Company: KBSR
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001482430-25-000036
Chunk: 124

Company: KBS Real Estate Investment Trust III, Inc.
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 8
Chunk 124
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 quarter reporting period.Additionally, the Carillon Third Modification Agreement provides that a default will occur under the Carillon Mortgage Loan if a written demand for payment following a default is delivered to REIT Properties III and not paid when due under (i) any loan facility under which REIT Properties III is a guarantor or borrower or (ii) any other indebtedness of REIT Properties III where the demand made is greater than $5.0 million and the required Carillon Lenders elect to call a default.

9.       DERIVATIVE INSTRUMENTS

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates.  The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives.  The Company does not enter into derivatives for speculative purposes.  The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable.  The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument.  In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position.  As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero.  As of March 31, 2025, the Company has entered into 12 interest rate swaps, which were not designated as hedging instruments.  The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of March 31, 2025 and December 31, 2024.  The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands): March 31, 2025December 31, 2024 Weighted-Average Fix Pay RateWeighted-Average Remaining Term in YearsDerivative InstrumentsNumber of InstrumentsNotional AmountNumber of InstrumentsNotional AmountReference Rate as of March 31, 2025Derivative instruments not designated as hedging instrumentsInterest rate swaps (1)12$1,000,000 14$1,100,000 One-month Term SOFR/Fixed at