Comstock Holding Companies, Inc. (NASDAQ:CHCI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

On March30, 2018, CDS Asset Management, L.C. (“CAM”), an entity wholly owned by Comstock Holding Companies, Inc. (the “Company”), entered into a master asset management agreement (the “Agreement”) with Comstock Development Services LC (“CDS”), an entity wholly owned by Christopher Clemente, the Chief Executive Officer of the Company. Entering into the Agreement is part of the Company’s strategic plan to transform its business model from for-sale homebuilding to commercial development, asset management and real estate services. The Company intends to concurrently wind down its current for-sale homebuilding business.

to the Agreement, CDS has engaged CAM to manage and administer the CDS’ commercial real estate portfolio (“CRE Portfolio”) and the day to-day operations of CDS and each property-owning subsidiary of CDS (collectively, the “CDS Entities”). to the terms of the Agreement, CAM will provide investment advisory, development and asset management services necessary to build out, stabilize and manage the CRE Portfolio. The CRE Portfolio consists primarily of two of the larger transit-oriented, mixed-use developments located at metro stops on Washington D.C. Metro’s Silver Line (Reston Station and Loudoun Station), which are owned by entities with varying ownership interests but all of which are controlled by Mr.Clemente.

to the Agreement, CDS will pay CAM an annual cost-plus fee (the “Annual Fee”) in an aggregate amount equal to the sum of (i)the employment expenses of personnel dedicated to providing services to the CRE Portfolio to the Agreement, (ii)the costs and expenses of the Company related to maintaining the listing of its shares on a securities exchange and complying with regulatory and reporting obligations as a public company, and (iii)a fixed annual payment of $1,000,000. In connection with the execution of the Agreement, CDS paid CAM a deposit in the aggregate amount of $2,500,000 to the Agreement that will be credited against the Annual Fee to be paid to CAM in accordance with the Agreement.

The initial term of the Agreement will terminate on December31, 2022 (“Initial Term”). The Agreement will automatically renew for successive additional one-year terms (each an “Extension Term”) unless CDS delivers written notice of non-renewal of the Agreement at least 180 days prior to the termination date of the Initial Term or any Extension Term. CDS may terminate the Agreement without cause upon 180 days advance written notice to CAM. In the event of such a termination, CDS will pay CAM any accrued Annual Fees due and payable as of the termination date. If a termination by CDS without cause is effective prior to January1, 2020, CDS will pay CAM an additional termination fee equal to $500,000. CAM may terminate the Agreement without cause upon 180 days advance written notice to CDS, in which event CDS will pay CAM any accrued Annual Fees due and payable as of the termination date.

CDS and CAM will indemnify each other and their affiliates and their respective directors, officers, employees, partners, members, stockholders, other equity holders agents and representatives (each, an “Indemnified Party”) from and against all expenses, losses, damages, liabilities and other claims incurred by any Indemnified Party related to the Agreement, except for those arising from actions constituting bad faith, willful misconduct or gross negligence by an Indemnified Party.

The foregoing description of the material terms of the Agreement is not exhaustive and is qualified in its entirety by reference to the full text of the Agreement which will be filed as an exhibit to the Company’s Form 10-Q for the quarter ending March31, 2018.

On April2, 2018, the Company issued a press release announcing the entry into the Agreement, which press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference.

Item 1.01

Financial Statements and Exhibits.

Comstock Holding Companies, Inc. Exhibit
EX-99.1 2 d523531dex991.htm EX-99.1 EX-99.1 Exhibit 99.1   Press Release Comstock Holding Announces Major Shift of Business Focus New Focus on Commercial Development,…
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