Company: KBSR
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001482430-25-000042
Chunk: 226

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 2
Chunk 226
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 sale, we cease depreciation and amortization expense for that property.  We expect depreciation and amortization to increase in 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 decreased from $33.2 million for the three months ended June 30, 2024 to $30.5 million for the three months ended June 30, 2025.  Included in interest expense was (i) $29.7 million and $26.9 million of interest expense payments for the three months ended June 30, 2024 and 2025, respectively, and (ii) the amortization of deferred financing costs of $3.5 million and $3.6 million for the three months ended June 30, 2024 and 2025, respectively.  The decrease in interest expense was primarily due to less interest expense incurred as a result of loan paydowns in connection with the sale of a real property in November 2024, partially offset by higher interest rate spreads as a result of recent refinancings subsequent to March 31, 2024 and the impact on interest expense of additional loan draws.  In general, we expect interest expense to decrease due to required loan paydowns, to vary based on fluctuations in interest rates (for our variable rate debt) and the amount of future borrowings and to increase due to higher interest rate spreads as a result of recent refinancings.

We recorded net gain on derivative instruments of $1.0 million for the three months ended June 30, 2025.  Included in net gain on derivative instruments was realized gain on interest rate swaps of $2.7 million, offset by unrealized loss on interest rate swaps of $1.7 million for the three months ended June 30, 2025.  We recorded net gain on derivative instruments of $4.9 million for the three months ended June 30, 2024.  Included in net gain on derivative instruments was realized gain on interest rate swaps of $6.3 million, offset by unrealized loss on interest rate swaps of $1.4 million for the three months ended June 30, 2024.  The change in net 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