Contract analysis

I. Executive Summary This memorandum sets forth the results of our comprehensive review and analysis of the existing mortgage loan facility with Pinnacle Federal Bank, N.A. ("Pinnacle" or "Lender") securing eight logistics properties in the portfolio being acquired by Fairwater Real Estate Investment Trust ("Fairwater" or "Buyer"). The purpose of this review is to identify and analyze all issues relevant to Fairwater

II. Loan Documents Reviewed Set forth below is a complete list of all documents comprising the Pinnacle loan facility that have been reviewed by C&H in connection with this engagement. All documents were obtained from the virtual data room maintained by Seller's counsel, Prescott Hale Vanderbilt LLP, except where otherwise noted. Where applicable, we have also reviewed amendments and modifications to such documents.

III. Key Loan Terms A. Aggregate Outstanding Principal Balance The total outstanding principal balance of the Pinnacle facility as of February 28, 2024, is $421,600,000. This figure has been confirmed against Seller's disclosure schedules delivered pursuant to Section 3.05(b) of the PSA and is consistent with the rent roll and financial data provided in the data room. We note that the individual allocations per Loan

IV. Change of Control Provisions A. Definition of "Transfer" and "Change of Control"

Section 5.02 of the Master Loan Agreement contains comprehensive restrictions on transfers of interests in the Properties and in the Borrower Entities. The operative definitions are critical to understanding the applicability of the consent requirement to the proposed transaction. "Transfer" is defined broadly in Section 5.02 to include any direct or indirect sale, assignment, conveyance, transfer, pledge, encumbranc

Section 5.02(a) of the Master Loan Agreement contains a blanket prohibition on transfers: "No Transfer of any nature whatsoever shall be made without the prior written consent of Lender, which consent may be granted or withheld in Lender's sole and absolute discretion, except for Permitted Transfers as defined in Section 5.02(b)." This provision grants Pinnacle unfettered discretion to approve or deny the proposed tr

Section 5.02(b) of the Master Loan Agreement enumerates several categories of "Permitted Transfers" that may be consummated without Lender consent. We have analyzed each Permitted Transfer exception and determined that none of the exceptions apply to Fairwater's proposed acquisition. Specifically: (i) Internal Fund Restructuring Transfers. Section 5.02(b)(i) permits transfers among existing members of GMP Fund III, p

Section 5.02(d) of the Master Loan Agreement sets forth the requirements and procedures for obtaining Lender consent to a Transfer constituting a change of control. The consent request must be submitted in writing and accompanied by the following items: (i) Identification of Proposed Transferee. Full identification of the proposed transferee and its principals, officers, and managing members, including organizational

V. Replacement Guarantor Requirements A. Current Guarantor Greystone Meridian Partners Fund III, L.P. (EIN: 83-1647205), a Delaware limited partnership, is the current Carve-Out Guarantor under the Guaranty dated September 15, 2020. GMP Fund III's general partner is Greystone Meridian Capital LLC (EIN: 83-1520984), a Delaware limited liability company. The existing Carve-Out Guaranty is a "bad boy" guaranty that prov

Section 5.02(d) of the Master Loan Agreement requires, as a condition to Lender's consent to a change of control, that the proposed transferee deliver a replacement guaranty from a substitute guarantor acceptable to Lender. The replacement guarantor must satisfy the following minimum financial covenants at closing and at all times throughout the remaining term of the loan: Minimum Tangible Net Worth: The replacement

VI. Default Provisions and Event of Default Analysis A. Events of Default (Section 7.01)

Section 7.01 of the Master Loan Agreement enumerates the following Events of Default. We have summarized each category below and provided our analysis of the risk of triggering such default in connection with the proposed transaction: (a) Payment Default. Failure to make any payment of principal, interest, or any other amount due within five (5) business days of the due date. This is a standard monetary default provi

VII. Borrower Covenants The Master Loan Agreement contains numerous affirmative and negative covenants that bind the Borrower Entities and, indirectly, Fairwater as the post-closing sole member and controller of the Borrower Entities. Set forth below is a detailed summary of the most significant covenants. A. Debt Service Coverage Ratio (DSCR) The Master Loan Agreement imposes a minimum DSCR covenant of 1.25x, tested