| LOANS PAYABLE AND SECURED LINE OF CREDIT | NOTE 11 – LOANS PAYABLE AND SECURED LINE OF CREDIT Corporate Credit Facility In December 2019, we entered into a multiple draw credit agreement aggregating $70.0 million (the “Corporate Credit Facility,” or “CCF”), which may be increased by $25.0 million subject to satisfaction of certain conditions and the consent of the lender (the “CCF Lender”). Draws under the Corporate Credit Facility were allowed during the 32-month period following the closing date of the Corporate Credit Facility (the “Closing Date”). Prior to the Recapitalization Transaction, as more fully described in Note 15 – Subsequent Events, the CCF was scheduled to mature on December 19, 2024, subject to extensions until December 19, 2025 and June 19, 2026, respectively, under certain circumstances. The CCF provided for the proceeds of the CCF to be used for investments in certain multi-family apartment buildings in the greater New York City area and certain non-residential real estate investments approved by the CCF Lender in its reasonable discretion, as well as in connection with certain property recapitalizations and in specified amounts for general corporate purposes and working capital. In connection with the December 2020 transaction noted under “77G Mezzanine Loan” below, the Company entered into an amendment to the CCF, pursuant to which, among other things, (i) we were permitted to enter into the 77G Mezzanine Loan Agreement (as defined below) and related documents, (ii) the commitment made by the CCF Lender under the CCF was reduced by the $7.5 million, and (iii) the MOIC amount was amended to combine the CCF and the 77G Mezzanine Loan. In connection with the closing of the 77G Mortgage Loan and amendment to the 77G Mezzanine Loan described below, we entered into amendments, dated as of October 22, 2021 and November 10, 2021, to our CCF pursuant to which, among other things, the parties agreed that (a) no additional funds will be drawn under the CCF, (b) the minimum liquidity requirement was made consistent with the 77G Mortgage Loan Agreement until May 1, 2023, (c) the Company will repay the outstanding principal balance of the CCF in an amount no less than $7.0 million on or prior to May 1, 2023 and (d) the multiple on invested capital (the “MOIC”) provisions were revised to provide that (i) the MOIC amount due upon final repayment of the CCF was amended to be consistent with the 77G Mezzanine Loan such that if no event of default exists and is continuing under the CCF at any time prior to June 22, 2023, the amount due will be combined with the 77G Mezzanine Loan, to the extent not previously paid, if any, and (ii) the amount of the CCF used to calculate the MOIC was reduced to $35.75 million. We entered into an amendment in November 2022, which eliminated the minimum liquidity requirement. In April 2023, the Company entered into a sixth amendment to the CCF, pursuant to which, among other things, the cash interest payments and the $7.0 million prepayment due May 1, 2023 were deferred until August 31, 2023, subject to extension in certain circumstances, and which also provided that the Company would enter into a strategic transaction that results in the repayment of the CCF or prepay the CCF by $5.0 million from equity proceeds by such date. Under the amendment, the CCF Lender was also granted the right to appoint an independent director to the Company’s board of directors, in addition to its existing right to appoint a director or Board observer. In June 2023, the Company entered into a seventh amendment to the CCF, which provided, among other things, that (i) the CCF be increased by up to $5,000,000, with $3,000,000 to be used for general corporate purposes and certain other items if applicable, and up to $2,000,000 to be used in connection with the extension of the loans in respect of the 237 11 th In August 2023, the Company entered into a forbearance agreement (the “CCF Forbearance Agreement”), pursuant to which the CCF Lender agreed to forbear from exercising its rights and remedies during the forbearance period with respect to certain specified defaults for the related forbearance period ending on December 31, 2023, which was subsequently extended to January 31, 2024, unless earlier terminated as a result of certain termination events. In December 2023, the Company entered into an eighth amendment to the CCF, which provided, among other things, for the provision of incremental term loan advances under the CCF in the amount of $750,000, with the first $375,000 being provided upon execution of the amendment and the second $375,000 to be provided upon and subject to Board approval of definitive agreements in respect of certain proposed transactions with the Company Investor and/or its affiliates, on the terms set forth in the non-binding term sheet and the filing of preliminary materials with the SEC for the solicitation of the vote or consent of the Company’s stockholders, if required. The amendment also amended the Company’s CCF forbearance agreement with respect to certain additional defaults in respect of which the lender was forbearing. The terms of the CCF forbearance agreement were otherwise unchanged . As of December 31, 2023, the CCF was fully drawn and had an outstanding balance of $41.1 million and $35.75 million at December 31, 2023 and 2022, respectively, excluding deferred finance fees of $334,000 and $1.3 million, respectively. Accrued interest, which is included in accounts payable and accrued expenses, totaled approximately $10.4 million and $6.1 million at December 31, 2023 and 2022. In connection with the Recapitalization Transactions, the Company entered into a Borrower Assignment and Assumption Agreement (the “Borrower Assignment and Assumption Agreement”), pursuant to which the Company assigned all of its rights, interests, duties, obligations and liabilities in, to and under the CCF, and each other document and instrument related to the CCF, to TPHGreenwich. In addition, TPHGreenwich entered into an amended and restated credit agreement, among TPHGreenwich, as borrower, certain subsidiaries of TPHGreenwich party thereto, as guarantors, the Company Investor, as lender and Mount Street US (Georgia) LLP (“Mount Street”), as administrative agent (the “Amended CCF”), pursuant to which the CCF was amended and restated in its entirety in order to, among other things, (i) release certain subsidiaries of the Company that were guarantors under the CCF from their guarantee obligations thereunder, (ii) extend the maturity date to June 30, 2026, and (iii) cause TPHGreenwich to incur an advance of $272,609. The Amended CCF bears interest at a rate per annum equal to (i) an all PIK interest rate equal to 10.325% per annum, or (ii) at TPHGreenwich’s election, a cash pay interest rate of 4.875% per annum and a PIK interest rate of 5.45% per annum. In connection with the Borrower Assignment and Assumption Agreement, the Company also entered into a holdco pledge agreement, pursuant to which the Company agreed to pledge all of its membership interests in TPHGreenwich to Mount Street. Prior to the Recapitalization Transactions, the CCF bore interest at an aggregate rate per annum equal to (i) a PIK interest rate of 5.25% and (ii) a scheduled cash pay interest rate of 4% which increased by 0.125% every six-month period from the Closing Date, subject to increase during the extension periods. The effective interest rate at December 31, 2023 and 2022 was 10.45% and 10.0%, respectively. A $2.45 million commitment fee was payable 50% on the initial draw and 50% as amounts under the CCF are drawn, with any remaining balance due on the last date of the draw period, and a 1.0% exit fee is payable in respect of CCF repayments. As of December 31, 2023, we had paid $1.85 million of the commitment fee. With the reduction in the committed amount under the CCF, no further commitment fee is due. The CCF may be prepaid at any time subject to a prepayment premium on the portion of the CCF being repaid. The CCF is subject to certain mandatory prepayment provisions, including that, subject to the terms of the mortgage loan documents applicable to the Company’s 77 Greenwich property, 90% or 100% of the net cash proceeds of residential condominium sales, depending on the circumstances, and 70% of the net cash proceeds of retail condominium sales at the Company’s 77 Greenwich property shall be used to repay the CCF. Upon final repayment of the CCF, the MOIC amount equal to 30% of the initial CCF amount plus drawn incremental amounts less the sum of all interest payments, commitment fee and exit fee payments and prepayment premiums, if any, shall be due, if such amounts are less than the MOIC amount. The collateral for the CCF consists of (i) 100% of the equity interests in our direct subsidiaries, to the extent such a pledge is permitted by the organizational documents of such subsidiary and any financing agreements to which such subsidiary is a party, (ii) our cash and cash equivalents, excluding restricted cash and cash applied toward certain liquidity requirements under existing financing arrangements, and (iii) other non-real estate assets of ours, including intellectual property. The Company determined that the CCF amendment will be treated as a modification with no gain or loss recognized during the year ended December 31, 2023 as the carrying amount of the loan was not greater than the respective undiscounted cash flows of the modified loan. The CCF provides that we and our subsidiaries must comply with various affirmative and negative covenants including restrictions on debt, liens, business activities, equity repurchases, distributions and dividends, disposition of assets and transactions with affiliates, as well as financial covenants regarding corporate loan to value and net worth. The CCF also provides for certain events of default, including cross-defaults to our other loans, and for a guaranty of the CCF obligations by our loan party subsidiaries. Pursuant to the terms of the CCF, so long as the CCF is outstanding and the CCF Lender is owed or holds greater than 50% of the sum of (x) the aggregate principal amount of the balance outstanding and (y) the aggregate unused commitments, the CCF Lender will have the right to appoint one member to our and each of our subsidiary’s board of directors or equivalent governing body (the “Designee”). At the election of the CCF Lender, a board observer may be selected in lieu of a board member. The Designee may also sit on up to three committees of the board of directors or equivalent governing body of ours and each subsidiary of the Designee’s choosing from time to time. The Designee will be entitled to receive customary reimbursement of expenses incurred in connection with his or her service as a member of the board and/or any committee thereof but will not, except in the case of an independent director, receive compensation for such service. The April 2023 amendment to the CCF also provided the CCF Lender with the right to appoint an independent director to the Company’s Board of Directors (the “Independent Director Designee”), in addition to its existing right to appoint the Designee so long as the advances remain outstanding and the CCF Lender is owed or holds greater than 50% of the sum of the aggregate principal amount of advances outstanding and the aggregate unused commitments. At the election of the CCF Lender, a Board observer may be selected in lieu of the Independent Director Designee. The Independent Director Designee, who was appointed in May 2023, may sit on up to three Board committees and will be automatically included on any Board committee relating to a Strategic Transaction. Loans Payable 77G Mortgage Loan In October 2021, TPHGreenwich Owner LLC, the subsidiary that owns 77 Greenwich (the “77G Mortgage Borrower”) entered into a loan agreement with Macquarie PF Inc., a part of Macquarie Capital, the advisory, capital markets and principal investment arm of Macquarie Group, as lender and administrative agent (the “77G Mortgage Lender”), pursuant to which 77G Mortgage Lender agreed to extend credit to Mortgage Borrower in the amount of up to $166.7 million (the “77G Mortgage Loan”), subject to the satisfaction of certain conditions (the “77G Mortgage Loan Agreement”). On the closing date of the 77G Mortgage Loan, the 77G Mortgage Borrower borrowed $133.1 million and a portion of the proceeds of the 77G Mortgage Loan, together with the proceeds of an increase in the 77G Mezzanine Loan, the Berkley Partner Loan and funds raised through the a private placement were used to repay the 77G Greenwich construction facility that the Company entered into in December 2017. At the time of the closing of the 77G Mortgage Loan in October 2021, $33.6 million was available to be used to, among other things, complete construction of 77G Greenwich and fund carry costs while the residential condominium units are being sold. The 77G Mortgage Loan had a two-year term and originally matured on October 1, 2023. The 77G Mortgage Loan is secured by the 77G Mortgage Borrower’s fee interest in 77G Greenwich. In May 2023, the loan benchmark was converted from LIBOR to SOFR. The 77G Mortgage Loan bears interest at a rate per annum equal to the greater of (i) 7.00% in excess of SOFR and (ii) 7.25%; provided that, if, on April 22, 2023, the outstanding principal balance of the 77G Mortgage Loan, together with any accrued and unpaid PIK Interest and unpaid Additional Unused Fee (as those terms are defined below) is equal to or greater than $91.0 million, the rate per annum will be equal to the greater of (i) 9.00% in excess of SOFR and (ii) 9.25%. The all-in interest rate was 14.34% at December 31, 2023. If cash flow from 77G Greenwich (including proceeds from the sales of residential condominium units) is insufficient to pay interest payments when due, any accrued but unpaid interest will remain unpaid and interest will continue to accrue on such unpaid amounts (“PIK Interest”) until the cumulative PIK Interest and Additional Unused Fee accrues to $4.5 million (the “Threshold Amount”), after which all such amounts in excess of the Threshold Amount shall be paid in cash on a monthly basis until such amounts are less than the Threshold Amount. As advances of the 77G Mortgage Loan are made to Mortgage Borrower and the outstanding principal balance of the 77G Mortgage Loan increases, net proceeds from the sales of condominium units will be paid to 77G Mortgage Lender to reduce the outstanding balance of the 77G Mortgage Loan. A 1% per annum fee (the “Additional Unused Fee”) on a $3.0 million portion (the “Additional Amount”) of the 77G Mortgage Loan, is payable on a monthly basis on the undrawn portion of such Additional Amount. To the extent the 77G Mortgage Loan was not fully funded by October 22, 2022 (April 22, 2023 in the case of amounts with respect to construction work related to the new handicapped accessible subway entrance on Trinity Place), 77G Mortgage Lender had the discretion to force fund the remaining balance other than the Additional Amount into a reserve account held by 77G Mortgage Lender and disbursed in accordance with the terms of the 77G Mortgage Loan Agreement. The 77G Mortgage Lender elected to force fund the 77G Mortgage Loan in October 2022. The 77G Mortgage Loan is prepayable without penalty, subject to 77G Mortgage Lender receiving a minimum total return of $15.26 million, or if an advance has been made of the Additional Amount, the sum of $15.26 million, plus 10% of the Additional Amount that has been disbursed, in each case, inclusive of interest and fees, and must be prepaid in part in certain circumstances such as in the event of the sale of residential and retail condominium units. The 77G Mortgage Borrower was required to achieve completion of the construction work and the improvements for the project on or before July 1, 2022, subject to certain exceptions. The 77G Mortgage Loan Agreement also includes additional customary affirmative and negative covenants for loans of this type. In November 2022, the 77G Mortgage Loan was amended to, among other things, extend the final Completion date to September 29, 2023 and eliminate the liquidity requirement. At that time, the 77G Mortgage Borrower drew down $3.0 million under the letter of credit to fund an interest reserve and $1.0 million to pay down the PIK balance. The Company determined that the 77G Mortgage Loan was considered a troubled debt restructuring due to a decrease in the post restructuring effective interest rate. The Company determined that the 77G Mortgage Loan will be treated as a modification with no gain or loss recognized during the year ended December 31, 2022 as the carrying amount of the loan was not greater than the respective undiscounted cash flows of the modified loan. In September 2023, the Company and the 77G Mortgage Borrower entered into a forbearance agreement for the purpose of providing additional time for the Company to pursue a potential strategic transaction, pursuant to which the 77G Mortgage Lender agreed to forbear from exercising its rights and remedies, until November 15, 2023 or the occurrence of other events specified therein, with respect to any failure by the 77G Mortgage Borrower to (i) make payments under the 77G Mortgage Loan Agreement, including, without limitation, interest payments due on September 1, 2023 and principal and interest payments due at maturity and (ii) achieve any Milestone Construction Hurdles or to satisfy the Quarterly Sales Hurdle (each as defined in the 77G Mortgage Loan Agreement) or make the related prepayment as and when required. On November 15, 2023, the forbearance period under the 77G Mortgage Loan forbearance agreement terminated in accordance with the terms of the agreement. On November 28, 2023, the Company, the 77G Mortgage Borrower and the 77G Mortgage Lender entered into an agreement pursuant to which, among other things, the 77G Mortgage Lender agreed to reinstate the forbearance period effective as of November 15, 2023 and extend the forbearance period to December 20, 2023, as was later further extended through the closing of the Recapitalization Transactions. In connection with the 77G Mortgage Loan Agreement, we entered into guarantees with the 77G Mortgage Lender pursuant to which we guaranteed the completion and payment of costs and expenses related to the construction; the payment of accrued and unpaid interest and other fees, costs, expenses and payments due and payable with respect to the 77G Mortgage Loan or 77G Greenwich; and the payment when due of all amounts due to 77G Mortgage Lender, as a result of “bad-boy” provisions. Mortgage Borrower and the Company also entered into an environmental compliance and indemnification undertaking for the benefit of 77G Mortgage Lender. As of February 28, 2023, we had received TCOs for 100% of the residential condominium units, lobby, Cloud Club (lounge, terrace, game room, dining room, kitchen and kids play room), mechanical rooms, and portions of the cellar (including the bike and storage rooms.) Our offering plan was declared effective in March 2021. In connection with the Recapitalization Transactions, the 77G Mortgage Borrower entered into a third amendment to the 77G Mortgage Loan Agreement with MPF Greenwich Lender LLC (as successor-in-interest to Macquarie PF Inc.), as lender, and certain entities affiliated with the Investor, as supplemental guarantors (the “77G MLA Amendment”), which, among other things, provides that (i) the original building loan will be reduced to $125,347,878, (ii) an additional project loan will be made in the amount of $2,850,000, (iii) the completion date will be extended to December 31, 2024, (iv) the maturity date will be extended to October 23, 2025 with an option to extend for one year and (v) TPHGreenwich Mezz LLC, the direct parent entity of 77G Mortgage Borrower, will enter into a new pledge agreement pursuant to which it will pledge 100% of its membership interests in 77G Mortgage Borrower. The 77G MLA Amendment further provides that the existing Completion Guaranty and Interest and Carry Guaranty by the Company, as original guarantor, are terminated, and that the existing Recourse Guaranty and Environmental Indemnification Agreement by the Company, as original guarantor, are only in full force and effect with respect to matters arising prior to the execution of the 77G MLA Amendment. As of December 31, 2023, the 77G Mortgage Loan had a balance of $104.4 million, which includes $10.2 million in PIK interest. Through December 31, 2023, the 77G Mortgage Loan was paid down by approximately $69.9 million through closed sales of residential condominium units. 77G Mezzanine Loan In December 2020, TPHGreenwich Subordinate Mezz LLC, a subsidiary of the Company (the “77G Mezz Borrower”) entered into a mezzanine loan agreement with an affiliate of the CCF Lender (the “77G Mezzanine Loan Agreement”). The 77G Mezzanine Loan was originally for the amount of $7.5 million and has a term of three years with two one-year extension options, exercisable under certain circumstances. The collateral for the 77G Mezzanine Loan was the borrower’s equity interest in its direct, wholly-owned subsidiary, which owns 100% of the equity interests in the borrower under the 77G Mortgage Loan. As of December 31, 2023, the annual blended interest rate for the 77G Mortgage Loan and the 77G Mezzanine Loan was 14.27%. Interest on the 77G Mezzanine Loan is not payable on a monthly basis but instead is automatically added to the unpaid principal amount on a monthly basis (and therefore accrues interest) and is payable in full on the maturity date of the 77G Mezzanine Loan. Upon final repayment of the 77G Mezzanine Loan, a MOIC will be due on substantially the same terms as provided for in the CCF. The 77G Mezzanine Loan may not be prepaid prior to prepayment in full of the 77G Mortgage Loan, but if the 77G Mortgage Loan is being prepaid in full, the 77G Mezzanine Loan may be prepaid simultaneously therewith. Subject to the prior sentence the 77G Mezzanine Loan may be prepaid in whole or in part, without penalty or premium (other than payment of the MOIC amount, if applicable, as provided above), upon prior written notice to the lender under the 77G Mezzanine Loan. In connection with the 77G Mezzanine Loan, the Company entered into a completion guaranty, carry guaranty, equity funding guaranty, recourse guaranty and environmental indemnification undertaking substantially consistent with the Company’s existing guarantees made to the 77G Mortgage Lender in connection with the 77G Mortgage Loan. In October 2021, the 77G Mezzanine Loan Agreement was amended and restated to, among other things, (i) increase the amount of the loan thereunder by approximately $22.77 million, of which $0.77 million reflects interest previously accrued under the original 77G Mezzanine Loan, (ii) reflected the pledge of the equity interests in the 77G Mortgage Borrower to the 77G Mezzanine Lender as additional collateral for the 77G Mezzanine Loan and (iii) conform certain of the covenants to those included in the 77G Mortgage Loan Agreement, as applicable. Additionally, the existing completion guaranty, carry guaranty, recourse guaranty and environmental indemnification executed in connection with the original 77G Mezzanine Loan Agreement were amended to conform to the mortgage guarantees and mortgage environmental indemnity made in connection with the 77G Mortgage Loan (and the existing equity funding guaranty was terminated). In November 2022, we amended the 77G Mezzanine Loan Agreement to, amongst other things, extend the final completion date to September 29, 2023 and eliminate the liquidity requirement. In August 2023, the Company and the 77G Mezz Borrower entered into a forbearance agreement, pursuant to which the 77G Mezzanine Lender agreed to forbear from exercising its respective rights and remedies with respect to certain specified defaults for the related forbearance period ending on December 31, 2023, which was subsequently extended to January 31, 2024, unless earlier terminated as a result of certain termination events. As of December 31, 2023 and 2022, the 77G Mezzanine Loan had a balance of $30.3 million and $30.3 million, respectively, and accrued interest totaled approximately $11.2 million and $5.8 million, respectively. In connection with the Recapitalization Transactions, the 77G Mezz Borrower entered into a second amendment to the 77G Mezzanine Loan Agreement, which provides for, among other things, the (i) termination of the pledge by TPHGreenwich Mezz LLC of 100% of its membership interests in the 77G Mortgage Borrower, (ii) extension of the completion date to December 31, 2024, (iii) the extension of the maturity date to October 23, 2025 with an additional option to extend for 1 year, (iv) the increase of the principal amount of the 77G Mezzanine Loan to approximately $60.8 million, inclusive of accrued interest as of that date, and (v) termination of the Completion Guaranty, Carry Guaranty and Equity Funding Guaranty by the Company, as original guarantor; and that the Recourse Guaranty and Environmental Indemnification Agreement by the Company, as original guarantor, are only in full force and effect with respect to matters arising prior to the execution of the second amendment. 237 11th Loans In June 2021, 470 4 th th th th th th th th th th th 1-year In June 2021, we also entered into an interest rate cap agreement as required under the 237 11 th In December 2022, we amended the 237 11 th th th As of December 31, 2023, the blended interest rate was 5.46% per year. The SOFR-based floating rate 237 11 th The 237 11 th th th As of December 31, 2023 and 2022, there was an outstanding balance of $50.0 million on the 237 11 th th In connection with the Recapitalization Transactions, (i) the 237 11 th th th th th th th Secured Line of Credit The subsidiary that owns the Paramus Property (the “Paramus Borrower”) has an $11.75 million secured line of credit that is secured by the Paramus, New Jersey property. The secured line of credit was scheduled to mature on May 22, 2023 and bore interest at the prime rate. Effective with an April 2023 amendment, the maturity date was extended to March 22, 2024 and the interest rate was reduced to 2.5% during the period from April 2023 to the new maturity date. On March 18, 2024, the Paramus Borrower entered into an amendment to the Secured Line of Credit, pursuant to which the maturity date was extended to October 15, 2024, with an option to further extend to April 15, 2025. As part of the amendment, the Company re-affirmed its guaranty under the Secured Line of Credit. The Secured Line of Credit is pre-payable at any time without penalty. The secured line of credit had an outstanding balance of $11.75 million and $9.75 million at December 31, 2023 and 2022, respectively, and an effective interest rate of 2.5% and 7.5% as of December 31, 2023 and 2022, respectively. The Company determined that the secured line of credit was considered a troubled debt restructuring due to a decrease in the post restructuring effective interest rate. The Company determined that the secured line of credit was to be treated as a modification with no gain or loss recognized during the year ended December 31, 2023 as the carrying amount of the loan was not greater than the respective undiscounted cash flows of the modified loan. Note Payable (250 North 10th Partner Loan) Prior to February 2023, we owned a 10% interest in a joint venture with TF Cornerstone (the “250 North 10 th th th Principal Maturities Combined aggregate principal maturities of our loans, Corporate Credit Facility and secured line of credit as of December 31, 2023, excluding extension options, were as follows (dollars in thousands): Year of Maturity Principal 2024 $ 247,503 2025 — 2026 — 2027 — 2028 — 247,503 Less: deferred finance costs, net (334) Total loans, corporate credit facility and secured line of credit, net $ 247,169 The maturity dates of the loans and the Corporate Credit Facility have been extended as per the terms of the February 14, 2024 closing of the transactions as contemplated by the Stock Purchase Agreement (see Note 15 – Subsequent Events for additional information). Interest Expense, net Consolidated interest expense, net includes the following (dollars in thousands): Year Ended Year Ended Year Ended December 31, December 31, December 31, 2023 2022 2021 Interest expense $ 29,918 $ 20,616 $ 21,238 Interest capitalized (689) (4,915) (13,314) Interest income — — (2) Interest expense, net $ 29,229 $ 15,701 $ 7,922 |
