Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 168

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 8
Chunk 168
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 and related forgiveness of debt in connection with a deed-in-lieu of foreclosure transaction in January 2024, partially offset by higher interest rate spreads as a result of recent refinancings subsequent to March 31, 2024 and the impact on interest expense of additional revolver draws and recent loan modifications which have resulted in additional loan fees being amortized to interest expense in 2025.  In general, we expect interest expense to vary based on fluctuations in interest rates (for our variable rate debt) and the amount of future borrowings, to increase due to higher interest rate spreads as a result of recent refinancings and to decrease due to required loan paydowns.  

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

We recorded net loss on derivative instruments of $1.8 million for the three months ended March 31, 2025.  Included in net loss on derivative instruments was (i) realized gain on interest rate swaps of $2.7 million, offset by (ii) unrealized loss on interest rate swaps of $4.5 million, for the three months ended March 31, 2025. We recorded net gain on derivative instruments of $16.2 million for the three months ended March 31, 2024.  Included in net gain on derivative instruments was (i) realized gain on interest rate swaps of $7.1 million, (ii) unrealized gain on interest rate swaps of $8.9 million, and (iii) gains related to swap terminations of $0.2 million, for the three months ended March 31, 2024.  The change in net loss (gain) on derivative instruments was primarily due to changes in fair values with respect to our interest rate swaps that are not accounted for as cash flow hedges during the three months ended March 31, 2025.  In general, we expect net gains or losses on derivative instruments to vary based on fair value changes with respect to our interest rate swaps that are not accounted for as cash flow hedges.  In addition, as the remaining lives of our interest rate swaps that are not accounted for as cash flow hedges decrease, we expect the fair values of these interest rate swaps to move towards zero, decreasing the net gains or losses on derivative instruments.

During the three months ended March 31, 2025 and