KBS REIT III Gets Weeks-Long Extensions on $455M in Office Loans
KBS Real Estate Investment Trust III Inc. extended two office loans totaling $455.2 million by only weeks, and one lender can now accelerate its loan before maturity.
The nontraded REIT signed both modifications Oct. 30, the company said in a filing with the Securities and Exchange Commission on Nov. 5. The loans, secured by Accenture Tower in Chicago and by 3001 and 3003 Washington Boulevard in Arlington, Va., had both been due Nov. 2.
Under a sixth modification of the Accenture Tower loan, the $317.4 million debt now matures Dec. 17, 2026. KBS REIT III can extend it to Nov. 2, 2027, if it meets conditions set in the agreement and pays a $400,000 extension fee.
The loan’s interest rate rose to the one-month secured overnight financing rate, or SOFR, plus 325 basis points effective Nov. 2, up from SOFR plus 300 basis points set in a December 2024 modification. If KBS REIT III exercises the extension, the spread drops back to 300 basis points. The lenders are U.S. Bank, Bank of America, Deutsche Pfandbriefbank, and National Bank of Kuwait. As of Oct. 30, $4.6 million of new funding remained available under the loan, the REIT said.
Accenture Tower is the REIT’s largest asset. The 1.46 million-square-foot building was 88.5% occupied and accounted for 24.7% of the REIT’s total assets as of June 30.
The ninth modification of the $137.8 million mortgage on 3001 and 3003 Washington Boulevard pushes its maturity to Jan. 20, 2027, with no further extension options. The REIT said lender Bank of America may declare a default and accelerate the loan before then if it determines, in its reasonable discretion, that a refinancing is unlikely to be completed by the maturity date on the terms the modification requires. The REIT paid a $100,000 extension fee.
That loan had been extended earlier this year. An April modification set an Aug. 4 maturity with an option to Nov. 2 and repriced the loan at SOFR plus 325 basis points, rising to 350 basis points upon extension. An Aug. 4 letter agreement waived certain conditions to exercising that option and moved the maturity to Nov. 2, which would put the loan at SOFR plus 350 basis points. KBS REIT III did not disclose any change to the loan’s pricing.
KBS REIT III said it is pursuing a refinancing of both loans but that it cannot be certain whether or when those plans will be completed.
The REIT repeated that management’s plans do not alleviate substantial doubt about its ability to continue as a going concern for at least a year from Aug. 13. It said cross-default provisions in its loan agreements mean a default under one facility could trigger defaults under others, that it may relinquish properties to lenders, and that it may seek the protection of the bankruptcy court to implement a restructuring plan. KBS REIT III first issued a going-concern warning in late 2023.
As of Aug. 13, the REIT had $1.2 billion of debt with a weighted-average remaining term of 0.3 years. Its June 30 maturity schedule showed $918.9 million of principal due in the second half of 2026. The portfolio consisted of 11 office properties totaling about 5.4 million square feet that were 77.0% occupied as of June 30.
In April, the REIT extended its modified portfolio revolving loan facility to Dec. 15, with a conditional option to extend to March 31, 2027, after selling Gateway Tech Center in Salt Lake City for $50 million in March.
The REIT’s board set an estimated value per share of $2.70 as of Dec. 18, 2025, down from $3.89 a year earlier and from $12.02 in December 2018. KBS REIT III has not declared a distribution since June 2023 and terminated its share redemption program in March 2024. It raised $1.7 billion in its primary offering, which ended in 2015. The company said it expects to update its estimated value per share no later than December 2026.
KBS REIT III’s annual stockholder meeting is scheduled for Dec. 17, the same day the Accenture Tower loan now comes due.
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