Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On December 1, 2014, ACRC 2013-FL1B Holder LLC (the “Seller”), a subsidiary of Ares Commercial Real Estate Corporation (the “Company”), and the Company entered into a global master repurchase agreement (the “UBS AG Note Facility”) with UBS AG (“UBS AG”), pursuant to which the Seller will sell, and later repurchase, certain retained subordinate notes in the Company’s 2013 CMBS securitization (the “Purchased Securities”) for an aggregate purchase price equal to $57.2 million. The scheduled repurchase date of the Purchased Securities under the UBS AG Note Facility is January 6, 2016 (the “Repurchase Date”). The transaction fee (or interest rate), which is payable monthly on the UBS AG Note Facility, is equal to one-month LIBOR plus 2.74% per annum on the outstanding amount. If the outstanding amount of the Purchased Securities subject to the UBS AG Note Facility is reduced or repaid prior to the Repurchase Date, UBS AG shall be entitled to a termination fee.
The UBS AG Note Facility is fully guaranteed by the Company. The UBS AG Note Facility contains certain affirmative and negative covenants and provisions regarding events of default that are customary for similar repurchase facilities, and imposes certain covenants on the Company with respect to maintenance of certain ratios of debt to net worth, fixed charges and other financial conditions. The UBS AG Note Facility also contains margin call provisions that provide UBS AG with certain rights if the applicable percentage of the aggregate asset value of the Purchased Securities is less than the aggregate purchase price for such Purchased Securities.
In connection with the $57.2 million provided by UBS AG under the UBS AG Note Facility, on December 1, 2014, ACRC Lender U LLC, ACRC Lender U TRS LLC and ACRC Lender U Mezz LLC, each a subsidiary of the Company, and the Company, amended the revolving master repurchase facility with UBS Real Estate Securities Inc. to reduce the maximum commitment by $55.0 million from $195.0 million to $140.0 million.
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