|12 Months Ended|
Dec. 31, 2016
|Debt Disclosure [Abstract]|
The following table presents certain information regarding Drive Shack Inc.'s debt obligations and related hedges:
See notes on next page.
CDO, Other Bonds and Notes Payable
During the second quarter of 2015, approximately $60.3 million of CDO VIII notes were repaid primarily due to the sale of securities and loans. See Notes 5 and 6. As a result of the repayment of the CDO VIII notes, Drive Shack Inc. also repaid $13.3 million of repurchase agreements associated with CDO VIII.
During the second quarter of 2015, approximately $51.4 million of CDO IX notes were repaid primarily due to the sales and pay down of securities and loans. See Notes 5 and 6. As a result of the repayment of the CDO IX notes, Drive Shack Inc. also repaid $22.3 million of repurchase agreements associated with CDO IX.
In June 2015, Drive Shack Inc. repurchased $11.5 million face amount of CDO bonds payable issued by CDO VIII at a price of 95.50% of par for total proceeds of $11.0 million. As a result, Drive Shack Inc. extinguished $11.5 million face amount of CDO bonds payable and recorded a gain on extinguishment of debt of $0.5 million.
In October 2015, Drive Shack Inc. financed an unencumbered real estate related loan with a face amount of $19.4 million with a mezzanine note payable for $11.7 million. This note payable bears interest at one month LIBOR + 3.00%, matures in October 2016 and is subject to customary margin provisions.
In March 2016, Drive Shack Inc. deconsolidated CDO and other bonds payable, see Variable Interest Entities in Note 2 for additional details.
In April 2016, Drive Shack Inc. sold a mezzanine loan with a face amount of $19.4 million at par. Drive Shack Inc. subsequently repaid $11.7 million of notes payable that were collateralized by the loan. See Note 6.
See Note 5 for information about the FNMA/FHLMC repurchase agreement activity for the years ended December 31, 2016 and 2015.
Golf Credit Facilities and Repurchase Agreement
In December 2013, Traditional Golf entered into two loan agreements (“First Lien Loan” and “Second Lien Loan”) with General Electric Capital Corporation (“GECC”). In August 2015, Drive Shack Inc. acquired from GECC $51.4 million outstanding face amount of the First Lien Loan at a price of 90.0% of par, or $46.3 million, and $105.6 million outstanding face amount of the Second Lien Loan at a price of 90.0% of par, or $95.0 million. The purchases were funded with $71.3 million cash and a $70.0 million repurchase agreement. Drive Shack Inc. recorded a gain on extinguishment of debt of $15.4 million.
In February 2016, Drive Shack Inc. extended the repurchase agreement on the golf loans to mature on May 31, 2016, with an option to extend to June 30, 2016. The repurchase agreement bears interest at LIBOR + 4.00%.
In May 2016, the option on the repurchase agreement on the golf loans was exercised to extend the maturity to June 30, 2016.
In June 2016, Drive Shack Inc. obtained third-party financing on 22 traditional golf properties for a total of $102.0 million at a floating rate of the greater of: (i) 30-day LIBOR + 4.70% or (ii) 6.50%. At the time of closing, Drive Shack Inc. purchased a co-terminus LIBOR interest rate cap of 1.80%. The financing is for a term of three years with the option for two one-year extensions. Drive Shack Inc. used $64.9 million of the proceeds to repay the outstanding balance on the golf loans repurchase agreement.
Traditional Golf is obligated under a $0.2 million loan with the City of Escondido, California (“Vineyard II”). The principal amount of the loan is payable in five equal installments upon reaching the "Achievement Date”, which is the date on which the previous 36-month period equals or exceeds 240,000 rounds of golf played on the property. As of December 31, 2016, 240,000 rounds of golf have not been achieved within an applicable 36-month period. The interest rate is adjusted annually and is equal to 1% plus a short-term investment return, as defined in the loan agreement. As of December 31, 2016, the interest rate is 2.20%.
Capital Leases - Equipment
Traditional Golf leases certain golf carts and other equipment under capital lease agreements. The agreements typically provide for minimum rentals plus executory costs. Lease terms range from 36-66 months. Certain leases include bargain purchase options at lease expiration.
The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of December 31, 2016 are as follows:
Drive Shack Inc.’s debt obligations (gross of $3.1 million of discounts at December 31, 2016) have contractual maturities as follows:
Drive Shack Inc.’s golf credit facilities contain various customary loan covenants, including certain coverage ratios. Drive Shack Inc. was in compliance with all of these covenants as of December 31, 2016.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef