Business Context and Reporting Period
This Form 8-K was filed by Resource Capital Corp. (noting a discrepancy in the request metadata which listed "ACRES Commercial Realty Corp.") on March 2, 2012, reporting an event dated February 27, 2012. The filing details the creation of a direct financial obligation by the Company's indirect wholly-owned subsidiary, RCC Real Estate SPE 4, LLC ("SPE 4"), to support the Company's core commercial real estate lending business.
Key Financial Metrics and Obligations
- Facility Amount: $150,000,000 Master Repurchase and Securities Contract.
- Counterparty: Wells Fargo Bank, National Association.
- Maturity Date: August 27, 2013, subject to two one-year extensions at the option of SPE 4.
- Upfront Costs: A structuring fee of 0.375% of the maximum facility amount, plus other reasonable closing costs.
- Guarantees: The Company fully guaranteed all payments and performance under the facility. Additionally, the direct parent, RCC Real Estate, Inc., pledged a security interest in its equity interest in SPE 4.
Material Changes and Terms
The filing establishes a new repurchase facility used to finance commercial real estate loans. Key terms include margin call provisions allowing Wells Fargo to require cash transfers or asset repurchases if the value of purchased assets declines (Margin Deficit). The agreement includes standard events of default, such as payment defaults, bankruptcy, change of control, and judgments exceeding $100,000 against SPE 4 or $5,000,000 in the aggregate against the Company or its affiliates.
Outlook, Risks, and Contingencies
The primary risk identified is the potential for margin calls requiring immediate liquidity to cover declines in asset values. Remedies for events of default include the acceleration of the principal amount outstanding and the liquidation of purchased assets by Wells Fargo. The filing does not provide specific revenue, profit, or cash flow metrics for the reporting period, as it is a current report focused on a specific financing transaction.
Investor Verification Checklist
- Verify the exact amount of the 0.375% structuring fee paid at closing.
- Review the full text of the Master Repurchase and Securities Contract (Exhibit 99.1) for specific asset eligibility criteria.
- Confirm the Company's current liquidity position to assess its ability to meet potential margin calls.
- Monitor the status of the two available one-year extension options for the facility.
- Check for any subsequent filings regarding the utilization of the $150 million facility.