Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 239

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 2
Chunk 239
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 loss on interest rate swaps of $21.2 million, offset by realized gain on interest rate swaps of $6.3 million for the three months ended September 30, 2024.  The change in net (gain) loss 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.  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 September 30, 2025, we recorded non-cash impairment charges of $65.5 million to write down the carrying value of The Almaden (located in San Jose, California), Towers at Emeryville (located in Emeryville, California) and 60 South Sixth (located in Minneapolis, Minnesota) to their estimated fair values.  The facts and circumstances leading to the impairments on our real estate held for investment during the three months ended September 30, 2025 are as follows:

•The Almaden:  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