Entry into a Material Definitive Agreement.
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
extensions at Seller’s 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 Seller’s 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 Guarantor’s
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
The information included in Item 1.01 of this Current Report on
Form 8-K is incorporated by
reference into this Item 2.03.
Financial Statements and Exhibits.
||Master Repurchase and
Securities Contract, dated as of November 2, 2018, by and
between CLNC Credit 8, LLC and Wells Fargo Bank, National
dated as of November 2, 2018, by Credit RE Operating Company,
LLC for the benefit of Wells Fargo Bank, National