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Note Payable, Held-For-Sale
 12 Months Ended
Jul. 31, 2022
Debt Disclosure [Abstract]  
NOTE PAYABLE, HELD-FOR-SALE

NOTE 12 – NOTE PAYABLE, HELD-FOR-SALE

 

On July 9, 2021, the Company, as guarantor, Rafael Holdings Realty, Inc., a wholly-owned subsidiary of the Company (“Realty”), as pledgor, and Broad-Atlantic Associates, LLC, a wholly-owned subsidiary of Realty (the “Borrower,” and together with the Company and Realty, the “Borrower Parties”), as borrower, entered into a loan agreement (the “Loan Agreement”) with 520 Broad Street LLC, a third-party lender (the “Lender”). The Loan Agreement provides for a loan in the amount of $15 million (the “Note Payable”) from Lender to Borrower secured by (i) a first mortgage on 520 Broad Street, Newark, New Jersey 07102; and (ii) a first priority security interest in the equity of the Borrower as set forth in the Pledge and Security Agreement between Realty and Lender.

 

The Note Payable bears interest at a rate per annum equal to seven and one-quarter percent (7.25%) from July 9, 2021, through July 31, 2021 and thereafter at an interest rate per annum equal to the 30-day LIBOR Rate, as published in The Wall Street Journal, plus 6.90% per annum, but in no event less than seven and one-quarter percent (7.25%) per annum. The Note Payable is due on August 1, 2022, subject to the Company’s option to extend the maturity date until August 1, 2023 for a fee equal to three-quarters of one percent (0.75%) of the Note Payable.

 

The Loan Agreement contains customary affirmative covenants, negative covenants and events of default, as defined in the Loan Agreement, including covenants and restrictions that, among other things, restrict the Borrower’s ability to incur liens, or transfer, lease or sell the collateral as defined in the Loan Agreement. A failure to comply with these covenants could permit the Lender to declare the Borrower’s obligations under the Loan Agreement, together with accrued interest and fees, to be immediately due and payable. The Company is in compliance with the covenants in the Loan Agreement as of July 31, 2022. The Company extended the maturity date to November 1, 2022 and paid an extension fee of $37,500 on July 29, 2022.

 

Interest expense under the Note Payable, which is recognized in loss on discontinued operations, amounted to $1.2 million and $64 thousand for the years ended July 31, 2022 and 2021, respectively.

 

Unamortized debt issuance costs on the Note Payable totaled $0 as of July 31, 2022. Amortization of the debt discount on the Note Payable totaled approximately $472 thousand and $28 thousand for the years ended July 31, 2022 and 2021, respectively.

 

Refer to Note 19 for further details on the subsequent sale of the 520 Property.