Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 246

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 2
Chunk 246
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 Included in net loss on derivative instruments was (i) unrealized loss on interest rate swaps of $8.4 million, offset by (ii) realized gain on interest rate swaps of $8.1 million, for the nine months ended September 30, 2025.  We recorded net gain on derivative instruments of $6.1 million for the nine months ended September 30, 2024.  Included in net gain on derivative instruments was (i) realized gain on interest rate swaps of $19.7 million, (ii) gains related to swap terminations of $0.2 million, and offset by (iii) unrealized loss on interest rate swaps of $13.7 million for the nine months ended September 30, 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 nine months ended September 30, 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 nine months ended September 30, 2025, we recorded non-cash impairment charges of $65.5 million to write down the carrying value of The Almaden (located in San Jose, California), Towers at Emeryville (located in Emeryville, California) and 60 South Sixth (located in Minneapolis, Minnesota) to their estimated fair values.  During the nine months ended September 30, 2024, we recorded non-cash impairment charges of $6.8 million to write down the carrying value of 60 South Sixth to its estimated fair value.  For the facts and circumstances leading to the impairments on our real estate held for investment during the nine months ended September 30, 2025 and 2024, see our discussion above under “ — Comparison of the three months ended September 30, 2025 versus the three months ended September 30, 2024.”

During the nine months ended September 30, 2025, we recorded an unrealized gain on real estate equity