KBS Real Estate Investment Trust III Inc. extended the maturity of two office loans totaling more than $455M over the next two months in hopes of landing refinancing.
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The California-based nontraded REIT signed the modifications to extend the loans tied to office buildings in Chicago and Arlington, Virginia, to December and January.
If the REIT isn't able to repay the debt, it might give either property back to the mortgage lender or seek protection under bankruptcy court to restructure, it said in a Thursday filing with the Securities and Exchange Commission.
The company cited upcoming loan maturities and challenging environments in the commercial real estate lending and office market transaction space as concerns.
"Management’s plans may not be considered probable and thus do not alleviate substantial doubt about KBS REIT III’s ability to continue as a going concern for at least a year from August 13, 2026," KBS REIT said in the filing, signed by Chief Financial Officer, Treasurer and Secretary Jeffrey Waldvogel.
KBS REIT is pursuing refinancing for the assets, the Accenture Tower in Chicago and two office buildings at 3001 and 3003 Washington Blvd. in Arlington, Virginia, but "there can be no assurance as to the certainty or timing of KBS REIT III's plans," it said in the filing.
The REIT last modified the $317.4M debt on the 1.5M SF Accenture Tower with two loan packages that increased the loan commitment from $306M to $322M in February 2025 and extended its terms to November of this year.
The recent modification delayed its maturity by weeks to Dec. 17 and provides an option to extend again through November of next year. To do so, the REIT would have to pay an extension fee of $400K and meet certain conditions set within the agreement.
The lenders on the loan are U.S. Bank, National Association, Bank of America, Deutsche Pfandbriefbank and National Bank of Kuwait, according to the filing.
The maturity for the $137.8M mortgage tied to the Arlington offices at 3001 and 3003 Washington Blvd. was pushed to Jan. 20. With no option to extend, the lender, Bank of America, can declare default and accelerate its maturity if it determines refinancing is implausible, according to the filing.
The modification on the loan marks the REIT's ninth and comes after attempting to sell the buildings earlier this year.
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