FIFTH AMENDMENT TO CONTRIBUTION AGREEMENT
Ex 10.217
FIFTH AMENDMENT TO CONTRIBUTION AGREEMENT
This FIFTH AMENDMENT TO CONTRIBUTION AGREEMENT (this “Amendment”) is
effective as of the 3th day of August 2022 (the “Amendment Date”) by and among Lodging Fund REIT III OP, LP, a Delaware limited partnership (the “Operating Partnership”), and RLC V RIFC, LLC, a Colorado limited liability company (the “Contributor”).
WHEREAS, Contributor and Operating Partnership entered into that certain Contribution Agreement dated February 1, 2022 (the “Agreement”) as amended by the First Amendment on March 24, 2022, as amended by the Second Amendment on April 29, 2022, as amended by the Third Amendment May 10th, 2022 as amended by the Fourth Amendment executed on June 9, 2022 for the contribution of a 113-room hotel business known as the Residence by Marriott Fort Xxxxxxx located at 0000 Xxxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxx 00000 (the “Property”);
NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
Ex 10.217
[signature pages to follow]
Ex 10.217
SELLER:
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Manager
Ex 10.217
Ex 10.217
OPERATING PARTNERSHIP:
LODGING FUND REIT III OP, LP
A Delaware limited partnership
By: Lodging Fund REIT III, Inc. Its: General Partner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Chief Investment Officer
Ex 10.217
EXHIBIT D TO
CONTRIBUTION AGREEMENT
TOTAL CONSIDERATION
Total Consideration pursuant to Section 2.8 of the Agreement shall be $17,700,000 consisting of:
$11,500,000 via assumption of Contributor’s current financing as of the Effective Date
$5,603,689.91 in Series T Limited Units, equivalent to 560,369 Series T Limited Units
$596,310.09. cash paid at Closing for delinquent taxes, which this amount is subject to a 1.5 multiplier at the time of conversion.
Distributions pursuant to Section 2.11 of the Agreement shall be: Base Year NOI is equal $1,500,768
Years 1-3 Distribution Schedule
Payable as cash distributions 14, 26, and 38 months post-closing
Distribution Amount | Condition |
0.70% | If NOI is equal to or greater than 70% but less than 80% of Base Year NOI |
1.4% | If NOI is equal to or greater than 80% but less than 90% of Base Year NOI |
2.10% | If NOI is equal to or greater than 90% but less than 100% of Base Year NOI |
2.80% | If NOI is equal to or greater than 100% but less than 110% of Base Year NOI |
3.50% | If NOI is equal to or greater than 110% but less than 120% of Base Year NOI |
4.20% | If NOI is equal to or greater than 120% of Base Year NOI |
The number of Common Limited Units in the Operating Partnership shall be determined based on the formula below, which shall constitute the Series T Value. The Series T Value shall be determined upon (i) the Contributor’s election of either 36 of 48 months after the Closing Date or (ii) the sale of (a) the Property or (b) substantially all of the Operating Partnership’s assets.
Conversion Valuation Formula means the Applicable Cap Rate (8.65%) when applied to the then current trailing 12 month net operating income of the Contributed Asset, less amounts incurred or accrued by the Partnership for (i) any funds advanced as cash at closing (ii) the Original Loan Balance, (iii) loan assumption or origination fees and related expenses, (iv) if applicable, costs of prepayment or defeasance and related expenses, (v) PIP and capital expenditures, (vi) operating cash infused by the General Partner and/or Partnership, (vii) any shortfall of the 10% minimum cumulative yield on General Partner’s invested capital, and (viii) any other unrealized or unreimbursed costs of operating the Contributed Asset, (ix) 2% of value at conversion to offset transaction costs.
Applicable Cap Rate shall mean: 8.65%
“12 month net operating income of the Contributed Asset” shall mean: (a) the Gross Revenue of the Property, minus (b) Operating Expenses for the Property, for the current trailing twelve (12)-month period.
Ex 10.223
“Gross Revenue” shall include the following amounts recorded in accordance with generally accepted accounting principles consistently applied:
“Operating Expenses” shall mean: all of the ordinary and normal expenses of operation of the Property, determined on an annualized accrual basis, including annualized property taxes and property assessed clean energy (“PACE”) loan payments, insurance premiums (or taxes and/or insurance impounds, if taxes and/or insurance are impounded by Lender), reserve account equal to four percent (4%) of Gross Revenue for furniture, fixtures and equipment reserves, franchise fees and royalties, telephone and internet expenses, administrative and general expenses, management fees, utilities, repair and maintenance, salaries and wages, and advertising and marketing expenses; provided, however, that Operating Expenses will not include:
| a. | depreciation and amortization; |
| b. | non-cash items; |
| c. | all capital items or expenditures, including construction costs and professional fees and other expenses relating thereto and any amortization thereof; |
| d. | costs of repair or restoration after a casualty or condemnation; |
| e. | debt service payments made to lenders; |
| f. | income or franchise taxes; and |
| g. | extraordinary one-time expenses that are not reasonably expected to be incurred in future periods. |
“Net Cash Flow” means the Property Net Operating Income (including any FF&E Reserves) less Principal and Interest, less any distributions provided on T-Unit Equity, less Borrower’s Fund Level Expenses attributable to Property.
“Combined Yield” defined as the sum of Borrower’s 10% annual returns plus Borrower’s share of Distributable Cash, divided by all of Borrower’s invested capital, annualized.
