Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 80

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 80
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 offset by higher interest rate spreads as a result of refinancings subsequent to June 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 gain on derivative instruments of $0.6 million for the three months ended September 30, 2025.  Included in net gain on derivative instruments was realized gain on interest rate swaps of $2.7 million, offset by unrealized loss on interest rate swaps of $2.2 million for the three months ended September 30, 2025.  We recorded net loss on derivative instruments of $14.9 million for the three months ended September 30, 2024.  Included in net loss on derivative instruments was unrealized loss on interest rate swaps of $21.2 million, offset by realized gain on interest rate swaps of $6.3 million for the three months ended September 30, 2024.  The change in net (gain) loss 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.  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 interest rate swaps to move towards zero, decreasing the net gains or losses on derivative instruments.

During the three months ended September 30, 2025, we 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 our real estate held for investment during the three months