KBS Real Estate Investment Trust III Inc.
02/02/2026 | Press release | Distributed by Public on 02/02/2026 13:52
Material Agreement, Financial Obligation (Form 8-K)
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The information in this Report set forth under Item 2.03 regarding the Modified Portfolio Revolving Loan Facility (defined below) is incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
Modified Portfolio Revolving Loan Facility
On October 17, 2018, certain of KBS Real Estate Investment Trust III, Inc.'s ("KBS REIT III") indirect wholly owned subsidiaries (the "Borrowers") entered into a loan facility (as subsequently modified and amended, the "Modified Portfolio Revolving Loan Facility") with U.S. Bank National Association, as administrative agent (the "Agent").1The current lenders under the Modified Portfolio Revolving Loan Facility are U.S. Bank National Association, Regions Bank, Citizens Bank, City National Bank and Associated Bank, National Association (the "Lenders").
The Modified Portfolio Revolving Loan Facility is secured by 515 Congress, Gateway Tech Center and 201 17th Street (the "Properties").
As of January 27, 2026, the outstanding principal balance of the Modified Portfolio Revolving Loan Facility was $205.5 million, and $3.3 million of the holdbacks on the Modified Portfolio Revolving Loan Facility are available for future disbursement, subject to certain terms and conditions contained in the loan documents. Prior to the Fourth Modification Agreement (defined below), the Modified Portfolio Revolving Loan Facility had a maturity date of March 1, 2026.
On January 27, 2026, KBS REIT III, through the Borrowers, entered into a fourth modification agreement (the "Fourth Modification Agreement") with the Agent and the Lenders to extend the maturity date of the Modified Portfolio Revolving Loan Facility to March 25, 2026 (the "Extended Maturity Date"), subject to the satisfaction of certain terms and conditions contained in the Fourth Modification Agreement, some of which conditions are not in the sole control of KBS REIT III, including KBS REIT III's taking identified actions relating to its portfolio. The failure of KBS REIT III to satisfy certain of these conditions will result in the Extended Maturity Date not being available and the maturity date of March 1, 2026 being reinstated. The Fourth Modification Agreement further provides that subject to the satisfaction of certain terms and conditions contained in the Fourth Modification Agreement, some of which conditions are not in the sole control of KBS REIT III, the maturity date of the loan may be further extended up to, but no later than, April 15, 2026. Notwithstanding the foregoing, the Fourth Modification Agreement provides that at any time following March 1, 2026, an immediate event of default will result under the Modified Portfolio Revolving Loan Facility two business days following the failure of KBS REIT III to meet certain conditions of the Fourth Modification Agreement.
Additionally, pursuant to the Fourth Modification Agreement, KBS REIT III agreed (i) to limit the amount of asset management fees that may be paid by KBS REIT III to KBS Capital Advisors LLC, KBS REIT III's external advisor (the "Advisor"), to 90% of the asset management fees associated with the Properties (with the remaining 10% of the asset management fees associated with the Properties being deferred until the obligations under the Modified Portfolio Revolving Loan Facility have been paid in full) and (ii) that KBS REIT III will not pay any disposition fees to the Advisor related to the Properties without the consent of the required lenders, except, provided no event of default has occurred and is continuing under the Modified Portfolio Revolving Loan Facility, payment of disposition fees in an amount not to exceed 0.65% of the contract sales price of the Properties (with any remaining disposition fees payable to the Advisor related to the Properties being deferred until the obligations under the Modified Portfolio Revolving Loan Facility have been paid in full). The Advisor had previously agreed to reduce and defer certain asset management fees and disposition fees with respect to the Properties in connection with the modification of another of KBS REIT III's debt facilities.
The Borrowers agreed to pay certain costs, fees and expenses of the Agent and Lenders in connection with the Fourth Modification Agreement. KBS REIT III continues to work with the Agent to reach a longer-term extension of the Modified Portfolio Revolving Loan Facility, though there can be no assurance as to the certainty or timing of a longer-term extension.
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1 For more information on the Modified Portfolio Revolving Loan Facility, see KBS REIT III's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 14, 2025.
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