Company: KBSR
Filing Date: 2025-12-19
Form Type: 8-K
Source: 0001482430-25-000057
Chunk: 13

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-12-19
Form: 8-K
Item: Item 8.01
Chunk 13
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 others, net operating income earned. However, valuations for U. S. office properties continue to fluctuate due to weakness in the current real estate capital markets and the lack of transaction volume for U. S. office properties, increasing the uncertainty of valuations in the current market environment. The valuation of the Company’s investment in Prime US REIT is also subject to increased uncertainty. Due to the disruptions in the financial markets, the trading price of the common units of Prime US REIT has experienced substantial volatility and has been significantly impacted by the market sentiment for stock with significant investment in U. S. office buildings.

The ongoing challenges affecting the U. S. commercial real estate industry, especially as it pertains to commercial office buildings, continues to be one of the most significant risks and uncertainties the Company faces. The combination of elevated interest rates and persistent inflation (or the perception that any of these events may continue), as well as a low level of lending activity in the debt markets, have contributed to continued weakness in the commercial real estate markets. The usage and leasing activity of the Company’s assets in several markets remains lower than pre-pandemic levels, and the Company cannot predict when economic activity and demand for office space will return to pre-pandemic levels in those markets. Both upcoming and recent tenant lease expirations and leasing challenges in certain markets amidst the aforementioned headwinds coupled with slower than expected return-to-office, most notably in the greater San Francisco Bay Area where the Company owns several assets, have had direct and material impacts to property appraisal values used by the Company’s lenders and have impacted the Company’s ability to access certain credit facilities and the Company’s ongoing cash flow, which, in large part, provide liquidity for capital expenditures needed to manage the Company’s real estate assets.

In order to refinance, restructure or extend the Company’s maturing debt obligations, the Company has been required to reduce the loan commitments and/or make paydowns on certain loans, and it has agreed to satisfy certain conditions that are not in its sole control, including making principal paydowns during the terms of the loans, selling assets and taking identified actions relating to the Company’s portfolio. Selling real estate assets in the current market may result in a lower sale price than the Company would otherwise obtain.

The Company may also be adversely affected if it is unable to satisfy the terms and conditions contained in its loan agreements. There is no assurance that the Company will be able to satisfy the terms and conditions of its existing loan agreements or the terms and conditions of