As filed with the Securities and Exchange Commission on August 24, 1998
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) August 7, 1998
CAPITAL TRUST
(Exact name of registrant as specified in its charter)
California 1-8063 94-6181186
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
605 Third Avenue, 26th Floor
New York, New York 10016
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(Address of principal executive offices) (Zip Code)
(212) 655-0220
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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ITEM 2. Acquisition or Disposition of Assets
On August 7, 1998, the Registrant originated and funded two,
cross-collateralized and cross-defaulted junior mezzanine loans aggregating $100
million (collectively, the "Loan") to NK- CR Holdings, LLC (the "Borrower"). The
Loan consists of a $65 million note (the "A Note") and a $35 million note (the
"B Note"). The Loan is secured by, among other things, a pledge of ownership
interests in the entity that owns certain classes of beneficial interests in the
entity that holds the subordinate interest in (i) 92 second mortgages
aggregating approximately $516 million secured by 431 net leased properties,
(ii) reserve accounts aggregating approximately $20 million and (iii) other
notes aggregating approximately $10.7 million. The security for the Loan is
subordinate to senior classes of beneficial interests in the items of collateral
described in clauses (i) and (ii) above. The Loan is additionally secured by two
unconditional and irrevocable letters of credit aggregating $12 million and
additional subordinate liens on real property with an aggregate balance of
approximately $3.4 million. The Loan was funded by the Registrant with its cash
on hand.
The A Note, which matures August 6, 1999, is non-amortizing and bears
interest at a contractual rate above LIBOR. At closing, the Borrower purchased
an interest rate cap from a third party for the A Note. Prior to May 4, 1999,
the A Note can be prepaid upon payment of a yield maintenance payment;
thereafter the A Note is fully prepayable with no premium or penalty.
The B Note, which matures August 6, 2001, is non-amortizing and bears
interest at a fixed rate of 11.793%. Simultaneous with the closing of the B
Note, the Registrant entered into a swap agreement (the "Swap") with a third
party under which it will receive a contractual rate above LIBOR on the notional
amount of the Swap in exchange for fixed payments. Upon repayment of the A Note,
prepayment of up to $10 million of the B Note is permitted with no premium or
penalty; thereafter, prepayment of the B Note is prohibited until maturity.
After repayment of the A Note, the Loan will be additionally secured
by (i) a several guaranty of interest by the principal owners of the Borrower
and (ii) an unconditional and irrevocable letter of credit with a face amount
equal to 40% of the then outstanding B Note balance. The Borrower may extend the
maturity of the B Note for up to two years (the "Extended Term"), subject to
certain terms and conditions. During any Extended Term, the interest rate on the
B Note would be converted from a fixed rate into a floating rate at a
predesignated specified rate above LIBOR and would be fully prepayable without
premium or penalty other than LIBOR breakage costs.
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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.
CAPITAL TRUST
(Registrant)
Date: August 24, 1998 By: /s/ Edward L. Shugrue III
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Name: Edward L. Shugrue III
Title: Chief Financial Officer
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