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| Item 1.01 | Entry into a Material Definitive Agreement. |
On July 15, 2022, CMFT SCF Borrower, LLC (the “Borrower”), an indirect wholly owned subsidiary of CIM Real Estate Finance Trust, Inc. (the “Company”), entered into a credit agreement (the “Credit Agreement”) with the lenders from time to time parties thereto (the “Lenders”), JPMorgan Chase Bank, N.A. (the “Bank”), as administrative agent, letter of credit issuer and syndication agent, and PNC Bank, N.A., as syndication agent, which provides for borrowings in the initial amount of $300,000,000 (the “Credit Facility”), which will include a $100,000,000 term loan facility (the “Term Loan”) and the ability to borrow up to $200,000,000 in revolving loans (the “Revolving Loans”) under a revolving credit facility (the “Revolving Facility”) with a $30,000,000 letter of credit subfacility. The Term Loan and the Revolving Facility both mature on July 15, 2025.
The Revolving Loans and Term Loans bear interest at rates depending upon the type of loan specified by the Borrower, the interest period, and the Company’s adjusted leverage ratio. For alternate base rate (“ABR”) loans, the interest rate will be equal to the greater of: (a) JPMorgan Chase’s prime rate (as defined in the Credit Agreement), (b) the NYFRB Rate (as defined in the Credit Agreement) plus 0.50%, and (c) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 1.0% for the interest period plus the applicable rate. For term benchmark (“Term Benchmark”) loans and RFR loans, the interest rate is based on the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as defined in the Credit Agreement), respectively, for the applicable interest period plus the applicable rate. The applicable rate is based upon the adjusted leverage ratio, and for ABR Loans, ranges from 0.50% at an adjusted leverage ratio below 2.50:1.00 to 1.375% at an adjusted leverage ratio greater than 3.50:1.00. For Term Benchmark loans and RFR loans, the applicable rate is 1.00% higher than for ABR loans at each adjusted leverage ratio range. The Company will be required to make periodic interest payments on the Revolving Loans and Term Loans, and the outstanding principal and any accrued and unpaid interest is due on July 15, 2025.
In connection with the Credit Facility, certain subsidiaries of the Company, including the Borrower, entered into a collateral assignment of equity interest and security agreement, by which certain subsidiaries of the Company, including the Borrower, pledged equity interests in certain property owning subsidiaries as collateral to secure on a first priority basis the obligations under the Credit Facility. The Company and certain subsidiaries of the Company also entered into a guaranty with the Lenders (the “Guaranty”), under which the Company and certain subsidiaries agreed to guarantee the Borrower’s obligations under the Credit Agreement.
The Company paid certain fees upon the closing of the Credit Facility, including arrangement and up-front fees. The Company will also pay ongoing customary fees including an annual administrative agent fee, as well as a fee for the undrawn portion of the Revolving Facility. The Company must also pay certain fees upon the issuance of each letter of credit under the Credit Agreement and a quarterly fee based on the outstanding face amount of any letters of credit.
The Borrower has the right to prepay the outstanding amounts under the Credit Facility, in whole or in part, without premium or penalty provided that (i) prior written notice is received by the administrative agent; and (ii) prepayments of any Revolving Loan shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof and any prepayment of Term Loans shall be in a principal amount of $2,500,000 or a whole multiple of $1,000,000 in excess thereof or, in each case, if less, the entire principal amount then outstanding. Any prepayment must include accrued interest on the amount prepaid plus any breakage amount.
The Credit Agreement contains customary representations, warranties, borrowing conditions and affirmative, negative and financial covenants, including minimum tangible net worth, debt service coverage and leverage ratio requirements and maximum variable rate and recourse debt requirements. The Credit Agreement also includes usual and customary events of default and remedies for facilities of this nature.
The foregoing description of the Credit Amendment does not purport to be complete and is qualified in its entirety by the full text of the Amendment, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.