UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol |
| Name of each exchange on which registered: |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |
☒ | Smaller Reporting Company | |||
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of the registrant’s common stock outstanding on July 15, 2021 was
INDEX
2
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
As of | |||||
(Unaudited) June 30, 2021 |
| December 31, 2020 | |||
ASSETS | |||||
Real Estate: | |||||
Land, at cost | $ | | $ | | |
Building and Improvements, at cost | | | |||
Total Real Estate, at cost | | | |||
Less, Accumulated Depreciation | ( | ( | |||
Real Estate—Net | | | |||
Assets Held for Sale | | — | |||
Cash and Cash Equivalents | | | |||
Restricted Cash | | — | |||
Intangible Lease Assets—Net | | | |||
Straight-Line Rent Adjustment | | | |||
Other Assets | | | |||
Total Assets | $ | | $ | | |
LIABILITIES AND EQUITY | |||||
Liabilities: | |||||
Accounts Payable, Accrued Expenses, and Other Liabilities | $ | | $ | | |
Prepaid Rent and Deferred Revenue | | | |||
Intangible Lease Liabilities—Net | | | |||
Long-Term Debt | | | |||
Total Liabilities | | | |||
Commitments and Contingencies—See Note 15 | |||||
Equity: | |||||
Preferred Stock, $ | |||||
Common Stock, $ | | | |||
Additional Paid-in Capital | | | |||
Dividends in Excess of Net Income | ( | ( | |||
Accumulated Other Comprehensive Income (Loss) | | ( | |||
Stockholders' Equity | | | |||
Noncontrolling Interest | | | |||
Total Equity | | | |||
Total Liabilities and Equity | $ | | $ | | |
The accompanying notes are an integral part of these consolidated financial statements.
3
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share, per share and dividend data)
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Revenues: | ||||||||||||
Lease Income | $ | | $ | | $ | | $ | | ||||
Total Revenues | | | | | ||||||||
Operating Expenses: | ||||||||||||
Real Estate Expenses | | | | | ||||||||
General and Administrative Expenses | | | | | ||||||||
Depreciation and Amortization | | | | | ||||||||
Total Operating Expenses | | | | | ||||||||
Net Income from Operations | | | | | ||||||||
Interest Expense | | | | | ||||||||
Net Income | | | | | ||||||||
Less: Net Income Attributable to Noncontrolling Interest | ( | ( | ( | ( | ||||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | $ | | $ | | $ | | $ | | ||||
Per Common Share Data: | ||||||||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | ||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||
Diluted | $ | | $ | | $ | | $ | | ||||
Weighted Average Number of Common Shares: | ||||||||||||
Basic | | | | | ||||||||
Diluted | | | | | ||||||||
Dividends Declared and Paid | $ | | $ | | $ | | $ | | ||||
The accompanying notes are an integral part of these consolidated financial statements.
4
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, in thousands)
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 |
| June 30, 2020 | June 30, 2021 |
| June 30, 2020 | |||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | $ | | $ | | $ | | $ | | ||||
Other Comprehensive Income (Loss) | ||||||||||||
Cash Flow Hedging Derivative - Interest Rate Swaps | ( | ( | | ( | ||||||||
Total Other Comprehensive Income (Loss) | ( | ( | | ( | ||||||||
Total Comprehensive Income (Loss) | $ | | $ | ( | $ | | $ | ( | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except per share data)
For the three months ended June 30, 2021:
| Common |
| Additional |
| Dividends in |
| Accumulated |
| Stockholders' |
| Noncontrolling |
| Total Equity | ||||||||
Balance April 1, 2021 | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | | |||||||
Net Income | — | — | | — | | | | ||||||||||||||
Stock Issuance to Directors | — | | — | — | | — | | ||||||||||||||
Stock Issuance, Net of Equity Issuance Costs | | | — | — | | — | | ||||||||||||||
Operating Units Issued | — | — | — | — | | | |||||||||||||||
Cash Dividend ($ | — | — | ( | — | ( | ( | ( | ||||||||||||||
Other Comprehensive Loss | — | — | — | ( | ( | — | ( | ||||||||||||||
Balance June 30, 2021 | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | | |||||||
For the three months ended June 30, 2020:
| Common |
| Additional |
| Dividends in |
| Accumulated | Stockholders' |
| Noncontrolling |
| Total Equity | |||||||||
Balance April 1, 2020 | $ | | $ | | $ | ( | $ | — | $ | | $ | | $ | | |||||||
Net Income | — | — | | — | | | | ||||||||||||||
Stock Repurchase | — | ( | — | — | ( | — | ( | ||||||||||||||
Stock Issuance to Directors | — | | — | — | | — | | ||||||||||||||
Cash Dividend ($ | — | — | ( | — | ( | ( | ( | ||||||||||||||
Other Comprehensive Loss | — | — | — | ( | ( | — | ( | ||||||||||||||
Balance June 30, 2020 | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | |||||||
For the six months ended June 30, 2021:
| Common |
| Additional |
| Dividends in | Accumulated |
| Stockholders' |
| Noncontrolling |
| Total Equity | |||||||||
Balance January 1, 2021 | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | |||||||
Net Income | — | — | | — | | | | ||||||||||||||
Stock Issuance to Directors | — | | — | — | | — | | ||||||||||||||
Stock Issuance, Net of Equity Issuance Costs | | | — | — | | — | | ||||||||||||||
Operating Units Issued | — | — | — | — | — | | | ||||||||||||||
Cash Dividend ($ | — | — | ( | — | ( | ( | ( | ||||||||||||||
Other Comprehensive Income | — | — | — | | | — | | ||||||||||||||
Balance June 30, 2021 | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | | |||||||
For the six months ended June 30, 2020:
| Common |
| Additional |
| Dividends in |
| Accumulated |
| Stockholders' |
| Noncontrolling |
| Total Equity | ||||||||
Balance January 1, 2020 | $ | | $ | | $ | ( | $ | — | $ | | $ | | $ | | |||||||
Net Income | — | — | | — | | | | ||||||||||||||
Stock Repurchase | — | ( | — | — | ( | — | ( | ||||||||||||||
Stock Issuance to Directors | — | | — | — | | — | | ||||||||||||||
Cash Dividend ($ | — | — | ( | — | ( | ( | ( | ||||||||||||||
Other Comprehensive Loss | — | — | — | ( | ( | — | ( | ||||||||||||||
Balance June 30, 2020 | $ | | $ | | $ | ( | $ | ( | $ | | $ | | $ | | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended | ||||||
June 30, 2021 | June 30, 2020 | |||||
Cash Flow from Operating Activities: | ||||||
Net Income | $ | | $ | | ||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||
Depreciation and Amortization | | | ||||
Amortization of Intangible Lease Assets and Liabilities to Lease Income | ( | ( | ||||
Amortization of Deferred Financing Costs to Interest Expense | | | ||||
Non-Cash Compensation | | | ||||
Decrease (Increase) in Assets: | ||||||
Straight-Line Rent Adjustment | ( | ( | ||||
COVID-19 Rent Repayments | | ( | ||||
Other Assets | | ( | ||||
Increase (Decrease) in Liabilities: | ||||||
Accounts Payable, Accrued Expenses, and Other Liabilities | | ( | ||||
Prepaid Rent and Deferred Revenue | | | ||||
Net Cash Provided By Operating Activities | | | ||||
Cash Flow from Investing Activities: | ||||||
Acquisition of Real Estate, Including Capitalized Expenditures | ( | ( | ||||
Net Cash Used In Investing Activities | ( | ( | ||||
Cash Flow from Financing Activities: | ||||||
Proceeds from Long-Term Debt | | | ||||
Payments on Long-Term Debt | ( | — | ||||
Cash Paid for Loan Fees | ( | ( | ||||
Repurchase of Common Stock | — | ( | ||||
Proceeds From Stock Issuance, net | | — | ||||
Dividends Paid | ( | ( | ||||
Net Cash Provided By Financing Activities | | | ||||
Net Increase (Decrease) in Cash and Cash Equivalents | | ( | ||||
Cash and Cash Equivalents, Beginning of Period | | | ||||
Cash and Cash Equivalents, End of Period | $ | | $ | | ||
Reconciliation of Cash to the Consolidated Balance Sheets: | ||||||
Cash and Cash Equivalents | $ | | $ | | ||
Restricted Cash | | — | ||||
Total Cash | $ | | $ | | ||
The accompanying notes are an integral part of these consolidated financial statements.
7
ALPINE INCOME PROPERTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited, in thousands)
Six Months Ended | ||||||
June 30, 2021 | June 30, 2020 | |||||
Supplemental Disclosure of Cash Flow Information: | ||||||
Cash Paid for Interest | $ | | $ | | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||
Unrealized Gain (Loss) on Cash Flow Hedge | $ | | $ | ( | ||
Operating Units Issued in Exchange for Real Estate | $ | $ | — | |||
Underwriting Discounts on Capital Raised Through Issuance of Common Stock | $ | $ | — | |||
Assumption of Mortgage Note Payable | $ | $ | — | |||
The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BUSINESS AND ORGANIZATION
BUSINESS
Alpine Income Property Trust, Inc. (the “Company” or “PINE”) is a real estate company that owns and operates a high-quality portfolio of commercial net lease properties. The terms “us,” “we,” “our,” and “the Company” as used in this report refer to Alpine Income Property Trust, Inc. together with our consolidated subsidiaries.
Our portfolio consists of
The Company has
ORGANIZATION
The Company is a Maryland corporation that was formed on August 19, 2019. On November 26, 2019, the Company closed its initial public offering (“IPO”) of shares of its common stock (the “Offering”) as well as a concurrent private placement of shares of common stock to CTO. Net proceeds from the Offering and the concurrent CTO Private Placement (defined below) were used to purchase
The price per share paid in the Offering and the concurrent private placement was $
We conduct the substantial majority of our operations through, and substantially all of our assets are held by, the Operating Partnership. Our wholly owned subsidiary, Alpine Income Property GP, LLC (“PINE GP”), is the sole general partner of the Operating Partnership. As of June 30, 2021, we have a total ownership interest in the Operating Partnership of
9
The Company has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least
COVID-19 PANDEMIC
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has continued to cause significant volatility in the U.S. and international markets, and in many industries, business activity has experienced periods of almost complete shutdown. There continues to be uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies.
Contractual Base Rent (“CBR”) represents the amount owed to the Company under the current terms of its lease agreements. As a result of the COVID-19 Pandemic, during the year ended December 31, 2020, the Company agreed to defer or abate certain CBR in exchange for additional lease term or other lease enhancing additions. Repayments of the remaining balance of deferred CBR began in the third quarter of 2020, with payments continuing, in some cases, through mid-year 2022.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period presented. Actual results could differ from those estimates.
Among other factors, fluctuating market conditions that can exist in the national real estate markets and the volatility and uncertainty in the financial and credit markets make it possible that the estimates and assumptions, most notably those related to PINE’s investment in income properties, could change materially due to continued volatility in the real estate and financial markets, or as a result of a significant dislocation in those markets.
LONG-LIVED ASSETS
The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 360-10, Property, Plant, and Equipment in conducting its impairment analyses. The Company reviews the recoverability of long-lived assets, primarily real estate, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Examples of situations considered to be triggering events include: a substantial decline in operating cash flows during the period, a current or projected loss from operations, an income property not fully leased or leased at rates that are less than current market rates, and any other quantitative or qualitative events deemed significant by management. Long-lived assets are evaluated for impairment by using an undiscounted cash flow approach, which considers future estimated capital expenditures. Impairment of long-lived assets is measured at fair value less cost to sell.
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PURCHASE ACCOUNTING FOR ACQUISITIONS OF REAL ESTATE SUBJECT TO A LEASE
Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price or development cost. We evaluate each acquisition transaction to determine whether the acquired asset meets the definition of a business. Under Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred. Improvements and replacements are capitalized when they extend the useful life or improve the productive capacity of the asset. Costs of repairs and maintenance are expensed as incurred.
In accordance with FASB guidance, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their relative fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the management believes that it is likely that the tenant will renew the lease upon expiration, in which case the Company amortizes the value attributable to the renewal over the renewal period. The value of in-place leases and leasing costs are amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off.
INCOME PROPERTY LEASE REVENUE
The rental arrangements associated with the Company’s income property portfolio are classified as operating leases. The Company recognizes lease income on these properties on a straight-line basis over the term of the lease. Accordingly, contractual lease payment increases are recognized evenly over the term of the lease. The periodic difference between lease income recognized under this method and contractual lease payment terms (i.e., straight-line rent) is recorded as a deferred operating lease receivable and is included in straight-line rent adjustment on the accompanying consolidated balance sheets. The Company’s leases provide for reimbursement from tenants for variable lease payments including common area maintenance, insurance, real estate taxes and other operating expenses. A portion of our variable lease payment revenue is estimated each period and is recognized as rental income in the period the recoverable costs are incurred and accrued.
The collectability of tenant receivables and straight-line rent adjustments is determined based on, among other things, the aging of the tenant receivable, management’s evaluation of credit risk associated with the tenant and industry of the tenant, and a review of specifically identified accounts using judgment. As of June 30, 2021 and December 31, 2020, the Company had recorded an allowance for doubtful accounts of $
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, bank demand accounts, and money market accounts having original maturities of 90 days or less. The Company’s bank balances as of June 30, 2021 and December 31, 2020 include certain amounts over the Federal Deposit Insurance Corporation limits. The carrying value of cash and cash equivalents is reported at Level 1 in the fair value hierarchy, which represents valuation based upon quoted prices in active markets for identical assets or liabilities.
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RESTRICTED CASH
Restricted cash totaled $
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY
Interest Rate Swaps. The Company accounts for its cash flow hedging derivatives in accordance with FASB ASC Topic 815-20, Derivatives and Hedging. Depending upon the hedge’s value at each balance sheet date, the derivatives are included in either other assets or accounts payable, accrued expenses, and other liabilities on the consolidated balance sheet at its fair value. On the date each interest rate swap was entered into, the Company designated the derivatives as a hedge of the variability of cash flows to be paid related to the recognized long-term debt liabilities.
The Company documented the relationship between the hedging instruments and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transactions. At the hedges’ inception, the Company formally assessed whether the derivatives that are used in hedging the transactions are highly effective in offsetting changes in cash flows of the hedged items, and we will continue to do so on an ongoing basis. As the terms of the interest rate swaps and the associated debts are identical, both hedging instruments qualify for the shortcut method, therefore, it is assumed that there is no hedge ineffectiveness throughout the entire term of the hedging instruments.
Changes in fair value of the hedging instruments that are highly effective and designated and qualified as cash-flow hedges are recorded in other comprehensive income and loss, until earnings are affected by the variability in cash flows of the designated hedged items (see Note 9, “Interest Rate Swaps”).
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company’s financial assets and liabilities including cash and cash equivalents, restricted cash, accounts receivable included in other assets, accounts payable, and accrued expenses and other liabilities at June 30, 2021 and December 31, 2020, approximate fair value because of the short maturity of these instruments. The carrying value of the Company’s Credit Facility, hereinafter defined, as of June 30, 2021 and December 31, 2020, approximates current market rates for revolving credit arrangements with similar risks and maturities. The Company estimates the fair value of its mortgage notes payable and Term Loan, hereinafter defined, based on incremental borrowing rates for similar types of borrowing arrangements with the same remaining maturity and on the discounted estimated future cash payments to be made for other debt. The discount rate used to calculate the fair value of debt approximates current lending rates for loans and assumes the debt is outstanding through maturity. Since such amounts are estimates that are based on limited available market information for similar transactions, which is a Level 2 non-recurring measurement, there can be no assurance that the disclosed value of any financial instrument could be realized by immediate settlement of the instrument.
FAIR VALUE MEASUREMENTS
The Company’s estimates of fair value of financial and non-financial assets and liabilities is based on the framework established by GAAP. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. GAAP describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:
| ● | Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
12
| ● | Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. |
CONCENTRATION OF RISK
Certain of the tenants in the portfolio of
During the six months ended June 30, 2021, the properties leased to Wells Fargo Bank, NA represented
As of June 30, 2021 and December 31, 2020, based on square footage,
RECLASSIFICATIONS
Certain items in the consolidated balance sheet as of December 31, 2020 have been reclassified to conform to the presentation as of March 31, 2021. Specifically, in the first quarter of 2021, the Company reclassified deferred financing costs, net of accumulated amortization, as a component of other assets on the accompanying consolidated balance sheet. Accordingly, deferred financing costs of $
NOTE 3. INCOME PROPERTY PORTFOLIO
As of June 30, 2021, the Company’s income property portfolio consisted of
Leasing revenue consists of long-term rental revenue from retail and office income properties, which is recognized as earned, using the straight-line method over the life of each lease.
The components of leasing revenue are as follows (in thousands):
Three Months Ended |
| Six Months Ended | ||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Lease Income | ||||||||||||
Lease Payments | $ | | $ | | $ | | $ | | ||||
Variable Lease Payments | | | | | ||||||||
Total Lease Income | $ | | $ | | $ | | $ | | ||||
13
Minimum Future Rental Receipts. Minimum future rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to June 30, 2021, are summarized as follows (in thousands):
Year Ending December 31, |
| Amounts | |
Remainder of 2021 | $ | | |
2022 | | ||
2023 | | ||
2024 | | ||
2025 | | ||
2026 and thereafter (cumulative) | | ||
Total | $ | | |
2021 Activity. During the six months ended June 30, 2021, the Company acquired
14
The net lease income properties acquired during the six months ended June 30, 2021 are described below:
Description | Location | Date of Acquisition | Square-Feet | Purchase Price ($000's) | Remaining Lease Term at Acquisition Date (in years) | ||||||
Dollar General | Cut and Shoot, TX | $ | |||||||||
Dollar General | Del Rio, TX | ||||||||||
Dollar General | Seguin, TX | ||||||||||
At Home | Canton, OH | (1) | |||||||||
Pet Supplies Plus | Canton, OH | (1) | |||||||||
Salon Lofts | Canton, OH | (1) | |||||||||
Sportsman Warehouse | Albuquerque, NM | ||||||||||
Burlington Stores, Inc. | North Richland Hills, TX | ||||||||||
Academy Sports | Florence, SC | ||||||||||
Big Lots | Durant, OK | (2) | |||||||||
Orscheln | Durant, OK | (2) | |||||||||
Lowe's | Katy, TX | ||||||||||
Harris Teeter | Charlotte, NC | ||||||||||
Rite Aid | Renton, WA | ||||||||||
Walgreens | Clermont, FL | ||||||||||
Big Lots | Germantown, MD | ||||||||||
Big Lots | Phoenix, AZ | ||||||||||
Circle K | Indianapolis, IN | (3) | |||||||||
Burger King | Plymouth, NC | (3) | |||||||||
Dollar Tree | Demopolis, AL | (3) | |||||||||
Firestone | Pittsburgh, PA | (3) | |||||||||
Advance Auto Parts | Ware, MA | (3) | |||||||||
Grease Monkey | Stockbridge, GA | (3) | |||||||||
Hardee's | Boaz, AL | (3) | |||||||||
Schlotzsky's | Sweetwater, TX | (3) | |||||||||
Advance Auto Parts | Athens, GA | (3) | |||||||||
Total / Weighted Average | $ | ||||||||||
| (1) | Tenants represent the acquisition of |
| (2) | Tenants represent the acquisition of |
| (3) | The aggregate purchase price of $ |
2020 Activity. During the six months ended June 30, 2020, the Company acquired
15
The net lease income properties acquired during the six months ended June 30, 2020 are described below:
Description | Location | Date of Acquisition | Square-Feet | Purchase Price ($000's) | Remaining Lease Term at Acquisition Date (in years) | ||||||
7-Eleven | Austin, TX | $ | |||||||||
7-Eleven | Georgetown, TX | ||||||||||
Conn's HomePlus | Hurst, TX | ||||||||||
Lehigh Gas Wholesale Services, Inc. | Highland Heights, KY | ||||||||||
American Multi-Cinema, Inc. | Tyngsborough, MA | ||||||||||
Hobby Lobby | Tulsa, OK | ||||||||||
Long John Silver's | Tulsa, OK | N/A | |||||||||
Old Time Pottery | Orange Park, FL | ||||||||||
Freddy's Frozen Custard | Orange Park, FL | ||||||||||
Hobby Lobby | Arden, NC | ||||||||||
Walmart | Howell, MI | ||||||||||
Total / Weighted Average | $ | ||||||||||
NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying value and estimated fair value of the Company’s financial instruments not carried at fair value on the consolidated balance sheets at June 30, 2021 and December 31, 2020 (in thousands):
June 30, 2021 | December 31, 2020 | |||||||||||
| Carrying Value |
| Estimated Fair Value |
| Carrying Value |
| Estimated Fair Value | |||||
Cash and Cash Equivalents - Level 1 | $ | | $ | | $ | | $ | | ||||
Restricted Cash - Level 1 | $ | | $ | | $ | — | $ | — | ||||
Long-Term Debt - Level 2 | $ | | $ | | $ | | $ | | ||||
The estimated fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.
The following tables present the fair value of assets (liabilities) measured on a recurring basis by Level as of June 30, 2021 and December 31, 2020 (in thousands):
Fair Value at Reporting Date Using | ||||||||||||
| Fair Value |
| Quoted Prices in Active Markets for Identical Assets (Level 1) |
| Significant Other Observable Inputs (Level 2) |
| Significant Unobservable Inputs (Level 3) | |||||
June 30, 2021 | ||||||||||||
Credit Facility Interest Rate Swap (1) | $ | | $ | — | $ | | $ | — | ||||
Term Loan Interest Rate Swap (2) | $ | | $ | — | $ | | $ | — | ||||
December 31, 2020 | ||||||||||||
Credit Facility Interest Rate Swap (1) | $ | ( | $ | — | $ | ( | $ | — | ||||
Term Loan Interest Rate Swap (2) | $ | — | $ | — | $ | — | $ | — | ||||
| (1) | Effective April 30, 2020, the Company utilized an interest rate swap to achieve a fixed interest rate of |
| (2) | Effective May 21, 2021, the Company utilized an interest rate swap to achieve a fixed LIBOR rate of |
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NOTE 5. INTANGIBLE ASSETS AND LIABILITIES
Intangible assets and liabilities consist of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their fair values. Intangible assets and liabilities consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):
As of | ||||||
June 30, 2021 | December 31, 2020 | |||||
Intangible Lease Assets: | ||||||
Value of In-Place Leases | $ | | $ | | ||
Value of Above Market In-Place Leases | | | ||||
Value of Intangible Leasing Costs | | | ||||
Sub-total Intangible Lease Assets | | | ||||
Accumulated Amortization | ( | ( | ||||
Sub-total Intangible Lease Assets—Net | | | ||||
Intangible Lease Liabilities: | ||||||
Value of Below Market In-Place Leases | ( | ( | ||||
Sub-total Intangible Lease Liabilities | ( | ( | ||||
Accumulated Amortization | | | ||||
Sub-total Intangible Lease Liabilities—Net | ( | ( | ||||
Total Intangible Assets and Liabilities—Net | $ | | $ | | ||
The following table reflects the net amortization of intangible assets and liabilities during the three and six months ended June 30, 2021 and 2020 (in thousands):
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Amortization Expense | $ | | $ | | $ | | $ | | ||||
Increase to Income Properties Revenue | ( | ( | ( | ( | ||||||||
Net Amortization of Intangible Assets and Liabilities | $ | | $ | | $ | | $ | | ||||
The estimated future amortization expense (income) related to net intangible assets and liabilities is as follows (in thousands):
Year Ending December 31, | Future Amortization Expense | Future Accretion to Income Property Revenue | Net Future Amortization of Intangible Assets and Liabilities | ||||||
Remainder of 2021 | $ | | $ | ( | $ | | |||
2022 | | ( | | ||||||
2023 | | ( | | ||||||
2024 | | ( | | ||||||
2025 | | ( | | ||||||
2026 and thereafter | | ( | | ||||||
Total | $ | | $ | ( | $ | | |||
As of June 30, 2021, the weighted average amortization period of both the total intangible assets and liabilities was
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NOTE 6. OTHER ASSETS
Other assets consisted of the following (in thousands):
As of | ||||||
June 30, 2021 | December 31, 2020 | |||||
Tenant Receivables | $ | | $ | | ||
Accrued Unbilled Tenant Receivables—Net of Allowance for Doubtful Accounts (1) | | | ||||
Prepaid Insurance | | | ||||
Deposits on Acquisitions | | | ||||
Prepaid and Deposits—Other | | | ||||
Deferred Financing Costs—Net | | | ||||
Interest Rate Swaps | | — | ||||
Total Other Assets | $ | | $ | | ||
| (1) | As of June 30, 2021 and December 31, 2020, includes $ |
NOTE 7. ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
Accounts payable, accrued expenses and other liabilities consisted of the following (in thousands):
As of | ||||||
June 30, 2021 | December 31, 2020 | |||||
Accounts Payable | $ | | $ | | ||
Accrued Expenses | | | ||||
Due to CTO | | (1) | | |||
Interest Rate Swap | — | | ||||
Total Accounts Payable, Accrued Expenses, and Other Liabilities | $ | | $ | | ||
| (1) | As of June 30, 2021, includes $ |
NOTE 8. LONG-TERM DEBT
As of June 30, 2021, the Company’s outstanding indebtedness, at face value, was as follows (in thousands):
Face Value Debt | Stated Interest Rate | Maturity Date | |||||
Credit Facility (1) | $ | | 30-Day LIBOR + | November 2023 | |||
Term Loan (2) | | 30-Day LIBOR + | May 2026 | ||||
Mortgage Note Payable – CMBS Portfolio | | October 2034 | |||||
Mortgage Notes Payable | | N/A | July 2021 (3) | ||||
Total Debt/Weighted-Average Rate | $ | | |||||
| (1) | Effective April 30, 2020, the Company utilized an interest rate swap to achieve a fixed interest rate of |
| (2) | Effective May 21, 2021, the Company utilized an interest rate swap to achieve a weighted average fixed interest rate of |
| (3) | Mortgage notes payable assumed in connection with the acquisition of |
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Credit Facility. On November 26, 2019, the Company and the Operating Partnership entered into a credit agreement (the “Credit Facility Credit Agreement”) with a group of lenders for a senior unsecured revolving credit facility (the “Credit Facility”) in the maximum aggregate initial original principal amount of up to $
On June 30, 2020, the Company and the Operating Partnership executed the first amendment to the Credit Facility Credit Agreement whereby the tangible net worth covenant was adjusted to be more reflective of market terms.
On October 16, 2020, the Company and the Operating Partnership executed the second amendment to the Credit Facility (the “Second Amendment”), with the addition of
On May 19, 2021, the Company and the Operation Partnership executed the third amendment to the Credit Facility (the “Third Amendment”). Among other things, the Third Amendment revised the Credit Facility Credit Agreement to provide that as of the last day of each fiscal quarter, the Operating Partnership shall not permit the ratio of Unsecured Indebtedness to Borrowing Base Value (as defined in the Credit Facility Credit Agreement) to be greater than
Pursuant to the Credit Facility Credit Agreement, the indebtedness outstanding under the Credit Facility accrues at a rate ranging from the 30-day LIBOR plus
The Operating Partnership is subject to customary restrictive covenants under the Credit Facility and the Term Loan (hereinafter defined), including, but not limited to, limitations on the Operating Partnership’s ability to: (a) incur indebtedness; (b) make certain investments; (c) incur certain liens; (d) engage in certain affiliate transactions; and (e) engage in certain major transactions such as mergers. The Credit Facility and Term Loan also contain financial covenants covering the Operating Partnership, including but not limited to, tangible net worth and fixed charge coverage ratios.
At June 30, 2021, the current commitment level under the Credit Facility was $
Term Loan. On May 21, 2021, the Operating Partnership, the Company and certain subsidiaries of the Company entered into a term loan credit agreement (the “Term Loan Credit Agreement”) for a term loan (the “Term Loan”) in an aggregate principal amount of $
Mortgage Notes Payable. On June 30, 2021, in connection with the acquisition of the CMBS Portfolio from CTO, the Company assumed an existing $
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Long-term debt as of June 30, 2021 and December 31, 2020 consisted of the following (in thousands):
June 30, 2021 | December 31, 2020 | |||||||||||
| Total |
| Due Within One Year |
| Total |
| Due Within One Year | |||||
Credit Facility | $ | | $ | — | $ | | $ | — | ||||
Term Loan | | — | — | — | ||||||||
Mortgage Note Payable – CMBS Portfolio | | — | — | — | ||||||||
Mortgage Notes Payable | | (1) | | — | — | |||||||
Financing Costs, net of accumulated amortization | ( | — | — | — | ||||||||
Total Long-Term Debt | $ | | $ | | $ | | $ | — | ||||
| (1) | Mortgage notes payable assumed in connection with the acquisition of |
Payments applicable to reduction of principal amounts as of June 30, 2021 will be required as follows (in thousands):
Year Ending December 31, |
| Amount | |
Remainder of 2021 | $ | | |
2022 | | ||
2023 | | ||
2024 | | ||
2025 | | ||
2026 and thereafter | | ||
Total Long-Term Debt - Face Value | $ | | |
The carrying value of long-term debt as of June 30, 2021 consisted of the following (in thousands):
| Total | ||
Current Face Amount | $ | | |
Financing Costs, net of accumulated amortization | ( | ||
Total Long-Term Debt | $ | | |
In addition to the $
The following table reflects a summary of interest expense incurred and paid during the three and six months ended June, 2021 and 2020 (in thousands):
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Interest Expense | $ | | $ | | $ | | $ | | ||||
Amortization of Deferred Financing Costs to Interest Expense | | | | | ||||||||
Total Interest Expense | $ | | $ | | $ | | $ | | ||||
Total Interest Paid | $ | | $ | | $ | | $ | | ||||
The Company was in compliance with all of its debt covenants as of June 30, 2021.
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NOTE 9. INTEREST RATE SWAPS
During April 2020, the Company entered into an interest rate swap agreement to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR for $
During May 2021, the Company entered into an interest rate swap agreement to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR for the $
NOTE 10. EQUITY
SHELF REGISTRATION
On December 1, 2020, the Company filed a shelf registration statement on Form S-3, relating to the registration and potential issuance of its common stock, preferred stock, warrants, rights, and units with a maximum aggregate offering price of up to $
ATM PROGRAM
On December 14, 2020, the Company implemented a $
FOLLOW-ON PUBLIC OFFERING
In June 2021, the Company completed a follow-on public offering of
NONCONTROLLING INTEREST
As of June 30, 2021, CTO holds, directly and indirectly, a
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DIVIDENDS
The Company has elected to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code. To qualify as a REIT, the Company must annually distribute, at a minimum, an amount equal to
NOTE 11. COMMON STOCK AND EARNINGS PER SHARE
Basic earnings per common share are computed by dividing net income attributable to the Company for the period by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share are determined based on the assumption of the conversion of OP Units on a one-for-one basis using the treasury stock method at average market prices for the periods.
The following is a reconciliation of basic and diluted earnings per common share (in thousands, except share and per share data):
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | $ | | $ | | $ | | $ | | ||||
Weighted Average Number of Common Shares Outstanding | | | | | ||||||||
Common Shares Applicable to OP Units using Treasury Stock Method (1) | | | | | ||||||||
Total Shares Applicable to Diluted Earnings per Share | | | | | ||||||||
Per Common Share Data: | ||||||||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | ||||||||||||
Basic | $ | | $ | | $ | | $ | | ||||
Diluted | $ | | $ | | $ | | $ | | ||||
| (1) | Represents the weighted average impact of |
NOTE 12. SHARE REPURCHASES
In March 2020, the Board approved a $
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NOTE 13. STOCK-BASED COMPENSATION
In connection with the closing of the IPO, the Company adopted the Individual Equity Incentive Plan (the “Individual Plan”) and the Manager Equity Incentive Plan (the “Manager Plan”), which are collectively referred to herein as the Equity Incentive Plans. The purpose of the Equity Incentive Plans is to provide equity incentive opportunities to members of the Manager’s management team and employees who perform services for the Company, the Company’s independent directors, advisers, consultants and other personnel, either individually or via grants of incentive equity to the Manager.
On November 26, 2019, in connection with the closing of the IPO, the Company granted restricted shares of common stock to each of the non-employee directors under the Individual Plan. Each of the non-employee directors received an award of
A summary of activity for these awards during the six months ended June 30, 2021 is presented below:
Non-Vested Restricted Shares |
| Shares |
| Wtd. Avg. Fair Value | ||
Outstanding at January 1, 2021 | | $ | | |||
Granted | | | ||||
Vested | | | ||||
Expired | | | ||||
Forfeited | | | ||||
Non-Vested at June 30, 2021 | | $ | | |||
As of June 30, 2021, there was $
Each member of the Board has the option to receive his or her annual retainer in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing the amount of the quarterly retainer payment due to such director by the trailing
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Stock compensation expense for the three and six months ended June 30, 2021 and 2020 is summarized as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Stock Compensation Expense – Director Restricted Stock | $ | | $ | | $ | | $ | | ||||
Stock Compensation Expense – Director Retainers Paid in Stock | | | | | ||||||||
Total Stock Compensation Expense (1) | $ | | $ | | $ | | $ | | ||||
| (1) | Director retainers are issued through additional paid in capital in arrears. Therefore, the change in additional paid in capital during the six months ended June 30, 2021 reported on the consolidated statements of stockholders’ equity does not agree to the total non-cash compensation reported on the consolidated statements of cash flows. |
NOTE 14. RELATED PARTY MANAGEMENT COMPANY
We are externally managed by the Manager, a wholly owned subsidiary of CTO. In addition to the CTO Private Placement, CTO purchased from us $
On November 26, 2019, we entered into the Management Agreement with the Manager (the “Management Agreement”). Pursuant to the terms of the Management Agreement, our Manager manages, operates and administers our day-to-day operations, business and affairs, subject to the direction and supervision of the Board and in accordance with the investment guidelines approved and monitored by the Board. We pay our Manager a base management fee equal to
Our Manager has the ability to earn an annual incentive fee based on our total stockholder return exceeding an
The initial term of the Management Agreement will expire on November 26, 2024 and will automatically renew for an unlimited number of successive
Our independent directors will review our Manager’s performance and the management fees annually and, following the initial term, the Management Agreement may be terminated annually upon the affirmative vote of -thirds of our independent directors or upon a determination by the holders of a majority of the outstanding shares of our common stock, based upon (i) unsatisfactory performance by the Manager that is materially detrimental to us or (ii) a determination that the management fees payable to our Manager are not fair, subject to our Manager’s right to prevent such termination due to unfair fees by accepting a reduction of management fees agreed to by -thirds of our independent directors. We may also terminate the Management Agreement for cause at any time, including during the initial term, without the payment of any termination fee, with
We will pay directly or reimburse our Manager for certain expenses, if incurred by our Manager. We will not reimburse any compensation expenses incurred by our Manager or its affiliates. Expense reimbursements to our Manager will be made in cash on a quarterly basis following the end of each quarter. In addition, we will pay all of our operating expenses, except those specifically required to be borne by our Manager pursuant to the Management Agreement.
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During the three and six months ended June 30, 2021, the Company incurred management fee expenses which totaled $
The following table represents amounts due from the Company to CTO (in thousands):
As of | ||||||
Description |
| June 30, 2021 |
| December 31, 2020 | ||
Management Fee due to CTO | $ | | $ | | ||
Other | | (1) | ( | |||
Total (2) | $ | | $ | | ||
| (1) | Includes $ |
| (2) | Included in Accrued Expenses, see Note 7, “Accounts Payable, Accrued Expenses, and Other Liabilities”. |
Exclusivity and ROFO Agreement
On November 26, 2019, we also entered into an exclusivity and right of first offer (“ROFO”) agreement with CTO. During the term of the exclusivity and ROFO agreement, CTO will not, and will cause each of its affiliates (which for purposes of the exclusivity and ROFO agreement will not include our company and our subsidiaries) not to, acquire, directly or indirectly, a single-tenant, net leased property, unless CTO has notified us of the opportunity and we have affirmatively rejected the opportunity to acquire the applicable property or properties.
The terms of the exclusivity and ROFO agreement do not restrict CTO or any of its affiliates from providing financing for a third party’s acquisition of single-tenant, net leased properties or from developing and owning any single-tenant, net leased property.
Pursuant to the exclusivity and ROFO agreement, neither CTO nor any of its affiliates (which for purposes of the exclusivity and ROFO agreement does not include our company and our subsidiaries) may sell to any third party any single-tenant, net leased property that was owned by CTO or any of its affiliates as of the closing date of the IPO or that is developed and owned by CTO or any of its affiliates after the closing date of the IPO, without first offering us the right to purchase such property.
The term of the exclusivity and ROFO agreement will continue for so long as the Management Agreement with our Manager is in effect.
On April 6, 2021, the Company entered into a purchase and sale agreement with a certain subsidiary of CTO for the purchase of
On April 2, 2021, the Company entered into a separate purchase and sale agreement with certain subsidiaries of CTO for the purchase of the CMBS Portfolio. The terms of the purchase and sale agreement, as amended on April 20, 2021, provided a total purchase price of $
The entry into the purchase and sale agreements, and subsequent completion of acquisitions, are a result of the Company exercising its right to purchase the Single Property and CMBS Portfolio under the ROFO agreement.
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Conflicts of Interest
Conflicts of interest may exist or could arise in the future with CTO and its affiliates, including our Manager, the individuals who serve as our executive officers and executive officers of CTO, any individual who serves as a director of our company and as a director of CTO and any limited partner of the Operating Partnership. Conflicts may include, without limitation: conflicts arising from the enforcement of agreements between us and CTO or our Manager; conflicts in the amount of time that executive officers and employees of CTO, who are provided to us through our Manager, will spend on our affairs versus CTO’s affairs; and conflicts in future transactions that we may pursue with CTO and its affiliates. We do not generally expect to enter into joint ventures with CTO, but if we do so, the terms and conditions of our joint venture investment will be subject to the approval of a majority of disinterested directors of the Board.
In addition, we are subject to conflicts of interest arising out of our relationships with our Manager. Pursuant to the Management Agreement, our Manager is obligated to supply us with our senior management team. However, our Manager is not obligated to dedicate any specific CTO personnel exclusively to us, nor are the CTO personnel provided to us by our Manager obligated to dedicate any specific portion of their time to the management of our business. Additionally, our Manager is a wholly owned subsidiary of CTO. All of our executive officers are executive officers and employees of CTO and one of our officers (John P. Albright) is also a member of CTO’s board of directors. As a result, our Manager and the CTO personnel it provides to us may have conflicts between their duties to us and their duties to, and interests in, CTO.
We may acquire or sell single-tenant, net leased properties in which our Manager or its affiliates have or may have an interest. Similarly, our Manager or its affiliates may acquire or sell single-tenant, net leased properties in which we have or may have an interest. Although such acquisitions or dispositions may present conflicts of interest, we nonetheless may pursue and consummate such transactions. Additionally, we may engage in transactions directly with our Manager or its affiliates, including the purchase and sale of all or a portion of a portfolio asset. If we acquire a single-tenant, net leased property from CTO or one of its affiliates or sell a single-tenant, net leased property to CTO or one of its affiliates, the purchase price we pay to CTO or one of its affiliates or the purchase price paid to us by CTO or one of its affiliates may be higher or lower, respectively, than the purchase price that would have been paid to or by us if the transaction were the result of arms’ length negotiations with an unaffiliated third party.
In deciding whether to issue additional debt or equity securities, we will rely, in part, on recommendations made by our Manager. While such decisions are subject to the approval of the Board, our Manager is entitled to be paid a base management fee that is based on our “total equity” (as defined in the Management Agreement). As a result, our Manager may have an incentive to recommend that we issue additional equity securities at dilutive prices.
All of our executive officers are executive officers and employees of CTO. These individuals and other CTO personnel provided to us through our Manager devote as much time to us as our Manager deems appropriate. However, our executive officers and other CTO personnel provided to us through our Manager may have conflicts in allocating their time and services between us, on the one hand, and CTO and its affiliates, on the other. During a period of prolonged economic weakness or another economic downturn affecting the real estate industry or at other times when we need focused support and assistance from our Manager and the CTO executive officers and other personnel provided to us through our Manager, we may not receive the necessary support and assistance we require or that we would otherwise receive if we were self-managed.
Additionally, the exclusivity and ROFO agreement does contain exceptions to CTO’s exclusivity for opportunities that include only an incidental interest in single-tenant, net leased properties. Accordingly, the exclusivity and ROFO agreement will not prevent CTO from pursuing certain acquisition opportunities that otherwise satisfy our then-current investment criteria.
Our directors and executive officers have duties to our company under applicable Maryland law in connection with their management of our company. At the same time, PINE GP has fiduciary duties, as the general partner, to the Operating Partnership and to the limited partners under Delaware law in connection with the management of the Operating Partnership. These duties as a general partner to the Operating Partnership and its partners may come into conflict with the duties of our directors and executive officers to us. Unless otherwise provided for in the relevant partnership agreement, Delaware law generally requires a general partner of a Delaware limited partnership to adhere to fiduciary duty standards under which it owes its limited partners the highest duties of loyalty and care and which generally prohibits such general partner from taking any action or engaging in any transaction as to which it has a conflict of interest. The partnership agreement provides that in the event of a conflict between the interests of our stockholders on the one hand and the limited
26
partners of the Operating Partnership on the other hand, PINE GP will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that so long as we own a controlling interest in the Operating Partnership, any such conflict that we, in our sole and absolute discretion, determine cannot be resolved in a manner not adverse to either our stockholders or the limited partners of the Operating Partnership shall be resolved in favor of our stockholders, and we shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the limited partners in connection with such decisions.
NOTE 15. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of business. The Company is not currently a party to any pending or threatened legal proceedings that we believe could have a material adverse effect on the Company’s business or financial condition.
NOTE 16. ASSETS HELD FOR SALE
The following is a summary of assets held for sale as of June 30, 2021 (in thousands).
As of June 30, 2021 | |||
Real Estate-Net | $ | | |
Intangible Lease Assets—Net | | ||
Intangible Lease Liabilities—Net | ( | ||
Total Assets Held for Sale | $ | | |
NOTE 17. SUBSEQUENT EVENTS
The Company reviewed all subsequent events and transactions through July 22, 2021, the date the consolidated financial statements were issued. There were no reportable subsequent events or transactions.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
When we refer to “we,” “us,” “our,” “PINE,” or “the Company,” we mean Alpine Income Property Trust, Inc. and its consolidated subsidiaries. References to “Notes to Financial Statements” refer to the Notes to the Consolidated Financial Statements of Alpine Income Property Trust, Inc. included in this Quarterly Report on Form 10-Q. Some of the comments we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section below entitled “Special Note Regarding Forward-Looking Statements.” Certain factors that could cause actual results or events to differ materially from those the Company anticipates or projects are described in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Special Note Regarding Forward-Looking Statements
This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Certain statements contained in this report (other than statements of historical fact) are forward-looking statements. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Forward-looking statements are made based upon management’s expectations and beliefs concerning future developments and their potential effect upon the Company. There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management.
Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. These risks and uncertainties include, but are not limited to, the strength of the real estate market; the impact of a prolonged recession or downturn in economic conditions; our ability to successfully execute acquisition or development strategies; any loss of key management personnel; changes in local, regional, and national economic conditions affecting the real estate development business and income properties; the impact of competitive real estate activity; the loss of any major income property tenants; the ultimate geographic spread, severity and duration of pandemics such as the outbreak of COVID-19, actions that may be taken by governmental authorities to contain or address the impact of such pandemics, and the potential negative impacts of such pandemics on the global economy and our financial condition and results of operations; and the availability of capital. These risks and uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements.
See “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion of these risks. Given these uncertainties, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.
OVERVIEW
We are a real estate company that owns and operates a high-quality portfolio of commercial properties located in the United States. Our properties are generally leased on a long-term basis and located primarily in, or in close proximity to major metropolitan statistical areas, or MSAs, and in growth markets and other markets in the United States with favorable economic and demographic conditions. Our properties are primarily leased to industry leading, creditworthy tenants, many of which operate in industries we believe are resistant to the impact of e-commerce or defensive in nature against economic uncertainty or disruption. The properties in our portfolio are primarily triple-net leases which generally require the tenant to pay all of the property operating expenses such as real estate taxes, insurance, assessments and other governmental fees, utilities, repairs and maintenance and certain capital expenditures. Our portfolio consists of 71 net leased retail and office properties located in 49 markets in 22 states. Twenty of these properties, representing our initial portfolio, were acquired
28
from CTO Realty Growth, Inc. (“CTO”) in the formation transactions, utilizing $125.9 million of proceeds from our initial public offering of our common stock (the “IPO”) and the issuance of 1,223,854 units of our operating partnership (the “OP Units”) that had an initial value of $23.3 million based on the IPO price of $19.00 per share (the “IPO Price”). The remaining 51 properties were acquired subsequent to the year ended December 31, 2019. Four properties in our portfolio are long-term ground leases where we are the lessor to the tenant.
We seek to acquire, own and operate primarily freestanding, commercial real estate properties primarily located in our target markets leased primarily pursuant to triple-net, long-term leases. Within our target markets, we will focus on investments primarily in retail properties. We will target tenants in industries that we believe are favorably impacted by current macroeconomic trends that support consumer spending, such as strong and growing employment and positive consumer sentiment, as well as tenants in industries that have demonstrated resistance to the impact of the growing e-commerce retail sector. We also will seek to invest in properties that are net leased to tenants that we determine have attractive credit characteristics, stable operating histories and healthy rent coverage levels, are well-located within their market and have rent levels at or below market rent levels. Furthermore, we believe that the size of our company will, for at least the near term, allow us to focus our investment activities on the acquisition of single properties or smaller portfolios of properties that represent a transaction size that most of our publicly-traded net lease REIT peers will not pursue on a consistent basis.
Our objective is to maximize cash flow and value per share by generating stable and growing cash flows and attractive risk-adjusted returns through owning, operating and growing a diversified portfolio of high-quality net leased commercial properties with strong long-term real estate fundamentals. The 71 properties in our portfolio are 100% occupied and represent 2.3 million of gross rentable square feet. As of June 30, 2021, our leases have a weighted-average remaining lease term of 8.0 years based on annualized base rent.
Our strategy for investing in income-producing properties is focused on factors including, but not limited to, long-term real estate fundamentals and target markets, including major markets or those markets experiencing significant economic growth. We employ a methodology for evaluating targeted investments in income-producing properties which includes an evaluation of: (i) the attributes of the real estate (e.g., location, market demographics, comparable properties in the market, etc.); (ii) an evaluation of the existing tenant(s) (e.g., credit-worthiness, property level sales, tenant rent levels compared to the market, etc.); (iii) other market-specific conditions (e.g., tenant industry, job and population growth in the market, local economy, etc.); and (iv) considerations relating to the Company’s business and strategy (e.g., strategic fit of the asset type, property management needs, alignment with the Company’s structure, etc.).
The Company has no employees and is externally managed by Alpine Income Property Manager, LLC, a Delaware limited liability company and a wholly owned subsidiary of CTO (our “Manager”). CTO is a Maryland corporation that is a publicly traded diversified REIT and the sole member of our Manager.
COVID-19 PANDEMIC
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus as a pandemic (the “COVID-19 Pandemic”), which has spread throughout the United States. The spread of the COVID-19 Pandemic has continued to cause significant volatility in the U.S. and international markets, and in many industries, business activity has experienced periods of almost complete shutdown. There continues to be uncertainty around the duration and severity of business disruptions related to the COVID-19 Pandemic, as well as its impact on the U.S. economy and international economies.
Contractual Base Rent (“CBR”) represents the amount owed to the Company under the current terms of its lease agreements. As a result of the COVID-19 Pandemic, during the year ended December 31, 2020, the Company agreed to defer or abate certain CBR in exchange for additional lease term or other lease enhancing additions. Repayments of the remaining balance of deferred CBR began in the third quarter of 2020, with payments continuing, in some cases, through mid-year 2022.
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As of June 30, 2021, the Company owned 71 income properties in 22 states. The following is a summary of these properties:
Type | Description | S&P Credit Rating (1) | Location | Rentable Square Feet | Remaining Term (Years) | Contractual Rent Escalations | Annualized Base Rent ($000's) (2) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Office | Wells Fargo | A+ | Portland, OR | 212,363 | 4.5 | Yes | $ | 3,137 | |||||||
Office | Hilton Grand Vacations | BB | Orlando, FL | 102,019 | 5.4 | Yes | 1,825 | ||||||||
Retail | Walmart | AA | Howell, MI | 214,172 | 5.6 | No | 1,369 | ||||||||
Retail | LA Fitness | CCC+ | Brandon, FL | 45,000 | 10.8 | Yes | 958 | ||||||||
Retail | Lowe's | BBB+ | Katy, TX | 131,644 | 10.6 | No | 917 | ||||||||
Retail | Burlington Stores, Inc. | BB+ | North Richland Hills, TX | 70,891 | 7.6 | Yes | 859 | ||||||||
Retail | Kohl's | BBB- | Glendale, AZ | 87,875 | 8.6 | Yes | 844 | ||||||||
Retail | Hobby Lobby | N/A | Tulsa, OK | 84,180 | 9.5 | Yes | 842 | ||||||||
Retail | At Home (6) | B | Canton, OH | 89,902 | 8.1 | Yes | 801 | ||||||||
Retail | Harris Teeter | BBB | Charlotte, NC | 45,089 | 6.8 | Yes | 768 | ||||||||
Retail | At Home | B | Raleigh, NC | 116,334 | 11.3 | Yes | 732 | ||||||||
Retail | Container Store | B | Phoenix, AZ | 23,329 | 8.7 | Yes | 726 | ||||||||
Retail | Cinemark | B | Reno, NV | 52,474 | 3.3 | Yes | 693 | ||||||||
Office | Hilton Grand Vacations | BB | Orlando, FL | 31,895 | 5.4 | Yes | 684 | ||||||||
Retail | Live Nation Entertainment, Inc. | B | East Troy, WI | — | (3) | 11.8 | Yes | 634 | |||||||
Retail | Academy Sports | B+ | Florence, SC | 58,410 | 7.8 | Yes | 629 | ||||||||
Retail | Sportsman Warehouse | N/A | Albuquerque, NM | 48,974 | 8.2 | Yes | 573 | ||||||||
Retail | Hobby Lobby | N/A | Winston-Salem, NC | 55,000 | 8.8 | Yes | 562 | ||||||||
Retail | Rite Aid | CCC+ | Renton, WA | 16,280 | 5.1 | Yes | 558 | ||||||||
Retail | Hobby Lobby | N/A | Arden, NC | 55,000 | 10.2 | Yes | 546 | ||||||||
Retail | American Multi-Cinema, Inc. | CCC+ | Tyngsborough, MA | 39,474 | 11.8 | Yes | 507 | ||||||||
Retail | Dick's Sporting Goods | N/A | McDonough, GA | 46,315 | 2.6 | No | 473 | ||||||||
Retail | Jo-Ann Fabric | B | Saugus, MA | 22,500 | 7.6 | Yes | 468 | ||||||||
Retail | Conn's HomePlus | B | Hurst, TX | 37,957 | 10.2 | Yes | 452 | ||||||||
Retail | Old Time Pottery | N/A | Orange Park, FL | 84,180 | 9.1 | Yes | 439 | ||||||||
Retail | 7-Eleven | A | Austin, TX | 6,400 | 13.8 | Yes | 377 | ||||||||
Retail | Walgreens | BBB | Birmingham, AL | 14,516 | 7.8 | No | 364 | ||||||||
Retail | Walgreens | BBB | Alpharetta, GA | 15,120 | 4.3 | No | 363 | ||||||||
Retail | Best Buy | BBB+ | McDonough, GA | 30,038 | 4.8 | Yes | 338 | ||||||||
Retail | Big Lots | N/A | Germantown, MD | 25,589 | 9.6 | Yes | 334 | ||||||||
Retail | Big Lots | N/A | Phoenix, AZ | 34,512 | 9.6 | Yes | 329 | ||||||||
Retail | Lehigh Gas Wholesale Services, Inc. | N/A | Highland Heights, KY | 2,578 | 9.4 | Yes | 329 | ||||||||
Retail | Walgreens | BBB | Clermont, FL | 13,650 | 7.8 | No | 328 | ||||||||
Retail | 7-Eleven | A | Georgetown, TX | 7,726 | 14.5 | Yes | 276 | ||||||||
Retail | Walgreens | BBB | Tacoma, WA | 14,125 | 9.1 | No | 259 | ||||||||
Retail | Walgreens | BBB | Albany, GA | 14,770 | 11.6 | No | 258 | ||||||||
Retail | Outback Steakhouse | B+ | Charlotte, NC | 6,297 | 10.3 | Yes | 220 | ||||||||
Retail | Circle K | BBB | Indianapolis, IN | 4,283 | 3.4 | Yes | 210 | ||||||||
Retail | Scrubbles Car Wash (4) | N/A | Jacksonville, FL | 4,512 | 16.3 | Yes | 189 | ||||||||
Retail | Cheddar's (4) | BBB- | Jacksonville, FL | 8,146 | 6.3 | Yes | 186 | ||||||||
Retail | Family Dollar | BBB | Lynn, MA | 9,228 | 2.8 | Yes | 160 | ||||||||
Retail | Orscheln (7) | AA (8) | Durant, OK | 37,965 | 1.7 | No | 160 | ||||||||
Retail | Advanced Auto Parts | BBB- | Severn, MD | 6,876 | 13.7 | Yes | 148 | ||||||||
Retail | Big Lots (7) | AA (8) | Durant, OK | 36,794 | 5.5 | No | 142 | ||||||||
Retail | Dollar General | BBB | Kermit, TX | 10,920 | 14.2 | Yes | 126 | ||||||||
Retail | Burger King | N/A | Plymouth, NC | 3,142 | 6.8 | Yes | 125 | ||||||||
Retail | Dollar General | BBB | Chazy, NY | 9,277 | 10.3 | Yes | 119 | ||||||||
Retail | Dollar General | BBB | Odessa, TX | 9,127 | 14.1 | Yes | 117 | ||||||||
Retail | Dollar General | BBB | Willis, TX | 9,138 | 14.1 | Yes | 114 | ||||||||
Retail | Dollar General | BBB | Winthrop, NY | 9,167 | 10.2 | Yes | 113 | ||||||||
Retail | Advance Auto Parts | BBB- | Ware, MA | 6,889 | 3.5 | Yes | 112 | ||||||||
Retail | Dollar General | BBB | Cut and Shoot, TX | 9,096 | 14.3 | Yes | 112 | ||||||||
Retail | Dollar General | BBB | Milford, ME | 9,128 | 12.3 | Yes | 110 | ||||||||
Retail | Dollar Tree | BBB | Demopolis, AL | 10,159 | 8.6 | Yes | 110 | ||||||||
Retail | Pet Supplies Plus (6) | N/A | Canton, OH | 8,400 | 6.3 | Yes | 110 | ||||||||
Retail | Dollar General | BBB | Salem, NY | 9,199 | 12.2 | Yes | 105 | ||||||||
Retail | Dollar General | BBB | Bingham, ME | 9,345 | 12.3 | Yes | 104 | ||||||||
Retail | Dollar General | BBB | Harrisville, NY | 9,309 | 12.5 | Yes | 104 | ||||||||
Retail | Dollar General | BBB | Heuvelton, NY | 9,342 | 11.3 | Yes | 104 | ||||||||
Retail | Firestone | A | Pittsburgh, PA | 10,629 | 7.8 | Yes | 103 | ||||||||
Retail | Dollar General | BBB | Barker, NY | 9,275 | 12.4 | Yes | 102 | ||||||||
Retail | Dollar General | BBB | Limestone, ME | 9,167 | 12.3 | Yes | 100 | ||||||||
Retail | Freddy's Frozen Custard (4) | N/A | Orange Park, FL | 3,200 | 5.4 | Yes | 99 | ||||||||
Retail | Dollar General | BBB | Hammond, NY | 9,219 | 11.5 | Yes | 98 | ||||||||
Retail | Dollar General | BBB | Somerville, TX | 9,252 | 14.0 | Yes | 96 | ||||||||
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Type | Description | S&P Credit Rating (1) | Location | Rentable Square Feet | Remaining Term (Years) | Contractual Rent Escalations | Annualized Base Rent ($000's) (2) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Retail | Dollar General | BBB | Seguin, TX | 9,155 | 13.7 | Yes | 90 | ||||||||
Retail | Grease Monkey | N/A | Stockbridge, GA | 1,846 | 12.3 | Yes | 90 | ||||||||
Retail | Schlotzsky's | N/A | Sweetwater, TX | 2,431 | 14.0 | Yes | 86 | ||||||||
Retail | Dollar General | BBB | Newtonsville, OH | 9,290 | 8.9 | Yes | 83 | ||||||||
Retail | Dollar General | BBB | Del Rio, TX | 9,219 | 13.6 | Yes | 83 | ||||||||
Retail | Hardee's | N/A | Boaz, AL | 3,542 | 9.3 | Yes | 80 | ||||||||
Retail | Advance Auto Parts | BBB- | Athens, GA | 6,871 | 3.5 | Yes | 79 | ||||||||
Retail | Salon Lofts (6) | N/A | Canton, OH | 4,000 | 6.7 | Yes | 72 | ||||||||
Retail | Long John Silver's (4) | N/A | Tulsa, OK | 3,000 | — | (5) | No | 24 | |||||||
Total / Weighted Average | 2,296,116 | 8.0 | $ | 28,936 | |||||||||||
| (1) | Tenant, or tenant parent, credit rating as of June 30, 2021. |
| (2) | Annualized straight-line base rental income in place as of June 30, 2021. |
| (3) | The Alpine Valley Music Theatre, leased to Live Nation Entertainment, Inc., is an entertainment venue consisting of a two-sided, open-air, 7,500-seat pavilion; an outdoor amphitheater with a capacity for 37,000; and over 150 acres of green space. |
| (4) | We are the lessor in a ground lease with the tenant. Rentable square feet represents improvements on the property that revert to us at the expiration of the lease. |
| (5) | Current lease agreement is month-to-month (“MTM”). |
| (6) | Tenants represent the acquisition of one property on March 9, 2021. |
| (7) | Tenants represent the acquisition of one property on June 25, 2021. |
| (8) | The AA S&P Credit Rating is attributable to the Company’s lessee, Walmart, versus the sublessees described herein. |
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COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
The following presents the Company’s results of operations for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020 (in thousands):
Three Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | $ Variance | % Variance | ||||||||
Revenues: | |||||||||||
Lease Income | $ | 6,597 | $ | 4,591 | $ | 2,006 | 43.7% | ||||
Total Revenues | 6,597 | 4,591 | 2,006 | 43.7% | |||||||
Operating Expenses: | |||||||||||
Real Estate Expenses | 824 | 550 | 274 | 49.8% | |||||||
General and Administrative Expenses | 1,286 | 1,132 | 154 | 13.6% | |||||||
Depreciation and Amortization | 3,463 | 2,286 | 1,177 | 51.5% | |||||||
Total Operating Expenses | 5,573 | 3,968 | 1,605 | 40.4% | |||||||
Net Income from Operations | 1,024 | 623 | 401 | 64.4% | |||||||
Interest Expense | 678 | 344 | 334 | 97.1% | |||||||
Net Income | 346 | 279 | 67 | 24.0% | |||||||
Less: Net Income Attributable to Noncontrolling Interest | (42) | (39) | (3) | 7.7% | |||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | $ | 304 | $ | 240 | $ | 64 | 26.7% | ||||
Revenue and Direct Cost of Revenues
Revenue from our income property operations during the three months ended June 30, 2021 and 2020, totaled $6.6 million and $4.6 million, respectively. The $2.0 million increase in revenues is reflective of the Company’s expanded income property portfolio, including the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020, net of one income property disposition during the third quarter of 2020, in addition to the acquisition of 23 income properties during the six months ended June 30, 2021. The direct costs of revenues for our income property operations totaled $0.8 million and $0.6 million for the three months ended June 30, 2021 and 2020, respectively. The $0.3 million increase in the direct cost of revenues is also attributable to the Company’s expanded income property portfolio.
General and Administrative Expenses
The following table represents the Company’s general and administrative expenses for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020 (in thousands):
Three Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | $ Variance | % Variance | ||||||||
Management Fee to Manager | $ | 721 | $ | 643 | $ | 78 | 12.1% | ||||
Director Stock Compensation Expense | 79 | 68 | 11 | 16.2% | |||||||
Director & Officer Insurance Expense | 129 | 112 | 17 | 15.2% | |||||||
Additional General and Administrative Expense | 357 | 309 | 48 | 15.5% | |||||||
Total General and Administrative Expenses | $ | 1,286 | $ | 1,132 | $ | 154 | 13.6% | ||||
General and administrative expenses totaled $1.3 million and $1.1 million during the three months ended June 30, 2021 and 2020, respectively. The $0.2 million increase is primarily attributable to growth in the Company’s equity base, which led to increased management fee expenses totaling $0.1 million. The management fees that the Company pays to the Manager are based on the Company’s total equity, as defined in the management agreement.
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Depreciation and Amortization
Depreciation and amortization expense totaled $3.5 million and $2.3 million during the three months ended June 30, 2021 and 2020, respectively. The $1.2 million increase in the depreciation and amortization expense is reflective of the Company’s expanded income property portfolio, as described above.
Interest Expense
Interest expense totaled $0.7 million and $0.3 million during the three months ended June 30, 2021 and 2020, respectively. The $0.3 million increase in interest expense is attributable to the higher average outstanding debt balance during the three months ended June 30, 2021 as compared to the same period in 2020. The overall increase in the Company’s long-term debt was utilized to fund the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020 in addition to the acquisition of 23 income properties during the six months ended June 30, 2021.
Net Income
Net income totaled $0.3 million during each of the three months ended June 30, 2021 and 2020. The increase in net income is attributable to the factors described above.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
The following presents the Company’s results of operations for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020 (in thousands):
Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | $ Variance | % Variance | ||||||||
Revenues: | |||||||||||
Lease Income | $ | 12,487 | $ | 8,762 | $ | 3,725 | 42.5% | ||||
Total Revenues | 12,487 | 8,762 | 3,725 | 42.5% | |||||||
Operating Expenses: | |||||||||||
Real Estate Expenses | 1,475 | 1,150 | 325 | 28.3% | |||||||
General and Administrative Expenses | 2,316 | 2,416 | (100) | (4.1)% | |||||||
Depreciation and Amortization | 6,606 | 4,309 | 2,297 | 53.3% | |||||||
Total Operating Expenses | 10,397 | 7,875 | 2,522 | 32.0% | |||||||
Net Income from Operations | 2,090 | 887 | 1,203 | 135.6% | |||||||
Interest Expense | 1,233 | 593 | 640 | 107.9% | |||||||
Net Income | 857 | 294 | 563 | 191.5% | |||||||
Less: Net Income Attributable to Noncontrolling Interest | (113) | (41) | (72) | 175.6% | |||||||
Net Income Attributable to Alpine Income Property Trust, Inc. | $ | 744 | $ | 253 | $ | 491 | 194.1% | ||||
Revenue and Direct Cost of Revenues
Revenue from our income property operations during the six months ended June 30, 2021 and 2020, totaled $12.5 million and $8.8 million, respectively. The $3.7 million increase in revenues is reflective of the Company’s expanded income property portfolio, including the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020, net of one income property disposition during the third quarter of 2020, in addition to the acquisition of 23 income properties during the six months ended June 30, 2021. The direct costs of revenues for our income property operations totaled $1.5 million and $1.2 million for the six months ended June 30, 2021 and 2020, respectively. The $0.3 million increase in the direct cost of revenues is also attributable to the Company’s expanded income property portfolio.
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General and Administrative Expenses
The following table represents the Company’s general and administrative expenses for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020 (in thousands):
Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | $ Variance | % Variance | ||||||||
Management Fee to Manager | $ | 1,359 | $ | 1,292 | $ | 67 | 5.2% | ||||
Director Stock Compensation Expense | 152 | 135 | 17 | 12.6% | |||||||
Director & Officer Insurance Expense | 257 | 229 | 28 | 12.2% | |||||||
Additional General and Administrative Expense | 548 | 760 | (212) | (27.9)% | |||||||
Total General and Administrative Expenses | $ | 2,316 | $ | 2,416 | $ | (100) | (4.1)% | ||||
General and administrative expenses totaled $2.3 million and $2.4 million during the six months ended June 30, 2021 and 2020, respectively. The $0.1 million decrease is primarily attributable to the recognition of $0.3 million, during the first quarter of 2020, of costs associated with audit services related to the 2019 annual audit, offset by increased management fee expenses totaling $0.1 million attributable to growth in the Company’s equity base. The management fees that the Company pays to the Manager are based on the Company’s total equity, as defined in the management agreement.
Depreciation and Amortization
Depreciation and amortization expense totaled $6.6 million and $4.3 million during the six months ended June 30, 2021 and 2020, respectively. The $2.3 million increase in the depreciation and amortization expense is reflective of the Company’s expanded income property portfolio, as described above.
Interest Expense
Interest expense totaled $1.2 million and $0.6 million during the six months ended June 30, 2021 and 2020, respectively. The $0.6 million increase in interest expense is attributable to the higher average outstanding debt balance during the six months ended June 30, 2021 as compared to the same period in 2020. The overall increase in the Company’s long-term debt was utilized to fund the acquisition of 18 income properties during the periods subsequent to June 30, 2020 through the year ended December 31, 2020 in addition to the acquisition of 23 income properties during the six months ended June 30, 2021.
Net Income
Net income totaled $0.9 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively. The increase in net income is attributable to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Cash totaled $8.5 million at June 30, 2021, including restricted cash of $2.2 million, see Note 2 “Summary of Significant Accounting Policies” under the heading Restricted Cash for the Company’s disclosure related to its restricted cash balance at June 30, 2021.
Long-Term Debt. As of June 30, 2021, the Company had $100.0 million available on the Credit Facility. See Note 8, “Long-Term Debt” for the Company’s disclosure related to its long-term debt balance at June 30, 2021.
Acquisitions and Investments. As noted previously, the Company acquired 23 income properties during the six months ended June 30, 2021 for an aggregate purchase price of $103.2 million, as further described in Note 3, “Income Property Portfolio”.
Dispositions. No income properties were disposed of during the six months ended June 30, 2021.
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Capital Expenditures. As of June 30, 2021 the Company had no commitments related to capital expenditures.
We believe we will have sufficient liquidity to fund our operations, capital requirements, maintenance, and debt service requirements over the next twelve months and into the foreseeable future, with cash on hand, cash flow from our operations and $100.0 million of available capacity on the existing $150.0 million Credit Facility, based on our current borrowing base of income properties, as of June 30, 2021.
The Board and management consistently review the allocation of capital with the goal of providing the best long-term return for our stockholders. These reviews consider various alternatives, including increasing or decreasing regular dividends, repurchasing the Company’s securities, and retaining funds for reinvestment. Annually, the Board reviews our business plan and corporate strategies, and makes adjustments as circumstances warrant. Management’s focus is to continue our strategy of investing in net leased income properties by utilizing the capital we raised in the IPO and available borrowing capacity from the Credit Facility to increase our portfolio of income-producing properties, providing stabilized cash flows with strong risk-adjusted returns primarily in larger metropolitan areas and growth markets.
Non-GAAP Financial Measures
Our reported results are presented in accordance with GAAP. We also disclose Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) both of which are non-GAAP financial measures. We believe these two non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs.
FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.
We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income or loss adjusted to exclude extraordinary items (as defined by GAAP), net gain or loss from sales of depreciable real estate assets, impairment write-downs associated with depreciable real estate assets and real estate related depreciation and amortization, including the pro rata share of such adjustments of unconsolidated subsidiaries. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to non-cash revenues and expenses such as straight-line rental revenue, amortization of deferred financing costs, amortization of capitalized lease incentives and above- and below-market lease related intangibles, and non-cash compensation. Such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. We use AFFO as one measure of our performance when we formulate corporate goals.
FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. FFO and AFFO may not be comparable to similarly titled measures employed by other companies.
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Reconciliation of Non-GAAP Measures (in thousands, except share data):
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
Net Income | $ | 346 | $ | 279 | $ | 857 | $ | 294 | ||||
Depreciation and Amortization | 3,463 | 2,286 | 6,606 | 4,309 | ||||||||
Funds from Operations | $ | 3,809 | $ | 2,565 | $ | 7,463 | $ | 4,603 | ||||
Adjustments: | ||||||||||||
Straight-Line Rent Adjustment | (117) | (614) | (264) | (937) | ||||||||
COVID-19 Rent Repayments (Deferrals), Net | 114 | (625) | 385 | (625) | ||||||||
Non-Cash Compensation | 79 | 68 | 152 | 135 | ||||||||
Amortization of Deferred Financing Costs to Interest Expense | 84 | 43 | 149 | 88 | ||||||||
Amortization of Intangible Assets and Liabilities to Lease Income | (50) | (29) | (91) | (48) | ||||||||
Accretion of Tenant Contribution | (5) | (7) | (11) | (7) | ||||||||
Recurring Capital Expenditures | (22) | (33) | (41) | (33) | ||||||||
Adjusted Funds from Operations | $ | 3,892 | $ | 1,368 | $ | 7,742 | $ | 3,176 | ||||
Weighted Average Number of Common Shares: | ||||||||||||
Basic | 8,853,259 | 7,544,991 | 8,212,902 | 7,721,835 | ||||||||
Diluted | 10,081,783 | 8,768,845 | 9,439,104 | 8,945,689 | ||||||||
Other Data (in thousands, except per share data):
Three Months Ended | Six Months Ended | |||||||||||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||
FFO | $ | 3,809 | $ | 2,565 | $ | 7,463 | $ | 4,603 | ||||
FFO per diluted share | $ | 0.38 | $ | 0.29 | $ | 0.79 | $ | 0.51 | ||||
AFFO | $ | 3,892 | $ | 1,368 | $ | 7,742 | $ | 3,176 | ||||
AFFO per diluted share | $ | 0.39 | $ | 0.16 | $ | 0.82 | $ | 0.35 | ||||
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
None.
OFF-BALANCE SHEET ARRANGEMENTS
None.
CRITICAL ACCOUNTING POLICIES
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from those estimates.
Our significant accounting policies are summarized in Note 2, “Summary of Significant Accounting Policies” included in this Quarterly Report on Form 10-Q and more fully described in the notes to the consolidated and combined financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. During the three months ended
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June 30, 2021, there have been no material changes to the critical accounting policies affecting the application of those accounting policies as noted in our Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation, as required by Rules 13a-15 and 15d-15 under the Exchange Act, was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act). Based on that evaluation, our CEO and CFO have concluded that the design and operation of the Company’s disclosure controls and procedures were effective as of June 30, 2021, to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the three months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company may be a party to certain legal proceedings, incidental to the normal course of our business. We are not currently a party to any pending or threatened legal proceedings that we believe could have a material adverse effect on our business or financial condition.
ITEM 1A. RISK FACTORS
For a discussion of the Company’s potential risks and uncertainties, see the information under the heading Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The risks described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company.
As of June 30, 2021, there have been no material changes in our risk factors from those set forth within the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
37
ITEM 6. EXHIBITS
| (a) | Exhibits: |
Exhibit 2.1 | ||
Exhibit 2.1a | ||
Exhibit 3.1 | ||
Exhibit 3.2 | ||
Exhibit 4.1 | ||
Exhibit 10.1 | ||
Exhibit 10.2 | ||
Exhibit 10.3 | ||
Exhibit 10.4 | ||
Exhibit 31.1 | Certification filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
Exhibit 31.2 | Certification filed pursuant to Section 302 of Sarbanes-Oxley Act of 2002. | |
Exhibit 32.1 | ||
Exhibit 32.2 | ||
Exhibit 101.INS | XBRL Instance Document | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document | |
Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
Exhibit 101.DEF | XBRL Taxonomy Definition Linkbase Document | |
Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(2). The omitted information is not material and is the type of information that the Company customarily and actually treats as private and confidential. |
39
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 thereunto duly authorized.
| ALPINE INCOME PROPERTY TRUST, INC. | |||
| (Registrant) | |||
July 22, 2021 |
| By: | /s/ John P. Albright | |
| John P. Albright President and Chief Executive Officer (Principal Executive Officer) | |||
July 22, 2021 |
| By: |
| /s/ Matthew M. Partridge |
| Matthew M. Partridge, Senior Vice President and Chief Financial Officer and Treasurer (Principal Financial Officer) | |||
July 22, 2021 |
| By: | /s/ Lisa M. Vorakoun | |
| Lisa M. Vorakoun, Vice President and Chief Accounting Officer (Principal Accounting Officer) | |||
40
Exhibit 10.3
Loan No: 31-0925537
LOAN AGREEMENT
Dated as of September 30, 2014
Between
THE ENTITIES SET FORTH ON SCHEDULE VI, collectively
as Borrower
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Lender
TABLE OF CONTENTS
Page
i
ii
iii
iv
SCHEDULES AND EXHIBITS
Exhibit AAdditional Definitions
Schedule IImmediate Repairs
Schedule IIOrganizational Chart
Schedule IIIDescription of REA’s
Schedule IVIntentionally Omitted
v
Schedule VAllocated Loan Amount
Schedule VIBorrowers
vi
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of September 30, 2014 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), between WELLS FARGO BANK, NATIONAL ASSOCIATION, having an address at Wells Fargo Center, 1901 Harrison Street, 2nd Floor, Oakland, California 94612 (together with its successors and/or assigns, “Lender”) and THE ENTITIES SET FORTH ON SCHEDULE VI, each having an address at c/o Consolidated-Tomoka Land Co., 1530 Cornerstone Blvd., Suite 100, Daytona Beach, Florida 32117 (individually or collectively, as the context may require, together with their successors and/or assigns, “Borrower”).
RECITALS:
Borrower desires to obtain the Loan (defined below) from Lender.
Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms of this Agreement and the other Loan Documents (defined below).
In consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, the parties hereto hereby covenant, agree, represent and warrant as follows:
For all purposes of this Agreement, except as otherwise expressly required or unless the context clearly indicates a contrary intent:
“30/360 Basis” shall mean on the basis of a 360-day year consisting of 12 months of 30 days each.
“Acceptable LLC” shall mean a limited liability company formed under Delaware or Maryland law which (i) has at least one springing member, which, upon the dissolution of all of the members or the withdrawal or the disassociation of all of the members from such limited liability company, shall immediately become the sole member of such limited liability company, (ii) otherwise meets the Rating Agency criteria then applicable to such entities and (iii) satisfies the requirements of Section 5.2 hereof with respect to an Independent Director.
“Accounts” shall mean the Tax Reserve Account, the Insurance Reserve Account, the Replacement Reserve Account, the Leasing Reserve Account, the Existing TI/LC Reserve Account, and any other account established by this Agreement or the other Loan Documents.
“Accrued Interest” shall have the meaning set forth in Section 2.6(b) hereof.
“Act” shall have the meaning set forth in Section 5.1(c) hereof.
“Actual/360 Basis” shall mean on the basis of a 360-day year and charged on the basis of actual days elapsed for any whole or partial month in which interest is being calculated.
“Adjusted Interest Rate” shall mean a rate per annum equal to the greater of (a) the Initial Interest Rate plus 3.0 percent (3.0%) and (b) the sum of (i) the greater of (x) the offer side on the Anticipated Repayment Date of the Ten Year Swap Yield as displayed electronically on Telerate Page 19901 on Dow Jones Telerate, Inc., Bloomberg Financial Markets, or another recognized source of financial market information selected by Lender and (y) the Treasury Rate as of the Anticipated Repayment Date, and (ii) four hundred seventy-two points (472 bps).
“Affiliate” shall mean, as to any Person, any other Person that, directly or indirectly, owns more than forty-nine percent (49%) of, is in Control of, is Controlled by or is under common ownership or Control with such Person or is a director or officer of such Person or of an Affiliate of such Person.
“Affiliated Manager” shall mean any managing agent of the Property in which Borrower, Guarantor, any SPE Component Entity (if any) or any Affiliate of such entities has, directly or indirectly, any legal, beneficial or economic interest.
“Allocated Loan Amount” shall mean, for each Property, the amount set forth on Schedule V annexed hereto. The Allocated Loan Amount with respect to any Substitute Property shall, immediately following the applicable substitution pursuant to Section 6.6, be equal to the Allocated Loan Amount with respect to the corresponding Substituted Property.
“ALTA” shall mean American Land Title Association, or any successor thereto.
“Alteration Threshold” shall mean an amount equal to 2% of the outstanding principal balance of the Loan.
“Annual Budget” shall have the meaning set forth in Section 4.12(a)(v).
“Anticipated Repayment Date” shall mean October 11, 2024.
“Applicable Law” shall mean all applicable federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower or the Property or any part thereof, or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting Borrower or the Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
“Applicable Interest Rate” shall mean (i) prior to the Anticipated Repayment Date, the Initial Interest Rate and (ii) on and after the Anticipated Repayment Date, the Adjusted Interest Rate.
2
“Approved ID Provider” shall mean each of CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company and Lord Securities Corporation; provided, that, additional national providers of independent directors may be deemed added to the foregoing hereunder to the extent approved in writing by Lender and the Rating Agencies.
“Assignment of Management Agreement” shall mean any Conditional Assignment of Management Agreement entered into after the date hereof among Lender, Borrower and Manager, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Award” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of the Property.
“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights.
“Borrower” shall have the meaning set forth in the introductory paragraph hereof.
“Borrower Party” shall mean any Person acting on behalf of or at the direction of Borrower, SPE Component Entity and/or Guarantor.
“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in the State of California are not open for business.
“Cash Management Account” shall have the meaning set forth in the Cash Management Agreement.
“Cash Management Agreement” shall mean that certain Cash Management Agreement of even date herewith among Lender and Borrower, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Cash Trap Event Period” shall have the meaning set forth in the Cash Management Agreement.
“Casualty” shall have the meaning set forth in Section 7.2.
“Casualty Consultant” shall have the meaning set forth in Section 7.4 hereof.
“Closing Date” shall mean the date of the funding of the Loan.
“Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result, in lieu or in anticipation, of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.
3
“Constituent Members” shall have the meaning set forth in Section 5.2(b) hereof.
“Control” shall mean the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.
“Creditors Rights Laws” shall mean any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts or debtors.
“DBRS” shall mean DBRS, Inc.
“Debt” shall mean the outstanding principal amount set forth in, and evidenced by, this Agreement and the Note together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Note, this Agreement or the other Loan Documents, including, without limitation, the payment of all sums advanced and costs and expenses incurred (including unpaid or unreimbursed servicing and special servicing fees) by Lender in connection with the enforcement and/or collection of the Debt or any part thereof.
“Debt Service” shall mean, with respect to any particular period of time, scheduled principal and/or interest payments under the Loan.
“Debt Service Coverage Ratio” shall have the meaning set forth on Exhibit A attached hereto and made a part hereof. All capitalized terms in such definition are also set forth on Exhibit A.
“Debt Yield” shall have the meaning set forth on Exhibit A attached hereto and made a part hereof. All capitalized terms in such definition are also set forth on Exhibit A.
“Default” shall mean the occurrence of any event hereunder or under the Note or the other Loan Documents which, but for the giving of notice or passage of time, or both, would be an Event of Default.
“Defaulting Borrower” shall have the meaning set forth in Section 17.16 hereof.
“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate, or (ii) the sum of (a) the Applicable Interest Rate and (b) five percent (5%).
“Defeasance Approval Item” shall have the meaning set forth in Section 2.8 hereof.
“Defeasance Collateral” shall mean either (i) with respect to a Total Defeasance Event, the Total Defeasance Collateral or (ii) with respect to a Partial Defeasance Event, the Partial Defeasance Collateral.
“Defeasance Collateral Account” shall have the meaning set forth in Section 2.8 hereof.
4
“Defeasance Date” shall have the meaning set forth in Section 2.8 hereof.
“Defeasance Event” shall mean a Total Defeasance Event or a Partial Defeasance Event, as applicable.
“Defeasance Lockout Release Date” shall mean the earlier to occur of (i) the third anniversary of the Closing Date and (ii) the date that is two (2) years from the “startup day” (within the meaning of Section 860G(a)(9) of the IRS Code) of the REMIC Trust established in connection with the last Securitization involving any portion of or interest in the Loan.
“Defeased Note” shall have the meaning set forth in Section 2.8 hereof.
“Defined Benefit Plan” shall mean a plan, document, agreement, or arrangement currently or previously maintained or sponsored by the Borrower or by any ERISA Affiliate or to which either the Borrower or any ERISA Affiliate currently makes, or previously made, contributions and (i) that provides or is expected to provide retirement benefits to employees or other workers and (ii) under which the Borrower could reasonably be expected to have any liability (including liability attributable from an ERISA Affiliate). A Defined Benefit Plan shall include any plan that if it were terminated at any time, would result in Borrower or any ERISA Affiliate being deemed to be a “contributing sponsor” (as defined in Section 4001(a)(13) of ERISA) of the terminated plan pursuant to ERISA Section 4069. A Defined Benefit Plan does not include a Multiemployer Plan.
“Deposit Account” shall have the meaning set forth in the Cash Management Agreement.
“Disclosure Document” shall have the meaning set forth in Section 11.2 hereof.
“Eligible Account” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (a) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company, is subject to regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authority. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“Eligible Institution” shall mean (a) a depository institution or trust company insured by the Federal Deposit Insurance Corporation, (i) the short term unsecured debt obligations or commercial paper of which are rated at least “A-1+” (or its equivalent) from each of the Rating Agencies in the case of accounts in which funds are held for thirty (30) days or less and (ii) the senior unsecured debt obligations of which are rated at least “A” (or its equivalent) from each of the Rating Agencies in the case of accounts in which funds are held for more than thirty (30) days or (b) such other depository institution otherwise approved by the Rating Agencies from time-to-time.
“Embargoed Person” shall have the meaning set forth in Section 3.28 hereof.
5
“Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement, dated as of the date hereof, executed by Borrower and Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Environmental Laws” shall have the meaning set forth in the Environmental Indemnity.
“Equity Collateral” shall have the meaning set forth in Section 11.6 hereof.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may heretofore have been or may hereafter be amended, restated, replaced or otherwise modified.
“ERISA Affiliate” shall mean all members of a controlled group of corporations and all trades and business (whether or not incorporated) under common control and all other entities which, together with Borrower, are treated as a single employer under any or all of Sections 414(b), (c), (m) or (o) of the IRS Code.
“Event of Default” shall have the meaning set forth in Section 10.1 hereof.
“Exchange Act” shall have the meaning set forth in Section 11.2 hereof.
“Exchange Act Filing” shall mean any filing under or pursuant to the Exchange Act in connection with or relating to a Securitization.
“Exculpated Parties” shall have the meaning set forth in Section 13.1 hereof.
“Existing Leases” shall mean those Leases as in effect as of the date hereof.
“Existing TI/LC Reserve Account” shall have the meaning set forth in Section 8.9 hereof.
“Existing TI/LC Reserve Funds” shall have the meaning set forth in Section 8.9 hereof.
“Fitch” shall mean Fitch, Inc.
“Flood Insurance Acts” shall have the meaning set forth in Section 7.1 hereof.
“GAAP” shall mean generally accepted accounting principles in the United States of America as of the date of the applicable financial report.
“Governmental Authority” shall mean any court, board, agency, commission, office or other authority of any nature whatsoever for any governmental unit (foreign, federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.
“Guarantor” shall mean Consolidated-Tomoka Land Co., a Florida corporation.
“Guaranty” shall mean that certain Guaranty of Recourse Obligations executed by Guarantor and dated as of the date hereof.
6
“Harris Teeter” shall mean Harris Teeter, LLC, and any permitted successor thereto with respect to the Harris Teeter Lease.
“Harris Teeter Condemnation Requirements” shall have the meaning set forth in Section 2.7 hereof.
“Harris Teeter Lease” shall mean that certain Lease dated as of April 17, 2008, by and between Harris Teeter, Inc., predecessor-in-interest to Harris Teeter as tenant, and Harris Teeter Properties, LLC, predecessor-in-interest to Golden Arrow Charlotte NC LLC, as landlord, as the same may be amended, modified or restated in accordance with the terms of this Agreement.
“Harris Teeter Property” shall mean that certain Individual Property located in Charlotte, North Carolina.
“Hazardous Substances” shall have the meaning set forth in the Environmental Indemnity.
“Immediate Repairs” shall have the meaning set forth in Section 4.24 hereof.
“Improvements” shall have the meaning set forth in the granting clause of the Security Instrument.
“Indebtedness” shall mean, for any Person, without duplication: (i) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable, (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder, (iii) all amounts required to be paid by such Person as a guaranteed payment to partners or a preferred or special dividend, including any mandatory redemption of shares or interests, (iv) all indebtedness guaranteed by such Person, directly or indirectly, (v) all obligations under leases that constitute capital leases for which such Person is liable, (vi) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case whether such Person is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss, and (vii) any other similar amounts.
“Indemnified Parties” shall mean (a) Lender, (b) any successor owner or holder of the Loan or participations in the Loan, (c) any Servicer or prior Servicer of the Loan, (d) any Investor or any prior Investor in any Securities, (e) any trustees, custodians or other fiduciaries who hold or who have held a full or partial interest in the Loan for the benefit of any Investor or other third party, (f) any receiver or other fiduciary appointed in a foreclosure or other Creditors Rights Laws proceeding, (g) any officers, directors, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, affiliates or subsidiaries of any and all of the foregoing, and (h) the heirs, legal representatives, successors and assigns of any and all of the foregoing (including, without limitation, any successors by merger, consolidation or acquisition of all or a substantial portion of the Indemnified Parties’ assets and business) in all cases whether during the term of the Loan or as part of or following a foreclosure of the Loan.
“Independent Director” shall have the meaning set forth in Section 5.2 hereof.
7
“Individual Property” shall mean each “Property” as such term is defined in each Security Instrument.
“Initial Interest Rate” shall mean a rate per annum equal to four and thirty-three hundredths percent (4.33%).
“Insurance Premiums” shall have the meaning set forth in Section 7.1 hereof.
“Insurance Reserve Account” shall have the meaning set forth in Section 8.2 hereof.
“Insurance Reserve Funds” shall have the meaning set forth in Section 8.2 hereof.
“Interest Accrual Period” shall mean the period beginning on the eleventh (11th) day of each calendar month during the term of the Loan and ending on (but including) the tenth (10th) day of the following calendar month.
“Interest Shortfall” shall have the meaning set forth in Section 2.7 hereof.
“Investor” shall mean any investor or potential investor in the Loan (or any portion thereof or interest therein) in connection with a Securitization of the Loan (or any portion thereof or interest therein).
“IRS Code” shall mean the Internal Revenue Code of 1986, as amended from time to time or any successor statute.
“Kroll” shall mean Kroll Bond Rating Agency, Inc.
“Land” shall have the meaning set forth in the Security Instrument.
“Lease” shall mean any and all leases, subleases, rental agreements and other agreements whether or not in writing for the occupancy or possession of the Land and/or the Improvements heretofore or hereafter entered into and all extensions, amendments and modifications thereto, whether before or after the filing by or against Borrower of any petition for relief under Creditors Rights Laws.
“Leasing Reserve Account” shall have the meaning set forth in Section 8.5 hereof.
“Leasing Reserve Funds” shall have the meaning set forth in Section 8.5 hereof.
“Leasing Reserve Monthly Deposit” shall have the meaning set forth in Section 8.5 hereof.
“Lender” shall have the meaning set forth in the introductory paragraph hereof.
“Liabilities” shall have the meaning set forth in Section 11.2 hereof.
“Licenses” shall have the meaning set forth in Section 3.11(a) hereof.
8
“Lien” shall mean any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement, restrictive covenant, preference, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting all or any portion of the Property or any interest therein, or any direct or indirect interest in Borrower or any SPE Component Entity, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“LLC Agreement” shall have the meaning set forth in Section 5.1(c) hereof.
“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement.
“Loan Bifurcation” shall have the meaning set forth in Section 11.1 hereof.
“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Environmental Indemnity, any Assignment of Management Agreement, the Cash Management Agreement, the Guaranty and all other documents executed and/or delivered in connection with the Loan.
“Loan-To-Value Ratio” shall mean a percentage calculated by multiplying (i) a fraction, the numerator of which is the outstanding principal balance of the Loan and the denominator of which is the value of the Property based on a current appraisal thereof, by (ii) one hundred (100).
“Losses” shall mean any and all claims, suits, liabilities (including, without limitation, strict liabilities and any impairment of Lender’s security for the Loan), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, amounts paid in settlement of whatever kind or nature (including but not limited to legal fees and other costs of defense).
“Lowe’s” shall mean Lowe’s Home Centers, LLC, and any permitted successor thereto with respect to the Harris Teeter Lease.
“Lowe’s Casualty Requirements” shall have the meaning set forth in Section 2.7 hereof.
“Lowe’s Lease” shall mean that certain Lease dated as of May 21, 1996, by and between Lowe’s Home Centers, Inc., predecessor-in-interest to Lowe’s as tenant, and Earlon C. McWhorter, predecessor-in-interest to CTLC Golden Arrow Katy LLC, as landlord, as amended by that certain First Amendment to Lease dated as of June 18, 1997, as amended by that certain Second Amendment to Lease dated as of March 11, 2014, as the same may be further amended, modified or restated in accordance with the terms of this Agreement.
“Lowe’s Property” shall mean that certain Individual Property located in Katy, Texas.
“Major Lease” shall mean (i) any Lease which, individually or when aggregated with all other Leases with the same Tenant or its Affiliate, either (A) accounts for 20% or more of the total rental income for any Individual Property, or (B) demises 20% or more of an Individual Property’s gross leasable area, (ii) any Lease which contains any option, offer, right of first refusal or other
9
similar entitlement to acquire all or any portion of the Property, and (iii) any instrument guaranteeing or providing credit support for any Lease meeting the requirements of (i) and/or (ii) above.
“Management Agreement” shall mean any management agreement entered into by and between Borrower and Manager in accordance with the terms hereof and of the other Loan Documents, pursuant to which Manager is to provide management and other services with respect to the Property.
“Manager” shall mean any entity selected as the manager of the Property in accordance with the terms of this Agreement or the other Loan Documents.
“Material Adverse Effect” shall mean a material adverse effect on (i) the Property, (ii) the business, profits, management, operations or condition (financial or otherwise) of Borrower, Guarantor or the Property, (iii) the enforceability, validity, perfection or priority of the lien of the Security Instrument or the other Loan Documents, (iv) the ability of Borrower to perform its obligations under the Security Instrument or the other Loan Documents, or (v) the ability of Guarantor to perform its obligations under the Guaranty.
“Material Agreements” shall mean each contract and agreement relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Property, other than the Management Agreement and the Leases, as to which either (i) there is an obligation of Borrower to pay more than $100,000.00 per annum; or (ii) the term thereof extends beyond one year (unless cancelable on thirty (30) days or less notice without requiring the payment of termination fees or payments of any kind).
“Maturity Date” shall mean October 11, 2034 or such other date on which the final payment of principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by declaration of acceleration, or otherwise.
“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.
“Member” shall have the meaning set forth in Section 5.1(c) hereof.
“Mezzanine Borrower” shall have the meaning set forth in Section 11.6 hereof.
“Mezzanine Option” shall have the meaning set forth in Section 11.6 hereof.
“Minimum Disbursement Amount” shall mean Twenty-Five Thousand and No/100 Dollars ($25,000).
“Monthly Debt Service Payment Amount” shall mean a payment equal to the amount of interest which has accrued during the preceding Interest Accrual Period computed at the Applicable Interest Rate.
10
“Monthly Insurance Deposit” shall have the meaning set forth in Section 8.2 hereof.
“Monthly Payment Date” shall mean the eleventh (11th) day of every calendar month occurring during the term of the Loan.
“Monthly Tax Deposit” shall have the meaning set forth in Section 8.1 hereof.
“Moody’s” shall mean Moody’s Investor Service, Inc.
“Morningstar” shall mean Morningstar Credit Ratings, LLC.
“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 3(37)(A) of ERISA or Section 4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is making, is obligated to make or has made or been obligated to make during the last six years, contributions on behalf of participants who are or were employed by any of them.
“Net Proceeds” shall mean: (i) the net amount of all insurance proceeds payable as a result of a Casualty to the Property, after deduction of reasonable costs and expenses (including, but not limited to, reasonable attorneys’ fees), if any, in collecting such insurance proceeds, or (ii) the net amount of the Award, after deduction of reasonable costs and expenses (including, but not limited to, reasonable attorneys’ fees), if any, in collecting such Award.
“Net Proceeds Deficiency” shall have the meaning set forth in Section 7.4 hereof.
“New Manager” shall have the meaning set forth in Section 4.15 hereof.
“New Non-Consolidation Opinion” shall mean a substantive non-consolidation opinion provided by outside counsel acceptable to Lender and the Rating Agencies and otherwise in form and substance acceptable to Lender and the Rating Agencies.
“Non-Conforming Policy” shall have the meaning set forth in Section 7.1 hereof.
“Non-Consolidation Opinion” shall mean that certain substantive non-consolidation opinion delivered to Lender by Brownstein Hyatt Farber Schreck, LLP in connection with the closing of the Loan.
“Note” shall mean that certain Promissory Note of even date herewith in the principal amount of $30,000,000, made by Borrower in favor of Lender, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time.
“OFAC” shall have the meaning set forth in Section 3.28 hereof.
“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by Responsible Officer of Borrower.
“Open Period Start Date” shall have the meaning set forth in Section 2.7(a) hereof.
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“Other Charges” shall mean all maintenance charges, impositions other than Taxes, and any other charges, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof.
“Overpaying Borrower” shall have the meaning set forth in Section 17.16 hereof.
“Partial Defeasance Collateral” shall mean U.S. Obligations, which provide payments (i) on or prior to, but as close as possible to, the Business Day immediately preceding all Monthly Payment Dates under the Defeased Note and other scheduled payment dates, if any, under the Defeased Note after the Defeasance Date and up to and including the Open Period Start Date of the Defeased Note, and (ii) in amounts equal to or greater than the Partial Defeasance Scheduled Defeasance Payments relating to such Monthly Payment Dates under the Defeased Note and other scheduled payment dates under the Defeased Note.
“Partial Defeasance Event” shall have the meaning set forth in Section 2.8 hereof.
“Partial Defeasance Scheduled Defeasance Payments” shall mean scheduled payments of interest and principal under the Defeased Note for all Monthly Payment Dates occurring after the Defeasance Date and up to and including the Open Period Start Date with respect to the Defeased Note, and all payments required after the Defeasance Date, if any, under the Loan Documents for servicing fees, rating surveillance charges (to the extent applicable) and other similar charges.
“Patriot Act” shall have the meaning set forth in Section 3.29 hereof.
“Permitted Encumbrances” shall mean collectively, (a) the lien and security interests created by this Agreement and the other Loan Documents, (b) all liens, encumbrances and other matters disclosed in the Title Insurance Policy, (c) liens, if any, for Taxes imposed by any Governmental Authority not yet due or delinquent, (d) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion, and (e) Liens contested pursuant to the terms and conditions of the Loan Documents.
“Permitted Equipment Leases” shall mean equipment leases or other similar instruments entered into with respect to the Personal Property; provided, that, in each case, such equipment leases or similar instruments (i) are entered into on commercially reasonable terms and conditions in the ordinary course of Borrower’s business and (ii) relate to Personal Property which is (A) used in connection with the operation and maintenance of the Property in the ordinary course of Borrower’s business and (B) readily replaceable without material interference or interruption to the operation of the Property.
“Permitted Equity Transfer” shall have the meaning set forth in Section 6.3 hereof.
“Permitted Property Transfer” shall have the meaning set forth in Section 6.4 hereof.
“Permitted Transfer” shall mean (i) a Permitted Equity Transfer, (ii) a Permitted Property Transfer, (iii) a Lease entered into in accordance with the terms hereof, (iv) any Permitted Encumbrances, and/or (v) any Permitted Equipment Leases.
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“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“Personal Property” shall have the meaning set forth in the granting clause of the Security Instrument.
“Policies” shall have the meaning specified in Section 7.1 hereof.
“Prohibited Transfer” shall have the meaning set forth in Section 6.2 hereof.
“Property” shall, individually or collectively, as the context may require, each Individual Property.
“Provided Information” shall have the meaning set forth in Section 11.2(b) hereof.
“Prudent Lender Standard” shall, with respect to any matter, be deemed to have been met if the matter in question (i) prior to a Securitization, is reasonably acceptable to Lender and (ii) after a Securitization, would be acceptable to a prudent lender of securitized commercial mortgage loans.
“Qualified Insurer” shall have the meaning set forth in Section 7.1 hereof.
“Qualified Leasing Expenses” shall mean actual, out-of-pocket expenses incurred by Borrower in leasing space at the Property pursuant to Leases entered into in accordance with the terms hereof, including brokerage commissions and tenant improvements, which expenses (a) (i) in connection with Leases which require Lender’s approval under the Loan Documents, are specifically approved by Lender, (ii) in connection with Leases which do not require Lender’s approval under the Loan Documents, are incurred in the ordinary course of business and are on market terms and conditions, or (iii) are otherwise approved by Lender, which approval shall not be unreasonably withheld or delayed, and (b) are substantiated by executed Lease documents and/or brokerage agreements. With respect to Qualified Leasing Expenses pursuant to clauses (ii) and (iii) above, Lender shall have received and approved a budget for such tenant improvement costs and a schedule of leasing commissions payments payable in connection with any Qualified Leasing Expenses.
“Qualified Manager” as used herein shall mean a reputable and experienced professional management organization approved by Lender (which such approval may, at Lender’s option, be conditioned upon Lender’s receipt of a Rating Agency Confirmation with regard to both the identity of the proposed manager and the replacement management agreement pursuant to which such manager will be employed).
“Rating Agencies” shall mean each of S&P, Moody’s, Fitch, DBRS, Kroll and Morningstar, or any successor thereto, or any other nationally-recognized statistical rating agency which has been approved by Lender, but only to the extent that such Rating Agency has been designated by Lender, or is anticipated to be designated by Lender, in connection with any Secondary Market Transaction.
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“Rating Agency Confirmation” shall mean a written affirmation from each of the Rating Agencies (obtained at Borrower’s sole cost and expense) that the credit rating of the Securities by such Rating Agency immediately prior to the occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation may be granted or withheld in such Rating Agency’s sole and absolute discretion. For the purposes of this Agreement and the other Loan Documents, if any Rating Agency shall waive, decline or refuse to review or otherwise engage any request for a Rating Agency Confirmation hereunder or under the other Loan Documents (hereinafter, a “RA Consent”), such RA Consent shall be deemed to eliminate, for such request only, the condition that a Rating Agency Confirmation by such Rating Agency (only) be obtained for purposes of this Agreement or the other Loan Documents, as applicable; provided, however, if Lender does not have a separate and independent approval right with respect to such event set forth herein or in the other Loan Documents, as applicable, then the term “Rating Agency Confirmation” shall be deemed instead to require the approval of Lender based on its good faith determination. For purposes of clarity, any such waiver, declination or refusal to review or otherwise engage in any request for a Rating Agency Confirmation hereunder or under the other Loan Documents shall not be deemed a waiver, declination or refusal to review or otherwise engage in any subsequent request for a Rating Agency Confirmation hereunder or under the other Loan Documents, and the condition for Rating Agency Confirmation pursuant to this Agreement and the other Loan Documents for any subsequent request shall apply regardless of any previous waiver, declination or refusal to review or otherwise engage in such prior request.
“REA” shall mean, individually and/or collectively (as the context may require), each reciprocal easement, covenant, condition and restriction agreement or similar agreement affecting the Property as more particularly described on Schedule III hereto and any future reciprocal easement or similar agreement affecting the Property entered into in accordance with the applicable terms and conditions hereof.
“Registrar” shall have the meaning set forth in Section 11.7 hereof.
“Registration Statement” shall have the meaning set forth in Section 11.2 hereof.
“Regulation AB” shall mean Regulation AB under the Securities Act and the Exchange Act, as such Regulation may be amended from time to time.
“Related Loan” shall mean a loan made to an Affiliate of Borrower, or secured by a Related Property, that is included with the Loan (or a portion of the Loan) in a Securitization.
“Related Party” shall have the meaning set forth in Section 5.1(e)(xi) hereof.
“Related Property” shall mean a parcel of real property, together with improvements thereon and personal property related thereto, that is “related”, within the meaning of the definition of Significant Obligor, to the Property.
“Release Amount” shall mean an amount equal to the greater of (i) 100% of the net proceeds of the sale of such Individual Property, as reasonably determined by Lender, (ii) 125% of the Allocated Loan Amount with respect to each Individual Property being released from the
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Security Instrument pursuant to the terms and conditions hereof or (iii) such greater amount as may be required to maintain compliance with REMIC Requirements.
“Release Property” shall have the meaning set forth in Section 2.9 hereof.
“Release Security Instrument” shall have the meaning set forth in Section 2.9 hereof.
“Remaining Property” shall have the meaning set forth in Section 2.9.
“REMIC Requirements” shall mean any applicable federal income tax requirements relating to the continued qualification of any REMIC Trust (including, without limitation, the continued treatment of the Loan as a “qualified mortgage” in the hands of the REMIC Trust) as such under the IRS Code, the non-imposition of any tax on such REMIC Trust under the IRS Code (including, without limitation, the taxes on “prohibited transactions” and “contributions”), and any other constraints, rules or other regulations or requirements relating to the servicing, modification or other similar matters with respect to the Loan (or any portion thereof or interest therein) that may exist in, or be promulgated administratively under, the IRS Code.
“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the meaning of Section 860D of the IRS Code that holds any interest in all or any portion of the Loan (including, without limitation, the Note).
“Rent Loss Proceeds” shall have the meaning set forth in Section 7.1 hereof.
“Rent Roll” shall have the meaning set forth in Section 3.17 hereof.
“Rents” shall have the meaning set forth in the Security Instrument.
“Replacement Reserve Account” shall have the meaning set forth in Section 8.4 hereof.
“Replacement Reserve Funds” shall have the meaning set forth in Section 8.4 hereof.
“Replacement Reserve Monthly Deposit” shall have the meaning set forth in Section 8.4 hereof.
“Replacements” for any period shall mean amounts expended for replacements and/or alterations to the Property and required to be capitalized according to GAAP and reasonably approved by Lender.
“Reporting Failure” shall have the meaning set forth in Section 4.12 hereof.
“Required Financial Item” shall have the meaning set forth in Section 4.12 hereof.
“Reserve Funds” shall mean the Tax Reserve Funds, the Insurance Reserve Funds, the Replacement Reserve Funds, the Leasing Reserve Funds, the Existing TI/LC Reserve Funds, and any other escrow funds established by this Agreement or the other Loan Documents.
“Responsible Officer” shall mean with respect to a Person, the chairman of the board, president, chief operating officer, chief financial officer, treasurer or vice president of such Person
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or such other similar officer of such Person reasonably acceptable to Lender and appropriately authorized by the applicable Person in a manner reasonably acceptable to Lender.
“Restoration” shall have the meaning set forth in Section 7.2 hereof.
“Restoration Retainage” shall have the meaning set forth in Section 7.4 hereof.
“Restoration Threshold” shall mean an amount equal to 2% of the outstanding principal balance of the Loan.
“Restricted Party” shall have the meaning set forth in Section 6.1 hereof.
“Sale or Pledge” shall have the meaning set forth in Section 6.1 hereof.
“Scheduled Defeasance Payments” shall mean scheduled payments of interest and principal under the Note for all Monthly Payment Dates occurring after the Defeasance Date and up to and including the Open Period Start Date (including the outstanding principal balance on the Note as of the Open Period Start Date), and all payments required after the Defeasance Date, if any, under the Loan Documents for servicing fees, rating surveillance charges (to the extent applicable) and other similar charges.
“Secondary Market Transaction” shall have the meaning set forth in Section 11.1 hereof.
“Securities” shall have the meaning set forth in Section 11.1 hereof.
“Securities Act” shall have the meaning set forth in Section 11.2 hereof.
“Securitization” shall have the meaning set forth in Section 11.1 hereof.
“Security Agreement” shall mean a security agreement in form and substance that would be satisfactory to a prudent lender pursuant to which Borrower grants Lender a perfected, first priority security interest in the Defeasance Collateral Account and the Defeasance Collateral.
“Security Instrument” shall mean, individually or collectively, as the context may require, each of the first priority (i) Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof with respect to the Individual Property located in Houston, Texas; (ii) Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof with respect to the Individual Property located in Charlotte, North Carolina; (iii) Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof with respect to the Individual Property located in Renton, Washington; (iv) Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof with respect to the Individual Property located in Glendale, Arizona; (v) Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof with respect to the Individual Property located in Germantown, Maryland; and (vi) Multistate Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated the date hereof with respect to the Individual Property located in Clermont, Florida, each as executed and delivered by the respective Borrower as security for the Loan and encumbering the
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Property, each as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Self-Insurance Requirements” shall have the meaning set forth in Section 7.1 hereof.
“Servicer” shall have the meaning set forth in Section 11.4 hereof.
“Severed Loan Documents” shall have the meaning set forth in Article 10.
“Significant Obligor” shall have the meaning set forth in Item 1101(k) of Regulation AB under the Securities Act.
“Single Purpose Entity” shall mean an entity which satisfies all of the requirements of Section 5.1 hereof and whose structure and organizational and governing documents are otherwise in form and substance acceptable to Lender and the Rating Agencies.
“SPE Component Entity” shall have the meaning set forth in Section 5.1(b) hereof.
“Special Member” shall have the meaning set forth in Section 5.1(c) hereof.
“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.
“State” shall mean the state in which the Property or any part thereof is located.
“Substitute Property” shall have the meaning set forth in Section 6.6 hereof.
“Substituted Property” shall have the meaning set forth in Section 6.6 hereof.
“Substitution” shall have the meaning set forth in Section 6.6 hereof.
“Successor Borrower” shall have the meaning set forth in Section 2.8 hereof.
“Tax Waiver Conditions Precedent” shall mean the following conditions precedent: (i) no Event of Default exists; and (ii) no more than thirty (30) days after the same have been paid, and in no event prior to the applicable Taxes having become delinquent, Borrower delivers to Lender evidence in form and substance satisfactory to Lender that the applicable Taxes have been paid for the corresponding period.
“Tax Reserve Account” shall have the meaning set forth in Section 8.1 hereof.
“Tax Reserve Funds” shall have the meaning set forth in Section 8.1 hereof.
“Taxes” shall mean all taxes, assessments, water rates, sewer rents, business improvement district or other similar assessments and other governmental impositions, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Land, now or hereafter levied or assessed or imposed against the Property or any part thereof.
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“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any portion of the Property under a Lease or other occupancy agreement with Borrower.
“Title Insurance Policy” shall mean that certain ALTA mortgagee title insurance policy issued with respect to the Property and insuring the lien of the Security Instrument.
“Total Defeasance Collateral” shall mean U.S. Obligations, which provide payments (i) on or prior to, but as close as possible to, the Business Day immediately preceding all Monthly Payment Dates and other scheduled payment dates, if any, under the Note after the Defeasance Date and up to and including the Open Period Start Date, and (ii) in amounts equal to or greater than the Scheduled Defeasance Payments relating to such Monthly Payment Dates and other scheduled payment dates.
“Total Defeasance Event” shall have the meaning set forth in Section 2.8 hereof.
“Treasury Rate” shall mean, as of the date of determination, the yield, calculated by Lender by linear interpolation (rounded to the nearest one-thousandth of one percent (i.e., 0.001%)) of the yields of non-inflation adjusted non-callable United States Treasury obligations with terms (one longer and one shorter) most nearly approximating the period from such date of determination to the Maturity Date, as determined by Lender on the basis of Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. Governmental Security/Treasury Constant Maturities, or another recognized source of financial market information selected by Lender. Lender’s determination of the Treasury Rate shall be final absent manifest error.
“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State.
“Undefeased Note” shall have the meaning set forth in Section 2.8 hereof.
“Underwriter Group” shall have the meaning set forth in Section 11.2 hereof.
“Updated Information” shall have the meaning set forth in Section 11.1 hereof.
“U.S. Obligations” shall mean “government securities” as defined in Section 2(a)(16) of the Investment Company Act of 1940 and within the meaning of Treasury Regulation Section 1.860G-2(a)(8); provided, that, (i) such “government securities” are not subject to prepayment, call or early redemption, (ii) to the extent that any REMIC Requirements require a revised and/or alternate definition of “government securities” in connection with any defeasance hereunder, the foregoing shall be deemed amended in a manner commensurate therewith and (iii) the aforesaid laws and regulations shall be deemed to refer to the same as may be and/or may hereafter be amended, restated, replaced or otherwise modified.
“Wells Fargo” shall mean Wells Fargo Bank, National Association.
“Wells Group” shall have the meaning set forth in Section 11.2 hereof.
“Walgreen Lease” shall have the meaning set forth in Section 7.1 hereof.
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“Walgreen Property” shall have the meaning set forth in Section 7.1 hereof.
“Walgreen Tenant” shall have the meaning set forth in Section 7.1 hereof.
“Work Charge” shall have the meaning set forth in Section 4.16(a) hereof.
“Yield Maintenance Premium” shall mean an amount equal to the greater of the following two amounts: (a) an amount equal to 3% of the amount prepaid; or (b) an amount equal to (i) the amount, if any, by which the sum of the present values as of the prepayment date of all unpaid principal and interest payments required hereunder, calculated by discounting such payments from the respective dates each such payment was due hereunder (or, with respect to the payment required on the Open Period Start Date (assuming the outstanding principal balance of the Loan is due on the Open Period Start Date), from the Open Period Start Date) back to the prepayment date at a discount rate equal to the Periodic Treasury Yield (defined below) exceeds the outstanding principal balance of the Loan as of the prepayment date, multiplied by (ii) a fraction whose numerator is the amount prepaid and whose denominator is the outstanding principal balance of the Loan as of the prepayment date. For purposes of the foregoing, “Periodic Treasury Yield” shall mean (y) the annual yield to maturity of the actively traded non-callable United States Treasury fixed interest rate security (other than any such security which can be surrendered at the option of the holder at face value in payment of federal estate tax or which was issued at a substantial discount) that has a maturity closest to (whether before, on or after) the Open Period Start Date (or if two or more such securities have maturity dates equally close to the Open Period Start Date, the average annual yield to maturity of all such securities), as reported in The Wall Street Journal or other authoritative publication or news retrieval service on the fifth Business Day preceding the prepayment date, divided by (z) 12. Lender’s calculation of the Yield Maintenance Premium, and all component calculations, shall be conclusive and binding on Borrower absent manifest error.
All references to sections, exhibits and schedules are to sections, exhibits and schedules in or to this Agreement unless otherwise specified. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.
Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.
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Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be re-borrowed.
The Loan shall be evidenced by the Note and this Agreement and secured by this Agreement, the Security Instrument and the other Loan Documents.
Borrower shall use the proceeds of the Loan to (i) pay and discharge any existing loans relating to the Property, (ii) pay all past-due Taxes, Insurance Premiums and Other Charges, if any, in respect of the Property, (iii) make initial deposits of the Reserve Funds, (iv) pay costs and expenses incurred in connection with the closing of the Loan, and (v) to the extent any proceeds remain after satisfying clauses (i) through (iv) above, for such lawful purpose as Borrower shall designate.
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Borrower shall have the right to cause no more than three (3) Individual Properties (each a “Release Property”) to be released from the lien of the related Security Instrument (the “Release Security Instrument”) and the Loan Documents upon a Partial Defeasance Event in connection with a bona-fide sale to a non-affiliated third-party, provided:
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Borrower represents and warrants as of the Closing Date that:
Borrower (a) is duly organized, validly existing and in good standing under the laws of its state of formation; (b) is duly qualified to transact business and is in good standing in the State; and (c) has all necessary approvals, governmental and otherwise, and full power and authority to own, operate and lease the Property. Borrower has full power, authority and legal right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the Property pursuant to the terms hereof and to keep and observe all of the terms of this Agreement, the Note, the Security Instrument and the other Loan Documents on Borrower’s part to be performed.
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There is no action, suit, investigation, arbitration or proceeding, judicial, governmental, administrative or otherwise (including any condemnation or similar proceeding), pending, filed or, to the best of Borrower’s knowledge, threatened against Borrower or Guarantor or against the Property that has not been disclosed to Lender by Borrower in writing in connection with the closing of the Loan, is not fully covered by insurance or, if determined adversely to Borrower or Guarantor, would have a material adverse effect on (a) Borrower’s title to the Property, (b) the validity or enforceability of the Security Instrument, (c) Borrower’s ability to perform under the Loan Documents, (d) Guarantor’s ability to perform under the Guaranty, (e) the use, operation or value of the Property, (f) the principal benefit of the security intended to be provided by the Loan Documents, or (g) the ability of the Property to generate net cash flow sufficient to pay the Debt Service and other amounts due under the Loan.
Borrower is not a party to any agreement or instrument or subject to any restriction which would have a Material Adverse Effect. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party or by which Borrower or the Property is bound. Borrower has no material financial obligation under any agreement or instrument to which Borrower is a party or by which Borrower or the Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the Property, (b) obligations under this Agreement, the Security Instrument, the Note and the other Loan Documents and (c) obligations disclosed in the financial statements delivered to Lender prior to the date hereof. There is no agreement or instrument to which Borrower is a party or by which Borrower is bound that would require the subordination in right of payment of any of Borrower’s obligations hereunder or under the Note to an obligation owed to another party.
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To the best of Borrower’s knowledge, Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any representation or warranty made herein to be materially misleading.
As of the date hereof and throughout the term of the Loan (a) Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (b) Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA, (c) transactions by or with Borrower are not and will not be subject to any state statute, regulation or ruling regulating investments of, or fiduciary obligations with respect to, governmental plans, and (d) none of the assets of Borrower constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. As of the date hereof, neither Borrower nor any ERISA Affiliate maintains, sponsors or contributes to a Defined Benefit Plan or a Multiemployer Plan. Neither the Borrower nor any ERISA Affiliate sponsors, contributes to or maintains, either currently or in the past, a plan, document, agreement, or arrangement subject to ERISA.
Borrower is not a “foreign person” within the meaning of § 1445(f)(3) of the IRS Code.
The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.
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Borrower’s principal place of business and its chief executive office as of the date hereof is c/o Consolidated-Tomoka Land Co., 1530 Cornerstone Blvd., Suite 100, Daytona Beach, Florida 32117. Borrower’s mailing address, as set forth in the opening paragraph hereof or as changed in accordance with the provisions hereof, is true and correct. Borrower is not subject to back-up withholding taxes.
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All financial data, including, without limitation, the balance sheets, statements of cash flow, statements of income and operating expense and rent rolls, that have been delivered to Lender in respect of Borrower, Guarantor and/or the Property (a) are true, complete and correct in all material respects, (b) accurately represent the financial condition of Borrower, Guarantor or the Property, as applicable, in all material respects, as of the date of such reports, and (c) to the extent prepared or audited by an independent certified public accounting firm, have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a Material Adverse Effect, except as referred to or reflected in said financial statements. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business of Borrower or Guarantor from that set forth in said financial statements.
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No Condemnation or other proceeding has been commenced, is pending or, to Borrower’s knowledge, is threatened with respect to all or any portion of the Property or for the relocation of the access to the Property.
The Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements is assessed and taxed together with the Property or any portion thereof.
Borrower has obtained and has delivered to Lender certified copies of all Policies with respect to coverage maintained by Borrower reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. There are no present claims of any material nature under any of the Policies, and to Borrower’s knowledge, no Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any of the Policies.
The Property is used exclusively as retail centers and other appurtenant and related uses.
Except as disclosed in the rent roll for the Property delivered to and approved by Lender (the “Rent Roll”) and the aging report and Tenant estoppels delivered to and approved by Lender, (a) Borrower is the sole owner of the entire lessor’s interest in the Leases; (b) the Leases are valid and enforceable against Borrower and the Tenants set forth therein and are in full force and effect; (c) all of the Leases are arms-length agreements with bona fide, independent third parties; (d) no party under any Lease is in default; (e) all Rents due have been paid in full and no Tenant is in arrears in its payment of Rent; (f) none of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated; (g) none of the Rents have been collected for more than one (1) month in advance (except a security deposit shall not be deemed rent collected in advance); (h) the premises demised under the Leases have been completed and the Tenants under the Leases have accepted the same and have taken possession of the same on a rent-paying basis with no rent concessions to any Tenants; (i) there exist no offsets or defenses to the payment of any portion of the Rents and Borrower has no monetary obligation to any Tenant under any Lease, except as expressly contained therein; (j) Borrower has received no notice from any Tenant challenging the validity or enforceability of any Lease; (k) there are no agreements with the Tenants under the Leases other than expressly set forth in each Lease; (l) except as otherwise disclosed to Lender, no Lease contains an option to purchase, right of first refusal to purchase, right of first refusal to lease additional space at the Property, or any other similar provision; (m) no person or entity has any possessory interest in, or right to occupy, the Property except under and pursuant to a Lease or Permitted Encumbrance; (n) no Tenants have exercised any right to “go dark” that they may have under their Leases and no event has occurred that, but for the giving of notice and/or passage of
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time, would give any Tenant any right to abate rent, “go dark” or terminate any Lease; (o) all security deposits relating to the Leases reflected on the Rent Roll have been collected by Borrower; (p) no brokerage commissions or finder’s fees are due and payable regarding any Lease; (q) each Tenant is in actual, physical occupancy of the premises demised under its Lease and is paying full rent under its Lease; and (r) no Tenant occupying 20% or more (by square feet) of the net rentable area of the Property is, to Borrower’s knowledge, a debtor in any state or federal bankruptcy, insolvency or similar proceeding.
All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under Applicable Law currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of this Agreement, the Security Instrument, the Note and the other Loan Documents, including, without limitation, the Security Instrument, have been paid or will be paid, and, under current Applicable Law, the Security Instrument is enforceable in accordance with its terms by Lender (or any subsequent holder thereof), except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Creditors Rights Laws, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Borrower is not a party to any management agreement and is not obligated to pay any party any management fees pursuant to a written agreement or otherwise.
Borrower has filed all federal, state, county, municipal, and city income, personal property and other tax returns required to have been filed by it and has paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it.
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Borrower knows of no basis for any additional assessment in respect of any such taxes and related liabilities for prior years.
To the best of Borrower’s knowledge, none of the Permitted Encumbrances, individually or in the aggregate, materially interferes with the benefits of the security intended to be provided by this Agreement, the Security Instrument, the Note and the other Loan Documents, materially and adversely affects the value or marketability of the Property, impairs the use or the operation of the Property or impairs Borrower’s ability to pay its obligations in a timely manner.
With respect to each Material Agreement, to the best of Borrower’s knowledge, (a) each Material Agreement is in full force and effect and has not been amended, restated, replaced or otherwise modified (except, in each case, as expressly set forth herein), (b) there are no defaults under any Material Agreement by any party thereto, which remains uncured after the expiration of any applicable notice and cure period, (c) all payments and other sums due and payable under the Material Agreements have been paid in full, (d) no party to any Material Agreement has commenced any action or given or received any notice for the purpose of terminating any Material Agreement, and (e) the representations made in any estoppel or similar document delivered by Borrower with respect to any Material Agreement in connection with the Loan are true, complete and correct and are hereby incorporated by reference as if fully set forth herein.
All of the assumptions made in the Non-Consolidation Opinion, including, but not limited to, any exhibits attached thereto, are true, complete and correct.
No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Applicable Law or by the terms and conditions of this Agreement, the Security Instrument, the Note or the other Loan Documents.
Borrower is not (a) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.
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Borrower (a) has not entered into the Loan or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and (b) received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan Documents, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of Borrower’s assets is and will, immediately following the execution and delivery of the Loan Documents, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities or its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the execution and delivery of the Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur debts and liabilities (including, without limitation, contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower).
As of the date hereof and at all times throughout the term of the Loan, including after giving effect to any transfers of interests permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower or Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or country which is a sanctioned person, entity or country under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder (including regulations administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury and the Specially Designated Nationals List maintained by OFAC) with the result that the investment in Borrower and/or Guarantor, as applicable (whether directly or indirectly), is prohibited by Applicable Law or the Loan made by Lender is in violation of Applicable Law (“Embargoed Person”); (b) unless expressly waived in writing by Lender, no Embargoed Person has any interest of any nature whatsoever in Borrower or Guarantor, as applicable, with the result that the investment in Borrower and/or Guarantor, as applicable (whether directly or indirectly), is prohibited by Applicable Law or the Loan is in violation of Applicable Law; and (c) to the best knowledge of Borrower, none of the funds of Borrower or Guarantor, as applicable, have been derived from any unlawful activity with the result that the investment in Borrower and/or Guarantor, as applicable (whether directly or indirectly), is prohibited by Applicable Law or the Loan is in violation of Applicable Law. Borrower covenants and agrees that in the event Borrower receives any notice that Borrower or Guarantor (or any of their respective beneficial owners, affiliates or participants) or any Person that has an interest in the Property is designated as an Embargoed Person, Borrower shall immediately notify Lender in writing. At Lender’s option, it shall be an Event of Default hereunder if Borrower, Guarantor or any other party to the Loan (other than Lender) is designated as an Embargoed Person.
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All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and regulations of the United States government and its various executive departments, agencies and offices related to the subject matter of the Patriot Act (collectively referred to in this Section only as the “Patriot Act”) are incorporated into this Section. Borrower hereby represents and warrants that Borrower and Guarantor and each and every Person affiliated with Borrower and/or Guarantor or that to Borrower’s knowledge has an economic interest in Borrower, or, to Borrower’s knowledge, that has or will have an interest in the transaction contemplated by this Agreement or in the Property or will participate, in any manner whatsoever, in the Loan, is: (i) in full compliance with all applicable requirements of the Patriot Act and any regulations issued thereunder; (ii) operated under policies, procedures and practices, if applicable, that are in compliance with the Patriot Act and available to Lender for Lender’s review and inspection during normal business hours and upon reasonable prior notice; (iii) not in receipt of any notice from the Secretary of State or the Attorney General of the United States or any other department, agency or office of the United States claiming a violation or possible violation of the Patriot Act; (iv) not a person who has been determined by competent authority to be subject to any of the prohibitions contained in the Patriot Act; and (v) not owned or controlled by or now acting and/or will in the future act for or on behalf of any person who has been determined to be subject to the prohibitions contained in the Patriot Act. Borrower covenants and agrees that in the event Borrower receives any notice that Borrower or Guarantor (or any of their respective beneficial owners, affiliates or participants) or any Person that has an interest in the Property is indicted, arraigned, or custodially detained on charges involving money laundering or predicate crimes to money laundering, Borrower shall immediately notify Lender. At Lender’s option, it shall be an Event of Default hereunder if Borrower, Guarantor or any other party to the Loan (other than Lender) is indicted, arraigned or custodially detained on charges involving money laundering or predicate crimes to money laundering.
The organizational chart attached as Schedule II hereto, relating to Borrower and certain Affiliates and other parties, is true, complete and correct on and as of the date hereof.
Borrower is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
With respect to each REA, to Borrower’s knowledge (a) each REA is in full force and effect and has not been amended, restated, replaced or otherwise modified (except, in each case, as expressly set forth herein), (b) there are no defaults under any REA by any party thereto and no event has occurred which, but for the passage of time, the giving of notice, or both, would
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constitute a default under any REA, (c) all sums due and payable under each REA have been paid in full, (d) no party to any REA has commenced any action or given or received any notice for the purpose of terminating any REA, and (e) the representations made in any estoppel or similar document delivered with respect to any REA in connection with the Loan, if any, are true, complete and correct and are hereby incorporated by reference as if fully set forth herein.
All information submitted by Borrower, Guarantor to Lender and in all financial statements, rent rolls, reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower and/or Guarantor in this Agreement or in the other Loan Documents, are accurate, complete and correct in all material respects. There has been no material adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading in any material respect or that would otherwise have a Material Adverse Effect.
Borrower hereby represents and warrants to Lender that:
Borrower hereby represents and warrants that, as of the date hereof, the representations and warranties set forth in Sections 3.1, 3.2 through 3.8, 3.12, 3.18, 3.21, 3.27, 3.28, 3.29, 3.32, and 3.34 above are true and correct with respect to Guarantor, as the same are applicable to Guarantor. Wherever the term “Borrower” is used in each of the foregoing Sections it shall be deemed to be “Guarantor” with respect to Guarantor.
Borrower agrees that, unless expressly provided otherwise, all of the representations and warranties of Borrower set forth in this Article 3 and elsewhere in this Agreement and the other Loan Documents shall survive for so long as any portion of the Debt remains owing to Lender. All representations, warranties, covenants and agreements made in this Agreement and in the other Loan Documents shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.
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From the date hereof and until payment and performance in full of all obligations of Borrower under this Agreement, the Security Instrument, the Note and the other Loan Documents or the earlier release of the lien of the Security Instrument (and all related obligations) in accordance with the terms of this Agreement, the Security Instrument, the Note and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:
Borrower will continuously maintain (a) its existence and shall not dissolve or permit its dissolution, (b) its rights to do business in the applicable State and (c) its franchises and trade names, if any.
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Borrower shall cause the Property to be maintained in a good and safe condition and repair in all material respects. The Improvements and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Personal Property) without the consent of Lender or as otherwise permitted pursuant to Section 4.21 hereof. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Section 3.13 hereof and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Borrower shall not initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property or any part thereof, without the prior written consent of Lender, which shall not be unreasonably withheld, conditioned or delayed. If under applicable zoning provisions the use of all or any portion of the Property is or shall become a nonconforming use, Borrower will not cause or permit the nonconforming use to be discontinued or the nonconforming Improvement to be abandoned without the express written consent of Lender. Borrower’s rights and obligations are subject to the applicable provisions of the applicable Lease and Tenant’s rights thereunder. To the extent the obligations set forth in this Section 4.3 are the responsibility of Tenant pursuant to the applicable Lease, Borrower shall be deemed to be in compliance with this Section 4.3 so long as Tenant is not in default under the applicable Lease or, if the Tenant is in default under the applicable Lease after any applicable notice and cure period, for the obligations above, Borrower is asserting its rights and is using commercially reasonable efforts to enforce Tenant’s obligations under the applicable Lease; provided, however, that the foregoing shall in no way limit Borrower’s obligations under this Section 4.3 and the Loan Documents.
Borrower shall not knowingly commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way impair the value of the Property or the security for the Loan. Except as otherwise permitted in the Permitted Encumbrances, Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Property, regardless of the depth thereof or the method of mining or extraction thereof.
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Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower or any SPE Component Entity which might have a Material Adverse Effect.
Subject to the rights of Tenants as set forth in the Leases, Borrower shall permit agents, representatives and employees of Lender to inspect the Property or any part thereof at reasonable hours upon reasonable advance notice.
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Borrower shall promptly advise Lender of any material adverse change in Borrower’s and/or Guarantor’s condition (financial or otherwise) or of the occurrence of any Default or Event of Default of which Borrower has knowledge.
Borrower shall cooperate fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which may adversely affect the rights of Lender hereunder or any rights obtained by Lender under any of the Note, the Security Instrument or the other Loan Documents and, in connection therewith, permit Lender, at Lender’s election, to participate in any such proceedings.
Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision to be observed and performed by Borrower under this Agreement, the Security Instrument, the Note and the other Loan Documents and, subject to the notice and cure periods contained therein, any Material Agreement pertaining to the Property and any amendments, modifications or changes thereto.
Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or insurance proceeds lawfully or equitably payable in connection with the Property, and Lender shall be reimbursed for any reasonable and customary expenses incurred in connection therewith (including reasonable, actual attorneys’ fees and disbursements, and the payment by Lender of the expense of an appraisal on behalf of Borrower in case of a Casualty or Condemnation affecting the Property or any part thereto) out of such Awards or insurance proceeds.
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Borrower shall observe and perform each and every term to be observed or performed by Borrower pursuant to the terms of any Material Agreement affecting or pertaining to the Property, or given by Borrower to Lender for the purpose of further securing the Debt and any amendments, modifications or changes thereto.
Borrower shall not cancel or otherwise forgive or release any claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person if such cancellation or forgiveness has a Material Adverse Effect with respect to Borrower or the current and/or intended operation of the Property, except for adequate consideration or in the ordinary course of Borrower’s business (including Borrower’s determination that any account receivable is uncollectable).
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Borrower shall not suffer, permit or initiate the joint assessment of the Property with (a) any other real property constituting a tax lot separate from the Property, or (b) any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the Property.
Lender’s prior approval (which approval shall not be unreasonably withheld or delayed) shall be required in connection with any alterations to any Improvements (a) that may have a Material Adverse Effect, (b) the cost of which (including any related alteration, improvement or replacement) is reasonably anticipated to exceed the Alteration Threshold, or (c) that are structural in nature, except for (x) any alterations performed as a part of a Restoration in accordance with Section 7.4 hereof, (y) any alterations or tenant improvements being made expressly pursuant to existing Leases that have been delivered to Lender and (z) any Immediate Repairs. If the total
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unpaid amounts incurred and to be incurred with respect to any alterations to the Improvements shall at any time exceed the Alteration Threshold, Borrower shall, if required by Lender, promptly deliver to Lender as security for the payment of such amounts and as additional security for Borrower’s obligations under the Loan Documents any of the following: (i) cash, (ii) U.S. Obligations, (iii) other securities acceptable to Lender (provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same), or (iv) a completion bond (provided that Lender shall have received a Rating Agency Confirmation as to the form and issuer of same). Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements over the Alteration Threshold. All alterations to any Improvements shall be made lien-free and in a good and workmanlike manner in accordance with all Applicable Laws.
Borrower shall, subject to any applicable restrictions or requirements in any Existing Leases (a) promptly perform and/or observe, in all material respects, all of the covenants and agreements required to be performed and observed by it under any REA and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (b) promptly notify Lender of any material default under any REA of which it is aware; (c) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, notice, report and estimate received by it under any REA; (d) enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed under any REA in a commercially reasonable manner; (e) cause the Property to be operated, in all material respects, in accordance with any REA; and (f) not, without the prior written consent of Lender, (i) enter into any new REA or execute modifications to any existing REA, (ii) surrender, terminate or cancel any REA, (iii) reduce or consent to the reduction of the term of any REA, (iv) increase or consent to the increase of the amount of any charges under any REA, (v) otherwise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, any REA in any material respect, or (vi) following the occurrence and during the continuance of an Event of Default, exercise any rights, make any decisions, grant any approvals or otherwise take any action under any REA.
Borrower shall (a) promptly perform and/or observe, in all material respects, all of the covenants and agreements required to be performed and observed by it under the Material Agreements and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (b) promptly notify Lender of any material default under the Material Agreements of which it is aware; (c) promptly deliver to Lender a copy of each financial statement, business plan, capital expenditures plan, notice, report and estimate received by it under the Material Agreements; (d) enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed under the Material Agreements in a commercially reasonable manner; (e) cause the Property to be operated, in all material respects, in accordance with the Material Agreements; and (f) not, without the prior written consent of Lender, (i) enter into any new Material Agreement or execute modifications to any existing Material Agreements, (ii) surrender, terminate or cancel the Material Agreements, (iii) reduce or consent to the reduction of the term of the Material Agreements, (iv) increase or consent to the increase of the amount of any charges
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under the Material Agreements, (v) otherwise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, the Material Agreements in any material respect, or (vi) following the occurrence and during the continuance of an Event of Default, exercise any rights, make any decisions, grant any approvals or otherwise take any action under the Material Agreements. Notwithstanding anything to the contrary contained herein, to the extent Lender’s prior approval is required for any matters set forth in this Section 4.23, Lender shall have ten (10) Business Days from receipt of written request and all information and documentation reasonably required to evaluate the applicable Material Agreement in which to approve or disapprove such matter, provided that such request to Lender is marked in bold lettering with the following language: “LENDER’S RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER” and the envelope containing the request must be marked “PRIORITY”. In the event that Lender fails to respond to the matter in question within such time, Lender’s approval shall be deemed given for all purposes. Borrower shall provide Lender with such information and documentation as may be reasonably required by Lender. For purposes of clarification, Lender’s requesting additional and/or clarified information, in addition to approving or denying any request (in whole or in part), shall be deemed a response by Lender for purposes of the foregoing.
Borrower shall perform, or shall cause the applicable Tenant to perform, the repairs at the Property as set forth on Schedule I hereto (such repairs hereinafter referred to as “Immediate Repairs”) in good and workmanlike manner and in accordance with Applicable Laws on or prior to the date occurring six (6) months after the date hereof; provided that, Lender may, in its sole discretion, extend the respective deadlines for performance of such Immediate Repairs by written notice to Borrower.
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Borrower shall not change (or permit to be changed) Borrower’s or the SPE Component Entity’s (a) name, (b) identity (including its trade name or names), (c) principal place of business set forth on the first page of this Agreement or, (d) if not an individual, Borrower’s or the SPE Component Entity’s corporate, partnership or other structure, without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Borrower’s or the SPE Component Entity’s structure, without first obtaining the prior written consent of Lender (except as otherwise provided elsewhere in this Agreement). Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request of Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower or the SPE Component Entity intends to operate the Property, and representing and warranting that Borrower or the SPE Component Entity does business under no other trade name with respect to the Property.
Borrower will continue to engage in the businesses now conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Property. Borrower will qualify to do business and will remain in good standing under the laws of the jurisdiction as and to the extent the same are required for the ownership, maintenance, management and operation of the Property.
For purposes of this Article 6, “Restricted Party” shall mean Borrower, Guarantor, any SPE Component Entity, any Affiliated Manager, or any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of Borrower, Guarantor, any SPE Component Entity, any Affiliated Manager or any non-member manager; and a “Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, mortgage, grant, bargain, lien, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or
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disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) a legal or beneficial interest.
Notwithstanding the restrictions contained in this Article 6, the following equity transfers shall be permitted without Lender’s consent (each, a “Permitted Equity Transfer”): (a) a transfer (but not a pledge) by devise or descent or by operation of law upon the death of a Restricted Party or any member, partner or shareholder of a Restricted Party, (b) the transfer (but not the pledge), in one or a series of transactions, of the stock, partnership interests or membership interests (as the
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case may be) in a Restricted Party (including, without limitation, transfers for estate planning purposes), (c) the sale, transfer or issuance of shares of common stock in any Restricted Party that is a publicly traded entity, provided such shares of common stock are listed on the New York Stock Exchange or another nationally recognized stock exchange, and (d) the sale, transfer or issuance of stock in a Restricted Party that is a non-traded public real estate investment trust to third party investors through licensed U.S. broker-dealers in accordance with Applicable Law (provided that the foregoing provisions of clauses (c) and (d) shall not be deemed to waive, qualify or otherwise limit Borrower’s obligation to comply (or to cause the compliance) with the other covenants set forth herein and in the other Loan Documents (including, without limitation, the covenants contained herein relating to ERISA matters)); provided, further, that, with respect only to the transfers listed in clauses (a) and/or (b) above, (A) (x) Lender shall receive written notice of any transfers pursuant to clause (a) above within ten (10) days of Borrower’s notice of such transfer and (y) Lender shall receive not less than thirty (30) days prior written notice of such transfers in connection with any transfer pursuant to clause (b) above, (B) no such transfers shall result in a change in Control of Guarantor or Affiliated Manager, (C) after giving effect to such transfers, Guarantor shall (I) own at least a 51% direct or indirect equity ownership interest in each of Borrower and any SPE Component Entity; (II) Control Borrower and any SPE Component Entity; and (III) control the day-to-day operation of the Property, (D) after giving effect to such transfers, the Property shall continue to be managed by Affiliated Manager or a New Manager approved in accordance with the applicable terms and conditions hereof, (E) in the case of the transfer of any direct equity ownership interests in Borrower or in any SPE Component Entity, such transfers shall be conditioned upon continued compliance with the relevant provisions of Article 5 hereof, (F) in the case of (1) the transfer of the management of the Property to a new Affiliated Manager in accordance with the applicable terms and conditions hereof, or (2) the transfer of any direct or indirect equity ownership interests in any Restricted Party that results in any Person and its Affiliates owning in excess of forty-nine percent (49%) of the direct or indirect equity ownership interests in Borrower or in any SPE Component Entity that did not own the same on the date hereof or at the time of the delivery of any New Non-Consolidation Opinion prior to such transfer, such transfers shall be conditioned upon delivery to Lender of a New Non-Consolidation Opinion addressing such transfer, (G) such transfers shall be conditioned upon Borrower’s ability to, after giving effect to the equity transfer in question, (I) remake the representations contained herein relating to ERISA, OFAC and Patriot Act matters (and, upon Lender’s request, Borrower shall deliver to Lender (x) an Officer’s Certificate containing such updated representations effective as of the date of the consummation of the applicable equity transfer and (y) searches, acceptable to Lender, for any Person owning, directly or indirectly, 20% or more of the interests in the Borrower as a result of such transfer) and (II) continue to comply with the covenants contained herein relating to ERISA OFAC and Patriot Act matters, and (H) without the prior written consent of Lender, after giving effect to such transfers, no party shall own, directly or indirectly, 49% or more of the interests in any Borrower unless such party owned 49% or more of the interests in either Borrower prior to such transfers. Upon request from Lender, Borrower shall promptly provide Lender a revised version of the organizational chart delivered to Lender in connection with the Loan reflecting any equity transfer consummated in accordance with this Section 6.3.
Notwithstanding the provisions of this Article 6, following the date which is twelve (12) months from the Closing Date, Lender shall not unreasonably withhold consent to the transfer of
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the Property, on three (3) occasions, in its entirety to, and the related assumptions of the Loan by, any Person (a “Transferee”) provided that, with respect to each such transfer, each of the following terms and conditions are satisfied (each, a “Permitted Property Transfer”):
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Notwithstanding the foregoing or anything herein to the contrary, Borrower may not exercise its rights pursuant to this Section 6.4 during the period that commences on the date that is sixty (60) days prior to the date of any intended Securitization of the Loan and ending on the date that is sixty (60) days after the date of such Securitization of the Loan.
Lender reserves the right to condition the consent to a Prohibited Transfer (expressly excluding any Permitted Equity Transfer and Permitted Property Transfer) requested hereunder
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upon (a) a modification of the terms hereof and on assumption of this Agreement and the other Loan Documents as so modified by the proposed Prohibited Transfer, (b) payment of a transfer fee of 1% of outstanding principal balance of the Loan and all of Lender’s expenses incurred in connection with such Prohibited Transfer, (c) to the extent required by Lender, receipt of a Rating Agency Confirmation with respect to the Prohibited Transfer, (d) the proposed transferee’s continued compliance with the covenants set forth in this Agreement, including, without limitation, the covenants in Article 5, (e) receipt of a New Non-Consolidation Opinion with respect to the Prohibited Transfer, and/or (f) such other conditions and/or legal opinions as Lender shall determine in its sole discretion to be in the interest of Lender. All expenses incurred by Lender shall be payable by Borrower whether or not Lender consents to the Prohibited Transfer. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Prohibited Transfer without Lender’s consent. This provision shall apply to every Prohibited Transfer, whether or not Lender has consented to any previous Prohibited Transfer.
Subject to the terms and conditions set forth in this Section 6.6, Borrower may obtain a release of the Lien of the Security Instrument (and the related Loan Documents) on any Individual Property (the “Substituted Property”), by substituting therefor another commercial property acceptable to Lender with a property of kind, quality (including location attributes of submarket strength, population and access) and use equal to or better than the Substituted Property to be acquired by Borrower or an Affiliate thereof (the “Substitute Property”), provided that any such substitution (a “Substitution”) shall be subject, in each case, to the following conditions precedent are satisfied:
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Additionally, Borrower further covenants and agrees to promptly send to Lender any notices of non-renewal or cancellation it receives from the insurer with respect to the Policies required pursuant to this Section 7.1.
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If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such Casualty, with such alterations as may be reasonably approved by Lender (a “Restoration”) and otherwise in accordance with Section 7.4. Borrower shall pay all costs of such Restoration whether or not such costs are covered by insurance. Lender may, but shall not be obligated to make proof of loss if not made promptly by Borrower. Notwithstanding anything to the contrary contained herein, Borrower’s obligations to promptly commence and diligently prosecute the Restoration of the Property in accordance with this Section 7.2 or take other actions on the Property under this Section are subject to any restrictions on the property owner to take such actions contained in the applicable Leases. To the extent the obligations of Borrower to restore the Property or take other actions on the Property are the responsibility of Tenant pursuant to the applicable Lease, Borrower shall be deemed to be in compliance with this Section so long as Borrower is asserting its rights and is using commercially reasonable efforts to enforce Tenant’s obligations under the applicable Lease including, without limitation, the exercise of remedies available under the applicable Lease; provided, however, that the foregoing shall in no way limit Borrower’s obligations to Lender under this Section 7.2 and this Agreement.
Borrower shall promptly give Lender notice of the actual or threatened commencement of any proceeding for the Condemnation of the Property of which Borrower has knowledge and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including but not limited to any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the Debt shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning authority but shall be entitled to receive out of the Award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the
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Restoration of the Property and otherwise comply with the provisions of Section 7.4. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt. To the extent the obligations of Borrower to restore the Property or take other actions on the Property are the responsibility of Tenant pursuant to the applicable Lease, Borrower shall be deemed to be in compliance with this Section so long as Borrower is asserting its rights and is using commercially reasonable efforts to enforce Tenant’s obligations under the applicable Lease including, without limitation, the exercise of remedies available under the applicable Lease; provided, however, that the foregoing shall in no way limit Borrower’s obligations to Lender under this Section 7.3 and this Agreement.
The following provisions shall apply in connection with the Restoration of the Property:
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(c) Notwithstanding the foregoing, Borrower shall not be required to make the Monthly Insurance Deposit as set forth above, provided that (i) no Event of Default shall have occurred and be continuing, (ii) the Policies maintained by Borrower covering the Property are part of a blanket or umbrella policy approved by Lender in its reasonable discretion pursuant to Section 7.1 hereof, including, without limitation, approval of the schedule of locations and values, (iii) Borrower provides Lender evidence of renewal of such Policies pursuant to Section 7.1 hereof, and (iv) Borrower provides Lender paid receipts for the payment of the Insurance Premiums by no later than ten (10) Business Days prior to the expiration dates of the Policies. Borrower shall immediately commence making all Monthly Insurance Deposits, as required pursuant to this Section 8.2, within five (5) days of receipt of notice from Lender of Borrower’s failure to comply
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with items (i), (ii), (iii) or (iv) above, which such notice shall instruct Borrower to immediately commence making all Monthly Insurance Deposits, until such failure is remedied.
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Borrower shall deposit with Lender on the date hereof $550,000, representing the tenant improvement costs which are payable by Borrower under the Lowe’s Lease ($500,000 with respect to HVAC improvements and $50,000 with respect to concrete repairs). Amounts deposited pursuant to this Section 8.9 are referred to herein as the “Existing TI/LC Reserve Funds”. The
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Existing TI/LC Reserve Funds shall be disbursed in accordance with Section 8.5(b) hereof. All Existing TI/LC Reserve Funds shall be held by Lender or Servicer in an Eligible Account (the “Existing TI/LC Reserve Account”) which, during the continuation of a Cash Trap Event Period, may be a sub-account of the Cash Management Account.
Borrower shall enter into the Cash Management Agreement on the date hereof which shall govern the collection, holding and disbursement of Rents and any other income from the Property during the term of the Loan.
In the event of a Cash Trap Event Period, all Excess Cash Flow (as defined in the Cash Management Agreement) shall be deposited into the Excess Cash Flow Subaccount (as defined in the Cash Management Agreement), as more particularly set forth in the Cash Management Agreement.
The occurrence of any one or more of the following events shall constitute an “Event of Default”:
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Notwithstanding anything herein to the contrary, if the Loan is included in a REMIC Trust and, immediately following a release of any portion of the real property relating to the Property, the ratio of the unpaid principal balance of the Loan to the value of the remaining real property relating to the Property is greater than 125% (such value to be determined, in Lender’s sole discretion, by any commercially reasonable method permitted to a REMIC Trust and it being agreed and acknowledged that such loan-to-value determination shall be based on the value of only real property and shall exclude any personal property or going-concern value, if any), the principal balance of the Loan must be paid down by Borrower by an amount sufficient to satisfy REMIC Requirements, unless the Lender receives an opinion of counsel that the Loan will not fail to maintain its status as a “qualified mortgage” within the meaning of Section 860G(a)(3)(A) of the IRS Code as a result of the related release of lien.
At the option of Lender, the Loan may be serviced by a servicer/trustee selected by Lender (the “Servicer”) and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to such servicer/trustee pursuant to a servicing agreement between Lender and such Servicer; provided, however, Borrower shall not be obligated to pay any monthly servicing fees to such Servicer.
In connection with any Rating Agency Confirmation or other Rating Agency consent, approval or review required hereunder (other than the initial review of the Loan by the Rating Agencies in connection with a Securitization), Borrower shall pay all of the costs and expenses of Lender, Servicer and each Rating Agency in connection therewith, and, if applicable, shall pay any fees imposed by any Rating Agency in connection therewith.
Lender shall have the option (the “Mezzanine Option”) at any time to divide the Loan into two parts, a mortgage loan and a mezzanine loan, provided, that (i) the total loan amounts for such mortgage loan and such mezzanine loan shall equal the then outstanding amount of the Loan immediately prior to Lender’s exercise of the Mezzanine Option, and (ii) the weighted average interest rate of such mortgage loan and mezzanine loan shall initially equal the Applicable Interest Rate. Borrower shall, at Lender’s sole cost and expense, cooperate with Lender in Lender’s exercise of the Mezzanine Option in good faith and in a timely manner, which such cooperation shall include, but not be limited to, (i) executing such amendments to the Loan Documents and Borrower or any SPE Component Entity’s organizational documents as may be reasonably requested by Lender or requested by the Rating Agencies, (ii) creating one or more Single Purpose
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Entities (the “Mezzanine Borrower”), which such Mezzanine Borrower shall (A) own, directly or indirectly, 100% of the equity ownership interests in Borrower (the “Equity Collateral”), and (B) together with such constituent equity owners of such Mezzanine Borrower as may be designated by Lender, execute such agreements, instruments and other documents as may be required by Lender in connection with the mezzanine loan (including, without limitation, a promissory note evidencing the mezzanine loan and a pledge and security agreement pledging the Equity Collateral to Lender as security for the mezzanine loan); and (iii) delivering such opinions, title endorsements, UCC title insurance policies and other materials as may be required by Lender or the Rating Agencies.
At the request of Lender, Borrower shall appoint, as its agent, a registrar and transfer agent (the “Registrar”) reasonably acceptable to Lender which shall maintain, subject to such reasonable regulations as it shall provide, such books and records as are necessary for the registration and transfer of the Note in a manner that shall cause the Note to be considered to be in registered form for purposes of Section 163(f) of the IRS Code. The option to convert the Note into registered form once exercised may not be revoked. Any agreement setting out the rights and obligation of the Registrar shall be subject to the reasonable approval of Lender. Borrower may revoke the appointment of any particular person as Registrar, effective upon the effectiveness of the appointment of a replacement Registrar. The Registrar shall not be entitled to any fee from Borrower or Lender or any other lender in respect of transfers of the Note and other Loan Documents.
Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all actual Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (b) any use, nonuse or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (c) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (d) any failure of the Property to be in compliance with any Applicable Law; (e) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Lease; (f) the payment of any commission, charge or brokerage fee to anyone (other than a broker or other agent retained by Lender) which may be payable in connection with the funding of the Loan evidenced by the Note and secured by the Security Instrument; and/or (g) the holding or investing of the funds on deposit in the Accounts or the performance of any work or the disbursement of funds in each case in connection with the
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Reserve Funds, provided, however, that Borrower shall not be responsible to indemnify any Indemnified Party for Losses to the extent arising solely from such Indemnified Party’s gross negligence, willful misconduct, fraud, or illegal acts. Any amounts payable to Indemnified Parties by reason of the application of this Section 12.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Indemnified Parties until paid.
Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to (a) any tax on the making and/or recording of the Security Instrument, the Note or any of the other Loan Documents (whether due upon the making of same or upon the exercise of its remedies under the Loan Documents), and (b) any transfer tax incurred by Indemnified Parties in connection with the exercise of remedies hereunder or under any other Loan Documents.
Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, reasonable attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender’s sole discretion) that Indemnified Parties may incur, directly or indirectly, as a result of a default under Sections 3.7 or 4.19 of this Agreement.
Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole discretion, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Parties, their attorneys shall control the resolution of any claim or proceeding. Upon demand, Borrower shall pay or, in the sole discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.
The obligations and liabilities of Borrower under this Article 12 shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Security Instrument, but shall not relate to matters first occurring from and after the date of any foreclosure sale or deed in lieu of foreclosure, provided such matters were not caused by Borrower or Guarantor.
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Simultaneously herewith, Borrower and Guarantor have executed and delivered the Environmental Indemnity to Lender, which Environmental Indemnity is not secured by the Security Instrument.
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Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents, and (B) the Debt shall be fully recourse to Borrower in the event that: (i) any representation, warranty or covenant contained in Article 5 hereof is violated or breached, provided, however, that any such breach or violation with respect to Article 5 shall not result in recourse liability hereunder unless such breach was material and, within fifteen (15) days of notice from any source whatsoever, Borrower fails to cure such breach and then only to the extent that such breach results in the substantive consolidation of the assets and liabilities of Borrower with any other Person as a result of such breach; (ii) if any Sale or Pledge occurs that is not a Permitted Transfer; (iii) Borrower or any SPE Component Entity files a voluntary petition under the Bankruptcy Code or any other Creditors Rights Laws; (iv) unless sought by Lender, an Affiliate, officer, director, or representative which Controls, directly or indirectly, Borrower or any SPE Component Entity files, or joins in the filing of, an involuntary petition against Borrower or any SPE Component Entity under the Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be solicited petitioning creditors for any involuntary petition against Borrower or any SPE Component Entity from any Person; (v) unless sought by Lender, Borrower or any SPE Component Entity files an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Creditors Rights Laws, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person; (vi) unless sought by Lender, any Affiliate, officer, director, or representative which Controls Borrower or any SPE Component Entity consents to or acquiesces in or joins in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower, any SPE Component Entity or any portion
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of the Property; (vii) unless sought by Lender, Borrower or any SPE Component Entity makes an assignment for the benefit of creditors or admits in any legal proceeding its insolvency or inability to pay its debts as they become due; (viii) there is substantive consolidation of Borrower or any SPE Component Entity (or any Restricted Party) with any other Person in connection with any federal or state bankruptcy proceeding involving the Guarantor or any of its Affiliates; (ix) Borrower or any SPE Component Entity (or any Restricted Party) contests or opposes any motion made by Lender to obtain relief from the automatic stay or seeks to reinstate the automatic stay in the event of any federal or state bankruptcy or insolvency proceeding involving the Guarantor or its Affiliates; (x) if following thirty (30) days written notice, Borrower fails to comply with the Cash Management Agreement relating to the establishment of a Deposit Account or Cash Management Account until such accounts shall have been established; (xi) if Borrower shall have failed to satisfy the Harris Teeter Condemnation Requirements in accordance with Section 2.7 hereof, in an amount equal to the then outstanding Allocated Loan Amount of the Harris Teeter Property (after deducting the Net Proceeds payable and paid to Lender relating to such Condemnation) until such time as the Harris Teeter Condemnation Requirements are satisfied or (xii) if Borrower shall have failed to satisfy the Lowe’s Casualty Requirements in accordance with Section 2.7 hereof, in an amount equal to the then outstanding Allocated Loan Amount of the Lowe’s Property (after deducting the Net Proceeds payable and paid to Lender relating to such Casualty) until such time as the Lowe’s Casualty Requirements are satisfied.
The obligations and liabilities of Borrower under this Article 13 shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Security Instrument.
All notices or other written communications hereunder shall be deemed to have been properly given (a) upon delivery, if delivered in person or by facsimile transmission with receipt acknowledged by the recipient thereof and confirmed by telephone by sender, (b) one (1) Business Day after having been deposited for overnight delivery with any reputable overnight courier service, or (c) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
If to Borrower: | c/o Consolidated-Tomoka Land Co. |
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With a copy to: | c/o Consolidated-Tomoka Land Co. |
If to Lender: | Wells Fargo Bank, National Association |
With a copy to: | Winstead PC |
or addressed as such party may from time to time designate by written notice to the other parties.
Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.
Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note, this Agreement or any of the other Loan Documents which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of the Note, this Agreement or such other Loan Document, Borrower will issue, in lieu thereof, a replacement thereof, dated the date of the Note, this Agreement or such other Loan Document, as applicable, in the same principal amount thereof and otherwise of like tenor.
Borrower forthwith upon the execution and delivery of the Security Instrument and thereafter, from time to time, will cause the Security Instrument and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses
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incident to the preparation, execution, acknowledgment and/or recording of the Note, the Security Instrument, this Agreement, the other Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Security Instrument, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by Applicable Law so to do.
Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the property and rights hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Agreement or for filing, registering or recording the Security Instrument, or for complying with all Applicable Law. Borrower, within five (5) Business Days of written demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including without limitation, such rights and remedies available to Lender pursuant to this Section 15.3.
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The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement, the Security Instrument, the Note or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singularly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.
No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, the Security Instrument, the Note and the other Loan Documents, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.
Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege under this Agreement, the Security Instrument, the Note or the other Loan Documents, or any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Security Instrument, the Note or the other Loan Documents, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Security
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Instrument, the Note and the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER, BY ACCEPTANCE OF THIS AGREEMENT, HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS AGREEMENT, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER OR BORROWER.
Borrower shall not be entitled to any notices of any nature whatsoever from Lender except (a) with respect to matters for which this Agreement specifically and expressly provides for the giving of notice by Lender to Borrower and (b) with respect to matters for which Lender is required by Applicable Law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Agreement does not specifically and expressly provide for the giving of notice by Lender to Borrower.
In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where by Applicable Law or under this Agreement, the Security Instrument, the Note and the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, to the fullest extent permitted by Applicable Law, Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages, and, to the fullest extent permitted by Applicable Law, Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment. Lender agrees that, in such event, it shall cooperate in expediting any action seeking injunctive relief or declaratory judgment.
Borrower hereby waives, to the extent permitted by Applicable Law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale under the Security Instrument of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of the Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of the Security Instrument and on behalf of all persons to the extent permitted by Applicable Law.
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To the extent permitted by Applicable Law, Borrower hereby expressly waives and releases to the fullest extent permitted by Applicable Law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its obligations hereunder, under the Note, Security Instrument or other Loan Documents.
Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents.
This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Debt is outstanding and unpaid unless a longer period is expressly set forth in this Agreement, the Security Instrument, the Note or the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender.
(A)THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK AND THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
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TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN WITH RESPECT TO LIENS AND SECURITY INTERESTS IN PROPERTY WHOSE PERFECTION AND PRIORITY IS COVERED BY ARTICLE 9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9-301 THROUGH 9-307 OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW EXCEPT AS SPECIFICALLY SET FORTH ABOVE.
(B)ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
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c/o Consolidated-Tomoka Land Co.
1530 Cornerstone Blvd., Suite 100
Daytona Beach, Florida 32117
Attention: General Counsel
Facsimile No.: 386-274-1223
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
The Article and/or Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any Creditors Rights Laws, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.
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Borrower shall, within ten (10) Business Days of demand, pay Lender all reasonable, out-of-pocket costs and expenses incurred by Lender in connection with: (a) the preparation, negotiation, execution and delivery of this Agreement and all of the other Loan Documents; (b) any modifications and amendments, if any, of this Agreement or any of the other Loan Documents; (c) the processing of any Borrower requests made hereunder and under any of the other Loan Documents; (d) the enforcement of any remedies hereunder or under the other Loan Documents or the satisfaction by Lender of any of Borrower’s or Guarantor’s obligations under this Agreement and the other Loan Documents; (e) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the Security Instrument, the Note, the other Loan Documents, the Property, or any other security given for the Loan; and (f) otherwise protecting Lender’s interests under this Agreement and any other Loan Document, including, without limitation, in connection with any “work-out” of the Loan or any bankruptcy, insolvency, receivership, reorganization, rehabilitation, liquidation or other similar proceeding in respect of Borrower, SPE Component Entity or Guarantor or an assignment by Borrower, SPE Component Entity or Guarantor for the benefit of its creditors. For all purposes of this Agreement and the other Loan Documents, Lender’s costs and expenses as described above shall also include, without limitation, all appraisal fees, engineering and architect costs and inspection fees, reasonable legal fees and expenses, accounting fees, fees for the disbursement of any Reserve Funds, environmental and other consultant fees, auditor fees, and the cost to Lender of any title insurance premiums and title company charges (including for down dates, abstracts, tax certificates, title insurance endorsements required by Lender, and UCC financing statements, tax lien and litigation searches), surveys, recording, reconveyance and notary fees, any transfer and mortgage taxes, any Rating Agency fees and expenses, and any loan servicing and special servicing fees and expenses (including, without limitation, any “work-out” and/or liquidation fees, but excluding any monthly servicing fees). Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender. Borrower recognizes and agrees that formal written appraisals of the Property by a licensed independent appraiser may be required by Lender’s internal procedures and/or federal regulatory reporting requirements on an annual and/or specialized basis and that Lender may, at its option, require inspection of the Property by an independent supervising architect and/or cost engineering specialist at least semiannually. Notwithstanding the foregoing, Borrower shall not be required to pay for more than one appraisal in any thirty-six (36) month period unless an Event of Default occurs and is continuing or as otherwise required by law. Additionally, if Borrower is undertaking a Restoration or is performing work that requires the obtaining of a building permit, then Borrower shall pay the reasonable out-of-pocket costs of architects, engineers and other consultants retained by Lender to review the performance of such Restoration or work. Any amounts payable to Lender pursuant to this Section 17.6 shall become immediately due and payable upon written demand and, if the same is not paid within ten (10) Business Days from such written demand, shall bear interest at the Default Rate from the date which is ten (10) Business Days from such written demand until the date such amounts have been paid.
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In the event (a) that the Security Instrument is foreclosed in whole or in part, (b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors, or (c) Lender exercises any of its other remedies under this Agreement, the Security Instrument, the Note and the other Loan Documents, Borrower shall be chargeable with and agrees to pay all costs of collection and defense, including attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post judgment action involved therein, together with all required service or use taxes. Any amounts payable to Lender pursuant to this Section 17.7 shall become immediately due and payable upon written demand and, if the same is not paid within ten (10) Business Days from such written demand, shall bear interest at the Default Rate from the date which is ten (10) Business Days from such written demand until the date such amounts have been paid.
The Exhibits and Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.
Any assignee of Lender’s interest in and to this Agreement, the Security Instrument, the Note and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.
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115
In the event of any conflict between the provisions of this Agreement and the Security Instrument, the Note or any of the other Loan Documents, the provisions of this Agreement shall control. Wherever the phrase “during the continuance of an Event of Default” or the like appears herein or in any other Loan Document, such phrase shall not mean or imply that Lender has any obligation to accept a cure of such Event of Default. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of this Agreement, the Note, the Security Instrument and the other Loan Documents and this Agreement, the Note, the Security Instrument and the other Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under this Agreement, the Note, the Security Instrument and the other Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse-to or competitive with the business of Borrower or its Affiliates.
This Agreement, the Note, the Security Instrument and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written between Borrower and Lender are superseded by the terms of this Agreement, the Note, the Security Instrument and the other Loan Documents.
If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.
This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
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Borrower acknowledges that Lender has made the Loan to Borrower upon the security of its collective interest in the Properties and in reliance upon the aggregate of the Properties taken together being of greater value as collateral security than the sum of the Properties taken separately. Borrower agrees that the Security Instruments are and will be cross-collateralized and cross-defaulted with each other so that (i) an Event of Default under any of the Security Instruments shall constitute an Event of Default under each of the other Security
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Instruments which secure the Note; (ii) an Event of Default under the Note or this Agreement shall constitute an Event of Default under each Security Instrument; and (iii) each Security Instrument shall constitute security for the Note as if a single blanket lien were placed on all of the Properties as security for the Note.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.
BORROWER:
BLUEBIRD ARROWHEAD PHOENIX LLC, a Delaware limited liability company
By: Golden Arrow 6 LLC, a Delaware limited liability company its sole member
By: Consolidated-Tomoka Land Co., a Florida corporation, its sole member
By: /s/ John P. Albright
Name: John P. Albright
Title: President and CEO
GOLDEN ARROW CLERMONT FL LLC, a Delaware limited liability company
By: Golden Arrow 6 LLC, a Delaware limited liability company its sole member
By: Consolidated-Tomoka Land Co., a Florida corporation, its sole member
By: /s/ John P. Albright
Name: John P. Albright
Title: President and CEO
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BLUEBIRD GERMANTOWN MD LLC, a Delaware limited liability company
By: Golden Arrow 6 LLC, a Delaware limited liability company its sole member
By: Consolidated-Tomoka Land Co., a Florida corporation, its sole member
By: /s/ John P. Albright
Name: John P. Albright
Title: President and CEO
GOLDEN ARROW CHARLOTTE NC LLC, a Delaware limited liability company
By: Golden Arrow 6 LLC, a Delaware limited liability company its sole member
By: Consolidated-Tomoka Land Co., a Florida corporation, its sole member
By: /s/ John P. Albright
Name: John P. Albright
Title: President and CEO
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GOLDEN ARROW KATY LLC, a Delaware limited liability company
By: Golden Arrow 6 LLC, a Delaware limited liability company its sole member
By: Consolidated-Tomoka Land Co., a Florida corporation, its sole member
By: /s/ John P. Albright
Name: John P. Albright
Title: President and CEO
BLUEBIRD RENTON WA LLC, a Delaware limited liability company
By: Golden Arrow 6 LLC, a Delaware limited liability company its sole member
By: Consolidated-Tomoka Land Co., a Florida corporation, its sole member
By: /s/ John P. Albright
Name: John P. Albright
Title: President and CEO
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LENDER:
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ John G. Nicol
Name: John G. Nicol
Title: Managing Director
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EXHIBIT A
ADDITIONAL DEFINITIONS
“Adjusted Net Cash Flow” shall mean NOI minus (a) normalized tenant improvement and leasing commission expenditures equal to $38,191 per annum, and (b) normalized capital improvements equal to $0.19 per square foot per annum.
“Debt Service Coverage Ratio” shall mean as of the last day of the calendar month immediately preceding the applicable date of calculation, the quotient obtained by dividing (1) the Adjusted Net Cash Flow by (2) the aggregate principal and interest projected to be due and payable over the twelve (12) month period subsequent to the date of calculation (interest only periods will be disregarded for purposes of this calculation) and a 30-year amortization period. Borrower shall deliver to Lender such information as is reasonably required for Lender to make all applicable calculations. Lender’s calculation of the Debt Service Coverage Ratio, and all component calculations, shall be conclusive and binding on Borrower absent manifest error.
“Debt Yield” shall mean, as of the last day of the calendar month immediately preceding the applicable date of determination, the quotient (expressed as a percentage) obtained by dividing (a) Adjusted Net Cash Flow as of such date by (b) the outstanding principal amount of the Loan as of such date. Lender’s calculation of the Debt Yield, and all component calculations, shall be conclusive and binding on Borrower absent manifest error.
“NOI” shall mean EGI minus Underwritten Operating Expenses.
INCOME
“EGI” shall mean Net Rental Income plus Other Income minus Bad Debt and Rent Concessions.
“Net Rental Income” shall mean Gross Potential Rent plus Expense Reimbursements minus Vacancy Deduction plus Percentage Rent.
“Gross Potential Rent” shall mean gross potential rent, computed in accordance with accounting principles reasonably acceptable to Lender, based on the most recent rent roll annualized, which should include (a) effective rent for occupied space (that is, actual rent collected from tenants in actual physical occupancy pursuant to valid Leases (which may be adjusted downward by Lender to reflect market rents), provided that to the extent a particular tenant is either in a scheduled rent concession period at the time of determination or has a rent concession period scheduled in the future, such tenant’s annualized rent may be adjusted by Lender in its reasonable discretion to reflect a normalized annualized amount unless no future rent is scheduled to be received from such tenant in which case no rent will be included for such tenant) and (b) market rents for vacant space.
“Expense Reimbursements” shall mean expense reimbursements as determined from the most recent operating statement, to the extent deemed recurring and sustainable, determined on a trailing 12-month basis (which should include actual expense reimbursements for occupied space and market expense reimbursements for vacant space and newly-leased space); provided, however, that (a) total Expense Reimbursements cannot exceed one hundred percent (100%) of Borrower’s Actual Operating Expenses (as defined in the definition of “Operating Expenses” herein), and (b)
if the Underwritten Expenses are used for determination of Operating Expenses, then Lender’s underwritten gross potential expense reimbursements will be used, which equal $949,376.
“Vacancy Deduction” shall be determined by multiplying Gross Potential Rent and Expense Reimbursements by the greatest of (a) the actual vacancy at the Property at the time of determination, (b) the then-prevailing market vacancy in the vicinity of the Property, and (c) an imputed vacancy rate of 3.0% with respect to the Individual Properties located at 17510 N. 75th Ave., Glendale, Arizona, 20926 Frederick Road, Germantown, Maryland, and 17615 140th Ave. S.E., Renton, Washington, and 0.0% with respect to the Individual Properties located at 19935 Katy Freeway, Houston, Texas, 2201 W. W.T. Harris Blvd., Charlotte, North Carolina, 2590 E. Highway 50, Clermont, Florida.
“Percentage Rent” shall mean percentage rent as determined from the most recent operating statement, to the extent deemed recurring and sustainable, determined on a trailing 12-month basis; provided, however, that for any particular tenant, the aggregate annual rent (including percentage rent) attributed to such tenant cannot exceed market rent.
“Other Income” shall mean all other applicable income as determined from the most recent operating statement for the Property at the time of determination, to the extent such income is deemed recurring and sustainable, determined on a trailing 12-month basis, computed in accordance with accounting principles reasonably acceptable to Lender, including, without limitation (and without duplication), parking income, cellular tower income, vending income and other similar items. Notwithstanding the foregoing, Other Income will not include insurance proceeds (other than proceeds of rent loss, business interruption or other similar insurance allocable to the applicable period); Condemnation Proceeds (other than Condemnation Proceeds arising from a temporary taking or the use and occupancy of all or part of the applicable Property allocable to the applicable period); proceeds of any financing; proceeds of any sale, exchange or transfer of the Property or any part thereof or interest therein (including proceeds of any sales of furniture, fixtures and equipment); capital contributions or loans to Borrower or an Affiliate of Borrower; any item of income otherwise includable in Other Income but paid directly by any tenant to a Person other than Borrower; any other extraordinary, non-recurring revenues; payments paid by or on behalf of any tenant under a Lease which is the subject of any proceeding or action relating to its bankruptcy, reorganization or other arrangement pursuant to the Bankruptcy Code or any similar federal or state law or which has been adjudicated a bankrupt or insolvent unless such Lease has been affirmed by the trustee in such proceeding or action pursuant to a final, non-appealable order of a court of competent jurisdiction; payments paid by or on behalf of any tenant under a Lease the demised premises of which are not occupied either by such tenant or an affiliate or sublessee thereof; payments paid by or on behalf of any tenant under a Lease in whole or partial consideration for the termination of any Lease; sales tax rebates from any Governmental Authority; sales, use and occupancy taxes on receipts required to be accounted for by Borrower to any Governmental Authority; refunds and uncollectible accounts; interest income from any source; unforfeited security deposits, utility and other similar deposits; income from tenants not paying rent; or any disbursements to Borrower from the Reserve Funds.
“Bad Debt” shall mean debt that remains uncollectible after reasonable efforts have been exhausted to collect the debt. Bad Debt will be determined on a trailing 12-month basis.
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“Rent Concessions” shall mean any remaining rent concessions for the Leases used to determine Gross Potential Rent (other than any concessions already accounted for in the determination of Gross Potential Rent above) to the extent such rent concessions relate to the forward 12-month period at the time of determination.
EXPENSE
“Underwritten Operating Expenses” shall mean projected annualized Operating Expenses based on a trailing 12-month period adjusted upwards or downwards in Lender’s reasonable discretion by anticipated changes in Operating Expenses.
“Operating Expenses” shall mean the greater of (a) all expenses, computed in accordance with accounting principles reasonably acceptable to Lender, of whatever kind and from whatever source, relating to the ownership, operation, repair, maintenance and management of the Property that are incurred on a regular monthly or other periodic basis, including, without limitation (and without duplication): Taxes (based on the most current bill annualized, subject to adjustment by Lender to take into account any change in assessment that has not yet been reflected in the most current tax bill); Insurance Premiums (based on the most current premium annualized); management fees (whether or not actually paid) equal to the greater of the actual management fees or 3.0% of EGI; costs attributable to the ordinary operation, repair and maintenance of the Improvements; common area maintenance costs; advertising and marketing expenses; professional fees; license fees; general and administrative costs and expenses; utilities; payroll, benefits and related taxes and expenses; janitorial expenses; computer processing charges; operating equipment or other lease payments as approved by Lender; ground lease payments; bond assessments; and other similar costs and expenses; in each instance, unless otherwise noted, only to the extent actually paid for by Borrower (the foregoing expenses being referred to herein as “Actual Operating Expenses”), or (b) Lender’s underwritten operating expenses at the time of closing (“Underwritten Expenses”), which equal $1,058,968. Notwithstanding the foregoing, Operating Expenses shall not include debt service (including principal, interest, impounds and other reserves), capital expenditures, tenant improvement costs, leasing commissions or other expenses which are paid from escrows required by the Loan Documents; any payment or expense for which Borrower was or is to be reimbursed from proceeds of the loan or insurance or by any third party; federal, state or local income taxes; any non-cash charges such as depreciation and amortization; and any item of expense otherwise includable in Operating Expenses which is paid directly by any tenant and any expenses (including legal, accounting and other professional fees, expenses and disbursement) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Property or in connection with the recovery of Insurance Proceeds or Awards which are applied to prepay the Note.
In making the calculations described herein, applicable line items may be adjusted by Lender in its reasonable discretion (a) to accurately reflect the amounts of any extraordinary non-recurring items in the relevant period and to reflect on a pro rata basis those items on an annual or semi-annual basis and (b) to reflect Leases (and projected changes to the applicable line items above) which are either (i) anticipated to terminate within the 90 days of the date of calculation or (ii) executed with creditworthy tenants with rent commencement dates scheduled to occur within 90 days of the date of calculation.
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SCHEDULE I
Immediate Repairs
(attached hereto)
SCHEDULE II
ORGANIZATIONAL CHART
(attached hereto)
SCHEDULE III
DESCRIPTION OF REA’S
Big Lots, Germantown, MD
Declaration of Covenants, Conditions, Easements and Restrictions by Germantown Seneca Joint Ventures, a Maryland general partnership, dated November, 1995 and recorded in Liber 13760, Page 483 (“Germantown REA”), as affected by the Supplementary Declaration of Covenants, Conditions, Easements and Restrictions for Land Bay 1 – Milestone Center by and between Germantown Seneca Joint Ventures, a Maryland general partnership, and Milestone Commercial Center Association, Inc., a Maryland nonstock corporation, dated ___________, 1995 and recorded in Liber 13760, Page 569; as amended by First Amendment to Germantown REA dated July 24, 1997 and recorded in Liber 15045, Page 139; as further amended by First Amendment to Germantown REA dated May 13, 2010 and recorded in Liber 39958, Page 001; as further supplemented by Supplementary Declaration of Covenants, Conditions, Easements and Restrictions for Land Bay 2 by and between Germantown Seneca Joint Ventures, a Maryland general partnership, and Milestone Commercial Center Association, Inc., a Maryland nonstick corporation, dated ___________, 1996 and recorded in Liber 13989, Page 464, as amended by First Amendment to Supplementary Germantown REA dated July 24, 1997 and recorded in Liber 15045, Page 188.
Maintenance and Easement Agreement between Germantown Seneca Joint Ventures, a Maryland general partnership, and GFS Realty, Inc., a Delaware corporation dated December 12, 1995 and recorded in Liber 13821, Page 270 (M&E Agreement); as amended by the First Amendment to Maintenance and Easement Agreement dated July 24, 1997 and recorded in Liber 15045, Page 201.
The Milestone Conservancy Declaration of Covenants, Conditions, and Restrictions by Germantown Seneca Joint Ventures, a Maryland general partnership, dated November, 1995 and recorded in Liber 13760, Page 483 (“Conservancy CC&Rs”)
Big Lots, Glendale, AZ
Agreement Respecting Easements and Restrictions between New River Associates, an Arizona partnership and Chicago Trust Company, an Arizona corporation dated June 29, 1992 and recorded in as Instrument No. 92-0361406 in the Maricopa County Recorder’s office (the “Glendale REA”)
Harris Teeter, Charlotte, NC
Declaration of Protective Covenants and Easements by University Research Park, Incorporated, a North Carolina corporation dated December 30, 1992 and recorded in Book 7156, Page 555, as amended by the Cross Deed, Boundary Agreement and Amendment to Declaration of Protective Covenants and Easements by and between University Research Park, Incorporated, a North Carolina corporation and Ruddco, Inc., a North Carolina corporation, dated November 29, 1993 and recorded in Book7568, Page 710, all in the Mecklenburg County Registry (the “Charlotte REA”).
Lowe’s, Katy, TX
Declaration of Covenants, Conditions and Restrictions by Barker Venture, Ltd., a Texas limited partnership and Earlon C. McWhorter dated May 28, 1996 and recorded as Instrument No. R943792 (the “Katy REA”).
RA, Renton, WA
Declaration of Easements, Covenants, Conditions and Restrictions between Gunna-Fairwood II, L.L.C., a Washington limited liability company and Gunna-Fairwood III, L.L.C., a Washington limited liability company dated May 11, 2006 and recorded as Instrument No. 2006511001592, as amended by Amendment to Declaration of Easements, Covenants, Conditions and Restrictions between Gunna-Fairwood II, L.L.C., a Washington limited liability company and Cho & Lee Investments, Inc., a Washington corporation dated _____, 2006 and recorded as Instrument No. 20061212001349, all in the King County, WA recorder’s office (the “Renton REA”)
WG, Clermont, FL
Reciprocal Easement Agreement with Covenants Conditions and Restrictions between Hancock Village LLC, a Florida limited liability company and Rock Hancock, Inc., a Florida corporation dated November 14, 2002 and recorded in Book 2209, Page 835 in the Public Records of Lake County, FL (the “Clermont REA”).
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SCHEDULE IV
INTENTIONALLY OMITTED
SCHEDULE V
ALLOCATED LOAN AMOUNT
Individual PropertyAllocated Loan Amount
19935 Katy Freeway, Houston, Texas$8,500,000
2201 W. W.T. Harris Blvd., Charlotte, North Carolina$6,600,000
17615 140th Ave. S.E., Renton, Washington$4,700,000
17510 N. 75th Ave., Glendale, Arizona$3,400,000
20926 Frederick Road, Germantown, Maryland$3,300,000
2590 E. Highway 50, Clermont, Florida$3,500,000
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SCHEDULE VI
BORROWERS
BLUEBIRD ARROWHEAD PHOENIX LLC, a Delaware limited liability company
GOLDEN ARROW CLERMONT FL LLC, a Delaware limited liability company
BLUEBIRD GERMANTOWN MD LLC, a Delaware limited liability company
GOLDEN ARROW CHARLOTTE NC LLC, a Delaware limited liability company
CTLC GOLDEN ARROW KATY LLC, a Delaware limited liability company
BLUEBIRD RENTON WA LLC, a Delaware limited liability company
3
EXECUTION DRAFT
ASSUMPTION AGREEMENT
This Assumption Agreement (“Assumption Agreement”) is made as of June 30, 2021 (the “Effective Date”), by and among WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, FOR THE BENEFIT OF THE REGISTERED HOLDERS OF WFRBS COMMERCIAL MORTGAGE TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24 (“Noteholder”), THE ENTITIES SET FORTH ON SCHEDULE I ATTACHED HERETO (individually or collectively as the context requires, “Borrower”), CTO REALTY GROWTH, INC., a Maryland corporation (“Current Guarantor”), ALPINE INCOME PROPERTY TRUST, INC., a Maryland corporation (“New Guarantor”), and PINE21 ACQUISITIONS LLC, a Delaware limited liability company (“Assumptor”).
RECITALS
NOW THEREFORE, FOR VALUABLE CONSIDERATION, including, without limitation, the mutual covenants and promises contained herein, the parties agree as follows:
Borrower and Assumptor each hereby further represents and warrants to Noteholder that no consent to the transfer of the Properties to Assumptor is required under any agreement to which Borrower or Assumptor is a party, including, without limitation, under any lease, operating agreement, mortgage or Security Instrument (other than the Loan Documents), or if such consent is required, that the parties have obtained all such consents. Borrower and Assumptor each hereby further represents and warrants to Noteholder that the Transaction is being performed in accordance with all Legal Requirements.
[SEE ATTACHED SIGNATURE PAGES]
IN WITNESS WHEREOF, Noteholder, Assumptor, New Guarantor, Borrower, and Original Guarantor have caused this Assumption Agreement to be duly executed as of the Effective Date.
NOTEHOLDER: | WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, FOR THE BENEFIT OF THE REGISTERED HOLDERS OF WFRBS COMMERCIAL MORTGAGE TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24 |
| By:Rialto Capital Advisors, LLC, a Delaware limited liability company, its attorney-in-fact By: /s/ Adam Singer Name: Niral Shah Adam Singer Title:Managing Director |
| |
BORROWER: | BLUEBIRD ARROWHEAD PHOENIX LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
BORROWER: | GOLDEN ARROW CLERMONT FL LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
BORROWER: | BLUEBIRD GERMANTOWN MD LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
BORROWER: | GOLDEN ARROW CHARLOTTE NC LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
BORROWER: | CTLC GOLDEN ARROW KATY LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
BORROWER: | BLUEBIRD RENTON WA LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
CURRENT GUARANTOR: | CTO REALTY GROWTH, INC., a Maryland corporation |
| By: /s/ Steven R. Greathouse Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
ASSUMPTOR: | PINE21 ACQUISITIONS LLC, a Delaware limited liability company By: Alpine Income Property OP, LP, a Delaware limited partnership, its sole member By: Alpine Income Property GP, LLC, a Delaware limited liability company, its general partner By: Alpine Income Property Trust, Inc., a Maryland corporation, its sole member By: __/s/ Steven R. Greathouse___ Name:Steven R. Greathouse Title:Senior Vice President and Chief Investment Officer |
| |
| |
NEW GUARANTOR: | ALPINE INCOME PROPERTY TRUST, INC., a Maryland corporation By: __/s/ Steven R. Greathouse_____________ Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
SCHEDULE I
LIST OF BORROWER ENTITIES
Bluebird Arrowhead Phoenix LLC,
Golden Arrow Clermont FL LLC,
Bluebird Germantown MD LLC,
Golden Arrow Charlotte NC LLC,
CTLC Golden Arrow Katy LLC and
Bluebird Renton WA LLC, each a Delaware limited liability company
EXHIBIT A
FORM OF MEMORANDUM OF ASSUMPTION AGREEMENT
PREPARED BY AND)
WHEN RECORDED MAIL TO:)
)
Alston & Bird LLP)
Bank of America Plaza )
101 S. Tryon Street, Suite 4000)
Charlotte, NC 28280-4000)
Attn: James A. L. Daniel, Jr.)
MEMORANDUM OF ASSUMPTION AGREEMENT
WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, FOR THE BENEFIT OF THE REGISTERED HOLDERS OF WFRBS COMMERCIAL MORTGAGE TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24 (“Noteholder”), BLUEBIRD ARROWHEAD PHOENIX LLC, GOLDEN ARROW CLERMONT FL LLC, BLUEBIRD GERMANTOWN MD LLC, GOLDEN ARROW CHARLOTTE NC LLC, CTLC GOLDEN ARROW KATY LLC and BLUEBIRD RENTON WA LLC, each a Delaware limited liability company (individually or collectively as the context requires, “Borrower”), CTO REALTY GROWTH, INC., a Maryland corporation (“Current Guarantor”), ALPINE INCOME PROPERTY TRUST, INC., a Maryland corporation (“New Guarantor”), and PINE21 ACQUISITIONS LLC, a Delaware limited liability company (“Assumptor”), are parties to that certain Assumption Agreement dated of even date herewith (“Assumption Agreement”). The undersigned parties agree that all obligations under that certain Promissory Note (“Note”) dated as of September 30, 2014 in the original principal amount of $30,000,000.00, secured by that certain [Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing] executed by [Borrower] for the benefit of Wells Fargo Bank, National Association (“Original Noteholder”), which secures the Note and other obligations of Borrower (“Security Instrument”), and which Security Instrument was recorded on [____], as Document No. [____], in the recorder’s office of the [____] County, [____] (“Official Records”), the Original Noteholder’s interest under which was assigned by Original Noteholder to Noteholder by instrument dated effective as of [____], and recorded on [____], as Document No. [____] in the Official Records; and all other Loan Documents (as defined in the Assumption Agreement) securing the real property described on Exhibit A, have been assumed by Assumptor upon the terms and conditions set forth in the Assumption Agreement. The Assumption Agreement is by this reference incorporated herein and made a part hereof. This Memorandum of Assumption Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original and all of which taken together will be deemed to be one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Noteholder, Assumptor, New Guarantor, Borrower, and Current Guarantor have caused this Memorandum of Assumption Agreement to be duly executed as of ____________________ ____, 2021.
NOTEHOLDER: | WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, FOR THE BENEFIT OF THE REGISTERED HOLDERS OF WFRBS COMMERCIAL MORTGAGE TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24 |
| By:Rialto Capital Advisors, LLC, a Delaware limited liability company, its attorney-in-fact By: Name: Niral Shah Title:Managing Director |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Niral Shah, as Managing Director of Rialto Capital Advisors, LLC, a Delaware limited liability company, on behalf of WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, FOR THE BENEFIT OF THE REGISTERED HOLDERS OF WFRBS COMMERCIAL MORTGAGE TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24, as its attorney-in-fact, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
BORROWER: | BLUEBIRD ARROWHEAD PHOENIX LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, the Sole Member of GOLDEN ARROW 6 LLC, a Delaware limited liability company, the Sole Member of BLUEBIRD ARROWHEAD PHOENIX LLC, a Delaware limited liability company, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
| GOLDEN ARROW CHARLOTTE NC LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, the Sole Member of GOLDEN ARROW 6 LLC, a Delaware limited liability company, the Sole Member of GOLDEN ARROW CHARLOTTE NC LLC, a Delaware limited liability company, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
| CTLC GOLDEN ARROW KATY LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, the Sole Member of GOLDEN ARROW 6 LLC, a Delaware limited liability company, the Sole Member of CTLC GOLDEN ARROW KATY LLC, a Delaware limited liability company, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
| BLUEBIRD RENTON WA LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, the Sole Member of GOLDEN ARROW 6 LLC, a Delaware limited liability company, the Sole Member of BLUEBIRD RENTON WA LLC, a Delaware limited liability company, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
| GOLDEN ARROW CLERMONT FL LLC, a Delaware limited liability company |
| By:Golden Arrow 6 LLC, a Delaware limited liability company, its sole member By:CTO Realty Growth, Inc., a Maryland corporation, its sole member By: Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, the Sole Member of GOLDEN ARROW 6 LLC, a Delaware limited liability company, the Sole Member of GOLDEN ARROW CLERMONT FL LLC, a Delaware limited liability company, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
BLUEBIRD GERMANTOWN MD LLC, a Delaware limited liability company
By: | Golden Arrow 6 LLC, a Delaware limited liability company, its sole member |
By: | CTO Realty Growth, Inc., a Maryland corporation, its sole member |
By:
Name:Steven R. Greathouse
Title:Senior Vice President and Chief Investment Officer
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, the Sole Member of GOLDEN ARROW 6 LLC, a Delaware limited liability company, the Sole Member of BLUEBIRD GERMANTOWN MD LLC, a Delaware limited liability company, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
CURRENT GUARANTOR: | CTO REALTY GROWTH, INC., a Maryland corporation |
| By: Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of ⌧ physical presence or ◻ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of CTO Realty Growth, Inc., a Maryland corporation, on behalf of said company, who is ◻ personally known to me or ◻ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
ASSUMPTOR: | PINE21 ACQUISITIONS LLC, a Delaware limited liability company By:Alpine Income Property OP, LP, a Delaware limited partnership, its sole member By:Alpine Income Property GP, LLC, a Delaware limited liability company, its general partner By: Alpine Income Property Trust, Inc., a Maryland corporation, its sole member By: _______________________________ Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
STATE OF FLORIDA
COUNTY OF _____________
The foregoing instrument was acknowledged before me by means of £ physical presence or £ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of Alpine Income Property Trust, Inc., a Maryland corporation, the Sole Member of ALPINE INCOME PROPERTY GP, LLC, a Delaware limited liability company, the General Partner of ALPINE INCOME Property OP, LP, a Delaware limited partnership, the Sole Member of PINE21 ACQUISITIONS LLC, a Delaware limited liability company, on behalf of said company, who is £ personally known to me or £ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
NEW GUARANTOR: | ALPINE INCOME PROPERTY TRUST, INC., a Maryland corporation By: ___________________________________ Name: Steven R. Greathouse Title: Senior Vice President and Chief Investment Officer |
| |
STATE OF FLORIDA
COUNTY OF ____________
The foregoing instrument was acknowledged before me by means of £ physical presence or £ online notarization, this _____ day of ________, 2021, by Steven R. Greathouse, as Senior Vice President and Chief Investment Officer of ALPINE INCOME PROPERTY TRUST, INC., a Maryland corporation, on behalf of said company, who is £ personally known to me or £ who has produced ______________________________ as identification.
(NOTARY SEAL)
Notary Public Signature
(Name typed, printed or stamped)
Notary Public-State of Florida
Commission No.:
My Commission Expires:
EXHIBIT B
MODIFICATIONS TO ORIGINAL LOAN DOCUMENTS
| 1. | All references to “Borrower in the Loan Documents shall mean Assumptor. |
| 2. | All references to “Guarantor” in the Loan Documents shall mean New Guarantor. |
| 3. | All references to “Lender in the Loan Documents shall mean Noteholder. |
| 4. | The following definition of “Assumption Agreement” is hereby added to Section 1.1 of the Loan Agreement: |
“Assumption Agreement” shall mean that certain Assumption Agreement dated as of June 30, 2021, by and among Borrower, Guarantor, Lender, Bluebird Arrowhead Phoenix LLC, Golden Arrow Clermont FL LLC, Bluebird Germantown MD LLC, Golden Arrow Charlotte NC LLC, CLTC Golden Arrow Katy LLC and Bluebird Renton WA LLC, each a Delaware limited liability company and CTO Realty Growth, Inc., a Maryland corporation.
| 5. | The definition of “Cash Management Agreement” in Section 1.1 of the Loan Agreement is hereby modified to refer to the Cash Management Agreement, as amended by the Amendment to Cash Management Agreement, as the same may be further amended, restated, supplemented or otherwise modified from time to time. |
| 6. | The following definition of “Deposit Account Post-Closing Obligation” is hereby added to Section 1.1 of the Loan Agreement: |
“Deposit Account Post-Closing Obligation” shall have the meaning set forth in the Assumption Agreement.
| 7. | The definition of “Environmental Indemnity” in Section 1.1 of the Loan Agreement is hereby modified to refer to the Environmental Indemnity together with the Current Indemnitor Joinder and the New Indemnitor Joinder, as the same may be amended, restated, supplemented or otherwise modified from time to time. |
| 8. | The definition of “Guaranty” in Section 1.1 of the Loan Agreement is hereby modified to refer to the Guaranty together with the Current Indemnitor Joinder and the New Indemnitor Joinder, as the same may be amended, restated, supplemented or otherwise modified from time to time. |
| 9. | The definition of “Loan Documents” in Section 1.1 of the Loan Agreement is hereby modified to the definition contained in Recital D above. |
| 10. | The following definition of “Post-Closing Estoppels” is hereby added to Section 1.1 of the Loan Agreement: |
“Post-Closing Estoppels” shall mean the Tenant estoppel certificates required to be delivered to Lender in connection with the Tenant Estoppel Post-Closing Obligation.
| 11. | The following definition of “Seller Estoppels” is hereby added to Section 1.1 of the Loan Agreement: |
“Seller Estoppels” shall mean the seller estoppel certificates required to be delivered to Lender in accordance with the terms of the Assumption Agreement.
| 12. | The following definition of “Tenant Estoppel Post-Closing Obligation” is hereby added to Section 1.1 of the Loan Agreement: |
“Tenant Estoppel Post-Closing Obligation” shall have the meaning set forth in the Assumption Agreement.
| 13. | The definition of “Title Insurance Policy” in Section 1.1 of the Loan Agreement is hereby modified to refer to the Replacement Title Insurance Policy. |
| 14. | Section 3.10 of the Loan Agreement is hereby deleted and replaced with the following: |
Section 3.10Borrower Information. Borrower’s principal place of business and its chief executive office as of the date hereof is: 1140 N. Williamson Blvd., Suite 140, Daytona Beach, Florida 32114. Borrower’s mailing address, as set forth in Section 14.1 hereof, as amended, or as changed in accordance with the provisions hereof, is true and correct. Borrower is not subject to back-up withholding taxes.
| 15. | The notice addresses of Lender and Borrower set forth in Section 14.1 of the Loan Agreement, together with all other references to the addresses of the Lender and Borrower in the Original Loan Documents, are hereby deleted and replaced with the following: |
If to Lender: | WILMINGTON TRUST, NATIONAL ASSOCIATION, AS TRUSTEE, FOR THE BENEFIT OF THE REGISTERED HOLDERS OF WFRBS COMMERCIAL MORTGAGE TRUST 2014-C24, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2014-C24 c/o Wells Fargo Commercial Mortgage Servicing 401 South Tryon Street, 8th Floor Charlotte, NC 28202-1934 MAC D1050-084 Attn: Asset Manager Fax: 705.715.0036 |
| |
With a copy to: | Alston & Bird LLP Bank of America Plaza 101 S. Tryon Street, Suite 4000 Charlotte, NC 28280-4000 Attn: James A. L. Daniel, Jr. Fax: 704.444.1776 |
| |
If to Borrower: | Pine21 Acquisitions LLC 1190 N. Williamson Blvd., Suite 140 Daytona Beach, FL 32114 Attn: Steven R. Greathouse Fax: 386.274.1223 |
| |
With a copy to: | Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 201 North Eola Drive |
Orlando, FL 32801 Attn: Joaquin E. Martinez Fax: 407.843.4444 | |
| |
| 16. | The following subsections (xii), (xiii) and (xiv) are hereby added to Section 13.1(a) of the Loan Agreement: |
(xii)Borrower’s failure to satisfy the Deposit Account Post-Closing Obligation, provided such Losses shall accrue as of the date of the Assumption Agreement;
(xiii)Borrower’s failure to satisfy the Tenant Estoppel Post-Closing Obligation; and/or
(xiv)in the event any defaults are disclosed by the Post-Closing Estoppels which were not disclosed by the Seller Estoppels.
| 17. | The organizational chart attached as Schedule II to the Loan Agreement is hereby deleted and replaced with the organizational chart of Assumptor attached hereto as Exhibit D. |
| 18. | The minimum Liquidity (as defined in the Guaranty) set forth in Section 21(j) of the Guaranty is hereby increased from $250,000.00 to $1,000,000.00. |
EXHIBIT F
DEFERRED MAINTENANCE ITEMS
The following items shall be repaired within ninety (90) days of the Effective Date:
Harris Teeter Property:
| ● | Water is ponding on the floor near the front entrance of the store (interior) due to an active HVAC leak. |
| ● | Several wood tie retaining wall pieces are rotting/missing/deteriorated at the back of the site. |
The following items shall be repaired within ninety (90) days of the Effective Date:
Rite Aid:
| ● | The south side roof drain system has a large amount of organic debris in the drain depressions. |
The following items shall be repaired within one hundred eighty (180) days of the Effective Date:
Walgreen Property:
| ● | The asphalt top coat is faded at 90% pervasiveness. |
| ● | Microbial growth is observable on the exterior wall primarily at the northeast section at 20% pervasiveness. |
EXHIBIT G
POST-CLOSING OBLIGATIONS
| 1. | Assumptor shall ensure (a) a Deposit Account (as defined in the Cash Management Agreement) is opened and established pursuant to the terms of the Deposit Account Control Agreement, (b) such Deposit Account has a valid P.O. Box into which Tenants may directly deposit Rents and (c) Tenant Direction Letters have been sent to all Tenants directing such Tenants to deposit Rents directly into the Deposit Account, all within thirty (30) days after the date hereof (such obligations, including the satisfaction thereof within the specified time period, collectively, the “Deposit Account Post-Closing Obligation”). |
| 2. | Assumptor shall deliver “clean” Tenant estoppel certificates to Noteholder confirming the items set forth on the seller estoppel certificates delivered from the applicable Borrower in favor of Noteholder with respect to the following Tenants: (1) Walgreens (Florida), (2) Big Lots (Maryland), (3) Big Lots (Arizona) and (4) Rite Aid (Washington), which estoppel certificates shall be delivered within thirty (30) days after the date hereof (such obligations, including the satisfaction thereof within the specified time period, collectively, the “Tenant Estoppel Post-Closing Obligation”). |
Exhibit 31.1
CERTIFICATIONS
I, John P. Albright, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Alpine Income Property Trust, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 22, 2021
By: |
| /s/ John P. Albright | | |
|
| John P. Albright | | |
|
| President and Chief Executive Officer | | |
|
| (Principal Executive Officer) | | |
Exhibit 31.2
CERTIFICATIONS
I, Matthew M. Partridge, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Alpine Income Property Trust, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 22, 2021
By: |
| /s/ Matthew M. Partridge | | |
|
| Matthew M. Partridge, Senior Vice President, | | |
|
| Chief Financial Officer and Treasurer | | |
|
| (Principal Financial Officer) | | |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Alpine Income Property Trust, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Albright, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 22, 2021
By: |
| /s/ John P. Albright | | |
|
| John P. Albright | | |
|
| President and Chief Executive Officer | | |
|
| (Principal Executive Officer) | | |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Alpine Income Property Trust, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew M. Partridge, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: July 22, 2021
By: |
| /s/ Matthew M. Partridge | | |
|
| Matthew M. Partridge, Senior Vice President, | | |
|
| Chief Financial Officer and Treasurer | | |
|
| (Principal Financial Officer) | | |