KBS REIT III Extends Loan Maturity Amid Financial Strain
On April 2, 2026, KBS REIT III reportedly entered into a fifth modification of its primary revolving loan facility, extending the initial maturity date to December 15, 2026, with a potential extension to March 31, 2027 if certain conditions are met, according to the Alt Wire.
This modification came after the REIT sold the Salt Lake Hardware Building (formerly Gateway Tech Center) for $50 million, generating approximately $48.1 million in net proceeds.
The REIT used those proceeds to:
- Pay down $47.5 million in outstanding debt
- Allocate $0.6 million to a required cash management account
Following the transaction, the outstanding loan balance stands at approximately $160.4 million.
While the modification provides short-term flexibility—such as eliminating required principal payments during the loan term—it underscores ongoing financial strain. The non-traded REIT also agreed to defer advisory fees owed to its sponsor, KBS Capital Advisors LLC, as part of the restructuring.
“Going Concern” Warning and Bankruptcy Risk
Despite these efforts, KBS REIT III has reportedly stated that substantial doubt remains about its ability to continue as a going concern for at least the next year.
Key concerns include:
- Upcoming loan maturities
- A challenging commercial real estate lending environment
- Broader market instability
The company has also acknowledged that bankruptcy remains a potential restructuring option—a serious red flag for investors.
Notably, this is not new. KBS REIT III first issued a going-concern warning back in 2023, and conditions have continued to deteriorate.
Property Sales at Losses Continue
KBS REIT III has been actively selling assets to raise liquidity—often at a loss.
In September 2025, the REIT sold Park Place Village in Kansas for $100 million, despite purchasing it in 2015 for $126.5 million.
After expenses, net proceeds totaled $95.5 million, which were used to:
- Pay off a $65.2 million mortgage
- Reduce its credit facility by $25.4 million
- Retain remaining funds for liquidity
This follows other dispositions, including Sterling Plaza, as the REIT continues to shrink its portfolio.
Remaining Portfolio and Debt Exposure
After the recent sale of the Salt Lake property, the REIT’s remaining assets securing its loan facility include:
- 515 Congress in Austin, Texas
- 201 17th Street in Atlanta, Georgia
With fewer assets and continued debt obligations, investor risk remains elevated.
Net Asset Value Collapse and Limited Liquidity
KBS REIT III’s performance has significantly declined in recent years:
- NAV dropped to approximately $3.89 per share, down from over $12.00 at its peak
- Shares have traded as low as $1.00 on secondary markets
- Total assets declined from nearly $1.99 billion to $1.78 billion
Additionally, the REIT has:
- Suspended share redemptions
- Reduced investor distributions
- Withdrawn plans to convert to a perpetual NAV REIT
These factors have left many retail investors unable to exit their investment or recover losses.
What Retail Investors Should Know About Non-Traded REIT Risks
KBS REIT III is a non-traded REIT, meaning:
- It is illiquid and not listed on a public exchange
- Investors may face limited or no ability to sell shares
- Valuations (NAV) can decline significantly without a transparent market
Many retail investors were allegedly not fully informed of these risks when the investment was recommended.
KBS REIT III Lawsuit Investigation
The White Law Group is investigating potential FINRA arbitration claims involving KBS REIT III.
Financial advisors and brokerage firms have a duty to recommend investments that are suitable based on an investor’s:
- Risk tolerance
- Financial situation
- Investment objectives
If your advisor failed to properly disclose:
- Illiquidity risks
- Declining asset values
- Concentration risks in commercial real estate
you may be eligible to recover your losses. Learn more about your rights here: Failure to Supervise.
Free Case Evaluation
If you invested in KBS REIT III and experienced losses, contact The White Law Group at 888-637-5510 for a free consultation.
Our firm represents investors nationwide in FINRA arbitration claims and has offices in Chicago, Illinois and Seattle, Washington.
FAQs
1. What is KBS REIT III and why is it risky?
KBS REIT III is a non-traded real estate investment trust that invests primarily in commercial real estate. It can be risky because it is illiquid, meaning investors may not be able to sell their shares, and its value has declined significantly in recent years.
2. Why is KBS REIT III facing financial difficulties?
The REIT has been impacted by declining commercial real estate values, rising interest rates, and debt obligations. It has sold properties at losses, extended loan maturities, and issued a going-concern warning, signaling financial instability.
3. Can I recover losses from KBS REIT III?
Possibly. If your financial advisor recommended KBS REIT III without fully explaining the risks or if the investment was unsuitable for your financial situation, you may be able to recover losses through FINRA arbitration.
