Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 216

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 5
Chunk 216
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 to arrive at the appraised value of the Appraised Properties:

Range in ValuesWeighted-Average BasisTerminal capitalization rate7.25% to 8.75%7.85%Discount rate8.00% to 9.75%9.11%Net operating income compounded annual growth rate (1)(1.28)% to 18.34%5.07%

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(1) The net operating income compounded annual growth rates (the “CAGRs”) reflect both the contractual and market rents and reimbursements (in cases where the contractual lease period is less than the valuation period of the property) net of expenses over the valuation period for each of the properties.  The range of CAGRs shown is the constant annual rate at which the net operating income is projected to grow to reach the net operating income in the final year of the hold period for each of the properties and can be significantly impacted by current occupancy at the properties.  For appraised properties over 90% occupied, the CAGR range is (1.28)% to 4.15% with a weighted average CAGR of 2.74%.  

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While we believe that Kroll’s assumptions and inputs are reasonable, a change in these assumptions and inputs would significantly impact the appraised value of the Appraised Properties and thus, our estimated value per share.  The table below illustrates the impact on our estimated value per share if the terminal capitalization rates or discount rates Kroll used to appraise the Appraised Properties were adjusted by 25 basis points, assuming all other factors remain unchanged.  Additionally, the table below illustrates the impact on our estimated value per share if these terminal capitalization rates or discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:

Increase (Decrease) on the Estimated Value per Share due toDecrease of 25 basis pointsIncrease of 25 basis pointsDecrease of 5%Increase of 5%Terminal capitalization rate$0.27 $(0.26)$0.41 $(0.38)Discount rate0.26 (0.26)0.47 (0.46)

Finally, a 1% increase in the appraised value of the Appraised Properties would result in a $0.13 increase in our estimated value per share and a 1% decrease in the appraised value of the Appraised Properties would result in a decrease of $0.14 to our estimated