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Item 1.01
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Entry into a Material Definitive Agreement.
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The information set forth in Item 2.03 below is incorporated by reference into this Item 1.01.
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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
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On March 17, 2021, INDUS Realty Trust, LLC, (“IRT”) a wholly owned subsidiary of INDUS Realty Trust, Inc. (“INDUS” or the “Registrant”) entered into the fourth amendment (the “Revolving Credit Line Amendment”) to the Revolving Line of Credit Loan Agreement (as amended, the “Amended Webster Credit Line”) with Webster Bank, N.A. (“Webster Bank”). The Revolving Credit Line Amendment increases the amount of the Amended Webster Credit Line from $19.5 million to $35.0 million (the “Credit Amount”), while adding 160 International Drive and 180 International Drive, industrial/logistics buildings aggregating approximately 283,000 square feet in the Charlotte, North Carolina area (“160 and 180 Industrial Drive”), to the collateral for the Amended Webster Credit Line. In addition to 160 and 180 International Drive, the collateral for the Amended Webster Credit Line will consist of eight office/flex buildings aggregating approximately 224,000 square feet and two industrial/logistics buildings aggregating approximately 50,000 square feet in Connecticut and an approximately 68,000 square foot industrial/logistics building in Orlando, Florida (collectively, the “Collateral Property”). Along with the Company’s separate $15.0 million credit line for acquisitions, total borrowing capacity under credit lines with Webster Bank was increased to $50.0 million as a result of the Revolving Credit Line Amendment. The Revolving Credit Line Amendment amends the Amended Webster Credit Line interest rate to include a provision that the one month LIBOR rate cannot be less than zero.
Under the terms of the Revolving Credit Line Amendment, the Collateral Property must have net operating income (as defined) equal to or greater than 125% of the interest due on the Credit Amount (the “Minimum Net Operating Income”), calculated as if the Credit Amount were fully advanced, subject to certain adjustments, and IRT must maintain a maximum ratio of the Credit Amount to the appraised value of the Collateral Property of not more than: (i) 70%, until the Third Extended Maturity Date (as defined in the Revolving Credit Line Amendment); and (ii) 65%, during the Fourth Extended Term (as defined in the Revolving Credit Line Amendment).
In addition, INDUS must maintain: (a) a minimum total stockholders equity of $80.0 million; (b) a minimum liquidity (as defined in the Revolving Credit Line Amendment) of $5.0 million; (c) a ratio of total debt to the total fair value of its assets not to exceed 50%: and (d) a fixed charge coverage ratio, defined as EBITDA minus cash income taxes and dividends paid, divided by debt service of at least 1.1 to 1.0.
The Amended Webster Credit Line, which expires on September 30, 2021, may be extended by IRT for an additional year through September 30, 2022, provided that the Minimum Net Operating Income covenant is satisfied, based upon an assumption that the maximum Credit Amount is paid at an assumed 5% interest rate over an assumed 30 year amortization period.
Upon execution of the Revolving Credit Line Amendment, IRT was required to pay a fee in the amount of $77,500 and, on October 1st of each year thereafter, a fee equal to 0.125% of the average undrawn portion of the Credit Amount, as further described under the terms of the Revolving Credit Line Amendment.