Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 28

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 1
Chunk 28
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 III where the demand made is greater than $5.0 million and the required Carillon Lenders elect to call a default.

9.       DERIVATIVE INSTRUMENTS

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates.  The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives.  The Company does not enter into derivatives for speculative purposes.  The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable.  The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument.  In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position.  As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero.  As of March 31, 2025, the Company has entered into 12 interest rate swaps, which were not designated as hedging instruments.  The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of March 31, 2025 and December 31, 2024.  The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands): March 31, 2025December 31, 2024 Weighted-Average Fix Pay RateWeighted-Average Remaining Term in YearsDerivative InstrumentsNumber of InstrumentsNotional AmountNumber of InstrumentsNotional AmountReference Rate as of March 31, 2025Derivative instruments not designated as hedging instrumentsInterest rate swaps (1)12$1,000,000 14$1,100,000 One-month Term SOFR/Fixed at 2.38% - 3.92%3.3%1.4_____________________(1) During the three months ended March 31, 2025, two of the Company’s interest rate swaps expired.  The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of March 31,