Contract analysis

I. EXECUTIVE SUMMARY This memorandum sets forth the results of our review and analysis of the senior loan documentation package provided by counsel to Pinnacle Fidelity Bank, N.A. ("Lender" or "Pinnacle Fidelity") in connection with a proposed $26,000,000 acquisition loan (the "Loan") to be secured by The Linden at Gramercy Park, a 212-unit Class A multifamily residential property with approximately 4,800 square feet

1. Loan Agreement by and between Pinnacle Fidelity Bank, N.A. and Gramercy Linden PropCo LLC (136 pages)

2. Promissory Note in the principal amount of $26,000,000 (7 pages)

3. Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the "Mortgage and Security Agreement") (52 pages)

4. Assignment of Leases and Rents (separate instrument) (18 pages)

5. Non-Recourse Carveout Guaranty (the "Guaranty") (22 pages)

6. Environmental Indemnity Agreement (14 pages)

7. Cash Management Agreement (28 pages)

8. UCC-1 Financing Statements (New York Department of State and Delaware Secretary of State)

9. Borrower's Organizational Certificate and incumbency documentation

10. Related ancillary documents, including the form of Compliance Certificate, Borrower's Closing Certificate, and loan closing checklist For reference, we have also cross-referenced the JV Operating Agreement of Gramercy Linden JV LLC dated April 19, 2023, which we reviewed in connection with Calderwood & Harkness Matter No. 1026-00004.

II. LOAN AMOUNT AND FUNDING A. Principal Amount The aggregate principal amount of the Loan is Twenty-Six Million Dollars ($26,000,000). The Loan is structured as a single advance to be fully funded at closing. There are no future advance provisions, delayed draw mechanics, or hold-back reserves built into the principal commitment. The full $26,000,000 will be disbursed to or on behalf of the Borrower at the closing o

III. INTEREST RATE A. Rate Structure The Loan bears interest at a floating rate equal to the 30-day Term SOFR plus a spread of 2.15% (215 basis points). The rate resets monthly on each payment date based on the 30-day Term SOFR rate published two (2) business days prior to the applicable payment date. The Loan Agreement references Term SOFR as administered by CME Group Benchmark Administration Limited, consistent wit

IV. LOAN TERM AND AMORTIZATION A. Maturity The initial term of the Loan is five (5) years from the date of closing. Based on the anticipated closing date of June 5, 2023, the initial maturity date would be June 5, 2028. There is no automatic extension of the maturity date. Extension of the Loan beyond the initial maturity date is available only through the exercise of the extension options described in Section IV.C b

V. PREPAYMENT PROVISIONS The Loan Agreement contains a multi-tiered prepayment structure that governs the Borrower's ability to prepay the Loan in whole or in part at various points during the Loan term. The prepayment regime is summarized as follows: A. Lockout Period For the first twenty-four (24) months from the closing date (through approximately June 5, 2025), no prepayment of the Loan is permitted. This constit

VI. FINANCIAL COVENANTS A. Debt Service Coverage Ratio (DSCR) The Loan Agreement contains an ongoing DSCR covenant requiring the Borrower to maintain a minimum Debt Service Coverage Ratio of 1.25x at all times during the Loan term. The DSCR is tested quarterly, based on the trailing twelve (12)-month Net Operating Income of the Property divided by the annualized debt service for the current period (calculated using t

VII. NON-RECOURSE STRUCTURE AND CARVEOUT GUARANTY A. Non-Recourse Provisions The Loan is structured as a non-recourse obligation of the Borrower, Gramercy Linden PropCo LLC. In the event of a default under the Loan, the Lender's sole recourse is to the Property and the other collateral securing the Loan (as described in Section XVI below), and the Lender may not seek a deficiency judgment against the Borrower or any

VIII. CASH MANAGEMENT A. Soft Lockbox (Default) Under normal operating conditions, the Cash Management Agreement establishes a soft lockbox arrangement. All rents, revenues, and other income from the Property are required to be deposited into a lockbox account maintained at Pinnacle Fidelity Bank, N.A. Tenants of the Property will be directed to make all rent payments to the lockbox account, and any rents received di

IX. RESERVES AND ESCROWS A. Tax and Insurance Escrows The Loan Agreement requires the Borrower to make monthly escrow deposits for real estate taxes and insurance premiums into escrow accounts maintained by the Lender. The monthly escrow deposits are calculated as follows: • Real Estate Taxes. The current annual real estate tax obligation for the Property is estimated at approximately $1,420,000, resulting in a month

X. TRANSFER RESTRICTIONS (DUE-ON-SALE / DUE-ON-ENCUMBRANCE) A. Due-on-Sale The Loan Agreement contains a standard due-on-sale provision under which any sale, transfer, conveyance, or other disposition of the Property, or any direct or indirect interest in the Borrower, without the Lender's prior written consent, constitutes an Event of Default and entitles the Lender to accelerate the Loan. The Loan Agreement provide

XI. SINGLE-PURPOSE ENTITY (SPE) REQUIREMENTS A. SPE Covenants The Loan Agreement requires Gramercy Linden PropCo LLC to be maintained at all times during the term of the Loan as a single-purpose, bankruptcy-remote entity. This requirement is a fundamental structural feature of the Loan, designed to insulate the Property and the Borrower from the bankruptcy risk of the Borrower's affiliates and to ensure that the Lend

XII. INSURANCE REQUIREMENTS A. Required Coverages The Loan Agreement requires the Borrower to maintain the following insurance coverages at all times during the term of the Loan: All insurance policies must be issued by carriers with an A.M. Best rating of not less than A-/VIII (or equivalent) and must contain standard mortgagee clauses naming Pinnacle Fidelity Bank, N.A. as mortgagee and loss payee. The Borrower is