Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 250

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 7
Chunk 250
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 buyer of the 201 Spear Street Mortgage Loan.  

During the year ended December 31, 2024 and 2023, we recorded unrealized losses on real estate equity securities of $11.2 million and $35.6 million, respectively, as a result of the change in the closing price of the units of the SREIT on the SGX-ST.  

During the year ended December 31, 2024, we recognized a gain on extinguishment of debt of $56.4 million in connection with the deed-in-lieu of foreclosure transaction related to the 201 Spear Street Mortgage Loan.  The gain on extinguishment of debt related to the 201 Spear Street Mortgage Loan represents the difference between the carrying amount of the outstanding debt and other liabilities of approximately $128.7 million and the carrying value of the real estate property and other assets of approximately $72.3 million, at the time of the transfer of the 201 Spear Street property and other assets in satisfaction of the loan.  We did not record any gain on extinguishment of debt during the year ended December 31, 2023.

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We recognized a gain on sale of real estate of $53.1 million during the year ended December 31, 2024 related to the dispositions of the McEwen Building in February 2024 and Preston Commons in November 2024.  We did not dispose of any real estate during the year ended December 31, 2023.  

Funds from Operations and Modified Funds from Operations

We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT.  We compute FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition.  FFO represents net income, excluding gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), gains and losses from change in control, impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures.  In addition, we elected the option to exclude mark-to-market changes in value recognized on real estate equity securities in the calculation of FFO.  We believe FFO facilitates comparisons of operating performance between periods and among other REITs.  However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance