Contract analysis

I. Purpose and Scope The purpose of this memorandum is to summarize the results of our review of building-level financial statements and operating expense history provided by Greystone Metropolitan Realty LLC ("Greystone" or "Landlord") for the commercial office building located at 787 Seventh Avenue, New York, NY 10019, commonly known as "Greystone Tower" (the "Building"). This review has been undertaken in connecti

1. Historical Operating Expenses. A review of total building operating expenses for calendar years 2019 through 2022 (audited) and the projected 2023 budget (unaudited), with particular attention to the distinction between controllable and uncontrollable expense categories as those terms are defined in the proposed Lease.

2. Real Estate Tax Escalation Trends. An analysis of the Building's real estate tax history over the applicable review period, including assessed valuations, applicable tax rates, and year-over-year increases, together with a projection of Aurelius's proportionate share of future tax escalations.

3. Base Year (Calendar Year 2023) Implications. An assessment of the financial implications of the negotiated base year — calendar year 2023 — for purposes of calculating operating expense and real estate tax escalation charges payable by Aurelius under the Lease.

4. Financial Exposure Assessment. A calculation of Aurelius's estimated financial exposure to escalation charges under the Lease, based on the Tenant's Proportionate Share of 12.76%, which is calculated as 185,000 RSF divided by 1,450,000 RSF of total building rentable area.

5. Lease Provision Implications. An evaluation of how the building-level financial data interacts with key negotiated provisions of the proposed Lease, including the 5% cumulative annual cap on controllable operating expenses, the gross-up provision, the capital expenditure amortization methodology, and the tenant audit right. This memorandum does not address the creditworthiness of Greystone or its parent fund at th

II. Building Overview Set forth below is a summary of the key building and ownership information relevant to this diligence review: Ownership Structure. Greystone Metropolitan Realty LLC is the operating entity and title holder for 787 Seventh Avenue. Greystone is wholly owned by Greystone Capital Partners Fund VI LP (the "Fund"), a closed-end real estate private equity fund managed by Greystone Capital Advisors LLC,

III. Documents Reviewed The following documents were provided by Landlord's counsel, Pemberton Locke & Strauss LLP, in response to our due diligence request, and form the basis of the analysis set forth in this memorandum:

1. Building-Level Operating Statements — Calendar Years 2019, 2020, 2021, and 2022 (Audited). These statements were prepared by Greystone's property accounting department under the supervision of the VP, Asset Management, Brendan T. Kozlowski. Each statement bears an audit certification from Severin Beck CPAs LLP, the Building's independent auditor. The statements are presented in a standard format with line-item det

2. Preliminary (Unaudited) Operating Statement — January through April 2023, with Projected Full-Year 2023 Budget. This document was provided in unaudited form and reflects actual operating expenses for the first four months of calendar year 2023, together with Greystone's projected budget for the full calendar year 2023. The 2023 budget is of particular significance because calendar year 2023 serves as the Base Year

3. Real Estate Tax Bills and Assessment Notices — Tax Years 2019/20, 2020/21, 2021/22, 2022/23, and Tentative Assessment for 2023/24. These documents were obtained from the New York City Department of Finance and were provided by Landlord's counsel in their original form. We have independently verified the assessed values and tax levies against the NYC Department of Finance's online property assessment database (ACRI

4. Building Insurance Premium Schedules — 2020 through 2023. These schedules set forth the annual premiums paid by Greystone for building-wide property insurance, general liability insurance, umbrella/excess liability coverage, and ancillary coverages (including terrorism risk insurance). Premium amounts, carrier names, and policy periods are detailed in the schedules.

5. Capital Expenditure Summary — 2019 through 2022. This summary provides a year-by-year accounting of major capital expenditures undertaken at the Building, including the nature of each project, the total cost, the amortization period applied, and the portion, if any, that is or may be passed through to tenants as an operating expense under the applicable lease provisions.

6. Building Occupancy Reports and Rent Roll Summary (Redacted) — As of Q1 2023. The rent roll summary was provided in redacted form, with tenant names partially obscured and specific rental rates redacted, but with sufficient detail to assess building occupancy levels, weighted average remaining lease terms, and the identity of major tenants occupying significant portions of the Building. This level of redaction is c

IV. Historical Operating Expense Analysis A. Total Operating Expenses — Summary Table The following table summarizes total building operating expenses (excluding real estate taxes) for calendar years 2019 through 2022 (audited) and the projected 2023 budget (unaudited): The general trend in total building operating expenses reflects a pattern consistent with the broader commercial office market in Manhattan during th

V. Real Estate Tax Analysis A. Historical Assessment and Tax Levy Summary Real estate taxes constitute the largest single expense category for the Building and represent the most significant component of uncontrollable operating expenses under the proposed Lease. The following table summarizes the Building's New York City assessed values and tax levies for the applicable review period: The Building is classified as T

VI. Building Occupancy and Revenue Context Based on the redacted rent roll summary provided by Landlord's counsel, Greystone Tower was approximately 91% leased as of Q1 2023, representing occupied space of approximately 1,319,500 RSF out of a total rentable area of approximately 1,450,000 RSF. This occupancy level is solid for the Midtown West office submarket, where the overall Class A vacancy rate has been in the r

VII. Capital Expenditure Review Greystone provided a capital expenditure summary for calendar years 2019 through 2022, which we have reviewed in detail. The following table summarizes major capital projects completed during the review period: Total capital expenditures during the 2019–2022 period aggregated approximately $33.4 million. These expenditures are consistent with the profile of a well-maintained Class A of

VIII. Insurance Premium Trends Building-wide insurance premiums have increased significantly during the review period, consistent with the broader hardening of the commercial property and casualty insurance market that has affected institutional-quality office buildings throughout Manhattan and other major U.S. gateway markets. The following table summarizes the Building's annual insurance premiums for 2020 through 2

IX. Tenant's Proportionate Share — Financial Exposure Summary Aurelius's Proportionate Share under the proposed Lease is 12.76%, calculated as 185,000 RSF (the rentable area of the Premises) divided by 1,450,000 RSF (the total rentable area of the Building). This Proportionate Share applies to both operating expense escalations and real estate tax escalations above the 2023 Base Year. The following table presents an

X. Key Observations and Recommendations Based on the analysis set forth in this memorandum, we make the following observations and recommendations for Douglas Fairchild's consideration in connection with the final review of the proposed Lease:

1. Base Year Gross-Up. We recommend confirming that the proposed Lease includes a standard gross-up provision ensuring that the 2023 Base Year operating expenses are calculated as if the Building were at least 95% occupied, regardless of actual occupancy levels during the Base Year. This protection is critical to preventing Aurelius from bearing disproportionate escalation charges attributable to vacancy fluctuations

2. Controllable Expense Cap. The negotiated 5% cumulative annual cap on controllable operating expenses is an important tenant protection that limits Aurelius's exposure to above-market increases in costs within the Landlord's discretion. Historical data supports the reasonableness of this cap — actual controllable expense increases have generally fallen within the 5% cumulative annual threshold, with the exception o

3. Real Estate Tax Exposure. Real estate taxes represent the largest uncontrollable cost variable under the proposed Lease. Historical NYC assessment trends suggest that assessed values — and, correspondingly, tax levies — will continue to increase during the Lease term, potentially at rates exceeding the historical average as the NYC Department of Finance recalibrates post-pandemic valuations. We recommend that Aure

4. Capital Expenditure Amortization. We recommend confirming that the proposed Lease restricts the pass-through of capital expenditures to those that are amortized over their useful life in accordance with GAAP, with a reasonable interest rate as described in Section VII above. Additionally, the Lease should expressly exclude from operating expenses: (a) capital costs attributable to other tenants' improvements or sp

5. Insurance Escalation. While insurance premiums are classified as uncontrollable operating expenses and are passed through without a cap, the 2023 Base Year captures the current elevated premium environment, which provides some degree of built-in protection for Aurelius. Future increases above the 2023 baseline will be borne proportionately at 12.76%. We note that the commercial insurance market is cyclical, and cu

6. Audit Right. We recommend confirming that the proposed Lease includes a robust tenant audit right permitting Aurelius, or its designated independent certified public accountant, to review and audit the Landlord's books and records relating to operating expenses and real estate taxes on an annual basis. The audit right should include: (a) the right to review source documents, invoices, contracts, and payroll record

7. Overall Financial Assessment. Taking into account the totality of the building-level financial data reviewed, Greystone's financial position as an institutional owner with a substantial diversified portfolio, and the Building's strong occupancy and well-maintained physical condition, we believe there is reasonable comfort regarding the Landlord's management capability and the reliability of the operating expense d

XI. Conclusion Based on our comprehensive review of Greystone's building-level financial statements and operating expense history for 787 Seventh Avenue (Greystone Tower), no material financial concerns have been identified that would affect the decision to proceed with the proposed Lease on the terms currently under negotiation. The Base Year (calendar year 2023) operating expense and real estate tax figures appear