Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On May 29, 2009, Colonial Realty Limited Partnership ("CRLP"), through a
wholly-owned special purpose subsidiary of CRLP, CMF 7 Portfolio LLC, closed on
a $156.4 million secured term loan (the "Loan") originated by Grandbridge Real
Estate Capital LLC, a North Carolina limited liability company unaffiliated with
CRLP, for repurchase by Fannie Mae (NYSE: FNM). CRLP, a Delaware limited
partnership, is the operating partnership of Colonial Properties Trust (the
"Company"). Of the $156.4 million, $145.3 million bears interest at fixed
interest rate equal to 5.29% and $11.1 million bears interest at a fixed
interest rate of 5.57%. The weighted average interest rate for the Loan is
5.31%. The Loan matures on June 1, 2019 and requires accrued interest to be paid
monthly with no scheduled principal payments required prior to the maturity
date. The Loan is non-recourse to the Company and CRLP (except that CRLP is
guarantor of customary non-recourse carveouts, such as misapplication of
proceeds, fraud or material misrepresentation, and failure to deliver books and
records and financial statements). In addition, the Loan becomes full recourse
to CRLP in the event of acquisition of property by the borrowing entity in
violation of the Loan documents, unpermitted transfers of the mortgaged
properties or CRLP's interest in the borrowing entity, changes in control of the
Company or CRLP, failure to comply with environmental obligations, and certain
bankruptcy and similar events. The Loan is collateralized by eight of CRLP's
multifamily apartment communities totaling 2,816 units. The entire Loan amount
was drawn on May 29, 2009.
The Loan contains various usual and customary covenants and events of default
for loans of this type, which could trigger acceleration of the Loan. Events of
default include nonpayment, failure to perform certain covenants beyond a cure
period, violation of any representations or warranties, failure to pay debts as
they become due and insolvency and transfers of interests in the borrowing
entity or in any of the collateral properties not permitted by the terms of the
Loan or in the case of a change in control of the Company or CRLP. The Loan
documentation also includes limitations on the borrowing entity's ability to
incur additional indebtedness and to acquire any additional properties and
requires that the Company maintain its status as a REIT. The Loan may be prepaid
at any time prior to maturity. Except in the case of a prepayment with the
proceeds of a casualty or a condemnation, any prepayment made prior to March 1,
2019 must be accompanied by a prepayment premium calculated in accordance with
the Loan documentation.
The net proceeds from the Loan were used to repay a portion of the
outstanding balance on the Company's $675 million unsecured line of credit. As
of June 1, 2009, the outstanding balance on the unsecured line of credit was
approximately $183 million (after giving effect to the application of the net
proceeds from the Loan).
Item 7.01. Regulation FD Disclosure.
On June 1, 2009, the Company issued a press release in which, among other
things, it provided updated full-year 2009 guidance. A copy of the press release
is attached to this Current Report on Form 8-K as Exhibit 99.1. The information
contained therein regarding updated full-year 2009 guidance under the heading
"Updated 2009 EPS and FFO Per Share Guidance" is
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incorporated by reference herein. Such information shall not be deemed "filed"
with the Securities and Exchange Commission (the "SEC") or incorporated by
reference in any registration statement filed by the Company under the
Securities Act of 1933, as amended.
* * *
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Certain statements 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 involve known and unknown risks, uncertainties
and other factors that may cause the company's actual results, performance,
achievements or transactions to be materially different from the results,
performance, achievements or transactions expressed or implied by the forward
looking statements. Factors that impact such forward looking statements include,
among others, real estate conditions and markets, including recent deterioration
in the multifamily market and the strength or duration of the current recession
or recovery; increased exposure, as a multifamily focused REIT, to risks
inherent in investments in a single industry; ability to obtain financing on
reasonable rates, if at all; performance of affiliates or companies in which we
have made investments; changes in operating costs; higher than expected
construction costs; uncertainties associated with the timing and amount of real
estate dispositions, including our existing inventory of condominium and
for-sale residential assets; legislative or regulatory decisions; our ability to
continue to maintain our status as a REIT for federal income tax purposes; price
volatility, dislocations and liquidity disruptions in the financial markets and
the resulting impact on availability of financing; the effect of any rating
agency action on the cost and availability of new debt financings; level and
volatility of interest rates or capital market conditions; effect of any
terrorist activity or other heightened geopolitical crisis; or other factors
affecting the real estate industry generally.
Except as otherwise required by the federal securities laws, the company assumes
no responsibility to update the information in this Current Report on Form 8-K.
The company refers you to the documents filed by the company from time to time
with the Securities and Exchange Commission, specifically the section titled
"Risk Factors" in the company's Annual Report on Form 10-K for the year ended
December 31, 2008, as may be updated or supplemented in the company's Form 10-Q
filings, which discuss these and other factors that could adversely affect the
company's results.
This Current Report on Form 8-K is being furnished on behalf of Colonial
Properties Trust and Colonial Realty Limited Partnership to the extent
applicable to either or both registrants. Certain of the events disclosed in the
items covered by this Current Report on Form 8-K may apply to Colonial
Properties Trust only, Colonial Realty Limited Partnership only or both Colonial
Properties Trust and Colonial Realty Limited Partnership, as applicable.
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