Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 197

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 8
Chunk 197
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 was primarily due to less interest expense incurred as a result of loan paydowns in connection with the sales of real properties in February 2024, November 2024, July 2025 and September 2025 and the disposition of an office property and related forgiveness of debt in connection with a deed-in-lieu of foreclosure transaction in January 2024, partially offset by higher interest rate spreads as a result of refinancings subsequent to September 30, 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.  

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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)

We recorded net loss on derivative instruments of $0.3 million for the nine months ended September 30, 2025.  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