UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 12, 2014

Cole Real Estate Income Strategy (Daily NAV), Inc.
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
 
 
 
 
 
 
 
Maryland
 
000-55187
 
27-3147801
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2325 East Camelback Road, Suite 1100, Phoenix, Arizona 85016
(Address of principal executive offices)
(Zip Code)
 
(602) 778-8700
(Registrant’s telephone number, including area code)
 
None
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 






Item 1.01    Entry into a Material Definitive Agreement
As previously reported in a Current Report on Form 8-K filed on December 13, 2011, Cole Real Estate Income Strategy (Daily NAV) Operating Partnership, LP (“Income NAV OP” or the “Borrower”), the operating partnership of Cole Real Estate Income Strategy (Daily NAV), Inc. (the “Company”), entered into a secured revolving credit facility (the “Credit Facility”) on December 8, 2011, providing for up to $50.0 million of borrowings pursuant to a credit agreement, as subsequently modified, (the “Credit Agreement”) with J.P. Morgan Securities, LLC, as sole lead arranger and sole bookrunner, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent, and other lending institutions that may become parties to the Credit Agreement. Subject to meeting certain conditions described in the Credit Agreement and the payment of certain fees customary for these types of facilities, the amount of the Credit Facility could be increased from $50.0 million up to a maximum of $250.0 million (the “Accordion Feature”).
On January 17, 2014, Income NAV OP entered into a third modification agreement (the “Third Modification Agreement”) with JPMorgan Chase, which exercised $25.0 million of the Accordion Feature in the Credit Agreement, and increased the allowable borrowings up to $75.0 million in revolving loans. Until such time as the Borrower entered into the Amended Credit Agreement (defined below), allowable borrowings remained at $75.0 million.
On September 12, 2014, Income NAV OP entered into an amended and restated credit agreement (the “Amended Credit Agreement”) with JPMorgan Chase, as administrative agent, swing line lender and letter of credit issuer, U.S. Bank National Association (“U.S. Bank”) as syndication agent and documentation agent and other lending institutions that are or may become parties to the Amended Credit Agreement (collectively with JPMorgan Chase and U.S. Bank, the “Lenders”). The Amended Credit Agreement allows Income NAV OP to borrow up to $75.0 million in revolving loans (the “Revolving Loans”) and includes a $25.0 million term loan (the “Term Loan”), with the maximum amount outstanding not to exceed the borrowing base (the “Borrowing Base”), calculated as (a) 65% of the aggregate value allocated to each qualified property comprising eligible collateral (as defined in the Amended Credit Agreement and collectively, the “Qualified Properties”) during the period from September 12, 2014 through September 11, 2015 and (b) 60% of the Qualified Properties during the period from September 12, 2015 to September 12, 2017 (the “Amended Credit Facility”). Up to 15% of the Revolving Loans may be used for issuing letters of credit and up to 10% of the Revolving Loans, not to exceed $50.0 million, may be used for issuing short term (ten day or less) advances (the “Swing Line Loans”). Subject to meeting certain conditions described in the Amended Credit Agreement and the payment of certain fees, aggregate borrowings under the Amended Credit Facility may be increased up to a maximum of $750.0 million. The Amended Credit Facility, letters of credit and Swing Line Loans mature on September 12, 2017; however, the Borrower may elect to extend the maturity dates of such loans to September 12, 2019, subject to satisfying certain conditions described in the Amended Credit Agreement.
The Revolving Loans and Term Loan will bear interest at rates depending upon the type of loan specified by the Borrower. For a eurodollar rate loan the interest rate will be equal to the one-month, two-month, three-month or six-month LIBOR for the interest period, as elected by the Borrower, multiplied by the Statutory Reserve Rate (as defined in the Amended Credit Agreement), plus the applicable rate (the “Eurodollar Applicable Rate”). The Eurodollar Applicable Rate is based upon the Company’s overall leverage ratio, generally defined in the Amended Credit Agreement as the total consolidated outstanding indebtedness of the Company divided by the total consolidated asset value of the Company (as defined in the Amended Credit Agreement) (the “Leverage Ratio”), and ranges from 1.90% at a Leverage Ratio of 50.0% or less to 2.45% at a Leverage Ratio greater than 60.0%. For base rate committed loans, the interest rate will be a per annum amount equal to the greatest of: (a) JPMorgan Chase’s Prime Rate; (b) the Federal Funds Effective Rate (as defined in the Amended Credit Agreement) plus 0.50%; and (c) one-month LIBOR multiplied by the Statutory Reserve plus 1.0% plus the applicable rate (the “Base Rate Applicable Rate”). The Base Rate Applicable Rate is based upon the Leverage Ratio, and ranges from 0.90% at a Leverage Ratio of 50.0% or less to 1.45% at a Leverage Ratio greater than 60.0%. The Amended Credit Agreement also includes an interest rate structure should the Company convert to an unsecured revolving credit facility, subject to meeting certain conditions described in the Amended Credit Agreement.
Income NAV OP paid certain fees under the Amended Credit Agreement, including arrangement and up-front fees. Income NAV OP will also pay an annual administrative agent fee, as well as an annualized fee for any unused portion of the Amended Credit Facility (the “Unused Fee”). The Unused Fee is equal to the daily undrawn amount multiplied by a per annum percentage for such day (as determined for a 360-day year) equal to 0.30%. Income NAV OP must also pay certain fees upon the issuance of each letter of credit under the Amended Credit Agreement and a quarterly fee based on the outstanding face amount of any letters of credit issued under the Amended Credit Facility.
The Borrower has the right to prepay the outstanding amounts under the Amended Credit Facility, in whole or in part, without premium or penalty provided that: (i) prior written notice is received by the administrative agent; (ii) any prepayment of eurodollar rate loans shall be in a principal amount of $5.0 million or a whole multiple of $1.0 million in excess thereof; and (iii) any prepayment of base rate committed loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount then outstanding.The Amended Credit Agreement contains customary representations, warranties, borrowing conditions and affirmative, negative and financial covenants, including





minimum net worth, debt service coverage and Leverage Ratio requirements, recourse debt requirements and dividend payout requirements.
The Amended Credit Agreement also includes usual and customary events of default and remedies for facilities of this nature. Upon the occurrence of any event of default, the eurodollar rate loans and base rate committed loans will bear interest payable at an interest rate equal to 2.0% per annum above the interest rate that would otherwise be applicable at that time, until the default is cured. In addition to Income NAV OP breaching any of the terms of the Amended Credit Agreement or related loan documents, events of default include, but are not limited to: (1) the failure to pay any principal when due; (2) the failure to pay interest and fees within five business days after the due date; (3) the occurrence of a change of control; (4) the inability to pay debts as they become due; (5) a material inaccuracy of any representation or warranty; (6) the bankruptcy or insolvency of Income NAV OP, the Company or any consolidated subsidiary providing a guaranty; (7) a violation of any financial, negative, affirmative or other covenants, subject to applicable cure periods, if any; (8) a violation of ERISA regulations; and (9) judgments against Income NAV OP, the Company or any consolidated subsidiary in excess of $15.0 million or $50.0 million in aggregate that remain unsatisfied or unstayed for 60 days. If an event of default occurs and is not cured timely, the Lenders shall have no obligation to make further disbursements under the Amended Credit Facility and all outstanding loans may or shall be immediately due and payable.
As of September 12, 2014, the Borrowing Base under the Amended Credit Facility based on the underlying collateral pool for Qualified Properties was approximately $91.5 million and the amount outstanding under the Amended Credit Facility was approximately $52.4 million.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



Dated: September 16, 2014
COLE REAL ESTATE INCOME STRATEGY (DAILY NAV), INC.
 
 
By:
/s/ Simon J. Misselbrook
 
 
Name:
Simon J. Misselbrook
 
 
Title:
Chief Financial Officer and Treasurer
 
 
 
Principal Financial Officer and Principal Accounting Officer