ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The information in this Report set forth under Item 2.03 is incorporated herein
by reference.
ITEM 2.03 CREATION OF A DIRECT OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE
SHEET ARRANGEMENT OF A REGISTRANT
Modified Term Loan
On November 14, 2016, KBS Growth & Income REIT, Inc., (the "Company"), through
an indirect wholly owned subsidiary, entered into a term loan and security
agreement initially secured by an office building located in Houston, Texas
("The Offices at Greenhouse") with JP Morgan Chase Bank, N.A. (the "Lender"),
for borrowings of up to $65.0 million (the "Term Loan"), consisting of $32.5
million of term commitment and $32.5 million of revolving commitment. On May 8,
2017, the Company entered into an assumption and joinder agreement with the
Lender to add an office building located in Irvine, California ("Von Karman Tech
Center") as a collateral property under the Term Loan. On November 9, 2017, in
connection with the acquisition of an office building located in Chicago,
Illinois (the "Institute Property"), the Company amended the Term Loan to
increase the loan amount to $72.8 million (consisting of $48.5 million of term
commitment and $24.3 million of revolving commitment). On January 17, 2020, in
connection with the disposition of Von Karman Tech Center, pursuant to the terms
of the Term Loan, the Company reduced the amount of the term commitment and
revolving commitment to $39.4 million and $19.7 million, respectively. Prior to
the Modified Term Loan (defined below), the outstanding balance under the Term
Loan consisted of $34.9 million of term commitment and $17.4 million of
revolving commitment.
On August 1, 2022, the Company, through its wholly owned subsidiaries
(collectively, the "Borrower"), entered into a modification agreement (the
"Modified Term Loan") with the Lender to (i) extend the maturity date from
November 9, 2022 to November 9, 2023, (ii) convert the revolving commitment to
term commitment and (iii) reset the interest rate of the loan. The Modified Term
Loan has an outstanding balance of $52.3 million, which is the maximum term
commitment available under the Modified Term Loan. The Modified Term Loan is
secured by the Offices at Greenhouse and the Institute Property.
The Modified Term Loan bears interest at the forward-looking term rate based on
SOFR ("Secured Overnight Financing Rate") with a tenor comparable to one-month
plus 10 basis points ("Adjusted Term SOFR") plus 200 basis points per annum
prior to May 9, 2023. After May 9, 2023, the Modified Term Loan will bear
interest at Adjusted Term SOFR plus 250 basis points per annum. Monthly payments
are interest-only with the remaining principal balance, all accrued and unpaid
interest and all other sums due under the loan documents payable at maturity.
The Company has the right to prepay all or a portion of the Modified Term Loan
at any time, subject to certain fees and conditions contained in the loan
documents.
Subject to certain terms and conditions contained in the loan documents, cash
currently held by the Company may only be used for the Company's operating costs
including but not limited to the Company's general and administrative costs,
liquidation costs (which may include proxy solicitation costs, DST transfer
agent costs, legal costs, tail insurance policy costs and other reasonable and
customary costs to maintain the REIT in good standing), capital costs (including
building improvements, tenant improvements and leasing commissions at its owned
properties) and any other reasonable costs and expenses required to maintain the
Company as a going concern (collectively "REIT Operating Costs"), but for no
other purpose. Further, the Company is required to deposit any cash amount
exceeding $7.0 million into an account controlled by the Lender or apply it to
pay down the Modified Term Loan. The Company is prohibited from making any cash
distributions (other than REIT Operating Costs) except for amounts needed to
maintain REIT status and redemptions sought upon a stockholder's death,
"qualifying disability" or "determination of incompetence" (each as defined in
the share redemption program) not exceeding $250,000 annually, in the aggregate,
for any calendar year. In addition, on a monthly basis, any excess cash flow (as
defined in the modification agreement) from the Offices at Greenhouse and the
Institute Property is required to be deposited into an account which will serve
as additional security for the loan.
KBS GI REIT Properties, LLC ("KBS GI REIT Properties"), the Company's wholly
owned subsidiary, in connection with the Modified Term Loan, is providing a
guaranty of the payment of (i) principal balance and any interest or other sums
outstanding under the Modified Term Loan as of the date such amounts become due,
and (ii) the principal balance and any interest or other sums outstanding under
the Modified Term Loan in the event of: certain bankruptcy, insolvency or
related proceedings involving the Borrower and KBS GI REIT Properties, as
described in the loan documents. KBS GI REIT Properties is also providing a
guaranty of the payment of certain liabilities, losses, damages, costs and
expenses (including legal fees) incurred by the Lender as a result of certain
intentional actions or omissions committed by the Borrower, KBS GI REIT
Properties and/or any of their affiliates in violation of the loan documents, or
certain other occurrences in relation to The Offices at Greenhouse, the
Institute Property and/or the Borrower, as further described in the amended and
restated guaranty.
1
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses