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 June 30, 2020, Riverbend Orlando Holdings III, LLC ("Borrower"), a wholly
owned subsidiary of Griffin Industrial Realty, Inc. ("Griffin" or "Registrant"),
entered into a $5.1 million nonrecourse mortgage loan (the "Mortgage Loan") on
the approximately 108,000 square foot fully-leased industrial/warehouse building
(the "Building") in Orlando, Florida that the Borrower acquired in February 2020
(such acquired property, the "Property"). The Mortgage Loan, evidenced by a
Promissory Note issued by the Borrower 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 2.56%. Upon closing the Mortgage Loan, the Borrower
entered into an interest rate swap agreement with Webster Bank that effectively
fixes the interest rate on the Mortgage Loan at 3.50% for the entire loan term.
$4.1 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 Borrower 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 65%.
The terms of the Mortgage Loan require that commencing on January 1, 2024, an
annual amount equal to a total of $1.00 per square foot shall be deposited by
the Borrower into an escrow account with Webster Bank until such escrow account
balance reaches $300,000. Subject to certain terms and conditions under the
Mortgage Loan, (i) the funds in the escrow account may be released by Webster
Bank upon extension of the Building's existing lease, or entry into any other
Approved Lease (as defined and further described under the Mortgage Loan) on
terms and conditions acceptable to Mortgagee, in each case for a term that runs
for a minimum of one year beyond the maturity date of the Mortgage Loan, or (ii)
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.
On June 30, 2020, Griffin and Webster Bank entered into a letter agreement (the
"Side Note") amending the $19.5 million Revolving Line of Credit Loan Agreement,
dated as of April 24, 2013 (as amended prior to such date, the "Line of Credit")
between Griffin and Webster Bank. Under the terms of the Side Note, an amount
equal to one year's debt service on the Mortgage Loan will be carved out and not
available to be borrowed (the "Holdback") under the Line of Credit. If the debt
service is not paid on the Mortgage Loan, Webster Bank would be able to advance
funds from the Line of Credit as needed to make monthly payments of debt service
under the Mortgage Loan. The provisions regarding the Holdback will expire on
September 30, 2021, being the maturity date of the Line of Credit; provided,
that, any extension to the maturity date of the Line of Credit would not apply
to the Holdback.
The foregoing descriptions of the Mortgage Loan, Promissory Note and Side Note
are subject to and qualified in their entirety by reference to the full text of
the Mortgage Loan, Promissory Note and Side Note, copies of which are filed
herewith as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3, respectively, each
incorporated herein by reference.
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Item 7.01. Regulation FD Disclosure
A copy of Griffin's July 6, 2020 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 III, LLC dated June 30, 2020
Exhibit 10.2: $5,100,000 Promissory Note by Riverbend Orlando Holdings III,
LLC dated June 30, 2020
Exhibit 10.3: Letter Agreement between Webster Bank, N.A. and Griffin
Industrial Realty, Inc. dated June 30, 2020
Exhibit 99.1: Registrant's July 6, 2020 Press Release (attached hereto).
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