KBS Real Estate Investment Trust III Reports Revenue Decline and Net Loss for Fiscal Year 2024

KBS Real Estate Investment Trust III, Inc. reported a decrease in revenue for the fiscal year ending December 31, 2024, with total rental income falling to $258.5 million from $270.2 million in 2023, a decline of approximately 4%. This drop was attributed primarily to the sale of properties and lease expirations. Additionally, dividend income from real estate equity securities plummeted by 92% to $967,000, reflecting a significant reduction in the dividend rate declared by the Singapore Real Estate Investment Trust (SREIT) in which KBS holds a substantial investment. The company also recorded a net loss attributable to common stockholders of $10.9 million, compared to a loss of $157.5 million in the previous year.

The company has faced significant operational challenges, particularly in the U.S. commercial real estate market, which has been adversely affected by elevated interest rates and persistent inflation. As of March 14, 2025, KBS had total debt obligations of $1.5 billion, with a weighted average remaining term of 1.5 years. The company has been actively restructuring its debt, having refinanced or extended $1.3 billion in maturing obligations since February 2024. However, it faces substantial upcoming principal paydowns and loan maturities, with $467 million due within the next 12 months. The company’s loan agreements require the sale of several properties over the next few years, which may result in lower sale prices due to current market conditions.

KBS's real estate portfolio, as of December 31, 2024, consisted of 13 office properties and one mixed-use office/retail property, totaling approximately 6.4 million rentable square feet, with an occupancy rate of 81%. The company has been monitoring its portfolio closely, particularly in light of tenant lease expirations and the slow return to office work, especially in markets like the San Francisco Bay Area. The ongoing challenges have led to a decrease in property appraisal values, impacting the company's ability to access credit facilities and maintain cash flow.

Looking ahead, KBS has expressed uncertainty regarding its ability to continue as a going concern, primarily due to the challenging commercial real estate lending environment and the lack of transaction volume in the U.S. office market. The company has suspended its dividend payments since June 2023 and terminated its share redemption program in March 2024, indicating a focus on liquidity management. KBS plans to evaluate raising capital through new equity or debt issuance as market conditions improve, but there is no assurance that it will be able to meet its financial obligations or resume distributions to stockholders in the near future.