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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2026
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ______
Commission File Number: 001-39641
Offerpad Solutions Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
85-2800538 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
433 S. Farmer Avenue, Suite 500, Tempe, Arizona |
85281 |
(Address of principal executive offices) |
(Zip Code) |
(844) 388-4539 |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Class A common stock, $0.0001 par value per share |
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OPAD |
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The New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 27, 2026, there were 4,832,749 shares of Offerpad’s Class A common stock outstanding.
OFFERPAD SOLUTIONS INC.
FORM 10-Q
FOR THE QUARTER ENDED June 30, 2026
TABLE OF CONTENTS
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes statements that express Offerpad Solutions Inc.’s (“Offerpad,” the “Company,” “we,” “us,” and “our,” and similar references) opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “potentially,” “may,” “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They may appear in a number of places throughout this Quarterly Report on Form 10-Q, including Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our future results of operations, financial condition and liquidity, real estate inventory and home acquisition pace, volume and strategy, mortgage rates, cash requirements, further equity issuances, financing plans and borrowing capacity, our intended use of net proceeds from our issuances of equity securities and debt financing arrangements, our prospects, optimized returns, potential growth or expansion evaluations, strategies, including without limitation, regarding product and service offerings and their expected impacts, expected capabilities of our AI-driven portfolio intelligence platform, expected adjustments to credit facility composition and evaluation of new potential debt arrangements, including impact on acquisition pace, ongoing collaborations, compliance with applicable laws, regulations and New York Stock Exchange (“NYSE”) continued listing rules, consideration of alternatives to cure any NYSE continued listing requirement deficiencies, macroeconomic trends, including due to conflict in the Middle East, potential tariffs or retaliations against such tariffs, geopolitical concerns, implications due to an “ownership change” under Section 382 of the Internal Revenue Code, including limitations on our ability to use net operating losses to offset future income tax liability, and the markets in which Offerpad operates.
The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to:
•our ability to respond to general economic conditions;
•the health of the U.S. residential real estate industry;
•our ability to grow market share in our existing markets or any new markets we may enter;
•our ability to grow effectively;
•our ability to accurately value and manage real estate inventory, to maintain an adequate and desirable supply of real estate inventory, and to manage renovations;
•our ability to successfully launch new offerings, and to manage, develop and refine our technology platform;
•our ability to maintain and enhance our products and brand, and to attract customers;
•our ability to achieve and maintain profitability in the future;
•the success of strategic relationships with third parties;
•our ability to regain compliance with NYSE Rule 802.01B, sufficiently execute our business plan, or failure to comply with other NYSE continued listing rules;
•the ability of our AI-powered intelligence platforms, including, without limitation, to manage and mitigate risk exposure; and
•our ability to use net operating loss carryforwards and other tax attributes has been impacted by an ownership change and may in the future be limited in connection with other ownership changes.
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and other risks and uncertainties discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 3
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
OFFERPAD SOLUTIONS INC.
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands, except par value per share) (Unaudited) |
|
|
|
2026 |
|
|
2025 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
$ |
33,118 |
|
|
$ |
26,543 |
|
Restricted cash |
|
|
|
|
1,741 |
|
|
|
1,627 |
|
Accounts receivable |
|
|
|
|
6,132 |
|
|
|
7,938 |
|
Real estate inventory |
|
|
|
|
94,226 |
|
|
|
93,793 |
|
Prepaid expenses and other current assets |
|
|
|
|
2,919 |
|
|
|
1,792 |
|
Total current assets |
|
|
|
|
138,136 |
|
|
|
131,693 |
|
Property and equipment, net |
|
|
|
|
14,074 |
|
|
|
14,673 |
|
Other non-current assets |
|
|
|
|
8,079 |
|
|
|
8,405 |
|
TOTAL ASSETS |
|
(1) |
|
$ |
160,289 |
|
|
$ |
154,771 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
$ |
2,881 |
|
|
$ |
1,667 |
|
Accrued and other current liabilities |
|
|
|
|
7,580 |
|
|
|
8,698 |
|
Secured credit facilities and other debt, net |
|
|
|
|
82,306 |
|
|
|
75,494 |
|
Secured credit facilities with a related party, net |
|
|
|
|
2,866 |
|
|
|
2,582 |
|
Warrant liabilities |
|
|
|
|
69 |
|
|
|
361 |
|
Total current liabilities |
|
|
|
|
95,702 |
|
|
|
88,802 |
|
Revolving credit facility, net |
|
|
|
|
14,718 |
|
|
|
14,650 |
|
Other long-term liabilities |
|
|
|
|
12,563 |
|
|
|
13,100 |
|
Total liabilities |
|
(2) |
|
|
122,983 |
|
|
|
116,552 |
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Class A common stock, $0.0001 par value; 2,000,000 shares authorized; 4,832 and 3,721 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively |
|
|
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
|
|
563,157 |
|
|
|
544,649 |
|
Accumulated deficit |
|
|
|
|
(525,851 |
) |
|
|
(506,430 |
) |
Total stockholders’ equity |
|
|
|
|
37,306 |
|
|
|
38,219 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
$ |
160,289 |
|
|
$ |
154,771 |
|
________________
(1)
Consolidated assets as of June 30, 2026 and December 31, 2025 include the following assets of certain variable interest entities (“VIEs”) that can only be used to settle the liabilities of those VIEs: Restricted cash, $1,416 and $1,302; Accounts receivable, $154 and $303; Real estate inventory, $94,226 and $93,793; Prepaid expenses and other current assets, $268 and $169; Property and equipment, net, $5,585 and $5,611; Total assets of $101,649 and $101,178, respectively.
(2)
Consolidated liabilities as of June 30, 2026 and December 31, 2025 include the following liabilities for which the VIE creditors do not have recourse to Offerpad: Accounts payable, $834 and $398; Accrued and other current liabilities, $409 and $526; Secured credit facilities and other debt, net, $85,172 and $78,076; Total liabilities, $86,415 and $79,000, respectively.
The accompanying notes are an integral part of these condensed consolidated financial statements.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 4
OFFERPAD SOLUTIONS INC.
Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
(in thousands, except per share data) (Unaudited) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Revenue |
|
$ |
77,653 |
|
|
$ |
160,315 |
|
|
$ |
157,728 |
|
|
$ |
321,013 |
|
Cost of revenue |
|
|
70,536 |
|
|
|
146,126 |
|
|
|
145,054 |
|
|
|
296,317 |
|
Gross profit |
|
|
7,117 |
|
|
|
14,189 |
|
|
|
12,674 |
|
|
|
24,696 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales, marketing and operating |
|
|
7,622 |
|
|
|
13,188 |
|
|
|
15,196 |
|
|
|
27,016 |
|
General and administrative |
|
|
6,780 |
|
|
|
7,796 |
|
|
|
12,907 |
|
|
|
14,992 |
|
Technology and development |
|
|
954 |
|
|
|
986 |
|
|
|
1,840 |
|
|
|
2,006 |
|
Total operating expenses |
|
|
15,356 |
|
|
|
21,970 |
|
|
|
29,943 |
|
|
|
44,014 |
|
Loss from operations |
|
|
(8,239 |
) |
|
|
(7,781 |
) |
|
|
(17,269 |
) |
|
|
(19,318 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
123 |
|
|
|
329 |
|
|
|
292 |
|
|
|
72 |
|
Interest expense |
|
|
(1,387 |
) |
|
|
(3,665 |
) |
|
|
(3,004 |
) |
|
|
(7,187 |
) |
Other income, net |
|
|
231 |
|
|
|
244 |
|
|
|
592 |
|
|
|
540 |
|
Total other expense |
|
|
(1,033 |
) |
|
|
(3,092 |
) |
|
|
(2,120 |
) |
|
|
(6,575 |
) |
Loss before income taxes |
|
|
(9,272 |
) |
|
|
(10,873 |
) |
|
|
(19,389 |
) |
|
|
(25,893 |
) |
Income tax expense |
|
|
(16 |
) |
|
|
(30 |
) |
|
|
(32 |
) |
|
|
(67 |
) |
Net loss |
|
$ |
(9,288 |
) |
|
$ |
(10,903 |
) |
|
$ |
(19,421 |
) |
|
$ |
(25,960 |
) |
Net loss per share, basic |
|
$ |
(1.94 |
) |
|
$ |
(3.93 |
) |
|
$ |
(4.13 |
) |
|
$ |
(9.38 |
) |
Net loss per share, diluted |
|
$ |
(1.94 |
) |
|
$ |
(3.93 |
) |
|
$ |
(4.13 |
) |
|
$ |
(9.38 |
) |
Weighted average common shares outstanding, basic |
|
|
4,795 |
|
|
|
2,777 |
|
|
|
4,708 |
|
|
|
2,767 |
|
Weighted average common shares outstanding, diluted |
|
|
4,795 |
|
|
|
2,777 |
|
|
|
4,708 |
|
|
|
2,767 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 5
OFFERPAD SOLUTIONS INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
(in thousands) (Unaudited) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
Balance at March 31, 2026 |
|
|
4,729 |
|
|
$ |
— |
|
|
$ |
562,404 |
|
|
$ |
(516,563 |
) |
|
$ |
45,841 |
|
Issuance of common stock upon vesting of restricted stock units |
|
|
103 |
|
|
|
— |
|
|
|
(259 |
) |
|
|
— |
|
|
|
(259 |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
1,012 |
|
|
|
— |
|
|
|
1,012 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,288 |
) |
|
|
(9,288 |
) |
Balance at June 30, 2026 |
|
|
4,832 |
|
|
$ |
— |
|
|
$ |
563,157 |
|
|
$ |
(525,851 |
) |
|
$ |
37,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
(in thousands) (Unaudited) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
Balance at March 31, 2025 |
|
|
2,754 |
|
|
$ |
— |
|
|
$ |
509,321 |
|
|
$ |
(475,103 |
) |
|
$ |
34,218 |
|
Issuance of common stock upon vesting of restricted stock units |
|
|
17 |
|
|
|
— |
|
|
|
(37 |
) |
|
|
— |
|
|
|
(37 |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
1,257 |
|
|
|
— |
|
|
|
1,257 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,903 |
) |
|
|
(10,903 |
) |
Balance at June 30, 2025 |
|
|
2,771 |
|
|
$ |
— |
|
|
$ |
510,541 |
|
|
$ |
(486,006 |
) |
|
$ |
24,535 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 6
OFFERPAD SOLUTIONS INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
(in thousands) (Unaudited) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
Balance at December 31, 2025 |
|
|
3,721 |
|
|
$ |
— |
|
|
$ |
544,649 |
|
|
$ |
(506,430 |
) |
|
$ |
38,219 |
|
Issuance of common stock upon vesting of restricted stock units |
|
|
111 |
|
|
|
— |
|
|
|
(259 |
) |
|
|
— |
|
|
|
(259 |
) |
Issuance of common stock from January 2026 Offering, net |
|
|
1,000 |
|
|
|
— |
|
|
|
16,813 |
|
|
|
— |
|
|
|
16,813 |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
1,954 |
|
|
|
— |
|
|
|
1,954 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(19,421 |
) |
|
|
(19,421 |
) |
Balance at June 30, 2026 |
|
|
4,832 |
|
|
$ |
— |
|
|
$ |
563,157 |
|
|
$ |
(525,851 |
) |
|
$ |
37,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
(in thousands) (Unaudited) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
Balance at December 31, 2024 |
|
|
2,738 |
|
|
$ |
— |
|
|
$ |
507,699 |
|
|
$ |
(460,046 |
) |
|
$ |
47,653 |
|
Issuance of common stock upon vesting of restricted stock units |
|
|
33 |
|
|
|
— |
|
|
|
(197 |
) |
|
|
— |
|
|
|
(197 |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
3,039 |
|
|
|
— |
|
|
|
3,039 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,960 |
) |
|
|
(25,960 |
) |
Balance at June 30, 2025 |
|
|
2,771 |
|
|
$ |
— |
|
|
$ |
510,541 |
|
|
$ |
(486,006 |
) |
|
$ |
24,535 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 7
OFFERPAD SOLUTIONS INC.
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
($ in thousands) (Unaudited) |
|
2026 |
|
|
2025 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(19,421 |
) |
|
$ |
(25,960 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
572 |
|
|
|
459 |
|
Amortization of debt financing costs |
|
|
197 |
|
|
|
618 |
|
Real estate inventory valuation adjustment |
|
|
661 |
|
|
|
2,795 |
|
Stock-based compensation |
|
|
1,954 |
|
|
|
3,039 |
|
Change in fair value of warrant liabilities |
|
|
(292 |
) |
|
|
(72 |
) |
Loss on disposal of property and equipment |
|
|
51 |
|
|
|
75 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
1,806 |
|
|
|
(3,695 |
) |
Real estate inventory |
|
|
(1,094 |
) |
|
|
(1,358 |
) |
Prepaid expenses and other assets |
|
|
(801 |
) |
|
|
990 |
|
Accounts payable |
|
|
1,214 |
|
|
|
(625 |
) |
Accrued and other liabilities |
|
|
(1,655 |
) |
|
|
88 |
|
Net cash used in operating activities |
|
|
(16,808 |
) |
|
|
(23,646 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(53 |
) |
|
|
(1,079 |
) |
Proceeds from sale of property and equipment |
|
|
29 |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(24 |
) |
|
|
(1,079 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Borrowings from secured credit facilities and other debt |
|
|
122,037 |
|
|
|
310,946 |
|
Repayments of secured credit facilities and other debt |
|
|
(115,024 |
) |
|
|
(332,904 |
) |
Payment of debt financing costs |
|
|
(46 |
) |
|
|
— |
|
Proceeds from January 2026 Offering |
|
|
18,000 |
|
|
|
— |
|
Issuance costs of January 2026 Offering |
|
|
(1,187 |
) |
|
|
— |
|
Payments for taxes related to stock-based awards |
|
|
(259 |
) |
|
|
(197 |
) |
Net cash provided by (used in) financing activities |
|
|
23,521 |
|
|
|
(22,155 |
) |
Net change in cash, cash equivalents and restricted cash |
|
|
6,689 |
|
|
|
(46,880 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
28,170 |
|
|
|
73,626 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
34,859 |
|
|
$ |
26,746 |
|
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
33,118 |
|
|
$ |
22,650 |
|
Restricted cash |
|
|
1,741 |
|
|
|
4,096 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
34,859 |
|
|
$ |
26,746 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash payments for interest |
|
$ |
3,712 |
|
|
$ |
9,091 |
|
Cash payments (refunds) for taxes, net |
|
$ |
107 |
|
|
$ |
(89 |
) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 8
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Nature of Operations and Significant Accounting Policies
Description of Business
Offerpad is a real estate solutions company focused on giving homeowners more control, flexibility, and choice when buying and selling a home. Founded in 2015, the Company combines proprietary technology with local real estate expertise to simplify the home sale process and reduce friction across the transaction lifecycle, helping customers move forward with speed, transparency, and confidence. The Company provides cash offers, brokerage services, access to additional cash buyers through marketplace-enabled capabilities, and renovation services that support both internal transactions and third-party partners.
The Company is headquartered in Tempe, Arizona and operates in over 1,900 cities and towns in 27 metropolitan markets across 18 states as of June 30, 2026.
Basis of Presentation and Interim Financial Information
The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures required for annual financial statements have been condensed or excluded pursuant to GAAP and SEC rules and regulations. Accordingly, the unaudited interim condensed consolidated financial statements do not include all of the information and note disclosures required by GAAP for complete financial statements. Therefore, this information should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025 included in the Company’s 2025 Annual Report on Form 10-K as filed with the SEC on February 24, 2026.
The accompanying financial information reflects all adjustments which are, in the opinion of the Company’s management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods.
Reverse Stock Split
On June 3, 2026, at the Company’s 2026 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved a reverse stock split of the Company’s Class A common stock, par value $0.0001 per share at a ratio ranging from any whole number between 1-for-5 and 1-for-50, as determined by the Company’s Board of Directors (the “Board”) in its discretion. Following the Annual Meeting, the Board approved a 1-for-10 reverse stock split (the “Reverse Stock Split”) of the Company’s Class A common stock. On June 8, 2026, the Company filed a certificate of amendment to its Fourth Restated Certificate of Incorporation (as amended from time to time, the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware to effect the Reverse Stock Split, and the Company’s Class A common stock began trading on a split-adjusted basis at market open on June 9, 2026 under the existing symbol “OPAD”.
As a result of the Reverse Stock Split, every 10 shares of the Company’s Class A common stock issued and outstanding at 5:00pm Eastern Time on June 8, 2026 (the “Effective Time”) were automatically converted into one share of Class A common stock. No fractional shares were issued in connection with the Reverse Stock Split. Instead, each stockholder received a cash payment in lieu thereof at a price equal to the fraction of one share to which the stockholder would otherwise be entitled multiplied by the closing price per share of Class A common stock (as adjusted for the Reverse Stock Split) on NYSE on June 8, 2026, the last trading day immediately preceding the Effective Time.
Further, proportionate adjustments were made to the number of shares of Class A common stock underlying the Company’s outstanding equity awards and the number of shares issuable under the Company’s equity incentive plans and existing agreements, as well as the exercise price and/or any stock price goals, as applicable. The Reverse Stock Split did not affect the number of authorized shares of Class A common stock or the par value of the Class A common stock. Additionally, under the terms of the Company’s applicable warrant agreements for the Company’s public warrants and private placement warrants, the number of shares of Class A common stock issuable on exercise of each warrant has been proportionately decreased, the warrant purchase price has been equitably adjusted (to the nearest cent) with respect to the Company’s public warrants, and the exercise price with respect to the Company’s private placement warrants has been proportionately increased. The terms of the Company’s outstanding warrants do not permit issuance of fractional shares upon exercise of such warrants. Instead, the number of shares issuable will be rounded down upon exercise of the public warrants and will be rounded up upon exercise of the private placement warrants.
All share and per share amounts in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 9
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. Significant estimates include those related to the net realizable value of real estate inventory, among others. Actual results could differ from those estimates.
Principles of Consolidation
The Company’s condensed consolidated financial statements include the assets, liabilities, revenues and expenses of the Company, its wholly-owned operating subsidiaries and variable interest entities where the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.
Real Estate Inventory
Real estate inventory consists of acquired homes and is carried at the lower of cost or net realizable value, with cost and net realizable value determined by the specific identification of each home. Costs include initial purchase costs and renovation costs, as well as holding costs and interest incurred during the renovation period, prior to the listing date. Selling costs, including commissions and holding costs incurred after the listing date, are expensed as incurred and included in sales, marketing and operating expenses.
The Company reviews real estate inventory for valuation adjustments on a quarterly basis, or more frequently if events or changes in circumstances indicate that the carrying value of real estate inventory may not be recoverable. The Company evaluates real estate inventory for indicators that net realizable value is lower than cost at the individual home level. The Company generally considers multiple factors in determining net realizable value for each home, including recent comparable home sale transactions in the specific area where the home is located, the residential real estate market conditions in both the local market in which the home is located and in the U.S. in general, the impact of national, regional or local economic conditions and expected selling costs. When evidence exists that the net realizable value of real estate inventory is lower than its cost, the difference is recognized as a real estate inventory valuation adjustment in cost of revenue and the related real estate inventory is adjusted to its net realizable value.
For individual homes or portfolios of homes under contract to sell as of the real estate inventory valuation assessment date, if the carrying value exceeds the contract price less expected selling costs, the carrying value of these homes is adjusted to net realizable value, which is determined using the contract price less expected selling costs. For all other homes, if the carrying value exceeds the expected sale price less expected selling costs, the carrying value of these homes is adjusted to net realizable value, which is determined using the expected sale price less expected selling costs. Changes in the Company’s pricing assumptions may lead to a change in the outcome of the real estate inventory valuation analysis, and actual results may differ from the Company’s assumptions.
The Company recorded real estate inventory valuation adjustments of $0.3 million and $1.1 million during the three months ended June 30, 2026 and 2025, respectively, and $0.7 million and $2.8 million during the six months ended June 30, 2026 and 2025, respectively. Refer to Note 2. Real Estate Inventory, for further details.
Recent Accounting Standards
Disaggregation of Income Statement Expenses
In November 2024, the Financial Accounting Standards Board (“FASB”) issued a new standard which is intended to improve an entity’s expense disclosures, primarily by requiring disclosure of disaggregated information about certain income statement expense line items. The new standard is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Accordingly, the new standard is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and subsequent interim periods, using either a prospective or retrospective approach. The Company is currently evaluating the impact that the standard will have on its condensed consolidated financial statements.
Interim Reporting
In December 2025, the FASB issued a new standard which is intended to provide clarity on an entity’s interim reporting disclosure requirements. The new standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. Accordingly, the new standard is effective for the Company’s
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 10
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Quarterly Report on Form 10-Q for the quarter ending March 31, 2028, using either a prospective or retrospective approach. The Company is currently evaluating the impact that the standard will have on its condensed consolidated financial statements.
Note 2. Real Estate Inventory
The components of real estate inventory, net of applicable lower of cost or net realizable value adjustments, consist of the following as of the respective period ends:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Homes preparing for and under renovation |
|
$ |
37,481 |
|
|
$ |
11,335 |
|
Homes listed for sale |
|
|
41,019 |
|
|
|
62,557 |
|
Homes under contract to sell |
|
|
15,726 |
|
|
|
19,901 |
|
Real estate inventory |
|
$ |
94,226 |
|
|
$ |
93,793 |
|
Note 3. Property and Equipment
Property and equipment consist of the following as of the respective period ends:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Leasehold improvements |
|
$ |
5,932 |
|
|
$ |
5,963 |
|
Rooftop solar panel systems |
|
|
4,904 |
|
|
|
4,935 |
|
Properties held for use |
|
|
4,442 |
|
|
|
4,389 |
|
Land |
|
|
1,239 |
|
|
|
1,239 |
|
Office equipment and furniture |
|
|
1,153 |
|
|
|
1,284 |
|
Software systems |
|
|
338 |
|
|
|
386 |
|
Computers and equipment |
|
|
224 |
|
|
|
224 |
|
Property and equipment, gross |
|
|
18,232 |
|
|
|
18,420 |
|
Less: accumulated depreciation |
|
|
(4,158 |
) |
|
|
(3,747 |
) |
Property and equipment, net |
|
$ |
14,074 |
|
|
$ |
14,673 |
|
Depreciation expense was $0.3 million during each of the three months ended June 30, 2026 and 2025, and $0.6 million and $0.5 million during the six months ended June 30, 2026 and 2025, respectively.
Note 4. Leases
The Company’s operating lease arrangements consist of its corporate headquarters in Tempe, Arizona, and field office facilities in certain metropolitan markets in which the Company operates in the United States. These leases typically have original lease terms of 1 year to 10 years, and some leases contain multi-year renewal options. The Company does not have any finance lease arrangements.
The Company’s operating lease costs are included in operating expenses in the accompanying condensed consolidated statements of operations. Operating lease costs during the three months ended June 30, 2026 and 2025 were $0.4 million and $0.7 million, respectively, and $0.8 million and $1.4 million, during the six months ended June 30, 2026 and 2025, respectively. Variable and short-term lease costs were less than $0.1 million during each of the respective periods.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 11
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Supplemental information related to leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Cash payments for amounts included in the measurement of operating lease liabilities |
|
$ |
516 |
|
|
$ |
851 |
|
|
$ |
1,032 |
|
|
$ |
973 |
|
Tenant incentive allowances |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
763 |
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2026 |
|
|
2025 |
|
Weighted-average remaining lease term (in years) |
|
|
8.9 |
|
|
|
9.3 |
|
Weighted-average discount rate |
|
|
7.5 |
% |
|
|
7.5 |
% |
There were no right-of-use assets obtained in exchange for new or acquired operating lease liabilities during each of the three and six months ended June 30, 2026 and 2025.
The Company’s operating lease liability maturities as of June 30, 2026 are as follows:
|
|
|
|
|
($ in thousands) |
|
|
|
Remainder of 2026 |
|
$ |
1,057 |
|
2027 |
|
|
1,949 |
|
2028 |
|
|
1,922 |
|
2029 |
|
|
1,974 |
|
2030 |
|
|
2,029 |
|
2031 |
|
|
2,085 |
|
Thereafter |
|
|
7,749 |
|
Total future lease payments |
|
|
18,765 |
|
Less: Imputed interest |
|
|
(5,091 |
) |
Total lease liabilities |
|
$ |
13,674 |
|
The Company’s operating lease right-of-use assets and operating lease liabilities, and the associated financial statement line items, are as follows as of the respective period ends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
Financial Statement Line Items |
|
2026 |
|
|
2025 |
|
Right-of-use assets |
|
Other non-current assets |
|
$ |
7,120 |
|
|
$ |
7,408 |
|
Lease liabilities: |
|
|
|
|
|
|
|
|
Current liabilities |
|
Accrued and other current liabilities |
|
$ |
1,111 |
|
|
$ |
1,105 |
|
Non-current liabilities |
|
Other long-term liabilities |
|
|
12,563 |
|
|
|
13,100 |
|
Total lease liabilities |
|
|
|
$ |
13,674 |
|
|
$ |
14,205 |
|
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 12
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5. Accrued and Other Liabilities
Accrued and other current liabilities consist of the following as of the respective period ends:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Home renovation |
|
$ |
2,044 |
|
|
$ |
2,328 |
|
Operating lease liabilities |
|
|
1,111 |
|
|
|
1,105 |
|
Payroll and other employee related expenses |
|
|
1,004 |
|
|
|
1,777 |
|
Interest |
|
|
495 |
|
|
|
613 |
|
Legal and professional obligations |
|
|
411 |
|
|
|
591 |
|
Marketing |
|
|
378 |
|
|
|
257 |
|
Other |
|
|
2,137 |
|
|
|
2,027 |
|
Accrued and other current liabilities |
|
$ |
7,580 |
|
|
$ |
8,698 |
|
The Company incurred advertising expenses of $1.5 million and $2.1 million during the three months ended June 30, 2026 and 2025, respectively, and $2.7 million and $4.4 million during the six months ended June 30, 2026 and 2025, respectively.
Other long-term liabilities consist of the non-current portion of operating lease liabilities as of June 30, 2026 and December 31, 2025.
Note 6. Credit Facilities and Other Debt
The carrying value of the Company’s credit facilities and other debt consists of the following as of the respective period ends:
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
2026 |
|
|
2025 |
|
Senior secured credit facilities with financial institutions |
$ |
78,640 |
|
|
$ |
57,957 |
|
Senior secured credit facilities with a related party |
|
1,160 |
|
|
|
628 |
|
Senior secured debt - other |
|
3,756 |
|
|
|
17,689 |
|
Mezzanine secured credit facilities with a related party |
|
1,737 |
|
|
|
2,006 |
|
Revolving credit facility |
|
15,000 |
|
|
|
15,000 |
|
Debt financing costs |
|
(403 |
) |
|
|
(554 |
) |
Total credit facilities and other debt, net |
$ |
99,890 |
|
|
$ |
92,726 |
|
The following details the classification of the Company’s credit facilities and other debt, as of the respective period ends:
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
2026 |
|
|
2025 |
|
Total credit facilities and other debt with financial institutions, net, current |
$ |
82,306 |
|
|
$ |
75,494 |
|
Total credit facilities with a related party, net, current |
|
2,866 |
|
|
|
2,582 |
|
Total credit facilities and other debt, net, current |
|
85,172 |
|
|
|
78,076 |
|
Revolving credit facility, net, non-current |
|
14,718 |
|
|
|
14,650 |
|
Total credit facilities and other debt, net |
$ |
99,890 |
|
|
$ |
92,726 |
|
The Company utilizes financing facilities consisting of senior secured credit facilities, mezzanine secured credit facilities and other senior secured borrowing arrangements to provide financing for the Company’s real estate inventory purchases and renovation. Borrowings under the Company’s senior and mezzanine secured credit facilities and other debt are classified as current liabilities on the accompanying condensed consolidated balance sheets as amounts drawn to purchase and renovate homes are required to be repaid as the related real estate inventory is sold, which is expected to be within twelve months.
Under the Company’s senior and mezzanine secured credit facilities, amounts can be borrowed, repaid and borrowed again during the revolving period. Any borrowings above the committed amounts are subject to the applicable lender’s discretion. The borrowing capacity is generally expected to be available until the end of the applicable revolving period as reflected in the tables below, and the borrowing capacity availability period may be extended after the end of the revolving period, subject to the applicable lender’s discretion. Outstanding amounts drawn under the Company’s secured credit facilities are required to be
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 13
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
repaid on the respective facility maturity date or earlier if accelerated due to an event of default or other mandatory repayment event.
The Company’s senior and mezzanine secured credit facilities have aggregated borrowing bases, which increase or decrease based on the cost and value of the properties financed under a given facility and the time that those properties are in the Company’s possession. When the Company resells a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured credit facilities. The borrowing base for a given facility may be reduced as properties age beyond certain thresholds or the performance of the properties financed under that facility declines, and any borrowing base deficiencies may be satisfied through contributions of additional properties or partial repayment of the facility.
Senior Secured Credit Facilities
The following summarizes certain details related to the Company’s senior secured credit facilities (in thousands, except interest rates):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing Capacity |
|
|
Outstanding |
|
|
Weighted-
Average
Interest |
|
|
End of
Revolving /
Withdrawal |
|
Final
Maturity |
As of June 30, 2026 |
Committed |
|
|
Uncommitted |
|
|
Total |
|
|
Amount |
|
|
Rate |
|
|
Period |
|
Date |
Senior financial institution 1 |
$ |
25,000 |
|
|
$ |
175,000 |
|
|
$ |
200,000 |
|
|
$ |
19,595 |
|
|
|
6.45 |
% |
|
December 2025 |
|
August 2026 |
Senior financial institution 2 |
|
— |
|
|
|
200,000 |
|
|
|
200,000 |
|
|
|
— |
|
|
|
— |
|
|
January 2026 |
|
July 2026 |
Related party facility 2 |
|
7,500 |
|
|
|
7,500 |
|
|
|
15,000 |
|
|
|
1,160 |
|
|
|
13.00 |
% |
|
October 2026 |
|
April 2027 |
Senior financial institution 4 |
|
— |
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
5,246 |
|
|
|
9.42 |
% |
|
September 2026 |
|
March 2027 |
Senior financial institution 5 |
|
— |
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
53,799 |
|
|
|
8.54 |
% |
|
August 2027 |
|
August 2027 |
Senior secured credit facilities |
$ |
32,500 |
|
|
$ |
507,500 |
|
|
$ |
540,000 |
|
|
$ |
79,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing Capacity |
|
|
Outstanding |
|
|
Weighted-
Average
Interest |
|
|
|
|
|
As of December 31, 2025 |
Committed |
|
|
Uncommitted |
|
|
Total |
|
|
Amount |
|
|
Rate |
|
|
|
|
|
Senior financial institution 1 |
$ |
25,000 |
|
|
$ |
175,000 |
|
|
$ |
200,000 |
|
|
$ |
19,173 |
|
|
|
7.07 |
% |
|
|
|
|
Senior financial institution 2 |
|
— |
|
|
|
200,000 |
|
|
|
200,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Senior financial institution 3 |
|
— |
|
|
|
150,000 |
|
|
|
150,000 |
|
|
|
— |
|
|
|
7.58 |
% |
|
|
|
|
Related party facility 1 |
|
25,539 |
|
|
|
24,461 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
9.32 |
% |
|
|
|
|
Related party facility 2 |
|
7,500 |
|
|
|
7,500 |
|
|
|
15,000 |
|
|
|
628 |
|
|
|
13.00 |
% |
|
|
|
|
Senior financial institution 4 |
|
— |
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
3,537 |
|
|
|
10.13 |
% |
|
|
|
|
Senior financial institution 5 |
|
— |
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
35,247 |
|
|
|
8.82 |
% |
|
|
|
|
Senior secured credit facilities |
$ |
58,039 |
|
|
$ |
681,961 |
|
|
$ |
740,000 |
|
|
$ |
58,585 |
|
|
|
|
|
|
|
|
As of June 30, 2026, the Company had multiple senior secured credit facilities, including one with a related party. Borrowings under the senior secured credit facilities accrue interest at a rate based on a Secured Overnight Financing Rate (“SOFR”) reference rate, plus a margin which varies by facility. Each of the Company’s senior secured credit facilities also have interest rate floors. The Company may also pay fees on its senior secured credit facilities, including a commitment fee, a usage fee and/or fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.
Borrowings under the Company’s senior secured credit facilities are collateralized by the real estate inventory financed by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against the Company with limited exceptions. The Company has, however, provided limited non-recourse carve-out guarantees under its senior and mezzanine secured credit facilities for certain of the SPEs’ obligations. Each senior secured credit facility contains eligibility requirements that govern whether a property can be financed.
During July 2026, the Company amended its senior secured credit facility with financial institution 1, which among other things, extended the revolving period to January 2027 and the final maturity date to June 2027, and provided that the $200 million facility is entirely uncommitted. Additionally, in July 2026, the Company amended and restated its senior secured
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 14
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
credit facility with financial institution 5, which among other things, increased the uncommitted borrowing capacity to $100 million. Lastly, the Company’s senior secured credit facility with financial institution 2 expired and was not renewed.
Mezzanine Secured Credit Facilities
The following summarizes certain details related to the Company’s mezzanine secured credit facilities (in thousands, except interest rates):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing Capacity |
|
|
Outstanding |
|
|
Weighted-
Average
Interest |
|
|
End of
Revolving /
Withdrawal |
|
Final
Maturity |
As of June 30, 2026 |
Committed |
|
|
Uncommitted |
|
|
Total |
|
|
Amount |
|
|
Rate |
|
|
Period |
|
Date |
Related party facility 1 |
$ |
— |
|
|
$ |
35,000 |
|
|
$ |
35,000 |
|
|
$ |
1,737 |
|
|
|
13.00 |
% |
|
June 2026 |
|
February 2027 |
Mezzanine financial institution 1 |
|
— |
|
|
|
45,000 |
|
|
|
45,000 |
|
|
|
— |
|
|
|
— |
|
|
January 2026 |
|
July 2026 |
Mezzanine secured credit facilities |
$ |
— |
|
|
$ |
80,000 |
|
|
$ |
80,000 |
|
|
$ |
1,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing Capacity |
|
|
Outstanding |
|
|
Weighted-
Average
Interest |
|
|
|
|
|
As of December 31, 2025 |
Committed |
|
|
Uncommitted |
|
|
Total |
|
|
Amount |
|
|
Rate |
|
|
|
|
|
Related party facility 1 |
$ |
— |
|
|
$ |
35,000 |
|
|
$ |
35,000 |
|
|
$ |
2,006 |
|
|
|
13.00 |
% |
|
|
|
|
Mezzanine financial institution 1 |
|
— |
|
|
|
45,000 |
|
|
|
45,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Mezzanine financial institution 2 |
|
— |
|
|
|
40,000 |
|
|
|
40,000 |
|
|
|
— |
|
|
|
11.58 |
% |
|
|
|
|
Related party facility 2 |
|
6,811 |
|
|
|
15,189 |
|
|
|
22,000 |
|
|
|
— |
|
|
|
13.00 |
% |
|
|
|
|
Mezzanine secured credit facilities |
$ |
6,811 |
|
|
$ |
135,189 |
|
|
$ |
142,000 |
|
|
$ |
2,006 |
|
|
|
|
|
|
|
|
As of June 30, 2026, the Company had two mezzanine secured credit facilities, including one with a related party. Borrowings under the Company’s mezzanine secured credit facilities accrue interest at a rate based on a SOFR reference rate, plus a margin which varies by facility. Each of the Company’s mezzanine secured credit facilities also have interest rate floors. The Company may also pay fees on its mezzanine secured credit facilities, including a commitment fee, a usage fee and/or fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.
Borrowings under the Company’s mezzanine secured credit facilities are collateralized by a second lien on the real estate inventory financed by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse against the Company with limited exceptions.
The Company’s mezzanine secured credit facilities are structurally and contractually subordinated to the related senior secured credit facilities.
During July 2026, the Company’s mezzanine secured credit facility with financial institution 1 expired and was not renewed. Additionally, in connection with the Company’s July 2026 amendment to its senior secured credit facility with financial institution 1, as described above, the final maturity date for the Company’s mezzanine secured credit facility with a related party was automatically extended to March 2027.
Maturities
Certain of the Company’s secured credit facilities mature within the next twelve months following the date these condensed consolidated financial statements are issued. Though the Company may from time to time adjust the composition of its credit facilities to correspond with its anticipated financing requirements, which may include modifying the available capacity under such credit facilities, or realigning the credit facility provider mix, the Company expects to enter into new financing arrangements or amend its existing arrangements to meet its obligations as they come due, which the Company believes is probable based on its history of prior credit facility renewals and entering into new financing facilities. The Company believes its existing cash on hand, proceeds from the resale of homes, fees and commissions earned from its other real estate service solutions, and cash from future borrowings available under each of the Company’s existing credit facilities, or the entry into additional new debt financing arrangements or further issuance of equity securities, will be sufficient to meet its obligations as they become due in the ordinary course of business for at least twelve months following the date these condensed consolidated financial statements are issued.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 15
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities
The Company’s secured credit facilities include customary representations and warranties, covenants and events of default. Financed properties are subject to customary eligibility criteria and concentration limits. The terms of these facilities and related financing documents require the Company to comply with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to tangible net worth). As of June 30, 2026, the Company was in compliance with all covenants and no event of default had occurred.
Senior Secured Debt - Other
The Company has a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin. As of June 30, 2026 and December 31, 2025, the weighted-average interest rate under the Company’s other senior secured debt was 8.31% and 8.92%, respectively.
Revolving Credit Facility
The Company has a $15.0 million revolving credit facility with a three-year term expiring in July 2028. Borrowings under the revolving credit facility accrue interest at 8.50% per annum and are secured by certain of the Company’s assets. The revolving credit facility includes customary financial and other covenants, such as maintaining a minimum level of liquidity, and events of default. As of June 30, 2026, the Company was in compliance with all covenants and no event of default had occurred.
Note 7. Warrant Liabilities
As of June 30, 2026, the Company had outstanding warrant liabilities consisting of 19.4 million public warrants and 2.4 million private placement warrants. Prior to the Reverse Stock Split, every 15 warrants were exercisable to purchase one share of Class A common stock at an exercise price of $172.50 per share. As a result of the Reverse Stock Split, and pursuant to the terms of the applicable warrant agreement, the number of shares of Class A common stock issuable on exercise of each warrant was proportionately decreased. Specifically, following effectiveness of the Reverse Stock Split, every 150 shares of Class A common stock that may be purchased pursuant to the exercise of warrants now represents one share of Class A common stock that may be purchased pursuant to such warrants. Accordingly, every 150 warrants are exercisable for one share of Class A common stock at an exercise price of $1,725.00 per share.
Public Warrants
A holder may exercise its public warrants only for a whole number of shares of Class A common stock. The public warrants will expire on September 1, 2026, or earlier upon redemption or liquidation. Pursuant to the terms of the warrant agreements, the Company may call the public warrants for redemption for cash or redeem the outstanding warrants for shares of Class A common stock under certain scenarios. The public warrants are traded on an over-the-counter market.
Private Placement Warrants
The private placement warrants have terms and provisions that are substantially identical to those of the public warrants, with the exception of certain redemption rights, options to exercise and registration rights when the private placement warrants are owned by specified holders.
Other Warrants
The foregoing discussion in this Note 7. Warrant Liabilities excludes the warrants that were issued and sold by the Company during July 2025 as these warrants are classified as equity securities. Refer to Note 9. Stockholders’ Equity, for further details.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 16
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 8. Fair Value Measurements
The fair values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and certain prepaid and other current assets and accrued expenses approximate carrying values because of their short-term nature. The Company’s credit facilities are carried at amortized cost and the carrying value approximates fair value because of their short-term nature.
The Company’s liabilities that are measured at fair value on a recurring basis consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2026 |
|
Quoted Prices in
Active Markets for
Identical Liabilities
(Level 1) |
|
|
Significant Other
Observable Inputs
(Level 2) |
|
|
Significant
Unobservable Inputs
(Level 3) |
|
Public warrant liabilities |
|
$ |
40 |
|
|
$ |
— |
|
|
$ |
— |
|
Private placement warrant liabilities |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2025 |
|
Quoted Prices in
Active Markets for
Identical Liabilities
(Level 1) |
|
|
Significant Other
Observable Inputs
(Level 2) |
|
|
Significant
Unobservable Inputs
(Level 3) |
|
Public warrant liabilities |
|
$ |
226 |
|
|
$ |
— |
|
|
$ |
— |
|
Private placement warrant liabilities |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
135 |
|
Public Warrants
The public warrants are traded on an over-the-counter market. The fair value of the public warrants is estimated based on the quoted market price of such warrants on the valuation date. The Company recorded changes in the fair value of the public warrants of $(0.1) million and $(0.3) million during the three months ended June 30, 2026 and 2025, respectively, and $(0.2) million and $(0.1) million during the six months ended June 30, 2026 and 2025, respectively. These changes are recorded in Change in fair value of warrant liabilities in the condensed consolidated statements of operations.
Private Placement Warrants
The following summarizes the changes in the Company’s private placement warrant liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the respective periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Beginning balance |
|
$ |
42 |
|
|
$ |
170 |
|
|
$ |
135 |
|
|
$ |
103 |
|
Change in fair value of private placement warrants included in net loss |
|
|
(13 |
) |
|
|
(86 |
) |
|
|
(106 |
) |
|
|
(19 |
) |
Ending balance |
|
$ |
29 |
|
|
$ |
84 |
|
|
$ |
29 |
|
|
$ |
84 |
|
The Company generally uses the Black-Scholes-Merton option-pricing model to determine the fair value of the private placement warrants, with assumptions including expected volatility, expected life of the warrants, associated risk-free interest rate, and expected dividend yield.
There were no transfers between Levels 1, 2, and 3 during the three and six months ended June 30, 2026 and 2025.
Note 9. Stockholders’ Equity
Authorized Capital Stock
The Company is authorized to issue 2,100,000,000 shares of capital stock, which consists of 2,000,000,000 shares of Class A common stock and 100,000,000 shares of preferred stock, both of which have a par value of $0.0001 per share.
Class A Common Stock
Market Information
The Company’s Class A common stock trades on the New York Stock Exchange under the symbol “OPAD” and the Company’s public warrants trade on the OTC Markets Group Pink Market under the symbol “OPADW.”
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 17
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
January 2026 Registered Direct Offering
During January 2026, the Company issued and sold 1,000,000 shares (the “2026 Shares”) of its Class A common stock for $18.00 per share, resulting in gross proceeds of $18.0 million, before deducting placement agent fees and other offering expenses (as adjusted for the Reverse Stock Split).
Sale Agreement
The Company has an active Open Market Sale AgreementSM (the “Sale Agreement”) with Jefferies LLC, under which the Company may offer and sell up to $100,000,000 of its Class A common stock from time to time in any manner deemed to be an “at the market” offering. The Company has no obligation to sell any shares under the Sale Agreement, but may do so from time to time. No shares were sold under the Sale Agreement during the six months ended June 30, 2026, and the Company had $69.7 million of remaining availability under the Sale Agreement as of June 30, 2026.
2025 Warrants
During July 2025, the Company issued warrants (“2025 Warrants”) to purchase shares of its Class A common stock. The 2025 Warrants became exercisable on January 26, 2026 and will expire on January 26, 2030. The 2025 Warrants are classified as equity securities based on the terms and conditions included in the agreements.
Prior to the Reverse Stock Split, the 2025 Warrants were exercisable to purchase up to 1,428,571 shares of the Company’s Class A common stock and had an exercise price of $2.30 per share.
As a result of the Reverse Stock Split, and pursuant to the terms of the applicable warrant agreement, the number of shares of Class A common stock issuable on exercise of each warrant was proportionately decreased and the exercise price per share was proportionately increased. Accordingly, following the Reverse Stock Split, the 2025 Warrants represent the rights to purchase an aggregate of 142,857 shares of Class A common stock, each with an exercise price of $23.00 per share.
Other Warrants
In addition to the 2025 Warrants described above, the Company has outstanding public and private placement warrants to purchase shares of Class A common stock that do not meet the criteria for equity classification and are recognized as liabilities. Refer to Note 7. Warrant Liabilities for further details.
Shares Outstanding
As of June 30, 2026, the Company had 4,832,094 shares of Class A common stock issued and outstanding.
Preferred Stock
As of June 30, 2026, there were no shares of preferred stock issued and outstanding.
Dividends
The Company’s Class A common stock is entitled to dividends if and when any dividend is declared by the Company’s Board, subject to the rights of all classes of stock outstanding having priority rights to dividends. The Company has not paid any cash dividends on Class A common stock to date. The Company may retain future earnings, if any, for the further development and expansion of the Company’s business and has no current plans to pay cash dividends for the foreseeable future. Any future determination to pay dividends will be made at the discretion of the Board and will depend on, among other things, the Company’s financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as the Board may deem relevant.
Note 10. Stock-Based Awards
2021 Equity Incentive Plans
Incentive Award Plan
Pursuant to the terms of the Offerpad Solutions Inc. 2021 Incentive Award Plan (the “2021 Plan”), the number of shares of the Company’s Class A common stock available for issuance under the 2021 Plan increases annually on the first day of each calendar year through January 1, 2031. The overall share limit automatically increased on January 1, 2026, following which there were 7,382,591 shares reserved for issuance under the 2021 Plan. As a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of Class A common stock underlying the Company’s outstanding equity awards under the 2021 Plan and the number of shares issuable under the Company’s 2021 Plan and existing agreements, as
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 18
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
well as the exercise price and/or any stock price goals, as applicable. Following the Reverse Stock Split, there are 738,257 shares reserved for issuance under the 2021 Plan as of June 30, 2026.
As of June 30, 2026, the Company has outstanding restricted stock units (“RSUs”), other stock or cash-based awards, and stock options that have been granted under the 2021 Plan.
Employee Stock Purchase Plan
Pursuant to the terms of the Offerpad Solutions Inc. 2021 Employee Stock Purchase Plan (“ESPP”), the number of shares of the Company’s Class A common stock available for issuance under the ESPP increases annually on the first day of each calendar year through January 1, 2031. The overall share limit automatically increased on January 1, 2026, following which there were 419,674 shares reserved for issuance under the ESPP. As a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of Class A common stock issuable under the ESPP. Following the Reverse Stock Split, there are 41,967 shares reserved for issuance under the ESPP as of June 30, 2026. No shares have been issued under the ESPP.
Restricted Stock Units
The following summarizes RSU award activity during the six months ended June 30, 2026, after taking into account the Reverse Stock Split:
|
|
|
|
|
|
|
|
|
Number of
RSUs
(in thousands) |
|
|
Weighted Average
Grant Date
Fair Value |
|
Outstanding as of December 31, 2025 |
|
476 |
|
|
$ |
19.61 |
|
Granted |
|
120 |
|
|
|
9.08 |
|
Vested and settled |
|
(148 |
) |
|
|
17.30 |
|
Forfeited |
|
(7 |
) |
|
|
13.76 |
|
Outstanding as of June 30, 2026 |
|
441 |
|
|
|
17.61 |
|
As of June 30, 2026, 0.1 million RSUs have vested, but have not yet been settled in shares of the Company’s Class A common stock, pursuant to elections made by certain non-employee members of the Board to defer settlement thereof under the Offerpad Solutions Inc. Deferred Compensation Plan for Directors.
As of June 30, 2026, the Company had $5.1 million of unrecognized stock-based compensation expense related to unvested RSUs. This expense is expected to be recognized over a weighted average period of 1.90 years. The fair value of RSUs that vested and settled during the six months ended June 30, 2026 and 2025 was $2.6 million and $2.2 million, respectively.
Other Cash or Stock-Based Awards
The Company did not grant any other cash or stock-based awards during the six months ended June 30, 2026.
As of June 30, 2026, the Company had $1.0 million of unrecognized stock-based compensation expense related to unvested other cash or stock-based awards granted in prior periods. This expense is expected to be recognized over a weighted average period of 1.45 years.
Stock Options
The following summarizes stock option activity during the six months ended June 30, 2026, after taking into account the Reverse Stock Split:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
(in thousands) |
|
|
Weighted-
Average
Exercise Price
Per Share |
|
|
Weighted Average
Remaining
Contractual
Term
(in years) |
|
|
Aggregate
Intrinsic
Value
(in thousands) |
|
Outstanding as of December 31, 2025 |
|
|
64 |
|
|
$ |
112.98 |
|
|
|
1.61 |
|
|
$ |
— |
|
Granted |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
Forfeited, canceled or expired |
|
|
(15 |
) |
|
|
112.12 |
|
|
|
|
|
|
|
Outstanding as of June 30, 2026 |
|
|
49 |
|
|
|
113.25 |
|
|
|
1.47 |
|
|
|
— |
|
Exercisable as of June 30, 2026 |
|
|
49 |
|
|
|
113.19 |
|
|
|
1.47 |
|
|
|
— |
|
Vested and expected to vest as of June 30, 2026 |
|
|
49 |
|
|
|
113.25 |
|
|
|
1.47 |
|
|
|
— |
|
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 19
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of June 30, 2026, the Company had an immaterial amount of unrecognized stock-based compensation expense related to unvested stock options that is expected to be recognized before the end of the third quarter of 2026. The fair value of stock options that vested during each of the six months ended June 30, 2026 and 2025 was immaterial.
Stock-based Compensation Expense
The following details stock-based compensation expense for the respective periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Sales, marketing and operating |
|
$ |
167 |
|
|
$ |
211 |
|
|
$ |
328 |
|
|
$ |
690 |
|
General and administrative |
|
|
773 |
|
|
|
860 |
|
|
|
1,482 |
|
|
|
2,005 |
|
Technology and development |
|
|
72 |
|
|
|
186 |
|
|
|
144 |
|
|
|
344 |
|
Stock-based compensation expense |
|
$ |
1,012 |
|
|
$ |
1,257 |
|
|
$ |
1,954 |
|
|
$ |
3,039 |
|
Note 11. Variable Interest Entities
The Company formed certain special purpose entities (each, an “SPE”) to purchase and sell residential properties. Each SPE is a wholly-owned subsidiary of the Company and a separate legal entity, and neither the assets nor credit of any such SPE are available to satisfy the debts and other obligations of any affiliate or other entity. The credit facilities are secured by the assets and equity of one or more SPEs. These SPEs are variable interest entities, and the Company is the primary beneficiary as it has the power to control the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses of the SPEs or the right to receive benefits from the SPEs that could potentially be significant to the SPEs. The SPEs are consolidated within the Company’s condensed consolidated financial statements.
The following summarizes the assets and liabilities related to the VIEs as of the respective period ends:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Assets |
|
|
|
|
|
|
Restricted cash |
|
$ |
1,416 |
|
|
$ |
1,302 |
|
Accounts receivable |
|
|
154 |
|
|
|
303 |
|
Real estate inventory |
|
|
94,226 |
|
|
|
93,793 |
|
Prepaid expenses and other current assets |
|
|
268 |
|
|
|
169 |
|
Property and equipment, net |
|
|
5,585 |
|
|
|
5,611 |
|
Total assets |
|
$ |
101,649 |
|
|
$ |
101,178 |
|
Liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
834 |
|
|
$ |
398 |
|
Accrued and other current liabilities |
|
|
409 |
|
|
|
526 |
|
Secured credit facilities and other debt, net |
|
|
85,172 |
|
|
|
78,076 |
|
Total liabilities |
|
$ |
86,415 |
|
|
$ |
79,000 |
|
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 20
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 12. Earnings Per Share
Basic earnings per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the weighted average number of common shares plus the incremental effect of dilutive potential common shares outstanding during the period. In periods when losses are reported, the weighted average number of common shares outstanding excludes Class A common stock equivalents, because their inclusion would be anti-dilutive.
The components of basic and diluted earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands, except per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(9,288 |
) |
|
$ |
(10,903 |
) |
|
$ |
(19,421 |
) |
|
$ |
(25,960 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic |
|
|
4,795 |
|
|
|
2,777 |
|
|
|
4,708 |
|
|
|
2,767 |
|
Dilutive effect of restricted stock units (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Dilutive effect of stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Dilutive effect of 2025 Warrants |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Weighted average common shares outstanding, diluted |
|
|
4,795 |
|
|
|
2,777 |
|
|
|
4,708 |
|
|
|
2,767 |
|
Net loss per share, basic |
|
$ |
(1.94 |
) |
|
$ |
(3.93 |
) |
|
$ |
(4.13 |
) |
|
$ |
(9.38 |
) |
Net loss per share, diluted |
|
$ |
(1.94 |
) |
|
$ |
(3.93 |
) |
|
$ |
(4.13 |
) |
|
$ |
(9.38 |
) |
Anti-dilutive securities excluded from diluted loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive restricted stock units (1) |
|
|
459 |
|
|
|
64 |
|
|
|
359 |
|
|
|
65 |
|
Anti-dilutive stock options |
|
|
53 |
|
|
|
78 |
|
|
|
57 |
|
|
|
80 |
|
Anti-dilutive 2025 Warrants |
|
|
143 |
|
|
|
— |
|
|
|
143 |
|
|
|
— |
|
Anti-dilutive warrants |
|
|
145 |
|
|
|
145 |
|
|
|
145 |
|
|
|
145 |
|
Anti-dilutive performance-based restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
(1) Due to the net loss during each of the three and six months ended June 30, 2026 and 2025, no dilutive securities were included in the calculation of diluted loss per share because they would have been anti-dilutive.
Note 13. Income Taxes
The Company determines its interim tax provision by applying the estimated effective income tax rate expected to be applicable for the full fiscal year to its income (loss) before income taxes for the period. The Company’s effective tax rate is dependent on several factors, such as tax rates in state jurisdictions and the relative amount of income the Company earns in the respective jurisdiction.
The Company recorded income tax expense of less than $0.1 million during each of the three months ended June 30, 2026 and 2025, and less than $0.1 million and $0.1 million during the six months ended June 30, 2026 and 2025, respectively. The Company’s effective tax rate was an expense of 0.2% and 0.3% during the three months ended June 30, 2026 and 2025, respectively, and 0.2% and 0.3% during the six months ended June 30, 2026 and 2025, respectively. The Company’s effective tax rate during the three and six months ended June 30, 2026 differed from the federal statutory rate of 21% primarily due to state taxes and net operating loss carryforwards. The valuation allowance recorded against the Company’s net deferred tax assets was $133.0 million as of June 30, 2026.
As of June 30, 2026, the Company continues to have a full valuation allowance recorded against its net deferred tax assets and will continue to evaluate its valuation allowance in future periods for any change in circumstances that causes a change in judgment about the realizability of the deferred tax assets. The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods if estimates of future taxable income during the carryforward period are increased, if objective negative evidence in the form of cumulative losses is no longer present, and if the Company employs tax planning strategies in the future.
The Internal Revenue Code (the “IRC”) contains provisions that limit the amount of net operating loss carryforwards that a company may use in a given year in the event of certain cumulative changes in ownership over a three-year period as described in Section 382 of the IRC. As a result of the Company’s registered direct offering in January 2026, the Company determined
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 21
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
that an ownership change occurred as of January 13, 2026. Consequently, the Company’s ability to utilize its net operating loss carryforwards and tax credit carryforwards that existed as of January 13, 2026 is subject to annual limitations. To the extent that any single-year limitation is not utilized to the full amount of the limitation, such unused amounts are carried over to subsequent years until the earlier of utilization or the expiration of the relevant carryforward period.
Note 14. Related-Party Transactions
LL Credit Facilities
As of June 30, 2026, the Company has one senior secured credit facility and one mezzanine secured credit facility with affiliates of LL Capital Partners I, L.P. (“LL Capital”), a related party. Roberto Sella, who is a member of the Board and holds more than 5% of the Company’s Class A common stock, is the managing partner of LL Funds, LLC.
The following summarizes certain details related to these facilities, which are further described in Note 6. Credit Facilities and Other Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2026 |
|
|
As of December 31, 2025 |
|
($ in thousands) |
|
Borrowing
Capacity |
|
|
Outstanding
Amount |
|
|
Borrowing
Capacity |
|
|
Outstanding
Amount |
|
Senior secured credit facilities with a related party |
|
$ |
15,000 |
|
|
$ |
1,160 |
|
|
$ |
65,000 |
|
|
$ |
628 |
|
Mezzanine secured credit facilities with a related party |
|
$ |
35,000 |
|
|
$ |
1,737 |
|
|
$ |
57,000 |
|
|
$ |
2,006 |
|
Since March 2020, the Company has been party to a mezzanine loan and security agreement (the “LL Mezz Loan Agreement”), with LL Private Lending Fund II, L.P., which is an affiliate of LL Capital. Under the LL Mezz Loan Agreement, the Company may borrow funds during the revolving/withdrawal period up to a maximum principal amount of $35.0 million.
Since October 2025, the Company has also been party to a senior loan and security agreement (the “2025 LL Senior Loan Agreement”) with LL Private Lending Fund II, L.P. Under the 2025 LL Senior Loan Agreement, the Company may borrow funds during the revolving/withdrawal period up to a maximum principal amount of $15.0 million.
From October 2016 through February 2026, the Company was party to a loan and security agreement (the “LL Funds Loan Agreement”), with LL Private Lending Fund, L.P. and LL Private Lending Fund II, L.P., both of which are affiliates of LL Capital. The LL Funds Loan Agreement was comprised of a senior secured credit facility and a mezzanine secured credit facility. During February 2026, the LL Funds Loan Agreement expired and was not renewed.
The Company paid interest for borrowings under the LL credit facilities of $0.1 million and $1.6 million during the three months ended June 30, 2026 and 2025, respectively, and $0.2 million and $2.8 million during the six months ended June 30, 2026 and 2025, respectively.
Use of First American Financial Corporation’s Services
First American Financial Corporation (“First American”), which holds more than 5% of the Company’s Class A common stock, through its subsidiaries is a provider of title insurance and settlement services for real estate transactions and a provider of property data services. Additionally, Kenneth DeGiorgio, who is a member of the Company’s Board, was the chief executive officer of First American through early April 2025. The Company uses First American’s services in the ordinary course of its home-buying and home-selling activities. The Company paid First American less than $0.1 million and $0.9 million during the three months ended June 30, 2026 and 2025, respectively, and $0.1 million and $1.8 million during the six months ended June 30, 2026 and 2025, respectively, for its services, inclusive of the fees for property data services.
Compensation of Immediate Family Members of Brian Bair
Offerpad employs Brian Bair’s brother and sister-in-law, Mr. Vaughn Bair and Ms. Katie Bullard, respectively. The following details the total compensation paid to Mr. Vaughn Bair and Ms. Katie Bullard during each of the respective periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Mr. Vaughn Bair |
|
$ |
207 |
|
|
$ |
112 |
|
|
$ |
321 |
|
|
$ |
321 |
|
Ms. Katie Bullard |
|
|
40 |
|
|
|
37 |
|
|
|
118 |
|
|
|
87 |
|
Total compensation paid |
|
$ |
247 |
|
|
$ |
149 |
|
|
$ |
439 |
|
|
$ |
408 |
|
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 22
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company did not grant any equity awards to Mr. Vaughn Bair and Ms. Katie Bullard during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company granted 2,043 RSUs to Mr. Vaughn Bair and 2,000 RSUs to Ms. Katie Bullard.
Note 15. Commitments and Contingencies
Homes Purchase Commitments
As of June 30, 2026, the Company was under contract to purchase 228 homes for an aggregate purchase price of $69.5 million.
Lease Commitments
The Company has entered into operating lease agreements for its corporate headquarters in Tempe, Arizona and field office facilities in certain metropolitan markets in which the Company operates in the United States. Refer to Note 4. Leases, for further details.
Legal and Other Matters
The Company is subject to various actions, claims, suits and other legal proceedings that arise in the ordinary course of business, including, without limitation, assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters. The Company records accruals for loss contingencies when it is probable that a loss will occur, and the amount of such loss can be reasonably estimated. The Company is not currently a party to any actions, claims, suits or other legal proceedings arising in the ordinary course of business, the outcome of which, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on the Company’s condensed consolidated financial statements.
The following is a description of pending litigation that falls outside the scope of ordinary and routine litigation incidental to the Company’s business.
Class Action Alleging Breach of Fiduciary Duties
On August 26, 2024, a purported stockholder of Offerpad (the “Plaintiff”) filed a complaint against Alexander Klabin, Spencer Rascoff, Ken Fox, Jim Lanzone, Gregg Renfrew, Rajeev Singh, Robert Reid, Michael Clifton, Supernova Partners, LLC (the “Supernova Defendants”), Brian Bair, and Michael Burnett (the “Offerpad Defendants”). The case is captioned In re Supernova Partners Acquisition Co. SPAC Litigation, C.A. No. 2024-0887 (Del. Ch.) (the “Complaint”). The Complaint generally alleges that the Supernova Defendants breached their fiduciary duties, with the Offerpad Defendants aiding and abetting these breaches, in connection with the merger between OfferPad, Inc. and Supernova Partners Acquisition Company, Inc. on September 1, 2021. The Complaint seeks, among other things, monetary damages, disgorgement of any unjust enrichment, rescissory damages, pre-judgment and post-judgment interest, and reasonable attorneys’ fees and costs. On September 19, 2024, proceedings related to the Complaint were temporarily stayed. On February 24, 2025, the court dismissed the Offerpad Defendants and Supernova Partners, LLC from the Complaint without prejudice, which terminated the case as to the Offerpad Defendants. On June 30, 2025, Plaintiff filed a notice lifting the stay, which became effective immediately. In October 2025, the parties reached an agreement in principle to resolve the matter. The settlement remains subject to court approval, which is not assured. A settlement hearing has been scheduled for December 2, 2026. The Company’s accrual associated with this matter as of June 30, 2026 reflects the terms of the agreement in principle to resolve the matter. Notwithstanding such agreement, in regard to the remaining allegations against the remaining Supernova Defendants, because of the many questions of fact and law that may arise, the outcome of this legal proceeding remains uncertain at this point.
Note 16. Segment Reporting
The Company operates in the U.S. residential real estate industry and its operating segments have been determined based on the method by which its Chief Executive Officer, who is the Company’s chief operating decision maker (“CODM”), evaluates performance and allocates resources. The Company has four operating segments, none of which have been aggregated, and two reportable segments. The following segment reporting presentation includes the Company’s Cash Offer and Renovate reportable segments and Other, which includes the Company’s two remaining operating segments, along with Offerpad corporate activities:
•
Cash Offer, in which customers can access the Company’s website or mobile application to receive a competitive cash offer for their home and quickly close without the major inconveniences associated with traditional real estate selling.
•
Renovate, in which the Company leverages its existing logistics, operations, technology and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize the Company’s renovations team to update their portfolio of homes for rent or to sell.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 23
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
oCash Offer Marketplace, including Direct+ partners, in which qualified homes are routed through a marketplace of third-party buyers, providing buyers with an opportunity to purchase homes within the Company’s funnel; and
oBrokerage Services, in which sellers can select from different agent-led pathways to sell their home, including HomePro, which connects customers with experienced agents, including both agents affiliated with the Company’s internal brokerage and independent local agents, supported by the Company’s platform, data and customer flow, and Agent Partnership Program, which provides an opportunity for third-party agents to present the Company’s cash offer as a potential solution for their customers.
During 2025, the Company revised its reportable segments due to changes in the composition of its operating segment financial results, following which, Renovate is a separate reportable segment. Accordingly, the Company has changed its presentation for all periods presented to reflect its revised segment reporting.
The Company’s CODM evaluates performance based on operating segment gross profit and uses this measure when making decisions about the allocation of operating resources to each segment, including through the annual budget and forecasting process, along with regular budget-to-actual variance analyses.
No individual customer accounted for more than 10% of the Company’s consolidated revenue during the three and six months ended June 30, 2026 and 2025.
The following details segment financial information for the respective periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
$ |
71,745 |
|
|
$ |
152,071 |
|
|
$ |
145,244 |
|
|
$ |
305,904 |
|
Renovate |
|
|
4,773 |
|
|
|
6,415 |
|
|
|
10,490 |
|
|
|
11,729 |
|
Other |
|
|
1,135 |
|
|
|
1,829 |
|
|
|
1,994 |
|
|
|
3,380 |
|
Total revenue |
|
|
77,653 |
|
|
|
160,315 |
|
|
|
157,728 |
|
|
|
321,013 |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer (1) |
|
|
66,610 |
|
|
|
140,914 |
|
|
|
136,484 |
|
|
|
286,649 |
|
Renovate |
|
|
3,808 |
|
|
|
5,117 |
|
|
|
8,344 |
|
|
|
9,357 |
|
Other |
|
|
118 |
|
|
|
95 |
|
|
|
226 |
|
|
|
311 |
|
Total cost of revenue |
|
|
70,536 |
|
|
|
146,126 |
|
|
|
145,054 |
|
|
|
296,317 |
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
|
5,135 |
|
|
|
11,157 |
|
|
|
8,760 |
|
|
|
19,255 |
|
Renovate |
|
|
965 |
|
|
|
1,298 |
|
|
|
2,146 |
|
|
|
2,372 |
|
Other |
|
|
1,017 |
|
|
|
1,734 |
|
|
|
1,768 |
|
|
|
3,069 |
|
Total gross profit |
|
|
7,117 |
|
|
|
14,189 |
|
|
|
12,674 |
|
|
|
24,696 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales, marketing and operating |
|
|
7,622 |
|
|
|
13,188 |
|
|
|
15,196 |
|
|
|
27,016 |
|
General and administrative |
|
|
6,780 |
|
|
|
7,796 |
|
|
|
12,907 |
|
|
|
14,992 |
|
Technology and development |
|
|
954 |
|
|
|
986 |
|
|
|
1,840 |
|
|
|
2,006 |
|
Total operating expenses |
|
|
15,356 |
|
|
|
21,970 |
|
|
|
29,943 |
|
|
|
44,014 |
|
Loss from operations |
|
|
(8,239 |
) |
|
|
(7,781 |
) |
|
|
(17,269 |
) |
|
|
(19,318 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
123 |
|
|
|
329 |
|
|
|
292 |
|
|
|
72 |
|
Interest expense |
|
|
(1,387 |
) |
|
|
(3,665 |
) |
|
|
(3,004 |
) |
|
|
(7,187 |
) |
Other income, net |
|
|
231 |
|
|
|
244 |
|
|
|
592 |
|
|
|
540 |
|
Total other expense |
|
|
(1,033 |
) |
|
|
(3,092 |
) |
|
|
(2,120 |
) |
|
|
(6,575 |
) |
Loss before income taxes |
|
$ |
(9,272 |
) |
|
$ |
(10,873 |
) |
|
$ |
(19,389 |
) |
|
$ |
(25,893 |
) |
(1) Includes real estate inventory valuation adjustments of $0.3 million and $1.1 million during three months ended June 30, 2026 and 2025, respectively, and $0.7 million and $2.8 million during the six months ended June 30, 2026 and 2025, respectively.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 24
OFFERPAD SOLUTIONS INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company’s CODM is not provided with, and does not review, segment assets when evaluating performance and allocating resources to its operating segments. Accordingly, segment asset information has not been provided.
Note 17. Subsequent Events
The Company has determined that there have been no events that have occurred that would require recognition in the condensed consolidated financial statements or additional disclosure herein, except as described elsewhere in the notes to the condensed consolidated financial statements.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis provides information that management of Offerpad (the “Company”) believes is relevant to an assessment and understanding of Offerpad’s consolidated results of operations and financial condition. The discussion should be read together with the unaudited interim condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Company’s audited consolidated financial statements and accompanying notes included in Item 8 of its Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2026.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Offerpad’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in Part I, Item 1A of Offerpad’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Overview
Our Business
We are a real estate solutions company focused on giving homeowners more control, flexibility, and choice when buying and selling a home. We combine proprietary technology with local real estate expertise to simplify the home sale process and reduce friction across the transaction lifecycle, helping customers move forward with speed, transparency, and confidence. We provide cash offers, brokerage services, access to additional cash buyers through marketplace-enabled capabilities, and renovation services that support both internal transactions and third-party partners. Founded in 2015, we have transacted on homes representing approximately $12.4 billion of aggregate revenue through June 30, 2026.
We are headquartered in Tempe, Arizona and operate in over 1,900 cities and towns in 27 metropolitan markets across 18 states as of June 30, 2026.
Current Economic Conditions and Health of the U.S. Residential Real Estate Industry
Our business and operating results are impacted by the general economic conditions and the health of the U.S. residential real estate industry, particularly the single-family home resale market. Our Cash Offer solution, which is the foundation of our business and generates the substantial majority of our consolidated revenue, generally depends on a high volume of residential real estate transactions throughout the markets in which we operate. While we have expanded our real estate service solutions beyond our Cash Offer service over time, including through the offering of renovation services through our Renovate solution, together with a range of other services that are designed to meet the unique needs of sellers and partners across multiple transaction paths, transaction volumes in the U.S. residential real estate market continue to affect substantially all of the ways that we generate revenue.
During the first half of 2026, the residential real estate market conditions continued to be negatively impacted by the ongoing housing affordability pressures, weakened consumer confidence and concerns associated with the macroeconomic and geopolitical environments, including the conflict in the Middle East which began towards the end of the first quarter of 2026. Additionally, the mortgage interest rate environment has remained elevated during 2026, with the average thirty-year fixed mortgage rate starting the year around 6%, before gradually increasing to around 6.5% at the end of June 2026. The cumulative impact of these factors continue to cause uncertainty in the market and challenge consumer confidence, resulting in decreased consumer demand for residential real estate and lower than normal real estate transaction volumes. We expect the uncertainty resulting from the Middle East conflict could continue to impact the macroeconomic and mortgage interest rate environments in the near-term and may have additional long term effects, particularly if the conflict further escalates or intensifies, or is prolonged.
In response to these prevailing market conditions during the first six months of 2026, we have maintained our focus on refining our operating model with the intention of improving acquisition accuracy, customer engagement, and capital efficiency across the transaction lifecycle. We believe the launch of our AI-powered homeowner intelligence platform, along with our AI-driven portfolio intelligence platform during the first quarter of 2026, has allowed us to better assess and more quickly adjust to changes in the local housing market conditions, allowing us to manage and mitigate our risk exposure more effectively.
Within this operating environment during the first half of 2026, we remained diligent in selling through our aged real estate inventory, while also leveraging our portfolio intelligence platform to streamline our evaluation and underwriting process, in order to steadily increase our home acquisition pace during the second quarter of 2026. This combination resulted in the average holding period of homes sold decreasing during the second quarter of 2026, a trend we expect to continue in the third quarter of 2026. Additionally, we anticipate our increased acquisition pace will also persist into the third quarter of 2026 as we continue to leverage our portfolio intelligence platform to improve the quality of homes in our real estate inventory mix.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 26
Further, our gross profit margin was 9.2% during the second quarter of 2026, the highest level since late 2023. Lastly, our focus on cost reduction and operational efficiencies throughout the business continues to be reflected in our lower cost structure, as we achieved year-over-year improvement in our net loss for the sixth consecutive quarter.
Given the current market conditions, we remain committed to growing our other real estate service solution offerings, and within our Cash Offer solution, proactively optimizing our capital allocation across our highest performing and most efficient markets along with using pricing adjustments and other incentives in an effort to drive consumer demand. These pricing adjustments have had a negative impact on our operating results over the past few years. Further, the uncertainty regarding the near-term macroeconomic conditions has been amplified as a result of the conflict in the Middle East, making it increasingly difficult to predict the near-term direction of mortgage interest rates and consumer demand for residential real estate. We anticipate the ongoing economic uncertainties and affordability pressures will continue to impact consumer demand for residential real estate during the third quarter of 2026. As a result of these market dynamics, we may be required to use similar pricing adjustments and incentives in the future, and though we currently plan to steadily increase our home acquisition pace in the near-term, we may also be required to reduce our real estate inventory or home acquisition pace in future periods in response to the prevailing market conditions at that time, as appropriate.
January 2026 Registered Direct Offering
We have been focusing on strategically strengthening our presence within existing markets through our various real estate service solutions, expanding our operations and implementing our long-term strategic initiatives over time. In connection with these efforts and to strengthen our balance sheet, we entered into a securities purchase agreement in January 2026 with the purchasers named therein, providing for the issuance and sale by us of an aggregate of 1,000,000 shares (the “2026 Shares”) of our Class A common stock. The 2026 Shares were sold for a purchase price of $18.00 per share, for gross proceeds of $18.0 million, before deducting placement agent fees and other offering expenses (as adjusted for the Reverse Stock Split).
New York Stock Exchange Listing Notices
April 2025 NYSE Notification
On April 10, 2025, we received notice (the “April 2025 NYSE Notification”) from the NYSE that we were not in compliance with Section 802.01B of the NYSE Listed Company Manual because our average global market capitalization over a consecutive 30 trading-day period and, at the same time, our last reported stockholders’ equity were each less than $50 million.
On July 16, 2025, the NYSE accepted our business plan advising the definitive action(s) we are taking or plan to take that would bring us into compliance with the NYSE continued listing standards within 18 months of receipt of the April 2025 NYSE Notification (the “Cure Period”). As a result, we are subject to quarterly monitoring for compliance with the business plan.
The April 2025 NYSE Notification has had no immediate impact on the listing of our Class A common stock. Further, our Class A common stock will continue to be listed and traded on the NYSE during the Cure Period, subject to our compliance with the other continued listing standards of the NYSE and continued periodic review by the NYSE of our progress with respect to the business plan.
March 2026 NYSE Notification
On March 3, 2026, we received notice (the “March 2026 NYSE Notification”) from the NYSE that we are not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Class A common stock was less than $1.00 over a consecutive 30 trading-day period.
On March 5, 2026, we notified the NYSE that we intend to cure the stock price deficiency and to return to compliance with the NYSE continued listing standards. On June 3, 2026, at our 2026 Annual Meeting of Stockholders, our stockholders approved a reverse stock split of our Class A common stock in order to regain compliance with the minimum closing price requirement. On June 8, 2026, we filed a certificate of amendment to our Fourth Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split, and our Class A common stock began trading on a split-adjusted basis at market open on June 9, 2026.
Under the NYSE’s rules, the price condition is deemed cured if the price promptly exceeds $1.00 per share, and the price remains above that level for at least the following 30 trading days. On July 1, 2026, we were notified by the NYSE that the average closing price of our Class A common stock exceeded the minimum $1.00 per share requirement on a 30-trading day average. Accordingly, we have regained compliance with Section 802.01C of the NYSE Listed Company Manual. However, there is also no assurance that we will maintain compliance with this or the other listing standards of the NYSE.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 27
Factors Affecting Our Performance
We believe our performance and future success depend on a variety of factors that present significant opportunities for our business but also present risks and challenges that could adversely impact our growth and profitability, including those discussed in Overview above, along with those discussed below.
Market Penetration in Existing Markets
The U.S. residential real estate market is substantial, with 4.4 million homes sold for a total transaction value of roughly $1.8 trillion during 2025, and is highly fragmented with a significant number of licensed real estate agents and real estate brokerages. In 2025, the total residential real estate transactions in our 26 active metropolitan markets as of December 31, 2025 covered roughly 22% of the 4.4 million homes sold during the year, and we estimate that we captured roughly 0.2% of such transactions. Given this high degree of fragmentation, we believe that giving homeowners more control, flexibility, and choice when buying and selling a home through our real estate service solutions could lead to continued market share growth and accelerated adoption of the digital model. We have demonstrated higher market share in certain markets over time, providing the backdrop to grow our overall market penetration as we focus on the expansion of our various real estate service solutions in existing markets. Additionally, we anticipate our market share will increase over time as we invest in additional brand marketing, strengthen our local partnerships and continue improving customer awareness of our offerings.
Expansion into New Markets
Since our launch in 2015, we have expanded our real estate operations into 27 metropolitan markets as of June 30, 2026. We have been strategic in our approach to growing our market footprint and have focused on geographic diversification across high population growth cities with affordable median sales prices and increasing employment characteristics. Given this current coverage, we believe there is significant opportunity to both increase market penetration in our existing markets and to grow our business through new market expansion over the long-term. Also, because of our strategic approach in offering four complementary solutions that serve sellers and partners across multiple transaction paths, we believe a significant portion of the total addressable market is serviceable with our business model. As we expand our reach through our various service offerings, we expect to continue to serve customers in markets beyond our direct service area. Further, this strategic approach has historically enabled us to enter into new markets to offer certain of our service offerings, without offering all of our buying and selling services in such markets. In connection with this approach, we are currently offering renovation services in select markets in which we operate.
Although we have expanded into new markets over time, we have decelerated our market expansion plans in more recent years given the uncertain economic outlook and challenging residential real estate market conditions. We intend to continue evaluating expansion plans on an ongoing basis in order to maintain our flexibility in assessing the overall timing of our expansion plan and appropriate market entry points in the future.
Renovate
Our renovation process has been a key component of our business model since our inception, built to improve home quality and resale outcomes. Over time, we have expanded this core capability into a data-driven platform that extends beyond owned homes into third-party renovation services. As we have developed and expanded our Renovate offering in recent years, our renovation volumes have increased and these services have become an increasingly larger component of our business and operating results, a trend we expect to continue in the future as we maintain our focus on driving additional volume from such services.
Through our Renovate services, we are able to leverage our existing logistics, operations, technology, and skill-sets to provide renovation services to other businesses, allowing other companies and homeowners to utilize our renovations team to update their portfolio of homes for rent or to sell. When providing these third-party renovation services, we receive a renovation project fee, and are also typically compensated with a service fee that is based on a percentage of the overall renovation project fee.
Cash Offer Marketplace
Our Cash Offer Marketplace, which includes Direct+ partners, provides third-party buyers with an opportunity to purchase homes within our funnel. Qualified homes are routed through a marketplace of third-party buyers, which is intended to increase overall conversion while preserving speed and certainty for sellers. These transactions can take several forms, including assigning the original purchase contract to the end buyer and collecting a fee at closing.
The Cash Offer Marketplace expands buyer demand beyond our balance sheet and generates additional fee-based revenue.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 28
Brokerage Services
Our Brokerage Services solution provides sellers with different agent-led pathways to sell their home, including HomePro, which connects customers with experienced agents, including both agents affiliated with our internal brokerage and independent local agents, supported by our platform, data, and customer flow. Brokerage Services also includes the Agent Partnership Program, which enables third-party real estate agents to present our cash offer as a potential solution for their customers. These services are designed to enable customers to utilize our services in a way that best suits their home-selling situation and increase in-home seller engagement, while also serving as a valuable resource for real estate agents.
Ancillary Products and Services
Over the long term, we aim to deliver other additional products and services tied to the core real estate transaction in a smooth, efficient, digital-driven platform, focused on transparency and ease of use. Although further developing these products and services will require significant investment, growing our current offerings and offering additional ancillary products and services, potentially including energy efficiency solutions, smart home technology, insurance, and home warranty services, we believe will strengthen our unit economics and allow us to better optimize pricing. Generally, the revenue and margin profiles of our ancillary products and services are different from our Cash Offer service, which accounts for the substantial majority of our revenue, with most ancillary products and services having a smaller average revenue per transaction than our cash offering service, but a higher margin.
While we have offered a variety of ancillary products and services over time, our title and escrow services represent the most notable ancillary service that we currently provide. We have a national relationship with a leading title and escrow company, through which we are able to leverage our size and scale to provide exceptional title and escrow closing services with a favorable economic impact principally in our Cash Offer service.
Unit Economics
We view Contribution Margin and Contribution Margin After Interest (see “—Non-GAAP Financial Measures”) as key performance indicators for unit economic performance, which are currently driven primarily by our Cash Offer transactions. We also use total real estate transactions as an operating metric to assess the scale and reach of our solutions platform across Cash Offer, Cash Offer Marketplace, and Brokerage Services. As we continue to expand our multi-solution platform, we expect future financial performance improvements to be driven by both growth in transaction volume across these solutions and expansion of unit-level margins, through initiatives such as:
•Continued optimization of acquisition, renovation, and resale processes and strategies, including our underwriting processes, as we increase our market penetration in existing markets;
•Effectively growing and expanding our solutions platform, including Cash Offer, Cash Offer Marketplace, and Brokerage Services, while optimizing customer and agent community engagement and increasing conversion across transaction pathways; and
•Introducing and scaling additional ancillary products and services to complement our core Cash Offer solution, over the long term.
Operating Leverage
We utilize our technology and product teams to design systems and workflows to make our operations teams more efficient and able to support and scale with the business. Many positions are considered volume based, and as our business grows over the longer term, we plan to focus on developing more automation tools to gain additional leverage. Additionally, in periods when our business is growing, we expect to be able to gain operating leverage on portions of our cost structure that are more fixed in nature as opposed to purely variable. These types of costs include general and administrative expenses and certain marketing and information technology expenses, which generally grow at a slower pace than proportional to revenue growth.
Real Estate Inventory Financing
Our business model requires significant capital to purchase real estate inventory. Real estate inventory financing is a key enabler to our growth and we rely on our non-recourse asset-backed financing facilities, which primarily consist of senior and mezzanine secured credit facilities, to finance our home purchases. Though we may from time to time adjust the composition of our credit facilities to correspond with our anticipated financing requirements, which may include modifying the available capacity under such credit facilities, or realigning the credit facility provider mix, the loss of adequate access to these types of facilities, or the inability to maintain these types of facilities on favorable terms, would impair our performance. See “—Liquidity and Capital Resources—Financing Activities.”
Seasonality
The residential real estate market is seasonal and varies from market to market. Typically, the greatest number of transactions occur in the spring and summer, with fewer transactions occurring in the fall and winter. Our financial results, including
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 29
revenue, margins, real estate inventory, and financing costs, have historically had seasonal characteristics generally consistent with the residential real estate market, a trend we expect to continue in the future, subject to the market conditions discussed above.
Risk Management
While we have expanded our real estate service solutions beyond our Cash Offer service over time, a significant portion of our business model continues to be based upon acquiring homes at a price that will allow us to provide a competitive offer to the consumer, while being able to add value through the renovation process, and relisting the home so that it sells at a profit and in a relatively short period of time.
Since inception, we have invested in real estate technology platforms, supported by a growing base of proprietary transaction-level data. This data foundation underpins an AI-driven operating model designed to improve acquisition accuracy, customer engagement, and capital efficiency across the transaction lifecycle.
During the first quarter of 2026, we deployed the first iteration of SCOUT, our AI-powered homeowner intelligence platform, across all markets. SCOUT integrates seller inputs with third-party data, public records, and proprietary data and is designed to inform acquisition and routing decisions prior to a cash offer or other solution being presented to the seller.
We also launched the initial version of HENRY, our portfolio intelligence platform, in its core monitoring capacity during the first quarter of 2026. HENRY is designed to evaluate properties within the context of portfolio performance by integrating market data, renovation outcomes, and capital criteria into a unified system, and is intended to support pricing, acquisition, and asset management decisions. We have implemented AI-driven inspection and renovation estimation tools as part of the HENRY platform, and additional capabilities are under development to support broader lifecycle decision-making.
We believe the recent implementation of our portfolio intelligence platform, combined with the extensive real estate experience of our internal teams, will allow us to better assess and more quickly adjust to changes in the local housing market conditions, and manage and mitigate our risk exposure more effectively.
During the second quarter of 2026, the average holding period of homes sold decreased to 141 days as we sold through our aged real estate inventory and increased our home acquisition pace, causing a shift in our overall real estate inventory mix to include a higher composition of newer acquired homes. Based on our current expectations, we anticipate our average real estate inventory holding period will continue to decline in the third quarter of 2026 as we steadily increase our home acquisition pace and our overall real estate inventory mix continues to shift and includes a greater composition of newly acquired homes. However, as there continues to be an increased level of uncertainty in the residential real estate market, and given our focus on effectively managing and mitigating our risk exposure, we intend to continue balancing our home acquisition pace to manage our real estate inventory levels, and ultimately, our average real estate inventory holding period.
Non-GAAP Financial Measures
In addition to our results of operations below, we report certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). These measures have limitations as analytical tools when assessing our operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income. We may calculate or present our non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures we report may not be comparable with those of companies in our industry or in other industries.
Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins)
To provide investors with additional information regarding our margins, we have included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. We believe that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across our markets. Each of these measures is intended to present the economics related to the number of homes sold or other real estate transactions during a given period. We do so by including revenue generated from our Cash Offer, Cash Offer Marketplace, and Brokerage Services solutions in the period and only the expenses that are directly attributable to these transactions, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in real estate inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs (including senior and mezzanine secured credit facilities and other senior secured debt) attributable to homes sold during a reporting period. We believe these measures facilitate meaningful period over period comparisons and illustrate our ability to generate returns on our homes sold and other real estate transactions after considering the costs directly related to such transactions in a presented period.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 30
Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest (and related margins) are supplemental measures of our operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in real estate inventory at the end of the period, costs required to be recorded under GAAP in the same period.
Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. We include a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.
Adjusted Gross Profit / Margin
We calculate Adjusted Gross Profit as gross profit under GAAP adjusted for (1) net real estate inventory valuation adjustment plus (2) interest expense associated with homes sold in the presented period and recorded in cost of revenue. Net real estate inventory valuation adjustment is calculated by adding back the real estate inventory valuation adjustment charges recorded during the period on homes that remain in real estate inventory at period end and subtracting the real estate inventory valuation adjustment charges recorded in prior periods on homes sold in the current period. We define Adjusted Gross Margin as Adjusted Gross Profit as a percentage of revenue.
We view this metric as an important measure of business performance, as it captures gross margin performance isolated to real estate transactions in a given period and provides comparability across reporting periods. Adjusted Gross Profit helps management assess performance across the key phases of processing a home (acquisitions, renovations, and resale) for a specific resale cohort.
Contribution Profit / Margin
We calculate Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income, net which is primarily composed of interest income earned on our cash and cash equivalents. The composition of our holding costs is described in the footnotes to the reconciliation table below. We define Contribution Margin as Contribution Profit as a percentage of revenue.
We view this metric as an important measure of business performance as it captures the unit level performance isolated to real estate transactions in a given period and provides comparability across reporting periods. Contribution Profit helps management assess inflows and outflow directly associated with a specific resale cohort.
Contribution Profit / Margin After Interest
We define Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred on homes sold during the period. This includes interest expense recorded in prior periods in which the sale occurred. Our senior and mezzanine secured credit facilities and other senior secured debt are secured by our homes in real estate inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold. See “—Liquidity and Capital Resources—Financing Activities.” We define Contribution Margin After Interest as Contribution Profit After Interest as a percentage of revenue.
We view this metric as an important measure of business performance. Contribution Profit After Interest helps management assess Contribution Margin performance, per above, when fully burdened with costs of financing.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 31
The following table presents a reconciliation of our Adjusted Gross Profit, Contribution Profit (Loss) and Contribution Profit (Loss) After Interest to our Gross Profit, which is the most directly comparable GAAP measure, for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands, except percentages, homes sold, and real estate transactions, unaudited) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Gross profit (GAAP) |
|
$ |
7,117 |
|
|
$ |
14,189 |
|
|
$ |
12,674 |
|
|
$ |
24,696 |
|
Gross margin |
|
|
9.2 |
% |
|
|
8.9 |
% |
|
|
8.0 |
% |
|
|
7.7 |
% |
Homes sold |
|
|
206 |
|
|
|
452 |
|
|
|
417 |
|
|
|
912 |
|
Gross profit per home sold |
|
$ |
34.5 |
|
|
$ |
31.4 |
|
|
$ |
30.4 |
|
|
$ |
27.1 |
|
Total real estate transactions (1) |
|
|
295 |
|
|
|
568 |
|
|
|
558 |
|
|
|
1,087 |
|
Gross profit per real estate transaction |
|
$ |
24.1 |
|
|
$ |
25.0 |
|
|
$ |
22.7 |
|
|
$ |
22.7 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Real estate inventory valuation adjustment - current period (2) |
|
|
247 |
|
|
|
1,052 |
|
|
|
356 |
|
|
|
1,629 |
|
Real estate inventory valuation adjustment - prior period (3) |
|
|
(529 |
) |
|
|
(1,556 |
) |
|
|
(978 |
) |
|
|
(2,601 |
) |
Interest expense capitalized (4) |
|
|
501 |
|
|
|
1,240 |
|
|
|
1,224 |
|
|
|
2,662 |
|
Adjusted gross profit |
|
$ |
7,336 |
|
|
$ |
14,925 |
|
|
$ |
13,276 |
|
|
$ |
26,386 |
|
Adjusted gross margin |
|
|
9.4 |
% |
|
|
9.3 |
% |
|
|
8.4 |
% |
|
|
8.2 |
% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Direct selling costs (5) |
|
|
(1,809 |
) |
|
|
(4,230 |
) |
|
|
(3,746 |
) |
|
|
(8,618 |
) |
Holding costs on sales - current period (6)(7) |
|
|
(210 |
) |
|
|
(361 |
) |
|
|
(574 |
) |
|
|
(1,193 |
) |
Holding costs on sales - prior period (6)(8) |
|
|
(246 |
) |
|
|
(507 |
) |
|
|
(525 |
) |
|
|
(900 |
) |
Other income, net (9) |
|
|
231 |
|
|
|
244 |
|
|
|
592 |
|
|
|
540 |
|
Contribution profit |
|
$ |
5,302 |
|
|
$ |
10,071 |
|
|
$ |
9,023 |
|
|
$ |
16,215 |
|
Contribution margin |
|
|
6.8 |
% |
|
|
6.3 |
% |
|
|
5.7 |
% |
|
|
5.1 |
% |
Homes sold |
|
|
206 |
|
|
|
452 |
|
|
|
417 |
|
|
|
912 |
|
Contribution profit per home sold |
|
$ |
25.7 |
|
|
$ |
22.3 |
|
|
$ |
21.6 |
|
|
$ |
17.8 |
|
Total real estate transactions (1) |
|
|
295 |
|
|
|
568 |
|
|
|
558 |
|
|
|
1,087 |
|
Contribution profit per real estate transaction |
|
$ |
18.0 |
|
|
$ |
17.7 |
|
|
$ |
16.2 |
|
|
$ |
14.9 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense capitalized (4) |
|
|
(501 |
) |
|
|
(1,240 |
) |
|
|
(1,224 |
) |
|
|
(2,662 |
) |
Interest expense on homes sold - current period (10) |
|
|
(234 |
) |
|
|
(1,342 |
) |
|
|
(518 |
) |
|
|
(3,919 |
) |
Interest expense on homes sold - prior period (11) |
|
|
(570 |
) |
|
|
(1,866 |
) |
|
|
(1,539 |
) |
|
|
(3,790 |
) |
Contribution profit after interest |
|
$ |
3,997 |
|
|
$ |
5,623 |
|
|
$ |
5,742 |
|
|
$ |
5,844 |
|
Contribution margin after interest |
|
|
5.1 |
% |
|
|
3.5 |
% |
|
|
3.6 |
% |
|
|
1.8 |
% |
Homes sold |
|
|
206 |
|
|
|
452 |
|
|
|
417 |
|
|
|
912 |
|
Contribution profit after interest per home sold |
|
$ |
19.4 |
|
|
$ |
12.4 |
|
|
$ |
13.8 |
|
|
$ |
6.4 |
|
Total real estate transactions (1) |
|
|
295 |
|
|
|
568 |
|
|
|
558 |
|
|
|
1,087 |
|
Contribution profit after interest per real estate transaction |
|
$ |
13.5 |
|
|
$ |
9.9 |
|
|
$ |
10.3 |
|
|
$ |
5.4 |
|
(1)Total real estate transactions represents the total number of closed real estate transactions including Cash Offer homes sold, Cash Offer Marketplace transactions, and listings closed under our Brokerage Services solutions.
(2)Real estate inventory valuation adjustment – current period is the real estate inventory valuation adjustments recorded during the period presented associated with homes that remain in real estate inventory at period end.
(3)Real estate inventory valuation adjustment – prior period is the real estate inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.
(4)Interest expense capitalized represents all interest related costs under our senior and mezzanine secured credit facilities and other senior secured debt, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.
(5)Direct selling costs represents selling costs incurred related to homes sold in the period presented. This primarily includes broker commissions and title and escrow closing fees.
(6)Holding costs primarily include insurance, utilities, homeowners association dues, property taxes, cleaning, and maintenance costs.
(7)Represents holding costs incurred on homes sold in the period presented and expensed to Sales, marketing, and operating on the Condensed Consolidated Statements of Operations.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 32
(8)Represents holding costs incurred in prior periods on homes sold in the period presented and expensed to Sales, marketing, and operating on the Condensed Consolidated Statements of Operations.
(9)Other income, net principally represents interest income earned on our cash and cash equivalents.
(10)Represents interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred on homes sold in the period presented and expensed to interest expense on the Condensed Consolidated Statements of Operations.
(11)Represents interest expense under our senior and mezzanine secured credit facilities and other senior secured debt incurred in prior periods on homes sold in the period presented and expensed to interest expense on the Condensed Consolidated Statements of Operations.
Adjusted Net Income (Loss) and Adjusted EBITDA
We also present Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP financial measures, which our management team uses to assess our underlying financial performance. We believe these measures provide insight into period over period performance, adjusted for non-recurring or non-cash items.
We calculate Adjusted Net Income (Loss) as GAAP Net Income (Loss) adjusted for the change in fair value of warrant liabilities. We define Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.
We calculate Adjusted EBITDA as Adjusted Net Income (Loss) adjusted for interest expense, amortization of capitalized interest, taxes, depreciation and amortization and stock-based compensation expense. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.
Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental to our operating performance measures calculated in accordance with GAAP and have important limitations. For example, Adjusted Net Income (Loss) and Adjusted EBITDA exclude the impact of certain costs required to be recorded under GAAP and could differ substantially from similarly titled measures presented by other companies in our industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.
The following table presents a reconciliation of our Adjusted Net Income (Loss) and Adjusted EBITDA to our GAAP Net Income (Loss), which is the most directly comparable GAAP measure, for the periods indicated:
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Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands, except percentages, unaudited) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Net loss (GAAP) |
|
$ |
(9,288 |
) |
|
$ |
(10,903 |
) |
|
$ |
(19,421 |
) |
|
$ |
(25,960 |
) |
Change in fair value of warrant liabilities |
|
|
(123 |
) |
|
|
(329 |
) |
|
|
(292 |
) |
|
|
(72 |
) |
Adjusted net loss |
|
$ |
(9,411 |
) |
|
$ |
(11,232 |
) |
|
$ |
(19,713 |
) |
|
$ |
(26,032 |
) |
Adjusted net loss margin |
|
|
(12.1 |
)% |
|
|
(7.0 |
)% |
|
|
(12.5 |
)% |
|
|
(8.1 |
)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,387 |
|
|
|
3,665 |
|
|
|
3,004 |
|
|
|
7,187 |
|
Amortization of capitalized interest (1) |
|
|
501 |
|
|
|
1,240 |
|
|
|
1,224 |
|
|
|
2,662 |
|
Income tax expense |
|
|
16 |
|
|
|
30 |
|
|
|
32 |
|
|
|
67 |
|
Depreciation and amortization |
|
|
285 |
|
|
|
253 |
|
|
|
572 |
|
|
|
459 |
|
Amortization of stock-based compensation |
|
|
1,012 |
|
|
|
1,257 |
|
|
|
1,954 |
|
|
|
3,039 |
|
Adjusted EBITDA |
|
$ |
(6,210 |
) |
|
$ |
(4,787 |
) |
|
$ |
(12,927 |
) |
|
$ |
(12,618 |
) |
Adjusted EBITDA margin |
|
|
(8.0 |
)% |
|
|
(3.0 |
)% |
|
|
(8.2 |
)% |
|
|
(3.9 |
)% |
(1)Amortization of capitalized interest represents all interest related costs under our senior and mezzanine secured credit facilities and other senior secured debt, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 33
Results of Operations
The following details our consolidated results of operations and includes a discussion of our operating results and significant items explaining the material changes in our operating results during the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025.
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
(in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
$ |
71,745 |
|
|
$ |
152,071 |
|
|
$ |
(80,326 |
) |
|
|
(52.8 |
)% |
Renovate |
|
|
4,773 |
|
|
|
6,415 |
|
|
|
(1,642 |
) |
|
|
(25.6 |
)% |
Other |
|
|
1,135 |
|
|
|
1,829 |
|
|
|
(694 |
) |
|
|
(37.9 |
)% |
Total revenue |
|
|
77,653 |
|
|
|
160,315 |
|
|
|
(82,662 |
) |
|
|
(51.6 |
)% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
|
66,610 |
|
|
|
140,914 |
|
|
|
(74,304 |
) |
|
|
(52.7 |
)% |
Renovate |
|
|
3,808 |
|
|
|
5,117 |
|
|
|
(1,309 |
) |
|
|
(25.6 |
)% |
Other |
|
|
118 |
|
|
|
95 |
|
|
|
23 |
|
|
|
24.2 |
% |
Total cost of revenue |
|
|
70,536 |
|
|
|
146,126 |
|
|
|
(75,590 |
) |
|
|
(51.7 |
)% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
|
5,135 |
|
|
|
11,157 |
|
|
|
(6,022 |
) |
|
|
(54.0 |
)% |
Renovate |
|
|
965 |
|
|
|
1,298 |
|
|
|
(333 |
) |
|
|
(25.7 |
)% |
Other |
|
|
1,017 |
|
|
|
1,734 |
|
|
|
(717 |
) |
|
|
(41.3 |
)% |
Total gross profit |
|
|
7,117 |
|
|
|
14,189 |
|
|
|
(7,072 |
) |
|
|
(49.8 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales, marketing and operating |
|
|
7,622 |
|
|
|
13,188 |
|
|
|
(5,566 |
) |
|
|
(42.2 |
)% |
General and administrative |
|
|
6,780 |
|
|
|
7,796 |
|
|
|
(1,016 |
) |
|
|
(13.0 |
)% |
Technology and development |
|
|
954 |
|
|
|
986 |
|
|
|
(32 |
) |
|
|
(3.2 |
)% |
Total operating expenses |
|
|
15,356 |
|
|
|
21,970 |
|
|
|
(6,614 |
) |
|
|
(30.1 |
)% |
Loss from operations |
|
|
(8,239 |
) |
|
|
(7,781 |
) |
|
|
(458 |
) |
|
|
5.9 |
% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
123 |
|
|
|
329 |
|
|
|
(206 |
) |
|
|
(62.6 |
)% |
Interest expense |
|
|
(1,387 |
) |
|
|
(3,665 |
) |
|
|
2,278 |
|
|
|
(62.2 |
)% |
Other income, net |
|
|
231 |
|
|
|
244 |
|
|
|
(13 |
) |
|
|
(5.3 |
)% |
Total other expense |
|
|
(1,033 |
) |
|
|
(3,092 |
) |
|
|
2,059 |
|
|
|
(66.6 |
)% |
Loss before income taxes |
|
|
(9,272 |
) |
|
|
(10,873 |
) |
|
|
1,601 |
|
|
|
(14.7 |
)% |
Income tax expense |
|
|
(16 |
) |
|
|
(30 |
) |
|
|
14 |
|
|
|
(46.7 |
)% |
Net loss |
|
$ |
(9,288 |
) |
|
$ |
(10,903 |
) |
|
$ |
1,615 |
|
|
|
(14.8 |
)% |
Revenue
Our consolidated revenue decreased by $82.7 million, or 51.6%, to $77.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Cash Offer revenue decreased by $80.3 million, or 52.8%, to $71.7 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily attributable to lower sales volumes as we sold 206 homes during the three months ended June 30, 2026 compared to 452 homes during the three months ended June 30, 2025, representing a decrease of 54.4%. This decrease in homes sold was primarily due to the increased level of uncertainty in the residential real estate market and our associated intentional reduction in home acquisition pace during 2025 as part of our effort to balance our real estate inventory levels, resulting in a fewer number of homes in real estate inventory during the first half of 2026.
This decrease in homes sold was partially offset by an increase in the average resale home price from $344,000 in the three months ended June 30, 2025 to $356,000 in the three months ended June 30, 2026. This increase was primarily due to a shift in the mix of homes sold in the respective periods, with a greater percentage of homes sold in geographic markets that tend to share relatively higher median price points during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
Renovate revenue decreased by $1.6 million, or 25.6%, to $4.8 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in Renovate revenue was primarily attributable to a decrease in the average renovation transaction value from $20,400 per home during the three months ended June 30, 2025 to $14,400 per
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 34
home during the three months ended June 30, 2026. This decrease was partially offset by an increase in renovation volumes. We completed 332 renovation projects during the three months ended June 30, 2026 compared to 315 renovation projects during the three months ended June 30, 2025, representing an increase of 5.4%.
Other revenue, which includes revenue generated by our Cash Offer Marketplace and Brokerage Services solutions, decreased by $0.7 million, or 37.9%, to $1.1 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in revenue is primarily due to a decrease in the number of Cash Offer Marketplace transactions during the second quarter of 2026 as compared to the second quarter of 2025. This decrease was partially offset by an increase in Brokerage Services transactions, which includes HomePro and Agent Partnership Program.
Cost of Revenue
Our consolidated cost of revenue decreased by $75.6 million, or 51.7%, to $70.5 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Cash Offer cost of revenue decreased by $74.3 million, or 52.7%, to $66.6 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily attributable to lower sales volumes.
Renovate cost of revenue decreased by $1.3 million, or 25.6%, to $3.8 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily attributable to a lower average renovation transaction cost per home, from $16,200 per home during the three months ended June 30, 2025 to $11,500 per home during the three months ended June 30, 2026, which was partially offset by an increase in the volume of renovation projects.
Other cost of revenue increased by less than $0.1 million, or 24.2%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This increase was primarily due to an increase in Brokerage Services transactions during the second quarter of 2026 as compared to the second quarter of 2025.
Gross Profit
Our consolidated gross profit margin was 9.2% for the three months ended June 30, 2026 compared to 8.9% for the three months ended June 30, 2025.
Cash Offer gross profit margin was 7.2% for the three months ended June 30, 2026 compared to 7.3% for the three months ended June 30, 2025. The slight decrease in gross profit margin was primarily due to a higher average real estate inventory holding period during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease in gross profit margin was partially offset by a decrease in the real estate inventory valuation adjustment, from $1.1 million during the three months ended June 30, 2025 to $0.3 million during the three months ended June 30, 2026.
Renovate gross profit margin was unchanged at 20.2% for each of the three months ended June 30, 2026 and 2025 as the mix of our renovation projects and the associated project and service fees remained relatively consistent during each of the respective periods.
Other gross profit margin was 89.6% for the three months ended June 30, 2026 compared to 94.8% for the three months ended June 30, 2025. The decrease in gross profit margin was primarily due to a shift in the product mix of the solution offerings included in Other. Our Cash Offer Marketplace offering, which includes Direct+ partners, generally has one of the higher margin profiles of the offerings included within Other gross profit, and represented a smaller component of Other gross profit during the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Sales, Marketing and Operating
Sales, marketing and operating expense decreased by $5.6 million, or 42.2%, to $7.6 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily attributable to a decrease in variable costs associated with the decrease in homes sold, decreased average employee headcount, and a $0.6 million decrease in advertising expense as we continue to reposition and optimize our marketing efforts in response to the increased level of uncertainty in the residential real estate market in recent years.
General and Administrative
General and administrative expense decreased by $1.0 million, or 13.0%, to $6.8 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily attributable to reductions in fees associated with legal and other professional obligations, operating lease costs, and lender fees in connection with reduced borrowings on our credit facilities.
Technology and Development
Technology and development expense decreased by less than $0.1 million, or 3.2%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily attributable to lower software
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 35
subscription fees and decreased average employee headcount, which was partially offset by higher third-party consulting fees.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities for the three months ended June 30, 2026 and 2025 represents gains of $0.1 million and $0.3 million, respectively, as a result of the fair value adjustment of our warrant liabilities.
Interest Expense
Interest expense decreased by $2.3 million, or 62.2%, to $1.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily attributable to a $123.0 million decrease in the average outstanding balance of our secured credit facilities and other debt, from $213.6 million during the three months ended June 30, 2025 to $90.6 million during the three months ended June 30, 2026. The decrease in expense was also due to a 0.2% decrease in the weighted average variable interest rates associated with our secured credit facilities and other debt. These decreases were partially offset by interest expense associated with our revolving credit facility, which was entered into during July 2025.
Other Income, Net
Other income, net principally represents interest income earned on our cash and cash equivalents during each of the three months ended June 30, 2026 and 2025. Other income, net also includes losses from the disposal of property and equipment during the three months ended June 30, 2026.
Income Tax Expense
We recorded income tax expense of less than $0.1 million during each of the three months ended June 30, 2026 and 2025, and our effective tax rate was an expense of 0.2% and 0.3% during the respective periods. Our effective tax rate during the three months ended June 30, 2026 differed from the federal statutory rate of 21% primarily due to state taxes and net operating loss carryforwards.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 36
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
(in thousands, except percentages) |
|
2026 |
|
|
2025 |
|
|
$ Change |
|
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
$ |
145,244 |
|
|
$ |
305,904 |
|
|
$ |
(160,660 |
) |
|
|
(52.5 |
)% |
Renovate |
|
|
10,490 |
|
|
|
11,729 |
|
|
|
(1,239 |
) |
|
|
(10.6 |
)% |
Other |
|
|
1,994 |
|
|
|
3,380 |
|
|
|
(1,386 |
) |
|
|
(41.0 |
)% |
Total revenue |
|
|
157,728 |
|
|
|
321,013 |
|
|
|
(163,285 |
) |
|
|
(50.9 |
)% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
|
136,484 |
|
|
|
286,649 |
|
|
|
(150,165 |
) |
|
|
(52.4 |
)% |
Renovate |
|
|
8,344 |
|
|
|
9,357 |
|
|
|
(1,013 |
) |
|
|
(10.8 |
)% |
Other |
|
|
226 |
|
|
|
311 |
|
|
|
(85 |
) |
|
|
(27.3 |
)% |
Total cost of revenue |
|
|
145,054 |
|
|
|
296,317 |
|
|
|
(151,263 |
) |
|
|
(51.0 |
)% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Offer |
|
|
8,760 |
|
|
|
19,255 |
|
|
|
(10,495 |
) |
|
|
(54.5 |
)% |
Renovate |
|
|
2,146 |
|
|
|
2,372 |
|
|
|
(226 |
) |
|
|
(9.5 |
)% |
Other |
|
|
1,768 |
|
|
|
3,069 |
|
|
|
(1,301 |
) |
|
|
(42.4 |
)% |
Total gross profit |
|
|
12,674 |
|
|
|
24,696 |
|
|
|
(12,022 |
) |
|
|
(48.7 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales, marketing and operating |
|
|
15,196 |
|
|
|
27,016 |
|
|
|
(11,820 |
) |
|
|
(43.8 |
)% |
General and administrative |
|
|
12,907 |
|
|
|
14,992 |
|
|
|
(2,085 |
) |
|
|
(13.9 |
)% |
Technology and development |
|
|
1,840 |
|
|
|
2,006 |
|
|
|
(166 |
) |
|
|
(8.3 |
)% |
Total operating expenses |
|
|
29,943 |
|
|
|
44,014 |
|
|
|
(14,071 |
) |
|
|
(32.0 |
)% |
Loss from operations |
|
|
(17,269 |
) |
|
|
(19,318 |
) |
|
|
2,049 |
|
|
|
(10.6 |
)% |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant liabilities |
|
|
292 |
|
|
|
72 |
|
|
|
220 |
|
|
* |
|
Interest expense |
|
|
(3,004 |
) |
|
|
(7,187 |
) |
|
|
4,183 |
|
|
|
(58.2 |
)% |
Other income, net |
|
|
592 |
|
|
|
540 |
|
|
|
52 |
|
|
|
9.6 |
% |
Total other expense |
|
|
(2,120 |
) |
|
|
(6,575 |
) |
|
|
4,455 |
|
|
|
(67.8 |
)% |
Loss before income taxes |
|
|
(19,389 |
) |
|
|
(25,893 |
) |
|
|
6,504 |
|
|
|
(25.1 |
)% |
Income tax expense |
|
|
(32 |
) |
|
|
(67 |
) |
|
|
35 |
|
|
|
(52.2 |
)% |
Net loss |
|
$ |
(19,421 |
) |
|
$ |
(25,960 |
) |
|
$ |
6,539 |
|
|
|
(25.2 |
)% |
* Not meaningful
Revenue
Our consolidated revenue decreased by $163.3 million, or 50.9%, to $157.7 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Cash Offer revenue decreased by $160.7 million, or 52.5%, to $145.2 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower sales volumes as we sold 417 homes during the six months ended June 30, 2026 compared to 912 homes during the six months ended June 30, 2025, representing a decrease of 54.3%. This decrease in homes sold was primarily due to the increased level of uncertainty in the residential real estate market and our associated intentional reduction in home acquisition pace during 2025 as part of our effort to balance our real estate inventory levels, resulting in a fewer number of homes in real estate inventory during the first half of 2026.
This decrease in homes sold was partially offset by an increase in the average resale home price from $342,000 in the six months ended June 30, 2025 to $356,000 in the six months ended June 30, 2026. This increase was primarily due to a shift in the mix of homes sold in the respective periods, with a greater percentage of homes sold in geographic markets that tend to share relatively higher median price points during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.
Renovate revenue decreased by $1.2 million, or 10.6%, to $10.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in Renovate revenue was primarily attributable to a decrease in the average renovation transaction value from $22,400 per home during the six months ended June 30, 2025 to $14,300 per home during the six months ended June 30, 2026. This decrease in revenue was partially offset by higher renovation volumes. We completed 735 renovation projects during the six months ended June 30, 2026 compared to 524 renovation projects during the six months ended June 30, 2025, representing an increase of 40.3%.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 37
Other revenue decreased by $1.4 million, or 41.0%, to $2.0 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in revenue is primarily due to the transition from our historical listing service offering as we shifted our focus to agent-led pathways in our Brokerage Services solution. The decrease in revenue was also due to a decrease in the number of Cash Offer Marketplace transactions during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Cost of Revenue
Our consolidated cost of revenue decreased by $151.3 million, or 51.0%, to $145.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Cash Offer cost of revenue decreased by $150.2 million, or 52.4%, to $136.5 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily attributable to lower sales volumes.
Renovate cost of revenue decreased by $1.0 million, or 10.8%, to $8.3 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily attributable to a lower average renovation transaction cost per home, from $17,900 per home during the six months ended June 30, 2025 to $11,400 per home during the six months ended June 30, 2026, which was partially offset by an increase in renovation volumes.
Other cost of revenue decreased by $0.1 million, or 27.3%, to $0.2 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily driven by lower volumes associated with our historical listing service offering, which was partially offset by an increase in Brokerage Services transactions.
Gross Profit
Our consolidated gross profit margin was 8.0% for the six months ended June 30, 2026 compared to 7.7% for the six months ended June 30, 2025.
Cash Offer gross profit margin was 6.0% for the six months ended June 30, 2026 compared to 6.3% for the six months ended June 30, 2025. The decrease in gross profit margin was primarily due to a higher average real estate inventory holding period during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in gross profit margin was partially offset by a decrease in the real estate inventory valuation adjustment, from $2.8 million during the six months ended June 30, 2025 to $0.7 million during the six months ended June 30, 2026.
Renovate gross profit margin was 20.5% for the six months ended June 30, 2026 compared to 20.2% for the six months ended June 30, 2025. The slight increase in gross profit margin was primarily due to a shift in the mix of our renovation projects and the associated project and service fees.
Other gross profit margin was 88.7% for the six months ended June 30, 2026 compared to 90.8% for the six months ended June 30, 2025. This decrease in gross profit margin was primarily due to a shift in the product mix of the solution offerings included in Other as our Cash Offer Marketplace offering represented a smaller component of Other gross profit during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Sales, Marketing and Operating
Sales, marketing and operating expense decreased by $11.8 million, or 43.8%, to $15.2 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily attributable to a decrease in variable costs associated with the decrease in homes sold, decreased average employee headcount, and a $1.7 million decrease in advertising expense as we continue to reposition and optimize our marketing efforts in response to the increased level of uncertainty in the residential real estate market in recent years.
General and Administrative
General and administrative expense decreased by $2.1 million, or 13.9%, to $12.9 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily attributable to decreases in lender fees in connection with reduced borrowings on our credit facilities, operating lease costs and fees associated with legal and other professional obligations.
Technology and Development
Technology and development expense decreased by $0.2 million, or 8.3%, to $1.8 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This decrease was primarily attributable to lower software subscription fees and decreased average employee headcount, which was partially offset by an increase in third-party consulting fees.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities for the six months ended June 30, 2026 and 2025 represents gains of $0.3 million and $0.1 million, respectively, as a result of the fair value adjustment of our warrant liabilities.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 38
Interest Expense
Interest expense decreased by $4.2 million, or 58.2%, to $3.0 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a $130.1 million decrease in the average outstanding balance of our secured credit facilities and other debt, from $226.9 million during the six months ended June 30, 2025 to $96.8 million during the six months ended June 30, 2026. The decrease in expense was also due to a 0.3% decrease in the weighted average variable interest rates associated with our secured credit facilities and other debt. These decreases were partially offset by interest expense associated with our revolving credit facility, which was entered into during July 2025.
Other Income, Net
Other income, net principally represents interest income earned on our cash and cash equivalents during each of the six months ended June 30, 2026 and 2025. Other income, net also includes losses from the disposal of property and equipment in both periods.
Income Tax Expense
We recorded income tax expense of less than $0.1 million and $0.1 million during the six months ended June 30, 2026 and 2025, respectively, and our effective tax rate was an expense of 0.2% and 0.3% during the respective periods. Our effective tax rate during the six months ended June 30, 2026 differed from the federal statutory rate of 21% primarily due to state taxes and net operating loss carryforwards.
Liquidity and Capital Resources
Overview
As of June 30, 2026, we had cash and cash equivalents of $33.1 million, which consists of operating cash on deposit with financial institutions. Our principal sources of liquidity have historically consisted of cash generated from our operations and financing activities.
With the exception of the year ended December 31, 2021, during which we generated net income, we have incurred losses each year from inception and during the three and six months ended June 30, 2026, and may incur additional losses in the future. Since our launch in 2015, we have invested significantly in the development and expansion of our operations. These investments include a continual improvement to our software and technology platform, including more recently, the development of our AI-driven operating architecture, along with improvements in our infrastructure. We have also invested in sales and marketing as we have increased our market penetration in existing markets, and grown our business through new market expansion and the increased offering of other real estate service solutions.
While we remain focused on strategically strengthening our presence within existing markets through our various real estate service solutions, we expect our working capital requirements will continue to increase over the long term as we seek to expand our operations and implement our long-term strategic initiatives over time.
In connection with our efforts to expand our operations, strengthen our balance sheet and support our working capital requirements, we have executed the following transactions in recent periods:
•
January 2026 Registered Direct Offering – During January 2026, we issued and sold 1,000,000 shares (the “2026 Shares”) of our Class A common stock for $18.00 per share, resulting in gross proceeds of $18.0 million, before deducting placement agent fees and other offering expenses (as adjusted for the Reverse Stock Split).
•
Sale Agreement – We have an active Open Market Sale AgreementSM (the “Sale Agreement”) with Jefferies LLC, under which we may offer and sell up to $100,000,000 of our Class A common stock from time to time in any manner deemed to be an “at the market” offering. We have no obligation to sell any shares under the Sale Agreement, but we may do so from time to time. No shares were sold under the Sale Agreement during the six months ended June 30, 2026, and we had $69.7 million of remaining availability under the Sale Agreement as of June 30, 2026.
While we have a history of operating losses, we believe our existing cash on hand, proceeds from the resale of homes, fees and commissions earned from our other real estate service solutions, and cash from future borrowings available under each of our existing credit facilities, or the entry into additional new debt financing arrangements or further issuances of equity securities, will be sufficient to meet our short-term working capital and capital expenditure requirements for at least the next twelve months. However, our ability to fund our working capital and capital expenditure requirements depends on the residential real estate market conditions in the markets in which we operate and in the U.S. in general, and various other general economic, financial, competitive, legislative, regulatory, geopolitical and other conditions that may be beyond our control. The uncertain economic outlook and challenging residential real estate market conditions have impacted, and may continue to impact, our business negatively. Based on these and other current market conditions, as described above, we may continue to seek additional financing. Volatility in the credit markets, rising interest rates and weakened consumer demand for residential real estate may have an adverse effect on our ability to obtain additional debt financing, on favorable terms or at all. If we are not
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 39
able to obtain necessary capital to meet our business objectives, we may need to further stall, moderate or decelerate our expansion activities, which may include various restructuring alternatives and options, including more significant cost reductions, product and operational changes focused on reductions in working capital requirements, including pausing or reducing real estate inventory acquisitions, and other actions to enhance the preservation of cash. If we are able to raise additional funds through further issuances of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our Class A common stock, or may require us to agree to unfavorable terms, and our existing stockholders may experience significant dilution.
Financing Activities
Our financing activities primarily include borrowings under our secured credit facilities and other debt, revolving credit facility and new issuances of equity. Historically, we have required access to external financing resources in order to grow market share in existing markets, expand opportunistically into new markets and launch new real estate solution offerings, and we expect this to continue in the future over the long term. Our access to capital markets can be impacted by factors outside our control, including economic conditions.
Buying and selling high-valued assets, such as single-family residential homes, is very cash intensive and has a significant impact on our liquidity and capital resources. We have historically used non-recourse secured credit facilities, consisting of both senior and mezzanine secured credit facilities, to finance a significant portion of our real estate inventory and related home renovations. Our senior and mezzanine secured credit facilities, however, are not fully committed, meaning the applicable lender may not be obligated to advance new loan funds if they choose not to do so. Our ability to obtain and maintain access to these or similar kinds of credit facilities is significant for us to operate the business.
While we have expanded our real estate service solutions beyond our Cash Offer service over time, including growing our other real estate service solutions which require lower levels of capital investment, our Cash Offer service continues to generate the substantial majority of our consolidated revenue. As a result, our financing needs continue to be significantly impacted by the level of transaction volumes in our Cash Offer service. Given the importance of our secured credit facilities in financing our real estate inventory purchases and renovation projects, we continually monitor our anticipated financing requirements and may from time to time adjust the composition of our credit facilities to correspond with such requirements. These changes may include modifying the available borrowing capacity under our credit facilities or realigning the credit facility provider mix.
In recent years, we reduced our home acquisition pace compared to our historical levels as part of our effort to balance our real estate inventory as we navigated through the increased level of uncertainty in the U.S. residential real estate market. In connection with the reduction in home acquisition pace during that time, we reduced the borrowing capacities available under certain of our credit facilities, along with not renewing certain credit facilities upon their expiration. The amount of our reduction in borrowing availability also represented debt capacity under our secured credit facilities that we had not historically utilized or relied upon in full.
During the first half of 2026, we increased the utilization of our portfolio intelligence platform to streamline our evaluation and underwriting process and steadily increased our home acquisition pace. We anticipate this recent increase in home acquisition pace will also persist in the near-term as we continue to leverage our portfolio intelligence platform to improve the quality of homes in our real estate inventory mix. In connection with our steadily increasing our home acquisition pace during 2026, we continue to adjust the composition of our credit facilities to support our financing requirements, including increasing the available borrowing capacity under certain facilities and evaluating new potential debt arrangements.
Senior Secured Credit Facilities
The following summarizes certain details related to our senior secured credit facilities (in thousands, except interest rates):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing Capacity |
|
|
Outstanding |
|
|
Weighted-
Average
Interest |
|
|
End of
Revolving /
Withdrawal |
|
Final
Maturity |
As of June 30, 2026 |
Committed |
|
|
Uncommitted |
|
|
Total |
|
|
Amount |
|
|
Rate |
|
|
Period |
|
Date |
Senior financial institution 1 |
$ |
25,000 |
|
|
$ |
175,000 |
|
|
$ |
200,000 |
|
|
$ |
19,595 |
|
|
|
6.45 |
% |
|
December 2025 |
|
August 2026 |
Senior financial institution 2 |
|
— |
|
|
|
200,000 |
|
|
|
200,000 |
|
|
|
— |
|
|
|
— |
|
|
January 2026 |
|
July 2026 |
Related party facility 2 |
|
7,500 |
|
|
|
7,500 |
|
|
|
15,000 |
|
|
|
1,160 |
|
|
|
13.00 |
% |
|
October 2026 |
|
April 2027 |
Senior financial institution 4 |
|
— |
|
|
|
50,000 |
|
|
|
50,000 |
|
|
|
5,246 |
|
|
|
9.42 |
% |
|
September 2026 |
|
March 2027 |
Senior financial institution 5 |
|
— |
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
53,799 |
|
|
|
8.54 |
% |
|
August 2027 |
|
August 2027 |
Senior secured credit facilities |
$ |
32,500 |
|
|
$ |
507,500 |
|
|
$ |
540,000 |
|
|
$ |
79,800 |
|
|
|
|
|
|
|
|
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 40
As of June 30, 2026, we had multiple senior secured credit facilities, including one with a related party. Borrowings under the senior secured credit facilities accrue interest at a rate based on a SOFR reference rate, plus a margin which varies by facility. Each of our senior secured credit facilities also have interest rate floors. We may also pay fees on our senior secured credit facilities, including a commitment fee, a usage fee and/or fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.
Borrowings under our senior secured credit facilities are collateralized by the real estate inventory financed by the senior secured credit facility. The lenders have legal recourse only to the assets securing the debt and do not have general recourse against us with limited exceptions. We have, however, provided limited non-recourse carve-out guarantees under our senior and mezzanine secured credit facilities for certain of the SPEs’ obligations. Each senior secured credit facility contains eligibility requirements that govern whether a property can be financed. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured credit facilities.
As described below in Part II, Item 5, “Other Information” in this Quarterly Report on Form 10-Q, during July 2026, (i) we amended our senior secured credit facility with financial institution 1, which among other things, extended the revolving period to January 2027 and the final maturity date to June 2027, and provided that the $200 million facility is entirely uncommitted, and (ii) we amended and restated our senior secured credit facility with financial institution 5, which among other things, increased the uncommitted borrowing capacity to $100 million. Lastly, our senior secured credit facility with financial institution 2 expired and was not renewed.
Mezzanine Secured Credit Facilities
In addition to the senior secured credit facilities, we have historically used mezzanine secured credit facilities which are structurally and contractually subordinated to the related senior secured credit facilities. The following summarizes certain details related to our mezzanine secured credit facilities (in thousands, except interest rates):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing Capacity |
|
|
Outstanding |
|
|
Weighted-
Average
Interest |
|
|
End of
Revolving /
Withdrawal |
|
Final
Maturity |
As of June 30, 2026 |
Committed |
|
|
Uncommitted |
|
|
Total |
|
|
Amount |
|
|
Rate |
|
|
Period |
|
Date |
Related party facility 1 |
$ |
— |
|
|
$ |
35,000 |
|
|
$ |
35,000 |
|
|
$ |
1,737 |
|
|
|
13.00 |
% |
|
June 2026 |
|
February 2027 |
Mezzanine financial institution 1 |
|
— |
|
|
|
45,000 |
|
|
|
45,000 |
|
|
|
— |
|
|
|
— |
|
|
January 2026 |
|
July 2026 |
Mezzanine secured credit facilities |
$ |
— |
|
|
$ |
80,000 |
|
|
$ |
80,000 |
|
|
$ |
1,737 |
|
|
|
|
|
|
|
|
As of June 30, 2026, we had two mezzanine secured credit facilities, including one with a related party. Borrowings under the mezzanine secured credit facilities accrue interest at a rate based on a SOFR reference rate, plus a margin which varies by facility. Each of our mezzanine secured credit facilities also have interest rate floors. We may also pay fees on our mezzanine secured credit facilities, including a commitment fee, a usage fee and/or fees on certain unused portions of the committed borrowing capacity under the respective credit agreements.
Borrowings under our mezzanine secured credit facilities are collateralized by a second lien on the real estate inventory financed by the relevant credit facility. The lenders have legal recourse only to the assets securing the debt, and do not have general recourse against us with limited exceptions. When we resell a home, the proceeds are used to reduce the corresponding outstanding balance under the related senior and mezzanine secured credit facilities.
During July 2026, our mezzanine secured credit facility with financial institution 1 expired and was not renewed. Additionally, in connection with the July 2026 amendment to our senior secured credit facility with financial institution 1, as described above, the final maturity date for our mezzanine secured credit facility with a related party was automatically extended to March 2027.
Covenants for Senior Secured Credit Facilities and Mezzanine Secured Credit Facilities
Our secured credit facilities include customary representations and warranties, covenants and events of default. Financed properties are subject to customary eligibility criteria and concentration limits. The terms of these facilities and related financing documents require compliance with a number of customary financial and other covenants, such as maintaining certain levels of liquidity, tangible net worth or leverage (ratio of debt to tangible net worth). As of June 30, 2026, we were in compliance with all covenants and no event of default had occurred.
Senior Secured Debt - Other
We have a borrowing arrangement with a financial institution to support purchases of real estate inventory. Borrowings under this arrangement accrue interest at a rate based on a SOFR reference rate, plus a margin. As of June 30, 2026 and December 31, 2025, the weighted-average interest rate under our other senior secured debt was 8.31% and 8.92%, respectively.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 41
Revolving Credit Facility
We have a $15.0 million revolving credit facility with a three-year term expiring in July 2028. Borrowings under the revolving credit facility accrue interest at 8.50% per annum and are secured by certain of our assets. The revolving credit facility includes customary financial and other covenants, such as maintaining a minimum level of liquidity, and events of default. As of June 30, 2026, we had $14.7 million in outstanding borrowings under the revolving credit facility, net of debt financing costs, and we were in compliance with all covenants and no event of default had occurred.
Cash Flows
The following summarizes our cash flows for the six months ended June 30, 2026 and 2025:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
($ in thousands) |
|
2026 |
|
|
2025 |
|
Net cash used in operating activities |
|
$ |
(16,808 |
) |
|
$ |
(23,646 |
) |
Net cash used in investing activities |
|
|
(24 |
) |
|
|
(1,079 |
) |
Net cash provided by (used in) financing activities |
|
|
23,521 |
|
|
|
(22,155 |
) |
Net change in cash, cash equivalents and restricted cash |
|
$ |
6,689 |
|
|
$ |
(46,880 |
) |
Operating Activities
Net cash used in operating activities was $16.8 million and $23.6 million for the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026, net cash used in operating activities primarily resulted from the $19.4 million net loss during the period, which included $2.0 million of non-cash stock-based compensation expense and a $0.7 million non-cash real estate inventory valuation adjustment. Net cash used in operating activities during the six months ended June 30, 2026 was also due to a $1.1 million increase in real estate inventory as we have steadily increased our home acquisition pace during the first half of 2026.
For the six months ended June 30, 2025, net cash used in operating activities primarily resulted from the $26.0 million net loss during the period, which included $3.0 million of non-cash stock-based compensation expense and a $2.8 million non-cash real estate inventory valuation adjustment. Net cash used in operating activities during the six months ended June 30, 2025 was also due to a $3.7 million increase in accounts receivable, primarily due to a higher number of home sales pending receipt of cash from the title company as compared to December 31, 2024.
Investing Activities
Net cash used in investing activities was less than $0.1 million and $1.1 million during the six months ended June 30, 2026 and 2025, respectively, and principally represents purchases of property and equipment in both periods.
Financing Activities
Net cash provided by (used in) financing activities was $23.5 million and ($22.2) million during the six months ended June 30, 2026 and 2025, respectively. Net cash provided by financing activities during the six months ended June 30, 2026 primarily consisted of $18.0 million of gross proceeds from the January 2026 Offering. Net cash provided by financing activities during the six months ended June 30, 2026 was also due to a net increase in secured credit facility and other debt funding of $7.0 million, resulting from $122.0 million of borrowings and $115.0 million of repayments during the six months ended June 30, 2026. The net increase in secured credit facility and other debt funding was primarily related to the increase in financed real estate inventory during the period.
Net cash used in financing activities during the six months ended June 30, 2025 primarily consisted of $332.9 million of repayments of credit facilities and other debt, which was partially offset by $310.9 million of borrowings from credit facilities and other debt. This net decrease in credit facility funding of $22.0 million was primarily attributable to reduced borrowing levels as a result of certain credit facility lenders advancing new loan funds at a lower rate during the six months ended June 30, 2025.
Material Cash Requirements and Other Obligations
Information regarding our material cash requirements and other obligations is provided in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Other than as described above under “Liquidity and Capital Resources,” there have been no material changes in our material cash requirements and other obligations since December 31, 2025.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 42
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with GAAP. In doing so, we make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented. Although we believe our estimates, judgments and assumptions are reasonable, actual results may differ from our estimates under different assumptions, judgments or conditions given the inherent uncertainty involved with such matters, which would impact our financial statements. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
There have been no material changes to the critical accounting estimates included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Our significant accounting policies and methods used in the preparation of our condensed consolidated financial statements are described in Note 1. Nature of Operations and Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, of this Quarterly Report on Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, refer to Note 1. Nature of Operations and Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes to the Company’s exposure to market risk since December 31, 2025. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Disclosure Controls and Procedures
In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of the disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its principal executive officer and its principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the Company’s principal executive officer and its principal financial officer have concluded that, as of June 30, 2026, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting, as identified in connection with the evaluation required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that occurred during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 43
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of its business, including, without limitation, assertions by third parties relating to intellectual property infringement, breaches of contract or warranties or employment-related matters. The Company is not currently a party to any actions, claims, suits or other legal proceedings arising in the ordinary course of its business, the outcome of which, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on its business, financial condition, results of operations and cash flows.
The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, its financial condition, results of operations or cash flows for that reporting period could be adversely impacted, perhaps materially.
Refer to Note 15. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding pending litigation that falls outside the scope of ordinary and routine litigation incidental to its business.
Item 1A. Risk Factors.
The Company’s risk factors are described in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes to the Company’s risk factors since the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Equity Securities
None.
Purchase of Equity Securities
The Company did not repurchase shares of its Class A common stock during the three months ended June 30, 2026.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a) On July 29, 2026, OP SPE Borrower Parent, LLC (“SPE”), as parent borrower, OP SPE PHX1, LLC (“PHX1”), as borrower, and OP SPE TPA1, LLC (“TPA1”), as borrower, each an indirect wholly owned subsidiary of the Company, entered into Amendment Number Nine to the Third Amended and Restated Master Loan and Security Agreement, dated as of July 29, 2026 (the “Ninth Amendment”), with Citibank, N.A., as lender, which amends that certain Third Amended and Restated Master Loan and Security Agreement, dated as of June 7, 2022, by and among SPE, PHX1, TPA1, Citibank, N.A., as lender, and Wells Fargo, N.A., as calculation agent and paying agent. The Amendment, among other things, (i) extended the revolving period for the facility during which certain advances may be made, subject to certain terms and conditions, to January 1, 2027, (ii) extended the final maturity date to June 30, 2027, (iii) eliminated the $25 million committed amount, and (iv) increased the uncommitted amount from $175 million to $200 million, such that the facility is entirely uncommitted.
On July 29, 2026, OP SPE SUMMIT, LLC, a Delaware limited liability company (“Summit Borrower”), and wholly owned subsidiary of the Company, and WHGG II TRUST, a Delaware statutory trust (“Lender”), entered into the Second Amended and Restated Revolving Loan Agreement (the “Second Amended and Restated Revolving Loan Agreement”) which amended and restated the Amended and Restated Revolving Loan Agreement dated August 27, 2025, as amended, between Summit Borrower and Lender, which, among other things, increased the uncommitted borrowing capacity from $75 million to $100 million.
The foregoing does not purport to be a complete description of the terms of the Ninth Amendment or the Second Amended and Restated Revolving Loan Agreement, and such descriptions are qualified in their entirety by reference to the Ninth Amendment and Second Amended and Restated Revolving Loan Agreement, respectively, copies of which are filed as Exhibits 10.1 and 10.2 hereto, respectively, and are incorporated herein by reference.
(b) None.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 44
(c) During the three months ended June 30, 2026, no director or “officer” (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 45
Item 6. Exhibits.
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|
Incorporated by Reference |
|
Exhibit
Number
|
|
Exhibit Description |
|
Form |
|
File No. |
|
Exhibit |
|
Filing
Date
|
3.1 |
|
Certificate of Amendment to the Fourth Restated Certificate of Incorporation, dated June 8, 2026 |
|
8-K |
|
001-39641 |
|
3.1 |
|
6/9/26 |
3.2 |
|
Amended and Restated Bylaws |
|
8-K |
|
001-39641 |
|
3.3 |
|
6/9/26 |
10.1*+ |
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Amendment Number Nine, dated July 29, 2026, to Third Amended and Restated Master Loan and Security Agreement, dated as of June 7, 2022, by and among Citibank, N.A., OP SPE Borrower Parent, LLC, OP SPE PHX1, LLC, and OP SPE TPA1, LLC |
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10.2*+ |
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Second Amended and Restated Revolving Loan Agreement, dated July 29, 2026, among OP SPE Summit, LLC and WHGG II Trust |
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31.1* |
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Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) |
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31.2* |
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Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) |
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32.1** |
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 |
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32.2** |
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 |
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101* |
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Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1. Financial Statements of this Quarterly Report on Form 10-Q |
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104* |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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* Filed herewith.
** Furnished herewith.
+ Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the SEC upon request.
Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 46
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 thereunto duly authorized.
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OFFERPAD SOLUTIONS INC. |
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Date: August 3, 2026 |
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By: |
/s/ Brian Bair |
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Brian Bair |
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Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
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Date: August 3, 2026 |
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By: |
/s/ Peter Knag |
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Peter Knag |
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Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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Offerpad Solutions Inc. | Second Quarter 2026 Form 10-Q | 47
EX-10.1
2
opad-ex10_1.htm
EX-10.1
EX-10.1
AMENDMENT NUMBER NINE
to the
THIRD AMENDED AND RESTATED MASTER LOAN AND SECURITY AGREEMENT
Dated as of June 7, 2022,
among
OP SPE BORROWER PARENT, LLC,
OP SPE PHX1, LLC,
OP SPE TPA1, LLC,
WELLS FARGO BANK, N.A.
and
CITIBANK, N.A.
This AMENDMENT NUMBER NINE (this “Amendment Number Nine”) is made this 29th day of July, 2026 (the “Amendment Effective Date”), among OP SPE BORROWER PARENT, LLC (“Parent Borrower”), OP SPE PHX1, LLC and OP SPE TPA1, LLC (each, a “Borrower” and collectively with Parent Borrower, “Borrowers”) and CITIBANK, N.A. (“Lender”), and acknowledged by WELLS FARGO BANK, N.A. (“Calculation Agent” and “Paying Agent”), to the Third Amended and Restated Master Loan and Security Agreement, dated as of June 7, 2022 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), among Borrowers, Lender and Calculation Agent and Paying Agent. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.
RECITALS
WHEREAS, Borrowers and Lender have agreed to amend the Loan Agreement as more specifically set forth herein; and
WHEREAS, as of the date hereof, Borrowers represent to Lender that the Relevant Parties are in full compliance with all of the terms and conditions of the Loan Agreement and each other Loan Document and no Default or Event of Default has occurred and is continuing under the Loan Agreement or any other Loan Document.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
Section 1.
Amendments. Effective as of the Amendment Effective Date, the Loan Agreement is hereby amended as follows:
(a)
Section 1.01 of the Loan Agreement is hereby amended by deleting the definition of “Amortization Option” in its entirety.
(b)
Section 1.01 of the Loan Agreement is hereby amended by deleting the definitions of “Amortization Period”, “Maturity Date” and “Revolving Period” in their entirety and replacing them with the following, respectively:
“Amortization Period” shall mean the period commencing on the last day of the Revolving Period and continuing at all times thereafter. For the avoidance of doubt, no new Advances are permitted during the Amortization Period (including, without limitation, any new Advances in respect of the Committed Amount).
“Maturity Date” shall mean (i) June 30, 2027, or (ii) such earlier date on which the Loans hereunder have become due and payable hereunder in accordance with Section 9.
“Revolving Period” shall mean the period commencing on the Effective Date and ending on the earliest of (i) January 1, 2027, (ii) the Maturity Date, and (iii) the date on which this Loan Agreement shall terminate in accordance with the provisions hereof or by operation of law or the Loans hereunder have become due and payable hereunder in accordance with Section 9.
(c)
Section 3.05(b) of the Loan Agreement is hereby amended by such Section in its entirety and replacing it with the following:
(b) To the extent that no Default or Event of Default has occurred and is continuing, the Paying Agent shall on each Payment Date, Funding Date and Repayment Date (in accordance with the Payment Date Report as approved by the Lender in accordance with Section 3.05(d) below), apply such Income on deposit in the Collection Account in the following order of priority:
first, to Paying Agent, for the account of the appropriate Agent or Diligence Agent, as applicable, any regularly scheduled fees, expenses, and any Calculation Agent Indemnity Amounts and Paying Agent Indemnity Amounts due and owing to the Agents or Diligence Agent, as applicable (including, without limitation, the Calculation Agent Fee, the Paying Agent Fee and the Diligence Agent Fee);
second, to pay to Paying Agent, for the account of Lender an amount equal to any fees (other than any Commitment Fee or Non-Utilization Fee), expenses and indemnity amounts due to Lender;
third, only if such date is a Payment Date, to pay to Paying Agent, for the account of Lender an amount equal to the amount of any Commitment Fee and Non-Utilization Fee for such period and any accrued and unpaid interest on the Loans for the Interest Period then ending;
fourth, to pay Paying Agent, for the account of Lender (i) during the Revolving Period, an amount equal to reduce the outstanding Advances with respect to any Properties that have been sold or transferred to zero and (ii) during the Amortization Period, an amount equal to one hundred ten percent (110%) of the outstanding amount of the Advances allocable to any Properties that have been sold or transferred;
fifth, to pay to Paying Agent, for the account of Lender an amount sufficient to eliminate any Borrowing Base Deficiency;
sixth, to pay to Paying Agent, for the account of Lender and held in the Collection Account an amount necessary to fully satisfy the Required Reserve Amount;
seventh, to pay to Paying Agent, for the account of Lender an amount sufficient to eliminate any Facility LTV Deficiency;
eighth, to pay to Asset Manager an amount equal to the Asset Management Fees and permitted expenses then due and owing to Asset Manager in accordance with the Loan Documents; and
ninth, 100% of the remaining amount less the Required Reserve Amount shall be paid to or at the direction of Borrowers.
(d)
Section 3.05(c) of the Loan Agreement is hereby amended by deleting the lead-in paragraph therein in its entirety and replacing it with the following:
(c) To the extent that a Default has occurred and is continuing or an Event of Default has occurred, Paying Agent shall (in accordance with the Payment Date Report as approved by Lender in accordance with Section 3.05(d) below) on each Payment Date, Funding Date and Repayment Date, to apply 100% of such Income on deposit in the Collection Account in the following order of priority:
Section 2.
Conditions Precedent; Effectiveness. This Amendment Number Nine shall become effective as of the date that the Lender shall have received:
(a)counterparts of this Amendment Number Nine duly executed by each of the parties hereto; and
(b)counterparts of that certain Amendment Number Eight to the Third Amended and Restated Pricing Side Letter, dated as of the date hereof, duly executed by each of the parties thereto.
Section 3.
Fees and Expenses. Borrowers jointly and severally agree to pay to Lender all reasonable out of pocket costs and expenses incurred by Lender in connection with this Amendment Number Nine (including all reasonable fees and out of pocket costs and expenses of Lender’s legal counsel) in accordance with Section 14.03 of the Loan Agreement.
Section 4.
Representations. Borrowers hereby represent to Lender that as of the date hereof, the Relevant Parties are in full compliance with all of the terms and conditions of the Loan Agreement and each other Loan Document and no Default or Event of Default has occurred and is continuing under the Loan Agreement or any other Loan Document.
Section 5.
Binding Effect; Governing Law. This Amendment Number Nine shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. THIS AMENDMENT NUMBER NINE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL GOVERN).
Section 6.
Counterparts. This Amendment Number Nine may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. The parties agree this Amendment Number Nine, any documents to be delivered pursuant to this Amendment Number Nine and any notices hereunder may be transmitted between them by e-mail and/or by facsimile. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files and signatures executed using third party electronic signature capture service providers, which comply with the Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state law based on the Uniform Electronic Transactions Act, shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested.
Section 7.
Limited Effect. Except as amended hereby, the Loan Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment Number Nine need not be made in the Loan Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Loan Agreement, any reference in any of such items to the Loan Agreement being sufficient to refer to the Loan Agreement as amended hereby.
[Signature Page Follows]
IN WITNESS WHEREOF, Borrowers and Lender have caused this Amendment Number Nine to be executed and delivered by their duly authorized officers as of the Amendment Effective Date.
OP SPE BORROWER PARENT, LLC,
as Parent Borrower
By: /s/ Adam Martinez
Name: Adam Martinez
Title: Chief Legal Officer
[Amendment Number Nine to Third A&R MLSA (Citi-Offerpad) (2026)]
OP SPE PHX1, LLC,
as a Borrower
By: /s/ Adam Martinez
Name: Adam Martinez
Title: Chief Legal Officer
[Amendment Number Nine to Third A&R MLSA (Citi-Offerpad) (2026)]
OP SPE TPA1, LLC,
as a Borrower
By: /s/ Adam Martinez
Name: Adam Martinez
Title: Chief Legal Officer
[Amendment Number Nine to Third A&R MLSA (Citi-Offerpad) (2026)]
CITIBANK, N.A.,
as Lender
By: /s/ Arunthathi Theivakumaran
Name: Arunthathi Theivakumaran
Title: Vice President
[Amendment Number Nine to Third A&R MLSA (Citi-Offerpad) (2026)]
Acknowledged as of the date first above written:
WELLS FARGO BANK, N.A., as Calculation Agent and Paying Agent
By: Computershare Trust Company, N.A., as Agent
By: /s/ Barry Akers
Name: Barry Akers
Title: Vice President
[Amendment Number Nine to Third A&R MLSA (Citi-Offerpad) (2026)]
EX-10.2
3
opad-ex10_2.htm
EX-10.2
EX-10.2
Loan No.: 250858
SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT (as amended, modified and/or restated from time to time, this “Agreement”) is entered into as of July 29, 2026 (the “Closing Date”) by OP SPE SUMMIT, LLC, a Delaware limited liability company (“Borrower”), WHGG II TRUST, a Delaware statutory trust (“WHGG”), and ASCENT DEVELOPER SOLUTIONS LLC, a Delaware limited liability company (“Ascent”; WHGG and Ascent individually and collectively referred to herein as “Lender”).
R E C I T A L S
A. Borrower and WHGG are parties to that certain Amended and Restated Revolving Loan Agreement dated August 27, 2025, as amended by that certain First Amendment to Amended and Restated Revolving Loan Agreement dated December 19, 2025 and by that certain Second Amendment to Amended and Restated Revolving Loan Agreement dated April 15, 2026 (as it may have been further amended, modified or restated from time to time, the “Original Loan Agreement”), pursuant to which Borrower established certain financing arrangements with Lender. The parties hereto desire to amend and restate the Original Loan Agreement and certain other documents, instruments and agreements executed in connection with the Original Loan Agreement.
B. WHEREAS, upon execution and delivery of this Agreement by the parties hereto and satisfaction of the conditions contained herein, the Original Loan Agreement and all obligations and rights of any party thereunder shall be amended and restated by this Agreement; provided, however, that the obligations to repay the “Obligations” arising under (and as defined in) the Original Loan Agreement shall continue in full force and effect and the Liens and security interests securing payment and performance thereof shall be continuing but shall now be governed by the terms of this Agreement and the other Loan Documents and such Liens and security interests shall secure the Obligations evidenced by this Agreement.
C. Borrower has requested that Lender make a revolving loan to it in the aggregate principal amount of up to $100,000,000.00, or such higher amount up to $200,000,000.00 as may be approved in Lender’s sole and absolute discretion pursuant to Section 2.1(b) (the “Loan”).
D. Lender is willing to make the Loan to Borrower subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, Lender and Borrower hereby agree as follows.
SECTION 1.
CERTAIN DEFINITIONS. As used herein, the following terms have the meanings indicated:
“Acquisition Advance” means a borrowing under the loan to acquire fee simple ownership of a Property, in Lender’s sole and absolute discretion.
“Advance” means
(A) a borrowing under the Loan to:
(i) fund the Initial Advance on or around the Closing Date,
(ii) fund an Acquisition Advance, or
(iii) fund a Construction Advance, in each case in accordance with the terms and limitations of this Agreement.
Any Acquisition Advance or Construction Advance shall, in each case, not be less than $75,000, and shall not exceed the lesser of:
(a)for a Reno Property, at the option of Borrower to be made with the Advance Request:
(1)85% of the Cost, 75% of the Valuation based on the “as-completed” value thereof, or $2,000,000.00, or
(2)90% of the Purchase Price plus 100% of the Construction Budget for such Project, 77.5% of the Valuation based on the “as-completed” value thereof, or $2,000,000.00; provided that the initial Advance for any such Reno Property shall not exceed 92% of the Purchase Price.”;
(b) for a Non-Reno Property, at the option of Borrower to be made with the Advance Request:
(1) 90% of the Cost, 80% of the Valuation, or $2,000,000.00 (“Non-Reno Option 1”), or
(2) 90% of the Cost, 70% of the Valuation, or $2,000,000.00 (“Non-Reno Option 2”); or
(B) any other advances of the Loan made by Lender for the purpose of making a Protective Advance, to the extent such Protective Advance is permitted under the terms of this Agreement or any of the other Loan Documents. Any other amounts paid by Lender on behalf of Borrower or any Affiliate permitted under any Loan Document shall also be an Advance for purposes of this Agreement.
“Advance Request” means a written request from Borrower for an Advance in form and substance attached hereto as Exhibit H, which request shall be executed and delivered by Borrower (together with any supporting documentation reasonably required by Lender) in connection with the funding of such Advance.
“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by, or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract, or otherwise.
“Allocated Loan Amount” means, with respect to any Property, the amount of any Advances disbursed by Lender to Borrower for such Property, calculated as of any date of determination.
“Applicable Law” means all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting any Borrower Party or the Property or any part thereof or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, including the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting any Borrower Party or the Property or any part thereof, including any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
“Appraisal” means an appraisal completed by an Appraiser prepared in conformance with the requirements of FIRREA and acceptable to Lender.
“Appraiser” means an appraiser designated by Lender or accepted by Lender from time to time.
“Award” or “Awards” means any compensation paid by any Governmental Authority in connection with a Condemnation in respect to all or any part of the Property.
“Borrower Party” means, individually and collectively, as the context may require, Borrower, Pledgor and Guarantor.
“Business Day” means any day, except a Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized or required by law to close.
“Change Order” means any amendment, supplement or other modification in any respect to any Project Document.
“Collateral” means all collateral encumbered by any of the Loan Documents.
“Collections” means, with respect to the Property, all Rents, Other Receipts, Insurance Proceeds, Awards, Transfer Proceeds, amounts paid to the Lockbox Account and all other payments received and all “proceeds” (as defined in Section 9-102 of the UCC) of the Property.
“Complete” (and the lower-case version thereof) shall mean, with respect to any of the work constituting the Project for the Property, that (a) such work is substantially completed in accordance with all Applicable Law in all material respects, (b) the Property is listed as “active on market” on the MLS and (c) the Borrower has delivered photo and video evidence reasonably acceptable to Lender of completion of the work. The terms “Completed” and “Completion” (and lower-case versions thereof) shall have the same meaning when used in the Loan Documents.
“Completion Date” - means twelve (12) months following the date of the Acquisition Advance for any Reno Property, the date by which construction of the work constituting the Project must be Complete.
“Condemnation” means a temporary or permanent taking by any Governmental Authority in the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto.
“Construction Advance” means each Advance made by Lender, which Advance is made for the purpose of funding Project Expenditures for the completion of the Project.
“Construction Budget” means the budget presented to and approved by Lender for any Project, as the same may be amended, modified, supplemented or replaced from time to time, which budget sets forth the costs and expenses to be incurred in connection with the Completion by Borrower of the Project.
In no event shall the Construction Budget for any Property exceed thirty percent (30%) of the Maximum Available Loan Funds applicable to such Property.
“Construction Documents” means, if and as applicable, each Design Professional Agreement, the General Contractor Agreement, and each Trade Contract, in each case, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, in accordance with the terms and conditions of this Agreement.
“Cost” means the Purchase Price for the applicable Property, plus all Hard Costs and Soft Costs estimated to be spent by Borrower to renovate such Property, as evidenced by the Construction Budget therefor.
“Debt” means the outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Loan under the Notes or any other Loan Document.
“Default” means the occurrence of any event or condition hereunder or under any other Loan Document that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.
“Deposit Account Control Agreement” means a deposit account control agreement, in form and content acceptable to Lender, among Borrower, Lender and a deposit bank approved by Lender, in favor of Lender, and any and all amendments or supplements thereto or replacements thereof.
“Design Professional” means, if and as applicable, any architect, engineer, or other design professional engaged by (or on behalf of) Borrower with respect to the design or engineering of any Project.
“Design Professional Agreement” means, if and as applicable, any agreement between Borrower and any Design Professional, each as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, in accordance with the terms and conditions of this Agreement.
“Eligible Asset” means a property, that satisfies the requirements of Section 2.4(e) (including, without limitation, the eligibility criteria set forth in Exhibit A attached hereto) and is otherwise acceptable to Lender in its sole and absolute discretion.
“Eligible Project” means a construction project for an Eligible Asset that satisfies the eligibility criteria set forth in Exhibit B attached hereto and is otherwise acceptable to Lender in its sole and absolute discretion.
“Embargoed Person” means any Person subject to trade restrictions under any Federal Trade Embargo.
“Environmental Indemnity” means that certain Environmental Indemnity Agreement of even date herewith by Borrower and Guarantor (if applicable) in favor of Lender, and any and all amendments thereto.
“Event of Default” shall have the meaning ascribed to it in Section 8.1.
“Extended Maturity Date” means the date which is six (6) months following the Original Maturity Date.
“Federal Trade Embargo” means any federal law imposing trade restrictions, including (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended), (ii) the International Emergency Economic Powers Act (50 U.S.C. §§ 1701 et seq., as amended), (iii) any enabling legislation or executive order relating to the foregoing, (iv) Executive Order 13224, and (v) the PATRIOT Act.
“Financial Covenants” shall have the meaning set forth in Exhibit C.
“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.
“General Contractor” means a general contractor with a valid contractor’s license in the state where the applicable Property is located.
“General Contractor Agreement” means, if and as applicable, a guaranteed maximum price construction contract between Borrower and General Contractor for the completion of the applicable Project in accordance with the Plans and Specifications, and consistent with the Construction Budget, in form and content reasonably acceptable to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, in accordance with the terms and conditions of this Agreement.
“Governmental Authority” means any and all governments, public or quasi-public authorities, courts or any and all agencies, authorities, bodies, bureaus, departments, or instrumentalities of any government.
“Guarantor” means individually and collectively, as the context may require, and jointly and severally, Offerpad Holdings LLC, a Delaware limited liability company (“Offerpad Holdings”), Offerpad Solutions Inc., a Delaware corporation (“Offerpad Solutions”), and any additional Persons (other than Pledgor) who may sign any guaranty or indemnity in favor of Lender in connection with the Loan.
“Guaranty” means, individually and collectively, as the context may require, that certain (a) Second Amended and Restated Completion Guaranty of even date herewith by Offerpad Holdings in favor of Lender, and (b) Second Amended and Restated Guaranty of Non-Recourse Carveouts of even date herewith by Guarantor in favor of Lender, and any and all amendments or supplements thereto or replacements thereof.
“Hard Costs” means, collectively, all costs and expenses set forth in the Construction Budget for any applicable Project, which are denominated therein as “hard costs”.
“Hazardous Materials” means any chemical, substance, object, condition, material or waste that is or may be hazardous to human health or safety or to the environment, due to its radioactivity, ignitability, corrosivity, flammability, reproductive toxicity, infectiousness or other harmful properties or effects, including all chemicals, substances, materials and wastes that are now or hereafter may be regulated in any manner, classified as dangerous, hazardous or toxic, or as pollutants or contaminants, or to which exposure is prohibited or restricted by any federal, state or local government or public agency, board, body or authority or by any Hazardous Material Law. “Hazardous Materials” include flammable explosives, radioactive materials, polychlorinated biphenyls, asbestos, hazardous waste, radon, toxic substances or other related materials whether in the form of a chemical, element, compound, solution, mixture or
otherwise, including those materials defined as “hazardous substances”, “hazardous materials”, “toxic substances”, “air pollutants”, “toxic pollutants”, “hazardous wastes”, “extremely hazardous waste” or “restricted hazardous waste” by any Hazardous Materials Law.
“Hazardous Materials Law” means any federal, state, or local law, ordinance or regulation or any rule adopted or guideline promulgated pursuant thereto, or any order, ruling or directive of any federal, state, local, executive, judicial, legislative, administrative or other governmental or public agency, board, body or authority relating to health, industrial hygiene, the environment, or the occupational or environmental conditions on, under or about the Property (including ambient air, soil, soil vapor, groundwater, surface water or land use), whether now or hereafter in force, including those relating to the release, emission or discharge of Hazardous Materials, those in connection with the construction, fuel supply, power generation and transmission, waste disposal or any other operations or processes relating to the Property. “Hazardous Materials Law” shall include the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Carpenter Presley Tannel Hazardous Substance Account Act, and similar laws of any state in which the Property is located, as the same are now or hereafter amended.
“HOA” means, for any Property, any non-profit corporation created for the purpose of governing that Property in accordance with the terms of the HOA Declaration for such Property.
“HOA Declaration” means, for any Property, any master declaration of covenants, conditions and restrictions, or similar document recorded in the real property records of the county in which such Property is located, setting forth the rights and obligations of each parcel of real property that forms a part of the HOA governed thereby.
“HOA Documents” means, collectively, (i) the HOA Declaration and (ii) any other documents reflected in the HOA Declaration (or in any other HOA Document) as governing the HOA.
“Indebtedness” of a Person means such Person’s (i) obligations for borrowed money; (ii) obligations representing the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade); (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from property now or hereafter owned or acquired by such Person; (iv) obligations which are evidenced by notes, acceptances, or other instruments; (v) obligations of such Person to purchase securities or other property arising out of or in connection with the sale of the same or substantially similar securities or property; (vi) capitalized lease obligations; (vii) the Loan; (viii) letters of credit; (ix) off-balance sheet liabilities; (x) sale and leaseback transactions; and (xi) any other obligation for borrowed money or other financial accommodation which in accordance with GAAP would be shown as a liability on the consolidated balance sheet of such Person.
“Insurance Proceeds” means all property and business interruption insurance proceeds paid or payable to Borrower or Lender in connection with damage to or destruction of the Property.
“Initial Advance” means the first Advance made by Lender on or around the Closing Date.
“Lien” means any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting the Property, the Collateral or any portion thereof or interest therein, or any Borrower Party or any interest therein, including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect
as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“Loan Documents” means each and all of: (a) this Agreement, (b) the Notes, (c) the Environmental Indemnity, (d) each Guaranty, (e) the Pledge Agreement (if any), (f) the Deposit Account Control Agreement (if any), (g) Uniform Commercial Code financing statements relating to Borrower’s interest in the Property and, to the extent Lender requires the execution of the Pledge Agreement, the Pledgor’s interest in Borrower, (h) the Security Instrument, (i) all other documents evidencing, securing, governing or otherwise pertaining to the Loan, whether now or hereafter entered into, and (j) all amendments, modifications, renewals, substitutions and replacements of any of the foregoing.
“Material Adverse Effect” means, in Lender’s reasonable discretion, a material adverse effect upon (i) the business, reputation, financial condition, results of operations or properties of Borrower or any other Borrower Party, (ii) the ability of any Borrower Party to perform its obligations under the Loan Documents (including any Borrower party’s involvement in, being a party to, or being a target of any litigation, arbitration or governmental investigation or proceeding that will reasonably likely to have a Material Adverse Effect on Borrower’s ability to perform such obligations), or (iii) the validity or enforceability of any of the Loan Documents or the rights and remedies of Lender under the Loan Documents. “Material Adverse Effect” shall not include any event, change, circumstance, development, condition, occurrence or effect resulting from or arising out of: (i) general economic conditions or changes therein, (ii) changes in financial, banking, credit, capital or securities markets, or (iii) industry-wide conditions affecting the Borrowers’ industry generally and not specifically to the Borrower.
“Maturity Date” means the Original Maturity Date or, to the extent extended pursuant to the terms of this Agreement, the Extended Maturity Date, as applicable.
“Maximum Available Loan Funds” means for each Eligible Project and each Eligible Asset, the maximum amount of Loan funds Lender may make available to such Eligible Project or Eligible Asset, as applicable, over the remaining term of the Loan, as of such date of determination.
“MLS” means the multiple listing service data base of real estate listing maintained by licensed brokers and agents.
“Milestone Advance” means any Advance which is either an Initial Advance or an Acquisition Advance.
“Non-Reno Property” means a Property acquired with an Acquisition Advance and which is not to undergo any renovations.
“Note” or “Notes” means any promissory note executed by Borrower and payable to the order of Lender in evidence of the Loan, and any amendments or supplements thereto or any renewals or replacements thereof, including without limitation that certain Fourth Amended and Restated Revolving Promissory Note of even date herewith, in the maximum principal amount of $86,927,278.89 (the “Fourth A&R Note”).
“Obligations” means, collectively, Borrower’s obligations for the payment of the Debt and the performance of all obligations of Borrower contained in the Loan Documents.
“OFAC List” means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any applicable governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities, including trade embargo, economic sanctions, or other prohibitions imposed by Executive Order of the President of the United States.
“Option to Extend” means Borrower’s option, subject to the terms and conditions of Section 3.5 of this Agreement, to extend the term of the Loan from the Original Maturity Date to the Extended Maturity Date.
“Original Maturity Date” means August 1, 2027.
“Other Receipts” means, for any period of determination, actual collections by Borrower in respect of the Property from sources other than Rents, to the extent they are recurring in nature and relate to such period of determination, regardless of when actually collected.
“PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56) (signed into law October 26, 2001), as amended from time to time.
“Permitted Encumbrances” means (i) any exceptions described in the Title Policy and approved by Lender, (ii) Liens for taxes, assessments (including HOA fees) or governmental charges or levies not yet due and payable and Liens for taxes, assessments or governmental charges or levies being contested in good faith and in accordance with this Agreement, (iii) Liens created by or pursuant to this Agreement, the Security Instruments or the other Loan Documents, or (iv) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and cash equivalents on deposit in one or more accounts maintained by Borrower or Pledgor, in each case granted in the ordinary course of business.
“Person” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust, or other entity or organization, or any government or political subdivision or any agency, department, or instrumentality thereof.
“Plans and Specifications” means, if and as applicable, the plans and specifications for the Completion of any Project (including a description of the materials, equipment and fixtures necessary for the Completion of such Project), prepared prior to or to be prepared by (or on behalf of) Borrower after the Closing Date, including any other architectural, structural, foundation and elevator plans and specifications prepared by a Design Professional and any other mechanical, electrical, plumbing and fire protection plans and specifications prepared by any Person retained or to be retained by Borrower, the applicable Design Professional or the General Contractor, in each case, as the same may be amended by Change Orders applicable thereto.
“Pledge Agreement” means a Membership Interest Pledge in form and content acceptable to Lender executed by Pledgor in favor of Lender, which secures Borrower’s Obligations, and any and all amendments or supplements thereto or replacements thereof.
“Pledgor” means Offerpad Summit Holdings, LLC, a Delaware limited liability company, which is the sole member of Borrower.
“Project” means the Completion of all capital improvements in connection with each Eligible Project, which capital improvements are described in the Construction Budget applicable to each Eligible Project, all completed in accordance with the Plans and Specifications the Construction Budget, and all Applicable Law.
“Project Documents” means collectively, all Construction Documents, the Plans and Specifications, the Construction Budget, the Project Permits and the Project Schedule for an Eligible Project, as any of the foregoing may be amended, replaced, supplemented or otherwise modified from time to time in accordance with the terms and conditions of this Agreement.
“Project Expenditure” means costs and expenses incurred in connection with the Completion by Borrower of an Eligible Project in accordance with the Construction Budget, including interest and carrying costs.
“Project Permits” means collectively, all authorizations, consents and approvals, licenses and permits given or issued by Governmental Authorities, which are required for the Completion of an Eligible Project in accordance with all Applicable Law and the Plans and Specifications for the Project, and for the performance and observance of all obligations and agreements of Borrower contained herein or in the other Loan Documents relating to the Completion of the Project, as the same may be amended, replaced, supplemented, assigned or otherwise modified from time to time in accordance with the terms of this Agreement and Applicable Law.
“Project Schedule” means the schedule for the projected progress of the Completion of an Eligible Project, setting forth a construction progress schedule reflecting, among other things, the anticipated dates of completion, which shall include, without limitation, a trade-by-trade breakdown of the estimated periods of commencement and completion of the specific work to be completed in connection with the Completion of the Project substantially in accordance with the Plans and Specifications and Applicable Law, as the same may be amended, restated, replaced, supplemented, updated or otherwise modified from time to time in accordance with the terms of this Agreement or otherwise with the approval of Lender, which approval shall not be unreasonably withheld.
“Property” or “Properties” means, individually and collectively, each Eligible Asset that (i) is acquired by Borrower with the Initial Advance or an Acquisition Advance or (ii) is owned by Borrower prior to the making of any Construction Advance and determined by Lender to be an Eligible Asset, pursuant to the terms hereof, together with the improvements and all appurtenances now or hereafter located on such real property.
“Property Taxes” means any real estate and personal property Taxes, assessments, water charges, sewer rents, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto now or hereafter levied or assessed or imposed by a Governmental Authority against the Property, any Collateral, any part of either of the foregoing, or Borrower.
“Purchase Agreement” means the purchase and sale agreement between Borrower and the seller of any Property for the purchase of such Property.
“Purchase Price” means, for any Property and the Initial Advance and/or Acquisition Advance relating thereto, an amount equal to (a) (i) the gross purchase price paid by Borrower for such Property minus (ii) any credit to Borrower with respect to such Property as set forth on the final closing statement for the purchase of such Property by Borrower that is provided to Lender prior to the closing of the related Initial Advance or Acquisition Advance, plus (b) any credit to Borrower with respect to such Property (other than any credit for any repair to such Property) as set forth on such final closing statement; provided, however, that in no event shall the total credit pursuant to clause (b) above with respect to any Property exceed six percent (6%) of the gross purchase price for such Property. Without limitation, Borrower acknowledges that the Purchase Price shall not include any amounts paid to any Affiliates of Borrower.
“Reno Property” means an Eligible Asset which is to undergo renovations by Borrower funded by an Acquisition Advance and a Construction Advance.
“Rents” means, with respect to the Property, all rents and rent equivalents and any fees, payments or other compensation from any tenant.
“Reserve Account” means, any reserve or escrow account established under the Loan Documents from time to time, which reserve or escrow account may be established, at Lender’s discretion, by reserving a portion of the outstanding principal balance of the Loan for such account.
“Security Instrument” means a Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing and/or Construction Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, in either case executed by Borrower for the benefit of Lender encumbering a Property.
“Soft Costs” means, collectively, all costs and expenses set forth in the Construction Budget for the applicable Project, which are denominated therein as “soft costs”.
“Subsequent Advance” means any Advance after the Initial Advance.
“Taxes” means all taxes, assessments, levies and charges imposed by any Governmental Authority having jurisdiction over the Property, which are or may affect, or become a lien upon, such Property or imposed pursuant to any HOA Documents or any rules or regulations adopted thereunder, or the rents, royalties, profits and income of the Property, or interest therein, or imposed by any Governmental Authority upon Borrower or Lender by reason of their respective interests in the Property or by reason of any payment, or portion thereof, made to Lender hereunder or pursuant to any Obligation secured by any of the Loan Documents (including all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon), other than taxes which are measured by and imposed upon Lender’s general net income.
“Title Policy” means an ALTA (or the relevant state equivalent in any state in which ALTA is not the commercial standard) extended Lender’s title insurance policy in the amount of the Loan, with such endorsements as Lender may require, containing no exceptions to title (printed or otherwise) that are unacceptable to Lender, and insuring that Lender has a first priority Lien on any Property.
“Trade Contract” means any agreement, contract or purchase order between Borrower, an Affiliate of Borrower or General Contractor, on the one hand, and any Trade Contractor, on the other hand, pursuant to which such Trade Contractor agrees to provide labor, materials, equipment or services in connection with the Completion of the Project, in each case, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.
“Trade Contractor” means any Person that is a contractor, subcontractor, sub-subcontractor, supplier or provider of labor, materials, equipment or services in connection with the Completion of a Project.
“Transfer” or “Transferred” means to sell, assign, convey, transfer, pledge, encumber or otherwise dispose of, or where used as a noun, a sale, assignment, conveyance, transfer, pledge, encumbrance or other disposition.
“Transfer Expenses” means, with respect to the Transfer of the Property, the reasonable expenses of Borrower incurred in connection therewith, for any of the following: (i) third-party real estate commissions, (ii) the closing costs of the purchaser of such Property actually paid by Borrower and (iii) Borrower’s miscellaneous closings costs, including title, escrow and appraisal costs and expenses.
“Transfer Proceeds” means, with respect to the Transfer of any Property, the gross sales price for such Property (including any earnest money, down payment or similar deposit included in the total sales price paid by the purchaser), less Transfer Expenses.
“Uniform Commercial Code” or “UCC” means (a) with respect to the Property, the Uniform Commercial Code as in effect in the state where such Collateral is located, and (b) with respect to the ownership interests in Borrower, the Uniform Commercial Code as in effect in the State of Delaware (except for matters which the Uniform Commercial Code of the State of Delaware provides shall be governed by the Uniform Commercial Code in effect in any other state, in which case “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in such other state), in each case as amended from time to time.
“Valuation” means the as-is value of the applicable Property (or in the case of a Reno Property, the “as-completed” value following the Completion of the renovation thereon) on or about (i) the date of acquisition by Borrower, if such Property was acquired through the making of an Initial Advance and/or Acquisition Advance, or (ii) the date of the initial Construction Advance if such Property was acquired by Borrower subsequent to the Closing Date, but not through receipt of an Initial Advance or Acquisition Advance, and prior to the making of the initial Construction Advance, as set forth in: (1) For a Reno Property, the “as-completed” value determined by: (a) for an Advance of less than $400,000, the lower of (i) the BPO (Broker Price Opinion) determined by Radian or (ii) Lender’s determination of value, or (b) for an Advance of $400,000 or more, Borrower shall provide an AAR (Amplified Appraisal Report) by Radian, the lower of (i) the Lender’s determination of value or (ii) the applicable AAR from Radian, and (2) For a Non-Reno Property, the “as-is” value determined by: (a) for an Advance of less than $400,000, the lower of (i) the BPO (Broker Price Opinion) determined by Radian or (ii) the Ascent Internal Valuation, or (b) for an Advance of $400,000 or more, Borrower shall provide an AAR (Amplified Appraisal Report) by Radian, the lower of (i) the Ascent Internal Valuation, or (ii) the applicable the applicable AAR from Radian.
SECTION 2.
LOAN; GENERAL.
(a)
Subject to the terms and conditions of this Agreement, Lender may, in Lender’s sole and absolute discretion, lend to Borrower, and Borrower agrees to borrow, the principal sum of up to $100,000,000.00, or such higher amount up to $200,000,000.00 as may be approved by Lender in its sole and absolute discretion pursuant to Section 2.1(b) below; said sum to be evidenced by the Notes and which shall be repaid in accordance with the terms of the Notes and the other Loan Documents. Each Advance under the Loan will be evidenced by a Note in substantially the form as Exhibit I. The Loan is a revolving loan, under which funds may be advanced, repaid and re-advanced, from time to time as permitted under the terms and conditions of this Agreement and the other Loan Documents. Notwithstanding the foregoing, the outstanding principal balance under the Loan and the outstanding principal balance under the Other Loans (as hereinafter defined), shall not in the aggregate exceed $100,000,000.00, or such higher amount up to $200,000,000.00 as may be approved by Lender in its sole and absolute discretion pursuant to Section 2.1(b) below.
(b)Borrower may request, at any time (but only one time), to increase the maximum principal amount of the Loan by up to $100,000,000.00 (i.e., up to a total of $200,000,000.00); provided, however, that such potential upsize is at Lender’s sole and absolute discretion and Lender shall have satisfied its full underwriting and internal approvals process including, without limitation, satisfaction that the following conditions have been satisfied: (a) no Default or Event of Default shall have occurred and be continuing as of the date of Borrower’s request and as of the date of the increase, (b) Borrower shall have provided Lender with written notice of Borrower’s desire to increase the maximum principal amount of the Loan, (c) Lender shall have approved such increase in its sole and absolute discretion; and (d) Borrower shall have reimbursed Lender for all costs and expenses incurred by Lender in connection with the requested increase, including legal fees and costs, title costs, appraisal costs and escrow costs (and Borrower shall be responsible for payment of such costs and expenses regardless as to whether the Borrower qualifies for or Lender approves the increase).
Section 2.2
Purpose. Amounts disbursed to or on behalf of Borrower pursuant to any Note shall be used for the purchase and renovation of each Property and the Project and for such other purposes and uses as may be permitted under this Agreement and the other Loan Documents.
Section 2.3
Grant of Security Interest in Property. Each Note shall be secured, in part, by a Security Instrument encumbering certain real property and improvements as described therein.
(a)
Initial Advance. Subject to the provisions of this Agreement, upon written request by Borrower, pursuant to Section 3.1 below, Lender may elect, in Lender’s sole and absolute discretion, to make the Initial Advance to Borrower.
(b)
Subsequent Advances. Subject to the provisions of this Agreement, upon written request by Borrower, Lender shall make Acquisition Advances and Construction Advances, from time to time, within fourteen (14) days after all conditions precedent to making such Advances (including those set forth in Sections 3.1 and 3.2 below), have been met.
(c)
Construction Holdback. The construction holdback amount will be 50% of the cost of each Project (the “Construction Holdback”). The Construction Holdback for any Property may be requested via Construction Advances in accordance with Section 3.2 of this Agreement.
(d)
Milestone Advances. Notwithstanding anything to the contrary contained herein, for any Advance which is a Milestone Advance, Lender may make such Advance in Lender’s sole and absolute discretion.
(i)Notwithstanding any other provision of this Agreement to the contrary, the aggregate amount of all Advances at any one time outstanding (with the exception of any Protective Advances (as hereinafter defined)) shall not exceed the amount of the Loan, and in no event shall the total Maximum Available Loan Funds for all Eligible Projects and Eligible Assets, as of such date of determination, exceed the maximum amount of the Loan.
(ii)Unless otherwise permitted by Lender, Advances shall be made (if at all) not more frequently than one (1) time in any calendar week and in a manner consistent with this Agreement and the Construction Budget.
(iii)In no event shall Lender be obligated to make Advances in excess of the percentage of construction completed as certified by Lender pursuant to any inspection completed by Lender, if any. The maximum amount of advances which Borrower may request for the Project or for any component or phase thereof shall be as set forth in the Construction Budget.
(iv)If required by Lender in its sole and absolute discretion following an Event of Default, all Advances shall be made into an account of Borrower that is subject to the Deposit Account Control Agreement.
(v)
Lender shall not be obligated to disburse Loan proceeds for the payment of any cost if the amount of such cost, together with the amounts of other costs included within the same “line-item” in the Construction Budget for which requests for advances have previously been submitted and approved, exceeds the amount set forth in the Construction Budget for such line-item, unless Borrower furnishes to Lender documentary evidence satisfactory to Lender that any such excess cost is offset by a reduction, in nature satisfactory to Lender, of at least an equal amount in another line-item in the Construction Budget, and Lender approves a revision to the Construction Budget.
(f)
Determination. Borrower understands that (A) a Property will not constitute an Eligible Asset, and Lender will not make any Initial Advance for the acquisition thereof, unless (i) at minimum, the conditions set forth in Exhibit A (collectively the “Eligible Asset Minimum Requirements”) are satisfied (as determined by Lender) and the conditions listed in clauses (i) through (iii) below are satisfied and (ii) Lender approves of such property as an Eligible Asset, which approval Lender may grant or withhold in its sole and absolute discretion, and (B) a construction project will not constitute an Eligible Project, and Lender will not make an Initial Advance for any Project Expenditure to be paid for therefrom, unless (i) at minimum, the conditions set forth in Exhibit B (collectively, the “Eligible Project Minimum Requirements”) are satisfied (as determined by Lender) and the conditions listed in clauses (i) through (iii) below are satisfied and (ii) Lender approves of such construction project as an Eligible Project, which approval Lender may grant or withhold in its sole and absolute discretion.
(i)
Lender has approved all information required under Section 3.1;
(ii)Lender shall have received, at Borrower’s sole cost and expense, the as-is value of the property on or about the date of acquisition by Borrower (or, if such property was acquired by Borrower prior to the request for such Initial Advance then on or about the date of such requested Initial Advance), as set forth in (i) for an Initial Advance of less than $400,000.00, the desktop valuation with inspection, or (ii) for an Initial Advance of $400,000.00 or more, the third-party appraisal from an Appraiser;
(iii)
All representations and warranties contained herein would be true and correct if the property were included as an Eligible Asset (including representations and warranties contained in Section 5.1.16) and/or if the construction project was included as an Eligible Project (including representations and warranties contained in Section 5.1.17), as applicable; and
(iv)The requested Maximum Available Loan Funds applicable to such proposed Eligible Project or proposed Eligible Asset, as applicable, together with all of the Maximum Available Loan Funds applicable to all then-current Eligible Projects and all Eligible Assets, does not, in the aggregate, exceed the maximum amount of the Loan.
Section 2.5
Loan Fees and Expenses. A non-refundable loan fee of (a) $1,200 shall be earned by Lender upon the making of an Acquisition Advance for each Property under either clause (a)(1) or clause (b) of the definition of “Advance” and (b) $1,400 shall be earned by Lender upon the
making of an Acquisition Advance for each Property under clause (a)(2) of the definition of “Advance”. In addition, Borrower shall pay to Lender, on the date hereof, those certain amounts referenced in the settlement statement approved by Lender in connection with the closing of the Loan.
Section 2.6
Partial Releases. The provisions of Exhibit D shall apply to this Agreement.
Section 2.7
Security Interests. To secure all payments of principal and interest under this Agreement and the payment and performance of all other Obligations of Borrower to Lender under this Agreement and any other agreement between Borrower and Lender, including without limitation, all construction obligations of Borrower for the completion of the Project in substantial accordance with the Plans and Specifications on or prior to the Completion Date and the payment and performance of all other obligations arising from all leases, the Loan Documents, any hedge agreement and any prepayment penalties or breakage costs, Borrower hereby grants to Lender a continuing first priority security interest in the Collateral, together with all accessions, attachments, replacements, substitutions, modifications and additions thereto, now or hereafter acquired, and all Proceeds (as defined in the applicable Uniform Commercial Code) thereof (including insurance proceeds). Borrower (i) authorizes Lender to file (and Borrower shall execute if requested by Lender) and (ii) irrevocably appoints Lender its agent and attorney-in-fact to execute in the name of Borrower and file, any Uniform Commercial Code financing statements (including any amendments thereto) or similar filings with such authorities and with any filing offices as Lender may determine are necessary or advisable to protect Lender’s interest in the Collateral and/or this Agreement, and Borrower agrees to reimburse Lender upon demand for all reasonable costs incurred with respect thereto and with respect to any lien, tax or other related searches (that Lender may reasonably determine are necessary or advisable) performed by Lender (whether prior to or after the date of this Agreement) in connection with any Loan transaction, provided that such searches at Borrower’s expenses shall be limited to one (1) in any twelve (12) month period unless there is a Default or Event of Default during such period.
SECTION 3.
ADVANCES; OPTION TO EXTEND.
Section 3.1
Closing Conditions; Advances. Lender’s obligation to make any Advances (including the Initial Advance) or take any other action under the Loan Documents shall be subject at all times to satisfaction of each and every one of the following conditions precedent in Lender’s discretion:
(a)Receipt and approval by Lender of an executed original of this Agreement, each of the Loan Documents, and any and all other documents, instruments, policies and forms of evidence or other materials which are required pursuant to this Agreement or any of the other Loan Documents or as otherwise required by Lender, each in form and content acceptable to Lender:
(b)There shall exist no Default or Event of Default under this Agreement or any of the Loan Documents;
(c)The Security Instrument is a valid lien upon the Property and is prior and superior to all other liens and encumbrances thereon except those that have priority under applicable law, those described in the Title Policy, or those approved by Lender in writing in Lender’s sole discretion (and, for the avoidance of doubt, the only liens or encumbrances affecting the Property are the Permitted Encumbrances);
(d)Lender shall have received and approved a final Construction Budget;
(e)Lender shall have received and approved the following: (i) a written appraisal prepared in conformance with the requirements of FIRREA, as well as any other applicable rules or regulations from any and all applicable governmental authorities (subject to review and adjustment by Lender consistent with Lender’s standard practices); (ii) evidence of the insurance coverage required under this Agreement; (iii) the Plans and Specifications, together with evidence of all necessary or appropriate approvals of governmental agencies or private parties; (iv) copies of all agreements which are material to Completion of the Project, including without limitation a copy of the General Contractor Agreement, if any, and copies of all Project Permits; and (v) a list of all Project Documents in effect for the Project as of the date of such request for Advance and copies of all such Project Documents.
(f)Borrower shall have presented evidence satisfactory to Lender that it has contributed equity in the Property and Project in the amount in the Construction Budget;
(h)
The representations and warranties contained in this Agreement shall be true and correct as of the Closing Date and as of the date of each Advance or any other amounts pursuant to the Loan Documents except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date;
(i)If required by Lender, Lender shall have received evidence that each of Borrower and Guarantor is in good standing in the state in which such entities are organized as of the date hereof and the states where such entities conduct business;
(j)If an Acquisition Advance, a copy of the purchase and sale agreement for the Property;
(k)Lender shall have received a commitment by a title company to issue the Title Policy (together with copies of all exceptions) in form and substance acceptable to Lender;
(l)If required by Lender, Lender shall have received legal opinions issued by counsel for Borrower and each other Borrower Party, as required by Lender;
(m)If required by Lender, Lender shall have received current Uniform Commercial Code searches for Borrower and each other Borrower Party, and, if required by Lender, the immediately preceding owner of the Property;
(n)If required by Lender, Lender shall have received evidence of insurance as required by this Agreement;
(o)There shall have occurred no Material Adverse Effect, and no condition exists with respect to the Borrower, the Property, or market conditions which could reasonably be expected to have a Material Adverse Effect;
(p)No condemnation or adverse zoning or usage change proceeding shall have occurred or shall have been threatened against the Property; the Property shall not have suffered any significant damage by fire or other casualty which has not been repaired or is not covered by insurance; no law, regulation, ordinance, moratorium, injunctive proceeding, restriction, litigation, action, citation or similar proceeding or matter shall have been enacted, adopted, or threatened by any governmental authority, which would have a Material Adverse Effect;
(q)Borrower shall have paid or reimbursed all of Lender’s reasonable and out-of-pocket fees outstanding fees and expenses (including the out-of-pocket fees and expenses of Lender’s construction consultant(s), if any, and all other out-of-pocket fees, costs and expenses of Lender (including any draw fees and any fees and expenses of outside legal counsel)) relating to the Loan, to the extent then due and payable, as well as all fees and commissions payable to real estate brokers, mortgage brokers, or any other brokers or agents in connection with the Loan or the acquisition of the Property, evidence of such payment to be accompanied by any waivers or indemnifications deemed necessary by Lender;
(r)The Property shall comply in all material respects with all Applicable Law;
(s)Such other documents or items as Lender or its counsel may require in their sole and absolute discretion (including credit and litigation information on Borrower and each other Borrower Party); and
(t)Lender shall have received and approved organizational documents, resolutions, certificates and consents with respect to Borrower (and the partners, members, managers or joint venturers of Borrower (if any)), all Guarantors (and the partners, members, managers or joint venturers of all such Guarantors (if any)), and such other related entities as Lender may require.
Section 3.2
Request for Construction Advance; Additional Conditions. With respect to each Advance Request for a Construction Advance, each of the following conditions must be met prior to any such Advance being funded:
(a)The Project for the applicable Property shall be Complete as reasonably determined by Lender;
(c)Lender shall have received a certificate of Borrower with respect to any construction work constituting the applicable Project Expenditures to be funded by such Advance (i) certifying that the work has been completed in a good and workmanlike manner in accordance with all Applicable Law, in all material respects and (ii) including (with the Advance Request) a copy of the certificate of occupancy for such Property, and (iii) to the extent any contractors or vendors have given preliminary notice of a Lien, accompanied by conditional lien waivers or other evidence of lien release upon payment satisfactory to Lender;
(d)Lender shall have determined that the applicable work with respect to which the Advance has been requested has been completed in good and workmanlike manner in accordance with all Applicable Law and the Plans and Specifications; and
(e)All Advance Requests shall clearly identify any amounts requested for payment to an Affiliate. Unless expressly set forth in the then effective Construction Budget or this Agreement, no developer’s, management, consulting or brokerage fee or commission, developer profit or other payment to any Affiliate shall be paid directly or indirectly from any proceeds of the Loan without Lender’s prior written approval.
Each Advance Request delivered by Borrower to Lender, whether to request an Initial Advance or any Subsequent Advance, shall be deemed to be a representation and warranty that (i) the information contained in the Advance Request is true and correct in all material respects, (ii) no Default or Event of Default has occurred or is continuing under any of the Loan Documents and (iii) all representations and warranties under this Agreement and the other Loan Documents are true, correct and complete in all
material respects and not misleading in any respect on the date of such Advance Request, as if such representations and warranties were made on such date.
Section 3.3
Full Repayment and Reconveyance, Satisfaction or Release. Upon receipt of all sums owing and outstanding under any Note and the Loan Documents, and the full performance of all other obligations secured by the Security Instrument, Lender shall reconvey, satisfy or release the Property from the lien of the Security Instrument and terminate any assignment of leases and rents or UCC-financing statements related to the Collateral; provided, however, that all of the following conditions shall be satisfied at the time of, and with respect to, such reconveyance, satisfaction or release: (a) Lender shall have received all escrow, closing and recording costs, the costs of preparing and delivering such reconveyance, satisfaction or release, the payment of any and all sums then due and payable under the Loan Documents, and the full payment and performance of all other obligations secured by the Security Instrument, including those set forth in the Note and the Security Instrument; and (b) Lender shall have received a written release reasonably satisfactory to Lender of any set aside letter, letter of credit or other form of undertaking which Lender has issued to any surety, governmental agency or any other party in connection with the Loan or the Property. Lender’s obligation to make further disbursements under the Loan shall terminate as to any portion of the Loan undisbursed as of the date of issuance of such reconveyance, satisfaction or release, and any commitment of Lender to lend any undisbursed portion of the Loan shall be cancelled. For avoidance of doubt, the Property may not be sold by Borrower unless it is released (and the required payment is made) pursuant to this Section 3.3 prior to or concurrently with such sale.
Section 3.5
Option to Extend. Subject to the provisions of this Agreement, Borrower shall have the Option to Extend the term of the Loan from the Original Maturity Date to the Extended Maturity Date, upon satisfaction of each and every one of the following conditions precedent in Lender’s discretion:
(a)
Borrower shall provide Lender with written notice of Borrower’s request to exercise the Option to Extend in the form attached hereto as Exhibit E or in such other written form (and including any reasonably necessary supporting documentation) reasonably acceptable to Lender not less than thirty (30) days and not more than one hundred twenty (120) days prior to the Original Maturity Date.
(b)As of the date of Borrower’s delivery of notice of request to exercise the Option to Extend, and as of the Original Maturity Date, no Default or Event of Default shall exist, and Borrower shall so certify in writing.
(c)Borrower shall execute or cause the execution of all documents reasonably required by Lender to exercise the Option to Extend.
(d)There shall have occurred no Material Adverse Effect, and no condition exists which could have a Material Adverse Effect.
(e)At Borrower’s sole cost and expense, the issuance by the title company, and Lender’s receipt, of any endorsements deemed necessary by Lender for attachment to Lender’s Title Policy, insuring the priority and validity of the Security Instrument.
(f)
On or before the Original Maturity Date, Borrower shall pay to Lender an extension fee in the amount of 0.75% of the Loan (whether disbursed or undisbursed), as determined on the Original Maturity Date.
(g)Borrower shall obtain Lender’s approval to exercise the Option to Extend, which approval shall be granted in Lender’s sole discretion.
In connection with this Section 3.5, Lender shall have the right, but not the obligation, to request and obtain from an appraiser acceptable to Lender at Borrower’s sole cost and expense, an updated Appraisal of the Property, which includes an opinion of value and supporting information reasonably acceptable to Lender. If such an Appraisal is obtained, Borrower agrees to cooperate with any appraiser, allow access to the Property and provide copies of any applicable statements and information reasonably requested by such appraiser. A copy of such updated Appraisal shall be provided to Borrower upon completion.
Except as modified by the Option to Extend, the terms and conditions of this Agreement and the other Loan Documents as modified and approved by Lender shall remain unmodified and in full force and effect.
Section 3.6
Recourse. The Loan shall be full recourse to Borrower and all of its assets, whether now owned or hereafter acquired or in which Borrower otherwise has an interest, and all proceeds thereof.
SECTION 4.
PAYMENT. All payments shall be made pursuant to the terms and conditions of the Notes and the other Loan Documents.
SECTION 5.
REPRESENTATIONS AND WARRANTIES.
Section 5.1
Borrower Representations. Borrower represents and warrants as of the date hereof and as of the date of each Advance that:
5.1.1
Authority/Enforceability. Each Borrower Party is in compliance in all material respects with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers and organizational authority to own, develop and operate the Property and improvements as contemplated by the Loan Documents.
5.1.2
Binding Obligations. Each applicable Borrower Party is authorized to execute, deliver and perform its obligations under the Loan Documents, and such obligations shall be valid and binding obligations of the applicable Borrower Party.
5.1.3
Formation and Organizational Documents. Borrower has delivered to Lender all formation and organizational documents of Borrower, the general partner or managing member of Borrower, and of all Guarantors of the Loan, if any, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender. Borrower shall immediately provide Lender with copies of any amendments or modifications of the formation or organizational documents. Borrower shall not, without the prior written consent of Lender, modify or amend its operating agreement or partnership agreement or other organizational documents in any way that would have a material adverse effect on its ability to own and operate the Property or to perform under the Loan Documents.
5.1.4
No Proceedings or Litigation. Except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or threatened in writing, against Borrower or affecting the Property.
5.1.5
No Defaults. No Borrower Party is in default with respect to any order or decree of any court or any order, regulation or demand of any Governmental Authority, which default might have
consequences that would materially adversely affect the condition (financial or other) or operations of any Borrower Party or might have consequences that would materially adversely affect Borrower Party’s performance hereunder or under any of the Loan Documents.
5.1.6
Consents. No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by any Borrower Party of, or compliance by any Borrower Party with, this Agreement or any other Loan Document or the consummation of the transactions contemplated hereby which lack thereof might reasonably be expected to materially adversely affect the condition (financial or other) or operations of any Borrower Party or might have consequences that would materially adversely affect Borrower Party’s performance hereunder or under any of the Loan Documents, other than those which have been obtained by the applicable Borrower Party or are in relation the construction of the Project.
5.1.7
Title. Borrower is the record and beneficial owner of, and has good and marketable title to, the Property, free and clear of all Liens whatsoever other than the Permitted Encumbrances, and lawfully holds and possesses the Property and has the right to encumber the same. Without limiting the generality of the foregoing, Borrower has not granted any option or right of first refusal or first opportunity to any party to acquire any interest in the Property. The Security Instrument, when recorded, will create valid, perfected first priority, subject to Permitted Encumbrances, security interest in and to the Property and the Collateral in favor of Lender. Pledgor owns one hundred percent (100%) of all interests in Borrower, and is the sole and managing member of Borrower. To the extent Lender requires Borrower to enter into the Pledge Agreement, the Pledge Agreement, together with the Uniform Commercial Code financing statements required to be filed in connection therewith, will create valid, perfected, first priority, subject to Permitted Encumbrances, security interests in and to the ownership interests in Borrower.
5.1.8
No Plan Assets. As of the date hereof and throughout the term of the Loan (a) each Borrower Party is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, (b) none of the assets of any Borrower Party constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3 101, (c) each Borrower Party is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA, and (d) transactions by or with any Borrower Party are not and will not be subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans.
5.1.9
Compliance. Borrower and the Property and the current use thereof comply in all material respects with all Applicable Law, including, without limitation, building and zoning ordinances and codes. Neither Borrower nor any other Borrower Party is in material default or violation of any order, writ, injunction, decree or demand of any Governmental Authority. Neither Borrower nor any other Borrower Party has committed any act that may give any Governmental Authority the right to cause Borrower or any Borrower Party to forfeit the Property or any part thereof or any monies paid in performance of Borrower’s Obligations under any of the Loan Documents.
5.1.10
Financial Information. All financial data, including, without limitation, the statements of cash flow and income and operating expense and any proposed budget, that have been delivered to Lender in respect of Borrower, the other Borrower Parties, the Property or the Project fairly present the financial condition of Borrower in all material respects, each other Borrower Party, the Property and the Project, as applicable, as of the date of such reports and have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein. Except as disclosed therein, neither Borrower nor any other Borrower Party has any contingent liabilities, liabilities for taxes, unusual forward or long term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower or any other Borrower Party. Since the date of the financial statements (including any proposed budget), there has been no Material Adverse Effect.
5.1.11
Single Purpose. Borrower hereby represents and warrants to, and covenants with, Lender that as of the date hereof and until such time as the Debt shall be paid in full (provided, however, that nothing in this Section shall require any shareholder, partner or member of Borrower or Pledgor to make additional capital contributions to either of them): (a) neither Borrower nor Pledgor has owned or will own any asset or property other than (i) the Properties and personal property (with respect to Borrower) or 100% of the ownership interests in Borrower and personal property (with respect to Pledgor), and (ii) incidental personal property necessary for the ownership thereof; (b) neither Borrower nor Pledgor has engaged or will engage in any business other than the acquisition, ownership, management, development, operation, renovation and sale of the Property (with respect to Borrower) or the ownership interests in Borrower (with respect to Pledgor). Each of Borrower and Pledgor will conduct and operate its business as presently conducted and operated; (c) neither Borrower nor Pledgor has incurred or will incur any Indebtedness, other than unsecured trade payables incurred in the ordinary course of business relating to the ownership, renovation and operation of the Properties and except as provided in the Loan Documents; (d) neither Borrower nor Pledgor has made or will make any loans or advances to any third party (including any Affiliate of Borrower); (e) each of Borrower and Pledgor is solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its own assets as the same shall become due; (f) each of Borrower and Pledgor has done or caused to be done and will do all things necessary to observe organizational requirements and formalities and preserve its existence, and neither Borrower nor Pledgor will amend, modify or otherwise change its certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents in any way that is materially adverse to the Lender without the prior consent of Lender in any manner that (i) violates the single purpose covenants set forth in this Section, or (ii) amends, modifies or otherwise changes any provision thereof that by its terms cannot be modified at any time when the Loan is outstanding or by its terms cannot be modified without Lender’s consent; (g) each of Borrower and Pledgor will (i) maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party, (ii) not cause or permit its assets to be listed as assets on the financial statement of any other Person, provided, however, that each of Borrower’s and Pledgor’s assets may be included in a consolidated financial statement of its Affiliates provided that such assets shall be listed on Borrower’s or Pledgor’s own separate balance sheet, (iii) except to the extent Borrower or Pledgor is disregarded for tax purposes, file its own tax returns (to the extent Borrower or Pledgor is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person, and (iv) maintain its books, records, resolutions and agreements as official records; (h) each of Borrower and Pledgor has been, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate or any constituent party thereof). Each of Borrower and Pledgor shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or part of the other and shall maintain and utilize separate stationery, invoices and checks bearing its own name; (i) neither Borrower nor Pledgor will seek or effect its dissolution, division, winding up, liquidation, consolidation or merger, in whole or in part; (j) neither Borrower nor Pledgor will commingle its funds and other assets with those of any Affiliate or constituent party or any other Person, and each of Borrower and Pledgor will hold all of its assets in its own name; (k) each of Borrower and Pledgor has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person; (l) neither Borrower nor Pledgor will guarantee or become obligated for the debts of any other Person nor will either hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person; (m) neither Borrower nor Pledgor will permit any Affiliate or constituent party independent access to its bank accounts; (n) each of Borrower and Pledgor shall pay the salaries of its own employees (if any) from its own funds and maintain a sufficient number of employees (if any) in light of its contemplated business operations; (o) each of Borrower and Pledgor shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred; (p) each of Borrower and Pledgor is and will remain organized in the State in which it was formed as a limited liability company with only one member; (q) no indemnity payment from the funds of Borrower or Pledgor (as distinct from funds
from other sources such as insurance) of any indemnity under any agreement (other than the Loan Documents) to which Borrower or any Pledgor may be a party (including under such party’s organizational documents) shall be payable from amounts allocable to any other Person, including Lender, pursuant to any of the Loan Documents, and (r) neither Borrower nor Pledgor nor any other Person on behalf of Borrower shall, without the affirmative vote of one hundred percent (100%) of the members, partners or stockholders of Borrower: (i) institute proceedings to be adjudicated bankrupt or insolvent, (ii) consent to the institution of bankruptcy or insolvency proceedings against it; (iii) file a petition seeking, or consenting to, reorganization or relief under applicable federal or state law relating to bankruptcy; (iv) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of Borrower or a substantial part of its property; (v) make any assignment for the benefit of creditors; (vi) admit in writing its inability to pay its debts generally as they become due or declare or effect a moratorium on its debts; or (vii) take any action in furtherance of any such action (each of the actions described in the foregoing clauses (i) through (vii), with respect to any individual or entity, are referred to herein as a “Bankruptcy Action”).
5.1.12
Tax Filings. Each of Borrower and Pledgor has filed (or has obtained effective extensions for filing) all federal, state and local tax returns required to be filed and has paid (unless they are not yet past due or are being contested in good faith, provided adequate reserves have been set aside), or made adequate provision for the payment of all federal, state and local taxes, charges and assessments payable thereby. Each of Borrower and Pledgor believes that its tax returns (if any) properly reflect the income and taxes of Borrower or Pledgor, as applicable, for the periods covered thereby.
5.1.13
Solvency. Borrower (a) has not entered into the transaction or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and (b) has received reasonably equivalent value in exchange for its Obligations. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower’s assets is and will, immediately following the making of the Loan, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower). Neither Borrower nor any other Borrower Party is contemplating either the filing of a petition by it under state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property, and neither Borrower nor any other Borrower Party has knowledge of any Person contemplating the filing of any such petition against it.
5.1.14
No Contractual Obligations, Restrictions or Defaults. Other than the Loan Documents, neither Borrower nor Pledgor is subject to any contractual obligations pursuant to which its assets are bound that might materially adversely affect the Property or the business, operations, or condition (financial or otherwise) of Borrower or any other Borrower Party, or has incurred any Indebtedness other than unsecured trade payables incurred in the ordinary course of business relating to the ownership, renovation and operation of the Properties. Neither Borrower nor any other Borrower Party is a party to any agreement or instrument or subject to any court order, injunction, permit, or restriction which might materially adversely affect the Property or the business, operations, or condition (financial or otherwise) of Borrower or any other Borrower Party. Neither Borrower nor any other Borrower Party is in violation of any agreement which violation would have a materially adverse effect on the Property, Borrower, or any
other Borrower Party or Borrower’s or any other Borrower Party’s business, properties, or assets, operations or condition, financial or otherwise.
5.1.15
Federal Trade Embargoes. Borrower and each other Borrower Party is in compliance with all Federal Trade Embargoes in all material respects. No Embargoed Person owns any direct or indirect equity interest in any Borrower Party. No Borrower Party shall knowingly deal with any Person identified on the OFAC List.
5.1.16
Additional Representations and Warranties With Respect to the Property.
(a)
Nature of Property. Each Property meets the Eligible Asset Minimum Requirements. The Property is not, nor shall it be, used for commercial purposes. Borrower shall not allow changes in the stated use of the Property from that disclosed to Lender at the time of execution hereof without prior notice to, and prior written consent from, Lender. Notwithstanding the foregoing, a Default under this Section 5.1.16(a) shall not occur so long as the Loan is used for business purposes at all time, and in the event of such a change in use in violation of this Section 5.1.16(a), Borrower shall have the opportunity, not to exceed fifteen (15) Business Days following written notice from Lender, to pay down the Loan in the amount of the Allocated Loan Amount applicable to such Property.
(b)
Compliance with Law; Property Condition. Borrower has all requisite licenses, permits, franchises, qualifications, certificates of occupancy or other governmental authorizations to own, lease and operate, repair and renovate (if applicable) the Property and carry on its business. None of Borrower, nor any other Borrower Parties or the Property or the Project are in material violation of any law, ordinance, regulation, or rule (federal, state, or local), including all permits and approvals issued thereunder affecting Borrower’s right and qualification to do business, the construction and installation of the improvements located or to be located upon the Property, the operation, leasing, financing or sale of the Property and the occupancy, use and enjoyment thereof. Without limitation on the foregoing, Borrower and the Property comply in all material repects with all applicable laws relating to accessibility for the handicapped, including The Architectural Barriers Act of 1968, The Rehabilitation Act of 1973, The Fair Housing Act of 1988, and The Americans With Disabilities Act of 1990. The Property is free of structural defects and other material physical or mechanical defects, and all building systems contained therein are in good working order, subject to ordinary wear and tear.
(c)
Utilities. All utility services, including, without limitation, gas, water, sewage, electrical and telephone, necessary for the development and occupancy of the Property are available at or within the boundaries of the Property, or Borrower has taken all steps necessary to assure that all such services will be available upon completion of the improvements.
(d)
Insurance. The Property is covered by a policy of hazard insurance and insurance against other insurable risks and hazards as are customary in the area where the Property is located and in accordance with Lender’s underwriting criteria, in an amount not less than the greatest of (i) 100% of the replacement cost of all improvements to the Property, (ii) the outstanding principal balance of the Loan, and (iii) the amount necessary to avoid the operation of any co-insurance provisions with respect to the Property or such maximum lesser amount as permitted by applicable law, all in a form usual and customary in the industry and that is in full force and effect, and all amounts required to have been paid under any such policy have been paid. If any portion of the Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the least of (1) the outstanding principal balance of the Loan, (2) the full insurable value of the Property, and (3) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood
Disaster Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming Lender, its successors and assigns, as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. All premiums on each such insurance policy have been paid. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Borrower has not engaged in any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by Borrower.
(e)
Ownership and Encumbrances.
(i)
Ownership. Borrower is and will at all times be the legal and equitable owner of the Property subject only to Permitted Encumbrances (and subject to releases permitted hereunder).
(ii)
No Leases. The Property are not subject to any leases, licenses or other occupancy agreements, except as may have been approved by Lender.
(iii)
Authority to Encumber. Borrower has, and will continue to have, the full right and authority to encumber the Property in favor of Lender.
(iv)
Validity of the Lien Created by Each Security Instrument. The Lien created by each Security Instrument is (a) legal, valid, binding and enforceable subject to bankruptcy, insolvency, moratorium, reorganization or similar laws and equitable principles of general application, (b) encumbers the entirety of the Property of Borrower, and (c) is first priority except for Liens that have priority under applicable law or for Permitted Encumbrances.
(f)
Taxes. The Property will be comprised of one or more parcels, each of which constitutes a separate legal parcel and a separate tax lot and none of which constitutes a portion of any other tax lot. There are no pending or, to Borrower’s knowledge, proposed, special or other assessments for public improvements or otherwise affecting any of the Property, nor are there any contemplated improvements to any of the Property that may result in such special or other assessments.
(g)
Accuracy of Documents. Any survey, mechanical and structural plans and specifications, leases, certificates of occupancy, warranties, operating statements, rent roll and income and expense reports, and all other books and records relating to the Property and all other budgets (including estimated budgets), contracts or documents delivered to Lender in connection with the Loan and the Loan Documents are, in all material respects, true, correct and complete copies of such documents.
(h)
Hazardous Materials. The Property complies with all Hazardous Materials Laws as to use and conditions on, under or about the Property including soil and groundwater condition. Neither Borrower nor any Borrower Party, nor, to Borrower’s knowledge, any other person, has used, generated, manufactured, stored or disposed of on, under or about the Property or transported to or from the Property any Hazardous Materials. To Borrower’s knowledge, there are no Hazardous Materials in, attributable to or affecting the Property or the area within 2,000 feet of the Property (and the area is not otherwise subject to recorded land use restrictions by reason of its proximity to Hazardous Materials). Without limitation on the foregoing, to Borrower’s knowledge: (i) the primary potable or drinking water source and groundwater have never been known to exceed the EPA Recommended Maximum Contaminant Level Goals set forth under the Safe Drinking Water Act and Clean Water Act, as amended; (ii) there is not
and has never been landfill containing decomposable material, petroleum wells, mineral bearing mines, sewage treatment facilities, underground storage tanks, sinkholes, radon or other toxic emissions within 2,000 feet of any boundary of the Property (and the Property is not otherwise subject to recorded land use restrictions by reason of its proximity to any of the foregoing), and (iii) no electrical transformers, fluorescent light fixtures with ballasts or other equipment containing polychlorinated biphenyls (PCBs) have been located on the Property at any time.
5.1.17
Additional Representations and Warranties With Respect to the Project.
(a)Each Project meets the Eligible Project Minimum Requirements.
(b)The current land use, zoning law, regulations and declarations covering the Property upon which the Project is being constructed permit, on an as-of-right basis, the completion of the Project substantially in accordance with the Construction Budget, the current zoning law and declarations covering the Property permit the Project being constructed thereon to be operated and used as contemplated by this Agreement, and no additional variance, conditional use permit, special use permit or other similar approval is required for such construction, use or occupancy of the Project that has not been or will not, if and when required, be obtained. The Property and the use thereof are currently and, upon completion of the Project being constructed thereon substantially in accordance with the Construction Budget, will be in all material respects in compliance with all Project Permits then required therefor and all other Applicable Law, and such compliance is not dependent on any land, improvements or facilities that are not a part of the Property. There are no pending, or to Borrower’s knowledge, threatened actions, suits or proceedings to revoke, attach, invalidate, rescind or modify the zoning applicable to the Property or any part thereof or any of the Project Permits applicable thereto, as currently existing.
(c)As of the Closing Date and as of each date on which this representation is deemed remade, the Construction Budget (as the same may be amended from time to time with the approval of Lender in accordance with this Agreement) accurately reflects Borrower’s best good faith estimate of all anticipated Hard Costs, Soft Costs, and any other costs and expenses reasonably anticipated to be incurred in connection with the Completion of the Project.
(d)The Project is expected to be Completed on or prior to the Completion Date.
5.1.18
General Facts. No statement of fact made by or on behalf of Borrower or any other Borrower Party in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading. There is no fact presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as far as Borrower can foresee, might adversely affect, the Property, the Project or the business, operations or condition (financial or otherwise) of Borrower or any other Borrower Party.
Section 5.2
Survival of Representations. The representations and warranties set forth in Section 5.1 and elsewhere in this Agreement and the other Loan Documents shall survive for so long as any amount remains payable to Lender under this Agreement or any of the other Loan Documents and shall be deemed to be remade as of the date of each Advance hereunder (except as may be disclosed to and expressly approved by Lender).
SECTION 6.
BORROWER COVENANTS.
Section 6.1
Borrower Affirmative Covenants. Borrower hereby covenants and agrees with Lender that:
6.1.1
Existence; Compliance with Applicable Law. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises and comply with all Applicable Law applicable to it, the Property and the Project.
6.1.2
Taxes and Other Charges; Effect of Change in Law. Borrower shall pay all Taxes and other charges now or hereafter levied or assessed or imposed against the Property, the Project or any part thereof before the same become delinquent or past due, unless Borrower is contesting such taxes in good faith and in accordance with this Agreement. When and if so requested by Lender, Borrower shall deliver promptly to Lender receipts evidencing such payments. Borrower shall not suffer, permit, initiate, or otherwise cause for any tax purpose, the joint assessment of any real property comprising the Property and any personal property located thereon, or any other procedure whereby the lien of real property taxes and assessments and the lien of personal property taxes shall be assessed, levied or charged against such real property as a single lien. While the Property remains subject to a Security Instrument, the Property shall be segregated on the applicable tax rolls from all other property, both real and personal; and, upon request, Borrower shall procure on behalf of Lender a tax service contract, the issuer, form and content of which shall be subject to Lender’s prior approval. Borrower shall not permit or suffer and shall promptly discharge any lien or charge against the Property other than Permitted Encumbrances.
6.1.3
Litigation. Borrower shall give prompt notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower, any other Borrower Party, the Property or the Project. If Lender is made a party to any litigation concerning the Security Instrument, or the Property or the Project or any part thereof or interest therein, or the occupancy thereof by any person or entity, then Borrower shall indemnify, defend and hold Lender harmless from all claims and liability by reason of such litigation, including reasonable attorneys’ fees and expenses incurred by Lender, whether or not any such litigation is prosecuted to judgment.
6.1.4
Access to Property. Borrower shall permit or cause to be permitted, agents, representatives and employees of Lender to inspect the Property, the Project or any part thereof at reasonable hours upon reasonable advance notice.
6.1.5
Further Assurances; Supplemental Affidavits. Borrower shall, and shall cause Pledgor and Guarantor to, at Borrower’s sole cost and expense:
(a)execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve or protect the security interest of Lender in the collateral at any time securing or intended to secure the obligations of Borrower, Pledgor and Guarantor under the Loan Documents, as Lender may reasonably require; and
(b)do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.
6.1.6
Title to the Collateral. Borrower will warrant and defend the validity and priority of Lender’s security interest in the Collateral.
6.1.9
Disposition of Insurance and Condemnation Proceeds and Damages.
(a)
Lender’s Rights in Proceeds and Damages. Borrower hereby collaterally assigns to Lender (a) any award for damages suffered or compensation paid by reason of a taking for public use, or an action in eminent domain, or the exercise of the police power, whether by a condemnation proceeding or otherwise (such as by inverse condemnation), or any transfer of all or any part of the Property in avoidance thereof, affecting the Property in excess of $100,000, (b) all proceeds of any insurance policies paid by reason of loss sustained to the Property in excess of $100,000, and (c) all claims, damages, causes of action, against or from any party or parties, with respect to the Property or the Project, or any funds received or receivable in connection with any damage to the Property or the Project, incurred as a result of any cause whatsoever. All proceeds of any such claims shall be paid by the person or entity making payment directly to Lender, and Borrower shall do all things necessary to obtain prompt settlement for each loss or claim covered by a policy of insurance. After first deducting all costs and expenses of Lender incurred in connection with the settlement or recovery of any proceeds hereunder, Lender may, at its option and without regard to the adequacy of the security hereunder, except as otherwise provided in clause (b) below, apply any such sum it retains hereunder to any indebtedness or obligation secured by the Security Instrument, whether due or not, and in such order or priority as Lender may determine in its sole and absolute discretion; however, after deducting its costs and expenses Lender may approve, regardless of any impairment of security or lack thereof, except as otherwise provided in clause (b) below, release to Borrower of all or any part of the entire amount so collected for reimbursement for costs and expenses incurred by Borrower for the repair and restoration of the Property upon any conditions Lender chooses. Application of all or any portion of such funds, or the release thereof, shall not cure or waive any Event of Default or notice of an Event of Default or invalidate any acts done pursuant to such notice. Borrower shall execute such further assignments, documents or instruments as Lender may from time to time require in order to evidence the assignment hereunder. If, on any loss of or damage to the Property or the Project or on a partial taking or condemnation of the Property, Lender is not entitled under law to retain the entirety of any proceeds or award pursuant to this Section, then Lender shall be entitled to apply the proceeds or award to the repayment of the Note and any other indebtedness secured by any Loan Document to reduce the Note balance and such other indebtedness by the ratio which the value of the Property remaining encumbered by the Security Instrument bears to the value of the Property immediately prior to such loss, damage or partial condemnation or taking, as determined by Lender’s appraiser retained for such purpose. In the event any insurance proceeds or condemnation awards are applied by Lender against the Note under this Section, no prepayment premium shall apply.
(b)
Use of Insurance Proceeds to Repair Property. In the event of damage to or destruction of the Property from any cause actually covered under insurance maintained by Borrower hereunder or any available condemnation proceeds, in each case, in an amount less than or equal to $100,000, the Borrower may collect such proceeds and use them for reconstruction and repair of the damaged or taken improvements. In the event of damage to or destruction of the Property from any cause actually covered under insurance maintained by Borrower hereunder or any available condemnation proceeds, in each case, in excess of $100,000, then Lender shall make available to Borrower the net insurance proceeds or condemnation proceeds available as a result of such damage or destruction (after deducting costs and expenses incurred by Lender in connection with the settlement or recovery of any proceeds as provided in clause (a) above) for use by Borrower, in the reconstruction and repair of the damaged or taken improvements to the condition approved by Lender, on the terms and conditions hereinafter set forth. In the event any of the conditions to Borrower’s right to utilize the net proceeds hereunder are not satisfied or fulfilled at any time, then such net proceeds shall be applied as provided in
clause (a) above. Such net proceeds shall be made available hereunder only if: (a) no Default or an Event of Default occurs; (b) Lender is satisfied that, by expenditure of the net proceeds hereunder, the Property damaged or destroyed or taken shall be fully restored within a reasonable period of time to substantially the equivalent of its original condition and value and all payments required under the Note will continue to be paid; (c) Lender is satisfied that such work of repair and restoration can be completed in the ordinary course of business within one (1) month from the commencement of work and at least one (1) month prior to the date on which all Advances (including any Advance for the Project being constructed thereon) are required to be repaid pursuant to the Note; (d) Lender has reviewed and approved Borrower’s plans and specifications for the work of repair and restoration, Borrower’s architect and any general contractors, subcontractors and material suppliers employed to perform such work; (e) all general contractors, all major subcontractors and material suppliers have supplied 100% performance and completion bonds and bonds protecting such Property from the imposition of mechanic’s or other liens; (f) if the net insurance proceeds or condemnation proceeds available are insufficient for payment of the full cost of restoration or repair and the payments under the Note during the completion period, as determined by Lender, Borrower has deposited with Lender sufficient additional funds to insure payment of all such costs, or made arrangements acceptable to Lender for such sufficient additional funds, such additional funds to be disbursed for costs incurred in the manner herein specified prior to the disbursement of any other funds held by Lender; and (g) Borrower shall have satisfied such other conditions as Lender may in determine to be appropriate in its sole discretion. Disbursement of funds by Lender hereunder shall be subject to all of Lender’s then customary construction loan disbursement procedures, including those set forth herein. No funds held by Lender hereunder shall bear interest; and Lender shall have no duties or obligations with respect thereto, or with respect to the provisions of this clause (b), other than that of a construction lender; and the reasonable costs and expenses of Lender incurred in connection therewith (including the fees of a construction consultant and disbursing agent) shall be paid by Borrower (and Lender shall be entitled to pay such costs and expenses out of the insurance proceeds held by Lender). Specifically, but without limiting the generality of the foregoing, no relationship of trust, or any other duty in the nature of fiduciary duties or otherwise, shall be imposed or implied by the status or actions of Lender hereunder; and under no circumstances shall Lender become obligated to take any action to repair or reconstruct any damaged or destroyed Property. Any net proceeds not disbursed under this clause (b) shall be disbursed in accordance with clause (a) above.
6.1.10
Maintenance and Preservation of the Property.
(a)
Borrower’s Obligation for Maintenance of Property and Security. Borrower shall: (a) keep the Property in good condition and repair, subject to any ongoing Project work and replace any items comprising the Property as they become obsolete or worn out with items of at least the same utility, quality and value, free of any liens or security interests of any kind or character other than the lien of the Loan Documents; (b) not remove or demolish any portion of the Property (except in connection with the Project to the extent approved by Lender); (c) restore promptly and in good and workmanlike manner any part of the Property which may be damaged or destroyed; (d) comply in all material respects with and not suffer violations of laws, ordinances, regulations, covenants, conditions, restrictions, equitable servitudes and easements, whether public or private, of every kind and character, and requirements of insurance companies and any bureau or agency which establishes standards of insurability; (e) not commit or permit intentional waste of the Property; (f) do all other commercially reasonable acts which from the character or use of the Property may be reasonably necessary to maintain and preserve their value or to protect the security of the Security Instrument; (g) perform and comply in all material respects with all obligations required to be performed or complied with in leases, licenses, concessions, management agreements, Project Documents or like agreements affecting the Property, if any, or the management, operation, repair, renovation, occupation or use thereof; (h) pay any and all charges, assessments or fees imposed in connection with the delivery, installation or maintenance of any utility services or installations on, to or for the Property; (i) not change the character, the nature of the occupancy or use of the Property,
or any portion thereof, except in connection with the Project, and then only to the extent consistent with the Project Documents therefor, if approved by Lender, in its sole discretion; (j) not drill for or extract, or enter into a lease or any other type of agreement for the drilling for or extraction of, oil, gas or other hydrocarbon substances, or any mineral of any kind, on, in or under the Property; (k) make no assignment of rents of the Property except to Lender pursuant to the Security Instrument; and (l) execute and, where appropriate, acknowledge and deliver, such further documents or instruments as Lender deems reasonably necessary to preserve, continue and perfect the security provided for in the Security Instrument.
(b)
Lender’s Approval Rights for Work. Borrower shall not undertake or suffer to be made any alteration, addition, relocation, removal or demolition of, or structural or other material change in, any building, improvement, fixture, machinery, or equipment comprising any Non-Reno Property, other than in connection with the Project, without the prior written approval of Lender, unless (a) the aggregate cost of such work for the Property does not exceed $20,000, (b) such work does not affect the roof or the structure of the building and improvements comprising the Property, or adversely affect or diminish the value of the Property or arise as a result of any damage or destruction, (c) such work is designed by licensed professionals and is constructed by licensed contractors, all qualified for such purpose, and in accordance with all Applicable Law, ordinances, regulations, permits and approvals, and (d) Borrower submits to Lender its proposed plans and budget for such work, together with all other supporting materials related to such work as Lender may reasonably require. The foregoing shall not limit Borrower’s obligations under clause (a) above and, accordingly, Borrower shall immediately seek any consent required under this clause (b) in connection with its obligations under clause (a) above.
6.1.11
Financial Covenants. Borrower shall cause Guarantor to, at all times, comply with the Financial Covenants.
6.1.12
Hazardous Materials. Borrower shall indemnify, defend and hold Lender, its employees, agents, officers and directors, harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage or expense (including attorneys’, experts’ and consultant fees and costs), directly or indirectly resulting from, arising out of, or based upon (a) the presence, release, use, manufacture, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such materials to or from, the Property, or (b) the violation, or alleged violation, of any Hazardous Materials Law affecting the Property, or the transportation of Hazardous Materials to or from the Property. This indemnity shall (i) include any damage, liability, fine, penalty, punitive damage, cost or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resources or the environment, nuisance, pollution, contamination, leak, spill, release or other adverse effect on the environment, and the cost of any required or necessary repair, cleanup, treatment or detoxification of the Property, and the preparation and implementation of any closure, disposal, remedial or other required actions in connection with the Property, and (ii) solely with respect to matters occurring prior to foreclosure, including an assignment in lieu of payment, survive foreclosure (whether judicial or non-judicial) of the Security Instrument for the Property and the full or partial payment or discharge of all indebtedness secured by the Security Instrument. WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF, OR ARE CLAIMED TO BE CAUSED BY OR ARISE OUT OF, THE NEGLIGENCE (WHETHER SOLE, COMPARATIVE OR CONTRIBUTORY) OR STRICT LIABILITY OF SUCH (OR ANY OTHER) INDEMNIFIED PERSON.
6.1.13
Notices. Borrower shall give notice, or cause notice to be given, to Lender promptly upon the occurrence of: (a) any Default or Event of Default; (b) any default or event of default under any contractual obligation of Borrower or any Affiliate that could reasonably be expected to have a
Material Adverse Effect; or (c) any litigation or proceeding affecting Borrower or the Property or affecting any of the other Borrower Parties if such litigation or proceeding could have a Material Adverse Effect.
6.1.14
Prohibited Persons. No Borrower Party or any of their direct or indirect equity holders shall (i) knowingly conduct any business, or engage in any transaction or dealing, with any Embargoed Person, including the making or receiving of any contribution of funds, goods, or services, to or for the benefit of an Embargoed Person, or (ii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any Federal Trade Embargo.
6.1.15
Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulations T, U, W or X of the Board of Governors of the Federal Reserve System, or to extend credit to any Person for such purpose, or for any other purpose which would be inconsistent with such Regulations or any other Regulations of such Board of Governors, or for any purposes prohibited by Applicable Law or by the terms and conditions of this Agreement or the other Loan Documents. Borrower agrees that, without the prior written consent of Lender, (i) the funds received from Lender hereunder shall not be used for the benefit of, or transferred to, any Affiliate of Lender and (ii) without limiting the generality of the foregoing, the funds received from Lender hereunder shall not be used to make an equity investment in any Person in which Affiliates of Lender have equity or debt positions if the proceeds of such investment would be used to refinance such Person’s outstanding indebtedness. For purposes of this Section 6.2.7, “Affiliate” shall have the meaning given to such term in Regulation W of the Board of Governors of the Federal Reserve System.
6.1.16
Deposit Account Control Agreement. If required by Lender in its sole and absolute discretion at any time following an Event of Default, Borrower shall deposit all revenues or other income into an account that will be subject to the Deposit Account Control Agreement once such agreement is entered into and otherwise utilize such account as its operating account, it being acknowledged that the Collateral includes Borrower’s accounts and all amounts on deposit therein and proceeds therefrom. Borrower covenants and agrees to take any actions requested by Lender in order to establish such account and enter into such Deposit Account Control Agreement.
6.1.17
Tenants. It is understood that Borrower may, pursuant to the Purchase Agreement for any Property, permit the seller thereof to remain as a tenant at such Property for a period of time not to exceed twenty (20) days after the applicable closing date following the closing thereof (a “Leaseback Tenancy”). Borrower shall enforce the terms of such Leaseback Tenancy as set forth in such Purchase Agreement. At all times: such tenant shall be adequately insured for its personal property and contents in or at the Property, and Borrower’s liability and property insurance shall adequately cover any liabilities arising from such Leaseback Tenancy and such tenant’s acts, omissions, negligence, and misconduct in or about the Property.
6.1.18
Collections and Reserve Funds.
(a)
Lockbox Account. During the continuance of an Event of Default, Lender may require that Borrower notify and advise each current and future tenant via an instruction letter in form acceptable to Lender to send all payments of Rent (whether by cash, check or electronic means) directly to an account controlled by Lender (a “Lockbox Account”). Without the consent of Lender, no Borrower nor Affiliate shall terminate, amend, revoke or modify any tenant direction letter in any manner whatsoever, or direct or cause any tenant to pay any amount in any manner other than as provided in such tenant direction letter, whether or not an Event of Default is continuing. Borrower hereby grants to Lender an irrevocable power of attorney, coupled with an interest, to execute and deliver to tenants such tenant direction letters.
In addition, during the continuance of an Event of Default, Lender may require Borrower to periodically deposit all Collections into a Lockbox Account. Such deposits shall be made in accordance with Lender’s written instructions. During the continuance of an Event of Default, Lender may apply funds collected in a Lockbox Account to the Obligations in such order and priority as Lender determines. All Rents and other Collections shall be collateral for the Obligations and shall be held by Borrower and Manager in trust for the benefit of Lender. The rights set forth in this Section 6.1.18(a) shall be in addition to all other rights and remedies available to Lender. Borrower shall pay for all expenses of opening and maintaining any Lockbox Account.
(b)
Loan Administration Reserve Account. Following an Event of Default, Lender may apply funds in a Reserve Account to pay for Taxes, insurance premiums and capital expenditures with respect to the Property and interest, principal and other Obligations with respect to the Loan, in such order and priority as Lender shall determine. If at any time Lender determines that the amount on deposit in such Reserve Account will not be sufficient to make necessary payments for Taxes, insurance premiums or capital expenditures with respect to the Properties for the succeeding six (6) month period, Lender may so notify Borrower, and Borrower shall, within twenty (20) Business Days of written notice from Lender, deposit with Lender an amount that Lender estimates is sufficient to make such payments.
(d)
Interest Reserve. To the extent Lender requires a reserve for payments of interest accrued on the outstanding principal balance of the Loan, then a portion of the Maximum Available Loan Funds equal to an amount determined by Lender (the “Interest Reserve”) shall be held back and not funded or advanced except as expressly provided for in this Agreement. Subject to the provisions of this Agreement, interest that is payable hereunder during the period from the initial Advance to the earliest to occur of: (i) the date upon which funds in the Interest Reserve have been depleted; (ii) an Event of Default occurs and is continuing; or (iii) the date of the last Advance; shall be payable by means of Advances made from the Interest Reserve. In the event that interest payable hereunder prior to the date of the last Advance is not capable of being paid from the Interest Reserve, Borrower shall duly and timely make such payment from Borrower’s funds to the extent not paid from the Interest Reserve. Subject to the terms and conditions of this Agreement, upon and during the occurrence of an Event of Default, Lender may, at its sole election, but shall not be obligated to, apply Advances from the Interest Reserve to pay debt service on the Loan. In addition, after an Event of Default, Advances from the Interest Reserve funds may, in Lender’s sole and absolute discretion, be disbursed by Lender and applied to outstanding Obligations. If at any time, the Interest Reserve has a balance that is insufficient to fund interest payments payable prior to the date of the last Advance, as reasonably determined by Lender, Borrower shall deposit funds equal to such insufficiency with Lender within fifteen (15) days after written notice from Lender. In no event shall Borrower have any right to withdraw or direct disbursement of all or any portion of the Interest Reserve.
(e)
Accounts and Reserve Funds Generally. Borrower shall not be entitled to any earnings or interest on funds deposited into the Lockbox Account or any Reserve Account, and Borrower shall not invest any funds in an account subject to a Deposit Account Control Agreement. Any funds remaining in any Reserve Account (other than earnings or interest) after the Obligations have been paid in full shall be returned to Borrower.
(f)
Security Interest. As security for the Obligations, Borrower hereby grants to Lender a first-priority security interest in all Collections, each Reserve Account, any Lockbox Account and all amounts at any time contained therein and the proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected first priority security interest therein, including executing and delivering to Lender deposit account control agreements and filing UCC-1 financing statements and continuations thereof.
6.1.20
Commencement and Completion. Borrower shall commence construction of the Project without delay after recordation of the Security Instrument and shall complete construction of the Project, free and clean of any mechanics’ and materialmen’s liens and stop notices, as applicable, in accordance with the Plans and Specifications and other provisions of the Loan Documents, with all construction costs having been paid, on or before the Completion Date.
6.1.21
Post-Closing Possession Agreements. Borrower shall continue to follow its internal standards, policies, and procedures regarding post-possession diligence and management throughout the term of this Loan in substantially the same manner as in place as of the Closing Date, unless otherwise agreed to in writing by Lender.
Section 6.2
Borrower Negative Covenants. Borrower covenants and agrees with Lender that:
6.2.1
Transfers. Without the prior written consent of Lender, and except in the case of the sale, transfer or issuance of stock listed on any nationally recognized stock exchange, neither Borrower nor any other Person having a direct or indirect ownership or beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or transfer any interest, direct or indirect, in the Property or in Borrower, whether voluntarily or involuntarily. Additionally, (a) if there currently exist no certificates, instruments or writings representing the Collateral, Borrower shall not, without the prior written consent of Lender, create certificates, instruments or writings representing the Collateral, and (b) if certificates, instruments or writings representing the Collateral currently exist, Borrower shall not, without the prior written consent of Lender, create new certificates, instruments or writings representing the Collateral. Borrower shall deliver to Lender any and all newly created certificates, instruments or writings representing the collateral. For avoidance of doubt, no Transfer of the Property or of any direct interest in Borrower or Pledgor shall occur without the prior written consent of Lender, or release Borrower, Pledgor or Guarantor from any liability under the Note and other Loan Documents. Upon any Transfer of any direct or indirect interest in the Property, Borrower or Pledgor in violation of this Section (each of which shall constitute an impairment of Lender’s security interests under the applicable Security Instrument), Lender shall have the absolute right, without demand or notice, to declare all Obligations secured by the Security Instrument to be immediately due and payable (including the prepayment premium, if any, set forth in the Note), except to the extent that and in such particular circumstances where exercise of such right by Lender is prohibited by law.
6.2.2
Liens. Borrower shall not create, incur, assume, permit or suffer to exist any Lien on any portion of the Collateral or the Property except for Permitted Encumbrances and Liens in favor of Lender as provided herein. Borrower shall pay at or prior to maturity, all obligations secured by or reducible to liens and encumbrances which now or hereafter shall encumber the Property, whether senior or subordinate to the Security Instrument, including all claims for work or labor performed, or materials or supplies furnished in connection with any work of improvement upon the Property, including, but not limited to, in connection with the Project; provided, however, that any such lien or encumbrance shall be paid and fully discharged by Borrower within fifteen (15) days after demand by Lender. Borrower may contest any such claim of lien without cost or expense to Lender, but only upon posting, and concurrently supplying to Lender, a certified copy of a statutory bond, escrowing funds in an amount determined by Lender, or other security sufficient under applicable law to fully protect any and all of the Property encumbered by such claim of lien and otherwise satisfactory to Lender to protect Lender against any judgment in favor of the lien claimant.
6.2.3
Leases. Borrower shall not enter into any lease of or occupancy agreement for the Property, or any portion thereof, or modify or amend or supplement any such lease or occupancy agreement without the prior written consent of Lender.
6.2.4
Property Management. Borrower shall not appoint, terminate or replace a manager for the Property, or enter, terminate or amend any management agreement for the Property, in each case without Lender’s prior written consent. Any property manager shall hold and maintain all necessary licenses, certifications and permits required by law. Borrower shall fully perform all of its covenants, agreements and obligations under any management agreement of the Property. Any management agreement will be subordinated to Lender’s rights under the Security Instrument and other Loan Documents.
6.2.5
Dissolution, Etc. Borrower shall not (i) engage in any dissolution, division, liquidation or consolidation or merger with or into any other business entity, or (ii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of Borrower (except as expressly permitted hereunder).
6.2.6
Change in Business; Change in Name. Borrower shall not enter into any line of business other than the ownership, operation, repair, restoration and sale of the Property. Borrower shall not change its name without first obtaining the prior written consent of Lender. In the event Lender grants such consent, Borrower shall, at Borrower’s sole cost and expense, take all action required by Lender for the purpose of perfecting or protecting the lien and security interest of Lender. Borrower shall promptly notify Lender in writing of any change in the organizational identification number of Borrower. If Borrower does not now have an organizational identification number and later obtains one, Borrower shall promptly notify Lender in writing of such organizational identification number.
6.2.7
Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any claim or debt owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.
6.2.8
Affiliate Transactions. Without Lender’s prior written consent, Borrower will not enter into any transaction (including, without limitation, the purchase or sale of any property or service) with, or make any payment or transfer to, any Affiliate.
6.2.9
Zoning. Borrower shall not use or permit the use of any portion of the Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior written consent of Lender.
6.2.10
Limitations on Distributions. So long as there is a Default or an Event of Default, Borrower shall not make any distributions to its members.
6.2.11
Other Limitations. Prior to the payment in full of the Debt, Borrower shall not, without the prior written consent of Lender, give its consent or approval to any of the following actions or items: (a) any material change in the method or conduct of the business of Borrower; or (b) the settlement of any claim against Borrower, other than a fully insured third party claim, in an amount greater than Ten Thousand Dollars ($10,000), such consent not to be unreasonably withheld (unless an Event of Default has occurred).
6.2.12
Compliance. Borrower, the Project and the Property and the use thereof shall comply in all material respects with all Applicable Law, including, without limitation, building and zoning ordinances and codes. No Borrower Party shall be in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority. No Borrower Party shall commit any act that may give any Governmental Authority the right to cause a Borrower Party to forfeit the Collateral or any part thereof or any monies paid in performance of Borrower’s Obligations. Without the prior written consent of Lender, Borrower shall not seek, make or consent to any change in the lot or parcel boundaries, zoning, conditions of use, or any other applicable land use laws, ordinances, regulations, permits, approvals or licenses pertaining to the Property, except in connection with the Project, or which would constitute a violation of the warranties and representations contained in this Agreement, or would change the nature of the use or occupancy of the Property. Borrower shall, upon request of Lender made not more than once per quarter, or its agent or representative, deliver to Lender copies of any and all approvals, permits and licenses procured by Borrower with respect to the Property, construction and installation of improvements thereon, including in connection with the Project, or the occupancy, use and enjoyment thereof, pursuant to applicable laws, ordinances, or regulations.
6.2.13
Hazardous Materials. Borrower covenants and agrees that Borrower shall not cause or permit the presence, use, generation, manufacture, release, discharge, storage or disposal of any Hazardous Materials on, under, in or about the Property, or the transportation of any Hazardous Materials to or from the Property. Borrower shall immediately notify Lender in writing of: (a) any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened with respect to the Property in connection with any Hazardous Materials; (b) any claim made or threatened in writing by any third party against Borrower or the Property relating to damage, contribution, cost recovery, compensation, loss or injury to persons or property resulting from any Hazardous Materials; and (c) Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause all or any portion of the Property to be subject to any restrictions on the ownership, occupancy, transferability or use of the Property under Hazardous Materials Law. Without Lender’s prior written consent, Borrower shall not take any remedial action in response to the presence of any Hazardous Materials on, in, under or about the Property, nor enter into any settlement agreement, consent decree or other compromise with respect to any Hazardous Materials (except that in the case of an emergency, Borrower shall take such action as may be reasonably required under the circumstances and shall immediately notify Lender in writing of any such action taken). So long as the Property remains subject to the Security Instrument, Lender shall have the right, on seventy-two (72) hours prior written notice to Borrower, at Borrower’s expense, to enter the Property and to conduct such tests and investigations as Lender requires, in the event that Lender has a good faith belief that such tests or investigations are required or advisable, or at any time following an Event of Default, to determine whether any Hazardous Materials are present in, under, on or about the Property. Such tests and investigation shall include underground borings, groundwater analyses and borings from the floors, ceilings and walls of any improvements located on the Property.
Section 6.3
HOMEOWNERS’ ASSOCIATION.
6.3.1
Covenants. For any Property that is part of a HOA, until payment and performance in full of the Debt and all other Obligations of Borrower in accordance with the terms of this Loan Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:
(a)Borrower shall promptly and faithfully observe, perform and comply in all material respects with all of the terms, covenants and provisions of any HOA Documents applicable to any Property and shall not do, suffer or permit to be done any act, event or omission that may cause a default or breach under any such HOA Documents.
(b)Borrower shall furnish to Lender such information and such other evidence as Lender may reasonably request from time to time concerning Borrower’s due observance,
performance and compliance with the terms, covenants and provisions of such HOA Documents, including, without limitation, evidence that all Taxes have been paid or are not then delinquent.
(c)Borrower shall promptly send to Lender a copy of (A) any notice received or sent by Borrower alleging any default by Borrower or any other Person under, or noncompliance with, any HOA Documents and, in the case of any such default or alleged default by Borrower, do all such acts and undertake all such reasonable steps and institute all such proceedings as shall be reasonably necessary to cure or avert such default and (B) any material responses, demands or further notice received or sent by Borrower in regard to any of the foregoing matters. Borrower shall promptly notify Lender in writing of the initiation of any litigation, arbitration or other proceeding affecting Borrower or any Property under or in connection with any HOA Documents applicable to any such Property and shall enforce its rights under all HOA Documents.
(d)To the extent that any approval rights, consent rights or other rights or privileges are granted to the holder of a recognized mortgagee under any HOA Documents, then such approval rights, consent rights or other rights or privileges shall be deemed to be required by this Agreement. If any HOA Documents provide for one or more “mortgagee representative(s)” (or the equivalent thereto), then Lender shall be named in such HOA Documents as the (or, if such HOA Documents provide for more than one, a) mortgagee representative for so long as the Loan is outstanding, and Borrower shall give notice to any Persons reasonably necessary for Lender to be recognized as a mortgagee under such HOA Documents.
(e)Borrower shall not assign (other than to Lender) or encumber (other than in favor of Lender as security for the Obligations) any of its rights under any HOA Documents. Borrower shall not, without prior written consent from Lender, cast any vote or give any consent, or permit any Affiliate to cast any vote or give any consent, where such vote or consent could adversely affect, alter or impair the lien of any Security Instrument or the security therefor, where such vote or consent could increase the obligation or diminish the rights of Lender or where such vote or consent could adversely affect any Property, without, in each instance, the prior written approval of Lender, such approval not to be unreasonably withheld, conditioned or delayed.
6.3.2
Indemnification Costs and Expenses. Borrower shall indemnify and save harmless Lender (and its officers, partners, members, directors, trustees, advisors, employees, agents, subagents, affiliates, successors, participants and assigns), from and against any expense or other liability of any nature whatsoever arising out of any obligations of Borrower under (A) any HOA Documents or (B) any HOA, including, without limitation, liability arising under Applicable Law, except to the extent an loss is directly caused by Lender’s gross negligence, willful misconduct, bad faith or fraud.
6.3.3
No Liability. Notwithstanding anything contained herein or otherwise to the contrary, Lender shall not have any liability or obligation under any HOA Documents by virtue of this Agreement or Lender’s acceptance of any security interest encumbering any Property.
6.3.4
Rights and Remedies.
(a)Lender shall have the rights and privileges which Borrower has under all HOA Documents (including, without limitation, all voting rights) as though Lender were the owner of the applicable Property governed thereby, which rights and privileges may only be exercised by Lender upon the occurrence and during the continuance of an Event of Default. Upon the occurrence and during the continuance of an Event of Default, Lender may vote in place of Borrower and may exercise any and all of said rights and privileges. Borrower hereby irrevocably appoints Lender as Borrower’s attorney-in-fact, coupled with an interest to vote as Borrower’s proxy and to act with respect to all of said rights and
privileges so long as any Event of Default exists. Written notice from Lender to any HOA governing a Property shall be deemed conclusive as to the existence of such Event of Default and as to Lender’s rights and privileges under this Section 6.3.4. Notwithstanding the foregoing, nothing contained in this Section 6.3.4 or otherwise, and no action taken by Lender under this Section 6.3.4 or otherwise, shall render Lender liable for the payment of any costs or expenses in connection with any Property.
(b)
Upon the occurrence and during the continuance of a default by Borrower under any HOA Documents, Lender may (but shall not be obligated to), in its sole discretion, cause such default by Borrower to be remedied and otherwise take or perform such other actions as Lender may deem necessary or desirable in connection therewith. Borrower shall, on demand, reimburse Lender for all advances made and reasonable out-of-pocket expenses incurred by Lender in curing any such default (including, without limitation, reasonable attorneys’ fees), together with interest thereon at the Past Due Rate (as such term is defined in the Note) from the date expended to the date repaid in full. The provisions of this Section 6.3.4 are in addition to any cure rights or other rights or remedies granted to Lender under any HOA Documents, the Loan Documents or otherwise.
SECTION 7.
FINANCIAL REPORTING. During the term of this Agreement, unless Lender shall otherwise consent:
Section 7.1
Financial Reporting; Books and Records. Borrower shall maintain complete books of account and other records for the Property and improvements and for disbursement and use of the proceeds of the Loan and Borrower’s funds, and the same shall be available for inspection and copying by Lender upon reasonable prior notice.
Section 7.2
Interim Statements. Upon Lender’s written request, for each calendar year, within (i) forty-five (45) days after the end of each of the first three calendar quarters and (ii) one hundred twenty (120) days after the end of the fourth calendar quarter, Borrower shall deliver to Lender financial statements of Borrower and Guarantor and its subsidiaries on a consolidated basis, including statements of income and changes in shareholders’ equity (or its equivalent) for the period from the beginning of such fiscal year to the end of such quarter, and the related balance sheet as of the end of such quarter, all in reasonable detail and certified by a responsible and authorized officer of Borrower and Guarantor, as applicable, subject, however, to year-end audit adjustments.
Section 7.3
Annual Statements. Within one hundred twenty (120) days following the end of Guarantor’s fiscal year, Guarantor shall deliver to Lender audited financial statements of Guarantor and its subsidiaries (including Borrower and Pledgor) on a consolidated basis, including statements of income and changes in shareholders’ equity (or its equivalent) for such fiscal year and the related balance sheet as at the end of such fiscal year, all in reasonable detail and accompanied by an unqualified opinion of a certified public accounting firm reasonably satisfactory to Lender; provided that such financial statements shall be deemed delivered upon the publicly available filing of such financial statements.
Section 7.4
Certificates. Borrower shall deliver, promptly after the furnishing thereof, copies of any compliance certificates or other similar compliance-related reports or letters furnished to any other party pursuant to the terms of any indenture, loan, credit or similar agreement and not otherwise required to be furnished to Lender pursuant to any other provision of this Section 7. The financial statements required to be delivered pursuant to this Section shall be certified by an officer of Guarantor, which certification shall also address whether Guarantor is in compliance with the Financial Covenants.
Section 7.5
Plans and Specifications. Upon Lender’s request, made not more than once per quarter, Borrower shall submit any and all Plans and Specifications for Lender’s review.
Section 7.6
Other Information. Borrower shall deliver, promptly after the furnishing thereof, copies of any financial statements or periodic reports furnished to any other party pursuant to the terms of any indenture, loan, credit or similar agreement and not otherwise required to be furnished to the Lender pursuant to any other provision of this Section 7, together with any other information (whether financial or otherwise) Lender may request during the term of the Loan. Borrower shall further inform Lender of any defaults by Borrower or any Affiliate of Borrower under the terms of any indenture, loan, credit or similar agreement.
Section 8.1
The occurrence of any one or more of the following shall constitute an event of default (“Event of Default”) under this Agreement and the other Loan Documents:
8.1.1Borrower’s failure to pay when due any sums payable under any Note or any of the other Loan Documents or Borrower’s failure to deposit any funds with Lender as and when required under this Agreement;
8.1.2if any representation or warranty made by Borrower herein or by any other Borrower Party in any other Loan Document shall have been false or misleading as of the date the representation or warranty was made or deemed remade, provided that if such failure is capable of being remedied, such failure continues unremedied for a period of thirty (30) days after the earlier of the date (i) that Borrower has actual knowledge of such failure, or (ii) of notice thereof from the Lender to Borrower.
8.1.3
if any Property shall cease to be an Eligible Asset (as determined by Lender in its sole discretion) while any Advance for such Property remains outstanding; provided, however, that if a Property fails to remain an Eligible Asset for a reason not caused by a Borrower Party or any of its Affiliates, the same shall not result in an Event of Default if (a) Borrower prepays the Allocated Loan Amount for such Property (including any Projects being constructed thereon), together with interest thereon and any other amounts payable with respect to such Allocated Loan Amount, within thirty (30) days after the discovery of such failure, including, but not limited to, if Lender notifies Borrower of such failure (it being acknowledged that Section 3.3 shall govern the release of any Property from the lien of the applicable Security Instrument), or (b) if such failure is reasonably susceptible of cure, Borrower causes such Property to return to being an Eligible Asset within five (5) Business Days after Borrower’s discovery of such failure (provided that if such failure cannot reasonably be cured within such period and Borrower has and continues to diligently proceed to cure the same, such period shall be extended to thirty (30) days);
8.1.4if any Project shall cease to be an Eligible Project (as determined by Lender in its sole discretion) while any Advance for such Project remains outstanding; provided, however, that if a Project fails to remain an Eligible Project for a reason not caused by a Borrower Party or any of its Affiliates, the same shall not result in an Event of Default if (a) Borrower prepays the Allocated Loan Amount of the applicable Property, together with interest thereon and any other amounts payable with respect to such Allocated Loan Amount, within thirty (30) days after the discovery of such failure, including, but not limited to, if Lender notifies Borrower of such failure, or (b) if such failure is reasonably susceptible of cure, Borrower causes such Project to return to being an Eligible Project within five (5) Business Days after Borrower’s discovery of such failure (provided that if such failure cannot reasonably be cured within such period and Borrower has and continues to diligently proceed to cure the same, such period shall be extended to thirty (30) days);
8.1.5if Borrower or any Guarantor incurs any Indebtedness in breach of this Agreement;
8.1.6if there shall occur any Transfer (whether a Transfer of the Property or the direct or indirect ownership interest therein) in breach of this Agreement;
8.1.7if there is any material deviation in the construction of the Project from the Construction Budget or Applicable Law;
8.1.9if there is (A) a condemnation, seizure or appropriation of, or occurrence of an uninsured casualty with respect to any material portion of the Property; (B) a sequestration or attachment of, or any levy or execution upon any of the Property, any other collateral provided by Borrower or any other party under any of the Loan Documents, any monies in any accounts or any substantial portion of the other assets of Borrower, which sequestration, attachment, levy or execution is not released, expunged or dismissed within twenty (20) days; or (C) a recording of any claim of lien against the Property or the service upon Lender of a withhold payment notice or bonded stop notice and the continuance of such claim of lien for twenty (20) days after such recording or service or five (5) days after Lender’s demand, whichever occurs first, without discharge, satisfaction or provision for payment being made by Borrower in a manner satisfactory to Lender;
8.1.10if any Borrower Party shall make an assignment for the benefit of creditors;
8.1.11if a receiver, liquidator or trustee shall be appointed for any Borrower Party or if any Borrower Party shall be adjudicated bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, any Borrower Party, or any other Bankruptcy Action (as hereinafter defined) occurs with respect to any Borrower Party or if any proceeding for the dissolution, division (e.g., pursuant to Section 18-217 of the Delaware Limited Liability Company Act, as amended from time to time) or liquidation of any Borrower Party shall be instituted;
8.1.12if any Borrower Party attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;
8.1.13if (A) this Agreement, any Note or any other Loan Document shall, in whole or in part, terminate, cease to be effective or cease to be a legally valid, binding and enforceable obligation of any Borrower Party; (B) any Borrower Party shall take any action in connection therewith or in furtherance thereof; (C) any party to any Loan Document (other than Lender) shall assert in writing that such document has ceased to be in full force and effect; or (D) the Liens created pursuant to any Loan Document shall cease to be a fully perfected enforceable first priority security interest or any portion of the Collateral is Transferred without Lender’s prior written consent;
8.1.16if there is a failure at any time of the Security Instrument to be a valid Lien upon the Property or any portion thereof (other than as a result of any release or reconveyance of the Security Instrument with respect to all or any portion of the Property pursuant to the terms and conditions of this Agreement), prior and superior to all other liens and encumbrances thereon except those approved by Lender in writing;
8.1.17if Borrower or Pledgor shall be in Default under any of the other terms, covenants or conditions of this Agreement or any other Loan Document not specified above; provided, however, that if such Default is curable and Borrower has not been given a notice of a similar Default within the preceding six (6) months, then it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such Default, either (x) cures the Default within five (5) Business Days or (y) if the cure requires more than five (5) Business Days, immediately initiates steps satisfactory to Lender to cure the Default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical; and provided further that under no circumstances shall Borrower have more than thirty (30) days to cure any such Default;
8.1.20any breach by Borrower under the terms of any other agreement between Borrower (or any Affiliate of Borrower) and Lender (or any Affiliate of Lender), that is not remedied within any grace period provided therein, including any agreement concerning any indebtedness or other obligation of Borrower (or any Affiliate thereof) to Lender (or any Affiliate thereof), whether currently existing or entered into after the date of this Agreement;
8.1.22
any occurrence of any default under any other loans which Borrower (or any Affiliate of Borrower) may have from Lender (or any Affiliate of Lender) during the term of the Loan, whether existing as of the date hereof or subsequently made (collectively, the “Other Loans”). Additionally, an Event of Default under the Loan Documents shall constitute an event of default under the Other Loans.
Notwithstanding the foregoing provisions of this Section 8.1, no Default which is particular to and only affects a certain Property shall result in an Event of Default if Borrower prepays the Allocated Loan Amount for such Property (including any Projects being constructed thereon), together with interest thereon and any other amounts payable with respect to such Allocated Loan Amount, within thirty (30) days after the discovery of such Default, including, but not limited to, if Lender notifies Borrower of such Default (it being acknowledged that Section 3.3 shall govern the release of any Property from the lien of the applicable Security Instrument).
9.1.1Upon the occurrence and during the continuation of an Event of Default (other than an Event of Default described in Sections 8.1.9 or 8.1.10 above) Lender may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower and in and to the Collateral, including each and all of the following rights and remedies, to the fullest extent permitted by law, and Lender may enforce or avail itself of any or all rights and remedies of a secured party under the Uniform Commercial Code against Borrower, Pledgor (if applicable) and the Collateral; and upon any Event of Default described in Sections 8.1.9 or 8.1.10 above, the Debt and all other Obligations shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.
(a)
Immediate Payment of Obligations. With or without notice, to declare all Obligations secured by any Loan Document immediately due and payable.
(b)
Cure Default; Protective Advances. With or without notice, and without releasing Borrower from any Obligation hereunder, to cure any default of Borrower and, in connection therewith, (i) to enter upon the Property in person, or by an agent or employee, or by a receiver appointed by a court of competent jurisdiction, and (ii) to do such acts and things as Lender may deem necessary or desirable to protect the security of the Security Instruments, including advancing funds to maintain, secure or otherwise protect the Collateral, Lender’s interest therein or the priority of the Liens granted by the Loan Documents (each a “Protective Advance”) (all of which shall constitute part of the Debt and be secured by the Security Instruments and other Loan Documents).
(d)
Manage and Operate Property. To enter upon, possess, manage and operate the Property, or any part thereof, either in person, or by an agent or employee, or by a receiver appointed by a court of competent jurisdiction; to make, terminate, enforce or modify leases of or occupancy agreements for the Property upon such terms and conditions as are satisfactory to Lender and to act in any manner which Lender may deem necessary or desirable in connection therewith; and to make repairs, alterations and improvements to the Property (including, but not limited to, in connection with the Project) that Lender determines to be necessary to protect or enhance the security of the Security Instrument. All sums realized by Lender under this clause (c), less all costs and expenses incurred by it hereunder, including attorneys’ fees and costs actually incurred, shall be applied to the indebtedness secured by the Security Instrument in such order of priority as Lender shall determine in its sole and absolute discretion. Neither application of such sums to such indebtedness, nor any other action taken by Lender under this clause (c), shall cure or waive any Event of Default or notice of Event of Default or nullify the effect of any such notice.
(e)
Resort to Collateral. To resort to and realize upon the Collateral and any other security now or hereafter held by Lender in such order and manner as Lender may determine in its sole and absolute discretion. Resort to any or all such Collateral may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non-judicial proceedings, or both.
All or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower or any other Borrower Party under this Agreement or any of the other Loan Documents or at law or in equity, may be exercised by Lender at any time and from time to time, whether or not all or any of the Debt shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Collateral. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein or in the other Loan Documents. Without limiting the generality of the foregoing, if an Event of Default is continuing, (i) to the extent permitted by applicable law, Lender is not subject to any “one action” or “election of remedies” law or rule, and (ii) all liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Collateral and the Collateral has been foreclosed upon, sold or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.
9.1.2Without limitation, upon the occurrence and during the continuation of an Event of Default, Lender shall have the right from time to time to partially foreclose upon the Collateral under the Security Instruments and the Pledge Agreement (if any).
9.1.3Any amounts recovered from the Collateral after an Event of Default may be applied by Lender toward the payment of any interest or principal of the Loan or any other amounts due under the Loan Documents in such order, priority and proportions as Lender shall determine in its sole and absolute discretion.
Section 9.2
Remedies Cumulative. The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower or any other Borrower Party pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default shall not be construed to be a waiver of any subsequent Default or Event of Default or to impair any remedy, right or power consequent thereon.
Section 9.3
Power of Attorney. For the purpose of carrying out the provisions and exercising the rights, powers and privileges granted in this Section 9, Borrower hereby irrevocably constitutes and appoints the Lender its true and lawful attorney in fact to execute, acknowledge and deliver any instruments and do and perform any acts such as are referred to in this subsection in the name and on behalf of Borrower. This power of attorney is a power coupled with an interest and cannot be revoked, but may only be exercised during the continuance of an Event of Default.
SECTION 10.
MISCELLANEOUS.
Section 10.1
Notices. Except when otherwise required by law, any notice which a party is required or may desire to give the other shall be in writing and may be sent by personal delivery or by mail (either (i) by United States registered or certified mail, return receipt requested, postage prepaid, or (ii) by Federal Express or similar generally recognized overnight carrier regularly providing proof of delivery), addressed as provided below in this Section. Any notice so given by mail shall be deemed to have been given as of the date of delivery (whether accepted or refused) established by U.S. Post Office return receipt or the overnight carrier’s proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon receipt of the same by the party to whom the same is to be given.
If to Borrower: Attn: Legal Department
433 S. Farmer Ave., Fifth Floor
Tempe, Arizona 85281
legalops@offerpad.com
If to Lender: c/o Ascent Developer Solutions, LLC
15821 Ventura Blvd, Suite 135
Encino, CA 91436
Attention: Lending Department
Section 10.2
Amendments and Waivers. No failure by Lender to insist upon the strict performance of any covenant, agreement, term or condition of this Agreement, each Note, each Security Instrument, the Pledge Agreement (if applicable) or any other Loan Documents or to exercise any right,
power or remedy consequent upon a breach thereof shall constitute a waiver, express or implied, of any such breach or of such covenant, agreement, term or condition. No amendment or waiver of any provision of the Loan Documents shall be effective unless in writing and signed by the party against whom enforcement is sought.
Section 10.3
Invalid Provisions. If any provision of any Loan Document is held to be illegal, invalid or unenforceable, such provision shall be fully severable; the Loan Documents shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part thereof; the remaining provisions thereof shall remain in full effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance therefrom; and in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of such Loan Document a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to be legal, valid and enforceable.
Section 10.4
Expenses; Indemnity.
10.4.1Borrower shall pay, whether or not the closing of the Loan occurs or any Advance is made to Borrower hereunder, all costs and expenses incurred by Lender or any of its Affiliates, from time to time, including documentation and diligence fees and expenses, all search, audit, appraisal, recording, professional and filing fees and expenses and all other out-of-pocket charges and expenses (including UCC and judgment and tax lien searches and UCC filings and fees for post-Closing UCC and judgment and tax lien searches, if required by Lender), all administrative fees and expenses and attorneys’ fees and expenses actually incurred, including, (a) in any effort to enforce, protect or collect payment of any Obligations or to enforce any Loan Document or any related agreement, document or instrument, or effect collection hereunder or thereunder, (b) in connection with entering into, negotiating, preparing, reviewing and executing this Agreement and the other Loan Documents and all related agreements, documents and instruments, (c) in connection with instituting, maintaining, preserving, enforcing and foreclosing on Lender’s security interests, whether through judicial proceedings or otherwise, (d) in defending or prosecuting any actions, claims or proceedings arising out of or relating to Lender’s transactions with Borrower, (e) in seeking, obtaining or receiving any advice with respect to its rights and obligations under this Agreement, any of the other Loan Documents and all related agreements, documents and instruments, (f) in connection with any modification, restatement, supplement, amendment, waiver or extension of this Agreement or any other Loan Document or any related agreement, document or instrument, and all of the same may be charged to Borrower’s account and shall be part of the Obligations, or (g) in connection with the administration of the Loan.
10.4.2Borrower shall indemnify and hold harmless Lender and its Affiliates, officers, partners, directors, employees and agents, from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the fees and disbursements of counsel for Lender in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender shall be designated a party thereto), that may be imposed on, incurred by, or asserted against Lender in any manner relating to or arising out of the transactions contemplated hereby, including (i) any and all present and future stamp and other similar taxes arising out of the transactions contemplated hereby, (ii) any delay or omission (other than to the extent attributable to Lender) to pay such taxes, (iii) environmental liabilities, (iv) any breach by Borrower of its obligations under, or any material misrepresentation by Borrower contained in this Agreement or the other Loan Documents, and (v) as a result of or in connection with any Leaseback Tenancy or the actions or omissions of any tenant in relation thereto, except in each case, for any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements arising from the fraud, gross negligence or willful misconduct of Lender, as determined by a final, non-appealable judgment of a court of competent jurisdiction.
10.4.3If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation or application of any thereof by any court or administrative or governmental authority (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce the amounts payable to Lender under this Agreement or any of the other Loan Documents, or (C) reduce the rate of return on Lender’s capital as a consequence of Lender’s obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender’s written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error.
Section 10.5
Approvals; Third Parties; Conditions. All approval rights retained or exercised by Lender with respect to leases, contracts, plans, studies and other matters are solely to facilitate Lender’s credit underwriting, and shall not be deemed or construed as a determination that Lender has passed on the adequacy thereof for any other purpose and may not be relied upon by Borrower or any other person or entity. This Agreement is for the sole and exclusive use of Lender and Borrower and may not be enforced, nor relied upon, by any person or entity other than Lender and Borrower. All conditions of the obligations of Lender hereunder, including any obligation to make advances, are imposed solely and exclusively for the benefit of Lender, its successors and assigns, and no other Person or entity shall have standing to require satisfaction of such conditions or be entitled to assume that Lender will refuse to make advances in the absence of strict compliance with any or all of such conditions, and no other Person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any and all of which may be freely waived in whole or in part by Lender at any time in writing in Lender’s sole and absolute discretion. Without limitation on the foregoing or Section 10.13 below, wherever this Agreement or any other Loan Document requires Lender’s approval or consent (or equivalent), such approval or consent (or equivalent) shall be in writing in Lender’s sole and absolute discretion unless otherwise expressly stated.
Section 10.6
Lender Not in Control; No Partnership. None of the covenants or other provisions contained in this Agreement shall, or shall be deemed to, give Lender the right or power to exercise control over the affairs or management of any Borrower Party, the power of Lender being limited to the rights to exercise the remedies referred to in the Loan Documents. The relationship between Borrower and Lender is, and at all times shall remain, solely that of debtor and creditor. No covenant or provision of the Loan Documents is intended, nor shall it be deemed or construed, to create a partnership, joint venture, agency or common interest in profits or income between Lender and Borrower or to create an equity in the Collateral or the Property in Lender. Lender neither undertakes nor assumes any responsibility or duty to Borrower or any other Borrower Party or to any other person with respect to the Collateral, the Property, the Project or the Loan, except as expressly provided in the Loan Documents; and notwithstanding any other provision of the Loan Documents: (1) Lender is not, and shall not be construed as, a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of any Borrower Party or its stockholders, members, or partners, and Lender does not intend to ever assume such status; (2) Lender shall in no event be liable for any debts, expenses or losses incurred or sustained by Borrower or any other Borrower Party; and (3) Lender shall not be deemed responsible for or a participant in any acts, omissions or decisions of Borrower or any Borrower Party or any of their stockholders, members, or partners. Lender and Borrower disclaim any intention to create any partnership, joint venture, agency or common interest in profits or income between Lender and Borrower, or to create an equity in the Collateral or the Property in Lender, or any sharing of liabilities, losses, costs or expenses.
Section 10.7
Time of the Essence. Time is of the essence with respect to this Agreement.
Section 10.8
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Lender and Borrower and their respective successors and assigns, provided that Borrower shall not, without the prior written consent of Lender, assign any rights, duties or obligations hereunder.
Section 10.9
Renewal, Extension or Rearrangement. All provisions of the Loan Documents shall apply with equal effect to each and every promissory note and all amendments thereof hereinafter executed by Borrower which in whole or in part represent a renewal, extension, increase or rearrangement of the Loan.
Section 10.10
Waivers; Representation by Legal Counsel. No course of dealing on the part of Lender, its officers, employees, consultants or agents, nor any failure or delay by Lender with respect to exercising any right, power or privilege of Lender under any of the Loan Documents, shall operate as a waiver thereof. Borrower acknowledges, warrants and represents, in connection with each waiver of any right or remedy of Borrower contained in this Agreement or any other Loan Document, that it has been fully informed with respect to, and represented by counsel of its choice in connection with, such rights and remedies, and all such waivers, and after such advice and consultation, has presently and actually intended, with full knowledge of its rights and remedies otherwise available at law or in equity, to waive or relinquish such rights and remedies to the full extent specified in each such waiver. Borrower acknowledges that it has been advised by Lender to seek the advice of legal counsel in connection with the negotiation and preparation of the Loan Documents. If Borrower has chosen not to obtain legal representation, whether due to cost considerations or for other reasons, the lack of such representation shall not furnish Borrower with any defense to the enforcement of Borrower’s obligations and Lender’s rights under the Loan Documents.
Section 10.11
Cumulative Rights. Rights and remedies of Lender under the Loan Documents shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy.
Section 10.12
Singular and Plural. Words used in this Agreement and the other Loan Documents in the singular, where the context so permits, shall be deemed to include the plural and vice versa. The definitions of words in the singular in this Agreement and the other Loan Documents shall apply to such words when used in the plural where the context so permits and vice versa.
Section 10.13
Accounting Principles. Any accounting term used and not specifically defined in any Loan Document shall be construed in conformity with, and all financial data required to be submitted under any Loan Document shall be prepared in conformity with, generally accepted accounting principles applied on a consistent basis or in accordance with such other principles or methods as are reasonably acceptable to Lender.
Section 10.14
Phrases; Rules of Construction. When used in this Agreement and the other Loan Documents, (a) the phrase “including” means “including, but not limited to,” (b) the phrase “satisfactory to Lender” (or equivalent) means “in form and substance satisfactory to Lender in its sole and absolute discretion in all respects,” (c) the phrase “with Lender’s consent” or “with Lender’s approval” (or equivalent) means such consent or approval (or equivalent) in writing in Lender’s sole and absolute discretion, (d) the phrase “acceptable to Lender” (or equivalent) means “acceptable to Lender in Lender’s sole and absolute discretion”, (e) the word “or” is not exclusive, and (f) the word “prompt” or “immediately” in any form, or words of similar import, when used with reference to any notice required to be given or act to be undertaken by any Borrower Party shall mean notice given or act performed not later than five (5)
Business Days after the occurrence of the specified event for which notice or action is required, in each case except as expressly provided otherwise herein or in any other Loan Documents. When the identity of the parties or other circumstances make appropriate in this Agreement and the other Loan Documents, the neuter gender shall include the feminine and masculine, and the singular number shall include the plural. If Borrower is composed of more than one Person, then the Obligations are joint and several; and each covenant, warranty, representation and agreement of Borrower hereunder and thereunder shall be deemed made by each such person or entity comprising Borrower, both individually and collectively.
Section 10.15
References and Other Terms. Any reference to any Loan Document or other document shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The term “document” is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms “including” and “include” mean “including (include) without limitation.”
Section 10.16
Exhibits and Schedules. The exhibits and schedules attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein.
Section 10.17
Titles of Articles, Sections and Subsections. All titles or headings to articles, sections, subsections or other divisions of this Agreement and the other Loan Documents or the exhibits hereto and thereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.
Section 10.18
Survival. All of the representations, warranties, covenants, and indemnities hereunder, shall survive the repayment in full of the Loan and the release of the liens evidencing or securing the Loan, and shall survive the transfer (by sale, foreclosure, conveyance in lieu of foreclosure or otherwise) of any or all right, title and interest in and to the Collateral to any party, whether or not an Affiliate of Borrower.
Section 10.19
Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE LOAN OR THE PROPERTY OR THE PROJECT (INCLUDING ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER THIS AGREEMENT.
Section 10.20
Governing Law; Venue. The Loan Documents are intended to be governed by the laws of the State of New York and of the United States of America shall govern the rights and duties of the parties hereto and the validity, construction, enforcement and interpretation of the Loan Documents, except to the extent otherwise specified in the Security Instruments or any of the other Loan Documents. Any legal suit, action or proceeding against Borrower arising out of or relating to this Agreement, the Notes or any other Loan Document (including the liens and security interests created under
the Security Instruments) shall be instituted in any federal or state court located in New York, New York or the state in which the Property is located. Borrower waives any objections which it may have based on venue or forum non conveniens of any such suit, action or proceeding, and irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding.
EACH OF BORROWER AND LENDER HEREBY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY MAIL, PERSONAL SERVICE OR IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, AT THE ADDRESS SPECIFIED IN SECTION 10.1 (AND AGREES THAT SUCH SERVICE AT SUCH ADDRESS IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER ITSELF IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT).
Section 10.21
Entire Agreement. This Agreement and the other Loan Documents embody the entire agreement and understanding between Lender and Borrower and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.
Section 10.22
Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document. The parties hereto agree that electronic signatures shall be deemed originals and admissible as best evidence for the execution and delivery of this Agreement by the parties hereto.
Section 10.23
Sale, Assignment and Participation.
10.23.1Lender may, at any time, sell, transfer, assign or grant participations in the Loan and any of the Loan Documents or sell, transfer or assign the Loan or any interest therein, without notice to or consent of Borrower or any other Borrower Party. Lender may forward to each participant and prospective participant all documents and information which Lender now has or later may acquire relating to those obligations and to Borrower, and any partners or joint venturers of Borrower, whether furnished by Borrower or otherwise. If, at any time, Lender desires to sell, transfer or grant a participation interest in all or any portion of the Loan and Loan Documents to any third person, Borrower shall furnish in a timely manner any and all information concerning the Property and the Project, and concerning Borrower’s, the other Borrower Parties’ and the Property’s or Project’s financial condition, which information is requested by Lender or such person in connection with any such sale, transfer or participation. All such financial information shall be in such form, substance and detail as Lender, or such person, may require.
10.23.2In addition to the foregoing, Lender shall have the right, without Borrower’s consent, to divide any Note into two or more separate promissory notes, each of which shall collectively represent the same aggregate indebtedness, interest rate, payment schedule, and other terms as set forth herein. Borrower’s obligations under this Agreement shall not be increased or otherwise altered by reason of any such division, and Borrower shall continue to make all payments in accordance with the terms of the Note until otherwise notified in writing of a change in payee or payment instructions.
Section 10.24
Limitation on Liability of Lender’s Officers, Employees, Etc. Any obligation or liability whatsoever of Lender which may arise at any time under this Agreement or any other Loan Document shall be satisfied, if at all, out of the Lender’s assets only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the property of any of Lender’s shareholders, directors, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.
Section 10.25
Commingling of Funds. No sums collected or retained by Lender shall be deemed to be held in trust; and Lender may commingle any and all such funds or proceeds with its general assets and shall not be liable for the payment of any interest or other return thereon, except to the minimum extent required by law.
Section 10.26
PATRIOT Act Records. Lender hereby notifies Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Borrower Party, which information includes the name and address of each Borrower Party and other information that will allow Lender to identify each Borrower Party in accordance with the PATRIOT Act.
Section 10.27
Confidentiality. Borrower agrees, and agrees to cause each of its Affiliates, (a) to treat this Agreement and all other Loan Documents and all provisions of the Loan Documents confidentially and not to transmit any copy hereof or thereof or disclose the contents hereof or thereof, in whole or in part, to any Person (including any financial institution or intermediary) without Lender’s prior written consent, other than to Borrower’s members and such members’ investors, advisors (including its accountants and attorneys) and officers on a need to know basis and to their respective agents, employees, officers, directors, attorneys, accounts and governmental regulatory authorities, (b) that Borrower shall inform all such Persons who receive information concerning this Agreement or any of the Loan Documents of the confidential nature hereof and thereof and shall direct them to treat the same confidentially and not to disclose it to any other Person, and (c) that each of them shall agree to be bound by these provisions. Lender reserves the right to review and approve all materials that Borrower or any Affiliate prepares that contain Lender’s name or describe or refer to this Agreement or any Loan Document or any of the terms hereof or thereof or any of the transactions contemplated hereby or thereby. Notwithstanding any other provision of this Agreement or any Loan Document, Borrower shall not, and shall not permit any of its Affiliates to, use Lender’s name (or the name of any of Lender’s Affiliates) in connection with any of its business operations. Nothing contained in this Agreement or in any of the other Loan Documents is intended to permit or authorize Borrower or any of its Affiliates to make any contract on behalf of Lender. Borrower shall not be deemed in violation of this Section solely because Lender records the Uniform Commercial Code financing statements or other Loan Documents.
Section 10.28
Cross-Default; Cross-Collateralization.
(a)Borrower acknowledges that Lender has made the Loan to Borrower upon the security of its collective interest in the Properties and in reliance upon the aggregate of the Properties taken together being of greater value as collateral security than the sum of each individual Property taken separately. Borrower agrees that each of the Loan Documents (including, without limitation, each Security Instrument) are and will be cross collateralized and cross defaulted with each other so that (i) an Event of Default under any of Loan Documents shall constitute an Event of Default under each of the other Loan Documents; (ii) an Event of Default hereunder shall constitute an Event of Default under each Security Instrument; (iii) each Security Instrument shall constitute security for the Note as if a single blanket lien were placed all of the Properties as security for the Note; and (iv) such cross collateralization shall in no event be deemed to constitute a fraudulent conveyance, and Borrower waives any claims related thereto.
(b)To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Properties, or to a sale in inverse order of alienation in the event of foreclosure of all or any of the Security Instruments, and agrees not to assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Properties for the collection of the Debt without
any prior or different resort for collection, or of the right of Lender to the payment of the Debt out of the net proceeds of the Property in preference to every other claimant whatsoever. In addition, each Borrower, for itself and its successors and assigns, waives in the event of foreclosure of any or all of the Security Instruments, any equitable right otherwise available to Borrower which would require the separate sale of the Properties or require Lender to exhaust its remedies against any individual Property or any combination thereof before proceeding against any other individual Property or combination thereof; and further in the event of such foreclosure, Borrower does hereby expressly consent to and authorize, at the option of Lender, the foreclosure and sale either separately or together of any combination of the Properties.
(c)The Loan Documents shall, at all times, be cross-defaulted and cross-collateralized with all Other Loans. A default under any of the Other Loans shall constitute an Event of Default under the Loan Documents. An Event of Default under the Loan Documents shall constitute an event of default under the Other Loans. To carry out the intent of this provision, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower agrees at any time to execute and record in the applicable real property records an amendment or modification of one or more mortgages, deeds of trust or deeds to secure debt, as applicable, securing such Other Loans. To the extent not prohibited by Applicable Laws, if the holder of the Note at any time, at its option, avails itself of this cross-collateralization/cross-default provision, such holder shall have the option to pursue its remedies in any combinations and against any or all of Lender’s security for the aforesaid loans, whether successively, concurrently or otherwise.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the parties hereto as of the date first written above.
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LENDER:
WHGG II TRUST, a Delaware statutory trust
By: /s/ David Hada
Name: David Hada
Title: Chief Financial Officer
ASCENT DEVELOPER SOLUTIONS LLC, a Delaware limited liability company
By: /s/ David Hada
Name: David Hada
Title: Chief Financial Officer
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BORROWER:
OP SPE SUMMIT, LLC, a Delaware limited liability company
By: /s/ Adam Martinez
Name: Adam Martinez
Title: Chief Legal Officer
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EX-31.1
4
opad-ex31_1.htm
EX-31.1
EX-31.1
Exhibit 31.1
CERTIFICATION
I, Brian Bair, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Offerpad Solutions Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 3, 2026 |
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By: |
/s/ Brian Bair |
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Brian Bair |
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Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
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EX-31.2
5
opad-ex31_2.htm
EX-31.2
EX-31.2
Exhibit 31.2
CERTIFICATION
I, Peter Knag, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Offerpad Solutions Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 3, 2026 |
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By: |
/s/ Peter Knag |
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Peter Knag |
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Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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EX-32.1
6
opad-ex32_1.htm
EX-32.1
EX-32.1
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of Offerpad Solutions Inc. (the “Company”) for the period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 3, 2026 |
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By: |
/s/ Brian Bair |
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Brian Bair |
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Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
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EX-32.2
7
opad-ex32_2.htm
EX-32.2
EX-32.2
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of Offerpad Solutions Inc. (the “Company”) for the period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: August 3, 2026 |
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By: |
/s/ Peter Knag |
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Peter Knag |
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Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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