Contract analysis

I. Executive Summary This memorandum reviews the existing mortgage financing encumbering the commercial property located at 450 West 34th Street, New York, NY 10001 (the "Property"), currently held by Eastbridge Commercial Bank, N.A. (the "Existing Lender"), and analyzes the feasibility and economic benefits of structuring a Consolidation, Extension, and Modification Agreement ("CEMA") in connection with the proposed

II. Background — The Existing Financing A. Existing Mortgage — Key Terms The Property is currently encumbered by a first-priority mortgage lien in favor of Eastbridge Commercial Bank, N.A., a federally chartered national bank. The key terms of the existing mortgage, as reflected in the recorded mortgage instrument and preliminary information obtained from Seller's counsel, are as follows: Mortgagee: Eastbridge Commer

III. Proposed Acquisition Financing — Pinnacle Federal Savings Bank A. Proposed Loan Terms The proposed acquisition financing for the Property is being arranged through Pinnacle Federal Savings Bank. Preliminary discussions have been conducted between Briarwood's principals and the Pinnacle relationship team. The key indicative terms of the proposed loan, based on verbal discussions and preliminary underwriting param

IV. Mortgage Recording Tax — Standard Calculation (Without CEMA) A. Applicable MRT Rate New York City imposes a mortgage recording tax on new mortgage debt recorded in the five boroughs of New York City (Manhattan, Brooklyn, Queens, the Bronx, and Staten Island). The MRT is imposed pursuant to New York Tax Law Article 11 and the New York City Administrative Code, and is payable at the time of recording of the mortgag

V. CEMA Structure — Overview and Feasibility A. What Is a CEMA? A Consolidation, Extension, and Modification Agreement ("CEMA") is a mechanism permitted under New York Real Property Law § 255 and related provisions of the New York Tax Law that allows a purchaser's new lender to effectively "step into the shoes" of the seller's existing lender by taking an assignment of the existing mortgage, rather than requiring the

1. Assignment of Existing Mortgage. At closing, Eastbridge Commercial Bank, N.A. would assign the existing mortgage — with an approximate outstanding principal balance of $28,700,000 — to Pinnacle Federal Savings Bank. The assignment would be effected through the execution and recording of an Assignment of Mortgage instrument, pursuant to which Eastbridge would transfer all of its right, title, and interest in and to

2. Preservation of Existing Lien. The existing Eastbridge mortgage would not be satisfied or discharged at closing. Instead, the mortgage lien would remain of record, and the assignment would transfer the lien from Eastbridge to Pinnacle (or through the borrower as intermediary). This is the key structural distinction from a standard closing, in which the existing mortgage would be satisfied and a new mortgage record

3. Recording of Supplemental/Gap Mortgage. Pinnacle Federal Savings Bank would record a supplemental mortgage (commonly referred to as a "gap mortgage" or "new money mortgage") for the "new money" amount — that is, the amount by which the total new loan ($78,000,000) exceeds the outstanding balance of the existing assigned mortgage ($28,700,000). The gap mortgage amount would therefore be $49,300,000 ($78,000,000 − $

4. Recording of CEMA Instrument. A Consolidation, Extension, and Modification Agreement would be recorded, consolidating the assigned existing mortgage (approximately $28,700,000) and the new gap mortgage ($49,300,000) into a single consolidated first-priority mortgage lien in the total amount of $78,000,000. The CEMA instrument would modify the terms of the consolidated lien to reflect Pinnacle's loan documents, inc

5. MRT Payable on Gap Mortgage Only. Mortgage recording tax would be payable only on the gap/supplemental mortgage of $49,300,000 — the "new money" portion — rather than on the full $78,000,000 consolidated mortgage amount. The MRT on the assigned portion ($28,700,000) is not payable because MRT was already paid when the Eastbridge mortgage was originally recorded in 2011. C. CEMA MRT Calculation The MRT calculation

VI. Requirements and Conditions for CEMA Execution The successful execution of a CEMA in this transaction is contingent upon the satisfaction of several requirements and the cooperation of multiple parties. Each of these requirements is discussed below. A. Eastbridge Commercial Bank, N.A. Cooperation The CEMA cannot proceed without the affirmative cooperation of Eastbridge Commercial Bank, N.A., the existing mortgage

1. Assign (rather than satisfy) its existing mortgage to the new lender (Pinnacle Federal Savings Bank) or to the purchaser/borrower (BFO 450 West 34th LLC), as applicable. This requires a departure from Eastbridge's standard payoff and satisfaction process.

2. Execute an assignment of mortgage instrument in recordable form, transferring all of Eastbridge's right, title, and interest in the mortgage, the underlying note, and the related loan documents to the assignee.

3. Deliver a payoff/assignment letter confirming the outstanding principal balance of the mortgage as of the closing date, together with any per diem interest adjustments, prepayment charges (if applicable), and other amounts due. The payoff/assignment letter will serve as the basis for the CEMA calculations and the wire transfer of funds at closing.

4. Assign the related UCC-1 financing statement covering fixtures and personal property at the Property, or consent to its termination and replacement with a new UCC-1 filing in favor of Pinnacle. The preferred approach will depend on whether the existing UCC-1 can be validly assigned or whether a new filing is required to ensure perfection of Pinnacle's security interest.

5. Execute a title affidavit or indemnity, if required by Granite State Title Insurance Company, confirming the validity and enforceability of the existing mortgage, the outstanding balance, and the absence of any defenses, offsets, or claims that would impair the lien. It is important to emphasize that Eastbridge is under no legal obligation to cooperate in a CEMA. There is no statutory requirement that an existing

1. Acceptance of an assignment of the existing Eastbridge mortgage as part of its consolidated first-priority lien, rather than requiring a wholly new mortgage lien. Pinnacle must be comfortable that the assigned mortgage, when consolidated with the gap mortgage through the CEMA instrument, will constitute a valid, enforceable, first-priority lien on the Property in the full amount of $78,000,000.

2. Title insurance endorsement confirming that the consolidated CEMA lien has the priority, validity, and amount of the full $78,000,000 mortgage. Pinnacle's counsel will require a lender's title insurance policy from Granite State Title Insurance Company specifically addressing the CEMA lien structure, including appropriate endorsements.

3. Modified loan document formats to accommodate the CEMA structure. In a CEMA closing, the standard loan document package is supplemented with additional instruments, including a supplemental or gap note, a gap mortgage, the CEMA agreement itself, and the assignment of mortgage instruments. Pinnacle's counsel must be willing to prepare or review these additional documents, and the loan documents must be structured t

1. Authorize and direct Eastbridge to assign (rather than satisfy) the mortgage at closing. This may take the form of a written direction letter from the Seller to Eastbridge, instructing Eastbridge to cooperate in the CEMA and to execute the assignment of mortgage.

2. Execute any required consents or estoppels in connection with the CEMA process, including any consent to the assignment of the mortgage and the related loan documents.

3. Confirm that no defaults exist under the existing Eastbridge loan documents as of the closing date. The existence of a default under the existing mortgage could impair the ability to assign the mortgage or could give rise to title insurance concerns. An estoppel certificate or borrower's affidavit confirming the absence of defaults will likely be required. To ensure that the Seller's cooperation is contractually s

VII. PSA Provisions Related to CEMA The draft Purchase and Sale Agreement (to be prepared on Buyer's form) should include the following provisions related to the CEMA structure. These provisions are essential to contractually secure the Seller's cooperation and to allocate the costs and risks associated with the CEMA process:

1. CEMA Cooperation Covenant. A covenant by the Seller obligating the Seller to cooperate in a CEMA transaction and to direct Eastbridge Commercial Bank, N.A. to assign, rather than satisfy, the existing mortgage at closing. The covenant should require the Seller to use commercially reasonable efforts (at a minimum) to obtain Eastbridge's cooperation, including by executing and delivering any reasonably required dire

2. Allocation of CEMA-Related Costs. A provision allocating the costs and expenses associated with the CEMA to the Buyer, since the Buyer is the party that receives the MRT savings. CEMA-related costs include any assignment or processing fee charged by Eastbridge, title company charges for CEMA endorsements and review, and incremental legal fees for document preparation and coordination. By allocating these costs to

3. Fallback Provision. A fallback provision expressly providing that if Eastbridge declines to cooperate in the CEMA, or if the CEMA is otherwise not feasible for any reason (including Pinnacle's unwillingness to participate or title insurance concerns), the existing Eastbridge mortgage will be satisfied at closing in the ordinary course, and the Buyer will record a new mortgage and pay the full MRT. The fallback pro

4. Payoff/Assignment Letter Obligation. An obligation requiring the Seller to request and deliver (or cause to be delivered) a payoff/assignment letter from Eastbridge within a specified timeframe — for example, no later than thirty (30) days prior to the closing date. The payoff/assignment letter should specify the outstanding principal balance, accrued interest, per diem interest, and any fees or charges applicable

5. UCC-1 Assignment or Termination. A provision addressing the disposition of the UCC-1 financing statement filed in favor of Eastbridge. If a CEMA is executed, the PSA should require the Seller to cooperate in the assignment of the UCC-1 to the new lender or, alternatively, in the termination of the existing UCC-1 and the filing of a new UCC-1 in favor of Pinnacle. If a CEMA is not executed and the mortgage is satis

VIII. Additional Considerations A. CEMA Costs and Fees While the CEMA structure yields significant MRT savings, there are incremental costs associated with the CEMA process that must be factored into the Buyer's closing budget. These costs include: • Eastbridge Processing/Assignment Fee: Eastbridge Commercial Bank, N.A. may charge an administrative or processing fee for its cooperation in the CEMA. Based on market ex

IX. Recommendations and Next Steps Based on the analysis set forth in this memorandum, we recommend the following actions:

1. Prepare and send CEMA cooperation request letter to Eastbridge Commercial Bank, N.A. A draft of this letter is currently underway and should be transmitted promptly after execution of the Purchase and Sale Agreement. If possible, we recommend sending the letter during the letter of intent period to gauge Eastbridge's willingness to cooperate at an early stage, thereby allowing the parties to plan the closing mecha

2. Raise CEMA structure with Pinnacle Federal Savings Bank. The CEMA structure should be included in the lender coordination letter to Daniel Ortega, Senior Vice President, Commercial Real Estate Lending, at Pinnacle. The letter should confirm Pinnacle's willingness to accept an assigned mortgage and to participate in a CEMA closing. Pinnacle's outside counsel should be identified and engaged on this topic as early a

3. Discuss with Granite State Title Insurance Company. We should confirm with Martin Clearfield, the assigned title officer, that Granite State is able and willing to insure the CEMA lien as a valid first-priority mortgage lien in the amount of $78,000,000. Any special requirements, additional endorsements, or conditions for issuing the CEMA lender's policy should be identified early to allow for adequate preparation

4. Include CEMA cooperation covenant in draft PSA. The initial draft of the Purchase and Sale Agreement should include a CEMA cooperation covenant obligating the Seller to use commercially reasonable efforts (or best efforts, if negotiable) to cooperate in the CEMA process and to direct Eastbridge to assign the existing mortgage. The PSA should also include appropriate fallback provisions in the event that the CEMA i

5. Request formal payoff/assignment letter from Eastbridge. A formal payoff/assignment letter should be requested from Eastbridge through Seller's counsel (Hargrove, Pettigrew & Sloane LLP, attention: Rebecca Tran, Esq.) or directly by the Seller, no later than mid-May 2026. The payoff/assignment letter will confirm the exact outstanding balance of the mortgage and any applicable per diem interest adjustments, and wi

6. Budget for CEMA transaction costs. The Buyer's closing budget should include an estimated $10,000 to $25,000 in incremental CEMA-related costs, including any Eastbridge processing fee, title company charges, and additional legal fees. These costs are well within the $803,600 in estimated MRT savings and represent a highly favorable cost-benefit ratio.

7. Monitor timeline. The CEMA process adds an estimated two (2) to four (4) weeks of coordination time to the closing process. It is essential to ensure that all CEMA-related actions — particularly the initial request to Eastbridge — are initiated promptly to preserve sufficient cushion before the July 31, 2026 outside closing date. We will maintain a CEMA milestone tracker and provide regular status updates to the d

X. Conclusion The CEMA structure is strongly recommended for the proposed acquisition and financing of 450 West 34th Street. The estimated mortgage recording tax savings of approximately $803,600 are substantial and well justify the incremental costs (estimated at $10,000 to $25,000) and coordination required to execute the CEMA. Even after accounting for all incremental transaction costs, the net savings to the Buye