Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 58

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 1
Chunk 58
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 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 March 31, 2025, our borrowings and other liabilities were approximately 56% of the cost (before deducting depreciation and other noncash reserves) and 59% of the book value (before deducting depreciation) of our tangible assets, respectively.  This leverage limitation is based on cost and not fair value, and our leverage may exceed 75% of the fair value of our tangible assets.  

We have not declared any distributions since June 2023.  We have experienced a reduction in our net cash flows from operations in recent periods primarily due to higher interest expense and a decrease in dividend income received from the SREIT and to a lesser extent, due to lease rollover and reduced demand for office space.  We are unable to predict when or if we will be in a position to pay distributions to our stockholders.  Due to certain restrictions and covenants included in our loan agreements as a result of refinancing certain of our debt facilities, we do not expect to pay any dividends or distributions until certain loans are repaid or refinanced.  One of the loans with these restrictions has a current maturity of January 2027 but may be extended subject to the terms and conditions of the loan agreement.  On March 15, 2024, we terminated our dividend reinvestment plan.   

We did not redeem any shares of our common stock during the three months ended March 31, 2025.  Due to certain restrictions and covenants included in our loan agreements as a result of refinancing certain of our debt facilities, we do not expect to redeem any shares of common stock until certain loans are repaid or refinanced.  One of the loans with these restrictions has a current maturity of January 2027 but may be extended subject to the terms and conditions of the loan agreement.  We terminated our share redemption program on March 15, 2024.

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