Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 30

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 1
Chunk 30
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 and  •Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.  The fair value for certain financial instruments is derived using a combination of market quotes, pricing models and other valuation techniques that involve significant management judgment.  The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments.  Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades.  The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly.  The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of assets and liabilities for which it is practicable to estimate the fair value:Cash and cash equivalents, restricted cash, rent and other receivables, and accounts payable and accrued liabilities:  These balances approximate their fair values due to the nature and/or short maturities of these items.Real estate equity securities: At March 31, 2025, the Company’s investment in the units of the SREIT was presented at fair value on the accompanying consolidated balance sheet.  The fair value of the units of the SREIT was based on a quoted price in an active market on a major stock exchange.  The Company classifies these inputs as Level 1 inputs.  

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Table of ContentsPART I. FINANCIAL INFORMATION (CONTINUED)Item 1.  Financial Statements (continued)KBS REAL ESTATE INVESTMENT TRUST III, INC.CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)March 31, 2025(unaudited)10.      FAIR VALUE DISCLOSURES (CONTINUED)

Derivative instruments: The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets.  The valuation of these instruments is determined using a proprietary model that utilizes observable inputs.  As such, the Company classifies these inputs as Level 2 inputs.  The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility.  The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed