Item 1.01 Entry into a Material Definitive Agreement.
Wake Forest 2-Park Acquisition
On June
24, 2022, MHP Pursuits LLC, a North Carolina limited liability company (“MHP Pursuits”) and wholly owned
subsidiary of Manufactured Housing Properties Inc. (the “Company”), entered into
a membership interest purchase agreement, which was amended on October 21, 2022 (the “Country Road MIPA”), with
Randy and Michelle Bailey, together the 100% owners of MACRAL Properties LLC (“MACRAL”), for the purchase of their
membership interests in MACRAL, which owns a manufactured housing community (the “Country Road Property”) located in
Franklinton, North Carolina consisting of 28 mobile home sites and 25 homes on approximately 27 acres for a total
purchase price of $2,000,000.
Also on June 24, 2022, MHP Pursuits entered into
a membership interest purchase agreement, which was amended on October 21, 2022 (the “Cooley’s MIPA”), with Randy
Bailey, the 100% owner of Ron-Ran Enterprises LLC (“Ron-Ran”), for the purchase of his membership interest in Ron-Ran,
which owns a manufactured housing community (the “Cooley’s Property”) located in Youngsville, North Carolina
consisting of 45 mobile home sites and 29 homes on approximately 16 acres for a total purchase price of $2,500,000.
The Country Road MIPA and Cooley’s MIPA
contain additional covenants, representations, and warranties that are customary of real estate purchase and sale agreements.
On October
27, 2022, MHP Pursuits assigned its rights and obligations in the Country Road MIPA to the Company’s newly formed wholly owned subsidiary,
Wake Forest 2 MHP LLC, a North Carolina limited liability company (formerly Country Road MHP LLC) (“Wake Forest MHP”),
pursuant to an assignment of membership interest purchase agreement (the “Country
Road Assignment”). On the same date, MHP Pursuits assigned its rights and obligations in the Cooley’s MIPA to Gvest
Wake Forest 2 Homes LLC, a North Carolina limited liability company (formerly Cooley’s MHP LLC) (“Gvest Wake Forest”),
pursuant to an assignment of membership interest purchase agreement. On November 8, 2022,
Gvest Wake Forest further assigned its rights and obligations in the Cooley’s MIPA to Wake Forest MHP by a first amended assignment
of membership interest purchase agreement (as amended, the “Cooley’s Assignment”).
On November
14, 2022, closing of the Country Road MIPA and Cooley’s MIPA were completed and Wake Forest MHP purchased the membership interests
in MACRAL and Ron-Ran. On the same day, MACRAL and Ron-Ran sold the homes owned by each respective entity to Gvest Wake Forest at their
appraised value.
In connection
with the acquisition of the membership interests, MACRAL and Ron-Ran entered into a loan agreement (the “Loan”) with
Vanderbilt Mortgage and Finance Inc. (“Vanderbilt”) for a loan in the principal amount of $3,600,000 and issued a promissory
note (the “Note”) to Vanderbilt for the same amount.
Interest on the disbursed and
unpaid principal balance accrues from the date funds are first disbursed at a rate of 7.39% per annum, on the basis of a 360-day year
and the actual number of calendar days elapsed. Payments will begin January 10, 2023, interest only for the first thirty-six months. On
December 10, 2025, the outstanding principal balance will be amortized over 360 consecutive monthly installments of principal and interest
until maturity on December 10, 2027. MACRAL and Ron-Ran may prepay the Note in part or in full at any time if they pay a prepayment premium
calculated in accordance with the Loan.
The Note is secured by a first priority security
interest in the Country Road Property and the Cooley’s Property pursuant to a deed of trust, assignment of leases and rents, security
agreement, and fixture filing pertaining to the real property (the “Land Security Agreement”), a security agreement
and assignment of rents between Vanderbilt and Gvest Wake Forest pertaining to the homes (the “Homes Security Agreement”),
as well as collateral assignment of the Company’s ownership interests in MACRAL and Ron-Ran (the “Ownership Assignment”).
The Note is guaranteed by Raymond M. Gee, the Company’s Chief Executive Officer.
The Note
and Loan contain customary financial and other covenants and events of default for real estate loans of their type.
The foregoing summary of the terms and conditions
of the Country Road MIPA, Cooley’s MIPA, Country Road Assignment, Cooley’s Assignment, Loan, Note, Land Security Agreement,
Homes Security Agreement and Ownership Assignment does not purport to be complete and is qualified in its entirety by reference to the
full text of the agreements attached as exhibits hereto, which are incorporated herein by reference.