Contract analysis

I. Purpose and Scope This memorandum summarizes the findings of the zoning and land use due diligence conducted in connection with the proposed $675,000,000 senior mortgage and mezzanine financing for the Hudson Yards West mixed-use development project (the "Project") to be constructed at 450 West 34th Street, New York, New York 10001 (Manhattan Block 729, Lots 1, 5, 12, and 15) (the "Project Site"). The Project is b

II. Executive Summary Based on the review described herein, the principal conclusions of our zoning and land use due diligence are as follows: • Zoning District. The Project Site is located within a C6-4 zoning district, subject to the Special Hudson Yards District overlay (ZR Article IX, Chapter 3, Sections 93-00 et seq.). The Project Site is situated within Subdistrict A (Large-Scale Plan Subdistrict), Subarea A2 (

III. Description of the Project Site A. Location and Tax Lot Information The Project Site is located at 450 West 34th Street, New York, New York 10001, in the Borough of Manhattan. The Project Site is comprised of the following four (4) tax lots: The four tax lots have been assembled to form a single zoning lot for purposes of all bulk and use calculations under the ZR, pursuant to the zoning lot merger provisions of

IV. Zoning District Classification A. C6-4 District — Overview The Project Site is located within a C6-4 zoning district, which is among the highest-density commercial districts in the New York City zoning framework. The C6-4 district is a general central commercial district that permits a wide range of commercial, residential, community facility, and manufacturing uses consistent with a high-density, transit-oriente

1. Promoting the development of a mixed-use area of the highest density served by mass transit, including the No. 7 subway line extension;

2. Facilitating the construction of a platform over the MTA Long Island Rail Road storage yards and the development of such platform with a mix of residential, commercial, open space, and community facility uses;

3. Promoting housing, including affordable housing, within the district;

4. Providing for a coordinated program of public improvements, including parks, open spaces, streetscape enhancements, and transit connections; and

5. Establishing a financing mechanism (the District Improvement Bonus) to fund the infrastructure improvements necessary to support high-density development. The Project Site falls within Subdistrict A (the Large-Scale Plan Subdistrict) and, more specifically, within Subarea A2 (the 34th Street Corridor). Subdistrict A is the area of the Special District designated for the highest-density development, centered on the

V. Floor Area Ratio and Bulk Compliance A. Maximum Permitted FAR The maximum permitted FAR for the Project Site, as confirmed by the Zoning Opinion and our independent review of the applicable ZR provisions, is 18.0. This maximum FAR is derived from the following components: With respect to the DIB, the Zoning Opinion confirms that MTDC has executed a DIB contribution agreement with HYIC, dated November 15, 2023, in

1. Ground Lease Restrictions. Section 7.04 of the Ground Lease provides that the Borrower may not transfer, sell, or otherwise dispose of unused development rights associated with the Project Site without the prior written consent of NYCEDC, which consent may be withheld in NYCEDC's reasonable discretion. Any such transfer is further conditioned upon compliance with the applicable provisions of the ZR and the Special

2. Special District Provisions. The transfer of unused development rights within the Special Hudson Yards District is governed by ZR § 93-32 and is generally limited to transfers within the same Subdistrict and Subarea, subject to CPC certification or authorization.

3. ULURP Conditions. The restrictive declaration recorded in connection with the ULURP approvals may impose additional limitations on the transfer or utilization of unused development rights, including phasing requirements and design consistency obligations. For purposes of the Lenders' collateral analysis, the unused development rights represent a significant embedded value in the Project Site that is not being util

VI. ULURP Approvals A. Overview of the ULURP Process The Uniform Land Use Review Procedure ("ULURP") is the public review process established under Sections 197-c and 197-d of the New York City Charter for certain categories of land use actions. ULURP applies to, among other actions, special permits, zoning map amendments, site selections for city facilities, acquisitions and dispositions of city-owned property, and

1. Special Permit under ZR § 93-29 — A special permit for a large-scale general development within the Special Hudson Yards District, authorizing the distribution of total permitted floor area, open space, dwelling units, and other program elements without regard to zoning lot lines or other restrictions otherwise applicable to the individual lots comprising the Project Site, and authorizing modifications to the appl

2. Special Permit under ZR § 93-052 — A special permit for public parking garage use within the Special District, authorizing the construction and operation of a below-grade accessory parking facility containing not more than 225 public parking spaces, subject to the conditions and restrictions set forth in the CPC resolution.

3. Authorization under ZR § 93-06 — An authorization by the CPC Chair for a curb cut along West 35th Street to serve the Project's loading dock and parking garage entrance, which curb cut would otherwise not be permitted under the Special District's access and streetscape regulations.

4. Certification under ZR § 93-22(c) — A certification by the CPC Chair confirming that the Project's proposed floor area distribution, including the utilization of DIB and inclusionary housing bonus floor area, complies with the applicable Special District provisions. For each of these actions, the Zoning Opinion confirms that the required approval, authorization, or certification has been duly obtained and remains

1. Design Review. The Borrower is required to submit final design drawings for the building exterior, ground-floor retail spaces, public access areas, and streetscape improvements to DCP for review and comment prior to the issuance of a building permit. The design review is administrative in nature (i.e., it does not require a further ULURP action) but must be completed to DCP's satisfaction. Status: Design submissio

2. Restrictive Declaration. The Borrower is required to execute and record a restrictive declaration against the Project Site, in form and substance satisfactory to CPC and the City Council, establishing binding obligations with respect to phasing, design, infrastructure delivery, sustainability commitments, MIH compliance, and public access area maintenance. Status: The restrictive declaration is in final negotiatio

3. MIH Compliance. The Borrower is required to provide affordable housing units in compliance with the MIH program, as further described in Section VII below. Status: MIH regulatory agreement is in final negotiation with HPD. See Section VII.C below.

4. Infrastructure Obligations. The Borrower is required to complete certain infrastructure improvements, including streetscape improvements along West 34th Street and Eleventh Avenue, installation of new street trees and pedestrian lighting, and construction of the publicly accessible plaza along the Eleventh Avenue frontage, in accordance with a phasing schedule set forth in the restrictive declaration. Status: The

5. Transit Connectivity. The Borrower is required to maintain and provide access to the below-grade MTA/NYCT easement area for transit infrastructure maintenance and to construct a below-grade pedestrian connection to the 34th Street-Hudson Yards station in accordance with specifications approved by MTA/NYCT. Status: Design specifications have been agreed with MTA/NYCT; construction will proceed concurrently with the

6. Local Hiring and MWBE Procurement. The City Council resolution includes commitments by the Borrower to use commercially reasonable efforts to achieve local hiring targets (30% of construction workforce from local community districts) and MWBE procurement goals (25% of construction contract value). Status: The Borrower has engaged a compliance consultant and established a local hiring office. These obligations are

7. Sustainability. The restrictive declaration includes a commitment to achieve LEED Gold certification (or equivalent) for the completed Project. Status: The Project is designed to meet LEED Gold standards; certification will be sought upon completion.

VII. Mandatory Inclusionary Housing Compliance A. MIH Program Applicability The Project Site is located within an area designated as a Mandatory Inclusionary Housing ("MIH") designated area pursuant to the ZR (Sections 23-90 et seq.) and the ULURP action that established the Special Hudson Yards District. MIH is a zoning requirement, applicable citywide in areas rezoned for residential use after March 22, 2016 (and i

1. Priority. The regulatory agreement will be recorded against the Project Site and will constitute an encumbrance on the Borrower's leasehold interest. The Senior Lender's leasehold mortgage will also be recorded against the Borrower's leasehold interest. The relative priority of the regulatory agreement and the mortgage must be addressed. Under standard MIH practice, HPD requires that the regulatory agreement be su

2. Subordination, Non-Disturbance, and Recognition Agreement ("SNDA"). The Lenders will require an SNDA or similar agreement from HPD, pursuant to which HPD agrees that, in the event of a foreclosure or other enforcement action by the Senior Lender, (a) the regulatory agreement will remain in effect and binding on any successor owner, (b) HPD will recognize the Lender (or any purchaser at a foreclosure sale) as the s

3. Transfer Restrictions. The regulatory agreement may include restrictions on the transfer of the Project (or the Borrower's interest therein) without HPD's prior consent. These restrictions must be reconciled with the transfer provisions in the Senior Mortgage Loan Agreement and the Mezzanine Loan Agreement, including the Lenders' rights to foreclose and take title (or assign to a purchaser).

4. Cash Flow Implications. The requirement to maintain 163 units at affordable rents (significantly below market) will affect the Project's net operating income and debt service coverage ratios. The deal team should confirm that the underwriting model properly accounts for the affordable unit rent levels and any applicable operating subsidies. These lender-related issues should be flagged for review by Clearfield & A

VIII. Special Permits and Other Discretionary Approvals A. Inventory of Special Permits The following special permits have been obtained in connection with the Project through the ULURP process:

1. Large-Scale General Development Special Permit (ZR § 93-29). This special permit authorizes the development of the Project Site as a large-scale general development within the Special Hudson Yards District, permitting the distribution of floor area, open space, and other program elements across the assembled zoning lot without regard to internal lot lines. The special permit also authorizes modifications to the he

2. Public Parking Garage Special Permit (ZR § 93-052). This special permit authorizes the construction and operation of a below-grade public parking facility containing not more than 225 parking spaces within the Project. The special permit was required because the Special District restricts the development of new parking facilities within the district and permits such facilities only upon a finding by CPC that the p

1. CPC Chair Certification of Floor Area Distribution (ZR § 93-22(c)). This certification confirms that the Project's utilization of DIB bonus and inclusionary housing bonus floor area complies with the applicable Special District provisions. The certification was issued by the CPC Chair on November 8, 2023, following the completion of the ULURP process and the verification of the DIB contribution agreement. A copy o

2. CPC Chair Authorization for Curb Cut (ZR § 93-06). This authorization permits the curb cut on West 35th Street for the Project's loading dock and parking garage entrance. The authorization was issued concurrently with the CPC Chair certification on November 8, 2023.

3. DCP Director Certification of Phasing Compliance. Under the restrictive declaration, the DCP Director is required to issue a certification confirming that the Project's construction phasing plan complies with the phasing milestones set forth in the declaration. This certification has not yet been issued and is expected to be sought by the Borrower following the filing of the DOB new building permit application. Th

IX. Other Land Use and Regulatory Considerations A. Landmarks and Historic Preservation Based on our review of LPC records and the Zoning Opinion, we confirm the following: • The Project Site is not an individually designated New York City Landmark, and no portion of the existing structures on the Project Site has been designated or calendared for consideration as a Landmark. • The Project Site is not located within

1. Eleventh Avenue Public Plaza. A publicly accessible plaza of not less than 5,500 square feet along the Eleventh Avenue frontage of the Project Site. The plaza is required to include seating, landscaping, pedestrian-scale lighting, and accessible pathways, in accordance with design specifications set forth in the restrictive declaration. The plaza must be completed and open to the public no later than the date of i

2. West 34th Street Sidewalk Widening. The sidewalk along the Project's West 34th Street frontage is required to be widened from the existing approximately 15 feet to a minimum of 20 feet, through a combination of building setback at grade and a dedication of a sidewalk easement. The widened sidewalk must include new street trees (planted in accordance with NYC Parks Department specifications), pedestrian lighting, a

3. West 35th Street Improvements. Curb-to-building-line improvements along the West 35th Street frontage, including new sidewalk paving, street trees, and relocation of utilities to accommodate the loading dock cur