UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Item 1.01 Entry into a Material Definitive Agreement.
Monmouth Real Estate Investment Corporation (“Monmouth” or the “Company”) has entered into a Term Loan Agreement, dated as of December 15, 2021 (the “Term Loan Agreement”), with Monmouth, as borrower, the guarantors from time to time party thereto and JPMorgan Chase Bank, N.A. as administrative agent and Sole Lead Arranger and Sole Book Runner (“JPMorgan”). The Term Loan Agreement provides for a $175,000,000 unsecured delayed-draw term loan facility that, based on the Company’s current leverage, bears interest at a spread of 140 basis points over LIBOR.
The loans issued under the Term Loan Agreement will, at the Company’s election, either bear interest at (i) LIBOR plus 130 basis points to 200 basis points, depending on the Company’s leverage ratio, or (ii) Base Rate plus 30 basis points to 100 basis points, depending on the Company’s leverage ratio.
In addition, the Company incurs a commitment fee at a rate per annum equal to 0.20% of the unused portion of the total amount committed under the Term Loan Agreement, which fee will be payable quarterly based on outstanding borrowings and the unused portion of the total amount committed under the Term Loan Agreement during the applicable quarter.
The Term Loan Agreement contains customary negative covenants similar to the Company’s current Amended and Restated Credit Agreement, dated as of November 15, 2019 (the “A&R Credit Agreement”), including, but not limited to, restrictions on the incurrence of liens, the sale of assets and other fundamental corporate changes. Moreover, the Term Loan Agreement also requires the Company to satisfy various affirmative and financial covenants, including, without limitation, maintenance of REIT status, a maximum leverage ratio, a minimum debt service coverage ratio, an unsecured leverage ratio, and a minimum tangible net worth threshold. The Term Loan Agreement includes the same events of default and remedies upon an event of default as the A&R Credit Agreement, including acceleration of the amounts due under the Term Loan Agreement.
The obligations of the Company under the Term Loan Agreement are guaranteed by each direct and indirect wholly owned subsidiary of the Company that owns an Unencumbered Real Estate Asset (as defined in the Term Loan Agreement).
JPMorgan has, from time to time, performed, and may in the future perform, various financial advisory, investment banking and general financing services for the Company, for which JPMorgan has received, and will receive, customary fees and expenses.
The description of the Term Loan Agreement in this Current Report on Form 8-K is qualified in its entirety by reference to the complete Term Loan Agreement that is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided 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.
(d) Exhibits.
| Exhibit No. | ||
| 10.1 |
| |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MONMOUTH REAL ESTATE INVESTMENT CORPORATION | ||
| /s/ Kevin S. Miller | ||
| KEVIN S. MILLER | ||
| Chief Financial and Accounting Officer | ||
| Date | December 17, 2021 |
| 3 |
EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.1 |
|
| 4 |