Item 1.01 Entry into a Material Definitive Agreement.
On September 22, 2020, Lomas Encantadas Development Company LLC ("LEDC"), a
subsidiary of the Company, entered into a Development Loan Agreement with BOKF,
NA dba Bank of Albuquerque ("BOKF"). The Development Loan Agreement is evidenced
by a Non-Revolving Line of Credit Promissory Note and is secured by a Mortgage,
Security Agreement and Financing Statement, between LEDC and BOKF with respect
to certain planned residential lots within the Lomas Encantadas subdivision
located in Rio Rancho, New Mexico. Pursuant to a Guaranty Agreement entered into
by AMREP Southwest Inc. ("ASW"), a subsidiary of the Company, in favor of BOKF,
ASW guaranteed LEDC's obligations under each of the above agreements.
o Initial Available Principal: Pursuant to the loan documentation, BOKF agrees to
lend up to $2,400,000 to LEDC on a non-revolving line of credit basis to
partially fund the development of certain planned residential lots within the
Lomas Encantadas subdivision.
o Repayments: LEDC is required to make periodic principal repayments of borrowed
funds not previously repaid as follows: $1,144,000 on or before December 22,
2022, $572,000 on or before March 22, 2023, $572,000 on or before June 22, 2023
and $112,000 on or before September 22, 2023. The outstanding principal amount
of the loan may be prepaid at any time without penalty.
o Maturity Date: The loan is scheduled to mature in September 2023.
o Interest Rate: Interest on the outstanding principal amount of the loan is
payable monthly at the annual rate equal to the London Interbank Offered Rate
for a thirty-day interest period plus a spread of 3.0%, adjusted monthly,
subject to a minimum interest rate of 3.75%.
o Lot Release Price: BOKF is required to release the lien of its mortgage on any
lot upon LEDC making a principal payment of $44,000.
LEDC and ASW made certain representations and warranties in connection with this
loan and are required to comply with various covenants, reporting requirements
and other customary requirements for similar loans. The loan documentation
contains customary events of default for similar financing transactions,
including LEDC's failure to make principal, interest or other payments when due;
the failure of LEDC or ASW to observe or perform their respective covenants
under the loan documentation; the representations and warranties of LEDC or ASW
being false; the insolvency or bankruptcy of LEDC or ASW; and the failure of ASW
to maintain a net worth of at least $32 million. Upon the occurrence and during
the continuance of an event of default, BOKF may declare the outstanding
principal amount and all other obligations under the loan immediately due and
payable. LEDC incurred customary costs and expenses and paid certain fees to
BOKF in connection with the loan.
The foregoing description of the loan documentation is a summary only and is
qualified in all respects by the provisions of the loan documentation; copies of
the Development Loan Agreement, Non-Revolving Line of Credit Promissory Note,
Mortgage, Security Agreement and Financing Statement, Guaranty Agreement are
attached hereto as Exhibits 10.1 through 10.4 and are incorporated herein by
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information in Item 1.01 of this Current Report on Form 8-K is incorporated
by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
Exhibit Number Description
10.1 Development Loan Agreement, dated as of September 22, 2020,
between BOKF, NA dba Bank of Albuquerque and Lomas Encantadas
Development Company, LLC.
10.2 Non-Revolving Line of Credit Promissory Note, dated September
22, 2020, by Lomas Encantadas Development Company, LLC in favor
of BOKF, NA dba Bank of Albuquerque.
10.3 Mortgage, Security Agreement and Financing Statement, dated as
of September 22, 2020, between BOKF, NA dba Bank of Albuquerque
and Lomas Encantadas Development Company, LLC.
10.4 Guaranty Agreement, dated as of September 22, 2020, made by
AMREP Southwest Inc. for the benefit of BOKF, NA dba Bank of
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