Business Context and Reporting Period
This Form 8-K was filed by Colony NorthStar Credit Real Estate, Inc. (CLNC) on April 23, 2018. The filing reports the entry into a material definitive agreement to secure financing for commercial real estate debt instruments.
Key Financial Metrics and Agreement Terms
- Facility Size: Up to $300.0 million in available funding.
- Counterparty: Citibank, N.A.
- Collateral: First mortgage loans, senior loan participations, and other commercial mortgage loan debt instruments.
- Interest Rate: One-month LIBOR plus a case-by-case spread.
- Maturity: Initial maturity of April 23, 2021, with two optional one-year extensions.
- Structure: Revolving credit facility allowing paydowns and redraws subject to conditions.
- Guaranty Liability: Maximum liability capped at 25% of the aggregate repurchase price of purchased assets.
Material Changes and Covenants
The filing establishes new financial covenants that the Guarantor (Credit RE Operating Company, LLC) must maintain:
- Liquidity: Minimum of the lower of $50.0 million or the greater of $10.0 million and 5% of recourse indebtedness.
- Tangible Net Worth: Not less than $2,105.0 million plus 75% of net cash proceeds from future equity issuances.
- Indebtedness: Must not exceed 75% of total assets.
- EBITDA Coverage: Ratio of EBITDA to fixed charges must be at least 1.40 to 1.00.
Outlook, Risks, and Contingencies
Management notes that advances may be stopped if conditions precedent are not satisfied. The filing includes a Safe Harbor statement regarding forward-looking statements, highlighting risks such as:
- Ability to comply with representations, warranties, and covenants.
- Ability to maintain required liquidity and leverage ratios.
- Availability of investment opportunities and capital.
- Changes in economic conditions, real estate values, and debt markets.
- Impact of investment losses on cash flow and returns.
The filing text does not provide specific revenue, profit, or cash flow figures for the reporting period, as this is a current report regarding a specific agreement rather than a periodic financial statement.
Key Facts for Investor Verification
- Verify the company's current tangible net worth against the $2,105.0 million covenant threshold.
- Confirm current liquidity levels meet the $50.0 million minimum requirement.
- Review the company's total indebtedness to ensure it remains below 75% of total assets.
- Assess the company's ability to generate sufficient EBITDA to maintain the 1.40x fixed charge coverage ratio.
- Monitor the utilization of the new $300.0 million facility and the associated leverage impact.