Uncertainties regarding JerniganCapital's liquidity constraints cloud the company's ability to remainin business in the near term, the company disclosed in a notification to the SEC.
JerniganCapital said in the March 31 filing that it has determined that it is unable to file its annual report onForm 10-K for the year ended Dec. 31, 2015, by the prescribed due date.
As of Dec. 31, 2015, the company had approximately $43.9 millionin unrestricted cash and approximately $115.1 million of unfunded loan commitmentsrelated to its investment portfolio.
Pursuant to a jointventure with an affiliate of Heitman Investment Management LLC, JerniganCapital was obligated to contribute three of its existing development property investments,which have an aggregate unfunded commitment of $34.5 million, to the venture, acontribution that was completed March 31. The company intends to fund the remaining$36.7 million in unfunded loan commitments with borrowings under a proposed creditfacility that is currently subject to lender due diligence and further negotiationand completion of definitive documentation.
After contribution of loans to the venture, Jernigan has 11 remainingdevelopment property investments with aggregate unfunded loan commitments of $52.7million as of Dec. 31, 2015.
If the proposed credit facility does not close or closes undersubstantially different terms than contemplated, by July liquidity constraints willlikely require that the company sell or contribute to the venture some or all ofthe additional existing development property investment, subject to Heitman's acceptanceof the investments.
Alternatively, should the venture not accept such investmentsby July, Jernigan will likely be required to sell some or all of its operating propertyand construction loans to provide the capital needed to sustain its operations andcontinue to meet its remaining unfunded loan commitments. The company believes itcould sell the assets, which are not its primary investment focus and would notsignificantly impact its operations. However, the sales would occur in a privatemarket and there is no certainty to the required marketing period for such loans.
Because of the uncertainties, management is unable to determinewhether the company's liquidity constraints will be resolved by the time Jerniganfiles its Form 10-K and, if not resolved, whether management's plans regarding liquiditywill alleviate substantial doubt relative to the company's ability to continue asa going concern.
The company said it intends to file its Form 10-K with the SECas soon as practicable.