ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
RIFC Loan
The information in this Report set forth under Item 2.03 is incorporated herein by reference into this Item 1.01.
A-1 Line of Credit Amendment
As previously disclosed, Lodging Fund REIT III OP, LP (the “Operating Partnership”), which is the operating partnership subsidiary of Lodging Fund REIT III, Inc. (the “Company”), entered into a $5.0 million revolving line of credit loan agreement dated as of August 10, 2022 (the “A-1 Line of Credit”) with Legendary A-1 Bonds, LLC (the “A-1 Lender”). The A-1 Lender is an affiliate of Legendary Capital REIT III, LLC, the Company’s external advisor (the “Advisor”), which is owned by Norman Leslie and Corey Maple, each a director and executive officer of the Company and principal of the Advisor. As previously disclosed, on December 15, 2022, the A-1 Line of Credit was amended to extend the maturity date of the A-1 Line of Credit from December 31, 2022 to December 31, 2023 and increase the A-1 Line of Credit to $7.5 million and on January 12, 2023, the Operating Partnership, the Company and the A-1 Lender was amended to increase the A-1 Line of Credit to $10.0 million. On April 18, 2023, the Operating Partnership, the Company and the A-1 Lender entered into a Change in Terms Amendment (the “Amendment”) in connection with the A-1 Line of Credit. The Amendment increased the A-1 Line of Credit to $13.3 million. Through the Amendment, the A-1 Line of Credit is secured by 1,330,000 unissued Common LP Units of the Operating Partnership. No other changes were made to the A-1 Line of Credit as a result of the Amendment. As of April 24, 2023, $9.2 million is outstanding under the A-1 Line of Credit.
Western Line of Credit Amendment
As previously disclosed, the Operating Partnership entered into a $5.0 million revolving line of credit loan agreement dated as of February 10, 2020 with Western State Bank (as previously amended on January 19, 2021, May 6, 2021, and May 5, 2022, the “Western Line of Credit”). As previously disclosed, on December 15, 2022, the Western Line of Credit was amended to extend the maturity date of the Western Line of Credit from December 15, 2022 to April 15, 2023. On April 15, 2023, the Operating Partnership, the Company and Corey Maple entered into a Change in Terms Amendment (the “Western Amendment”) in connection with the Western Line of Credit. The Western Amendment extends the maturity date of the Western Line of Credit from April 15, 2023 to June 15, 2023. The Western Line of Credit is secured by the Company’s Hampton Inn hotel property in Eagan, Minnesota, the Company’s Holiday Inn Express hotel property in Cedar Rapids, Iowa, the Company’s Hampton Inn hotel property in Fargo, North Dakota and limited partnership units of the Operating Partnership. No other changes were made to the Western Line of Credit as a result of the Western Amendment. As of April 24, 2023, $5.0 million is outstanding under the Western Line of Credit.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
As previously disclosed in a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on August 10, 2022, LF3 RIFC, LLC and LF3 RIFC TRS LLC (collectively, the “Borrower”), subsidiaries of the Company’s Operating Partnership, entered into a $11.5 million loan (the “Original RIFC Loan”) with Legendary A-1 Bonds, LLC, (the “Original Lender”), secured by the 113-room Residence Inn by Marriott Fort Collins hotel in Fort Collins, Colorado (the “RIFC”), pursuant to a Loan Agreement, dated as of August 3, 2022. The Original Lender is an affiliate of Legendary Capital REIT III, LLC, the external advisor to the Company (the “Advisor”) which is owned by Norman Leslie and Corey Maple. The Original RIFC Loan was evidenced by three promissory notes in the amounts of $10,298,535 (“Tranche 1”), $700,000 (“Tranche 2”) and $501,465 (“Tranche 3”) and had a fixed interest rate of 7.0% per annum. On April 18, 2023, the proceeds of the New RIFC Loan as defined and described in Item 2.03 below were used to refinance the Original RIFC Loan, and the outstanding obligations under Tranche 1 were repaid in full and under Tranche 2 were forgiven. A 1.75% exit fee was paid on Tranche 1, and no penalty was incurred on Tranche 1 or Tranche 2. Tranche 3 remains an ongoing obligation, no longer secured by the RIFC, under the terms of the Original RIFC Loan and Tranche 3 promissory note. All guaranties in connection and collateral with respect to the Original RIFC Loan and Tranche 1, Tranche 2 and Tranche 3 promissory notes have been terminated or released, and all commitments with respect to the Original RIFC Loan and Tranche 1 and Tranche 2 promissory notes have been terminated or released.
