Item 1.01 Entry into a Material Definitive Agreement.
Charlotte 3 Park Refinance
On April 14, 2022, Charlotte 3 Park MHP LLC (“Charlotte
3 MHP”), a wholly owned subsidiary of Manufactured Housing Properties Inc. (the “Company”), entered into
a loan agreement (the “Charlotte 3 Loan Agreement”) with Townebank for a loan in the principal amount of $3,158,400
and issued a promissory note (the “Charlotte 3 Note”) to the lender in the same amount.
The Charlotte 3 Note bears interest at 4.25% per
annum with payments to begin May 1, 2022 and matures on October 1, 2028. Payment for the first eighteen (18) months of the term of the
Charlotte 3 Note shall be interest-only based on the principal outstanding, days in the period, and daily interest rate. Thereafter, principal
and interest shall be due and payable based on a twenty (20) year amortization schedule. Charlotte 3 MHP may prepay the Charlotte 3 Note
in part or in full subject to prepayment penalties set out in the Charlotte 3 Loan Agreement if repaid before May 1, 2027 and without
penalty if repaid on or subsequent to that date.
The Charlotte 3 Loan Agreement is secured by a
first-priority security interest in the properties and lot rent due under all leases associated with manufactured housing communities
owned by Charlotte 3 MHP pursuant to two deeds of trusts, assignments of rents and leases, security agreements and fixture filings (the
“Dixie Deed” and “Driftwood Deed”), a mortgage (the “Meadowbrook Mortgage”),
and an assignment of leases and rents (the “Meadowbrook Assignment of Rents”). The Charlotte 3 Loan Agreement is guaranteed
by Raymond M. Gee, the Company’s Chief Executive Officer.
The Charlotte 3 Loan Agreement and Charlotte 3
Note contain customary financial and other covenants and events of default for a loan of its type.
The foregoing summary of the terms and conditions
of the Charlotte 3 Loan Agreement, the Charlotte 3 Note, the Dixie Deed, the Driftwood Deed, the Meadowbrook Mortgage, and the Meadowbrook
Assignment of Rents does not purport to be complete and is qualified in its entirety by reference to the full text of the agreements attached
as exhibits hereto, which are incorporated herein by reference.
Red Fox Acquisition
On February
11, 2022, MHP Pursuits LLC, a North Carolina limited liability company (“MHP Pursuits”) and wholly owned
subsidiary of the Company, entered into a purchase and sale agreement with Harold and Brenda Allen
for the purchase of a manufactured housing community located in Clyde, North Carolina, a part of the Asheville Metropolitan Statistical
Area, consisting of 51 sites and 51 homes on approximately 9 acres (the “Red Fox Property”)
for a total purchase price of $3,050,000.
The purchase and sale agreement was amended by
a first amendment to purchase and sale agreement on April 24, 2022, which was amended by a second amendment to purchase and sale agreement
on May 17, 2022, and a third amendment to purchase and sale agreement on July 22, 2022, whereby the examination period and closing date
were extended (as amended, the “Red Fox Purchase Agreement”).
On July
12, 2022, MHP Pursuits assigned its rights and obligations in the Red Fox Purchase Agreement to the Company’s newly formed wholly
owned subsidiary Red Fox MHP LLC, a North Carolina limited liability company (“Red Fox MHP”) (the “Red Fox
Assignment”). On July 29, 2022, closing of the Red Fox Purchase Agreement was completed and Red Fox MHP purchased the land,
land improvement, and buildings. The Red Fox Purchase Agreement also contains additional covenants, representations, and warranties
that are customary of real estate purchase and sale agreements.
In connection
with the closing of the Red Fox Property, on July 29, 2022, Red Fox MHP entered into a loan agreement (the “Red Fox Loan Agreement”)
with Charlotte Metro Federal Credit Union for a loan in the principal amount of $2,250,000 and issued a promissory note to the lender
for the same amount (the “Red Fox Note”).
Interest
on the disbursed and unpaid principal balance accrues as follows: (a) from the date funds are first disbursed at a rate of 5.25% per annum,
interest only for the first twenty-four months, and (b) on September 1, 2024, interest on the disbursed and unpaid principal balance accrues
at a rate 5.25% per annum until maturity. Interest is calculated on the basis of a 365-day year and the actual number of calendar days
elapsed. Interest-only payments will begin on September 1, 2024 and continue the 1st of every month until September 1,
2024 at which point the monthly payment consisting of principal and interest will be $13,483 per month until maturity on August 1, 2032.
Red Fox MHP may prepay the Red Fox Note in part or in full at any time without penalty.
The Red
Fox Note is secured by a first priority security interest in the Red Fox Property pursuant to a deed of trust (the “Red Fox Deed”),
an assignment of rents (the “Red Fox Assignment of Rents”) and is guaranteed by the Company (the “Corporate
Guaranty”) and Raymond M. Gee.
The Red
Fox Loan Agreement and Red Fox Note contain customary financial and other covenants and events of default for a loan of its type.
The foregoing summary of the terms and conditions
of the Red Fox Purchase Agreement, the Red Fox Assignment, the Red Fox Loan Agreement, the Red Fox Note, the Red Fox Deed, the Red Fox
Assignment of Rents, and the Corporate Guaranty does not purport to be complete and is qualified in its entirety by reference to the full
text of the agreements attached as exhibits hereto, which are incorporated herein by reference.
Solid Rock Acquisition
On February
25, 2022, MHP Pursuits entered into a purchase and sale agreement with K10 Enterprises LLC for the purchase of a manufactured housing
community located in Leesville, South Carolina, consisting of 39 sites and homes on approximately 11 acres (the “Solid
Rock Property”) for a total purchase price of $1,700,000. The purchase and sale agreement was amended by a first amendment
to purchase and sale agreement on June 28, 2022, whereby the closing date was extended (as amended, the “Solid Rock Purchase
Agreement”).
On July
7, 2022, MHP Pursuits LLC assigned its rights and obligations in the Solid Rock Purchase Agreement to Solid Rock MHP LLC (“Solid
Rock MHP”) and Solid Rock MHP Homes LLC, wholly owned subsidiaries of the Company, pursuant to an assignment of purchase and
sale agreement (the “Solid Rock Assignment”). On July 7, 2022, closing of the Solid Rock Purchase Agreement was completed
and Solid Rock MHP purchased the land and land improvements and Solid Rock MHP Homes LLC purchased the buildings.
In connection
with the closing of the property, on July 7, 2022, Solid Rock MHP entered into a loan agreement
with United Bank for a loan in the principal amount of $1,125,000 (the “Solid Rock Loan Agreement”) and issued a promissory
note to the lender for the same amount (the “Solid Rock Note”).
Interest
on the disbursed and unpaid principal balance accrues from the date funds are first disbursed at a rate of 5% per annum, interest only
for the first twelve months. The interest rate may change on June 30, 2027 and every five years thereafter based on the Wall Street Journal
U.S. Prime Rate plus 1 percentage point with the minimum rate being 5%. Interest is calculated on the basis of a 360-day year and the
actual number of calendar days elapsed. Payments began on July 30, 2022 and continue the 30th of every month until maturity
on July 7, 2032. Solid Rock MHP may prepay the Solid Rock Note in part or in full at any time if it pays a prepayment premium calculated
in accordance with the Solid Rock Loan Agreement.
The Solid
Rock Note is secured by a first priority security interest in the Solid Rock Property pursuant to a mortgage (the “Solid Rock
Mortgage”) and an assignment of leases and rents (the “Solid Rock Assignment of Rents”) and is guaranteed
by Raymond M. Gee. The Solid Rock Loan Agreement and Solid Rock Note contain customary financial and other covenants and events of default
for a loan of its type.
The foregoing
summary of the terms and conditions of the Solid Rock Purchase Agreement, the Solid Rock Assignment, the Solid Rock Loan Agreement, the
Solid Rock Note, the Solid Rock Mortgage and the Solid Rock Assignment of Rents does not purport to be complete and is qualified
in its entirety by reference to the full text of the agreements attached as exhibits hereto, which are incorporated herein by reference.