Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 209

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 2
Chunk 209
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 ended March 31, 2024.  The change in net loss (gain) on derivative instruments was primarily due to changes in fair values with respect to our interest rate swaps that are not accounted for as cash flow hedges during the three months ended March 31, 2025.  In general, we expect net gains or losses on derivative instruments to vary based on fair value changes with respect to our interest rate swaps that are not accounted for as cash flow hedges.  In addition, as the remaining lives of our interest rate swaps that are not accounted for as cash flow hedges decrease, we expect the fair values of these interest rate swaps to move towards zero, decreasing the net gains or losses on derivative instruments.

During the three months ended March 31, 2025 and 2024, we recorded unrealized losses on real estate equity securities of $5.2 million and $19.5 million, respectively, as a result of the change in the closing price of the units of the SREIT on the SGX-ST. 

During the three months ended March 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 three months ended March 31, 2025.

We recognized a gain on sale of real estate of $14.8 million during the three months ended March 31, 2024 related to the disposition of the McEwen Building in February 2024.  We did not dispose of any real estate during the three months ended March 31, 2025.  

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