Belpointe PREP, LLC, a real estate company, has entered into a significant financial arrangement, securing a construction loan amounting to $104 million. On Monday, an indirect majority-owned subsidiary of the company finalized the construction loan agreement with an unnamed lender, as agent for several lenders.
The loan, which is supported by promissory notes, will carry an interest rate of 3.8% annually, in addition to the one-month forward-looking term rate for SOFR as determined by the CME Group (NASDAQ:CME) Benchmark Administration Limited, with potential adjustments as outlined in the loan agreement.
Secured by a first-lien mortgage on the property located at 1000 1st Avenue North, St. Petersburg, Florida—known as "Viv"—the loan will fund the ongoing development and certain leasing costs and expenses for the project. The agreement also includes the establishment of reserves as required by the terms of the loan.
The initial maturity date for the loan is set for June 28, 2027, and includes options to extend for two additional one-year periods, subject to specific conditions.
In conjunction with the loan, Belpointe PREP has provided the lenders with several guarantees. These include a Debt Service and Carry Guaranty, ensuring payment of the loan's interest and principal, and a Completion Guaranty, which assures the completion of the development work on Viv.
Moreover, a Non-Recourse Carveout Guaranty indemnifies the lenders against losses resulting from defined "bad acts," insolvency, environmental issues, or violations of the loan terms.
The company is also obligated to maintain certain financial covenants throughout the loan's term, including a minimum net worth of $110.0 million and a minimum liquidity of $10.0 million.
Furthermore, Belpointe PREP has agreed to an Environmental Indemnity Agreement, indemnifying the lender from specific environmental liabilities associated with Viv.
The details of this financial obligation are based on a press release statement and reflect Belpointe PREP's strategic moves to finance its real estate development endeavors.
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