KBS Real Estate Investment Trust III Reports Decline in Revenue and Net Loss for Q2 2025

KBS Real Estate Investment Trust III, Inc. reported a decline in financial performance for the second quarter of 2025, with total revenues of $65.4 million, down from $69.4 million in the same period last year. Rental income specifically decreased by 6% to $60.9 million, attributed primarily to the sale of properties in the previous fiscal year. The company also recorded a net loss of $22.4 million for the quarter, compared to a loss of $28.6 million in the prior year. For the first half of 2025, total revenues were $129.8 million, down from $139.6 million in 2024, with a net loss of $55.7 million compared to a net income of $9 million in the same period last year.

The company's balance sheet as of June 30, 2025, showed total assets of $1.78 billion, a decrease from $1.82 billion at the end of 2024. Notably, total stockholders' equity fell to $200.8 million from $256.6 million, reflecting a cumulative distribution in excess of net income. The company’s liabilities increased slightly to $1.58 billion, primarily due to an increase in notes payable, which rose to $1.37 billion from $1.35 billion at the end of 2024. The company continues to face challenges in the commercial real estate market, particularly in the office sector, which has been impacted by rising interest rates and reduced demand.

Operationally, KBS REIT III owned 13 office properties and one mixed-use property as of June 30, 2025, with an overall occupancy rate of 79.3%. The company reported approximately 400 tenants across its portfolio, with no single tenant accounting for more than 10% of annualized base rent. The company has also classified one property as held for sale, which was subsequently sold on July 11, 2025, for $126.5 million, with net proceeds used to pay down debt.

Looking ahead, KBS REIT III faces significant liquidity challenges, with $556.5 million in notes payable maturing within the next 12 months. The company has indicated that it may need to sell additional assets to manage its liquidity needs, particularly in a challenging real estate market. Management has expressed uncertainty regarding its ability to meet upcoming debt obligations and has not declared any dividends since June 2023. The company is also evaluating options for raising capital through new equity or debt issuance, although it acknowledges that market conditions may limit its ability to do so effectively.