Current Report Filing (8-k)
November 07 2018 - 8:32AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 2, 2018
COLONY CREDIT REAL ESTATE, INC.
(Exact name of registrant as specified in its charter)
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Maryland
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001-38377
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38-4046290
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(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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515 S. Flower Street, 44th Floor
Los Angeles, CA
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90071
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code: (310)
282-8820
Not Applicable
(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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☐
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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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☐
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Pre-commencement
communications pursuant to Rule
13e-4(c)
under the Exchange Act (17 CFR
240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company 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).
Emerging growth company ☒
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. ☐
Item 1.01.
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Entry into a Material Definitive Agreement.
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On November 2, 2018, CLNC Credit 8, LLC (Seller), an indirect subsidiary of Colony Credit Real Estate, Inc. (CLNC), entered into a
Master Repurchase and Securities Contract (the Repurchase Agreement) with Wells Fargo Bank, National Association (Wells). The Repurchase Agreement provides up to $300.0 million to finance first mortgage loans, senior
loan participations and other commercial mortgage loan debt instruments secured by commercial real estate, as described in more detail in the Repurchase Agreement documentation.
Advances under the Repurchase Agreement accrue interest at per annum rates ranging from the
one-month
London Interbank
Offered Rate, plus a spread to be determined on a case by case basis between Seller and Wells. The initial maturity date of the Repurchase Agreement is November 2, 2021, with two
(2) one-year
extensions at Sellers option (any such extension options, an Extension Option), which may be exercised upon the satisfaction of certain conditions set forth in the Repurchase Agreement. The Repurchase Agreement will act as a
revolving credit facility that can be paid down and subsequently
re-drawn
subject to the satisfaction of customary conditions precedent. In addition, Wells may stop making advances under the Repurchase
Agreement if any conditions precedent to funding are not satisfied.
In connection with the Repurchase Agreement, Credit RE Operating Company, LLC
(Guarantor), entered into a Guarantee Agreement with Wells (the Guaranty), under which the Guarantor agreed to guaranty Sellers payment and performance obligations under the Repurchase Agreement. Subject to certain
exceptions, the maximum liability under the Guaranty will not exceed the sum of (a) 25% of the then-current total amount due and payable from Seller to Wells under the Repurchase Agreement with respect to core purchased assets and (b) 50% of the
then-current total amount due and payable from Seller to Wells under the Repurchase Agreement with respect to flex purchased assets. CLNC intends to finance primarily core purchased assets under the Repurchase Agreement.
The Repurchase Agreement and Guaranty contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that
are customary for agreements of these types. In addition, the Guaranty contains financial covenants that require Guarantor to maintain: (i) minimum liquidity of not less than the lower of (x) $50.0 million and (y) the greater of (A)
$10.0 million and (B) 5% of Guarantors recourse indebtedness; (ii) tangible net worth of not less than $2,105.0 million plus 75% of the net cash proceeds of any equity issuance by CLNC after the date of the Repurchase Agreement;
(iii) indebtedness not to exceed 75% of total assets; and (iv) a ratio of EBITDA to consolidated interest expense of not less than 1.40 to 1.00.
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the Repurchase Agreement and the
Guaranty, which are filed as exhibits to this Current Report on Form
8-K.
Item 2.03. Creation of a Direct
Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 of this Current
Report on Form
8-K
is incorporated by reference into this Item 2.03.
Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit
No.
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Description
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10.1
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Master Repurchase and Securities Contract, dated as of November 2, 2018, by and between CLNC Credit 8, LLC and Wells Fargo Bank, National Association
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10.2
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Guarantee Agreement, dated as of November 2, 2018, by Credit RE Operating Company, LLC for the benefit of Wells Fargo Bank, National Association
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Safe Harbor Statement
This Current Report on Form
8-K
contains certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are generally identifiable by use of
forward-looking terminology such as will, may, plans, intends or other similar words or expressions. These statements are based on CLNCs current expectations and beliefs and are subject to a
number of trends and uncertainties that could cause actual results to differ materially from those described in the forward looking statements; CLNC can give no assurance that its expectations will be attained. Forward-looking statements are
necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying any forward-looking statements will not materialize or will vary significantly from actual results. Variations of assumptions and results may be
material. Factors that could cause actual results to differ materially from CLNCs expectations include, but are not limited to, the ability to comply with the representations, warranties, covenants and conditions precedent to funding contained
in the Repurchase Agreement and Guaranty; the ability to maintain the minimum liquidity, minimum total equity and the ratio of total borrowings to total equity required under the Repurchase Agreement; the availability of investment opportunities;
the ability to use the Repurchase Agreement to finance core purchased assets, including, first mortgage loans, senior participations and other investments; future property values; the impact of any losses from CLNCs investments on cash flow
and returns; changes in economic conditions generally and the real estate and debt markets specifically; the availability of capital; the ability to achieve targeted returns; changes to generally accepted accounting principles; policies and rules
applicable to REITs and the factors specified in Part I, Item 1A of CLNCs Annual Report on Form
10-K
for the fiscal year ended December 31, 2017, as well as in CLNCs other filings with the
Securities and Exchange Commission. The foregoing list of factors is not exhaustive. All forward-looking statements included in this Current Report on Form
8-K
are based upon information available to CLNC on
the date of this report and CLNC is under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
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Date: November 7, 2018
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COLONY CREDIT REAL ESTATE, INC.
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By:
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/s/ David A. Palamé
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David A. Palamé
General Counsel and
Secretary
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Colony Credit Real Estate (NYSE:CLNC)
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