Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 146

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1A
Chunk 146
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 applicable contract, we would have the right to terminate all outstanding derivative transactions with that counterparty and settle them based on their net market value or replacement cost.  In such an event, we may be required to make a termination payment to the counterparty, or we may have the right to collect a termination payment from such counterparty.  We assume the credit risk that the counterparty will not be able to make any termination payment owing to us.  We may not receive any collateral from a counterparty, or we may receive collateral that is insufficient to satisfy the counterparty’s obligation to make a termination payment.  If a counterparty is the subject of a bankruptcy case, we will be an unsecured creditor in such case unless the counterparty has pledged sufficient collateral to us to satisfy the counterparty’s obligations to us.  

We assume the risk that our derivative counterparty may terminate transactions early.  

If we fail to make a required payment or otherwise default under the terms of a derivative contract, the counterparty would have the right to terminate all outstanding derivative transactions between us and that counterparty and settle them based on their net market value or replacement cost.  In certain circumstances, the counterparty may have the right to terminate derivative transactions early even if we are not defaulting.  If our derivative transactions are terminated early, it may not be possible for us to replace those transactions with another counterparty, on as favorable terms or at all.  

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We may be required to collateralize our derivative transactions.  

We may be required to secure our obligations to our counterparties under our derivative contracts by pledging collateral to our counterparties.  That collateral may be in the form of cash, securities or other assets.  If we default under a derivative contract with a counterparty, or if a counterparty otherwise terminates one or more derivative contracts early, that counterparty may apply such collateral toward our obligation to make a termination payment to the counterparty.  If we have pledged securities or other assets, the counterparty may liquidate those assets in order to satisfy our obligations.  If we are required to post cash or securities as collateral, such cash or securities will not be available for use in our business.  Cash or securities pledged to counterparties may be repledged by counterparties and may not be held in segregated accounts.  Therefore, in the event of a counterparty insolvency, we may not be entitled to recover some or all collateral pledged to that counterparty, which could result in losses and have an adverse effect on