MEMORANDUM

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
FROM: Rafael Dominguez, Lead Associate, Real Estate Practice Group, Calderwood & Harkness LLP
TO: File (Matter No. 1017-00009)
CC: Douglas Fairchild, Responsible Partner; Cynthia Ho, Working Associate
DATE: June 5, 2023
RE: Summary of Phase I Environmental Site Assessment — 787 Seventh Avenue, New York, NY 10019 (Floors 34–38) — Aurelius Media Holdings Inc. Headquarters Lease
CLIENT: Aurelius Global Media Group PLC / Aurelius Media Holdings Inc.
MATTER NUMBER: 1017-00009
I. Purpose and Background
This memorandum summarizes the findings of the Phase I Environmental Site Assessment (the "Phase I ESA") prepared in connection with the proposed Agreement of Lease (the "Lease") between Greystone Metropolitan Realty LLC, a Delaware limited liability company (the "Landlord"), and Aurelius Media Holdings Inc., a Delaware corporation and wholly owned subsidiary of Aurelius Global Media Group PLC (the "Tenant"), for approximately 185,000 rentable square feet ("RSF") located on Floors 34, 35, 36, 37, and 38 (collectively, the "Premises") of the commercial office building commonly known as Greystone Tower, located at 787 Seventh Avenue, New York, NY 10019 (Block 1024, Lot 18, Borough of Manhattan) (the "Building").
The Phase I ESA was commissioned by Calderwood & Harkness LLP on behalf of Aurelius to evaluate potential environmental liabilities and conditions associated with the Building and the Premises prior to the execution of the Lease. The assessment serves as a key component of the environmental due diligence process undertaken in connection with the Tenant's prospective long-term occupancy of the Premises as the North American headquarters of Aurelius Media Holdings Inc. and its affiliated operating divisions. The engagement of an independent environmental consultant was undertaken at the direction of this firm as part of the broader due diligence program coordinated with the Tenant's in-house legal, real estate, and facilities teams.
The assessment was performed by Greenfield Environmental Sciences LLC in accordance with ASTM Standard E1527-21, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, which is the current industry standard for conducting Phase I environmental site assessments and is recognized by the United States Environmental Protection Agency ("EPA") as the methodology for establishing the "innocent landowner" defense and the "bona fide prospective purchaser" defense under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq. While the "all appropriate inquiries" framework under CERCLA is most directly applicable to property acquisitions, the Phase I ESA process remains widely employed in major commercial lease transactions to identify environmental risks that could give rise to tenant liability, business disruption, or impairment of the intended use of the premises.
The Lease involves a fifteen (15)-year initial term with two (2) five-year renewal options, an approximate aggregate deal value of approximately $90,000,000 in base rent over the initial term, with a Commencement Date of August 1, 2023. Given the scale and duration of this transaction and the Tenant's intended investment in build-out improvements to the Premises (estimated at approximately $35,000,000 to $40,000,000), the Phase I ESA constitutes a critical due diligence deliverable. This memorandum is prepared for the firm's files and for the information of the responsible partner and working associate on this matter.
II. Identification of the Environmental Consultant
The Phase I ESA was prepared by the following independent environmental consulting firm, retained by Calderwood & Harkness LLP on behalf of Aurelius:
Greenfield Environmental Sciences LLC is a New York-based environmental consulting firm with extensive experience in environmental due diligence for commercial real estate transactions in the New York metropolitan area. Dr. Nadine Bertram is a licensed Professional Engineer in the State of New York and has served as lead consultant on Phase I and Phase II environmental assessments for numerous Class A office properties in Manhattan. The firm was selected based on its qualifications, its familiarity with the regulatory landscape applicable to commercial office buildings in New York City, and its prior engagement history with Calderwood & Harkness LLP on comparable matters.
III. Property Description
The following summarizes the key physical and ownership attributes of the Building and the Premises as set forth in the Phase I ESA report and confirmed through independent due diligence:
The Building is a steel-frame, curtain-wall construction Class A office tower situated on the west side of Seventh Avenue between West 51st Street and West 52nd Street in midtown Manhattan. The Building achieved LEED Gold certification from the U.S. Green Building Council and is equipped with modern base building mechanical, electrical, plumbing, and life safety systems. The Building includes a multi-story lobby, retail space on the ground floor, and underground parking and loading facilities on below-grade levels. The Premises floors (Floors 34–38) are currently in shell condition following the departure of the prior tenant, and the Tenant intends to undertake a full build-out of the Premises for its headquarters operations, including general office space, media production studios, executive offices, and ancillary amenities.
IV. Scope of the Phase I ESA
The Phase I ESA was conducted by Greenfield Environmental Sciences LLC in accordance with the requirements of ASTM Standard E1527-21 and included the following components:
A. Environmental Database Records Review. Greenfield conducted a comprehensive search of federal, state, and local environmental databases through Penrose Solutions ("EDR"), covering the subject property and surrounding properties within the applicable ASTM search radii. The databases reviewed included, but were not limited to, the following:
•  EPA National Priorities List ("NPL") database
•  EPA Comprehensive Environmental Response, Compensation, and Liability Information System ("CERCLIS") database
•  EPA Resource Conservation and Recovery Act ("RCRA") Treatment, Storage, and Disposal Facilities ("TSDF") and Large/Small Quantity Generator ("LQG/SQG") databases
•  EPA Toxic Release Inventory ("TRI") database
•  New York State Department of Environmental Conservation ("NYSDEC") Spills database
•  NYSDEC Environmental Remediation databases (including the Brownfield Cleanup Program, Voluntary Cleanup Program, and State Superfund Program)
•  New York City Department of Environmental Protection ("NYC DEP") regulatory databases
•  NYSDEC Bulk Storage (PBS/Ridgeway Enterprises) databases
•  EPA Underground Storage Tank ("UST") database
•  Additional state and local databases as specified by ASTM E1527-21
B. Historical Use Review. Greenfield reviewed historical sources to reconstruct the chain of use for the subject property and surrounding areas. Sources reviewed included:
•  Trelwick fire insurance maps (available editions from 1904 through 2010)
•  City directory listings for the subject property address
•  New York City Department of Buildings records, including certificates of occupancy, demolition permits, and new building permits
•  Historical aerial photographs (available from 1951 through present)
•  Prior environmental reports, where available
C. Site Reconnaissance. Dr. Nadine Bertram, P.E., conducted a visual inspection and site reconnaissance of the Building on May 22, 2023. The reconnaissance included observation of the following areas:
•  Building common areas, including the lobby, loading dock, below-grade parking levels, and refuse handling areas
•  Mechanical rooms and base building systems, including the emergency generator installations, HVAC plant, cooling tower systems, and electrical switchgear rooms
•  Each of the Premises floors (Floors 34, 35, 36, 37, and 38), including visual inspection of ceiling plenums, perimeter conditions, core areas, and restroom facilities
•  The Building rooftop and cooling tower installations
•  Exterior perimeter of the Building at grade level
The site reconnaissance was conducted with the cooperation and accompaniment of Building management personnel.
D. Interviews. Greenfield conducted interviews with representatives of the Landlord's property management and asset management teams, including the following principal interview:
•  Brendan T. Kozlowski, Vice President, Asset Management, Greystone Metropolitan Realty LLC, who provided information regarding building operations, hazardous materials management and storage practices, storage tank inventory and compliance status, environmental incident history, and the status of asbestos abatement on the Premises floors. Mr. Kozlowski confirmed that no environmental incidents, releases, or regulatory enforcement actions have occurred at the Building during the Landlord's period of ownership.
E. Regulatory File Review. Greenfield reviewed available regulatory files and records from the following agencies:
•  NYSDEC spill and remediation databases (no open spill cases or remediation sites identified at or adjacent to the property)
•  NYC DEP records, including asbestos-related filings (ACP-5 and ACP-7 forms) for the Building
•  EPA CERCLIS/NPL records (no listings identified for the subject property)
The scope of the Phase I ESA was consistent with standard practice for commercial office lease transactions of this nature and scale. No significant data gaps were identified by Greenfield that would affect the reliability of the assessment's conclusions.
V. Summary of Findings
The following summarizes the principal findings of the Phase I ESA as reported by Greenfield Environmental Sciences LLC.
A. Recognized Environmental Conditions (RECs)
The Phase I ESA identified no Recognized Environmental Conditions ("RECs") in connection with the Building or the Premises. Under ASTM E1527-21, a Recognized Environmental Condition is defined as the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (i) due to a release to the environment; (ii) under conditions indicative of a release to the environment; or (iii) under conditions that pose a material threat of a future release to the environment. Greenfield's assessment concluded that no such conditions exist at the Building or the Premises.
In addition, no Controlled Recognized Environmental Conditions ("CRECs") were identified. A CREC is defined under ASTM E1527-21 as a recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority, subject to the implementation of required controls (e.g., engineering controls, institutional controls, activity and use limitations). No such conditions were identified at the Building.
Further, no Historical Recognized Environmental Conditions ("HRECs") were identified. An HREC is defined as a past release of hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority without subjecting the property to any required controls, and which, based on currently available information, does not present a material risk of future impact to the property. No such conditions were identified.
B. Environmental Database Review
The subject property (787 Seventh Avenue, Block 1024, Lot 18, Borough of Manhattan) was not identified on any federal, state, or local environmental databases searched as part of the Phase I ESA. Specifically, the property does not appear on the EPA National Priorities List ("NPL"), the CERCLIS database, any RCRA database listing, the NYSDEC Spills database, the NYSDEC Environmental Remediation databases, or any New York City brownfields or voluntary cleanup program listings.
Greenfield also reviewed database listings for properties adjoining or in the vicinity of the subject property, within the applicable ASTM search radii. No adjoining or nearby properties were identified as posing a material environmental risk to the Building. While certain properties within the broader search radius appeared on regulatory databases (which is common in a densely developed urban area such as midtown Manhattan), none of these listings were determined to represent a condition that could reasonably be expected to impact the subject property, taking into account the nature of the listed conditions, the distance and direction from the subject property, local hydrogeology, and the Building's construction characteristics.
C. Historical Use
Based on the historical use review conducted by Greenfield, the subject property site has been used continuously for commercial office purposes since the Building's construction and completion in 2001. No industrial, manufacturing, or other environmentally sensitive uses were identified at the site during any period of the historical record.
Prior to the construction of Greystone Tower, the site was occupied by a mid-rise commercial office building constructed circa 1955. That predecessor building was demolished in approximately 1998–1999 to make way for the construction of Greystone Tower. Greenfield's review of Trelwick maps, city directories, and aerial photographs confirmed that the predecessor building was used exclusively for commercial office purposes throughout its existence. No industrial use was identified in the historical chain of use for the site, including during the period prior to the construction of the predecessor building (when the site was occupied by low-rise commercial structures).
No underground storage tanks ("USTs") or aboveground storage tanks ("ASTs") were identified on the property, with the exception of emergency generator diesel day tanks. The Building is equipped with emergency diesel generators located on a below-grade mechanical level, each served by a diesel fuel day tank. These day tanks are compliant with New York City Fire Code requirements and NYSDEC Petroleum Bulk Storage ("PBS") regulations. Mr. Kozlowski confirmed during his interview that the day tanks are subject to routine inspection and maintenance and that no spills or releases from the tanks have occurred.
D. Hazardous Materials
Building operations involve the use and storage of standard commercial cleaning chemicals and maintenance products, emergency generator diesel fuel (contained in compliant day tanks as described above), and HVAC refrigerants used in the Building's central cooling systems. All such materials are managed, stored, and disposed of in accordance with applicable federal, state, and local regulations, including RCRA, OSHA Hazard Communication Standard requirements, NYC Fire Code, and NYC DEP regulations.
No evidence of polychlorinated biphenyl ("PCB")-containing electrical equipment (e.g., transformers, capacitors, or ballasts) was observed during the site reconnaissance. The Building's electrical infrastructure utilizes dry-type transformers and non-PCB equipment, which is consistent with post-2000 construction standards. No evidence of lead-based paint was observed on the Premises floors (Floors 34–38), which is consistent with the Building's 2001 construction date (well after the Consumer Product Safety Commission's 1978 ban on lead-based paint in residential applications and the general discontinuation of lead-based paint in commercial applications). No other regulated hazardous materials were observed on the leased floors during the site reconnaissance.
E. Asbestos-Containing Materials
The Phase I ESA report noted that the Building was constructed in 2001, which post-dates the general prohibitions on certain asbestos-containing building materials imposed under the EPA's Asbestos Hazard Emergency Response Act ("AHERA"), the Clean Air Act National Emission Standards for Hazardous Air Pollutants ("NESHAP") regulations, and applicable New York State and New York City asbestos regulations. Accordingly, the Building was not constructed using spray-applied asbestos-containing fireproofing, asbestos-containing thermal system insulation, or other bulk asbestos-containing construction materials that were commonly employed in buildings constructed prior to the 1980s.
However, the Phase I ESA report noted that certain limited asbestos-containing materials ("ACMs") were historically present in portions of the Building's mechanical systems and fireproofing in specific areas, including certain pipe insulation fittings, gasket materials, and floor tile adhesive in select mechanical and utility rooms. These materials are not uncommon in buildings of this vintage, as certain asbestos-containing products (such as gaskets and certain specialty materials) were not subject to the broadest EPA bans and remained commercially available and permissible in limited applications after 2000.
Critically, with respect to the Premises floors (Floors 34–38), the Landlord has represented to Greenfield and to Calderwood & Harkness that all asbestos-containing materials on those floors have been fully abated prior to the Tenant's occupancy. The abatement was performed in connection with the departure of the prior tenant and the Landlord's preparation of the Premises for re-leasing.
Greenfield reviewed the Landlord's asbestos abatement records, including the New York City Department of Environmental Protection ACP-5 (Asbestos Project Notification) and ACP-7 (Project Completion Certification) forms for Floors 34 through 38. These forms document the notification to NYC DEP of the asbestos abatement project, the scope of work performed, and the certification of project completion by a licensed asbestos project monitor. Greenfield found the ACP-5 and ACP-7 forms to be complete and in order, and no deficiencies were noted in the abatement documentation.
Note: The Landlord's representation and warranty regarding the completion of asbestos abatement on the Premises floors, and the Landlord's indemnification obligation for pre-existing environmental conditions (including any conditions related to asbestos-containing materials), are addressed in the Agreement of Lease. The relevant lease provisions are summarized in Section VI of this memorandum below.
F. Indoor Air Quality / Mold
During the site reconnaissance of Floors 34–38, no evidence of significant mold growth, water infiltration damage, or indoor air quality concerns was observed by Dr. Bertram. The Premises floors were in shell condition at the time of the inspection, and no active water leaks, staining patterns indicative of chronic water intrusion, or visible mold growth were noted on any of the five floors. Window seals and exterior curtain wall conditions appeared to be in good order, with no evidence of moisture intrusion at the building envelope.
The Building's HVAC system is centrally managed by the Landlord and includes air filtration systems meeting or exceeding standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers ("ASHRAE"). The Building's ventilation system is designed to provide outdoor air ventilation rates consistent with ASHRAE Standard 62.1, Ventilation for Acceptable Indoor Air Quality. No indoor air quality complaints or remediation events were reported by Building management during the interview process.
G. Vapor Intrusion
Given the Building's Class A construction (post-2000), its concrete mat foundation with below-grade parking levels, the absence of any known soil or groundwater contamination at or adjacent to the site, and the absence of any nearby known contamination sources, the Phase I ESA report concluded that the risk of vapor intrusion into the Building is de minimis. The Building's foundation and below-grade construction provide a substantial barrier to any potential subsurface vapor migration, and the presence of multiple below-grade levels between the ground surface and the occupied office floors further attenuates any theoretical vapor intrusion pathway. No further investigation or vapor intrusion assessment was recommended by Greenfield.
VI. Relevant Lease Provisions — Landlord Environmental Representations and Indemnity
The Agreement of Lease between the Landlord and the Tenant is currently in an advanced stage of negotiation, with final form expected to be agreed upon by approximately July 1, 2023. The Lease contains the following environmental protections for the Tenant, which were negotiated by Calderwood & Harkness LLP and are reflected in the Tenant's redline of the Lease delivered to Pemberton Locke & Strauss LLP (Landlord's counsel; lead partner Diane Ashford) on May 2, 2023:
A. Landlord's Representation — Asbestos Abatement. Article 40.01(a) of the Lease provides that the Landlord represents and warrants to the Tenant that, as of the Commencement Date, all asbestos-containing materials on the Premises floors (Floors 34, 35, 36, 37, and 38) have been fully abated in accordance with all applicable federal, state, and local laws, rules, and regulations, including without limitation the New York City Asbestos Control Program regulations (Title 15, Rules of the City of New York, Chapter 1). The Landlord further represents that it shall deliver to the Tenant, prior to the Commencement Date, copies of all ACP-5 and ACP-7 forms, air monitoring reports, and final clearance documentation evidencing the completion of such abatement.
B. Landlord's Environmental Indemnity. Article 40.02 of the Lease provides that the Landlord agrees to indemnify, defend, and hold harmless the Tenant, its parent, subsidiaries, affiliates, officers, directors, employees, agents, successors, and assigns from and against any and all claims, actions, suits, proceedings, losses, liabilities, damages, costs, and expenses (including, without limitation, reasonable attorneys' fees and disbursements, consultant fees, investigation costs, and remediation costs) arising from or relating to:
(i) any pre-existing environmental conditions at the Building or the Premises, including but not limited to conditions arising from the presence, release, or threatened release of Hazardous Materials (as defined in the Lease) at, on, under, or migrating to or from the Building or the Premises, to the extent such conditions existed prior to the Commencement Date (August 1, 2023);
(ii) any breach of the Landlord's environmental representations and warranties set forth in Article 40.01 of the Lease; and
(iii) any remediation, removal, or response actions required under applicable Environmental Laws (as defined in the Lease) with respect to conditions predating the Commencement Date.
The Landlord's environmental indemnity obligation survives the expiration or earlier termination of the Lease and is not subject to any cap or basket. The indemnity extends to the Landlord's obligation for any investigation, remediation, removal, or corrective action required under applicable law — including CERCLA, the New York State Environmental Conservation Law, and New York City local laws — for environmental conditions predating the Lease term.
These provisions remain subject to final agreement between the parties and their respective counsel. As of the date of this memorandum, the Landlord's counsel has not objected to the substance of the environmental representation and indemnity provisions, though certain conforming and clarifying edits have been exchanged in the most recent markup. We will update this file memorandum if any material changes to these provisions are agreed upon in the final Lease.
VII. Conclusions and Recommendations
Based on the foregoing review of the Phase I Environmental Site Assessment completed by Greenfield Environmental Sciences LLC on June 2, 2023, the following conclusions and recommendations are presented:
1.  No RECs, CRECs, or HRECs Identified. The Phase I ESA identified no Recognized Environmental Conditions, no Controlled Recognized Environmental Conditions, and no Historical Recognized Environmental Conditions in connection with the Building or the Premises. The environmental condition of the Building and the Premises is satisfactory for the proposed headquarters lease.
2.  No Phase II Recommended. No Phase II Environmental Site Assessment (i.e., subsurface investigation, soil sampling, groundwater sampling, or other environmental testing) is recommended at this time. The findings of the Phase I ESA do not warrant further investigation, and the environmental risk profile of the Building and the Premises is consistent with a modern, well-maintained Class A commercial office tower.
3.  Contractual Protections Adequate. The Landlord's representations regarding the completion of asbestos abatement on Floors 34–38 and the Landlord's broad environmental indemnity obligation in the Agreement of Lease provide adequate contractual protection to Aurelius against pre-existing environmental conditions. These provisions, together with the clean findings of the Phase I ESA, substantially mitigate the Tenant's environmental risk exposure in connection with this transaction.
4.  Distribution and Retention of the Report. It is recommended that the Phase I ESA report be retained in Calderwood & Harkness's closing files for Matter No. 1017-00009. A copy of the report, together with this summary memorandum, should be provided to the following individuals at Aurelius for their records and internal files:
•  Vivienne Caldwell, Senior Vice President, Global Real Estate & Facilities, Aurelius Media Holdings Inc.
•  Tariq Nassar, General Counsel, Aurelius Media Holdings Inc.
5.  Availability for Title Insurance. The Phase I ESA should also be made available to Commonwealth Fidelity Title Insurance Co. if required in connection with the leasehold title insurance policy being obtained by the Tenant (Policy No. LTP-2023-07842). Certain title insurers request or require environmental assessments in connection with the issuance of leasehold title policies for high-value commercial leases, and the Phase I ESA report should be produced upon request to facilitate the timely issuance of the policy.
6.  Ongoing Monitoring. While no further environmental investigation is recommended at this time, the Tenant should remain attentive to any environmental disclosures or notifications from the Landlord during the Lease term and should promptly notify Calderwood & Harkness of any environmental issues that arise during the build-out or occupancy of the Premises.
VIII. Attachments / Enclosures
The following documents are attached to or enclosed with this memorandum and are maintained in the closing files for Matter No. 1017-00009:
Attachment A: Phase I Environmental Site Assessment Report, dated June 2, 2023, prepared by Greenfield Environmental Sciences LLC (Dr. Nadine Bertram, P.E., Lead Consultant) — 787 Seventh Avenue, New York, New York 10019. Full copy on file with Calderwood & Harkness LLP, Real Estate Practice Group document management system, indexed under Matter No. 1017-00009.
Attachment B: New York City Department of Environmental Protection ACP-5 (Asbestos Project Notification) and ACP-7 (Project Completion Certification) forms for Floors 34, 35, 36, 37, and 38 of 787 Seventh Avenue. Copies provided by Greystone Metropolitan Realty LLC (Brendan T. Kozlowski, VP, Asset Management) and reviewed by Greenfield Environmental Sciences LLC as part of the Phase I ESA.
This memorandum is prepared as attorney work product and is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP in connection with the representation of Aurelius Global Media Group PLC and Aurelius Media Holdings Inc. in Matter No. 1017-00009. Distribution of this memorandum or the attached Phase I ESA report to third parties should be made only with the prior approval of the responsible partner.
Rafael Dominguez Lead Associate, Real Estate Practice Group Calderwood & Harkness LLP 425 Park Avenue, 18th Floor New York, NY 10022 Tel: (212) 555-7400
Email: rdominguez@calderwoodharkness.com
Date: June 5, 2023
Item | Detail
Consultant | Greenfield Environmental Sciences LLC
Address | 55 Water Street, Suite 1010, New York, NY 10041
Lead Consultant | Dr. Nadine Bertram, P.E. (NY Lic. No. 092873)
Report Date | June 2, 2023
Report Title | Phase I Environmental Site Assessment — 787 Seventh Avenue, New York, New York 10019
Applicable Standard | ASTM E1527-21, Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process
Item | Detail
Building Name | Greystone Tower (also known as 787 Seventh Avenue)
Address | 787 Seventh Avenue, New York, NY 10019
Building Class | Class A, LEED Gold Certified Commercial Office Tower
Year of Construction | 2001
Total Floors | 52 floors above grade, plus 4 below-grade levels
Total Rentable Area | Approximately 1,450,000 RSF
Owner of Record | Greystone Metropolitan Realty LLC (a Delaware limited liability company)
NYC Tax Block/Lot | Block 1024, Lot 18, Borough of Manhattan
Premises Under Lease | Floors 34, 35, 36, 37, and 38, each approximately 37,000 RSF (total approximately 185,000 RSF)
Intended Use | General office, studio/production, and ancillary uses consistent with a global media, entertainment, and e-commerce headquarters