Item
1.01 Entry into a Material Definitive Agreement.
Monmouth
Real Estate Investment Corporation (“Monmouth” or the “Company”) has entered into a Term Loan Agreement, dated
as of December 15, 2021 (the “Term Loan Agreement”), with Monmouth, as borrower, the guarantors from time to time party thereto
and JPMorgan Chase Bank, N.A. as administrative agent and Sole Lead Arranger and Sole Book Runner (“JPMorgan”). The Term
Loan Agreement provides for a $175,000,000 unsecured delayed-draw term loan facility that, based on the Company’s current leverage,
bears interest at a spread of 140 basis points over LIBOR.
The
loans issued under the Term Loan Agreement will, at the Company’s election, either bear interest at (i) LIBOR plus 130 basis points
to 200 basis points, depending on the Company’s leverage ratio, or (ii) Base Rate plus 30 basis points to 100 basis points, depending
on the Company’s leverage ratio.
In
addition, the Company incurs a commitment fee at a rate per annum equal to 0.20% of the unused portion of the total amount committed
under the Term Loan Agreement, which fee will be payable quarterly based on outstanding borrowings and the unused portion of the total
amount committed under the Term Loan Agreement during the applicable quarter.
The
Term Loan Agreement contains customary negative covenants similar to the Company’s current Amended and Restated Credit Agreement,
dated as of November 15, 2019 (the “A&R Credit Agreement”), including, but not limited to, restrictions on the incurrence
of liens, the sale of assets and other fundamental corporate changes. Moreover, the Term Loan Agreement also requires the Company to
satisfy various affirmative and financial covenants, including, without limitation, maintenance of REIT status, a maximum leverage ratio,
a minimum debt service coverage ratio, an unsecured leverage ratio, and a minimum tangible net worth threshold. The Term Loan Agreement
includes the same events of default and remedies upon an event of default as the A&R Credit Agreement, including acceleration of
the amounts due under the Term Loan Agreement.
The
obligations of the Company under the Term Loan Agreement are guaranteed by each direct and indirect wholly owned subsidiary of the Company
that owns an Unencumbered Real Estate Asset (as defined in the Term Loan Agreement).
JPMorgan
has, from time to time, performed, and may in the future perform, various financial advisory, investment banking and general financing
services for the Company, for which JPMorgan has received, and will receive, customary fees and expenses.
The
description of the Term Loan Agreement in this Current Report on Form 8-K is qualified in its entirety by reference to the complete Term
Loan Agreement that is attached hereto as Exhibit 10.1 and is incorporated herein by reference.