Item 1.01. Entry into a Material Definitive Agreement
The information set forth in Item 2.03 below is incorporated by reference into
this Item 1.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement
On December 20, 2019, Riverbend Orlando Holdings I, LLC and Riverbend Orlando
Holdings II, LLC (collectively, the "Borrowers"), each wholly owned subsidiaries
of Griffin Industrial Realty, Inc. ("Griffin" or Registrant"), entered into a
$6.5 million nonrecourse mortgage loan (the "Mortgage Loan") on the
approximately 100,000 square foot fully-leased industrial/warehouse building
(the "Building") in Orlando, Florida that Griffin acquired in October 2019 (such
acquired property, the "Property"). The Mortgage Loan, evidenced by a Promissory
Note issued by the Borrowers to Webster Bank, National Association ("Webster
Bank"), has a ten year term with principal payments based on a twenty-five year
amortization schedule and a variable interest rate based on the one-month LIBOR
rate plus 1.75%. At closing of the Mortgage Loan, the Borrowers entered into an
interest rate swap agreement with Webster Bank that effectively fixes the
interest rate on the Mortgage Loan at 3.6% for the entire loan term.
Approximately $5.9 million of the proceeds from the Mortgage Loan were used to
repay Webster Bank for the borrowing under Griffin's line of credit for
acquisitions that was used to finance a portion of the Property's purchase
price.
Under the terms of the Mortgage Loan, the Borrowers must maintain a minimum debt
service coverage ratio (the "DSCR"), calculated by dividing the trailing twelve
months net operating income of the Building by the debt service on the Mortgage
Loan for the DSCR test period, as further described under the terms of the
Mortgage Loan, equal to or greater than 1.25 times, and the Loan to Value Ratio
(as defined and further described under the Mortgage Loan) may not exceed 67.5%.
The terms of the Mortgage Loan require that, if the current tenant does not
exercise its option to renew its lease, commencing on January 1, 2023, an annual
amount equal to a total of $1.00 per square foot shall be deposited by the
Borrowers into an escrow account with Webster Bank until such escrow account
balance reaches $200,000. Subject to certain terms and conditions under the
Mortgage Loan, a portion of the funds in the escrow account may be released by
Webster Bank for tenant improvements and lease commissions related to Approved
Leases (as defined and further described under the Mortgage Loan) or the current
tenant exercising their right to extend their lease. Upon extension of the
Building's existing lease or entering into a lease with a new tenant that would
generate cash flow equal to the Building's current cash flow, any balance
remaining in the escrow account would be returned to the Borrowers.
Also, under the terms of the Mortgage Loan, if the Building's current tenant
does not exercise its option to renew its lease, the Borrowers are required to
deposit at Webster Bank all of the net cash flow generated by the Building
during the final six months of the current lease to serve as additional
collateral (the "Additional Collateral") for the Mortgage Loan. Upon entering a
new lease (or leases) of space in the Building that generates cash flow equal to
the Building's current cash flow, the Additional Collateral would be released to
the Borrowers.
The foregoing descriptions of the Mortgage Loan and Promissory Note are subject
to and qualified in their entirety by reference to the full text of the Mortgage
Loan and Promissory Note, copies of which are filed herewith as Exhibit 10.1 and
Exhibit 10.2, incorporated herein by reference.
Item 7.01. Regulation FD Disclosure
A copy of Griffin's December 23, 2019 press release announcing the closing of
the Mortgage Loan is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
Exhibit 10.1: Mortgage, Security Agreement and Fixture Filing (Securing
Present and Future Advances) (Orlando, Orange County, Florida) by Riverbend
Orlando Holdings I, LLC and Riverbend Orlando Holdings II, LLC. dated December
20, 2019
Exhibit 10.2: $6,500,000 Promissory Note by Riverbend Orlando Holdings I, LLC
and Riverbend Orlando Holdings II, LLC. dated December 20, 2019
Exhibit 99.1: Registrant's December 23, 2019 Press Release (attached
hereto).
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