| Item 1.01 | Entry into a Material Definitive Agreement. |
Invesco Real Estate Income Trust Inc. (the “Company”) and Massachusetts Mutual Life Insurance Company (“MassMutual”) entered into an amendment, dated December 9, 2022 (the “Amendment”), to the Subscription Agreement, dated July 29, 2021, by and between the Company and MassMutual (the “Subscription Agreement”). MassMutual has a material financial interest in and the right to designate a member of the board of directors of Invesco, Ltd., the Company’s sponsor and ultimate parent of the Company’s adviser Invesco Advisers, Inc. (the “Adviser”).
Under the Subscription Agreement, MassMutual agreed to purchase up to $200 million in shares of Class N common stock of the Company (“Class N Shares”) upon the Company’s request at one or more closings held prior to January 29, 2023 (the 18-month anniversary of the date of the Subscription Agreement) in the Company’s private offering of Class N Shares exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. MassMutual previously agreed to purchase up to $200 million in Class N Shares in the Company’s private offering pursuant to the subscription agreement between the Company and MassMutual dated August 7, 2020 (the “Initial Subscription Agreement”), for a total commitment of up to $400 million. The Subscription Agreement granted MassMutual certain repurchase rights in connection with the Class N Shares acquired by MassMutual pursuant to the Subscription Agreement and the Initial Subscription Agreement (collectively, the “MassMutual Shares”).
The Amendment revises the terms of the Subscription Agreement to (1) allow the Company to recycle the capital committed by MassMutual through December 31, 2024, by providing that the Company may require MassMutual to purchase additional Class N Shares (the “Additional Shares”), in one or more closings, in an amount equal to the aggregate purchase price paid by MassMutual for Class N Shares that were subsequently repurchased by the Company and (2) revise MassMutual’s repurchase rights as described below.
Amendments to MassMutual’s Automatic Repurchase Rights
Before the Amendment went into effect, the Subscription Agreement required the Company to repurchase MassMutual Shares on a monthly basis at a price per share equal to the NAV per Class N Share as of the last day of the month preceding the Determination Date (as defined below) until it repurchased at least $200 million of MassMutual Shares.
The Amendment revises these automatic repurchase rights such that through December 31, 2024, the Company is not required to repurchase MassMutual shares on a monthly basis but may in its discretion repurchase MassMutual Shares on a monthly basis, at a price per share equal to the NAV per Class N share as of the last day of the month preceding the Determination Date (as defined below). In any month, the Company may repurchase an amount of MassMutual Shares with an aggregate repurchase price no greater than (1) the aggregate purchase price paid by MassMutual for MassMutual Shares (including any Additional Shares) less (2) the aggregate repurchase price paid to MassMutual by the Company.
Beginning January 1, 2025 and continuing until the Company has repurchased $200 million of MassMutual Shares (calculated as the aggregate repurchase price paid to MassMutual by the Company less the aggregate purchase price of any Additional Shares acquired by MassMutual), the Company will be required to repurchase MassMutual Shares on a monthly basis, subject to the following terms and conditions. The aggregate amount (based upon aggregate repurchase price) of MassMutual Shares the Company will be required to repurchase in any month will be equal to (a) the sum of 100% of monthly net proceeds to the Company from the sale of shares of common stock to Invesco Global Property Plus Fund, a sub-fund of Invesco Global Real Estate Fund FCP-RAIF (the “IGP+ Fund”), which is managed by an affiliate of the Adviser, as of the Determination Date, plus (b) between 50% and 100% (in the Company’s discretion) of the monthly net proceeds to the Company from the sale of shares of common stock to persons other than the IGP+ Fund as of the Determination Date. For purposes of the Subscription Agreement, as revised by the Amendment, “Determination Date” means the date that is two business days prior to the first calendar day of the month in which the repurchase occurs.
In any month, MassMutual may elect to forgo the next monthly repurchase. At all times, the Company will limit monthly repurchases as necessary to ensure that the aggregate NAV of MassMutual Shares is not less than $50 million.
Amendments to MassMutual’s Repurchase Rights Upon Request
Before the Amendment went into effect, the Subscription Agreement provided that, upon (a) the expiration of the Lock-Up Period (as defined below) and (b) the Company’s having repurchased $200 million (based upon the aggregate repurchase price paid by the Company) of MassMutual Shares in accordance with MassMutual’s automatic repurchase rights, MassMutual will have the right to request that the Company repurchase any outstanding MassMutual Shares, subject to the terms described below. “Lock-Up Period” means the period beginning on September 28, 2020 and ending upon the earlier of (1) May 14, 2024 (the third anniversary of the date we commenced this public offering) and (2) the date that the Company’s aggregate NAV is at least $1.5 billion.
The Amendment revises these repurchase rights by allowing MassMutual’s repurchase rights upon request to operate simultaneously with MassMutual’s automatic repurchase rights such that beginning January 1, 2025, MassMutual will have the right to request that the Company repurchase any outstanding MassMutual Shares, subject to the terms described below.
