Company: KBSR
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001482430-25-000021
Chunk: 141

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-03-14
Form: 10-K
Item: Item 1A
Chunk 141
---
 property, then we will need to fund such payments from other sources.  In addition, incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions.  In that case, we could lose the property securing the loan that is in default, reducing the value of our stockholders’ investment in us.  For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage.  If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though we would not necessarily receive any cash proceeds.  We have given and may give partial guarantees to lenders of mortgage or other debt on behalf of the entities that own our properties.  When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of all or a part of the debt or other amounts related to the debt if it is not paid by such entity.  

In addition, the loan documents for indebtedness may include various coverage ratios, the continued compliance with which may not be completely within our control.  If such coverage ratios are not met, the lenders under such indebtedness may declare any unfunded commitments to be terminated and declare any amounts outstanding to be due and payable.  Moreover, our loan agreements contain cross default provisions, including that the failure of one or more of our subsidiaries to pay debt as it matures under one debt facility may trigger the acceleration of our indebtedness under other debt facilities.  

Many of these same issues also apply to credit facilities which are expected to be in place at various times as well.  Credit facilities may be secured by our properties or unsecured.  If we have insufficient income to service our recourse debt obligations, our lenders could institute proceedings against us to foreclose upon our assets.  If a lender successfully forecloses upon any of our assets, our stockholders could lose all or part of their investment in us.  

We may not be able to access financing sources on attractive terms, which could adversely affect our ability to execute our business plan.  

We may finance our assets over the long-term through a variety of means, including credit facilities and other structured financings.  Our ability to execute this strategy will depend on various conditions in the markets for financing in this manner that are beyond our control, including lack