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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) SEPTEMBER 30, 1998
AMRESCO CAPITAL TRUST
(Exact name of registrant as specified in its charter)
TEXAS 1-14029 75-2744858
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
700 NORTH PEARL STREET
SUITE 2400, LB 342
DALLAS, TEXAS 75201
(Address of principal executive offices)
(Registrant's telephone number, including area code) (214) 953-7700
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 30, 1998, AMREIT I, Inc. (the "Company"), a wholly-owned
subsidiary of AMRESCO Capital Trust (the "Registrant"), acquired certain loans
from AMRESCO Commercial Finance, Inc. ("ACFI") pursuant to two separate
agreements.
ACFI is a wholly-owned subsidiary of AMRESCO, INC. ("AMRESCO," and,
together with its affiliated entities, the "AMRESCO Group"). AMRESCO is also an
affiliate of AMREIT Managers, L.P. (the "Manager"), the manager of the
Registrant. Pursuant to a management agreement, the Manager is responsible for
the day-to-day operations of the Registrant. Additionally, three of the seven
members of the Board of Trust Managers of the Registrant and all of the
Registrant's officers are employed by the AMRESCO Group. The AMRESCO Group
currently owns approximately 15% of the Registrant.
PACKAGE 1
The first Sale and Assignment Agreement between the Company and ACFI
provided for the purchase by the Company from ACFI of three loans, represented
by nine notes and primarily secured by first liens, for a cash purchase price of
approximately $11,313,916. The Company paid the purchase price from cash on
hand.
The first of these loans provides for a $13,000,808 commitment, with an
outstanding principal balance of approximately $7,673,611 as of September 30,
1998. Additionally, the Company acquired accrued interest totaling $114,790. The
proceeds of the loan are being used for the construction and lease-up of a
115,000 (approximate) square foot office building in Richardson, Texas. The loan
earns interest at an accrual rate of 14% per annum. Payments of interest only
are due and payable monthly at a pay rate of 10% per annum. The Company is
entitled to receive and apply 50% of any excess cash flow from the rental of the
property to the interest accrual. The Company is also entitled to a 50% residual
profits interest. The initial maturity date is October 30, 1999.
The second of these loans provides for a $3,157,900 commitment, with an
outstanding principal balance of approximately $1,554,552 as of September 30,
1998. Additionally, the Company acquired accrued interest totaling $13,678. The
proceeds of the loan are being used to finance the development of a 400-acre
residential community in San Antonio, Texas. The loan earns interest at 22% per
annum. Payments of interest only are due and payable monthly. The initial
maturity date is May 1, 2001.
The third loan provides for a $8,400,000 revolving credit commitment,
with an outstanding principal balance of approximately $1,949,116 as of
September 30, 1998. Additionally, the Company acquired accrued interest totaling
$8,169. The proceeds of the loan are being used to finance the development of
various residential subdivisions in San Antonio, Texas. The loan earns interest
at an accrual rate of 14% per annum. Payments of interest only are due and
payable monthly at a pay rate of 10% per annum. Payments of interest at the
accrual rate are due and payable quarterly. The various notes underlying the
loan mature on various dates through August 1, 2000.
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PACKAGE 2
Pursuant to a separate Sale and Assignment Agreement with ACFI, the
Company acquired five loans, represented by seven notes, for a cash purchase
price of approximately $22,978,251, including accrued interest. The Company paid
the purchase price from cash on hand and certain borrowings under the Company's
Master Repurchase Agreement with Prudential Securities Credit Corporation.
Immediately following the purchase of the five loans described below,
pursuant to an Economics Equivalents and Funding Agreement dated as of September
30, 1998, the Company sold to ACFI for a cash purchase price of approximately
$5,020,292 the right to collect from the Company an amount equal to the economic
equivalent of all amounts collected from the five loans in excess of $17,957,959
plus a return on this amount, or so much of it as is outstanding from time to
time, equal to 12% per annum. As additional consideration, ACFI agreed to
reimburse the Company for any additional advances required to be made under the
loan documents. ACFI was also granted the right to service these five loans,
subject to obtaining the Company's consent to certain amendments or
modifications of the loan under certain circumstances.
Loan one is a $3,664,000 first lien facility, the proceeds of which
were used by the borrower to finance the acquisition and renovation of a
240-unit apartment complex in Galveston, Texas. Additionally, the Company
acquired accrued interest totaling $236,686. The loan earns interest at an
accrual rate of 15% per annum. Payments of interest only are due and payable
monthly at a variable rate equal to the prime rate plus 1.5% per annum. The loan
agreement provides that 25% of any excess cash flow from the rental of such
property shall be applied to the interest accrual. Furthermore, the loan
agreement provides for a 40% residual profits interest. The initial maturity
date is July 15, 1999.
Loan two is a $2,650,000 mezzanine facility of which approximately
$2,587,000 had been funded as of September 30, 1998. Additionally, the Company
acquired accrued interest totaling $246,802. The borrower used the proceeds to
finance the construction of a 278-unit apartment complex in Fort Worth, Texas.
The loan earns interest at an accrual rate of 16% per annum. Payments of
interest only are due monthly at a pay rate of 10.5% per annum. The loan
agreement provides that 75% of any excess cash flow from the rental of such
property shall be applied to the interest accrual. Additionally, the loan
agreement provides for a 33% profits participation through January 8, 1999 and
a 38% profits participation thereafter. The initial maturity date is January 8,
1999.
Loan three consists of two loans (one a first lien facility and one a
second lien facility) aggregating $6,325,000, of which approximately $6,247,000
had been funded as of September 30, 1998. Additionally, the Company acquired
accrued interest totaling $86,327. The borrower used the proceeds to finance
the acquisition, completion and leasing of a 56,000 (approximate) square foot
office building in Austin, Texas. The loan earns interest at an accrual rate of
16% per annum. Payments of interest only are due monthly at a pay rate of 10%
per annum. The loan agreements provide that 65% of any excess cash flow from
the rental of such property shall be applied to the interest accrual. Certain
additional amounts are to be paid by the borrower in the event of a sale or
refinancing of the property. The initial maturity date is April 18, 1999.
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Loan four is a $3,015,000 first lien facility, of which approximately
$2,364,000 had been funded as of September 30, 1998. Additionally, the Company
acquired accrued interest totaling $53,180. The borrower used the proceeds to
finance the acquisition and expansion of an existing medical office building in
Dallas, Texas. The loan earns interest at an accrual rate of 13% per annum.
Payments of interest only are due monthly at a pay rate of 10% per annum. The
loan agreement provides that 50% of any excess cash flow from the rental of such
property shall be applied to the interest accrual. Furthermore, the loan
agreement provides for a 50% residual profits participation. The initial
maturity date is June 30, 1999.
Loan five is a $8,765,000 first lien facility, of which approximately
$7,441,000 had been funded as of September 30, 1998. Additionally, the Company
acquired accrued interest totaling $51,775. The loan proceeds are being used as
one-year bridge financing for a 147,000 (approximate) square foot
office/industrial building in Norwood, Massachusetts. The loan earns interest at
an accrual rate of 12.5% per annum. Payments of interest only are due monthly at
a pay rate of 10% per annum. The loan agreement provides that 100% of any excess
cash flow from the rental of such property shall be applied to the interest
accrual. The initial maturity date is July 22, 1999.
ITEM 5. OTHER EVENTS.
On July 1, 1998, the Company originated a $10,068,000 mezzanine loan
for the acquisition of four office buildings in Dallas, Texas; the initial
funding totaled approximately $6,283,000. The loan earns interest at an accrual
rate of 15% per annum. Payments of interest only are due monthly at a pay rate
of 10% per annum. Additionally, the borrower paid a 2% commitment fee to the
Company. The initial maturity date is July 1, 2001.
On July 2, 1998, the Company originated a $7,000,000 first lien loan
for the acquisition of an office building in Washington, D.C.; the initial
funding totaled approximately $5,247,000. The loan earns interest at an accrual
rate of 10.5% per annum. Payments of interest only are due monthly at a pay rate
of 10.5% per annum. Additionally, the borrower paid a 2% commitment fee to the
Company. The initial maturity date is June 30, 2000.
On July 10, 1998, the Company originated a $3,350,000 first lien loan;
the initial funding totaled approximately $1,887,000. The loan is to be used by
the borrower to finance the acquisition and renovation of a multi-family complex
in Pasadena, Texas. The loan earns interest at an accrual rate of 14% per annum.
Payments of interest only are due and payable monthly at a pay rate of 10% per
annum. Additionally, the borrower paid a 1% commitment fee to the Company. The
initial maturity date is July 31, 2000.
On September 1, 1998, the Company originated an $18,419,000 first lien
loan; the initial funding totaled approximately $17,413,000. The loan is to be
used by the borrower to finance the acquisition and refurbishment of nine
buildings containing 754,000 (approximate) square feet of net rentable space,
for manufacturing, mixed-use office and ground floor retail use in Los Angeles,
California. The loan earns interest at an accrual rate of 12% per annum.
Payments of interest only are due and payable monthly at a pay rate of 10% per
annum. The Company is entitled to receive and apply 100% of any excess cash flow
from the rental of such space to the interest accrual.
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Additionally, the borrower paid a 1% commitment fee to the Company. The initial
maturity date is February 28, 2001.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits. The following exhibits are filed as part of this report on
Form 8-K:
2.1 Sale and Assignment Agreement by and between AMRESCO Commercial
Finance, Inc. and AMREIT I, Inc. dated effective as of September
30, 1998 relating to three loans.
2.2 Sale and Assignment Agreement by and between AMRESCO Commercial
Finance, Inc. and AMREIT I, Inc. dated effective as of September
30, 1998 relating to five loans.
2.3 Economics Equivalents and Funding Agreement by and between AMRESCO
Commercial Finance, Inc. and AMREIT I, Inc. dated effective as of
September 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMRESCO CAPITAL TRUST
Date: October 15, 1998 By: /S/ MICHAEL L. MCCOY
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Name: Michael L. McCoy
Title: Senior Vice President, General Counsel
and Secretary
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INDEX TO EXHIBITS
Exhibit
No. Exhibit
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2.1 Sale and Assignment Agreement by and between AMRESCO
Commercial Finance, Inc. and AMREIT I, Inc. dated effective as
of September 30, 1998 relating to three loans.
2.2 Sale and Assignment Agreement by and between AMRESCO
Commercial Finance, Inc. and AMREIT I, Inc. dated effective as
of September 30, 1998 relating to five loans.
2.3 Economics Equivalents and Funding Agreement by and between
AMRESCO Commercial Finance, Inc. and AMREIT I, Inc. dated
effective as of September 30, 1998.