KBS Real Estate Investment Trust III, Inc 8-K, filed Dec 13, 2024
KBS Real Estate Investment Trust III, Inc. (KBSR)
8-K
2024-12-13
For: 2024-12-09
View Original
Added on
April 06, 2026
About this 8-K
KBS Real Estate Investment Trust III, Inc filed this 8-K on December 13, 2024, reporting on events of December 9, 2024.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
______________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 9, 2024
(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________
| (State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices)
Registrant's telephone number, including area code: (949 ) 417-6500
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| None | N/A | N/A | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The information in this Report set forth under Item 2.03 regarding the Accenture Tower Revolving Loan (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
Accenture Tower Revolving Loan
On November 2, 2020, KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”), through an indirect wholly owned subsidiary (the “Accenture Tower Borrower”), entered into a loan facility with U.S. Bank, National Association, as administrative agent (the “Agent”), joint lead arranger and co-book runner; Bank of America, N.A., as syndication agent, joint lead arranger and co-book runner; and each of the financial institutions signatory thereto as lenders (as amended and modified, the “Accenture Tower Revolving Loan”). The current lenders under the Accenture Tower Revolving Loan are U.S. Bank, National Association, Bank of America, N.A., Deutsche Pfandbriefbank AG and the National Bank of Kuwait S.A.K.P. Grand Caymans Branch (the “Accenture Tower Lenders”). The Accenture Tower Revolving Loan is secured by Accenture Tower.
As previously disclosed, on November 1, 2024, KBS REIT III, through the Accenture Tower Borrower, entered into a third modification agreement with the Accenture Tower Lenders (the “Third Modification Agreement”). Pursuant to the terms of the Third Modification Agreement, the maturity date of the Accenture Tower Revolving Loan was extended to December 10, 2024 and any prior right of the Accenture Tower Borrower to exercise an additional 12-month extension option was removed.
On December 9, 2024, KBS REIT III, through the Accenture Tower Borrower, entered into an extension agreement with the Accenture Tower Lenders (the “First Extension Agreement”) to extend the maturity date of the Accenture Tower Revolving Loan to December 13, 2024, and on December 12, 2024, KBS REIT III, through the Accenture Tower Borrower, entered into a second extension agreement with the Accenture Tower Lenders (the “Second Extension Agreement”, together with the First Extension Agreement, the “Extension Agreements”) to further extend the maturity date of the Accenture Tower Revolving Loan to December 18, 2024. Under the Extension Agreements, the Agent and the Accenture Tower Lenders waived the requirement for KBS REIT Properties III, LLC (“REIT Properties III”), KBS REIT III’s wholly owned subsidiary, as guarantor to satisfy the net worth covenant, the leverage ratio covenant and the EBITDA to fixed charges ratio covenant for all periods following December 9, 2024 through the extended maturity date of December 18, 2024. As of December 12, 2024, the outstanding principal balance of the Accenture Tower Revolving Loan was $306.0 million, which consisted of $229.5 million of term debt and $76.5 million of revolving debt. KBS REIT III continues to work with the Accenture Tower Lenders to reach a longer-term extension of the Accenture Tower Revolving Loan, though there can be no assurance as to the certainty or timing of KBS REIT III’s plans.
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Forward-Looking Statements
Certain statements included in this Current Report on Form 8-K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of KBS REIT III and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. These include statements about KBS REIT III’s plans, strategies and prospects, including its ability to comply with any terms, conditions, obligations or covenants contained in any agreements related to debt obligations. These statements are subject to known and unknown risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and KBS REIT III undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth below, as being heightened as a result of the continued disruptions in the financial markets impacting the U.S. commercial real estate industry, especially as it pertains to commercial office buildings. All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of KBS REIT III’s Annual Report on Form 10-K for the year ended December 31, 2023 and in Part II, Item 1A of KBS REIT III’s Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission.
As a result of KBS REIT III’s upcoming loan maturities, the challenging commercial real estate lending environment, the current interest rate environment, leasing challenges in certain markets where KBS REIT III owns properties and the lack of transaction volume in the U.S. office market as well as general market instability, there is substantial doubt as to KBS REIT III’s ability to continue as a going concern for at least a year from November 14, 2024. There is no assurance that KBS REIT III will be able to satisfy, extend or refinance any maturing loans. KBS REIT III may also be adversely affected if it is unable to satisfy certain covenants or other terms and conditions contained in its loan agreements. Certain of KBS REIT III’s loan agreements require KBS REIT III to satisfy conditions that are not in its sole control, including making required principal paydowns of the loans and KBS REIT III taking identified actions relating to its portfolio. There is no assurance that KBS REIT III will be able to satisfy these terms and conditions or the terms and conditions of any future extension or refinancing agreement that is entered into. If KBS REIT III is unable to refinance or extend maturing loans, make required paydowns under certain loans or satisfy certain covenants and conditions in its loan agreements, the lenders may seek to foreclose on the underlying collateral. Moreover, KBS REIT III’s loan agreements contain cross default provisions, including that certain events of defaults or the failure of one or more of its subsidiaries to pay debt as it matures under one debt facility may trigger the acceleration of KBS REIT III’s indebtedness under other debt facilities. If KBS REIT III is unable to successfully refinance or restructure certain of its debt instruments or unable to meet the conditions of its loan agreements, KBS REIT III may seek the protection of the bankruptcy court to implement a restructuring plan, which would constitute an event of default under the indebtedness of its subsidiaries.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KBS REAL ESTATE INVESTMENT TRUST III, INC. | ||||||||||||||
| Dated: December 13, 2024 | BY: | /s/ Jeffrey K. Waldvogel | ||||||||||||
| Jeffrey K. Waldvogel | ||||||||||||||
| Chief Financial Officer, Treasurer and Secretary | ||||||||||||||