Contract analysis

I. Executive Summary This memorandum presents our review, analysis, and commentary on the term sheet dated August 25, 2025 (the "Term Sheet") received from Clarendon Metropolitan Insurance Company (NAIC No. 38921; 1 MetroTech Center, Brooklyn, NY 11201; contact: Garrett W. Hollister, Head of CMBS Originations) (the "Lender" or "Clarendon Metropolitan") for a $240,000,000 permanent fixed-rate CMBS mortgage loan (the "

II. Background — Existing Bridge Facility The following section summarizes the material terms and context of the existing Bridge Facility, which the Proposed Loan is intended to replace. A thorough understanding of the Bridge Facility's terms is essential both for the comparative economic analysis presented in Section IV and for the identification of the structural improvements offered by the Proposed Loan. A. Bridge

III. Summary of Proposed Permanent Loan Terms (Clarendon Metropolitan Term Sheet) The following section provides a detailed summary of the material terms set forth in the Term Sheet. Where applicable, we have included our preliminary commentary and identified terms that are subject to further negotiation or clarification. A comprehensive discussion of our recommended negotiation positions follows in Section V. A. Loa

I. Reserves The Term Sheet requires the following reserve arrangements: Tax and Insurance Escrows. Monthly escrow deposits for real property taxes and insurance premiums are required. This is standard for all CMBS conduit loans and is non-negotiable. The amounts will be determined based on the applicable tax and insurance obligations for each of the 14 properties. Capital Expenditure Reserve. The Term Sheet indicates

IV. Comparative Economic Analysis — Bridge vs. Permanent Loan This section presents a detailed side-by-side comparison of the economic terms of the Bridge Facility and the Proposed Loan to quantify the financial benefits of the proposed refinancing. A. Interest Rate Comparison The most significant economic benefit of the Proposed Loan is the reduction in interest cost achieved by transitioning from the Bridge Facilit

V. Key Negotiation Points Based on our review of the Term Sheet and our experience with comparable CMBS conduit transactions, we have identified the following key negotiation points for discussion with Clarendon Metropolitan and its counsel, Ashworth McPhail LLP. These points are presented in order of priority, as assessed by our team. A. Cash Management — Hard vs. Springing Lockbox Issue. The Term Sheet provides for

1. Springing Full Recourse Triggers. The Term Sheet identifies voluntary bankruptcy filing and collusive involuntary bankruptcy as "full recourse" triggers — meaning that the occurrence of either event converts the entire outstanding loan balance into a full recourse obligation of the guarantor. We recommend: (a) Confirming that the full recourse triggers are limited to voluntary bankruptcy filing by the borrower (or

2. Fraud / Intentional Misrepresentation. We recommend: (a) Limiting the fraud carve-out to "actual fraud" and resisting the inclusion of "constructive fraud" or "negligent misrepresentation," which are significantly broader concepts that could expose the guarantor to liability for good-faith errors or omissions in representations and warranties. (b) Adding a knowledge qualifier — i.e., liability arises only for misr

3. Misapplication of Rents and Insurance/Condemnation Proceeds. We recommend: (a) Defining "misapplication" to exclude the ordinary-course application of rents to property operating expenses, even if such expenses were not specifically approved in an annual budget or operating expense category. (b) Ensuring that the receipt and disbursement of insurance or condemnation proceeds in accordance with the loan documents'

4. Environmental Liability. We recommend: (a) Confirming that environmental liability is covered by a separate environmental indemnity agreement (standard for CMBS transactions) and negotiating to avoid duplicative exposure under both the environmental indemnity and the carve-out guaranty. Ideally, the carve-out guaranty would reference the environmental indemnity as the exclusive remedy for environmental claims. (b)

5. SPE Separateness Covenant Violations. We recommend: (a) Treating SPE covenant violations as a loss-based carve-out (limited to actual loss suffered by the Lender) rather than a full recourse trigger. (b) Adding a notice-and-cure period — the carve-out should not be triggered until the borrower has received notice of the violation and has had a reasonable period (e.g., 30 days) to cure. (c) Adding a materiality qua

6. Waste Carve-Out. The Term Sheet does not specifically reference "waste" as a carve-out, but this is a common provision in CMBS carve-out guaranties. We recommend: (a) If waste is included as a carve-out, ensuring that it is defined as intentional or willful waste (i.e., affirmative destruction or material impairment of the collateral properties) and does not inadvertently capture ordinary-course property managemen