ALTISOURCE RESIDENTIAL CORPORATION (NYSE:RESI) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
Third and Final Closing
On November29, 2017 Altisource Residential, L.P. (“Buyer”), a wholly-owned subsidiary of Altisource Residential Corporation (the “Company”), acquired 1,957 single family properties (the “Acquired Properties”) in the third and final closing under the Company’s previously disclosed Purchase and Sale Agreement (as amended and as discussed below, the “PSA”) to acquire up to 3,500 single family rental properties from Vaca Morada Partners, LP (“VMP”) and MSR II, LP (“MSR,” and collectively with VMP, the “Sellers”), which are entities sponsored by Amherst Holdings, LLC (“Amherst”). As consideration for the Acquired Properties, Buyer paid to Sellers $305.1 million, which is subject to certain purchase price adjustments in accordance with the PSA. The purchase price was funded with the proceeds from the Loan Agreements (as described in Item 1.01 below) as well as cash on hand.
to the PSA and in connection with the Loan Agreements, Buyer assigned the right to purchase the Acquired Properties to HOME SFR Borrower IV, LLC, a newly formed special purpose entity and an indirect wholly-owned subsidiary of the Company (“Property Owner”). In addition, Property Owner entered into a property management services agreement to which the current property manager for the Acquired Properties and an affiliate of Amherst, Main Street Renewal, LLC, will provide Property Owner with leasing and lease management, operations, maintenance, repair, property management and property disposition services regarding the Acquired Properties.
As previously disclosed in a Current Report on Form 8-K filed April5, 2017, on March30, 2017, the Company completed the first closing to the PSA with the acquisition of 757 single family rental properties for an aggregate purchase price of $106.5 million. Also as previously disclosed in a Current Report on Form 8-K filed July6, 2017, on June29, 2017, the Company completed the second closing to the PSA with the acquisition of 751 single family rental properties for an aggregate purchase price of $117.1 million.
Amendment to the PSA
Also on November29, 2017, Buyer and Sellers entered into a second amendment to the PSA (the “Second Amendment to the PSA”) to amend, among other things, the criteria of certain properties that qualify as Acquired Properties under the PSA, the timing of Sellers’ obligations to renovate and lease those Acquired Properties, the entry into interim leasing arrangements with affiliates of the Sellers regarding certain Acquired Properties and the methodology for determining any final purchase price adjustments for such Acquired Properties.
The foregoing description of the Second Amendment to the PSA does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Second Amendment to the PSA, which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
The foregoing description of the PSA entered into on March30, 2017 does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the PSA, which was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on April5, 2017.
Loan Agreements
The information set forth in Item 1.01 is incorporated by reference into this Item 1.01.
Item 1.01 Completion of Acquisition or Disposition of Assets
The information set forth in Item 1.01 regarding the Acquired Properties acquired to the PSA is incorporated by reference into this Item 1.01.
Item 1.01 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant
On November29, 2017, as part of the seller financing for the Acquired Properties under the Second Amendment to the PSA, Property Owner entered into two separate loan agreements (collectively, the “Loan Agreements”) with VMP and MSR, as lenders (“Lenders”), and Amherst SFR Lender, LLC, as agent. The Property Owner borrowed $114,201,225 to the first Loan Agreement and $114,589,997 to the second Loan Agreement (collectively, the “Loans”). The Loans represent 75% of the aggregate purchase price of the Acquired Properties. Each of the Loans has a fixed interest rate of 4.00%. The maturity date for each of the Loans is December9, 2022.
Each Loan is secured by first priority mortgages on a portion of the Acquired Properties. The Loan Agreements require that Property Owner comply with various affirmative and negative covenants that are customary for loans of this type, including limitations on indebtedness that Property Owner can incur, limitations on sales and dispositions of the Acquired Properties and various restrictions on the use of cash generated by the operations of the Acquired Properties while each Loan is outstanding. The Loan Agreements have cross-default (but not cross collateralization) provisions based on customary events of default, the occurrence of which would allow the Lenders to accelerate payment of all amounts outstanding thereunder.
The foregoing description of the Loan Agreements do not purport to be complete and are subject to and qualified in their entirety by reference to the full text of the Loan Agreements, which are filed hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.
Item 1.01 Other Events.
On November29, 2017, the Company issued a press release, a copy of which is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 1.01 Financial Statements and Exhibits.
| (a) | Financial Statements of business acquired. |
The financial statements required by this Item, if required, will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed.
| (b) | Pro forma financial information. |
The pro forma financial information required by this Item, if required, will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed.
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Exhibit No. |
Description |
| 2.1 | Second Amendment to the Purchase and Sale Agreement, dated November 29, 2017, among Vaca Morada Partners, LP, MSR II, LP and Altisource Residential, L.P. * |
| 10.1 | Loan Agreement (Tranche 3A), dated November 29, 2017, among Home SFR Borrower IV, LLC, as Borrower, Vaca Morada Partners, LP, as a Lender, MSR II, LP, as a Lender, and Amherst SFR Lender, LLC, as Agent |
| 10.2 | Loan Agreement (Tranche 3B), dated November 29, 2017, among Home SFR Borrower IV, LLC, as Borrower, Vaca Morada Partners, LP, as a Lender, MSR II, LP, as a Lender, and Amherst SFR Lender, LLC, as Agent |
| 99.1 | Press Release of Altisource Residential Corporation dated November 29, 2017 |
* Certain schedules have been omitted to Item601(b)(2) of Regulation SK. The Company agrees to furnish supplementally a copy of any of the omitted schedules upon request by the United States Securities and Exchange Commission, provided, however, that the Company may request confidential treatment to Rule 24b-2 of the Exchange Act, as amended, for any schedules so furnished.
Altisource Residential Corp ExhibitEX-2.1 2 d505247dex21.htm EXHIBIT 2.1 EXHIBIT 2.1 Exhibit 2.1 Execution Version SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT This SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT is made as of November 29,…To view the full exhibit click here
About ALTISOURCE RESIDENTIAL CORPORATION (NYSE:RESI)
Altisource Residential Corporation is a real estate investment trust (REIT). The Company is focused on acquiring, owning and managing single-family rental properties throughout the United States. The Company operates through the segment focused on the resolution of sub-performing and non-performing mortgages, and acquisition and ownership of rental residential properties. It acquires its single-family rental properties primarily through the acquisition of sub-performing and non-performing loan portfolios. The Company conducts its activities through its subsidiary, Altisource Residential, L.P., and its subsidiaries. The Company has approximately 6,520 real estate owned (REO) properties, consisting of over 4,930 REO properties held for use and over 1,580 held for sale. Of approximately 4,930 REO properties held for use, over 2,120 properties are leased, over 260 are listed and ready for rent, and approximately 350 are in varying stages of renovation and unit turn status.