MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Douglas Fairchild, Responsible Partner, Real Estate Practice Group
FROM: Cynthia Ho, Working Associate, Real Estate Practice Group
DATE: May 10, 2023
RE: Change of Control Assignment Right — Analysis and Negotiation Recommendations; Aurelius Global Media Group PLC / Greystone Tower Headquarters Lease (Agreement of Lease between Greystone Metropolitan Realty LLC and Aurelius Media Holdings Inc., 787 Seventh Avenue, New York, NY 10019)
MATTER NO.: 1017-00009
CLIENT: Aurelius Global Media Group PLC / Aurelius Media Holdings Inc.
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I. Executive Summary
The purpose of this memorandum is to analyze the change of control assignment right being negotiated as part of the proposed Agreement of Lease (the "Lease") between Greystone Metropolitan Realty LLC ("Landlord") and Aurelius Media Holdings Inc. ("Tenant") for approximately 185,000 rentable square feet ("RSF") on Floors 34 through 38 at 787 Seventh Avenue, New York, NY 10019, commonly known as Greystone Tower (the "Building" or "Greystone Tower"). This memorandum provides a comprehensive legal analysis of the key issues, evaluates market comparables, and sets forth specific negotiation recommendations for the next round of lease negotiations.
By way of context, Landlord's initial draft of the Lease was received by our office on April 18, 2023, from Pemberton Locke & Strauss LLP (Diane Ashford, Partner), counsel to Greystone Metropolitan Realty LLC. The initial draft did not include a tenant-favorable change of control assignment right — an omission that is not uncommon in initial landlord-prepared lease drafts, but one that must be addressed given the profile of our client. Calderwood & Harkness's first comprehensive redline of the Lease was returned to Pemberton Locke & Strauss on May 2, 2023, and included, among other substantive modifications, a proposed Article governing assignment and subletting that incorporates a robust change of control assignment right.
Given Aurelius Global Media Group PLC's ("Aurelius PLC" or the "Parent") status as a publicly traded company cross-listed on the London Stock Exchange (LSE: AURL) and the New York Stock Exchange (NYSE: AURL), with an approximate market capitalization of $11.2 billion as of April 2023, the change of control provision is critically important to protect the Tenant's lease rights in the event of a future corporate transaction — whether structured as a merger, consolidation, stock sale, asset sale, or other form of corporate reorganization. The Premises at Greystone Tower will serve as the US headquarters for Aurelius PLC's American operations, and any disruption to the occupancy of this space resulting from an inability to transfer the Lease in connection with a change of control event would be materially adverse to the client's interests.
This memorandum addresses the following issues in detail:
(1) The proposed definition of "Control" and "Change of Control";
(2) The scope and mechanics of the change of control assignment right;
(3) Financial thresholds and protections for Landlord, including the tangible net worth test;
(4) The interplay between the change of control assignment right and the Parent Guaranty to be executed by Aurelius PLC;
(5) The waiver of Landlord's recapture right in the context of a change of control assignment;
(6) Market comparables from recent Class A Manhattan office leases involving credit tenants; and
(7) Anticipated Landlord counter-arguments and recommended responses.
Recommendation: The proposed change of control provisions set forth in our May 2, 2023 redline are consistent with market practice for Class A Manhattan office leases involving credit tenants and should be pursued aggressively in negotiations with Pemberton Locke & Strauss. The terms appropriately balance Tenant's need for corporate flexibility with Landlord's legitimate interest in ensuring the continued creditworthiness of its counterparty. As discussed in further detail below, the provisions offer Landlord meaningful protections through the tangible net worth test, assumption of obligations, financial disclosure requirements, and a replacement guaranty mechanism, while affording Aurelius PLC the transactional certainty required for a multinational publicly traded company.
II. Background and Transaction Context
A. The Tenant
The named Tenant under the proposed Lease is Aurelius Media Holdings Inc. ("AMH" or "Tenant"), a Delaware corporation (Delaware File No. 7318294). AMH is the primary US operating subsidiary of Aurelius Global Media Group PLC and was incorporated in Delaware in 2009 for the purpose of consolidating Aurelius PLC's US media operations, including its television, digital media, and publishing divisions. AMH currently maintains offices at 1330 Avenue of the Americas, New York, NY 10019, pursuant to a lease that expires on March 31, 2024, which is the proximate driver for the current relocation and this transaction. AMH employs approximately 1,800 persons in the New York metropolitan area and anticipates growing its headcount to approximately 2,200 over the initial lease term.
B. The Parent Guarantor
Aurelius Global Media Group PLC ("Aurelius PLC" or "Guarantor" or "Parent") is a multinational media conglomerate incorporated in England and Wales (Company No. 04291837) with its registered office at 140 Southwark Bridge Road, London, SE1 0AF, United Kingdom. Aurelius PLC is publicly traded on the London Stock Exchange (Premium Listing, FTSE 250) and cross-listed on the New York Stock Exchange through a Level III American Depositary Receipt program. Key financial metrics and personnel are as follows:
• FY2022 Revenue: £4.87 billion (approximately $6.05 billion at applicable exchange rates)
• Market Capitalization (April 2023): Approximately $11.2 billion
• Tangible Net Worth (as of December 31, 2022): Approximately $3.1 billion (calculated in accordance with IFRS; see discussion of GAAP reconciliation in Section IV.C below)
• Chief Executive Officer: Sir Marcus Hale, CBE
• Chief Financial Officer: Eleanora Voss
• General Counsel: Tariq Nassar
• SVP, Global Real Estate & Facilities: Vivienne Caldwell
Aurelius PLC operates in over forty countries and its business units span broadcast media, digital content, print publishing, and live entertainment. The company has been the subject of published analyst reports speculating on potential consolidation within the global media sector, and Aurelius PLC's management has publicly acknowledged that it regularly evaluates strategic alternatives, including potential acquisitions and combinations. This publicly known strategic posture underscores the importance of securing a robust change of control assignment right in the Lease.
C. The Landlord
Greystone Metropolitan Realty LLC ("Landlord") is a Delaware limited liability company (Delaware File No. 5820416) that serves as the operating entity and title holder for Greystone Tower. Landlord is the wholly owned subsidiary of Greystone Capital Partners Fund VI LP ("Fund VI"), a closed-end real estate private equity fund managed by Greystone Capital Advisors LLC, a New York-based real estate investment management firm. Key personnel and organizational details are as follows:
• CEO, Greystone Capital Advisors LLC: Harrison Drexel
• Managing Principal, Greystone Metropolitan Realty LLC: Jonathan R. Whitfield
• SVP, Leasing: Catherine Ng
• Fund VI Vintage: 2018; approximately $3.4 billion in committed capital; anticipated fund wind-down in 2030–2032
• Outside Counsel: Pemberton Locke & Strauss LLP (Diane Ashford, Partner; Nathan Goldberg, Senior Associate)
It is worth noting that Fund VI's closed-end structure and anticipated wind-down timeline may be relevant to our negotiations. A fund nearing the end of its life cycle may be motivated to ensure long-term lease stability and creditworthiness of its tenant base, which could make Greystone more receptive to structured financial tests (such as the tangible net worth threshold) as opposed to subjective consent standards that introduce uncertainty.
D. The Premises and Key Deal Terms
The proposed Premises consist of approximately 185,000 RSF across five full floors — Floors 34 through 38, inclusive — at Greystone Tower, 787 Seventh Avenue, New York, NY 10019. Greystone Tower is a 52-story Class A office tower that achieved LEED Gold certification in 2019. The Building is located in the heart of Midtown Manhattan, proximate to Columbus Circle and Central Park, and benefits from excellent transportation access via the 59th Street–Columbus Circle subway station (1, A, B, C, D lines).
The key economic terms of the proposed Lease are as follows:
Given the scale and duration of this transaction — representing approximately $90 million in aggregate lease value over the initial 15-year term, with potential expansion and renewal rights that could extend Aurelius's occupancy for up to 25 years — the change of control provision must be drafted with precision and foresight. The provision must address potential changes in control at both the Tenant entity level (AMH) and the Parent Guarantor level (Aurelius PLC), since a change at either level could trigger legitimate Landlord concerns about the ongoing creditworthiness and identity of the parties responsible for lease performance.
III. Analysis of the Proposed Definition of "Control"
A. Recommended Definition
The foundation of any change of control provision is the underlying definition of "Control." We recommend that the Lease define "Control" as follows:
"Control" means the direct or indirect ownership of more than fifty percent (50%) of the voting equity interests of an entity, or the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract, or otherwise.
This definition captures both equity-based control (through ownership of a majority of voting equity interests) and functional or governance-based control (through contractual arrangements, management agreements, or other mechanisms that confer the power to direct an entity's management and policies). The dual formulation is important in the context of Aurelius PLC's corporate structure for several reasons.
First, as a publicly traded company cross-listed on two major stock exchanges, Aurelius PLC's equity ownership is dispersed among a large number of public shareholders, institutional investors, and other market participants. Control of a publicly traded company may be established not only through the acquisition of a majority equity stake but also through proxy contests, voting agreements, shareholder coalitions, or other arrangements that confer de facto control without direct majority equity ownership. The functional control prong of the definition ensures that these scenarios are captured.
Second, the layered corporate structure — in which Aurelius PLC (a UK public company) owns AMH (a Delaware corporation) through one or more intermediate holding entities — means that control changes may occur at various levels of the organizational hierarchy. The "direct or indirect" modifier ensures that the definition captures control changes at any level that ultimately result in a change in the identity of the person or entity exercising control over the Tenant.
Third, the 50% threshold for the equity-based prong is the market-standard threshold for change of control provisions in commercial leases and is consistent with formulations commonly found in merger agreements, loan documents, and corporate governance instruments. A lower threshold (e.g., 35% or even 20%) would be unnecessarily broad and could be triggered by routine portfolio adjustments by institutional shareholders, while a higher threshold (e.g., 67% or 75%) would create gaps that could allow de facto control changes to escape the definition.
B. Scope of "Change of Control" Definition
Building upon the definition of "Control," we propose that "Change of Control" be defined as follows:
"Change of Control" means any transaction or series of related transactions (including, without limitation, any merger, consolidation, stock sale, asset sale, or reorganization) resulting in a change in the identity of the person or entity that Controls Tenant or Guarantor.
Several elements of this definition merit discussion.
Breadth of covered transactions. The definition is intentionally broad, encompassing any transaction or series of related transactions that results in a change in ultimate control. The illustrative list — mergers, consolidations, stock sales, asset sales, and reorganizations — is preceded by "including, without limitation," making clear that the list is non-exhaustive. This breadth is necessary to capture the full range of corporate transactions that could result in a change of control, including hybrid transactions, reverse mergers, schemes of arrangement (a mechanism commonly used under English law), and other structures that may not fit neatly within traditional categories.
Series of related transactions. The "series of related transactions" language is critically important. Without this language, a third party could structure around the provision by acquiring control through a series of incremental acquisitions, each individually below the 50% threshold but collectively resulting in a change of control. For example, an acquiror could purchase a 20% stake in Aurelius PLC through an initial open-market purchase, an additional 15% through a secondary block trade three months later, and a further 16% through a tender offer six months after that, each step individually falling below the 50% threshold but collectively resulting in the acquisition of a 51% voting stake. The "series of related transactions" formulation ensures that such a programmatic acquisition strategy is treated as a single change of control event.
Dual coverage — Tenant and Guarantor. The term "Tenant" for purposes of this provision encompasses both Aurelius Media Holdings Inc. (the lease signatory) and Aurelius Global Media Group PLC (the Parent Guarantor). This dual coverage is essential because a change of control at the Parent level — even without any change at the subsidiary level — would alter the identity and creditworthiness of the guarantor supporting the Lease. Landlord's underwriting of this transaction necessarily depends in part on the creditworthiness of Aurelius PLC as guarantor, and a change of control at that level could substitute a different (and potentially weaker) ultimate credit.
Public company exception. It is worth noting that in certain transactions involving publicly traded companies, the parties may negotiate a "public company exception" that exempts changes in ownership resulting from ordinary trading activity on public securities exchanges. Such a carve-out would provide that routine stock trades on the LSE or NYSE — which may over time result in changes in the composition of Aurelius PLC's shareholder base — do not constitute a "Change of Control" unless and until a single person or entity (or a group acting in concert) acquires Control as defined above. We recommend seeking this carve-out in our next markup, as it provides important certainty for a publicly traded tenant. However, given Greystone's institutional fund ownership structure and the conservative posture that institutional landlords typically adopt on assignment provisions, this carve-out may be difficult to obtain. We should be prepared with a fallback position: specifically, that the definition of Control already inherently provides a public company exception because routine trading activity on a public exchange, by itself, does not result in a "change in the identity of the person or entity that Controls" the Tenant or Guarantor. This interpretation should be supported by drafting a "Notwithstanding" clause that makes this implicit protection explicit.
C. Key Drafting Considerations
In connection with the definitions of "Control" and "Change of Control," several additional drafting considerations should be addressed:
Internal reorganizations. The definition must ensure that it is triggered only by an actual change in ultimate control — not by internal reorganizations within the Aurelius corporate group. For example, if Aurelius PLC restructures its US holding company hierarchy by transferring its ownership of AMH from one wholly owned intermediate holding company to another, this internal reorganization does not change the identity of the person or entity that ultimately controls the Tenant (Aurelius PLC remains in control throughout). The definition should include a carve-out explicitly confirming that such intra-group transfers do not constitute a Change of Control. We propose the following carve-out language:
"Notwithstanding the foregoing, neither (i) any transfer of direct or indirect interests in Tenant or Guarantor among Affiliates of Tenant or Guarantor, nor (ii) any change in the composition of the board of directors (or equivalent governing body) of Tenant or Guarantor, shall constitute a 'Change of Control,' provided that in either case, there is no change in the identity of the person or entity that Controls Tenant or Guarantor."
Affiliate definition. The effectiveness of the internal reorganization carve-out depends on a properly drafted definition of "Affiliate." We recommend defining "Affiliate" as any entity that directly or indirectly Controls, is Controlled by, or is under common Control with, the relevant entity. This is the standard formulation used in commercial contracts and is consistent with the definition of "affiliate" under Rule 405 of the Securities Act of 1933.
Board composition changes. The definition should expressly exclude changes in the composition of the board of directors (or equivalent governing body) of Tenant or Guarantor from the scope of "Change of Control," absent a concurrent change in equity ownership exceeding the threshold. As a publicly traded company, Aurelius PLC's board composition changes regularly through annual elections, retirements, and appointments. These governance-level changes should not, standing alone, trigger the change of control provisions of the Lease.
IV. The Change of Control Assignment Right
A. Mechanics of the Right
The central element of the proposed change of control provision is the assignment right itself. We propose that upon a Change of Control of either Aurelius Media Holdings Inc. (the Tenant) or Aurelius Global Media Group PLC (the Guarantor), Tenant shall have the right to assign the Lease to the successor entity without Landlord's prior written consent. This right is sometimes referred to as a "deemed consent" or "no-consent-required" assignment right in the change of control context.
This provision represents a departure from the general assignment restriction that will be set forth elsewhere in the Lease's assignment and subletting article. Under the general assignment provisions, Tenant may not assign the Lease or sublet all or any portion of the Premises without Landlord's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. The change of control assignment right operates as a specific exception to this general restriction, reflecting the recognition that change of control transactions differ in kind from voluntary third-party assignments.
The rationale for this distinction is both practical and legal. In many corporate transactions — particularly mergers, stock acquisitions, and statutory consolidations — the assignment of the lease occurs by operation of law or as an automatic consequence of the transaction itself, rather than as a discrete, negotiated assignment. For example, in a statutory merger under Delaware General Corporation Law Section 251, all rights, privileges, and obligations of the constituent corporations vest in the surviving corporation by operation of law, without the need for a separate assignment instrument. Requiring Landlord consent in such circumstances creates several risks for the Tenant:
• Deal uncertainty: The requirement for landlord consent injects an element of uncertainty into the closing process for the corporate transaction. The acquiror cannot be certain that the lease will remain in place, which may affect the valuation of the target and the structure of the transaction.
• Timing risk: Even where the lease provides that landlord consent shall not be unreasonably withheld, the process of seeking, negotiating, and obtaining consent takes time — time that may not be available in the context of a time-sensitive corporate transaction with regulatory filing deadlines, financing conditions, and other time-critical elements.
• Leverage for landlord concessions: A consent requirement gives the landlord leverage to extract concessions — such as increased rent, additional security, modification of tenant options, or above-market lease terms — as a condition of granting consent. Even where such conditions might be deemed "unreasonable" under applicable law, the cost and delay of litigating the issue make it an impractical remedy in the context of a live corporate transaction.
• Confidentiality concerns: Requiring prior landlord consent necessarily requires disclosure of the contemplated transaction to the landlord before the transaction is publicly announced. In the context of a public company acquisition, premature disclosure could trigger securities law obligations, disrupt the transaction process, or create competitive disadvantage.
For all of these reasons, the change of control assignment right — allowing assignment without landlord consent, subject to specified financial and procedural conditions — is the appropriate framework for a tenant of Aurelius's profile and a transaction of this magnitude.
B. Conditions to Exercise
The change of control assignment right is not unconditional. Rather, we propose that the right be subject to three conditions, each of which provides meaningful protection to Landlord while preserving the practical benefits of the no-consent-required framework for Tenant:
1. Tangible Net Worth Test. The successor entity must have a tangible net worth, calculated in accordance with generally accepted accounting principles consistently applied, equal to or greater than Aurelius Global Media Group PLC's tangible net worth as of the date of the Lease — specifically, three billion one hundred million dollars ($3,100,000,000) (the "Net Worth Threshold"). This threshold ensures that the successor entity has sufficient financial substance to support the obligations under the Lease and provides Landlord with a quantitative, objective standard for evaluating the creditworthiness of the successor.
2. Assumption of Obligations. The successor entity must execute and deliver to Landlord an assumption agreement, in form and substance reasonably acceptable to Landlord, pursuant to which the successor entity assumes all obligations of Tenant under the Lease. This requirement ensures that there is a clear contractual nexus between the successor entity and Landlord, eliminating any ambiguity about the identity of the party responsible for lease performance following the change of control transaction.
3. Notice and Financial Disclosure. Tenant must provide Landlord with thirty (30) days' prior written notice of the assignment, together with reasonable evidence of the successor entity's financial condition sufficient to demonstrate satisfaction of the tangible net worth test. "Reasonable evidence" should include audited financial statements of the successor entity (or, if audited financials are not available at the time of notice, unaudited financial statements accompanied by an officer's certificate as to their accuracy), together with a calculation of tangible net worth derived from such financial statements.
These three conditions collectively provide Landlord with the substantive protections it needs — assurance of financial capacity, contractual privity with the successor, and informational transparency — while avoiding the uncertainties and delays associated with a subjective consent standard.
C. Analysis of the Tangible Net Worth Threshold
The proposed tangible net worth threshold of $3.1 billion warrants careful analysis, as it will likely be a focal point of negotiation with Greystone.
Basis for the threshold. The $3.1 billion figure represents Aurelius PLC's tangible net worth as of the anticipated Lease Date, based on the company's audited financial statements for the fiscal year ended December 31, 2022, adjusted for known changes through the anticipated Lease Date. This figure will be fixed at the time of lease execution and documented in the body of the Lease or in a schedule thereto. The use of the Lease Date figure as the permanent benchmark — as opposed to a rolling or current-year test — is the market-standard approach for change of control net worth tests in commercial leases.
Relationship to lease obligations. The $3.1 billion threshold is extremely high relative to the Tenant's obligations under the Lease. The aggregate lease value over the 15-year term is approximately $90 million, and the Parent Guaranty cap is $18 million. The Net Worth Threshold therefore represents approximately 34 times the aggregate lease value and approximately 172 times the guaranty cap. This provides a substantial cushion for Landlord and should alleviate concerns about the creditworthiness of any successor entity that meets the threshold.
Landlord counter-proposals. We anticipate that Greystone may seek to modify the tangible net worth test in one or more of the following ways: (a) increasing the threshold amount; (b) adding an annual escalation to the threshold (e.g., at CPI or 3% per annum); (c) requiring that the threshold be the greater of the Lease Date figure or the successor's tangible net worth at the time of the transaction; or (d) requiring that the net worth test be satisfied on a current basis (as of the most recent fiscal year end) rather than measured against a fixed Lease Date benchmark. Each of these modifications should be resisted for the reasons discussed in Section VIII.C below.
Accounting standards. As a UK-listed company, Aurelius PLC prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and the United Kingdom. The proposed Lease references "generally accepted accounting principles, consistently applied" without specifying US GAAP or IFRS. This ambiguity should be addressed in the final Lease. We recommend that the definition of tangible net worth specify that it may be calculated in accordance with either US GAAP or IFRS, consistently applied, with the following formulation:
"Tangible net worth" shall mean the total assets of the applicable entity, minus (a) all liabilities of such entity, and (b) all intangible assets of such entity (including, without limitation, goodwill, trademarks, patents, copyrights, and other intellectual property), in each case as determined in accordance with generally accepted accounting principles consistently applied (which, for the avoidance of doubt, shall include International Financial Reporting Standards).
This formulation accommodates the possibility that a successor entity may report under either US GAAP or IFRS while ensuring consistency and comparability.
Fixed-date vs. current-year test. The use of a fixed Lease Date figure as the permanent benchmark is preferable for Aurelius because it provides certainty. If Aurelius PLC's tangible net worth grows significantly between the Lease Date and the date of a future change of control transaction (e.g., from $3.1 billion to $5.0 billion), a current-year test would require the successor to meet the higher $5.0 billion figure, potentially disqualifying otherwise creditworthy acquirors. Conversely, the fixed-date approach establishes a clear, knowable standard that any potential acquiror can evaluate at the outset of a transaction. We should emphasize this point in negotiations.
V. Waiver of Landlord Recapture Right
A. General Recapture Framework
Under the general assignment provisions of the proposed Lease, Landlord retains a recapture right for voluntary assignments to unrelated third parties. The recapture right operates as follows: upon Tenant's submission of a request for Landlord's consent to a proposed assignment, Landlord has thirty (30) days to elect to recapture the Premises — that is, to terminate the Lease as to the Premises proposed to be assigned and take back the space. If Landlord exercises the recapture right, the Lease terminates as to the recaptured space on a date specified by Landlord (typically 60–90 days after the recapture election), and Landlord is free to re-let the space to a third party at market rates.
The recapture right serves as a standard institutional landlord protection in Class A Manhattan office leases. Its purpose is to give the landlord the option of re-leasing the space directly — potentially at higher rents or on more favorable terms — rather than allowing the existing tenant to profit from an assignment in a rising rental market. The recapture right is particularly valued by institutional landlords like Greystone that operate sophisticated leasing platforms and have the resources to re-market space efficiently.
B. Waiver in Change of Control Context
We propose that the recapture right be expressly waived in the case of a change of control assignment. This waiver is essential for Aurelius for the following reasons.
First, and most fundamentally, if a change of control transaction is being pursued — for example, if a third-party acquiror has agreed to acquire Aurelius PLC through a public tender offer or scheme of arrangement — the acquiror needs certainty that the Greystone Tower lease will remain in place following the closing of the transaction. Greystone Tower serves as the US headquarters for Aurelius PLC's American operations, and the Premises are integral to the ongoing business operations that the acquiror is seeking to acquire. If Landlord retained the right to recapture the Premises upon a change of control, the acquiror would face the risk that its newly acquired US headquarters could be taken away — a prospect that could materially affect the acquiror's willingness to proceed with the transaction or the price it is willing to pay.
Second, the recapture right in the change of control context could be used as leverage by Landlord to extract concessions from the Tenant or the acquiror. Even if Landlord does not ultimately exercise the recapture right, the mere existence of the right creates a negotiating dynamic in which Landlord can demand above-market rent increases, additional security deposits, modifications to tenant options, or other favorable lease terms as the implicit price of waiving the recapture right. This leverage dynamic is particularly problematic in the context of time-sensitive corporate transactions where the parties cannot afford delays for lease renegotiation.
Third, the waiver of recapture upon a change of control is increasingly market-standard for credit tenants in Class A Manhattan leases. As documented in our market comparable analysis below (Section VII), each of the four comparable transactions we surveyed includes a waiver of the landlord's recapture right in the change of control context. Landlords have demonstrated increasing willingness to accept this waiver where, as here, it is coupled with a robust tangible net worth test and a replacement guaranty requirement.
It is important to note that the recapture waiver applies only in the change of control context. Landlord retains its recapture right for voluntary third-party assignments outside the change of control framework — that is, where Tenant proposes to assign the Lease to an unrelated third party in a transaction that is not driven by a change of control event. This distinction preserves Landlord's traditional protections for voluntary assignments while recognizing the unique dynamics of change of control transactions.
VI. Interplay with Parent Guaranty
A. Replacement Guaranty Requirement
The Parent Guaranty to be executed by Aurelius Global Media Group PLC is a critical component of Landlord's underwriting of this transaction. The Guaranty will be unconditional, will guarantee all obligations of Tenant under the Lease (including, without limitation, rent, additional rent, and all other monetary and non-monetary obligations), and will be capped at eighteen million dollars ($18,000,000), representing approximately two years' average base rent over the initial lease term.
In the event of a change of control assignment, the successor entity (or its parent) must execute and deliver to Landlord a replacement guaranty (the "Replacement Guaranty") on substantially the same terms as the original Parent Guaranty executed by Aurelius PLC. Specifically, the Replacement Guaranty must satisfy the following requirements:
(a) The Replacement Guaranty must be unconditional and guarantee all obligations of Tenant under the Lease, as assumed by the successor entity;
(b) The Replacement Guaranty must be capped at $18,000,000 — the same cap as the original Guaranty;
(c) The Replacement Guaranty must be subject to the same burn-down or release provisions (if any) as the original Guaranty;
(d) The Replacement Guaranty must be in form and substance reasonably satisfactory to Landlord; and
(e) The Replacement Guaranty must be executed and delivered to Landlord simultaneously with or prior to the effective date of the change of control assignment.
The phrase "substantially the same terms" is intentionally used rather than "identical terms" to accommodate necessary modifications (e.g., substitution of the successor guarantor's name, updated representations and warranties, conforming changes to reflect the successor's organizational structure) while ensuring that the economic substance of the guaranty is preserved.
B. Release of Aurelius PLC
Upon delivery of the Replacement Guaranty by the successor entity (or its parent) in compliance with the requirements set forth above, Aurelius Global Media Group PLC shall be released from its obligations under the original Parent Guaranty on a prospective basis. That is, upon the effective date of the Replacement Guaranty, Aurelius PLC shall have no further liability under the Guaranty for obligations arising from and after such date.
This release is critically important to Aurelius PLC's ability to exit a change of control transaction cleanly. Without a release, Aurelius PLC would remain liable under the Guaranty for the remainder of the 15-year lease term (and potentially longer, if the Lease is renewed) — even after Aurelius PLC has fully divested its ownership of AMH and has no ongoing relationship with either the Tenant entity or the Premises. Continuing guaranty exposure under such circumstances would be commercially unreasonable and would create an ongoing contingent liability on Aurelius PLC's balance sheet that could affect its credit rating, borrowing capacity, and financial flexibility.
Anticipated Landlord pushback. We anticipate that Greystone (through Diane Ashford at Pemberton Locke & Strauss) may resist a clean release and instead seek to require that Aurelius PLC remain liable under the Guaranty for a tail period following the closing of the change of control transaction. The most commonly proposed tail periods in our experience range from 12 to 24 months. The rationale for a tail period, from the landlord's perspective, is to provide a bridge during the initial period of the successor entity's tenancy, allowing the landlord to evaluate the successor's performance under the Lease before releasing the original guarantor.
We recommend resisting any tail liability for Aurelius PLC. The tangible net worth test applied to the successor entity — requiring a net worth of at least $3.1 billion — provides robust protection for Landlord and eliminates the need for a continuing guaranty from a divesting parent. The purpose of the change of control provision is to facilitate clean corporate transactions, and an ongoing guaranty obligation for the divesting parent is inconsistent with that purpose. If, however, Greystone insists on a tail period as a condition of agreeing to the overall change of control framework, we could consider a six-month tail as a last-resort compromise. Even in this scenario, the tail should be subject to the following conditions: (i) the tail period runs from the effective date of the Replacement Guaranty, not from the closing of the change of control transaction; (ii) Aurelius PLC's liability during the tail period is limited to obligations first arising during the tail period; and (iii) Aurelius PLC's aggregate exposure during the tail period is capped at the lesser of the Guaranty cap ($18,000,000) or six months' base rent.
C. Guaranty Continuity Absent Change of Control
For clarity, the original Parent Guaranty by Aurelius PLC remains in full force and effect absent a change of control assignment. There is no burn-down, reduction, or release of the Guaranty cap over the initial lease term in the absence of a change of control event. This is distinct from the letter of credit burn-down schedule applicable to the $5,180,000 security deposit, which provides for periodic reductions in the L/C amount based on the passage of time and the absence of uncured defaults. The Guaranty and the L/C are independent credit support mechanisms, and their respective terms should not be conflated.
VII. Market Comparables — Class A Manhattan Office Leases
A. Survey Methodology
To assess the market-appropriateness of the proposed change of control provisions, we surveyed change of control provisions in recent Class A Manhattan office leases (executed between 2020 and 2023) involving credit tenants — defined for purposes of this survey as tenants with investment-grade credit ratings or tangible net worth exceeding $1 billion — where the aggregate lease value exceeded $50 million and the premises encompassed 100,000 RSF or more. Our sources included proprietary Calderwood & Harkness lease databases (covering approximately 340 leases executed during the survey period), market intelligence provided by Blackmoor Advisory Group LLC (Dennis Rourke, Managing Director — Transaction Advisory), and publicly available information from real estate industry publications and SEC filings.
While confidentiality restrictions prevent us from identifying the specific parties, buildings, or transactions in the comparable leases, we have provided sufficient detail regarding the key terms to enable a meaningful comparison. The four transactions summarized below are representative of the market for change of control provisions in leases of the type and scale at issue in the Greystone Tower transaction.
B. Comparable Transactions Summary
Comparable 1 — Major Financial Services Tenant, Midtown West (2022)
• Premises: 250,000 RSF, Midtown West Class A office tower
• Lease Term: 20 years
• Tenant Profile: Major financial services firm with investment-grade credit rating
• Change of Control Assignment: Without landlord consent, subject to the following conditions: successor entity must have tangible net worth equal to or exceeding 75% of tenant's tangible net worth as of the lease signing date; successor must execute assumption agreement; tenant must provide 30 days' prior written notice with financial statements demonstrating satisfaction of net worth test
• Recapture Right: Waived upon change of control; retained for voluntary third-party assignments
• Replacement Guaranty: Required at same cap as original guaranty; parent released upon delivery of replacement guaranty
Comparable 2 — Technology Company, Hudson Yards (2021)
• Premises: 180,000 RSF, Hudson Yards Class A office tower
• Lease Term: 16 years
• Tenant Profile: Major technology company listed on NASDAQ; market cap exceeding $30 billion
• Change of Control Assignment: Without landlord consent, provided successor entity has (a) an investment-grade credit rating from at least one of S&P, Moody's, or Fitch, or (b) tangible net worth exceeding $2 billion; successor must assume all obligations in writing
• Recapture Right: Waived upon change of control
• Replacement Guaranty: Not applicable (no parent guaranty structure due to tenant's investment-grade credit)
Comparable 3 — Media Conglomerate, Midtown East (2023)
• Premises: 160,000 RSF, Midtown East Class A office tower
• Lease Term: 15 years
• Tenant Profile: Media conglomerate with publicly traded parent; market cap approximately $8 billion
• Change of Control Definition: 50% change in voting interests of tenant or guarantor
• Change of Control Assignment: Without landlord consent, subject to the following conditions: successor entity must have tangible net worth equal to or exceeding tenant's tangible net worth as of the lease date; 30 days' prior written notice required with financial documentation
• Recapture Right: Waived upon change of control
• Replacement Guaranty: Required at same cap as original guaranty; guarantor released upon delivery of replacement guaranty
This comparable is particularly relevant because it involves a media conglomerate of a similar size and profile to Aurelius PLC, with an identical lease term and a substantially similar change of control framework. The terms obtained by the comparable tenant are very closely aligned with the terms we have proposed for the Greystone Tower lease.
Comparable 4 — Global Consulting Firm, Park Avenue (2022)
• Premises: 200,000 RSF, Park Avenue Class A office tower
• Lease Term: 17 years
• Tenant Profile: Major global consulting firm; privately held with annual revenue exceeding $15 billion
• Change of Control Assignment: Without landlord consent, subject to the following conditions: successor entity must have tangible net worth equal to or exceeding 100% of tenant's tangible net worth as of the lease date; successor must assume all obligations; tenant must provide 30 days' prior written notice
• Recapture Right: Waived upon change of control; retained for voluntary third-party assignments
• Replacement Guaranty: Required at same cap; original guarantor released upon delivery of replacement guaranty; no tail period
Conclusion from Comparables. The terms proposed in the Aurelius/Greystone Tower lease are consistent with, and in some respects more landlord-friendly than, the market comparables surveyed. Specifically:
• Our proposed net worth test is at 100% of the tenant's Lease Date tangible net worth ($3.1 billion), which matches or exceeds the threshold in three of the four comparables (Comparable 1 uses a 75% threshold; Comparables 3 and 4 use 100%);
• Our proposed 30-day notice period is consistent with all four comparables;
• Our proposed recapture waiver is consistent with all four comparables;
• Our proposed replacement guaranty mechanism is consistent with Comparables 1, 3, and 4 (Comparable 2 did not have a parent guaranty structure and thus did not require a replacement guaranty); and
• The $3.1 billion Net Worth Threshold is the highest absolute dollar threshold among the comparables (reflecting the size of Aurelius PLC), providing Landlord with robust protection against successor credit risk.
C. Market Trends
Beyond the specific comparables surveyed, several broader market trends are worth noting:
Tenant-favorable trajectory. The trajectory in the Class A Manhattan office market has been toward increasingly tenant-favorable change of control provisions, particularly for credit tenants with investment-grade ratings or substantial tangible net worth. This trend has been accelerated by the competitive dynamics of the post-COVID office leasing market, in which landlords have been more willing to offer concessions — including on non-economic lease terms — to attract and retain large credit tenants.
Recapture waiver acceptance. Landlords have shown increasing willingness to waive recapture rights upon change of control events, provided that the waiver is coupled with a strong financial test on the successor entity. The recapture waiver is now a standard feature of change of control provisions in Class A leases involving tenants occupying 100,000 RSF or more.
Replacement guaranty universality. The replacement guaranty requirement has become virtually universal in Class A leases that include a parent guaranty structure. This reflects a market consensus that the replacement guaranty is the appropriate mechanism for protecting the landlord's credit position upon a change of control, rather than continuing guaranty exposure for the divesting parent.
Notice period standardization. The 30-day notice period has become the standard in the market, although some landlords continue to seek 45- or 60-day notice periods. In our experience, 30 days is the most commonly agreed-upon period, and landlords that initially seek longer periods typically concede during negotiations.
VIII. Potential Landlord Counter-Arguments and Responses
Based on our experience with Pemberton Locke & Strauss and with institutional landlords of Greystone's profile, we anticipate the following counter-arguments from Landlord's counsel in the next round of negotiations. For each anticipated counter-argument, we have prepared a recommended response.
A. Landlord May Seek to Retain Consent Right
Anticipated argument: Greystone (through Diane Ashford at Pemberton Locke & Strauss) may argue that Landlord should retain a consent right — even one subject to a "reasonableness" standard (i.e., consent not to be unreasonably withheld, conditioned, or delayed) — upon a change of control of Tenant or Guarantor. Landlord may contend that the consent right, coupled with the reasonableness standard, adequately protects Tenant's interests because any unreasonable withholding of consent would be actionable.
Recommended response: A consent right — even one subject to a reasonableness standard — creates unacceptable deal uncertainty for Aurelius and is below market for a tenant of this credit quality. The practical reality is that the reasonableness standard does not provide meaningful protection in the context of a time-sensitive corporate transaction. If Landlord withholds consent, Tenant's remedy is to commence a lawsuit seeking a declaratory judgment that the consent was unreasonably withheld — a process that can take months or years to resolve and that is wholly incompatible with the timeline of a corporate acquisition. Moreover, the reasonableness standard invites litigation over subjective and fact-specific questions (What constitutes a "reasonable" basis for withholding consent? Is a decline in credit rating sufficient? What about a change in business lines?), creating uncertainty for all parties.
The tangible net worth test, assumption requirement, and replacement guaranty mechanism proposed by Tenant provide Landlord with objective, quantifiable, and meaningful protections that are superior to a subjective reasonableness standard. We should emphasize that the proposed framework actually provides greater certainty for Landlord — because it establishes clear, measurable criteria that a successor entity must satisfy — than a reasonableness standard, which by its nature is ambiguous and subject to interpretation.
B. Landlord May Seek to Retain Recapture Right
Anticipated argument: Greystone may argue that the recapture right should apply to all assignments, including change of control assignments, as it represents a fundamental landlord right to control the tenant mix and credit profile of the building.
Recommended response: The recapture right upon a change of control is fundamentally inconsistent with the purpose of the change of control provision and would undermine the entire framework. If Landlord retained the right to terminate the Lease upon receiving notice of a change of control, the change of control assignment right would be illusory — Tenant would have the theoretical right to assign, but Landlord could terminate the Lease before the assignment takes effect. This would leave the acquiror without the US headquarters that is a key component of the acquisition and would destroy value for all parties.
The recapture waiver upon change of control is now firmly established as market practice for Class A Manhattan leases involving credit tenants, as demonstrated by the market comparables in Section VII above (all four comparables included recapture waivers upon change of control). Landlord's legitimate interests are adequately protected by the tangible net worth test, which ensures that the successor entity has financial resources vastly exceeding the lease obligations.
C. Landlord May Seek Higher Net Worth Threshold or Escalating Test
Anticipated argument: Greystone may propose that the tangible net worth threshold be increased above $3.1 billion, or that the threshold escalate annually at a fixed rate (such as CPI or 3% per annum) to account for inflation and the time value of money.
Recommended response: The fixed threshold at the Lease Date tangible net worth figure is the market-standard approach, as confirmed by our comparable analysis (Comparables 3 and 4 both use the tenant's Lease Date tangible net worth as the fixed benchmark). The $3.1 billion figure is already extraordinarily high relative to the lease obligations — approximately 34 times the aggregate lease value and 172 times the guaranty cap — providing Landlord with a cushion that is more than adequate to ensure the successor entity's ability to perform under the Lease.
An escalating threshold creates uncertainty and could deter otherwise creditworthy acquirors. For example, if the threshold escalated at 3% per annum, by Year 10 of the Lease the threshold would exceed $4.1 billion, and by Year 15, it would approach $4.8 billion. These elevated thresholds could exclude potential acquirors that are wholly capable of performing under the Lease but that do not meet an artificially inflated net worth standard. This outcome would harm both Tenant and Landlord, as it could prevent a change of control transaction that would otherwise result in a creditworthy successor assuming the Lease.
D. Landlord May Seek Tail Liability for Aurelius PLC
Anticipated argument: Greystone may request that Aurelius PLC remain secondarily liable under the Parent Guaranty for a period of 12 to 24 months following a change of control assignment, even after delivery of the Replacement Guaranty.
Recommended response: As discussed in Section VI.B above, Aurelius PLC should be fully released from its Guaranty obligations upon delivery of the Replacement Guaranty. The purpose of the change of control provision is to facilitate clean corporate transactions, and an ongoing guaranty obligation for the divesting parent is inconsistent with that purpose. Landlord's protection lies in the tangible net worth test on the successor entity — not in continuing exposure to a divesting parent that will have no ongoing relationship with the Tenant entity or the Premises.
If pressed, we may consider a six-month tail as a compromise of last resort, but this concession should be traded against another Landlord concession (such as a broader affiliate transfer carve-out, an expanded public company exception, or a reduction in the notice period). Any tail liability, if agreed, should be strictly limited as described in Section VI.B above.
E. Impact of Fund Ownership Structure
As noted in Section II.C above, Greystone Metropolitan Realty LLC is the operating entity for Greystone Capital Partners Fund VI LP, a closed-end real estate private equity fund managed by Greystone Capital Advisors LLC. This institutional ownership structure has several implications for our negotiations.
First, Harrison Drexel (CEO of Greystone Capital Advisors) and the Fund VI investment committee may have fund-level approval requirements for certain lease modifications, including the change of control provisions. It is possible that Catherine Ng and Jonathan Whitfield have authority to negotiate the business terms but require fund-level approval for final execution. We should ask Diane Ashford at the outset of the next negotiation session whether Greystone has obtained any necessary fund-level authorizations for the change of control framework, and if not, what the approval timeline looks like.
Second, the institutional fund ownership structure may actually make Greystone more receptive to structured financial tests (such as the tangible net worth threshold) as opposed to subjective consent standards. Institutional investors generally prefer clear, quantifiable criteria that can be evaluated objectively, rather than subjective standards that require judgment calls and create litigation risk. We should frame our proposal in terms that resonate with institutional investors — emphasizing the objectivity, clarity, and enforceability of the proposed framework.
IX. Recommended Lease Language — Key Provisions
Set forth below is the proposed lease language for the key change of control provisions. This language is intended for inclusion in the assignment and subletting article of the Lease (anticipated to be Article 10) and should be cross-referenced to the Parent Guaranty (Exhibit J to the Lease).
A. Definition of "Control"
"Control" means the direct or indirect ownership of more than fifty percent (50%) of the voting equity interests of an entity, or the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract, or otherwise. The terms "Controls," "Controlled by," and "under common Control with" shall have correlative meanings.
B. Definition of "Change of Control"
"Change of Control" means any transaction or series of related transactions (including, without limitation, any merger, consolidation, stock sale, asset sale, or reorganization) resulting in a change in the identity of the person or entity that Controls Tenant or Guarantor.
Notwithstanding the foregoing, neither (i) any transfer of direct or indirect interests in Tenant or Guarantor among Affiliates of Tenant or Guarantor, nor (ii) any change in the composition of the board of directors (or equivalent governing body) of Tenant or Guarantor, shall constitute a "Change of Control," provided that in either case, there is no change in the identity of the person or entity that Controls Tenant or Guarantor.
C. Assignment Right
Notwithstanding anything to the contrary in this Article 10, upon a Change of Control of Tenant or Guarantor, Tenant shall have the right to assign this Lease to the successor entity without Landlord's consent, provided that all of the following conditions are satisfied:
(i) the successor entity (or, if the successor entity is a subsidiary, the ultimate parent entity of such successor entity) has a tangible net worth (calculated in accordance with generally accepted accounting principles, consistently applied, including without limitation International Financial Reporting Standards) equal to or greater than Guarantor's tangible net worth as of the date of this Lease (Three Billion One Hundred Million Dollars ($3,100,000,000));