|
Item 1.01.
|
Entry into a Material Definitive Agreement.
|
On October 23, 2018, DB Loan
NT-II,
LLC, and CLNC Credit 5, LLC (collectively, “Seller”), each an
indirect subsidiary of Colony Credit Real Estate, Inc. (“CLNC”), entered into a Master Repurchase Agreement (the “Repurchase Agreement”) with Deutsche Bank AG, Cayman Islands Branch (“DB”). The Repurchase Agreement
provides up to $200.0 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 DB. The initial maturity date of the Repurchase Agreement is October 23, 2019, with three
(3) one-year
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, DB 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 Guaranty with DB (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 25% of the aggregate repurchase price of all purchased assets under the Repurchase Agreement (such cap, the “Guaranty Cap”),
unless there are no remaining Extension Options available to Seller under the Repurchase Agreement documentation, in which case the Guaranty Cap will increase to 50% of the aggregate repurchase price of all 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.