Attached files
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): December 27, 2019
(December 20, 2019)
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Manufactured Housing Properties Inc.
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(Exact name of registrant as specified in its charter)
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Nevada
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000-51229
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51-0482104
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(State or other jurisdictionof incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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136 Main Street, Pineville, North Carolina
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28134
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(Address of principal executive offices)
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(Zip Code)
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(980) 273-1702
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(Registrant’s telephone number, including area
code)
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(Former name or former address, if changed since last
report)
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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:
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[ ]
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Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2
of the Securities Exchange Act of 1934.
Emerging Growth
Company [ ]
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [
]
Securities
registered pursuant to Section 12(b) of the Act: None
Item
1.01
Entry into a Material Definitive Agreement.
As previously reported, on November 11, 2019, MHP Pursuits LLC, a
wholly-owned subsidiary of Manufactured Housing Properties Inc., a
Nevada corporation (the “Company”),
entered into a purchase and sale agreement (the
“Purchase
Agreement”) with The ARC
Investment Trust, a South Carolina trust (the
“Seller”),
for the asset purchase of 5 manufactured housing communities
located in South Carolina and totaling 181 sites (the
“Property”)
for a total purchase price of $6,500,000. On December 20, 2019,
closing of the Purchase Agreement was completed and the
Company’s newly formed wholly owned subsidiary ARC MHP LLC
(“ARC”) purchased the
Property.
In connection with the closing, on December 20, 2019, ARC entered
into a loan agreement (the “Loan
Agreement”) with Liberty
Bankers Life Insurance Company (the “Lender”)
for a term loan in the principal amount of $5,300,000 (the
“Loan”)
and ARC issued a promissory note to the Lender in the principal
amount of $5,300,000 (the “Note”).
In connection with the Loan, ARC paid the Lender a commitment fee
of $18,655 and an inspection fee of $1,345.
The Note bears interest at a rate of 5.5% per annum. Interest and
principal in the amount of $32,546.64 are due and payable on
February 1, 2020 and continuing on the first day of the month
thereafter (each, a “Payment
Date”) until January 1,
2030 (the “Maturity
Date”), when the entire
remaining unpaid principal balance of the Note and any and all
accrued but unpaid interest are due and payable in full. In the
event any payment of interest is not paid on the date when due,
interest shall accrue thereon on a compounded basis until paid in
full. Further, in the event any payment of interest is not paid
within ten (10) days of the date when due, ARC shall pay a late
payment charge in an amount equal to five percent (5%) of the late
payment. In addition, for so long as any Event of Default (as
defined in the Note) exists, interest shall accrue on the
outstanding principal balance at the Default Interest Rate, and
such accrued interest shall be immediately due and payable. The
“Default Interest
Rate” means a rate per
annum equal to the lesser of eighteen percent (18%) or the maximum
lawful rate of interest which may be contracted for, charged,
taken, received or reserved by the Lender in accordance with the
applicable laws of the State of South Carolina (or applicable
United States federal law to the extent that such law permits the
Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under South Carolina law), taking into
account all charges made in connection with the transaction
evidenced by the Note and the other Loan Documents (as defined in
the Note).
During the first year of the Note, the Note may be paid in full
upon thirty (30) days prior written notice to the Lender, on any
Payment Date; provided that such prepayment shall be accompanied by
a charge of five percent (5%) of the then current principal balance
of the Note at the time of such prepayment. This fee will reduce
one percent (1% ) each year thereafter to a minimum of one percent
(1%), which shall be the prepayment premium payable during the
fifth loan year; providing, however, that during the period from
sixty (60) days prior to the Maturity Date to the Maturity Date,
there will be no prepayment premium and the Note may be prepaid in
full without any prepayment charge.
The Loan Agreement contains customary closing conditions and
representations and warranties. The Loan Agreement also contains
customary financial and other covenants for a loan of this type.
The Loan Agreement also contains events of default, including, but
not limited to: (i) for failure to make payments under the Note
when due; (ii) if any statement, representation, or warranty made
by ARC or the Company in the Loan Documents (as defined in the Loan
Agreement) or in any writing, or any statement or representation
made in any certificate, report, or opinion delivered to the Lender
pursuant to the Loan Documents, is false, calculated to mislead,
misleading, or erroneous in any material respect at the time made;
(iii) if ARC shall (a) execute an assignment for the benefit of
creditors, or (b) become or be adjudicated as bankrupt or
insolvent, or (c) admit in writing its inability to pay its debts
generally as they become due, or (d) apply for or consent to the
appointment of a conservator, receiver, trustee, or liquidator of
it or all or a substantial part of its assets, or (e) file a
voluntary petition seeking reorganization or an arrangement with
creditors or to take advantage or seek any other relief under any
Debtor Relief Law (as defined in the Loan Agreement), or (f) file
an answer admitting the material allegations of or consenting to,
or default in, a petition filed against it in any liquidation,
conservatorship, bankruptcy, reorganization, rearrangement,
debtor’s relief, or other insolvency proceedings, or (g)
institute or voluntarily be or become a party to any other judicial
proceedings intended to effect a discharge of its debts, in whole
or in part, or a postponement of the maturity or the collection
thereof, or a suspension of any of the rights or powers of the
Lender granted in any of the Loan Documents (as defined in the Loan
Agreement); (iv) if ARC shall involuntarily (a) have an order,
judgment, or decree entered against it by any tribunal pursuant to
any Debtor Relief Law that could suspend or otherwise affect any of
the rights granted to the Lender in any of the Loan Documents (as
defined in the Loan Agreement), or (b) have a petition filed
against it or any of its property seeking the benefit or benefits
provided for by any Debtor Relief Law that would suspend or
otherwise affect any of the rights granted to the Lender in any of
the Loan Documents (as defined in the Loan Agreement); (v) upon the
failure to have discharged or bonded off within a period of sixty
(60) days after the commencement thereof any attachment,
sequestration, or similar proceedings against any of the material
assets of ARC or the Company; (vi) upon the dissolution of ARC for
any reason whatsoever; (vii) if a default or event of default shall
occur and be continuing after the expiration of any applicable
grace, notice, and cure periods under any other written agreement
or Loan Document (as defined in the Loan Agreement) between the
Lender and ARC; and (viii) for the failure or refusal of ARC or the
Company to properly perform, observe, and comply with any covenant
or agreement contained in the Loan Agreement. The foregoing events
of default are subject to certain grace, notice, and/or cure
periods pursuant to the provisions of the Loan
Agreement.
The Loan Agreement contains a cross-default provision, whereby a
default under (i) a loan from the Lender to Chatham Pines MHP LLC
in the original principal amount of $1,395,000.00; (ii) a loan from
the Lender to Maple Hills MPH LLC in the original principal amount
of $2,800,000.00; (3) a loan from the Lender to Hunt Club MHP LLC
in the original principal amount of $1,463,000.00; and (iv) a loan
from the Lender to Crestview MPH LLC in the original principal
amount of $4,200,000.00 will constitute a default under the Loan
Agreement.
The Loan is secured by the Property, pursuant to a mortgage of real
estate, security agreement and financing statement and ARC pledged
the leases and rents for each parcel comprising the Property
pursuant to an assignment of rents and leases. The Loan is
guaranteed by the Company pursuant to a limited guaranty executed
by the Company.
The foregoing summary of the terms and conditions of the Loan
Agreement and the Note does not purport to be complete and is
qualified in its entirety by reference to the full text of the
agreements attached hereto as Exhibits 10.2 and 10.3, respectively,
which are incorporated herein by reference.
Item 2.01
Completion of Acquisition or Disposition of Assets.
The information set forth under Item 1.01 is incorporated by
reference into this Item 2.01.
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 with respect to the Loan
Agreement and the Note is incorporated by reference into this Item
2.01.
Item 8.01
Other Information.
On December 27, 2019, the Company issued a press
release announcing the closing of the transactions
contemplated by the Purchase Agreement. The press
release is furnished herewith as Exhibit 99.1.
Item 9.01
Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The financial statements of business acquired will be filed by an
amendment to this Form 8-K within 71 calendar days of the date
hereof.
(b) Pro forma financial information
Pro forma financial information will also be filed by an amendment
to this Form 8-K within 71 calendar days of the date
hereof.
(d) Exhibits
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Exhibit
No.
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Description of Exhibit
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Purchase and Sale
Agreement, dated November 11, 2019, between MHP Pursuits LLC and
The ARC Investment (incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K filed on November 15,
2019)
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Loan
Agreement, dated December 20, 2019, between ARC MHP LLC and Liberty
Bankers Life Insurance Company
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Promissory Note
issued by ARC MHP LLC to Liberty Bankers Life Insurance Company on
December 20, 2019
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Press
Release issued on December 27, 2019
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this current report to be signed on its
behalf by the undersigned hereunto duly authorized.
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Date: December 27, 2019
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MANUFACTURED HOUSING PROPERTIES INC.
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By:
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/s/ Raymond M. Gee
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Raymond
M. Gee
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Chief Executive Officer
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