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So, how are they going to use the loan?
Owens Realty Mortgage (NYSE:ORM)announced today that TOTB Miami, a subsidiary of the Company, has secured a loan from Bank of the Ozarks of up to approximately $13 million. TOTB Miami is a Florida limited liability company, which is 80.74% owned by the Company and 19.26% owned by the Company’s manager, Owens Financial Group, Inc.
The proceeds of the Loan attributable to the Company will be used, subject to the terms and conditions of the Loan documents that the Company has filed today with the Securities and Exchange Commission pursuant to a Report on Form 8-K, to increase the lending capacity of and provide for additional liquidity for the Company. The Loan is secured by a first priority lien on the Condominiums in the Pointe building and the related parcel and all related improvements, amenities, appurtenances, rents and other interests as described in the Loan Documents. In addition, the loan is cross collateralized by the vacant units held in TOTB North, LLC which security is junior to a construction loan also held by Bank of the Ozarks.
The Loan matures on November 16, 2017, provided that the maturity date may be extended at the option of Borrower for two additional one year periods if a number of conditions are met. All outstanding borrowings under the Loan will bear interest at a the floating daily three month LIBOR rate of interest plus four percent (4.0%) per annum, subject to a floor rate of 4.25%. Amortized payments over 25 years are payable monthly, in arrears, on the first business day of each month in addition to reserves for taxes, insurance and $250 annually per unit for property replacement.
Commencing on each Payment Date until the maturity date, Borrower is required to make, in addition to the interest payment due on such date, a monthly principal payment. The principal payment is calculated monthly based on the principal component of a mortgage-style amortization schedule calculated using the principal balance and the floating daily interest rate as of the corresponding Payment Date and a period of 300 months (less the number of any such monthly principal payments made by Borrower prior to the applicable monthly calculation). The balance of the Loan is due on the maturity date.
“Obtaining this loan will assist the Company to broaden its lending base, further increasing income and cash flow,” commented Bill Owens, Chairman and CEO of Owens Realty Mortgage.
