Loan Agreement (2015)Full Document 

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LOAN AGREEMENT

THIS LOAN AGREEMENT ("Agreement") is made as of the 20th day of May, 2015, by and between BR-TBR WHETSTONE OWNER, LLC, a Delaware limited liability company ("Borrower") and KEYBANK NATIONAL ASSOCIATION, a national banking association ("Lender").

RECITALS

WHEREAS, Borrower has applied to Lender for a loan in the aggregate principal amount of the Loan Amount (as defined below) (the "Loan"); and

WHEREAS, the Loan shall be advanced substantially concurrently with the recordation of the Deed of Trust (defined below), which covers certain real property which may be known as Whetstone Apartments located at 501 Willard Street, Durham, Durham County, North Carolina (the "Land"). The Land is more particularly described on Exhibit A attached hereto, which Land, together with the Improvements thereon, are sometimes collectively referred to herein as the "Property"; and

WHEREAS, the improvements located on the Land consist of a 204-unit multifamily property (the "Improvements") which is currently subject to certain lease agreements (such existing leases, and all future leases, being collectively referred to herein as the "Leases"); and

WHEREAS, Lender has agreed to make the Loan to Borrower and to document, evidence and secure the Loan on the condition that this Agreement be executed and delivered for the purpose of governing and coordinating the Loan and to assure the application of the proceeds of the Loan to the acquisition of the Property and payment of related closing expenses in accordance with the approved settlement statement (the "Closing Statement") attached hereto and made a part hereof as Exhibit B.

NOW, THEREFORE, BORROWER AND LENDER HEREBY AGREE AS FOLLOWS:

1. Certain Definitions: In addition to the definitions in the Recitals, as used herein the following definitions shall have the following meanings:

"Affiliate" means, with respect to any Person, (a) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, (i) such Person or (ii) any general partner, manager or member of such Person; (b) any other Person 10% or more of the equity interest of which is held beneficially or of record by (i) such Person or (ii) any general partner, manager or member of such Person, and (c) any general partner, limited partner or member of (i) such Person or (ii) any general partner or member of such Person. As used in the previous sentence, "control" means the possession, directly or indirectly, of the power to cause the direction of the management of a Person, whether through voting securities, by contract, family relationship or otherwise.

"Appraisal" means the current appraisal of the Property delivered to and approved by Lender prior to the Closing Date.

"Assignment of Rents" means the Assignment of Leases and Rents of even date herewith executed by Borrower in favor of Lender, as amended from time to time.

"Borrower Manager" means BR-TBR Whetstone Venture, LLC, a Delaware limited liability company.

"Closing Date" means the date of this Agreement.

"Closing Statement" shall have the meaning set forth in the Recitals.

"Collateral" means the collateral provided to Lender pursuant to the Security Documents.

"Debt Service Coverage Ratio" means with respect to a particular period, the ratio of (a) the Pro Forma NOI to (b) the Total Annual Debt Service.

"Deed of Trust" means that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing made by Borrower to Christopher T. Neil, as Trustee for the benefit of Lender as beneficiary, dated as of even date, as may be amended from time to time.

"Default" means the occurrence of a condition or state of facts which, but for the giving of notice or the expiration of any applicable grace or cure period, would constitute an Event of Default.

"Dispute" means any controversy, claim or dispute between or among the parties to the Loan Documents, including any such controversy, claim or dispute arising out of or relating to (a) this Agreement, (b) any other Loan Document, (c) any related agreements or instruments, or (d) the transaction contemplated herein or therein (including any claim based on or arising from an alleged personal injury or business tort).

"Environmental Indemnity Agreement" means the Environmental and Hazardous Substances Indemnity Agreement of even date herewith (as may be amended from time to time) by the Borrower and Guarantor in favor of the Lender.

"Equity Interests" means the membership interests in the Borrower.

"Equity Sale" has the meaning set forth in Section 6.4.

"Event of Default" has the meaning set forth in Section 8.1.

"Guarantor" means Bluerock Residential Growth REIT Inc., a Maryland corporation, together with its respective successors and/or assigns.

"Guaranty" means the Guaranty Agreement of even date herewith (as may be amended from time to time) executed by Guarantor in favor of Lender.

"Improvements" has the meaning set forth in the Recitals.

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"Indebtedness" means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits (other than security deposits of tenants held in the ordinary course of business) or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, including mandatorily redeemable preferred stock (other than, in the case of Borrower, any preferred equity interest held by Guarantor), (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all guarantees (excluding non-recourse carve-out guaranties) by such Person of Indebtedness of others, (h) all capital lease obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances, (k) all obligations contingent or otherwise, of such Person with respect to any interest rate protection agreements (calculated on a mark-to-market basis as of the reporting date), and (l) payments received in consideration of sale of an ownership interest in Borrower when the interest so sold is determined, and the date of delivery is, more than one (1) month after receipt of such payment and only to the extent that the obligation to deliver such interest is not payable solely in such interest of such Person. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefore as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Indebtedness shall be calculated on a consolidated basis in accordance with generally accepted accounting principles, consistently applied.

"Interest Rate Agreement" has the meaning set forth in the Deed of Trust.

"Land" has the meaning set forth in the Recitals.

"Leases" has the meaning set forth in the Recitals.

"Loan Amount" means the principal amount equal to the lesser of (a) Twenty-Five Million One Hundred Forty-Seven Thousand Five Hundred and No/100 Dollars ($25,147,500.00), (b) seventy percent (70%) of the sum of the purchase price of the Property and Borrower's broker fee relating thereto, (c) an amount which would result in a Loan to value ratio of no greater than the lesser of (i) seventy percent (70%) of the "as completed" appraised value of the Property or (ii) sixty-five percent (65%) of the "as stabilized" appraised value of the Property, in each case pursuant to the Appraisal approved by Lender prior to the date hereof, or (d) a principal amount which would provide a Debt Service Coverage Ratio of no less than 1.25 to 1.00.

"Loan Documents" means this Agreement, the Note, the Guaranty, the Security Documents and all other documents executed in connection with the Loan.

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"Management Agreement" means that certain property management agreement dated as of the date hereof between Borrower and Property Manager.

"New Parking Construction" means the construction of an additional level to the Property's existing parking deck, which addition is expected to increase the parking stalls by approximately 65 stalls, commence in late 2015/early 2016, take approximately 3 months to complete once commenced and cost approximately $1,300,000, all as more fully described in Section 6.1(s) below.

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