Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 76

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 1
Chunk 76
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 on the realized economics of the real estate; 

•Gain from extinguishment of debt.  A gain from extinguishment of debt represents the difference between the carrying value of any consideration transferred to the lender in return for the extinguishment of a debt and the net carrying value of the debt at the time of settlement.  We have excluded the gain from extinguishment of debt in our calculation of MFFO because these gains do not impact the current operating performance of our investments and do not provide an indication of future operating performance; 

•Unrealized loss (gain) on derivative instruments.  These adjustments include unrealized losses (gains) from mark-to-market adjustments on interest rate swaps.  The change in fair value of interest rate swaps not designated as a hedge are non-cash adjustments recognized directly in earnings and are included in interest expense.  We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the economic impact of our interest rate swap agreements; and

•Gains related to swap terminations.  Gains related to swap terminations represent the difference between the settlement fees received and the value of interest rate swaps terminated, which are included in net (gain) loss on derivative instruments.  Although these amounts increase net income, we exclude them from MFFO to more appropriately reflect the ongoing impact of our interest rate swap agreements.  

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Table of ContentsPART I. FINANCIAL INFORMATION (CONTINUED)Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculation of MFFO, for the three months ended March 31, 2025 and 2024 (in thousands).  No conclusions or comparisons should be made from the presentation of these periods.  

For the Three Months EndedMarch 31,20252024Net (loss) income$(33,272)$37,574 Depreciation of real estate assets22,581 23,496 Amortization of lease-related costs3,825 4,038 Unrealized loss on real estate equity securities5,223 19,512 Gain on sale of real estate, net — (14,781)FFO (1)(1,643)69,839 Straight-line rent and amortization of above- and below-market leases, net(2,316)(