Company: KBSR
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001482430-25-000054
Chunk: 65

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 65
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 value of The Almaden to its estimated fair value as of September 30, 2025, The Almaden is currently valued at $110.7 million, which is less than the outstanding mortgage debt of $117.3 million that has a maturity of February 1, 2026.  We are currently in discussions with the mortgage lender with regards to this asset and the upcoming loan maturity.  For information on non-cash impairment charges during the three and nine months ended September 30, 2025, see “—Results of Operations.” 

As a result of certain upcoming loan maturities and required principal paydowns, the challenging commercial real estate lending environment and the lack of transaction volume in the U.S. office market as well as general market instability, management’s plans may not be considered probable and thus do not alleviate substantial doubt about our ability to continue as a going concern for at least a year from the date of the issuance of our financial statements.

In addition, as of November 14, 2025, six of our debt facilities (representing $1.3 billion of our outstanding debt that are secured by 12 of our properties) are subject to cash sweep arrangements, whereby each month the excess cash flow from the properties securing the loan is deposited into a cash management account held for the benefit of our lenders.  Generally, excess cash flow means an amount equal to (a) gross revenues from the properties securing the facility less (b) an amount equal to principal and interest paid with respect to the associated debt facility, operating expenses of the properties securing the facility and in certain cases a limited amount of REIT-level expenses.  In certain cases, we may request disbursements from the cash management accounts to fund capital or operating shortfalls at the underlying assets.  However, such cash management accounts place limits on our access to cash flows from these properties and decrease our operating flexibility. 

As a result of the current interest rate environment, the recent extensions and refinancings of certain of our loans have also reduced our available liquidity due to increased interest rate spreads.  Additionally, we have entered into various interest rate swap agreements that are currently below market and as those swaps expire, our interest expense will increase and further impact our liquidity position and ongoing cash flows.

We expect that our debt financing and other liabilities will be between 45% and 65% of the cost of our tangible assets (before deducting depreciation and other non-cash reserves).  There is no limitation on the