Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 191

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 191
---
maden:  During the three months ended September 30, 2025, we recorded non-cash impairment charges of $28.5 million for The Almaden, reflecting a decline in the estimated fair value of the property below its carrying value.  The decrease was primarily attributable to changes in valuation assumptions and softening market conditions in the San Jose central business district.  Key factors contributing to the decline included an increase in the terminal cap and discount rates, lower occupancy levels at the building, increased market leasing costs, and reduced projected revenue due to lower market rents, slower projected rent growth, and reduced lease renewal expectations in the San Jose office market. 

•Towers at Emeryville:  During the three months ended September 30, 2025, we recorded non-cash impairment charges of $16.3 million for the Towers at Emeryville, reflecting a decline in the estimated fair value of the property below its carrying value.  The decrease was primarily attributable to changes in valuation assumptions and softening market conditions in the East Bay office sector.  Key factors contributing to the decline included an increase in the terminal cap and discount rates, lower occupancy levels at the building, and an increase in general vacancy assumptions within the discounted cash flow model.  The appraisal also reflected lower projected revenue due to reduced effective rents and higher projected vacancy levels, consistent with broader trends in the East Bay office market, where vacancy rates have continued to rise amid slower leasing activity and elevated tenant turnover.

•60 South Sixth:  During the three months ended September 30, 2025, we recorded non-cash impairment charges of $20.7 million for 60 South Sixth, reflecting a decline in the estimated fair value of the property below its carrying value.  The decrease was primarily attributable to changes in valuation assumptions.  Key factors contributing to the decline included an increase in the terminal cap and discount rates, reflecting a more cautious investment outlook and higher required returns for office assets in the Minneapolis central business district.  The valuation also utilized an increased stabilized vacancy assumption and reflected a modest decrease in in-place occupancy, consistent with the current occupancy at the building and broader market trends indicating softening demand and rising availability in the downtown Minneapolis office market.

During the three months ended September 30, 2024, we recorded non-cash impairment charges of $6.8 million to write down the carrying value of 60 South Sixth to its estimated fair value as a result of changes in cash flow estimates which resulted in the future estimated