Contract analysis

I. Executive Summary This memorandum analyzes and recommends the optimal acquisition structure for Fairwater Real Estate Investment Trust's ("Fairwater" or "Buyer") proposed acquisition of a 14-property Sun Belt logistics and office portfolio (the "Portfolio") currently valued at $1,100,000,000 (the "Purchase Price") from Greystone Meridian Partners Fund III, L.P. ("GMP Fund III" or "Seller"). The two principal struc

14. GMP Mount Juliet LLC The balance of this memorandum provides a detailed analysis of the entity-purchase and asset-purchase structures across multiple dimensions, including transfer taxes, federal and state tax implications, assumed debt mechanics, lender consent requirements, entity-level liability exposure and due diligence, lease and tenant considerations, title and survey matters, property management transitio

II. Description of Alternative Structures We have evaluated three potential acquisition structures for the Portfolio transaction: (A) an entity-purchase structure, (B) an asset-purchase structure, and (C) a hybrid structure combining elements of both. Each is described in detail below, along with its principal advantages and disadvantages. For the reasons summarized above and elaborated throughout this memorandum, we

III. Transfer Tax Analysis — Five States A. Overview of Transfer Tax Framework Real property transfer taxes are a significant component of the economic analysis in any large-scale portfolio acquisition. In a traditional asset purchase, the recording of a deed transferring title to real property triggers documentary stamp taxes, recording taxes, or excise taxes in most jurisdictions, computed as a percentage of the pu

1. Georgia (4 Properties) Properties: Fairfield Logistics Center I (Fairfield, GA), Fairfield Logistics Center II (Fairfield, GA), Buckhead Place Office Tower (Atlanta, GA), and Peachtree Corners Logistics Center (Peachtree Corners, GA). Target Entities: GMP Fairfield I LLC, GMP Fairfield II LLC, GMP Buckhead LLC, and GMP Peachtree LLC. Applicable Tax. Georgia imposes a real estate transfer tax, commonly referred to

2. Texas (3 Properties) Properties: Westlake Distribution Hub (Westlake, TX), Katy Freeway Logistics Park (Katy, TX), and Alliance Commerce Center (Fort Worth, TX). Target Entities: GMP Westlake LLC, GMP Katy LLC, and GMP Alliance LLC. Applicable Tax. Texas is one of the few states that does not impose a state-level real property transfer tax. There is no documentary stamp tax, deed recording tax, or excise tax impos

3. Florida (3 Properties) Properties: Lakeland Crossings Industrial (Lakeland, FL), Southport Logistics Park (Southport, FL), and Brickell Bay Office Building (Miami, FL). Target Entities: GMP Lakeland LLC, GMP Southport LLC, and GMP Brickell LLC. Applicable Tax. Florida imposes a documentary stamp tax on deeds and other instruments transferring interests in real property under Florida Statutes § 201.02. The standard

4. Tennessee (3 Properties) Properties: Murfreesboro Distribution Center (Murfreesboro, TN), Cool Springs Office Park (Franklin, TN), and Mount Juliet Commerce Park (Mount Juliet, TN). Target Entities: GMP Murfreesboro LLC, GMP Cool Springs LLC, and GMP Mount Juliet LLC. Applicable Tax. Tennessee imposes a real estate transfer tax (commonly referred to as the "recording tax" or "transfer tax") under T.C.A. § 67-4-409

5. North Carolina (1 Property) Property: SouthPark Corporate Center (Charlotte, NC). Target Entity: GMP SouthPark LLC. Applicable Tax. North Carolina imposes a real estate excise tax (commonly referred to as the "revenue stamp tax") under N.C.G.S. § 105-228.30 at a rate of $1.00 per $500 of consideration (equivalent to 0.20%). Controlling-Interest Transfer Tax. North Carolina does not currently impose a controlling-i

IV. Tax Implications — Entity-Purchase vs. Asset-Purchase A. Depreciation and Stepped-Up Basis The most significant federal income tax consequence distinguishing the entity-purchase structure from the asset-purchase structure is the treatment of depreciation and the tax basis of the acquired real property and improvements. Asset-Purchase Structure. Under an asset-purchase structure, Fairwater would receive a fully st

V. Assumed Debt — Analysis of Existing Mortgage Financing A. Summary of Existing Mortgage Debt The 14 Portfolio properties are encumbered by three mortgage loan facilities, secured by the real property and improvements of the respective borrower Target Entities. The following table summarizes the key terms of each facility: The weighted-average interest rate across the three facilities is approximately 4.30%, and the

VI. Lender Consent Requirements — Change of Control Provisions A. Overview Each of the three existing mortgage loan agreements contains a "change of control" provision that prohibits any direct or indirect transfer of ownership interests in the borrower entity (i.e., the relevant Target Entity LLC) without the prior written consent of the lender. The transfer of 100% of the membership interests in each Target Entity