Exhibit 10.2
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of April 23, 2024 (as amended, restated, supplemented, or otherwise modified from time to time, this “Guaranty”), made by STARWOOD CREDIT REAL ESTATE INCOME TRUST, a Maryland statutory trust (“Guarantor”), in favor of Morgan Stanley Bank, N.A., a national banking association (together with its successors and assigns, “Buyer”).
RECITALS
NOW, THEREFORE, in consideration of the foregoing premises, to induce Buyer to enter into the Transaction Documents and to enter into the transactions contemplated thereunder, Guarantor hereby agrees with Buyer as follows:
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Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by Guarantor on the date of each Transaction under the Repurchase Agreement, on and as of such date of the Transaction, as though made hereunder on and as of such date.
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Buyer: MORGAN STANLEY BANK, N.A.
c/o Morgan Stanley & Co. International plc
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25 Cabot Square, Canary Wharf
London E14 4QA, United Kingdom
Attention: Meera Balachandra and Kumaresh Thiru, The Deleveraging and Lending Group
Email: dlg-crewh-loanreports@ms.com
eu-warehouse_servicing@ms.com
With copies to: Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Attention: Jason P. Stratmoen, Esq.
Telephone: (212) 318-6813
Telecopy: (212) 303-7013
Email: jasonstratmoen@paulhastings.com
Guarantor: STARWOOD CREDIT REAL ESTATE INCOME TRUST
2340 Collins Avenue
Miami Beach, Florida 33139
Attention: SCREDIT Counsel
Email: SCREDITWarehouseNotices@starwood.com
With copies to: Sidley Austin LLP
787 Seventh Avenue
New York, New York 10019
Attention: Robert L. Boyd, Esq.
Telecopy: (212) 839-5599
Email: rboyd@sidley.com
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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered as of the date first above written.
GUARANTOR:
STARWOOD CREDIT REAL ESTATE INCOME TRUST, a Maryland statutory trust
By: /s/ Marc Fox
Name: Marc Fox
Title: Chief Financial Officer
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Exhibit A
FINANCIAL COVENANT DEFINITIONS
“Capital Stock” shall mean, with respect to any Person, (i) any share, interest, participation and other equivalent (however denominated) of capital stock of (or other ownership, equity or profit interests in) such Person, (ii) any warrant, option or other right for the purchase or other acquisition from such Person of any of the foregoing, (iii) any security convertible into or exchangeable for any of the foregoing, and (iv) any other ownership or profit interest in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date.
“Cash and Cash Equivalents” shall mean for any Person and its consolidated Subsidiaries, the sum, without duplication and determined on a combined basis, in the aggregate, of all unrestricted assets classified as cash and cash equivalents in accordance with GAAP including, but not limited to (a) cash including currency on hand or immediately available federal funds, including such funds delivered by wire transfer, (b) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any state of the United States and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P, (c) securities free and clear of all liens and scheduled to mature within 90 days and issued or fully guaranteed or insured by the United States Government or any agency thereof, (d) money market deposit accounts issued or offered by any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000 and that issues (or the parent of which issues) commercial paper rated at least “Prime-1” (or the then equivalent grade) by Moody’s or “A-1” (or the then equivalent grade) by S&P, and (e) certificates of deposit with Purchaser or a member of the Federal Reserve System that issues (or the parent of which issues) commercial paper rated as described in clause (b) above, is organized under the laws of the United States or any state thereof and has combined capital and surplus of at least $1,000,000,000.
“Cash Liquidity” shall mean, for any Person and its consolidated Subsidiaries, on any date, the sum of (i) Cash and Cash Equivalents held by such Person and its consolidated Subsidiaries (ii) the amount of Undrawn Borrowing Capacity of such Person, (iii) the fair market value of the unrestricted CMBS and CLO Securities of such Person which are rated at least AAA- by Standard & Poor or Aaa3 by Moody’s on a long-term basis, calculated in accordance with GAAP as of such date and (iv) the aggregate SCG Capital Commitment as of such date.
“Consolidated Net Income” shall mean, with respect to any Person for any Test Period, the consolidated net income (or loss) of such Person and its Subsidiaries for such Test Period as determined on a consolidated basis in accordance with GAAP.
“Convertible Debt Securities” shall mean any debt securities of Guarantor, the terms of which provide for conversion into Capital Stock, cash by reference to such Capital Stock, or a combination thereof.
“EBITDA” shall mean, with respect to any Person for any Test Period, an amount equal to the sum of (i) Consolidated Net Income of such Person (prior to any impact from minority interests or joint venture net income and before deduction of any dividends on preferred stock), plus the following (but only to the extent actually included in determination of such Net Income): (A) depreciation and amortization expense, (B) Interest Expense, (C) income tax expense, and (D) extraordinary or non-recurring gains and losses, plus (ii) such Person’s proportionate share of Consolidated Net Income of the joint venture investments and unconsolidated Affiliates of such Person, all with respect to such Test Period, plus (iii) amounts deducted
in accordance with GAAP in respect of other non-cash expenses in determining such Consolidated Net Income for such Person and plus (iv) amounts deducted in accordance with GAAP in determining such Consolidated Net Income for such Person in respect of expenses that were paid or reimbursed to such Person by SCG.
“Indebtedness” shall mean, for any Person, without duplication (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person) upon which interest charges are customarily paid and reflected as debt on the Guarantor’s consolidated balance sheet in accordance with GAAP other than trade accounts payable arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered. Notwithstanding the foregoing, with respect to any Person, Non-Recourse Indebtedness owing pursuant to a securitization transaction such as a REMIC securitization, a collateralized loan obligation transaction or other similar securitization under the laws of the United States of America shall not be considered Indebtedness for such Person.
“Fixed Charge Coverage Ratio” shall mean with respect to any Person and for any Test Period at any time, the EBITDA for such period, divided by the Fixed Charges for the same period.
“Fixed Charges” shall mean with respect to any Person and for any Test Period at any time, the amount of recurring monthly interest paid in cash with respect to Indebtedness as shown on such Person’s consolidated statement of cash flow in accordance with GAAP as offset by the amount of receipts pursuant to net receive interest rate swap agreements of such Person and its consolidated Subsidiaries during the applicable period.
“Interest Expense” shall mean, with respect to any Person for any Test Period, the amount of total interest expense incurred by such Person and its Subsidiaries, including capitalized or accruing interest (but excluding interest funded under a construction loan), all with respect to such Test Period, determined on a consolidated basis in accordance with GAAP.
“Leverage Ratio” shall mean as of any date of determination, the ratio of (i) Total Indebtedness to (ii) Total Assets.
“Net Worth” shall mean with respect to Guarantor and its consolidated Subsidiaries, as of any date of determination, the sum of (I) all amounts which would be included under, or classified as, capital, temporary or mezzanine equity, or shareholders’ equity (or any like caption) on a consolidated balance sheet of the Guarantor pursuant to GAAP, plus (a) the aggregate amounts of (i) accumulated depreciation and amortization related to properties and (ii) accrued but unpaid shareholder servicing fees charged directly to equity, and excluding (b) the aggregate amount of non-credit related valuation adjustments reflecting (i) valuation declines below par and (ii) valuation increases above par in the fair market valuations of debt assets (including loans and securities) and liabilities, and minus (c) the amount by which (i) the principal balance of any mortgage loan or mezzanine loan held by such Person or its Subsidiaries exceeds (ii) the market value of the collateral securing such loan, as determined by Guarantor in its sole good faith discretion, all on or as of such date, determined, in each case, on a consolidated basis without duplication and (II) the aggregate SCG Capital Commitment as of such date.
“Non-Recourse Indebtedness” shall mean, with respect to any Person and any date, Indebtedness for borrowed money of such Person with respect to which recourse for payment (except for customary non-recourse exceptions for fraud, misapplication of funds, environmental indemnities, insolvency events,
non-approved transfers or other “bad act” events, cost overruns, completion or carry costs) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness.
“Recourse Indebtedness” shall mean, with respect to any Person and any date, all Indebtedness except for Non-Recourse Indebtedness.
“Restricted Cash” shall mean for any Person, any amount of cash of such Person that is either encumbered with a prior lien or claim or is contractually required to be set aside, segregated or otherwise reserved.
“SCG” shall mean Starwood Real Estate Income Holdings, L.P., a Delaware limited partnership (“Starwood Real Estate Income Holdings”) or any Affiliate of Starwood Real Estate Income Holdings and any of their respective predecessor entities.
“SCG Capital Commitment” shall mean, as of any date of determination, the amount of the uncalled capital commitment of SCG for which Guarantor has a right to call capital from SCG pursuant to the SCG Subscription Agreement.
“SCG Subscription Agreement” shall mean that certain Subscription Agreement, dated as of November 13, 2023, from Starwood Real Estate Income Holdings to Guarantor, pursuant to which Starwood Real Estate Income Holdings has committed to purchase Class E common shares of beneficial interests of Guarantor, as same may be amended, modified and/or restated from time to time.
“Test Period” shall mean for any calendar quarter, the twelve (12) month period ending as of the last day of such calendar quarter, commencing with the calendar quarter ending March 31, 2025.
“Total Assets” shall mean, with respect to any Person on any date, (i) an amount equal to the aggregate book value of all assets owned by such Person and its Subsidiaries on a consolidated basis and the proportionate share of assets owned by non-consolidated Subsidiaries of such Person, plus (ii) the aggregate amount of accumulated depreciation and amortization related to properties, less (iii) the amount by which (A) the principal balance of any mortgage loan or mezzanine loan held by such Person or its Subsidiaries exceeds (B) the market value of the collateral securing such loan, as determined by Guarantor in its sole good faith discretion, and excluding (iv) the aggregate amount of non-credit related valuation adjustments reflecting (A) valuation declines below par and (B) valuation increases above par in the fair market valuations of debt assets (including loans and securities) and liabilities, all on or as of such date, and determined in each case, on a consolidated basis without duplication, in accordance with GAAP.
“Total Indebtedness” shall mean, with respect to any Person and its Subsidiaries on a consolidated basis, as of any date of determination, the aggregate Indebtedness of such Person plus the proportionate share of all Indebtedness of all non-consolidated Subsidiaries of such Person as of such date (in each case, excluding Non-Recourse Indebtedness).
“Undrawn Borrowing Capacity” shall mean, with respect to any Person as of any date, the total undrawn borrowing capacity available to such Person and its direct or indirect Subsidiaries under any repurchase and credit facilities and similar agreements to which they are a party, but (i) with respect to any such repurchase or credit facility or similar agreement that is a secured facility, solely to the extent that collateral has been approved by and pledged to the related buyer or lender under such facility, and (ii) with respect to any such credit facility or similar agreement that is an unsecured facility, solely to the extent that such undrawn borrowing capacity is committed by the related lender.