BRG-A Bluerock Residential Growth REIT Inc

Credit Facility

On April 6, 2022, Bluerock Residential Holdings, L.P., the operating partnership of Bluerock Residential (the “Operating Partnership”), as risk retention sponsor, and various subsidiaries of the Operating Partnership (the “Borrowers”) entered into a Loan Agreement (the “Loan Agreement”) with Deutsche Bank Securities Inc., as sole lead arranger, Deutsche Bank AG, New York Branch, as administrative agent, the financial institutions party thereto as lenders (the “Lenders”) and Computershare Trust Company, N.A., as paying agent and calculation agent. Pursuant to the Loan Agreement, consistent with the terms, conditions and provisions of a two-year revolving credit facility, the Borrowers may obtain loans in an aggregate amount not exceeding $150,000,000 (the “Credit Facility”). Borrowings under the Credit Facility are limited to financings related to the acquisition, renovation, rehabilitation, maintenance and leasing of single-family properties. As of the date of this Current Report on Form 8-K, the Borrowers have drawn $35,000,000 under the Credit Facility.

The Credit Facility has an initial maturity date of April 6, 2024, which may be extended by the Borrowers for up to two years through the exercise of two one-year extension options (each, an “Extension Period”), in each case, subject to certain customary conditions and the payment of an extension fee of 0.25% of the aggregate amount of the then outstanding revolving commitments. Revolving loans under the Loan Agreement bear interest at a benchmark interest rate, which will initially be based on term SOFR, plus 2.80% (the “Spread”). The Spread shall increase by 0.15% for each Extension Period. Loans owed under the Loan Agreement may be prepaid at any time without premium or penalty, subject to customary conditions. The Borrowers are subject to certain mandatory prepayment provisions under the Loan Agreement in the event certain conditions are not satisfied; provided, that such mandatory prepayments are limited to amounts necessary to satisfy the conditions set forth in the Loan Agreement.

The Loan Agreement contains customary affirmative and negative covenants that, among other things, require customary reporting obligations, contain certain ongoing operational requirements, and restrict, subject to certain exceptions, the incurrence of liens, the ability of the Borrowers and certain affiliates to enter into mergers, consolidations, sales of assets and similar transactions, the making of dividends and other distributions and the consummation of transactions with affiliates. In addition, the Borrowers will be subject to the following financial maintenance covenants: (1) maximum ratio of total indebtedness to total value of the financed assets of 72.5%, (2) minimum ratio of underwritten net cash flow to total interest expense of 1.25 to 1.00, and (3) minimum ratio of underwritten net cash flow to total outstanding debt amounts of 6.25%.

The Loan Agreement contains events of default relating to customary matters, including, among other things, payment defaults, covenant defaults, acceleration of other material indebtedness, bankruptcy events, judgment defaults and change of control events. The occurrence of an event of default will limit the ability of the Borrowers to make distributions and may result in the termination of the Credit Facility, acceleration of repayment obligations and the exercise of other remedies by the Lenders.

In connection with the Loan Agreement, Bluerock Residential entered into a Sponsor Guaranty, dated April 6, 2022 (the “BRG Sponsor Guaranty”), pursuant to which Bluerock Residential provides a guaranty of certain obligations of the Borrowers under the Loan Agreement until the completion of the Separation and Distribution. Similarly, Bluerock Homes entered into a Sponsor Guaranty, dated April 6, 2022 (the “BHM Sponsor Guaranty”), pursuant to which Bluerock Homes shall provide a guaranty of certain of the obligations of the Borrowers under the Loan Agreement following the Separation and Distribution. Bluerock Residential is also subject to certain financial covenants under the Loan Agreement related to tangible net worth and liquidity. Upon the consummation of the Distribution and Separation, Bluerock Residential, as the initial sponsor under the Loan Agreement, shall no longer have any obligations or liabilities to the Lenders under the Loan Agreement. Following the Distribution and Separation, Bluerock Homes, as the replacement sponsor, shall be solely responsible for the obligations and liabilities to the Lenders previously held by Bluerock Residential under the Loan Agreement.

The foregoing descriptions of the Loan Agreement, the BRG Sponsor Guaranty and BHM Sponsor Guaranty do not purport to be complete descriptions and are qualified in their entirety by reference to the Loan Agreement, the BRG Sponsor Guaranty and BHM Sponsor Guaranty, which are filed herewith as Exhibits 10.1, 10.2 and 10.3 hereto, and incorporated herein by reference.