Exhibit 10.52

 

AMENDMENT NO. 2

TO

BRIDGE LOAN WAREHOUSING CREDIT AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 2 (this “Amendment”) is entered into as of February 26, 2016,
by and among ACRC LENDER B LLC, a Delaware limited liability company (the
“Borrower”), the Persons party to the Credit Agreement (as defined herein) from
time to time as lenders (the “Lenders”), and BANK OF AMERICA, N.A., a national
banking association, as a Lender and in its capacity as administrative agent for
the Lenders under the Credit Agreement (in its capacity as administrative agent,
the “Administrative Agent”).

 

RECITALS

 

Reference is made to the following:

 

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to
that certain Bridge Loan Warehousing Credit and Security Agreement, dated as of
May 27, 2015 (as amended, restated, supplemented, extended, renewed or otherwise
modified from time to time, the “Credit Agreement”).  Capitalized terms used
herein and not otherwise defined herein shall have the same meanings herein as
ascribed to them in the Credit Agreement;

 

WHEREAS, the Borrower has requested that the Lenders and the Administrative
Agent add MF Property (as defined below) as a type of Property; and

 

WHEREAS, in response to such request, the parties have agreed to amend the
Credit Agreement solely upon the terms and conditions set forth herein, it being
the intention of the parties that such amendments shall not constitute a
novation of the obligations of the Borrower under the Credit Agreement and the
other Loan Documents.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by the Borrower, the Lenders and the
Administrative Agent, the parties hereto agree as follows:

 

Section 1.              Amendments to Credit Agreement.

 

Section 1.1.           Additional Definition.  The Credit Agreement is hereby
amended by adding the following definition to Section 12.1 of the Credit
Agreement in the appropriate alphabetical order:

 

“‘MF Property’ means a Multifamily Property consisting of general or affordable
multifamily housing that is not an AL Property, an IL Property, a SN Property,
student housing, a manufactured housing community or other dedicated housing.”

 

Section 1.2.           Definition of Applicable Margin.  The definition of
“Applicable Margin” set forth in Section 12.1 of the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:

 

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“‘Applicable Margin’ means, with respect to LIBOR Loans and Alternative Base
Rate Loans, the applicable interest rate margin per annum with respect to each
Warehousing Advance, as determined pursuant to the below pricing grid, based on
whether the Warehousing Advance relates to an AL Property, an IL Property, a MF
Property or a SN Property:

 

Type of Property

 

Applicable Margin

 

AL Property

 

250

bps

IL Property

 

225

bps

MF Property

 

225

bps

SN Property

 

275

bps ”

 

Section 1.3.           Definition of Property.  The definition of “Property” set
forth in Section 12.1 of the Credit Agreement is hereby amended by deleting it
in its entirety and replacing it with the following:

 

“‘Property’ means an AL Property, an IL Property, a MF Property or a SN
Property.”

 

Section 1.4.           Definition of Underwriting Guidelines. The definition of
“Underwriting Guidelines” set forth in Section 12.1 of the Credit Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:

 

“‘Underwriting Guidelines’ means Borrower’s policies and procedures for
underwriting Mortgage Loans secured by Multifamily Properties, constituting AL
Properties, IL Properties, MF Properties or SN Properties for a Targeted
Permanent Loan Program, as in effect on the date of this Agreement, a copy of
which has been provided to and approved by Administrative Agent, as the same may
be modified from time to time in accordance with this Agreement.”

 

Section 1.5.           Warehousing Advance Debt Service Coverage Ratio
Covenants.

 

(a)           Section 3.3(f) of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:

 

“(f)          If the Warehousing Advance Debt Service Coverage Ratio with
respect to any Pledged Loan is less than (i) 1.50 to 1.00 for an AL Property,
(ii) 1.40 to 1.00 for an IL Property, (iii) 1.20 to 1.00 for a MF Property, or
(iv) 1.60 to 1.00 for a SN Property, as of the

 

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last day of any Fiscal Quarter, the Borrower shall prepay the related
Warehousing Advance, within five (5) Business Days after such testing was
required to be reported, by at least an amount such that, if such prepayment had
been made as of the applicable testing date, the Warehousing Advance Debt
Service Coverage Ratio with respect to such Pledged Loan would have been at
least (w) 1.50 to 1.00 for an AL Property, (x)1.40 to 1.00 for an IL Property,
(y) 1.20 to 1.00 for a MF Property, or (z) 1.60 to 1.00 for a SN Property, as of
such quarterly testing date.”

 

(b)           Section 8.1(w) of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:

 

“(w)        As of the date of closing of the Mortgage Loan against which a
Warehousing Advance is being made and as of the date such Warehousing Advance is
made the Warehousing Advance Debt Service Coverage Ratio must be at least
(i) 1.50 to 1.00 with respect any AL Property, (ii) 1.40 to 1.00 for any IL
Property, (iii) 1.20 to 1.00 for any MF Property, and (iv) 1.60 to 1.00 for any
SN Property.  For the purposes of calculating Warehousing Advance Debt Service
Coverage Ratio, (y) the Property EBITDA shall be determined on a trailing twelve
month basis, and (z) the Testing Debt Service Amount shall be determined using
the total outstanding amount of the related Warehousing Advances for the subject
Mortgage Loan.”

 

Section 1.6.           Warehousing Advance-to-Mortgage Loan Ratio Covenant. 
Section 3.3(g) of the Credit Agreement is hereby amended by deleting it in its
entirety and replacing it with the following:

 

“(g)         If the Warehousing Advance-to-Mortgage Loan Ratio exceeds (i) 65%
for any AL Property, (ii) 70% for any IL Property, (iii) 80% for any MF
Property, or (iv) 65% for any SN Property, as of the last day of the second or
fourth Fiscal Quarters of any Fiscal Year, Borrower shall prepay such
Warehousing Advance, within five (5) Business Days after such quarterly testing
date was required to be reported, by at least an amount such that, if such
prepayment had been made as of the applicable testing date, the Warehousing
Advance-to-Mortgage Loan Ratio would not exceed (w) 65% for any AL Property,
(x) 70% for any IL Property, (y) 80% for any MF Property, or (z) 65% for any SN
Property, as of such semi-annual testing date.”

 

Section 1.7.           Warehousing Advance-to-Appraised Value Ratio Covenants.

 

(a)           Section 5.2(k) of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:

 

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“(k)         The Warehousing Advance-to-Appraised Value Ratio with respect to
such Warehousing Advance and the related Pledged Loan shall not exceed (i) 52%
for any AL Property, (ii) 56% for any IL Property, (iii) 64% for any MF
Property, and (iv) 52% for any SN Property.”

 

(b)           Section 5.3(g) of the Credit Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:

 

“(g)         The Warehousing Advance-to-Appraised Value Ratio with respect to
such Subsequent Warehousing Advance and the related Pledged Loan shall not
exceed (i) 52% for any AL Property, (ii) 56% for any IL Property, (iii) 64% for
any MF Property, and (iv) 52% for any SN Property.”

 

Section 1.8.           Underlying Debt Service Coverage Ratio Covenant. 
Section 8.1(x) of the Credit Agreement is hereby amended by deleting it in its
entirety and replacing it with the following:

 

“(x)         As of the date of closing of the Mortgage Loan against which a
Warehousing Advance is being made and as of the date such Warehousing Advance is
made the Underlying Debt Service Coverage Ratio must be at least (i) 1.30 to
1.00 for an IL Property, (ii) 1.40 to 1.00 for an AL Property, (iii) 1.00 to
1.00 for a MF Property, and (iv) 1.50 to 1.00 for a SN Property.  For the
purposes of calculating Underlying Debt Service Coverage Ratio, (y) the Property
EBITDA shall be determined on a trailing twelve month basis, and (z) the
Mortgage Loan debt service shall be determined based on the then outstanding
principal amount of such Mortgage Loan taking into account any Mortgage Loan
advance then being made.”

 

Section 1.9.           Amendment to Exhibit A.  Exhibit A to the Credit
Agreement is hereby amended by deleting Schedule 1 contained therein in its
entirety and replacing it with Schedule 1 attached hereto as Exhibit A.

 

Section 1.10.         Amendment to Exhibit B.  Exhibit B to the Credit Agreement
is hereby amended by adding “ MF Property” directly below the reference to
“Independent Living” contained therein.

 

Section 1.11.         Amendment to Exhibit C.  Exhibit C to the Credit Agreement
is hereby amended by adding “, MF Property” directly after the reference to “IL
Property” contained in Section II.1 therein.

 

Section 1.12.         Amendments to Exhibit E.

 

(a)           Section B(f) of Exhibit E to the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:

 

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“(f)          Advance Rate:  The amount of the Warehousing Advance (including
the aggregate cumulative amount of Warehousing Advances made with respect to a
Multiple Advance Mortgage Loan) will not exceed either (a) (i) 52% for any AL
Property, (ii) 56% for any IL Property, (iii) 64% for any MF Property, or
(iv) 52% for any SN Property, of the most recent “as is” appraised value of the
Mortgaged Property with respect to the particular Mortgage Loan based upon a
third party MAI appraisal, reviewed and approved by the Administrative Agent;
and (b) (i) 65% for any AL Property, (ii) 70% for any IL Property, (iii) 80% for
any MF Property, or (iv) 65% for any SN Property, of the outstanding principal
amount of the Mortgage Note (as may be applicable with respect to any
Warehousing Advance, the ‘Advance Rate’).”

 

(b)           Section B(g) of Exhibit E to the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:

 

“(g)         Warehousing Advance Debt Service Coverage Ratio:  The Warehousing
Advance Debt Service Coverage Ratio must be at least (a) 1.50 to 1.00 for any AL
Property, (b) 1.40 to 1.00 for any IL Property, (c) 1.20 to 1.00 for any MF
Property, or (d) 1.60 to 1.00 for any SN Property, as of the Advance Date.  For
purposes of calculating Warehousing Advance Debt Service Coverage Ratio, (i) the
Property NOI shall be determined on a trailing twelve (12) month basis,
annualized and normalized, and (ii) the Testing Debt Service Amount shall be
determined using the total outstanding principal amount of the related
Warehousing Advance(s) with respect to the subject Mortgage Loan.”

 

(c)           Section B(h) of Exhibit E to the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:

 

“(h)         Maximum Underlying Loan-to-Value Ratio and Loan-to-Cost Ratio:  The
Underlying Loan-to-Value Ratio may not exceed 80%, and the Loan-to-Cost Ratio
(other than for any MF Property) may not exceed 80%.  The Loan-to-Cost Ratio for
any MF Property may not exceed 90%.”

 

(d)           Section B(i) of Exhibit E to the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:

 

“(i)          Underlying Debt Service Coverage Ratio:  The Underlying Debt
Service Coverage Ratio must be at least (a) 1.40 to 1.00 for any AL Property,
(b) 1.30 to 1.00 for any IL Property, (c) 1.00 to 1.00 for any MF Property, or
(d) 1.50 to 1.00 for any SN Property.  For purposes of calculating Underlying
Debt Service Coverage Ratio, (i) the Property EBITDA shall be determined on a
trailing

 

5

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twelve (12) month basis, annualized and normalized, and (ii) the Mortgage Loan
debt service shall be determined based on the outstanding principal amount of
such Mortgage Loan.”

 

(e)           Section B(k)(iii) of Exhibit E to the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:

 

“(iii)        (A) Based upon the updated appraised value of the Mortgaged
Property, and the updated assessment, the Advance Rate would not be exceeded,
(B) the Warehousing Advance Debt Service Coverage Ratio as of the last day of
the calendar month of the otherwise expiring Warehouse Period is at least
(i) 1.50 to 1.00 for any AL Property, (ii) 1.40 to 1.00 for any IL Property,
(iii) 1.20 to 1.00 for any MF Property, or (iv) 1.60 to 1.00 for any SN
Property, and (C) the Mortgaged Property must continue to satisfy, on a proforma
basis as of the maturity date of the Pledged Loan, the requirements of the
Targeted Permanent Loan Program, unless the Borrower makes a partial prepayment
of the Warehousing Advance in an amount necessary so that all of the preceding
conditions in this clause (iii) are satisfied.”

 

Section 2.              Ratification.  Except as hereby amended, the Credit
Agreement, all other Loan Documents and each provision thereof are hereby
ratified and confirmed in every respect and shall continue in full force and
effect, and this Amendment shall not be, and shall not be deemed to be, a waiver
of any Default or Event of Default, or of any covenant, term or provision of the
Credit Agreement or the other Loan Documents.

 

Section 3.              Representations and Warranties.  The Borrower represents
and warrants to the Lenders as of the effective date of this Amendment that,
assuming the due execution and delivery of this Amendment:  (a) no Default or
Event of Default is in existence, from and after, or will result from, the
execution and delivery of this Amendment or the consummation of any transactions
contemplated hereby; (b) each of the representations and warranties of the
Borrower in the Credit Agreement and the other Loan Documents is true and
correct in all material respects on the effective date of this Amendment (except
for representations and warranties limited as to time or with respect to a
specific event, which representations and warranties shall continue to be
limited to such time or event); and (c) this Amendment and the Credit Agreement
(as amended by this Amendment) are legal, valid and binding agreements of the
Borrower and are enforceable against it in accordance with their terms, except
as enforceability may be limited by applicable insolvency, bankruptcy or other
Laws affecting creditors’ rights generally, or general principles of equity,
whether such enforceability is considered in a proceeding in equity or at law.

 

Section 4.              Conditions Precedent.  The representations, warranties,
covenants and agreements set forth in this Amendment are conditional and this
Amendment shall not be effective until the Administrative Agent receives
(a) fully-executed counterpart originals of this Amendment, and (b) payment by
the Borrower of all of the Administrative Agent’s fees, costs and expenses
associated with the preparation, negotiation, execution and delivery and

 

6

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administration of this Amendment and the Credit Agreement accrued through the
date hereof, including, without limitation, the Administrative Agent’s
reasonable attorney fees.

 

Section 5.              Counterparts.  This Amendment may be executed and
delivered in any number of counterparts with the same effect as if the
signatures on each counterpart were upon the same instrument.

 

Section 6.              Amendment as Loan Document.  Each party hereto agrees
and acknowledges that this Amendment constitutes a “Loan Document” under and as
defined in the Credit Agreement.

 

Section 7.              Successors and Assigns.  This Amendment shall be binding
upon each of the Borrower, the Lenders, the Administrative Agent and their
respective successors and assigns, and shall inure to the benefit of each of the
Lenders’ and the Administrative Agent’s respective successors and assigns.

 

Section 8.              Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

Section 9.              Expenses.  The Borrower agrees to promptly reimburse the
Administrative Agent and the Lenders for all reasonable expenses, including,
without limitation, reasonable fees and expenses of outside legal counsel, it
has heretofore incurred or hereafter incurs in connection with the preparation,
negotiation and execution of this Amendment and all other instruments, documents
and agreements executed and delivered in connection with this Amendment.

 

Section 10.            Integration.  This Amendment contains the entire
understanding of the parties hereto with regard to the subject matter contained
herein.  This Amendment supersedes all prior or contemporaneous negotiations,
promises, covenants, agreements and representations of every nature whatsoever
with respect to the matters referred to in this Amendment, all of which have
become merged and finally integrated into this Amendment.  Each of the parties
hereto understands that in the event of any subsequent litigation, controversy
or dispute concerning any of the terms, conditions or provisions of this
Amendment, no party shall be entitled to offer or introduce into evidence any
oral promises or oral agreements between the parties relating to the subject
matter of this Amendment not included or referred to herein and not reflected by
a writing included or referred to herein.

 

Section 11.            No Course of Dealing.  The Administrative Agent and the
Lenders have entered into this Amendment on the express understanding with the
Borrower that in entering into this Amendment the Administrative Agent and the
Lenders are not establishing any course of dealing with the Borrower.  The
Administrative Agent’s and the Lenders’ rights to require performance pursuant
to and in accordance with all of the terms and conditions of the Credit
Agreement and the other Loan Documents shall not in any way be impaired by the
execution of this Amendment.  None of the Administrative Agent and the Lenders
shall be obligated in any manner to execute any further amendments or waivers
and if such waivers or amendments are requested in the future, assuming the
terms and conditions thereof are satisfactory to them, the Administrative Agent
and the Lenders may require the payment of fees in connection therewith.

 

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Section 12.  Governing Law; Jurisdiction; Waiver of Jury Trial.  This Amendment
shall be governed by the provisions of the Credit Agreement pertaining to
governing law, jurisdiction and waiver of jury trial.  In furtherance of the
foregoing, the provisions of Sections 11.5, 11.11 and 11.12 of the Credit
Agreement are hereby incorporated by reference, mutatis mutandis.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to Bridge Loan
Warehousing Credit and Security Agreement to be duly executed by their duly
authorized officers or representatives, all as of the date first above written.

 

 

BORROWER:

 

 

 

ACRC LENDER B LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Anton Feingold

 

Name: Anton Feingold

 

Title: Vice President

 

 

 

ADMINISTRATIVE AGENT AND

 

SOLE LENDER:

 

 

 

BANK OF AMERICA, N.A,

 

a national banking association,

 

 

 

 

 

By:

/s/ Andrew Blomstedt

 

Name: Andrew Blomstedt

 

Title: SVP

 

By executing this Amendment No. 2 in the space provided below, the Guarantor
hereby ratifies and confirms the Guaranty in every respect and acknowledges that
the Guaranty continues in full force and effect, and that the consent and
agreements set forth therein do not establish any course of dealing among the
parties.

 

GUARANTOR:

 

ARES COMMERCIAL REAL ESTATE CORPORATION

 

By:

/s/ Anton Feingold

 

Name: Anton Feingold

 

Title: Vice President

 

 

Signature Page to Amendment No. 2 to
Bridge Loan Warehousing Credit and Security Agreement

 

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EXHIBIT A

 

Schedule 1 to Exhibit A

 

[See attached.]

 

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SCHEDULE 1

 

Approval Request

 

Project Borrower

 

 

Project / Sponsor Name

 

 

Borrower Contact info.

 

 

Project Address

 

 

Project completion date

 

 

Borrower maximum loan amount (may not exceed $35,000,000)

 

 

Construction Escrow Holdback

 

 

Underwritten FHA, Fannie Mae or Freddie Mac Permanent Loan Amount

 

 

Requested Warehousing Advance Amount for Single Advance Mortgage Loan(1) (may
not be less than $5,000,000 and may not exceed $24,500,000)

 

 

Requested Total Approved Warehousing Advance Amount for Multiple Advance
Mortgage Loan (may not be less than $5,000,000 and may not exceed $24,500,000)

 

 

Anticipated Warehousing Advance date

 

 

Borrower Loan Initial Maturity

 

 

Borrower Loan Extended Maturity

 

 

 

Warehousing Advance Request Review:

 

Item

 

Guideline

 

Actual /
Comment

 

Complies
(Y or N)

Targeted Permanent Loan Program

 

Must be Fannie Mae, Freddie Mac, HUD or FHA

 

 

 

 

 

 

 

 

 

 

 

Applicable Expected Permanent Loan Amount

 

Must be equal to or greater than the aggregate outstanding Warehousing Advances
for the specific Mortgage Loan

 

 

 

 

 

 

 

 

 

 

 

Warehousing Advance Amount

 

An amount not to exceed (i) (w) 52% for any AL Property, (x) 56% for any IL
Property, (y) 64% for any MF Property, or (z) 52% for any SN Property, of the
most recent “as is”

 

 

 

 

 

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(1) A Warehousing Advance Request must be delivered to Lender in accordance with
Section 2.l(b) of the Agreement.

 

A-1

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appraised value of the Mortgaged Property related to the particular Mortgage
Loan based upon a third party MAl appraisal, reviewed and approved by the
Administrative Agent; and (ii) (w) 65% for any AL Property, (x) 70% for any IL
Property, (y) 80% for any MF Property, or (z) 65% for any SN Property, of the
outstanding principal amount of the Mortgage Note (as may be applicable with
respect to any Warehousing Advance, the “Advance Rate”).

 

Warehousing Advance Debt Service Coverage Ratio must be equal to or greater than
(A) 1.50x for any AL Property, (B) 1.40x for any IL Property, (C) 1.20x for any
MF Property, and (D) 1.60x for any SN Property

 

 

 

 

 

 

 

 

 

 

 

Borrower Loan Amount

 

Underlying Debt Service Coverage Ratio must be equal to or greater than
(i) 1.40x for any AL Property, (ii) 1.30x for any IL Property, (iii) 1.00x for
any MF Property, and (iv) 1.50x for any SN Property

 

Each of the Loan-to-Cost Ratio (other than for any MF Property) and Underlying
Loan-to-Value Ratio must be less than or equal to 80%. The Loan-to-Cost Ratio
for any MF Property must be less than or equal to 90%.

 

 

 

 

 

 

 

 

 

 

 

Pro forma Property NOI

 

Must be reasonably believed by Borrower to be sufficient for Targeted Permanent
Loan Program

 

 

 

 

 

 

 

 

 

 

 

Amount of Borrower Loan designated for Property rehab

 

<15% of Cost

 

 

 

 

 

 

 

 

 

 

 

Subordinate

 

Not permitted, other than (i)

 

N/A

 

N/A

 

A-2

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Financing/Mezz Financing

 

customary trade payables; and, (ii) to the extent approved by the Administrative
Agent, (a) accounts receivable or other working capital facilities or
(b) mezzanine financing directly or indirectly affecting or related to the
related Mortgaged Property or the direct or indirect ownership interests in the
related mortgagor

 

 

 

 

 

 

 

 

 

 

 

FIRREA Compliant Appraisal Report

 

Required

 

Appraisal Dated:

 

 

 

 

 

Environmental Report

 

Required

 

ESA Dated:

 

 

 

 

 

Property Condition Report

 

Required

 

PCR Dated:

 

A-3

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