Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 248

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 7
Chunk 248
---
 future periods as a result of additional capital improvements, offset by a decrease in amortization related to fully amortized tenant origination and absorption costs and to the extent we dispose of properties.

Interest expense increased from $120.5 million for the year ended December 31, 2023 to $126.6 million for the year ended December 31, 2024.  Included in interest expense was (i) $116.3 million and $117.1 million of interest expense payments for the years ended December 31, 2023 and 2024, respectively, and (ii) the amortization of deferred financing costs of $4.2 million and $9.5 million for the years ended December 31, 2023 and 2024, respectively.  The increase in interest expense was primarily due to higher one-month BSBY and one-month Term SOFR during the year ended December 31, 2024 and the impact on interest expense related to our variable rate debt, a higher fixed interest rate on the Almaden Mortgage Loan, which became effective in December 2023, additional revolver draws and recent loan modifications which have resulted in additional loan fees being amortized to interest expense in 2024, partially offset by less interest expense incurred as a result of the disposition of an office property and related forgiveness of debt in connection with a deed-in-lieu of foreclosure transaction in January 2024 and loan paydowns in connection with the sales of real properties in February 2024 and November 2024.  In general, we expect interest expense to vary based on fluctuations in interest rates (for our variable rate debt) and the amount of future borrowings, to increase due to higher interest rate spreads as a result of recent refinancings and to decrease due to required loan paydowns.  

We recognized net gain on derivative instruments of $17.6 million for the year ended December 31, 2024.  Included in net gain on derivative instruments was (i) realized gain on interest rate swaps of $24.3 million, (ii) gains related to swap terminations of $0.2 million, and offset by (iii) unrealized loss on interest rate swaps of $6.8 million for the year ended December 31, 2024.  We recognized net gain on derivative instruments of $14.9 million for the year ended December 31, 2023.  Included in net gain on derivative instruments was (i) realized gain