Contract analysis

1. Introduction and Engagement Identification This firm represents Fairwater Real Estate Investment Trust ("Fairwater" or "Buyer"), a Maryland real estate investment trust with its principal offices located at 7200 Chesapeake Parkway, Suite 1100, Columbia, Maryland 21044. Fairwater is publicly traded on the New York Stock Exchange under the ticker symbol "FREIT" and, as of the fourth quarter of 2023, maintained a mar

2. Transaction Overview 2.1 Purchase and Sale Agreement Pursuant to a Purchase and Sale Agreement dated February 28, 2024 (the "PSA"), between Greystone Meridian Partners Fund III, L.P., a Delaware limited partnership ("Seller" or "GMP Fund III"), and Fairwater, Buyer has agreed to acquire 100% of the membership interests in each of fourteen (14) single-purpose Delaware limited liability companies, including each of

3. Information Regarding Fairwater (Proposed Transferee / Replacement Guarantor) 3.1 Entity Information Set forth below is a summary of key entity information regarding Fairwater Real Estate Investment Trust, as the proposed transferee and replacement guarantor: Full Legal Name: Fairwater Real Estate Investment Trust Entity Type: Maryland Real Estate Investment Trust (publicly traded REIT) State of Organization: Mary

1. Fairwater's audited consolidated financial statements for the fiscal years ended December 31, 2022, and December 31, 2023, prepared by Ashford Prewitt LLP (independent auditors; engagement partner Martin Ashford, CPA);

2. Fairwater's unaudited quarterly financial statements for the period ended September 30, 2023; and

3. Fairwater's most recent annual report on Form 10-K as filed with the U.S. Securities and Exchange Commission. The enclosed financial statements reflect Fairwater's strong and well-capitalized financial position. Fairwater hereby represents that, as of the date hereof and as of the anticipated closing date, it satisfies and will satisfy the Guarantor Financial Covenants set forth in the Master Loan Agreement, inclu

4. Replacement Guaranty In connection with the proposed change of control, Fairwater proposes to execute a Replacement Carve-Out Guaranty in favor of Pinnacle Federal Bank, N.A., replacing Greystone Meridian Partners Fund III, L.P. as the carve-out guarantor under each of the eight loans. A draft form of the Replacement Guaranty, substantially in the form attached as Exhibit S to the PSA, is enclosed herewith for Pin

5. Consent Fee We acknowledge that, pursuant to the terms of the Master Loan Agreement, a consent fee is payable to Pinnacle in connection with the grant of the change of control consent requested herein. Based on our review of the applicable provisions of the Master Loan Agreement, we understand the consent fee to be calculated as follows: Consent Fee Rate: 0.25% of the aggregate outstanding principal balance Aggreg

6. Assumption Agreement In addition to the Replacement Guaranty described in Section 4 above, Fairwater proposes to enter into an Assumption Agreement with Pinnacle, pursuant to which Fairwater will formally assume all borrower obligations under the Master Loan Agreement and each of the eight individual loan supplements. A draft form of the Assumption Agreement is enclosed herewith for Pinnacle's review and comment.

7. Additional Information Regarding the Borrower Entities Each of the eight Borrower entities is and will remain a single-purpose Delaware limited liability company organized solely for the purpose of owning and operating its respective secured property. Following the closing of the change of control, each Borrower's operating agreement will be amended and restated to reflect Fairwater as the sole member of each enti

8. Enclosures The following documents are enclosed with this letter for Pinnacle's review:

1. Copy of the executed Purchase and Sale Agreement dated February 28, 2024, together with all exhibits and schedules thereto;

2. Fairwater's audited consolidated financial statements for the fiscal years ended December 31, 2022, and December 31, 2023 (prepared by Ashford Prewitt LLP, independent auditors);

3. Fairwater's unaudited quarterly financial statements for the period ended September 30, 2023;

4. Fairwater's most recent annual report on Form 10-K as filed with the U.S. Securities and Exchange Commission;

5. Draft Replacement Carve-Out Guaranty (Fairwater Real Estate Investment Trust in favor of Pinnacle Federal Bank, N.A.);

6. Draft Assumption Agreement (Pinnacle Loans 1-A through 1-H);

7. Organizational chart of Fairwater Real Estate Investment Trust and its subsidiaries, including post-closing ownership structure of each of the eight Borrower entities;

8. Certificate of good standing for Fairwater Real Estate Investment Trust (State Department of Assessments and Taxation of Maryland);

9. Certificates of formation and good standing for each of the eight Borrower entities (Secretary of State of the State of Delaware); and

10. Current rent rolls and occupancy summary for each of the eight secured properties.

9. Request for Response and Contact Information We respectfully request that Pinnacle and Whitfield & Archer review the enclosed materials and provide any comments on the draft Replacement Guaranty and Assumption Agreement at their earliest convenience. As noted above, the PSA-mandated lender consent deadline is May 24, 2024, and the scheduled closing date is May 31, 2024. We are mindful of these deadlines and wish t