Broad Street Realty, Inc. (Form: 8-K, Received: 05/15/2020 16:50:24)

BROAD STREET REALTY INC.

May 15, 2020

/s/ Michael Z. Jacoby

Michael Z. Jacoby

Chief Executive Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 12, 2020

BROAD STREET REALTY, INC.

(Exact name of registrant as specified in its charter)


Delaware	001-09043	36-3361229
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7250 Woodmont Ave, Suite 350 Bethesda, Maryland		20814
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 301-828-1200

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None

N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01.

Entry into a Material Definitive Agreement

On May 12, 2020, Broad Street Realty, Inc. (the “Company,” “we,” “our” or “us”) and certain of its subsidiaries entered into an amendment, effective as of May 10, 2020 (the “Amendment”), to the Loan Agreement, dated as of December 27, 2019 (the “Loan Agreement”), by and among MVB Bank, Inc., as lender, the Company, Broad Street Operating Partnership, LP and Broad Street Realty, LLC, as borrowers, and BSV Cromwell Land LLC, a subsidiary of the Company, and Michael Z. Jacoby, the Company’s chairman and chief executive officer, as guarantors. As previously disclosed, the Loan Agreement provides for a $6.5 million loan consisting of a $4.5 million term loan (the “MVB Term Loan”) and a $2.0 million revolving credit facility. The Amendment provides for interest-only payments for the MVB Term Loan for three months, beginning with the monthly payment that was due on April 27, 2020, after which regular payments of principal and interest shall resume based on a ten-year amortization schedule. The principal payments that would have been due during the three-month concession period will be due with the final balloon payment at maturity or the earlier repayment of the MVB Term Loan. In addition, the Amendment provides that the requirements to comply with the financial covenants under the Loan Agreement will begin as of March 31, 2021, rather than September 30, 2020.

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

Item 7.01.

Regulation FD Disclosure.

On May 15, 2020, the Company issued a press release providing certain information with respect to the impact of the ongoing COVID-19 pandemic on the Company. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K, including exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 8.01.

Other Events

The Company will be relying on the Securities and Exchange Commission’s Order under Section 36 of the Exchange Act, Modifying Exemptions From The Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) (the “Order”) to delay the filing of its Quarterly Report on Form 10-Q for the three months ended March 31, 2020 (the “Form 10-Q”) due to circumstances related to COVID-19. In particular, the current remote work environment caused by the COVID-19 pandemic has resulted in disruptions in the Company’s ability to complete its accounting and internal review processes and provide its auditors with timely access to its original books and records to complete their required procedures in a timely manner. Substantially all of the Company’s accounting staff and all members of the independent auditors are now exclusively working remotely, which has made it more difficult for the Company to complete the Form 10-Q in a timely fashion. In accordance with the Order, the Company expects to file the Form 10-Q on or about June 29, 2020, which is the 45th day from the original deadline of May 15, 2020, but the Company can provide no assurances that it will be able to file the Form 10-Q by such time.

Risk Factor

The ongoing COVID-19 pandemic and measures intended to mitigate its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic and, on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to mitigate its spread, including restrictions on freedom of movement and business operations, such as travel bans, border closings, business closures, quarantines and shelter-in-place or similar orders.

All of our properties, as well as our headquarters and other offices, are located in areas that are or have been subject to shelter-in-place orders and restrictions on the types of businesses that may continue to operate. Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our tenants to meet their rent and other obligations to us, and the government-imposed measures in response to the COVID-19 pandemic, coupled with customers reducing their purchasing activity in light of health concerns or personal financial distress, have resulted in significant disruptions to our and our tenants’ businesses. We have observed the impact of COVID-19 manifest in the form of temporary closures or significantly limited operations among our tenants, with the exception of tenants operating in certain “essential” businesses, which has resulted, and may in the future result in, a decline in on-time rental payments and increased requests from tenants for temporary rental relief. For example, as of May 14, 2020, we had collected 70% of contractual rent due for the month of April and 53% of contractual rent due for the month of May, and we had agreed to defer 20% of contractual rent due for the month of April and 23% of contractual rent due for the month of May.

Collections and rent deferrals to date may not be indicative of collections or rent deferrals in any future period. We expect that our rent collections will continue to be significantly below our tenants’ contractual rent obligations for so long as governmental orders require non-essential businesses to remain closed and residents to stay at home, which will adversely impact our results of operations. Even after governmental restrictions are lifted, our tenants may continue to be impacted by economic conditions resulting from COVID-19 or public perception of the risk of COVID-19, which could adversely affect foot traffic to our tenants’ businesses and our tenants’ ability to adequately staff their businesses. If the impacts of the pandemic continue for an extended period of time, we expect that certain tenants will experience greater financial distress, which could result in additional tenants being unable to pay contractual rent (including deferred rent) on a timely basis, or at all, additional requests for rental relief, early lease terminations, tenant bankruptcies, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations. In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. In addition, lease renewals and new leasing activity are expected to be adversely impacted as businesses delay executing leases amidst the immediate and uncertain future economic impacts of the COVID-19 pandemic. These factors also may adversely affect the value of our properties. The extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted.

The COVID-19 pandemic also has caused, and may continue to cause, severe economic, market and other disruptions worldwide, including in the bank lending, capital and other financial markets. Prior to the economic fallout from the COVID-19 pandemic, our access to capital was already constrained as a result of our existing debt and the lack of a public market for our common stock, and we expect our access to capital will be further constrained if there is a prolonged economic downturn. We may not have access to capital in order to be able to refinance debt as it comes due, make debt service payments, acquire additional properties or pay dividends to our stockholders. In the event that we default under our existing debt agreements, subject to any applicable cure periods, the lenders could accelerate the timing of payments under the applicable debt obligations and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition and results of operations.

In addition, our management team is focused on mitigating the impacts of the COVID-19 pandemic, which has required, and will continue to require, a large investment of time and resources across our business. Furthermore, all of our employees are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. In addition, our ability to close the remaining seven mergers with Broad Street entities, pursuant to the agreements and plans of merger that were entered into on May 28, 2019, has been adversely impacted by the market and other disruptions related to the COVID-19 pandemic, including delays in obtaining consent from the requisite lenders.

The extent of the COVID-19 pandemic’s effect on our future operational and financial performance, financial condition and liquidity will depend on future developments, including the duration, spread and intensity of the pandemic, the duration of government measures to mitigate the pandemic and how quickly and to what extent

normal economic and operating conditions can resume, all of which are uncertain and difficult to predict. Given this uncertainty, we cannot accurately predict the effect on future periods, but we expect the pandemic and the related government measures to have an adverse impact on our financial condition, liquidity, results of operations and cash flows in future periods and the impact could be material.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits


Exhibit No.		Description

10.1		Amendment to MVB Loan Agreement.

99.1		Press Release dated May 15, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 10.1

CHANGE IN TERMS AGREEMENT

Principal

$4,423,984.96

Loan Date

12-27-2019

Maturity

12-27-2022

Loan No

213470

Call / Coll

Account

Officer

GAR

Initials

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.


Borrower:	BROAD STREET OPERATING PARTINERSHIP, LP;	Lender:	MVB BANK, INC
	BROAD STREET REALTY, INC.; and BROAD		Reston Branch
	STREET REALTY, LLC		12100 Sunset Hills Road
	7250 Woodmont Ave., Suite 350		Suite 130
	Bethesda, MD 20814		Reston, VA 20190
			(571) 526-4545


Principal Amount: $4,423,984.96		Date of Agreement: May 10, 2020

DESCRIPTION OF EXISTING INDEBTEDNESS.

PROMISSORY NOTE DATED 12/27/2019 IN THE ORIGINAL PRINCIPAL AMOUNT OF $4,500,000.00 FROM BORROWER TO LENDER.

DESCRIPTION OF COLLATERAL.

INCLUDING BUT NOT LIMITED TO 1.) FIRST SECURITY INTEREST AND PLEDGE OF MICHAEL JACOBY’S AVAILABLE SHARES AND OPERATING UNITS OF THE CURRENT REAL ESTATE HOLDING COMPANYS, AND 2.) UCC-1 FILING DELAWARE DEPARTMENT OF STATE NO. 2019 9307237.

DESCRIPTION OF CHANGE IN TERMS.

1.) Commencing as of the monthly payment due April 27, 2020, and continuing through the monthly payment due on June 27, 2020 (the “ Concession Period”), regular monthly payments due under the Note shall be interest only in an amount calculated and determined by the Lender based upon the outstanding principal balance and the interest rate charged to the Borrower under the terms of the Note. Upon the expiration of the Concession Period: (a) the Borrower shall resume making monthly payments of principal and interest in an amount to be calculated and determined by the Lender, the first such payment being due on July 27, 2020 and continuing monthly through the Maturity Date, and (b) the principal amount due under the terms of the Note that would have been payable had the Concession Period not been granted will be included in the final balloon payment due on the Maturity Date or earlier payoff of the Loan, and payable at that time. This is a special circumstance and Lender shall have no obligation to provide any further or extended period of interest only payments or other concessions.

2.) Reporting Requirements during the Concession Period: As soon as available and not more than 15 days after the end of each month, the Borrower will provide monthly cash flow statements, including rent analysis.

3.) Financial Covenants: The Debt Service Coverage Ratio, Total Funded Debt to EBITDA Ratio, and Minimum Liquidity financial covenants commencing as of September 30, 2020 will be amended to March 31, 2021.

4.) All other terms and conditions to remain the same.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.

Loan No: 213470

CHANGE IN TERMS AGREEMENT

(Continued)

Page 2

THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

PRIOR TO SIGNING THIS AGREEMENT, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. EACH BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

CHANGE IN TERMS SIGNERS:

BROAD STREET OPERATING PARTINERSHIP, LP

BROAD STREET OP GP, LLC, General Partner of BROAD STREET OPERATING PARTINERSHIP, LP


By:	/s/ Michael Z. Jacoby	(Seal)
	Michael Z. Jacoby, Member - Chief Executive Officer of BROAD STREET OP GP, LLC

BROAD STREET REALTY, INC.

By:	/s/ Michael Z. Jacoby	(Seal)
	Michael Z. Jacoby, Chief Executive Officer of BROAD STREET REALTY, INC.

BROAD STREET REALTY, LLC

By:	/s/ Michael Z. Jacoby	(Seal)
	Michael Z. Jacoby, Member - Chief Executive Officer of BROAD STREET REALTY, LLC

BSV CROMWELL LAND LLC

By:	/s/ Michael Z. Jacoby	(Seal)
	Michael Z. Jacoby, Member - Chief Executive Officer of BSV CROMWELL LAND LLC

X	/s/ Michael Z. Jacoby	(Seal)
	Michael Z. Jacoby

LENDER:

MVB BANK, INC

X	/s/ Garret Reed
	Garret Reed, Commercial Loan Officer

Exhibit 99.1

LOGO

BROAD STREET REALTY, INC. PROVIDES UPDATE ON IMPACT OF COVID-19

BETHESDA, MD, May 15, 2020 /PRNewswire/ —Broad Street Realty, Inc. (OTC:BRST) today provided an update on the impact of COVID-19 on the Company’s business.

“In light of these unprecedented times, we thought it was important to provide a general update on the impact of COVID-19 on the operations of Broad Street Realty,” commented Chief Executive Officer and Chairman, Michael Z. Jacoby. “The health and safety of our coworkers, tenants and communities are Broad Street’s top priority. Given the importance of the role that our necessity-focused shopping centers play in the communities we serve, we have been carefully monitoring the impact of COVID-19 and have been taking proactive measures to maintain the strength of our business and ensure the continuity of operations as local conditions permit.”

Early on during this pandemic, the Company established a temporary COVID-19 impact response team to be proactive and anticipate issues arising as a result of the pandemic. The Company has worked hard to maintain an open line of communication with its tenants and offer assistance where possible, including helping them identify local, state and federal resources that may be available to support their businesses and employees. The Company has had a number of tenants request various forms of rent relief, which the Company is evaluating on a case-by-case basis.

As of May 14, 2020, the Company had collected 70% of contractual rent due for the month of April and 53% of contractual rent due for the month of May, and the Company had agreed to defer 20% of contractual rent due for the month of April and 23% of contractual rent due for the month of May. Collections and rent deferrals to date may not be indicative of collections or rent deferrals in any future period.

“The impact of Covid-19 is real and significant,” said Mr. Jacoby. “The pandemic has caused interruptions and slowdowns in our and our tenants’ businesses, as well as our ability to complete the seven pending mergers with Broad Street entities. I am proud of the entire Broad Street team that is working hard each day to manage our business, and we will continue to actively monitor the implications of COVID-19 on our and our tenants’ businesses and take further actions that are in the best interests of our employees, tenants and stockholders. It is our intention to provide all of our stakeholders with additional information when we report our results for 2019 and the first quarter of 2020. We thank all for your patience.”

About Broad Street Realty, Inc.

Broad Street Realty, Inc. is a fully integrated and self-managed real estate company that owns, operates, develops and redevelops primarily grocery-anchored shopping centers and mixed-use properties in the Mid-Atlantic, Southeast and Denver, Colorado markets. Broad Street is also a

market-leading commercial real estate services firm that delivers cost-effective solutions for office, industrial and retail clients. The company has extensive experience in tenant representation, landlord representation, property acquisition and disposition, real estate development, project/construction management, finance, strategic consulting, property management and asset management.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. These statements are based on current expectations of the Company’s management with respect to the matters described in this press release. While the Company’s management believes the assumptions underlying its forward-looking statements and information are reasonable, such information is necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and are beyond the control of the Company’s management. These risks include, but are not limited to: uncertainties related to the COVID-19 pandemic, including the unknown duration and economic, operational and financial impacts of the COVID-19 pandemic and the actions taken or contemplated by U.S. and local governmental authorities or others in response to the pandemic on the Company’s business, employees and tenants, including, among others, (i) changes in tenant demand for the Company’s properties, (ii) financial challenges confronting tenants, including as a result of decreased customers’ willingness to frequent, and mandated stay in place orders that have prevented customers from frequenting, some of the Company’s tenants’ businesses and the impact of these issues on the Company’s ability to collect rent from its tenants; (iii) operational changes implemented by the Company, including remote working arrangements, which may put increased strain on the Company’s IT systems and create increased vulnerability to cybersecurity incidents, (iv) adverse impacts on the Company’s liquidity and access to financing on attractive terms, or at all, and (v) prolonged measures to contain the spread of COVID-19 or the premature easing of government-imposed restrictions implemented to contain the spread of COVID-19; the inability to complete the remaining mergers due to the failure to satisfy other conditions to completion of the remaining mergers, including the financing condition and obtaining consent from the requisite lenders, or otherwise; the ability to recognize the benefits of the mergers; the Company’s substantial leverage as a result of indebtedness incurred and preferred equity issued in connection with the mergers, which could adversely affect the Company’s ability to pay cash dividends and meet other cash needs; the Company’s ability to repay, refinance, restructure and/or extend its indebtedness as it comes due; the availability of financing and capital to the Company; the Company’s ability to identify, finance, consummate and integrate additional acquisitions or investments; adverse economic or real estate developments, either nationally or in the markets in which the Company’s properties are located; adverse changes in financial markets or interest rates; the nature and extent of competition for tenants and acquisitions; other factors affecting the retail industry or the real estate industry generally; and other risks that are set forth under “Risk Factors” in MedAmerica’s Annual Report on Form 10-K for the year ended December 31, 2018, and other documents filed by the Company with the Securities and Exchange Commission from time to time. All forward-looking statements speak only as of the date of this press release. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. Except as otherwise may be required by law, the Company undertakes no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.