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Debt, Net
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Debt, Net

Note 8 – Debt, Net

 

On May 12, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) entered into a variable-rate construction loan agreement (the “1991 Main Construction Loan Agreement”) for up to $130.0 million in principal amount (the “1991 Main Construction Loan”) with Bank OZK (the “Mortgage Lender”), which is secured by our investment in 1991 Main Street, Sarasota, Florida (“1991 Main”). Advances under the 1991 Main Construction Loan bear interest at a per annum rate equal to the one-month term SOFR plus 3.45%, subject to a minimum all-in per annum rate of 8.51%, and will be used to fund the development of 1991 Main. The 1991 Main Construction Loan has an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions. As of December 31, 2023, we have drawn down $23.1 million on the 1991 Main Construction Loan, and have incurred interest expense of $0.1 million which was capitalized to Real estate under construction in our consolidated balance sheets. We incurred deferred financing costs of $4.0 million (inclusive of debt discount of $1.4 million) for the 1991 Main Construction Loan which are reflected as a component of Debt, net in our consolidated balance sheets as of December 31, 2023. During the construction period, the deferred financing costs are amortized to Real estate under construction in our consolidated balance sheets. As of December 31, 2023, the accumulated amortization for deferred financing costs was $0.6 million.

 

In connection with the 1991 Main Construction Loan, we provided a carveout guaranty to the Lender (the “Guaranty”) pursuant to which we guaranteed the Borrower’s obligations to the Lender with respect to certain non-recourse carveout events, such as “bad acts,” environmental conditions, and violations of certain provisions of the loan documents. The Guaranty contains financial covenants requiring that we maintain liquid assets of no less than $20.0 million and a net worth of no less than $130.0 million. As of December 31, 2023, the Company was in compliance with all covenants under the Guaranty.

 

Together with the Borrower, we also provided a customary environmental indemnity agreement to the Lender pursuant to which we agreed to protect, defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities related to 1991 Main.