Explanatory Note
This Form 8-K/A is filed as an amendment (this “Amendment”) to the Current Report on Form 8-K filed by Lodging Fund REIT III, Inc. (the “Company”) with the Securities and Exchange Commission on April 2, 2024 (the “Original Report”) in which the Company reported, among other events, the execution of the Fourth Amendment to the Revolving Line of Credit Loan Agreement (the “Fourth Amendment”) entered into by Lodging Fund REIT III OP, LP and Legendary A-1 Bonds, LLC. This Amendment is filed (a) to update Item 1.01 to include a description of changes to the A-l Line of Credit (as defined below) which are included in the Fourth Amended and Restated Promissory Note (the “Amended Promissory Note”) entered into in connection with the Fourth Amendment, and (b) to include the Amended Promissory Note as Exhibit 10.10, which discussion and exhibit were inadvertently omitted from the Original Report. This Amendment also updates the description of the exit fee under the heading “New A-1 Lakewood Loan” under Item 2.03. No other changes have been made to the Original Report.
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. The Fourth Amended and Restated Promissory Note (the “Amended Promissory Note”) entered into by the Operating Partnership in connection with the Fourth Amendment provides that (i) the interest rate on the A-1 Line of Credit is increased to 14.5% per annum, and (ii) the A-1 Lender will receive an exit fee equal to 1.5% of the full amount due under the Line of Credit upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. No other changes were made to the A-1 Line of Credit as a result of the Fourth Amendment or the Amended Promissory Note. 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
