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Notes Payable, net
 6 Months Ended
Jun. 30, 2023
Notes Payable, Net [Abstract]  
Notes Payable, net

Note 4: Notes Payable, net

 

Notes payable, net consisted of the following at June 30, 2023(1):

 

      Debt discount
and deferred
financing 		      Interest Rate   Maturity
   Gross   costs   Net   Stated   Effective   Date
Preferred equity loan(2)  $6,800,000   $
-
   $6,800,000    7.00%   7.00%  Various
City of Canton Loan(3)   3,425,000    (4,749)   3,420,251    0.50%   0.53%  7/1/2027
New Market/SCF   2,999,989    
-
    2,999,989    4.00%   4.00%  12/30/2024
JKP Capital Loan(5)(6)   9,367,890    
-
    9,367,890    12.50%   12.50%  3/31/2024
MKG DoubleTree Loan(7)   15,300,000    
-
    15,300,000    

10.00

%   10.00%  9/13/2023
Convertible PIPE Notes   27,868,206    (6,452,215)   21,415,991    10.00%   24.40%  3/31/2025
Canton Cooperative Agreement   2,570,000    (164,861)   2,405,139    3.85%   5.35%  5/15/2040
CH Capital Loan(5)(6)(8)   9,048,146    
-
    9,048,146    12.50%   12.50%  3/31/2024
Constellation EME #2(4)   3,049,642    
-
    3,049,642    5.93%   5.93%  4/30/2026
IRG Split Note(5)(6)(9)   4,400,702    
-
    4,400,702    12.50%   12.50%  3/31/2024
JKP Split Note(5)(6)(9)   4,400,702    
-
    4,400,702    12.50%   12.50%  3/31/2024
ErieBank Loan   19,888,626    (503,601)   19,385,025    9.25%   9.49%  12/15/2034
PACE Equity Loan   8,104,871    (270,576)   7,834,295    6.05%   6.18%  7/31/2047
PACE Equity CFP   2,984,572    (26,252)   2,958,320    6.05%   6.10%  7/31/2046
CFP Loan(6)(10)   4,119,019    
-
    4,119,019    12.50%   12.50%  3/31/2024
Stark County Community Foundation   5,000,000    
-
    5,000,000    6.00%   6.00%  5/31/2029
CH Capital Bridge Loan(6)   10,724,551    
-
    10,724,551    12.50%   12.50%  3/31/2024
Stadium PACE Loan   33,387,844    (4,042,020)   29,345,824    6.00%   6.51%  1/1/2049
Stark County Infrastructure Loan   5,000,000    
-
    5,000,000    6.00%   6.00%  8/31/2029
City of Canton Infrastructure Loan   5,000,000    (10,820)   4,989,180    6.00%   6.04%  6/30/2029
TDD Bonds   7,425,000    (661,989)   6,763,011    5.41%   5.78%  12/1/2046
TIF(11)   18,100,000    (1,556,840)   16,543,160    6.375%   6.71%  12/30/2048
Total  $208,964,760   $(13,693,923)  $195,270,837              

 

Notes payable, net consisted of the following at December 31, 2022:

 

   Gross   Debt discount
and deferred
financing costs		   Net 
Preferred equity loan(2)  $3,600,000   $
-
   $3,600,000 
City of Canton Loan(3)   3,450,000    (5,333)   3,444,667 
New Market/SCF   2,999,989    
-
    2,999,989 
JKP Capital loan(5)(6)   9,158,711    
-
    9,158,711 
MKG DoubleTree Loan(7)   15,300,000    
-
    15,300,000 
Convertible PIPE Notes   26,525,360    (8,097,564)   18,427,796 
Canton Cooperative Agreement   2,620,000    (168,254)   2,451,746 
CH Capital Loan(5)(6)(8)   8,846,106    
-
    8,846,106 
Constellation EME #2(4)   3,536,738    
-
    3,536,738 
IRG Split Note(5)(6)(9)   4,302,437    
-
    4,302,437 
JKP Split Note (5)(6)(9)   4,302,437    
-
    4,302,437 
ErieBank Loan   19,465,282    (536,106)   18,929,176 
PACE Equity Loan   8,250,966    (273,031)   7,977,935 
PACE Equity CFP   2,437,578    (27,586)   2,409,992 
CFP Loan(6)(10)   4,027,045    
-
    4,027,045 
Stark County Community Foundation   5,000,000    
-
    5,000,000 
CH Capital Bridge Loan(6)   10,485,079    
-
    10,485,079 
Stadium PACE Loan   33,387,844    (4,091,382)   29,296,462 
Stark County Infrastructure Loan   5,000,000    
-
    5,000,000 
City of Canton Infrastructure Loan   5,000,000    (11,572)   4,988,428 
TDD Bonds   7,500,000    (668,884)   6,831,116 
Total  $185,195,572   $(13,879,712)  $171,315,860 

 

During the three months ended June 30, 2023 and 2022, the Company recorded amortization of note discounts of $882,240 and $1,122,324, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded amortization of note discounts of $1,738,131 and $2,478,298, respectively.

 

During the six months ended June 30, 2023 and 2022, the Company recorded paid-in-kind interest of $2,282,040 and $1,681,722, respectively.

 

See below footnotes for the Company’s notes payable:

 

(1)The Company’s notes payable are subject to certain customary financial and non-financial covenants. As of June 30, 2023 and December 31, 2022 the Company was in compliance with all of its notes payable covenants. Many of the Company’s notes payable are secured by the Company’s developed and undeveloped land and other assets.
   
(2)The Company had 3,600 and 1,800 shares of Series A Preferred Stock outstanding and 52,800 and 52,800 shares of Series A Preferred Stock authorized as of June 30, 2023 and December 31, 2022, respectively. The Series A Preferred Stock is required to be redeemed for cash after five years from the date of issuance.
   
(3)The Company has the option to extend the loan’s maturity date for three years, to July 1, 2030, if the Company meets certain criteria in terms of the hotel occupancy level and maintaining certain financial ratios.
   
(4)The Company also has a sponsorship agreement with Constellation New Energy, Inc., the lender of the Constellation EME #2 note.

 

(5)On March 1, 2022, the Company entered into amendments to certain of its IRG and IRG-affiliated notes payable. See discussion below for the accounting and assumptions used in the transactions.
   
(6)On November 7, 2022, the Company entered into amendments to certain of its IRG and IRG-affiliated notes payable. See discussion below for the accounting and assumptions used in the transactions.
   
(7)On March 1, 2022, HOF Village Hotel II, LLC, a subsidiary of the Company, entered into an amendment to the MKG DoubleTree Loan with the Company’s director, Stuart Lichter, as guarantor, and ErieBank, a division of CNB Bank, a wholly owned subsidiary of CNB Financial Corporation, as lender, which extended the maturity to September 13, 2023. The Company accounted for this amendment as a modification, and expensed approximately $38,000 in loan modification costs. The Company is currently in the process of refinancing this loan prior to its maturity date.
   
(8)On March 1, 2022, CH Capital Lending purchased and acquired, the Company’s $7.4 million Aquarian Mortgage Loan (as thereafter amended and acquired by CH Capital Lending, the “CH Capital Loan”).
   
(9)On March 1, 2022, pursuant to an Assignment of Promissory Note, dated March 1, 2022, IRG assigned (a) a one-half (½) interest in the IRG Note to IRG (the “IRG Split Note”) and (b) a one-half (½) interest in the IRG Note to JKP (the “JKP Split Note”). See “IRG Split Note” and “JKP Split Note”, below.
   
(10)See “CFP Loan”, below, for a description of the loan along with the valuation assumptions used to value the warrants issued in connection with the loan.
   
(11)See “TIF Loan”, below, for a description of the loan.

 

Accrued Interest on Notes Payable

 

As of June 30, 2023 and December 31, 2022, accrued interest on notes payable, were as follows:

 

   June 30,
2023		   December 31,
2022		 
Preferred equity loan  $131,931   $64,575 
City of Canton Loan   1,586    1,555 
New Market/SCF   60,333    
-
 
MKG DoubleTree Loan   273,594    121,656 
Canton Cooperative Agreement   57,739    48,708 
CH Capital Loan   60,036    55,328 
IRG Split Note   28,490    28,490 
JKP Split Note   35,138    35,138 
ErieBank Loan   163,222    140,394 
PACE Equity Loan   211,615    213,842 
CFP Loan   5,245    5,245 
Stark County Community Foundation   150,834    
-
 
CH Capital Bridge Loan   
-
    70,659 
Stadium PACE Loan   166,939    166,939 
TDD Bonds   13,533    13,533 
TIF   
-
    
-
 
Total  $1,360,235   $966,062 

 

The amounts above were included in “accounts payable and accrued expenses” on the Company’s condensed consolidated balance sheets.

 

TIF Loan

 

For the Company, the Development Finance Authority of Summit County (“DFA Summit”) offered a private placement of $10,030,000 in taxable development revenue bonds, Series 2018. The bond proceeds are to reimburse the developer for costs of certain public improvements at the Hall of Fame Village, which are eligible uses of tax-incremental funding (“TIF”) proceeds.

 

The term of the TIF requires the Company to make installment payments through July 31, 2048. The current imputed interest rate is 5.2%, which runs through July 31, 2028. The imputed interest rate then increases to 6.6% through July 31, 2038 and finally increases to 7.7% through the remainder of the TIF. The Company is required to make payments on the TIF semi-annually in June and December each year.

 

On December 27, 2022, the Company paid $9.7 million to reacquire the TIF bonds related to the Stadium PACE agreement. In January 2023, the DFA Summit issued new bonds as TIF proceeds.

 

On February 2, 2023, the Company received proceeds from the issuance on such date by Stark County Port Authority (“Port Authority”) of $18,100,000 principal amount Tax Increment Financing (“TIF”) Revenue Bonds, Series 2023 (“2023 Bonds”). Of the $18,100,000 principal amount, approximately $6.8 million was used to reimburse the Company for a portion of the cost of certain roadway improvements within the Hall of Fame Village grounds, approximately $8.6 million was used to pay off the Development Finance Authority of Summit County (“DFA”) Revenue Bonds, Series 2018 ( “2018 Bonds”) that had been acquired by the Company in December 2022 pursuant to a previously disclosed arrangement (such that the Company received the payoff of the 2018 Bonds), approximately $1.2 million was used to pay costs of issuance of the 2023 Bonds, and approximately $.9 million was used to fund a debt service reserve held by The Huntington National Bank (“2023 Bond Trustee”), as trustee for the 2023 Bonds. The maturity date of the 2023 Bonds is December 30, 2048. The interest rate on the 2023 Bonds is 6.375%. Interest payments are due on the 2023 Bonds semi-annually on June 30 and December 30 of each year, commencing June 30, 2023.

 

In connection with the issuance of the 2023 Bonds by the Port Authority, the Company transferred ownership of a portion of the roadway and related improvements within Hall of Fame Village grounds to the Port Authority. The Company maintains management rights and maintenance obligations with regard to such roadway pursuant to a Maintenance and Management Agreement among the Port Authority, the Company and the Company’s subsidiary, Newco.

 

The 2023 Bonds will be repaid by the Port Authority from statutory service payments in lieu of taxes paid by the Company in connection with the Company’s Tom Benson Hall of Fame Stadium, ForeverLawn Sports Complex, Constellation Center for Excellence, Center for Performance, Retail I property, Retail II property, Play Action Plaza and an interior private roadway, net of the portion payable to Canton City School District and Plain Local School District and net of administrative fees of Stark County and the City of Canton, and from minimum service payments levied against those parcels excluding the Stadium and Sports Complex. Net statutory service payments are assigned by the City of Canton to the Port Authority for payment of the 2023 Bonds pursuant to a Cooperative Agreement among the Port Authority, City of Canton, the Company and Newco, and then pledged by the Port Authority to the 2023 Bond Trustee for payment of the 2023 Bonds pursuant to a Trust Indenture between the Port Authority and the 2023 Bond Trustee. Minimum service payments are a lien on the parcels under certain TIF declarations and supplements thereto, and are paid by the Company to the 2023 Bond Trustee.

 

The Company and Newco are required to make payments (“Developer Shortfall Payments”) to the extent the above described net statutory service payments and minimum service payments actually paid are not sufficient to pay the scheduled debt service on the 2023 Bonds, and entered into a guaranty of payment of minimum service payments under a Minimum Payment Guaranty until certain performance criteria (debt service coverage of 1.05x for the 2023 Bonds for three consecutive years) are met. In addition, a member of the Company’s board of directors, Stuart Lichter, individually and with his trust, guaranteed Developer Shortfall Payments until debt service coverage of 1.0x for the 2023 Bonds for three consecutive years are met.

 

To the extent statutory service payments and minimum service payments exceed the amounts required for debt service on the 2023 Bonds, the excess paid will first increase and/or restore the 2023 Bonds fund reserve to a maximum of 10% of the original principal amount of the 2023 Bonds (i.e. $1,810,000) and then to redeem the 2023 Bonds, with the amount paid applied to the principal balance of the 2023 Bonds. The 2023 Bonds fund reserve (initially 5% (i.e., $905,000) subject to increase up to 10%) mentioned above will be maintained to be used for payment of debt service and administrative fees if there are insufficient funds generated from the statutory service payments, minimum service payments and Developer Shortfall Payments, and, to the extent unused, make the final 2023 Bonds payment of debt service.

 

November 7, 2022 Refinancing Transactions

 

On November 7, 2022, the Company and IRG a entered into a letter agreement (the “IRG Letter Agreement”) whereby IRG agreed that IRG’s affiliates and related parties (“IRG Affiliate Lenders”) will provide the Company and its subsidiaries with certain financial support described below in exchange for certain consideration described below. The financial support provided under the IRG Letter Agreement consists of the following (“IRG Financial Support”):

 

(a)Extend the CH Capital Bridge Loan maturity to March 31, 2024
   
(b)Release the first position mortgage lien on the Tom Benson Hall of Fame Stadium
   
(c)Provide a $28 million financing commitment for the Company’s Hilton Tapestry Hotel
   
(d)Provide a completion guarantee for the Company’s waterpark
   
(e)Amend IRG loans to provide an optional one-year extension of maturity option to March 31, 2025 for a one percent fee

 

In exchange, the Company agreed in the IRG Letter Agreement to:

 

(a)Issue 90,909 shares to IRG and pay $4,500,000 in cash out of the Oak Street financing (See Note 12)
   
(b)Increase interest rate on all IRG loans to 12.5% per annum
   
(c)Make all IRG loans convertible at $12.77 per share
   
(d)Modify the Series C through Series G Warrants to be exercisable at $12.77 per share

 

In the IRG Letter Agreement, IRG and the Company agreed to comply with all federal and state securities laws and Nasdaq listing rules and to insert “blocker” provisions for the above-described re-pricing of the warrants and the conversion provisions, such that the total cumulative number of shares of Common Stock that may be issued to IRG and its affiliated and related parties pursuant to the IRG Letter Agreement may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”), except that such limitation will not apply following approval of the Company’s stockholders. In addition, the provisions of the IRG Letter Agreement are limited by Nasdaq Listing Rule 5635(c), subject to approval of the Company’s stockholders. On June 7, 2023, the stockholders of the Company approved (i) issuance of shares of Common Stock in excess of the Nasdaq 19.99% Cap to IRG Affiliate Lenders with respect to transactions described in the IRG Letter Agreement; and (ii) the issuance to an entity wholly owned by a director of additional shares of Common Stock issuable upon the conversion of certain convertible debt and the exercise of certain warrants described in the IRG Letter Agreement.

CFP Loan

 

On April 27, 2022, Midwest Lender Fund, LLC, a limited liability company wholly owned by our director Stuart Lichter (“MLF”), loaned $4,000,000 (the “CFP Loan”) to HOF Village Center for Performance, LLC (“HOF Village CFP”). Interest accrues on the outstanding balance of the CFP Loan at 6.5% per annum, compounded monthly. The CFP Loan matures on April 30, 2023 or if HOF Village CFP exercises its extension option, April 30, 2024. The CFP Loan is secured by a mortgage encumbering the Center for Performance.

 

As part of the consideration for making the Loan, on June 8, 2022 following stockholder approval, the Company issued to MLF: (A) 5,681 shares (the “Commitment Fee Shares”) of Common Stock, and (B) a warrant to purchase 5,681 shares of Common Stock (“Series G Warrants”). The exercise price of the Series G Warrants will be $33 per share. The Series G Warrants will become exercisable one year after issuance, subject to certain terms and conditions set forth in the Series G Warrants. Unexercised Series G Warrants will expire five years after issuance. The exercise price of the Series G Warrants will be subject to a weighted-average antidilution adjustment.

 

On November 7, 2022, the Company further amended the CFP Loan in order to add an extension option that the Company may exercise at any time in order to extend the CFP Loan to March 31, 2025. In exchange for the amendment, the interest rate of the CFP Loan was increased to 12.5% per annum.

 

Huntington Loan

 

On September 27, 2022, HOF Village Retail I, LLC and HOF Village Retail II, LLC, subsidiaries of the Company, as borrowers (the “Subsidiary Borrowers”), entered into a loan agreement with The Huntington National Bank, pursuant to which the lender agreed to loan up to $10,000,000 to the Subsidiary Borrowers, which may be drawn upon the Project achieving certain debt service coverage ratios. Under the Note, the outstanding amount of the Loan bears interest at a per annum rate equal to the Term SOFR (as defined in the Note) plus a margin ranging from 2.60% to 3.50% per annum.

 

The Loan matures on September 27, 2024 (the “Initial Maturity Date”). However, Subsidiary Borrowers have the option (the “Extension Option”) to extend the Initial Maturity Date for an additional thirty six (36) months.

 

As of June 30, 2023, the Company has not drawn under the loan agreement.

 

Additionally, in connection with the Huntington Loan, on September 27, 2022, the Company entered into an interest rate swap agreement with a notional amount of $10 million to hedge a portion of the Company’s outstanding Secured Overnight Financing Rate (“SOFR”) debt with a fixed interest rate of 4.0%. The effective date of the interest rate swap is October 1, 2024 and the termination date is September 27, 2027.

 

Future Minimum Principal Payments

 

The minimum required principal payments on notes payable outstanding as of June 30, 2023 are as follows:

 

For the years ending December 31,  Amount 
2023 (six months)  $15,961,612 
2024   47,393,467 
2025   32,220,218 
2026   3,628,667 
2027   7,465,957 
Thereafter   102,294,839 
Total Gross Principal Payments  $208,964,760 
      
Less: Debt discount and deferred financing costs   (13,693,923)
      
Total Net Principal Payments  $195,270,837