False000152937700015293772021-11-122021-11-12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 12,
2021
ARES COMMERCIAL REAL ESTATE CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Maryland |
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001-35517 |
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45-3148087 |
(State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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245 Park Avenue, |
42nd Floor, |
New York, |
NY |
10167 |
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(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area
code (212) 750-7300
(Former Name or Former Address, if Changed Since Last
Report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions
(see
General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock, $0.01 par value per share |
ACRE |
New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth
company as defined in as defined in Rule 405 of the Securities Act
of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
o
Item 1.01 Entry into a Material Definitive Agreement.
Term Loan Credit Agreement
On November 12, 2021 (the “TL Closing Date”), Ares Commercial Real
Estate Corporation (the “Company”), as borrower, and ACRC Holdings
LLC, ACRC Mezz Holdings LLC and ACRC Warehouse Holdings LLC,
wholly-owned subsidiaries of the Company, as guarantors
(collectively, the “Guarantors”), entered into an Amended &
Restated Credit and Guaranty Agreement (the “A&R Term Loan
Agreement”) with the lenders referred to therein (the “Lenders”)
and Cortland Capital Market Services LLC, as the administrative
agent and collateral agent for the Lenders (the “Collateral
Agent”), which amends and restates the Credit and Guaranty
Agreement entered into on December 9, 2015 (as amended prior to the
date hereof, the “Existing Term Loan Agreement”).
Except as described in this Current Report on Form 8-K, the terms
and conditions of the A&R Term Loan Agreement remain
substantially consistent with the Existing Term Loan Agreement. The
A&R Term Loan Agreement includes a total drawn term loan
commitment of $150,000,000. The term loan was funded net of an
original issue discount amount equal to 0.50% of the drawn term
loan commitment. The A&R Term Loan Agreement also amends the
financial covenants with respect to the Company such that the
minimum asset coverage ratio is 115%, the minimum unencumbered
asset ratio is 125%, the maximum total net leverage ratio is
4.50:1.00, and a minimum interest coverage ratio of 1.10:1.00 was
added.
The A&R Term Loan Agreement has a term of five (5) years from
the TL Closing Date. Pursuant to the A&R Term Loan Agreement,
interest accrues at the following fixed rates: (i) commencing on
the TL Closing Date until the 42-month anniversary of the TL
Closing Date, the fixed rate is 4.500% per annum; (ii) after the
42-month anniversary of the TL Closing Date through the 48-month
anniversary date, the interest rate increases 12.5 basis points
every three months; and (iii) after the 48-month anniversary date
of the TL Closing Date through the 60-month anniversary date, the
interest rate increases 25.0 basis points every three
months.
The A&R Term Loan Agreement is subject to a prepayment premium
for the first 36 months following the TL Closing Date (through
November 12, 2024), which is equal to the greater of (i) 1.00% of
the outstanding principal amount of the term loan; and (ii) the
present value of the amount that the lender would earn if that
portion of the term loan being repaid were invested in U.S.
treasury obligations.
The obligations of the Company under the A&R Term Loan
Agreement continue to be guaranteed by the Guarantors, including
pursuant to a Reaffirmation Agreement with the Collateral Agent
pursuant to which the Company and the Guarantors reaffirmed the
security interests and guarantees, in each case, granted in favor
of the Collateral Agent.
The foregoing descriptions of the A&R Term Loan Agreement and
the Reaffirmation Agreement are only summaries of certain material
provisions of the agreements relating to the term loan and are
qualified in their entirety by reference to copies of such
agreements, which are filed herewith as Exhibits 10.1 and 10.2,
respectively, and by this reference incorporated
herein.
CNB Facility
On November 12, 2021 (the “CNB Facility Closing Date”), ACRC Lender
LLC (“ACRC Lender”), a subsidiary of the Company, entered into an
amendment to its secured revolving credit facility (the “CNB
Facility”) with City National Bank.
The purpose of the amendment to the CNB Facility was to, among
other things: (1) increase the commitment amount from $50.0 million
to $75.0 million and (2) amend the financial covenants with respect
to the Company, as guarantor, to delete the financial covenant
regarding recourse debt to tangible net worth and to set the
maximum debt to tangible net worth ratio to 4.50 to 1.00.
In connection with the increased commitment, the $25.0 million
accordion feature was also removed. Under the CNB Facility, ACRC
Lender may request advances as SOFR loans or base rate
loans.
The interest rate on advances after the CNB Facility Closing Date
will accrue at a per annum rate equal to (a) with respect to SOFR
loans, Daily Simple SOFR (with a 0.35% floor) plus 2.65% and (b)
with respect to base rate loans, the greater of (i) a base rate
(which is the highest of a prime rate, the federal funds rate plus
0.50%, or Daily Simple SOFR plus 1.00%) plus 1.00% and (ii)
2.65%.
The foregoing description of the CNB Facility is only a summary of
certain material provisions of the amendment to the CNB Facility
and is qualified in its entirety by reference to a copy of such
agreement, which is filed herewith as Exhibit 10.3, and by this
reference incorporated herein.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information required by Item 2.03 contained in Item 1.01 of
this Current Report on Form 8-K is incorporated herein by
reference.
Item 7.01. Regulation FD Disclosure.
On November 15, 2021, the Company issued a press release announcing
the entry into the A&R Term Loan Agreement and the amendment to
the CNB Facility. A copy of the press release is furnished herewith
as Exhibit 99.1 and by this reference incorporated
herein.
The information disclosed under this Item 7.01, including Exhibit
99.1 hereto, is being furnished and shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934 (the
“Exchange Act”), and shall not be deemed incorporated by reference
into any filing made under the Securities Act of 1933 or the
Exchange Act, except as expressly set forth by specific reference
in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits:
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Exhibit Number |
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Description |
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Amended and Restated Credit and Guaranty Agreement, dated as of
November 12, 2021, by and among, Wilmington Trust, National
Association, as grantor trust trustee, as lender, Cortland Capital
Market Services LLC, as the administrative agent and the collateral
agent for the lenders, and Ares Commercial Real Estate Corporation,
as borrower, and ACRC Holdings LLC, ACRC Mezz Holdings LLC and ACRC
Warehouse Holdings LLC, as guarantors.
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Reaffirmation Agreement, dated as of November 12, 2021, by and
among, Cortland Capital Market Services LLC, as the collateral
agent for the lenders, and Ares Commercial Real Estate Corporation,
as borrower, ACRC Holdings LLC, ACRC Mezz Holdings LLC and ACRC
Warehouse Holdings LLC, as guarantors.
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Amendment Number Eight to Credit Agreement and Amendment to General
Continuing Guaranty, dated as of November 12, 2021, by and among
ACRC Lender LLC, as borrower, City National Bank, a national
banking association, as arranger and administrative agent, the
lenders party thereto, and Ares Commercial Real Estate Corporation,
as guarantor.
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Press Release, dated November 15, 2021 |
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104 |
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Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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ARES COMMERCIAL REAL ESTATE CORPORATION |
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Date: |
November 15, 2021 |
By: |
/s/ Anton Feingold |
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Name: |
Anton Feingold |
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Title: |
General Counsel, Vice President and Secretary |
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