Company: KBSR
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001482430-25-000042
Chunk: 23

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 23
---
 notes payable contain financial debt covenants.  As of June 30, 2025, the Company believes it was in compliance with the debt covenants under its notes payable.  However, the Company determined it did not meet the debt service coverage ratio required under one of the Company’s loan agreements as of March 31, 2025, and as a result, on August 7, 2025, the Company received a demand notice from the agent under the loan agreement of a required paydown of approximately $4.2 million.  The Company has not made this paydown and is in discussions with the agent in regard to this matter.  In accordance with the loan agreement, the Company has 30 days from the notice date to cause the outstanding principal balance of the loan to not exceed the amount available as determined by the debt service coverage ratio test.  The receipt of the demand letter does not constitute a default under the loan agreement. The Company’s loan agreements contain cross default provisions, including that the failure of one or more of the Company’s subsidiaries to pay debt as it matures under one debt facility may trigger the acceleration of the Company’s indebtedness under other debt facilities.  As of June 30, 2025, the Almaden Mortgage Loan, the Modified Portfolio Revolving Loan Facility, the Amended and Restated Portfolio Loan Facility, the 3001 & 3003 Washington Mortgage Loan, the Accenture Tower Loan and the Carillon Mortgage Loan are subject to cash sweep arrangements, whereby each month the excess cash flow from the properties securing the loan is deposited into a cash management account held for the benefit of the Company’s lenders.  Generally, excess cash flow means an amount equal to (a) gross revenues from the properties securing the facility less (b) an amount equal to principal and interest paid with respect to the associated debt facility, operating expenses of the properties securing the facility and in certain cases a limited amount of REIT-level expenses.  In certain cases, the Company may request disbursements from the cash management accounts to fund capital or operating shortfalls at the underlying assets.  Amounts held in the cash management accounts at each reporting period are included in restricted cash in the accompanying consolidated balance sheets.  Recent Financing TransactionsAmended and Restated Portfolio Loan FacilityOn November 3, 2021, certain of the Company’s indirect wholly owned subsidiaries (the “Amended and Restated Portfolio Loan Facility Borrowers”) entered into a loan agreement with Bank of America, N.A