Exhibit 10.58
Commercial Real Estate Financing & Services
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇-▇▇▇▇, Fx: 212 850-5850
January 20, 2004
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
The Archon Group
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Wellsford Portfolio Modification
Dear ▇▇▇▇▇▇:
This letter sets forth the terms of a extension of the Wellsford Portfolio loan
by General Electric Capital Corporation ("GECC").
1. Collateral: First priority lien mortgage/deed of trust on the Wellsford
Portfolio, a nine asset, 1.6MM square foot office portfolio
located in New Jersey and Massachusetts (the "Mortgage Loan
Portfolio"). All assets will be owned directly by Borrower
(single borrower loan structure) and will be
cross-collateralized and cross-defaulted satisfactory to
Lender.
2. Borrower: Wellsford/Whitehall Holdings LLC, The Borrower's assets
currently consist of the Mortgage Loan Portfolio and a 100%
indirect ownership interest in six office properties which
are currently the subject of a mortgage loan from Nomura
(the "Nomura Loan Portfolio"). The borrower is owned 55.4%
indirectly by Whitehall Street Real Estate Limited
Partnerships XI, VII and V and their affiliates
(collectively, "Whitehall") and 32.6% indirectly by
Wellsford Commercial Properties Trust and its affiliates
(collectively, "Wellsford").
3. Lender: GECC or a designated affiliate or entity managed by GECC.
4. Total
Commitment: $122,078,131
5. Initial Funding: $105,078,131 (after Borrower $1MM paydown). Lender will have
the right at closing to reallocate the existing allocated
loan balances based on its updated underwriting of the
portfolio prior to closing.
6. TI/LC/CapEx
Fundings: $17,000,000 for tenant improvements, leasing commissions and
capital expenditures reasonably approved by Lender, subject
to GE's standard draw processing procedures as set forth in
the existing loan documentation. The Borrower's ability to
draw on these funds will expire on December 31, 2005. The
first $1MM of fundings will be subject to Borrower having
previously funded a minimum of $4MM of new cash equity
towards TI/LC/Capex at the properties, and will be advanced
at a rate of 100% of actual costs incurred. All subsequent
fundings will be advanced as follows:
- 50% of actual costs funded if the CoC is less than 10%
- 65% of actual costs funded if the CoC is between 10% and
11.4%
- 80% of actual costs funded if the CoC is equal to or
greater than 11.5%.
Borrower to be entitled to a one-time retroactive funding
equal to the difference between (a) 80% of approved
TI/LC/CapEx costs since closing of this proposed extension,
and (b) the amount actually funded by Lender for those
costs, subject to the following conditions:
- 13% minimum CoC after funding
- Availability expires December 31, 2005
- Amount funded does not increase the total TI/LC/CapEx
Fundings above $17MM.
- $250,000 minimum advance amount
7. Subordinate
Fundings: None.
8. Interest Rate: 30-Day LIBOR +3.25%, payable monthly (actual/360 basis),
with a floor rate of 4.35% (1.1% LIBOR floor). If at any
time Lender is funding 50% of TI/LC/Capex costs and the CoC
is less than 8%, the interest rate will be increased to
LIBOR+3.50% until such time as the CoC exceeds 8% for 3
consecutive calendar months.
9. Rate Protection: Borrower to extend existing interest rate cap for 2 years
until December 31, 2006.
10. Commitment Fee: $610,391 fee due at closing, representing: - 50bps on the
Initial Funding and the TI/LC/CapEx Funding commitment.
11. Term: 2.5 yrs from the June 2004 maturity date. (December 31,
2006)
12. Extension
Options: None
13. Lockbox Account:Lockbox cash controls to be implemented as established on
the WHMLS transaction.
14. Cash Flow Sweep:Cash flow after debt service to be paid to lender to fund a
Reserve for TI/LC/CapEx/Debt Service as follows: - 100% cash
flow sweep if the portfolio CoC is less than 10%. - 50% cash
flow sweep if the CoC is between 10% and 11.4%. - No cash
flow sweep if the CoC is equal to or greater than 11.5%.
Such CoC testing will be done on a quarterly basis.
Borrower will have the right to draw on the Reserve to pay
for the cost oftenant improvement, leasing commission and
capital costsreasonably approved by Lender, not funded by
the TI/LC/CapEx funding commitment.
15. Amortization: 25-year schedule to go into effect at any time there is no
Cash Flow Sweep in effect (CoC is at least 11.5%).
Notwithstanding anything to the contrary, the amortization
paid under the 25-year schedule will be deposited into a
cash collateral account to be applied to repayment of Loan
principal at Borrower's election or Event of Default. The
amounts held by Lender as additional cash collateral shall
be subject to quarterly replacement by a letter of credit in
a manner consistent with previous GECC/Whitehall
transactions.
16. Lockout: Loan will be locked out to refinancing in full until June
30, 2005, and remain closed to refinancing in part for the
term of the loan. Loan may be prepaid in full or in part at
any time as a result of a sale to an independent 3rd party,
subject to the Release Price below.
17. Release Price: 100% of net sale proceeds from individual Lender-approved
asset sales to be paid to Lender as amortization of the
Loan. Releases will be permitted if the outstanding loan
balance is less than $100MM and the CoC<12% (currently
prohibited in the existing loan documentation).
Notwithstanding anything to the contrary, the excess of Net
Sales Proceeds over 125% of Allocated Loan Amount will be
deposited into a cash collateral account to be applied to
repayment of Loan principal at Borrower's election or Event
of Default. The amounts held by Lender as additional cash
collateral shall be subject to quarterly replacement by a
letter of credit in a manner consistent with previous
GECC/Whitehall transactions.
The release price changes to 120% of the allocated loan
amount if the CoC after release is at least 12%.
18. Call Provision: Same provisions as in the existing loan documents.
19. Non-Recourse: Same provisions as in the existing loan documents.
20. Assumability: Same provisions as in the existing loan documents.
21. Impound/Escrow: Same provisions as in the existing loan documents.
22. Good Faith
Deposit: $50,000. Such deposit will be returned to Borrower, less
out-of-pocket Loan Costs incurred by Lender in pursuing the
proposed transaction, in the event that the Loan does not
close.
23. Closing: On or before March 31, 2004.
24. Covenants: No Borrowings; Liens: Same provisions as in the existing
loan documents.
No Transfers: Same provisions as in the existing loan
documents.
Management: Same provisions as in the existing loan
documents.
Approval Rights: Same provisions as in the existing loan
documents.
Borrower will provide Lender with a detailed 3-year capital
budget, which will be approved by Lender prior to closing.
Borrower will continue to send Lender copies of budgets and
performance results as required in the existing loan
documents. Lender will have the right, at Borrower's
expense, to audit the Collateral once per year.
25. Loan Costs: Borrower will be responsible for paying all of Lender's
out-of-pocket costs associated with this transaction,
including (but not limited to) legal fees, and audits of
property income and expenses.
26. Closing
Conditions: Closing will be subject to satisfactory loan documentation,
and the satisfaction of customary closing conditions. These
conditions include, but are not limited to, completion of
legal due diligence, legal opinions, title updates, receipt
of satisfactory tenant estoppels for all tenant greater than
15m sf and title and survey review, hazard and liability
insurance, no pending or threatened litigation and other
customary matters. All third-party reports must be performed
for the use and reliance of Lender, its affiliates,
successors and assigns.
27. Non-Assignable: This letter and any commitment that may be issued in
connection herewith may not be assigned by Borrower without
Lender's prior written approval.
28. Governing Law: This letter will be governed by and construed in accordance
with the laws of the State of New York.
29. Other
Conditions: All other terms and conditions in the existing loan
documentation to remain unchanged by this extension.
If you are in agreement with the terms as outlined above, please sign this
letter in the space provided below and return it, together with the good faith
deposit, to GECC on or before January 29, 2004.
Very truly yours,
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signitory
ACCEPTED & AGREED:
WELLSFORD/WHITEHALL HOLDINGS, L.L.C., a Delaware limited liability company
By: Wellsford/Whitehall Properties II, L.L.C., a Delaware limited liability
company, its managing member
By: Wellsford/Whitehall Group, L.L.C., a Delaware limited liability company,
its sole member
By: WP Commercial, L.L.C., a Delaware limited liability company, its manager
By: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title:Vice President
Appendix A - Definitions
Lender Audited NOI: In-place property net operating income, representing:
(1) Revenue from existing tenants that are in occupancy of
their space and are current on their rental obligations
(excluding month-to-month tenants, tenants that have filed
for bankruptcy protection, tenants currently in free rent
periods and non-recurring categories of other income); LESS
(2) Operating expenses based on the most recent 12-month
period, adjusted for inflation, tax increases (based on
projected revisions to the assessed value), and other items
revealed in Lender's underwriting.
The NOI will be adjusted to reflect the following: (a)
occupancy based on the lower of actual or current market,
subject to a maximum of 95%; (b) management fees at the
greater of actual or 3% of EGI; and (c) a capital reserve
added to the expenses equal to the greater of $0.20 per
square foot or such higher amount as may be determined by
Lender's consulting engineer. Lender Audited NOI will
exclude rental income from the AT&T and ▇▇▇▇▇▇▇ ▇▇▇▇▇ leases
that are set to expire between December 2003 and March 2004,
unless the leases are renewed (or new leases signed with
replacement tenants) for a term of at least 3 years.
CoC: Cash-on-Cash Yield, defined as Lender Audited NOI divided by
the outstanding balance of the Loan.
DSCR: Debt Service Coverage Ratio, defined as Lender Audited NOI
divided by the debt service on the Loan, calculated at the
Interest Rate in effect at the time of the calculation
(including the impact of Rate Protection).
LTV: Loan-to-Value, defined as the outstanding loan balance
divided by the value of the underlying collateral as
determined by Lender underwriting.