Exhibit 1.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): March 7, 2022
Harbor Custom Development, Inc.
(Exact name of registrant as specified in its charter)
| Washington | 001-39266 | 46-4827436 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
11505 Burnham Dr., Suite 301
Gig Harbor, Washington 98332
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (253) 649-0636
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 (see General Instruction A.2. below):
| ☐ | 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 Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
| Common Stock | HCDI | The Nasdaq Stock Market LLC | ||
| Series A Cumulative Convertible Preferred Stock | HCDIP | The Nasdaq Stock Market LLC | ||
| Warrants | HCDIW | The Nasdaq Stock Market LLC | ||
| Warrants | HCDIZ | The Nasdaq Stock Market LLC |
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
Loan Agreement
On March 7, 2022, Harbor Custom Development, Inc., a Washington corporation (the “Company”), entered into a loan agreement (the “Loan Agreement”) with BankUnited, N.A., a national banking association (the “Lender”), pursuant to which the Company requested the Lender to establish a $25,000,000 revolving credit facility in favor of the Company (the “Secured Revolving Line of Credit”) and Lender agreed to establish the Secured Revolving Line of Credit in favor of Company on the following terms:
| ● | Committed Amount – $25,000,000 to be used for general working capital needs, including real estate investments | |
| ● | Applicable Interest Rate – Secured Overnight Financing Rate (SOFR) plus 4.75% | |
| ● | Maturity Date – March 7, 2024 | |
| ● | Optional Extension to Maturity Date – March 7, 2025 | |
| ● | Loan secured in favor of Lender with a junior lien security interest by all Company assets in the event of default | |
| ● | Monthly interest payments only until Maturity Date | |
| ● | No prepayment penalty | |
| ● | Piper Sandler acted as the Company’s financial advisor and received a 3% fee for the transaction |
| The foregoing description of the Loan Agreement is qualified in its entirety by reference to the Loan Agreement, a copy of which is attached hereto as Exhibit 1.1 and is hereby incorporated by reference into this Item 1.01. |
Security Agreement
In connection with the Loan Agreement, the Company entered into a Security Agreement on March 7, 2022 (the “Security Agreement”). The Security Agreement sets forth the terms of collection of the debt in the event of a default as defined in the aforementioned Loan Agreement.
| The foregoing description of the Security Agreement is qualified in its entirety by reference to the Security Agreement, a copy of which is attached hereto as Exhibit 1.2 and is hereby incorporated by reference into this Item 1.01. |
Revolving Line of Credit Promissory Note
In connection with the Loan Agreement, the Company entered into a Revolving Line of Credit Promissory Note on March 7, 2022 (the “Promissory Note”). The Promissory Note sets forth the terms of repayment of the loan as described in the aforementioned Loan Agreement.
The foregoing description of the Revolving Line of Credit Promissory Note is qualified in its entirety by reference to the Revolving Line of Credit Promissory Note, a copy of which is attached hereto as Exhibit 1.3 and is hereby incorporated by reference into this Item 1.01.
|
Item 8.01. Other Events.
On March 9, 2022, the Company issued a press release announcing the closing of the Secured Revolving Line of Credit with BankUnited, N.A. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit Number |
Description | |
| 1.1 | Loan Agreement, dated March 7, 2022, by and between Harbor Custom Development, Inc. and BankUnited, N.A. | |
| 1.2 | Security Agreement, dated March 7, 2022, by and between Harbor Custom Development, Inc. and BankUnited, N.A. | |
| 1.3 | Revolving Line of Credit Promissory Note, dated March 7, 2022, by Harbor Custom Development, Inc. | |
| 99.1 | Press Release of Harbor Custom Development, Inc., dated March 9, 2022 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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.
| Date: March 9, 2022 | Harbor Custom Development, Inc. | |
| By: | /s/ Jeff Habersetzer | |
| Jeff Habersetzer | ||
| Chief Operating Officer, Secretary, and General Counsel | ||
Exhibit 1.1
Exhibit 1.2
Exhibit 1.3
Exhibit 99.1
Harbor Custom Development, Inc. Announces the Completion of New Senior
Secured Revolving Credit Facility of $25 Million
Gig Harbor, Washington, Mar. 9, 2022 (GLOBE NEWSWIRE) — Harbor Custom Development, Inc. (Nasdaq: HCDI, HCDIP, HCDIW, HCDIZ) (“Harbor,” “Harbor Custom Homes®,” or the “Company”), an innovative and market leading real estate company involved in all aspects of the land development cycle, today announced the closing of a senior secured revolving credit facility (the “Revolving Facility”) with BankUnited, Inc. The facility will provide the Company with a $25 million capacity over a two-year term.
“The closing of this $25 million facility provides the Company with additional liquidity and financial flexibility to pursue further growth initiatives,” said Sterling Griffin, Harbor Custom Development’s Chief Executive Officer. “We remain committed to strengthening our current market position and expect that the completion of this facility will assist in the acceleration of our growth and market reach.”
“We are excited to offer this relationship capability and capital solution to fuel Harbor’s growth plans,” said Ben Stacks, BankUnited’s Executive Vice President and Head of Commercial Real Estate.
Piper Sandler served as Harbor’s exclusive financial advisor. The Facility has a rate of SOFR plus 4.75%. The funds will provide the company additional resources to support general working capital requirements and general corporate purposes, including real estate equity investments.
About Harbor Custom Development, Inc.
Harbor Custom Development, Inc. is a real estate development company involved in all aspects of the land development cycle including land acquisition, entitlements, construction of project infrastructure, home building, marketing, sales, and management of various residential projects in Western Washington’s Puget Sound region; Sacramento, California; Austin, Texas and Punta Gorda, Florida. As a land developer and builder of apartments, condominiums, single-family homes and luxury homes, Harbor Custom Development’s business strategy is to acquire and develop land strategically based on an understanding of population growth patterns, entitlement restrictions, infrastructure development, and geo-economic forces. Harbor focuses on acquiring land with scenic views to develop and sell residential lots, new home communities, and multi-story condominium and apartment properties within a 20 to 60-minute commute of the nation’s fastest-growing metropolitan employment corridors. Harbor is leading the real estate industry as the first national land developer and home builder accepting payment in the form of cryptocurrency for its listed land, developed lots, residential homes, condominiums, and apartments. For more information on Harbor Custom Development, Inc., please visit www.harborcustomdev.com.
About BankUnited
BankUnited, Inc. (NYSE: BKU), with total assets of $35.8 billion at December 31, 2021 is the bank holding company of BankUnited, N.A., a national bank headquartered in Miami Lakes, Florida that provides a full range of banking and related services to individual and corporate customers through banking centers located in the state of Florida and in the New York metropolitan area. BankUnited also offers certain commercial lending and deposit products through national platforms. For additional information, call (877) 779-2265 or visit www.BankUnited.com. BankUnited can be found on Facebook at facebook.com/BankUnited.Official and on Twitter @BankUnited.
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are subject to various risks and uncertainties, including without limitation those set forth in the Company’s filings with the Securities and Exchange Commission. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.
Investor Relations
Hanover International
IR@harborcustomdev.com
866-744-0974