Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 123

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 123
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 business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results.  Impairment of Real EstateDuring the three and nine months ended September 30, 2025, the Company 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.  The facts and circumstances leading to the impairments on the Company’s real estate held for investment during the three and nine months ended September 30, 2025 are as follows:The AlmadenDuring the three and nine months ended September 30, 2025, the Company recorded non-cash impairment charges of $28.5 million for The Almaden, reflecting a decline in the estimated fair value of the property below its carrying value.  The decrease was primarily attributable to changes in valuation assumptions and softening market conditions in the San Jose central business district.  Key factors contributing to the decline included an increase in the terminal cap and discount rates, lower occupancy levels at the building, increased market leasing costs, and reduced projected revenue due to lower market rents, slower projected rent growth, and reduced lease renewal expectations in the San Jose office market. Towers at EmeryvilleDuring the three and nine months ended September 30, 2025, the Company recorded non-cash impairment charges of $16.3 million for the Towers at Emeryville, reflecting a decline in the estimated fair value of the property below its carrying value.  The decrease was primarily attributable to changes in valuation assumptions and softening market conditions in the East Bay office sector.  Key factors contributing to the decline included an increase in the terminal cap and discount rates, lower occupancy levels at the building, and an increase in general vacancy assumptions within the discounted cash flow model.  The appraisal also reflected lower projected revenue due to reduced effective rents and higher projected vacancy levels, consistent with broader trends in the East Bay office market, where vacancy rates have continued to rise amid slower leasing activity and elevated tenant turnover.60 South SixthDuring the three and nine months ended September 30, 2025, the Company recorded non-cash impairment charges of $20.7 million for 60 South Sixth,