Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 245

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 2
Chunk 245
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 to $74.8 million for the nine months ended September 30, 2025, primarily due to the sales of real properties in November 2024, July 2025 and September 2025 and a decrease in depreciation and amortization due to lease expirations at a property held throughout both periods.  We expect depreciation and amortization to decrease in future periods to the extent we dispose of properties, decrease for the properties that we recognized non-cash impairment charges during the nine months ended September 30, 2025 which reduced those properties’ depreciable book value and decrease due to fully amortized tenant origination and absorption costs, offset by an increase as a result of additional capital improvements. 

Interest expense decreased from $97.7 million for the nine months ended September 30, 2024 to $88.0 million for the nine months ended September 30, 2025.  Included in interest expense was (i) $89.9 million and $78.8 million of interest expense payments for the nine months ended September 30, 2024 and 2025, respectively, and (ii) the amortization of deferred financing costs of $7.8 million and $9.2 million for the nine months ended September 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 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.