preparation, printing, reproduction, delivery (including postage, airfreight charges and charges for counting and packaging) of the Preliminary Prospectus and the Prospectus, and each amendment or supplement thereto, in such number as may be reasonably requested for use in connection with the offering and sale of the Units;
6.2.5
Marketing logistics
In association with the expenses relating to the marketing the Offering and the Cornerstone Subscription Agreements (including, without limitation, roadshow transportation and other costs and expenses incurred by or on behalf of the representatives of the Managers in connection with the presentation to investors (including cornerstone investors));
6.2.6
Qualification
In connection with any registration or qualification of the Units for offer, subscription and sale under the laws of any jurisdiction (pursuant to Clause 4.4 (including filing fees and the reasonable fees and expenses of counsel for the Joint Bookrunners and Underwriters relating to such registration and qualification)) where such Units are offered or sold;
6.2.7
SGX-ST and MAS
In connection with admission of the Units to the Official List of the SGX-ST and any filings or registration requirements by the MAS;
6.2.8
Participating Banks
Of the fees and expenses of the Participating Banks through which applications for the Public Offer are made through the automated teller machines, and if applicable, the internet and mobile banking platforms, of the Participating Banks. Without prejudice to the generality of the foregoing, the Manager shall pay to DBS electronic application fees equivalent to 0.5% of the aggregate application monies from successful applications made though DBS automated teller machines (" ATMs ") (including POSB ATMs), internet banking website and mobile banking interface, subject to a fixed minimum fee of S$10,000 (exclusive of applicable GST);
6.2.9
Taxes and Duties
Of all stamp, registrations, transfer and other similar taxes, duties fees and charges (including any interest and penalties thereon or in connection therewith) arising under the laws of Singapore or any other jurisdiction where the Manager and the Joint Bookrunners and Underwriters have agreed the Units may be offered and sold in connection with the issue of and subscription for the Units contemplated hereby other than such taxes, duties, fees and charges as are payable by subscribers or purchasers of Units through or from any Joint Bookrunners and Underwriter; and

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6.2.10
Other
Otherwise incurred by the Trustee, the Manager, the Sponsor or the Unit Lender and incidental to the performance by them of their obligations under this Agreement and not otherwise specifically provided for in this Clause 6.2.
Unless previously paid by the Trustee, the Manager or the Sponsor, the equivalent in United States dollars (as reasonably determined by the Joint Bookrunners and Underwriters and notified in advance to the Manager) of any amount due under this Clause 6.2 may be deducted from the Offering Proceeds to be paid to the Trustee for Prime US REIT on the First Closing Date (provided that any marketing or promotional expenses not permitted to be so deducted pursuant to the Code shall be paid by the Manager to the Joint Bookrunners and Underwriters on the First Closing Date).
6.3
Joint Bookrunners and Underwriters' expenses
Whether or not there is closing on the First Closing Date, the Manager will pay or cause the Trustee to pay and/or reimburse (as the case may be) (failing such payment and/or reimbursement, the Sponsor shall be liable to pay and/or reimburse each of the Joint Bookrunners and Underwriters) within 14 days after demand all out-of-pocket costs and expenses properly incurred in connection with the Offering, including but not limited to:
6.3.1
Professional Advisers
The fees and expenses of third party advisers, including Clifford Chance Pte. Ltd., Nagashima Ohno & Tsunematsu and other advisers engaged for the purposes of advising on applicable selling restrictions in connection with the Offering, incurred by the Joint Bookrunners and Underwriters in connection with the Offering (for the avoidance of doubt, such fees and expenses also includes those incurred in connection with the Repayment Side Letter and the transactions contemplated thereunder);
6.3.2
Marketing Logistics
The costs and expenses incurred by the Joint Bookrunners and Underwriters in connection with the Offering and the Cornerstone Subscription Agreements, including, without limitation, all travel and accommodation expenses, all roadshow expenses, document production costs, translation fees, courier costs, advertising and promotion expenses, ratings agency fees, accounting fees, registration and listing fees and expenses, all printing costs in connection with the Offering and the Cornerstone Subscription Agreements, all costs and expenses incurred by the Joint Bookrunners and Underwriters in connection with preparing, reviewing and publishing the "tombstone", the pre-deal investor education costs, costs incurred in connection with the cornerstone subscription process and the costs of any other marketing, advertising and any other announcement permitted by applicable law in relation to the Offering and the Cornerstone Subscription Agreements;
6.3.3
Acquisitions

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Any amounts and costs incurred in relation to any funding to facilitate the completion of the Acquisitions pursuant to the Repayment Side Letter;
6.3.4
Taxes and Duties
Any taxes, duties, fees and charges which are payable by the Manager (or Prime US REIT) but which are charged to the Joint Bookrunners and Underwriters;
6.3.5
Prime US REIT's Costs and Expenses
Any costs and expenses incurred in connection with the Offering and Cornerstone Subscription Agreements which are payable by the Manager (or Prime US REIT) but which are charged to the Joint Bookrunners and Underwriters;
6.3.6
Remittance
Any charges or fees levied on the remittance of moneys by the Joint Bookrunners and Underwriters, the Trustee, the Manager or Prime US REIT (as the case may be); and
6.3.7
Other
All other costs and expenses which are incurred by the Joint Bookrunners and Underwriters with the prior approval of the Manager (for the avoidance of doubt, such costs and expenses also includes those incurred in connection with the Repayment Side Letter and the transactions contemplated thereunder).
Unless previously paid by the Trustee or the Manager, the equivalent in United States dollars (as determined by the Joint Bookrunners and Underwriters) of any amount due, or which the Joint Bookrunners and Underwriters estimate will be due (such estimate having been agreed between the Manager and the Joint Bookrunners and Underwriters) under this Clause 6.3 will be deducted from the Offering Proceeds paid to the Trustee on the First Closing Date.
6.4
Gross-up
All payments made by the Manager, the Trustee or the Sponsor, as the case may be, under this Clause 6 and Clause 9 shall be made gross, free of any right of counterclaim or set off and without deduction or withholding of any kind other than any deduction or withholding required by law, provided that if the Manager, the Trustee, or the Sponsor, as the case may be, makes a deduction or withholding required by law, the sum due to the Joint Bookrunners and Underwriters or any of them from the Manager, the Trustee, or the Sponsor, as the case may be, shall be increased to the extent necessary to ensure that, after the making of any deduction or withholding, the relevant Joint Bookrunner(s) and Underwriter(s) receive a sum equal to the sum it/they would have received had no deduction or withholding been made. The Joint Bookrunners and Underwriters agree that all invoices to be issued by them to the Manager, the Trustee, or the Sponsor, as the case may be, shall be issued by their respective Singapore offices.

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6.5
Goods and Services Tax
All amounts set out in this Clause 6 are exclusive of GST or any other tax or other levies imposed in connection with the Joint Bookrunners and Underwriters' obligations pursuant to this Agreement. Any GST or other levies now or hereafter imposed by law or required to be paid in respect of any moneys payable to or received or receivable by the Joint Bookrunners and Underwriters or any of them pursuant to this Agreement shall (except to the extent prohibited by law) be borne and paid by the Trustee (failing which, the Manager, and failing which, the Sponsor shall liable to pay).
6.6
Brokerage fees
The Manager and the Sponsor agree that other than the fees and commissions referred to in Clause 6.1, the Joint Bookrunners and Underwriters may charge any brokerage or other similar fees up to one per cent of the Offering Price per Unit in respect of the issue, sale or re-sale of such number of Offering Units (including the Cornerstone Units, except that no brokerage or other fees will be charged with respect to the KCIH Units, the KBS Units, the US Trusts Units and any Units being subscribed by KBS REIT Properties III, LLC and Linda Bren 2017 Trust under the Placement Tranche) set forth against the name of each Joint Bookrunner and Underwriter in Schedule 1 and any GST or other levies now or hereafter imposed by law, save that no brokerage or fees will be charged to Prime US REIT, the Manager and the Sponsor under this Agreement.
6.7
Repayment Side Letter
Without prejudice to the obligations of the Manager under this Clause 6, the Manager acknowledges and agrees that any amount due and owing (including principal, interests and fees accrued thereof and all out-of-pocket costs and expenses) under the Repayment Side Letter may be deducted from the Offering Proceeds to be paid to the Trustee for Prime US REIT on the First Closing Date in accordance with Clause 7.2.1.
7.
CLOSING AND CONDITIONS
7.1
Closing
7.1.1
Subject to the fulfilment of the conditions set out in Clause 7.3, the closing of the subscription for the Placement Units and the sale and purchase of any Over­Allotment Units in respect of which the First Closing Date has been designated as the Option Closing Date shall take place at 10.00 a.m. (Singapore time) (or such other time as the Manager and the Joint Global Coordinators may agree in writing) on the First Closing Date. The closing of the sale and purchase of any Over-Allotment Units in respect of which the Over-Allotment Option has been exercised and in respect of which the First Closing Date has not been designated as the Option Closing Date therefore shall take place in writing at 3.00 p.m. (Singapore time) (or such other time as the Manager and the Joint Global Coordinators may agree) on the Option Closing Date designated in the notice of such exercise.

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7.1.2
The Manager (in the case of the Placement Units), the Unit Lender (in the case of the Over-Allotment Units), the Sponsor and the Joint Global Coordinators may agree to postpone any Closing Date (in the case of Placement Units) or Option Closing Date (in the case of Over-Allotment Units) to another date being (in relation to that Closing Date) a date failing not more than 20 Business Days after the date originally designated as such Closing Date, and (in relation to any Option Closing Date) a date falling not more than two Business Days after the date originally designated as such Option Closing Date, whereupon all other references herein to such Closing Date or Option Closing Date (as the case may be) shall be construed as being to that later date.
7.2
Payment and delivery
7.2.1
Delivery of the Units shall be made to the CDP account(s) or sub-account(s) of each Joint Bookrunner and Underwriter or as it may direct against payment by the Joint Bookrunners and Underwriters of the Offering Price in relation to the Placement Units, to be paid to the Trustee in the manner to be agreed between the Manager and the Joint Bookrunners and Underwriters, less any deductions made pursuant to Clause 6.1, Clause 6.2, Clause 6.3, Clause 6.4 Clause 6.5 and/or Clause 6.7; and
7.2.2
In relation to the Over-Allotment Units in respect of which the Over-Allotment Option has been exercised, payment by the Joint Bookrunners and Underwriters of the Offering Price in relation to the Over-Allotment Units on an Option Closing Date, to or to the order of the Unit Lender, by giving irrevocable instructions to effect a telegraphic transfer.
It is understood and agreed by the parties hereto that no delivery of Units on the First Closing Date or an Option Closing Date (as the case may be) shall be effective unless and until payment therefore has been made, and that no such payment shall be effective unless such delivery has been made, in each case in accordance with this Agreement.
7.3
Conditions Precedent to First Closing
The obligations of the Joint Bookrunners and Underwriters to subscribe or to procure subscribers for the Placement Units shall be subject to the accuracy of the representations and warranties on the part of the Manager and the Sponsor (by reference to the facts or circumstances subsisting at that time) contained in this Agreement as of the Execution Time and the time immediately prior to the payment of the Offering Price for the Units on the First Closing Date, to the accuracy of the representations and warranties of the Manager and the Sponsor (by reference to the facts or circumstances subsisting at that time) made in any certificate delivered pursuant to this Agreement, to the performance by the Manager and the Sponsor of their respective obligations under this Agreement and to the following additional conditions:
7.3.1
Closing Documents
The Joint Bookrunners and Underwriters shall have received on the Date of Registration and/or on or before payment for the Placement Units on the First Closing Date, as the case may be, the following documents:

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(a)
Opinions of Allen & Gledhill LLP . On the Date of Registration, a Singapore law disclosure opinion dated the Date of Registration, and on the First Closing Date, a Singapore law enforceability opinion and a "bring down" Singapore law disclosure opinion dated as of the First Closing Date, addressed to the Joint Bookrunners and Underwriters from Allen & Gledhill LLP, in agreed form;
(b)
Opinions of Clifford Chance Pte. Ltd . On the Date of Registration, a Singapore law disclosure opinion dated the Date of Registration, and on the First Closing Date, a Singapore law enforceability opinion and a "bring down" Singapore law disclosure opinion dated as of the First Closing Date, addressed to the Joint Bookrunners and Underwriters from Clifford Chance Pte. Ltd., in agreed form;
(c)
Opinions of DLA Piper LLP (US) . On the Date of Registration, a U.S. corporate legal opinion dated the Date of Registration, and on the First Closing Date, a U.S. corporate legal opinion dated as of the First Closing Date, addressed to the Joint Bookrunners and Underwriters from DLA Piper LLP (US), in agreed form;
(d)
Opinions of Greenberg Traurig, LLP . On the Date of Registration, a U.S. corporate and enforceability legal opinion on the Portfolio Sale and Purchase Agreement dated the Date of Registration, and on the First Closing Date, a "bring down" U.S. corporate and enforceability legal opinion on the Portfolio Sale and Purchase Agreement dated as of the First Closing Date, addressed to the Joint Bookrunners and Underwriters from Greenberg Traurig, LLP, in agreed form;
(e)
No-Registration Opinion . On the First Closing Date, a no-registration opinion dated the First Closing Date addressed to the Joint Bookrunners and Underwriters from Clifford Chance Pte. Ltd., in agreed form;
(f)
Legal Due Diligence Reports of Greenberg Traurig, LLP . On or prior to the date of lodgement of the Prospectus, and on the Date of Registration, legal due diligence reports for each of the Properties addressed to the Joint Bookrunners and Underwriters from Greenberg Traurig, LLP, in agreed form;
(g)
Certificate of the Manager . A signed Officers' Certificate dated as of the First Closing Date from the Manager, substantially in the form set out in Schedule 3;
(h)
Certificates of the Sponsor . A signed Officers' Certificate dated as of the First Closing Date from the Sponsor, substantially in the form set out in Schedule 4;
(i)
Reporting Auditor's Comfort Letters . On the date of Registration, a comfort letter dated the Date of Registration respectively, and on the First Closing Date, a "bring-down" comfort letter dated as of the First Closing Date, addressed to the Joint Bookrunners and Underwriters from the Reporting Auditor, in agreed form;

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(j)
Marketing Materials . In relation to each Marketing Material disseminated or published after registration of the Prospectus by the MAS and prior to the First Closing Date, prior to the dissemination or publication of each such Marketing Material, the Joint Bookrunners and Underwriters having received a confirmation in relation to each such Marketing Material, dated the date of dissemination or publication and substantially in the form set out in Schedule 9 and signed by a member of the senior management (in respect of the Manager, as defined in the CIS Regulations) of the Manager;
(k)
Tax Comfort Letters . On the date of lodgement of the Preliminary Prospectus with the MAS and on the Date of Registration, comfort letters dated the date of lodgment of the Preliminary Prospectus with the MAS and the Date of Registration respectively, and on the First Closing Date, a "bring-down" comfort letter dated as of the First Closing Date, addressed to the Joint Bookrunners and Underwriters from each of the independent Singapore tax adviser, Allen & Gledhill LLP and the independent U.S. tax adviser, DLA Piper LLP (US), in agreed form;
(l)
Reliance Letters . On the date of lodgement of the Preliminary Prospectus and the Date of Registration, reliance letters dated the date of lodgement of the Preliminary Prospectus and the Date of Registration, respectively, addressed to the Joint Bookrunners and Underwriters from the independent valuers, Cushman & Wakefield Illinois, Inc. and JLL Valuation & Advisory Services, LLC and the independent market research consultant, Cushman & Wakefield Illinois, Inc., in agreed form;
(m)
Transaction Documents . Each Transaction Document to be entered into prior to the First Closing Date, duly executed and delivered, on or before the First Closing Date by or on behalf of all parties thereto;
(n)
Tax Rulings . The Tax Rulings shall not have been withdrawn or materially and adversely amended;
(o)
SGX-ST Waiver . The SGX-ST Waiver shall not have been withdrawn or materially and adversely amended;
(p)
MAS Waiver . The MAS Waiver shall not have been withdrawn or materially and adversely amended;
(q)
CMS Licence . The CMS Licence, shall be in full force and effect and not amended or revoked and there being no breach of the terms and conditions applicable to the CMS Licence; and
(r)
Authorisation . The authorisation of Prime US REIT as a collective investment scheme by the MAS having not been withdrawn or materially and adversely amended;
7.3.2
Singapore Offer Agreement

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The Singapore Offer Agreement coming into force in accordance with its terms, the conditions precedent contained in the Singapore Offer Agreement being satisfied in accordance with their terms (except with respect to the unconditionality of this Agreement) and the Singapore Offer Agreement not having been terminated pursuant to Clauses 7.3 and 8 of the Singapore Offer Agreement.
7.3.3
Unit Lending Agreement
The Unit Lender shall have entered into the Unit Lending Agreement with the Stabilising Manager in agreed form, and the Unit Lending Agreement shall be in full force and effect without any breach by the Unit Lender of its respective representations, warranties or undertakings thereunder;
7.3.4
KBS Subscription Agreement
KBS REIT Properties III is not in breach of the KBS Subscription Agreement, and each of the conditions precedent under the KBS Subscription Agreement has been satisfied;
7.3.5
KCIH Cornerstone Subscription Agreements
KCIH is not in breach of the KCIH Cornerstone Subscription Agreement, and the conditions precedent under the KCIH Cornerstone Subscription Agreement has been satisfied;
7.3.6
US Trusts Cornerstone Subscription Agreements
Each of the US Trusts is not in breach of the respective US Trusts Subscription Agreements, and each of the conditions precedent under the US Subscription Agreements has been satisfied;
7.3.7
Lock-Up Letters
On or prior to the date of the Singapore Offer Agreement, the Joint Bookrunners and Underwriters having received the Lock-Up Letters from each of KBS REIT III, KBS REIT Holdings III, LLC, KBS Limited Partnership III and KBS REIT Properties III and the Manager, each signed by duly authorised signatories and the Lock-Up Letters shall not have been breached subsequent thereto;
7.3.8
Listing of Units
All necessary steps have been taken, all necessary approvals and consents have been obtained (including the in-principle approval for listing of the Units on the SGX-ST), all necessary formalities in Singapore have been completed and all applicable laws, regulations and directives have been complied with to enable the Units to be issued and allotted and listed and traded on the SGX-ST (including but not limited to compliance with the unitholding and distribution requirements under the Listing Manual), and there shall not have occurred any withdrawal of such approval or any ruling or any event or condition that would prevent the commencement of trading of the Units;

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7.3.9
Breach of Obligations
Each Transaction Document is in full force and effect (and not amended or supplemented) (but not including a termination of any Cornerstone Subscription Agreement (save for the KCIH Cornerstone Subscription Agreement and the US Trusts Cornerstone Subscription Agreement) which is solely caused by a Cornerstone Investor failing to make payment for the Units to be subscribed under the relevant Cornerstone Subscription Agreement (save for the KCIH Cornerstone Subscription Agreement and the US Trusts Cornerstone Subscription Agreement)) and each of the conditions precedent (if any) (but not including any conditions precedent in any Cornerstone Subscription Agreement (save for the KCIH Cornerstone Subscription Agreement and the US Trusts Cornerstone Subscription Agreement) which a Cornerstone Investor is to make payment for the Units to be subscribed under the Cornerstone Subscription Agreement) in each of the Transaction Documents shall have been satisfied (except with respect to the unconditionality of this Agreement) or waived (provided that any such waiver shall not have any material adverse effect on the transaction contemplated by such Transaction Document), there shall not have occurred any breach or non-compliance by any of the parties thereto of their obligations and agreements under such documents which prevents the closing of or which have any material adverse effect on the transactions contemplated by such Transaction Documents (save for a failure by any Cornerstone Investor to make payment for the Units to be subscribed by it under the relevant Cornerstone Subscription Agreement (save for the KCIH Cornerstone Subscription Agreement and the US Trusts Cornerstone Subscription Agreement)). For purposes of this Clause 7.3.9 and without prejudice to any rights of the Joint Bookrunners and Underwriters under this Agreement and the Cornerstone Subscription Agreements, in the event that a Cornerstone Investor makes payment for the Units to be subscribed under the relevant Cornerstone Subscription Agreement in full before such time when payment under Clause 7.2 is required to be made by the Joint Bookrunners and Underwriters, and the relevant Units subscribed for under such Cornerstone Subscription Agreement are issued to that Cornerstone Investor, the Joint Bookrunners and Underwriters hereby agree that, in relation to such Cornerstone Subscription Agreement, the conditions in this Clause 7.3.9 shall be satisfied or deemed to be satisfied and the Joint Bookrunners and Underwriters shall not be entitled to claim that, in relation to such Cornerstone Subscription Agreement, the condition in this Clause 7.3.6 is not satisfied;
7.3.10
Specific Obligations
Without prejudice to Clause 7.3.9, the obligations of the Joint Bookrunners and Underwriters to purchase the Units shall be subject to:
(a)
the completion of the Portfolio Sale and Purchase Agreement, and the terms thereof not having been breached in any respect or terminated;
(b)
the execution of the escrow letter pursuant to the Portfolio Sale and Purchase Agreement ensuring, among other things, the commitment of the Title Insurance Company to issue its owner's policy of title insurance upon satisfaction of the conditions precedent to such escrow letter; and

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(c)
the facility agreements entered into in relation to the Facilities and the terms therein being in full force and effect and not having been waived, breached, amended, varied, supplemented or terminated in any material respect.
7.3.11
Prospectus
The Prospectus having been registered by the MAS in accordance with Section 296 of the SFA and not being withdrawn;
7.3.12
No Change in Law
No stop order or similar order has been issued by the MAS or any court or other judicial, governmental or regulatory authority in Singapore in relation to the Offering nor is the sale and subscription and/or purchase of the Units in accordance with the provisions of this Agreement or the execution and performance of any of the Transaction Documents prohibited by any statute, order, rule, regulation or directive issued by, or objected to by any legislative, executive or regulatory body or authority of Singapore (including, without limitation, the MAS and the SGX-ST);
7.3.13
No Amendment or Supplement to the Prospectus
No amendment or supplement to the Prospectus shall have been announced, issued, published or delivered to investors without prior approval by the Joint Global Coordinators;
7.3.14
No Withdrawal of Consent
None of the Reporting Auditors or the Experts has withdrawn its consent to the issue of the Prospectus with the inclusion of their respective reports and references to their names included in the form and context in which such reports and names appear in the Prospectus; and
7.3.15
No Termination
There shall not have occurred any event or circumstances, which would authorise the Joint Bookrunners and Underwriters to terminate this Agreement pursuant to Clause 8.1 hereof.
provided, however, that the Joint Bookrunners and Underwriters may, at their discretion, waive satisfaction or modify (with or without condition(s) attached) any of the conditions specified in this Clause 7.3 or extend the time provided for fulfilment of any such conditions in respect of all or any part of the performance thereof provided always that any such waiver or modification as aforesaid shall be without prejudice to the right of the Joint Bookrunners and Underwriters to elect to treat any further or other breach, failure or event as releasing and discharging the Joint Bookrunners and Underwriters from their payment or underwriting obligations under Clause 2 and shall be without prejudice to the right of the Joint Bookrunners and Underwriters to terminate this Agreement by notice pursuant to Clause 8.

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The parties acknowledge that the conditions specified above are for the benefit of the Joint Bookrunners and Underwriters only.
7.4
Conditions Precedent to Option Closing
The obligations of the Joint Bookrunners and Underwriters to subscribe or to procure subscribers for the Over-Allotment Units shall be subject to the accuracy of the representations and warranties on the part of the Manager and the Sponsor (by reference to the facts or circumstances subsisting at that time) contained in this Agreement as of the Execution Time and the time immediately prior to the payment of the Offering Price for the Over-Allotment Units on the Option Closing Date, to the accuracy of the representations and warranties of the Manager and the Sponsor (by reference to the facts or circumstances subsisting at that time) made in any certificate delivered pursuant to this Agreement, to the performance by the Manager and the Sponsor of their respective obligations under this Agreement and to the following additional conditions:
7.4.1
Closing Documents
The Joint Bookrunners and Underwriters receive on or before payment for the Over-Allotment Units on the Option Closing Date, as the case may be, the following documents:
(a)
Opinions of Allen & Gledhill LLP . On the Option Closing Date, a "bring down" Singapore law enforceability opinion dated as of the Option Closing Date, addressed to the Joint Bookrunners and Underwriters from Allen & Gledhill LLP, in agreed form;
(b)
Opinions of Clifford Chance LLP . On the Option Closing Date, a "bring down" Singapore law enforceability opinion dated as of the Option Closing Date, addressed to the Joint Bookrunners and Underwriters from Clifford Chance LLP, in agreed form;
(c)
No-Registration Opinion . On the Option Closing Date, a "bring-down" no­registration opinion dated as of the Option Closing Date addressed to the Joint Bookrunners and Underwriters from Clifford Chance Pte. Ltd., in agreed form;
(d)
Certificate of the Manager . A signed Officers' Certificate dated as of the Option Closing Date from the Manager, substantially in the form set out in Schedule 3;
(e)
Certificate of the Sponsor . A signed Officers' Certificates dated as of the Option Closing Date from the Sponsor, substantially in the form set out in Schedule 4;
(f)
Certificate of the Unit Lender . A signed Officers' Certificates dated as of the Option Closing Date from the Unit Lender, substantially in the form set out in Schedule 5;
(g)
Reporting Auditor's Comfort Letters . On the Option Closing Date, a "bring down" comfort letter dated as of the Option Closing Date, addressed to the Joint Bookrunners and Underwriters from the Reporting Auditors, in agreed form; and
(h)
Tax Comfort Letters . On the Option Closing Date, a "bring-down" comfort letter dated as of the Closing Date,

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addressed to the Joint Bookrunners and Underwriters from each of the independent Singapore tax adviser, Allen & Gledhill LLP and the independent U.S. tax adviser, DLA Piper LLP (US), in agreed form;
7.4.2
No changes
There shall not have occurred and be continuing any circumstances contemplated by Clause 8.1;
7.4.3
Breach of Obligations
Each Transaction Document is in full force and effect (and not amended or supplemented) (but not including a termination of any Cornerstone Subscription Agreement which is solely caused by a Cornerstone Investor failing to make payment for the Units to be subscribed under the relevant Cornerstone Subscription Agreement) and each of the conditions precedent (if any) (but not including any conditions precedent in any Cornerstone Subscription Agreement which a Cornerstone Investor is to make payment for the Units to be subscribed under the Cornerstone Subscription Agreement) in each of the Transaction Documents shall have been satisfied or waived (provided that any such waiver shall not have any material adverse effect on the transaction contemplated by such Transaction Document), there shall not have occurred any breach or non-compliance by any of the parties thereto of their obligations and agreements under such documents which prevents the closing of or which have any material adverse effect on the transactions contemplated by such Transaction Documents (save for a failure by any Cornerstone Investor to make payment for the Units to be subscribed by it under the relevant Cornerstone Subscription Agreement). For purposes of this Clause 7.4.3 and without prejudice to any rights of the Joint Bookrunners and Underwriters under this Agreement and the Cornerstone Subscription Agreements, in the event that a Cornerstone Investor makes payment for the Units to be subscribed under the relevant Cornerstone Subscription Agreement in full before such time when payment under Clause 7.2 is required to be made by the Joint Bookrunners and Underwriters, and the relevant Units subscribed for under such Cornerstone Subscription Agreement are issued to that Cornerstone Investor, the Joint Bookrunners and Underwriters hereby agree that, in relation to such Cornerstone Subscription Agreement, the conditions in this Clause 7.4.3 shall be satisfied or deemed to be satisfied and the Joint Bookrunners and Underwriters shall not be entitled to claim that, in relation to such Cornerstone Subscription Agreement, the condition in this Clause 7.4.3 is not satisfied;
7.4.4
No Amendment or Supplement to the Prospectus
No amendment or supplement to the Prospectus shall have been announced, issued, published or delivered to investors without prior approval by the Joint Global Coordinators;

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7.4.5
Lock-Up Letters
The Lock-Up Letters remain in full force and effect and have not been breached.
7.4.6
No Withdrawal of Consent
None of the Reporting Auditors or the Experts has withdrawn its consent to the issue of the Prospectus with the inclusion of their respective reports and references to their names included in the form and context in which such reports and names appear in the Prospectus;
7.4.7
No Termination
There shall not have occurred any event or circumstances, which would authorise the Joint Bookrunners and Underwriters to terminate this Agreement pursuant to Clause 8.1 hereof; and
7.4.8
Status of Documents and Approvals, Rulings or Waivers
There shall not have occurred: (i) any event causing any of the documents delivered pursuant to Clause 7.3.1 and 7.4.1 not to be in full force and effect, and no occurrence of any breach or non-compliance by any of the parties hereto of their obligations and agreements under such documents; and (ii) any withdrawal, revocation, or material and adverse amendment of any of the approvals, rulings or waivers referred to in Clauses 7.3.1(o), 7.3.1(p), 7.3.1(q), 7.3.1(r) and 7.3.8,
provided, however, that the Joint Bookrunners and Underwriters may, at their discretion, waive satisfaction of or modify (with or without condition(s) attached) any of the conditions specified in this Clause 7.4 or extend the time provided for fulfilment of any such conditions in respect of all or any part of the performance thereof provided always that any such waiver or modification as aforesaid shall be without prejudice to the right of the Joint Bookrunners and Underwriters to elect to treat any further or other breach, failure or event as releasing and discharging the Joint Bookrunners and Underwriters from their payment or underwriting obligations under Clause 2 and shall be without prejudice to the right of the Joint Bookrunners and Underwriters to terminate this Agreement by notice pursuant to Clause 8.
7.5
Delivery of documents
The documents required to be delivered under Clauses 7.3 and 7.4 will be delivered at the offices of Clifford Chance Pte. Ltd., Marina Bay Financial Centre, 25 th  Floor, Tower 3, 12 Marina Boulevard, Singapore 018982 or such other location as the Joint Bookrunners and Underwriters and the Manager may agree, on the Closing Date and the Option Closing Date, respectively.
7.6
Effect of non-fulfilment of conditions precedent
If any of the conditions in this Clause 7 is not satisfied on or before the First Closing Date (in the case of conditions in Clause 7.3) or on or before the Option Closing Date (in the case of conditions in Clause 7.4), as the case may be, the Joint Bookrunners and Underwriters may terminate this Agreement by notice pursuant to Clause 8 given at, or

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at any time prior to the relevant Closing Date. Notice of such termination shall be given to the Manager and the Sponsor in writing or by telephone or facsimile confirmed in writing. Upon such notice being given, this Agreement shall terminate and be of no further effect and no party shall be under any liability to any other in respect of this Agreement, except (a) for any antecedent breach by the Manager, Prime US REIT, the Sponsor, the Unit Lender, the Guarantors and/or the Joint Bookrunners and Underwriters; (b) for the rights of the Joint Bookrunners and Underwriters pursuant to Clause 8.3 and Clause 9 which shall survive such termination, (c) that the Manager and the Sponsor shall be liable for the payment of all costs and expenses referred to in Clause 6 and already incurred or incurred in consequence of or in connection with such termination and the respective obligations of the parties pursuant to Clause 10.2 which would have continued had the arrangements for the subscription and issue of the Units been completed, shall continue. Termination pursuant to this Clause 7.6 will not affect the liability of the Manager, the Sponsor, the Unit Lender or the Guarantors in relation to any liability arising before or in relation to such termination.
8.
TERMINATION
8.1
Termination notice
Notwithstanding anything contained in this Agreement, the Joint Bookrunners and Underwriters may in their sole discretion, following consultation with the Manager (to the extent reasonably practicable), by notice to the other parties terminate this Agreement at any time prior to, in respect of the Offering Units, 10.00 a.m. on the First Closing Date and, in respect of the Option Units, 3.00 p.m. on the Option Closing Date, if in the opinion of the Joint Bookrunners and Underwriters:
8.1.1
Inaccuracy of representations and warranties
There occurs any breach of, or any event rendering untrue, misleading or incorrect in any respect (or in the case of any representation or warranty which is not qualified by materiality, in any material respect) any of the representations and warranties contained in Clause 3 and Clause 14.4 or any failure to perform in any material respect any of the undertakings or agreements by any party (other than the Joint Bookrunners and Underwriters) in this Agreement;
8.1.2
Material adverse change
There occurs (i) any breach of the obligations, warranties or undertakings by any of the Manager, the Trustee, the Sponsor, the Unit Lender or the Guarantors under this Agreement and/or the Transaction Documents, or (ii) any change or any development, which, individually or in aggregate, has a Material Adverse Effect or will have a prospective Material Adverse Effect;
8.1.3
Suspension of trading
There shall have occurred a suspension, moratorium or restriction of trading in shares or securities generally on the SGX-ST, The Stock Exchange of Hong Kong Limited, London Stock Exchange plc or the New York Stock Exchange, Inc. or any moratorium on banking activities or foreign exchange rating or securities settlement or clearing services in or affecting Singapore, Hong Kong,

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United Kingdom or the U.S. such as would in their view be likely to prejudice materially the success of the Offering and distribution of the Units, the ability of the Joint Bookrunners and Underwriters to market the Offering and distribute the Offering Units and/or dealings in the Units in the secondary market;
8.1.4
Force majeure
There shall have been, since the date of this Agreement, any change in national or international monetary, financial, political or economic conditions or currency exchange rates or foreign exchange controls or legal or regulatory environment or such other event or series of events in the nature of force majeure (including, without limitation, acts of government, strikes, lock­ outs, fire, explosion, flooding, civil commotion, acts of war, acts of God, epidemic, accident or interruption or delay in transportation) in or affecting any of Singapore, Hong Kong, the United Kingdom or the U.S. such as would in their view be likely to prejudice materially the success of the Offering and distribution of the Units, the ability of the Joint Bookrunners and Underwriters to market the Offering and distribute the Offering Units and/or dealings in the Units in the secondary market;
8.1.5
Hostilities
Without limiting the foregoing, there shall have occurred any local, national, regional or international outbreak or escalation of epidemics, hostilities (whether or not war is or has been declared), act of terrorism, or any other state of emergency or calamity or crisis, which would in their view be likely to prejudice materially the success of the Offering and distribution of the Units, the ability of the Joint Bookrunners and Underwriters to market the Offering and distribute the Offering Units and/or dealings in the Units in the secondary market;
8.1.6
Taxation
There shall have occurred a material adverse change or development involving a prospective material adverse change, in taxation in Singapore or in the U.S. such as would in their view be likely to prejudice materially the success of the Offering and distribution of the Units, the ability of the Joint Bookrunners and Underwriters to market the Offering and distribute the Offering Units and/or dealings in the Units in the secondary market;
8.1.7
Change
If there shall have been, since the date of this Agreement, any introduction or prospective introduction of or any change or any prospective change in any legislation, regulation, order, policy, rule, guideline or directive in Singapore, Hong Kong, the United Kingdom or the U.S. (whether or not having the force of law and including, without limitation, any directive or request issued by the Securities Industry Council of Singapore, the SGX-ST, the MAS, the IRAS or the IRS) or in the interpretation or application thereof by any court, government body, regulatory authority or other competent authority in Singapore, Hong Kong, the United Kingdom or the U.S. which would in their view be likely to

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prejudice materially the success of the Offering and distribution of the Units, the ability of the Joint Bookrunners and Underwriters to market the Offering and distribute the Offering Units and/ or dealings in the Units in the secondary market;
8.1.8
Winding up
There is an order or petition for the winding up of any of the Guarantors, or any composition or arrangement made by any of the Guarantors, with any of their respective creditors or a scheme of arrangement entered into by any of the Guarantors, or any resolution for the winding-up of any of the Guarantors, or a provisional liquidator, receiver or manager over all or part of the material assets or undertaking of any of the Guarantors, is appointed or anything analogous thereto occurs in respect of it; or
8.1.9
Closing Date
If the First Closing Date falls on a date later than 22 July 2019 (or such other date as the Manager and the Joint Global Coordinators may agree in writing).
8.2
Effects of termination
Upon such notice being given pursuant to this Clause 8, this Agreement shall terminate and be of no further effect and no party shall be under any liability to any other in respect of this Agreement, except that (i) in the event such termination occurs on or prior to the First Closing Date, the Manager, the Sponsor and the Guarantors shall continue to be bound, by their respective obligations under Clause 6 (other than Clause 6.1), this Clause 8.2, Clause 8.3, Clause 9 and Clause 10.2 to Clause 14, (ii) in the event any such termination occurs after the First Closing Date but prior to the Option Closing Date, the Manager, the Sponsor, the Guarantors and the Joint Bookrunners and Underwriters shall continue to be bound by all of their respective obligations (other than Clause 2.1, Clause 6.1.3 and Clause 6.1.5), and (iii) Clause 9 and Clause 14 shall survive any termination and shall remain in full force and effect.
8.3
Saving
Termination pursuant to this Clause 8 will not affect the liability of the Manager, the Sponsor, the Unit Lender or the Guarantors in relation to any liability arising before or in relation to such termination.
9.
INDEMNIFICATION AND CONTRIBUTION
9.1
Indemnity by the Manager
The Manager on behalf of itself and Prime US REIT agrees with each Joint Bookrunner and Underwriter to fully indemnify, defend and hold harmless on a continuing and after tax basis, each Joint Bookrunner and Underwriter and each of its Affiliates and each officer, director, employee and agent of such Joint Bookrunner and Underwriter and each such Affiliate and each person who controls such Joint Bookrunner and Underwriter within the meaning of section 15 of the Securities Act or Section 20 of the Exchange Act (each an " Indemnified Person ") on demand from and against any and all claims, demands, actions, liabilities, damages, losses, costs or expenses,

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investigations, awards, proceedings or judgments, each of which an Indemnified Person may become subject to (collectively, " Claims ") (whether or not such Claim is successful, compromised or settled, joint or several, threatened, pending or actual) (including, without limitation, legal fees, all payments, costs, expenses and charges arising out of, in relation to or in connection with the investigation, dispute, defence or settlement of or response to any Claims or the enforcement of any such settlement or any judgment obtained in respect of any Claims) and taxes, each of which an Indemnified Person may become subject to (collectively, " Losses "), arising out of or in connection with:
9.1.1
Performance of the Agreement
The performance of the Joint Bookrunners and Underwriters' obligations under this Agreement or any Claims which may be brought against any of them in relation to the Offering, the Listing or the offer and sale of the Units;
9.1.2
Misstatements
Any statement of a material fact contained in the Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) not being, or being alleged not to be, true and accurate and not misleading, in the context of the offering and sale of Units pursuant to the Public Offer and Placement Tranche, is or is alleged to be material for disclosure in the Preliminary Prospectus or the Prospectus (as the case may be);
9.1.3
General Duty of Disclosure
The Preliminary Prospectus or the Prospectus (or any amendment or supplement thereto) not containing, or being alleged not to contain, all information about Prime US REIT which is or might be material for disclosure to a potential investor and its professional advisers or which they would reasonably require and reasonably expect to find there for the purpose of making an informed assessment of the merits and risk of an investment in Prime US REIT, including without limitation the assets and liabilities, financial position, profits and losses, prospects, forecast, estimate or expression of opinion, intention or expectation of Prime US REIT and of the rights attached to Prime US REIT's unit capital, issued and to be issued;
9.1.4
Breach of Agreement
Any breach or alleged breach by the Manager, the Sponsor or the Unit Lender of the respective representations, warranties, undertakings, covenants or obligations made by, or relating to, it under this Agreement; or
9.1.5
Failure to comply with law
Any failure or alleged failure by the Manager, the Sponsor or the Unit Lender or any of their respective directors, agents or employees to comply with any law, regulation, order, judgment, in any jurisdiction in relation to the Offering,
and agrees to reimburse each such Indemnified Person on a full indemnity basis for all costs, charges and expenses, (including legal fees and any applicable GST or value

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added tax) as incurred by such Indemnified Person in connection with investigating, disputing or defending any such Claims or Losses (whether actual, pending or threatened and whether or not any Indemnified Person is or may be a party to any such Claims) or exercise of any right of action, provided that the indemnity provided in Clause 9.1 (to the extent it relates to the performance of Joint Bookrunners and Underwriters' obligations under this Agreement) shall not apply to the extent that such Claims or Losses have been determined by a final judgment of a court of competent jurisdiction to have resulted from the fraud, wilful default or gross negligence of such Indemnified Person. This indemnity will be additional to any liability which the Manager may otherwise have, and will be additional and without prejudice to any rights which such Indemnified Person may have at common law or otherwise. The non-application of the indemnity to an Indemnified Person shall not affect the application of such indemnity in respect of any other Indemnified Persons.
9.2
Indemnity by the Sponsor
The Sponsor hereby undertakes to each Joint Bookrunner and Underwriter (on behalf of itself and its relevant Indemnified Person):
9.2.1
to fully indemnify, defend and hold harmless on a continuing and after tax basis each Indemnified Person against any and all Losses or Claims joint or several (including legal fees and any applicable GST, value added tax or other similar taxes)) which it may become subject to (whether or not such Claim is successful, compromised or settled, and whether actual, pending or threatened), insofar as such Losses or Claims are based on or arising, or indirectly, out of any breach or alleged breach by the Sponsor of any of the representations, warranties, undertakings or obligations made by, or relating to, it under this Agreement; and
9.2.2
without limiting Clause 9.2.1, to reimburse each Indemnified Person on a full indemnity basis for all costs, charges and expenses, (including legal fees and any applicable GST or value added tax) related to enforcement proceedings incurred by such Indemnified Person in connection with investigating, disputing, defending, settling or responding any such Claims or Losses based on or arising, directly or indirectly, out of any breach or alleged breach by the Sponsor of any of the representations, warranties, undertakings or obligations made by, or relating to, it under this Agreement (whether actual, pending or threatened and whether or not any Indemnified Person is or may be a party to any such Claims) or exercise of any right of action or the enforcement of any such settlement or any judgment obtained in respect of any Claims and Losses.
This indemnity will be additional to any liability which the Sponsor may otherwise have, and will be additional and without prejudice to any rights which such Indemnified Person may have at common law or otherwise. The non-application of the indemnity to an Indemnified Person shall not affect the application of such indemnity in respect of any other Indemnified Persons.
9.3
Back-up indemnity by the Sponsor
As a separate, additional and continuing obligation, the Sponsor undertakes, unconditionally and irrevocably, by way of a full indemnity (by way of a back-up

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indemnity) to the Joint Bookrunner and Underwriters (on behalf of itself and its Indemnified Persons) that:
9.3.1
if the Manager fails to pay any or all amounts owed by it under Clause 9.1 or Clause 9.5 following (i) the date on which such amounts have been declared by a court of competent jurisdiction (without being subject to further appeal) to be due and payable, or (ii) the date on which the Manager has admitted liability in writing to make such payments; or
9.3.2
if the Manager shall have been adjudged by a court of competent jurisdiction to have acted with fraud, gross negligence, wilful default and/or breach of the Trust Deed while acting as manager of Prime US REIT and/or to have failed to have shown the degree of diligence and care required of it having regard to the provisions of the Trust Deed, and thereby having no right to be indemnified out of and to have recourse to the assets of Prime US REIT under the Trust Deed or at law, for the amounts owed by such Manager under Clause 9.1 or Clause 9.5,
the Joint Bookrunners and Underwriters (on behalf of themselves and each relevant Indemnified Person) shall be entitled upon written demand to the Sponsor to recover from the Sponsor, and the Sponsor shall thereupon (on a several basis) pay to the Joint Bookrunners and Underwriters an amount equal to half of the Manager's unpaid liability under Clause 9.1 and/or Clause 9.5 plus accrued interest from the date of original demand on the Manager pursuant to Clause 9.1 and/or Clause 9.5 at any applicable judgment rate, including any costs and legal fees incurred by the Joint Bookrunners and Underwriters to collect such amounts.
This indemnity will be additional to any liability which the Sponsor may otherwise have, and will be additional and without prejudice to any rights which such Indemnified Person may have at common law or otherwise.
9.4
Indemnity by the Unit Lender
The Unit Lender undertakes to and agrees with each Joint Bookrunner and Underwriter:
9.4.1
to fully indemnify, defend and hold harmless on a continuing and after tax basis each Indemnified Person against any and all Losses or Claims joint or several (including legal fees and any applicable GST, value added tax or other similar taxes)) which it may become subject to (whether or not such Claim is successful, compromised or settled, and whether actual, pending or threatened), insofar as such Losses or Claims are based on or arising, or indirectly, out of any breach or alleged breach by the Unit Lender of the representations, warranties, undertakings or obligations made by, or relating to, it under this Agreement; and
9.4.2
without limiting Clause 9.4.1, to reimburse each Indemnified Person on a full indemnity basis for all costs, charges and expenses, (including legal fees and any applicable GST or value added tax) related to enforcement proceedings incurred by such Indemnified Person in connection with investigating, disputing, defending, settling or responding any such Claims or Losses based on or arising, directly or indirectly, out of any breach or alleged breach by the Unit Lender of any of the representations, warranties, undertakings or obligations made by, or relating to, it under this Agreement (whether actual, pending or threatened and

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whether or not any Indemnified Person is or may be a party to any such Claims) or exercise of any right of action or the enforcement of any such settlement or any judgment obtained in respect of any Claims and Losses.
This indemnity will be additional to any liability which the Unit Lender may otherwise have, and will be additional and without prejudice to any rights which such Indemnified Person may have at common law or otherwise. The non-application of the indemnity to an Indemnified Person shall not affect the application of such indemnity in respect of any other Indemnified Persons.
9.5
Contribution
If the indemnification provided for in Clause 9.1 (both separately and after taking into account the Sponsor's obligations in Clause 9.3), Clause 9.2 and/or Clause 9.4 is unavailable to or insufficient to hold harmless an Indemnified Person in respect of any Losses or Claims (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such Indemnified Person as a result of such Losses or Claims in such proportion as is appropriate to reflect the relative benefits received by the Manager, the Sponsor or the Unit Lender on the one hand and the Joint Bookrunners and Underwriters on the other from the offering of the Units.
If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such Indemnified Person in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Manager, the Sponsor and/or the Unit Lender on the one hand and the Joint Bookrunners and Underwriters on the other in connection with the statements or omissions which resulted in such Losses or Claims (or actions in respect thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Manager, the Sponsor and/or the Unit Lender on the one hand and the Joint Bookrunners and Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the Placement Units and Cornerstone Units subscribed for or purchased under this Agreement (before deducting expenses), bear to the total underwriting discounts and commissions received by the Joint Bookrunners and Underwriters with respect to the Placement Units and Cornerstone Units subscribed for or purchased under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Manager, the Sponsor and the Unit Lender on the one hand or the Joint Bookrunners and Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Manager, the Sponsor, the Unit Lender and the Joint Bookrunners and Underwriters agree that it would not be just and equitable if contributions pursuant to this Clause 9.5 were determined by pro rata allocation (even if the Joint Bookrunners and Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Clause 9.5. The amount paid or payable by an Indemnified Person as a

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result of the Losses or Claims (or actions in respect thereof) referred to above in this Clause 9.5 shall be deemed to include any legal or other expenses incurred by such Indemnified Person in connection with investigating, disputing or defending any such Claims or Losses (whether actual, pending or threatened and whether or not any Indemnified Person is or may be a party to any such Claims).
Notwithstanding the provisions of this Clause 9.5, no Joint Bookrunner and Underwriter shall be required to contribute any amount in excess of the amount by which the underwriting discounts and commissions received by such Joint Bookrunner and Underwriter exceeds the amount of any damages which such Joint Bookrunner and Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Joint Bookrunner and Underwriters' obligations in this Clause 9.5 to contribute are several in proportion to their respective underwriting obligations and not joint.
9.6
Conduct of Claims
If any Claim or action shall be brought or asserted against an Indemnified Person hereunder, and with respect to which an indemnity may be sought hereunder against any of the Manager, the Sponsor or the Unit Lender (as the case may be), the relevant Indemnified Person shall notify the indemnifying party in writing as soon as practicable (but the failure or delay so to notify any indemnifying party will not relieve it from liability under this Clause 9). An indemnifying party may participate at its own expense in the defence of any such action, provided however, that legal advisers to the indemnifying party shall not (except with the consent of the Indemnified Person) also be legal advisers to the Indemnified Person.
No indemnifying party shall, without the prior written consent of the Indemnified Persons, settle or compromise or consent to the entry of any judgment with respect to any proceeding, commenced or threatened, or any Claim whatsoever in respect of which indemnification may be sought under this Clause 9 (whether or not the Indemnified Persons are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each Indemnified Person in form and substance reasonably satisfactory to such Indemnified Party from all liability arising out of such proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. The rights of the Indemnified Persons herein are in addition to any rights that each Indemnified Person may have at law or otherwise and the obligations of the indemnifying party herein shall be in addition to any liability which the indemnifying parties may otherwise have. The indemnifying party shall be liable for the fees and expenses of any legal advisers (in addition to any local legal advisers) separate from its own legal adviser for any Indemnified Person.
9.7
Arrangement with advisers
If an indemnifying party enters into any agreement or arrangement with any Adviser for the purpose of or in connection with the Offering, the terms of which provide that the liability of the Adviser to the indemnifying party or any other person is excluded or

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limited in any manner, and any of the Indemnified Persons may have joint and/or several liability with such Adviser to the indemnifying party or to any other person arising out of the performance of its duties under this Agreement, the indemnifying party shall:
9.7.1
not be entitled to recover any amount from any Indemnified Person which, in the absence of such exclusion or limitation, the indemnifying party or the Indemnified Person would not have been entitled to recover; and
9.7.2
indemnify the Indemnified Persons in respect of any increased liability to any third party which would not have arisen in the absence of such exclusion or limitation.
9.8
Payments
All payments by the Manager, the Sponsor and/or the Unit Lender under this Agreement shall be paid without deductions, set-off, withholdings or counterclaim.
10.
GENERAL
10.1
Time of the essence
Any date or period specified herein may be postponed or extended by mutual agreement among the parties but, as regards any date or period originally fixed or so postponed or extended, time shall be of the essence.
10.2
Survival
The representations and warranties, undertakings, and other obligations made by the parties under this Agreement, the indemnities given by the Manager, the Sponsor and the Unit Lender under this Agreement, and the guarantee by each Guarantor under Clause 14, will continue in full force and effect notwithstanding a Joint Bookrunner and Underwriter's actual or constructive knowledge with respect to any of the matters referred to in the representations and warranties given by the Manager, the Sponsor or the Unit Lender, the completion of the arrangements set out in this Agreement for the subscription, transfer and payment for the Units, any investigation by the Joint Bookrunners and Underwriters or the termination of this Agreement pursuant to Clause 2.1, Clause 7.6 and Clause 8.
10.3
Rights and remedies
The rights and remedies of the Joint Bookrunners and Underwriters provided for herein are cumulative and not exclusive of those provided by law. The failure to exercise or any delay in exercising a right or remedy under this Agreement shall not constitute a waiver thereof or a waiver of any other right or remedy.
10.4
Currency indemnity
If a judgment or order is rendered by a court of any particular jurisdiction for the payment of any amounts owing to any of the parties to this Agreement or under a judgment or order of a court of any other jurisdiction in respect thereof, or for the payment of damages in respect thereof, in each case by any other party to this

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Agreement, and any such judgment or order is expressed in a currency (the " Judgment Currency ") other than the currency of the relevant obligation (the " Contractual Currency "), the relevant payor shall indemnify the relevant payee against any deficiency arising or resulting from any variation in rates of exchange between the Judgment Currency and the Contractual Currency occurring between (a) the date as at which any amount expressed in the Contractual Currency is converted, for the purposes of making or filing any claim resulting in any such judgment or order into an equivalent amount in the Judgment Currency or, if such conversion is made by the court for the purpose of making such judgment or order, the date as at which such conversion was made and (b) the date or dates of payment of such amount or of discharge of such first-mentioned judgment or order as appropriate.
10.5
Successors and assigns
This Agreement shall be binding on and enure to the benefit of the parties hereto and their respective successors and assigns except that none of the parties may assign any of their rights or obligations hereunder (except that any Joint Bookrunner and Underwriter may assign any of its rights hereunder to any of its Affiliates but a subscriber or purchaser of any Units through or from a Joint Bookrunner and Underwriter shall not be deemed such a successor or assign by virtue only of that fact).
10.6
Rights of third parties
A person who is not a party to this Agreement, may not enforce its terms under the Contracts (Rights of Third Parties) Act (Chapter 538) of Singapore, except that each non-contracting Indemnified Person referred to in Clause 9 shall have the right under the Contracts (Rights of Third Parties) Act (Chapter 538) of Singapore, to enforce their respective rights under this Agreement as amended from time to time.
10.7
Entire agreement
Without prejudice to:
(a)    the Lock-Up Letters;
(b)    the Repayment Side Letter;
(c)    the Unit Lending Agreement; and
(d)    the notices delivered pursuant to this Agreement,
this Agreement supersedes any prior agreement, understanding or arrangement between the parties to this Agreement (or any of them) in connection with the issuance, subscription and sale of the Units in connection with the Offering and constitutes the sole and entire Agreement between the parties in connection therewith.
10.8
No fiduciary relationship
Each of the Manager, the Sponsor and the Unit Lender acknowledges that
(a)
each of the Joint Bookrunners and Underwriters is acting on an arm's length basis as principal, and not as its agent or adviser, to provide the services

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described herein and owes no fiduciary duties to it or any of its directors or management, employees, shareholders, Affiliates or creditors;
(b)
the Joint Bookrunners and Underwriters are not acting in a fiduciary or advisory capacity with respect to it;
(c)
the Joint Bookrunners and Underwriters are not assuming any duties or obligations other than those expressly set forth in this Agreement and may have interests that differ from its interests; and
(d)    it has consulted its own professional advisers to the extent it deems appropriate.
Further, each of the Manager, the Sponsor and the Unit Lender agrees and acknowledges that it is not the intention of the parties to create a fiduciary relationship between them and that it will not claim that the Joint Bookrunners and Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to any of the Manager, the Sponsor or the Unit Lender in connection with the purchase and sale of the securities under this Agreement or the process leading thereto.
In addition, each of the Manager, the Sponsor and the Unit Lender acknowledge and agree that (i) each of Joint Bookrunners and its Affiliates (each, an " Underwriter Group ") is engaged in a wide range of financial services and businesses (which may include asset management, corporate banking, financing, non-banking financial company services, securities or derivatives trading and brokerage, insurance, corporate and investment banking and research). In the ordinary course of each Underwriter Group's activities, each Underwriter Group may at any time hold "long" or "short" positions and may trade in or otherwise effect transactions for their own account or accounts of customers in debt or equity securities of any company that may be involved in the Offering. Members of each Underwriter Group and businesses within each Underwriter Group generally act independently of each other, both for their own account and for the account of clients. Accordingly, there may be situations where parts of an Underwriter Group and/or its clients either now have or may in the future have interests, or take actions, that may conflict with the interest of the Manager, Prime US REIT, the Sponsor or the Unit Lender. For example, an Underwriter Group may, in the ordinary course of business, engage in trading in financial products or undertake other investment businesses for their own account or on behalf of other clients, including, but not limited to, trading in or holding long, short or derivative positions in securities, loans or other financial products of the Manager, Prime US REIT, the Sponsor, the Unit Lender or any other entity involved in the offering. Each of the Manager, the Sponsor and the Unit Lender hereby acknowledges and agrees that, by reason of law or duties of confidentiality owed to other persons or the rules of any regulatory authority, the Underwriter Group may be prohibited from disclosing confidential information (or if such disclosure is inappropriate) to the Manager, Prime US REIT, the Sponsor or the Unit Lender, in particular information as to the Joint Bookrunners and Underwriters' possible interests as described herein. Each Underwriter Group shall not restrict its activities as a result of this engagement, and the Underwriter Groups may undertake any business activity without further consultation with, or notification to, the Manager, the Sponsor or the Unit Lender. Neither this Agreement nor the receipt by the Underwriter Groups of confidential information or any other matter shall give rise to any fiduciary, equitable or contractual duties (including any duty of trust or confidence)

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that would prevent or restrict such Underwriter Group from acting on behalf of other customers or for their own accounts or in any other capacity; (ii) members of each Underwriter Group and the Underwriter Group's directors, officers and employees may also at any time invest on a principal basis or manage funds that invest on a principal basis, in debt or equity securities of any company that may be involved in the Offering, or in any currency or commodity that may be involved in the Offering, or in any related derivative instrument. Further, each of the Joint Bookrunners and Underwriters and any of the members of each Underwriter Group may, at any time, engage, in ordinary course, broking activities for any entity that may be involved in the Offering; and (iii) the Underwriter Groups may be representing and/or may have provided financial advisory and financing services for and received compensation from any one or more of the parties which are or may hereafter become involved in this transaction. The Joint Bookrunners and Underwriters and/or any member of their respective Underwriter Group may, in the future, seek to provide financial services to and receive compensation from such parties. None of the relationships described in this Agreement or the services provided by the Joint Bookrunners and Underwriters to the Manager, Prime US REIT, the Sponsor or the Unit Lender or any other matter shall give rise to any fiduciary, equitable or contractual duties (including any duty of confidence) which would preclude or limit in any way the ability of the Joint Bookrunners and Underwriters and/or any member of their respective Underwriter Groups from providing similar services to other customers, or otherwise acting on behalf of other customers or for their own respective accounts. Each of the Manager, the Sponsor and the Unit Lender acknowledge and agree that, by reason of law or duties of confidentiality owed to other persons, or the rules of any regulatory authority, the Joint Bookrunners and Underwriters may be prohibited from disclosing information to the Manager, the Sponsor, the Unit Lender or their respective Affiliates (or such disclosure may be inappropriate), including information as to the Underwriter Group’s possible interests as described in this paragraph and information received pursuant to client relationships.
10.9
Severability
If any provision of this Agreement is held to be invalid or unenforceable, then such provision shall (so far as invalid or unenforceable) be given no effect and shall be deemed to be included in this Agreement but without invalidating any of the remaining provisions of this Agreement.
11.
NOTICES
11.1
Form
Unless expressly stated otherwise in this Agreement, all notices, certificates, consents, approvals, waivers and other communications in connection with this Agreement must be in writing, signed by an authorised officer of the sender and marked for attention as set out below in Clause 11.2 or, if the recipient has notified otherwise, then marked for attention in the way last notified.
11.2
Delivery
They must be:
(a)    left at the address set out below; or

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(b)    sent by prepaid post (airmail if appropriate) to the address set out below; or
(c)    sent by fax to the fax number set out below,
if to the Manager, to it at:
KBS US Prime Property Management Pte. Ltd.
230 Victoria Street #06-05A
Bugis Junction Towers
Singapore 188024
Fax:    +65 6803 1717
Attention:    Chief Executive Officer I Chief Financial Officer
if to KAP, to it at:
KBS Asia Partners Pte. Ltd.
9 Raffles Place
#26-01 Republic Plaza
Singapore 048619
Attention:    Director
if to PBren Investments, L.P., to it at:
PBren Investments, L.P.
590 Madison Avenue
26 th Floor
New York, NY 10022
Phone: 212-644-6662
Fax: 212-644-1372
Attention: Richard Bren
if to Schreiber Real Estate Investments L.P., to it at:
Schreiber Real Estate Investments L.P.
800 Newport Center Drive, Suite 700
Newport Beach
CA 92660
Phone: 949-417-6500
Fax: 949-417-6501
Attention: Charles J. Schreiber, Jr.
if to KBS RA, to it at:
KBS Realty Advisors LLC.
800 Newport Center Drive, Suite 700
Newport Beach
CA 92660

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Phone: 949-417-6500
Fax: 949-417-6501
Attention: Charles J. Schreiber, Jr.
if to the Unit Lender, to it at:
KBS REIT Properties III, LLC
800 Newport Center Drive, Suite 700
Newport Beach
CA 92660
Phone: 949-417-6500
Fax: 949-417-6501
Attention: Charles J. Schreiber, Jr.
if to DBS, to them at:
DBS Bank Ltd.
12 Marina Boulevard, Level 46
DBS Asia Central@ MBFC Tower 3
Singapore 018982
Fax:    +65 6227 9162
Attention:    Tan Jeh Wuan / Sanjog Kusumwal
if to BAML, to them at
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay #14-01
OUE Bayfront
Singapore 049321
Fax:    +65 6678 0130
Attention:    Martin Siah / Antonio Puna
if to CICC, to them at
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road #33-01
Singapore 049909
Fax:    +65 6327 1278
Attention:    Lindsay Lin / Ding Peng
if to CS, to them at
Credit Suisse (Singapore) Limited
One Raffles Link #03/#04-01
South Lobby
Singapore 039393

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Fax:    +852 2284 7184
Attention:    Investment Banking & Capital Markets - Legal
if to Maybank, to them at
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road #03-01
Singapore 059304
Fax:    +65 6636 3549
Attention:    Ms Audrey Lam / Mr Lak Yau Huang
if to OCBC, to them at
Oversea-Chinese Banking Corporation Limited
63 Chulia Street #03-03
OCBC Centre East
Singapore 049514
Fax:    +65 6532 2935
Attention:    Andrew Teo / Allen Cheong
However, if the intended recipient has notified a changed postal address or changed fax number, then the communication must be to that address or number.
11.3
Effectiveness
Every notice or communication sent in accordance with Clause 11.2 shall be effective upon receipt by the addressee, except in the case of any notice or communication sent by fax, which shall be effective upon despatch by the sender.
12.
LAW AND JURISDICTION
12.1
Governing law
This Agreement and all matters arising from or connected with it are governed by, and shall be construed in accordance with, Singapore law.
12.2
Jurisdiction of Singapore courts
All the parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this Agreement or otherwise arising in connection with this Agreement and for such purposes irrevocably submit to the jurisdiction of the Singapore courts.
12.3
Serving documents
Without preventing any other method of service, any document in a court action may be served on a party by being delivered to or left at that party's address for service of notices under Clause 11.

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12.4
Appointment of Process Agents
12.4.1
Each Guarantor hereby irrevocably appoints KBS Asia Partners Pte. Ltd. of 9 Raffles Place, #26-01 Republic Plaza, Singapore 048619 as agent to accept service of process in Singapore in any legal action or proceedings arising out of this Agreement, service upon whom will be deemed completed whether or not forwarded to or received by the Guarantors. The Guarantors will inform the Joint Bookrunners and Underwriters, in writing, of any change in the address of the process agent of the Guarantors and such change in address will not be effective until such notice is received by the Joint Bookrunners and Underwriters. Such service will be deemed to be completed on delivery to the process agent (whether or not it is forwarded to and received by the Guarantors). If such process agent ceases to be able to act as such or to have an address in Singapore, each Guarantor irrevocably agrees to immediately appoint a new process agent in Singapore acceptable to the Joint Bookrunners and Underwriters and to deliver to the Joint Bookrunners and Underwriters within 14 days a copy of a written acceptance of appointment by the process agent.]
12.4.2
Nothing in this Clause 12.4 will affect the right of the parties hereto to serve process in any other manner permitted by law.
12.5
Waiver of immunity
To the extent that any of the Manager, the Sponsor or the Unit Lender has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment in aid or otherwise) with respect to itself or any of its property, each of the Manager, the Sponsor and the Unit Lender hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement.
13.
COUNTERPARTS
This Agreement may be executed in any number of counterparts each of which when executed and delivered (whether in original, facsimile or electronic mail) shall be an original, but all the counterparts together shall constitute one and the same instrument.
14.
GUARANTEE
14.1
The Guarantee
14.1.1
In consideration of the entry by the Joint Bookrunners and Underwriters into this Agreement, the sufficiency of which is acknowledged, each Guarantor irrevocably and unconditionally, subject to the Limitation Act, Chapter 163 of Singapore:
(a)
guarantees to each Joint Bookrunner and Underwriter as principal obligor, the due and punctual performance and observance by the Sponsor of all of its representations, warranties, obligations and undertakings under this Agreement; and

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(b)
indemnifies each Joint Bookrunner and Underwriter against all losses, damages, costs and expenses incurred by each Joint Bookrunner and Underwriter arising from the failure by the Sponsor to perform and/or observe any of its representations, warranties, obligations and undertakings under this Agreement.
14.1.2
If the Sponsor fails for any reason whatsoever punctually to pay any amount to any of the Joint Bookrunners and Underwriters under this Agreement, the Guarantors shall cause each and every such payment to be made as if the Guarantors instead of the Sponsor were expressed to be the primary obligors under this Agreement and not merely as surety (but without affect the nature of the Sponsor obligations) such that the respective Joint Bookrunner and Underwriter shall receive the same amounts as would have been receivable had such payments been made by the Sponsor.
14.1.3
If any payment received by the Sponsor under the provisions of this Agreement shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Sponsor or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability of the Guarantors and this guarantee shall continue to apply as if such payment had at all times remained owing by the Sponsor, provided that the obligations of the Sponsor and/or the Guarantors under this Clause 14 shall, as regards any payments made to the Sponsor which is avoided or set aside, be contingent upon such payment being reimbursed to the Sponsor or other persons entitled through the Sponsor.
14.1.4
Each Guarantor hereby agrees that its obligations under this Clause 14 shall be unconditional and that the Guarantors shall be fully liable irrespective of the validity, regularity, legality or enforceability against the Sponsor of, or of any defence or counter-claim whatsoever available to the Sponsor in relation to, its obligations under this Agreement, whether or not any action has been taken to enforce the same or any judgment obtained against the Sponsor, whether or not any of the other provisions of this Agreement have been modified, whether or not any time, indulgence, waiver, authorisation or consent has been granted to the Sponsor by any of the Joint Bookrunners and Underwriters, whether or not there have been any dealings or transactions between the Sponsor and any or all of the Joint Bookrunners or Underwriters, whether or not the Sponsor has been dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or not the Sponsor has been prevented from making payment by foreign exchange provisions applicable at its place of registration or incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge of or defence to a guarantor. Accordingly the validity of this guarantee shall not be affected by reason of any invalidity, irregularity, illegality or unenforceability of all or any of the obligations of the Sponsor under this Agreement and this guarantee shall not be discharged nor shall the liability of the Guarantors under this Agreement be affected by any act, thing or omission or means whatever whereby its liability would not have been discharged if it had been the principal debtor.

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14.2
Waiver
Each Guarantor waives diligence, presentment, demand of payment, filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Sponsor, any right to require a proceeding first against the Sponsor, protest or notice with respect to this Agreement or the indebtedness evidenced thereby and all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate balance of all sums payable and obligations owed by the Sponsor under this Agreement, shall not be discharged except by complete performance of the obligations in this Agreement and is additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether from the Guarantors or otherwise.
14.3
Payment
If any moneys shall be payable by the Guarantors to a Joint Bookrunner and Underwriter under this guarantee, the Guarantors shall not, so long as the same remain unpaid, without prior written consent of the relevant Joint Bookrunner and Underwriter:
14.3.1
in respect of any amounts paid by it under this guarantee, exercise any rights of subrogation or contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such payment; or
14.3.2
in respect of any other moneys for the time being due to the Guarantors by the Sponsor, claim payment thereof or exercise any other right or remedy,
(including in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Sponsor, proving in competition with any of the Joint Bookrunners and Underwriters). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Sponsor, any payment or distribution of assets of the Sponsor of any kind or character, whether in cash, property or securities, shall be received by the Guarantors before payment in full of all amounts payable under this Agreement shall have been made to the relevant Joint Bookrunner and Underwriter, such payment or distribution shall be received by the Guarantors on trust to pay the same over immediately to the relevant Joint Bookrunner and Underwriter for application in or towards the payment of all sums due and unpaid under this Agreement.
14.4
Representations and Warranties of the Guarantors
The Guarantor represents and warrants to and agrees with each Joint Bookrunner and Underwriter as set forth below:
14.4.1
none of the Guarantors is in liquidation in any jurisdiction, nor has any step or action been taken or threatened, nor any resolution passed, nor legal proceedings started or threatened, nor orders made in any jurisdiction, nor any petitions presented, for the winding up or dissolution of any of the Guarantors, or for any of them to enter into any compromise, arrangement, scheme of arrangement or composition for the benefit of creditors, or for the appointment of a receiver, administrator, receiver and manager, judicial manager, trustee, provisional supervisor, provisional liquidator, liquidator or similar or analogous officer or

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equivalent person of any of them or their respective interests, properties, revenues or assets;
14.4.2
Linda Bren is the beneficial owner of a 100% limited partnership interest (the “PBren Interest”) in PBren Investments, L.P., a limited partnership organized and existing under the laws of the State of Delaware. The PBren Interest is 100% (one hundred percent) of the limited partnership interests in PBren Investments, L.P. The legal owner thereof is Richard Bren, Trustee of the Linda Bren 2017 Trust, which trust is revocable, and all of whose property may be withdrawn, by Linda Bren. Richard Bren, as Trustee of the Linda Bren 2017 Trust, is the lawful owner of, and has good and marketable title to 100% of the limited partnership interests in PBren Investments, L.P., free and clear of any and all Encumbrances;
14.4.3
Charles J. Schreiber, Jr is the beneficial owner of a 98.5075% partnership interest (the " Schreiber Interest ") in Schreiber Real Estate Investments L.P., a limited partnership organized under the laws of the State of Delaware. The remaining limited partnership interests in the Schreiber Real Estate Investments L.P. are owned by Mr. Schreiber’s adult children. The Schreiber Interest represents 98.5075% of the outstanding partnership interests in Schreiber Real Estate Investments L.P. Charles J. Schreiber, Jr is the lawful owner of, and has good and marketable title to his 98.5075% interests in Schreiber Real Estate Investments L.P., free and clear of any and all Encumbrances; and
14.4.4
each of PBren Investments, L.P. and Schreiber Real Estate Investments L.P. is the legal owner of a 50.0% limited liability company interest (the " KBS RA Interests ") in KBS RA, a limited liability company organized and existing under the laws of the State of Delaware. The KBS RA Interests represent 100% (hundred percent) of the outstanding membership interests in KBS RA. PBren Investments, L.P. and Schreiber Real Estate Investments L.P. are the lawful owners of, and have good and marketable title to each of their respective 50% interests in KBS RA, free and clear of any and all Encumbrances.
The representations and warranties of the Guarantors in this Clause 14.4 shall be deemed to be repeated by the Guarantors as of the Execution Time and at all times up to and including each Closing Date (including without limitation, the date of the Repayment Side Letter, the Completion Date and at the time immediately prior to closing on each Closing Date). For the avoidance of doubt, the representations and warranties of the Guarantors in this Clause 14.4 do not, and are not intended to, apply to any period after any Option Closing Date and shall not be construed as covenants that apply after any Option Closing Date.
15.
AMENDMENTS AND VARIATIONS
This Agreement may only be amended or supplemented in writing signed by or on behalf of each of the parties hereto.







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SCHEDULE 1
THE JOINT BOOKRUNNERS AND UNDERWRITERS
(Clause 2.1)
Joint Bookrunners and Underwriters
Number of Offering Units
and Cornerstone Units
(Column 1)
Proportion of Over-
Allotment Units
 
 
 
 
 
DBS Bank Ltd.
 
242,106,000
 
-
Merrill Lynch (Singapore)
Pte. Ltd.
 
113,326,000
 
100%
China International Capital
Corporation (Singapore) Pte.
Limited
 
567,000
 
-
Credit Suisse (Singapore)
Limited
 
36,058,000
 
-
Maybank Kim Eng
Securities Pte. Ltd.
 
87,570,000
 
-
Oversea-Chinese Banking
Corporation Limited
 
36,058,000
 
-
Total
 
515,685,000
 
100%


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SCHEDULE 2
LOCK-UP LETTERS


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DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road #03-01
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the " Joint Bookrunners and Underwriters ")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS REIT Properties III LLC wishes to restrict its right to deal in the units in Prime US REIT (the " Units ") in which it legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the " Listing Date ") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the " KBS REIT Properties III LLC Lock-up Units "), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the " Prospectus ").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS REIT Properties III LLC undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be

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unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the " First Lock-up Period "), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the " Second Lock-up Period "), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock-up Period.

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3.
The above restrictions in paragraph 2 shall not apply to prohibit KBS REIT Properties III, LLC from being able to:
(a)
create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
enter into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
transfer the KBS REIT Properties III LLC Lock-up Units to and between KBS REIT Properties III LLC or any direct and indirect wholly-owned subsidiaries of KBS REIT Properties III LLC, provided that KBS REIT Properties III LLC shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS REIT Properties III LLC has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners and Underwriters undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS REIT Properties III LLC to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.

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6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.
Yours faithfully,
For and on behalf of KBS REIT Properties III, LLC
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

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DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road #03-01
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the " Joint Bookrunners and Underwriters ")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS Limited Partnership III (" KBS LP III ") wishes to restrict its right to deal in its effective interest in the units in Prime US REIT (the " Units ") which KBS REIT Properties III LLC legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the " Listing Date ") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the " KBS REIT Properties III LLC Lock-up Units "), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the " Prospectus ").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS LP III undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the

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Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the " First Lock-up Period "), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the " Second Lock-up Period "), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock-up Period.
3.
The above restrictions in paragraph 2 shall not apply to prohibit:
(a)
KBS LP III from being able to create a charge over the KBS REIT Properties III

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LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
KBS REIT Properties III LLC from entering into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over-allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
KBS LP III from being able to transfer the KBS REIT Properties III LLC Lock-up Units to and between any direct and indirect wholly-owned subsidiaries of KBS LP III, provided that KBS LP III shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS LP III has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS LP III to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.
6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.

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7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.
Yours faithfully,
For and on behalf of KBS Limited Partnership III
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:     /s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer
 

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DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road #03-01
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the " Joint Bookrunners and Underwriters ")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS REIT Holdings III, LLC (" KBS REIT Holdings III ") wishes to restrict its right to deal in its effective interest in the units in Prime US REIT (the " Units ") which KBS Real Estate Investment Trust III, Inc. legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the " Listing Date ") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the " KBS REIT Properties III LLC Lock-up Units "), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the " Prospectus ").

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2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS REIT Holdings III undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the " First Lock-up Period "), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the " Second Lock-up Period ")), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock-up Period.

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3.
The above restrictions in paragraph 2 shall not apply to prohibit:
(a)
KBS REIT Holdings III from being able to create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
KBS REIT Properties III LLC from entering into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over-allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
KBS REIT Holdings III from being able to transfer the KBS REIT Properties III LLC Lock-up Units to and between any direct and indirect wholly-owned subsidiaries of KBS Limited Partnership III, provided that KBS Limited Partnership III shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS REIT Holdings III has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS REIT Holdings III to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.

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6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.

Yours faithfully,
KBS REIT HOLDINGS III LLC,
a Delaware limited liability company
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:     /s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer
 


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DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road #03-01
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the " Joint Bookrunners and Underwriters ")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS Real Estate Investment Trust III, Inc. (" KBS REIT III ") wishes to restrict its right to deal in the units in Prime US REIT (the " Units ") in which it legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the " Listing Date ") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the " KBS REIT Properties III LLC Lock-up Units "), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the " Prospectus ").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS REIT III undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent

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of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the " First Lock-up Period "), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the " Second Lock-up Period "), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock-up Period.

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3.
The above restrictions in paragraph 2 shall not apply to prohibit:
(a)
KBS REIT III from being able to create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
KBS REIT Properties III LLC from entering into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over-allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
KBS REIT III from being able to transfer the KBS REIT Properties III LLC Lock-up Units to and between any direct and indirect wholly-owned subsidiaries of KBS REIT III, provided that KBS REIT III shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS REIT III has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners and Underwriters undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS REIT III to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.

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6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.
Yours faithfully,
For and on behalf of KBS Real Estate Investment Trust III, Inc.
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

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IN WITNESS WHEREOF , this Agreement was entered into on the date first stated above.
KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
(acting as Manager on behalf of Prime US REIT and in its own capacity)

By:
/s/ Sandip Talukdar
Name: Sandip Talukdar
Title: Chief Financial Officer

Endeavour – Placement Agreement



KBS ASIA PARTNERS PTE. LTD.
By:
/s/ Charles J. Schreiber, Jr.
Name: Charles J. Schreiber, Jr.
Title: Director


Endeavour – Placement Agreement




KBS REIT PROPERTIES III, LLC
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer

Endeavour – Placement Agreement




PBren Investments, L.P.
By:
PBren Investments, LLC, as general partner 
By:
PBCS Management, LLC, a Manager 
By:
/s/Charles J. Schreiber, Jr.
Charles J. Schreiber Jr., Manager

Endeavour – Placement Agreement




Schreiber Real Estate Investments, L.P.
By:
Schreiber Investments, LLC, as general partner
By:
/s/Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr., Manager


Endeavour – Placement Agreement




KBS REALTY ADVISORS LLC
By:
Schreiber Real Estate Investments, L.P., a Manager
By:
Schreiber Investments, LLC, as general partner
By:
/s/Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.
Manager

Endeavour – Placement Agreement



DBS BANK LTD.
By:
/s/ Tan Jeh Wuan
Name: Tan Jeh Wuan
Title: Managing Director, Head of Capital Markets, Singapore



Endeavour – Placement Agreement



MERRILL LYNCH (SINGAPORE) PTE. LTD.
By:
/s/ Siah Geok Wah
Name: Siah Geok Wah
Title: Managing Director


Endeavour – Placement Agreement




CHINA INTERNATIONAL CAPITAL CORPORATION (SINGAPORE) PTE.
LIMITED
By:
/s/ Lindsey Lin
Name: Lindsay Lin
Title: Managing Director, Head of Southeast Asia, Investment Banking


Endeavour – Placement Agreement



CREDIT SUISSE (SINGAPORE) LIMITED
By:
/s/ Tan Kuan Ern
Name: Tan Kuan Ern
Title: Managing Director

By:
/s/ Adrian Yeo
Name: Adrian Yeo
Title: Director, General Counsel Division


Endeavour – Placement Agreement



MAYBANK KIM ENG SECURITIES PTE. LTD.
By:
/s/ Audrey Lam
Name: Audrey Lam
Title: Investment Banking & Advisory, Singapore


Endeavour – Placement Agreement



OVERSEA-CHINESE BANKING CORPORATION LIMITED
By:
/s/ David Cheng
Name: David Cheng
Title: Head, Corporate Finance

By:
/s/ Andrew Teo
Name: Andrew Teo
Title: Head, Corporate Finance



Endeavour – Placement Agreement



16 July 2019
DBS Bank Ltd.
12 Marina Boulevard
DBS Asia Central @ Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay #14-01
OUE Bay Front
Singapore 049321
Credit Suisse (Singapore) Limited
One Raffles Link #03/#04-01
South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00
Singapore 049514
Ladies and Gentlemen:
This letter agreement (" Side Letter ") is being executed and delivered (a) in connection with that a Singapore Offer Agreement dated 8 July 2019 and a Placement Agreement entered into on the date hereof among KBS US Prime Property Management Pte. Ltd., as the manager of Prime US REIT (the " Manager "), KBS Asia Partners Pte. Ltd. as the Sponsor, KBS Realty Advisors LLC, PBren Investments, L.P. and Schreiber Real Estate Investments, L.P. as the Guarantors, KBS REIT Properties III LLC as a Unit Lender, DBS Bank Ltd., as the Sole Financial Adviser and Issue Manager, Joint Global Coordinator, Joint Bookrunner and Underwriter, Merrill Lynch (Singapore) Pte. Ltd. as Joint Global Coordinator, Joint Bookrunner and Underwriter, and China International Capital Corporation Limited, Credit Suisse (Singapore) Limited, Maybank Kim Eng Securities Pte. Ltd. and Oversea-Chinese Banking Corporation Limited as Joint Bookrunners and Underwriters (collectively, the " Underwriting Agreements ") and (b) to confirm certain agreements with respect to the funding of Prime US REIT by each of DBS Bank Ltd. and/or its affiliates (" DBS "), Merrill Lynch (Singapore) Pte. Ltd. and/or its affiliates (" BAML "), Credit Suisse (Singapore) Limited and/or its affiliates (" CS "), Maybank Kim Eng Securities Pte. Ltd. and/or its affiliates (" Maybank ") and Oversea-Chinese Banking Corporation Limited and/or its affiliates (" OCBC ", and DBS, BAML, CS, Maybank and OCBC, in such capacities, are each an " Advance Funding Party "; and collectively, the " Advance Funding Parties ") of all or part of the aggregate amount to be funded to enable DBS Trustee Limited (in its capacity as trustee of Prime US REIT) (the " Trustee ") to acquire the Properties on the Completion Date, provided , however , that the portion of such aggregate amount to be funded by the Advance Funding

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Parties, which shall be no more than US$259,360,239.87 (the " Advance Funding Amount ") is agreed (in United States dollars) with the Advance Funding Parties.
All capitalized terms used and not otherwise defined in this Side Letter have the respective meanings ascribed to them in the Underwriting Agreements. Headings and sub-headings are for ease of reference only and shall not affect the construction of this Side Letter, and references to the singular include the plural and vice versa .
In consideration of the agreement by the Advance Funding Parties to fund the Advance Funding Amount in such amount as the Advance Funding Parties may agree, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the parties hereto hereby agree as follows:
1.
Advance Funding
(a)
Funding . DBS, BAML, CS, Maybank and OCBC shall severally (and not jointly or jointly and severally) fund the Advance Funding Amount two business days prior to the Completion Date or such other date as may be agreed by the parties hereto (the " Funding Date "), Singapore time, respectively to the Advance Funding Account in the breakdown set out below:
Joint Bookrunners and Underwriters
Advance Funding Amount
(US$)
DBS Bank Ltd.
108,175,733.86
Merrill Lynch (Singapore) Pte. Ltd.
50,635,449.89
Credit Suisse (Singapore) Limited
35,310,943.51
Maybank Kim Eng Securities Pte. Ltd.
49,126,833.10
Oversea-Chinese Banking Corporation
Limited
16,111,279.51
(b)
Each of the Manager and DBS Trustee Limited (in its capacity as trustee of Prime US REIT) (the " REIT Trustee "), acknowledges and agrees that (i) it will directly or indirectly benefit from such funding to facilitate the offering of units representing undivided interests in Prime US REIT (the " Offering "), (ii) it has received valuable consideration for executing this Side Letter and (iii) the Advance Funding Parties have informed it that they would not fund the Advance Funding Amount to the REIT Trustee without the execution and delivery of this Side Letter by the REIT Trustee and the Manager. For the purpose of this Side Letter, " Advance Funding Account " shall mean the following non-interest bearing account maintained by the Manager at DBS Bank Ltd. with the following details:
Account name:    Prime USD Unit Issue Account
Account number:    0003-044253-01-2

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SWIFT Code:    DBSSSGSG
or any other account or accounts domiciled in Singapore designated as the Advance Funding Account by agreement between the Advance Funding Parties.
(c)
Conditions to Funding. The obligation of the Advance Funding Parties to remit the Advance Funding Amount on the Funding Date shall be conditional upon the receipt by each of the Advance Funding Parties of all of the documents and evidence, and satisfaction of all other conditions, set out in Schedule B below (save for any waived by all the Advance Funding Parties).
(d)
Failure to Fully Fund . If any Advanced Funding Party (" Defaulting Funding Party ") fails to remit the full amount of its proportion of the Advance Funding Amount to the Advance Funding Account by the Funding Date, then:
(i)
none of the other Advance Funding Parties will be obliged to fund their respective proportion of the Advance Funding Amount;
(ii)
the REIT Trustee and the Manager must immediately on demand from each Advance Funding Party refund to that Advance Funding Party the amount of the Advance Funding Amount which that Advance Funding Party had remitted to the Advance Funding Account under this Clause 1, and DBS Bank Ltd. will (and is hereby irrevocably authorised and directed by the REIT Trustee and the Manager to), as soon as reasonably practicable, deduct the amount of that refund from the Advance Funding Account and remit it to that Advanced Funding Party by wire transfer of immediately available funds (in United States dollars) to the account specified by that Advance Funding Party; and
(iii)
the REIT Trustee must immediately pay to each Advance Funding Party (other than a Defaulting Funding Party) its Advance Funding Fee accrued from the Funding Date up to (but excluding) the date of that Advance Funding Party's receipt of such refund, together with all other sums owing from the REIT Trustee to that Advance Funding Party.
(e)
Unlawfulness of Funding Cancelling Commitments . If, after the date of this Side Letter, it is or will become unlawful or will become unlawful in any jurisdiction for an Advance Funding Party to perform any of its obligations as contemplated by this Side Letter or to fund or maintain its participation in the Advance Funding Amount, no Advance Funding Party shall be obligated to make available its participation in the Advance Funding Amount to the REIT Trustee and (if any part of the Advance Funding Amount has been made available to the REIT Trustee) the Advance Funding Parties may cancel their respective commitments and require immediate repayment of the Advance Funding Amount or such part that has been advanced together with all accrued Advance Funding Fee outstanding and interest due and payable at the Applicable Rate (as defined in Clause 2 below) and any other outstanding sums and, if not repaid by the close of business (in Singapore) on the Business Day (in Singapore) after such amounts first become due, at the Default Rate (as defined in Clause 19 below). An Advance Funding Party must immediately notify all the other Advance Funding Parties and the REIT Trustee if it becomes

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(f)
aware that it is unlawful in any relevant jurisdiction for that Advance Funding Party to perform any of its obligations under this Side Letter or to fund or maintain its participation in the Advance Funding Amount.
2.
Advance Funding Fees
To compensate the Advance Funding Parties for their agreement to fund the Advance Funding Amount to the REIT Trustee on the Funding Date, the REIT Trustee shall pay to the Advance Funding Parties (to be allocated among the Advance Funding Parties pro rata in accordance with their respective Advance Funding Amounts) a fee (the " Advance Funding Fee ") in an amount equal to interest accruing on the Advance Funding Amount from the Funding Date until the date that the Advance Funding Amount has been repaid in full at the Applicable Rate to the Advance Funding Parties. As used herein, the " Applicable Rate" means a rate to be advised by the Advance Funding Parties to the REIT Trustee. The Advance Funding Fee shall be fully-earned and become non-refundable upon payment of the Advance Funding Fee, and shall be due and payable on the date that the Aggregate Advance Funding Obligations (as defined in Clause 3 below) are due and payable.
3.
Obligation to Repay
(a)
Repayment Obligations if Listing Occurs . If the Units in Prime US REIT are listed (the " Listing ") on Singapore Exchange Securities Trading Limited (the " SGX-ST ") by 2:00 p.m. (Singapore time) on 19 July 2019, or such other date and time as may be agreed by the Advance Funding Parties in their sole discretion (the " Listing Date "), the Aggregate Advance Funding Obligations shall be repayable immediately by the REIT Trustee and the Manager to the Advance Funding Parties pro rata in accordance with their respective Advance Funding Amounts, and the REIT Trustee agrees to cause, and hereby irrevocably authorises and directs, the Manager to set aside a sufficient portion of Listing proceeds to be applied towards repayment of the Aggregate Advance Funding Obligations. The REIT Trustee and the Manager agree that the Advance Funding Parties and/or the Joint Bookrunners and Underwriters may set off the Aggregate Advance Funding Obligations against (and retain, for payment of the Aggregate Advance Funding Obligations, from) the proceeds of the Offering and the Cornerstone Units before remitting any further proceeds to the REIT Trustee, or into the non-interest bearing account opened by the Manager and operated by DBS Bank Ltd. (as the Receiving Bank) and designated as the "PRIME USD Unit Issue Account" solely for the purpose of depositing proceeds from the Offering and the Cornerstone Units (the " Receiving Bank "), pursuant to the terms of the Singapore Offer Agreement and the Placement Agreement, respectively. For the avoidance of doubt, the setting off of the Aggregate Advance Funding Obligations against the proceeds of the Offering and the Cornerstone Units pursuant to this Clause 3(a) shall satisfy the obligations of the REIT Trustee under this Side Letter to repay the Aggregate Advance Funding Obligations, to the extent of the amount so set off and paid to the Advance Funding Parties.
(b)
Repayment Obligation if Listing Does Not Occur . If, for any reason, the Listing does not occur by the Listing Date, then the REIT Trustee shall immediately repay the Aggregate Advance Funding Obligations to the Advance

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(c)
Funding Parties pro rata in accordance with their respective Advance Funding Amounts and procure the repayment of such amounts in accordance with the terms of the closing escrow agreement to be entered into on or around 17 July 2019 between the relevant parties substantially in the form set out in Schedule C (the “ Escrow Agreement ”). If, for any reason, the Aggregate Advance Funding Obligations are not repaid in full by the Listing Date, the REIT Trustee agree to repay or procure the repayment to each Advance Funding Party of all that Advance Funding Party's unpaid portions of the Aggregate Advance Funding Obligations by the close of business (in Singapore) on the next Business Day (in Singapore) by wire transfer of immediately available funds (in United States dollars) to the account specified by that Advance Funding Party.
(d)
Overdue Amounts : If the REIT Trustee fails to repay the Aggregate Advance Funding Obligations or any part thereof when due, it shall be liable to pay the Advance Funding Parties interest on such amount at the Default Rate from the due date until the date of repayment of the overdue amount; and the Advance Funding Parties shall be entitled to exercise all remedies available to them at law or in equity and the REIT Trustee shall, in addition to the Advance Funding Amount and the Advance Funding Fee and interest on overdue sums, be obligated to pay all out-of-pocket costs and expenses (including legal fees on the full indemnity basis) incurred by the Advance Funding Parties to enforce such obligations of the REIT Trustee under this Side Letter (the Advance Funding Amounts, Advance Funding Fee and such costs and expenses and all other sums payable by the REIT Trustee are, collectively, the " Aggregate Advance Funding Obligations "). Interest (if unpaid) on any amount (whether overdue or otherwise) will be compounded with that amount at the end of each calendar month but will remain immediately due and payable.
(e)
Time of the Essence . The parties hereto agree that time is of the essence with respect to the funding and repayment of the Advance Funding Amount and the Aggregate Advance Funding Obligations, and the REIT Trustee shall have the responsibility of securing all consents and approvals and taking all necessary steps to ensure that the repayment is made to the relevant parties in United States dollars in the most expeditious manner and in any event no later than the due date required by this Clause 3.
(f)
Pari Passu Payment to the Advance Funding Parties. The parties to this Side Letter agree, and the REIT Trustee undertakes to the Advance Funding Parties that, all payments of the Aggregate Advance Funding Obligations must be made to the Advance Funding Parties on a pari passu basis, proportionate to their respective shares of the Aggregate Advance Funding Obligations,
4.
Manager's Undertaking
In consideration of the Advance Funding Parties funding the Advance Funding Amount, the Manager hereby irrevocably and unconditionally undertakes with the Advance Funding Parties that whenever the REIT Trustee does not pay any interest amounts when due under or in connection with this Side Letter, the Manager must immediately on demand by any Advance Funding Party pay that interest amount to such Advance Funding Party, as if the Manager were the principal obligor in respect of that interest amount, subject to Clause 19 below.

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5.
Gross-up
All payments made by the REIT Trustee or the Manager under this Side Letter shall be made gross, free of any right of counterclaim or set off and without deduction or withholding of any kind other than any deduction or withholding required by law, provided that if the REIT Trustee or the Manager makes a deduction or withholding required by law, the sum due to the Advance Funding Parties from the REIT Trustee or the Manager shall be increased to the extent necessary to ensure that, after the making of any deduction or withholding, each Advance Funding Party receives a sum equal to the sum it would have received had no deduction or withholding been made. Each Advance Funding Party agrees that all invoices to be issued by it to the REIT Trustee or the Manager in connection with this Side Letter shall be issued by its Singapore office.
6.
Goods and Services Tax ("GST")
Any GST or other levies now or hereafter imposed by law or required to be paid in respect of any moneys payable to or received or receivable by the Advance Funding Parties pursuant to this Side Letter shall (except to the extent prohibited by law) be borne and paid by the REIT Trustee and the Manager (as the case may be).
7.
Indemnity
The REIT Trustee and the Manager jointly and severally agree to indemnify each Advance Funding Party and its Affiliates against any and all losses that it or they may suffer arising out of the funding of any Advance Funding Amount or otherwise in connection with this Side Letter, including, without limitation, the repayment of the Aggregate Advance Funding Obligations, accrued interest, tax imposed on the Advance Funding Parties (including without limitation stamp duty, GST, value added tax and any other applicable tax) and all costs and expenses (including, without limitation, out-of-pocket legal fees and expenses) incurred by the Advance Funding Parties as a result of the delay in the repayment and in seeking a full repayment of the Aggregate Advance Funding Obligations; provided, however, that the REIT Trustee and the Manager shall not be liable to any Advance Funding Party for any losses resulting from the fraud, gross negligence or intentional malfeasance of that Advance Funding Party.
8.
Currency Indemnity
If any sum due from the REIT Trustee or the Manager under this Side Letter (a " Sum "), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the " First Currency" ) in which that Sum is payable into another currency (the " Second Currency" ) for the purpose of:
(a)
making or filing a claim or proof against the REIT Trustee or the Manager; or
(b)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
the REIT Trustee and the Manager shall, as an independent obligation, within three Business Days of demand in writing, indemnify each Advance Funding Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the

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conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum. The REIT Trustee and the Manager waive any right they may have in any jurisdiction to pay any amount under the Transaction Documents in a currency or currency unit other than that in which it is expressed to be payable.
9.
General Currency Indemnity
The REIT Trustee and the Manager must, as an independent obligation, within three Business Days of demand, indemnify each Advance Funding Party against any loss or liability which that Advance Funding Party incurs as a consequence of that Advance Funding Party receiving an amount in respect of the liability of the REIT Trustee or the Manager under this Side Letter in a currency other than the currency in which the amount is expressed to be payable under this Side Letter.
10.
Obligations Unconditional
(a)
To the fullest extent permitted by applicable law, except as expressly set forth in this Side Letter or as otherwise agreed by all parties in writing, the liability of the REIT Trustee and the Manager hereunder shall not be impaired, abated, deferred, diminished, modified, released, terminated or discharged, in whole or in part, or otherwise affected, by any event, condition, occurrence, circumstance, proceeding, action or failure to act, with or without notice to, or the knowledge or consent of, the REIT Trustee or the Manager, including, without limitation:
(i)
any amendment, modification, or extension or termination of either of the Underwriting Agreements or any of the other documents executed in connection therewith (collectively, the " Transaction Documents ");
(ii)
any extensions of time for performance, whether in whole or in part, of any obligation given prior to or after default under any of the Transaction Documents;
(iii)
any guarantee, indemnity or other agreement now or hereafter executed by the REIT Trustee, the Manager or any other person and any payment thereunder;
(iv)
any waiver of or assertion or enforcement or failure or refusal to assert or enforce, in whole or in part, any payment of any obligation, claim, cause of action, right or remedy which an Advance Funding Party may, at any time, have under any Transaction Documents or with respect to the REIT Trustee or the Manager;
(v)
any act or thing or omission or delay to do any act or thing which may in any manner or to any extent vary the risk of the REIT Trustee or the Manager or which would otherwise operate as a discharge of the REIT Trustee or the Manager as a matter of law;

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(vi)
the release of any indemnitor or guarantor for the payment of any obligation, whether by operation of law or otherwise (except by reason of the payment in full of such party's obligations under this Side Letter);
(vii)
except in connection with the demand required by Clauses 1(c), 4, 8 or 9 above, the failure to give the REIT Trustee and/or the Manager any notice whatsoever under this Side Letter;
(viii)
any right, power or privilege that an Advance Funding Party may now or hereafter have against the REIT Trustee, the Manager or any other person, entity or collateral;
(ix)
any assignment, conveyance, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise) of all or any part of the REIT Trustee's and/or the Manager's interests in or rights under the Transaction Documents;
(x)
any assignment, conveyance, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or part of the interest or rights of an Advance Funding Party under the Transaction Documents;
(xi)
any accuracy or inaccuracy of any representations or warranties made by any person in any Transaction Documents;
(xii)
any recovery as a result of the exercise of an Advance Funding Party's rights or remedies under any of the Transaction Documents (other than to the extent of such recovery);
(xiii)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, execute, take up or enforce, any rights against, or security over assets of, any person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(xiv)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the REIT Trustee, the Manager or any other person;
(xv)
any unenforceability, illegality or invalidity of any obligation of any person under any Transaction Document or any other document or security;
(xvi)
any insolvency or similar proceedings; or
(xvii)
this Side Letter or any Transaction Document not being executed by or binding upon any other party.
(b)
None of the REIT Trustee's and/or the Manager's obligations to make payment in accordance with this Side Letter nor any remedy for the enforcement thereof shall be impaired, modified, changed, stayed, released or limited in any manner by any impairment, modification, change, release, limitation or stay of the

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liability of the REIT Trustee and/or the Manager or their respective estate in bankruptcy or any remedy for the enforcement thereof, resulting from the operation of any present or future provision of any applicable bankruptcy, liquidation, insolvency or similar laws of any applicable jurisdiction or other statute or from the decision of any court interpreting any of the same (collectively, " Insolvency Laws "), and the REIT Trustee and the Manager shall be obligated under this Side Letter as if no such impairment, stay, modification, change, release or limitation had occurred. If any Advance Funding Party shall be obligated by reason of any action under any Insolvency Laws or other legal proceeding to pay or repay to the REIT Trustee and/or the Manager, or to any trustee, receiver or other representative, any amounts previously paid (the " Affected Amounts "), such previous payment shall not be considered as discharging or diminishing the liability of the REIT Trustee and/or the Manager, and their liability to pay those Affected Amounts shall continue or be reinstated as if such previous payment had not been made and the Affected Amounts had instead at all times remained owing by the REIT Trustee and the Manager.
11.
Waiver
Each of the REIT Trustee and the Manager hereby waives (a) presentment, demand, protest, notice of protest, notice of dishonor and notice of non-payment, non-performance or non-observance, (b) the right to require any party to proceed against any collateral or other security now or hereafter held by such party or to pursue any other remedy available to such party, (c) the benefit of or right to assert any statute of limitations affecting liability hereunder or the enforcement thereof to the extent permitted by law, (d) any rights and remedies afforded by applicable law, (e) any defence which may arise by reason of (i) the incapacity, lack of authority, insolvency, liquidation, dissolution, death or disability of, or revocation hereof by, any person or persons, (ii) the failure of any party to file or enforce any claim against the assets or estate (in probate, bankruptcy, liquidation insolvency, or any other proceedings) of the REIT Trustee, the Manager or any other person or persons or (iii) the absence, impairment or loss of any right of reimbursement or subrogation or other right or remedy of the REIT Trustee and/or the Manager against any other person, or against any security resulting from the exercise or election of any remedy or remedies, and (f) all rights and remedies accorded by applicable law to indemnitors or guarantors.
12.
Rights and Remedies
The rights and remedies of the Advance Funding Parties provided for in this Side Letter are cumulative and not exclusive of those provided by law or by any Transaction Documents. The failure to exercise or any delay in exercising a right or remedy under this Side Letter shall not constitute a waiver thereof or a waiver of any other right or remedy.
13.
Successors and Assigns
This Side Letter shall be binding on and enure to the benefit of the parties hereto and their respective successors and assigns except that the REIT Trustee and the Manager may not assign any of their rights or obligations hereunder. References to each of the parties to this Side Letter include their successors and permitted assigns .

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14.
Rights of Third Parties
A person who is not a party to this Side Letter may not enforce its terms under the Contracts (Rights of Third Parties) Act (Chapter 53B) of Singapore, except that each non-contracting Affiliate referred to in Clause 7 above shall have the right under the Contracts (Rights of Third Parties) Act (Chapter 53B) of Singapore, to enforce their respective rights under this Side Letter as amended from time to time, but notwithstanding any term of this Side Letter, the consent of any person who is not a party to this Side Letter is not required to rescind or vary this Side Letter at any time.
15.
Severability
If any provision of this Side Letter is held to be invalid or unenforceable, then such provision shall (so far as invalid or unenforceable) be given no effect and shall be deemed to be included in this Side Letter but without invalidating any of the remaining provisions of this Side Letter.
16.
Notices
(a)
Form . All notices, certificates, consents, approvals, waivers and other communications in connection with this Side Letter must be in writing, signed by an authorised officer of the sender and marked for attention as set out below in Schedule A below (in the case of the REIT Trustee or the Manager), or in clause 11 of the Singapore Offer Agreement and/or clause 11 of the Placement Agreement (in the case of an Advance Funding Party) or, if the addressee has notified the sender otherwise, then marked for attention in the way last notified.
(b)
Delivery . They must be left at or sent by prepaid post to the address of the addressee, as set out in Schedule A below (in the case of the REIT Trustee or the Manager) or clause 11 of the Singapore Offer Agreement and/or clause 11 of the Placement Agreement (in the case of an Advance Funding Party); or such other address notified by the addressee to the sender.
(c)
Effectiveness . Every notice or communication sent in accordance with this Clause 16 shall be effective upon receipt by the addressee, except in the case of any notice or communication sent by fax, which shall be effective upon despatch by the sender.
17.      Amendments
This Side Letter may not be modified or amended or the rights of any party hereunder waived unless such modification, amendment or waiver is effected by a written instrument expressly modifying, amending or waiving this Side Letter or the rights of a party hereunder, which instrument is executed by each party hereto.
17.
Governing Law
This Side Letter and all matters arising from or connected with it are governed by, and shall be construed in accordance with, Singapore law.
18.
Jurisdiction

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(a)
Jurisdiction of Singapore courts . All the parties to this Side Letter agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this Side Letter or otherwise arising in connection with this Side Letter and for such purposes irrevocably submit to the jurisdiction of the Singapore courts.
(b)
Serving Documents . Without preventing any other method of service, any document in a court action may be served on a party by being delivered to or left at that party's address for service of notices under Clause 16 above.
(c)
Waiver of Immunity . To the extent that the REIT Trustee or the Manager has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment in aid or otherwise) with respect to itself or any of its property, each of them hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Side Letter.
19.
Payments
All amounts due hereunder shall be paid in United States dollars, and if not paid when due shall bear interest at a rate (the " Default Rate ") of 3.2% per annum until such time when all amounts due to the Advance Funding Parties under this Side Letter shall have been fully repaid by the REIT Trustee and/or the Manager to the Advance Funding Parties.
20.
Entire Agreement
The Underwriting Agreements and this Side Letter constitute the entire agreement among the parties hereto pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements and understanding of the parties in connection therewith. In the event of a conflict between the provisions of this Side Letter and either of the Underwriting Agreements, the provisions of this Side Letter shall prevail.
21.
Binding Agreement
The execution and delivery of this Side Letter by each of the parties hereto constitutes the representation that (a) each such party is authorized to execute this Side Letter, and (b) the terms of this Side Letter are binding upon, and in full force and effect against, such party.
22.
Counterparts
This Side Letter may be executed in any number of counterparts each of which when executed and delivered (whether in original, facsimile or electronic mail) shall be an original, but all the counterparts together shall constitute one and the same instrument.
23.
Termination

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In the event that either of the Underwriting Agreements are terminated, this Side Letter shall terminate immediately and:
(i)
if the termination of this Side Letter occurs prior the remittance of the Advance Funding Amount to the Advance Funding Account, any commitment or obligation of the Advance Funding Parties to fund the Advance Funding Amount shall simultaneously terminate without any further action, without prejudice to the obligations of the REIT Trustee and the Manager in this Side Letter, including but not limited to their obligation to repay any Aggregate Advance Funding Obligations immediately to the Advance Funding Parties; or
(ii)
if the termination of this Side Letter occurs after the remittance of the Advance Funding Amount to the Advance Funding Account, the Trustee shall immediately repay the Aggregate Advance Funding Obligations to the Advance Funding Parties pro rata in accordance with their respective Advance Funding Amounts and where applicable, procure the repayment of such amounts in accordance with the terms of the Escrow Agreement entered to be entered into the date hereof between that relevant parties substantially in the form set out in Schedule C.
24.
Several Liabilities and Rights of the Advance Funding Parties
Any provision of this Side Letter which is expressed to bind more than one Advance Funding Party shall bind each of the Advance Funding Parties severally (and not jointly or jointly and severally). For the avoidance of doubt, each Advance Funding Party will be responsible under this Side Letter on a several (and not joint or joint and several) basis only for its own actions and omissions and will not be responsible in any manner for any actions or omissions of the other Advance Funding Parties. Any provision of this Side Letter which is expressed in favour of more than one Advance Funding Party shall be exercisable by each of them severally and shall not be required to be exercised by them jointly or jointly and severally. For the avoidance of doubt, where the right of one Advance Funding Party under this Side Letter is unavailable to such Advance Funding Party due to its own default, fraud or negligence, the corresponding rights of the other Advance Funding Parties will not be affected.
25.
Limitation of Liability of REIT Trustee
(a)
Notwithstanding any provision to the contrary in this Side Letter, the parties hereto agree and acknowledge that DBS Trustee Limited (" DBS Trustee ") has entered into this Side Letter in its capacity as trustee of Prime US REIT and not in its personal capacity and all references to the REIT Trustee in this Side Letter shall be construed accordingly. As such, notwithstanding any provision to the contrary in this Side Letter, DBS Trustee has assumed all obligations under this Side Letter in its capacity as trustee of Prime US REIT and not in its personal capacity and any liability of or indemnity, covenant, undertaking, representation and/or warranty given by the REIT Trustee under this Side Letter is given by DBS Trustee in its capacity as trustee of Prime US REIT and not in its personal capacity and any power and right conferred on any receiver, attorney, agent and/or delegate is limited to the assets of Prime US REIT over which DBS Trustee in its capacity as trustee of Prime US RIET has recourse and shall not

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extend to DBS Trustee's personal assets or any assets held by DBS Trustee in its capacity as trustee of any other trust. Any obligation, matter, act, action or thing required to be done, performed, or undertaken or any covenant, representation, warranty or undertaking given by the REIT Trustee under this Side Letter shall only be in connection with the matters relating to Prime US REIT and shall not extend to DBS Trustee's obligations in respect of any other trust or real estate investment trust of which it is trustee. The foregoing shall not restrict or prejudice the rights or remedies of the parties under law or equity whether in connection with any gross negligence, fraud or breach of trust of DBS Trustee.
(b)
Notwithstanding any provision to the contrary in this Side Letter, the parties hereby acknowledge and agree that the REIT Trustee's obligations under this Side Letter will be solely the corporate obligations of DBS Trustee and that the parties shall not have any recourse against the shareholders, directors, officers or employees of DBS Trustee for any claims, losses, damages, liabilities or other obligations whatsoever in connection with any of the transactions contemplated by the provisions of this Side Letter. The foregoing shall not restrict or prejudice the rights or remedies of the parties under law or equity whether in connection with any gross negligence, fraud or breach of trust of DBS Trustee.
(c)
For the avoidance of doubt, any legal action or proceedings commenced against the REIT Trustee whether in Singapore or elsewhere pursuant to this Side Letter shall be brought against DBS Trustee in its capacity as the trustee of Prime US REIT and not in its personal capacity. The foregoing shall not restrict or prejudice the rights or remedies of the parties under law or equity whether in connection with any gross negligence, fraud or breach of trust of DBS Trustee.
(d)
This Clause 25 shall survive the termination or rescission of this Side Letter.
(e)
The provisions of this Clause 25 shall apply, mutatis mutandis , to any notice, certificate or other document which the REIT Trustee issues under or pursuant to this Side Letter, as if expressly set out in such notice, certificate or document.
Please confirm your acceptance of this Side Letter and your agreement to the above terms and conditions by signing the signature pages below on a copy of this Side Letter and delivering a copy of the Side Letter signed by you, by email to us (i.e. the REIT Trustee and the Manager) at our email addresses set out in Schedule A below.


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Very truly yours,
DBS TRUSTEE LIMITED
(IN ITS CAPACITY AS TRUSTEE OF PRIME US REIT)




By:
/s/ Joyce Chua    /s/ Celine Koh
Name:
Joyce Chua    Celine Koh
Title:
Manager, Corporate Trust    Manager, Corporate Trust
DBS Trustee Limited    DBS Trustee Limited

Endeavour – Repayment Side Letter

KBS US PRIME PROPERTY MANAGEMENT PTE. LTD.
(company registration no. 201825461R)
(IN ITS CAPACITY AS TRUSTEE OF PRIME US REIT)



By:
/s/ Sandip Talukdar
Name:
Sandip Talukdar
Title:
Chief Financial Officer


Endeavour – Repayment Side Letter

Agreed and Accepted:
DBS BANK LTD.




By:
/s/ Tan Jeh Wuan
Name:
Tan Jeh Wuan
Title:
Managing Director, Head of Capital Markets, Singapore

17-40684037

MERRILL LYNCH (SINGAPORE) PTE. LTD.




By:
/s/ Siah Geok Wah
Name:
Siah Geok Wah
Title:
Managing Director


17-40684037

CREDIT SUISSE (SINGAPORE) LIMITED




By:
/s/ Angeline Aw    /s/ Adrian Yeo
Name:
Angeline Aw    Adrian Yeo
Title:
Manager Director    Director
General Counsel Division

Endeavour – Repayment Side Letter                                    17-40684037

MAYBANK KIM ENG SECURITIES PTE. LTD.




By:
/s/ Audrey Lam
Name:
Audrey Lam
Title:
Head
Investment Banking & Advisory, Singapore

Endeavour – Repayment Side Letter                                    17-40684037

OVERSEA-CHINESE BANKING CORPORATION LIMITED




By:
/s/ David Cheng
Name:
David Cheng
Title:
Head, Corporate Finance


By:
/s/ Andrew Teo
Name:
Andrew Teo
Title:
Head, Singapore Coverage


Endeavour – Repayment Side Letter                                    17-40684037



SCHEDULE B
Conditions Precedent
A.      Corporate documents
1.
A copy of the Constitution of the REIT Trustee, certified as a true copy by its authorised signatory(ies) of the REIT Trustee.
2.
A copy of the Constitution of the Manager, certified as a true copy by a director or the secretary of the Manager.
3.
A copy of the Trust Deed and any agreements, deeds or documents amending, varying or supplementing any term of the Trust Deed, each certified as a true copy by a director or the secretary of the Manager.
4.
A copy of the resolutions of the board of directors of the REIT Trustee authorising specified persons to execute the Transaction Documents to which it is a party, and all notices, authorisations and other documents to be signed by it under or in connection with any Transaction Document, certified as a true copy by its authorised signatories.
5.
A copy of the resolutions of the board of directors of the Manager approving the terms of, the transactions contemplated by and the entry by the REIT Trustee and the Manager into the Transaction Documents to which the REIT Trustee or the Manager (as the case may be) is a party, the issue by the Manager of the Manager's Written Directions (as defined below), and authorising specified persons to execute the Written Directions, the Underwriting Agreements, the Side Letter and all notices, authorisations and other documents to be signed by it under or in connection with any Transaction Documents, and, in each case, the transactions contemplated thereunder, certified as a true copy by its director or secretary.
6.
A copy of the written instructions from the Manager to the REIT Trustee directing the REIT Trustee to borrow the Advance Funding Amount and enter into this Side Letter (and any other Transaction Documents to which it is to be party) ( Written Directions ).
7.
A specimen of the signature of each person authorised to sign the Side Letter on behalf of the REIT Trustee or the Manager (each, an Authorised Signatory ).
8.
A certificate of an Authorised Signatory of the REIT Trustee confirming that:
(a)
borrowing the Advance Funding Amount and its execution and performance of the Transaction Documents to which it is a party would not cause any borrowing limit binding on it or Prime US REIT to be exceeded or breached or any covenants, obligations or documents by which it or Prime US REIT is bound to be breached;
(b)
none of the charges registered against the REIT Trustee at the Accounting and Corporate Regulatory Authority of Singapore relates to any assets of Prime US REIT; and

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(c)
each copy document relating to it specified in this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Side Letter (or such other date prescribed by the Advance Funding Parties).
9.
A certificate of an Authorised Signatory of the Manager certifying that each copy document relating to it specified in this Schedule is correct, complete and in full force and effect as at a date no earlier than the date of this Side Letter.
B.      Documents and matters required relating to the IPO
1.
A certificate of an Authorised Signatory of the Manager confirming that:
(a)
the CMS Licence is in full force and effect and has not been amended or revoked and there is no breach of the terms and conditions applicable to the CMS Licence;
(b)
the Tax Rulings have not been withdrawn or materially and adversely amended;
(c)
the SGX-ST Waiver has not been withdrawn or materially and adversely amended;
(d)
the MAS Waiver has not been withdrawn or materially and adversely amended; and
(e)
the authorisation of Prime US REIT as a collective investment scheme by the MAS has not been withdrawn or materially and adversely amended.
2.
The Advance Funding Parties are satisfied that:
(a)
the Underwriting Agreements have been entered into by all parties thereto and has not been terminated, and none of the Advance Funding Parties has given notice to the REIT Trustee that either of the Underwriting Agreements have been breached;
(b)
the receiving bank agreement required relating to the Listing (and any other settlement-related agreements which the Advance Funding Parties have determined are required in connection with the Listing) has/have been entered into between all parties thereto and have not been terminated or breached;
(c)
no circumstances have occurred that would be reasonably likely to prevent the commencement of trading of the Units on the SGX-ST after Listing occurs;
(d)
no circumstances have occurred which indicate that Listing is unlikely to occur by the proposed Listing Date; and
(e)
all of the other conditions set out in in clause 7.3 of the Singapore Offer Agreement and clause 7.3 of the Placement Agreement have been fulfilled.
C.      Legal opinions
3.
A legal opinion addressed to the Advance Funding Parties from Clifford Chance Pte. Ltd. addressing the enforceability of this Side Letter;

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4.
A legal opinion addressed to the Advance Funding Parties from Allen & Gledhill LLP addressing, among others, the due incorporation and authority of the Manager to execute, deliver and perform its obligations under this Side Letter; and
5.
A legal opinion addressed to the Advance Funding Parties from Shook Lin & Bok LLP addressing, among others, the due incorporation and authority of the REIT Trustee to execute, deliver and perform its obligations under this Side Letter,
each substantially in the form approved by the Advance Funding Parties and dated on the Funding Date or such other date acceptable to the Advance Funding Parties.
D.      Other documents and evidence
A copy of the escrow agreement substantially in the form set out in Schedule C below and dated on or before the Funding Date.



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SCHEDULE C
FORM OF ESCROW AGREEMENT


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DRAFT
July 12, 2019

FORM OF CLOSING ESCROW AGREEMENT
THIS CLOSING ESCROW AGREEMENT (this “ Agreement ”) is made and entered into as of this 17th day of July, 2019, by and among those parties identified as the “Seller Parties” on Exhibit A attached hereto (collectively, “ Seller ”), those parties identified as the “Buyer Parties” on Exhibit A attached hereto (collectively, “ Buyer ”), PRIME US-LOWER TIER, LLC, a Delaware limited liability company (“ Borrower ”), BANK OF AMERICA, N.A., as Administrative Agent for the lenders (the “ Lenders ”) party to the Credit Agreement described below (“ Administrative Agent ”), the investment banks listed on Exhibit B (the “ Pre-funding Parties ”), COMMONWEALTH LAND TITLE INSURANCE COMPANY, in its capacity as the “Escrow Holder” under the Purchase Agreement (defined below) (“ Escrow Holder ”), and COMMONWEALTH LAND TITLE INSURANCE COMPANY, in its capacity as “Title Company” under the Purchase Agreement (“ Title Company ”).
RECITALS
A. Seller and Buyer entered into that certain Portfolio Purchase and Sale Agreement and Escrow Instructions dated as of June 27, 2019 (the “ Purchase Agreement ”) for the purchase and sale of certain properties located throughout the United States, and more particularly described in the Purchase Agreement (each a “ Real Property ” and collectively, the “ Real Properties ”) and as set forth next to each applicable Seller Party’s name on Exhibit A attached hereto. Escrow Holder is the “ Escrow Holder ” named in the Purchase Agreement. Title Company is the “ Title Company ” named in the Purchase Agreement. Any capitalized terms not otherwise defined herein shall have the meanings assigned thereto in the Purchase Agreement.
B. The Purchase Agreement was executed in connection with the offering of units (“ Units ”) in Prime US REIT and listing of the Units on the Singapore Exchange Securities Trading Limited (“ SGX ”) (the offering and the listing of the Units are referred to as the “ IPO ”). The IPO is scheduled to occur at 2:00 p.m. (Singapore Time) on July 19, 2019 (which is 11:00 p.m. (Pacific Time) on July 18, 2019) (the “ IPO Commencement Time ”).
C. Borrower has entered or will be entering into that certain Credit Agreement, dated as of July 18, 2019 (the “ Credit Agreement ”), among Borrower, Administrative Agent and the Lenders party thereto. Borrower is joining in the execution of this Agreement to signify its agreement to and acceptance of the terms set forth herein, and to authorize Administrative Agent to take all actions and deliver all notices required or permitted to be taken or delivered hereunder.
D. Buyer has advised Seller, Administrative Agent, Pre-funding Parties and Escrow Holder that the “Close of Escrow” (as defined in Section 3.5) and the Closing (as defined in the Credit Agreement) must occur substantially contemporaneously with the IPO Commencement Time. As a result, Seller, Buyer, Borrower, Administrative Agent (on behalf of the Lenders) and each of the Pre-funding Parties need to coordinate the Close of Escrow hereunder and the Closing under the Credit Agreement with the IPO and the requirements and timing thereof, and therefore, desire to establish the specific procedures by which (1) Buyer and Seller will authorize and complete the Close of Escrow pursuant to the Purchase Agreement and (2) Administrative Agent (on behalf of the Lenders), upon the Borrower’s satisfaction of the conditions precedent to the Closing under the Credit Agreement, will authorize and complete the Closing thereunder, so that

1

DRAFT
July 12, 2019

the Close of Escrow hereunder and the Closing under the Credit Agreement will occur substantially contemporaneously with the IPO Commencement Time. Nothing contained in this Agreement shall obligate Administrative Agent (on behalf of the Lenders) to authorize and complete the Closing unless the conditions to the Closing under the Credit Agreement have been satisfied or will be satisfied upon the Close of Escrow as a result of the transactions provided for in these instructions and the other arrangements with respect to the Closing under the Credit Agreement that are occurring outside of this Agreement (collectively, such arrangements, the “ Outside of Escrow Arrangements ”).
E.    Seller, Buyer, Borrower, Administrative Agent and Pre-funding Parties desire to set forth the terms and conditions upon which (1) Escrow Holder, as the Escrow Holder under the Purchase Agreement, will be authorized to proceed with the Close of Escrow thereunder and the release of funds to the Borrower in connection with the Closing under the Credit Agreement, and Title Company, as the Title Company under the Purchase Agreement, will issue the Title Insurance Policies to Buyer, all as more particularly set forth in the Purchase Agreement.
F. At the request of the Borrower, provided that the conditions to the Closing under the Credit Agreement have been satisfied or will be satisfied upon the Close of Escrow as a result of the transactions provided for in these instructions and the Outside of Escrow Arrangements, the Lenders plan to remit funds to Administrative Agent representing the initial extensions of credit under the Credit Agreement, and Administrative Agent will remit those funds, less certain possible amounts to be net funded representing certain fees and costs due to Administrative Agent, the joint lead arrangers of the credit facilities under the Credit Agreement or the Lenders (collectively, such net amounts, the “ Credit Agreement Funds ”), to a separate holding escrow account solely for the benefit of Administrative Agent (on behalf of the Lenders) that Administrative Agent has established or will be establishing with the Escrow Agent (the “ Credit Agreement Holding Escrow ”) and in which none of the other parties hereto has or shall have any interest. Administrative Agent and the Escrow Holder are parties to separate escrow instructions related to the Credit Agreement Holding Escrow (the “ Credit Agreement Holding Escrow Instructions ”).
NOW, THEREFORE, in consideration of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:
1. Recitals .     The Recitals above are hereby incorporated as a material part of this Agreement. This Agreement is the Closing Escrow Agreement referred to in the Purchase Agreement.
2.
Procedure for Delivery and Confirmation of Closing Deliverables .
2.1     Delivery of Closing Documents . Prior to 9:00 a.m. Pacific Time on July 17, 2019 (which is 12:00 p.m. Eastern Time on July 17, 2019 and 12:00 a.m. Singapore Time on July 18, 2019) (the “ Closing Document Delivery Deadline ”), Seller, Buyer, Borrower and Administrative Agent, as applicable, shall cause to be delivered to Escrow Holder all of the documents listed in Exhibit C attached hereto (collectively, the “ Closing Documents ”) to be held in trust by Escrow Holder pending the Close of Escrow, including without limitation the e recorded with respect to each Real Property executed and acknowledged

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by the applicable party, which are specifically designated on Exhibit C as recordable documents (the “Recordable Documents”). Buyer and Seller agree that the Closing Documents are certain documents required to be delivered by (i) Seller and/or Buyer, as applicable, pursuant to the Purchase Agreement and (ii) any other documents provided by a party hereto to Escrow Holder to be held in escrow pursuant to this Agreement pursuant to separate escrow instruction letters. Escrow Holder shall not be responsible for verifying whether it has received all required Closing Documents and may rely on a statement by the Buyer and Seller or their respective counsel under the Purchase Agreement, or by Administrative Agent or its counsel Morrison & Foerster LLP under the Credit Agreement, that all fully executed, original Closing Documents required to be delivered into this escrow have been delivered to it.
2.2 Confirmation of Closing Documents . Upon Escrow Holder’s receipt of all of the fully executed original Closing Documents, if any, Escrow Holder shall immediately notify Seller, Buyer, Borrower, Administrative Agent and the Pre-funding Parties in writing by electronic mail (the “ Closing Document Confirmation Notice ”). If not all Closing Documents are fully executed and delivered prior to the Closing Document Delivery Deadline, Escrow Holder shall deliver written notice by electronic mail that identifies the Closing Documents that are missing or incomplete (the “ Closing Document Deficiency Notice ”), which electronic mail shall state that all Closing Documents have not been delivered in accordance with Section 2.1. In each case, Escrow Holder shall deliver a Closing Document Confirmation Notice or a Closing Document Deficiency Notice, as applicable, by 12:00 p.m. Pacific Time on July 17, 2019 (which is 3:00 p.m. Eastern Time on July 17, 2019 and 3:00 a.m. Singapore Time on July 18, 2019). If Escrow Holder delivers a Closing Document Deficiency Notice, but subsequently receives all the Closing Documents, Escrow Holder shall immediately deliver a Closing Document Confirmation Notice. Escrow Holder’s delivery of the Closing Document Confirmation Notice shall constitute Escrow Holder’s confirmation that it has received all Closing Documents, each Closing Document has been executed by the applicable party(ies) thereto, and all exhibits and schedules to each such Closing Document, as applicable, have been attached thereof (or that Escrow Holder has the exhibits and schedules to be attached and has authorization to attach such exhibits or schedules). If no Closing Documents are listed on Exhibit C , the requirements in this Section 2 for the delivery of a Closing Document Confirmation Notice or Closing Document Deficiency Notice shall be inapplicable and, instead, the Buyer and Seller or their respective counsel under the Purchase Agreement, and Administrative Agent or its counsel Morrison & Foerster LLP under the Credit Agreement, shall endeavor to notify each other and the Escrow Agent within the time periods indicated above as to whether they are holding outside of this escrow for delivery upon the Close of Escrow and Closing under the Credit Agreement all documents and items necessary under the Purchase Agreement and Credit Agreement respectively.
2.3
Execution of Closing Statement .
2.3.1    Prior to 7:00 a.m. Pacific Time on July 16, 2019 (which is 10:00 a.m. Eastern Time on July 16, 2019 and 10:00 p.m. Singapore Time on July 16, 2019) (the “ Closing Statement Delivery Deadline ”), Buyer, Seller, Borrower and Administrative Agent shall approve and execute a master closing settlement statement (the “ Closing Statement ”) prepared by Escrow Holder shall also certify the approved Closing Statement.

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2.3.2    Administrative Agent’s execution of the Closing Statement is solely for the purposes of confirming that it on behalf of the Lenders authorizes the use of the Credit Agreement Funds in accordance therewith, and Administrative Agent has no responsibility for the accuracy or completeness of the payments pursuant to the Closing Statement or to assure payment of the same. Seller has been and shall remain solely responsible for directing that the Seller charges be paid in accordance with the Closing Statement and for determining the amount of such Seller charges. The Closing Statement shall provide that funds in the Escrow Account other than the Credit Agreement Funds are earmarked to pay the fees and expenses included in the line item for “arranger fees, upfront fees and non-legal expenses of Administrative Agent” on the Closing Statement. Buyer and Seller hereby advise Escrow Holder that a portion of the Purchase Price will not be funded into the Escrow Account because KBS REIT Properties III, LLC will instead be receiving certain Units (the “KBS Units”) as of the Close of Escrow in lieu of cash, which will be reflected in the Closing Statement. As of the date hereof, the estimated amount of the portion of Purchase Price that will be paid in the form of Units is approximately $200,999,919.
2.4     Confirmation of Closing Statement . Upon Escrow Holder’s receipt of a fully executed Closing Statement, Escrow Holder shall immediately notify Seller, Buyer, Borrower, Administrative Agent and the Pre-funding Parties in writing by electronic mail (the “ Closing Statement Confirmation Notice ”), which electronic mail shall attach a copy of the fully executed Closing Statement. If Escrow Holder has not received a fully executed Closing Statement prior to the Closing Statement Delivery Deadline, Escrow Holder shall deliver written notice by electronic mail (the “ Closing Statement Deficiency Notice ”). In either case, Escrow Holder shall deliver a Closing Statement Confirmation Notice or a Closing Statement Deficiency Notice, as applicable, by 9:00 a.m. Pacific Time on July 16, 2019 (which is 12:00 p.m. Eastern Time on July 16, 2019 and 12:00 a.m. Singapore Time on July 17, 2019). If Escrow Holder delivers a Closing Statement Deficiency Notice to Buyer, Borrower, Administrative Agent, the Pre-funding Parties and Escrow Holder, but subsequently receives the fully-executed Closing Statement, Escrow Holder shall immediately deliver a Closing Statement Confirmation Notice to such parties.
2.5     Delivery of Closing Funds . At or prior to 9:00 a.m. Pacific time on July 18, 2019 (which is 12:00 p.m. Eastern time on July 18, 2019 and 12:00 a.m. Singapore Time on July 19, 2019), the Buyer (i) [(out of a receiving bank account maintained with ______. in Singapore into which funds advanced by the Pre-funding Parties shall have been deposited)] shall initiate one or more wire transfers to the Escrow Holder in accordance with the wire transfer instructions set forth on Exhibit D , or cause such wire transfer to be initiated, so that the full “prefunding equity amounts” in the aggregate amount set forth in the Closing Statement (the “ Pre-funded Equity Funds ”) are deposited into a segregated account of Escrow Holder (the “ Closing Escrow Account ”) and (ii) shall arrange for certain additional funds to be deposited into the Closing Escrow Account representing certain net proceeds from financing (“ MetLife Financing Proceeds ”) provided by MetLife. Upon receipt of the Closing Statement Confirmation Notice, and provided that Escrow Holder has delivered its Closing Document Confirmation Notice if required, and provided that the conditions to the Closing under the Credit Agreement have been satisfied or will be satisfied upon the Close of Escrow as a result of the transactions provided for in these instructions and the Outside of Escrow Arrangements, Administrative Agent shall request the Lenders to remit their respective shares of the Credit Agreement Funds to it, and following

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receipt thereof, Administrative Agent shall initiate one or more wire transfers, or cause such wire transfers to be initiated, so that the Credit Agreement Funds are deposited into a separate, segregated account of Escrow Holder established for the Credit Agreement Holding Escrow (the “ Credit Agreement Holding Escrow Account ”) pursuant to the Credit Agreement Holding Escrow Instructions. All Pre-funded Equity Funds and Credit Agreement Funds shall be delivered by wire transfer in current and immediately available funds.
The Pre-funded Equity Funds, the MetLife Financing Proceeds and, if and when released from the Credit Agreement Holding Escrow to the Closing Escrow Account or otherwise authorized to be used on behalf of Administrative Agent for payment of the amounts set forth on the approved Closing Statement pursuant to the Credit Agreement Holding Escrow Instructions, the Credit Agreement Funds (collectively, if and when the Credit Agreement Funds are so released or authorized to be so used, the “ Closing Funds ”) represent the aggregate closing funds due from Buyer that are necessary for the Close of Escrow as set forth on the approved Closing Statement.
2.6     Confirmation of Closing Funds . Upon Escrow Holder’s receipt of the Pre-funded Equity Funds and the MetLife Financing Proceeds in the Escrow Account and the Credit Agreement Funds in the Credit Agreement Holding Escrow Account, Escrow Holder shall immediately notify Seller, Buyer, Borrower, Administrative Agent and the Pre-funding Parties in writing by electronic mail (the “ Closing Funds Confirmation Notice ”). If Escrow Holder has not received all such funds by 9:00 a.m. Pacific Time on July 18, 2019 (which is 12:00 p.m. Eastern Time on July 18, 2019 and 12:00 a.m. Singapore Time on July 19, 2019), Escrow Holder shall deliver written notice to such parties by electronic mail (the “ Closing Funds Deficiency Notice ”). If Escrow Holder delivers a Closing Funds Deficiency Notice, but subsequently receives the Pre-funded Equity Funds and MetLife Financing Proceeds in the Closing Escrow Account and the Credit Agreement Funds in the Credit Agreement Holding Escrow Account as required for the Close of Escrow pursuant to Closing Statement, Escrow Holder shall immediately deliver a Closing Funds Confirmation Notice. Escrow Holder’s delivery of the Closing Funds Confirmation Notice shall constitute Escrow Holder’s irrevocable confirmation and agreement that:
2.6.1 Escrow Holder has received all of the Closing Documents, the Closing Statement, and is holding, in the Closing Escrow Account and the Credit Agreement Holding Escrow Account, all Closing Funds that (when the Credit Agreement Funds are released to the Closing Escrow Account or otherwise authorized to be used on behalf of Administrative Agent for payment of the amounts set forth on the approved Closing Statement in accordance with the Credit Agreement Holding Escrow Instructions) are required by this Agreement; and
2.6.2 Provided that Escrow Holder is authorized by Administrative Agent to release the Credit Agreement Funds from the Credit Agreement Holding Escrow Account to the Closing Escrow Account or to use such funds for payment of the amounts set forth on the approved Closing Statement, Escrow Holder shall be in a position to satisfy all of the conditions and requirements set forth in this Agreement and any supplemental instruction letter sent to Escrow Holder by Seller, Buyer, Borrower, MetLife, Administrative Agent or any of such party’s respecctive counsel.

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2.7 Additional Parties May be Copied on Notices . In light of the need to coordinate the Close of Escrow and the Closing under the Credit Agreement with the IPO, each of Buyer, Borrower, Seller and Administrative Agent shall have the right to request that certain members of their working teams (and of the working team of MetLife), including without limitation, representatives of the Pre-funding Parties and other parties managing and coordinating the IPO, and their respective counsel, be copied on the notices described in this Section 2 and Section 3 below; provided that the requesting party makes such request in writing prior to the Closing Document Delivery Deadline and clearly provides the electronic mail addresses of the parties to be copied in an electronic format.
2.8 No Release of Closing Deliverables . Escrow Holder shall hold, and shall not release, any Closing Documents (including specifically the Deeds), any Pre-funded Equity Funds, the MetLife Financing Proceeds or, if and when released from the Credit Agreement Holding Escrow to the Closing Escrow Account or otherwise authorized to be used on behalf of Administrative Agent for payment of the amounts set forth on the approved Closing Statement pursuant to the Credit Agreement Holding Escrow Instructions, any Credit Agreement Funds (sometimes collectively referred to as the “ Closing Deliverables ”) prior to the Close of Escrow and the Closing under the Credit Agreement or the termination of this Agreement. Buyer, Borrower, Seller and the Pre-funding Parties acknowledge that Escrow Holder will be holding the Credit Agreement Funds in the Credit Agreement Holding Escrow and will be entitled to release such funds into the Closing Escrow Account or otherwise authorize the use of such funds for payment of the amounts set forth on the approved Closing Statement only upon the instruction to do so provided to the Escrow Holder by or on behalf of Administrative Agent or as otherwise provided in Section 3.5 of this Agreement or the Credit Agreement Holding Escrow Instructions, and none of Buyer, Borrower, Seller or any of the Pre-funding Parties has any interest in, or right to provide instructions to Escrow Holder with respect to, the Credit Agreement Holding Escrow.
2.9 Agreement of Borrower to Pay Interest and Related Obligations . By their execution hereof and joinder herein, Borrower promises for the benefit of Administrative Agent and the Lenders to pay interest on the Credit Agreement Funds from the time such funds are advanced by the Lenders to Administrative Agent as contemplated hereby, until they are repaid, at the rate provided for in the Credit Agreement, which interest shall be payable in accordance with the Credit Agreement on the first Interest Payment Date, as such term is defined therein (if the Close of Escrow and Closing under the Credit Agreement occur, as more fully provided below) or, upon any termination of this Agreement, on the Termination Date. The amount of interest so due shall be paid to Administrative Agent in accordance with the payment procedures set forth in the Credit Agreement. Borrower’s obligations under this Section 2.9 shall apply regardless of whether the Close of Escrow or Closing occur and shall survive any Termination Date hereunder. Borrower also agrees that its obligations set forth in Article III of the Credit Agreement shall apply to the Credit Agreement Funds (which shall be deemed to be Credit Extensions, as defined in the Credit Agreement), including, without limitation, its obligations under Section 3.05 if the Credit Agreement Funds bear interest at the rate applicable to Eurodollar Loans, as such term is defined in the Credit Agreement.

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3.     Procedure to Authorize the Close of Escrow .
3.1     Seller’s Irrevocable and Unconditional Authorization to Close . Not later than [7:15] p.m. Pacific Time on July 18, 2019 (which is [10:15] p.m. Eastern Time on July 18, 2019 and [10:15] a.m. Singapore Time on July 19, 2019) (the “ Final Authorization Time ”), (a) Seller shall deliver to Escrow Holder, Buyer, Borrower, Administrative Agent and each Pre-funding Party, by electronic mail, an irrevocable and unconditional authorization to proceed with the Close of Escrow as of 1:59 p.m. Singapore Time on July 19, 2019 (which is 10:59 p.m. Pacific Time on July 18, 2019 and 1:59 a.m. Eastern Time on July 19, 2019) (the “ Automatic Time for the Close of Escrow ”) pursuant to, and subject to, the terms of the Purchase Agreement and this Agreement (“ Seller’s Irrevocable Authorization to Close ”) and (b) provided that Seller has delivered Seller’s Irrevocable Authorization to Close in accordance with clause (a) of this Section 3.1 and Buyer has delivered its Buyer’s Authorization to Close (as defined in Section 3.3 below) in accordance with Section 3.3 below and Escrow Holder has delivered its Closing Funds Confirmation Notice, and Administrative Agent has not delivered a written notice prior to [10:00] a.m. Singapore Time on July 19, 2019 (which is [7:00] p.m. Pacific Time on July 18, 2019 and [10:00] p.m. Eastern Time on July 18, 2019) (the “ Final Determination Time ”) that a Supervening Disqualification Event (as hereinafter defined) has occurred or will occur or that the conditions to the Closing under the Credit Agreement have not been satisfied, fail to remain satisfied or will not be satisfied prior to the Final Determination Time (a “ Supervening Event Disqualification Notice ”), Administrative Agent shall deliver to Escrow Holder by the Final Authorization Time, by electronic mail, an authorization to proceed with the Close of Escrow as of the Automatic Time for the Close of Escrow which shall be irrevocable and unconditional. Such authorization from Administrative Agent is referred to herein as the “ Administrative Agent’s Notice .” The parties agree that upon delivery of the foregoing authorizations, no further action is required from Seller, Buyer, Borrower or Administrative Agent for the Close of Escrow, and that Seller’s authorizations to consummate the Close of Escrow, and Administrative Agent’s authorization to consummate the Closing under the Credit Agreement pursuant to Administrative Agent’s Notice, are irrevocable and unconditional. 1  
3.2     Supervening Disqualification Event . As used herein, “ Supervening Disqualification Event ” means any of the following events that exist or will exist at or prior to the Final Determination Time (i) an Event of Default has occurred or would exist, (ii) the issuance by any Governmental Authority of an order to enjoin the funding of the Credit Agreement Funds or the Closing under the Credit Agreement, (iii) the commencement of any action, suit, investigation or proceeding in any court that could reasonably be expected to have a material adverse effect on the Loan Parties or any transaction contemplated by the Credit Agreement or on the ability of the Loan Parties to perform their obligations under the documents to be executed in connection with the Credit Facilities, or (iv) any Loan Party or any other Person purports to revoke, disavow, terminate or rescind, in whole or in part, any Loan Document or other agreement, document, consent, comfort letter, certificate, opinion or other matter delivered to Administrative Agent or its counsel in connection with the Outside of Escrow Arrangements (as such terms “Event of
______________________
1  
The times for the Automatic Time for the Close of Escrow and the Final Determination Time, and the times
indicated in Section 3.3, remain subject to review with local counsel.

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Default,” “Governmental Authority,” “Loan Party” or “Loan Parties,” “Subsidiaries,” “Credit Facilities” and “Person” are defined in the Credit Agreement).
3.3     Buyer’s Revocable and Conditional Authorization to Close . Not later than the Final Authorization Time, Buyer shall deliver to Escrow Holder, Seller, Administrative Agent and Pre-funding Parties by electronic mail an authorization to proceed with the Close of Escrow as of the Automatic Time for the Close of Escrow pursuant to, and subject to, the terms of the Purchase Agreement and this Agreement (“ Buyer’s Authorization to Close ”). Buyer’s Authorization to Close shall be irrevocable unless:
3.3.1    Buyer or any of the Pre-funding Parties notifies Escrow Holder and Seller by electronic mail prior to [10:30] a.m. Singapore Time on July 19, 2019 (which is [7:30] p.m. Pacific Time on July 18, 2019 and [10:30] p.m. Eastern Time on July 18, 2019) that Buyer or such Pre-funding Party does not believe the IPO will be successful (a “ Buyer’s Closing Termination Notice ”); or
3.3.2    Buyer or any of the Pre-funding Parties notifies Escrow Holder and Seller by electronic mail prior to Automatic Time for the Close of Escrow that Buyer or the Pre-funding Parties have received written notice from SGX or MAS that the IPO will not be permitted to proceed (a “Regulator’s Closing Termination Notice” and, together with a Buyer’s Closing Termination Notice, a “Closing Termination Notice”), which electronic mail shall include a copy of the applicable notice from SGX or MAS.
Borrower agrees that it shall be irrevocably and unconditionally bound by Buyer’s Authorization to Close as Borrower’s own authorization for the Closing under the Credit Agreement to occur.
3.4 Confirmation of Receipt of Closing Authorizations by Escrow Holder . Within five (5) minutes of Escrow Holder’s receipt of all of the Seller’s Irrevocable Authorization to Close, Administrative Agent’s Notice and the Buyer’s Authorization to Close, Escrow Holder shall notify Buyer, Seller, Administrative Agent and the Pre-funding Parties of same by electronic mail. Thereafter, Escrow Holder shall be irrevocably authorized by Seller, Buyer, Borrower, Administrative Agent and the Pre-funding Parties to consummate the Close of Escrow and the Closing under the Credit Agreement as of the Automatic Time for the Close of Escrow unless Buyer or any of the Pre-funding Parties timely delivers a Closing Termination Notice. Buyer’s ‘delivery of Buyer’s Authorization to Close shall constitute Buyer’s irrevocable commitment to issue the KBS Units to which KBS REIT Properties III, LLC is entitled upon the Close of Escrow within one (1) business day following the Close of Escrow.
3.5 Confirmation of Close of Escrow . If Escrow Holder has received all of the Seller’s Irrevocable Authorization to Close, Administrative Agent’s Notice and the Buyer’s Authorization to Close, and Buyer or a Pre-funding Party does not timely deliver a Closing Termination Notice within the applicable time periods, then the close of escrow (the “ Close of Escrow ”) and the Closing under the Credit Agreement shall automatically and irrevocably occur as of Automatic Time for the Close of Escrow without the need for any further authorization or approval of Seller, Buyer, Borrower, Administrative Agent or Prefunding Lenders (oral or written), at which time (i) the funds in the Credit Agreement Holding Escrow Account shall automatically be transferred to the Closing Escrow Account (or, if not so transferred, otherwise

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treated as part thereof, as if they were on deposit in the Closing Escrow Account, and authorized to be used for payment of the amounts set forth on the approved Closing Statement)) for use as part of the Closing Funds hereunder, (ii) the Deeds and other Closing Documents shall be deemed to have been delivered to Buyer, (iii) any closing documents held by the attorneys for the Buyer, Borrower, Seller and Administrative Agent in escrow (or other Outside of Escrow Arrangements) shall automatically and irrevocably be released from such escrow, delivered and effective without the need for any further authorization or approval of any other party, (iv) the Buyer shall be irrevocably committed to issue and deliver the relevant KBS Units to KBS REIT Properties III, LLC in accordance with the Purchase Agreement, and (v) as soon as practicable after the Automatic Time for the Close of Escrow (but within not more than fifteen (15) minutes), Escrow Holder shall notify Buyer, Borrower, Seller and Administrative Agent by electronic mail that the Close of Escrow has occurred.
3.6     Confirmation of Closing Termination . If Escrow Holder has not timely received all of the Seller’s Irrevocable Authorization to Close, Administrative Agent’s Notice and the Buyer’s Authorization to Close, or Buyer or any of the Pre-funding Parties timely delivers a Closing Termination Notice or Administrative Agent timely delivers a Supervening Disqualification Event Notice within the time periods provided herein (the date on which any of the foregoing occurs is referred to herein as the “ Termination Date ”), then Close of Escrow and the Closing under the Credit Agreement shall not occur, the Purchase Agreement shall terminate, and commencing at 8:30 a.m. Pacific Time (which is 11:00 a.m. Eastern Time and 11:30 p.m. Singapore Time) on the next business day in the United States following the Termination Date, Escrow Holder shall (i) send by overnight delivery each original counterpart of the Closing Documents and the Closing Statement to the parties which delivered the same (or as such parties may direct in writing, which may include the direction that Escrow Holder destroy as opposed to return its original counterparts), (ii) remit the Credit Agreement Funds to Administrative Agent in accordance with the Credit Agreement Holding Escrow Instructions and (iii) remit the Pre-funded Equity Funds by wire transfer to each of the Pre-funding Parties in the respective portions and pursuant to the wire instructions set forth on Exhibit E attached hereto. Escrow Holder’s obligation so to remit such funds to Administrative Agent and the Pre-funding Parties shall be absolute and unconditional, irrespective of any contrary instruction or demand that Escrow Holder may receive from Seller, Buyer, any of the Borrowers or any other person.
4. Release of Closing Documents; Delivery of Closing Funds . As soon as practicable following the Close of Escrow, Escrow Holder and Title Company shall take the following actions in the following order:
4.1 Escrow Holder shall deliver to Seller, by wire transfer in immediately available funds, the amounts due to Seller in accordance with the Closing Statement in accordance with the wire instructions provided by the Seller and Buyer to the Escrow Holder but commencing no later than 8:30 a.m. Pacific Time on July 19, 2019 (which is 11:30 a.m. Eastern Time on July 19, 2019 and 11:30 p.m. Singapore Time on July 19, 2019);
4.2 Escrow Holder shall deliver to Administrative Agent, to the Pre-funding Parties and to third parties reflected on the Closing Statement, the amounts reflected as being due osing Statement pursuant to the instructions set forth on the Closing

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Statement or otherwise pursuant to instructions, payoff letters, demands, invoices or other communications provided to Escrow Holder by or on behalf of such parties but commencing no later than 8:30 a.m. Pacific Time on July 19, 2019 (which is 11:30 a.m. Eastern Time on July 19, 2019 and 11:30 p.m. Singapore Time on July 19, 2019), with all such wire transfers to be concluded on or before 12:00 p.m Pacific Time on July 19, 2019 (which is 3:00 p.m. Eastern Time on July 19, 2019 and 3:00 a.m. Singapore Time on July 20, 2019);
4.3 With respect to all Closing Documents delivered to Escrow Holder, and to the extent necessary, Escrow Holder shall insert into all blanks requiring the insertion of the Close of Escrow the date “July 18, 2019”;
4.4 Escrow Holder shall deliver to itself the sums indicated on the Closing Statement as being due to Escrow Holder for title insurance and escrow costs;
4.5 Title Company shall submit for recordation each Recordable Document in the official records of the County in which the applicable Real Property is located;
4.6 Escrow Holder shall deliver the KBS Unit Transfer Documents (as defined in Exhibit B attached hereto) to Seller;
4.7 Escrow Holder shall deliver to Buyer, Seller and Administrative Agent each a copy of all of the Closing Documents and a conformed copy of each Recordable Document; and Title Company shall issue the Title Insurance Policies within five (5) business days after the Close of Escrow.
5.     Irrevocable Agreement to Issue Title Policies . By its execution of this Agreement, Title Company hereby confirms and agrees it is irrevocably committed to issue to Buyer owner’s policies of title insurance showing only those exceptions and including those endorsements shown in the pro forma title policies that Buyer has heretofore approved in writing, as more fully provided in the separate escrow instructions that Buyer has delivered to Title Company. Each of the title insurance policies shall insure that the applicable named fee leaseholder is the owner of good and marketable fee simple title to the subject real property listed therein, as the case may be, subject only to the exceptions shown in the applicable pro forma policy.
6. Nature of Escrow Holder’s Obligations . Escrow Holder shall have no duties or responsibilities except for those specifically set forth in this Agreement, in the Credit Agreement Holding Escrow Instructions which are ministerial in nature. Without limiting the foregoing, Escrow Holder shall have no duties or responsibilities under the Purchase Agreement or Credit Agreement. If in doubt as to its duties and responsibilities under this Agreement, Escrow Holder may consult with counsel of its choice (at Escrow Holder’s sole expense) and shall be protected in any action taken or omitted in accordance with the advice of such counsel.
7. Conflict with Purchase Agreement . If there is any conflict or inconsistency between the terms of this Agreement and the Purchase Agreement, this Agreement shall prevail. If r inconsistency between the terms of this Agreement and the Credit

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Agreement Holding Escrow Instructions, the Credit Agreement Holding Escrow Instructions shall prevail.
8.     Notices . Except for the notices required to be sent by electronic mail in Sections 2 and 3 above, all other notices shall be in writing and shall be sent by electronic mail or nationally recognized overnight courier to the address set forth below (or such other address as a party may hereafter designate for itself by notice to the other parties) of the party for whom such notice or communication is intended:
If to Seller :
 
 
 
c/o KBS Capital Advisors LLC
with a copy to:
800 Newport Center Drive, Suite 700
 
Newport Beach, CA 92660
KBS Capital Advisors LLC
Attention: Rodney Richerson
800 Newport Center Drive, Suite 700
Telephone No: (949) 417-6515
Newport Beach, CA 92660
Fax No.: (949) 417-6518
Attention: Jim Chiboucas
 
Telephone No: (949) 417-6555
 
Fax No.: (949) 417-6523
 
 
 
and to:
 
KBS Realty Advisors, LLC
 
800 Newport Center Drive, Suite 700
 
Newport Beach, CA 92660
 
Attention: Jeff Waldvogel
 
Telephone No: (949) 797-0327
 
Fax No.: (949) 417-6501
 
 
 
and to:
 
Greenberg Traurig LLP
 
3161 Michelson Drive, Suite 1000
 
Irvine, CA 92612
 
Attention: Bruce Fischer
 
Telephone No: (949) 732-6670
 
Fax No.: (949) 732-6501
 
 
If to Buyer :
 
 
 
KBS US PRIME Property Management Pte. Ltd.
with a copy to:
(as manager of Buyer S-REIT)
KBS Realty Advisors, LLC
1 Raffles Place
800 Newport Center Drive, Suite 700
#40-01 One Raffles Place
Newport Beach, CA 92660
Singapore 048616
Attention: Jeff Waldvogel
Attention: Sandip Talukdar
Telephone No: (949) 797-0327
Telephone No: 65 6422 7996
Fax No.: (949) 417-6501


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Fax No.: 65 6441 5251
 
 
and to:
 
Greenberg Traurig LLP
 
2375 E. Camelback Road, Suite 700
 
Phoenix, AZ 85016
 
Attention: Caroline Pritcher
 
Telephone No: (602) 445-8261
 
Fax No.: (602) 445-8100
 
 
If to Administrative Agent :
 
 
 
Bank of America, N.A.
with a copy to:
520 Newport Center Drive, Suite 1100
Morrison & Foerster LLP
Newport Beach, CA 92660
707 Wilshire Boulevard
Attn: Kevin McLain
Los Angeles, California 90017
Telephone: 949-287-0461
Attn: Thomas R. Fileti, Esq.
Electronic mail:kevin.mclain@bofa.com
Phone: (213) 892-5276
 
Electronic mail: tfileti@mofo.com
 
 
 
and to:
 
Morrison & Foerster LLP
 
707 Wilshire Boulevard
 
Los Angeles, California 90017
 
Attn: Adam N. Hopkins, Esq.
 
Phone: (213) 892-5276
 
Electronic mail: ahopkins@mofo.com
 
 
If to Pre-funding Parties :
 
 
 
DBS Bank Ltd.
 
12 Marina Boulevard, Level 46
 
DBS Asia Central@ MBFC Tower 3
 
Singapore 018982
 
Fax: +65 6227 9162
 
Attention: Tan Jeh Wuan / Sanjog Kusumwal
 
 
 
Merrill Lynch (Singapore) Pte. Ltd.
 
50 Collyer Quay #14-01
 
OUE Bayfront
 
Singapore 049321
 
Fax: +65 6678 0130
 
Attention: Martin Siah / Antonio Puna
 
 
 
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road #33-01
 


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Singapore 049909

Fax: +65 6327 1278
Attention: Lindsay Lin / Ding Peng
 
Credit Suisse (Singapore) Limited
One Raffles Link #03/#04-01
South Lobby
Singapore 039393
Fax: +852 2284 7184
Attention: Investment Banking & Capital Markets - Legal
 
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road #03-01
Singapore 059304
Fax: +65 6636 3549
Attention: Ms Audrey Lam / Mr Lak Yau Huang
 
Oversea-Chinese Banking Corporation Limited
63 Chulia Street #03-03
OCBC Centre East
Singapore 049514
Fax: +65 6532 2935
Attention: Andrew Teo / Allen Cheong
 
If to Title Company or Escrow Holder :
 
Commonwealth Land Title Insurance Company
4100 Newport Place Drive, Suite 120
Newport Beach, California 92660
Attention: Joy Eaton
Phone: (949) 724-3145
Fax No.: (949) 271-5762
Electronic mail: joyeaton@ltic.com

Any electronic notice shall be deemed given on the day sent. Any notice sent by nationally recognized overnight courier shall be deemed given one business day following delivery to the overnight courier. For avoidance of doubt, the notices required to be given by Escrow Holder, Seller, Buyer, Borrower, Administrative Agent and the Pre-funding Parties pursuant to Sections 2 and 3 above may only be given by electronic mail and any other form of delivery of any such notices shall not be effective. Specifically, a Closing Termination Notice or Supervening Disqualification Event Notice may only be delivered by electronic mail and if either of such notices are sent to Escrow Holder in an alternative manner (such as by facsimile or overnight delivery) and not electronic mail, Escrow Holder shall not be authorized to accept or follow such notice and shall have no liability for consummating the Close of Escrow notwithstanding such improperly delivered notice.


13

DRAFT
July 12, 2019

9. Attorneys’ Fees . Subject to the obligations of the Borrower under Section 10.4 of the Credit Agreement, each party shall be responsible for its own legal fees in preparing and reviewing this Agreement. If there is any legal action or proceeding between the parties arising from or based upon this Agreement, the unsuccessful party to such action or proceeding shall pay to the prevailing party all costs and expenses, including reasonable attorneys’ fees and disbursements incurred by the prevailing party in such action or proceeding and in any appeal in connection therewith, and such costs, expenses, attorneys’ fees and disbursements shall be included in and as part of such judgment.
10. Further Assurances . The parties shall execute and deliver such further documents or instruments and take such additional actions as may be reasonably necessary or appropriate to accomplish or further the purposes of this Agreement; provided , however , that no such documents or instruments shall increase any party’s obligations or liabilities, or diminish any party’s rights, under this Agreement. Such documents or instruments shall be on customary forms and contain customary and reasonable terms and conditions.
11. Miscellaneous .
11.1 This Agreement shall be binding upon the parties and their respective successors and assigns.
11.2 If any provision of this Agreement shall be determined by a court to be invalid or unenforceable for any reason, such invalid or unenforceable provision shall be deleted from this Agreement, and the remaining provisions of this Agreement shall be interpreted and enforced to give effect to the intent of this Agreement as if such invalid or unenforceable provisions had never been contained herein.
11.3 This Agreement may not be altered, amended, modified, or waived in any respect unless same shall be in writing and executed by the parties.
11.4 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF CALIFORNIA.
11.5 To facilitate execution, this Agreement may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. Delivery of an executed counterpart of this Agreement by facsimile, electronic mail or other electronic means shall be binding upon the party so delivering it.


14

IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed as of the day and year first above written.
[Signature Pages Follow]


15

SIGNATURE PAGES FOR BUYER PARTIES
PRIME US-VILLAGE CENTER STATION II, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
_____________________
Charles J. Schreiber, Jr.,
President

1

PRIME US-TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
______________________
Charles J. Schreiber, Jr.,
President

2

PRIME US-ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
______________________
Charles J. Schreiber, Jr.,
President

3

PRIME US-222 MAIN, LLC,
a Delaware limited liability company
By:
PRIME US-ACQUISITION I, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US PROPERTIES, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
______________________
Charles J. Schreiber, Jr.,
President

4

PRIME US-171 17TH STREET, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
_____________________
Charles J. Schreiber, Jr.,
President

5

PRIME US-RESTON SQUARE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
______________________
Charles J. Schreiber, Jr.,
President

6

PRIME US-101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
_____________________
Charles J. Schreiber, Jr.,
President

7

PRIME US-VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
_____________________
Charles J. Schreiber, Jr.,
President

8

PRIME US-PROMENADE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
______________________
Charles J. Schreiber, Jr.,
President

9

PRIME US-CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
_____________________
Charles J. Schreiber, Jr.,
President

10

PRIME US-TOWER AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
______________________
Charles J. Schreiber, Jr.,
President


11

SIGNATURE PAGES FOR SELLER PARTIES
VILLAGE CENTER STATION II OWNER, LLC,
a Delaware limited liability company
By:
KBSIII VILLAGE CENTER STATION II MEMBER, LLC,
a Delaware limited liability company,
its sole member and manager
By:
KBSIII REIT ACQUISITION XXXII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
______________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

1

KBSIII TOWER AT LAKE CAROLYN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION VI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

2

KBSIII ONE WASHINGTONIAN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION X, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

3

KBSIII 222 MAIN, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

4

KBSIII 171 17TH STREET, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XV, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

5

KBSIII RESTON SQUARE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XVIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

6

KBSIII 101 SOUTH HANLEY, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XX, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

7

KBSIII VILLAGE CENTER STATION, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXIII, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

8

KBSIII PROMENDAGE ONE, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE ONE MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENAGE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

9

KBSIII PROMENADE TWO, LLC,
a Delaware limited liability company
By:
KBSIII PROMENADE TWO MEZZ, LLC,
a Delaware limited liability company,
its sole member
By:
KBSIII PROMENADE AT EILAN, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII 3003 WASHINGTON MEMBER, LLC,
a Delaware limited liability company,
its manager
By:
KBSIII REIT ACQUISITION XVII, LLC,
a Delaware limited liability company,
its managing member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III,
INC.,
a Maryland corporation,
its general partner
By:
_____________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

10

KBSIII CROSSPOINT AT VALLEY FORGE TRUST,
a Delaware Statutory Trust
By:
KBSIII CROSSPOINT AT VALLEY FORGE, LLC,
a Delaware limited liability company,
as Administrative Trustee
By:
KBSIII REIT ACQUISITION XXVI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
______________________
Charles J. Schreiber, Jr.,
Chief Executive Officer

11

KBSIII TOWERS AT EMERYVILLE, LLC,
a Delaware limited liability company
By:
KBSIII REIT ACQUISITION XXI, LLC,
a Delaware limited liability company,
its sole member
By:
KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company,
its sole member
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
______________________
Charles J. Schreiber, Jr.,
Chief Executive Officer


12

SIGNATURE PAGE FOR BORROWER
"BORROWER"

PRIME US-LOWER TIER, LLC
a Delaware limited liability company,
its sole member and manager
By:
PRIME US-MIDDLE TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-UPPER TIER, LLC,
a Delaware limited liability company,
its sole member
By:
PRIME US-SUB REIT, INC.,
a Delaware corporation,
its sole member
By:
_____________________
Charles J. Schreiber, Jr.,
President


1

SIGNATURE PAGE FOR ADMINISTRATIVE AGENT
"ADMINISTRATIVE AGENT"

BANK OF AMERICA, N.A. , as
Administrative Agent
By: ____________________________
Name: __________________________
Title: ___________________________


1

SIGNATURE PAGE FOR PRE-FUNDING PARTIES

DBS BANK LTD.


By:
___________________________
Name:
Title:

1



MERRILL LYNCH (SINGAPORE) LTD.


By:
___________________________
Name:
Title:

2



CHINA INTERNATIONAL CAPITAL CORPORATION (SINGAPORE) PTE. LIMITED


By:
___________________________
Name:
Title:

3



CREDIT SUISSE (SINGAPORE) PTE. LIMITED


By:
___________________________
Name:
Title:

4



MAYBANK KIM ENG SECURITIES PTE. LIMITED


By:
___________________________
Name:
Title:

5



OVERSEA-CHINESE BANKING CORPORATION LIMITED


By:
___________________________
Name:
Title:


By:
___________________________
Name:
Title:


6

SIGNATURE PAGE FOR TITLE COMPANY AND ESCROW HOLDER
" TITLE COMPANY "

COMMONWEALTH LAND TITLE INSURANCE COMPANY


By: ____________________________
Name: __________________________
Title: ___________________________


" ESCROW HOLDER "

COMMONWEALTH LAND TITLE INSURANCE COMPANY


By: ____________________________
Name: __________________________
Title: ___________________________


1

EXHIBIT A

List of Seller Parties, Buyer Parties and Real Properties

 
SELLER PARTY
REAL PROPERTY NAME AND
ADDRESS
BUYER PARTY
1.
Village Center Station II
Owner, LLC, a Delaware
limited liability company
Village Center Station II (Charter
Communications )
6350 and 6360 South Fiddlers
Green Circle
Greenwood Village, CO 80111
Prime US-Village Center Station
II, LLC, a Delaware limited
liability company

2.
KBSIII Tower at Lake
Carolyn, LLC, a
Delaware limited
liability company
Tower At Lake Carolyn (Tower
909 )
909 E. Lake Carolyn Parkway,
Irving, TX 75039
Prime US-Tower At Lake
Carolyn, LLC, a Delaware
limited liability company
3.
KBSIII One
Washingtonian, LLC, a
Delaware limited
liability company
One Washingtonian
9801 Washingtonian Boulevard
Gaithersburg, MD 20878
Prime US-One Washingtonian,
LLC, a Delaware limited
liability company
4.
KBSIII 222 Main, LLC,
a Delaware limited
liability company
222 Main
222 South Main Street,
Salt Lake City, UT 84101
Prime US-222 Main, LLC, a
Delaware limited liability
company
5.
KBSIII 171 17th Street,
LLC, a Delaware limited
liability company
171 17th Street
171 17th Street NW
Atlanta, GA 30363
Prime US-171 17th Street, LLC, a
Delaware limited liability
company
6.
KBSIII Reston Square,
LLC, a Delaware limited
liability company
Reston Square
11790 Sunrise Valley Drive
Reston, VA 20191
Prime US-Reston Square, LLC, a
Delaware limited liability
company
7.
KBSIII 101 South
Hanley, LLC, a
Delaware limited
liability company
101 South Hanley
101 South Hanley
Clayton, MO 63105
Prime US-101 South Hanley,
LLC, a Delaware limited
liability company

1

8.
KBSIII Village Center
Station, LLC, a
Delaware limited
liability company
Village Center Station
6380 South Fiddlers Green Circle
Greenwood Village, CO 80111
Prime US-Village Center Station,
LLC, a Delaware limited
liability company
9.
Promenade One
KBSIII Promenade One,
LLC, a Delaware limited
liability company


Promenade Two
KBSIII Promenade Two,
LLC, a Delaware limited
liability company
Promenade I & II At Eilan

Promenade One
17806 IH-10 W
San Antonio, Texas 78257

Promenade Two
17802 IH-10 W
San Antonio, Texas 78257
Prime US-Promenade, LLC, a
Delaware limited liability
company
10.
KBSIII CrossPoint At
Valley Forge Trust, a
Delaware Statutory Trust
Crosspoint
550 East Swedesford Road
Wayne, PA 19087
Prime US-CrossPoint At Valley
Forge, LLC, a Delaware limited
liability company
11.
KBSIII Towers At
Emeryville, LLC, a
Delaware limited
liability company
Towers At Emeryville – Tower I
1900 Powell Street
Emeryville, CA 94608

Prime US-Tower At Emeryville,
LLC, a Delaware limited
liability company


2

EXHIBIT B
Pre-Funding Parties

DBS BANK LTD.
MERRILL LYNCH (SINGAPORE) PTE. LTD.
CHINA INTERNATIONAL CAPITAL CORPORATION (SINGAPORE) PTE. LIMITED
CREDIT SUISSE (SINGAPORE) LIMITED
MAYBANK KIM ENG SECURITIES PTE. LTD.
OVERSEA-CHINESE BANKING CORPORATION LIMITED

1

EXHIBIT C

List of Closing Documents

GENERAL

The following documents pertaining to the Units to be Acquired by _______________________ (the
" Unit Transfer Document "):

1.
[ TBD - to be completed prior to execution ]
2.
3.



VILLAGE CENTER STATION II (CHARTER COMMUNICATIONS)
6360 South Fiddlers Green Circle
Greenwood Village, CO

Buyer:
Seller: Village Center Station II Owner, LLC
1.
Special Warranty Deed, executed by Seller.
2.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
3.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
4.
Owner's Affidavit, executed by Seller.
5.
Seller's Reaffirmation, executed by Seller.
6.
Notice to Tenants, executed by Seller and Buyer.
7.
Closing letter, executed by Seller and Buyer.
8.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
9.
DR 1083 – Information With Respect to a Conveyance of Colorado Real Property Interest Form,
executed by Seller.
10.
Real Party Transfer Declaration (TD 1000), executed by Seller.

TOWER AT LAKE CAROLYN (TOWER 909)
909 E. Lake Carolyn Parkway
Irving, TX

Buyer:
Seller: KBSIII Tower at Lake Carolyn, LLC
11.
Special Warranty Deed, executed by Seller.
12.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.

1

13.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
14.
Owner's Affidavit, executed by Seller.
15.
Seller's Reaffirmation, executed by Seller.
16.
Notice to Tenants, executed by Seller and Buyer.
17.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.

ONE WASHINGTONIAN
9801 Washingtonian Boulevard
Gaithersburg, MD

Buyer:
Seller: KBSIII One Washington, LLC
18.
Special Warranty Deed, executed by Seller.
19.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
20.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
21.
Owner's Affidavit, executed by Seller.
22.
Seller's Reaffirmation, executed by Seller.
23.
Notice to Tenants, executed by Seller and Buyer.
24.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
25.
WH – AR Form (Certification of Exemption from Withholding Upon Disposition of Maryland Real
Estate Affidavit of Residence or Principal Residence), executed by Seller.

222 MAIN
222 South Main Street
Salt Lake City, Utah

Buyer:
Seller: KBSIII 222 Main, LLC
26.
Special Warranty Deed, executed by Seller.
27.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
28.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
29.
Owner's Affidavit, executed by Seller.
30.
Seller's Reaffirmation, executed by Seller.
31.
Notice to Tenants, executed by Seller and Buyer.


2

32.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.

171 17TH STREET
171 17th Street
Atlanta, GA

Buyer:
Seller: KBSIII 171 17th Street, LLC
33.
Limited Warranty Deed, executed by Seller.
34.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
35.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
36.
Owner's Affidavit, executed by Seller.
37.
Seller's Reaffirmation, executed by Seller.
38.
Notice to Tenants, executed by Seller and Buyer.
39.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
40.
Affidavit of Seller's Residence, executed by KBS Real Estate Investment Trust III, Inc.
41.
Seller's Broker Affidavit, executed by Seller.
42.
Buyer's Broker Affidavit, executed by Buyer.

RESTON SQUARE
11790 Sunrise Valley Drive
Reston, VA

Buyer:
Seller: KBSIII Reston Square, LLC
43.
Special Warranty Deed, executed by Seller.
44.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
45.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
46.
Owner's Affidavit, executed by Seller.
47.
Seller's Reaffirmation, executed by Seller.
48.
Notice to Tenants, executed by Seller and Buyer.
49.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
50.
Virginia Department of Taxation Nonresident Real Property Owner Registration (Form R-5),
executed by Seller


3

101 SOUTH HANLEY
101 South Hanley
Clayton, MO

Buyer:
Seller: KBSIII 101 South Hanley, LLC
51.
Special Warranty Deed, executed by Seller.
52.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
53.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
54.
Owner's Affidavit, executed by Seller.
55.
Seller's Reaffirmation, executed by Seller.
56.
Notice to Tenants, executed by Seller and Buyer.
5.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
58.
St. Louis County Certificate of Value Form, executed by Buyer.

VILLAGE CENTER STATION
6380 South Fiddlers Green Circle
Greenwood Village, CO

Buyer:
Seller: KBSIII Village Center Station, LLC
59.
Special Warranty Deed, executed by Seller.
60.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
61.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
62.
Owner's Affidavit, executed by Seller.
63.
Seller's Reaffirmation, executed by Seller.
64.
Notice to Tenants, executed by Seller and Buyer.
65.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
66.
DR 1083 – Information With Respect to a Conveyance of Colorado Real Property Interest Form,
executed by Seller.
67.
Real Property Transfer Declaration (TD 1000), executed by Seller.


4

PROMENADE I & II EILAN
17806 W. Interstate 10 & 17802 W. Interstate 10
San Antonio, Texas

Buyer:
Seller: KBSIII Promenade One, LLC
KBSIII Promenade Two, LLC
68.
Special Warranty Deed, executed by Seller.
69.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
70.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
71.
Owner's Affidavit, executed by Seller.
72.
Seller's Reaffirmation, executed by Seller.
73.
Notice to Tenants, executed by Seller and Buyer.
74.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.

CROSSPOINT
550 East Swedesford Road
Wayne, PA

Buyer:
Seller: KBSIII CrossPoint At Valley Forge Trust
75.
Special Warranty Deed, executed by Seller.
76.
Assignment of Leases and Contracts and Bill of Sale, executed by Seller and Buyer.
77.
FIRPTA Certificate, executed by KBS Real Estate Investment Trust III, Inc.
78.
Owner's Affidavit, executed by Seller.
79.
Seller's Reaffirmation, executed by Seller.
80.
Notice to Tenants, executed by Seller and Buyer.
81.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
82.
Realty Transfer Tax Statement of Value, executed by Seller.
83.
One (1) original Application for Tax Clearance Certificate, executed by Seller.
84.
PA Realty Transfer Tax Statement of Value, executed by Buyer.

5

TOWERS AT EMERYVILLE – TOWER I
1900 Powell Street
Emeryville, CA

Buyer:
Seller: KBSIII Towers At Emeryville, LLC
85.
Grant Deed, executed by Seller.
86.
Assignment of Leases and Contracts and Bill of Sale and Post Closing Agreement, executed by Seller
and Buyer.
87.
FIRPTA Certificate and California Form 593-C Withholding Exemption Certificate, each executed
by KBS Real Estate Investment Trust III, Inc.
88.
Owner's Affidavit, executed by Seller.
89.
Seller's Reaffirmation, executed by Seller.
90.
Notice to Tenants, executed by Seller and Buyer.
91.
Real Estate Reporting Solicitation (Form 1099), executed by Seller.
92.
CA Natural Hazard Disclosure Statement, executed by Seller and Buyer.
93.
California Preliminary Change of Ownership Report, executed by Buyer.


6

Exhibit 10.8
CLIFFORD
CHANCE
 
CLIFFORD CHANCE PTE LTD
                                    
EXECUTION VERSION


DATED THE 15 th DAY OF JULY 2019


Between

KBS REIT PROPERTIES III LLC

as the Lender

and

Merrill Lynch (Singapore) Pte. Ltd.
as the Borrower



________________________________________________________________

UNIT LENDING AGREEMENT
in relation to
22,727,000 units representing undivided interests in Prime US REIT
________________________________________________________________


        


537518-4-8567-v1.2
 
17-40684037


CONTENTS
Clause
Page
 
1.
Definitions
2
2.
Loan of Units
4
3.
Delivery of Loan Securities
5
4.
Rights and Title
6
5.
Duties, Cost and Expenses
7
6.
Representations, Warranties and Agreements
7
7.
Termination of the Loan and Re-Delivery of the Equivalent Securities
9
8.
Events of Default
10
9.
Notice
12
10.
Miscellaneous
13
11.
Remedies
14
12.
Rights of Third Parties
14
13.
Counterparts
14
14.
Governing Law and Jurisdiction
14





537518-4-8567-v1.2
 
17-40684037


THIS AGREEMENT is made on 15 July 2019 BETWEEN:
(1)
KBS REIT Properties III LLC, a limited liability company organised under the laws of the State of Delaware, whose registered office is at Registered Agent Solutions, Inc. 9E Loockerman Street, Suite 311 Dover, DE, Kent County 19901, USA (the " Lender "); and
(2)
Merrill Lynch (Singapore) Pte. Ltd., a company incorporated in Singapore and having its principal place of business at 50 Collyer Quay #14-01, OUE Bayfront, Singapore 049321 (the " Borrower "),
(the Lender and the Borrower shall be referred to collectively as the " parties " and each individually referred to as a " party ").
WHEREAS :
(A)
Prime US REIT was constituted by a trust deed dated 7 September 2018, as amended and supplemented, made between KBS US Prime Property Management Pte. Ltd. as manager of Prime US REIT (the " Manager ") and DBS Trustee Limited as trustee of Prime US REIT (the " Trustee ") and is authorised as a collective investment scheme under Section 286 of the Securities and Futures Act, Chapter 289 of Singapore. The Manager is a company incorporated in Singapore on 26 July 2018 under the Companies Act (as defined below).
(B)
In connection with the Offering (as defined below) and listing of units representing undivided interests in Prime US REIT on the SGX-ST (as defined below), the Lender has granted the Joint Bookrunners (as defined below) an over-allotment option exercisable by the Borrower in consultation with the Joint Bookrunners, in full or in part, on one occasion, to borrow up to an aggregate of 22,727,000 Units (the " Borrowed Units ") representing not more than 6.8% of the total Offering Units (as defined below), solely to cover the over-allotment of Units.
(C)
On 11 February 2019, the SGX-ST confirmed in a letter, the validity of which was extended in a letter dated 7 May 2019 (the " Eligibility Letter ") that Prime US REIT was eligible for a listing on the Main Board of the SGX-ST and approved the quotation and dealing of, inter alia , all the Units comprised in the Offering, the KBS Units, the Cornerstone Units, all Units which will be issued to the Manager from time to time in full or part payment of the Manager's fees and all the Units which may be issued from time to time for full or part payment of the property manager's fees on the Main Board of the SGX-ST, subject to the terms and conditions as set out in the Eligibility Letter.
(D)
The Borrower is the stabilising manager in respect of the Offering on the terms and conditions described in the Prospectus (as defined below).
(E)
The Borrower wishes to borrow up to an aggregate of 22,727,000 Units from the Lender and the Lender has, at the Borrower’s request, agreed to lend to the Borrower such number of Units that is needed to cover over-allotment of Units (if any), subject to the terms and conditions of this Agreement.

 
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(F)
In consideration of the payment of S$1.00 to the Lender (the receipt and the sufficiency of which is hereby acknowledged), the Borrower and the Lender have agreed to enter into unit borrowing and lending transactions subject to the terms and conditions of this Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS :
1.
DEFINITIONS
1.1
In this Agreement unless the context otherwise requires:
" Affiliate " has the meaning given to it by Rule 501(b) of the United States Securities Act of 1933, as amended.
" Authority " means the Monetary Authority of Singapore;
" BHC Act Affiliate " has the meaning assigned to the term "affiliate" in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
" Borrowing Request " means the request made by the Borrower to the Lender (in writing substantially in the form attached to this Agreement as Schedule 1) in respect of a proposed borrowing of Units pursuant to Clause 2 specifying the amount of such Units and the Settlement Date;
" Borrowed Units " means up to an aggregate of 22,727,000 Units (representing not more than 6.8% of the total Offering Units) to be issued pursuant to the exercise of the Over-Allotment Option;
" Business Day " means any day other than a Saturday, a Sunday, a legal or gazetted holiday or a day on which the SGX-ST is not open for trading or banking institutions or trust companies are authorised or obligated by law to close in Singapore;
" CDP " means The Central Depository (Pte) Limited;
" Companies Act " means Companies Act, Chapter 50 of Singapore;
" Default Right " has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
" Encumbrances " means any and all claims, charges, mortgages, liens, encumbrances, options (of any kind or nature), equities, powers of sale, hypothecations, voting trusts, agreements concerning or relating to voting, proxies, retention of title, transfer restrictions, right of pre-emption, right of first refusal, right of first offer, drag-along rights, tag-along rights, or other third party right or security interest of any kind or an agreement, understanding, arrangement or obligation to create any of the foregoing;
" Equivalent Securities " means Units of an identical type, description and amount (including all substitutions therefor, all additions and accretions thereto and all distributions, options and other rights arising therefrom and attaching thereto) as the Loan Securities and if applicable, includes any certificates and other documents of or evidencing title thereto and transfer thereof;

 
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" Event of Default " has the meaning ascribed to it in Clause 8.1;
" Income " has the meaning ascribed to it in Clause 4.3;
" Joint Bookrunners " means DBS Bank Ltd., Merrill Lynch (Singapore) Pte. Ltd., China International Capital Corporation (Singapore) Pte. Limited, Credit Suisse (Singapore) Limited, Maybank Kim Eng Securities Pte. Ltd. and Oversea-Chinese Banking Corporation Limited;
" Loan " means the loan of Loan Securities under this Agreement;
" Loan Securities " means the Borrowed Units delivered or to be delivered under the Loan and, if applicable, includes any certificates and other documents of or evidencing title and transfer thereof.
" Market Value " with respect to the Equivalent Securities, means the amount it would cost the Lender to purchase a like amount of such securities at such time when the Lender makes a claim for Equivalent Securities on the principal market for such securities, plus all brokers’ fees, commissions, clearing fees, stamp duty, other transfer tax and all other costs, fees and expenses (if any) that would be reasonably incurred in connection with such purchase;
" Offering " means the offering of the Offering Units, pursuant to and in accordance with the terms of the Singapore Offer Agreement and the Placement Agreement, by the Manager;
" Offering Units " means the 335,203,200 Units which are subject of the Offering (assuming the Over-Allotment Option is not exercised);
" Offering Price " means US$0.88 per Unit;
" Over-Allotment Option " means the option granted to the Joint Bookrunners by the Lender, exercisable by the Borrower, in its capacity as stabilising manager, (or persons acting on behalf of the stabilising manager) in consultation with the Joint Bookrunners, in full or in part, on one or more occasion, to subscribe for the Borrowed Units at the Offering Price, representing not more than 6.8% of the total number of Offering Units from the date of commencement of trading in the Units on the SGX-ST until the earlier of (i) the date falling 30 days thereafter, or (ii) the date when the Borrower (or persons acting on behalf of the Borrower) has bought on the SGX-ST an aggregate of 22,727,000 Units, representing not more than 6.8% of the total Offering Units, solely to cover the over-allotment of Units in connection with the Offering;
" Placement Agreement " means the placement agreement entered into on 15 July 2019 among the Manager, KBS Asia Partners Pte. Ltd., KBS Realty Advisors LLC, PBren Investments, L.P., Schreiber Real Estate Investments, L.P., the Unit Lender and the Joint Bookrunners in relation to the Placement Tranche;
" Prospectus " means the prospectus dated 8 July 2019 issued (including the application forms accompanying the prospectus) in connection with the Offering, including any appendices and exhibits thereto;

 
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" Settlement Date " has the meaning ascribed to it in Clause 3.1;
" SGX-ST " means Singapore Exchange Securities Trading Limited;
" Singapore Offer Agreement " means the Singapore offer agreement entered into on 8 July 2019 among the Manager, KBS Asia Partners Pte. Ltd., KBS Realty Advisors LLC, PBren Investments, L.P., Schreiber Real Estate Investments, L.P. and the Joint Bookrunners in relation to the Public Offer;
" Termination " means termination of the Loan as specified in Clause 7;
" Termination Date " means the earlier of (i) the date falling 30 days from the date of commencement of trading of the Units on the SGX-ST, and (ii) the date when the Borrower (or persons acting on behalf of the Borrower) has bought on the SGX-ST, an aggregate of 22,727,000 Units, representing not more than 6.8% of the total Offering Units to undertake stabilising actions;
" Underwriting Agreements " means the Singapore Offer Agreement and the Placement Agreement;
" Units " mean units representing undivided interests in Prime US REIT; and
" U.S. Special Resolution Regime " means each of (a) the U.S. Federal Deposit Insurance Act and the regulations promulgated thereunder and (b) Title II of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
1.2
Notwithstanding the use of the expressions such as "borrow", "deliver", "lend" and "re-deliver", which are used to reflect terminology used in the market for transactions of the kind provided for in this Agreement, title to the Loan Securities shall pass from one party to another as provided for in this Agreement, the party obtaining such title being obliged to re-deliver Equivalent Securities, including title to Equivalent Securities in accordance with Clause 7.
1.3
All headings appear for convenience only and shall not affect the interpretation hereof.
1.4
References to Clauses and Sub-clauses are to clauses and sub-clauses of this Agreement.
1.5
Any capitalised term not defined in this Agreement shall have the meaning ascribed to it in the Underwriting Agreements.
2.
LOAN OF UNITS
2.1
Subject to the terms and conditions of this Agreement, the Borrower may, at its discretion, send the Borrowing Request to the Lender to borrow Loan Securities from the Lender. The Lender shall, upon receipt of the Borrowing Request from the Borrower no later than four (4) Business Days prior to the Settlement Date, lend the number of Units requested and the Borrower shall borrow such number of Units from the Lender on such Settlement Date solely to cover the over-allotment of Units in connection with the Offering (if any). For the avoidance of doubt, only one (1)

 
‑ 4  ‑
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Borrowing Request may be made, and any subsequent Borrowing Request shall be subject to (a) the prior written consent of the Lender (such consent not to be unreasonably withheld or delayed), and (b) such subsequent Borrowing Request being delivered to the Lender no later than four (4) Business Days prior to the Settlement Date. The Borrowing Request may only be given on a Business Day, and if given later than 5.00 p.m. (Singapore time) on any Business Day shall be deemed to have been given on the Business Day immediately following such Business Day.
2.2
The aggregate number of Units which the Borrower may borrow under this Agreement shall not exceed the total number of Units available under the Over-Allotment Option.
2.3
Except as provided under Recital (F) and Clause 5, the Borrower and the Lender agree that no fees and no collateral will be payable by the Borrower in connection with any Loan under this Agreement.
2.4
Notwithstanding the provisions in this Agreement with respect to when the Loan occurs, the Loan hereunder shall not occur until such Loan Securities in respect of the Borrowing Request shall have been delivered to the Borrower in accordance with Clause 3.
2.5
The Lender agrees that the Borrower is irrevocably authorised, subject to all applicable laws and regulations, to delegate all or any of its relevant rights, duties, powers and discretions (which rights, duties, powers and discretions shall at all times be exercised in accordance with the provisions of this Agreement) in such manner and on such terms as it thinks fit (with or without formality and without prior notice of any such delegation being required to be given to the Lender) to any one or more of its Affiliates, provided that the Borrower shall continue to be bound by the terms of this Agreement and shall remain liable under this Agreement for all acts and omissions of any Affiliate in breach of this Agreement to which it delegates any such rights, duties, powers or discretions.
3.
DELIVERY OF LOAN SECURITIES
3.1
Subject to each of the Underwriting Agreements not having been terminated pursuant to the terms thereof on or prior to the date of admission of Prime US REIT to the Official List of the SGX-ST (the " Listing Date "), upon receipt of a Borrowing Request in accordance with Clause 2.1, the Lender shall deliver such number of Loan Securities specified in the Borrowing Request to the Borrower no later than 12.00 noon (Singapore time) (or such other time as the parties may agree) on the Listing Date (the " Settlement Date ") by:
(a)
causing the Loan Securities to be debited from the Lender's CDP accounts and credited to the CDP account(s) notified to the Lender by the Borrower; or
(b)
any other method of delivery as shall be agreed upon by both parties.
3.2
The Borrower shall notify the Lender of the details of the CDP account(s) that the Loan Securities are to be credited to prior to or together with the delivery of any Borrowing Request made pursuant to Clause 2.1.

 
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3.3
Notwithstanding the foregoing, delivery of the Loan Securities shall be made in such manner as shall be effective to give the Borrower full right, title and interest in the Loan Securities.
4.
RIGHTS AND TITLE
4.1
The parties hereto shall execute and deliver all necessary documents and give all necessary instructions to procure that all right, title and interest in:
(a)
(in the case of the Lender) any Loan Securities borrowed pursuant to Clause 2; and
(b)
(in the case of the Borrower) any Equivalent Securities re-delivered pursuant to Clause 7;
shall pass from one party to the other on delivery or re-delivery of the same (as the case may be) in accordance with this Agreement, free from all Encumbrances. In the case of Loan Securities or Equivalent Securities, title to which is registered in a computer-based system that provides for the recording and transfer of title to the same by way of book entries, delivery and transfer of title shall take place in accordance with the rules and procedures of such system as in force from time to time. The party acquiring such right, title and interest shall have no obligation to return or re-deliver any of the assets so acquired but, in so far as any Loan Securities are borrowed, such party shall be obliged, subject to the terms of this Agreement, to re-deliver Equivalent Securities.
4.2
Where any right to vote in respect of any Loan Securities arises or rights relating to conversion, sub-division, consolidation or pre-emption, rights arising under a takeover offer, or rights requiring election by the holder for the time being, in respect of any Loan Securities become exercisable prior to the re-delivery of the Equivalent Securities, the Borrower shall, only to the extent that it retains control over or has possession of such Loan Securities, arrange for such rights in respect of the Loan Securities to be exercised in accordance with the instructions of the Lender (in respect of the Loan Securities), provided that the Lender must notify the Borrower of its instructions in writing no later than seven Business Days prior to the latest time upon which such votes are exercisable or for the exercise of the right or as otherwise notified by the Borrower to the Lender. For the avoidance of doubt, the Borrower shall not be obliged to exercise the votes or make the election in respect of a number of Loan Securities greater than (a) the number so lent to it by the Lender, or (b) the number of such Loan Securities that the Borrower retains control over or is in possession of (provided that any cessation of control over or possession of any Loan Securities shall be solely for the purpose of covering over-allotments of Units in connection with the Offering), whichever is less. For the avoidance of doubt, the parties agree that subject as hereinbefore provided, any voting rights attaching to or

 
‑ 6  ‑
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election of rights in respect of the Loan Securities and/or the Equivalent Securities shall be exercisable by the persons in whose name they are registered.
4.3
The Lender shall be entitled to receive such amounts as are equal to all interest, dividend or other distribution or payment of any kind whatsoever (" Income ") on or in respect of the Loan Securities for the record dates which occur during the term of the Loan and are received by the Borrower. Any cash Income on or in respect of the Loan Securities, which the Lender is entitled to receive pursuant to this clause shall be paid to the Lender by the Borrower, if received by the Borrower, no later than seven Business Days after the date of receipt by the Borrower of the same subject to the Lender having provided full payment details to the Borrower, or such other date as the Lender and the Borrower may from time to time agree. Non-cash Income on the Loan Securities which are received by the Borrower shall be added to the Loan Securities and shall be considered as such for all purposes, except that if the Loan has terminated, the Borrower shall deliver such non-cash Income to the Lender no later than seven Business Days after the date of receipt by the Borrower.
5.
DUTIES, COST AND EXPENSES
5.1
For the avoidance of doubt, the Lender shall not be responsible for income taxes payable by the Borrower in connection with its role as stabilising manager in respect of the Offering or arising out of or in connection with the transactions contemplated in this Agreement.
6.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
6.1
Each of the Lender and the Borrower warrants and represents that:
(a)
it is duly incorporated, established, organised or constituted (as the case may be) and validly existing under the laws of its country or state of incorporation, establishment, organisation or constitution (as the case may be);
(b)
it has the power to execute and deliver this Agreement;
(c)
it has the power to enter into the Loan contemplated hereby and to perform its obligations hereunder;
(d)
all actions, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents and authorisations) in order to (i) enable it to lawfully enter into, execute and deliver, exercise its rights and power and comply with its obligations under this Agreement, and (ii) to ensure that those obligations are legal, valid, legally binding and enforceable, have been taken, fulfilled and done; and
(e)
this Agreement constitutes its legal, valid and binding obligations, enforceable in accordance with its terms (subject to bankruptcy, insolvency and similar

 
‑ 7  ‑
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laws of general applicability relating to or affecting creditors rights and to general principles of equity); and
(f)
in the case of the Lender, as to all Loan Securities, (i) it will on the Settlement Date be absolutely entitled to pass full legal and beneficial ownership of such Loan Securities provided by it hereunder to the Borrower free and clear of all Encumbrances, (ii) the Loan Securities shall rank in all respects pari passu with all Units existing as at the Settlement Date and will be fully paid-up or credited as fully paid-up, (iii) no other person has or shall have any pre-emptive or similar rights over the Loan Securities, (iv) it is an accredited investor within the meaning of the Securities and Futures Act, Chapter 289 of Singapore (the " SFA ") at the time the Lender delivers the Loan Securities to the Borrower, and will continue to be an accredited investor within the meaning of the SFA through the entire duration of the Loan, and (v) with respect to its ownership of the Units, it shall be in compliance with all applicable laws and regulations in Singapore and elsewhere, and with the rules of the SGX-ST.
6.2
Each party accepts liability as principal with respect to its obligations hereunder. For the avoidance of doubt, the Lender shall not be liable for any loss, or entitled to any profit made by the Borrower arising from any over-allotment or stabilisation undertaken by the Borrower (in its capacity as stabilising manager) as contemplated under the Placement Agreement.
6.3
Each party represents and warrants (with respect to itself) that the execution, delivery and performance by it of this Agreement and the Loan will to its knowledge comply with all applicable laws, rules and regulations including those of the SGX-ST, the CDP and the Authority.
6.4
The Borrower warrants and represents to the Lender that :-
(a)
all Loan Securities will be used by the Borrower solely for the purpose of covering over-allotments of Units in connection with the Offering;
(b)
it is absolutely entitled to pass full legal and beneficial title to all Equivalent Securities provided by it hereunder to the Lender, fully paid-up and free and clear of all Encumbrances; and
(c)
the Equivalent Securities shall rank in all respects pari passu with all Units existing as at the date the Equivalent Securities are re-delivered and will be fully paid-up or credited as fully paid up and no other persons will have any pre-emptive or similar rights over such Equivalent Securities.

 
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6.5
Each party further represents and warrants that each of the representations and warranties contained in Clauses ‎6.1, ‎6.3 and 6.4 (as the case may be) will, in respect of itself, be true and accurate in all respects throughout the duration of the Loan.
7.
TERMINATION OF THE LOAN AND RE-DELIVERY OF THE EQUIVALENT SECURITIES
7.1
The Loan may be terminated by the Borrower at any time upon giving not less than one (1) Business Day’s notice of the Termination to the Lender provided always that Termination by the Borrower shall not occur after the Termination Date. The Loan, if not terminated earlier by the Borrower, shall automatically terminate on (a) the termination of any of the Underwriting Agreements, or (ii) the Termination Date, whichever is earlier.
7.2
In the event the Loan is terminated by the Borrower, the Borrower shall re-deliver, or procure the re-delivery of, the Equivalent Securities (in the same quantity as that set out in the Borrowing Request to the Lender) which, for the avoidance of doubt, shall include any Income made on the Loan Securities due and outstanding (and which have not yet been delivered to the Lender under Clause 4.3) to the CDP account of the Lender, or by such other means that the parties may agree in writing, not later than the date falling three (3) Business Days (or as otherwise agreed in writing between the Borrower and the Lender ) after the date of Termination indicated in the notice of Termination given by the Borrower to the Lender pursuant to Clause 7.1.
7.3
In the event that the Loan is not terminated by the Borrower, and is terminated on the Termination Date, the Borrower shall re-deliver, or procure the re-delivery of, all Equivalent Securities which, for the avoidance of doubt, shall include any Income made on the Loan Securities due and outstanding (and which have not yet been delivered to the Lender under Clause 4.3) to the CDP account of the Lender, or by such other means that the parties may agree in writing, not later than the date falling four (4) Business Days (or as otherwise agreed in writing between the Borrower and the Lender) after the Termination Date.
7.4
The re-delivery to the Lender of the Equivalent Securities under this Agreement may be effected by:
(a)
the Borrower causing the Equivalent Securities to be credited to the Lender’s account with CDP and such crediting shall result in notice of the transaction being given to the Lender; or
(b)
any other method of delivery as shall be agreed upon in writing by both parties.
The Lender shall accept such re-delivery of all (and not some only) of the Equivalent Securities as full and final settlement of the Loan.

 
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7.5
The Equivalent Securities shall rank in all respects pari passu with all existing Units as at the date the Equivalent Securities are re-delivered and shall be re-delivered to the Lender fully paid-up and free and clear from all Encumbrances. For the avoidance of doubt, such Equivalent Securities shall include any non-cash distribution made on the Loan Securities due and outstanding.
7.6
(a)    The Lender shall be entitled to terminate the Loan and to call for re-delivery of all or any Equivalent Securities at any time by giving seven (7) days’ notice on any Business Day. The Borrower shall re-deliver such Equivalent Securities on or before the expiry of such notice period in accordance with the Lender’s instructions.
(b)
The Lender and the Borrower acknowledge that the Borrower agrees to the Lender having the right under this Clause 7.6 in order to address the Lender’s concerns that it is not deemed, under the Singapore Code on Take-overs and Mergers, to have disposed of the Loaned Securities when it lends them to the Borrower or to have acquired Equivalent Securities when they are returned to the Lender by the Borrower under this Agreement.
8.
EVENTS OF DEFAULT
8.1
Each of the following events shall constitute an Event of Default under this Agreement:
(a)
in relation to the Borrower only, if Equivalent Securities shall not be delivered to the Lender in accordance with this Agreement following Termination;
(b)
in relation to the Borrower only, if the Borrower fails to make payment of Income in accordance with Clause 4.3;
(c)
if the Borrower or the Lender ceases or threatens to cease carrying on its core business prior to the re-delivery of the Equivalent Securities;
(d)
if the Borrower or the Lender makes a general assignment for the benefit of its creditors, or admits in writing its inability to pay its debts as they become due and payable, or files a petition in bankruptcy or is adjudicated bankrupt or insolvent, or files a petition seeking reorganisation, liquidation, dissolution, administration or similar relief under any present or future statute, law or regulation, or seeks consent to or acquiesces in the appointment of any trustee, receiver, liquidator, judicial manager or other similar officer of it or over any material part of its properties;
(e)
if any petition is filed against the Borrower or the Lender (other than by the other party to this Agreement in respect of the obligations under this

 
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Agreement) in any court or before any agency alleging the bankruptcy or insolvency of such party or seeking any reorganisation, arrangement, composition, re-adjustment, liquidation, dissolution, administration or similar relief under any present or future statute, law or regulation, or the appointment of a receiver, liquidator, trustee, judicial manager or other similar officer of it or over all or any material part of such party’s property, and such petition or appointment is not vacated or stayed within thirty (30) days;
(f)
in relation to the Borrower only, if the Borrower shall have been suspended or expelled from membership or participation in any securities exchange, clearing house or association or other self-regulatory organisation in Singapore or if it is suspended from dealing in securities by any governmental agency in Singapore such that the Borrower’s ability to perform its obligations under this Agreement is adversely affected;
(g)
if any representation or warranty given or made or deemed to be made by either the Borrower or the Lender in this Agreement is or proves to have been untrue or inaccurate in any material respect; or
(h)
if any of the Underwriting Agreements is terminated in accordance with its terms,
provided that in respect of an event mentioned in Clauses 8.1(a), 8.1(b) and 8.1(f) above in relation to a party, the non-defaulting party has served written notice on such defaulting party stating that such event shall be treated as an Event of Default for the purposes of this Agreement and such default is not cured within five (5) Business Days after the date of the notice.
8.2
If an Event of Default occurs in respect of the Lender, such Lender shall give notice in writing of the occurrence of the Event of Default to the Borrower forthwith and the Borrower shall re-deliver the Equivalent Securities, free from all Encumbrances, to the Lender in the manner contemplated by Clause 7.2.
8.3
If an Event of Default occurs in respect of the Borrower, the Borrower shall give notice in writing of the occurrence of the Event of Default to the Lender forthwith, and the Borrower shall as soon as reasonably practicable and in any event no later than four (4) Business Days following the date of the Event of Default re-deliver the Equivalent Securities, free from all Encumbrances, to the CDP account of the Lender. If the Borrower fails to do so, the Borrower shall pay the Lender damages equal to Market Value of the Equivalent Securities on the date such Event of Default occurs. Insofar as may be applicable, an Event of Default is deemed to occur on the date where the notice expires, if a notice is served, or else it is the specified termination date of the Loan.

 
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8.4
If the event referred to in Clause 8.1(h) above occurs, the Borrower shall re-deliver all Loan Securities received by the Borrower to the Lender, free from all Encumbrances, as soon as reasonably practicable and in any event no later than four (4) Business Days following the termination of any of the Underwriting Agreements.
9.
RECOGNITION OF THE U.S. SPECIAL RESOLUTION REGIMES
9.1
In the event that the Borrower becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from the Borrower of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
9.2
In the event that the Borrower or a BHC Act Affiliate of the Borrower becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against the Borrower are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States..
10.
NOTICE
Each and every communication under this Agreement shall be made by facsimile or otherwise in writing. Each communication or document to be delivered to any party shall be sent to that party at the facsimile number or address and marked for the attention of the person (if any), from time to time designated by that party for the purpose of this Agreement. The initial addresses and facsimile numbers of the parties are:
The Lender
 
 
KBS REIT Properties III LLC
Fax Number
:
949-417-6501
Address
:
800 Newport Center Drive, Suite 700
Newport Beach
CA 92660


Attention
:
Charles J. Schreiber, Jr.
The Borrower
    

 
‑ 12  ‑
17-40684037



Merrill Lynch (Singapore) Pte. Ltd.
Fax Number
:
65 6678 0130
Address
:
50 Collyer Quay #14-01
OUE Bayfront
Singapore 049321

Attention
:
Martin Siah / Antonio Puna
In proving such service it shall be sufficient to prove that delivery by hand was made or that the envelope containing such notice or document was properly addressed and posted as prepaid ordinary mail or that the facsimile confirmation note indicates the transmission was successful.
11.
MISCELLANEOUS
11.1
This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns, except that none of the parties may, without the prior written consent of the other parties, assign any of their rights or obligations under this Agreement save for the Borrower, which may assign or delegate its rights and obligations under this Agreement to its affiliates.
11.2
This Agreement shall not be amended or cancelled (subject only to fulfilment of any obligations then outstanding) except by notice in writing signed by each of the parties.
11.3
If any provision of this Agreement is declared by any judicial or other competent authority to be void or otherwise unenforceable, that provision shall be severed from this Agreement and the remaining provisions of this Agreement shall remain in full force and effect. This Agreement shall, however, thereafter be amended by the parties in such reasonable manner so as to achieve, without illegality, the intention of the parties with respect to that severed provision.
11.4
Time shall be of the essence of this Agreement. The parties shall execute and do, and procure that all other necessary persons or companies (if any) execute and do, all such further deeds, assurances, acts and things as may be reasonably required to be done such that full effect may be given to this Agreement.
11.5
The Borrower’s right to borrow any Units and the Lender's obligations to lend any Units under this Agreement shall expire on the Termination Date and such expiry shall be without prejudice to other rights and obligations of the Borrower and the Lender hereunder.

 
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12.
REMEDIES
12.1
No delay or omission on the Lender's or the Borrower’s part in exercising any right, power, privilege or remedy hereunder shall impair such right, power, privilege or remedy or be construed as a waiver thereof nor shall any single or partial exercise of any such right, power, privilege or remedy preclude any further exercise thereof or the exercise of any other right, power, privilege or remedy.
12.2
The rights, powers, privileges and remedies herein provided are cumulative and not exclusive of any rights, powers, privileges or remedies provided by law. All remedies hereunder shall survive the termination of the Loan, re-delivery of Equivalent Securities and termination of this Agreement.
13.
RIGHTS OF THIRD PARTIES
Save as expressly provided for in this Agreement, a person who is not a party to this Agreement shall have no rights under the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore, to enforce any of its terms but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
14.
COUNTERPARTS
This Agreement may be entered into in any number of counterparts and by the parties on separate counterparts, each of which when so executed and delivered shall be deemed an original, and all the counterparts shall together constitute one and the same instrument.
15.
GOVERNING LAW AND JURISDICTION
15.1
This Agreement is governed by, and shall be construed in accordance with Singapore law.
15.2
The parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this Agreement or otherwise arising in connection with this Agreement and for such purposes irrevocably submit to the non-exclusive jurisdiction of the Singapore courts. All parties hereto irrevocably waive any objections to the non-exclusive jurisdiction of the Singapore courts.
15.3
The parties irrevocably agree that a judgment order of the Singapore courts in connection with this Agreement is to be conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction.





 
‑ 14  ‑
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‑ 15  ‑
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IN WITNESS WHEREOF , this Agreement was entered into on the date first stated above.
LENDER
For and on behalf of KBS REIT Properties III, LLC

KBS REIT PROPERTIES III, LLC ,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner

By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.,
Chief Executive Officer









Endeavour – Unit Lending Agreement




BORROWER
For and on behalf of
MERRILL LYNCH (SINGAPORE) PTE. LTD.

By:
/s/ Siah Geok Wah
Name:
Siah Geok Wah
Title:
Managing Director



Endeavour – Signature page to Unit Lending Agreement


Exhibit 10.9
8 July 2019
DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the "Joint Bookrunners and Underwriters")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS Real Estate Investment Trust III, Inc. ("KBS REIT III") wishes to restrict its right to deal in the units in Prime US REIT (the "Units") in which it legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the "Listing Date") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the "KBS REIT Properties III LLC Lock-up Units"), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the "Prospectus").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS REIT III undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the "First Lock-up Period"), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to

537518-4-8538-v2.1
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purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock­ up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the "Second Lock-up Period"), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock­ up Period.
3.
The above restrictions in paragraph 2 shall not apply to prohibit:
(a)
KBS REIT III from being able to create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;

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(b)
KBS REIT Properties III LLC from entering into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over-allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
KBS REIT III from being able to transfer the KBS REIT Properties III LLC Lock-up Units to and between any direct and indirect wholly-owned subsidiaries of KBS REIT III, provided that KBS REIT III shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS REIT III has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners and Underwriters undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS REIT III to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.
6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.


537518-4-8538-v2.1
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17-40684037


Yours faithfully,
For and on behalf of KBS Real Estate Investment Trust III, Inc.

KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,

By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.
Chief Executive Officer


Endeavour – Signature page to Lockup Letter


Exhibit 10.10
8 July 2019
DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the "Joint Bookrunners and Underwriters")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS Limited Partnership III ("KBS LP III") wishes to restrict its right to deal in its effective interest in the units in Prime US REIT (the "Units") which KBS REIT Properties III LLC legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the "Listing Date") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the "KBS REIT Properties III LLC Lock-up Units"), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the "Prospectus").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS LP III undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the "First Lock-up Period"), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to

537518-48597-v2.2
‑ 1  ‑
17-40684037


purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock­ up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the "Second Lock-up Period"), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock­ up Period.
3.
The above restrictions in paragraph 2 shall not apply to prohibit:
(a)
KBS LP III from being able to create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
KBS REIT Properties III LLC from entering into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the

537518-48597-v2.2
‑ 2  ‑
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KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over-allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
KBS LP III from being able to transfer the KBS REIT Properties III LLC Lock-up Units to and between any direct and indirect wholly-owned subsidiaries of KBS LP III, provided that KBS LP III shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS LP III has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS LP III to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.
6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.


537518-48597-v2.2
‑ 3  ‑
17-40684037


Yours faithfully,
For and on behalf of KBS Limited Partnership III

KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.
Chief Executive Officer


Endeavour – Signature Page to Lockup Letter


Exhibit 10.11
8 July 2019
DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore O18982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the "Joint Bookrunners and Underwriters")

Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS REIT Holdings III, LLC ("KBS REIT Holdings III") wishes to restrict its right to deal in its effective interest in the units in Prime US REIT (the "Units") which KBS Real Estate Investment Trust III, Inc. legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the "Listing Date") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the "KBS REIT Properties III LLC Lock-up Units"), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the "Prospectus").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS REIT Holdings III undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the "First Lock-up Period"), directly or indirectly:

537518-4-8536-v2.1
 ‑ 1  ‑
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(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock­ up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the "Second Lock-up Period")), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock­ up Period.
3.
The above restrictions in paragraph 2 shall not apply to prohibit:
(a)
KBS REIT Holdings III from being able to create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0 % of the effective interest in the KBS REIT

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Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
KBS REIT Properties III LLC from entering into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock-up Units by KBS REIT Properties III LLC pursuant to the exercise of an over-allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
KBS REIT Holdings III from being able to transfer the KBS REIT Properties III LLC Lock-up Units to and between any direct and indirect wholly-owned subsidiaries of KBS Limited Partnership III, provided that KBS Limited Partnership III shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS REIT Holdings III has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS REIT Holdings III to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.
6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.
8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.


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Yours faithfully,
KBS REIT HOLDINGS III LLC,
a Delaware limited liability company
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.
Chief Executive Officer


Endeavour – Singapore page to Lockup Letter


Exhibit 10.12
8 July 2019

DBS Bank Ltd
12 Marina Boulevard
Level 3, Marina Bay Financial Centre Tower 3
Singapore 018982
Merrill Lynch (Singapore) Pte. Ltd.
50 Collyer Quay
#14-01 OUE Bayfront
Singapore 049321
China International Capital Corporation (Singapore) Pte. Limited
6 Battery Road
#33-01 South Lobby
Singapore 049909
Credit Suisse (Singapore) Limited
One Raffles Link
#03/04-01 South Lobby
Singapore 039393
Maybank Kim Eng Securities Pte. Ltd.
50 North Canal Road
#03-01
Singapore 059304
Oversea-Chinese Banking Corporation Limited
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
(collectively, the "Joint Bookrunners and Underwriters")
Dear Sirs
Offering Of Units in Prime US REIT
1.
KBS REIT Properties III LLC wishes to restrict its right to deal in the units in Prime US REIT (the "Units") in which it legally and/or beneficially, directly or indirectly owns or will own, on the date of admission (the "Listing Date") of Prime US REIT to the Official List of Singapore Exchange Securities Trading Limited (the "KBS REIT Properties III LLC Lock-up Units"), in accordance with the terms in this letter agreement. Terms used, but not otherwise defined herein, have the meanings ascribed thereto in the final prospectus to be dated on or around 8 July 2019 and to be registered with the Monetary Authority of Singapore in connection with the Offering (the "Prospectus").
2.
In consideration of S$1.00, the receipt and sufficiency of which is hereby acknowledged, KBS REIT Properties III LLC undertakes to the Joint Bookrunners and Underwriters that it will not, subject to the exceptions set out in paragraph 3 below, without the prior written consent of the Joint Bookrunners and Underwriters (such consent not to be unreasonably withheld or delayed) during the period commencing from the date of issuance of the Units until the date falling six months after the Listing Date (both dates inclusive) (the "First Lock-up Period"), directly or indirectly:
(a)
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to

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purchase, lend, hypothecate, grant security over, encumber or otherwise dispose of or transfer, any or all of its effective interest in the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(b)
enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the KBS REIT Properties III LLC Lock-up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units);
(c)
enter into any transaction (including a derivative transaction) or other arrangement with a similar economic effect to the foregoing sub-paragraph (a) or (b);
(d)
deposit any of its effective interest in the KBS REIT Properties III LLC Lock­ up Units (including any securities convertible into or exercisable or exchangeable for any KBS REIT Properties III LLC Lock-up Units or which carry rights to subscribe for or purchase any such KBS REIT Properties III LLC Lock-up Units) in any depository receipt facility;
(e)
enter into a transaction which is designed or which may reasonably be expected to result in any of the above; or
(f)
publicly announce any intention to do any of the above,
whether any such transaction described in sub-paragraphs (a) to (e) above is to be settled by delivery of such capital or securities, in cash or otherwise (whether or not such transaction will be completed within or after the First Lock-up Period or the period immediately following the First Lock-up Period until the date falling 12 months after the Listing Date (the "Second Lock-up Period"), and the same restrictions will apply in respect of its effective interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units (adjusted for any bonus issue or subdivision) during the Second Lock­ up Period.

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3.
The above restrictions in paragraph 2 shall not apply to prohibit KBS REIT Properties III, LLC from being able to:
(a)
create a charge over the KBS REIT Properties III LLC Lock-up Units or otherwise grant of security over or creation of any encumbrance over the KBS REIT Properties III LLC Lock-up Units, provided that such charge, security or encumbrance (i) cannot be enforced over any KBS REIT Properties III LLC Lock-up Units during the First Lock-up Period, and (ii) can only be enforced with respect to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period. The charge, security or encumbrance will only be created if the charge (such as a bank or financial institution) agrees that the charge, security or encumbrance over the KBS REIT Properties III LLC Lock-up Units cannot be enforced over 100.0% of the KBS REIT Properties III LLC Lock-up Unit during the First Lock-up Period and can only be enforced in relation to 50.0% of the effective interest in the KBS REIT Properties III LLC Lock-up Units during the Second Lock-up Period;
(b)
enter into any unit lending agreement with the Joint Bookrunners and Underwriters or any sale or transfer of the KBS REIT Properties III LLC Lock­ up Units by KBS REIT Properties III LLC pursuant to the exercise of an over allotment option granted by the Unit Lender to the Joint Bookrunners and Underwriters; and
(c)
transfer the KBS REIT Properties III LLC Lock-up Units to and between KBS REIT Properties III LLC or any direct and indirect wholly-owned subsidiaries of KBS REIT Properties III LLC, provided that KBS REIT Properties III LLC shall, during the First Lock-up Period, maintain a direct or indirect interest in 100.0% of the KBS REIT Properties III LLC Lock-up Units and, during the Second Lock-up Period, maintain a direct or indirect interest in 50.0% of the KBS REIT Properties III LLC Lock-up Units and KBS REIT Properties III LLC has procured that such transferee subsidiaries have executed and delivered to the Joint Bookrunners and Underwriters undertakings to the effect that such transferee subsidiaries will comply with such restrictions so as to enable KBS REIT Properties III LLC to comply with the foregoing restrictions for the unexpired period of the First Lock-up Period and the Second Lock-up Period.
4.
For the avoidance of doubt, any Units returned to KBS REIT Properties III LLC pursuant to any unit lending agreement with the Joint Bookrunners and Underwriters shall be subject to the restrictions set out in this letter agreement as if they were KBS REIT Properties III LLC Lock-up Units.
5.
If, for any reason, the Offering is not completed within six months of the date of the Prospectus, this letter agreement shall be terminated immediately.
6.
A person who is not a party to this letter agreement shall have no rights under the Contracts (Rights of Third Parties) Act (Chapter 53B of Singapore) to enforce any term of this letter agreement.
7.
This undertaking is given in favour of the Joint Bookrunners and Underwriters, and accordingly, may be enforced by the Joint Bookrunners and Underwriters. Without prejudice to any other rights or remedies which the Joint Bookrunners and Underwriters may have, we acknowledge and agree that damages may not be an adequate remedy for any breach of this undertaking and the Joint Bookrunners and Underwriters shall be entitled to seek the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this undertaking.

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8.
This letter agreement is governed by, and shall be construed in accordance with, the laws of Singapore.
9.
Both parties agree that the courts of Singapore are to have non-exclusive jurisdiction to settle any dispute (including claims for set-off and counter claims) which may arise in connection with the creation, validity, effect, interpretation, or performance of, or of legal relationships established by, this letter agreement or otherwise arising in connection with this letter agreement.


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Yours faithfully,
For and on behalf of KBS REIT Properties III, LLC

KBS REIT PROPERTIES III, LLC,
a Delaware limited liability company
By:
KBS LIMITED PARTNERSHIP III,
a Delaware limited partnership,
its sole member
By:
KBS REAL ESTATE INVESTMENT TRUST III, INC.,
a Maryland corporation,
its general partner
By:
/s/ Charles J. Schreiber, Jr.
Charles J. Schreiber, Jr.
Chief Executive Officer


Endeavour – Singapore page to Lockup Letter


Exhibit 31.1
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Charles J. Schreiber, Jr., certify that:
1.
I have reviewed this quarterly report on Form 10-Q of KBS Real Estate Investment Trust III, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
August 9, 2019
By:
/ S / C HARLES  J. S CHREIBER , J R .    
 
 
 
Charles J. Schreiber, Jr.
 
 
 
Chairman of the Board,
Chief Executive Officer and Director
 
 
 
(principal executive officer)





Exhibit 31.2
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Jeffrey K. Waldvogel, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of KBS Real Estate Investment Trust III, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
August 9, 2019
By:
/S/ J EFFREY  K. W ALDVOGEL
 
 
 
Jeffrey K. Waldvogel
 
 
 
Chief Financial Officer, Treasurer and Secretary
 
 
 
(principal financial officer)





Exhibit 32.1
Certification pursuant to 18 U.S.C. Section 1350,
as Adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of KBS Real Estate Investment Trust III, Inc. (the “Registrant”) for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Charles J. Schreiber, Jr., Chief Executive Officer and Director of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:
August 9, 2019
By:
/ S / C HARLES  J. S CHREIBER , J R .     
 
 
 
Charles J. Schreiber, Jr.
 
 
 
Chairman of the Board,
Chief Executive Officer and Director
 
 
 
(principal executive officer)





Exhibit 32.2
Certification pursuant to 18 U.S.C. Section 1350,
as Adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of KBS Real Estate Investment Trust III, Inc. (the “Registrant”) for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jeffrey K. Waldvogel, the Chief Financial Officer of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:
August 9, 2019
By:
/S/ J EFFREY  K. W ALDVOGEL
 
 
 
Jeffrey K. Waldvogel
 
 
 
Chief Financial Officer, Treasurer and Secretary
 
 
 
(principal financial officer)