| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 23, 2018, DB LoanNT-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 theone-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 subsequentlyre-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 Form8-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 Form8-K is incorporated by reference into this Item 2.03.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit No. | | Description |
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| 10.1 | | Master Repurchase Agreement, dated as of October 23, 2018, by and among DB LoanNT-II, LLC, CLNC Credit 5, LLC and Deutsche Bank AG, Cayman Islands Branch |
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| 10.2 | | Guaranty, dated as of October 23, 2018, by Credit RE Operating Company, LLC for the benefit of Deutsche Bank AG, Cayman Islands Branch |
