Item 1.01 Entry into a Material Definitive Agreement.
On December 18, 2017, Lomas Encantadas Development
Company LLC (“Borrower”), an indirect subsidiary of AMREP Corporation, entered into a Development Loan Agreement with
BOKF, NA dba Bank of Albuquerque (“Lender”). The Development Loan Agreement is evidenced by a Non-Revolving Line of
Credit Promissory Note, dated December 18, 2017, and is secured by a Mortgage, Security Agreement and Financing Statement, between
Borrower and Lender, dated November 16, 2017, with respect to 343 planned residential lots within the Lomas Encantadas subdivision
(the “Mortgaged Property”). Pursuant to a Guaranty Agreement, dated December 18, 2017, entered into by AMREP Southwest
Inc. (“Guarantor”) in favor of Lender, Guarantor has guaranteed Borrower’s obligations under each of the above
agreements. The Development Loan Agreement, Non-Revolving Line of Credit Promissory Note, Mortgage, Security Agreement and Financing
Statement, Guaranty Agreement and other related transaction documents are collectively referred to as the “Loan Documentation.”
Pursuant to the Loan Documentation, Lender agrees
to lend up to $4,750,000 to Borrower on a non-revolving line of credit basis to partially fund the development of the Mortgaged
Property. Interest on the outstanding principal amount of the loan is payable monthly at the annual rate equal to the London Interbank
Offered Rate for a thirty-day interest period plus a spread of 3.0%, adjusted monthly. Lender is required to release the lien of
its mortgage on any lot included in the Mortgaged Property upon Borrower making a principal payment of $43,000 or $53,000 depending
on the location of the lot. Borrower is required to make periodic principal repayments to the extent not previously paid as follows:
$1,370,000 on or before August 18, 2019, $599,000 on or before November 18, 2019, $599,000 on or before February 18, 2020, $599,000
on or before May 18, 2020, $599,000 on or before August 18, 2020 and $599,000 on or before November 18, 2020. The outstanding principal
amount of the loan may be prepaid at any time without penalty. The loan is scheduled to mature on December 18, 2021. Borrower incurred
certain customary costs and expenses and paid certain fees to Lender in connection with the loan.
Borrower and Guarantor have made certain representations
and warranties in the Loan Documentation and are required to comply with various covenants, reporting requirements and other customary
requirements for similar loans. The Loan Documentation contains customary events of default for similar financing transactions,
including: Borrower’s failure to make principal, interest or other payments when due; the failure of Borrower or Guarantor
to observe or perform their respective covenants under the Loan Documentation; the representations and warranties of Borrower or
the Guarantor being false; the insolvency or bankruptcy of Borrower or Guarantor; and the failure of Guarantor to maintain
a tangible net worth of at least $35 million. Upon the occurrence and during the continuance of an event of default, Lender may
declare the outstanding principal amount and all other obligations under the Loan Documentation immediately due and payable.
The foregoing description of the Loan Documentation
is a summary only and is qualified in all respects by the provisions of the Loan Documentation; copies of the Development Loan
Agreement, Non-Revolving Line of Credit Promissory Note, Mortgage, Security Agreement and Financing Statement, Guaranty Agreement
are attached hereto as Exhibits 10.1 through 10.4 and are incorporated herein by reference.