ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
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 9, 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, a director and executive officer of the Company and principal of the Advisor, and Corey Maple, a director of the Company and a principal of the Advisor. As previously disclosed, on December 21, 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, on January 12, 2023, the A-1 Line of Credit was amended to increase the A-1 Line of Credit to $10.0 million, and on April 18, 2023, the A-1 Line of Credit was amended to increase the A-1 Line of Credit to $13.3 million. On March 27, 2024, the Operating Partnership and the A-1 Lender entered into a Fourth Amendment to the Revolving Line of Credit Loan Agreement (the “Fourth Amendment”) in connection with the A-1 Line of Credit. The Fourth Amendment extended the maturity date of the A-1 Line of Credit to December 31, 2024 and increased the A-1 Line of Credit to $15.5 million. Through the Fourth Amendment, the A-1 Line of Credit is secured by 1,550,000 unissued common limited partnership units of the Operating Partnership. In consideration of the extension of the maturity date, the Operating Partnership paid to the A-1 Lender an extension fee in the amount of $133,000. No other changes were made to the A-1 Line of Credit as a result of the Fourth Amendment. As of April 2, 2024, $14.8 million is outstanding under the A-1 Line of Credit.
The information in this Report set forth under Item 2.03 is incorporated herein by reference into this Item 1.01.
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
As previously disclosed in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on March 31, 2022, LF3 Lakewood, LLC and LF3 Lakewood TRS LLC (collectively, the “Borrower”), subsidiaries of the Operating Partnership, entered into a $12.61 million loan (the “Original Lakewood Loan”) with the A-1 Lender pursuant to a Loan Agreement dated as of March 29, 2022, which such loan was secured by the 142-room Fairfield Inn and Suites in Lakewood, Colorado. The Original Lakewood Loan had a fixed interest rate of 7.0% per annum and a maturity date of March 28, 2024. On March 27, 2024, the proceeds from the New Lakewood Loan and the New A-1 Lakewood Loan, each as defined and described in Item 2.03 below, were used to refinance the Original Lakewood Loan, and the outstanding obligations under Original Lakewood Loan were repaid in full. At the closing of the refinancing, an unpaid extension fee in the amount of $138,450 was paid to the A-1 Lender under the Original Lakewood Loan which was due but not paid in connection with the prior March 2023 extension of the Original Lakewood Loan. All guaranties in connection and collateral with respect to the Original Lakewood Loan have been terminated or released, and all commitments with respect to the Original Lakewood Loan have been terminated or released.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF REGISTRANT
New Lakewood Loan
On March 27, 2024, pursuant to the Loan Agreement dated as of March 27, 2024 (the “New Lakewood Loan Agreement”), the Borrower entered into a new $12.0 million loan with Bluebird Credit EM LLC (the “New Lakewood Lender”), which is secured by the 142-room Fairfield Inn and Suites in Lakewood, Colorado (the “New Lakewood Loan”). The New Lakewood Lender is not affiliated with the Company or the Advisor. The New Lakewood Loan is evidenced by a promissory note and has an adjustable interest rate based on the SOFR Index plus 7.0% (increasing to 7.5% during the extension of the loan), with an initial interest rate of 12.327%; provided, however, in no event will the interest rate be adjusted to less than 11.0%. The maturity date of the New Lakewood Loan is October 5, 2025, with an option to extend the term for an additional 6 months through April 6, 2026, upon payment of a $60,000 extension fee and satisfaction of certain other conditions. The New Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Borrower has the right to prepay the New Lakewood Loan in whole
