PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP
Real Estate / Project Development Group 1000 Louisiana Street, Suite 3800 Houston, Texas 77002
MEMORANDUM
This memorandum is a privileged and confidential communication prepared by Calderwood & Harkness LLP for the exclusive use of Calloway-Briggs Renewables Inc. and the other addressees and copy recipients identified above. This memorandum constitutes attorney-client privileged communication and attorney work product. It is not intended for distribution to, or use by, any third party without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege.
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I. EXECUTIVE SUMMARY
This memorandum summarizes the real property diligence conducted by Calderwood & Harkness LLP ("C&H" or the "Firm") on behalf of Calloway-Briggs Renewables Inc. ("CBR") in connection with the approximately $180,000,000 combined tax-equity and transferable-credit financing of the Solstice Portfolio (the "Portfolio"). The Portfolio comprises seven utility-scale solar photovoltaic projects with a combined nameplate capacity of 420 MW(dc), situated across five counties in Texas (Reeves, Pecos, Ward, Hudspeth, and Val Verde) and two counties in New Mexico (Lea and Sandoval). This memorandum is intended to provide the addressees and copy recipients with a comprehensive overview of the real property title, lease, easement, survey, environmental, zoning, and related diligence findings for each project in the Portfolio, as well as a discussion of curative matters identified and resolved during the course of diligence.
The financing is structured to include a tax-equity commitment by Ridgeline Capital Partners, LLC ("Ridgeline") in the amount of $120,000,000, a transferable investment tax credit purchase by Pinehurst Insurance Group, Inc. ("Pinehurst") in the amount of $60,000,000 face-value ITCs at $0.92 per $1.00 of credit, and construction and back-leverage lending by Osprey National Bank, N.A. ("Osprey") under construction facility ONB-PF-2022-0341 and back-leverage facility ONB-PF-2023-0587, with an aggregate post-closing commitment of $68,000,000.
The Portfolio is held through Solstice Holdings, LLC (EIN 88-4071523), a Delaware limited liability company taxed as a partnership for U.S. federal income tax purposes. Solstice Holdings holds 100% of the membership interests in each of the seven project company special purpose entities ("SPEs"), each of which is organized as a Delaware limited liability company treated as a disregarded entity for U.S. federal income tax purposes. The seven SPEs and their respective projects are: (i) Pecos Sun Solar, LLC (85 MW(dc), Reeves County, Texas); (ii) Red Mesa Solar, LLC (70 MW(dc), Pecos County, Texas); (iii) Coyote Flats Solar, LLC (65 MW(dc), Ward County, Texas); (iv) Llano Verde Solar, LLC (55 MW(dc), Hudspeth County, Texas); (v) Cimarron Solar, LLC (50 MW(dc), Lea County, New Mexico); (vi) Sandoval Ridge Solar, LLC (50 MW(dc), Sandoval County, New Mexico); and (vii) Amistad Solar, LLC (45 MW(dc), Val Verde County, Texas).
The aggregate engineering, procurement, and construction ("EPC") cost across all seven projects is $384,600,000. Vasquez Brothers Construction, Inc. serves as the EPC contractor for all seven projects under separate fixed-price, date-certain EPC agreements with each project company SPE.
The transaction documents were signed on September 21, 2023, including the Amended and Restated Limited Liability Company Agreement of Solstice Holdings, LLC (the "LLCA"), the Tax Credit Purchase Agreement between CBR and Pinehurst (the "TCPA"), the Capital Contribution Agreement, and the Osprey credit facility documents. The original closing date was scheduled for November 30, 2023. Due to a delay in receiving final ERCOT interconnection confirmation for the Amistad project, the actual closing was postponed by eight days to December 8, 2023. As discussed in Section III.G below, the real property requirements for Amistad were satisfied prior to the original closing date; the delay was attributable solely to the interconnection confirmation process.
The Texas projects (Pecos Sun, Red Mesa, Coyote Flats, Llano Verde, and Amistad) are each party to a 15-year power purchase agreement ("PPA") with Lone Star Grid Solutions, LLC ("Lone Star"). The New Mexico projects (Cimarron and Sandoval Ridge) are each party to a 20-year PPA with Enchantment Power Cooperative ("Enchantment"). As detailed below, the primary lease terms for all seven project sites are co-extensive with or exceed the applicable PPA tenors, in each case with renewal options providing additional term beyond the PPA expiration.
Overall Conclusion. Based on the diligence summarized in this memorandum, all seven project sites in the Solstice Portfolio have satisfactory title, valid and enforceable ground leases with terms co-extensive with or exceeding the applicable PPA tenors, and all necessary real property rights—including easements, rights-of-way, and access agreements—for the construction, operation, and maintenance of the solar facilities. Certain curative matters were identified during diligence, as described herein, and all such matters have been resolved as of the date of this memorandum. No material unresolved title defects, encumbrances, or real property issues remain outstanding. We are satisfied that the real property conditions precedent to closing under the LLCA, TCPA, Capital Contribution Agreement, and Osprey credit facilities have been met.
II. SCOPE OF DILIGENCE
A. Documents Reviewed
In conducting the real property diligence for the Solstice Portfolio, Calderwood & Harkness reviewed, analyzed, and, where applicable, negotiated or assisted in the preparation of the following categories of documents with respect to each of the seven project sites:
• Ground Leases and Surface Use Agreements. All ground leases between the respective project company SPEs and the private landowners (or trusts) constituting the lessors for each project site, including all amendments, supplements, and side letters thereto. Where applicable, separate surface use agreements and surface damage waiver agreements with mineral estate holders were also reviewed.
• Easements and Rights-of-Way. All recorded easement agreements, including gen-tie (generation-tie) transmission line easements, access road easements, water pipeline and waterline crossing easements, drainage easements, and temporary construction staging and laydown area licenses. In addition, the Bureau of Land Management right-of-way grant applicable to the Cimarron project was reviewed.
• Title Commitments and Policies. Title commitments issued by the applicable title companies for each project site, together with pro forma ALTA owner's and lender's title insurance policies, schedules of permitted encumbrances, and all title endorsements, including affirmative coverage endorsements where required.
• ALTA/NSPS Land Title Surveys. ALTA/NSPS land title surveys for all seven project sites, certified to CBR, the respective project companies, Solstice Holdings, Ridgeline, Osprey, and the title companies.
• Environmental Site Assessments. Phase I Environmental Site Assessments prepared in accordance with ASTM E1527-21 for all seven project sites. NEPA compliance documentation was also reviewed for the Cimarron and Sandoval Ridge projects, as discussed in Section VII below.
• Zoning and Land Use Approvals. County-level conditional use permits, special use permits, development agreements, and other zoning and land use approvals, as applicable, for each project site.
• Mineral Estate Waivers and Subordination Agreements. Where applicable, subordination, non-disturbance, and attornment agreements ("SNDAs") with mineral estate holders, surface use and non-interference agreements, and related documentation.
• Lessor Estoppel Certificates. Estoppel certificates executed by the lessors under each ground lease, confirming the status of each lease, the absence of defaults, and other customary matters.
• Miscellaneous. Trust certification and authority documentation (Coyote Flats), pipeline operator non-interference letters (Amistad), telecom surface use agreements (Llano Verde), boundary line agreements (Sandoval Ridge), shared access agreements, water rights agreements, and other ancillary real property documents.
B. Jurisdictions
The diligence encompassed real property located in five Texas counties (Reeves, Pecos, Ward, Hudspeth, and Val Verde) and two New Mexico counties (Lea and Sandoval). Title searches and local recording reviews were performed in each county by local counsel retained by Calderwood & Harkness and by the title companies issuing the commitments and policies described below. The Firm's diligence considered the real property laws of both Texas and New Mexico, including, without limitation, applicable recording statutes, landlord-tenant law, mineral estate law, and zoning and land use regulations.
C. Coordination with Other Advisors
Calderwood & Harkness coordinated its real property diligence with the following parties:
• Meridian Technical Advisors, LLC ("Meridian"), represented by Dr. Rajan Mehta, Principal Engineer. Meridian served as the independent engineer for the Portfolio and provided technical review of site layouts, setback compliance, array configurations, and survey verification for all seven project sites. The Firm relied upon Meridian's technical confirmation that survey results were consistent with engineering site plans and that setback distances from easements, property lines, and other features complied with applicable requirements.
• Sentinel Underwriters, Inc. ("Sentinel"), represented by Laura Jennings, Senior Vice President, and Fortis Indemnity Company ("Fortis"). Sentinel served as the insurance broker for the Portfolio, and Fortis issued the property, casualty, and environmental liability insurance policies. The Firm coordinated with Sentinel and Fortis regarding insurable interest, property descriptions in insurance policies, and alignment between the real property records and the scheduled properties under the insurance program.
• Robert Jansen, counsel responsible for UCC and lien search coordination. UCC-1 financing statement filings, judgment and tax lien searches, and related matters are addressed separately in the UCC/Lien Search Summary Memorandum prepared by Mr. Jansen and are not duplicated in this memorandum, except as expressly referenced herein with respect to Osprey's existing filings.
III. PROJECT-BY-PROJECT DILIGENCE SUMMARIES
The following sections present the real property diligence findings for each of the seven projects in the Solstice Portfolio, organized alphabetically by project company name within the two state groupings (Texas projects followed by New Mexico projects), except that the projects are presented in the order of their nameplate capacity for ease of reference within the Portfolio. For each project, we address the site lease, easements and rights-of-way, title, surface use and mineral estate matters, and curative items.
A. Pecos Sun Solar, LLC — 85 MW(dc), Reeves County, Texas
1. Site Lease
Pecos Sun Solar, LLC ("Pecos Sun"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under two separate ground leases covering an aggregate of approximately 640 acres in Reeves County, Texas. The two leases are with two private landowners (the "Pecos Sun Lessors"). The site is located approximately 12 miles southeast of the town of Pecos, Texas, in an area historically used for cattle ranching and limited dryland farming.
The primary term of each ground lease is 30 years from the lease commencement date in 2022, with two successive 10-year renewal options exercisable at the option of Pecos Sun, providing a potential total term of 50 years. The lease terms substantially exceed the 15-year PPA tenor with Lone Star Grid Solutions, LLC. Annual rent under each lease consists of a fixed base rent, escalating at 1.5% per year, plus a production royalty component payable to the lessors based on a per-MWh rate applicable to energy generation above a specified annual threshold. The specific per-MWh royalty amount is set forth in the confidential schedules to each lease and has been reviewed by C&H and confirmed to be consistent with market terms for utility-scale solar ground leases in West Texas.
Lessor estoppel certificates have been obtained from both Pecos Sun Lessors. Each estoppel confirms that the respective lease is in full force and effect, that no defaults exist on the part of the lessee, that all rent payments are current, and that the lessor has not received notice of any liens, claims, or encumbrances affecting the leased premises other than the permitted encumbrances described in the lease.
The aggregate EPC cost for the Pecos Sun project is $78,200,000. The target commercial operation date ("COD") was October 15, 2023, and Pecos Sun achieved COD on that date.
2. Easements and Rights-of-Way
The following easements and rights-of-way have been obtained and recorded in the Reeves County deed records in connection with the Pecos Sun project:
• Transmission Line Easement. A gen-tie line easement extending approximately 4.2 miles from the project site to the ERCOT point of interconnection. The easement is a perpetual easement, subject to the continuation of the ground leases, and provides for the construction, operation, maintenance, repair, and replacement of overhead and underground electrical transmission lines and associated infrastructure.
• Access Road Easement. An easement from the nearest county road to the project site, providing vehicular and pedestrian access for construction, operation, maintenance, and emergency purposes. The access road easement is co-terminous with the ground lease term, including any renewal periods.
• Water Pipeline Easement. A temporary easement for the installation and operation of a water pipeline to supply construction-phase water to the project site. This easement is limited to the construction period and expires upon the achievement of substantial completion under the EPC agreement.
All three easements were duly executed by the respective grantors, notarized, and recorded in the official records of Reeves County, Texas. The Firm has verified the recording information and confirmed that the easement instruments are in recordable form and properly indexed.
3. Title. A title commitment was issued for the Pecos Sun project site by the applicable title company, and pro forma ALTA owner's and lender's title insurance policies are to be issued at closing. The title search was conducted through the effective date of the commitment and revealed no material title defects.
The standard exceptions noted on the title commitment include a mineral estate reservation by prior owners of a portion of the property. The mineral estate was severed from the surface estate in a conveyance recorded in the 1950s. However, the mineral rights are not currently under any active lease or development, and there are no active oil, gas, or other mineral operations on or adjacent to the property. Accordingly, a separate surface waiver agreement was not deemed necessary at this time, though we recommend ongoing monitoring as discussed in Section XI below.
Permitted encumbrances scheduled on the title commitment include existing utility easements (electric and telephone lines) that do not interfere with the solar facility footprint, as confirmed by the ALTA survey and by Meridian Technical Advisors. The only other encumbrances reflected in the title are Osprey's existing UCC-1 financing statement filings under construction facility ONB-PF-2022-0341, which are expected and permitted under the transaction documents.
No outstanding liens, judgments, or other adverse matters were identified affecting the project site.
4. Surface Use / Mineral Estate
As noted above, a surface use agreement was not required for the Pecos Sun project because the mineral estate, although severed, is dormant and not subject to any active mineral lease or development. The solar facility footprint does not interfere with any subsurface rights, and there is no evidence of any planned or anticipated mineral exploration or production activity on the property. Nevertheless, we recommend that CBR and the project company monitor for any new mineral lease activity during the project life, as new mineral development could potentially require negotiation of a surface use agreement or accommodation arrangement. This recommendation is reiterated in Section XI.B below.
5. Curative Matters
During the title review, C&H identified a minor legal description discrepancy in the ground lease covering the eastern parcel of the Pecos Sun site. Specifically, the metes and bounds description in the original lease instrument contained a transposition error in one bearing call, resulting in a slight mismatch between the lease boundary and the surveyed boundary. A corrective amendment to the ground lease was prepared by C&H and executed by Pecos Sun and the lessor on September 5, 2023, correcting the legal description to conform to the ALTA survey. The corrective amendment has been recorded in the Reeves County deed records.
No other curative matters were identified for the Pecos Sun project. All real property deliverables for this project are complete.
B. Red Mesa Solar, LLC — 70 MW(dc), Pecos County, Texas
1. Site Lease
Red Mesa Solar, LLC ("Red Mesa"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under a single ground lease with one private ranch owner (the "Red Mesa Lessor") covering approximately 520 acres in Pecos County, Texas. The site is located in a semi-arid rangeland area historically used for cattle grazing and is situated approximately 20 miles south of Fort Stockton.
The primary term of the ground lease is 25 years from the lease commencement date in 2022, with two successive 10-year renewal options exercisable at the option of Red Mesa, providing a potential total term of 45 years. The lease term exceeds the 15-year PPA tenor with Lone Star Grid Solutions, LLC. Annual rent consists of a fixed payment, escalating at 2.0% per year. There is no production royalty component in the Red Mesa lease.
A lessor estoppel certificate has been obtained from the Red Mesa Lessor, confirming the lease is in full force and effect, no defaults exist, all rent is current, and no adverse claims have been asserted against the leased premises.
The EPC cost for the Red Mesa project is $63,700,000. The target COD was October 28, 2023, and Red Mesa achieved COD on that date.
2. Easements and Rights-of-Way
The following easements have been obtained and recorded in the Pecos County deed records:
• Gen-Tie Line Easement. An easement extending approximately 6.8 miles from the project site to the applicable ERCOT substation. This is the second-longest gen-tie corridor in the Portfolio and traverses privately held ranchland. The easement provides for the construction, operation, maintenance, repair, and replacement of overhead electrical transmission infrastructure and associated facilities.
• Road Access Easement. An easement from the nearest state highway to the project site, providing all-weather vehicular access for construction and ongoing operations.
• Drainage Easement. A drainage easement benefiting the adjacent ranch property, which allows for the natural flow of surface water across a portion of the project site. This easement does not impede the solar array area, as confirmed by the ALTA survey and the site plan prepared by Meridian Technical Advisors. The drainage easement predates the ground lease and is a pre-existing permitted encumbrance.
All easements are recorded in the official records of Pecos County, Texas.
3. Title. A title commitment was issued for the Red Mesa project site. The title search revealed that the mineral estate has been partially severed from the surface estate. Specifically, a prior owner conveyed a portion of the mineral rights to a third party in a deed recorded in 1972, and those mineral rights are currently subject to an active oil and gas lease held by a mineral lessee. The oil and gas lease covers a portion of the property; however, the mineral lessee's operations are currently limited to a single inactive well site located outside the solar facility footprint.
To address the partially severed mineral estate, C&H negotiated and obtained the following curative documents:
• A surface waiver and subordination agreement executed by the mineral rights holder, subordinating the mineral estate to the ground lease and waiving any right to use the surface within the solar facility footprint for mineral exploration or production purposes during the term of the ground lease.
• A non-interference and surface damage waiver agreement between Red Mesa Solar, LLC and the mineral lessee, providing that the mineral lessee will not conduct surface operations within the solar facility footprint during the lease term without Red Mesa's prior written consent.
• A subordination, non-disturbance, and attornment agreement (SNDA) executed by the mineral lessee in favor of Solstice Holdings, LLC, Ridgeline Capital Partners, LLC, and Osprey National Bank, N.A.
These agreements are discussed further in Section III.B.4 below. All permitted encumbrances, including the mineral reservation, the oil and gas lease, and the drainage easement, are scheduled on the title commitment.
4. Surface Use / Mineral Estate
The surface use and damage agreement between Red Mesa and the mineral lessee was executed in August 2023. The agreement provides comprehensive protections for the solar facility, including the following key provisions:
• The mineral lessee agrees not to conduct any surface operations—including drilling, completion, workover, or production activities—within the solar facility footprint during the term of the ground lease without the prior written consent of Red Mesa.
• If the mineral lessee desires to conduct operations on the property outside the solar facility footprint, the lessee must provide Red Mesa with at least 90 days' advance written notice and must comply with specified setback distances from the solar array, substation, and gen-tie line.
• The mineral lessee agrees to indemnify Red Mesa and its affiliates, successors, and assigns against any loss or damage arising from the mineral lessee's operations on the property.
The SNDA was executed by the mineral lessee, Red Mesa, Solstice Holdings, Ridgeline, and Osprey, and provides that the mineral lessee's interest in the property is subordinate to the interests of the solar project and its financing parties, and that the mineral lessee will not disturb the solar project's use and occupancy of the surface so long as the ground lease remains in effect.
5. Curative Matters
The principal curative matter for the Red Mesa project was the negotiation and execution of the mineral lessee's SNDA and the surface waiver/non-interference agreements described above. These documents were completed in August 2023 and are in full force and effect. No other curative matters were identified for the Red Mesa project, and all real property deliverables are complete.
C. Coyote Flats Solar, LLC — 65 MW(dc), Ward County, Texas
1. Site Lease
Coyote Flats Solar, LLC ("Coyote Flats"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under a single ground lease with a family trust (the "Coyote Flats Trust") covering approximately 480 acres in Ward County, Texas. The site is located in an area of flat, open terrain historically used for ranching, approximately 8 miles west of Monahans, Texas.
The primary term of the ground lease is 30 years from the lease commencement date in 2022, with one 10-year renewal option exercisable at the option of Coyote Flats, providing a potential total term of 40 years. The lease term exceeds the 15-year PPA tenor with Lone Star Grid Solutions, LLC. Annual rent consists of a fixed base payment plus a production royalty component linked to energy generation.
A lessor estoppel certificate has been obtained from the trustee of the Coyote Flats Trust. In addition to the standard estoppel confirmations, C&H reviewed the trust instrument and obtained a trustee authority confirmation letter from the trust's legal counsel, confirming that the trustee has the authority under the trust instrument and applicable Texas law to execute the ground lease and to bind the trust to its terms. The trustee authority confirmation letter was obtained in July 2023.
The EPC cost for the Coyote Flats project is $59,100,000. The target COD was November 5, 2023, and Coyote Flats achieved COD on that date.
2. Easements and Rights-of-Way
The following easements have been obtained and recorded in the Ward County deed records:
• Transmission Line Easement. A gen-tie line easement extending approximately 3.1 miles from the project site to the ERCOT interconnection point, providing for the construction and operation of overhead and underground electrical transmission lines and associated infrastructure.
• Access Easement. An easement from the nearest Farm-to-Market road to the project site, providing vehicular access for construction, operation, maintenance, and emergency purposes.
• Temporary Construction Laydown Area License. A license agreement with an adjacent landowner for the use of an approximately 5-acre area as a construction staging and equipment laydown area. This license is temporary and expires upon the achievement of substantial completion under the EPC agreement. The license has been properly documented and, while not recorded (as it is a license rather than an interest in real property), is reflected in the project files and disclosed on the title commitment.
3. Title. A title commitment was issued for the Coyote Flats project site. The title search revealed no material exceptions beyond standard permitted items, including existing utility easements that do not interfere with the solar facility footprint. The mineral estate has not been severed from the surface estate; the Coyote Flats Trust holds both the surface and mineral rights. Accordingly, there are no separate mineral estate issues to address.
The only encumbrances reflected on the title commitment, beyond the standard utility easements, are Osprey's existing UCC-1 construction lien filings under facility ONB-PF-2022-0341, which are expected and permitted.
4. Surface Use / Mineral Estate
Because the Coyote Flats Trust holds the full mineral and surface estate, no separate surface use agreement was necessary. The trust documentation—including the trust instrument, amendments thereto, and the trustee authority confirmation letter—was reviewed by C&H to confirm the trustee's authority to execute the ground lease and to encumber the trust property for the purposes of the solar project. No deficiencies were identified in the trust documentation.
5. Curative Matters
The only curative matter identified for the Coyote Flats project was the need to confirm the trustee's authority to execute the ground lease on behalf of the Coyote Flats Trust. A trustee authority confirmation letter was obtained from the trust's legal counsel in July 2023, confirming the trustee's authority under the trust instrument and applicable law. No other curative matters were identified, and all real property deliverables for this project are complete.
D. Llano Verde Solar, LLC — 55 MW(dc), Hudspeth County, Texas
1. Site Lease
Llano Verde Solar, LLC ("Llano Verde"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under a single ground lease with a private landowner (the "Llano Verde Lessor") covering approximately 410 acres in Hudspeth County, Texas. The site is located in the far western portion of Texas, in a sparsely populated area characterized by arid desert terrain, approximately 30 miles east of the city of El Paso.
The primary term of the ground lease is 25 years from the lease commencement date in 2023, with two successive 5-year renewal options exercisable at the option of Llano Verde, providing a potential total term of 35 years. The lease term exceeds the 15-year PPA tenor with Lone Star Grid Solutions, LLC. Annual rent consists of a fixed base rent, subject to annual adjustment based on increases in the Consumer Price Index ("CPI"), a customary escalation mechanism in ground leases for renewable energy projects in the region.
A lessor estoppel certificate has been obtained from the Llano Verde Lessor.
The EPC cost for the Llano Verde project is $50,400,000. The target COD was November 12, 2023, and Llano Verde achieved COD on that date.
2. Easements and Rights-of-Way
The following easements have been obtained and recorded in the Hudspeth County deed records:
• Gen-Tie Line Easement. A gen-tie line easement extending approximately 8.5 miles from the project site to the ERCOT interconnection substation. This is the longest gen-tie corridor in the Portfolio, reflecting the remote location of the Llano Verde site relative to the nearest ERCOT interconnection point. The easement traverses the property of two additional landowners beyond the Llano Verde Lessor, requiring negotiation and execution of three separate easement agreements (one with the Llano Verde Lessor and two with adjacent landowners). All three easement agreements were recorded by September 2023.
• Access Road Easement. An easement from the nearest county road to the project site, providing vehicular access for construction, operation, maintenance, and emergency purposes.
• Temporary Water Sourcing Agreement. A water sourcing agreement with an adjacent landowner, providing access to water from a well on the adjacent property for construction-phase use. This agreement is temporary and limited to the construction period.
3. Title. A title commitment was issued for the Llano Verde project site. The title search revealed one notable matter: a prior unrecorded surface use agreement dated 2011 between the Llano Verde Lessor and a telecommunications company (the "Telecom Agreement") granting the telecommunications company the right to install and maintain a small cell tower on the northwest corner of the property. The cell tower and its associated equipment occupy a small footprint (approximately 0.1 acres) on the property.
C&H obtained a copy of the Telecom Agreement, reviewed its terms, and confirmed the following:
• The cell tower site is located in the northwest corner of the property, outside the solar facility footprint as confirmed by the ALTA survey and the site plan prepared by Meridian Technical Advisors.
• The Telecom Agreement does not grant the telecommunications company any rights that would interfere with or restrict the construction, operation, or maintenance of the solar facility.
• The Telecom Agreement is limited to a specific, delineated area and does not create any blanket encumbrance on the property.
The title company agreed to insure over the Telecom Agreement exception, providing affirmative insurance coverage against any loss arising from the unrecorded instrument. The Telecom Agreement has been scheduled as a permitted encumbrance on the title commitment.
The Llano Verde Lessor holds a unified estate (both surface and mineral rights). No active mineral leases or mineral development activity exists on or adjacent to the property.
4. Surface Use / Mineral Estate
No severed mineral estate exists for the Llano Verde project site. The landowner holds both the surface and mineral rights, and there are no active mineral leases or operations on the property. The Telecom Agreement, as described above, has been documented and scheduled as a permitted encumbrance. Its limited scope and location outside the solar facility footprint do not raise any surface use concerns for the project.
5. Curative Matters
Two curative matters were identified and resolved for the Llano Verde project:
1. Unrecorded Telecom Surface Use Agreement. As described above, the title company provided affirmative insurance coverage with respect to the unrecorded Telecom Agreement. This curative matter is complete.
2. Extended Gen-Tie Easement Negotiations. The 8.5-mile gen-tie corridor required easements across the properties of two additional landowners beyond the Llano Verde Lessor. C&H assisted in the negotiation and execution of these easement agreements, which were completed and recorded in the Hudspeth County deed records by September 2023. This curative matter is complete.
No outstanding curative matters remain for the Llano Verde project.
E. Cimarron Solar, LLC — 50 MW(dc), Lea County, New Mexico
1. Site Lease
Cimarron Solar, LLC ("Cimarron"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under a single ground lease with a private rancher (the "Cimarron Lessor") covering approximately 385 acres in Lea County, New Mexico. The site is located in the southeastern portion of New Mexico, in the Permian Basin region, in an area characterized by flat, open rangeland historically used for cattle ranching.
The primary term of the ground lease is 30 years from the lease commencement date in 2022, with two successive 10-year renewal options exercisable at the option of Cimarron, providing a potential total term of 50 years. The lease term exceeds the 20-year PPA tenor with Enchantment Power Cooperative. Annual rent consists of a fixed base payment, escalating at 2.0% per year. A lessor estoppel certificate has been obtained from the Cimarron Lessor.
The EPC cost for the Cimarron project is $45,800,000. The target COD was September 30, 2023, and Cimarron achieved COD on that date, making it the first project in the Portfolio to reach commercial operation. The weighted-average PPA price for the Cimarron project is $29.75/MWh, with a 2.0% annual escalator.
2. Easements and Rights-of-Way
The following easements and rights-of-way have been obtained for the Cimarron project:
• Transmission Line Easement. A gen-tie line easement extending approximately 5.4 miles from the project site to the Northgate Corporation/WECC interconnection point. The gen-tie corridor traverses privately held ranchland for approximately 4.6 miles and crosses federal land administered by the Bureau of Land Management ("BLM") for approximately 0.8 miles.
• BLM Right-of-Way Grant. A right-of-way grant issued by the BLM under the Federal Land Policy and Management Act (FLPMA) authorizing the use of the 0.8-mile segment of federal land for the gen-tie transmission line. The BLM right-of-way has a 30-year term and is subject to standard BLM conditions, including compliance with the National Environmental Policy Act ("NEPA"), wildlife surveys, and cultural resource clearance requirements. All NEPA environmental review requirements have been completed, and the BLM issued a Finding of No Significant Impact (FONSI) for the project. C&H reviewed the BLM right-of-way grant documentation and confirmed compliance with all conditions.
• Access Road Easement. An easement from the nearest state road to the project site, providing vehicular access for construction and ongoing operations.
All private easements are recorded in the official records of Lea County, New Mexico. The BLM right-of-way grant is documented in the BLM's records and a copy has been obtained and included in the project files.
3. Title. A title commitment was issued for the Cimarron project site by the applicable title company. The New Mexico title search was conducted through the effective date of the commitment and revealed no material title defects.
The title commitment noted a standard mineral reservation by the State of New Mexico on a small portion of the site where state trust land is adjacent to the private parcel. Upon review, C&H determined that the state mineral reservation does not affect the surface use of the property for solar energy purposes and does not encumber the solar facility footprint. The state mineral reservation has been scheduled as a permitted encumbrance.
No outstanding liens, judgments, or other adverse matters were identified affecting the project site.
4. Surface Use / Mineral Estate
There are no active mineral operations on the Cimarron site. The State of New Mexico mineral reservation described above does not affect the surface use of the property for solar energy generation. C&H confirmed that New Mexico law does not grant the holder of a reserved mineral interest the right to unreasonably interfere with surface uses conducted pursuant to a valid lease.
In connection with the BLM right-of-way, the following environmental compliance requirements were completed:
• Wildlife surveys, including surveys for the lesser prairie-chicken and other species of concern, were conducted by a qualified biologist and found no occupied habitat within the gen-tie corridor.
• Cultural resource clearance surveys were conducted by a qualified archaeologist and found no significant cultural resources within the gen-tie corridor.
• The BLM issued a Finding of No Significant Impact (FONSI), completing the NEPA review process.
All BLM right-of-way conditions have been satisfied, and the right-of-way is in full force and effect.
5. Curative Matters
The principal curative matter for the Cimarron project was obtaining the BLM right-of-way approval for the portion of the gen-tie corridor crossing federal land. The BLM right-of-way was obtained following completion of the environmental review process, including the wildlife and cultural resource surveys described above. No outstanding conditions or requirements remain. All real property deliverables for the Cimarron project are complete.
F. Sandoval Ridge Solar, LLC — 50 MW(dc), Sandoval County, New Mexico
1. Site Lease
Sandoval Ridge Solar, LLC ("Sandoval Ridge"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under two ground leases with two private landowners (the "Sandoval Ridge Lessors") covering an aggregate of approximately 375 acres (two parcels, referred to herein as "Parcel A" and "Parcel B") in Sandoval County, New Mexico. The site is located in the Rio Grande Valley area north of Albuquerque, in a region with a mix of agricultural, residential, and open-space land uses.
The primary term of each ground lease is 25 years from the lease commencement date in 2023, with two successive 10-year renewal options exercisable at the option of Sandoval Ridge, providing a potential total term of 45 years. The lease terms exceed the 20-year PPA tenor with Enchantment Power Cooperative. Annual rent under each lease consists of a fixed payment per acre, escalating annually at a fixed percentage rate.
Lessor estoppel certificates have been obtained from both Sandoval Ridge Lessors.
The EPC cost for the Sandoval Ridge project is $46,100,000. The target COD was October 20, 2023, and Sandoval Ridge achieved COD on that date.
2. Easements and Rights-of-Way
The following easements have been obtained and recorded in the Sandoval County deed records:
• Transmission Line Easement. A gen-tie line easement extending approximately 2.7 miles from the project site to the Northgate Corporation interconnection substation. This is the shortest gen-tie corridor in the Portfolio, reflecting the proximity of the Sandoval Ridge site to existing Northgate Corporation transmission infrastructure.
• Access Road Easement. An easement from the nearest county road to the project site, providing vehicular access. The access road is shared with an adjacent agricultural operation, and a shared access agreement has been executed between Sandoval Ridge Solar, LLC and the agricultural tenant. The shared access agreement allocates maintenance obligations for the access road between the parties and establishes protocols for coordinating use during periods of heavy construction or agricultural activity. The shared access agreement has been recorded and is scheduled as a permitted encumbrance on the title commitment.
• Water Rights Agreement. An agreement with the Sandoval County utility district for the provision of construction-phase water to the project site. The water rights agreement is limited to the construction period and does not create a long-term obligation.
3. Title. Title commitments were issued for both Parcel A and Parcel B by the applicable title company.
Parcel A has a clean chain of title with no material exceptions beyond standard permitted encumbrances, including existing utility easements.
Parcel B presented one notable historical matter: a boundary dispute between the Parcel B landowner and an adjacent landowner that was the subject of litigation in the early 2010s. The dispute was resolved by a boundary line agreement executed by both parties and recorded in the Sandoval County deed records in 2019. C&H reviewed the boundary line agreement and confirmed that it clearly delineates the boundary between the two properties and that the boundary as established by the agreement is consistent with the legal description in the Parcel B ground lease and with the ALTA survey. The title company has agreed to insure over this historical matter and has issued the title commitment for Parcel B without any exception related to the boundary dispute.
No mineral estate issues were identified for either parcel. Both Sandoval Ridge Lessors hold unified surface and mineral estates, and there are no active mineral leases on either parcel.
4. Surface Use / Mineral Estate
Both landowners hold the unified surface and mineral estate for their respective parcels. No separate surface use agreements were required. The shared access agreement with the adjacent agricultural operation, as described above, has been documented and scheduled as a permitted encumbrance. The shared access agreement includes right-of-way maintenance obligations that are shared between Sandoval Ridge Solar and the agricultural tenant, ensuring that the access road remains in serviceable condition throughout the project life.
5. Curative Matters
The sole curative matter identified for the Sandoval Ridge project was the historical boundary dispute affecting Parcel B. As described above, the boundary line agreement recorded in 2019 resolved the dispute, and the title company has issued affirmative insurance coverage over this matter. No other curative matters were identified, and all real property deliverables for the Sandoval Ridge project are complete.
G. Amistad Solar, LLC — 45 MW(dc), Val Verde County, Texas
1. Site Lease
Amistad Solar, LLC ("Amistad"), a Delaware limited liability company and disregarded entity wholly owned by Solstice Holdings, LLC, is the lessee under a single ground lease with a private landowner (the "Amistad Lessor") covering approximately 340 acres in Val Verde County, Texas. The site is located approximately 15 miles north of Del Rio, Texas, in an area of open rangeland historically used for sheep and goat ranching.
The primary term of the ground lease is 25 years from the lease commencement date in 2023, with one 10-year renewal option exercisable at the option of Amistad, providing a potential total term of 35 years. The lease term exceeds the 15-year PPA tenor with Lone Star Grid Solutions, LLC. Annual rent consists of a fixed base rent, escalating at 1.5% per year.
A lessor estoppel certificate has been obtained from the Amistad Lessor.
The EPC cost for the Amistad project is $41,300,000. The target COD was November 18, 2023, and Amistad achieved COD on that date, making it the final project in the Portfolio to reach commercial operation. The closing of the financing transaction was delayed from the original scheduled date of November 30, 2023 to December 8, 2023, pending receipt of ERCOT interconnection confirmation for the Amistad project. The real property requirements for Amistad were satisfied prior to the original closing date; the delay was attributable solely to the ERCOT interconnection process, as discussed further in Section IX below.
2. Easements and Rights-of-Way
The following easements have been obtained and recorded in the Val Verde County deed records:
• Gen-Tie Line Easement. A gen-tie line easement extending approximately 4.9 miles from the project site to the ERCOT interconnection point, providing for the construction, operation, maintenance, repair, and replacement of overhead electrical transmission lines and associated infrastructure.
• Access Road Easement. An easement from the nearest county road to the project site, providing vehicular access for construction, operation, maintenance, and emergency purposes.
• Temporary Construction Staging Easement. A temporary easement with an adjacent ranch for the use of an approximately 3-acre area as a construction staging area. This easement is limited to the construction period and expires upon the achievement of substantial completion under the EPC agreement.
• Waterline Crossing License. A license agreement for the crossing of a waterline across a portion of the adjacent property for the purpose of providing construction-phase water to the project site. This license is temporary and limited to the construction period.
All easements and licenses were duly executed and recorded in the official records of Val Verde County, Texas.
3. Title. A title commitment was issued for the Amistad project site. The title search revealed no material defects. One minor matter was identified: an existing natural gas gathering pipeline easement crossing the southern portion of the site. The pipeline easement was granted to a pipeline operator in a recorded instrument and provides for the maintenance of an underground natural gas gathering line. C&H contacted the pipeline operator and obtained a non-interference letter confirming the following:
• The pipeline operator has no surface facilities (including valves, meters, or above-ground appurtenances) located within the solar array footprint.
• The pipeline operator does not intend to install any new surface facilities within the solar array footprint during the term of the ground lease.
• The pipeline operator acknowledges the solar project and agrees not to interfere with the construction, operation, or maintenance of the solar facility, provided that the solar project does not interfere with the pipeline operator's access to the pipeline for routine maintenance and emergency repair.
Setback distances between the solar array and the pipeline easement corridor have been confirmed by Meridian Technical Advisors (Dr. Rajan Mehta), and the site plan accommodates the pipeline easement without any impact on array capacity or layout.
The Amistad Lessor holds a unified estate (both surface and mineral rights). No active mineral leases or mineral development activity exists on or adjacent to the property.
4. Surface Use / Mineral Estate
No severed mineral estate exists for the Amistad project site. The landowner holds both the surface and mineral rights. The pipeline easement, as described above, has been documented and accommodated in the project site plan. The non-interference letter from the pipeline operator has been obtained and is included in the project files.
5. Curative Matters
Two matters were addressed in connection with the Amistad project:
1. Pipeline Operator Non-Interference Letter. The non-interference letter was obtained from the pipeline operator in October 2023. This curative matter is complete.
2. ERCOT Interconnection Confirmation. The receipt of final ERCOT interconnection confirmation for the Amistad project was the last outstanding condition precedent to closing. The confirmation was received on approximately December 5, 2023, enabling the closing to proceed on December 8, 2023. While the ERCOT confirmation is not itself a real property matter, it was the sole reason for the 8-day delay in closing. All real property requirements for the Amistad project were satisfied prior to the original November 30, 2023 closing date.
No outstanding real property curative matters remain for the Amistad project.
IV. CROSS-PORTFOLIO SUMMARY TABLE
The following table consolidates the key real property diligence data points for all seven projects in the Solstice Portfolio. All curative matters identified during diligence have been resolved, and no outstanding real property issues remain for any project.
As reflected in the table above, all seven projects have lease terms (including renewal options) that significantly exceed the applicable PPA tenors. The aggregate acreage under lease is approximately 3,150 acres, and the total gen-tie corridor length across the Portfolio is approximately 35.6 miles.
V. TITLE INSURANCE
A. Title Insurance Program
A comprehensive title insurance program has been established for the Solstice Portfolio, consisting of the following components:
ALTA Owner's Policies. Pro forma ALTA owner's title insurance policies are to be issued at closing for each of the seven project company SPEs (Pecos Sun Solar, LLC; Red Mesa Solar, LLC; Coyote Flats Solar, LLC; Llano Verde Solar, LLC; Cimarron Solar, LLC; Sandoval Ridge Solar, LLC; and Amistad Solar, LLC). Each owner's policy insures the respective project company's leasehold interest in the project site against loss or damage arising from defects in or liens or encumbrances on title, subject to the scheduled permitted encumbrances discussed in Section V.B below. The insured amount under each owner's policy is commensurate with the value of the project company's interest in the respective project site, including the value of the improvements to be constructed thereon.
ALTA Lender's Policies. Lender's title insurance policies are to be issued at closing in favor of Osprey National Bank, N.A. in connection with its security interests under the construction credit facility (ONB-PF-2022-0341) and the back-leverage credit facility (ONB-PF-2023-0587). The lender's policies insure Osprey's mortgage or deed of trust interest (as applicable) in each project site against loss or damage arising from title defects or encumbrances, subject to the scheduled permitted encumbrances.