ARES COMMERCIAL REAL ESTATE CORPORATION Item 1.01 Entry into a Material Definitive Agreement.
OnJanuary 28, 2021 , ACRE Commercial Mortgage 2021-FL4 Ltd. (the "Issuer") and ACRE Commercial Mortgage 2021-FL4 LLC (the "Co-Issuer"), both wholly owned indirect subsidiaries ofAres Commercial Real Estate Corporation (the "Company"), entered into an Indenture (the "Indenture") withACRC Lender LLC , as advancing agent,Wells Fargo Bank, National Association , as note administrator ("Wells Fargo"), andWilmington Trust, National Association , as trustee, which governs the issuance of approximately$603 million principal balance secured floating rate notes (the "Notes"). The Notes are collateralized by interests in a pool of (a) 11 fully-funded pari-passu participations in commercial real estate mortgage loans and (b) 12 whole commercial real estate mortgage loans (collectively, the "Mortgage Assets") having a total principal balance of approximately$667 million . During the period ending inApril 2024 (the "Companion Participation Acquisition Period"), the Issuer may use certain principal proceeds from the Mortgage Assets to acquire additional funded pari-passu participations related to the Mortgage Assets that meet certain acquisition criteria. The sale of the Mortgage Assets to the Issuer is governed by a Mortgage Asset Purchase Agreement (the "Mortgage Asset Purchase Agreement") betweenACRC Lender LLC , a wholly owned subsidiary of the Company (the "Seller"), and the Issuer, in which the Seller made certain customary representations, warranties and covenants. In connection with the securitization, the Issuer and Co-Issuer offered and issued the following classes of Notes: Class A, Class A-S, Class B, Class C, Class D and ClassE Notes (collectively, the "Offered Notes") to third party investors. A wholly owned subsidiary of the Company retained approximately$127 million of the Notes and$64 million of preferred equity in the Issuer.
The aggregate principal balance of the Offered Notes is approximately
Class Initial Note Balance Interest Rate
Class A $ 365,318,000 LIBOR + 0.83%
Class A-S 31,695,000 LIBOR + 1.10%
Class B 36,698,000 LIBOR + 1.40%
Class C 50,878,000 LIBOR + 1.75%
Class D 45,873,000 LIBOR + 2.60%
Class E 10,009,000 LIBOR + 3.10%
The Company used the net proceeds to repay outstanding amounts under its secured funding facilities and for general working capital.
The foregoing discussion of the Indenture and the Mortgage Asset Purchase
Agreement does not purport to be a complete description of the terms of such
agreements and is qualified in its entirety by reference to (i) the Indenture, a
copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and
(ii) the Mortgage Asset Purchase Agreement, a copy of which is filed as Exhibit
10.2 to this Current Report on Form 8-K, both of which are incorporated herein
by reference.
Certain statements contained in this Current Report on Form 8-K may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act
of 1934, as amended ("Exchange Act"), which relate to future events or the
Company's future performance or financial condition, and such statements are
intended to be covered by the safe harbor provided by the same. Such statements
are intended to be identified by using words such as "believe," "expect,"
"intend," "estimate," "anticipate," "will," "project," "plan" and similar
expressions in connection with any discussion of future operating or financial
performance. Readers are cautioned not to put undue reliance on such
forward-looking statements. These statements are not guarantees of future
performance, condition or results and involve a number of risks and
uncertainties. Actual results could differ materially from those in the
forward-looking statements as a result of a number of factors, including those
described from time to time in the Company's filings with the Securities and
Exchange Commission . The Company undertakes no duty to update any
forward-looking statements made herein, whether as a result of new information,
future events or otherwise, except as required by law.
--------------------------------------------------------------------------------Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information required by Item 2.03 contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
OnJanuary 29, 2021 , the Company issued a press release announcing the closing of the collateralized loan obligation described in Items 1.01 and 2.03 of this Current Report on Form 8-K. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference into this Item. The information disclosed in this Item 7.01, including Exhibit 99.1, is being furnished and will not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, nor will it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any general incorporation language in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit Number Description
10.1 Indenture dated as of January 28, 2021 , among ACRE Commercial Mortgage
2021-FL4 Ltd , as issuer, ACRE Commercial Mortgage 2021-FL4 LLC , as
co-issuer, ACRC Lender LLC , as advancing
agent,
Association, as trustee, and Wells Fargo
note administrator.
10.2 Mortgage Asset Purchase Agreement, dated as
of
ACRC Lender LLC , as seller, and ACRE
Commercial Mortgage 2021-
issuer, and agreed and acknowledged by ACRC 2017-FL3 Holder REIT LLC .
99.1 Press Release dated January 29, 2021 .
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