Condor Hospitality Trust, Inc. (NASDAQ:CDOR) Files An 8-K Entry into a Material Definitive Agreement
Item1.01 Entry into a Material Definitive Agreement.
On March1, 2017, Condor Hospitality Limited Partnership
(CHLP), the operating partnership of Condor Hospitality
Trust, Inc. (the Company), entered into a Credit Agreement
with KeyBank National Association, as administrative agent and a
lender, KeyBanc Capital Markets Inc. and The Huntington National
Bank, as joint lead arrangers, and the other lenders and agents
party thereto (the Credit Agreement). The Credit Agreement
provides for a $90 million senior secured revolving credit
facility (the Facility). At closing, CHLP borrowed $34.25
million under the Facility, of which $32.7 million was used in
connection with the repayment and termination of the credit
facilities and loans described under Item1.02 below and $1.55
million was used to pay a portion of the reserves and costs
related to the closing of the Facility.
The Credit Agreement includes an accordion feature that allows
the Facility to be increased to $400 million, subject to certain
conditions, including obtaining additional commitments from any
one or more lenders. The amount available to borrow under the
Facility is limited according to a borrowing base formula for the
pool of hotel properties securing the facility. As of the date
hereof, the collateral pool consists of 14 hotel properties and
the available borrowing capacity under the Facility is $41.05
million. CHLP has the option to add hotel properties to the
collateral pool and remove hotel properties from the collateral
pool, subject to certain conditions, including its continued
compliance with the financial covenants and other terms of the
Credit Agreement. Subject to certain conditions, borrowings under
the Facility can be used for the repayment of debt, future
acquisitions and capital improvements and general corporate and
working capital purposes. The Company anticipates using
borrowings under the Facility to acquire three out of the four
Home2 Suites hotels currently under contract to be acquired (as
discussed in the Companys Form 8-K dated January23, 2017), which
will be added to the collateral pool for the Facility.
The Facility has a scheduled maturity date of March1, 2019, with
an automatic one-year extension upon the completion of one or
more offerings of common stock of the Company resulting in an
aggregate of $50 million of gross proceeds (a Qualified
Capital Raise). The Facility has two additional one-year
extension options, subject to certain conditions, including the
completion of one or more offerings of common stock of the
Company resulting in an aggregate of $100 million of gross
proceeds (including the proceeds from a Qualified Capital Raise)
and payment of 0.25% extension fees. The Facility requires
monthly interest payments and principal is due on the maturity
date. CHPL may, at any time, voluntarily prepay any borrowing
under the Facility in whole or in part without premium or penalty
(other than customary LIBOR breakage costs).
Prior to the occurrence of a Qualified Capital Raise, borrowings
under the facility accrue interest, at CHLPs option, at either
LIBOR plus 3.95% or a base rate plus 2.95%. Thereafter,
borrowings bear interest based on a leverage-based pricing grid,
at CHLPs option, at either LIBOR plus a spread ranging from 2.25%
to 3.00% (depending on leverage) or a base rate plus a spread
ranging from 1.25% to 2.00% (depending on leverage). In addition,
CHLP is required to pay a fee equal to 0.20% of the amount of the
unused portion of the Facility if amounts borrowed are greater
than 50% of the total commitments under the Facility or 0.25% if
amounts borrowed are less than or equal to 50% of such
commitments.
The Facility is secured by first priority liens and security
interests on the hotel properties in the collateral pool and the
tangible and intangible personal property used in connection with
such hotel properties, including inventory, equipment, fixtures,
accounts and general intangibles. After a Qualified Capital
Raise, hotel properties added to the collateral pool will be
secured by a pledge of the equity interests in the subsidiaries
of CHLP that own or lease such hotel properties. The Credit
Agreement also requires customary cash management arrangements.
The Facility is guaranteed by the Company and its material
subsidiaries that do not have stand-alone financing, to an
Unconditional Guaranty of Payment and Performance dated as of
March1, 2017 by Condor Hospitality REIT Trust, the Company and
the subsidiary guarantors party thereto (the Guaranty).
The Credit Agreement contains customary representations and
warranties and financial and other affirmative and negative
covenants. CHLPs ability to borrow under the Facility is subject
to ongoing compliance by the Company and CHLP with various
customary restrictive covenants, including with respect to
indebtedness, liens, investments, distributions, mergers and
asset sales. In addition, the Credit Agreement requires the
Company and CHLP to satisfy certain financial covenants,
including the following:
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Leverage Ratio: Prior to the occurrence of a Qualified Capital Raise, the ratio of consolidated total indebtedness to consolidated total asset value cannot exceed (a)70% (from closing through June29, 2017), (b)65% (from June30, 2017 through the day prior to a Qualified Capital Raise) and (c)60% (from and after the date of a Qualified Capital Raise). When the first extension option becomes effective, the foregoing leverage ratio will no longer be applicable, and in lieu thereof, the ratio of consolidated total indebtedness to adjusted consolidated EBITDA for the most recently ended four fiscal quarters cannot exceed 6.25 to 1. |
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Secured Leverage Ratio: The ratio of consolidated secured indebtedness (excluding the Facility) to consolidated total asset value cannot exceed 40%. |
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Debt Service Coverage Ratio: The ratio of adjusted consolidated EBITDA for the most recently ended four fiscal quarters to consolidated debt service for the most recently ended four fiscal quarters cannot be less than (a)1.50 to 1 (from closing through the first to occur of (i)December31, 2017 and (ii)a Qualified Capital Raise), (b)1.75 to 1 (provided that a Qualified Capital Raise has not occurred, from January1, 2018 through the occurrence of a Qualified Capital Raise) and (c)2.00 to 1 (from and after the occurrence of a Qualified Capital Raise). |
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Fixed Charge Coverage Ratio: The ratio of adjusted consolidated EBITDA for the most recently ended four fiscal quarters to consolidated fixed charges for the most recently ended four fiscal quarters cannot be less than (a)1.00 to 1 (from closing through the first to occur of (i)December31, 2017 and (ii)a Qualified Capital Raise), (b)1.10 to 1 (provided that a Qualified Capital Raise has not occurred, from January1, 2018 through the occurrence of a Qualified Capital Raise) and (c)1.50 to 1 (from and after the occurrence of a Qualified Capital Raise). |
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Tangible Net Worth: Consolidated tangible net worth cannot be less than $55 million plus 80% of net offering proceeds. |
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Borrowing Base: There must be at least seven hotel properties in the collateral pool with an aggregate appraised value of at least $150 million. |
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Unhedged Variable Rate Debt: Consolidated unhedged variable rate debt cannot exceed 25% of consolidated total asset value. |
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Distributions: Prior to the occurrence of a Qualified Capital Raise, the Company is permitted to make scheduled distributions on its preferred stock and distributions on its common stock at the current dividend rate ($0.01 per share per month). After the occurrence of a Qualified Capital Raise, the Company is permitted to make distributions during any period of four fiscal quarters in an aggregate amount of up to 95% of funds available for distribution. |
Certain of the terms used in the foregoing descriptions of the
financial covenants have the meanings given to them in the Credit
Agreement, and certain of the financial covenants are subject to
pro forma adjustments for acquisitions and sales of hotel
properties and for a Qualified Capital Raise.
The Credit Agreement includes customary events of default, in
certain cases subject to customary cure periods. The occurrence
of an event of default, following any applicable cure period,
would permit the lenders to, among other things, declare the
unpaid principal, accrued and unpaid interest and all other
amounts payable under the Facility to be immediately due and
payable.
Some of the lenders in the Credit Agreement and / or their
affiliates have other business relationships with the Company
involving the provision of financial and bank-related services,
including cash management and treasury services, and have
participated in the Companys prior debt financings.
The foregoing summary of the Credit Agreement and Guaranty does
not purport to be complete and is qualified in its entirety by
reference to the Credit Agreement and Guaranty, copies of which
are attached as Exhibits 10.1 and 10.2 hereto, respectively, and
are incorporated herein by reference.
Item1.02. Termination of a Material Definitive
Agreement.
The information reported under Item1.01 above is incorporated
herein by reference. On March1, 2017 and in connection with the
closing of the Facility described under Item1.01 above, the
following credit facilities and loans were repaid in full and the
related loan documents were terminated:
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Amended and Restated Loan Agreement dated December3, 2008 by and between the Company and Great Western Bank, as amended; |
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Assignment and Assumption of Deed of Trust and Other Loan Documents and Modification Agreement dated October1, 2015 by and among PHG San Antonio, LLC, Jatin Desai, Mitul Patel, and Gregory M. Friedman, CDOR San Spring, LLC, TRS San Spring, LLC and the Company, and LMREC 2015CRE1, Inc., as amended; |
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Loan Agreement dated January5, 2007 by and between CHLP and Western Alliance Bank, as amended; |
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Loan Agreement dated December31, 2007 by and between SPPRSouth Bend, LLC and Western Alliance Bank, as amended; |
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Loan Agreement dated November2, 2012 by and between Solomons Beacon Inn Limited Partnership, TRS Subsidiary LLC and Morgan Stanley Mortgage Capital Holdings, LLC, as amended; |
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Loan Agreement dated October12, 2012 by and between SPPRDowell, LLC, SPPR-Dowell TRS Subsidiary, LLC and Cantor Commercial Real Estate Lending, L.P.; and |
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Loan Agreement dated October26, 2015 by and between SPPRHotels, LLC, SPPR TRS Subsidiary, LLC and The Huntington National Bank, as amended. |
Item2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information reported under Item1.01 above is incorporated
herein by reference.
Item9.01 Financial Statements and Exhibits.
(d) Exhibits.
| 10.1 |
Credit Agreement dated as of March1, 2017 by and among Condor Hospitality Limited Partnership, as Borrower, Keybank National Association and the other lenders party thereto, as Lenders, and Keybank National Association, as Agent. |
| 10.2 |
Unconditional Guaranty of Payment and Performance dated as of March 1, 2017 by Condor Hospitality REIT Trust, Condor Hospitality Trust, Inc. and the subsidiary guarantors party thereto. |
Condor Hospitality Trust, Inc. (NASDAQ:CDOR) Recent Trading Information
Condor Hospitality Trust, Inc. (NASDAQ:CDOR) closed its last trading session 00.00 at 2.14 with 1,298 shares trading hands.