Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 95

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 15
Chunk 95
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) on interest rate swaps (1)6,833 16,426 (52,189)Gains related to swap terminations(178)— — Unrealized loss on interest rate cap— 25 — Net gain on derivative instruments$(17,634)$(14,907)$(51,932)_____________________

(1) For the year ended December 31, 2023, unrealized loss (gain) on interest rate swaps included an $8.7 million unrealized loss related to the change in fair value of two off-market interest rate swaps (which expired on November 2, 2023) determined to be hybrid financial instruments for which the Company elected to apply the fair value option.  For the year ended December 31, 2022, unrealized loss (gain) on interest rate swaps included a $10.7 million unrealized gain related to the change in fair value of two off-market interest rate swaps determined to be hybrid financial instruments for which the Company elected to apply the fair value option.  

10.      FAIR VALUE DISCLOSURES

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 nature and/or short maturities of these items.  Real estate equity securities: At December 31, 2024, the Company’s investment in the units of the SREIT was presented at fair value on the accompanying consolidated balance sheet.  The fair value of the units of the SREIT was based on a quoted price in an active market on a major stock exchange.  The Company classifies these inputs as Level 1 inputs. 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