Kbs Real Estate Invt Tr Iii Inc. · OTC:KBSR
Kbs Real Estate Invt Tr Iii — KBS Real Estate Investment Trust III — Corporate Update (December 2023)
34 slides from Kbs Real Estate Invt Tr Iii's corporate update, Dec 15, 2023
Slide 1: December 15, 2023 Portfolio Update
December 15, 2023 Portfolio Update 60 South Sixth Minneapolis, MN Exhibit 99.1
Slide 2: Important Disclosures
KBS.COM The information contained herein should be read in conjunction with, and is qualified by, the information in KBS Real Estate Investment Trust III, Inc.’s (the “Company”, “KBS REIT III”, ”we” or “our”) Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”), and
Slide 3: Important Disclosures (cont.)
KBS.COM Important Disclosures (cont.) Upcoming and recent tenant lease expirations and leasing challenges in certain markets amidst the aforementioned headwinds coupled with slower than expected return-to-office, most notably in the San Francisco Bay Area where the Company owns several assets, have
Slide 4: Executives Presenting
KBS.COM Executives Presenting 4 Marc DeLuca KBS Capital Advisors Jeff Waldvogel KBS Capital Advisors Gio Cordoves KBS Capital Advisors Michael Zapata KBS Capital Markets Group Chief Executive Officer and Regional President, Eastern U.S. Chairman of the Board and Director KBS REIT III Chief Financial
Slide 5: Real Estate Update
Real Estate Update 5 Accenture Tower Chicago, IL
Slide 6: Office Rental Rates Continue Upward Trajectory
KBS.COM f 6 Office Rental Rates Continue Upward Trajectory Asking rents continue to grow as higher-quality new space is added to the market, reaching $39.50 per SF in Q3, a 0.5% increase quarter-over-quarter. - JLL U.S. Office Outlook Q3 2023, October 17, 2023 Interest Rates The U.S. economy has pro
Slide 7: KBS REIT III Leasing Trends
KBS.COM 7 KBS REIT III Leasing Trends In light of persistent concerns for U.S. office space, KBS REIT III’s portfolio exhibited notable resilience amid the pandemic and uncertainties in the office sector. Nevertheless, assets in key markets, such as the San Francisco Bay Area, continue to see substa
Slide 8: Portfolio occupancy by property
KBS.COM 8 Despite the volatility in real estate valuations over the past year due to various macroeconomic factors, the portfolio has exhibited resilience, maintaining stability in both economic and leased occupancy rates. However, the commercial real estate office sector faces significant challenge
Slide 9: San Francisco Bay Area
KBS.COM San Francisco Bay Area ▪ The Bay Area markets are facing severe leasing challenges due to the slower-than- expected return-to-office and ongoing crime and homelessness. This has led to a reduction in office footprints as tech companies have been scaling down their occupancy. ▪ The significan
Slide 10: Minneapolis, MN
KBS.COM 10 Minneapolis, MN Downtown Minneapolis has struggled considerably due to a lack of return-to-office by the many large employers (Target HQ, US Bank HQ, Thrivent HQ, numerous large law firms, Ameriprise HQ, Wells Fargo’s sizable presence, etc.) that occupy a majority of the central business
Slide 11: Sterling Plaza, Dallas, TX
KBS.COM 11 Sterling Plaza, Dallas, TX The asset recently completed a multimillion-dollar amenity expansion project, which included the addition of a tenant lounge, conference center, breakout areas, and the expansion and renovation of the fitness center. This upgrade has led to a significant improve
Slide 12: Accenture Tower, Chicago, IL
KBS.COM 12 Accenture Tower, Chicago, IL In light of the soaring vacancy rates in Chicago since the beginning of the pandemic, some employers are capitalizing on this situation by enhancing their existing office spaces to create top-notch working environments with excellent amenities, particularly in
Slide 13: Leasing Activity Year to Date
KBS.COM Leasing Activity Year to Date1 9/30/2023 13 . 1 Excludes leases with terms less than 12 months. 2 Weighted Average Lease Expiry is measured by leases in years and is weighted based on the tenant’s leased area 2 Property2 Property RSF New/Expansion/Renewal SF Wale2 (Years) % of Asset New/Expa
Slide 14: Investment in PRIME US REIT (SREIT)
KBS.COM Investment in PRIME US REIT (SREIT) 14 Units Owned Percentage Interest Owned Current Value at closing on 9/30/2023 215,841,899 18.2% $29.8 million Our remaining investment in stock in the SREIT has been significantly impacted by the market sentiment for stock with significant investment in c
Slide 15: Debt and Swap Update
Preston Commons Dallas, TX 15 Debt and Swap Update
Slide 16: Debt Market Update
KBS.COM Debt Market Update 16 The Federal Reserve indicated in late November that the rate increases may likely be high enough to bring inflation back to the 2% target. Rates have been raised 11 times in the past year and a half to approximately 5.4%, the highest level in 22 years. Any additional hi
Slide 17: Upcoming Loan Maturities and Status
KBS.COM Upcoming Loan Maturities and Status 17 KBS REIT III has a significant number of loan maturities in the next 12 months, though several of them have extension options. However, with those extension options there are various debt service coverage ratio and loan to value tests that determine the
Slide 18: Debt Maturities
KBS.COM $606,288 $178,376 $653,395 $213,800 $65,000 $0 $200,000 $400,000 $600,000 $800,000 Initial Debt Maturities1 1 Debt maturities as of November 30, 2023 and debt balances as of September 30, 2023. Extensions available upon meeting certain conditions set forth in the loan agreements for certain
Slide 19: Interest Rate Swaps and Hedging
KBS.COM 19 Throughout this current rising interest rate environment, we have been active in strategically entering into additional swaps (at points in time when rates dip and with the assumption that rates would ultimately stay higher for longer) in order to extend the amount of term of our swap pos
Slide 20: Interest Rate Exposure
KBS.COM 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% Ju n- 20 Se p -2 0 D ec -2 0 M ar -2 1 Ju n- 21 Se p -2 1 D ec -2 1 M ar -2 2 Ju n- 22 Se p -2 2 D ec -2 2 M ar -2 3 Ju n- 23 Se p -2 3 D ec -2 3 M ar -2 4 Ju n- 24 Se p -2 4 D ec -2 4 M ar -2 5 Ju n- 25 Se p -2 5 D ec -2 5 LIBOR/SOFR vs KBS REIT III
Slide 21: December 2023 Estimated Value per Share
21 December 2023 Estimated Value per Share Accenture Tower Chicago, IL
Slide 22: Valuation Information
KBS.COM Valuation Information1 1 For additional information, see the Valuation 8-K. ▪ KBS REIT III’s estimated value per share was determined in accordance with the Institute for Portfolio Alternatives’ Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs. ▪ Kroll, an indep
Slide 23: Valuation Summary
KBS.COM Valuation Summary 1 Based on the estimated value of KBS REIT III’s assets less the estimated value of KBS REIT III’s liabilities, or net asset value, divided by the number of shares outstanding, all as of September 30, 2023, with the exception of adjustments to KBS REIT III’s net asset value
Slide 24: Valuation Change Summary
KBS.COM Valuation Change Summary On December 12, 2023, KBS REIT III’s Board of Directors approved an estimated value per share of $5.601. The following is a summary of the estimated value per share changes within each asset and liability group. 1 Based on the estimated value of KBS REIT III’s assets
Slide 25: Stockholder Valuation Information
KBS.COM • a stockholder would be able to resell his or her shares at KBS REIT III’s estimated value per share; • a stockholder would ultimately realize distributions per share equal to KBS REIT III’s estimated value per share upon liquidation of KBS REIT III’s assets and settlement of its liabilitie
Slide 26: Stockholder Valuation Information (cont.)
KBS.COM 26 Stockholder Valuation Information (cont.) • As discussed, KBS REIT III has $1.7 billion of loan maturities in the next 12 months. • Considering the current commercial real estate lending environment, this raises substantial doubt as to KBS REIT III’s ability to continue as a going concern
Slide 27: Valuation Change Summary by Region
KBS.COM 27 Valuation Change Summary (December 2023 vs. September 2022)[1] West Central East West Region Valuation Change in Value $681,100,000 -24.2% Avg. Change in Discount Rate Avg. Change in Terminal Cap 130 bps 100 bps Central Region Valuation Change in Value $1,237,900,000 -7.2% Avg. Change in
Slide 28: The total value would change to $11.68 and $9.64 for a first and last
KBS.COM 1 The total value would change to $11.68 and $9.64 for a first and last investor, respectively, who fully participated in KBS REIT III’s dividend reinvestment plan for the life of the investment and did not make any redemptions. 2 Total value equals the December 2023 estimated value per shar
Slide 29: Liquidity Update
Park Place Village Leawood, KS 29 Liquidity Update
Slide 30: Share Redemption Plan and Ongoing Distributions
KBS.COM Share Redemption Plan and Ongoing Distributions 30 Prior to the most recent real estate downturn and credit crunch that occurred subsequent to the COVID-19 pandemic and the aggressive interest rate hiking cycle by the federal reserve, we have always been focused on providing liquidity to sha
Slide 31: Future Strategy
Future Strategy 31 515 Congress Austin, TX
Slide 32: Future Strategy
KBS.COM 32 Future Strategy In the current market environment with valuations of any kind at a significant discount, a strategic transaction involving a portfolio that is nearly 100% office is very difficult if not impossible to achieve. KBS REIT III’s conflicts committee and our board of directors b
Slide 33: KBS REIT III 2024 Goals & Objectives
KBS.COM KBS REIT III 2024 Goals & Objectives 33 Manage liquidity to continue enhancing asset values Extend and refinance certain maturing loans in the portfolio Efficiently manage the real estate portfolio through the economic downturn in order to maximize the long-term portfolio value Continue to m
Slide 34: Investor/Advisor Relations contact
34 For questions, please contact Investor/Advisor Relations toll free at: (866) 527-4264
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